THE HARPER CASE.

Star (Christchurch), Issue 5429, 3 December 1895, Page 3

THE HARPER CASE.

THE CRIMINAL PROCEEDINGS. THIS DAT. [Yesterday 'b proceedings are reported on another page.] The hearing of the charge of embezzlement of £1751, the moneys of the Miles' trust, againßt Leonard Harper, was resumed before His Honor Mr Justice Denniston and the Bpecial jury at 10,30 a.m. to-day. Mr Skenett, with him Mr Kippenberger, appeared for the Crown ; and Sir Robert Stout, with him Mr Wilding, for the accused. The examination of Edward Parkerson by Mr Skerrett in reference to the financial position of Harper and Co. before 1886, was resumed. Mr Skerrett asked what steps had been taken in Borne cases in respect of moneys which had been paid to the firm, and which instructions had been received to remit to England. Sir Robert Stout objected to the question. He submitted that the Legislature assumed that nothing which had been done after the commission of the alleged offence, by an accused person, could be given in evidence against him, except in certain specified cases such as uttering and cognate offences. In all othera the evidence must be confined to the issues. He cited " Russell on Crimes" to Bhow that the facts laid before the jury must be strictly relevant to the particular charge, and have no reference to the conduct of the prisoner in respect to other matters. The same rule was laid down in " Taylor on Evidence." The English law had been amended so as to admit evidence after the fact in regard to Borne offences— such aa receiving stolen goods— but even' in these cases the law on the subject was very strictly construed. He cited Regina v. Drage, xiv., Cox/ 85; and Regina v. Carter, L.R. xii.^ Q. 8., ,p. 522 ; Regina v.. Holt, Bell, 280, and other authorities; This evidence was' not relevant to the iaaue, which was alleged embezzlement by the accused in reference to a particular act. There was in thia case no suggestion of a trusteeship. Mr Skerrett said that there was. His Honor said that Mr Skerrett had treated the 'payment of the £1751 into the bank in 1883 as the conversion. The evidence sought to be brought in was solely, he understood, to show that at the time of that particular transaction, the firm was in an insolvent position. The question to be met by the defence now was whether Mr Skerrett was entitled to rely upon the possession of the money in 1887 as an act of embezzlement. If Sir Robert Stout could satisfy him chat Mr Skerzett was not entitled to rely on a converaion in 1887, | he (his Honor) would not ask him to argue on the question of the financial position of the firm. Sir Robert Stout said that the evidence, which it waa sought to have admitted, was not relevant to the present issue, and might) have reference to other charges. He cited authorities in support of his contention. ' After farther discussion his Honor said that he would have thought that the evidence already given was sufficient to prove that the firm in 1887 was in a critical position. Mr Parkerson had admitted that it was in dire financial Btraits. Sir R.* Stout again submitted that the evidence must refer solely to Miles' case, and that that sought to be tendered was not relevant thereto, and not admissible. 'Mr" Skerrett submitted that the Grown was entitled to prove the conversion of the money at any time when it was' in the possession of the accused. He quoted from RoECOe, p. 80, to show that it . was .not! necessary to restrict the proof in such cases in reßpeot to time and place. He citei "Russell on Crimes," to show that the particular time need only be proved where time was the essence of the offence. If a specific time were, alleged in the indictment the prosecution was not bound by it. The case here was that the money had been paid into an overdrawn bank account, and had never been really invested. The proseuution was entitled to call evidence to show that the accused in 1887 — when admittedly there waa no security— parted with the money, and was in dire financial straits and resorting to fraudulent expedients to keep the business alive. On that point the evidence was admissible. It was also admissible on the ground that from 1883 to 1887 false accounts were rendered of the investment of this money. It was open to the accused to say that this was an isolated case, a mistake, not designedly dine. It was open to the Crown, therefore, to prove that: during the same period other false acoounts were rendered. The Ciown, for another ground, was entitled to show that this money wsb obtained by a trustee at a time when his circumstances were desperate, as he knew. His Honor asked whether i+< would be a fraudulent conversion if a trustee, with the consent of the beneficiaries, obtained money when he was in desperate circumstances; Mr Skeirett said that it would be in this case, because the consent had been obtained by fraud ? He submitted that, in 1887, a consent, according to the hypothesis of the accused, waa obtained to this money being deposited. He would be prepared to show that, at that time, the money was not there, and could not, in point of fact, have been repaid by the firm out of itß own moneys. Could it be suggested that if the money could not have been repaid except ont of money entrusted to the firm for investment, evidence of that was , not admissible an inferring, fraud. He . would submit, farther, that the money being retained in the business from 1883 to the bankruptcy, evidence to Bhow the solvency of the business in that period was admissible, and therefore evidence as to false accounts ■having been rendered to other parties was also admissible. The Crown was entitled to show that this money was, in point of fact, ' invested in ; a business in which the accused was a partner,- and which was in- an insolvent condition. It wae not enough for the Crown to show the simple conversion of the money ; it must show conversion with intent to defraud, and evidence of the condition of the business was relevant as bearing on that intent. Again, the money had been paid into a particular account, tbe No. 2 account, and the Crown was entitled to show all the doings in connection with that account. As to the general question of intent; it was established by authority that in order to show intent, evidence might be given of prior acts whioh might not be connected with the offence, and which might not have been committed within " a reasonable time " before it. He cited Barnett v. Longiii., H.L. 395; and. Regina v. Wilkinson ii., Foster, and Finlayson, 343, Regina v. Gray Hi., Foster and Finlayson, 1102, His Honor said that as he had previously pointed oat to Sir Robert Stout, he had to decide whether this evidence was admissible, at once, on general principles, and on one or two leading cases. He had not time to give the cases cited the full consideration whioh he would in connection with a tanco argument. Therefore, he thought that it would be well if counsel would refrain from^ citing so many authoMrSkerrett said that he merely wished to cite some authorities in order to assist his. Honor, but he would admit the force of his Honor's remarks. Mr Kippe=berger proceeded to address Mb Honor. His Honor asked if there was authority for a second counsel to be heard for the Crown in an interim argument. Mr SVerrett said that such was done at nisi priM The practice had, however, been objected to. Sir Robert Stout did not object, and Mr Kippenberger continued. He said that he wished to bring under hia Honor's notice authorities, such as Regina v. Long, bearing on the question of intent. Sir Robert Stout said that the embezzlement oases cited by the Crown differed from thia, in that they were cages between master and servant. Tbe Crown wished to show that there had been untrue etatementa, not to Miles ot any of the benefioiarieß under this trust,

but to other persons. It was as inadmissible 08 would be evidence of a previous conviction for false pretences to some other persons. As to the question of time, the Crown really did not know when the alleged conversion took place. A certain date 1 had been put into the indictment, and by that date the prosecution was - bound, unless his learned friend ohoae to ' alter it. He (Bir R. Stout) did not rely 1 : so much on that, as on the broad principle that evidence could not be given of untrue statements to other parties. Hit* Honor said that he understood that Mr Skerrett proposed to put a series of similar queptions to the witness. MrSkerrefct: Yes, your Honor. His Honor said that he was not satisfied that Mr Skerrett was not entitled to put in this evidence. The question was whether it was legitimate evidence, as tending to show the financial position of the firm at that particular time. He might say that if he admitted doubtful evidence now the prisoner would be entitled to the full benefit of any consequences o? it in any subsequent proceedings; and the Crown, if it pressed the evidence, must take the lisk attending it. He did not. however, propose to allow the evidence to «b<j given with the fulness of detail suggested by Mr Skerrett, but would merely admit th<3 general evidence. He did not propose to allow tbe case to be burdened with a mass of such details as had been mentionei, and to make it the arena for other cases. He would take a note of Sir Robert's objection. . The witness re-entered the box and was asked by Mr Skerrett : " Were false accounts rendered ?" Witness: They were. When the principal moneys were repaid, such payments were not credited in the accounts sent Home, in which the mortgages still appeared as current. The interest was 'shown as paid, and commission was charged for collecting it, although repaid. Proper entries were made in the firm's books. The first false account of this nature was, according to witness' recollection, sent in 1888. In the account of Mr Troyte, on Feb. 1, 1885, there was an entry of the repayment of £1000. That was an actual repayment. The accounts sent Home were submitted to Mr Leonard Harper, who generally looked over them. The account book produced was in the possession of the firm at the time referred to. Press copies were made . of the accounts, and those copied into the book produced were generally examined by Mr Leonard Harper, who had copiea of the caßfa-book furnished to him weekly, and went through the different transactions with witness. Mr Harper would know from those accounts whether moneys were received from an investment. Cross-examined by Sir R. Stout : Mr L. Harper was in Parliament in 1835 and .1886. Witness and Mr Maude looked after the accounts then, and witness corresponded with Mr L, Harper on the subject. Mr Troyte was a relative of Mr L. Harper,' and his, account was an entirely exceptional account. Mr Harper did not look at the press copy account book pnt in, and did not make up the accounts in it. Mr Harper went Home in 1886. To Mr Skerrett : Mr L. Harper knew of the existence of the press copy account book produced. Mr Skerrett Baid that his object was to fix a date. ' . His Honor said that this instance, an .isolated case of an exceptional account, was, not of much value. . . ; - Witness continued : In the investment leleer. there is an entry, dated Feb. 24, 1887, "By cash, Banks, on account, £3C0," under the heading "J. Eardjey Hill/' TbaS was on account of a mortgage, and he assumed the security had. not been released. The false accounts continued for -some years, but witcess could not recollect how 1 many. They .ceased six months before • witness left Harper and Co.'s employ, in Nov. 1892. There were several such accounts, but how many he could not say. Leonard Harper was aware of these false accounts, Witness was directed ■ by him, in 1888, to have the acoounts made out in that way. In 1885 an investment account was opened at the Union Bank. It was a trust account, in the names of Messrs G. Harper and Maude. Witness had a conversation with Mr L. Harper about it, pointing out that the object of it was to keep the trust money separata. Witness told accused that he did not think the firm could afford to keep the account going. Mr Harper replied that it was just as well to establish the account and to try to keep it going. A balance-sheet of the firm waß prepared in 1886, and copied in a letter-book. No doubt Mr L. Haiper must have Been the balance-sheet. When it was prepared the firm was insolvent. In July, 1891, a conversation took place between MrL. Harper, Mr G. Harper and witness. A stetement of the firm's acoount had been prepared by Mr Millar, which witness submitted to show the position of the film. The account showed a deficit of £150,030 to £160,000, representing moneys uninvested. Mr L. Harper's object m going Home was to finance for the firm. To Sir X. Stout: Mr Harpr'a friends at Home raised £35,000, which was Sent ont. At that time book debts were ovring to the firm of over £200,000, xepresent'ug losses on mortgages. • *To' Sir Robert Stout: When Miles's money was lent to Mr Packer, the lattex'a Property tax return showed a surplus of about £25,030. Mr Packer was the sole owner of the land on which the money wra lent, and the security was ample; the company afterwards lent £8000 on it. Witness gave instructions to the conveyancing department to have a mortgage to Miles prepared. Mr L. Harper had nothing to do with that department. Harper and Co. found money for Mr Packer to work the land, by financing , in this way. The salariea of No. 2 department were paid out of No.. 1 account. No. 2 department made profits. If : all the people to whom Harper and Co. lent money had repaid them, they would have been in a good position. Witness did. not know why Packer's mortgage to Mile's was not executed. Mr Pacfcer knew that he was liable for the advance. No untrue account was ever sent to Miles. After the money had been repaid, Miles knew that it remained on deposit with the firm. After the luncheon adjournment the croßa- examination of the witness was continued : He stated that No. 1, the ordinary law business, was very profitable. In 1891, when Mr L. Harper went Home, he thought that he would be able to make arrangements for carrying on ; he waa a sanguine man. Mr L. Harper did not make all the advences. He had a considerable number of business engagements outside the firm. When witness .told Mr Miles that the money was on deposit the firm held securities against the moneys on deposit, not specially set aside, however, but shares and properties on which money had been lent on mortgage, and which had been taken over by the firm. Re-examined by Mr Skerrett, Mr Packer was in the colony when Milea'a money was lent them. He soon afterwards went Home, and was away for three years. Harper and Co. had control of his affairs under a power of attorney, during his absence. Some of the book debts mentioned by Sir R. Stout, were in the balance-sheet as "tied-up accounts." Some indebtedness on the private amounts of the partners in Harper and Co. waa included in the balance-sheet, but not under "tied-up accounts." On Packer, Harper and Co.'s account there was a loss of about £20,000. The securities in 1887 against the deposits .ware not equal in amount, but he could not tell the proportion. Alexander Millar deposed, in reply to Mr Skerrett, that he had been accountant to Harper and Co. from 1886 to the firm's bankruptcy on March 14, 1893. Mr L. Harper left New Zealand in July, 1886, returned in 1887, left again in July, 1891, returned in June, 1892, and left again in November, 1892. Witness could not- say that he remembered false accounts being rendered to clients in England in 1886 and 1887. There would be false accounts in 1888 and up to March, 1892, a year before the bankruptcy. Witness had gone through the books to ascertain those particulars. The falsity of the a accounts consisted in their not showing as -having been repaid money (or investment, whioh had been repaid,

The accused knew of these false accounts. Witness had seen him on a number of occasions abont them, but could not fix any particular account or conversation. Witness had objected, but not to Mr Harper, to rendering the accounts in that form. An approximate balance of the firm's affairs was prepared in 1891, and another in 1892, but none between 1886 and 1891. Profit and loss accounts were prepared daring that period ; bat, in preparing 1 them, no losssb were written off. The profit and loss account for the six months ending Feb. 28, 1887, showed for commissions earned £2117 5s sd ; it showed a deficiency of interest of £552 16s 3d. That meant that, after paying out interest on uninvested capital to clients, Harper and Co. had to find that sum. The balance-sheet for the six months ending August 31. 1887, showed deficiency of interest .£3089 19a lOd. and profits on commission £2831 13s 9d, That statement showed a nominal profit of about £800. The. deficiency of interest decreased for three half years, but in August, 1889, it increased, and was £4380 15s 4d. Witness had assisted Mr Ollivier to prepare from the books a statement of the moneys entrusted to the firm for investment, and . the proportion of those moneys not lent on mortgage, and not repaid. All sums which the" firm treated in their books as ; deposits were excepted. The total of the : sums entrusted for investment was £284,344 lla Id. Moneys paid off and moneys not invested amounted to £178,052 I 11s lOd. It waa a general practice to submit ' a weekly statement of receipts and diaj bursen-enta to Mr L. Harper. The approxij mate balance-sheet prepared in 1891 could ; not be found, and had pot been copied. j Cross-examined by Sir B. Stout : Since i witness entered the firm, hundreds of I thousands of pounds had .been remitted to • England, and paid off in the colony. In speaking of money uninvested he did not [take into consideration money lent to i people, but not on mortgage. He was aware that taking those into consideration, the amount was nearly a quarter of a million. He had nofc taken the money lent on r shares into consideration. Some money j was owing to the firm on shares at the time of the bankruptcy. Had all the money )ent by Harpers been repaid to them they would have been able to pay all their debts. Re-examined by Mr Skerrett t In prepariiig the statement - before the Court wherever a security .was assigned to a client he had treated the amount covered ' by that security as having been invested. All the book debts must not be taken as bad. A number of them turned out since the bankruptcy to be bad. The book debts were taken into consideration in the statement at a certain figure. Charles Reginald Bradley, clerk in the Union Bank, produced certain books of the bank, and stated that Miles's money was received in London on Nov. 2, 1888, and the bank here advised by cablegram on Nov. 3, when it was credited to Harper's No. 2 acoount. On the morning of Nov. 2, the No. 2 account was overdrawn £3782 14a 2d. It was only in credit a few days/between Feb. 6, 1884 and March 30, It was never again in credit. On Nov. 2," 1884, the account was in debit £27,811 15« lOd. On July 17, 1885, at the opening of the investment account .the debit balance on No. 2 account waa £40,146 lla 2d. The investment account continued open to Nov. 17, 1886. When it was closed it was £31,095 18s 8d in- credit. A cheque for that Bum: on the investment account was placed to •the 'credit of i^To. 2 "account; which, after the *■ payment ~of ' that • -Bum ■ into it, xemaiDed. in debit £5327 9$ lid. .A year later, on Nov. 17, 1887, No. 2 account was' in debit £27,582 18a sd. • In July, 1891, 'Harper and Go. : opened another account, a : guaranteed account;- At the date of bankruptcy, March 14, 1893, there were four accounts. The credit balances were' — Trust account £2093 19a 3d, and No. 1 account £12 15a lOd, No. 2 acoount was overdrawn £18,397 18?, and the guaranteed acoount was overdrawn £29,738 19a 6d. In 1891 certain securities were given to the bank. [Left sitting.] j