Eighth Day—Saturday.

His Honor took his seat at 10.30 a.m.

In reply to Mr Solomon, who asked whether the statement of Mr Ward's account was prepared.

Mr Cooper replied in the affirmative, and handed in the statement.

Mr Solomon: There is the statement of Mr Ward's position in 1892.

Mr Cooper: We will give you that later on in the morning, Mr Solomon.

Mr Solomon: I asked my friends to supply me, your Honor, with the statement as to how the £67,000, as I made it, was made up. That is to say, the money Mr Ward had spent. It comes to £72,200 10s 5.1 in addition to the £12,000. I was pretty near the mark in setting it down at £12,000, for the salaries, rents, and emoluments amount to £12,584 14s. I think it Is as well I should read this.

Statement of J. G. Ward's Account from 1st December, 1892, to 30th June, 1896.

To private house and travelling expenses	£ 2,454	6	0
Properties acquired and repairs	8,287	15	6
Shares acquired in the Ward and other companies	7,834	15	10
Rates, rents; fire, and life insurance, and interest on mortgages	5,128	10	4
Interest paid Ward Company	4,618	10	0
Freezing works account	14,826	12	9
Grain account	7,000	0	0
Freezing works boilers, paid Nelson	1,700	0	0
Paid to Colonial Bank	20,350	0	0

Mr Solomon: That is everything we want, with one exception. I do not understand what is meant by "paid to tbe Colonial Bank." I want to know how that is made up, when it was paid, and what it was paid for. That is the item I want explained. All we can find oat by Mr Cook's examination is that Mr Ward's losses were less by £20,000 than the amount he gave, the promissory note for. That is what I want to find out. This statement contains an item "£20,000 to the Colonial Bank" I want to know how that amount is made up, when paid, and what it is for.

Mr Cooper: We only gave you general results.

Mr Solomon: Quite so; I have nothing to complain of in this statement, but that—

Mr Cooper: We will get you that this morning, and tne other also.

The examination of Mr Fisher was then resumed

In reply to questions by Mr Solomon, witness said he was made aware by Mr Birch that the two cheques for £21,000 and £35,000 which he was told to draw on Mr Ward and pay into the association on the balancing days of 1893 and 1894 respectively were to be taken out again the day after balance. If Mr Birch said that the cheques paying is the amount and the ones withdrawing them were handed to the bank simultaneously he would not contradict him. Mr Birch did not tell him that the object of the transaction was to prevent shareholders seeing the real state of the overdraft. Witness's opinion was that the effect was to reduce Mr Ward's account, but he formed no opinion that he could remember what the object of it was. The intention, he presumed, was to have Mr Ward's account put into the best possible condition for the balance.

The examination of John Fisher, manager of the association, was then resumed.

Mr Solomon: There is another item I want to get at. Did you keep a book in which yonc stocks were entered—I am not speaking of produce?—Of goods in stock, I think we had. page 90 I did not know personally of the books that were kept.

You did not know what?—I did not know of the boobs that were kept, bnt I believe the atoreman kept in-and-out books

You tell me that you, as manager of the association, did not know of the books that were kept?—Certainly not; how can a manager know all the books of the company.

Yon do not know whether a book was kept keeping a record of your goods?—It was part of the business of the man who had charge of the department to keep the books.

And it is no part of your business to know whether such book was kept or not?—I do not think so. I did not keep charge of the department.

Did you not think it part of you duties to know whether such a book was in existence?—I believe it was.

Was there such a book?—I do not know.

Don't you know?—If you produce the book I will know.

Mr Solomon: You do not know whether there was such a book to keep a record of your goods?

Witness replied that he believed thera was at Invercargill, but he did not know that there was at other places He did not koow whether there was any book recording the amount of produce in stock; he did not know what the Btoreman kept Witness knew pretty well what oats were coming in and out.

Do you mean to say that you carried in your head all the time the amount of oats you had in store?—I don't say that.

Then how did you know? Do you know anything about what is usually done in business in regard to these matters? Do you know if it is a usual thing for a compauy or business of this *ort to beep a stock account or goods account, so that you can at any moment look up and see what stocks you have in hand?—I have, had no experience of that sort.

Then you don't know whether it is a usual thing?—I do not know.

Take Brooks and Co., for instance, to whom you gave warrants for 22,000 sacks of oats, What means had you of knowing whether you had in hand sacks for the warrants you had given to them?—I would get word from the storeman of what oats there were on hand anc of what were standing.

Did you do that in each case?—I cannot saj that I did.

If you did not do so, bow else did you know 1—I knew; that is all I can tell you. I knew that I bad not given warrants for oats that! had not in band.

What means had you except asking the store man?—I don't know that I had any means

If you had the oats in store, gave warrants fo them, and sold any of the oats it would be you duty, would it not, to place the amount in re duction of the account of the person to whom you had given the warrants?—I expect [unclear: the] that would be my duty.

But how could they possibly get them if tb oats were short?—Because in a good many [unclear: cas] amounts were paid in that were not written [unclear: c] by warrants.

By whom?—By the Colouial Bank.

What? Paid in to the credit of those [unclear: pt] sons?—I don't think it was. We paid it [unclear: in] the Colonial Bank, who should have written off.

But your association got credit, did they [unclear: ill] for the moneys paid in?—That may be so.

How can you justify it P You sold the [unclear: od] belonging to these people, from whom you [unclear: hi] borrowed money upon them, and take the [unclear: mou] from the sale of these oats yourselves P—It [unclear: m] simply replaced by other securities-—[unclear: whatefl] the money wan exoended on.

Where are those securities?—They have [unclear: n] got securities apparently, but we have not [unclear: i] the money now.

What you did is this, is it not: You [unclear: borrow] money on these oats, gave warrants for [unclear: the] sold the oats, and took the proceeds?—[unclear: That] about what it amounts to.

Can you justify it?—The money was [unclear: pa] into the bank, and should have been [unclear: writtj] off

But it went into your pocket?—No.

Into the coffers of the association, then? No.

How?—Into other business represented by [unclear: the] association.

But it went to the oredit of the associate did it not?—That was so.

Oats pledged to your customers were [unclear: and] and the proceeds paid into your credit?—[unclear: Th] is so

Is there any excuse whatever for such a [unclear: m] ceeding?—I don't think there is.

At last we bave got a straight answer. [unclear: The] accounts for the fact that the oats were [unclear: she] You still say that, although these oats [unclear: w] sold and you got the money for them, you [unclear: in] a right to take credit tor any oats in stock your own property?—Yes, for any oats of [unclear: i] own.

How could they possibly be your own [unclear: who] you knew that you had sold other [unclear: people] oats and taken the money they brought?—[unclear: 1] credited it to the other people and paid [unclear: the] for them.

But you did not. Show me a single credit [unclear: c] you can, having been made to these other [unclear: peofl] They held the warrants, but you had the oats [unclear: a] the money?—I know that a lot of the [unclear: warn] were held, and a lot of money paid on [unclear: the] warrants, but was not written off.

How do you mean?—I know that a [unclear: lot] money was remitted to the people in [unclear: Lond] I cannot say that any eash has been credited that way either to Brooks or Connells. [unclear: Is] that we bad a right to replace these oats [unclear: w] other stuff.

page 91

But the oats have gone and, you have the money P—They have got a debit balance. I say that as the oate were paid for we had a right to take them.

And yet you say that you have a right to take credit for oate in store as your own property?—Certainly. Oats that were paid for we have a right to take.

Although pledged to other people?—It is not case of pledging to other people.

If you have 10,000 sacks of oats on which you borrow £8000 or £9000. and you give warrants for those oats to the bank, do you say those oats are still yours?—I cannot say they are, but it does not affect the matter of book-keeping.

I am not asking that.—Then I cannot make it plainer than I have done.

Do the oats not belong to the person who has the warrant?—Yes; to the extent of the warrant

And all the oats in "took are more than (covered by warrants?—Yes.

You admit, then, that those oats are the property of somebody else to the extent of the warrants. That being so, how can you say you have a single oat in store that belongs to you?—I cannot explain it to you more than I have. If we paid for the oats originally, the proceeds of those oats (when sold) would go to a certain account.

Do you not know that every oat is more tnan covered by warrants?—Yes; but it does not affect the position of the oats belonging to us t on a particular account.

Did ihey belong to you at all?—We took the amount in as a liability, and consequently we are allowed to take them in as an asset. Further examined: In the 1895 balance sheet the produce account was taken in at £16,243 9s 1d, but the stock had not been valued minutely to arrive at that amount. He got from the storeman the approximate amount of the stock on hand, and with other produce he reckoned: on he came to the sum set out. What counsel evidently wanted to infer was that the association was 16,000 sacks short.

Mr Solomon said it was not for witness to infer anything; he would find later on what was inferred. (To witness): When you made up your statement of assets, why did you not put in the actually accurate assets?

Witness: I do not know why I did not.

Did you ever put in not the actual amount, but an approximation, except in this case?—I do not think I ever did.

Do you not know that you did not?—Are there any in the schedules?

Answer my question. Do you not know you did not?—No, I do not.

Then in every other case, in putting down the statement of assets you correctly got all the assets there, but not in this case. Can you tell me why you did not in this case also?—I cannot tell why.

Questioned as to the interview with Mr Ward in Wellington, Witness said he could not say whether, when he told Mr Ward that he owed the association £55,000, he (witness) also told Mr Ward that he was good for only £35,000. He probably told Mr Ward that he approximated the amount to be £25,000 short, but did not know that he did.

Mr Solomon: But you can say that you told Mr Ward in Wellington, before the balance sheet came out, that he owed the association £55,000?

Witness: I do not think there is any doubt about it.

Will you then explain, by any process of reasoning, how it came about that Mr Ward as managing director of tbe company, and you as manager of the same company, you having told him that he owed the association at that date £55,000,—how you as the manager and he as the managing director then put your names to a balance sheet which showed the total debts owing to the association on all classes whatever to be £44,000 when he and you knew that he owed £10,000 more than the total debts put down in the balance sheet?—I cannot say.

Look at the balance sheet and see if my figures are not correct. All the debts owing to the association on that date £44,000—£34,000 advances against shipments and £10,000 current accounts. Not another item of any sort. Is that not so?—Yes.

You and be knew that Mr Ward at that date owed the association £10,000 more than the total there shown?—I cannot explain it at all.

Mr Solomon said he was glad that they could now get away from debatable ground. They had been quarrelling long enough. He now wanted witness to assist the liquidator in respect to a matter concerning the realisation of assets. The association shipped a lot of oats by the Prince Albert, tbe oats of different people. These oats were of different classes, and realised different prices, some of the shippers making a profit and some a loss.

Witness said that that was so.

Mr Solomon said that the people who were shown to have made a loss said that they did not make a loss, and the liquidator wanted to know how the oats were sold. The liquidator had been given to understand that, instead of each man getting credit for the amount his shipment realised, the whole amount was Jumped together and then divided, and the liquidator wanted to know his position.

Witness said that was not correct. The Prince Albert took a shipment of 43,000 sacks on account of 50 or 60 persons. Different invoices were sent for each lot, and different brands, and each lot was marked with a separate account sale. When they got to London a great number of them were sold absolutely on their own brands. Some grading was done by the consignees, and some of the brands were mixed. When the account sales came out they page 92 were fairly approximately in accordance with each lot gent Home, but the ones that had been graded had to be dissected, and through some error in London a lot of individual account sales came out with wrong weights on them, some going live bushels to the bag and some three and a-half, which was on the face of it wrong. The association had to take the total weight shipped and the total weight realised and find out what the loss in weight was. Then, when they got out the total loss in weight, they averaged it per bag and gave account sales for the shipped weight, less the ascertained loss in weight. The prices in some cases were grade prices, and three or four folks who got account sals were dissatisfied with the price, and said that their oats could not have been sold on their merits; and in one case, one man's oats, that they knew must have been amongst the best oats sold, and have brought the best price, the account sales afterwards came out at 19s per quarter, which evidently was an error, and must have referred to some lower grade oats. They accounted to this man, who disputed it, and the Gore manager arranged with him—a Mr Wendell—that owing to that error the association would take over the loss. The account was something over £100. Most of the folks had paid the losses that had accrued, but there were two or three in the same way. A lot of people had paid long before Mr Cook went into possession.

Mr Cook: You will find it is a good many more than two or three; that is why I want the explanation.

Witness said he had given the explanation, but Mr Anderson knew more about this matter than he did and would give any information. The account sales were either in the office or had been sent to the people.

Mr Solomon said that was what the people complained of—why did they not send the account sales; the people said the association had made up account sales of its own.

Witness said that had only heen done in the way he had explained, but further information could be given by Mr Anderson. The expenses were only lumped in the same way he had indicated.

Mr Solomon then intimated that he was going to ask about the drafts of which notice had been given, divided into three classes: (a) draf te drawn on a particular day, expecting to be able to draw later on the same person; (b) drafts drawn in the expectation of being able to draw and drawing on some other person; (c) drafts drawn which it was not intended should be used. Mr Solomon continued: What we complain of, and what we want you to explain, is this: The word bogus has been used about those. I do Dot know how the word has crept in, but it has crept in. This is our contention: that these drafts were all drawn, and when they were drawn it was not intended they should be used. That is the point, and it is on that we [unclear: want] your explanation.

His Honor: That applies to all.

Mr Solomon: To every one of the 174 [unclear: cases] not to these items only. I have selected [unclear: these] particular ones to whioh we call attention, [unclear: but] we say iu every ease in the whole £118,00 when the drafts were drawn—no matter [unclear: how] they were treated afterwards—it was [unclear: never] intended that they should be presented, [unclear: and] they were drawn apparently for the purpose [unclear: of] concealing the state of the accounts. The [unclear: con] tention is that the whole of the drafts [unclear: wen] fictitious in this sense: that they were [unclear: issaei] and not intended to be used, iu the [unclear: ordinary] way of business, and we want an explanation [unclear: of] these things.

Mr Chapman suggested that Mr [unclear: Solomon] should read the portion of the report [unclear: bearing] on the question.

Mr Solomon read from the report as follows "I have already alluded to some [unclear: peculiarity] in the method of carrying on the [unclear: banking] account of the association. My examination [unclear: of] the books has disclosed the fact that [unclear: almost] from the establishment of the association [unclear: J] system has been pursued of effecting [unclear: temporw] reductions of its overdraft which is open [unclear: to] grave objection. I find that from the 25th February, 1893, to the 18th November, [unclear: 189]; drafts varyiug in amount from £100 to [unclear: £615] drawn by the association upon persons or [unclear: firs] in other parts of the colony, and also in [unclear: A] tralia were discounted at the bank, and [unclear: shortfc] afterwards taken up by the [unclear: associatioi] apparently without having been presented [unclear: l] the drawees. The number of these drafts [unclear: ci] 174, representing a total sum of £118,330 4s. [unclear: J] find that none of those were entered in the [unclear: bt] book, that they were all drafts on [unclear: demii] (excepting two), and that there is no trace [unclear: i] business with the drawees to support any [unclear: o] them." After reading this Mr Solomon said That is what we want to get at. We [unclear: maintti] our position precisely.

Mr Cooper: The whole number? Mr Solomon: The whole number. I [unclear: m] only calling attention to this, Mr Cooper. is impossible for me to go through the [unclear: whose]: number. The instances that we have given [unclear: oi] the report you have examined into.

Mr Cooper: The 41 instances you [unclear: have] given in the report we have examined [unclear: into] but we cannot be expected to examine [unclear: ia] them all.

Mr Solomon: I intended that for the [unclear: bend] of your side. I say we hold to all our [unclear: count] now, and if you can show that we are [unclear: wrooi] so much the better for you. We don't want [unclear: oti] do anything unfair.

Mr Cooper: It is manifestly unfair to us [unclear: it] expect us to answer any matter in [unclear: connect] with these drafts other than the [unclear: spec]-instances which are given to us. [unclear: Therefa] we have confined our attention to those [unclear: specif] page 93 instances, and we have nothing to do with the other 130 instances.

His Honor: I understand Mr Solomon did not intend to go into any more than those. If Mr Solomon makes out a case in respect to those, probably he is right as to the rest.

Mr Cooper: If not he ought to withdraw his statement as to the rest.

His Honor: I think so.

Mr Solomon: If we are wrong.

His Honor: If you don't make out a case for those instances you ought to withdraw the rest.

Mr Solomon said if he could not succeed on those it was not very likely that he could succeed on the rest. His cootention was that there wae no business to support the particular drafts that he bad mentioned.

Mr Cooper: We have gone into every one of those.

Mr Solomon: We will take the first case. It is one that is referred to as a draft for £6150.

Witness: Yes; drawn on Nelson Bros., Dunedin.

Have they got an establishment in Dunedin?—They had then.

You drew for £6150?—Yes.

Why did you draw that draft?—Against a shipment of mutton being made by the Hawke's Bay on that day.

My point is throughout that you did not intend these drafts to be used.—I think in this case it was intended to go forward. Instead of paying that, Nelson Bros sent their cheque two days afterwards for £6623 7s, for which we retired the draft for £6150. Either that, or we drew £6150 and retired the cheque for £6623 7s.

Don't you know which it is?—I have given the effect. I think it was one or the other.

Does this draft of £6150 appear in your books?—Yes.

Examination continued: Witness said that he could find no record of the cheque for £6150 in the books. The only explanation he could give was that the bank had debited back the £6150 without getting a cheque for it when they got the cheque for £6623 to replace it. Whatever his explanation might be he could find no trace in the books of the drawing on Nelson Bros, for £6150. On the balancing day, Monday, February 20, they were entitled to money from Nelson Bros. for sheep shipped by the Hawke's Bay. The agreement with Nelson Bros, was that they were to pay for the balance of the sheep the steamers did not take from the freezing works. The non-entry of the other draft was an error of bookkeeping, but it did not make a scrap of difference. The drafts were not presented on the name day; as a matter of fact there was a couple of days' difference, but in the interval the association received Nelson feros.' cheque. In this particular instance the association were entitled to receive this money from Nelsons, and they paid in the draft in anticipation, and retired it with their cheque. That was a matter of everyday business, and was done in Dunedin repeatedly. He could not explain why the transaction was not entered in the books; he admitted that it should have been entered in full from tbe bank book, but the result was exactly the same. He could not say why the draft was not retired on February 22 instead of the 25th. He could not explain why Nelson's second draft was dishonoured; he knew there was mutton in store to represent it.

I want to know what was the object in putting the first draft?—We were entitled to the money, and we required it.

What for?-To keep the overdraft within limits.

That is my point exactly—But do you not see the bild reading of the statement is this: that we issued those drafts—

Do not trouble your head about that, Mr Fisher.—I am answering your question, and I do not care if you take a week to propound a question. You are not going to dictate my answer. I say that on that particular date we were entitled to receive £6150, and we anticipated our shipping documents by drawing our money, and when we got payment for the documents we retired the draft. If the amount was not paid in we did not twice get the money.

The plain fact remains that on balance day you reduced your overdraft by £6150?—Yes.

You drew a draft which you did not enter in the books?—I cannot expiain the entry; it should have been there. There is no question about it that it should have been there.

Can you say that that draft for £6150 was supported by business?—Yes, to the extent of the balance that we did not ship.

But there was no business done to support the draft?—Yes.

My point is this, Mr Fisher: Class A applies to cases in which you drew on a man expecting to be able to draw on that man in a few days. You did not enter it in the books and withdrew it in favour of others. Is this case not that class exactly?—What I say is this: that we were entitled to draw on Nelson Bros, and if we anticipated the draft by two days that was a pure matter between ourselves and our client.

I do not care whether you were able to draw or not. I give you illustrations of cases that fall within my words, and I say that class A ia that class of bill in which tbe association drew a bill on the bank on balance day, not intending it to be presented, but expecting to be able to draw on the same people in the course of a few days, and then withdraw the draft and issue others. Does not that transaction come within my words?—Yes, but it does not follow that you have not business with the people. It is a thing that is done every day. A business firm will anticipate a draft any day. We do page 94 not get £6150, plus the amount of the invoice-we ultimately draw, because with the value of the invoice we retire the draft we had previously drawn.

His Honor: Mr Fisher answers as you say, bat he says too that it is a legitimate transaction.

Mr Solomon: That is so. He says he was entitled to do it, and we say he was not. I suppose this tribunal canoot decide who is right. Now, we will go to class C, Mr Fisher, which is more important. Go to the 17th September, 1894, and you will find this group of accounts: S Sinclair, £350; 24th September (next week), S. Sinclair, £200; 1st October (next Monday), S. Sinclair, £750; 8th October (next Monday), S. Sinclair, £500; 15th October (next Monday), S. Sinclair, £250?—: That is right.

Now, we will take these drafts. On the 17th September you drew on Sinclair for £350?—Yes.

Was that draft presented?—I do not think so.

What was the business to support it?—Sales made through Sinclair; and on the 24bh September, a week later, instead of the whole shipment going forward we shipped £225 of goods to Sawtell and Wachsmann and Kaye and Carter.

You drew on Sinclair?—Yes, as our agent for these people.

As your agent? What right had you to draw on your agent?—When we could not ship the stuff in time, and could not draw on the people it was going to, we drew on the agent, and after we had shipped the stuff we withdrew the draft.

What light had you to draw on your own agent—your own servant?—I cannot express to you the right, but what I say is that it makes no difference. Your statement, directly put, is that all these drafts were being drawn without business to support them.

We will see about that. You say that this item is class B, and I say it is class C?—I take it as one of a lot which I do not divide into classes at all.

Did you think that the draft would go forward?—I do not think we did.

You drew the draft on a dummy?—No. We had business to come behind it.

In order to reduce your liability you drew on a man whom you knew jou had no right to draw on?—I do not say that at all.

Answer my question, please. You are answering something else. It would not surprise me at all, after the replies I have been getting, if I asked whether it was not a fine day to-day to hear that it was a beautiful day yesterday. That is the class of answer I have been getting for the past week. I can only find out such a simple thing as what sort of day it is after about 10 minutes' questioning. Now, do tell me this. I want to know, apart from any explanation, whether you thought then or [unclear: thir] now that you then had any right to draw [unclear: l] Sinclair?—Only in the direction I have [unclear: in] cated.

Had you any right to expect him to [unclear: hono] your draft?—If the goods were going to [unclear: h] there would be.

But under the circumstances as [unclear: th] were?—Then I say we had a right to draw [unclear: i] him.

He might have honoured the draft under [unclear: c] cumstances different to what they were?-[unclear: i] Say we had a right to draw upou him as [unclear: u] agent when we anticipated shipping the goods.

Did you intend to ship the goods?—[unclear: I] never intended that draft to go forward.

Show me the shipment of goods that [unclear: ttfi] place on the 24th to support it?—It was [unclear: I] Sawtell and Wachsmann.

Where is it?—It was on the 24th September 1894.

To what amount P—£184 8s, and there [unclear: v] Kaye and Carter's £40 14s 5d. There it is. [unclear: i]

Ryegrass. You drew, you know, on the [unclear: 11] September for £350. Show me that? [unclear: Ti] have shown me £184 of it We will pass [unclear: til] by—There was Kaye and Co.

£40, I think you said.

Mr Cooper: £40 14s 5d.

Mr Solomon: Who are Sawtell and [unclear: Was] mann.

Witness: Merchants in Christchurch.

That is £220 you have shown me out of [unclear: £33] Where is the balance?—The balance was [unclear: she] shipped.

The fact is that you drew for £350 on [unclear: b] balancing day, and £130 of that was never [unclear: ai] at all P—That is so; until later on.

We will come to that. For this £130 you [unclear: hl] absolutely no business to support the draft! [unclear: i] It does not necessarily follow if the stuff [unclear: i] shut out.

On the following week, the 24th, you [unclear: dr] £140?—We drew £200, and that was the [unclear: pj] ceeds of retiring the previous draft.

What was that £200 for?—Against [unclear: further] shipments to be made.

What were those? You still had the [unclear: £m] draft?—No; we paid for that out of [unclear: proceed] and on the 10th October we sent the [unclear: shipms] on.

Seventeen days afterwards?—Yes.

But in the meantime you had drawn [unclear: £750?] That was against other business. On the [unclear: 1] October we drew the draft for £750.

Quite so; but in the meantime there is [unclear: £li] you got credit for at the bank that you do [unclear: no] account for at all?—It does not follow that [unclear: w] have not business against it. Suppose [unclear: the] steamer had taken the whole of those good, [unclear: a] draft would have been retired in full.

What was the £200 for the next week?[unclear: -] Goods shut out of that shipment. We [unclear: d] £350, and if all the goods had gone we would page 95 have had sufficient to pay our account on balancing day.

When you drew on the 24th, had you notice from Mr Sinclair that he had sold those goods?—I cannot tell you without the letters. The whole of Mr Sinclair's correspondence is not here.

Why did you draw on him at all?—Because of the goods to go forward.

But they could not go forward until they were sold?

Witness: Perhaps they had been. He had sold £225 worth of them for certain.

And what about the balance?—I cannot say he had not.

It seems to me that because you bad a certain amount of goods in store that you could sell you drew against them ou some imaginary person.—We did not draw until they went forward.

You do not send goods to Mr Sinclair without his having sold them?—Oh yes, we do.

Show me what Mr Sinclair had sold on the 24th December?—I have told you it was to the extent of £224 2s 5d. On the 10th of October he drew on Sawtell and Wachs̹ann for £156 17s 4d, and on the Canterbury Seed Company for £59 13s 2d. The draft for £200 was retired, and on the same day he drew on Sinclair and Co., the agents in Christchurch, £750 on 700 bags of ryegrass to be sent forward The ryegrass was not sent forward, and the draft was retired on the 8th of October. They then drew for £600, the balance being made up of shipment to Mills and Co. and Kaye and Carter. The only sale that had gone on up to that time was £150. He drew for the £750 because he was looking forward to a shipment of ryegrass, which afterwards was not sent. Mr Cook was not correct in calling that a bogus transaction.

His Honor: Were no drafts ever sent forward to Sinclair and Co.?

Mr Solomon: Not a single draft. They drew week after week, and not one was sent forward, and there is not a single line of correspondence referring to a single draft The whole business he did for the company during the whole time was £33, and here in one week they drew for £750.

Witness: Yes; but he was our agent.

Witness continued: There did not appear to be much business done with Mr Sinclair as their agent, but there was some. Up to September, 1894, they had only sold him goods to the extent of £8, but he had sold a lot as agent for the association. When he drew for £750 it was intended that the ryegrass should go forward. He could not show any business to represent £600 of the draft for £750; but he had given his explanation of that. He did not admit there was no right to draw for that £750; if the ryegrass had been sent forward that would have been all right. In this instance no goods were sent. He did not know that they had ever sent goods to Sinclair and Co. to be stored and sold for them.

Mr Solomon: Well now, what happened with the £600 draft?

Witness: I have told you we retired it. In that particular instance no business was done.

Oh, there was not? You admit that that £600 is a "C" item?—I don't say what item it is. Put it in "C."

It ought to be there?—I don't say what list it ought to be in. Put it in the "C" list.

You cannot show any business to represent it?—No.

It is a bogus draft?—It is not a bogus draft.

It is a draft drawn on a man who owed no money, who had not bought goods or sold them, and you cannot show me a tittle of business to represent it?—It is following out what is done every day in business.

I want you to answer about that draft of £600. It was drawn on a man who had not bought goods to that extent?—That is so.

It was drawn on a man that had not sold goods to that extent?—That is so.

It was not presented?—No.

Was it never intended to be presented?—No; because it never went forward.

The exchange was refunded?—That might have been so. Yes.

Now, next week—the next balancing day—you drew on Sinclair again for £250?—Yes, against a shipment to Kaye and Carter of £149 16s 3d.

There is £100 of that draft with nothing to support it at all. You cannot show any business to support the balance of the £350?—No.

You have got £107 and £100. That is £207, and £600 is £807 that you cannot show any business for at all. Now, let us take Young. On the 7th of May you drew on Young, of Auckland, for £1700?—Yes.

On the 30th April you drew on Young, of Auckland, for £1550?—Yes; we replaced that by a draft on the 7th of May of £1700.

In reply to further questions, witness said on the 12th of May the second draft was retired, and goods shipped to the value of £1815 10s 4d.

Were either of those drafts ever presented?—No.

Were they ever intended to be presented?—I don't think they were.

They were purely tor the purpose of reducing your balance at the bank over balance day?—That is the effect they had, but as a matter of fact they were to represent actual business that Mr Young had done with us.

As a matter of fact don't you know that you did not get credit for that amount? Although your bank balance had been reduced by that amount you paid interest just as if it had been drawn?—Yes.

Mr Solomon: And all items of recharges were credited to it?

page 96

Witness replied that that was so. He read the list of drafts drawn against shipments amounting to £1815 10s 4d. They had not drawn on the people to whom the goods were sold, because they could not draw until the bills of lading were attached. He bad drawn on Nelson Bros. without the bills of lading, but that was for the balance which they had left in the works, and the arrangement was, as had previously been stated, that Nelson Bros. were to pay for all sheep shut off at the works. The sheep not taken away were, however, paid for separately. The whole of the drawings were focussed on to Young, the agent, and his draft was lifted when the actual business went forward.

Mr Solomon: As an actual fact, the drawing on Young meant absolutely nothing?—Witness: It meant a great deal.

It meant that the directors of the Colonial Bank were deceived as to the actual position of the account on that day?—Nothing of the sort.

What actual business was there for the drafts?—Mr Birch will tell you whether the bank were deceived on any of these drafts.

Never mind about that. We will have Mr M'Lean here next week, and we will hear what he has to say on that.—There never was one of these drafts went forward but that the bank knew of it—in every instance.

I fancy that is true, but the Colonial Bank must fight their own battles. It looks to me at present as if you had put your heads together about this the same as you did about the £21,000 cheque. What I want to know is this: What was the business object of making these drafts on Young at all?—We required money on that day, and we drew on him and paid the draft off by the business that followed.

Why did you require the money on that day?—Probably to keep the overdraft down to its limit.

You say "probably." You must know. Give us something definite?—It is certain that that was the cause.

It is absolutely certain?—It is probably certain.

These drafts were all drawn on a Monday?—Yes——I don't know that they were all drawn on a Monday I am not sure.

It does not make much difference. You will not take my word for it.—It may suit you to say so.

I will not allow you to make remarks of that sort.

Mr Cooper: You make some unpleasant remarks about Mr Fisher.

Mr Solomon: But I support them by fact. If not, you and Mr Chapman would not i' there silent day after day. If I make one unpleasant remark about Mr Fisher that is not true, I challenge you or your friend to stop me at once.

His Honor: You were saying that the [unclear: do] were all on a Monday.

Mr Solomon: Take this particular one the 30th April, 1894. You say it suits me make these statements. Now I will fix [unclear: y] Look at the calendar. What day of the [unclear: w] was the 50th of April, when you drew the [unclear: d] for £1550?

Winners: Monday.

And the next one, the 7th of May?—[unclear: T] follows, of course; it was a Monday.

Well, you see my statement is correct? [unclear: O] far; but you said just now that all this [unclear: busis] was done on Mondays, and you know that your wo list it is not so I

I say that every draft I call attention to is a Monday—You qualify it now.

Mr Solomon: Very well. But never [unclear: mi] I am quite ashamed that I [unclear: condescended] argue with you at all. However, what was business effect of that draft?

Witness said it went to the [unclear: association] credit on that particular day, and reduced [unclear: th] bank balance. He knew the draft was [unclear: ness] be presented, but the business was to [unclear: fo] on. This was done every day in [unclear: business]. the association were entitled to the £1500 [unclear: the] drew on Young. That did him no [unclear: harm], the association got £1500 and wiped it [unclear: out] the actual shipment of the stuff. The draft £300 on Harrison, Jones, and Devlin [unclear: was] Australian draft. That was not retired til days after it was drawn. It was not [unclear: a] forward It could have been sent forward any time the association liked There [unclear: no] £900 worth of business to support that [unclear: draft].

What I want to call your attention [unclear: to] this: you will remember that I pointed [unclear: ou] peculiarity in connection with Nelson's [unclear: dra] I asked you how it was that you [unclear: presented] draft and the cheque to retire it on the [unclear: sa] date?—Yes.

You replied, "Oh, no, I do not admit [unclear: th] at all. The cheque is dated the same [unclear: day], whenever a cheque is given to retire a [unclear: draft] cheque is always dated the day of the [unclear: draft] I believe that is so.

Now this draft is dated 3rd [unclear: December], the cheque to retire it bears date 8th [unclear: January]. That is a mistake of the bank's. As a [unclear: mat] of fact, according—

But this is your own cheque?—If it is [unclear: deb] on the 8th January they could only charge interest from that date, and in the internval would have saved interest.

If it was the proper thing to date it [unclear: the] December, why was it not done?—I do [unclear: t] know. The writing is not mine, but the [unclear: sig] ture is. The writing is that of the book [unclear: keep] in the office.

At any rate you were debited with 36 [unclear: dr] interest on Harrison, Jones, and Devlin's [unclear: ch] and got a refund of charges?—Yes.

So, to take this case, this is a cheque [unclear: dra] on a man which remains for 36 days, [unclear: and] page 97 can give me no trace of business to support it?—But in the case of Harrison, Jones, and Devlin we had the right to ship anything and draw—

And why did you not use the draft?—Immediately we drew the draft the market took an unfavourable turn and we would not [unclear: ship].

But you kept it for 36 days?—Probably the market was bad all the time.

Did you intend to ship when you drew the first draft?—Oh, yes; no question about it.

Had you the goods?—Yes.

You bad enough to ship if you had wanted to?—Yes, and it was our intention.

And why did you not ship?—We required the draft on that day, and if the steamer had been in at that time the goods would have gone forward.

At 1.5 p.m. the court adjourned till 11 o'clock on Monday morning.