THE TE ARO HOUSE CASES. MR. SMITH'S EVIDENCE CONTINUED.

Evening Post, Volume LV, Issue 125, 28 May 1898, Page 5

THE TE ARO HOUSE CASES. MR. SMITH'S EVIDENCE CONTINUED.

The hearing of the charges of embezzlement against John Craig was continued in the Magistrate's Court after we went to press yesterday afternoon. In further cross-examination by Mr. Young, Mr. James Smith (proprietor of Te Aro House) said the memorandum (produced) was made up to date tc be handed to the Bank, and included a list of the branch stocks. Mr. Young —Do you remember seeing any list of the branch stocks ? Witness — Yes. Mr. Young—And isn't that the list?" Witness —lt may not bo the identical one. It was pointed out that the Dannevirke* stock was included in the list, and was put down at £1500. Mr. Young asked why, if the branch had been sold to Barsby, it was shown in that statement, and the witness replied that the Dannevirke business had still been looked upon as a branch. Continuing, he said he did not think there was a special arrangement between Craig and Barsby for any definite period. Witness would swear that the arrangement was not made between him (witness) and Craig aa to the appointment of Barsby in the employ of the firm. Mr. Young—Did not Mr. Craig tell you that he was paying Barsby out of salaries ? Witness —No. Mr. Young —Now, wasn't the money to pay Barsby taken out of the salaries, so that the Bank would not be aware of the precise state of affairs ? Witness —No. Continuing, the witness said the reason why they had taken back Barsby's stock was that Craig had suggested doing so. Up till then the firm had discounted Barsby's bills at the Te Aro branch of the Bank of New Zealand. The Bank never asked witness to close up the Daunevirke branch. The firm was reducing the branches of its own accord, and that was tho real reason Barsby's business was closed up and the stock taken back. It was Craig's wish and Craig's plan. Mr. Young—Yes, put it all down to Mr. Craig. Witness —The whole plan wa6 worked out right through, from first to last, by Mr. Craig. Then it. was Mr. Craig's plau making the sham purchase and discounting Barsby'e bills P-Yei. It worked very well until closing the branch up ? Craig's account at Te Aro Bank was very convenient to work on, you found ? —Well, I suppose so. Do you remember Mr. Craig being authorised to send £100 to Auckland, and draw the money from the firm later ? —No. On 26th January Craig paid witness his (Craig's) cheque for £100, but witness did not think he authorised Craig to draw a corresponding sum from the firm's account. Witness may have said "Give me your cheque for £100 and draw it from the firm." About 18th February £100 was drawn from .the firm's account by Craig. And he is now charged with stealing it! Have you looked through the list of charges ?—I have looked through the list. And you saw the £100 ?— Yes. And you didn't go to the Bank and say " That sum was drawn by my instructions ?" —No; I didn't do that. In answer to the Bench, Mr. Smith said he had no special recollection of authorising Craig to draw the £100. Further cross-examination— Witness could not 3ay he was indebted to Craig for about £80. The book produced, showing a statement of private accounts between James Smith and John Craig, had never been in witness's possession other than just in his hand. Had not had it even in his hand since 1896. Witness had sent up to Craig's house a number of books, as accused wished to post them up. Witness did not know they were all behind, as Craig had over and over again said they were posted up to date. Did not know that such was not the case until Mr. Hislop informed him so. Mr. Young—Do you remember authorising Mr. Craig to draw the difference between the amount to his credit (£433 Is) in the pld ledger and that in the new (£200) ?—No, I don't remember doing bo. I ma}' have. Continuing, witness said he had sufficient confidence in accused to let him draw it himself in the proper way, if he was bo authorised. You don't complnin because be drew it in salary cheques, do you ? —Yes; I do. Mr. Young —Yes, it might have been better to draw it otherwise. Bub if he (Craig) saw fit to draw it in salary cheques you wouldn't charge him with stealing it, would you ? —Yes, I would. Why P —Because it was the wrong way of doing it. Can you suggest any other way of getting the money ?—Yes; he could have asked for the proper amount, and he would have got it. And you would not object to him drawing it himself P —No, provided he drew the proper amount. Witness had in earlier days asked Craig to leave what money he could in the business. Then he used the business as a means of depositing his surplus earnings ?—«Well, not exactly that. Continuing, witness said he was informed that Craig bad not drawn his full salary. Witness had no objection to his drawing whatever he was entitled to. In whatever manner he chose ?—He ought to do it in the ordinary way: Proceeding-, witness said he had always thought until these discoveries were made that accused was very loyal to the firm. He dared Bay it was out of his loyalty to the firm that he assisted some of the customers to meet their bills. Witness had made that remark to Mr. Somerville. Accused had not shown witness any list of money he had paid out of bis own pocket iv connection with his expenses — Customs duties, &c. When accused went to Palmerston North he was entitled to expenses, £6 10s. Will you say that Mr. Craig is not entitled to £318 as shown in the list (produced) ?— I could not say what he is entitled to. If be paid out of his own money that amount in respect of the firm he would be entitled ( to draw it. Witness remembered discounting a bill of Pattersons for £250 on sth January, 1898. Of that £40 was for an amount due to witness personally for rent. If Crtdg paid the £250 he lost £40. Witness drew two cheques (£lll 12s Gd and £98 7s 6d) for theamouat, but he could not say why he did so. Mr. Young —Now, can't you giv« me an explanation ? x Witness—l don'l know that I can. I didn't want to draw a oheque for £210. His Worship advised Mr. Smith to explain what object be bad in drawing the two cheques instead of one. If he declined to give an explanation it made it appear that he was doing so for sqiub improper purpose. Witness said there was no explanation to offer. Replying to further question^ he said he owed the Bank a lot of money. At this stage, a letter from Mr. Craig to Mr. Smith was put iv by Mr. Young, and read by his Worship. It ran as follows, being dated 13th April, 1898:—" Dear Sir— I have to acknowledge that in the preparation o£ the balance-sheets of James Smith and James Smith & Co., where I was in the position of accountant, I alone drew up the said balancesheets. You never interfered with them, and I never informed you that they were in any way inaccurate balance,-slieets, and so far as I know you always accepted my balance-sheets as conreut. —(Signad) John Cbaig." Mr. Young (to witness) — "Sou bogged Mr. Craig to give you that letter? — No. That letter was drafted by your solicitor, and taken by you to Me. Craig, *nd you asked him to sign it ?—Ye*. Did you not tell him he could not incur any responsibility, and it would be at groat

benefit to you P— No. I had received « letter from him before. It was for your benefit he wrote that, ia order that you might take it to the Bank ?— He might have done so. Did you show it to the Bank ?— I would have if they had asked me. Each sentence in the letter was then read out, and Air. Smith was asked as to its correctness or otherwise. Mr. Young— l understand that the only complaints as regards the balance-sheets are that the stock was overvalued and the liabilities undervalued ? — I believe so. To several more questions by Mr. Young, witness twice repeated that he did not suggest figures to Mr. Craig and for him 10 . put them down. Mr. Young— Now, did you really not do so ?— I don't think I did. Would j'ou swear that you never made suggestions in the making up of (he balance-sheets, and put down figures ?— I won't swear that I didn't. You'll admit that you did ?— No. Mr. Young then produced a document and gave it to Mr. Smith to examine, at the same time expressing a hope that he would not be obliged to put it in as evidence. After a brief interval, Mr. Young again asked — "Will you admit that you sometimes did do what I suggest ? Witness — I must have done on that occasion. Mr. Young — Then in that letter Mr. Craig took all the blame (if there was any, which I don't admit) on himself, when he should not have ? — Yes. He did it out of loyalty to you? — Yes. Then that letter was to assist you ia dealing with the Bank ? — Yes. You were sorry to lose Mr. Craig, weren't you ? — At first, when he left, I was* sorry. Continuing, witness said that on the day when Craig left he (witness) drew a cheque for £50 for accused, who said that did not settle the firm's indebtedness to him. There had been a few cheques that accused was entitled to draw for odd amounts. Witness did not recollect telling Mr. Leary that accused had not been entited to draw cheques. Witness did uot tell Craig ho was sorry he (witness) had misled Mr. Leary. Of that he was quite sure. Mr. Young — Now, you sometimes drew more than your proper drawing— £looo a year — and charged to investment account f — Yes. And there are entries in the cash-book lo the investment account P — I didn't know that. Continuing, witness said if Mr. Craig drew cheques and charged them to duties it wouldn't matter, so long as they were entered up properly afterwards. During one year witness overdrew bis share, and returned £500. Mr. Young — And you w6uld have no objection to Mr. Carter doing the same, or anyone authorised by him ?—-No.? — -No. Witness would not complain if Mr. Carter's account had been overdrawn so long aa it was adjusted at the end of the year. There was no harm in Craig drawing the firm's cheque to pay Mr. Carter's own debts provided they were afterwards debited to Mr. Carter. These was no reason why Carter's debts to Craig should not be paid in that way. At this stage the Court adjourned till 10.30 a.m. on Monday, when the crossexamination of Mr. Smith will be continued.