Next witness was Mr, Thomas McKenna, an inspector' of the Shanghai Municipal Police attached to the Provisional Court, in charge of the foreign civil office at the present time there, Shortly before adjournment of the morning session exhibits wore offered in evidence by counsel for the plaintiff from the records of the Provisional Court, granting a petition appointing plaintiffs receivers.
Mr, L. Sturrock, cA. of the firm of Seth, Mancell & McClure, chart fered accountants, gave evidence. In reply to Mr,' Schuhl, he said that his firm were appointed receivers, and they took over the assets of the C. 0. C, The Provisional Court had sealed the doors of the C. 0. C. offices, and the seals wore broken by witness's firm. The books were very carefully examined. The general ledger went back to October 21, 1916. At that time the C. 0. C. was insolvent to the extent of $250,000. The capital of $100,000 had been lost. Prior to the alleged sale the Company was insolvent. There was an entry in the journal of a deposit of $200, 00 in the Chinese Savings Bank—Dat there was no money in the Bank, While examining the books hho came across an item referring to the shares in question, but he could not find the share certificates, According to the entries the shares had been donated to the company in December, 1924. The Company had lost at that time 60 much money that the directors donated the shares to cover the loss.
There never had been any money in the Chinese Savings Bank on account of the Company, said Mr. Sturrock, as far as the books showed. He had no idea who took the share certificates. The book value of the shares was $114,656.75. A letter was on file from Mr. Steen, the same time there were six other resignations from the Board. He did not know whether Mr, Sanchez was a director. There were no records to that effect.
Three Dollars in the Bank Asked whether there was an} cash in the Bank Mr, Sturrock there was—$3! Other than that the books showed assets:—Investments 172.917; mortgages $258,602; bond Toans $158,507; due from -agents $87,306; furniture, ete, $17,098; stationery $4,000; cash in hand 3651; deposits $247. Between November 1926 and the time the wit C.] ness's firm took over the assets were realized, but witness had no idea of what'had happened to the proceeds of the sale of the assets.
Replying to the Judge witness said that he presumed the Directors of the firm had drawn the money from the Bank.
Mr. Schul, addressing the Judge, said the directors wanted to get rid of the company because of the loas of 25 lakhs which had been sustain-
The Judge ruled that that had nothing to do with case. They were suing because someone had put their hands into others' pockets and. extracted that which was not theirs.
Mr, Franklin agreed, and said that Mr. Schuhl's conduct of the case had as much bearing upon it as the foreign policy of Peru ha:
Mr, Bryan said their case was, that if there was a sale of the assets of the company, then it was sale by fraud, a8 the company was insolvent.
The Mathematical Reserve Mr. Sturrock was again ques tioned by Mr, Schuhl. He said that the mathematical reserves of tha company were put at $710,153, and. that the investments should equal that amount—but they did not, Aw to what had become of the difference between the investments and the mathematical reserve he could say only that the money had been lost: that instead of investing, the money the company had paid it out as overhead charges. The books showed a loss of $184,000 but the actual loss was much more, amount= ing to $300,000 up to October St, 1924, Mr. C. H. Mack, former chief Inspector of the agencies of the 0. Cy was the next witness. He said that he had had some reim tions with Mr, Steen regarding the sale of the C. 0. C. He asked Me. Steen what formalities were, required for the negotiation of the deal, and My. Steen had written them on a sheet of paper which was produced in court, Witness was acting a8 a broker, and he was to receive $10,000, There were no French directors present during the negotiations—no one but Mr, Steen. in fact. When the ©. 0, C, chang hands the books were examined, it was found that the ledger and several vouchers wore missing and could not be found. Witness could not say what had become of the missing documents, Alleged "Double-Crossing"
Mr. Mack continued that whort hho became general manager of the Great Northern Savings Associa tion, as far as he knew he was selling the C. 0. C. to that Association, When he took over there was no cash in the C. 0. C4, and as he was no mathematician ho could not say whether the matho= magical reserve was intact. Tt would take months to go through the figures, The Great Northern people, ho added, tried to "double-cross" him on the deal, by attempting to enter into direct' negotiations with Me. Steen after he had done all the preliminary work, The case is proceeding,
Text read from the printed page and cleaned; old type leaves the occasional error.