The appeal therefore extends to the whole decree, every paragraph of which must be altered if the Appellant succeeds. The embarrassments under which Lord Audley laboured from the year 1818, when he succeeded to those estates scattered over the southern part of the county of Cork, compelled him to try to raise money on the security of the estates; and Mr. Griffith's representations of the mines enabled his Lordship to obtain several small loans, with which he charged the lands and mines. These charges and subsequent incumbrances are still subsisting, although they were not disclosed to the West Cork Mining Company; and that is one of the numerous frauds of which the cross bill complained. The testimony of Mr. Griffith to the value of the mines was not, as Pike alleges, unqualified: at the conclusion of his report in 1819, he says:-"On the whole, I am of opinion that the several mines already discovered on Lord Audley's estate hold out a fair prospect of success, if worked judiciously and cautiously in the commencement; and should they be found to prove well in depth, there can be little doubt of their ultimately enriching those who undertake to work them." The value of that testimony depended on the fact of the mines proving well in depth, which had not been then ascertained. Mr. Griffith did not in that, or in his report of 1820, make any estimate of the value of the mines. He visited them again in 1824 or 1825, and found that they did not prove well in depth; that, on the contrary, the deeper they were worked the worse they were found; so that he changed his opinion, and advised the working of them to be discontinued as profitless. That change of opinion was known to Lord Audley, as appears from the report of 1840. VIGERS v. РІКЕ. Adam Murray in 1833, but was not communicated by his Lordship in his negotiation with the West Cork Mining Company. That concealment is another part of the fraud charged by the cross bill. Those mines were inspected in 1820 by Mr. John Taylor, who is admitted to be the best judge living of mines and mining operations. In his depositions in the cause, he says, that although the indications of ore were good as to quality, they were not at all favourable to the capability of the mines for yielding a sufficient quantity of ore to make it worth while working them. He accordingly came to the opinion that the mines were of no value; and he shortly afterwards communicated that opinion to Lord Audley. The concealment of that opinion by his Lordship during the negotiations of 1834 is another part of the fraud charged against him and his personal representative in these causes. Mr. Taylor's opinion of the mines was sustained by the result of the dealings with the Commissioners of Public Works, and with the Irish Mining Company. The Commissioners advanced 6,000l. to Lord Audley on mortgage of the estates and mines, in consequence of the favourable report of Mr. Frazer, founded on the examination of Matthew Luke, a person then in the employment of Lord Audley, and therefore disposed to enhance the value of his Lordship's property. The report and examination were improperly admitted as evidence in the cause. The Irish Mining Company, rather contrary to the advice of Mr. Weaver, their engineer, took a lease for 31 years of the mines, at a royalty of one-twelfth; and after expending about 20,000l., including 8,500l. paid for assignments of the mortgage to the Commissioners and of other charges, abandoned the mines as not worth the expense of working, and surrendered the lease in 1832. The incumbrances on the estates and mines at that time exceeded 40,000l.; a sum far above the true value of the mines; and yet the agreement of February 1834, between Lord Audley and the Respondent Pike, contained a proviso that the lease thereby covenanted to be granted to the company should be subject to all prior incumbrances. That proviso took away all value from the lease, and was a fraud on the company. It was not in Lord Audley's power to grant a valid lease of the mines without the consent of the incumbrancers. Is it possible for these Respondents to obtain specific performance of a contract for payment of 165,000l. for property, which is subject to so many incumbrances, that the value of the lease covenanted to be granted, if sold, would not be adequate to discharge them? The decree is erroneous in directing an account against the company, without first ordering these incumbrances to be discharged; and, until then, these Respondents, even if the contract was in all other respects unobjectionable, are not entitled to specific performance. But the contract was entirely founded on fraud, and is therefore void. The prospectus first put forth by Lord Audley and Pike, who was then and subsequently his agent, was false and fraudulent in every paragraph, framed with a view to defraud the company which might be formed by them. There was no company then in existence; it was all fiction. It was a direct falsehood that the lodes were rich; it was equally false that Mr. Griffith made a favourable report in 1826; he made no report that year; and the opinion he gave to the Irish Mining Company, unfavourable to the working of the mines, in 1825, known to Lord Audley, was suppressed. It was most false that "the manganese was inexhaustible," and that "the quality 1840. VIGERS v. PIKE. 1840. VIGERS v. PIKE. 66 was equal to the best Cornish manganese;" for there was no manganese in these mines; it was nothing better than clay iron, or, as the country people called it, cockieron," the dirt of iron. The statement about the excellence of the slates was equally false. The depositions of several of the witnesses examined in the cause show that the falsehood of these statements was well known to Lord Audley. The reports and accounts exhibited by him and Pike, and the directors, who were their creatures, were gross frauds on the public. The property was in a desperate condition at that time, and of its condition Lord Audley was well aware: he knew that the working of the mines proved a complete failure, brought ruin on many, and was abandoned by all who had attempted to work them. The answer of Pike to these charges is, that the books of the company, containing all the accounts, were without any concealment open to all the directors, and that, through the directors, the company had the means of informing themselves of every matter relating to the property. But it is not stated or pretended that the shareholders knew of the unfavourable opinions given of the mines by Griffith, Taylor, and Weaver, or that the working of them had been abandoned by the Irish Mining Company with enormous loss. The books were not open to the shareholders at large; and what was done and represented by the directors, who for the first two years were all under the influence of Lord Audley, bribed and corrupted by his gifts of shares, was false and fraudulent. If ever a case of fraud had been made out against a party by his own witnesses, it was this case: not only misrepresentations of value, but fraudulent suppressions, were clearly brought home to Lord Audley, bringing him within the well-known case of Edwards v. M'Leay (c), in which a purchaser was released by Sir W. Grant from a contract founded on the misrepresentation of title; and that decision was affirmed by Lord Eldon (d), has been followed ever since, and gives the law to transactions of this nature. All the cases on the subject have been brought under the notice of this House, in the late case of Attwood v. Small (e). Lord Audley, from the moment of his accession to these estates in 1818, was making experiments on the mines until he granted the lease to the Irish Mining Company in 1824. It was impossible that he could be ignorant of the value of the mines. That Company promised him a royalty of 1-12th only; so that they ran no greater risk than the expense of exploring the mines. His attention was then fixed to the nature, extent, and value of them. Pike's knowledge of the mines was derived from Lord Audley; and with a complete knowledge of their worthlessness, both signed the first prospectus in the schedule annexed to the deed of February 1834. Without any known previous dealings between them, they acted together in promulgating that prospectus and inviting subscribers to the company, which they then formed of their own creatures, and to which they appointed those unprincipled directors whose names appeared in that prospectus, bribing them with a distribution of the shares that were reserved for Lord Audley, J. Pike himself being the managing director; Warneford, Lord Audley's attorney, another director; Ellis, the tutor to his Lordship's children, another; Jacob, a partner of Pike in a school agency, another; Moon, a bookseller, 1840. VIGERS V. PIKE. |