Gray and Prideaux
Gray and Prideaux
This was the accountancy practice called in to sort out Thomas Hudson's financial affairs.
What follows is a transcript of a handwritten document and as a result there are some omissions and possible errors.
Report on the Executorship and Trusteeship Accounts of the late Thomas Hudson formerly of Cheswardine in the County of Salop Esquire.
Mr Thomas Hudson died in April 1852 leaving a very large fortune
The property according to his own estimate of its value three months before his death amounted to £457,684~16s~11d. (Equivalent to about £56,000,000 in 2019)
It consisted at the time of his death of the estate of Cheswardine in the County of Salop with other real estate at Wigton and a small property at Wrexham yielding altogether a rental of about £1800 a year. A leasehold house in Park Crescent now let at £280 a year which at the time of his death was furnished. The usual furniture of a gentleman’s seat in the country and the Stock and appurtenances of a Home Farm.
He had property at the Cape of Good Hope which had latterly been let and Mr Hudson had been receiving about £100 a year as his share of the rental,
He had also some little property in the Island of Madeira.
There was a large cash balance and numerous xxxxx Bills of Exchange in his Banker’s hands, a number of other Bills of Exchange and notes of land in his own possession and a large debt was due to him by his two nephews Messrs H & J Donaldson of Mark Lane.
The bulk of his fortune however he had invested in a variety of British and Foreign Stocks Mortgages and railway xxxxxxxx to the amount of about £340,000.
Mr Hudson made a will dated 29th June 1850 and after giving various Annuities and Legacies he left the residue of his estate in trust to be settled eventually on Charles Donaldson, the second son of his nephew John Donaldson, for his life with remainder to his children and with ulterior limitation in favour of Thomas Donaldson and his children and Anne Donaldson and her children and other members of his family.
On the 12th April 1852 recorded a settlement of a very large portion of his property as detailed in a Schedule thereto, the trusts being for the benefit of Charles Donaldson and the others previous named in his will.
In compliance with a Clause in the Settlement, Mr John Donaldson assumed the management of Mr Hudson’s property immediately on his decease.
He managed the Home Farm, received the rents for the real estates, and collected the interest and dividends of the personal property, and in short undertook the entire superintendence and management of the Trust and the Accounts.
Mr John Donaldson was a partner with his brother Henry Donaldson trading under the firm of Henry and John Donaldson. Mr Hudson had assisted them liberally in their business and at the time of his death they owed him on a running account bearing interest at 5% per annum, the sum of £14,019~15s~5d. He also held their notes of land, bearing interest at 5% for £5,000 and several acceptances of theirs payable at various long dates.
Mr Hudson also held a number of Mercantile Bills of Exchange mostly drawn on and accepted by H and J Donaldson which he had discounted to accommodate them.
The notes of Land for £5,000 have remained deposited among the other securities of the trust but the acceptances of H & J Donaldson amounting to £3,214~12s~6d and the other Bills of Exchange amounting to £2,310~15s~1d were taken possession of by Mr John Donaldson immediately after Mr Hudson’s death.
The Acceptances have never been paid to the Trust Account; the Bills of Exchange were realised by H & J Donaldson but the proceeds were applied to the purposes of their own business the amounts in both instances being credited to Mr Hudson’s Trust Account in their books and added to the large debt previously due in that account.
Interest and Dividends on the numerous Stocks and Securities under the Deed of Settlement began to accrue immediately after Mr Hudson’s death and all were received by Mr John Donaldson. The bulk of these he paid into the Trust account at the bankers.
Some of the dividends and interest however, never reached the trust account. but were handed over by Mr John Donaldson to Messrs H & J Donaldson who were simply debited with them in the trust books as another addition to their large debt. The sums so dealt with principally in the form of Bills of Exchange received as dividends on American Securities but two other sums being interest on Spanish Bonds received in cash in London were dealt with in the same way and one sum of £38~13s~1d received by John Donaldson as interest on Portuguese Bonds cannot be traced beyond his own hands. Messrs H & J Donaldson are not debited with it and it never reached the trust account.
It appears that the trust securities were kept in the office of Bennett Dawson & Thornhill the trustee’s solicitors in Lincoln’s Inn and Mr J Donaldson had occasional access to them in order to cut off the coupons and make other necessary arrangements for receiving the Interest on Investments. It would seem that on one of these occasions he took away from the Box, Securities for £2,500 in Spanish Bonds payable to Bearer which he sold for £1,500 and paid to H & J Donaldson in whose books it was not carried to the credit of Mr Hudson’s trust account as the Acceptancer. Bills of Exchange and Dividends had been but to a separated account opened under the head of “Spanish Bonds” – this transaction took place in September 1853.
In December 1854 he removed from the Trustees Box Belgian Bonds for 507,000 francs, also payable to Bearer which he sold at three different periods for sums amounting together to £14390~17s~3d. This sum was also paid over to H & J Donaldson and was placed by them to a separate account opened in their Books under the head of “Belgian Bonds”
In January 1855 Debentures of the York, Newcastle and Berwick Railway Company for £2,920 became payable. Mr Donaldson removed these securities from the Box and received the amount and paid it over to H & J Donaldson who opened for it a third separate Account in their Books under the head of “York, Newcastle and Berwick Railway”.
Neither of these three transactions appear in any way in the Books of the Trust Account but the amounts which ought to have been received as dividends thereon were duly entered in the trust accounts at the times at which they would have become due if they had remained unsold.
Before Mr Donaldson was appointed receiver by the Court of Chancery he received £8,000 for a Midland railway Company Debenture then paid off and this sum was duly paid to the trust accounts as well as about £20,000 of dividends and interest on other of the securities.
Out of these sums Mr Donaldson laid out about £25,000 in the purchase of new securities consisting of Railway shares and stocks.
After Mr Donaldson became the courts’ receiver and upto the time of his death on the 25th April 1856 he collected and paid into the trust account about £35,000 on account of income. And out of these monies he made a further small addition to the new securities paid various calls on Railway shares already in hand, discharged the necessary expenses of the real estate, retained his own allowance of £500 per year as Receiver, and an allowance of £300 a year for each of his children Thomas, Anne and Charles Donaldson. Beyond the £300 for each he seems to have appropriated a sum of £1,200 a year for Thomas Donaldson and £700 a year for Anne Donaldson to make up the annuities given to them and he also appropriated at 5% per annum on a legacy of £10,000 left to Thomas Donaldson out of which accumulations he made he made some investments for Thomas and Anne Donaldson in Railway shares, and he lent the remainder to H & J Donaldson at interest and so all these appropriations only absorbed about a quarter of the £35,000 he was receiving. He handed over from time to time the greater part of the remainder to H & J Donaldson by means of cheques drawn on the trust account in their favour. The aggregate amount of such cheques was £26,990 thus making the total of advances to the firm at the time of John Donaldson’s death amount to the large sum of £74,162~15s~9p, without calculating interest upon it.
Mr Bennett had no idea of the course pursued by Mr John Donaldson until after his death when Mrs Donaldson informed him that she was afraid that all was not correct in respect of the trust account.
From that time the sole management of the trust account devolved and the proceeds as received after paying the Annuities and allowances ordered by the court have been paid to the Accountant General.
Shortly after Mr John Donaldson’s death, the books of xxxx in H & J Donaldson were submitted to a strict examination and from this and an examination which has been made of Mr Hudson’s trust accounts the above information has been obtained.
On Mr J Donaldson’s death a trust was instituted in the Court of Chancery for administering the partnership estate and a Receiver was appointed to wind up the affairs of the firm and realize the assets.
Mr H Donaldson died on the 31st December 1858 and the estate has to a great extent been realized and there is now in Court a sum of £ which will be applicable towards the debts owing by H & J Donaldson and John Donaldson respectively to Mr Hudson’s Estate.
Mr John Donaldson during his life set aside as before stated two monies to which he considered Thomas and Anne Donaldson were entitled, but as the loan of their money to his own firm cannot be considered as a proper mode of accommodation or have treated the Railway shares which he had professed to have bought for the children as having been bought on account of the trust. They were indeed bought in the names of the Trustees and we have treated the aforesaid loan from the children to H & J Donaldson as so much more money taken from the trust fund and added to the debt of Messrs H & J Donaldson and the amount is included in the above £74,162~15s~9d.
The amount charged therefore in the accompanying account in respect of the three children during the life of John Donaldson is limited to £300 a year for the maintenance and education of each.
All the accounts have been most carefully and thoroughly examined, and every endeavour has been made in the two accompanying statements to place them in as clear a point of view as possible.
The account No. 1 is divided into 3 parts
1st The property included in the settlement.
2nd The personal estate passing under Mr Hudson’s wife
3rd The Real Estate
The Receipts and Payments of each of these three portions are divided into three distinct periods.
1st From Mr Hudson’s death on the 15th April 1852 to the appointment of Mr John Donaldson as Receiver under the Court of Chancery on the 1st August 1854.
2nd From the latter date to Mr John Donaldson’s death on the 25th April 1856.
3rd From Mr J Donaldson’s death to the present time.
In each of these three periods the books receipts and payments have been balanced correctly with the Bankers Book. The sums which have been withheld from the Cash Account of the Trustees appear in Red Ink, on the one hand as due to the Estate and on the other hand as due from H & J Donaldson.
It is also shown how much of the sums due by H & J Donaldson was taken respectively from the Settlement property – from the real estate and from the personal estate.
The Statement No.2 contains the particulars of all the securities mentioned in the Deed of Settlement, shows what alterations have taken place in them, which or what portion of any have been paid off or sold, what additions have been made, what is the present amount of each security, what interest each bears, what interest or dividends have been received on each, in each of the three periods specified in the former statement, the aggregate of each and the total of the whole distinguishing principal from interest together with the date upto which the interest or dividends have been paid and such observations as arise in particular cases.
To this has been added a like amount with respect to the new securities which were purchased by Mr John Donaldson, i.e. the early part of his management in all of which the principal remains intact. In one instance £100has been added by allotment to the Stock originally purchased.
To this latter account can easily be added, if required, the present market prices of the securities and their exparte under aggregate value at those prices.
Gray and Prideaux
Accountants
48 Lincoln’s Inn Field
December 21st 1861.