98
THE HONGKONG WEEKLY PRESS AND
charge double brokerage in respect of the so- counts mentioned in the case. On one ocoa- sion in respect of a transaction in 150 Banks he did authorize the defendants to charge double brokerage. The sale had been effected at a very good rate and Mr. Kelly asked if he could charge double brokerage as it was a very large business and he had had to pay for telegrams and stamps, &c. Witness allowed the double brokerage. Respecting an interview with Mr. Kelly witness said he told him the firm had not treated him honestly. Kelly said, If we have done anything we will pay you back. Tell me what it is." Witness refused to give him any particulars. Kelly said, "What are you going to do, Gorham ? What is the punishment, Gorham ?" He appeared to be very nervous and, while fingering his watch chain, Baid, "If your boy takes your watch and he gives it back to you you cannot kill him; you must forgive him and take back your watch." Witness said, "It is all very fine, but if your boy takes your watch you must open his box to see what else he has taken." Witness refused to give any particulars of any of the trans. sations and therefore he was not shown the books. Subsequently he went to Mr. Master's office and was informed that he could not see the books. He was asked to mention any particular transaction and when he refused to do this Mr. Master said, "You are here fishing for grounds on which to base an action." Mr. Wilkinson, who was present at the interview, said that that was not inspecting the books. Mr. Master replied, "Well, here are the books. Go and do what you like." Witness went away and commenced legal proceedings.
Cross-examined by Mr. Drummond.- Witness had been in the colony 24 years and had been in the habit of dealing in shares for the last 10, 12, or 15 years. He could not recall any occasion prior to November, 1896, on which he spoke to Mr. Potts about the sale of Indo-Chinas. He had been anxious to sell them as the market was falling. He could not recollect that Mr. Rotts advised him not to sell. At one time before November, 1896, and probably in September he was dissatisfied with Mr. Potts, but they "made it up" again. Witness did not, prior to the 6th November, urge Mr. Potts to sell the Indo- Chinas. He had reason at that time to put his account in the Chartered Bank on & sounder footing, but there was DO particular reason why he wished to ease his account by selling Indo-Chinas. He first communicated with Mr. Kelly about the shares. Up to November, 1896, he had no suspicion "of that sort of any member of the firm. Once he was dissatisfied with the result of some business put throngh by Mr. Potts, but he had no suspicion that Mr. Potts was making any false transactions. Witness thought Mr. Potts was not sufficiently studying his interests. That was two or three months before November and concerned, he thought, some Rope shares. Mr. Potts sold some shares for him and a day or two afterwards the market went up. Witness told Benjamin and Kelly that he was not satisfied with Potts and that Kelly must see him in stead of Potts. Witness could not give the exact date on which he commenced to do business through Kelly, He authorized Kelly to sell 100 Indo-Chinas at the best rate he could get for cash. He did not tell Kelly after the shares were sold that they had fetched $41, nor did he give any intimation of the suspicion in his mind or give Kelly any chance of clearing the matter up.
8th February.
Mr. Drummond continued his cross-examin. ation of the plaintiff. Witness said that he did tell his solicitors that he had consulted Mr. Johnson, and he knew that within the last few days Mr. Wilkinson had applied for the produc tion of certain entries in Messrs. Johnson, Stokes, and Master's diary relating to the visits to Mr. Johnson. Witness gave Mr. Johnson a com- pradore's order for $15. He did not wish any other members of the firm to know that he had been visiting Mr. Johnson, as he wished to get merely the private opinion of. that gentleman. The charge for that consultation was $5, and the remaining $10 referred to previous atten- dances on other business. Witness did not think that the memorandum for $15 produced was the
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one which Mr. Johnson sent to him. The in- structions to sell the West Point shares, which were bought by Mr. Cobbold on the 18th No vember, were given in order to catch the defend ants. Mr. Potts told him that Mr. Cobbold was the purchaser. Mr. Potts put through that transaction, but witness did not remember who put through the Bank shares on the 17th No- vember. Mr. Potts transacted the business in West Points on the 20th November. Witness did not know why the entry in his diary of the 20th November was omitted from his affidavit. He swore that the entry was in his diary when he made the affidavit on the 17th May, 1897. The entry relates to the first sale of West Points about which he had made a charge. There was an entry of the sale of 50 West Points at $183 on the 24th November. There was no entry of the name of the pur. cbaser, as witness was himself the purchaser through Mr. Hurley. He received an account from Mr. Perry and Mr. Hurley about the 26th November showing that the shares had been sold at $184. When witness had the three accounts in his possession he thought he had sufficient evidence to show that the defendants had treated him dishonestly, but he thought more evidence would do no harm. All the sales were put through by Mr. Potts, Witness thought it was extremely advisable not to convey his suspicions to the defendants, as he did not care to bring up the matter until the end of the year, when the books were closed. He still went on employing the defendants "in. a way." He employed them on a number of selling transac. tions, but he bought nothing from them. He bought 140 Watsons in December, his object being to sell them again for the purposes of a trap for the defendants, but he did not do anything with the shares. He sometimes employed Mr. Potts and sometimes Mr. Kelly. As far as his recollection went Watsons were the only shares he bought, but there were selling transactions up to the 17th March, 1897. Two days before that he sold 100 Nationals through Mr. Potts. By employing defendants" in a way" he meant that he limited his transactions. He only bought Watsons, and be sold shares to reduce his overdraft at the Bank. The manner in which he conducted those transactions was in no way different from the ordinary course. He did not recollect employing any other brokers. To the best of his recollection he transacted the whole of his business through the defendants, except the busi- ness of the two lots of shares put through by Mr. Perry. He sold the 100 Nationals for the purpose of obtaining more evidence, but that transaction was a straightforward one and Mr. Potts told him Mr. Perry had bought the shares, He sold the 150 Bank shares at 181 on the 27th November for delivery on the 31st December. He swore he had no recollection of a written contract, but if there was one he thought he could produce it. There was also another time transaction in Banks, the rate being 1864 for February settlement, 1897. He had no re- collection of a contract, but if there was one he would produce it. Mr. Kelly transacted the business. Witness could not say whether he received only a memorandum, which con- tained no numbers, from Mr. Kelly relating to the business. Witness knew he trusted himself entirely to the integrity and straight forwardness of Mr. Kelly in those transactions, but Mr. Kelley was bound to be straightforward; be could not help himself. The position witness took up was that there were grave errors or a fraud in the defendants' accounts to him. In his mind most assuredly it was fraud that had been committed by them, but he had no recollec. tion of having used that term to them. He did not recollect that he told anyone that he did not charge defendants with fraud. He did not recollect telling Mr. Perry that. He did not recollect the second para- graph of the petition respecting the at- tempts to get further evidence. He left the matter in the hands of his solicitors. He was certainly consulted about the case, but he did not advise his solicitors how to draw up legal documents. He certainly was in hopes of obtaining additional evidence. He remembered seeing Mr. Benjamin at the tram station some- where about April, 1897, and having a conversa- tion with him. "Mr. Benjamin requested him not to take the matter into court and said he would 'pay the costs. Witness told him he would like
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[Feb T
8.
to see what the costs were, so that he could tell how he stood. To the best of witness's. recollection Mr. Benjamin spoke about the Indo-Chinas and the West Points and said that Potts told him he had arranged for double brokerage. Witness said that that was not so. Mr. Benjamin said, "Well, Potts says so. Anyhow, it's only a matter of 325, and you would not go to court for $25." Witness, replied, "I should go to court not for the $25 but for the account." Mr. Potts went and saw witness on the following day. Witness did not then say he wanted to make a business proposal with Mr. Potts, but that he wanted his account. Mr. Potts did not say he did not understand what was meant. Witness did not say "Go and ask Mr. Benjamin about it," but witness did remember Mr. Potts say- ing, "I am prepared to swear you said you would give double brokerage, and you have no documentary evidence. It will be my word against yours and my word will be taken as well as yours." Witness did not tell him to think about it, nor did he say "I am a business man and I am not out here for the benefit of my health." Witness was acting on the advice of his solici- tor and was careful in what he said.
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After the adjournment Mr. Francia intimated that the plaintiff had been unable to look through all his papers and had not found the contracts spoken of in his evidence, but he would try to find them by this morning.
In re-examination by Mr. Francis witness said he did not remember whether he or Mr. Johnson suggested he should continue to do business with the defendants with a view to entrapping them.
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Isaac Samuel Perry said he had been in business in Hongkong 88 a share and general broker since 1891 or 1892. On the 6th November he received a wire from Shanghai instructing him to buy 100. Indo- Chinas at $41 and other shares. He purchased the Indo-Chinas at $41 from Messrs. Benjamin, Kelly, and Potts. He took delivery of the shares from them on the 9th and paid for them by cheque on the National Bank. On the 7th be bought 50 Indo-Chinas at $41. He reported the purchases to Shanghai on the 10th. The difference between $41 and $404. was the brokerage allowed him by Benjamin, Kelly, and Potts. He took the scrip to the National Bank. On the 7th he met the plaintiff, who asked him about the state of the share market. He replied that as far as he knew there was very little doing. Plaintiff then asked him the quotation for Indo-Chinas and witness replied '$41,” adding that he had done business for the North at that rate. Plaintiff asked him if he was quite sure it was $41 or better, and witness again said that he had done business at that figure. In reply to another question he said he got the shares from Benjamin, Kelly, and Potts. On the 9th plaintiff saw him and gave him instructions to sell forward some Indo- China shares. On the 19th November he pur- chased 50 West Points from the defendants at $18.75 on behalf of the plaintiff, to whom hẹ. took the shares. Witness then mentioned the transaction with Mr. Hurley, for whom he bought 50 West Points at $18.75. He did not know that Mr. Hurley was buying for the plaintiff. Mr. Hurley said he had a few dollars to speculate with and he gave no reasons what. ever for buying the shares.
Cross-examined by Mr. Drummond-It. was not right that witness bought 150 Indo-Chinas at $41 for the plaintiff on the 6th November; he only bought 100. The plaintiff must have misunderstood witness if he gave the number as 150. Witness was told by plaintiff that he (plaintiff) had consulted Mr. Johnson (.about | the share transactions. Later plaintiff said, “I' am not bringing an action for fraud. I am bringing an action for the discovery of accounts. Unless I can show grave error or fraud I can- not get the accounts. That conversation took" place about July or August last year, when witness went to the plaintiff on behalf of Ben- jamin, Kelly, and Potts with a view to a settle-
ment of the matter.
Re-examined-Witness went to the plaintiff with a view to a postponement of the case and not, as he had erroneously stated, with a view to a settlement. He went to the plaintiff at the request of Benjamin and Kelly. It was possible that he may have mentioned to Mr. Gorham on the afternoon of the 7th that he had bought
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