HomeMy WebLinkAboutThe Signal, 1915-10-14, Page 6e T*DttawY, ocenatw 14 INA
Tilt $1GNAL GODERICH, ONTARIO
ONTARIO RAILWAY BOARD'S
REPORT ON O.W.S. RAILWAY
A Deliverance That 1s of Peculiar interest in This
District Moyes, the Wrecker of the Railway
Project, Denounced in Vigorous Terms.
The story of the Gamete West Shore
}tailw•y Company, as tall In the
aauual report, lost issued, of the On.
taro Railway and duolcipel Boatel,
is one in which the people of this dis-
trict
ietrict bare •deep, intimate and abiding
interest, and in order that reader* of
The Signal may know the official view
of the peculiar traneactinim In which
Julie W. Moyes was the central and
eontrofing figure the report of the
Board in this wetter is herewith given
in full.
The report is dated the 11th day of
May, 1914. Tbe proceedings were
before D. M. McIntyre, K. C.. chair•
tt�tr� of the Board ; A. H. Ingram,
eke -chat' man, and u. N. Kittaon,
ocenn.tasioner. The applicants in the
matter were the corporations of the
tnwuebip of Ashfield, the town of
lloderich, the town of Kincardine and
the township of Huron ; the Ontario
West ?thole Railway Company being
seated es respondent.
Tile report is as follows:
This ie an application by the above
four municipal gen.rations under
.action 10 of the Board's Act, as
amended in 1912, to investigate all the
alairs and ttsneectionsof the respond-
ent from Ste inception, and ascertain
what has become of certain moneys
guaranteed by the applicants, and
otberwise provided for the construc-
tion and equipment of the respondent's
railway, and generally to make a full
and complete examination of the
.affairs of the tespoudrnt, and the
reason for the failure on the respond-
ent's pert tocarry out certain statutes,
agreements and bylaws referred to in
fuller detail hereafter.
Under the name of "The Huron,
Bruce and (trey Electric Railway 1'om-
patty," the respondent. was incorpor-
ated by Chapter 711 of the
Ontario Stolid/se of 190'2, with
power to construct and operate an
electric railwa frothe town of
(aodericb southerly,
erly, northerly and
easterly as particularly set forth in
that Act. By Chapter 99 of the On-
tario Statutes of 1903, the corporate
same of the Company wee eban=ed
and declared to be "The Ontario West
Shore Rlect$o Railway Company,"
and additional powers were conferred
on the Company. By Chapter 113 of
the Ontario Statutes of 1906 the terms
for the eommeneemenl and completion
of the line were extended, and all the
sIroviaions of the Ontario Railway
Act applicable to railways operated by
electricity were. declared to apply
to the Company and the railway
' to be onnateucled. By Chapter 13111 of
jot he ammo,,
e Statutes was changed tu!90e the • to
"The Ontario West' Phore Rahway
Cots " By these Acta the Com -
'peers ceare capital was flied at $600,-
000, in VW shares of $100 each, and it
was authorised to iesue hones to the
extent of $15,000 per mile for every
rode of single track of the railway,
which, upon the mileage of the sec-
tion from (lodericb to Kincardine. it
was assumed would auth wiz, the issue
Of $tMkl,(IN) of bonds.
By certain bylaws and agreement*
forming schedules A. B. (' and It res-
pectively, of Ohepter 133 of the On-
tario Statutes of Me the applicants
aevecally agreed to guarantee the
bonds of the respondent ; the town Of
Voderich in the sum of $150,000, the
town of Kincardine in the sum of $50,-
000, the township of Ashfield in the
sum of $125,1100 and the township
of Huron i i the sum of $7b,000: in all
the sow of $400,000. In consideration
of thee guarantees the Company
bound itself to commence and com-
4)1ate the coastractlon of the railway
from O rdericb to Kincardine. In
&•bsdule "A" to Qbapter 119 of the
On tario Etat utes of ll9$oBMYthere le*et Mit
the deed of trust and mortgage exe-
cute] pursuant to the provisions of
the municipal bylaws authorizing the
guarantees; by which the Toronto
lieneral Trusts Corporation was &p -
pointed truster Thr deed of trust,
following the terms of the guarantee-
ing bylaws, provided that the bends so
gueranteed should be placed in the
possession of the trustee to he certi-
fied and that the bonds or the nmoneva
arising fl om their sale or pledge should
be deposited with or paid to the trues.
tees. The arms of payment over by
the 'restage to Ibe railway company
continued in the deed of tout were
omietrued by Mr. dipole.. Middleton
on An applirat,en by the trustee to
which the interested municipelilies
aria the Company were parties. That
leaned judge declared that upon Ie-
(wiviug from time to time progress
certificate. by the chief engineer of
the respondent certifying to niuely
per ceul. of the value of the act vices
and materials done or supplied in the
carat, action of the railway to the date
of sorb • ertiflcate. the trustee's duty
was in every such case to pay to the
rrt.pendeut out. of the moneys in its
hand., being the pureed. of the guar-
antee.) Land•, two thirds of the ninet f
pet cent. set out in such progress t er-
eh etc, issued and delivered to the
u n.tee.
Mors the (:entrolhag Spirit.
John \V. Moyss, the president of
the railway rainy, and the content -
Unit aid dorm ing spelt of the enter-
prise thrnughnui. negotiated the salty
ort the guersnteed bnde and deposited
the processor., amounting In grete7Ie1,
with •1.e ti aster. Construction 01 the
railway was begun in the autumn of
lee and wale *named therms/limit the
ears Upset. 191' and the major part of
1911 rooftree* riotincsaes for various
sums signed by the 'engineer of the
railway company were prerntdd to
the cruets!, and the Mlpulat.wd peropen•
(Jon of the soros syortinert wa.paid .ever
to the Company. 10 all fifty *even
eartiflcatea were issued and pet.•mat.ed
-the 11rS1 dated 11,h al July, I91101, the
tact 3rd October. 1911 foe rhe aggro -
get. &mouse of MRiA,9N 79 (ipon
thew (MetNeatee ibm trustees pad
ewer to John W. Moyes, represeetinj
Lfsq railway oompaay, two-thirds of
*Suety per cent., making in all ales
sum of $31139t%4.94. This exhausted the
avails ot the guataoteeed bonds, except
as to ,Dune 130.00, and on 7th Septem-
ber, 1911, John W. Moyes ordered the
work of construction to be stopped.
** Over -payment of ljaoo,eso.
The line of railway from liodericb to
Klucardine was far from complete.
Time went on and the work of 000-
seructioa was not resumed by the
Company. The bolder, of the bonds
were demandingfrom the g uaran teeing
municipalities payment of the overdue
interest, default wing been made by
the railway commonly. Appetit to the
Uowpeoy avalled the applicants noth-
ing, and so in October, 1912, their re -
teem' Ni. H. W. Middlembt, (. E„
to investigate and report upon the
condition of the railway. This be did
in January, 1913, styI hie report forms
exhibit No. 9 of (here proceedings.
Mr. Middlemist estimates the value of
the work and materials already done
and futaished, including five per cent.
for engineering expenses and fifteen
per sent.. fat profit, at fell,,201, 78. As-
suming Mr. Middlemiet's estimate of
the ebervicrs and materials" done end
furnished to be correct, there should
have been paid out of the avails of the
guaranteed bonds in the bawds of the
Toronto General Trusts Corporation
two-thirds of ninety per cent. of this
automat, namely, $183,131.443. As a fact
there bad been paid out 1:iR1,909.94 or
an over -payment of 10,849.0t, Upon
theme facts appearing the guarantee-
ing municipslitles applied fur an ie-
vestigatioo of the company's transac-
tions, with a view CO diacovererfg why
the express terms of their contract as
guarantors bad been so grossly vio-
lated.
The Board issued an appointment to
enter upon the enquiry, returnable on
the 30th of May. 7913, but learning
that John W. Moyes, who as president
had been most active in the Company's
affaita, was •Went from Canada, and
that without his testimony little pro-
gress could be made, the appointment
was enlarged sine die. Another ap-
pointment was taken out returnable
un the I2tb September, 1913, and on
its return the geoerel course of pro-
cedure to b.olf lowed was decided
on. Sittings of the Board for the
taking of evidence were held in the
year 1913 on the 19th of September,
October, doth and 21st November.
and in theear 1911 on the &h, 7th,
19tb and 21st of Jaivare pnd the 7th,
6th, 9th and /let of April and on the
1st of May. A number of witnesses
were examined, including representa-
tives of the Toronto General Trusts
Corporation, and of tbe Dominion and
Sterling Ranks, as well as John W.
Noyes, the prinidmat, Hub J. Mac-
aws,, the s.esetary, sad Vaughan N.
Roberta, the engineer of the railway
c3mpany.
,'Hold, Reiterated Falsehood,"
The relevant sheets of the hedger ac-
counts of the teveral banks in wbicb
the company's financial business has
been transacted were produced by the
officials having custody pf them.
These, with the testimony of the offic-
er,* of the Trust Company, showed
that the guaranteed bonds bad been
sold, the proceeds deposited with the
trustee, and by the latter paid over to
Moyes representing the railway com-
pany. But neither the bank books
nor the testimony of the trustee's of-
ficers disclosed the ultimate destina-
tion of these money* after being re-
ceived by the railway company.
Obviously for an elucidation of this,
recourse must lie had to the books,
vouchers and othet documental y re-
cords of the Oompeny. Both Mr. Mac-
flwan, the secretary, and Mr. Roberts,
the engineer of the Company, declared
that all the books and pepets of the
Ouutpany, that at any time had been
in their pnssession. had been delivered
by them to the president" John W.
Mops. To Noyes, accordingly, whose
attendance fot examination had been
procured with some difficulty and
alter a long delay, the Bawd looked
for discovety of the faces. 4n this,
however, the Board we. disappointed.
While hie turnery refused to resell
with accuracy indrviduel uanaacti we
recorded in the hank ledger., even the
application of • cheque for so large an
amount as Creole, the totally unex-
pected and dieconrerting tun. which
his testimony took when *eked in
produce the Company's hook. and
papers pron.iaed to land the inveepga-
tion In an {appease from wbich then
seemed no escape A frw ex-
cerpt, llom the notes of evidence will
beet illustrate this, and show the un-
satisfeetory ebararter of Moye. testi-
mony, which throughout was cherse-
terixed by rhilty evasion, and, as.uh-
sequent devrlopmrnte proved. by bold
reiterated falsehood Questioned by
Nr. Proudfot, the following answers
were elicited from Mr. Moyes
Q.-1 believe you weir president of
the Ontario Wert Shore Railway l'om-
peny?
A. -i was.
Q. -Do you still occupy that posi-
tive t
A. -No.
Q, --Wee is president now ?
A -i cannot .ay
Q - When did you resew to he presi-
dent?
A. I ceased to he president well on
to a year ago.
Q. -At a meeting of the Company?
A - Yes, I resigned my poeilion at
that time
Q. I).d you resign at • meeting ?
A.- I presented my resignation .1 •
-meeting of the ()teepee!.
Q. - W here was thy meeting held t
A. -la Mr. ttrwoke's ntAce.
Q• -That waa the late Mr. Smoke ?
�.-Yes.
Q. Who wig appointed In your
t
A -No one at that meeting, and 1
halm attended no meetings sinew
Ne.oke was antic4Uw for the
Company r
A. -Ho wen vies.presideet of the
may.
Q. -And bis firm were solleiton for
tbe„Ooopaoy ?
A - His Mau were solicitor' for the
Omapan7.
Q. -Was your resignation accepted?
A.-- Yee. •
loQg.- Who was present at the meet.
A. -51e. (Stooks and myself.
Q. -Just the two of you ?
A. -Yea.
Q -Did you Mill remain • director t
A -No, 1 resigned absolittely.
Q.-1 would hike you to tell tae
where the minute book of the Ontario
West tibore Railway Company is ??
A. --I cannot tell you.
Q. -Where are the other papers be.
longing to the Company 'r
A.--1 handed.allthe other papers
over.
Q. -To whom ?
A.-1 sent them over to the vlos-
president's office.
Q. -What hoc k, did you send over
to the vice-president
A. -There were the books of the
Company Itself -business books ; they
were not tare, ; they were ChM, ►how•
Ing the various Unusactinus of the
Company itself. and there were the
papers and things incidental to the
operations and business of the Com -
peaty.
Q. -Do you mean to say tb.t every
scrap of paper or book that you had
belonging to the Company were
Winded to Mr. Smoke?
A. -Yee, they were sent over.
Q. -Can you tell me when these
Papere were sent to Mr. Smoke ?
A. -They were sent over very short-
ly after 1 tendered my resignation,
and severed my COnneCtiotee
Q. --Did you actually send them over
yourself ?
A. -Yeti
"Dead Mee T.0 No Tales "
Moyes' story under oath was that he
hid resigred the presidency of the
Company about a year before, and
shortly afterwards bad handed over
all the Company's looks and papers to
Mr. Smoke, the vice-president. Mr.
Smoke was then dead, having deed on
the 3ist of May, 1913 A search
amongst the latter'. effects by his
business partnere and by his executor
failed to disclose any of the Company's
books and gapers beyond the minutes
of meetings of shareholders and direc-
tors These latter, which covered only
• few months of the year 1906, were
concerned only with the forme' legal
organization of the Company. Of the
books and papers wbicb recorded and
evidenced the transactions of the Com-
pany, which extended over several
years, and involved the disbursement
of upwards of $100,00t, 00 trace was
to be found. The Board's enquiry has
been piloted into this cul-de-sac by
Moyes, and there no doubt he in-
truded that it should end. And yet, as
afterwards appeased, tbu story se
solemnly affirmed and reaffirmed by
Moyes was an infamous fabrication.
Dead men tell no tales ; and appreci-
ating this, with shameless cynicism
and cakuletiog cunning, Moyer' sought
to unload upon the dead vim -president,
Mr. Smoke, the vanished books and
papers, with all the odium attaching
to their disappearance.
Books Acadentalty Discovered.
About the middle of January past
the Board learned that a trunk and
parcel of paper,. probably relevant to
this enquiry, had come into the bands
of the city. rice. Their capture w$s
in virtue of the execution of a search
warrant issued at the instance of John
W. Moyes against one William M.
Baxter, residing at201 Beverley street,
Toronto, in whose possession on these
premises tbey were found. An in-
spection showed that they conWned
the long sought books and papers, and
they were at once turned over to tbe
Board, and Mr. A. C. Neff, a chartered
accountant, was appointed to examine
and report upon them. This Mr. Neff
has done in a thorough and exhaustive
manner, and his report, afterwards
confirmed and amplified by his sworn
testimony, is in the hands o1 the parties
to Ibis application. Mr. Neff's
labors were made more difficult by the
condition of affairs which aprelimin-
ary examination disclosed He found
that no systematic record of the Com-
pany's buminees bad been kept. The
only books of account wbieh he could
Rod were a cash book and a ledger, in
each of which but a few entries had
been made, and those referring( only to
traasecticns im the year 1908. This
amazing fact is the more lucredible
when it is borne is mind that during
the years 19119 and 19111, and a pert c,(
the year 1911, the major part of the
work of construction was carried nn
by the0ompany,and the casb disburse-
ments had amounted tc V57.959.03.
Yet during this period of nearly three
years not a single entry wee wade
in the hooks of the Company to show
what wee heist( done with this large
sum of money. Mr. Nefo difficulties
ware further increased by the confa•-
ion and uncertainty arising from the
fact that Move* had opened eight sev-
eral bank accounts -acme at Toronto
and others at (loderirh-no less than
eve being in his own name -to eacb of
wbieh some part of the railway com-
pany's money was traced.
With the kd,;er leases of these hank
assonants before him, Mr Neff essayed
to ell therm out. aided by the inform-
suoo furnished front the cheques,
cheque-book stub., pay -roll., vouchers,
accounts, etre now in the poesetelnn of
tbe Board. He then combined these se-
veral accounts iw one statetoent by ell.
whistling, as far as possible, transfers
represeatieg multiple voters of the
earn* sum In more rbanone freeman'. in
• word, he sought to build op ex post
facto books of account. which, with
• properly conducted company, would
have been the mshject of daily coo-
tempnr';neMrr record.
Records ismentpkte. l
Throe accounts, so built up anJ rom-
bined, are Included In a scbedule to his
report. As saany of the cheque, n
polt
several of these acroonts are missing,
and the right of many persons to m-
otive pa meat under denotes issued to
them is far from clear, evidence 1. still
wantingof the destination and legiti-
atw disbursement sbursement of many tbnu•nnds
of dollars. Mr Neff. however, states
Mat he peeee•tsd ea nobarent, com-
plete and detailed a report of the deal-
ings by Noyes with tb*as mosey, as It
was possible for hies to make with the
material at his command.
A *tuber of the Pkiard was arranged
for the let M.y Instant, for the pnrpods
of further eeaselaing Noyes, his eons -
.N aesnrirNg tM Hord ODA be would
be preemst. De WWI to •Mend, bow -
ever, a relative stating thatWto
the *find-*, t!b. of his beak!' 1It
the city under the %dvioe of hie made
cal atceodaat. Without the &esterase*
of him esphastlous many rte* fir
cosseted with the Company mart
remota involved 1a doubt. Aa
bowseer, Moles displayed Sittig diaper
teas at any tftieto awn( the Board la
uerav,Uimg the lbopaay's tangled
g�affftarly!rs, k wee decided to does the an-
rtber ea-
Itgbtwsmaat treat him; andaritheat Mediae fortthe Bogged
will@ sow wmma(Ise the salient facts
fa the ase, tweed ant oertaio general
coociraslona whkb the oddment moss,11
to warrant-
Fiadtag* of the Beare.
For the mks of cleanest* thew facts
ar„d oomolustabs may be ousysolentiy
arrested union the fullowisg beads :
L The orpaaisatias ot the Company
and Ste scheme wet Seance.
11 The Company's arrangements
for constructing the railway.
The wackiest's progress eerti
lithium .)red the mode of coseputiog
the amounts cert ified.
IV. Tees app'i iati,n of the Com-
pany's money..ad semi' i -s.
V. Toe ammo of the Company.
VI. The liabbltiee of the Company.
VII. Summery of ooncleeior a,
1,-THa Oa0Ax12ATION OP THR ('(111•
PANT 4111) ITd-Su HEM* OP FINAN('x,
The Railway Act pro, i les that wben
twenty-five per cent. of the authog lied
capital .to.:k ie sut„cribmd, and ten
per cent. paid therronleto some char-
tered bank to its credit, the permanent
organisation of the compsny may Is
proceeded with. As appeal.* from the
minute book of the Company, a meet-
ing of the shareholders of the Com.
pany was held at the town of
Ooderich on the 23rd of March, 190i.
At this meeting there were {,resent
John W.Mo fie, H. J. A ttacEwan, S.
C, Smoke, M. Williams, and Neil
Sinclair (by bis proxy, Mr. Smoke) :
these gentlemen ie tog all the share-
holders of the Company. John
W. Moyes wags appointed chair-
man of the u.eet.ng, and retorted that
twenty-five per cent., namely, $1'i.:,0(10
of the capital .tock had Leet, nub•
merited, and that the same was then
held as follows :
John W Moyes $121.001)
H. J. A. Mrs -Ewan1,000
S. C. Smoke 1,000
R. S. Willi.ws 1,000
Neil Sindalr 1,000
and that tan per cent., namely, 11'600,
had Leen paid thereon, and was then
in the Dominion Rank, Toronto, to
the credit of the Company, in accord-
ance with the provisions of the statute.
Under examieatioo, doges stated
that he got the money to make the de-
posit from Mr- Smoke. Both tbese
ntdtemeots by Moyne are false -that as
to the receipt "Isom Mr- Smoke of
$13,5)1), and that as to. its deposit in
the hank in alleged coml)liance wilt
the Maftway Act.
" Financial Jugglery."
What had been done was this:
Moyes had procured one Appleton ].
Pattison, a broker in Toronto, to draw
a cheque upon the Dominion Bank,
Toronto, in favor of the Ontario
West Shore Railway Company. Al-
tbough at the time of the issue of this
cheque Pattison', account was already
overdrawn, be procured the beak to
omrtifiy it ; and cm the 21w of March,
1908, it was deposited with the Domin-
ion Bank to the credit of the railway
company. This deposit was not an un-
conditional credit, represeotiog a fund
which might 14 freely drawn upon by
the Oowpany, and converted into cash.
Opposite the entry of the etedit is the
bank ledger appear the words to red
ink, " Hold, cheques to be shown to
Mr. Pettier," Mr. Peeler being the
manager of the lank. Upon this
dubious fabric ofcredit, Noyes based
his statement teat 912,500 had been
paid into the bank on account of sub.
scribed stock. Ewen that flimsy found-
ation tailed him, when oe the 27th of
March -.ix days later -this credit was
wiped out by a cross debit entry of
91' 551), and the account closed.
Thi• piece of financial juggler -
obviously fraudulent and intended to
deceive -is the only pretence that any-
tbine was ever {paid on account of the
capital stock. lu view of this the Com-
pany waa never validly organized.
At the same meeting the above-
named John W. Moyes, H. J. A.
MacEwao, S. (' Smoke, H. le.W illiams
and Neil Sinclair were elected dir-
ectors : and authority was given to
issue bonds to the extent of 115!11)
per mite, and to secure them by mort-
gage on all the assets and reveoees of
the Company.
At a meeting of the directors held
the same day, John W. Moyes was
elected president, and S. C. Smoke,
eine-president, and H. J. A.Mock:wan
was appointed e.cretary of the Com-
pany. Act ing upon the above authori-
ze ion. Moyn Iaeued the beasts of the
Company to the amount of p100,000,
upon an a.eutned mileage of forty
mile, end deposited the unguaranteed
hoods (*200,111*) and the peneeeds of the
guaranteed foods (114(10,000), 'which, as
above stated, realised *384,OW, with the
Toronto (tensest Trusts Oorporetion a.
trustee. At a subsequent meeting of
the shareholders, the direetars wereau-
tborized to enter Into a contract Inc
the con.truetlon and equipment of the
railway from Godeaicb to Kineardine.
Per tb•. undertaking, wbleb Mr.
Middled oat etimated to cost in cash
*l102.7:et tai, Moyes bad the following
securities :--
Stock a+,tborIzed 1500.(11)
Bonds authorised :
Ili Guaranteed 401,0(11)
(2) (-nguaunteed .... .2I10,010)
$1,100,009
Company Mad No Capital.
In the y04r 1ft11M Moyes bo,rnwed
some mosey from Appleton J Patti-
son. the htoker above menuneed: but
that wee repaid blur out of the •veils
of the guaranteed boode. Nothing was
ever paid fro the stork, and the un
teed fiends being umalat,le,
r. Neff in tbe last p.nsgraphof his
N
report, has pithily md
rss••rrfiss the
linesmen/ of the Company: "Appar-
ently,al no permanent copied whatever
ho. en furni.hed, outside of the pro -
ends of the guaranteed (roods"
tr.-Twit (Yrwrawe's A**Ate0*Mmere
70* OO1OTRt( r1$O TMs RAILWAT.
At • tweeting of the ubarehotdere
heal at Toronto xis ted 7th of Ap?)l,
191111. the directne were an$boths d to
ester rate a coalra11 fur Ibm eosstrwo
tine and eq.ipm,ast of the raltway
from Godewmh to Klaoardlaeo apes
speeded terms, *add
at • of Ale -
some bold os lea 19th of 1 , 1M,
Mr reported the ssemelsa • OW
Lasa/ by Ihm Duro* Clenstandies Co(m-
pamy - The teams of tits caste -setae
to payment were ltsta Call that the
trostairsegioe comp•py 'WON reosive
.he stock and hoods 04Ott Company,
ss
that is, osalm•Ily a eratlo. of
•1,100.000. Owlalg to the evasive sad
untruthful as.w.n of Noyes, such
agafwioe &rase in the earlier stages of
the enquiry, gad,b.fore pIwessioa was
W of the books sad peptim as to the
identity of the Haroe Oonstructioa
Oompett. As nearly as the Board oat
gather fromlthe documents and the
tessemooy, the facts are these : Moyes
procured to be laoorpoeated raider -
tors patent "The Hums Construction
Company, limited." This is vouched
for by Mir. Boaf, who.iaute that Moyes
Instructed bits to apply for the incor-
poration, and paid Lim his fee, al-
though Moyes !wore he bad nothing
to du with Ihat company. Tbie coi-
paoy, so incorporated, weever got be-
yond tbe stage of provisional organ-
ization, and never tranaaeted any
business. Bank accounts were rimmed
by Moyes with the Sterling Bank, at
(*odersch and at Toronto, in the name
of the Huron Construction Company.
Cheques were drawn against the fur
ther account by Mon, and his atter-
bey, Mac/Wane. and against lb* latter
by Appleton J. Pattison. a Toronto
broker. This Huron Construction
Company was not incorporated. and
was ready John W. Mayes. Pateison
disclaiming any interest in the Com-
pany, and declaring( that he acted
throughout under irutrzctioos from
Moyne 1t is this unincorporated
company which is 'hereafter referred
to es the Huron Construction Com•
patty.
A draft contract ewe found amongst
the papers between the Hall wayCom-
pany and the Huron Construction
Company, by which the latter agreed
to build and equip the railway between
the above termini, for the consider-
ation above mentioned. No executed
copy of this draft contract has been
found, but according to the testimony -
of Moyes itnorrectt sets out the ar-
rangements made between tbe Rail-
way Company and the Huron Con-
struction Company, Thereafter the
work of construction, so far as it pro-
ceeded, was carried on byMoyes in
the name of the Huron onstruction
Company. That Company was with-
out doubt John W. Mbyte,. He was
the sole initiating, efficient actor
throughout, the others who appeared
upon the stage,Roberta the engineer,
MacEwen the secretary, end Pattison
the accommodating broker, being ad-
mittedly mere agents moved by hem
and dcirg his will.
Breach of Railway Act,
By section 10 of the Railway Act.
11116, it is provided that no director or
promoter of the company shall enter
Into or be directly or indirectly inter-
ested or concerned in or participate in
the profit of any contract with :be
company, not relating to the purchase
of land necessary for the railway, nor
be nor become a partner of any con-
tractcr with the company. In the
event of breach of this -provision, an
action lies against such director or
Promoter at suit of a shareholder or
municipality interested for the benefit
of the funds of the cempacy, for the
wbole amount of profit accruing to
such director or promoter from such
**attract. It thus appears that the
contract made by the Huron CoDstruc-
tion Company, which was John W.
Moes, with the Ontario Wert Shore
Railway Company. controlled by John
W. Moyes, was to breach of the ex-
press teems of the Railway Act, and
drew upon bim the liabilities above
mentioned.
111. -TBE ireotwintnet PEOOREam cen-
TIP CAT*!, AND THE MODE OF
eWrPIITlxO TH■ AMOUlres
ceerraTIED,
A form of progress certificate was
settled by the trustee and the Railway
Company, which is bawd upon the
terms as to payment over by the trus-
tees set nut in the trust deed and
mortgage. It reads as follows: -
"Duplicate Ooderich 19
1 Chief Engineer of
the Ontario West Shore Railway Com-
pany, hereby certify that for and im
the construction of the floe of the
above Company from (4odericb to
Kincardine, the materials anti ser-
vices provided and done are. ...$
90e, thereof amounts to 1
.Deduct amount previously
certified. 9
Balance for which the cer-
tificate is given $
And i certify that the said Company
has fulfilled the terms and conditions
neeeseary to be fulfilled under Bylaw
No. 49, 1907, of the Town of Godericb,
Bylaw No. 5$2 of the Town of Kincar-
dine, Bylaw No. S71, 1907, of the Town-
ship of Huron, Bylaw No. V11I, of the
Tnwn.hlp of AsbAeld, to entitle the
raid Company to receive trout theTor•
onto General Trusts Corporation the
said sum of 8..........
Chief Engioeer."
No
The Progress Certificates.
At a meeting of the directors held on
the Ma July, 190*, Vat►ghan M. Rob-
erta was appointed engineer of the
Railway Company, and upon him
devolved the duty of issuing the prog-
raee ontifleateie. some fifty -even in
number, and .inonnting in all to $8119,•
949.711. The applicant municipalities
did sot retain aa engineer to make an
independent inspection and appraise -
meat on their behalf of the work dose
from time to Uaoe batt lett this mat-
ter, eo vital to their protection,
entirely to the Railway Company'. ap-
pointee. Front documents found
among the papers of the Company, It
le clear that Robatta tailed grievou.ly
1. his duty u eertIfyleg wegi ataear. He
was unable to redoes any mentor -
sada ,bowing the varioue compute -
done Oa wbieh be based the propene
esrtl4rates Mooed by him. I oder
examination ►I. IzplIaaatios of hie
method shows testi waa not in ac-
cord
scord weed the teres* of the tenet deed
as.ommwrt.sd le therwr1JA.
cater stgned by him. QM nmooed as to
this b. sage (p. e081, "1 toads my
calculation nn a pageseriatee baste of
the whole e,mteset (p. L74,
"M y Inetrnetinns osmm hem Mr. Noyes
to few. isr, m) estimate els the mewtraet
pries. Again (p. 501):
" Q.-- Sapposfsg a lionised dollars of
work and material were dose and
supplied at a certain steer In Oils
tranmctlote would you certify that a
thousand dollars' worth of wort and
materlal had iw•en supplied
"A. - No : 1 would osrtlty to 1te per-
osatas* no the whole rnstawe4.
"Q. -Supposing there wan • deemed
Utilizes every heat unit. Flues arranged so
6e.1 h forced to travel over top of oven in
,e down behind it and twice un-
der the bottom before escap-
ing to chimney. See the McClary dealer.' es
Sold by HOWELL HARDWARE CO.
dollars' worth of work done, woo
you certify to a greater amount than
a thousand dollars ?
"A. -Yrs, assuming that the scoot
cost of the work is one thousand do
lays, and my pro rata rate of th
brought it up to three thousand do
Ian under the contract, that was th
amount that was certified.
lel' at (:cderieb finti,106.6i3
7 ies 111114) , 11,596.13
Rails 174,875.40
1 I.ese :ilr of price
1- paid wet uhgu*-
.l' centred bona.
1.1 take* at par. s' .fit
e 5
I,II11
2
,7ai
way d,777,6n
Tiruta-rRightof. . 1,011,00
f Additional constrict ion
nal out )- ii,0110.0D
s • •
"rt inthousand dollars' worth n
work le dopa, sod
you certify, my
se,
that three thousand dollars ,worth of
work is done ; you may have dune
such *thine as that by this method of
calculation ?
Yes."
Roberti Peculiar Method.
This means in short that Rohett,,
under instructions from Moyes,
adopted the contract price as the Naas
of the progress estimates end rot "rhe
value of the set ;ice and rnatetials
done or supplied io rte con -traction
ret the railway."was which wthe true
boas as laid own. in the tru.t deed.
The application of such an erroneous
method might explain, but could
never justify, a result by whish work
and materials appraised by Mr. Mid-
dletuist at $313,Jtl). i i were certified to
be of a value of $tF%l,919, 7t4 but tbe
papers show that no such method was
in fact followed. Along aitb the
duplicates of the fifty-seven progre-a
certificates issued were found, in the
handwriting of Moyer, computation,
rhowing how the am rerts of each
certificate were made up. 'These
indicate," to quote Mr Netts report,
"that it was customary to a,.-ertsin
the amount of funds required and to
lasue the certificates for an amount
which would produce the amount
required after deducting ten per cent.
and one-third." In a word, the finan-
cial necessities of Moyes, not the
deserts of the Company. determined
the quantum of his demand. 'l here is
nothiog to show that Roberts made
any attempt to protect the applicant
municipalities, by checking up the
work actually done as a preliminary
to iseuing his certificate. On the con-
trary, • large number of certificates in
blank signed by him were found
amongst the Company's paper., show•
ing that Roberts bad abdicated his
functions as the certifying engineer
under he trust deed and placed bine
self complete) in the bands of Moyes,
thus facilitating the fraudulent pur-
poses of the latter
One or two illustratinos may be
given to illustrate Moyes. methods. Ira
.August, Mel, a quantity of rails was
bought from the Yrovincial Steel Com-
pany. To meet the price, 116}({.et.
Noyes prepared and issued a fraudu-
lent certificate INo. 1A of the *rise)
for 18,220.17, the patter being the sum
which, when reduced by ten per cent.
and one-third, will produce exactly
116,973 -So.
Fags and Fraudulent Certificates.
During tbe years 1tee, lido and
1911, when it became necebsary to
mime funds to meet the interest
coupons on the guaranteed boogie
Moyes adopted the bold expedient of
issuing certificates In this way be
drew $58,11e) on false and fraudulent
certificates of work does and materials
supplied, when in fact not one dollar
of tons money went into construction
df the railway
1V.-THR APPLM•ATuni 1)[' THE MONRTN
AND aECORITIEe or THE comi,ANl'
The enquiries of the Board into this
matter wets rendered difflrult by •
number of cireumstancee. No boekr
of account of the t.lompeny's Mutineer
had been kept. No )es. than eight
Lank accounts bad been opened, to
each of which some part of the
moneys iq question was traced. Three
of these accounts were at lioderich,
and five at Toronto : five of them is
the name of John W. Moyes, twc in
the name of The Huron Construction
Oompany, and erre io thereat* of The
Ontario West Sbore Railway CODA -
patty. Many cheques were tainting,
eo that it wee impossible to Identity
some of the entiin in the hack ledger.
The embarrassment of the Board aris-
ing from throe matters was further'
increased by the feet that Nnyve failed
utterly on this enquiry to realize and
discharge his duty ae a trustee ac-
countable for thew moneyys. The
main actor in thew transactions, he
alone rould let in Tight upon many
metiers which are stiU otwcure, yet
with every opportunity given him to
explain be bas cheese toramain silent,
as,, wort* ati11, to wlffulty mislead the
Board. Yoder these circumstance* be
has no just ground of complaint if he
is heed acooueuhe* for that pact of
theme moneys and securities traced to
his poseewlon and control, whieh are
not clearly and unmistakably ebowo
to have been properly applied.
A -ws TO Tran roxg(ta
Nr, Maeliwsn, as the secretory of
the party .and Mayer agent at
Oodericb, had mxcmptional rt*m. 1
ides of hseomher taasitfar with the
•Tpeoditu*ss on eonmtructioe amount,
and as hie statement of the amount
so t closely appr'ozlsataa to Mr.
Neff's eosclusions, the Board believes
it may be safely adopted as -reseed,
Nr. MaeEwaa sebmits a atet.ement
shows ps mento at
that an the I
(+tederieb. end those of ln,onto or
whMh he has knowledge, mad* on
aeconnt of mouttraetba, were t1'�,-
$7104 aside *p is this wag
Pay relit saki assn* S. paid
Vete 272.00
Mr. elacEwan can speak positively
of these payments, As to the rail,, be
states that the invoices read that thirty
per cent. of the price w.. to he paid is
unguaranteed bands. Further than
this Mr. MacEwan's positive knowledge
does not extend. although he says
that besides the above payments tures
probably made at Toronto for a )oeo-
motive, 12,010, and for legal expenses,
a unknown to hint.
1 Moyes Held Accountable
i The guaranteed bands. principal and
ngterpat, produced the sum of $irlC.-
1 NJ 37, which is to be accounted for_
1 Mr. MacEwan's testimony. cotrobor-
;tett by the documentary evidence, so
fax as applicable, makes it reasonably
certain that 't.+,_r;J,tlll were probably
!ezpeuded in the construction of the
railway. This leaves to 1e accounted
for a trlance of $t7l,5 5 31, and the
!for
places the burden of accounting
I for this where it properly belongs, ,
upon the shoulders of John `t•, Noyes.
1 This burden he has so far signally
I failed to discharge. How much of
obis large balance was tegitimatefy
1 applied to the purpo,ea of the railway
the Board is unable to say from the
material'at its command his much
the Board can say, that the documen-
tart' evidence makes it clear that of
this balance, wbicb was all paid out
by Moyes. targe sums were deliberately
Imisappropriated; for instance, cheques
` and vouchers show the following :
Paid in interest coupons *611 pW
Transferred to Moyes' private
aocouots , .17 905
Paid on account of Philadelphia
lanJ deal 15e1G0
Paid on account of Maitland
River Power Company..• 10,11yI)
Paid A. J. Pattison A Co. (al-
leged stock purcbasem...,• 9,700
n. -.At` eo met UNITIES,
(1) The bonds guaranteed by�� the
applicants of a par value of $M1),(111
were sold, and realized, as stated
above, terie110 This sum, augmented
by accrued toterest to $402,tlti7.8i, was •
applied as above set out.
(21 'Phe unguaranteed bonds of a
par value of $215),010 were not aopd,
and so fax as appears were applied as.
follow,
1•'ilt.en bond, • Nos. 401 to 415) of a.
par value Of $15,0.0 were on the 3rd of
April, '1109, deposited with the Do-
minion Beak of Toronto by the Huron
Construction Company, John W.
Moyes, subject to the order of tbs
Provincial flue) Company. Limited.
ted
tth
ad-
dressedyletter toathe 1Don,io otntHHank, the
Provincial Steel Compesny, Limited.
claire to be entitled to these bonds.
The bonds are note in possession of
the Burd, subject to existing legal
tights exhibits Nos. 43 40),
Twenty bonds (Noe. 561 to 800) of a
par value of *211,115, were on the 2kd
of July, lee, deposited with the To-
ronto lienerel Trusts Corporation by
John W. Noyes, president . (presum-
ably of the Railway Company), The
letter from Moyes accompanying the
deposit is aowmwhat vague, but,arms
to indicate that they met* be held for
the Huron Construction Company, and
delivered over upon • certificate of
this Board being iaued. These bonds
are now in poasesshun of the Trusts
Corporation
Dtspaitioc of the Bonds
value of $ltt.i; x11, •ne the bonds,
is .aIaI-
ti�ted, in the possess*,n or control of
Moyes. The books of the Dominion
Bank show that on the 23rd of July
11111, a sealed packet was received
from J. W. Moyes* geld to contain 160
$1,1111 %Vest Shore ponds la-
stntctinns to the bank were that the
picket was to be delivered on the trent
si natures of A. J. Patttaom and .1. W
More, On the lath of Novetnbsr,
1Hl3. the Dominion Hank, upon an or-
der signed by TMnres and Pattluxt,
delivered over to Moyn thew packet.
Apparently the block of fifteen qt
these bonds now in the pre ion of
the Board was in the interval with-,
drawn from tbe packet. The remelts-
ing leoS hods of a per value of $l) 1'.( *
ate, the Huard believes, in the pn(isse-
don and content of Moyne As Mo
cannot take any grunt u�ider the con-
tract
whe, in the nan. f The Huroa
Coamtructt4prpt� Company, a made with
he Rellwey Company be meow.
make title to any of thea- hoods on4,.
that contrast, lint.., mem claim or
len of which the Beard bee no knowl-
eddgmm has "ipersened, tee Rs'
Company 5 entitledIn ebe d.Itvn
this billet of ler. lends, $s well a. the
above block .of twenty boud., of a
total par value o. $IQIj000,
' -Twit AIMITa rev TEN Mcrae!.
These rename. solve1y w far as d1e-
ek..ad. of the efgbterforay for the rail-
way between tiode,icb *ad Kincar-
dine, the work of enastrietioe dose an
that line, and eertaln railway material.
(C*e'la,.M es mat. a
t