TO-DAY'S PROCEEDINGS

Evening Post, Volume LXXXIX, Issue 124, 27 May 1915, Page 2

TO -DAY'S PROCEEDINGS

When the hearing was resumed to-day, Herbert R. Searle, importer, and secretary of the Colonial Building Society since July, 1914, gave He was also, he said, secretary of the No. 5 Building Society. 'As to the latter, (jthere was a shortage of £20, but they had recouped themselves by holding back certain salary checks. There were no funds there which did not belong to the society. As _to the plaintiff society's books, he said that when he was appointed he had great difficulty in getting them from Mr. Crewes. On one occasion he had a conversation with Mr. Crewes regarding the accounts. Mr. Crewes said he was quite prepared to learn that there were shortages. Everyopportunity was given to Mr. Crewes to make an explanation. Mr. 'Blair: His difficulty was that he could never make head or tail of the accounts. To Mr. Blair: Witness said that a member of the No.. 5 Society was a Miss Atkinson, and tho books showed thab the society owed her £60. If it was shown that she had received the money No. 5 Society would show a surplus. John C. Uric, clothing manufacturer, and a member of" the plaintiff society, said he had been a director of the society since 1911. There had always been trouble about the books and production of returns. The bank pass-book was seen very rarely, but never in conjunction ' with the big cash book. Mr. Crewes's son had no position in the society. In October, 1912, Mr. Crewes complained of not being " well, and was granted leave of absence from night meetings, but ifc was understood that he would be there during the day. His son was to look after the business at night. After defendant had been granted leave of absence from night work defendant did not attend directors' meetings. The directors asked him to pay lfore personal attention to the business, and eventually asked him to resign. QUESTION OP RESPONSIBILITY. To Mr. Blair : Witness said there was a rule that the bank pass-book should be produced at every meeting of the directors His Honour : How can that be an answer? Either the secretary did his duty or he did not. If he did his duty that is one thing. If he did not, the mere fact that the directors did not do their duty is no excuse for him. Mr. Blair : Our case is that while young Crewes was acting as secretary the bank pass-book was, apparently, never produced. If the directors had insisted on getting it they would have seen at once that ,the moneys were not being banked. His Honour: That is not an answer at all. Either he is liable for the acts of his son or he is not. If he is liable, the mere fact that the directors did not do their duty is no answer. Mr. Blair: It is submitted that it is an answer. His Honour : Do you mean to say that if the directors of a public company do not choose to find out if their secretary is honest or not, that therefore the dishonesty is excused. If not, then either Mr. Crewes is responsible or he is not. Mr. Blair : If the position was that Mr. Crewes himself had taken the money • His Honour : It has nothing to do with the thing at all. Mr. Blair : I submit that it has. His Honour : If he is responsible for his son's actions it doesn't matter whether the directors were good, bad, or indifferent. You will not say that, because the directors did not do something, defendant is not responsible for the intromissions of his son? Mr. Blair: Yes. His Honour -. Well, I don't agree with you. This closed the case for the plaintiff society. CASE FOR THE DEFENDANT. In opening the case {or the defendant Mr. Blair repudiated the suggestion that

defendant had been helping himself to the society's funds. His Honour • Thero is no direct charge of that kind proved. " Counsel urged that it was quite possible that the method of conducting the business of these societies was not what the ordinary business- man would approve. Mr. Crewes began with 'one society, but the business grew, other societies were formed, and the system, though perhaps good enough for one company, was not sufficient for a group of societies. When defendant was granted leave of absence on account of ill-health, his son became acting-secre-tary, and the directors wero aware that he was looking after the business. Mr. Crowes had not the slightest inkling that his son became ill and mentally incapable of explaining the position of affairs when his father approached him. Mr. Crewes's son would receive cheques, and stick them in a drawer, and they were now trying to find the owners of several cheques which had been discovered. He produced several cheques of that description. Mr. Crewes made a strenuous effort to put things right, and entered up the big cash book from the rough cash book on the assumption that the cash had been banked. It Was tile fault of the directors in not calling for the bank pass book that had ena.bled defendant's son to misappropriate these moneys. His Honour: He was the secretary all the time, and in receipt of a salary. How can you say he is not responsible? Counsel went on to contend that the directors had departed from the rule, and it was a question as to whose was the default that enabled these moneys to be misappropriated. His Honour : The question fa t Did the secretary perform his duty? If you answer yes 7 , there is an c"nd to the action. If you answer no, what is the next question? DEFENDANT'S EVIDENCE. John Crewes, the defendant, in giving evidence, said he had been secretary of building societies for some sixteen or seventeen years. He had a fair business training before he qualified for the ministry. The system of receiving moneys was that the secretary received the money during'' the daytime and attended weekly, with two directors, from 7.30 to 9 p.m. ; then took the book for the directors to add up the receipts of the week and sign the book. He took the money from the directors, put it in a bag, and put the bag in the safe. He showed the directors a weekly bank pass-book to show that the moneys of the previous week had been banked. Always while he was there he showed the pass-book or the duplicate pay-in slips. He could not remember a week in which that practice was not carried out. He therefore concluded that the directors had seen that the money shown in the weekly book had been banked. The directors never intimated to him that they had been unable to get the pass-book from his son. At each monthly meeting of the board a statement, of accounts was presented, and the bank book, the small cash book, the Post Office Bank book, and tho weekly bank book were laid upon the table and inspected by the directors before the ordinary business was commenced. Except in very rare instances, as far as he could recollect, not twice in any year, was there any departure from that practice. His son grew up in the office, and for years was allowed by all the societies to take money and sign receipts. The directors all knew that he was doing so. There seemed a great mystery about the last year of his (defendant's) connection with the plaintiff society. He would explain. There came upon him in that year three tragedies which had t caused the appearance that he made a promise which he did not fulfil. He was at the point of death himself, and he went subsequently to the chairman of the board and baid he could not possibly carry on the business any longer. That was the night he got three months' leave of absence. He asked the directors if they would accept his son as his successor. They said they would, and his son was appointed, on the understanding that if he satisfied them he was to be witness's successor. He was appointed act-ing-secretary straight away, and witness was given three months' leave of absence, just to retain his connection during that period of his son's probation. No one ever said anything to him about going back at the end of three months ; it was distinctly under- ' stood that he was not going back. Some time after the expiry of the three months things were not going on satisfactorily, and he was asked to go back. He believed he then agreed to go on in his old capacity, and straighten up matters. About that time his wife died. When he resumed his position he found that the rules had not been carried out; also that the directors had been pleading . in vain for a balance-sheet. He made out a balance-sheet himself, checking the additions in the weekly book ; found that the main cash book 'had not been entered up, and took for granted that the moneys entered had been, banked. When he came to balance he was unable to do so, as some of the moneys that he had assumed were banked had not been banked. He also found that thero were a great many cheques in different parts of the office that had never been put through. With the knowledge of the chairman, he received the moneys that came into the office, banked them regularly, and went to work with the idea of unravelling tho entanglement and put the books in proper order. He did not anticipate any serious shortage. His son became ill, and it was impossible to get any assistance from him. If he had done what had been suggested yesterday that ho did to cover up his actions he would consider himself the meanest scoundrel in the world. Mr. Blair : Can you give any idea of how many cheques you found lying about the office? Witness : "No ; I am still finding them. 1 paid them in as I discovered them." As to the cheque referred to yesterday by Mr T. W. Fisher, Undersecretary for Native Affairs, he thought he remembered Mr. Fisher giving him a closed envelope one dinner hour. He ,took it into the office and left word that it was_ to be entered as soon as his son came in. His salary in this society was £1 a week. Mr. Blair : What arrangement did you make about your son's salary? Witness : It was always understood that he was the secretary It was a family affair as far as salary was concerned. As soon as he found signs of trouble in the books he went to one of the directors and mentioned the matter. His Honour intimated that he was going to aek the auditor to report on the deficiencies between the various books at different periods up to the time of defendant's retirement. ' His Honour also pointed out that none of the cheques found on the office premises and produced for the defendant were dated within the period during which Crewes, jun., was acting as secretary. Some of them were dated as far back as 1908. Mr, Blair : Did they belong to this society ? His Honour : They are endorsed by Mr. Crowes. At this sta-ge, the further hearing of the cabe was adjourned until Tuesday of next week.