February 12, 1898.]
Mr. Drummond-Has any member of your firm a general authority from Mr. Polishwalla to buy or sell shares ?""
Mr. Francis objected to the question. The person possessing such authority was the pro- per person to say so.
Mr. Drummond-Witness has a personal knowledge of that fact. However, I will put it in a different way. Did you have authority to buy or sell for Polishwulla?
Witness-I, personally, no. Mr Drummond-Had any member of your 'firm authority?
Witness-Yes; Mr. Kelly and in his absence Mr. Benjamin.
Cross-examined by Mr. Francis-Witness did not know when the authority was given. When he joined the firm the authority had been given. When he joined the firm new books were opened. He had not seen the old books.
His Lordship at this point asked Mr. Francis not to go quite so fast.
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Mr. Francis-With all respect, my Lord, I think it would be better if your Lordship would listen to the evidence instead of taking it down in full.
His Lordship-Then it would be no good; we must have a record.
Mr. Francis-The jury are listening to the evidence. Cross-examination under such cir cumstances is extremely difficult, my Lord. Half the value of cross-examination will be lost if there is to be an interval between each question while the Judge is taking a note.
His Lordship-Mr. Francis, I will get it down as soon as I can.
Mr. Francis (to witness) When did you leave Russell and Co. ?
Witness-I do not remember. I think it was in 1890.
Was it not in 1889 and shortly after you had an action against Mr. Rustomjee in connection with Ropes 7-Yes.
Was it not in consequence mainly of that action that you left the firm of Russell and Co.? -No, it was not.
You sued Mr. Rustomjee for not taking delivery of a certain number of Rope shares ?- I did.
The defence was a conspiracy between you and Mr. Shewan and Mr. Grimble to create a fictitious price in the market for those Rope shares ?-I forget the actual circumstances. It was something like that..
You honestly mean to tell the jury that you do not remember what the defence was? It was something like that,
And you gave evidence and denied the
existence of such a combination ?-Yes.
Do you remember what the verdict of the jury was in that case ?—They found in my favour,
I think.
I will read it. "We hold that at some time after this case there was a combination, to raise to a fictitious value the price of Rope shares of
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which the plaintiff was a partner." Is not
that so P-If you say so.
Here is the report of it.
Fon can read it yourself ?-Well, it must be so.
Do you remember being flatly contradicted in the witness box in a certain statement you had sworn to by one of your employers, Mr. Tomes ?-No, I do not recollect it.
Do you recollect swearing that you and Mr. .Shewan had not applied to Mr. Whitehead for the joint advance or loan of some shares? I did. And Mr. Whitehead swore to the direct contrary ?—Yes.
CHINA OVERLAND TRADE REPORT.
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Do you remember the judge intimating in his summing up to the jury that they would probably prefer to accept Mr. Whitehead's version rather than yours ?--I do not recollect.
I will remind you then.. (Reading from the report of the Judge's summing up). "Mr. Potts and Mr, Shewan said in effect that it was not a jointdemand. Mr. Whitehead understood it to be a joint demand, and he thought the jury would, taking the circumstances into con- sideration, be inclined to accept Mr White- head's version."-If it is there, it must be right. Was it in consequence mainly of that case and of what had occurred that you left Russell and Co. ?—No, it was not
Do you remember when you left Russell and Co.? I cannot say exactly,
17th. Did Kelly tell you that morning he had no buyers ?-No.
Now you went to the Chartered Bank and to Mr. Gorham and received an order to sell 150 Indo-Chinas. Then you went back to the office. Did Kelly have any opportunity of consulting Polish walla between the time you were telling him you had 150 shares for sale and the time he said, "Take them ?"-No.
Then necessarily he must have had his in- structions from Polishwalla to buy these shares before you spoke to him Yes.
We have been furnished with a copy of your ledger entries in Mr. Polishwalla's account. Let us see Mr. Polishwalla's account. Let us see Mr. Polishwalla's account in your ledger, please--the entry of the 6th November with reference to the purchase and sale of the shares. Will you tell me what profit Mr. Polishwalla made by buying and selling these shares P-No profit at all.
And the brokerage your firm made out of the transaction ?-Was $150.
Is Mr. Polishwalla here for the benefit of his health exclusively P-L'do not know.
Or for the pleasure of paying brokerage to your firm with no profit to himself. It may suit him occasionally.
Will you kindly refer to your cash sales books-the sale of Indo Chinas on November'
Will you tell me the balance of Mr. Polish- walla's account for the month of November. What was the state of his account at the end of November?-It was closed in December.
It was not closed in November?-No; we render accounts quarterly. The account was
our
$557,258.
I do not ask for the total, but for the balance. -There are charges against this; that is the balance.
In his favour or against him ?-Against him. On the face of the accounts he owed $557,248 -It was against security.
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?
Hare you any list of the securities you hold against that rather extensive balance ?—I have not got one with me.
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You heard Mr. Gorham assert positively in his evidence that it was Mr. Kelly and not you to whom he gave his instructions that morning for the sale of the 100 Indo-Chinas?—Yes.
What means have you for bringing to your recollection the fact that you saw him that morning ?-Because he had been worrying me about the shares for several weeks and he got angry with me that morning and said,
Go and sell the shares."
In answer to further questions witness said he did not keep a memorandum book in which he kept instructions to buy or sell. He had a did not know himself that Polishwalls had morning round of about 25 or 30 people. He
entries in the day book were made before tiffia; bought the shares until Kelly told him. All the there was practically little business in the
afternoon.
The Court then adjourned for luncheon. After the adjournment the cross-examination of the witness was continued. Witness said
there was no difference between himself and
plaintiff for two or three months prior to the 6th November with the exception of three days. He could not remember the exact date or the reason for the difference. There was nothing in the books to indicate which particular trans- action was put through by him and which by Mr. Kelly,
Mr. Francis-How are you able to tell from looking at the books which transaction Kelly did ?-I know it in my own mind.
You profess to state that you personally dis- tinctly recollect which transactions Kelly did and which you did ?—Yes.
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Have you in preparation for this trial looked over those books and endeavoured to recollect which transactious you did and which Kelly did P-Yes, I have,
You know that Gorham stated he gave in. structions to Kelly about the shares and not to you?—Yes.
And be made a memorandum of the trans- action. Don't you think in the face of the memorandum that he is right and that you are mistaken-that it was Kelly who received the instructions ?--No.
Witness further said that the transaction with Perry took place after tiffia.
Mr. Francis Then how could the entries have been made before tiffin ?—It was entered after tiffin.
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You told me expressly and I asked you two. or three times-that the entries on that date, were made before tiffiu.-All the entries with the exception of the 100 shares.
You made no exception at all.-I think you will find I said that in my evidence.
His Lordship referred to his notes and said the witness stated that the entries were made before tiffin.
Witness-I meant all with the exception of that one.
Mr. Francis-It is all very well to make that statement now. Why did you break up the 100 into two sales of 75 and 257-Because Kelly told me 25 were for a friend of Polishwalla.
Mr. Francis-And the friend of Polishwalla was converted in the evening into. Polishwalla himself.
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Witness, continuing, said it was extremely improbable that Perry went to him before twelve o'clock and immediately after receiving the tele- gram, as he would probably go to other brokers.. That transaction was put through without wit- ness having consulted Kelly or Polishwalla. Kelly bought and sold constantly for Polish- walla.
Mr. Francis Has Polishwalla any direct or indirect interest in your concern.-)
-No. Not so far as you know ?—I am sure he has
Has Polishwalla any joint interest with Kelly ?-No.
not.
You are quite sure about it ?—Yes.
Do you know the relationship that existed be- tween Polishwalla and Kelly before you joined the firm?-I cannot say.
These shares were sold at $41 and you returned to the broker 25 cents per share ?-Yes..
Who paid that brokerage?-We did out of our own pockets.
Then it was a sale at $41 to Polishwalla? Why did you enter it in your books at $403 P-It came to the same thing. That is our custom.
Is that your invariable rule when there is a return of brokerage, not to show the rate on the face of the transaction P-I cannot say it is our invariable rule.
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You might find an exception
might.
Yes, you
Did Polishwalla, so far as you know, have any intimation from any of you that these shares had been bought and sold in his name ?-- I had nothing to do with that transaction. All that was left to Mr. Kelly ?—Yes. that the account for Decomber showed a balance In reply to further questions witness said of $9,893.27 due to Polishwalla. The balance of bad not got the list of securities held at the settlement was $45,138 02 against him. Witness
Hongkong and Shanghai Bank. In November due by Polishwalla. The securities were in the end of December against the enormous amount
there were 18 purchases by Polishwalla and 13 sales. He did not ascertain who was the friend of Polishwalla for whom the 25 shares were. bought. Polishwalla was charged 50 cents brokerage on the 125 Indo-Chinas, and 25 cents was returned to him. That did not appear in the books, only the net rate, $404, being written in. In regard to the sale of West Point shares. at 18 witness said there were many shares in the market.
Mr. Francis-Do you think you acted fairly to your client, knowing that shares could be got at 18, to sell them at 18.-I sold them to` a broker.
What had that got to do with it! That did not make a difference of half a dollar on each share. Why did you not get the shares for Mr. Perry for $18-Because he was broker and I tried to get as much as I could out of him.
You tried to squeeze as much as you could out of Perry. Was it not your duty to Perry to get those shares as cheaply as you,bould ?- No, certainly not.
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You did not look upon him in the light client-No.
Is it not strictly forbidden by the rules of the Stock Exchange to take any other or differ- ent brokerage from that laid down in the Stock Exchange scale ?-No.
Does it not say [reading from the rules] that "if it should be proved to the satisfaction of the Standing Committee that any member has wilfully evaded or attempted to evade the scale. of charges for the time being in force," there is power to expel him? In what light do you read that regulation? What possessed you to fall
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