The Cunard Dilettantes

The plaintiffs, who are shipbuilders at Belfast, brought this action against Messrs. MacIver, shipowners, of Liverpool, to recover £2,500 upon a bill of exchange. The defence was that the bill was accepted on behalf of the City of Liverpool Steam Navigation Company, and a counter-claim for various sums was set up. Sir Richard Webster, Q.C., M.P., Mr Pickford, Q.C., and Mr Carver appeared for the plaintiffs; and Mr Bigham, Q.C., Mr Walton, Q.C. and Mr Maurice Hill for the defendants.

     Sir Richard Webster, in opening the plaintiffs’ case, said that having regard to the issues raised, he regretted it was necessary to lay the facts before the jury to in reference to gentlemen well known to Liverpool, and where commercial reputation stood so high. So far back as 1883 the City of Liverpool Steam Navigation Company was incorporated, and the defendants were directors, shareholders, and managers of it. The limited company was established for the purpose of owning and running certain steamships, and the present action arose out of the construction of certain ships. In 1883 the company bought the steamers Europa and Niagara, and commissioned the plaintiffs to build two others the Etolia and the Lycia. Plaintiffs were in course of building another called the Ionia in I 890, and the terms on which the terms on the vessels to be built were contained in a letter dated March 5, 1890.

     The company was to pay the actual cost of wages and material and other direct expenses with a due proportion of trade expenses and a commission of 5 per cent of the whole. Thus the plaintiffs’ profit was 5 per cent, on the cost of the ships. If during the construction of the vessels the defendants paid any money they were to be allowed 5 per cent interest from the time of payment until the period when the money would become due, and if defenders drew bills on the plaintiffs, such bills would be discounted by the plaintiffs at the Bank of England  rate plus l per cent per annum. The bills were to be renewed on the same terms over a maximum period of three years. The ships were constructed, and in 1891 the City of Liverpool Steam Navigation Company raised 1,500 debentures of £1,000 each under a deed dated Nov. 23, and entered into between the company and the Law Guarantee Company. The security for the debentures consisted of five vessels, but it was further arranged that that security should always stand at double the amount of the debentures. While the Ionia was being built the defendants were unwilling to remain any longer responsible for the company, and they informed the plaintiffs they were unsecured creditors of the company to the extent of £20,000. Accordingly the plaintiffs became second mortgagees for the unpaid purchase money to the extent of £,90,000, and, at the request of defendants, also became large shareholders in the company. The plaintiffs, in pursuance of their contract, arranged for the financing of the bills which became due in respect of the purchase money. In June 1892, Mr. Pirrie, one of the principals in the plaintiffs firm, was in Liverpool, and the defendants asked for a personnel loan of £5,000 which he undertook to give against the acceptance of the defendants at three months. The defendants stated that in all probability they would not want the money for more than a month. This transaction kept separate in the plaintiffs’ books, and the defendants also opened a fresh account in their books under the heading “H. and W. (Limited) No. 2.” It was never in any way treated as money belonging to the steamship company, but only as lent to the defendants personally. The defendants paid £1,000, on account of the bill, but this sum was carried forward, and when the bill matured it was renewed for the full amount. When the second bill became due the £1,000 was deducted, and a new bill for £4,000, given. In respect to that bill the defendants wrote to the plaintiffs on paper headed, “City of Liverpool Navigation Company,” and when their attention was called to the fact replied that the heading was an inadvertence, and that the draft tor £4,000.

The £5,000 bill and its renewal, were not credited to the company, nor was the latter debited with the interest or the £1,000 paid on account in June, 1892. The bill for £3,650, to pay interest on debentures met by the defendant so was not debited to the company. These facts, in his opinion, showed that the defendants treated them as personal debts. In the books there were accounts with which the company had nothing to do. Cross-examined: He did not know that the company preferred to have a regular line of steamers between Liverpool and the East, and that Messrs, MacIver, to keep the company’s business together, chartered extra vessels. He did not know that the accounts he had spoken of referred to such chartered vessels.

Mr Bailey, commercial manager to Messrs. Harland and Wolff said that on Nov. 22, £3,816, was due to Messrs Harland and Wolff on account of this company, independent of debentures. All the bills accepted in the name of the company were signed by Messrs MacIver on their own account.

     Mr. Bigham, for the defendants, said that the questions in this case were surrounded by matters which might be to some extent matters of prejudice, but they were matters which it would be absolutely necessary he should deal with. The first question the jury would have to decide was what were the terms upon which the £5.000 was lent in June, 1892. Was it lent on the terms that Messrs. Harland and Wolff would have to look to the company for repayment, or was it lent upon the terms that they were to contribute and Messrs, MacIver were to contribute to the refunding of the amount, or was it, as the plaintiffs contended, a mere loan to D. and C. MacIver, for which they alone were wholly responsible? Some question might arise with reference to the advance of £3.600, which was made for the purpose of interest upon debentures, but the circumstances in this case were perhaps different. There was only one other question, and this was whether the defendants were entitled to set up in this action their claim for non-consumed stores which were on board the vessels. The jury knew that in 1863 Messrs MacIver formed this company with a capital of £500,000, but only a small portion was allotted - something like £120,000. Of this Messrs MacIver had by far the largest share. They had been connected with the American trade before the formation of the Cunard Company, and they were desirous of forming a connection with the East - with India - and this company was formed for this purpose. They had given their services and their money freely for the welfare of this company from year to year it struggled on during those dreadful times shipping went through during the last l0 years,

     They began by purchasing the Europa and Niagara, which now belonged to Harland and Wolff: and they bought from Harland and Wolff two other ships - the Etolia and Lycia, and for which they paid about £85,000. At this time Messrs. Harland and Wolff took a considerable stake in the company by subscribing for £15,000 worth of shares, and afterwards two other steamers were ordered, but only one was built by Messrs. Harland and Wolff, the Ionia, for £90,000. By the terms of the agreement on this occasion Messrs. Harland and Wolff were bound to renew the bills for something like three or four year. In November, 1891, an arrangement was made by Messrs. MacIver with a trust company by which there was issued £150,000 debentures, and by means of this issue the company was enabled to pay the balance of money due to Messrs. Harland and Wolff for the Lycia an Etolia, about £20,000, and they were able to pay Messrs. Armstrong, Mitchell and Co, for the Athenia. The debenture interest was 6 per cent. When Messrs. Harland and Wolff took their interest of £15,100 in the company they stipulated that they should have from Messrs. MacIver a guarantee that for five years they should receive a dividend of 6 per cent, and they did receive it, and on two occasions they received 7 per cent. In January, 1892, the Ionia was finished and handed over, and Messrs Harland and Wolff insisted on further security. They got a second mortgage on all the ships for the £90,000, and this practically brought the company to a standstill. This was the state of things in the Spring of 1892. It was in June of 1892 that this £5,000 was lent. There had been £l70,000 paid for these three steamers and the whole of fleet had been valued at £304,000. Messrs. Harland and Wolff had very large interest in these steamers, and one could not help thinking that under these circumstances it was not unlikely that they would be disposed to reach out a helping hand to the extent of this comparatively paltry sum of £5,000. The steamship company had no separate banking account, and was managed by Messrs. MacIver very much as if it was their own business. They were managers and were entitled to receive commission, but they never received a penny. It was a labour of love to keep this company alive - the company in which they had embarked a large part of their fortune. Consequently they asked Mr. Pirrie to make an advance to help them to go on with the company and £5,000 was the sum agreed to be advanced. It was at first suggested that the bill should be drawn upon the company, But Mr. Pirrie said steamship companies were not liked, and that Messrs MacIver’s name would be more negotiable. It was therefore decided that the bill should be drawn in the name of Messrs. D. and C. MacIver. If the bill had been in the hands of a third party there was not the least doubt Messrs. MacIver would be bound to pay the money, but the circumstances of the arrangement must be taken into account, and he submitted that, Messrs. Harland and Wolff advanced the money for the use of the company through Messrs. MacIver. Therefore Messrs, MacIver were not personally responsible for this amount, but were the parties who got the money for the use of the company. With regard to the loan of £3,660 it was rather different, and it would not say anything about it until he had heard the evidence of Mr. MacIver. With regard to the fact that Messrs. MacIver had not been continued in the management of the company be would say very little. Messrs. Harland and Wolff had only exercised their rights, but sometimes very great wrongs might be done in the exercise of rights. A man may have a light, but it may be a very wrong thing to use it. But it might be that he was mistaken, and he was not disposed to blame Messrs. Harland and Wolff more than he should do. But the fact was that they got the whole of this property tor £214,000 and it was scarcely creditable that the very day they got possession of the steamers they took from Messrs. MacIver the management of the vessels and gave it to Messrs. Elder, Dempster and Co. they took from Messrs. MacIver the sources of their occupation and living. Perhaps, however, this might be prejudice. He thought Messrs. Harland and Wolff would have been better advised to have left the management as it was, and as it had been for the last 10 years.

     His clients also claimed for the stores which were on the vessels when they were taken over by Messrs Harland and Wolff. Messrs MacIver put on board each vessel a certain quantity of stores, which were always more than required for the voyage. As these were used the steamer’s account was debited with the cost of the stores consumed, but there stores which remained were still the property of Messrs. MacIver. It was for these they claimed the amount set forth, and to which they considered they were justly entitled.

     Mr Henry MacIver said that when the company was formed they contributed four-fifths of the capital and all the working expenses. They signed all letters referring to the company’s business in the name of the firm. They had never drawn any management commission. In describing what took place in June, 1892, when he and his brother met Mr. Pirrie, the witness said it was agreed the money should be advanced. Mr. Pirrie suggested that in future the bills should not be signed for the company but by D. and C. MacIver, because it would assist in discounting, those of steamship companies being in bad odour. He replied that they would fall in with Mr. Pirrie views, and accepted the bill as that of the firm. He, however, pointed out that the money was purely for the business of the company. Two sums of £1,000, each, which went to reduce the bill, came out of the company’s coffers. Mr. Bigham here announced that after seeing the correspondence relating to the bills he would withdraw the defence that the £3,600 was not a private bill. Mr. Charles MacIver corroborated the evidence given by Mr, Henry MacIver.

     His Lordship having addressed the Jury, the latter, without leaving the box, returned a verdict for the plaintiffs.

     Mr.Pickford: With regard to the counter-claim, Mr. Bigham suggests that what seems to reasonable course – that Mr. Spenser on the one side and Mr. Nicholson on the other should look into the this matter of the stores, and if they agree as to the facts we shall bring the matter before your lordship and if they do not agree that they should communicate with the solicitor and refer it to some gentleman, and again bring it before your lordship.

His Lordship: That is very-reasonable. I will give judgement for the plaintiffs in the claim.