The Edinburgh United Breweries Fraud Trial

I told you we'd learn what happened to the managing director and head brewer of Edinburgh United Breweries in court.

It was quite a big case, as you can see from the number of prosecution witnesses called:

"£31,000 TAX ALLEGATIONS.
71 WITNESSES TO BE CALLED FOR PROSECUTION.
It was intimated at Edinburgh Sheriff Court to-day, when William Lawrie, director and secretary, and John Archibald Clark, head brewer in the employment Edinburgh United Breweries. Ltd.. Edinburgh, appeared, that their trial on a charge defrauding the Commissioners' Customs and Excise of sums amounting to £31,291 would take place in the High Court on March 5th.

There are 71 witnesses for the prosecution. "
Nottingham Evening Post - Saturday 23 February 1935, page 4.

And it lasted more than a week, before the inevitable guilty verdicts. There's a little more detail given as to exactly how the fraud was perpetrated:

"BEER DUTY EVASION,
TWO SCOTTISH BREWERY
OFFICIALS SENTENCED.
After a trial bating eight days William Lawrie, managing director and secretary of Edinburgh United Breweries, and John Archibald Clark, head brewer, were at Edinburgh yesterday found guilty of conspiring to defraud the Customs and Excise authorities.

Lawrie was sentenced to 21 months' imprisonment and Clark to 12 months' imprisonment.

An appeal on behalf of Lawrie was lodged and he was liberated on bail.

The charge alleged that the company had evaded the payment of beer duty amounting to £2,291. It was stated that the methods adopted were the abstraction of worts before the Excise officers had taken measurements and the running of secret brews upon which no duty was paid.

The Lord Justice Clerk said that having regard to the magnitude of the sum involved and the period over which the fraud was carried on he had difficulty in refraining from passing sentence of penal servitude.

On the other hand the accused were both men who had good records. Grave as the frauds were, the money did not go directly into their pockets although they might have derived indirect benefit."
Financial Times, 15th March 1935, page 13.

I’m pleased that Lawrie got the longer sentence. As managing director, he was the one ultimately responsible for the fraud. Too right he got banged up for longer than the head brewer.

Good records? I suppose they did have good records, other than the little matter of 7 years of committing fraud. It's true they didn't receive any direct benefit from the fraud. Other than not losing their jobs when EUB went bust, as it well might have without the fraud. The company's inability to meet the Excise demand for the dodged duty shows its finances weren't too healthy.

The managing director, unlike the head brewer, refused to accept the guilty verdict and apealed. Unsurprisingly, without luck:

"BREWERY DIRECTOR'S APPEAL DISMISSED
The Scottish Court Criminal Appeal at Edinburgh yesterday, dismissed the appeal Wm. Lawrie, director and secretary of the Edinburgh United Breweries, Ltd., against his conviction sentence of 21 months imprisonment on a charge of being concerned with other employes of the company in a fraud the Inland Revenue whereby the company avoided payment beer duty amounting to £31,291. Lawrie had been tried along with John Archibald Clark, head brewer of the company, who was sentenced to 12 months imprisonment."
Western Daily Press - Friday 14 June 1935, page 8.

I wonder what happened to Lawrie and Clark when they were released? Did they ever work in the industry again? I'd love to find out.

An appeal

I've just discovered that there's a book devoted to the Edinburgh United Breweries duty fraud. Brilliant! Except that it's out of print and I can't find a second hand copy. Hence this appeal.

Anyone know where I can get my hands on "The Edinburgh Beer Duty Fraud, 1926-1933" by John Pink?

I'd be ever so grateful.

Edinburgh United Brewery officials charged with fraud

Things weren't going well at Edinburgh United Breweries. First the Customs and Excise put the company into liquidation by demanding the dodged duty immediately. Then those at the centre of the fraud were charged.

There's been a lot in the papers recently about financial scandals, like the fixing of the Libor rate. Which seems to have amounted to fraud. But those in upper management - the ones ultimately responsible for their company's behaviour - always claim to have known nothing of what was going on, blaming their subordinates. Only those well down the food chain ever end up in court. It wasn't like that in the case of the EUB duty fraud.

"£47,000 FRAUD CHARGE Against Brewery Officials
A charge of fraud involving £47,000 was brought at Edinburgh on Saturday against William Lawrie, managing director of Edinburgh United Breweries; John Archibald Clark, head brewer; David Smith, assistant brewer; and Ernest Wiles, working brewer. The indictment alleged that accused, in concert and in pursuance of a common fraudulent purpose, pretended to Customs and Excise officials that the records kept in the brewery were true and complete records for the calculations of the duty payable; that they had systematically understated the quantities of materials, and secretly carried through brews and deliberately refrained from entering references to them in the records. The period of the alleged fraud extended from October, 1926, to December, 1933, in the case of Lawrie, Clark and Wiles, and from June, 1930, to December, 1933, in the case of Smith. Bail was fixed for Lawrie in £500, Clark in £200, and Smith and Wiles in £100 each."
Hull Daily Mail - Monday 21 May 1934, page 6.

At EUB, it wasn't only the brewing staff in the dock, but the top man, the managing director, as well. Not only was he charged, but the court insisted on him being charged:

"EDINBURGH BREWERS' ALLEGED FRAUD.
MANAGING DIRECTOR AND NEW INDICTMENT
Judgment was given yesterday by the High Court at Edinburgh on the various legal objections made on Tuesday to the Crown procedure in the charge against three brewers employed by the Edinburgh United Breweries.

These are John Archibald Clark, David Smith and Alexander Wiles, and they are accused or defrauding the Customs and Excise of duty amounting to £31,29l. The indictment alleged that the accused acted in concert with William Lawrie, managing director of the firm.

The Court, consisting of Lord Justice Clerk Aitchison, Lord Anderson and Lord Murray, unanimously decided that the case should not proceed to trial on the present indictment without a charge being brought against the managing director, or intimation on behalf of the Crown that it was not proposed to bring any such charge."
Financial Times, 1st January 1935, page 8.

Even more surprisingly, the charges against the junior brewing staff were dropped, leaving only the managing director and the head brewer to stand trial:

"BEER DUTY CASE.
PROCEEDINGS AGAINST TWO MEN DROPPED.
In connection with a charge in the High Court at Edinburgh of defrauding the Customs and Excise of £31,291 beer duty, it is understood that the Crown has intimated to two of the three accused men, David Smith, assistant brewer of the Edinburgh United Breweries Limited, and Ernest Wiles, working brewer, that no further proceedings are to be taken against them.

It is understood that the defendants' solicitor received an intimation to this effect from the law officers."
Nottingham Evening Post - Thursday 17 January 1935, page 8.

It seems very fair to me: punish those responsible for initiating the fraud, not just the poor workers carrying out instruction.

The observant amongst you may have noticed the amount of the fraud is declining: from the initial £51,901 to £47,000 and then £31,291. Was the initial figure just a wild arse guess? Or did they trim down the claim to make the prosecution easier?

Wondering what happened to the two accused? Patience, patience. We'll be getting to that in due course.

Edinburgh United Breweries in the doodoo

I've been gathering information about this for a while: the largest duty fraud of the 20th century. When Edinburgh United Breweries finally got caught after years of secret brewings and duty dodging. It all got rather messy.

Ever since 1926 there had been furtive nocturnal brewings that hadn't been registered in the official brewing books and of which the Excise was totally unaware. The point was to dodge paying the duty, which was already a considerable proportion of the cost of brewing beer.

The whole of the brewing staff had been in on the fiddle. It eventually came to light when a disgruntled sacked employee tipped off the Excise. Their retribution was swift and terrible. They demanded £51,000 in back duty be paid immediately. EUB didn't have that much cash, so the Excise started seizing their property. The net result was that EUB had to file for bankruptcy, not having sufficient assets to carry on the business.

"EDINBURGH UNITED BREWERIES.
COMPANY PETITIONS FOR WINDING UP.
UNEXPECTED DEMAND FOR £51,000 DUTY.

In the First Division of the Court of Session, Edinburgh, yesterday a petition was presented on behalf of the Edinburgh United Breweries for the compulsory winding-up of the company and the appointment of a provisional liquidator.

Mr. T. M. Cooper, K.C., who appeared for the petitioners with Mr. J. L. Clyde, said the circumstances were of exceptional urgency. The petition was an the instance of the company and the whole of the directors, and one of their number in his character as a creditor. The capital of the company was roughly £100,000; it was a public company with some 500 shareholders, and the shares were quoted on the principal Stock Exchanges.

A few weeks ago allegations were made by the Excise authorities that irregularities had occurred  in the  payment of duty on beer brewed at the brewery, and the company's books had been seized.

On Tuesday without previous warning, the Excise authorities presented to the company a demand for over £51,000 as duty, coupling their demand with a request for instant payment.

The company being unable to comply, the Excise authorities proceeded to distrain upon the company's goods, with the result that the company's activities had been paralysed. In that situation the company had had no opportunity and no time to investigate the validity or the quantum of the claim. The directors had come to the conclusion that immediate action should be taken for the protection of the interests on the one hand of the shareholders, and on the other hand of the other creditors of the company.


BOOKS TAKEN AWAY.
BOARD UNINFORMED.

It was alleged in the petition that the directors were unaware and prior to the allegation in January, 1934, had no knowledge of any irregularity affecting the payment or non-payment of duty. The books and records had been out of their possession from that date to this. If the £51,000 of duty were due so far as it was possible to say, the company was unable to pay its debts within the meaning of the Companies Acts.

Apart from that, their Lordships would appreciate that questions of importance might arise, but he was not in a position to say whether they would or not is to the preference to the Execise Authorities And the effect of the distress on the other creditors. The whole question had been thrown upon the company at a few hours' notice.

Lord Morison asked if the Excise had any special powers under their warrant.

Mr. Cooper read the section of the Revenue Act to the effect that the collector by warrant might empower any person to distrain.

Lord Sands: Is there any other section under which the Revenue is the sole judge?

Mr. Cooper Nor that I am aware of. The situation is this — that in pursuance of a claim the existence of the quantum of which has never been ascertained, the Excise authorities are at this moment engaged in liquidating a public company at their own hands.


CLAIM DATING BACK TO 1926.

Lord Blackburn; Does the claim run back for a period of years?

Mr, Cooper: Back to 1926. My motion is that your Lordships should pronounce the first order in the petition and simultaneously make the appointment of a provisional liquidator. I understand that the collector of Excise intimated that he was acting under instructions when he took this strong action yesterday. I think it would he desirable, that an independent person with the authority of the Court behind him should be in a position to possess himself of the assets, which at the present moment are being taken out of the brewery. Your Lordships have ample power and a duty to consider the interests of others than the Commissioners of Excise. There are other creditors and the shareholders. The alternative to the motion I am making just now would be the destruction of the company and possibly the seizure of the whole liquid assets.

The Lord President: We had better have the Lord Advocate here. I see I great difficulty in appointing a liquidator who cannot get the stocks and  who even cannot get access to the books.

Mr. Cooper: A good deal of mischief has been done. Seizures were made yesterday, and with such rigour that they have even extended to a car belonging to the wife of one of the directors.

Lord Sands: It might not be to their interests to sell this place as a break-up.


AUTHORITIES' POWERS.
COUNSEL'S SURPRISE.

Mr, Cooper: The extent of the powers possessed by the Excise authorities surprises me. Your Lordships will appreciate that if the Excise authorities have a preference for £51,000, then the liquidation would not affect that, and I do not think the Lord Advocate would he prejudiced by this appointment. I am anxious to avoid the inevitable and irretrievable loss. If someone in an independent position is not at once appointed it may be that an independent person could negotiate when the directors could not.

Lord Morison: Is it clear that the liquidator will supersede this officer who is in possession ?

Mr. Cooper: I do not know whether he would, but be certainly would be in a position to talk to the authorities in London. It does seem to me if nothing is done that the company will be irretrievably damaged.

The Lord President, alter consulting with the other Judges, said they would make an order giving intimation of the petition to the Lord Advocate, Either he or the Solicitor-General was in Edinburgh, and, in view of the exceptional character of the situation, it would be no more than reasonable if the Lord Advocate or Solicitor-General were to appear in that Court after lunch.

The Solicitor-General, who appeared after the internal, said that, according to his information, there had been fraudulent evasion of duty since 1926, and he was entitled to take any steps which the statute gave to enforce payment.

After counsel had given details of an arrangement suggested for carrying on the business, the Lord President inquired if that included handing back the books.

The Solicitor-General replied that he could give no undertaking, as the books were required for other proceedings.

Counsel for the company said he was there to defeat the Solicitor-General's attempt to secure an illegal preference over the other creditors.

The Solicitor-General denied that he was seeking such preference.

The Court ordered that the petition should he advertised, and appointed a provisional liquidator.

The Solicitor-General subsequently appeared before Lord Fleming and obtained an "ex parte" order for payment of duties amounting to £51,901.

Lard Fleming said he expressed no opinion as to whether the Crown was entitled to enforce the decree or what would be the effect if they did so."
Financial Times, 22nd February 1934, page 9.

There's a lot to digest there. But there's a technical point that's puzzling me. It's to do with gyle numbers.

As the dodgy brews weren't in the brewing books, they wouldn't have a proper gyle number. Usually the gyle number would be marked on the cask, so that if there were any problems, it could be traced back in the brewing records. I wonder which gyle number they put on the casks of the secret brews?

How many barrels had they brewed secretly? It's easy to work out a rough estimate. The Excise wanted £51,901 in unpaid duty. In 1926 to 1934 the rate of duty was 80/- or 114/- per standard barrel. Because beer was by then well under standard barrel strength, it averaged about 60/- per bulk barrel. So about three quid. Or approximately 17,300 barrels. The fraud went on for 8 years, which means they brewed about 2,000 barrels a year secretly.

Had the directors really known nothing about the dodgy goings on? Would they end up in the dock? We'll find out the answer to those and many other questions in future instalments.

Edinburgh United Breweries' beers 1926 - 1934

All those court cases and dodgy prospectuses are giving me a thirst. Time to take a look and the products of Edinburgh United Breweries.

I just noticed something weird about these beers. They were all brewed in the period when Edinburgh United Breweries were defrauding the revenue by brewing in secret. Were any of these beers, I wonder, brewed that way? It's a definite possibility.

Let's start with the Brown Ale. With a gravity of the mid 1050's, it's definitely not a Southern Brown Ale. Looks more like a Double Brown to me. I'd love to know what the beer was like. Were Scottish Brown Ales like English ones? Given the business they did in the Northeast of England, it's tempting to think that they must have been similar to Newcastle Brown or Vaux Double Maxim

I've got an analysis of Newcastle Brown from 1931: OG 1056, FG 1014, colour 62. It looks pretty similar to the EUB beer, except for the colour, which was paler. And an analysis of Vaux Double Maxim tells me that had an OG of 1053.2 and an FG of 1009.3. On the face of it, all three look quite similar.

Now for the Pale Ales. I'm still trying to get my head around the naming conventions in Scotland between the wars. Most of the 90/- Pale Ales I've seen were weaker than this one. Usually in the low to mid 1030's. And Export usually was used for something stronger than 1040º. I'm all confused.

Finally we've Disher's Ten Guinea Ale. A real beast of a beer. Amazing that they sold the stuff on draught. I assume that they didn't sell it in pints. Even I would struggle to get down more than one. It's quite well attenuated for a beer with an OG north of 1100º.

Edinburgh United Breweries beers 1926 - 1934
Year	Brewer	Beer	Style	Price	size	package	FG	OG	colour	ABV	App. Atten-uation
1929	EUB	Export	Pale Ale		pint	bottled	1008	1040	40	4.16	80.00%
1931	EUB	Brown Ale	Brown Ale		pint	bottled	1015	1055	92	5.20	72.73%
1931	EUB	Brown Ale	Brown Ale	3.5d	nip	bottled	1014	1056	65	5.46	75.00%
1931	EUB	Brown Ale	Brown Ale	6d	half	bottled	1015	1055	75	5.20	72.73%
1933	EUB	90/- Pale Ale	Pale Ale		pint	bottled	1007	1040		4.29	82.50%
1934	EUB	Pale Ale	Pale Ale		pint	draught	1013	1037		3.17	66.22%
1926	Disher	Ten Guinea Draught Ale	Strong Ale	20d	pint	draught	1035	1115.4		10.61	70.10%
1927	Disher	£10.10/- (10 guinea)	Strong Ale		pint	bottled	1029	1114	130	11.20	74.56%
1928	Disher	Strong Ale	Strong Ale		pint	bottled	1027	1104	120	10.11	74.04%
1931	Disher	Strong Ale	Strong Ale		pint	bottled	1033	1091		7.53	63.74%
Sources:
Thomas Usher Gravity Book document TU/6/11 held at the Scottish Brewing Archive
Whitbread Gravity book held at the London Metropolitan Archives, document number LMA/4453/D/02/001
Younger, Wm. & Co Gravity Book document WY/6/1/1/19 held at the Scottish Brewing Archive

Edinburgh United Breweries' litigation (part four)

I told you EUB and Mr. Dunn didn't give up easily. They took their case as far as they could: all the way to the House of Lords, the ultimate court of appeal in the UK.

"THE LAW COURTS. 
HOUSE OF LORDS APPEALS.
(Present : The Lord Chancellor and Lords Watson, Ashbourne, Macnaghten, and Morris.)
THE SALE OF A BREWERY COMPANY.
The Edinburgh United Breweries Company (Limited) and others v. Molleson and another. — This was an appeal from a decision of the First Division of the Court of Session in Scotland. — The Solicitor General (Sir J. Rigby, Q.C), the Solicitor General for Scotland, and Mr. Shaw were counsel for the Appellants ; the Lord Advocate and Mr. Muir for the Respondents.

The question raised by the appeal was whether a contract of sale between oue of the Appellants, William H. Dunn, and the Respondent James A. Molleson ought to be set aside, and the contract price repaid. David Nicholson owned the Palace Brewery Company, Edinburgh, which, in consequence of failing health, he conveyed in 1887 to Molleson, a chartered accountant, as trustee, with a view to its eventual sale. In November, 1889, Molleson sold the property to Dunn for £20,500, and Dunn resold it to the Edinburgh United Breweries Company for £28,500, thus making a profit of £8000. by the re-sale. The contract between Dunn and the company contained a condition that the actual profits from the bnsiness were £3750 a year. It appeared that Dunn employed two firms of accountants to examine the books and verify the profits; but after the Breweries Company entered into possession it was discovered that a clerk employed at the brewery during Molleson's management had falsified the books ; that Dunn's accountants had been misled ; and that the true profits were £1000 less a year than the accoun- tants reported. No blame attached to Molleson, the falsification being made to lead him to believe that the concern was more prosperous than it was in reality. Retention of his own situation and salary was the only motive suggested for the clerk's wrong-doing. Then the Breweries Company and Dunn instituted the present proceedings against Molleson and Nicholson, the original owners, to set aside the contract, and recover back what had been paid. They contended they were both entitled to sue, and that the transac- tion was induced by misrepresentations, for which the Respondents were responsible. The Respondents said that under the peculiar circumstances of the case neither of the Appellants was entitled to sue, Dunn because he suffered no injury, having in fact profited to the extent of £8000, and the company because they had no contract with the Respondents, and had suffered no wrong for which the Respondents were answerable. The First Division of the Court of Session decided the matter in favour of the Respondents — hence the present appeal. Their Lordships, Without calling upon counsel for the Respondents, upheld the decision of the First Division, which was appealed from, and dismissed the appeal with costs. — Appeal dismissed accordingly. "
London Standard - Saturday 10 March 1894, page 2.

Unsurprisingly, the Lords upheld the decisions of the lower courts. How could they have decided otherwise? The facts hadn't changed. Ultimately what buggered EUB and Dunn was the weird way the brewery had first been purchased by Dunn, then sold on to EUB. It meant that there was no connection between EUB and Molleson.

I'd have come to the same decision. What could EUB possibly have been claiming? They'd bought the Palace Brewery from Dunn. How could the books have played any role in that transaction?

It must have cost them a few quid, taking the case through all the courts right up to the House of Lords. Wondering how much? Wonder no longer:

"The annual meeting of the EDINBURGH UNITED BREWERIES (Limited) was held yesterday at Dowell's Rooms, Edinburgh - Sir Walter Dalrymple, Bart., chairman of the directors, presiding. The report of the directors for the year to 13th October stated that the gross profits amounted to £20,385 12s 6d. After providing for upkeep, depreciation, and deducting head office charges, legal expenses, &c., there remains a balance of £23,152 8s., including the amount brought forward from the previous year. It was proposed to complete the dividend on the preference shares, making in all 6 per cent, for the year; to write off the whole expenses incurred in connection wins the Palace Brewery action, £4868 17s 1d ; and to carry forward the balance of £1703 10s 11d. The directors a hoped that their policy in at once wiping off the whole of the expenses of their litigation over the Palace Brewery and not declaring a dividend on the ordinary shares would meet with the approval of the shareholders."
Glasgow Herald - Saturday 29 December 1894, page 7.

They spent £4868 17s 1d. Did they bear all the costs of the action, or did Dunn pay half? Even if Dunn didn't contribute, that's still a hefty sum wasted on the court action. Remember that they bought the Palace Brewery for just £28,500. They would have had to get pretty much all of that refunded for it to have been worth their while. I wouldn't have been very happy, had I been a shareholder.

Edinburgh United Breweries' litigation (part three)

EUB and Mr. Dunn just couldn't let their claim against Molleson go. After their initial claim was thrown out by Lord Kyllachy, they appealed. Not that the appeal achieved much, other than fill the pockets of their lawyers.

Molleson must have been well and truly sick of the affair. He hadn't been the owner of the Palace Brewery, just the trustee. He hadn't committed - or even been aware of - the fraud in books. Yet he kept getting dragged through the courts by EUB. I wonder if he had been paid for his work as trustee?

Here's a report of the appeal:

"EDINBURGH UNITED BREWERIES (LIMITED) v. JAMES A. MOLLESON.
Judgment was given in the action by the Edinburgh United Breweries Company and Mr Henry Dunn, 27 Bishopsgate Street, London, against James Alexander Molleson, C.A., Edinburgh, trustee under a trust deed by David Nicolson, brewer, Parson's Green. Edinburgh, in which reduction was sought of the sale of the Palace Brewery, Edinburgh. The price paid was £28,500, and pursuers said it was effected by fraudulent misrepresentations that the profits of'the business for the two years previous had amounted to £3750 a year. Defenders said the books of the brewery were examined by accountants on behalf of the purchasers, and that the purchase was completed upon their report. In the Outer House Lord Kyllachy said it had transpired that the books of the brewery had been falsified by a clerk. This was done to deceive Mr Molleson, and his Lordship held that both parties agreed to accept the books as showing the true amount of the profits. He therefore held the pursuers were not entitled to reopen the contract, and be gave absolvitor, with expenses. The pursuers reclaimed to the First Division, who gave judgment today.

Lord McLAREN delivered the opinion of the Court. He said that to his mind the placing of falsified books before the purchaser was equal to placing no books before them at all. He came to the conclusion that Mr Dunn could not be barred by the agreement between him and Mr. Molleson from challenging the sale, because he only agreed to take the brewery on the condition that the books should contain a true record of the business. But while he held that to be established, it did not quite follow that the pursuers were in a position to enforce a claim for restitution, which was what was asked in this action. There were two contracts, one between Mr Molleson and Mr Dunn, and the other between Mr Dunn and the United Breweries. The United Breweries were not parties to the contract with Mr Molleson, and the really important question was whether Mr Dunn had a right to reduce the contract. The special feature of the case was that Mr Dunn had re-sold the brewery at a profit of £8000. He understood that Mr Dunn intended to keep that £8000 which he made by means of the representation of forged books, and at the same time to cut down the sale on the ground that it was restricted by those very books. The truth was that Mr Dunn was not an injured person. His Lordship thought they would do no injustice if they maintained unimpaired the principle that no person could maintain the principle of equity who was not prepared to do equity, and that, in particular, the right of relief against fraud was denied to him who was seeking to obtain benefit secured by fraud. As, in his opinion, Dunn was not in a position to claim restitution, it followed that the action at the instance of the United Breweries must also fail. The other judges concurred, and Lord Kyllachy's judgment was affirmed, with expenses."
Glasgow Herald - Saturday 18 March 1893, page 3.

Mr. Dunn had a cheek. He was happy to keep the profit he got from selling the brewery, benefit of the cooked books, but wanted to get the price he had paid reduced. As EUB and Dunn brought the case jointly, one can only assume that some of the reduction of the price he paid would have been passed on to EUB.

I can see how EUB and Dunn got sucked into this case. They must have been pretty pissed off when they found out the Palace Brewery books had been lying. Angry enough to bring in the lawyers. But they don't seem to have thought things through. Did their lawyers think they had a chance of winning? Perhaps not. Probably not. Maybe Dunn and EUB just ignored their sage advice and told them to get on with it. We'll never know.

Edinburgh United Breweries' litigation (part two)

Persistent. Edinburgh United Breweries were certainly that in pursuit of poor Mr. Molleson. They didn't give up when their case was thrown out in 1891. They tried again in 1892. Same arguments as first time around. Was this judge more impressed than the first? Read the article:

"EDINBURGH UNITED BREWERIES COMPANY v. J. A. MOLLESON.
Lord KYLLACHY gave his judgment in the action by the Edinburgh united Breweries Company and William Henry Dunn, 27 Bishopsgate Street, London, against James Alexander Molleson, C. A,. Edinburgh trustee under a trust deed, by David Nicolson, brewer and wine merchant, Parson's Green, Edinburgh, in which reduction was asked of the minute of agreement for the sale of the Palace Brewery, Edinburgh. The price paid for the brewery and ground was £28,500. It was stated that the sale was a representation by the seller that the profits for the two previous years amounted to £3750, a year, and it was averred that the books of the brewery had been falsified. Defenders stated that the books were examined by accountants, upon whose report the purchase was completed. Lord Kyllachy said the price of the brewery was fixed, not on so many years' purchase of the profits, but with reference to certain valuations of the brewery premises and plant. The agreement was dated 13th November, and the date of settlement was 31st December, 1889. During that interval the purchaser was to have access to the books of the brewery with a view to purifying the profits, and there was an express provision for repayment of the purchaser's deposit in the event of a shortcoming in the profits being ascertained, but there was no corresponding provision for repayment of the price. He preferred to hold that the settlement of the 31st Decemnber foreclosed, and was intended to foreclose, all further reference to the question of profits. But it was said by pursuers that they were entitled to get behind the settlement. The books of the brewery were placed in the hands of the purchasers, and they were examined, first by a firm of accountants in London, and then by a firm of accountants in Edinburgh. Some discussion arose, but the purchaser waived his objection and completed the purchase, and the company which was then formed has since carried on the business of the brewery. In the course of last summer it transpired by the confession of a clerk that the balance-sheet for the year 1888 had beer falsified to the intent of £1000 and that the ledgers had been falsified so as to correspond with the balance-sheet. These falsificationss had been, made by the managing clerk in order to deceive Mr Molleson, and they were made by exaggerating the assets. The frauds were certainly so perpetrated that they were quite likely to be overlooked if the accountants were not suspicious, and did not think it necessary to go into the details of customers' accounts, or only thought it necessary to do so by taking a specimen entry here and there. Pursuers' accountants in fact failed to discover them, and the question was what was the legal result ? Was the purchaser entitled to be restored or was the true view of the matter that both parties being in entire good faith, the seller performed his part of the contract by handing over the books, while, on the other hand, the purchaser took their chance of obtaining from the books the true amount of the profits? The seller did not know, and it was not suggested that he did, that the books were otherwise than correct. The only persons who knew were two clerks, and they Were in no way identified with the seller, and they did not even know that the question of profits entered into the sale. The question therefore was whether it was a condition of the contract, express or implied, that the books of the firm were to contain no errors, or at least no errors that were not easiy discovered. He confessed he saw no sufficient reason for so holding. He could find no standard according to which the purchase examination of the books was to be conducted, and he was therefore not able to hold that the pursuers were entitled to re-open the contract, and to raise now the question of whether a condition as to the amount of the profits had been fulfilled. His decision was that fraud had been disproved, and he granted absolvitor to the defenders, with expenses, under deduction of the expenses of debates in the procedure roll and in the Inner House. "
Glasgow Herald - Thursday 14 July 1892, page 4

Simple answer: no. There were two flaws in their case. First, Molleson hadn't known the books were false. Second, the profits hadn't determined the selling price. That had been based on a valuation of the brewery and its stock.

Did EUB and Dunn get discouraged by this second failure? No. They weren't about to stop now.

Edinburgh United Breweries' litigation

Remember how Edinburgh United Breweries was formed? A Mr. Dunn bought the four breweries and then sold them on to the new limited company. It seemed an odd arrangement to me. It turned out not everyone was happy with the transaction.

Having looked at a few flotations and their aftermath, I've learned that what was in the prospectus wasn't always true. Often they included some items of improved truth. In particular, the profits of the company. That was the case here.

"EDINBURGH UNITED BREWERIES COMPANY v. MOLLESON.
The Edinburgh United Breweries Company and William Henry Dunn, 27 Bishopsgate Street, London, here sue James Alexander Molleson, C.A. Edinburgh, trustee under a trust deed by David Nicolson, brewer and wine merchant, residing at Parsons Green, Edinburgh, for reduction of a minute so agreement dated in November, 1889, between Dunn and the defender, which proceeded on the narrative that Nicolson was the proprietor of the Palace Brewery in Edinburgh, and of maltings and bottle stores, that Dunn should become the purchaser of them with the whole plant connected with them at the price of £20,500, and that he should take over the stock at a valuation. Reduction is also asked of a disposition conveying a ground in London Road to the United Brewery Company for £28,500, of which £8000 was contributed by Dunn and £20,500 by Molleson. Persuers also seek to be restored in possession of the Properties, and they sue for payment of £20,500 or alternatively for £10,568 2ls 1d. Pursuers state that it was represented by Mr Molleson that the profits in the brewery and wine business for the two years ending 31st December, 1888, amounted to £3700 in each year. The company was formed With a view to the purchase of four breweies in Edinburgh, including the one in question, Mr Dunn's intention being to transfer his interests to the company. Before the transaction was completed Mr Dunn employed accountants to ascertain the profits, and it was stated that the balance-sheet for 1888 showed a profit £2181 10s. It is averred that the figures in the balance-sheet were fraudulently falsified, and that the balance-sheet was concocted so as to show the balance of profit for the year to be greater than it really was. Another balance-sheet was discovered by them a bringing out a profit of £930 17s. Persuers aver that Mr Molleson personally knew of the fraudulent alterations, but they state that he has benefited by them to the extent of the enhanced price. The defence is that the Pursuer Dunn was the mere nominee of a company called the City of London Contract Corporation, that before the agreement the accounts were examined - first, by a firm of accountants in London, and a subsequently by another firm in Edinburgh, upon whose report the pursuers paid the price. It is also stated that the sale did not proceed upon the Profits, but upon the valuations of the subjects sold. It is maintained that the contract was completed by Dunn with the full knowledge that the profits did not amount to the sum stated. The record in the case was closed to-day. "
Glasgow Herald - Monday 02 November 1891, page 4.

It's all rather odd. Mr. Molleson, the accountant who sold the brewery, was unaware that the books had been cooked. And Edinburgh United Breweries hadn't even been a party to the agreement, yet were still suing Mr. Molleson.

Wondering why it took two years before they sued? Because it was only when the clerk who committed the fraud confessed after more than a year thaat anyone realised the books weren't right.

This case was to run and run. Edinburgh United Breweries just wouldn't let it go. No doubt much to the delight of their lawyers.