CRAFTSMAN CASE

Evening Post, Volume CXIX, Issue 33, 8 February 1935, Page 4

CRAFTSMAN CASE

CHARGES OF FRAUD

END OF LONG TRIAL

JUDGE SUMS UP

The trial was concluded in the Supreme Court, this afternoon of Charles Ernest Vickers and Ernest Mabin Gilmour on a charge of conspiracy to defraud and charges of misrepresentation in connection with the sales in the Craftsman Manufacturing Company of New Zealand, Ltd. (in liquidation) When, however, "The Post" went to press the jury had not returned with a verdict. .. They retired just before 1.30 pjn.

The case for the Crown in rebuttal closed in the mid-afternoon yesterday and Mr. Leicester for Vickers and Mr. Macassey, Crown Prosecutor addressed the jury. The Court adjourned at 5.30 p.m. ' Today, Mr. W. P. Rollings addressed the jury in de^ fence of Gilmour, and his Honour Mr. Justice Smith summed up before the jury retired.'

"I will now call Mr. Hislop," said Mr. Macassey when the long cross-ex-amination of Vickers had ended. "I hadn't intimated that my case was closed yet," said Mr. Leicester, who added that he would not, however, call further evidence. •. ' Asked by his Honour if they had any objections to the Crown calling evidence after closing its case, counsel for the defence raised none so long as Mr. Hislop was confined purely to matters in rebuttal. "Mr. Hislop was available. when the Crown case was open," observed Mr Rollings. MR. HISLOP'S EVIDENCE. T. C. A. Hislop Ssaid he was present at a meeting when one Barbour asked if there was a patent. Witness had said, "these people have a registered trade mark but no patent whatever,;' but witness was informed that the appliance was the result of secret process and costly of imitation. Barbour had expressed dissatisfaction, saying that was "not good enough to invest his money in." Witness said he had made all.necessary searches. Cross-examined, witness said he found the company had a registered trade mark to sell. Witness said he could not refer to any diary entry about a meeting. He relied entirely upon his files. "There were not very many interviews with Ihese people, you know," said witness. He had written to the Australian people on May,27 asking many questions about balance-sheets and the nature of their business. He got a reply from the Australian people. "These people knew there was no patent because their people in Australia wrote and said so," said witness. He would not say there was a patent "simply from looking at' a number." It was absurd to suggest that. * "That sugestion has not been made, Mr. Hislop," said Mr. Leicester. • Witness would not admit that ha had said after inspecting the numbers on the reflector "that he would look further into it." Witness imagined that all the people had seen the prospectus and there was nothing there about patent rights. "All the shareholders at the statutory meeting knew what they were getting. I had told them. I don't know what others may have told them. I made it ■plain," said witness. The vendors were getting £15,000 for the product, were they not?— Yes. People in New Zealand were to furnish that?— Presumably. ■■■■■• •-. Was it not your business as solicitor of the New Zealand company to see that they got something more than a worthless trade-mark ?—Oh, no, not worthless. ■ What were they getting?— They were getting a secret process, dies, and a trade-mark. At the statutory/ meeting witness agreed he may have said nothing about patent rights or trade-mark. "I never at any time suggested to people that they should go in for this investment," he said.later; "You can't make patents out of air, and all the people at the statutory meeting knew it as well as could be that there wasn't any."' A SOLICITOR'S DUTY. His Honour told Mr. Leicester during his cross-examination that Mr. Hislop seemed to have been asked for advice and to have given it. Mr. Leicester seemed to suggest it was Mr. Hislop's duty to tell the world there was no patent. It was a question of what a solicitor's duty was. Mr. Leicester said there was surely some duty as Mr. Hislop had acted as solicitor for the New Zealand company in its formation stage.- v Mr. Hislop asked, at the conclusion, of his evidence, if he might say •something further —"Not evidence," he said. His Honour said he thought Mr. Hislop could not do that. "It was about my late appearance in court, your Honour." .It was not necessary, said his Honour. Addressing the jury, Mr. Leicester said it was very disagreeable for one solicitor or counsel to attack another of the same profession, and he had no desire to attack.Mr. Hislop in his personal attitude towards the Craftsman Company, no matter whether he had been negligent or not negligent, but counsel made it.the main plank of the case for Vickers that the question of patent rights had been left in the air, and that for some weeks the position was not clear. If the position had been clear in Mr. Hislop's mind he would not have written the letter to Australia of May 27. Mr. Leicester said he made no personal attack upon Mr. Hislop but he did have to bring him into ±he case because it was Mr. Hislop's duty to be satisfied that the New Zealand company had got full protection. Vickers had a right to assume that everything was in order. Apparently Mr. Hislop was satisfied about the payment by the company of £.lE>,OOO because he thought the trade-mark and secret dies were sufficient. There was not a tittle of evidence that the company ever tried to get the patent rights in New Zealand. • ■ It was usual for solicitors to keep diaries, but for some reason Mr. Hislop had not kept one in the matter. Therefore his evidence was likely to be just as defective as that of any other witness after four or five years. Had everything not been all right, one would have expected Mr. Hislop to say to Vickers as Flight's (the vendor's) attorney, "Look here, Vickers, you'll have to do this," or "You'll have to get that," but nothing of the kind was asked of Vickers. All Mr. Hislop had said was "I'll look into it." CROWN'S SUBMISSIONS. Mr. Macassey maintained that the charges were not that the accused defrauded the company, but the shareholders, by their, misrepresentations. The men were i hand in glove. Their purpose was to float a. company and sell the paid-up shares as quickly as they could to pay the vendor, and then get out. They had gone to South Africa and done the same thing there. During the company's operations only 200 reflectors had been sold. Instead of looking for contracts and getting orders, Gilmour had worked in with

Vickers "in going round the country telling a lot of lies." Vickers was always about the company's office, was not a shareholder in his own right, and had no right to be there. It was significant that McKinley had been engaged by Vickers to sell 5000 vendor's shares during a fortnight or three weeks and to earn £1750. Everything pointed to a conspiracy. The adjournment then was taken until this morning. MR. ROLMNGS'S ADDRESS. Mr. Rollings made a meticulous analysis of the evidence in his address to the jury, which lasted about an hour. First of all, he said, the prosecution alleged there was a conspiracy an actual agreement, between -Vickers and Gilmour and a man named Kelly. The jury must find that at least two of the men were parties to | the alleged conspiracy. He intimated that whatever might be the position in regard to the other men, Gilmour was not, and could not, have been a party to any conspiracy. Gilmour was not one of Flight's missionaries from Australia. The jury might or might not approve of the methods adopted in floating mushroom companies, but they had to judge the. transaction according to the existing business ethics of the community, and they were not entitled to say,' merely because the men were both selling shares in the "same company, that they must have been parties to a conspiracy. In relation to the conspiracy charge, particularly in the case of Gilmour, he submitted that it was most important for the jury to see whether there was any intention to defraud.

Largely speaking, there were two sets of circumstances or facts—on one hand the general circumstances of the case, and on the other the individual cases of the men who had paid for shares and who had gone in and out of the witness-box in a sort of procession during the last few days. A very great deal had been said about vendor shares. There was no restriction /in this country on the sale of vendor shares, either by the general law or in the case of this particular company by the articles of association. It had notTaeen shown that Gilmour received one penny of the pr.oceeds of vendors' shares, and how could it be said that there was a conspiracy and an intention to defraud on his part when there was such a complete absence of motive as that?As to the individual cases, Mr. Rollings submitted it was clear that Gilmour had not sold any of the vendor shares. When he went to the men himself it was only contributing shares he -sold. In every case-where it was alleged by the prosecution that he sold vendor shares there was an explanation, which, if they knew anything of the business and selling world, must appeal to the jury, and must convince them that the position was not as sinister as it might appear. ' If Gilmour was a party to a conspiracy and was engaged in a nefarious scheme was it conceivable that he would have given the long notice of his intention to .resign from the company that he had? Mr. Rollings, after referring to other aspects of the evidence, concluded his address by claiming Gilmour's acquittalon all charges. HIS HONOUR SUMS UP. In his summing-up Mr. Justice Smith told the jury that the case was one of some importance. If they were of the opinion that the Crown had established its case beyond reasonable doubt, an attempt to defraud the public was, of course, a serious matter. His Honour paid a.tribute to the way the case for, the prosecution and also for the defence had been put before the, Court. Counsel for. the defence had shown courage and ability, and in making that comment he did not mean to imply that counsel .for the prosecution had not dbne the same thing. -•' Dealing with the, charge of conspiracy, his Honour said that although the accused and another man were mentioned in that count, if the jury found that there was only an agreement between the two.accused that would be' sufficient. His Honour directed the jury on the legal position further before passing on to an examination of the evidence relating to the formation of the company. One. feature that was unusual, he said, was < that Flight was to have the right to appoint the chairman of directors for all time. There was a definite difference at the outset as to whether Vickers understood he had a patent or hot. The jury had heard evidence as to his capabilities and it was entirely for them to say whether he was a man. of the simplicity of mind that had been suggested. Then there was. the point of whether the of whether there was a patent or trade mark was actually discussed at the outset. Varying evidence had been given on the subject. Mr. Hislop had said that he pointed out at once from the agreement Jhat there was no patent. Vickers took a different view. His Honour read to the jury the notes of. evidence on the subject. On. June. 10 a cablegram had been received from Flight to the effect that^ the agreement for the sale of rights did not relate to the sale'of a trade mark and dies. The jury had to ask themselves as reasonable men whether it was conceivable that at the meeting on June 12 anybody was told by anybody that there was a patent being bought. Was it conceivable? -.If Mr. Hislop had said' at the meeting that there was a patent he would be guilty of a flagrant breach of the common principles of honesty. " ■

Mr. Leicester suggested that his Honour was putting to the jury a suggestion that had not been made by the defence. It had not been suggested that Mr. Hislop had said there was a patent, but that he had said he would look into the question and had then left the matter in the air. .

His Honour said he might have been putting the matter too strongly. He thought Mr. Leicester was right. It was for the jury to say what the position was at the time of the signing of the memorandum of association. Did Vickers think that the company was buying the patent? Did he think; he was buying something else which by reason' of the fact that the process was secret afforded some measure of protection? His Honour's . summing up lasted about two hours.