The Light that Lies

by George Barr McCutcheon

James Hildebrand was its founder, some thirty years prior to his surreptitious retirement, and for the first twenty years of its existence he was its president. At the end of that period in the history of the thriving and honourable business, Mr. Stevens became an active and important member of the firm through the death of his father, who had long been associated with Mr. Hildebrand as a partner. The other partners were John L. Drew, Joseph Schoolcraft, Henry R. Kauffman and James Hildebrand, Jr., the son of the president. The business, according to Mr. Stevens, was then being conducted along “back number” lines. It became necessary and expedient to introduce fresh, vigorous, up-to-date methods in order to compete successfully with younger and more enterprising concerns. (On cross-examination, Mr. Stevens admitted that the company was not making money fast enough.) The defendant, it appears, was a conservative. He held out stubbornly for the old, obsolete methods, and, the concern being incorporated, it was the wisdom of the other members (Hildebrand, Jr., dissenting) that a complete reorganisation be perfected. The witness was made president, Mr. Drew vice-president, and Mr. Hildebrand secretary and treasurer, without bond. His son withdrew from the company altogether, repairing to Colorado for residence, dying there three years later.

The defendant, individually and apart from his holdings in the company, owned considerable real-estate on Manhattan Island. His income, aside from his salary and his share of profits in the business, was derived from rentals and leaseholds on these several pieces of property. Values in certain districts of New York fell off materially when business shifted from old established centres and wended its fickle way northward. Mr. Hildebrand was hard hit by the exodus. His investments became a burden instead of a help and ultimately he was obliged to make serious sacrifices. He sold his downtown property. The depreciation was deplorable, Mr. Stevens admitted.

The former president of the company soon found himself in straitened circumstances. He was no longer well-to-do and prosperous; instead, he was confronted by conditions which made it extremely difficult for him to retain his considerable interest in the business. The company at this stage in the affairs of their secretary and treasurer, proffered help to him in what Mr. Stevens considered an extremely liberal way. It was proposed that Mr. Hildebrand sell out his interest in the company to the witness and his brother-in-law, Mr. Drew, they agreeing to take all of his stock at a figure little short of par, notwithstanding it was a very bad year—1907, to be precise.

The defendant refused to sell. Subsequently he reconsidered, and they took over his stock, excepting five shares which he retained for obvious reasons, and he was paid in cash forty-four thousand dollars for the remaining forty shares. Mr. Stevens already had purchased, at a much higher price, the fifteen shares belonging to James Hildebrand, Jr. The defendant was to retain the position of secretary and treasurer at a fixed salary of six thousand dollars a year.

In brief—although the district attorney was a long time in getting it all out of Mr. Stevens—it was not until 1908 that the bomb burst and the company awoke to the fact that its treasury was being, or to put it exactly, had been systematically robbed of a great many thousands of dollars. Experts were secretly put to work on the books and after several weeks they reported that at one time the total shortage had reached a figure in excess of ninety-five thousand dollars, but that this amount had been reduced by the restoration of approximately fifty thousand dollars during a period covering the eleven months immediately preceding the investigation. It was established beyond all question that the clerks and bookkeepers in the office were absolutely guiltless, and, to the profound distress of the directors, the detectives employed on the case declared in no uncertain terms that there was but one man who could explain the shortage. That man was the former president of this old and reliable concern, James W. Hildebrand.

To avoid a scandal and also to spare if possible the man they all loved and respected, Mr. Stevens was authorised by the other directors to effect a compromise of some sort whereby the company might regain at least a portion of the funds on the promise not to prosecute. The defendant, however, had got wind of the discovery, and, to the utter dismay of his friends, fled like a thief in the night. Mr. Stevens did not have the chance to see him.

The defalcation was not made public for several weeks. An effort was made to get in touch with the fugitive, in the hope that he could be induced to return without being subjected to open disgrace, but he had vanished so completely that at first it was feared he had made way with himself. He was at the time a widower, his wife having died many years before. His son James was the only child of that marriage, and he was living—or rather dying, in Colorado. Private detectives watched the home and the movements of the son for some weeks, hoping to obtain a clue to the old man's whereabouts.

Then, out of a clear sky, as it were, came letters to each of the stockholders, posted in Paris and written by the fugitive. In these letters he made the most unfair charges against the witness and against Mr. Drew. Without in any way attempting to explain, confess or express regret for his own defection, he horrified both Mr. Stevens and Mr. Drew with the staggering accusation that they had tricked him into selling certain downtown property at an outrageously low figure, when they knew at the time of the transaction that an insurance company had its eye on the property with the view to erecting two mammoth office buildings on the ground. Subsequent events, declared the writer, bore out his contention, for it was on record that his two partners did sell to the insurance company for nearly ten times the amount they had paid him for the property; and, moreover, at that very moment two large buildings were standing on the ground that had once been occupied by his ancient and insignificant six story structures.

In so many words, this old defaulter (to use Mr. Stevens' surprisingly acid words) deliberately sought to discredit them in the eyes of their fellow-directors and stockholders. He accused them of foul methods and actually had the effrontery to warn all those interested in the business with them to be on their guard or they would be tricked as he had been. (Note: One of these letters, now five years old, was introduced in evidence as Exhibit A.)

Sampson afterwards found himself marvelling over the assistant district attorney's stupidity in introducing this particular bit of evidence. It was the cross-examination that opened his eyes to the atrocious mistake the State had made in volunteering the evidence touching upon the real-estate transaction.