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should disclose the fact that the dividend was declared out of capital.” In consequence, a resolution was drawn up by the defendant as follows “That a dividend of 2) per cent be declared—it being understood that the statement to the shareholders at the annual meeting is to be a true and correct representation of the affairs of the bank, as far as it goes, whatever may be the result.”

The defendant, then admitting his connection with the report actually made to the shareholders, viz., the one in question, of July 28, 1857, said of that report

" The report that has been presented, well-examined shows the fact, although I do feel that it does not make the statement in the broad terms that would have been adopted if the intention had been to state that there was a very handsome surplus,”

At the close of the plaintiff's case, the Attorney-general (Sir F. Kelly) submitted that there was no case to go to the jury; that there was no fraudulent misrepresentation by the defendant in the month of July; and that the representation was addressed to the shareholders and not to the plaintiffs.

The judge said—“I don't think I can say there is no evidence ; but, Mr. Attorney-general, if you will consent to leave the case here, I will give you leave to move, that is if you do not call witnesses."

The Attorney-general, however, elected to proceed.

On the part of the defendant he contended — That the capital was paid up, or that defendant believed it so to be; that there were profits to the extent stated in the report of July, during the half-year therein alluded to; and that the report was so far true. That as to the statement of losses made to the defendant by Mr. Smith, the manager (hereafter more particularly alluded to), it was only an estimate of possible loss, and did not represent the amount of debts absolutely lost. Further, that Mr. Dixon acted in good faith in making the report, believing its truth; that the report was not calculated to mislead and induce people to purchase shares, for that on the face of it it was unsatisfactory; that the report was not addressed to the public at large as a recommendation to purchase shares, but was in fact on the face of it an apology to the shareholders for the non-payment of the usual dividend; and that it was not a representation to the plaintiffs, merely because the directors permitted it to be published.

The defendant was called as a witness, and after speaking to his appointment as a director, and as managing director, and to the fact that only the managing directors and the manager knew, or could verify the state of the bank's affairs; and also to his having, when an outside director, expressed his dissatis

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fiction at the small amount of information given in the matter to the outside directors, and after speaking to his having applied to Mr. Smith, the manager (as being the “person who knew most of the affairs of the bank”), about the losses, and of Mr. Smith's having made a statement to him about the losses, or as he, the defendant, contended, the possible losses, of the company, -amongst other things said, alluding to what he did after his appointment as managing director, and after his conversations with Mr. Smith, as follows:

“I proceeded to consider whether a dividend onght to be declared on the current half-year. I put down my conclusion in figures. The fignres are in my handwriting.” [The figures were £33 1,000 and £301,000, and the deficit was then stated to be £33,000.] The defendant continued, “I added £25,000 to this at a subsequent period. This made a total deficit of £58,000.” He proceeded, “I communicated it to the whole body. A draft report was drawn up by the manager. I do not know what has become of it,

This was early in July; I attended a meeting on the 4th of July; it

a full meeting I mentioned my views that there ought to be no dividend. I stated that it was based on calculations furnished to me by Mr. Smith. The majority disagreed with me, and resolved upon a dividend. I myself continued to be of the same opinion as before. It was stated by Mr. Smith, he was under the impression that the customers of the bank and the shareholders would be much alarmed by the non-payment of a dividend. I said that paying dividends out of capital was a logical absurdity, which if they pleased they might commit, provided they placed upon record a minute that the so doing should not interfere with giving to the shareholders a true and correct statement of the affairs of the bank. I drew up a draft resolution to that effect, which was read. The report was prepared in a form different from that ultimately published."

This draft report, here referred to by the witness as having been prepared and not published, ran as follows:

“In winding up the affairs of 1854, a year which is well known as most disastrous to the customers of the bank who were engaged in the colonial shipping trade, heavier loss has been sustained in the realization of assets then taken over by way of security, than the directors could have anticipated, and than the large provision already made for that purpose will meet. While the directors entertain no doubt that the policy of taking over these assets was one by which the interest of the bank was best consulted, they regret to inform the shareholders, that the result of a careful revision of these assets leads them to declare that the reserved fund can now no longer be considered an item to the credit of the bank, and that the further amount required to meet their losses, if realized at once, would absorb about 58 per cent. (£58,000) of the capital of the bank.

1 This was the resolution before referred to at p. 235, commencing " That a dividend of 2 per cent. be declared, it being understood,” &c.


“Under these circumstances, the directors were in doubt as to the propriety of paying any dividend for the last half-year, but conclude to do so, on the ground that the business of the past year, taken by itself, warranted their doing so, and that it was advisable to spread the losses arising from the affairs of 1854, over a future period, rather than expose the shareholders to the inconvenience of the intermission of any dividend, which some of them might feel perhaps very severely. The directors do not see any more impropriety in this course, than in that of an individual, after an unfortunate year's business, supplying his necessary expenses out of his trading capital, provided always that the fact of this being done is fairly and honestly laid before the shareholders."

The witness then continued thus :

“A discussion took place upon it” (that is the draft report just set out), “it was decided it should be set aside. They did not like it. I concurred in the resolution. Finally, I waived my objection, and concurred in the report actually presented(the report complained of, of 20th July, 1857).

The defendant said of this last report, “I believed the statement in the report to be true. I believed all the statements made to be true.” Again he said, “I did know what Mr. Smith told me; but I did not know the state of the bank as disclosed afterwards by Mr. Banner's report.”

The Attorney-general wished to put in two reports of directors, dated in 1837 and 1838, containing the following extracts :

1837.—“It may be proper here to remind the proprietors that the internal management is essentially that of a private bank. With the exception of one only, appointed by the directors out of their own body, it is conducted by the chairman and managing director, no other having access to the pecuniary transactions of the customers, thus combining the secresy of a private with the security of a jointstock bank.”

July 31, 1838.-"One other point only remains to be mentioned the internal management. This remains as before, being exclusively confined to the manager, assisted by the directors, who alone have access to the details of the bank.”

On being asked by the presiding judge for what purpose he tendered this evidence, the Attorney-general said he tendered it to meet the strong remarks of Mr. Edward James, that every attempt had been made to shuffle all responsibility on to the shoulders of the manager and one or two of the managing directors.

The learned judge rejected the evidence.

The learned judge told the jury that, in order to sustain the plaintiffs' case, the report must be false, and to defendant's knowledge, and made by him with a fraudulent intention to deceive


and mislead, and made with the intent to deceive and mislead the plaintiffs. If they believe Mr. Tinley, as every broker could get a copy, obviously for the purpose of showing it to persons most likely to deal in shares, it would be for the jury to say whether the report primarily made for the proprietors was not also made for the consideration of persons wishing to deal in shares.

Ultimately the jury found for the full amount claimed by the plaintiffs.

In Michaelmas Term last the Attorney-general, on behalf of defendant, moved for a new trial, on several grounds :1. That there was no evidence for the jury of false and fraudu

lent misrepresentation. 2. That the verdict was against weight of evidence. 3. That there was no evidence of any representation made to

the plaintiffs that the report was true. 4. That the reports of the directors of 1837 and 1838 were

improperly rejected in evidence. A rule nisi was granted on all the grounds.

The rule was argued in the following Hilary Term, before Lord Campbell, C. J., and Justices Wightman, Crompton, and Hill. The able arguments of Mr. Edward James, Q.C., against the rule, and of the Attorney-general in support of it, deserve attention. They were confined principally to the particular facts of the case, to which we have already adverted ; and we have, moreover, already presented them briefly, but perhaps sufficiently, in narrating the points relied on at the trial on both sides respectively. What additional matter it is desirable to introduce to the readler's notice will be fully gathered from the extracts from the judgments, which we proceed to subjoin.

The rule was discharged by the unanimous judgment of the Court.

Lord Campbell said :

“I really feel great pain upon this question, because I look upon Mr. Dixon as a gentleman to be considered as still an honourable man, and I do not think that any permanent stigma is attached to his character, but I think in this transaction he has been over-persualed to do wbat is wrong.

Video meliora, &c. &c. The declaration imputes to him that he knowingly concurred in a report that he knew to be untrue, and that he did so with the intention of deceiving. I am sorry to say, I think in this case that has been proved against him. The report, I think, amounts to this—that the dividend of five per cent. was for that half-year to be paid out of profits, and that hereafter in all probability it would be paid out of profits; and that this bank was in a fit situation to award the divident of five per cent. on the 28th July, 1857. Certainly this declaration is not against him for concurring in a dividend, but it is for representing that that dividend was paid out of profits, and that the bank was in a situation safely to make such a dividend."

His lordship then, after observing that he thought the report in question amounted to such representation, thus proceeded :

“Was that the true state of the affairs of the bank? Most undoubtedly it was not. Upon that there is no dispute that this was incorrect; it was untrue. The next important question is-was this incorrect and untrue to the knowledge of Mr. Dixon ?"

His lordship then read over and commented on the statements made in Mr. Dixon's speech in February, 1858, and other evidence already referred to, and observed of Mr. Dixon's statement that that report, "well examined, showed the facts” (i. e., the actual state of the bank); and of all the arguments adduced to prove that it did so, his lordship disposed by asking, whether “it was fair that it should require a very microscopic inspection of this sort ?” and expressed a decided opinion that it did not disclose the true state of the bank. Then, after alluding to the conflict-the doubts--the more than doubts-that the defendant admitted existed in his mind at the time the report of July was published as to what really ought to have been done, his lordship said :

“Still he concurred in this report. Now, with what view does he do so? I


he does so for the sake of the bank, but regardless of the interests of those who were to deal with the bank; that it would be very much for the benefit of the shareholders, of whom he was one, that this substituted report should be published, instead of the more genuine report, and he concurs in that. Why does he concur in it? Nay, the fair inference is this—that he concurs in it because he believed that it would not alarm ; that it would not prevent people from continuing their deposits in the bank; that it would not prevent people from buying shares in the bank. Is not that a fraud, although he might believe that if the bank-went on prosperously, and made £100,000 & year, that ultimately it might prosper and become a successful speculation ? In the case of the directors of the British Bank, I had occasion to lay down, and I believe that that was not considered as a misdirection in point of law, to the jury, that if it was the intention of the directors to publish what they knew to be untrue, for the purpose of inducing persons to buy shares in the bank, that they were guilty of doing what was wrong, and might be indicted for a conspiracy, although they might have believed at the time, that by a successful career the barik might ultimately be solvent; but publishing an untrue statement of the condition of the bank, for the purpose of inducing persons to become purchasers of shares, and running the risk of the

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