did, in point of fact, exist, and that this business was worthless to the knowledge or belief of the defendants, and that they conspired together to dispose of it knowing it to be worthless, with intent to defraud the shareholders, there could be no doubt that they committed an offence against the law; for upon the general law a conspiracy to cheat and defraud is an offence of the most serious character, and it is not the less so because it may not be directed against any particular persons. They must be satisfied, however, in order to convict the defendants, that there was a deliberate intention and design to cheat and defraud the public or the subscribers, and unless they were satisfied of that they could not convict them upon this indictment.

The Lord Chief Justice pointed out that the charge involved four questions— first, what was the real state of the business of Overend and Gurney, and whether it was so worthless as was represented on the part of the prosecution; next, if so, was its condition known to the defendants at the time of the transfer? If so, then, thirdly, did they misrepresent its state and condition to the world? If so, then, lastly, what was their intention in so doing, and was it to deceive and defraud the public? As to the first, it was plain from the evidence that in 1865 the firm was not solvent. It was natural for men in the position of the defendants, with such an enormous business and with such a name and reputation, to shrink from bankruptcy. Then, what other course was open to them? It was to sell the business, or to obtain new partners who should bring in fresh capital to supply the deficit and enable them to carry on the business. Nobody could doubt that such a course was perfectly legitimate, provided that they made known to their new partners all the circumstances necessary to enable them to understand their position. But, on the other hand, if they practised deliberate misrepresentation, and, knowing the business to be insolvent, represented it as sound, or if they had recourse to artifice or concealment to prevent the other parties from getting at the truth, then they would be guilty of fraud. And if they combined to carry out that object, then they were guilty of the crime of conspiracy. They made up their minds to dispose of the business to a joint-stock company, and to take a large number of shares in the undertaking themselves. It was for the jury to judge for themselves, from the immense amount of money turned over, and the enormous number of bills discounted, which stood upon figures not disputed, whether, after making all due allowances, it could reasonably be said that such a business was so worthless that to attempt to dispose of it was fraudulent. It was not a question how things actually turned out; the question was what was honestly believed at the time as to the value of the property or the business. Were they to judge simply by the light of events which had occurred they would be led to conclusions which a sounder judgment would show to be erroneous. They must see what was the honest belief of the defendants at the time the estimates were made and the transaction entered into. Could they suppose that men of business, of great wealth and high commercial position, would join such a large scheme, and embark such immense sums of money without going into calculations to see how far the terms proposed were such as they could prudently accept? Could they suppose that they took so many shares and made themselves liable for such large sums without making those inquiries? As to the third question, whether the defendants had misrepresented the state and condition of the business to the public, it had been said that the prospectus was fraudulent in these respects-that the defendants falsely pretended that it was not necessary to call up more than 157. per share; that the pecuniary affairs of the business were

in a prosperous condition; that the business was worth 500,0007.; and that three of the members would retain a large pecuniary interest. They might easily dispose of two or three of these heads of the charge. As to the first-that it was not intended to call up more than 157. per share-it would probably depend upon whether the jury believed in the alleged conspiracy or not. If the parties believed that the undertaking was likely to be successful, then the probability was that the amount of one call, 1,125,000l., would be sufficient. If, on the other hand, they considered that they did not so believe, then it would be otherwise. Then as to the guarantee of the vendors against all loss, there was no doubt that there was such a guarantee given, and it was no answer to say that, in point of fact, it turned out not to be really sufficient. That would depend on whether they believed that the private estates and the other assets relied upon were honestly believed to be sufficient. Then, again, as to the statement that Messrs. Gurney and Birkbeck were to retain a large pecuniary interest, there could be no doubt that they did retain such an interest in the form of shares, and this, again, would depend upon whether they were really believed to be worthless or of value. There were, however, two important points to which their attention must be directed. First, what was the effect of the whole of the prospectus with the reference to the articles of association and the deed? Was it to produce the impression upon those who read it that the concern was substantially a sound one, in which men might embark their capital with a very fair and reasonable expectation of success? Now, as to the effect of the prospectus, they must judge of it partly from its contents, and partly from the circumstances of the case. On the whole, his lordship could not help thinking that, looking at the prospectus, it did bear the construction that the concern was sound and valuable. It was, indeed, perhaps, as succinct and jejune a prospectus as one ever saw. The other point to which it was necessary to advert was that the prospectus mentioned only one deed. It certainly did only refer to one, and it was equally certain that to enable any body to understand exactly the nature of the arrangement, it would have been necessary to read both of the deeds. He thought the shareholders ought to have known that there was a second deed, and that the Stock-Exchange Committee, who exercise such a salutary influence in the prevention of fraud in such undertakings, ought to have been informed of it. And he could not help thinking that the public might be warned by this case not to trust too much to the exercise of that power; for it was impossible that any one should look carefully at the first deed without seeing that another must be necessary to carry out the arrangement; yet, the Stock-Exchange Committee did not observe it, and asked for no further information. The shareholders, however, ought to have been apprized of the real nature of the arrangement between the old firm and the new. Not that he believed that, with regard to the great mass of the shareholders, it would have made the slightest difference. It was all very well for men who find they have embarked in a ruinous enterprise to turn round and say that if they had been told of a second deed they would have looked at it, and so have found that there was a deficiency of assets to be provided for in the course of three years, and that if they had known that they would not have joined the concern; but when they found that out of all the thousands who applied for shares scarcely thirty or forty went to see the deed they might have seen, they might reasonably suppose that if they could have seen both deeds they would have looked at neither. Still it was for the jury to judge whether, if the public had known the whole of the real truth, they would have thought that because there was a deficiency-of some

uncertain amount not exceeding a million-therefore, the business was not worth purchasing.

The Lord Chief Justice then passed to the fourth head of the case, which was whether even if there was misrepresentation by the old firm, it was intentional; and fraudulent intention in this case was every thing. The guilty mind—the mens rea-was essential to the offence. No doubt every man must be taken to have intended the natural consequences of his acts, and if they found misrepresentation resulting in manifest deception, they might primâ facie presume an intention to defraud; but when the act was in its nature dubious or doubtfulthat is, when it was doubtful whether the act itself was wrongful-then the guilty intention became necessarily doubtful also, and it became most important to look to see the motives which could have operated in the minds of the parties accused; and therefore it was important here to see what motives could have operated in the minds of the defendants to induce them to perpetrate the supposed fraud. Now here there was an obvious distinction between the case of the old directors and of the new. It was obvious that if there were any fraud, the new directors were as much defrauded as any of the other shareholders. They had embarked their capital in the undertaking, and the jury were asked to believe that these four gentlemen-Messrs. Barclay, Gordon, Rennie, and Gibb --although not connected with the old firm, for the purpose of buying it up, invested vast sums in a scheme which they knew to be fraudulent, and a business they knew to be rotten. Moreover, these gentlemen did not only take these shares, but kept them also to the last. They might have sold their shares, and if they knew this to be a worthless scheme, and a mere bubble company, they would have sold their shares when they were at a high premium, and thus could have realized large sums. Instead of this, they kept these shares, and paid the calls upon them to an enormous amount. If they had sold these shares so soon as they could to realize a profit, that would have been most cogent evidence of fraud; but for the same reason their not selling them might fairly lead to the opposite inference. And then as to the members of the old firm, what motive had they for entering into such a conspiracy? Let them give that question a fair and dispassionate consideration. They gave up all their interest in the business; they pledged their whole fortunes to satisfy the deficiency; they gave up the purchase-money, not a shilling of which they were to touch until the deficiency was satisfied (for the shares they were to receive for half of it were to be hypothecated under the guarantee); every thing they were to receive was contingent on the success of the scheme. They gave up every thing. What motive, then, had they for fraud? What could they gain by it?

Gentlemen, said the Lord Chief Justice in conclusion, it may be hoped that this memorable case, in which you see arraigned at the bar of a criminal court gentlemen who once stood so high in this great city, will not be without its salutary results. We have been told that the commercial world is not animated by the lofty principles of conduct which once prevailed, and that, instead of those sound principles upon which our forefathers established the great commerce of the British Empire, and made the name of a British merchant respected to the uttermost ends of the world, there has been substituted a spirit of reckless speculation and commercial gambling, which has lowered the mercantile reputation of the country. If that be so, I trust that this memorable example will not be without its warning to those who are growing up among us. Here we have an old-established house, transacting a business almost un

equalled, and the names of those who were its heads known throughout the world as men of vast wealth and of the highest position: we see them now fallen from that high position and involved in ruin, and for what? Through turning aside from the safe and settled path of business and going astray after vain phantoms and illusive dreams, embarking their capital in the wildest speculations, and the rashest enterprises, we have seen them reduced to ruin, their lost fortunes scattered to the winds, their reputation tarnished and impaired, and they themselves at last at the bar of a criminal court on a charge of conspiracy to defraud. What an impressive lesson! But I hope it is not only in the commercial world -if this lesson was necessary-that this lesson will be learnt. I trust it may not be without its influence on the rest of society. There can be no doubt that the spirit of speculation and gambling has taken deep root in the minds of all classes of the community. Those who were wont to be satisfied with moderate profits and safe investments seem now to be led away with the spirit of greed and gain, and are now ready to embark their fortunes-the results, perhaps, of years of thought and toil-in the vain expectation of realizing enormous gains; and if this case shall teach those who are so ready to follow the ignes fatui of such vain delusions, that you cannot gain extravagant profits without extreme risk, that it is unsafe to embark in enterprises of which they cannot comprehend the scope, the management of which they cannot really control; if this case shall have a salutary effect in checking the spirit of speculation which seems to pervade all classes, and which has caused high and illustrious names to be thus soiled and tarnished, then the result may be rejoiced at. But all this is beside the question you have to determine. That question is, whether you believe that these gentlemen, knowing this business was worthless, conspired together to pass it off upon the public, and to cheat and defraud the shareholders. If you are satisfied of that, you will convict them; but if the prosecution have failed to satisfy you of that, and if, looking at all the circumstances, you think they acted honestly, then I am sure you will have satisfaction in being able to acquit them, and thus relieve them from their present position, in which the degradation of the accusation is added to all the loss and ruin they have suffered through this great disaster; though, on the other hand, if you really think them guilty, no sentiment of compassion must deter you from the discharge of your duty, and the verdict which in that case it will be your duty to pronounce.

The jury retired to consider their verdict, but in less than ten minutes returned into Court, and the foreman delivered the verdict of "Not Guilty."

The defendants, as soon as the verdict was made known, were greeted with most enthusiastic cheers both within and outside the Court. So ended this memorable

case.

APPENDIX.

PUBLIC DOCUMENTS AND STATE PAPERS.

THE "ALABAMA" QUESTION.