SUPREME COURT.—CIVIL SITTINGS.

Fkiday, June 15

(Before His Honor Chief Justice Prendergast) NEWTON V. BTJEKii {continued). The examination of T. K. NowtOH, tho plaintiff, proceeded as follows: — Witness wrote a letter to Mr Burke and handed it to Mr Foster, who was then teller at tho Bank of New South Wales. [Mr Travel's: Mr Burke denies receiving it]. Witness had a press copy of that letter, in which ho said that as Mr Burke would not accept his proposals unless ho sold tho mortgage, he offered the 3s cash and 2s in uiisomu'ed bills at four months, and agreed to handover Sutherland's debt and mortgage for £1500 cash. Witness received no reply to that letter. Nothing more transpired until Mr Thompson, the co-trustee, arrived on the 12th February to make a final scttloment and sign the necessary deeds. During Mr Thompson's stay Mr Burke brought him over to witness's office, saying ho had como to say, in Mr Thompson's presence, that if witness were not satisfied with the arrangement which had been made he was prepared to cancel it. He referred to the sale of the moi'tgitgo, and he went on to say he had given full yaluu for it. Witness replied that different people might hold different opinions, but that ho was not anxlouß to discuss the matter. Mr Burke seemed to dislike that remark, and got angry, insist ing that he had not only given full value for tho mortgage, but more than the value; ho did not care two straws whether he bought the thing or not—in fact, he felt yory much inclined to throw up th-j thing altogothor. He also reproached witness for what he had said to Mr Thompson. Witness said that Mr Thompson, being a trustee, had a perfect right to know what took place, Tho deed rc-trausferring tho business to witness was not signed until February 26th, when he took possession, and immediately before that deed was signed tho deed conveying Sutherland's debt and mortgage was signed by witness.

Cross-examined by Mr Travers: Witness and Mr Sutherland dissolved partnership early in 1879. Witness was a party to two mortgages of Sutherland's stock and leasehold given in 1877 to the Loan and Mercantile Company covering advances made and further advances. The amount secured was £7000 and interest. Witness received no statements from the Loan Company during the currency of these mortgages. Mr Sutherland might. Ho did not know the halance in February, 1881, but ho quite undorstood there was sufficient margin to cover both mortgages. He believed the amount owing to the Loan and Mercantile Agency Company to be between £3000 and £4000; he did not believe it was £6000. [Account put in.] He did not know whether that account was correct; assuming it was, the amount due in March, 1881, was £5968 6h 4d. When witness went out of the partnership he got nothing, but by an understanding witness' son was to stand in the position of a partner. The son from time to time drew money by way of salary. Sutherland was supplied by witness with goods before the dissolution, and the second mortgage to witness was given as security. He did not offer to sell the mortgage to MiThompson before it was sold to Mr Burke ; he said that most positively. Sutherland considered the run worth £10,000. Ho knew Sutherland's signature. [Two documents put. in,] Those documents arc signed by Sutherland. Mr Travers oxplained that the first deed dated 18th January, 1881, was an agreement to sell to Mr Hugh Hamilton the run and stock for £8000. That included GOOO sheep and 1500 lambs, an allowance of 5s per head to bo made for any sheep more or less. Mr Miller sold as Mr Sutherland's agent, and Mr Sutherland confirmed the agreement.

Cross-examination resumed : The document did not surprise witness. In those times he had known many things to be sold under their value. Would bo much surprised to hear the sheep delivered were 3000 short of the number stated. In that case the second mortgage would look rather "fishy." Mr Burke did not tell witness that it was Mr Thompson who had promised to "protect" Sutherland. Witness was dissatisfied with tho latter, but did not intend to enforce tho mortgage. He could have thwarted Sutherland's desires had he held the mortgage. It was several weeks after the interview with Mr Thompson that witness complained about Mr Burke " putting tho screw on him" to force him to soil. Witness had never offered to retract the statement. When the deeds were signed there was no suggestion that witness should first have them looked into. Mr Burke did not then say, in the presence of Mr Carlile that witness could at any time have tho mortgage ro-transforred by paying back the £1500. The only time he made that oifer was after the present action had been commenced ; Mr Burke then said he would hand over the rim if witness would pay £1500 and take over the liabilities. Witness did not know, when ho was negotiating with Mr Burke, that Sutherland had agreed to sell for £8000. He did not yet believe there were 3000 sheep short: that was never proved. Ho did not say that there had been a conspiracy to defraud Sutherland, but there was something in the accounts which yet required looking into, and more would probably be heard of the matter. Witness, at the time of his assignment, owed £23,000. Out of the £1500 received for the mortgage £1400 went in cash payments to tho creditors represented by Mr Burke. Witness could have carried out the arrangement with his creditors without that sale. Ho know that Mr Burke and Mr Thompson came to an accord; but lie know Mr Thompson had a different private opinion. Witness mado certain representations to Mr Thompson; ho did not tell Mr Burke about what ho said—if ho had it might have been worse for him. Those representations were absolute statements of fact. Witness wanted to bring tho action in December, 1881, but Mr Lascelles would not consent, owing to ■witness's ill-health. An action was brought by Sutherland against Mr Balfour, and Mr Lascellos was in it. Witness did not prompt that action to get useful information for the present action ; ho did not know whether Mr Lascelles did so or not. When Mr Thompson came to Napier to settle about the re-transfer he was hero several days—five or six, witness believed. Witness had good reason for not agreeing to take back tho mortgage when it was offered in Mr Thompson's presence. Mr Thompson knew those reasons. The inturviow was a farce; all the actors knew beforehand what would take place. Ho had been told by Mr Thompson that, although ho (Mr Thompson) Avas anxious to sec him get back tho mortgage, he could not assist him to do so, and he (witness) must consent or Mr Burko would ruin him. That was the reason why ho did not take back the mortgage. Ho could have got the money from the Rev. S. Williams or from the bank on tho security of the mortgage, so he did not consent because the £1500 was an absolute necessity to enable him to make the cash payments to his creditors. Possibly ho might not havo been able to get the £1500 on tho security of tho mortgage if it were a fact that Sutherland had previously agreed to sell for £8000, subject to a reduction of £7.30, and £6000 was due to the Loan and Mercantile Agency Company. Mr Sutherland had nothing beyond tho run; witness relied entireiy upon the security named in the second mortgage. He believed Mr Williams would have lent him the money without any security ; he did not know, because Mr Williams had morely promised him assistance, and no iorms were mentioned. His assumption of the value of the second mortgage was based upon tho belief that tho run was worth more than it was sold for, and that the first mortgage was only for £3500 or £1000. He believed the accounts would yet be gone into because the Loan and Mercantile Agency Company had paid tho account to tho Bank of New Zealand, and he believed there was no such guarantee, and that his second mortgage had a claim before the bank. Mr Burko told him there was no such guarantee to the bank ; he had asked to sec it, but it was not produced. Until after his assignment witness did not hold a second mortgage ; it was not given to him but to tho trustees. Before that Sutherland could have paid oft' the bank by drawing tho money from the Loan and Mercantile Agency Company, provided ho did not exceed the £7000 secured by the first mortgage. Mr Travers said it could bo shown that tho Loan and Mercantile Agency Company guaranteed the bank overdraft, and that the amount of the overdraft was always stated in the accounts sent to Sutherland by the company. Crows-examination continued.: It was to a large extent owing to pressure from the Union Bank that witness had to make arrangements with his creditors. Re-examined by Mr Lascelles : The sale of the mortgages was made a sine qua non by Mr Burke in assenting to the arrangement with witnesses creditors.

Several othor witnesses having boon exuminccl and cross-examined, tho case was closed for tho plaintiff. Mr Travel's, in opening the case for the defence, said tho ovidence ho would call Would be absolutely contradictory to that given for the plaintiff. So far from pressure being put on Mr Nowton to sell, Mr Burko only offered to buy to enable Mr Newton to make arrangements for the rcpurchaso of his business, and it would be conclusively shown that, so far from making a profit on the transaction ho had incurred heavy loss. John Simley Macdougal Thompson, cotrusteo with the defendant in the plaintiff's estate, said that as trustees they took a second mortgage over Sutherland's run and stock to secure the money he owed to the the estate. Thoy knew the amount of the first motgage. The trustees made enquiries as to tho run, and as tho result the trustees thought the value insufficient to cover the amount secured under tho second mortgage. As a trustee, ho never expected to get from tho estate nearly the amount, lie thought the £1500 given for the mortgage by Mr Burke was its full value; witness would not have given so much for it. About the middle of February witness was present at an interview between Mr Newton and Mr Burke. lie had never said to Mr Newton that Mr Burke would ruin him if he did not consent to sell the mortgage ; he (witness) never had such an idea. At the interview Mr Burko told Mr Newton that lie had taken him (witness) there so that lie might ask, in witness's presence, whether he (Burke) had brought pressure, to bear in the Newton said lie had not; he (Nowton) wished to carry out the arrangement. Mr Burke .said that if hu could find bhkJblnOO elsewhere he was at liberty to do bo. " IVfi , Newton said ho wanted the transaction closed, and did not express dissatisfaction. Witness spoke to the plaintiff

in tho afternoon, but he did not then say he was dissatisfied. The impression in witness's mind was that Mr Newton would rather have kept tho mortgage if he could —he felt he was selling at a necessary sacrifico. Cross-examined by Mr Brown : Witness remembered receiving letters from Mr Newton about that time, before he left Wellington, but, so far as he could remember, there was no mention in those letters of the proposed sale of tho mortgage. On arriving in Napier witness had a long interview with Mr Newton. Mr Newton left the impression on witness's mind that he was dissatisfied with Mr Burkes action. He seemed to have been afraid, from the date of the assignment, that Mr Burke was working to put him out of the business. Witnoss probably said to Mr Newton that Mr Burke would make something out of the transaction ; he did not suppose he would go into in unless he expected to do so. Witness told Mr Burke that he considered the price too high for a leasehold, but said that if ho make it a freehold the transaction might pay him. As trustee, it was witness's duty to see that the property in the estate was not sold below its value. Mr Burke seemed to want the mortgage, but witness did not say to Mr Newton that Mr Burko was determined to have it, and that he woidd sell up the business if Mr Newton refused to sell the mortgage. He said that Mr Burke was anxious to wind up the estate- Witness was not anxious to take 5s in the £1, because he thought that the estate was worth more. He had no doubt the telegram produced—"Burke wires me he has offer five shillings in tho pound cash ; wants me to accept "—was sent by him to Mr Newton. Witness knew that was a bona fide offer ; but he would not recommended the creditors to take that sum from anyone except Mr Newton. At the time of tho interview with Mr Burke and Mr Newton witness did not. know of any offer of £8000 for the run. Mr Sime told him that about £1000 was due to the Loan and Mercantile Agency Company, and that there was a guarantee to the Bank of New Zealand, secured under the first mortgage, making tho total about £0000. Had witness known that £8000 had been offered he certainly would not have advised Mr Newton to sell. At this stago the Court adjourned until 10 o'clock next morning.

Tins Day. His Honor took his scat at 10 a.m. William Ulick Burke, the defendant, was sworn, and said ho was one of tho trustees in Mr Newton's estate. There was a debt duo by a person named Sutherland, over which there was no security at that time. His co-trustee and himself took a mortgage over it. He was not then aware of what stock was on the run, nor had ho seen it then. Witness represented a number of English creditors to tho extent of about £10,000. Mr Newton conferredwith witness after having communicated with the colonial creditors in the estate with respect to paying an additional 5s in tho £, and re-purchasing the balance of the estate. Had. no recollection of at any time asking plaintiff how his arrangements with Sutherland were proceedcecding. Did not know he had any negotiations with Sutherland. With respect to tho evidence of Mr Newton about protecting Sutherland witness said he told plaintiff he would have to accept all responsibilities the trustees had incurred and pay all liabilities, and that he must undertake not to .sell Sutherland up until such time had elapsed as the trustees had agreed with the Loan and Mercantile Company and the Bank of New Zealand to enable Sutherladd to complete the arrangements. Witness heard from Mr Thompson what took place at tho interview hold with the managers of tho Bank of New Zealand and the Loan Company. He was not present himself. He aftewards told Mr Newton what MiThompson had communicated to him. Witness approved of that arrangement. Witness subsequently purchased the mortgage from Mr Newton. He had a letter from Mr Newton on January 31st asking witness if he would advance £1500 on this mortgage and any additional security that might be agreed upon. Witness did not accept this offer, and told plaintiff so verbally. Some conversation followed, the effect of which was that plaintiff did not see how he could pay off his indebtedness to his English creditors if hampered with a protection to Sutherland, and reiterated the ■statements contained in his letter. He asked witness if he would not assist him personally by taking his mortgage. Plaintiff would have been willing to transfer the mortgage to him. Witness declined to do so, but aslced plaintiff what he would take for the mortgage, and told him what he believed to be the value of the estate. He offered £1500 for it, which plaintiff agreed to take. There were no other conditions or terms imposed by witness such as his assenting to the sale of tho remaining assets to Mr Newton. When they wore talking about the value of the property Mr Newton might have made use of the expression that he should not lose more than £1000 on tho transaction Witness did not make use of any such expression as that he would prefer to hold the deed. There was not a word of truth in Mr Newton's evidence about witness saying he would send the stock to auction and the other expressions alleged to havo been used on that occasion. In discussing the question of the mortgages with Mr Newton there was no mention, to the best of witness's belief, about the guarantee. Sutherland told him several times there was no guarantee, but in August 1880, he said there was a guarantee, and ho had forgotten about it. He also received a letter from Sutherland (produced) informing him that there was a guarantee. At the time of his arrangements with Mr Newton he was not aware of the sale to Mr Hamilton. Witness subsequently purchased the property on the basis of Hamilton's offer for £8000. That was on March 28th. Before the purchase witness took stops to ascertain the quantity of stock that was on tho station. It was represented in tho transfer from the Loan and Mercantile Company to plaintiff at 8500, and in tho original mortgage as 6000. When witness took possession he had a muster, and the total stock on the station then was found to be under 4000. Witness by this time knew the terms of the agreement "with. I-£amiltoTi.

Cross-examined by Mr Lascelles : Witness, as a bank manager, had frequent experience in mortgages of stock, &c. "Was not in the habit of buying mortgages or advancing money on them without first inspecting the property cither personally or by soino competent agent. Witness had since sold the run in question, he believed in February, 1882. The price fixed was £10,000. That was for the whole of the land assigned to him by tho Loan and Mercantile Company. He had a clip of wool off the station, which realised about £800 or £000. There were 85 bales, but he could not say whether or not the total amount received for the wool after deducting all charges was £109-1 12s Id. It might have been that. Did not think ho ever read to Mr Braithwaitc a copy of the account sales. Between tho time of his purchase in March, 1881 and his sale in the February following ha bought 5675, and bred 17io sheep on the station. He sold 1000 .sheep during that time. He did not sell 1200 as well to Mr Morris before his sale to Mr Braithwaitc The lot delivered to Mr Kinross might have been 1210 ; he would not be sure. The paper handed to witness by Mr Lascellos appeared to be a page from his stock-book, and was in tho handwriting of the man who acted as his manager. The informarion therein he believed to be correct. It set forth that the number of .sheep shorn up to February, 1882, was CS39. The responsibility he took over witli the mortgage was the same as was imposed on the trustees. After witness took over the mortgage Mr Sutherland tried to sell the property without his knowledge to Mr Hamilton. Witness asked Sutherland what lie meant by trying to sell to Hamilton at such a price, when Sutherland said, "Well; you had better buy it yourself." The witness did so on tho terms proposed by Hamilton, and worked the run tor twelve months, thereby saving himself. Witness first communicated the arrangement about accepting .js in the £ to his co-triiHtee some time in January, he thought. It might have been after he received Mr Newton's letter of lilst January agreeing to witness's terms about the mortgage. The letter in Mr Newton's handwriting dated 3nd February the witness never saw before. Witness was not certain at what time he communicated the arrangement made with Mr Newton to his co-trustee. The letter produced and signed by Mr Thompson sets forth that the terms wore communicated to Mr Thompson on February 2nd by wire. In re-assigning the estatp to Mr Newton the creditors felt they -were giving the plaintiff a present of a considerable amount. The assets handed over were cp.)itp sufficient to pay ox or Gα in tho £. There was a cash offer of 5s in tho £ made

for the estate about .the same time as Mr Newton's. That was a better offer than the plaintiff's. (Mercantile Agency Company's account produced.) Witness noticed an entry in tho account handed him of £5748 paid by him to the Loan Company for purchase of tho estate. That was on the 14th April. Re-examined by Mr Travers : The total number of sheep on the station in May, 1882, was 5390, after allowing for the sale of 1210 wethers to Mr Kinross and 1047 old ewes sold after Mr Braithwaite took possession. Had it not been for these sales there would havo been 10,647 sheep on the station. Witness, besides putting £1000 worth of sheep on the run, built a house, sowed grass seed, and otherwise improved it. There was also £400 and £500 of additional plant placed by witness on the station, which was not included in the second mortgage. The return he had for his clip of wool barely paid interest on his outlay. He made no profit out of the transaction. The evidence of Mr Carlile as to the preparation of the deeds in the estate was being taken when our reporter left.