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YouE Worships have kindly permitted me to answer in de- tail the extraordinary and monstrouH counter charges made against myself and others by Mr. liennelly, nominally in de- fence of the criminal action which I have been necessitated to bring against him for tresapasp upon my suspended railway ^vorks, hat de f acid Vf\ih the object of delaying justice to my dlaim. against the Cape Breton Company. As I am, how- ever, obliged to trust to memory and a few notes, taken ^.. during the reading of his very^ carefully and cunningly pre- pared statement, I trust you will, allow me to supplement my reply, hereafter, with additiouahrwDarks and extracts from correspondence. ^r. Kennelly became connected with the. Amalgamated Cml and Railway Companies, now knowti as the "Cape I«|on Co., Limited.," early iii January, 1874, at the in^nce of ms triend Sir Jaa. Anderson, who made it a condition of his acooptanco of office as Chairman, that Mr. Kennelly should be hb assistant, as Managing Director of the company, at a salary of XIOOO per annum. >,f ' 1 "KlB '-^ , ^l^'ri^W'M*^ ^«^ ^r-„ . mmmmmtltfm Appointments and contracta. Unconnected with matters of finance. LotB of Impnr- t«nt oo«I iikles .\ few weeks later I was invited to visit London (being then in Cape Breton) by the new Board of Directors with a view to beinj; appointed Local Manager of the Company, and also as a probable contractor for the Louisburg raihyay and nier The tinal result of many interviews with the Pirectors was "that I returned to Sydney as Local Manager & Engineer in Chief at a salary of £1,000 stg. per annum and a per cent- acre upon anticipated profits to the company, hm.ted to X2,000 per annum additional ;-AIso as contractor for mining all their coal at a fixed price per ton and minimum out-put, to bank or into trucks,— And furthermore as contractor for the construction of the Louisburg railway and pier for the lump sum of £115,000 stg., plus extras, this amount I may here ob- seiwe being some £40,000 lkss than other English contractors would have tendered at. I was also the lessee of al the com- pany's stores from whence the workmen and to a limited ex- tent, umlcr agreement, the collieries, had been and were to be supplied with provisions and other goods . * r. « With such emoluments and powers I returned to Cape Breton about the end of April, 1874, the collieries having been worked from 1st January (at which time my salary waa dated) upon my private account; but I was expressly instruct- ed to make no change in the original Company s ofiicials or management until Mr. Kennelly as Managing Director of the Company should arrive in Cape Breton and it thus happened that de facto I never entered upon the duties or responsibili- ties of Local Manager; but continued to act in my former capacity as Engineer in Chief. And you must p ease bear in mind that from the conception of the several Companies 1 was entirely unconnected with matters of payments, x\Ir. Harvey being Manager and Financial Agent for the " Qlas- iow and Cape Breton" and "Schooner Pond Cornpaniea, and Mr Nichols being the Accountant sent out from London by the "Lorway Mining" Company. Without direct col u- sion, therefore, with a charge which even Mr. Kennelly dares no* advance, it was impossible that I could obtain any unfair advantages from the Companies' resources. It is also necessary to explain that before leaving Cape Breton for London, my Montreal agent, Mr. Walter Burke, had negotiated the purchase of the entire out put of the Lor- wav Emery colliery (estimated at 75,000 tons minimum) at 82.75 per ton F. O. B. at Sydney; but that through extreme dilatoriness in accepting an offer made in Dec. 1873 to March •74 and the then demand for unusual terms of payment made by Mr. quent o again h in a fit and the an offer The I pointme eiuleavo that I re Com pan out put basis upi profit. I Breton, the most i'lg due ] and no p tracts wh to hav .; t i'lg mute to xny ] precedinc Mr. Ken^i with my i paid, the iiig the sf I have n fulfilment I then \ Company' improveni the severa iu copper, to coal mil Keserve a the Qoven had also cc other cxpe experience Ca[.t. Geo Colliery, e reliable ma the Lorvvai n (being '3 with a lany, and Iway and directors Engineer per cent- to £2,000 lining all at-put, to 31" for the tlie lump r here ob- 3nti'actor8 1 the com- limited ex- vere to be 1 to Cape es liaving salary waa y inatruct- officials or ctor of the happened isponsibili- ny former use bear in >nipanie8 1 leuts, Mr. he "Glas- 'ompanieg, )m London rect collu- , Konnellj obtain any Lving Cape ter Burke, of the Lor- iniraiim) at ;h extreme '3 to March ment made for coal 8 qt^t^;fe"/o,OOrtons aTLlo'if^lY ^"^ ^^ ^ -^>- ?gain lost through Mr Ke.u iv w''"' *^' '^^^^ "^^''t, was in a fit of his ustlai ill-temnor X'^e l^T^?."^?*' ^'^° ^''^^ and then offered to re-apZnt a, f « fn ^\^^^^^^ agency, an offer which he respoffirv deh ej "" '^' '''^ "^ ^''^ The primary and immediate reau t of fh. f pointments, and the utter faimnTf at tji« foregoing dieap- c'o„t,,«. , endeavour to sell coa liu tl e Unlro d ^^/;^'^'"\«lty's personal o^^i!' that I received orders fro, Xfi 1? ®\f ^' ''^"^ ^'^''^da, was Company's Secreta,^ in L,,^^ ' ^r"*''^"^ -l^o from the out put from the mines a d tZ, J; '^''^ • ' \'' '"^^"•^^ the basKs upon whien I made mv est m^t^ i^'^'^tica ly broke the profit. Shortly afterwards Mr S. f^' '^'''''S coal to a Breton, quite hcpareVto re.L^ ""'''^ ^'"'"'^^^ "^ Cape the most'gloon\y Lebod?ng^aT L Ja^ r^ ''''''^'''' ^^''^^^ mg due regard to the laro-e^nun„H.*'^?' Prospects, and hav- and no prospective sales, fcSulK. .^l..^ ^^''^*^^' '" ^""J^' tracts which it would have boon • "^ ^'onsented to cancel cou- to ha . tulfilcd, M Kennonv '"^PP^^'^'*-^ ^^r the Company ing materials and p y fo'; aif ^J,f ^,?^'"g ^« Jake over all \nhl to my private iolfie?; ac o'/, t LT n' ''.^'^^ ^^^'^^^^^ proccding. These loPom.fl , ^™ ^^^ l^t Januarv Mr. Ken'^.elly and 1 Con 0^,';- '^^'" ^'^^'^""^ adjusted by with my accountant. Ml cE IT.T''''^'\^ ^^'- Stirling, paid, the remaining VthbeinJretainif^" ^^ *^'' "'^«""t ""^ H.g the settlement°ol- othe fccou ts 'uSfh-'^'.'""^^"*' P^"^'' I have now an action nonrlf,? "*'"" ^ mouths, and fulfilment of such agreemen?^' consequent upon the'non- I then visited Louisburf^ with Mr v^ n Conipai.y's Collieries audTnexpluld^f^r"^' "'^^ ^^^^ the m„„...„«. , improvements then attainablJ^&t i iv"^^^ the several Compani ' '^s ^ted t S a^^^^ amalgamation of 1" copper, lead and gold mi nl'r i ^'^'l?"?'* ^'^Pericnced to coal mining and therefore jf^d I ' '' \^^^^ ^''''' "«^^' Reserve a.ul Lorway Erne' ttlT'^''''','^ ''''''^ «» the the Government Inspector ff ml u T^7 ^'^^'^^ f''on. nad also consulted ArUy pZo C-u^''- Ki\therford, that I other cxperceinced Coll er^ mTi mUm^^ I IJuJledge sr, and experience with Capt Bu hi v T i ?T ' '"""^ 'i^'''* ''^'^''' ^ ^'^ort Capt. Geo Scott, (vvhras tfi,^ ""^^'^'.^ *''" ^^''^'"es of Coflierv, enjoyed a fir<,t^i '^^^""^«'" ?f the Block Kousc reliable manfw"]ol^.rent:c;rro"t\.:R" ^'•'*""" "^^ the Lorvvav pits w^.g h- - -* - ''^^^^'^^''^'«5— Tliat RetilKiiatlari of maniiKemout. Govt. Inspector of mines and were in charge of Capt. Arklev S'MrTr v"* ^'°n ^^"/ Dear Sir —Wni you kindly give me a call here on your way to the office. Yours truly, D. J. Kennblly." .v,^V*^® ensuing interview he surprised me by suggeetinff that I should resign my appointment as Manager, statins that such position was incompatible with my duties as contractor tor the Louisburg railway, and in further explanation added that the prospects of trade and the financial condition of the Compan hinted, s amount < to cance upon wh unless I report uj returned meanwhi way and offensive shake mc cation ar give cred ence over After s elusions t possible t Because ] freed fron heavy sto( maturing suspensioi I there! great advi wishes, th; ditional a would cov stated wei tension), tl line betwe^ which he i view with Henry) bei addressed ] J). J. Kenn Dear S office of ma of works fo in accordani you this mc 'apt. Arkley, fed by advice aager of the dge, Jr., and 5 latter being mpany's col- worked from sment of Mr. B mine,) and 'the General in for a short 1 to the fact, d worked aa future araal- ant, or other Jtarted with- fact all was Y of the coal to judge of ight of pres- 2 time satia- •ing charge, scited Com- c., and that ) resign my ical to my- i with what it, he wrote ^ey), hureday. ill here on fTNELLY." su^geating ' itating that contractor ion added, ^ tioD of the I w-y and shut down he^ 'ol Iriet Zt tL^?""'^"T ''"^- After some hours of reflection "however I cam<. fn +!.« elusions to rosio-n i«f Ti«„„ V , , • , "^® ^'^ *°6 con- Si , ° alftfar d',l™,°i„' "S""»',»'"<^1' acceptance, ie i gre„t!'aJ™,Ta.r rtoS ^-wT'"^' "ho . pr„„™od that Henry) bei t nrl,^V Af,^ '^"',™'"' ''°''"'""' ('""'' Ju'lfe'e J>. J.KennCy, E.,., Mana,«, 2^^ J",?/^*' '«'*• iOU..recpcv;uUuy, i*. l\, GlSBORNE. e Memo. That Mr. G. resign his office as manager and chief engineer of the Cape Breton Company, Lt, with salary paid to date, plus X500. Thus, in fact, I was paid, and promised, the full years' sal- ary of iGlOOO for my voluntary resignation ; and if further proof be necessary, I afterwards wrote Mr. Kennelly a letter under date July 9th, 1874, from which I submit the follow- ing extract: — "That the £500 comjyensation is to be paid upon adjustment of coal sales and consignment account, said adjustment to be made within three mouths from date;" and my resignation is thus acknowledged : "Cape Breton Company. Sydney, July 4th, 1874. F. l!T. GiSBORNE, Esq., Sydney : Bear Sir, — I beg to acknowledge receipt of your letter of the 2oth ult.. and enclosed memo, accompanying, conveying vbur resijrnation of manaojer and on^ineer-in-chief of this company from this date. Your faithfully, D. J. Kennelly, Manaying Director." But what must your Worships think of a man who noiv ad- vances foul and elandroua accusations, which be swears were made on Thursday, June 25th, 1874, and then addresses the person, whom he so vilely accuses, in the following lan- guage : "Friday Evening. 31y dear Gisborne, — I think I'll fish from 7 to-morrow till the train picks me up at 11. Cum you let me have the prom- ised rod and line, and oblige, Yrurs truly, D. J. Kennelly." And if still further proof be necessary of the truthfulness of my assertions, and the unblushing falsehood of my opponent,' I now quote from my letter to Mr. T. P. Baker, R. N., C. B., who was interested in my proceedings, and was then acting in London as my Agent and Representative, under Power of Attorney. Sydney, June 25th, 1874, My dear Baker, — I have visited the collieries, and also Louisburg, with Mr. Kennelly. He is surprised and pleased with the progress made upon the railway, and also with the quality c the store reinstitu said I w( trade at takeovei free of rei moved el an arran^ down the aid towai railway, '. the Oomj the necess stoppage manager, to be occ is a fact,) also agre By the si them is, c mum outf kindly fee but he th izer of la his own u errs, as pr do both ; s most atte arranyemer And ag£ My dear of his firsl After a disputed a both the Jici ing Mr. St materials i those char^ accounts w iiager and v'ith salary years' sal- if further lly a letter he follo-vv- be paid ;;ouut, said ititc ;" and ,h, 1874. ur letter of conveying ief of this LLY, director:' ho noiv ad- .vears were Iresses the )wiug lan- SVENINO. Qorrow till 5 the prom- SNELLY." hfuluess of ' opponent,' . N., C.B., ;ben acting sr Power of th, 1874, , and also md pleased 30 with the quality of the work done ; but he was down upon mv havinc^ the stores (a system, whicii, be it here observ-eT he^.in "ff re ns Ututed as proved per subsequent letter,) and I a once said 1 would give them up if he would takeover the stootn trade at cost and charges. S^inally wearrango.rthat he shtu d W^!l/i T I *'^^§"o^^« tor workmen were disposed of or re- the neccssU>, or economy being the order of the day T/t the a^oppage of the (colliery) wSrks would make nS^'officc as t^ bT^c'c^^Tr wftlX "^,"""^' '' "^ "'^^^^ *''- "PP"- "d La factTw P L.T *'^^, /^'l^^-'-^y contract (which entre nous IS a tact,) ^v hether I would not resign such oflice. To this I also agreed, he paying me salary in full to date plus So By the stoppage of the collieries, the contracrfo? wofki.i^ mrou'tput"7o'r"',f ^'' ''' r^^--^" wafforr' i? mum output. To myself personally Mr. Kennelly expresses kindly feelings, and also as to my open and fafr deS in' s but he thinks my services much more valuable aJ an oS' izer of labor and driver of works, than as a smerdown(li^: Hn A./T ^1 ^^ ™^ telegraphic experience ; but I cannot do both ; and, as active work pays best, I naturally LveU the most attention, and am, therefor, ^ite sSld rftl l^nt arrangements to relieve me of sitti . liion work ^ . , . Yours, &c., F. N. GrsBORNR. And again : -^ ^ "Sydney, July 10th, 1874. nfff«t'''.^''^"''~-^^^""^^^''-^e»"elly].ag modified many ^t'er ':^Viorgr"?nvrstts:^'t r '^^^^' r ^"' disputed account)endr/^;|:S tlie' cotpanT^nd 'I2t I^ffn • ; ^*^^^".^S to gi^e my stores the first offer for anv materials required by the collieries at prices not exceeding those charged at other stores. He also remarked that aUmf accounts were honest and above board." ^ TTftnrn Xr.a p GlSnOivNE. AficiiKutiiiii iii{iUM«t Mr. KIkin. Stores. The above letter is fully conlirmod by the followllip: note : Sydney, C. B., July 9th, 1874, D. J. Kennelly, Esq., Bear Sir,— ["Memo. Items."] I understaiid from our verbal arrangements of this even- ing. "That Mr. Sterling is instructed to collect for me miners' stoppages (due) to date, and also back debts (due) from miners employed, or if re-employod, on the company's works. That Mr. Sterling is instructed to give me the first offer for the supply of any goods or material's required at the collieries, and that my tender bo accepted if the prices do not exceed those of other storekeepers. Yours, &c., F. N. GiSBORNB. And now your Worships it may be well that I should ex- plain more fully the modus operandi under which my stores were conducted, and thus meet Mr. Kennelly's slanderous accusation against Mr. J. L. Elkin whom he accuses of re- ceiving a brihe of X2,500 stg. iu order that I might obtain his consent to my supplying the companies' colli'eries with goods from my stores, a practice, he it observed, which I have already shown was sanctioned and approved by him- self two years later. The mines stores were opened about the end of May 1872, and Mr. Harvey the Manager and Financial Agent of the Glasgow and Cape Breton and the Schooner Pond Com- panies arrived at Sydney in June. He assumed, among other duties, the charge of the above Companies' Collieries until after the arrival of Mr. Elkin (with full powers as their repre- sentative) during the fall of the same year. After an in- spection of Mr. Harvey's management I again took charge of the Collieries at Mr. Elkin's special request, and continued so to act until March 1873, when I entered into a contract with the above Companies' to mine their coal at a fixed price per ton, to bank or into railway trucks. All coal thus raised was duly weighed and the quantities checked, by two tally- men, the one being appointed and paid by Mr. Harvey on be- half of the Company, and the other by the miners who were cutting the coal at a price per ton. Such daily out-puts were telegraphed to Mr. Harvey and myself, and all accounts were settled nonthly and paid by Mr. Harvey. From the opening of the Collieries until Mr. Elkin arrival, the G. & C. B. and Schooner ] placed the fifl investij arriverl at to obtain, goods fro 11 Company that .\f r. E any bribe ( and ciilum Mr. Elkin counts for monthly, d do with tli( to ray hea [ tunately hn [my store pi cent, advan amined by ling, passed counts, for to my store goods were Mr. Kennel transferred membered ppaies at an 01 construct full knowl( accounts for examined a Nichols, the and that I w annual rentr It will be that the Glai were only eu articles from lieries at m accounts beii mines, and c The final i the Glasgow loss upon th )\vili!:;^ note : 9th, 1874, . Items."] )f this even- oct for mc debts (due) } company's me tlie first uired nt the prices do JlSBORNB. should ex- L my stores shiuderous nises of re- ight obtain lieries with d, which I jd by him- May 1872, :ent of, the 'ond Com- nong other ieries until :heir repre- ^ter an in- k charge of continued a contract fixed price thus raised two tally- •vey on be- who were -puts were ounts were ]e opening C. B. and Schooner Pond Companies imported their own snpphes and placed them under Mr. Harvey's care; but after a\nos'c re fifliMvestigation and entirely unsolicited on mu part Uvi\k\n arrived at the conclusion that it would be 4C\ onon ica Inl'r"'"'''""^^^''''"^'''''^^'^^ '-•^^l'^''-^^!. ^'^iiM^ small ware goods from my ,tores as practiced by the Lorway Emery thaT\T7Flt'r^ ^'"'- f'- F'^'^y ''''''' accordini^Iy bu^ that Nf r. Elkm was induced to tUvor mc in considenition of auv bribe or payment, past, present, or porspective, i a ase S F ki'n""?? r "''r ?■ '''••• ^-:--"y'«. and douuies^ count, fan 1 Pi-f ecute hmi for it in due course. Ac- n?n. /n 1 f" '"' i supphos were rendered to Mr. Hurvcv month y duly certified, and without my having m^tl Ir/o to mv h 'Tir.'''''^'' '"vr"? giving general ins'truc fons to my head storekeeper, Mr. John McDonald, (who unfor- tunately had the whole control and solo manar^ement o a my store purchases and sales,) to invoice all gooTs at 10 pe cent, advance upon cost. When such accouufs had been ex amined by Mr. Ilaryey the Company's accountant, Mr Stir- ling, passed and paid them. At the same time counter ac- counts, or railway freight and charges upon goods conveyed to my stores were put in as an offstt, thus pfoving tl at tl'e goods were my private property, and not as falseh^H a ed bv t^i;^'""i^^ P"'-^^^«^'l "Po» Company's account, and then trans erred by me to them at a profit. It should also be re membered that I leased all store buildings from the Com pp^ies at an annual rental of 17i per cent. Tnterest u on co^ 01 construction, and that all golcls were suppl ed w th the full knowledge and consent. I may here add that the accounts for all goods furnished to the Lorway Company were Sol'^th?^ passed by their London JccouiS, Mr? fn^ .? : T^" 'f'f^"* '" ^ape Breton, before bcinir paid annX'iIir ''' ^""^ °' '''''' ''^'^ ^-'^^"^s at a'siS +1 ^wV''l.^® ^*^®"' ^^o^^ever, from the foregoincr statements that the Glasgow & C. B. and the SchoonerVn'd Compa.des were on y supplied from the Fall of 1872 to March, Svvith articles from my stores, as from that date I worked he col lenes at rny own expense and risk; the same system of accounts being continued; goods being churgeraS nsUhe mines, and credited to the stores' accoifnt. ^ ^ the Glasgow 'fc B 'f^^' '°""''f/-' ^"^ ^ ^'^"^^ P^^^^ "PO" cne uiasgow & 0. B. s Reserve colliery; but a much heavier loss upon the Schooner Pond Company's colli^;;., alSgh Ii ^^^^^^'^ sales effected by mysell ner as possible. 1st. The result ot sales ,eenient and agJnts when I was IP^^'^I^^^.^'J,, letter (A) hereto with tlie several companies, ^".^;", '^' ^^uent consignments rnnexed, my authority f^J^^^^f SgClerBtood^hat no of coal upon company s account, J ^^ g ^^^^^^ ^.^j j corn- purchases were made "P^^^^-^^^^'ent, and that the results ^^enced shipping <^°^^ "P°" ^^f ^f "ounted for to the company of all such consignments ^vere accou .^ perhaps made Spon private account. , 1^1,. w N Gisborne during season of 18T3: Statement of Coal sold by F. JV. Crisoor/ MONTREAL. ^ :^s„£r;^a:s Z ax M.f'thetlutofX above 'vo... cgc. v . about 83,500.00, there was still a nett average rosult ot over «^i\Sr H;'^r nul'efoT'tris qrill-ve ,.oe„ sold, b„t f„,^. rtWo'ct -l" t'he t,ier .boots, .A ^^'^^^'Z^ :SL:'fa!C„..l5te™aras.Laieab,n.^^ r»a::;:fs,:;;tt sstS'sl' fj oot.:,!i orlo r& H ;LUt"e G i"o b" V Comi.a.iy at e2.25 cents pa- to,,, bav-ing ,^:tltab,5™e|a.osbi,coa^^ l,h„„c.l ,,, ""f.^) '" 3™i ri isb Lio,>," have either been r R."bv '^ ' '.rrStea companies, or direct f,-,,,n agent, fi,?.,roxol initio,, of tbo outstanding notes, ul„cl, oi ght In final expl.m.vl, on oi i ....n^e'liat wben qnostions ?:!;„"/ :l;f„ed fo,"t fewLndred dollars, wl.iel, wa, aftcw.rds repaul tome by Mr. Uarvey, the coinpauies manager. 15 The captain of "Peerless" next clainfed a much lamer 8um, and as no nnmediate arran^^.eraent could be made S --- ''""" him, he, upon arrival at Montreal, landed the ca?go and he d It h rough h,s agent ; but at last the dispute was arrar^gsd 1 y Mr irarveys consent, the coal was sold by Mr. Burke on company s account, and a note endorsed by Mr. Harvey Tlfe"' T ;•' ''''?^^'' '''''^ '^'' 'l^'^murrage agreed up^n ^ M 1,1"? "''^'■^^ ^^^ purchased by Mr Molson of Montreal, he being charterer ot' the ship ; but payment 'for the coa was refused until his claim forVi'emurrage ^' set tied. Under instructions from Mr. Harvey au action was commenced by Mr. Burke, at Montreal, to recover tl e vaTue of said car.,0, and a judgment in his favor was finally o" tamed ; but previous to said judgment being given, Mr \Io 1- 8on become insolvent, and I am not aware vvhat dividend ha3 been declared by his estate. The " British Lion " was sent to Quebec with a trial car-o Irnt?- 7V\ '^"y on company's account as per paragraph from Ins etter to mo of 8th June, ls74 :-- 1 1 Live . Id e Quebec shipment lying uver since' la.t vear at ^5 50 i cl al- dron It «nnply would have eaten itseff up in charges," veLeh f ;"whlh H V '^' ''''-''' «f the three mentioned vessels (toi which the live notes, now over three years past d..e were given,) were assumed by the company, tereby SvmelS't '"'r^^''^'''^ "i^"' "■^''^^' '^'^y --- obJLineZ 1 aj ment for sanl notes was not, and I believe never would futc^l bv tTf''^' '"'^^^ '''\ ^'^''^ proceedings been insti- contract%c '""''''' '^'^'"^^ ''^ Lo.ushnr^ railway siiV'r! M/^^''''™?r' '^"^'"'''^ ignorant of the final result of sad cargoes as the returns have been made direct to tho company or their agent, Mr. Kennelly them asserts: otW Di.-n^;'"''V ^'«'/«'-"« & ^^'ker had conspired with o he Directors to make large and fraudulent profits by tho purchase ot coal areas which were afterwards so d to the vari^ ous Companies recited at exhorbitant prices. But what are the facts, your Worships, before those recited ovT.""Vri''' '^r^^' ^' ^" ""'y P'-'^-^'t'e characte bonded e'-oS: th.r ihv •" ''^'' "''^^ °" ^' "^"•- t''« presumed route of the railway since constructed to Schooner Pond. Tho nro- perties were then of comparatively little value as they were without facilities for coal BhipmeuiB. "" J^y ^^tIO I I Coal area asBO- These bonds £ main- in I ' 16 tained for about two years, paying the interest rerjularfv • but when near y expired and renewals refusell of fflt fu , I associated mysef with some gentlemen who-^med and registered themselves, under the Joint Stock Com- p mess Act, as the "Coal Area Association, LhniteT" ad to this association I transfered all the lands bonded or purchased by me as agent and trustee. A lar^-e um of ready money was thus primarily expended ina'quirn^ these properties, and in due course they were disposed S' b>/ the Association to the various companies reci ed bu m .r.ry instance the great preponderance, of the con ider ation demanded, was accepted in the ordinary shares of the K, T?o'^' ^r'^'''?F' ^"^ I" °"^ ""^''^^'^ ^"^tance, recited by Jf h? S ''"h'i'" P^r.'^'^^f .^>- 1^« Cape Breton Compan^ ?L [\ f .;' . ^^-y^." ^"^^''^'^I'noral" areas for £42,000 (as set forth m their original prospectus) £30,000 was accep ed iii shares and only £12,000 was pdd in cash al! f-^nfn^ ^'"^ r opportunity cf selling them in Canada for £o0 000 in cash and objected to the sale of the properties to tic Cape Breton, until assured by my associates, tWwe mus fo ego present cash profits as the'acquirement of all the r^ ^JT.r' ''^'''\ ^^'' ^''^P' ^''^ton Company's railway \Z to |5^T™°;"* importance to the companyf and would capital """' '"^<^^t^e"t^ i» their ordinary share Another of Mr. Kennelly's false accusations and most easv Cano'C '"'r''"' ^ '""^i the Reserve area to the GlaTgowS Cape Breton Company for £40,000 vantage; but thdr pros- pectus shows that £5000 in cash and £5000 in shares was the consideration paid for the entire enterprize, including elabor- ate and costly surveys of the proposed 'railway ifne, the Reserve area, and also the pnliminari^ expenses of forming and orgamzing the Company, such hemg the only Z.^«/marer n which provision can be made for such necessarv outlay and I can truly add, and prove by correspondeuce "and accounts that personally I never received one dollar or a single share ot the above consideration. ° Before entering upon the main subject before your Wor- ships, VIZ.: The disputed claimsandcounter charges relating my contract for the construction of the Louisblrg Slwaf Zu ?'''';J n""! f ^T ^"''*^^ ^« «'^>' i" '•eference to Mr. S nelly swilfidli/ false (because to him already fully explabed) accusatson relative to my dealings with the - Louisburj Land Company's " funds and Drocertv. H« «.va . ■^°"''^'^"^g 17 Breton Co had purchased and one of which I had mort- pged to the Company, knowing that I had no title to ^hc and upon which it was erected. Also, that I had paid a less sum for one lot than I had received from the Company » Iho Loui8burg Land Company, Limited," is an assoch- 'TheXTA' '"; '''^■''' Pr^^^ similar 'objects as :: ont^^:lf/\ ' ^?«««i^ 'O". Limited," viz. : the acquisition of lands at a low price, with a view to selling them at a con- siderable advance, so soon as the completed loorks of the C'« L Breton Company Limited, made theni of value. It so hap- pens, however, that Mr. Kennelly is one of the sharehoS who own all the lands thus acquired, and is thus satisfied but because he was not included in the eight or ten gon'lo: men who formed the Coal Area Associatio?, he seekf.^di all the malice natural to his envious and avaricious natTire to throw discredit upon their transactions Twenty gentlemen all shareholders in the Cape Breton Com- pany, are equal shareholders in the Louisburg tand Companv ?"lO// nfT'"^"'"''; ^'-^^^'''^ executors' and myseTfS 1-10/A of the property and have paid l-im of all the monev required for its purchase and subsequent manao-ement ItL important to remember such fact, as it utterly ^discredits the charge no^y made that I have voluntarily purchased and paid tor lands already in legal possession of the Company ^ Under an old judgment oi nearly 20 vears standiifo- (which subsequently and inadvertently was made the reakstmeZ o conveyance) the Company became possessed of a c S clear y specified property purchased by me, as their agent from the late Mr. John Scott, of Louisburg, fo'rthe 8umff $7 000 t^iTftZ"-''^ nT^'' ?'' %' J"^f™^"t Mr. Kennelly «o^ seeks to claim a« the estate from Kis executors and amon^ other properties the lands of a Mr. J. Martin and Mr S^ Tutty which tliey purchased and paid Mr. Scott for manv vears ago and have since improved, being meanwhile fn happy Ignorance of the aforesaid judgment. ^ Subscque tly 1 purchased these properties for $l,606\nd Sl,100 respecUvJh and any Court of Equity would sustain sudi course o^atlo Nothng, however, more clearly proves the greed and co templa ed injust.ce of the man (who now t?ies to re cr^l inmself, ,f possible, for the scathi, g rebuke which I adm fe- ~iismim. 'I ■ 1 1 I 18 tored to him upon discovering his intentioua) tlmnhis present uttempt to rob those poor men of their honestly acquired properties and u'ho now accuses nic of appropriating? to my own use $1,400 of the §1,600 purchase money paid for the Martin property. Let us examine W\g facts. ftiYSo" "i'^''''"'"« V'Vi^^^ ^ f^''^'^ ^^'^^ ^^'^ Martin, per check, «1,400 and, per cash, $200 (which I brought out from Sydney at ins request) as he wished to imestW,^ §1,400 and to pay oil Mr A\r. II, Morley builder, had erected a store and offices in Sydney and that I become, during construction, a 2-3rd8 partner or shareholder in a venture which yiehled us 12 per cent interest upon its cost of S4,200. As the largest share- ho dor, the property was registered in my name— Mr. Morlcv builditfo-''' "'''''*"''°'' '^'''''^ ^*'' ^1'400 as his share in the It was lUs mortgage that Mr- Martin purchased by advice of bis own and the Company's Solicitors, (Messrs ]w[cKay & 111 ,) from Mr. Morley, to whom the 81,400 was paid, and it }Z "i""' ^^'^^ ^ '"^'''' '-eceived a dollar of the money and to him ""''"^' "''''' '''^'''^^ "" ^^^^^ ^^'^^-gc already explained maTnl'tri?'"; ^^'^ I^^^«i«burg Land Company accusation I may as well at once explain thatafter surveyin J and laying off ho streets and lots of the proposed newtown IJn accordance '7i n '! """"T^^lf intention hefore leaving London in March, rotir,lf ; f ^""f^^'^ t'^« necessary building materials pe • cable despatch, and afterwards caused to be erected for the cornpany s requirements sundry buildings, composing2double dwellings suitable for laboring men, a farge birn aSd stable nd forges presuming of course, that the Cape Breton Com- aiiy ^^ould pay for them in due course, which they finallv lid and this constitutes the sum of ^1,400 received by m^e Kn^f/lV "*• \^-' i;''^''"-^^' <^«»tract,) and to whiclfMr. Jvennelly refers in his charge, .X^}^^ caused to be oroctcd for my private use and at my .rivute cost, a dwelling houso outside the limits of the street lots, presuming that, the Louisburg Land Companv for }r.f,o 1 f ''^"?""'^'-^^>'^« whatsoever, would only have been too pleased to sell me an aero or even half an acre at a reasonable price, and when Mr. Konnelly arrived in Cape Breton I at Ins ^nshgaton, addressed a letter to the Company, sol ci tin'' m part acknowledgment of my services, a t tie io an un nf- 19 proved acre of wild land, offering for it over three times its original cost to the Company ; but thro', as I now believe, -Mr. Kennelly s secret machinations, the land was offered me in exchange for the transfer of a miningliccnse (obtained sur- reptitiously by one of the Company's employees, whom I had no means of controlIing,)and thus the matter rested pro tern- but with a final assurance, thro' Mr. Baker, that the Companv would do what was liberal and right if 1 did not succeed iii obtaining the coveted license. Having meanwhile, liowevor, received an assurance in wntingtrom the Company'.; Solicitors, Messrs. McKay & Hill thatl had an equitable iiUe to the land in question, I transferred m my then capacity of Trustee) all the lands previous! v bonded and purchased. Some months later (when pressed for money m consequence of the Cape Breton Company's in- ability to meet their engagements on Louisburg R. R., and when they had advised me that they were borrowing money at 12^ per cent, themselves) I cabled to London a request, to obtain tor me XIOOO on mortgage of the house in question, which money they at once sent with a full knowledge of the foregoing facts, the Directors of the Cape Breton Company being identifaed with those of the Louisburg Land Com/any When, however, I discovered, at a later date, that tlie £1000 had been advanced out of funds set aside by the Cape Breton Company to meet the interest upon their own bonds shortly becoming due, and that it had not been borrowed from inde- pendent sources, I refused to pay oither interest or principal pending a settlement of my claim against the Corapan/, I replevined all the property conveyed under such agreement when seized by the Sherift; and still hold possession of said property pending a setllement of accounts. Mr. Kennelly next charges me with having sold the Solici- tor^ip of the Glasgow and Cape Breton Company to Messrs. McKay & Hill for the sum of $1,200; but what are the simple tacts of the case. Upon the formation of the Company I ap- pointed Mr. Alonzo J. White (not then, as now, Atty. Gen^ of Nova Scotia) Solicitor to the Company ; but sooh after- r/ i^vJ^^ reasons at present quite unnecessary to explain. Mr. W hite wished to dispose of his appointment which was estimated to be worth $800 per annum in prospective, and requested me, as a favor, to negotiate the matter tor him with Messrs. McKay & Hill with whom he was not upon friendly terms. Upon my recommendation fand I m&v h^re observe that the arrangement was a good one for both the Saleoftolicitat- ship. Iff If-' if l.oiilaborg rail- way contract, 20 Company and the Solicitors in qnestiou) the purchase was completed, and the money paid over by Messrs. McKay & IIill to Mr. White, and I need scarcely add that I never re- ceived or claimed a dollar for commission. I think, however that both Messrs. McKay & Hill and the Hon. Alonzo J. White have now every reason to exclaim, " Save us from our friend Kennelly!" for the transaction was, it appears, an unprofessional one as between firms of " highly respectable lawyers." And is it not somewhat singular that Messrs. McKay & Hill were " weak enough" to have exposed this transaction m an endeavor to obtain an advance from Mr. Kennelly in consideration of the purchase made from Mr. White? You will thus perceive how readily another of Mr. Kennelly's false and malicious charges is explained and dis- proved. And now, your Worships, I must, as briefly as ponsible, relate the history of my Louisburg Railway Contract during which I shall endeavor to show, (by extracts from original correspondence) the statements and terms upon which I undertook it— the nature of the disputes relating to " right of way, land purchases"— trucks— " orders to accelerate speed of construction in advance of contract time"— ordinary extras incidental to all railway contracts and specially provi- ded for in my own'"— and final breach of contract upon the Company's part, consequent upon their financial difficulties." I WU9 induced to enter into a contract for the construction ot trie Louisburg Railway and Pier upon a statement made by Sir James Anderson. Chairman, and endorsed by Mr Kennelly, Managing Director, at the first general meeting ot shareholders in London, myself and sureties, Major Martin Petrie aud Mr. Baker, being present, the truthfulness of such statement having previously been impressed upon us by Mr. Knn-ielly in private conversation. The Chairman said, thus publicly, that £90,000, out of the required £95,000 for the con- htruction of the work had already been subscribed, and that a turther amount was promised and in reply to an enquiry made at the instigation of one of my sureties answerd that the said sum of £90,000 would be applied exclusively for contract purposes, and would not in any manner be used on account of liabilities appertaining to any of the amalgamated Companies. Upon 811 ch an assurance being given, two thousand pounds of additional capital was subscribed for by gentlemen present ^Jl ^'^^^""sidered our security for paymen^ satisfactory. But wiiat MCic the facts, your Worships? Before I had well purchase -was isrs. McKay & at I never re- bink, however, on. Alonzo J. VQ us from our it appears, an ly respectable ' that Messrs. } exposed this mce from Mr. lade from Mr. nother of Mr. ained and dis- '.y as poBsible, intract during sxtracts from I terms upon tes relating to 's to accelerate ac" — ordinary )ecially provi- ract upon the il difficulties." e construction atement made orsed by Mr. leral meeting Major Martin ulness of such )on us by Mr. lan said, thus 00 for the con- bed, and that o an enquiry jwerd that the / for contract on account of d Companies, isand pounds emen present sfactory. But e I had well 21 commeuced operations in Cape Breton, my agent, Mr. Baker was called upon to subscribe, and did subscribe, £2,000 cash' towards a syndicate or loan, dated July 10th, 1874, for X70,000 required to meet the first certificates for work per- formed under my contract!! The natural and immediate con- sequence was, that the 8 per cent, preference shares (which I had consented to accept in one-fourth part payment of mv contract and which were quoted at a premium when I signed it,) became utterly unmarketable and valueless for contract^pur- poses. No one would accept such shares in part payment of railway material as is usually the custom, and I was thus embarrassed from the outset. Mr. Kennelly was not slow to take advantage of my necessities and as Managing Director and, I may add, factotum of the Cape Breton Com- pany he dictated just such terms as he thought fit, and in proof thereof hear what my unfortunate agent wrote in answer to my complaints : '-' October 7th, 1874. '' Mr. Baker to Mr. Gisborne, — " I was at the time obliged to consent to anything asked me by Mr. Keunelly except that of svjning your death war- rant!!"^ But, adds the poor man, "it will, however, be all right in the end, for Mr. Kennelly desires me to inform yon with his kind regards that he is quite for you {going for you would, however, be nearer the truth) now and hereafter, and will assist you all in his power." I am advised that in consequence of the foregoing misre- presentation of facts, thati am entitled to regard the contract as a cash transaction only, and in fact the Company, (by grant- ing me an amended contract, in part acknowledgment of the injustice of the first and Mr. Kennelly, per various admis- 8ions,)have endorsed this very reasonable view of the case. As I shall have occasion to refer to this amended or supplemen- tary contract hereafter, I will only now state that itjyrofessed to give me £10,000 additional in cash, thus leaving .£13,750 payable in the 8 per cent, preference shares, but which waste paper I decline to accept for valuable considerations given. In answer to Mr. Kennelly's first charge, namely, that I had failed in completing my contract although paid in full by the Company for all that was done I invite your attention to the following balance sheet prepared by mv Accountant Mr. W. H. Clarke, from the accounts current rendered to me by the fl! ;;i! I I i 22 rompany and more fully oxplaiued in the dotailed accounts, ree appendix marked B. Balance 8hekt. The Cape Breton Company Limited in account with F. N. Gisborne. l^r- 1876. To amount of Contract £95,000 Extra Expenditure upon ac- celerating work within con- tract time -. 5,472 10 7 Ordinary Extras 3,224 7 11 £103,696 18 G <>• 1876. By amt. paid for material as per. account £27,356 13 6 Cash payments as per aect 38,827 17 2 Cash advanced upon signing Contract and not to be , charged until final ■ cttle- ment of account as per supplementary Contract clause 2 5,000 00 Amount estimated for rolling stock as per Letter March 3, 74, to Maunging Director 9,500 00 Maximum balance of resident Engineer's 1875 estimate for completion of contract ^vork 7,00000 Balance due H, \V, I. Works guaranteed to them by the Company ' ... 1^337 10 tt;C,0::-00 8 Balance due F. K Gisborne £14,624 17 10 Plus amount of private account 402 19 9 £15,027 17 7 Or ^73,111.80 Plii -Jamages 71,174.37 /aid as claimed under the writ — . 0144,286.17 'tiiilod nccount.s. (h F. N. Gisborne. 7 11 —^103,696 18 G 6 2 -.i tC,o:i, 00 8 ,X14,624 1710 402 19 9 ■X15,02717 7 30 57 -^144,286.17 28 From which claim .£1,000 will bo deducted upon rolousc ot the Contractor's property now hold under mortffaffc hv the Company. ° ° W. II. Clarke, Accouniant. Th v;iriou'^ itoms in the above Balance Sheet will bo ex- plaiucJ aa I pn)ceed to answer Mr. Kennelly's statement. The next charge made by Mr. Kcnnelly is: That I wrongfully purchased land required for the light of way, &c., in my own name and held possession until compelled to transfer it. B^'my contract, which it is here advisable to remind you '! was for the gross or lump sum of ^£9500, plus extras ; I had to provide all such lands at my own expense, and purchase them tor and in the name of the company. I therefore ac- cording to law, caused arbitrators to be appointed to assess the value ot said lands, and (as I was not then an officer of the com- pany aa was the case when the contract was made,) tho awards were rendered, as between myself, as contractor, and the property owners. In consequence thereof the title deeds, m 80 far as they could be obtained, wcretnade out in ray own name by the conipow/s solicitors, Messrs. McKav & Hill with whom I had previously arranged that a single deed of conveyance should be made from myself to the company so soon as all the titles had been approved and obtained ; the company's resident engineer, Mr. LoBretou, being also fully aware of the mode of purchase. Before, however, the titles \yere completed, the Cupe Breton Company went into liquida- tion, and several months later, when a demand was made upon me for the transfer, I was advised, by counsel, to refuse pending a settlement of my claim for work performed and breach of contract. Soon afterwards, however, I visited Loudcu by invitation, and upon a promise made by Mr x».ennelly, in his then position of official liquidator, that, con- conditionally upon an immediate transfer, my claim should at once be referred to arbitration, I acceded to his wishes, and yet you now find this said Mr. Kennelly, resisting- (with all the maligpity of which I have proved him to be capable.) the arbitration order, which after manv vexatious delays anil heavy expenditure, I have at last obtained from your own Su- preme Court. Hft further accuses Ine of misappropriatinii- the sum of £700. paid by the comiumy as an item for these ••ands, audiorwiiicuhc claims to hold Mr. Baker's recel- i)nt there is no such special sum recited in n^y contract, nt icr iiiliviy I'.rtu, lutercst, GoRl triu'kli. 24 is there any covenant therein that I should account for Hny payments made account thereof. It was advanced in like manner, as were other lump sums, for engineering, freights, customs, contingencies, &c., and I had perfect liberty to ex- pend such amounts in accordance with the more immediate requirements of my contract; and it must not be forgotten that I have expended a much larger sum upon works and materials, as certified by the company's engineer, than the aggregate amount of money received from the company. Mr. Kennelly also says : That 1 covenanted to pay 8 per cent, interest upon cash advanced account railway material purchasea for me by the company, and that XGOOO is thus charged against, and repudiated by me. Now, what are the facts ? It was never agreed nor antici- pated, when I signed the contract, that I was to pay any interest whatsoever, and the first intimation of such ii demand was a letter dated August 25th, 18G4, Mr. Kennelly to Mr. Gisborne: "I think that you must allow that the 8 per cent, upon cash advances for materials which the company charges you is moderate, considering that they arc borrowui}/ the same at 12^ per cent. ! ! " and with such primary notice comes a document dated August 20th, 1874, corroborative of the above intimation, and signed by my agent under Mr. Kennelly's skilful! pressure and most friendly assurances, that the interest would not amount to any sum of con- sequence, as it would simply date from the time of pay- ment by the company for railway materials purchased, and run until such materials were accepted and paid for, under the engineer's monthly certificates; and yet X6000 is now Mr. Kennelly's modest little estimate for interest upon bor- rowed money, which ought, according to the public statements of Sir James Anderson and himself, to have been at the credit of the company when the contract was entered into. Mr. Kennelly then asserts that so soon as tho company stop supplying mo with funds, viz. : during tho month of January, 1875, I repudiated an arrangement entered into with Mr. Baker for tho transfer to my account of 100 railway trucks in part payment under the contract; but what are the facts ? In the first place it is necessary to explain that the original ooal shoots and shipping apparatus attached to tho Capo Breton Goiuniinv'g i'ior at S»dfie>J and also tb.eir coal (vnck-'i were very defective; tho coa' was broken up into slack, iccount for Hny vanced in like sering, freights, t liberty to ex- lore immediate ot be forgotten )on works and neer, than the ! company. rest upon cash for me by the i against, and eed nor antici- aa to pay any )u of such u , Mr. Kennelly V that the 8 per h the company y arc borrowi/ifj primary notice , corroborative gent under Mr. dly assurances. i sum of con- 3 time of pay- lurchased, and )aid for, under £6000 is now rest upon bor- blic statements en at the credit 1 into. 1 the company the montn of t entered into of 100 railway it what are the lat the original to the (Jape ..... ,, ...,».,, up into slack, 26 and a large amount of labor was required when unloadinrr Perceiving that the reputation of the company's coal was thus being ruined, while at the same time the shipping capacity of the pier was reduced to a minimum, J invented L new tip shoot which eftectually overcame every difficulty, and was adopted by the compaiiv; but without any confpensation being awarded to me. The company's old trucks were altered at considerable expense, in order to render them serviceable; butouly after considerable opposition from Mr.Badham floco- motiye superintendent) who meanwhile had tried several ex- pensive plans of his own which resulted in failure. The com- pany were however still deficient in necessary rolling stock for the Schooner Pond traffic and finally determined to order 100 additional trucks for such purpose. At my suggestion, com- plete drawings and specification, for an imprSved form of truck, were prepared by Mr. Albert Hill the company's engineer and manager at Lorway Colliery, and after luy ap- proval were duly submitted to tlie company, who then passed a resolution authorizing me to order 100 trucks for use upon their Si/dney and Schooner Pond Line, Finally a tender for oQ trucks was accepted from Messrs. D. Starr & Sons of Halifax, who ofterod to supply them through an American firm in Massacliusetts, and 50 were contracted for with an Lnghsh firm both contractors being furnished with copies of the original drawings and specification. In due course the American trucks were delivered, by the manufacturer in per- son, at Sydney Cape Breton, where they were received and accepted by Mr. Kennelly himself, who ordered the account to be paid. Upon subsequent trial it was found that, although built to specification the springs were not placed quite hifrh enough and in consequence the truck bodies would not carl-y the required 4 ton load witliout occasionally making contact with the axle gear. Mr. Kennelly then requested the com- pany s servants Messrs. Badham, Rumble & Sterling to furnish him with a condemnatory report upon them and it is needless to add that they were pleased to report as directed. Some weeks later the English trucks were delivered and proved to be satisfactory, their springs were properly placed and amply strong, thus the spccificUion was proved to be correct and I was free from any possible blame or responsi- oility 111 tlie matter. ^ I must also exjdain, that in the contract for con- structing the Louisburg railway for the himn a"'" r.FfiO'^ nni^ plus extras, it waa stipulated that I shouUrfurnish two loco* I'urrhHBi' If trucks. i PI Rt'fiiRSl to ac- cept tniclu- 26 motives and 100 trucks (at an estimated cost of £9500)for the equipment of that line when finished, and meanwhile that the company should furnish me with two eno-ines and 50 trucks free of charge during the construction of the railway _ Imai,nne therefore my surprise when I received the follow- ing letter July 28th 1^74, Mr. Kennelly to Mr. Gisborno : ''It has beenruled, under the circumstances of the case that the 100 trucks furnished -50 by Messrs. Starr k Co., and 50 trom this side— shall form the 100 trucks to be delivered* to the company under your contract, the same to be delivered in gocd working order and capable of carrying safely 4 tons of coal. It IS trusted you will acquiese in this \evy reasonable arrangement, which will tend to ovp.rcome a dilHculty ex- perienced, so far as concerns 50 of those trucks received from Messrs. Starr & Sons. ! !'' Mr. Baker, per same mail advised me "that he should be obliged to agree to such an arrangement as the company were short of funds," to carry out all the provisions of the contract Per return mail I wrote : to Mr. Kennelly » That Mr Jiakerhad evidently consented to an agreemeiit relntive to the 100 trucks without knowledge of the^-ircumstances under which the contractor was asked to accept them under his con- tract. And immediately upon receipt of a copy of the agreement I wrote Mr. Kidson (Secy to the Cape Breton Company) as follows. September 29th, 1874. "With regard to the trucks I have to observe that thev were purchased for the Sclioouer Pond and Sydney line and thatinany of them are in use upon that line, while the few supplied me under my contract have the old car dun^reroim screw couplings, the new ones being added to the company's old trucks! I cannot therefore conjirm the conditional atrree- meiit entered into with Mr. Baker to debit my contract with the trucks now in Cape Breton." At the same time I wrote Mr. Baker "That the truck arrangement is a downright imposition and we must re- pudiate It, or their full value, (jGO.OOO plus freight duty &c ) will assuredly be deducted from the contract ! !'^ The companv repeatedly reverted to the' disputed truck arrangement; but I as constantly refused to acknowledtro the agreement entered into with Mr. Baker vide extracts irora uie lOuovviug subBcqueut letters iv Ihe comimny. I ' 27 October 14tli 1874. Mr. Gisborne to Mr. Kennelly, "I am eorrv tliat I cannot agree with you as to the equity of the 100 truck arrangement; but hope the matter will he settled without any disafrreemeut between myself and the Directors." ° May 12th, 1875 r. Gisborne to Mr. Baker, "In a court of equity the pe iory_ debit against me of £6,551 16 4 for trucks, whic , Mr erap were estimated under my contract'to cosl ^6^000 onTv, woidd be considered sharp practice and would be disallowed."" r- ch May 13th, 1785. Mr. Gisborno to Mr. Kidson, '« Both as regards the dobitino- my account with the trucks and the tying up of all preference shares as security for £10,000, de facto to cover cost of said trucks, engine, bridge extension, &c., &c. 1 have from tirst to last Ignored the facts and do not believe a court of equity would admit them as facts; but desiring to complete my con- tract amicably and in good faith, I have always trusted that a final settlement of accounts would render it unnecessary to revert to such disputed topics." During the same month (May 21st, 1875) I received the ful- low inrupt demand for payment of all that was considered due from a Board of Directors among whom I had personal friends. Mr. Kennelly says that'l had made a sub-contract for the Mira Iron Bridge, and then sought to make the Cape Breton Company a party directly interested therein, and I thus explain the transaction : — "I contracted with the "Hamilton, Windsor, Iron Works Company" for the Iron Bridge at Mira, at a definite price, based upon plans and measurements duly signed bv the Cape Breton Company's consulting engineer, Mr. Sauiuel, I_ never having previously visited the crossing at Mira river, or having had any opportunity of proving the cor- rectness of the plans and measurements, prior to signing the Louisburg Railway Contract. I afterwards discovered, 1iow- ever, that through an error in measurement the said iron bridge would require to have 30 feet additional span, and in consequence the Hamilton Windsor Iron Company demanded and my agent agreed to pay them, the additional sum of .£840 stg. This amount the company's Resident engineer re- ported would be a fair charge as an extra, and Mr. Kennelly has since admitted the justice of the claim. Before, however, the bridge was completed to the satisfaction of myself, the company's Resident engineer accepted the bridge from the sub-contractor, and authorized payment of the final instal- ment due thereon, the company having guaranteed the H, W. I. W. Company in such payment, and although the com- pany rendered mo an account in which the item was entered as guaranteed, they afterwards sought to repudiate it. In consequence, the Hamilton Windsor Iron Works Company commenced legal proceedings both against my- self and the company ; and in order to avoid law costs, and afford the Cape Breton Company time to reconstruct or ob- tain additional capital, I gave the H. W. I. W. Company a conditionalUcn upon any funds belonging to me in the com- pany's possession, for the amount ot their claim ;— the con- dition im[;osed, being, the completion of the draw bridge to the satisf.iotion of JHj/s^;/; but such condition has never vct 1 III iititru. Mr. Kennelly statts that no authority was given to instruct Kxtra sju'eil. 30 eontrSTmr. ^hnTt^J'*' '^^ ^^''^'^ ^^ advance of contract time ; but I thus prove to tlie contrary. Under date, June 28th, 1874, Mr. Baker (then a Director of the Cape Breton Company, the Managing? Director Mi Ktn follo';;a ""^p"'"''"' '^ "^rf"'). ""'''''' '' Mr. Si^borne as I 1, .= "Ifyoucanget the line open early in 1875 you f? tl r^-^'" ^f'f'' ^^^^^ ""'>' f«^^ I ^^^^'^^« the comple' to enab i tlF^''' ^"' ^'°? ""^-^^^ ^'"'^ «"^ something temporary '' to enable the company to commence business. I am certain m «te In 1-nn V ''^''' ^" .V^ completion and otherwise col jjensaie you lor your energy. June 30th, 1814. tbfti'nf/n/' *" ^^•"- ?^^^^«''.r' ''^^y^'' ^'-^^ materially reduce M .• ?l ^P^^'^S the raihvay to Louisburg telegraph mo Mention the time and additional cost in next letter " Under same date, July 30th, 1874. Mr Kidson (Secretary) to Mr. Gisborne; "The directors are of opinion that it will be to the advantage of the OompZ that the railway should be pushed on with all possible smd i^aker, 'As cabled, I could complete the line by the end of Apnl nexl,presunnng that 1 am furnished with all necessary 7mdL 1 ao not anticipate that the pier will delav mp and certainly we shall have one or two deep witelfe hs ready for vessels by April." -"^nua July 22nd, 1874. Mr. Gisborne to Mr. Kennolly, ctor that those were being placed on the ground before he left Sydney for England ; and it is presumed the same reason will apply in reference to the extra charge for timbers. The directors never contemplated paying, at most, more than the sum of £1,000 for expenses, which you would incur in run- ning ihe line down more rapidly than was contemplated by the contract; and I am to say that that opinion was supported by a statement made by the Resident Engineer in July last." Mr. Kidson enclosed copies of extracts from a portion only of the foregoing correspondence, and concludes by stating that they do not justify the claim made ! ! Now, it is evident from the correspondence heroin set forth,— Ist, That I was induced to incur considerable extra expense, upon the distinct understanding that such outlay would be met by the company, 'a liquidation of the author- ized drafts upon Mr. Baker; secondly, as regards logs, that the contractor's cable from England reads as follows : 'i)nl xr-ni'lr nnil nrli/in onorofi/Mia txr^-pn suspended, during the following June, 1 estimated that from i iiP i Forced Into liquidation. 36 ' jGSOOO to 6000 would finish it and I actually wroto Mr. Kennelly that I would complete the contract if £4000 only was remitted. Mr. LeBreton then returned to London and furnished an- other estimate which Mr. Kennelly inadvertently allowed me to glance at, and when I expressed ray surprize at the total being c£10,000 he allowed that Mr. LeBreton had at his suggestion salted the estimate in order to cover contingen- cies ; such contingencies being, as I then suspected, a covert intention on Mr. Kennelly's part first to deprive me of the result of my labors and then to have an ample margin in or- der to cover the expenses of his future experiments in engineering, kc. Mr. Kennelly says: — That assistance to the extent of £3000 was ottered by the Directors, and rejected by me if I would therefore undertake to complete my suspended works. Such was the case and I think the perusal of foregoing facts will justify my refusing to have a portion of the large sum then due for actual works performed doled out to my men and employees at the caprice of the company's agent in Cape Breton. Such being the actual condition of the ofi'er. Mr, Kennelly says that notice was then served upon my- self and sureties to complete the contract. This notice was served upon me after the directors had satisfied themselves (in accordance with a lithographic letter to the shareholders, a copy of which Ihold,) that the company would be forced into liquidation, as £2,600 only was sub- scribed, (after more than one postponement to allot, towards the £100,000 asked for, and no better proof can be given that up to this time I had been kept in abeyance upon false hopes imparted to me by Mr. Kennelly, through Mr. Baker, than the fact that the special clause in my contract, whereby the Resident engineer was bound to give me 40 days' icritten notice to proceed with the work, in case of stoppage, was never acted upon. Mr. Kennelly next complains that the company were con- sequent upon iny failure to complete the railway, forced into liquidation. I have already proved that the company was in pecuniary difficulties fram its earliest conception, that in June, 1874, the directors were borrowing money at the rate of 12J per cent., although at that time they ought (according to the public statement made by Sir James Anderson and Mr. Kenuelly) to have had many thousands of pounds in the bank at in- lly wroto Mr. if ^4000 only . furnished an- \y allowed me surprize at iBrcton had at ver contingen- jcted, a covert ve me of the margin in or- icperiuients in dent of X3000 Tie if I would I works. of foregoing 1 of the large oled out to my ny's agent in 1 of the ofier, ved upon my- directors had igraphic letter t the company only was sub- allot, towards be given that dn false hopes , Baker, than whereby the days' loritten ige, was never ,ny were con- 'ay, forced into 1 in pecuniary ane, 1874, the 12J per cent., to the public ^Ir. Kenuellv^ 1 bank at in- 37 terest, but in further proof I will now quote extracts from the following letters; — June 30th, 1874. Mr. Baker (then acting as a director) to Mr. Gisboruc, " You must not order the 100 wagons named in your agree- ment, the company will supply you with their 100 new trucks and one tank engine only must be ordered- This arises from want of cash!" December 29, 1874. Mr. Baker to Mr. Gisborne, " I have not received anything from the last two working certificatos of LeBreton (i. e. for October and November), they (i, e. the company) inform me they have not the money and, that therefore, cannot 'pay!" The company then issued circulars and endeavored to raise the ^100,000 already alluded to (in part to repay the loan obtained under the syndicate) and failing in so doing they could neither meet the iuteresi on their debenture bonds nor on their preference shares, and were thus forced into liquidation, and it is impudent as well as idle for Mr. Kennelly now to assert that ray inability to complete the railway, (6 months in advance of contract time,) caused the collapse of the company, Mr. Kennelly took precious good care, however, that the company should go into liquidation with a shot in the locker, although at the expense of some of the bond holders, and hence in my opinion the cause of present delays which profit no one but the liquidators. Mr. Kennelly professess. great indignation because I then instituted legal proceedings in the Supreme Court of N"ova "^^'o'y Scotia versus the company, and claimed ^144,286.17— fabout £30,000) — for monies due and damages for breach oi con- tract. In answer to such charges I have only to refer you to the accounts annexed, and it simply remains for me to prove hereafter that such accounts are correct, and for the arbitra- tors to award me such damages as they may consider fair and reasonable for over two years loss of time and capital. Mr. Kennelly states that with a view to some settl mont I was invited to visit London by one of the Directors, and when there consented to finish' the contract for the sum of i£10,000 in full of all claims previously advanced. This is not so. The facts being as follows : .£10,000 stg. pins 46840 aocouat Mira Brido^e was offered by the official liquidators, as liquidators, if I would complete the railway and pier Action veiHusC. tlffer niiKle Mr. GIsborne. Mr. aiBhorne'H visit to LDuduii 38 they paying for the locomotives, etc., provided in the original contract. At the same time Mr. Kennelly distinctly stated that beyond that sum the Liquidators, no matter liow willino-, had not power to go, as the £50,000 of new capital was being raised upon terms which precluded them from exceeding the sum ottered, and that any additional compensation must be left to the new Board of Directors. It was intimated to me that so soon as the company was out of liquidation, and again under control of the directors, I might rely upon reooiving an ad- ditional £2.000 m cash, and also the exclusive ar^rnr>/ for the sale ot all the company's coal,— an appointment worth (under my management and the advantages of Louisburo- aa u i)ort of shipment) from £2,000 to £5,000 per annum. At the same time Mr. Baker, then upon his death bed offered me all his shares m the Cape Breton Company (about £s,000 worth) and his shares m the Louisburg Land Company (valued ut £1,000 present minimum), if I would end all litigation, and thu.s enable him to settle all his worldly affairs before he died. Under such circumstances. Your Worships, I consented to accept the terms offered by the Officii Liquidators last July, but with this proviso, that I should be furnished with the tuuda necessary to complete the railway and part of pier last seasoii,^ and the balance of the pier during this winter,— a condition, as I shall prove in the next paragraph, which Mev were unable to fulfil, and as Mr. Kennelly adds :— That from some cause not fully explained I withdrew from such arrangement, returned to Cape Breton and re- newed legal proceedings against the company. I was detained in London by the official 'liquidator, upon one pretext or another, from Mai/ until the uid of Avqust, but not without an indignant protest. Witness my letter marked C, in the Appendix, and addressed to the Committee representing the Bond and Shareholders in the Cape Breton Company. I soon afterwards discovered that only £11 QGO had been Bubscribed towards the £50,000 imperatively' de- manded by the High Court of Chancery, as the condition upon u-hu'k the company would be released from the order for Imudation in bankruptcy. I, liowever, waited in London until It was almost too late in the season for completiii"' the inc during 187G; and then (August 17th) wrote tcf the liquidators for a definite order to proceed with the work • and on the 2lHt received answer, that they were not ma ^osilwn to proceed further In mgotiaiing an agreement for the in the original ictly stated that )\v willing, had ■as being raised eding the sum must be left to to me that so d again under 'civing an ad- ofjencij for the t worth (under )urg as a port At the same red mo all his SS,000 worth), my (valued at litigation, and lira before he " consented to •Jtors last July, rove his reckless assertions. In this however he was mistaken, for my Ilalifax Bolicilors, Messrs. McDonald & Kigby, assisted by Mr. Norman Kitchie obtained the necessary extension of time to enforce it in due course. Defeated in this attempt Mr. Kennelly then arranged a meeting with me through the company's local solicitors, Messrs. McKay & Hill and my solicitors, Messrs. J)odd & Gillies, and on Jany. 4th, 1877, he stated that good and sub- stantial contractors had ofiered to complete all iiiy suspended works for ihe sum of £7000 stg., and asked me if I would treat upon such basis, I declim'd ; but called his attention to the fact that £7000 was the exact sum which I had allowed for such work in my account rendered for claims against the Cape Breton Company. He then asked mo if I wiiuld liniah the work upon the basis of the London arrangement, viz.: £10,000 plus £840 and stay all legal proceedings, giving se- curity for due iuliihnent of the new contract or, if t pleased, working under inspection without suroiicR, the Companv ac- counting to me for the balance remaining iu their hands 'after rtiiiilu Mr nil" . 40 the work was completed. In conclusion he stated that he had uo power or authority to deal with me unless I would consent to guash all prior claims for xoork verformcd, .fc, 1 aeain declined. '^ ^ Ue then be^j^ged mo to reconsider his proposal and not to write but to see him again ; but I knew my man too well by this time aud thus wrote to him: — Sydney, January 4th,, 1877. D. J. Kennelly, Esq., — Official Liquidator Cape Breton Company {Limited). Dear Sir,— In reply to your verbal communication of this morning, I beg to state that I am prepared to enter into a contract, and to furnish Sureties for the completion of the Louis- burg Railway and pier for the sum of £10,000 stg., (plus £840 Jtg., account lengthening Mira iron bridge), as per estimate of the company's late Resident Engineer, and as offered to me when in London ; but I am not, as then, pre- pared to forego my claims for services rendered, work per- formed, &c., &c. ; the collateral advantages then available for so doing not being at present command. Or should it meet your views— (memo., this being Mr. Kennelbfs proposal)— L am willing to complete the railway and pier for the sum of £10,000 stg., under inspection, you paying for labor and material and accounting to me for the balance (leas .£500, as provided in the original contract for six months' maintain- ance) upon completion of the work,— and settlement of all accounts, claims and charges, which, meanwhile, shall, as quickly as possible, be adjudicated upon, either by arbitration, or perforce at law. Yours, &c., F, N. GiSBORNB. To which he replied as follows : — January. 4th. Mr. Kennelly to Mr. Gisborne,— I beg to acknowledge ro- C( ipt of your letter of this date containing two propositions for the completion by you of the railway toLouisburg neither of which, tor reasons 1 verbally explained to you to-(fiiy, I am unable to accept. And in a P. S. he invited me to call and examine his books and lute contract accounts, which I declined doing, as my I aa, iiuwcver, 41 in possession of all accounts renderGd by the company vi.le i:5. in Appendix, and therefore declined to enter into the trap thus prepared for me, and thus addressed him :— Sydney, January 5th, 1877. D. J. Ken'nellt, Official Liquidator, &c. : DcarSir,-! reply to the P. S. in your note of yesterday's date. We (1. e., myself and counsel) are of opinion, that wu/er (he circumstances which induced me to undertake the original contrat at so lo\y an estimate (viz., about ^3,300 i.er mile, exclusive of a costly iron bridge, large pier, an?rHCinR!!v responsible for any breach of the peace in his attempt to take f 6th, 1877. powers ooin- nd dropimg of 1 was and am 10 completion Jan., 1877. )f yesterday's Joint Official Limited), on ary, I entered pier between id of all the ed therewith, 'eon, the pro- e of railway, ossession and ENNELLY. y 8th. 1877, lence of your ,y evening), I :he following to resist the npted : — ly lien as Con- ispendeil works liiist the " Cape al supplied, and irects ; and that my pei-son tres- rials, or plant, SBORNE, .'ay and Pier. ally tempt to take m ncra — I 43 Mr. Kennelly to Mr. Gisborue : "^'"""'^ ^^^' ^^^^• ''I decline to accept service of any notice of the character contained in your letters of to-day and yesterday/' -I took possession of the Louisbnrgrailwiy on the Istinst in mv visea \ou. "i came here with power to enter intn 'if-nntro^f with you for the completion of ?he cor^pany's "liC ^a basis discussed in London." "I have tried all ivailabremeans onTrl^t' andTd ^rr""^ ^". completing your abLidord contract, and to do so have f/one to the utmost limit of the powers ^Z!fX:k;^'^'''' '--' '-'-^' ^^ meet^eTX Mr. Gisborne to Mr. Kennelly r '^'"""'^ ^'^'' ^^'^' "I have given my agents written instructions to abstain from committing any breach of the peace, and only to defend orrr^'!.rr'' "^ «'>y .attack Sr int'ertereneJ with my ^I u -.u ' ^o^'^y^' ^^"'' »"^ ^'^<''" that I am unjustly dealt with, as proved by my desire to go to arbitration a J ODly asking to appoint one member out of the three selected r And now, your Worship's, as you are fiillv coo-ni7inf ni- oil late proceedings, I have ol^ly'to ifotice Mr I^e MyTdosin^ ---- remarks. He completes his statement with a se tWauda o f peroration in which he expresses great commissera on fo^ our half-starved laborers, a/though if is well k^vn tlmt ve' now he IS endeavoring to take" advantage of the r poverty and has oflered them wa^^os upon such cruel terms of nav^ flTr^ 'K'^f^ ^7^''''^. ^" ''^''' «" rather ban ac?eS them. He demands ncquittal as an officer of the High Court of Chancery, and m the same breath appeals to your sfmpathv as a stranger in a strange land. He boasts of his oinTocil standing and acumen, tries to flatter you with an opi.Hon tha you know the law and then makes a savage onslaughru on his w breath: d.piorejTi;7M;s;;;anST?rh;ri; 2 lly'i Ciiinnu'iiilatory letters. 44 blo^v at me wliich I thus contemptuously ward off with the follovviug quotations from his own letters : — December Slst, 1874. Mr. Kennelly to Mr. Gishorne, "I am candidly of opinion that the capability you have shown in the Louisburg line marks you out as a contractor of first rate ability, for constructing railways, and I have no doubt that, short as this line is, it will not be without its influence in obtaining for you heavier works of that character." March 23rd, 1875. Mr. Kennelly to Mr. Gishorne, "I shall much regret should 3'ou not put the road down in readiness for our tb t shipraents for I have now (orders for) 4 foreign cargoes on hand, I shall regret, for my part, should you fail to make a fair profit out of the line, for there can be no doubt you deserve to d) so." June 15th, 1875. Mr. Kennelly to Mr. Gishorne, "As a railway contractor I believe you have the qualities which would, with some capital, (this, by the way, being a delicate reminder that he couhl obtain capital if interested with me in future railway contracts), would make you eminently successful as such. Speaking at our anjiual meeting, at the London Tavern, on Friday last, I expressed this opinion openly, and praised the eflbrts you had made under your contract with the company." But even in the letter just quoted, ho endeavored to de- ceive me as proved by my letter to Mr. Kidson, and marked D in the appendbx, — a letter which I imagine some of the late Directors will now see for the first time. I also beg to call your attention to the fact that all Mr. Keunelly's charges have been concocted witliin tlie last few days: ?(0 such accusations appear in the writ served uiion my London Solicitors on tiie 27th of November last, and his statement that I transferred my suit against the company to escape arrest when there, is as untrue as other alligations. I also ask you to remember what Sydney was under my management of the Company's coal trade, — your harbor thronged with shipping and the hum of businesi in your streets atid then com'>urc its a'lDenrance under Mr. Kf>n= nelly's term of office with collieries shut down and hardly a 45 off with the 5l8t, 1874. }' of o})inion aisburg line ability, for at, short as ill obtaining 3id, 1875. egret should t sliipmenta uid. I shall iir profit out d) so." oth, 1875. [contractor I with some nder that he tnre railway ful as such. Tavern, on praised the J company." 'orod to de- and marked 10 me of the that all Mr. the last few ed upon my ast, and his company to ligations, is under my -our harbor lesJ in your r Mr. jvcn= nd hardly a vessel other moderate the pier, although the International, Caled [•hb orin r, amiough the International, Caledonia and g Companies were d.iing a fair business at a profit ; but what can u.u«.aLo pront ; ut wliat can you expect from a gimlkt (an pt simile which I heard applied to Mr. Kennellv in his en nection with another English Co a hole into a sound cask and is the mpany) which can only bore n incapable of stopping the As I have now, I trust, clearly proved, to the satisfa leak which it h as created ! —■- - ••"■'v> ..vy>%, i uuBL, Clear v proved to the Kntidf-ir. ,• . tion of your Worships, that Mr. Kennelly' ' stateme fts Ind F" '? cou[?cd M, 'r -n'^' ""T'^'i' '' credence,\nd as m/ ll:,.red "' counsel, Mr Gillies, has shown in some measure through the KumTr ?/ '^''''' ;;\o«t,un.^^7% witnesses, Messrs. Stirling ad tumble, (two toor^A^es whom, I shall prosecute hereafter for neglecting the precepts enjoined in the ninth comman ment that he has attempted to take violent possession of mv ra il have forcibly removed one of my agents from the line when in S f r 1 ''f ^^"^-'-t^^^t they used slack coal which I had L L %r-^ ^'"'"•'^ "P°", ^^'"^ '""•'^^^ ^'•^^' l^allasting purposes! to feed their engine with although it was within a shor distance of their own coal ban k,-that he caused the r - moyal of my fence and the destruction of my written notices,-that Mr. Wm. McDonahl was my paid Yerva in tel .In ""^'^'^J ^'•""^ Bridge8,4hLthetelegr.;h line to Louisburg was being worked under a special ifcn-ee- meut with myself,_that permission had been asked'and obtained from Mr. W. H. Clarke (agent under power of attoniey when I was in England) to^ ?un locomotives over my works as a matter of courtesy but not of right, and that I can an< shall prove hereafter most conclusively, bo^h by cor- respondence and witnesses, that Mr. Stirling al.o solicited ask 3 oui Worship s for a conviction, not as a punishment, but a.rnply as a con umat.on of your already oplmlv expressed opinions, VIZ. "that asyouhave ?io authority or iurisdiJtion to able tile to the possession of the suspended works of the theP ',?? R^'lway. you will 8end«/^;,arZe.. in this suit before theCxiand Jury at the next term of the Supreme Court And now, your Worship's, I must conclude with an apology t°L:V°"? *" 'P'^'")' ' ^^t '^ ^« 0"^ch easier for Mr. Konneliv TO,,:.,=nc:aiseaecusionB than to i>rove them, neither can his hasy assertions be refuted in as few words as they were made. ivcd E I 46 Mr. Martiu then asked Mr. Clarke ij he had again chanacd his mmd or wa, stiUof the same opinion winch he hadexpresTdV- Me hearing Mr. Gisborne's repttj I and being answerid in the CorttTh.^ff ?^f.^;" P-'-"n«ed the^jnd^ment of he Comt to the effect, " that m his opinion Mr, Kenuelly should be bound over to stand his trial; but that as his brother ground. ^^^^'"^ '''^^' ^'"^ ^^'° prosecution fell to the Mr. Kennelly was by no means gratified, however, with the reception given by those present to this ^^mn-vxovev^' stvle of acquittal, and before leaving the crowded court room an! gnly whi,j>eredio Mr. Gisborne,^ "that he would have hiSi in a criminal dock next;" but received for answer "that before hat happened he would be at the bar of public opinion hTm- selt, and tnus the passage at-arms (for, Uqalbj, the whole enquiry was httle else in a magistrate's Court) terminated InlLT.ri' ^^tf^^^t t^« P'-^^P^ct of a plentiful crop of aw! suits at the final cost of the Cape Bretoi Company Limited if/mo— After the above verdict was rendered Mrf Kennellv was served with a writ by Mr. Gisborne in §20,000 damages tor trespass and slander and it transpired that a writ fad been served upon Mr. Kennelly. iu London, by Mr. Rooney, for aiding and abetting in a conspiracy to defraud him by ii- ducing him to take shares and invest monies in the company upon a misrepresentation of facts. ^ ^ . ■^' -^-"T^® publication of this pamphlet has been rendered imperative m c< usequence of Mr. Kennelly's attack being published in the Cape Breton Times newspaper. ^ F. K GISBORME. 1l;f +7 gain changed expressed be- 'ered in the lent of the uellj should his brother fell to the wever, with n-oven" style irt room au- la ve him in • that before pinion him- the whole terminated ; crop of law- ny Limited, r. Ken nelly 30 damages \ writ had [r. Rooney, him by in- e company in rendered ack being ^ORFE. APPENDIX A. [copy.] Sydney, C. B., July iCth, 1874. ^' ^' Limuld? ^"^•' ^^"^S'"S ^''•«^t<^r ^>e Breton Company Dear Sir, — «lJnJn'''?. *? ^'''"'' ''"'^."'''^ ""^ *^ "^y authority or reasons for eh.pp „g Coal upon consignment last year I beg to state: stillJaigo last September, and no sales or contracts were boin-r trGS^Z'^'H^' P ^""''T ^S«"^« ^' *^« Pr'«- limited:! .-roS shfn nS? .n -^^1'" P'"*^? ^^O'^P'-^ny^-ocommendiig thorn to leuer? ''^^^'gn'^ent, and in reply received the following [Extract, Sept. 23rd 1873.] vJ?^'^'' reference to the postscript in your letter of 2nd instinf f A f^^: !v winter upon consignment, 1 instructed Mr. Ilarvio tSinkXVvoVdrdlo^ Board agreed to act thereon, and f tlulu^t luinit tnatyou did not suggest this course earlier." ..,, , , W. Wmairr, ^ecre(!arw. follows :~'''"^ '^''''' *^ *^" Schooner Pond Company as consUrenfTo''^ ^''"'" ''"T'"« ™" *« ^'"P *b« ^O'-^J Jn bank on foXS !!: ^ '"^ ''^''^' ^Sents, and iu reply I received the aT>„f„,.,.- „ . . . ^ " 23rd September 187.'!. inst lo inVr^l ^Tu Wi'lP*^ ^ telegraphed Mr. Ilarvie on lOth n bailc to Z^'''" ^^^\ ^^"^ ^°^^'^' ^S''^^*^ *'' y«"'' consigning coal T- . , ^^- Wrioht, Secretary." ialill T "^^«^^^^'>^ to observe that 1 was acting as Coal A-ent act nL,rif^K^''^r^"^'"'^"'^"^^*^>^ 5" duty bound o tl l^TlhX^I ""^^ "r^ Companies in effecting sales, and find mg that the Lorway Company had still in bank aU their fii-^t mined_crop and clay stained coll I advised the Secretary as 1^! "September 18th 1873. we .hould d„ exceedingly „elY io Wiiel^' p„, tn," L'^d "ha "1 " That the trade was ll'ffp* trial car^^o to Ilalifax was now en route, and I will report result for ' your guidance and lul-ther orders." Sept. 30th 73 I wrote :— ''I fear wc cannot clear offEeserve and Schr. Pond banks of coal before the do.e of navigation. Emery bank 1 shall clear olfdurin- October, and thus have fresh and lorge mined coal to ship during Isoyember and part December," and "I have trial ca -oes en route o Portland and St. John's, Newfoundland, and a so a 'esse re.ghtediorls^ew York,asIdeem it advisable in the first place Ind "i?:,"^''^ bank coal, which is in fact the balance of our crop! and, thereiore, inferior to present production." ^ To my letter of the ISth Sept. the reply was as follows : • "London, Oct. 7th 1873. "Yours of the 18th ult. received. Keeping this view it is very son ?n 't/" n'"^ ^? ^''''' "^'^"' '"^^^ '" ^^"1^' ''^ ^^^^ ^"J oi the sea- son and the Dircc ors are, therefore, willing to leave you a certain discretion as to price fex^ling sure that you will do the best you can for the interests of the Comp.iiny. ^ W. C. Hanbury, Secretary. Underdate Oct. 21st, the Secretary when acknowledgingmy letter of beptember 30th makes no objections to further ?onsi-nmentI o '^th^'n '• V°^"" ^'I'^F'"''- ^^'^ ^^^'^ «^™« to hand on lie 4th oth December, is the first qualified objection made, the result 01 some of the consignments being meanwhile reported as unsatis- tactory, xn i in the same letter the Secretary writes : «."/ ^J^»"Ot too strongly express the Directors' .nstructions that no further shipments of coal be made on consignment." To the above letter I replied, Dec. 10, advising further sales of coal on consignment as follows:— " tmi saies ot VnJu" W'llitiix coul sold well, also the Newfoundland coal. The ioitland con.signments are stored for winter sales. The New York account sales of consignments will be forwarded next mail and much regret the result which was quite a surp se The f e ght was low, viz, S3.25 @ 63.50 Greenbacks, and at the date of the consignment the coal sold to the New York gas works bv the Block House, Caledonia and other mines was cos^tngl As Lva bcotia currency, ,n consequence of the ynuch higher rate of freight charged from those parts. The panic was the sole cause of loss ?nd i sappo.n ment: ordinary dealers and manufacturers cou'd not pur aso.and the Gas Companies, though rich, took advantagrof^tho F.. /.^necessity tounload vessels within th^^ir laydays Whonyour it^5 GoTo?'^! I ^^"^''''-^'^y «'^f tored a brig to load for Dememia at fc.0 oO Ireightj and 1 now enclose my agent' duced the venture. I my agent's circular which in- am, howover, quite willing to accept the /;' port i-osult for banks of coul Icavofl'during eliip (iurinj^ 1 cargoes en also a '-esse I he first place D of our croi>, ows : .. 7th 1873. ^w it is very id of tlie 8ea- rou a certain best you can ecretary. ing my letter 3nsigiiment8 don the 4th , the result d as unsatis- ictions that bcr sales of coal. The The New 1 next mail, prise. The the date of 3rks by tho S!7.15 Xova 3 of freight of loss and lid not pur- tage of tho Whonyour ' Demeraia which in- accept tho venture upon my own ])rjvat(j account, crediting your Company .v,th §3 per ton F. O B. By return mail please inform mo of your wishes on tho subject. Feeling satisfied that we should have no demand for coal at tho end of the season, and being anxious to ship away our first mined tender and clay discolored coal at bank, in order to clear the ground ior our permanent banking frames before cold weather prevented, was tho reason why I considered it advisable to shin f?nn/'? nT'^"/'.*^^:, "P^" consignment, but in future your instruc- tions shall be strictly adhered to." In reply to this, under date Dec. 30th, the Secretary writes with regard to the brig " Odione" loaded for Demerara and your offer to take oyer the venture, the Directors have suggested that you should take over the whole consignments made, as on your private account. ' ^ i .. J'"'"'..''^ ?.'"'"'^' ^ d?«l'"ed as manifestly unfair to myself, as J ou will ^-ather from ?ho foregoing statement. Yours, faithfully, F. N. GiSBORNE. APPKNDIX B. THE CAPE BRETON COMPANY LIMITED IN LIQUIDATION. In account with F JV. Gisborne upon Louishurq Raihony Contract and compiled from accounts rendered to him bu the Companu 1874. Dr. To amount of Contract £95,000 Extra Expenditure upon accelerating work within contract time , 5,472 10 7 Ordinary Extras 3,224 7 11 ^«74. Cr. Material. Mch. 31 Paid for Mira Bridge £1,225 May 31. Stirlings ac- count sun- o. Do. Slack.. 14 7 9 Do. Do. Railway Carriage 26 3 8 Do. Do. Sundries 19 16 Aug. 1. Paid Mr. Baker 2,126 2 5. Paid Freight 178 8 5 Jo' ?ill^ f«yal>mO days 1,000 ly. Paid Insurance 88 "n gil^« Payable at sight 3,000 oO. Paid Mr, Baker 113 q n ^^- " , " .■::::::.v.35o o o Stirling s account Railway Carriage 18 12 11 Do. Do. Slack...... 35 2 9 Do. Do, Sundries 20 3 2 Do. Do. Freight per "Brothers' Pride" 20 11 Sept. 4 Rud Mr. Baker 1,500 8. " Freight 184 2 11 " Rails, etc., 4,973 5 " Bill Stamp 2 10 9. " Spoon Head brobs 437 10 6 " Charges 80 19. " Cablegram 5 4 Carried foruard £19.878 j?.ii «iSQ o n i-ina.^s ,3 - . 1..... ,. ^ y iiuo,uu6 18 Oct. Oct. Nov. Cr. Material. Cii.sh. Brought forward £10,878 9X11.889 2 0^103 696 18 Bills Payable, 60 days 3,000 26. Paid Mr. Baker 1,300 28. Bills Payjible, 60 days 830 29. Paid Mira Bridge 3,330 30. Stirling's account Railway Carriage 42 17 3 Do. Do. Slack 33 18 1 Do. Do. F't. and Duty 548 13 9 Oct. 3. Paid Insurance 14 13 9 ... 189 17 5 " Brobs 131 9 12. Bills Payable, 60 days 3,494 1.5 2 15. PaidMr. Baker 3,000 24. " Brobs 254 18 6 31. Stirling's account Ft. and Duty ... 348 11 7 Do. Do. Sundries 22 13 Oct. 31. Stirling's account Sundries 19 1 2 Do. Do. Slack 47 11 Do. Do. Railway Carriage 91 4 9 Do. Do. Slack for Engine 7 12 Do. Do. Rent Stables 5 13 Cost of Engine for inonth 24 13 2 Nov. 5. Paid charges per "Harmonv" 10 19 11 PaidMr. Baker 1,000 " Brobs 120 10. " Mira Bridge 1,387 10 12. " Telegram 3 16 17. Bills Payable, 60 days 3,200 18. Paid Mr. Baker 2 000 19. " Steel Cross- ings 136 21. Bills Payable 25 30. Stirling's account Railway Carriage 36 2 7 Carried forward .£20,655 16 11X29,738 17 2 £103,696 18 1 4 8 D 'ec 15. 31. Feb 6 1874 Cr. Material. Cash. V ^.f,fi7^'^./«'-«W'/ £20,655 16 11 £29,7;3.S 17 r»ov. JU. btirlmg's account Ft. aiul Duty 95 17 10 Do. Do. .Slack 68 18 2 Do. Do. Suiulnes 22 15 2 Do. Do. Coal for En- gine 2 9 Do. Hay. oat-s, etc 15 9 Co.st of Eiii^ine for month 24 13 2 Paid Mr. Baker (509 Bills payal.le at .sight ".'.'.'. 2,"oOO Stirling s account Duty and F't 17 16 U Do. Do. Sundries 14 6 11 Do. Do. Rent Stables 5 ]3 q Do. Do. Railway Carriage 1 9 q Cost of Engine for "i™tli 24 13 2 n ^'"^^^'.--'.^'^ker 1,100 16 Ca.sh paid hy E. Stirling 2,000 14. Paid Mr. Baker i^O 00 £;. '^ l"^>'=^''Jo "Pon demand 600 ^-. Paid calile nu!,ssage...2 " Wheatly Ship- ping Charges 42 5 2 Stirling's account Fmghtand Duty.. 6 8 11 Do. Do. Sundries. .4 10 10 Do, Do. Sjiick 50 14 3 Do. Do. Coal for ^E"g'ne 45 19 9 Do. Do. Railway Carriage 4 50 ' Do. Do. Tel(>grapli Wire Paid Bolts IDG 16 " Mr. Baker Stirling's uccouut labor 4 5 g 2 .£103,696 18 6 1875 Jan. 1. 26 31. 6 .700 Carried forward £'27,-2d7 5 5 £37,827 17 a jei03,696 18 6 2so. No, .£103,606 18 6 )3,G96 18 6 7 Or, Material. Crvfh. Brought foncard £27,2'J7 5 5 £37,827 17 2 £103,696 18 6 Mch, 1. Paiil Slii)i)ing Chiirges 19 8 7 Apl. 29. Casli paid Ijy E. Stirling 1,000 Miiy 6. Stirling's account Bolts 33 12 11 26. Do. Do. Freight anil whaifage 5 1 9 June 30. Do. Do. Kivets, etc 1 4 10 £27,356 13 6 £38,827 17 2 £103,696 18 6 To rthich a .'"tbe^'^Vf^'r," ^""^■'-^•" Co,n„„„,. in .|,„ Witbin :cr„l.;™t,!t,Z'''L''.''r''' '" ""• No. 16. June 3rd, 74, i)aid bv Stir'infr i-q .jo vr ever rendered ti'n.c b,^Mr';'s",*ling'ft',„o^°:mS "K i ;5?^,7f i„T"tl,ln?m" r' """r". '" -» "' No, No. IS nr.f ^1 '7. „ .7," • •■"'"^''l"""""'OIOl'tlieC0Ht. ... .°°' • ''*• Int"t>-'^'-t c-aneelled ] cioGH 20 \^hito Waslnng slrueturos 7iOO') Raising and Extension of Pier 1 ',7«qfi 2\:r(?^ti^r- ^r^ ®-^'^ ••••••••■ ^:«^?-6o i! hotb Cattle Guards, Louisbnrg «() 00 i" ili.ng and placing Ballast aroun.l cylin- dersMim Bridge : 208.00 $42,325.07 : No. 17 20 21 26 32 37 38 38 40 43 Amount.. S2G7.00 • ■'.... 42.00 458.23 26140 40.00 66.46 100.00 126.00 536.62 300.00 114.00 4,200.00 300.00 .... 400.00 40.00 574.23 800.00 550.00 rds 908.25 160.00 50.00 40.00 .... 600.00 .... 575.00 116.00 .... 100.00 40.00 40.CO ... 680.00 ... 12200 100.00 ... 2.296.22 ... 800 00 ... 6.000.00 . . l.OOO.OO ... 2,000.00 ... 0,i)68.20 .. 750.00 .. 1,57896 .. 8,835.50 80.00 1- .. 208.00 $12,325.07 ! 11 We, the undersigned, do hereby certify thai the foregoing items of account are just and reasonable in amount, and that they can be proved cither at law or to the entire satisfaction of the Arbi- trators. F. N. GiSBORNE, Albert J. Hill, T. J. ElTCIIIE, Railway Contractors and Engineers. Witness, W. H. Clarke, Accountant. Memo — Bill of Items for Extra Cash Expendituio incurred in forwarding Railway Works to completion within contract time as requested, as taken from the Account of Extras over the signatures of Messrs. Gisbornc, Hill, and Ritchie. No. Station. Description. Araeunt. 17 550 200 feet Bridging 400 00 20 660 150 '■■ " 300.00 21 660 Urushing and Extra Piling 250 00 26 880' 300 feet Bridging 600 00 32 1020 340 " " 680.00 37 Extra expense on 6,000 logs 6,000.00 38 " '« " Sleepers ... 1,000.00 38 " " " Timber 2,00000 40 Advance on Contracts 6,568.20 43 Waste 35,S42 c. yards @ 25c 8,83: ,jO 526.633.70 Or X5,472 10 7 The Cape Breton Company Limited in Account with F. N. Gisbolne. [private account.] 1874. « Dr. To amount duo mo upon resignation 01 Managership £600 Balance duo upon settlement of accounts 189 1 1875. Amount Tip Shoot Account 51 6 7 Feb. 1 Horse TO 5 5 Commission on S.S."Norraanton'8" Cargo 10 5 2 May 1 Year's Rent Mr. LeBreton'B office 12 6 7 4 Caeka Baiiway (irease 5 15 1 •£779 6 12 1874. Cr. July 31. By Stirling's account, Eaihvay Carriage 4 7 9 Aug. Stirling's Account for work on ballast boxes on Pier 5 17 7 Stirling's Account 50 Fire Brick 8 3 31. " " Kailway Car- riage 2 19 5 Sep. 80. Stirling's Account Eailway Car- riage 10 1 2 Oct. 1. Stirling's Account Store Rents... 34 13 6 Stix-ling's Account Cask Oxide Paint 8 4 5 31. Stirling's Account Metal and Steam Pipes 2 4 Stirling's Account Railway Car- riage 10 6 Nov. 30. Stirling's Account Railway Car- riage 2 4 11 1875. Jan. 5. Order in favor E. Stirling Louis- burg Land Company 300 JuneSO. Stirling's Account for Bay 6 11 376 9 E. & O. B. Balance due Mr. Gisborne 402 19 9 Sydney, C. B., Jan. 20th, 1876. \ APPENDIX C. 3 Adelaide Street, Lqndon, July 22, 1876. Committee of Deben- ture Holders. Committee of Share- holders. Caj Breton ' Company Limit'd Francis Pavy, Esq., Thos. W. Powell, Esq., Henry Waite, Esq., Thos. Fenn, Esq., Pcrc. Spurling, Esq., Dr. \Ym. Wegg. Oentlemen, — Very important interests being entruBted to your judgment, it i»4 udviHiiblu iLui yuur upiuiuus oLiouid not bv buHuil upun au ex parte explanation of the apparently insurmountable differences bo- 376 9 402 19 9 22, 1876. Breton nyLimit'd igraent, it ipoii All ex srenccs bo- i tion to the following facts. remembered that I undertook In the first instance it 8ho"\?^°V !he Louisbuvg Railway and the contract for the |-«%- '^^ c«s' than the e^stimate of the Pier at a price fully ^J^^/^^^*^ that finally 1 agreed to ac- Surveying Engineer, Mr. feamuel a ^^^^^^^^ ^^ ,^ „pon a cept one-fourth V^yf^'^^,^ u,£ Ss estimate. And wherefore teider which was ^20,000 "derj. ^^^ ^^ ^^^ Company at Because at that t'^e Ijyas a salane . ^^^ ^^^.^^ ^^^ ^tndor such very favorable ^^"2^^ ^T^Joff^o^rh dcrtake a contract '^^ ,^ ^1'ZZ^^tiT^J.n.J mVgin of pro- whom I was thoroughly conversant a ^^ ^^^ fit. It is also apparent ^^^^^f Jl^ ^^ increase the value, not Jarry out a work which was des'f^f f%our Company, but also nierelv of the ordinary share ^f^P'^^'Ji^^.J^ soeedily and well. aU my private investments ^"^Cje Breton s^ ^^^^^^ ^ For good and ^«ffi?^«"^'*'^^;"Xcia^Ippo ntment upon terms not mainly depended. „„*inna however, under an ast^iu- " I had hardly commenced oP^^-^ti^^s, ho^ ev ^ ^^^^^^ anco given by your Chairman at ^ 1^"^.^^^ ^^ devoted exrlu- Lcess^kry capital had been ^f^a^^i-Va called unon to subscribe sively to the undertaking, when i wa ^ ^^^ ^^^.^, pnrpoc. £2 OO'J towards a synd.ca e of ^^^'OOO c^mr ^^^^^ tiZy upon thi. astonishing and unan^^icpated ^^^,^^^^^ , fcrence shares became valuejes^ ^^^^ ^^^ under pronv- contract purposes, and at the same t^^^^^ ^,- consulorub c ises of ample P^,?""''*':^ ^'^f^Jde^^^^^^^ ded for in the contract. annealed to the Company f"V . Under such ^■i'^'"'"^^'?"rcoit.S was entered into with my assistance, and an amended c<^^^^t.actw. ^^^ ^^^^^^ ^ ^ asent, Mr. Baker, whereby an em arf,^^ ^^^^^^^^ ^.^ ,, ^^^-^^^. "^.Il-^f^i^^u^oHlfin^rin cash. ^ ^a^no^nm^Mor ;:S'ia;:i^you wm perceive by my nccoun. c..e... ^.. 14 In my account rendered, as attested anc ewo- to bv onm^M.nf .gnorcs b,B own instructions and written orders fb o,.lin: "l?A'f but al.o suggests a mode of escape from tlie outlay for exnoS^ Ca^'{^l'^'''^\'''^y ^ ^'^y «•• t^^« previous To L?do, a ZeS Cape Ere on and several montiis after alliabor bad been susnondpH^ uJ'^VTy] f^e'-cfore, rely upon tbo fact tbat I sbali have huf l.ttle difficulty in satisfying the Court that when I stoDnod woH. Z-ZZrT '^ ''''''''^ "^' ^''^"'' «"g'"«^^'-^ month y^Sfirte was^o 'rcrSr;!'""'" "'^''^ "r" ^''^ 1^''^'^ ^''^t L mire cash at comuiand there was upon all counts a suffiL t sum VS ino comp.i 13. Ihe purchase was, however, made soieiv wifh a View to economy, with the full knowledge of yo r Res dont P^r neer and througi, the iuMtrumentality of you™', ocal sol cUof ' and hc.tatod to transfer the lands in pi rt so acquired when de' «ul^ect as aff^ctini n^^l,^. a.t t^tr^" t ISnlaLrb^l;! . 1 cash and 81,250 cash ig doduotod I positively Jcii ordei-ed, )rove to be Hud which tion of the 'competent expoditin,.nnlf "-^ <^««^— There are also good and sufficient reasons why you feSlx%rc\irbt. "'^'^^" '' ^"""'' *^^'^ -^' ^™-^^' - -" duiTn!; 187^ ^'^^i ?.""'', ^5 ''""*' r' *«^ ^ ^g'^"^^* 48 and 50 cents duung 1872, and 55 cents dunng the following season, and 81 per vard for narrow workings as against $1.20 during 1872, and $1.40 fL 187 Lf V T^f '^'^' """"^^ *° *^' '^''^' •** *''^ unprofitable rate of $2.50 10 hndinri f ' k"? ""^^ '^^'' ''"^'' '" P'-^/'«'-«*"««- I also made 10 Jandings—S of which are m present use— 7 air cro.ssinjr.s, and an tuidergi-ound stable of 20 stalls, to say nothing of pumping po"^ ion a of which are unprofitable items, but you have the Vesent' ndvaiZe of iett It in the form which has enabled you to mine coal very cheap y for a s^xson ; but so soon as you recommence operations upon an extended scale, wages will rise, s' .pes, levels, landin-^s and air cros" . sings must be provided and your cost per ton of coal wilVdi LZ- naTiw^'l 7 "' ' l^owever have (under proper managementrfXer nariow places to cut, comparatively little slope to drive, and the mineral being more compact to the deep, much less slack to rai^^ Beonomtc Management. -The amalgamation of Comji.Miies had this special desuleratum n view and when "your Managing dVi-^Si arrived m this country, trade being .stagnant and ray conlnrct for raisin" coa in consequence cancelled, several sub-contractoi-s and overmen wei^. d's charged, not because they had not been r,reviously and mion Mr. Kennelly, being fully aware that personal in- tttnce ^rnrcoiiection is all important, in obtauung any con- TrTot of conseauence in America. Pictou coUienes regamed-the Se that mvTelf and agents had obtained for Cape Bi^ton coal, vm U vLXve^u^ment^■eporte confirm such statement It is thus ;l£t,'thS Mi-Burke is in no manner to blame and that no " loose contract " was ever entered into with him by myselt. As ah-eady explained, the delay of settlement, losses and disappomt- men^i pmi fomer shipments ar'e clearly tmceable to demurrage, and o£ caCs, over which neither myself nor agents, had any control, or are in the slightest degree to blame. „^„^r. Dual management, and I may add London -^---^f^^%;^X±Zl obtain a North American trade for your Company; but South Amen can European and Indian traffic can of coui-se be better controlled m itoZnolis. I am quite free in expressing such an opinion, as I anrnot'in any manner seeking employment tron. your Directors. # i^- 6»4 € ^e^f'Tyi:^^^^^^^ --Jt3 "Pon the above mine. A s I niaintainfK] +L fi" • ^ "'^ ^^ ^'""^^^ ** yo"*" terminal from the broorYoutill«i?? ^^"^'J'T *^« «"^«t^'^ta apd not Dominion C^erlZ^l^'^l:::^- toJ^ltl'^'' "^ *'^ as maintained bv mvsJu n, n«T,L„ i- x- f^ ^*™"«r Co. s seams, are, Ca2)e Breton Co. L'd, 60 tons ! rnent-CUTtA^l^Tmft ^ -f^- Judgment or manage- poJssion of and hen open un 1^ «"™P«'ited, m order to obtain - lages in the midst ofZcuT 7 "'^explored seams and constmcfc vil- tmnsit of mat^Si'irit'^tt'™^' "^^ T'^^""' ^«^'^ *« f««iii**te ed faithfull/to^^ ^'ootm^^^^^^^ ^T "^T^^^^ ^«^« ^^^^er- employed. and I tWefor^.^w Company by ,vhom I have been thus xmable to defend and^expl2 mysSf ' "«'"°^' ^^^^" "*'«*«^* ^^ meS'S LSt7\u?thf s ^^^^^^^^^^^^ ^-^^ «Pon embank- away and I a^^blS to Jtaln Z '^ ^' T*^'^ ^ ^"^^ ^^^S present non-product fe) «nt,V^t H 'ITf ' °^ '^^«^*' P«"o°8 («* i:>^-c^d4htrc;l:rar^^^^^^^^^ ^« -'>^ - Be.S;rs,'rd^wi7fiivrkT"''*T r ^^-^^^^ ^« »>^--g of accounts ' ' ** ^^''^^ considered in our final settlement Yours faithfully, _ F. N. GiSBOBWB. ADDENDA. my just ci« J, rs^s.ii^^r"' ''«'"^ ""*' "' rs:' r" ;i ■\ -0^: