THE PAKEHA BLANKETS CASE.

Star (Christchurch), Issue 19799, 17 November 1919, Page 7

THE PAKEHA BLANKETS CASE.

MANAGER STREET FINED £SO.

At the Magistrate's Court this morning Mr S. E. J I'Garth;. S.M., gave his | decision in tho case brought against Brown’s Highbury laundry, Ltd,, mi- ; dor tho War Regulations, for breaking , a contract entered into with the. Crown in respect of cleaning certain blankets j from tho transport Pakeha; and in tho case against Henry Eugene Street, manager of the laundry, who was charged with aiding and abetting tho breaking of tho contract. Iho company was lined £IOO and Street £SO. Mr S. G. Raymond, K.C., represented the Crown; /frown's Highbury Laundry, Ltd., was represented by Mr M. J. Gressou; and Henry Eugene Street by Mr W. J. SimMr M'Oarthv’s judgment was lengthy. Ho outlined the facts of the case as already published. Ho said that it was made abundantly clear to tho laundry officials that the blankets were for tlie Crown, and that on or about Juno 20, 1919, a contract was entered into for washing military blankets. By delivering iho blankets not ; properly trashed as they should have been, pursuant to tlu said contract., a breach of regulation T‘2 of the Avar Regulations was alleged by the prosecution to have been committed. Thu Pakeha, stated the Magistrate, carried Imperial troops belonging to the New Zealand Expeditionar Forces. Tho Imperial Government paid tho whole cost of running tho ship, and its owner, tho Shaw, SaviU and Albion Company, acted as tho agent lor that Government. which got the benefit of all tho owners’ contracts relating to the ship. The owner as agent for tho Imperial Government contracted .with the defendant company for the washing and cleaning of 4060 blankets which had been used by tho troops. The oiler of tlie contract to wash and cleanse was made by Mr Farrow, accountant at Lyttelton of the owner, to Mr Miller, the Lyttelton agent of the defendant company, the headquarters of which are at Christchurch. This offer was made by Mr Ira /row on behalf. of the Crown. It was not specifically stated to Mr Miller that the blankets wore the property of the Grown. it was, however, made abundantly clear that it was military blankets from the troopship Pakeha that were to ho washed and cleansed. Mr Miller communicated tho offer, and tho fact that the blankets proposed to be washed were military blankets from the troopship Pakeha, to Mr Street, tho drfenclhnt company’s manager. Mr Street at first demurred, but eventnaijy agreed to accept the offer if certain hammocks were cut out of the nuiterla! the subject matter of the contract. This was done, and Mr Street accepted the offer THE CONTR ACT BROKEN. There is no doubt that tlie defendant company entered into a contract with the Crown for tlie purpose of tho present war with Germany, and, if it wore material an to find, that those responsible for its management knew of that I'.ict, The blankets were, in fact, delivered to tho defendant company, and a large proportion of them, at least threefourths, wore designedly loft unwashed. Tile defendant company engaged two returned soldiers, named respectively Solomon and Brett, to assist in dealing with tho blankets. When engaging Solomon tho manager Street said to him; Whatever yon see in thin laundry, you must keep your mouth shut to outsiders, as there arc tricks and haves in all trades.” "When Solomon started work a day or two later in company., with Brett. Street made a similar remark to both. The blankets the subject of tho contract were coloured re- ' sportively white mid grey. According to instructions from Street, the white blankets were made Up in bundles of five, a washed blanket was placed top and bottom of tho bundle and the rc- ! maining throe were placed inside. Tho i middle blankets were for tlie most part 1 unwashed. The grey blankets were made up in bundles of ten. Most of ; those were unwashed with a few washed 1 ones worked in All tapes were removed from all blankets, and tho huti- ! dies, white, and grey, wore re manipulated ns to make them look ns if all the blankets had been washed. As ' bundles were made nn they were re- ! turned to the ship. When all had been I returned, an invoice was sent charging * the owner of the ship for the washing s of paeh distinct blanket sent to the. Dei fendant company’s laundry, whether it i had or had not washe such blankets I Tho amount chanted for the blankets ! was £199 19s, The defendant com- ; pane's directors and tho manager : Street were afterwards interviewed, > when Street admitted and the directors i repudiated the attempted fraud. THE DIRECTORS'. LIABILITY. '['here is no doubt, the Magistrate : | continued, that the directors wore por- ■ sonally unaware of Street’s conduct. 4 This fact, however, cannot avail tile company to prevent its being affected * with notice of Street's misconduct. Such notice will lie presumed. Taken literally, Regulation 12 of those, made on November 15 included a trading cor--1 porntion. The defendant company is 1 admittedly incorporated under the Companies Act. 1008, and is a trading corporation owning am! managing tho : Ilighhurv Laundry. The Magistrate d '.ah with conten--1 tious raised by the defendant company, " which, however, railed no evidence,, and summed nn lenglhv reference as * follows!.poking at the trend of 1 tho modei’u an thorites there can ho no don lit that a corporation can he i convicted of an offence of which mens 1 rea is an essential element, unless tho 0 only punishment prescribed is such that s it cannot he inflicted on a corporation a or unless the offence is one which can 1 only be committed by a natural person. The defendan 4 - corporation will - be convicted Doubtless 'the directors 0 were not cognisant of Street’s action ii and disavowed it dimdv they heard of t it. However, they are responsible, for 1 his acts committed, as hero, within tho s scope of his nnthori v. A corporation s can only act through agents, and if I these agents are guilty of fraudulent u conduct tho appropriate penalty must 1 be inflicted on the corporation. Tho 0 defendant company will he convicted - and fined £IOO and ordered to pay the costs. s INTENTION TO APPEAL. Mr Gresson said that Ills instructurns in tho event of conviction were to make application tor leave to ap- ‘ peal- He would ask whether in the ! circumstances the Magistrate’s decision 7 in tho case against Street could be withheld, pending Hie result of the ' appeal. J j THE CASE AGAINST STREET. • Tlie Magistrate said both cases could 1 I go to appeal, and lie then proceeded to . 1 deliver judgment iu the Street ease, as follows; — , "The defendant heroin is charged with aiding and abetting tho company of which he is manager. Contentions have been raised in this case which demand consideration, apart from those t which apply to the defendant corpori at ion. It has been urged that, un- - like the. company, defendant lias entered tho witness box. and with Die

DECISION OF MR S. E, M’CARTHY, SI

COMPANY CONVICTED AND FINED £IOO,

witness Brett, has categorically denied on oath Solomon’s story. It is also urged that the weight of testimony is in defendant's favour. It is thirdly contended that, in any event, as defendant was, o/i the theory of the prosecution, the solo instrument whorohy the company committed the offence of which it has been found guilty, he. himself cannot bo convicted of aiding and abetting in tho corn mission of that offence. Doubtless both defendant and Brett havo flatly contradicted Bolomou. Whhso testimony is then the most reliable, theirs or Solomon’s? Now Solomon is corroborated by SergeantMajor Patchett, Captain Cbudleigh, and the manager of the Victoria Laundry, not only ms to i.ho unwashed, dirty condition of the greater part of the blankets, but also as to the method adopted to conceal that condition. The testimony of those three witnesses cannot reasonably he rejected, and it renders the evidence of defendant and liroLt unworthy of credence. The evidence of Solomon, therefore, stands. Bith regal’d ro tho legal position, it is a well-recognised principle that a director, shareholder, or official of a corporation has an existence distinct and apart therefrom. Thus each, if lie has a cause of action, can sue tho corporation. His legal existence is not merged therein. ' There is, therefore, no adequate reason why he should not he convicted of .aiding and abetting rho corporation to commit any offence of which ho has been cither solely <n jointly with others the instrument whereby it has committed such offence. A corporation as wo havo seen can only act through agents; and both on principle and authority, not only the corporation hut its agents come " ithin tho ambit of the law creating tho offence. Mere tho contention raised for tho defence to prevail every officer who assisted in the commission of an offence might shelter himself behind corporation and escape scot free. Coming to tho question of penalty, it is not as though the defendant had acted under compulsion of his superior officers. They wore ignorant of the illegal and fraudulent act by which defendant has bound tho defendant corporation. Further, ho is a holder of 500 out of 4000 shares.” Finally tho Magistrate said:-—"The act of which defendant has been found guilty was committed in callous disregard of the ultimate consequences not only to those who might thereafter use tho unwashed blankets, hut to those who might ho called upon to suffer "through tlie spread of some infectious disease which might devastate a whole community, j have decided not to imprison tho defendant, hut the penalty must bo substantial. Ho will be convicted and fined £'so and ordered to pay the costs.”