CO129-535-5 N.I. Brewer- transcript of trial and evidence 1-1-1929 - 31-12-1931 — Page 228

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The object of the company originally was the formation of a trustee bank.

I had come direct from the study of Trustee banks in America, and had put up the idea of its formation and it was so formed.

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An agreement was entered into there has been no suggestion that the agreement was not a proper one I will not dwell on that but that agreement declared that certain contracts were to be purchased for cash. The agreement stated "for

cash" because the directors of new companies, to my knowledge, are frequently lavish with shares. No one is wantonly lavish with cash. Therefore, I refused to enter into a contract whereby I would sell my rights for shares. I

insisted on cash in order that a proper valuation should be arrived at by the directors.

Then it came to the question of how should that agreement be entered in the books. I was responsible for the book-keeping. I did not personally enter up the books, but I gave instructions

as to how the book-keeping was to be done.

I had new a discretion.

That

It is

It is possible to argue that no cash in fact passed. this agreement was satisfied by the giving of shares.

possible to say that cash did pass and that cash was used to purchase shares.

I had a discretion. It was not a question of leaving out an entry or fraudulently putting in an entry - it was a

question of discretion of how an entry was to be made in the book.

I decided this by asking the question "What is the intention of the parties" ? and whenever a question of book-keeping has arisen I have decided that way by asking that test question "what is the intention of the parties". In these particular transactions, as soon as I had asked myself that question, the way clarified. The agreement stated "Cash must be paid". If cash were not in fact paid then the

agreement had never been satisfied because, had the item been entered in the book as being satisfied by shares, you

must necessarily assume at law the legal fiction of a letter of agreement, permitting satisfaction by shares.

By asking myself what is the intention of the parties, and ordering these transactions to be entered as cash, I at once

obviated the necessity for any legal fiction. The agreement could be left as it stood, it required cash to satisfy it - the books stated that cash had been received in satisfaction, and all the documents and receipts here out the fact that

cas had been given and cash was utilized.

But as I would stress, it was purely a discretion on me to decide which of two entirely proper methods should be adopted.

Then the next point was the question of capital.

Before the company was formed I was asked by the intending shareholders what capital would be necessary. I was quite

clear in my mind on that point. In America there are literally thousands of trustee and private banks.

Judge:- We cannot go into that - Stick to the points on which you have been examined. You have been given a great

deal of latitude, you must not make speeches.

I have been asked whether the capital of our company was

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