ALLEGED EMBEZZLEMENT.

Otago Daily Times, Issue 13940, 27 June 1907, Page 10

ALLEGED EMBEZZLEMENT.

CHARGE AGAINST J. M'MILLAN. At tlio City Polico Court yesterday, before Mr C. C. Graham, S.M., John M'Millan, of Wellington, contractor, v:as charged with having, between October 2." 18)7. and October o, 1905, stolon £1151 18s 10n, such sum being drawn in varying amounts out of the funds o[ the fii'i of M'Kechnio and Flaming, of which defendant was a partner, in excess of the amount which ho was entitled to draw, such sum havivg been so dron with intent to defraud his co-partners and luring b?en fraudulently converted by him to his own use. Mr L, 1. Burnwu appeared on behalf of tlio ciimpkinanta, and..Mr jj, Cooke for accused. Mr Burnard Faid the facis were that accused was charged with stealing this amanai out of (lie partnership funds of tho firm. Tho accused. and Mr Floming had catered into partnership in 1897, and the firm was so constituted for the ensuing six mouths, when Mr M'Kechnie joined. In tho early stages of the firm, equal drawings wore made by the partners. M'Millan took charge of the books, and, ho remained in Dunedin while tho other partners went all over the colony, visiting various dredging fields. In 1902 Mr M'Kechnie wont to start a branch of the firm in Wellington, and in March of Ihe following year accused joined him there. Up to that time the books had not been in order. Accused had not kept his books u.i to dut® at Ml, and it was arranged that he should be given an opportunity to right them. Accordingly, accused took the books, tqgetlior with the bauk-bo»k, to Wellington. Howevor, the b;«ks were not properly adjusted, ncr woro they sent back to Dunedin, nud for two years this state of affairs existed! Mr Fleming was anxious to obtain the books, but when he wont to Wellington in Maroh, 1903, lie was put off by accused's evasive ana-era. and he b;g;m to suspect that there was something wrong. Mr Fleming consulted Mr Sim on tho matter on returning to Dunedin. II was not until August that M'Millan came down with the books, and instructions wero then given to Messrs Prain and Mitchell to write them up and prepare a statement of the partnership. This was accordingly done, but in the course of it accused west back to Wellington, and declined to supply the firm with certain particulars he hud in his jKissossion. Accused further refused to oomo back to Dunedin and assist them in the preparation of the statement) which was. however, compiled as fully as possible. Then Mr Fleming took out a writ in tho Supremo Court. Accused defended' on that oocasion, but by judgment of the court the partnership was dissolved and an order made for the taking of the accounts. Ultimately Mr Thompson was appointed to take the accounts, and each party was oixkred to file a statement as relating to his own drawings. M'Millan had failed to do this. In itself this was contempt of court, and as a, result' it prolonged the accountant's work very much. At tho beginning of tlie year, however, Mr Thompson was enabled to prepare elaberate statements showing the exact drawings, mid thess were sent to each of the parties. A day was then appointed for tho taking of the accounts, and on three separate occasions the inquiry was adjourned to give accused an opportunity to come to Dunedin and lodge a dispute if He.wished. The accounts were finally taken, woro embodied in the report, and placed by the accountant before the judge, who confirmed the report, and, subsequently, in response to a motion, judgment wa3 entored up in accordance with the terms of it. The result of the investigations made showed that accused hsd taken the Mini mentioned in the oha-Tge. In the course of taking the accounts Mr Thompson discovered Hint after accused had gone to Wellington in Maroh, IfKKI, he lwd drawn a large number of cheques on the partnership aooounl, and had used tho money for gambling purposes. At least this was s,impacted, and subsequent investigation disclosed that tho suspicion was a /act. It would bo shown that these cheques had hssn paid into bookmakers' accounts. Mr Cooke: How do you know the money was used for gambling? Mr Burnard: I will deal with that later. At one timo a partner could not commit theft, but under the existing legislation he was in just tho same position as an outsider or a servant. A number of facts would bo produced, each of which in itself, and the cumulative effnot of whif'h, would show that accused knew 1 what lie was doing, ar.d that he was committing a series of tho most carefully thought-out thefts, the object of which jraa to rob his partners in Dunedin who knew nothing of what was going on. When accused went to Wellington the accounts were ill a somc-wwt unsatisfactory state. A number of the dredge-building oar,tracts hed not been finished (at least, full payments had not been made), and tho partners did not exactly know where they woro, and it was ngrwd that all the. parties should .draw as littlo as possible from tho partnership until the accounts wore finally squared up. It was arranged that Mr Fleming should pay defendwife £2 ncr week out of tho partnership funds, Mrs M'Millan then being in Dunedin, and that accused should draw what ho found necessary to keep himself. As soon as accused wont to Wellington this heavy drawing commenced, and in two yoars M'Millan had taken fHOfr-at the rate of £700 pw yar,—whereas the others were drawing between £3 and « per veok. During the first few weeks £72 was drawn by accused' and nothing was paid in until some months later, which latter fact showed that accused did not consider himself entitled to draw the monoy. Accused also had a trust account, contrary to instructions. It was significant that the cheque books of fhe partner-' ship, which wero ke.pt by accuscd, bore on the blocks the initials of various bockmakers. These initials, however, had b?»n altered, those of accused appearing. Tho alterations in most cases were badly mads, but at till events they showed that i>ccu?ed had endeavoured to cover up his transactions In Dunedin M'Millan denied having entered into gambling Transactions, but when taxed with what ho had drawn by Mr Thompson never said a word. Robert Fleming, contractor, residing in Dunedin, corroborated Mr Burnartl's statements. He also said that from October, 1807. until March, 1900. witness was on the West Coast, and from March, 1900, until August, 1901, ho was on the Molyneux River buifdiii" dredges for Hie firm. Up to 1901 witness constantly urged M'Millan to get the books put in order. The books were not sufficiently in order to enable Hie parties to get at the exact position of the partnership. On the 10th January, 1901, M'Millan wrote to wit. ness stating that he had got a letter from Haggitt re the bookß, and that he would get a man on to them at once, concluding by stating that that would fix the matte"r up. A little time previous to M'Millan going to Wellington he stated that he would leave the books and all the papers with witness, but on the night before going to Wellington he stated that as ho had not had time to make up tho books he would take them with him to Wellington and send them back to witness within a month or six weeks, in which time he expected to have tbom written up That was not done, and witness only

received from him a. list of engagements that had boon entered into, and.that witness was to look after. Before going -to Wellington M'Millan arranged with him that he waa to pay Mrs M'Millan, who remained in Dunedin, £i per week, or anything extra that might be required; and it was also arranged that the partnership drawings were to ho as little as possible—nothing in cxccss of actual requirements. The maximum amount to be drawn by each partner was not to exceed £1 per week. This agreement was a verbal and not n written one. The average drawings of members of tho firm had not been more than M yer wcc k each. When tho books, as promised, did noi come from "Wellington, witness began to get anxious, and 1m went to Wellington in March of 1905. Ho was not satisfied with what lie observed while there, and as a. result of his pressing for a statement of accounts M'Millan pro" miscd to come back with him to Dunedin and to bring tho hooks, but he did not do so. The books were not then made up. The reason M'Millan gave for not coming to Dunedin as promised wa9 that there was a draw coming duo for some work done by tha firm. M'Millan came -to Dunedin about a fortnight later, and then brought the bookr with him. , Witness spent som« four or fivt days with him making up railway charges in connection with Dunedin work which had not been written up. M'Millan then went back to Wellington with the book*, and without informing witness of his intention to do eo. After that he 'made continuous promises that ho would coma down with tho books again in a fortnight, but he did not come back until 'the latter end of 1903. Tho books were not then submitted to witness, and he told M'Millan that he wished .them put through the hands of an accountant. M'Millan replied that he did not think that was necessary, and that it would only bo a wasto of money; but ultimately agreed to allow the books to go before an accountant. 1 M'Millan, on being asked, said he did inot care what accountant was selected, and on witness's suggestion the books were taken to Messrs Prain and Mitchell. A writ was issued by the Supreme Court for a dissolution of partnership and for the taking of accounts. M'Kechnie and -witness iiled their statements, but M'Millan filed only a very small portion of his account, which covered only a. part of the partnership work. After some delay, the accountant appointed by the court prepared a 'statement of the various partners' drawings, which showed the relative position oi each. Each partner got a copy of the statement. 'The accountant prepared a report and submitted it to the court, and tho report showed that a sum of £928 Ills 2d was duo by M'Millan to him (Fleming) and that £223 5s 8d was due by .M'Millan to M'Kechnie, making a total of £1151 18s lOd. The report was confirmed by the judge, and an order v/as mado giving witness liberty to enter up judgment against tl& accused. At no time was authority given to M'Millan to draw out a larger sum for private purposes than had been agreed upon beforo ho wont to Wellington. Six cheques were here handed in as exhibits, bearing the signature of accused, "J. M'Millan, trust account." Witness (continuing) said that was tho name under which M'JCillan opened the firm's banking account in Wellington. A chequo block of November 23, 1901. for a sum of £100 3s (xl had the initials "J. M'M.," and also tho letters "B. C." The "B. C." was partly obliterated.—Mr Burnard; I will show that the allerations were mado after the blocks left the fir Ft accountant's hands.—A cheque on tho 29th. March, 1994. drawn by accused for tho sum of £51 Gs also had the letters "B. C.," in addition to "J. M'M." A large number of cheque blocks were here handed in as exhibits. Witness'(continuing) stated that he knew Ben Curtis, who kept Tattersall's Cigar Divan. When M'JLillan went to Wellington ho drew £100 withont witness's knowledge and without consulting him, and 110 only learned of the matter from the banker. To Mr Cooke: No money ivas sent from Wellington direct to witness; he was quite Bure of that. What money 1 was sent was sent through the bank. Hugh Mitchell, accountant, formerly of the firm of Prain and Mitchell, gave evidence as to the bookß being placed in his firm's hands for the purpose of getting out a statement. The firm asked for all books, accounts, vouchers, cheque blocks, but from the material furnished nothing could bo satisfactorily lnsdo out, and they found it necessary to call in M'M.iMan to explain a number of matters. M'Millan promised to give a fortnight's assistance, but left for Wellington after two days without stating that lie was going. Tho information siiDplied was most meagTe, and witness saw Mr Sim .lid told him they were stuck up for want 'of information. He wrote to accused that tho lxwks and documents were most incomplete, but no reply v/as received to the letter. The bank book was not uiven to witness's firm so as to enable a report to be mado out, but Mr Sim g<st one bank book in the Suureme Court which was of assistance. When M'Millan was at witness's office 110 was asked a number of questions, some of which were answered and others were to be answered later on. After witness's firm ha<i been engaged 011 the books for some f.imo it wan found that alterations were made 011 tne cheque blocks, and he (witnessfwaited on Mr Sim and reported the matter to him. Ihe cheque blocks were in accused's possession. Tho initials of tho person to whom the amount of the cheque was to bo paid were put in afterwards. Some of the cheques were charged to M'Millan and some were charged to Ben Curtis and others. After the statement had been made out witness informed Mr Sim that his firm did not wish to nave anything further done in the matter owing to the alterations. The alterations, witness thought, were made, with the intention of altering the report made by witness's firm. M'Millan said that he was satisfied Wlili tho report nt first, but that some credits had not been made in his account. Ho afterwards took up a. different attitude, and changed everything, The hearing of the charge at this stage was adjourned to the following afternoon at - 0 clock, the same bail us previously being accepted—namely, accused in £200 und out surety of a like amount.