LUCK AND WITLESS VIRTUE vs. GUILE IN WHICH AN ENGLISH CLERGYMAN PROVES THE NEMESIS OF JOHN ("JAKE THE BARBER") FACTOR, alias J. WISE, alias H. GUESTJOHN JACOB FACTOR is now serving a ten-year sentence in a federal penitentiary for a crime which fell far below the standard of performance he set for himself in England. The only point of similarity to the subject matter of this paper is that the complaining witness in the recent federal prosecution, which terminated Factor's career, was a clergyman.
By Thomas Chalfont McConnell
Delivered to The Chicago Literary Club March 1, 1943
Copyright 1943 by The Chicago Literary Club
Delivered to The Chicago Literary Club March 1, 1943
Copyright 1943 by The Chicago Literary Club
Through the aid of a British solicitor doing business in Paris, an introduction was obtained to the Director of Criminal Prosecutions in the Prefecture. To my surprise, this gentleman was not French, but English. His name was Roberts, and, after twenty years of effort, he had accomplished the almost impossible feat of heading a department under French Civil Service. It would seem that he is entitled to a slight digression. He had an office in that part of the Prefecture which dates back to the year 800. This part of the building had stood since Paris was merely an island on a mud flat on a bend in the Seine. The windows to his office were grated slits in a wall at least six feet thick. The window over his desk gave view to the approach to the Prefecture and a part of the Seine. During his tenure of the office, Roberts had occupied his spare time in making sketches of the scenes he viewed through this window. The office walls were covered with these drawings and proved him a talented artist, and a few minutes conversation proved him a highly cultured and extremely intelligent man. I have since wondered whether or not his position as head of the law-enforcement division of the Civil Service might not have been explained by some connection with the British Secret Service.
To him was submitted the problem of how to obtain evidence in a land where to divulge it was a crime. He advised that there was an exception to this law in that the Director of Criminal Prosecutions could compel the production of any documents or records he might require in making an investigation. However, there was a limitation to this exception. While the witness who provided the information was protected from prosecution by the Prosecutor's request, he could refuse to divulge it, and upon such refusal the maximum penalty was a fine of twenty francs, at that time eighty cents in our money. The French court had no power to cite such refusal as a contempt, as is the common practice here. However, the witnesses were perfectly willing to give the information, when assured of their own immunity. This procedure thus procured the records necessary to prove the transactions which had taken place in France.
On arrival in London, the really serious part of the business began. We had previously determined that the source of the trust funds in Chicago was twofold: first, the cable of one million dollars from Brown, Shipley, and Company in London to Brown Bros., Harriman, and Company in New York by Arthur J. Klein to Rella Factor, and, second, a registered package containing a million-dollar market value of British War Loan Bonds sent by a broker in London to the Union Bank of Chicago as receiving agent for a Mrs. Cohen, who was Factor's mother-in-law. We had obtained the serial numbers of these bonds and also the name of the English broker who had forwarded them. This, then, was the obvious starting point for further investigation.
Depositions were started before the United States consul in London. The broker's records showed he had been put in funds for the purchase of these bonds by cash withdrawn from the North of Scotland Bank on the order of Arthur J. Klein. The records of that bank disclosed that these funds had been paid out of the account of H. Guest. The memorandum in the possession of the bank justifying this charge was what was termed a "paying-out slip." This document showed the charge to the account, the delivery of the money to a bank messenger, and the receipt signed by the broker. The account of H. Guest was shown to be the account of Factor by the bank manager, who, by pointing out a photograph of Factor, identified him as the bank's customer. The bank had in its possession a power of attorney executed by H. Guest making Arthur J. Klein his attorney in fact to check against the account. The signature on this document was identified as that of Jacob Factor. In a similar manner, the million dollars in currency sent by Brown, Shipley, and Company to New York was traced back to a withdrawal by Klein from the H. Guest account in the North of Scotland Bank. It was now necessary to trace the source of the monies which had been paid into the account of H. Guest at the North of Scotland Bank. They totaled in all some nine hundred thousand pounds sterling. A large part of these sums came from Barclay's Bank and the Midland Bank, but among the deposits was a cash item of something over one hundred and seven thousand pounds which was made at a date corresponding to the closing of the account of the Financial Recorder in the Midland Bank.
To understand the difficulties involved, some explanation is necessary of the nature and character of the English banking system. There are five great branch banking systems. The banks named above are two of these and have branches all over the City of London, throughout England, the colonies, and on the Continent, so that a payment made to the North of Scotland Bank designated on its records as originating from Barclay's Bank might have come from any bank belonging to the chain. It was necessary to work down through the records of the head offices of these banks to find and locate the particular branch involved. It is sufficient here to note that, as a result of a lot of examination of books and records, it was ultimately disclosed that the deposits in the H. Guest account originated in withdrawals from branches of Barclay's and the Midland with which the Broad Street Press did business.
At the time these transactions took place, the British banks were using a depositor's book called a "paying-in book." It was somewhat similar to the passbook used by our own banks, but with a difference, in that the original paying-in book belonged to the bank and remained in its possession. The entries in the book were made by the customers and showed the number of the check deposited, the name of the drawer, the drawee bank, and the amount. Cash deposits showed the numbers appearing on the bank notes. When a deposit was made, the customer called for his paying-in book, made the entry, and turned the book back to the bank. It thus constituted a statement of account made out in the handwriting of the depositor and was thus an admission of the receipt of any items handled and gave complete evidence of their source.
At the time the depositions were taken the paying-in books had been superseded by deposit slips similar to our own, but the old paying-in books of the Broad Street Press still remained in the hands of the bank, and these furnished us the evidence, not only of payments into the account of the Broad Street Press, but also of the source of the payments and the state of the accounts of the company with its various clients. As these customers were as a class the persons upon whose behalf the suit was brought, and as it was their money we were seeking to trace, these records proved a commingling of their money in a bank account in the name of the Broad Street Press.
The mere statement of this proof can give no adequate picture of the many technical difficulties with the evidence which counsel had to meet and overcome. For example, British banks do not voluntarily produce their books so that proof can be made in American courts. In fact, to produce the sort of proof of these transactions our courts require would have disrupted the entire banking system of England, because the customers accounts are not kept in a loose-leaf ledger, as is the practice in this country, but are entered in longhand in a voluminous and bulky customers ledger. This ledger is in constant use in an English bank to show the state of its accounts with its clients, and is the only permanent record which they have. To subpoena in the books themselves would mean that the English bank would be giving its permanent records into the jurisdiction of an American court, which in turn might order them returned to America and thus deprive the bank of the only source of information as to the state of its accounts.
To protect the banks from the loss of their records, the British Parliament had passed a Banker's Act which provided that, upon a subpoena being served, the requirements of evidence could be satisfied by certification by the bank manager of the entries in the ledger. Under that act it was not necessary in England to prove the making of the entries in the books or any of the foundation proof so necessary in our courts, as the records so certified proved themselves and were admissible without more.
As any lawyer knows, such proof would not prove anything in our courts, and it was necessary for us in some way to devise a method of getting a record proof which would satisfy our rules of evidence. This was done by arranging to have the bankers photostat the entries, and then produce the books under a stipulation permitting their withdrawal from evidence after opposing counsel were given the opportunity to use them on their cross-examination. The photostats were then proved to be the same as the original records and the foundation proof as to the making of the entries was put in by the testimony of the ledger clerks. Since the British bankers were unfamiliar with what seemed to them a very queer proceeding, they would invariably refuse to answer any question until it was arranged to have their own counsel present. The result was that at practically every session of the taking of the depositions, a bank manager would appear accompanied by a barrister and a solicitor, all dressed in cutaway coats and striped trousers, prepared for a very formal and dignified noting of their objections in the record. Whenever a question was asked, they would go into a huddle and decide whether or not they should advise the witness to answer.
To get these bank witnesses in the first place, it was necessary to petition the English High Court of Justice for a subpoena calling for oral testimony and records. Counsel, of course, had no standing in the English courts, but did have a very important looking document designated as "Letters Rogatory" under the seal of the United States District Court, with large red ribbons attached. "Letters Rogatory" at that time were only honored under the treaties with England in a case where the nation itself was a party to the suit. However, the English High Court of Justice was not familiar with this technicality, and since counsel for the banks did not point it out and counsel for the plaintiffs were content to rest their plea on the document itself, the subpoenas issued without difficulty.
The taking of these depositions was a day and night task, and we made the American Club our office and headquarters. Never before or since has the staid, austere, and thoroughly reputable American Club seen such a succession of questionable characters pass through its portals. Examining witnesses out of court in the evening and in court by day, and with two lawyers working continuously at the task fifteen hours a day, months were spent. As Westbrook Pegler would say, the English lawyers went off the sled at the first turn. By the end of the month of August, 1932, most of the technical proof had been introduced in evidence, but all that had been done so far had only given emphasis to the most difficult problem in the entire case, which, if not solved, threatened to defeat and negative all that had gone before.
After a tiresome succession of ledger clerks and bank witnesses and the offering into evidence of hundreds of documents and records, and after taking the testimony of more than two hundred witnesses, it was apparent that exactly no progress had been made in connecting up the Faber claim with the funds of the Broad Street Press. Faber's money had been paid into the Midland Bank. His canceled check showed the indorsement of Captain Bowles to the account of the Financial Recorder. The record of this account showed deposits of around two hundred thousand pounds sterling. It showed numerous withdrawals from time to time, but from the time of the Faber deposit until the closing of the account there were always sufficient funds on hand to cover Faber's payment.
The applicable theory of tracing is that, as between a person wronged and the wrongdoer, money paid out of a commingled fund is presumed to belong to the wrongdoer until the fund is exhausted. Under this theory Faber could trace down to the date of the closing of the account, but there the trail ended in a blind alley. Bowles had closed the account by withdrawing the balance in cash. As pointed out above, a clue had been given by the records in the North of Scotland Bank, which showed a credit to the H. Guest account of cash in a similar, but not identical, amount to that of the Bowles withdrawal. The dates of the withdrawal and the deposit were only two days apart. It was therefore a moral certainty that the entry in the H. Guest account represented a payment from Bowles to Factor of monies drawn from the Financial Recorder account. If this could be proved, then Faber's money was commingled with the Broad Street Press money in the account of H. Guest.
It was obvious that the missing link of proof could only be supplied by Bowles, but where to find Bowles? Scotland Yard was consulted, but all they could tell us was that he had not left the country, at least not under his own name. Since the affair of the Financial Recorder some two years before, he had dropped completely out of sight. A young lawyer named Perry, associated with the Wordsworth firm, had met him at the time of an investigation by the senior official receiver of the affairs of the Financial Recorder. He had talked with him and he could recognize him. Perry was assigned the task of locating him to the exclusion of all else. He ran down all available clues, traveling to Hull, Liverpool, and various places in Scotland. All during the time the depositions were being taken he could report no progress. We were nearing the end of our task, and the constant subject of discussion was when and where and if ever we might count on finding Bowles. We had finally reached the stage of considering amendments or other ways and means of getting out from under the legal objections to our suit which a failure to make this proof would immediately raise. We knew that our opponents were enjoying our discomfiture. They kept asking us whether or when we intended to put Bowles on the stand. From this we could only infer that Bowles was enjoying himself on the Continent or in the colonies on a Factor expense account.
One evening I invited Perry to the American Club for dinner. We took the underground and got off at Piccadilly Circus, intending to walk the remaining distance to the Club. Now Perry had a profound and enduring regard for an English drink named "gin and ginger." The sight of the Piccadilly Bar caught his eye as we emerged from the underground. In the next two hours that establishment did quite a business in Perry's favorite drink.
Comfortably installed in an eighteenth century atmosphere, the thought of dinner at the Club had long since lost any attraction for either of us. By this time Perry had shed his customary English reserve and was well launched on a lengthy discourse, the topic of which, if ever remembered, has long since been forgotten, when suddenly he stopped talking and began to listen.
There was a telephone stall directly behind the booth in which we were sitting, and someone was having difficulty with a number. Perry quietly disengaged himself from the table and walked behind the booth. A few seconds later he was back introducing me to Captain Alexander Clarence Bowles, V.C. Much later in the evening, at a restaurant in Soho, he told us all about his association with Factor.
Needless to say, by that time we had developed quite an attachment for the Captain, and we had no desire or intention of losing his company. He had no guest card, but nevertheless he spent the night at the American Club with a doorman hired by the Club to keep his like out, now hired by us to keep him in. Next morning Bowles, Perry, and I left the Club, bound for a deposition hearing at the Linited States consul's office on Harley Street.
Bowles made an excellent witness. He testified he had withdrawn all the funds of the Financial Recorder under directions from Factor and had met him two days later at his rooms in the Mayfair Hotel. There he had received instructions to deposit the money in cash to the account of H. Guest at the North of Scotland Bank. He further testified that Factor had told him to keep for himself the sum of five hundred pounds with which to take up residence on the Continent. He said he had made the deduction and deposited the balance, but not wishing to spend the five hundred pounds in Continental travel he had sedulously avoided any further meeting with Factor.
On cross-examination some considerable doubt was cast on whether Factor had actually authorized the five hundred pound deduction, but this line of questioning only strengthened the proof of the actual deposit of Financial Recorder funds in Factor's account. When Bowles left the stand, no one present had the slightest doubt but that Faber's case stood complete and beyond refutation.
Settlement talks immediately ensued. So far as Factor's counsel and ourselves were concerned we had practically reached an agreement two days after the conclusion of the Bowles testimony, but we had not reckoned with Mr. Pepys. This old fuddy-duddy had all of the vices and none of the virtues of the original Pepys, who wrote the diary. He was incensed at the thought that American lawyers were undertaking to agree about matters within his prerogatives, so he sent around a note by messenger that the settlement conversations were to be continued at the office of the Senior Official Receiver. Since all of Factor's companies were in liquidation and Pepys was the liquidator, we had no alternative but to adjourn our meetings to this place of assignation. There Mr. Pepys held court from his desk on a little raised dais, and we sat before him at desks, feeling like little schoolboys, while he called on us one by one for our views. He then called in scriveners to put the suggestions in draft form. The sessions would start at eleven in the morning and continue until two-thirty in the afternoon, at which time Pepys would ring a bell, and his clerk would bring him his hat, coat, rubbers, and umbrella, and we were through for the day. One Friday we had reached a point in the discussion vital to Mr. Lee and myself, in fact one might say that, from our point of view, it was the crux of the matter, and that was the size of our fee. At this juncture Mr. Pepys rang his bell and his clerk appeared with the customary accouterments. Since it was only one o clock, we asked him where he was going, to which he replied that his weekly holiday had started and that he would be back on the following Tuesday.
As Charley McCarthy would say, "That did it." Lee wrathfully announced that he was sailing on the next boat. Factor's lawyers announced that they had made the only proposal they were ever going to make, and he could take it or go on with the suit; that since holidays seemed to be in season they were taking one too, and were leaving immediately for three weeks on the Continent. Pepys never turned a hair. He calmly put on his j rubbers, his coat, and his bowler hat, picked up his umbrella, said "Good day, gentlemen," and walked out of our respective lives forever. Lee took the next boat, leaving to Wordsworth and myself the task of obtaining approval of the settlement. We circularized all the victims and obtained the consent of 94 per cent of them, and then appeared before a British court to get the approval. After the hearing the court took under advisement a petition to approve, without prejudice to the extradition proceedings, a net payment of some three hundred and seventy-four thousand pounds in release of the claims of those who dealt with Factor's companies. This amount was the approximate equivalent of the then value of the trusts established in the Chicago banks.
Faber, however, had not completed his mission. He insisted that out of the settlement funds he be paid the amount he had invested plus what he termed his customary profit plus all his costs, including those incurred in the Bowles suit, plus interest at bank rates. This, in gratitude, the other claimants were willing to concede after they found out Faber intended to block the settlement unless they did.
Since the court had indicated that the settlement would be approved in due course, I felt free to sail for home. I had passage on the "Europa" and went aboard at Plymouth without awaiting the actual entry of the order. Again I had reckoned without Pepys. When I checked in with the purser he handed me a telegram from Wordsworth requesting me to return to London immediately to defend a petition by Pepys to modify the settlement to permit the fixing of the attorneys fees by the English court. The purser had also handed me a cable from my wife stating that she was meeting the boat in New York. I went to my stateroom to consider the position. It was apparent that Pepys could do no real damage, as Judge Wilkerson, with jurisdiction over the fund, would have the final word regardless of what the English court might say. It was also fairly clear that Wordsworth's hand was strengthened, on any further hearing, by my absence. The amenities of the situation, however, still needed careful consideration. Thereupon I had an inspiration. Everyone in the case had been addicted to holidays except myself. To an Englishman the word "holiday" connotes something sacrosanct, a natural, inalienable, and fundamental right. Why not call this boat trip my holiday? I then wired Wordsworth to tell Pepys that I was taking a holiday, and that if the judge indicated an intention to amend the order of approval, to withdraw our petition, cable me in New York, and I would return on the next boat and renew the application. On my arrival in New York I found a cable from Wordsworth saying that the judge, in spite of Pepys objection, had approved the settlement without amendment or modification.
Probably a more apt title for this paper would have been "Luck and Stubborn or Shrewd Virtue vs. Guile," because it is quite apparent that Faber's actions in the course of this suit were far from witless. There can, however, be no doubt about his luck. Factor prided himself on his amazing success at games of chance. The records at Le Touquet showed that he had won almost a million francs in competition with the best of Continental gamblers. There is a well-authenticated story that as banker in a game of chemin de fer he had once left a future king of England living for a time on the interest of his debts. Be that as it may, Factor couldn't win a trick from Faber.
The chances against the disclosure of the hiding place of Faber's money four thousand miles away, by casual conversation in the presence of a person in a city of three million souls, who had his claim in hand, far exceed any possible combinations of odds at Monte Carlo, and any editor worth his salt would reject outright the story of Perry's meeting with Bowles as far beyond the range of credibility.
A moralist of the High Church school would conclude that the very Fates themselves were set in angry and retributive motion when Factor instructed Bowles to tell a clergyman of the State Church of England to go to hell. However, no moralist could survive the advantage, enjoyed by the writer, of studying proximate causation under the late Joseph H. Beale. Applying Beale's theory of the latest intervening factor upon a set stage or fixed frame of reference, there can be not the slightest scintilla of a doubt but that the success of the Reverend Faber should be ascribed to Mr. Perry's well-developed taste for "gin and ginger."
THIS PAPER WAS WRITTEN FOR THE CHICAGO LITERARY CLUB AND READ BEFORE THE CLUB ON MARCH FIRST, NINETEEN HUNDRED AND FORTY-THREE. THIS EDITION OF THREE HUNDRED AND THIRTY COPIES WAS PRINTED FOR THE MEMBERS OF THE CLUB IN THE MONTH OF JULY, NINETEEN HUNDRED AND FORTY-THREE.