ALLEGED FRAUD

Evening Post, Volume CXVII, Issue 50, 28 February 1934, Page 11

ALLEGED FRAUD

CASE AGAINST BANK

ACCOUNT GUARANTEED ,

PLAINTIFF'S EVIDENCE

After he had given his evidence in chief at the Supreme Court yesterday, Frederick AYilliam Moore, who is proceeding against the Commercial Bank of Australia, its manager, Edwin Percy Yaldwyn, Athol Pierard, bacteriologist, and Sidney John Hammond, %builder, was subjected to a lengthy cross-exam-ination which occupied the whole afternoon. Moore is claiming £.1481 10s 2d from the defendants, jointly and severally. Against the bank and Yaldwyn he alleges fraud in connection with information. civeri to him as to

the affairs of the Unique Advertising Service (N.Z.), Ltd., a company now in liquidation, the account of which he had guaranteed to the bank. His claim against Pierard and Hammond is based on the allegation . that they, as coguarantors, -were liable for a contribu-

The case is being heard by the Chief Justice (Sir Michael Myers).

, The .plaintiff is represented by Mr. H. F. O'Leary. Mr. P. B. Cooke, with Mr. H. J. V. James, appear for th,e bank, Mr. G. G. G. Watson for. Yaldwyn, Mr. A. T. Young for.Pierard, and Mr. S. G. Stephenson for Hammond.

Cross-examined .by Mr. Watson after ."The Post" went to press yesterday, the plaintiff said that he paid off the bank's demand in connection with' the guaranteo in November, 1930, and started the present action in September, 1933.

Mr. Watson (to witness):: During the interval did you make any complaint whatever to. the bank concerning this transaction?— No.

Tho witness explained that he had not taken action earlier because •he could not find accommodation outside the Commercial Bank for his account, and he was afraid the bank might crush him.

Mr. Watson: How many years had you been a customer of the bank 9— About twelve.

Had there been any attempt to crush you in any of your' transactions over that period of twelve years?—-No.

The substance of your'allegations is that the bank had represented this company to be in a good sound position and that the bank had not disclosed that there had been any talk of appointing a receiver?— Yes. Dcf yon now complain tha!. you were told by Mr. Yaldwyn that the signing of this guarantee was a mere formality and involved no liability?—l complained then, and I now complain. ~ INTEREST AT 25 PER CENT. And you were being paid 8 per cent;, and were to receive £250 at the end of twelve months?— That was the proposal. Did it not appear to you to be something more than a mere guarantee if you were getting altogether- 25■■ per cent.?— Mr. Yaldwyn assured mo that th<! company was such a, "unique" kind of company that it could 'pay almost anything when it got into its swing! Did you believe at that time that I any company would pay at the rate of 25 per cent, per annum for accommodation if there was no risk involved?— Yes. As I say, I got my assurance from Mr. Yaldwyn. Ho statedthat this compatt'y, was, as its name represents it to be,i'a "unique"'company. • Apart from what Mr. Yaldwyn may and may not have said, did you apply your business knowledge and experience in considering the problem?—l did up to a point.

And up to the point that you applied j your business knowledge' did you not consider that 25per cent, was an enormous rate of interest to pay ■if there was no risk?—l did. ■.■-.-■■ ; OTHER GUARANTEES. !' In reply to further questions Moore said that he hafijbeen in.business for some forty years and had graduated from the retail grocery trade to ths wholesale side of the business.' : |

Mr. Watson: Is it not a fact that since 1931 you have had eighteen guarantees put through ' the Commercial Bank?—Y,es, but the explanation is that these are trading, accounts. .Involving a total-liability on your part o^ about £18,000?— I suppose so, but all these people I guaranteed have large assets themselves.

. Did you not guarantee a gramophone company' to the Bank of New Zealand for jS 10,000?— Yes. ' ■ " -~

That was for a- cash consideration, was it not?— Yes.

Did you-not know from your Knowledge of the wholesale and grocery trade that the cash order business was a precarious and dangerous qne?—The witness replied that'Tie'had not taken any interest in that particular business apart from knowing how it was operated. .... . . ■

Questioned.as to his interviews with Mr. Yaldwyn in connection with the guarantee for the Unique Company, witness; denied that Yaldwyn had refused to advise liim and had' told him to see Mr; Arcus, the iauditor for the company. : INTERVIEW, WITH AUDITOR.^

Why did you'go to see Mr. Arcus? —I went to Mr. Arcus after I had the assurance of Mr. Yaldwyn that the company's account was a good one, and he said that if I had any doubt, about it I could go and see Mr. Atcus.

Mr. Arcus will say that at the interview he had with you he. showed you the balance-sheet of the company and told you the figures and definitely advised you not to go: on with this guarantee. If Mr. Arcus-says that, is it untrue!—lt is as untrue as. anything could possibly be untrue.

Will you tell me again exactly what representations were mado to you by Mr. Yaldwyn at1 the first interview you had with him on ithis matter? — The exact representations were that the Unique Company was a strong financial company, absolutely in a safe position, and that I would-be taking no r"isk whatever if I guaranteed the account. / Witness admitted that he had received several letters from Yaldwyn, dating from four months after the guarantee was signed, in which the bank expressed concern about the position of the company.' He said that he had not complained to the bank because ho thought it would close down on. him. ". "FRIGHTENED TO TALK." Mr. Watson: Did you ever make a complaint to any other person connected with the Unique Company in any way suggesting that the bank had misrepresented the position to you?—l did not know anybody connected with the Unique Company.

The witness was then cross-examined by Mr. Cooke: In reply to a question Moore said that he first thought he had a complaint against the bank after he had paid the money up.-- Witness said that he tried to change his account to another bank after he had finalised the payment under the guarantee, but had been unable to do so for a considerable time.

Mr. Cooke: You, I imagine, harboured these grievances from October, 1930. to September, 1933?— Yes.

You were frightened to say anything about it because you were frightened they would shut down on you?— Yes. • Why/then, did you' not say anything about it when you changed your account in January, 1933 ?—Because I was

wanting to see'what evidence I could get to' substantiate and support my convictions.',; •;■■•' ■~->.. -..•-: • .

The Court then adjourned until tc day.

When the case' was .resumed this morning Moore, in reply to a- further question by Mr. Cooke, said that ho first realised that Mr. Yaldwyn's statements mu't have been untrue in October, 1930.

Mr. O'Leary (re-examining): When was it that you considered, or were advised, that you had evidence that would show they were untrue and that Mr. Yaldwyn knew they were untrue? —When I. put the matter in Mr. (Stewart) Hardy's hands. ,

In September, 1933?— Yes.

After you closed your account did you take or ge_t, any other accounts taken away from the Commercial Bank?— Yes..

t "CROCODILE TEARS."

It was put to you repeatedly yesterday as to whether it was not a fact that what Davies said to you at your last' conference with him prior to your agreeing to guarantee the account influpnced you to finally decide?-—No, I did not know Caries.'it was my confidence and faith in my bank manager and my financial adviser. I was taking his advice. ' • -, .

Questioned as' to his feeling about the letters the bank had written him about the affairs of the company, Moore said that he looked upon them as false sympathy and "crocodile tears."

The Chief. Justice . (to witness): Mr. Moore, prior, to May, 1930—that is when you first saw Davics—had you been in the habit of giving, ''in',l "the course of your business, guarantees of commercial accounts of your customers?— Yes. .''■"■•"' " '•. ~,-

; Was that fact known to Mr.'Yaldwyn in his capacity as your banker? —Oil, yes.

"Up to that time had you ever seenj known, or heard anything of Davies?— No. .... ~ .- •-

I understand you to say that when Davies came- to you he told you he had been sent to you by Mr. Yaldwyn?— • He told me that my name- had been brought up, and Mr. Yaldwyn suggested him coming to see me. Did you,, when you saw Mr. Yaldwyn, tell him what Davies had told you?—Oh, yes, that is all I Mid to introduce the subject. . Mr. Yaldwyn .did not deny it?— No. SOLICITOR'S EVIDENCE. Audrey Basil Croker, barrister and solicitor, said that after he had been consulted by Mr. jack Pierard in 1930 he obtained from Mr. Athol' Pierard (one of the defendants) three balancesheets for the Unique Advertising Service Company. Two, for the years ending 1928 and 1929, were printed, and a third, also for -1929, was typewritten. The typewritten balance-sheet for 1929 and the printed balance-sheet for that year differed materially. He came to certain conclusions, and on February 15, 1930, he interviewed Mr. Yaldwyn. "I asked him if it was correct,that the bank, required further. security, M said the witness, "and he told me they had asked for further security.- I asked him if. tWre would be any check on Davies obtaining, payment of 'any part of his £5000 (for patent rights)'. He. said that there would be no check by the bank. I told him that I had advised my client to obtain a meeting for the purpose of endeavouring, to force a resolution to liquidate, and that that was essential: in his interest." ,',--. Witness said that he had the balancesheets with him when he interviewed Mr. Yaldwyn. He'had pointed out to Mr. Yaldwyn .tliat> £5000 was due. to the vender of the patent. Cross-examined by Mr. W.atson,' witness saicl that the balance-sheets were laid,on Mr. Yaldwyn's table, and atthe close of the interview he (witness) !took them; away with him. Witness said that the only mattej; in reference to the balance-sheets that: was discussed was the question of Davies's. £5000.

Evidence .dealing with the various balance-sheets was given by -Robert A. Scott, Joseph Albert. Smyth, Alexander John McLennan, and Charles Stuart Falconer, accountants.

(Proceeding.)