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TRIALS, LAW CASES, &c.

CASE OF MESSRS. STRAHAN, PAUL, AND BATES. CENTRAL CRIMINAL COURT, October 26 and 27.

(Before Baron Alderson, Baron Martin, and Mr. Justice Willes.) WILLIAM STRAHAN, Sir John Dean Paul, bart., and William Makin Bates, were indicted for a misdemeanor, in having illegally converted to their own use certain securities which had been entrusted to them, as bankers, for security.

The general particulars of the disastrous bankruptcy of the old banking firm of Strahan, Paul, and Co., and the subsequent arrest of the partners on criminal charges, have already been given in the CHRONICLE of this volume. The unhappy men were now placed at the bar of the Central Criminal Court to take their trial on those charges. The indictment, which was framed on a special Act of Parliament, charged that the defendants had carried on the business of bankers, and that in that capacity they had been intrusted with certain Danish bonds of the value of 50001. for the purpose of safe custody, and that without any authority to pledge, sell, or negotiate the bonds so intrusted to them, they had, contrary to good faith, sold and converted them to their own use. In other counts the defendants were charged with

having sold the bonds in question, and with having negotiated them; and they were also charged with conspiring together with the same object.

The defendants pleaded "Not guilty."

The Attorney-General said he had, on the present occasion, a painful duty to discharge in pressing an accusation of a very serious character against the defendants on this indictment-gentlemen known to most of them, and who had hitherto maintained a high position in society, and a character of unquestioned integrity and honour, which prevented them from being supposed capable of the offence with which they were now charged. The present charge, therefore, was one not only involving penal consequences of great magnitude, but also affecting the honour and character of those gentlemen at the bar. The defendants had carried on for some time the business of bankers in this metropolis. The firm was of ancient date; its transactions were large, and it enjoyed the confidence of a highly numerous body of customers. Among others, the prosecutor, Dr. Griffith, Prebendary of Rochester, opened an account with the then firm of Snow, Paul, and Co. in 1830. In 1838 Snow retired, and the defendants, Strahan and Bates, joined the firm. Subsequently Sir John Dean

Paul, the father of the defendant, died, and from that period the business had been conducted by the three defendants. Dr. Griffith continued the account he had opened with the firm of Snow, Paul, and Co. in 1830, until the transactions now the subject of inquiry occurred. He was a gentleman of great fortune and character, and employed the defendants, as bankers, to invest money for him from time to time in public and foreign securities. The present inquiry related to some of those securities, fraudulently disposed of by the defendants, in contravention of the statute which makes it penal to dispose of securities placed in their hands for safe custody. On three several occasions Dr. Griffith employed the defendants to invest money for him in Danish five per cent. bonds; - namely, in 1850, to invest 20007.; which was done by the purchase of five bonds numbered 370, 457, 458, 459, 460; in the same year, to invest 10007., which was represented by one bond numbered 87; and in 1851, when 2000l. was invested by the purchase of bonds numbered 426, 573, 657, 659, 660, 661, 662, 663, 793, and 794; for which sums, amounting in the whole to 49987., were paid and debited against Dr. Griffith in the bankbook. Whether in the case of the two first transactions there was any written order was uncertain; there certainly was in the last; and it was undeniable that all three had been entered into by the express desire of Dr. Griffith. The defendants regularly received the dividends on these bonds as they became due, and credited in their books Dr. Griffith with them. They received the dividends from time to time, and continued to do

so until the 1st of March, 1854. At that time the firm of Strahan and Co. had got into difficulties, and had recourse to the desperate and guilty expedient of resorting to the securities they held in their hands belonging to their customers, for the purpose of raising money to meet the necessities of the hour. In March, 1854, Sir J. Paul applied to a Mr. Beattie to raise money on these bonds, by way of loan. On his refusal he asked him to dispose of some of them. Mr. Beattie consented to this transaction, and took some of the securities from Sir J. Paul and placed them in the hands of Messrs. Foster and Braithwaite, brokers in the City, for the purpose of sale. Among these securities were the bonds of Dr. Griffith, the numbers of which have been enumerated, and which constituted security for 5000l. They were sold, and a cheque was given to Mr. Beattie, who then gave his own cheque to Sir J. D. Paul for the amount. There was no doubt that Sir J. D. Paul received the money on account of that cheque, and made it available for the purposes of the firm. Therefore, so far as Sir J. D. Paul was concerned, there could be no question of his complicity in the guilty transaction of misapplying the securities which had been deposited with him for safe keeping. It would be made perfectly clear by the evidence that Sir J. D. Paul and his partners had no authority, direct or indirect, from Dr. Griffith to sell or otherwise dispose of these securities. With regard to the other two defendants, what was the state of their knowledge of the transaction? That must be shown by other evidence. This transaction took place in March,

1854, and in the month of June in this year the embarrassments of the firm became so great that it was impossible for it to go on. It accordingly stopped, and became bankrupt. On hearing this Dr. Griffith, who had at the time 22,000l. worth of securities in their hands, became considerably alarmed, and immediately put himself in communication with the official assignee, and asked what had become of his securities. The official assignee proceeded to the banking-house, and inquired about them. He was told by Mr. Strahan, in the presence of Mr. Bates, that the securities were either sold or pledged. He then asked whether in any book the securities of the customers were recorded; and Mr. Strahan and Mr. Bates looked at one another, and he got no answer. Shortly afterwards Mr. Strahan proceeded to see Dr. Griffith, who, in the meantime, had laid a criminal information against the partners. Mr. Strahan acknowledged fully that the securities had been disposed of with his knowledge and co-operation, but urged most anxiously on Dr. Griffith to forego this prosecution, and not to adopt anything like a criminal proceeding. Dr. Griffith observed that he had a public duty to perform, and that, however unwilling he might feel to act hostilely towards gentlemen with whom he had been acquainted, he had no alternative but to enforce the application of the law against them. The jury would hear the details of the conversation which passed with Dr. Griffith, which would leave no doubt on their minds that Mr. Strahan thoroughly combined with Sir J. D. Paul in this transaction. In fact, the object was to

raise money to meet the necessities of the bank; and, therefore, it would not be straining the evidence at all to say that what was done was done with the concurrence of Mr. Strahan; and it would be for the jury to say whether or not the transaction was brought fully home to Mr. Bates. The defendants are indicted under the 7th and 8th of George IV., chap. 29, section 49, which provides :

"And for the punishment of embezzlements committed by agents intrusted with property, be it enacted, that if any chattel, or valuable security, or any power of attorney for the sale or transfer of any share or interest in any public stock or fund, whether of this kingdom, or of Great Britain, or of Ireland, or of any foreign State, or in any fund of any body corporate, company, or society, shall be intrusted to any banker, merchant, broker, attorney, or other agent for safe custody, or for any special purpose, without any authority to sell, negotiate, transfer, or pledge, and he shall, in violation of good faith, and contrary to the object or purpose for which such chattel, security, or power of attorney shall have been intrusted to him, sell, negotiate, transfer, or pledge, or in any manner convert to his own use or benefit such chattel, or security, or the proceeds of the same, or any part thereof, or the share or interest in the stock or fund to which such power of attorney shall relate, or any part thereof, every such offender shall be guilty of a misdemeanor, and, being convicted thereof, shall be liable, at the discretion of the Court, to any of the punishments which the Court may award, as hereinbefore last mentioned."

He would show that these securities were purchased by the direction of Dr. Griffith, with his money; that they were left for safe custody in the hands of his bankers, and that they were disposed of, with the knowledge undoubtedly of two of the defendants, without the authority of Dr. Griffith, and that the proceeds were applied in such a way as brought the transaction within the terms of the statute he had referred to. It had been suggested that the defendants, by disclosing examination before the Court of Bankruptcy all these circumstances, might avail themselves of the terms of another section of the statute, which enacts,

in an

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That nothing in this Act contained, nor any proceeding, conviction, or judgment to be had or taken thereupon against any banker, merchant, broker, factor, attorney, or other agent as aforesaid shall prevent, lessen, or impeach any remedy at law or in equity which any party aggrieved by any such offence might or would have had if this Act had not been passed; but, nevertheless, the conviction of any such offender shall not be received in evidence in any action at law or suit in equity against him; and no banker, broker, merchant, factor, attorney, or other agent as aforesaid shall be liable to be convicted by any evidence whatever as an offender against this Act in respect of any act done by him, if he shall at any time previously to his being indicted for such offence have disclosed such act, on oath, in consequence of any compulsory process of any court of law or equity in any action, suit, or proceeding which shall have been bona fide instituted by any party aggrieved,

or if he shall have disclosed the same in any examination or deposition before any Commissioners of bankruptcy."

It was true that there had been proceedings in bankruptcy, and that some disclosures were made by one of the defendants, or perhaps by the whole of them; but there would be very little difficulty in showing that whatever took place in the Court of Bankruptcy was done by concert and connivance. It was not a compulsory proceeding, but was resorted to purposely with the view that the defendants might avail themselves of a particular section in the Act of Parliament referred to. The securities in question were sold in March, 1854, and after that the defendants bought other securities with a view to replace those they had disposed of; and at a subsequent period, shortly before stopping, they disposed again of the new securities so purchased, not to the persons they sold the first to, but to other persons. Now, the disposal of these latter securities, to which the disclosure in the Court of Bankruptcy referred, was not the occasion of the present charge against the defendants. He (the Attorney-General) knew nothing that they might subsequently have done that was at all binding on Dr. Griffith.

That gentleman authorised and intrusted them to purchase and keep specific securities with specific numbers, and it was for getting rid of those securities without his authority, and converting the proceeds to their

Own

use, that they were now charged. With respect to other securities which they might have purchased subsequently he knew nothing; and he believed therefore, that this defence, if gone

into, would fail. Having now stated the principal features of the case, he felt it was not incumbent on him upon the present occasion to say one single word which would tend to aggravate the position of the defendants, or which would operate to their prejudice. He should simply proceed to prove the facts he had stated, and he did not believe that, either on the merits or law of the case, there could be any answer to the charge.

Dr. Griffith detailed his instruction to the firm of Strahan, Paul, and Co., for the purchase of the bonds as stated by the Attorney-General, and then said: The whole of them amounted to the sum of 5000l. in Danish bonds, which the prisoners were authorised to take charge of for me. I do not think I ever saw these particular bonds or made any inquiries respecting them. I remember having a conversation with Mr. Bates upon the subject of these bonds and my other securities since they were purchased, and he told me that they were quite secure and safe in their custody; and on the 28th of April, 1855, I asked the defendant Bates particularly respecting the Danish bonds, and told Mr. Bates that they had received the dividends on the Danish bonds, but not the interest upon some gas shares, which was then due. Mr. Bates said the interest had been received, but was not yet carried to my account. Mr. Strahan was present when this conversation took place. The interest upon the Danish bonds was regularly passed to my account down to March, 1855. I never at any time gave the defendants authority, directly or indirectly, to sell, transfer,

pledge, or in any manner convert these securities to their own use, and there was no plea nor pretext by which they could consider themselves authorised to make use of them. Dr. Griffith then narrated his interview with Mr. Strahan in the same terms as when before the magistrates [CHRONICLE, p. 99, which should be referred to].

The prosecutor was cross-examined by Sir F. Thesiger for the defendant Strahan.-I never saw the Danish bonds at any time. I have stated accurately the conversation that took place between me and Mr. Strahan, but I may have omitted something that occurred. I made a memorandum at the time, which has assisted my memory. I only had two interviews with Mr. Strahan. I generally transacted my banking business with Mr. Bates.

By Serjeant Byles (for Sir J. D. Paul).-I had a key of the box at the bank, and the defendants had a key also.

By Mr. James (for Mr. Bates). -The gas shares were not misappropriated. The bank had nothing to do with them. They were in the possession of a friend, and I have never seen them.

Mr. Peppercorn and Mr. Hill, stock-brokers, proved the purchase of the Danish bonds numbered as stated, for the defendants' firm. Mr. Hill also proved that in June, 1854, he purchased 5000l. worth of Danish bonds for the defendants.

Mr. Allen, a clerk in the banking-house, proved that the securities passed into the hands of the new firm at the death of Sir J. Paul, senior, and that the interest on Dr. Griffith's bonds was received and placed to his credit up to September, 1853.

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