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Evening Star, Issue 3821, 24 May 1875, Page 2

In the London papers of February 26 is fully reported a law suit which has occupied a good deal of attention at Home, and deserves a passing. notice, because it involved principles of action which have too long been permitted to remain in doubt. The “ Canadian Oil Wells ” suit shows how easily men can be induced to lend their names to ventures, which a little thoughtful inquiry would demonstrate to be swindles. The launching of the “Canadian Oil Wells Corporation” was characterised by the once greatest judicial authorities in England Lord Chief Justice Cockburn to have been a “villainous fraud ; and for that fraud it was sought to make the directory of the Corporation, which included such wellknown names as those of Mr Eastwick, M.P. ; Mr M'Gullagh Torrens, M.P.; Sir John Hay, M.P.; and Sir Seymour Blane, responsible. Although the directors were charged with fraud, it was not alleged that they invented the swindle which was undoubtedly perpetrated : that was the work of others; but it was affirmed that they became aware that it was fraudulent, and nevertheless adhered to it. This was a very extreme representation; it was modified in the progress of the trial, and the Loifi Chief Justice expressed his regret that it had been put forward. The defence was that the directors had been the innocent dupes of clever scoundrels, who, to effect their own ends, did not hesitate to subpoena false witnesses, buy official testimony, falsify documents, and even interpolate correspondence. The Question left to the jurywhether the defendants were not aware of the fraud, or should not have found it out?—they were unable to decide, and they had to be discharged without agreeing to a verdict. Though this great case, costing LII.OOO (half of that sum repiesenting the plaintiffs costs) came to an impotent conclusion, it is important, because it has been the means of obtaining the decisively expressed opinion of so high a legal authority as the Lord Chief Justice, that although “ directors may have known the statements in the prospectus to be false, yet if they were in a condition of ignorance or uncertainty, and so put forth statements calculated to prejudice others, they were liable for the consequences of the misrepresentation.” Thus we have it affirmed for the first time that intending shareholders must inquire for themselves as to the bona fides of nny concern about to be floated, and that if they afterwards find themselves deceived they can only recover against directors when they prove (which is very unlikely) that the latter put forward statements, knowing them to be untrue. Doubtless, speculators and investors will be materially influenced in future by a knowledge of these things.