BORROWING TO PAY

NZ Truth, 15 March 1924, Page 3

BORROWING TO PAY

CONTRACTION OF 6EBTS WHEN INSOLVENT *. ______ Financial Wizardry m the Land of the Moratorium (From "Truth's" Hastings Rep.) A remarkable story has been told m Hastings of debts contracted at a time when the debtor is admitted to have been insolvent. ii +? f co "r se» !t takes two parties to make a debt; and, where fu the, ordmary credit precautions are broken, can one accuse the debtor and yet excuse tha creditor?

Some rather unique methods of .doing business by a presumably capable and well-known- Hastings business man were disclosed at a meeting of creditors of John Tinsley Horton, seedsman, of Hastings. Horton got into debt to the extent of £1111 13s lid, and the only assets m the estate were book debts estimated to produce £30 and furniture worth £25. BANKRUPT'S STATEMENT. Under examination, Horton said that he was a .married man with four children of ages ranging from 12 months to 8 years. Since last June he 'had earned an average of. £3 10s per week, and was paying 25s per week rent. The furniture m the house belonged tohis wife, but she was prepared to give to the creditors £25 worth of it, which she could do without. . He had shares m the H.B. Fruitgrowers, Ltd., and the Starr Bowkett Society, but as the calls had not been paid these, would probably not be worth anything. Lawyer C. Duff appeared for Mr. Christie, a furniture maker, who was one of the creditors. Mr. Duff asked bankrupt if it was true that he purchased some furniture for £25 from Mr. Christie m August last? Bankrupt: Yes. Mr. Duff: And you sent it straight to the auction room to be sold? — Yes. Did you pay for., the furniture? — No. . Well, it seems an extraordinary way to do business? — I would like to explain. . . . At that time my brother was m Hastings, and was getting married, so I thought I would like to give him a wedding present. You mean Mr. Christie was to give the wedding present? — No. My brother then went away, and could not use the furniture. I did not like to take it back to Mr. Christie, so I sent it to the auction mart. Instructions were given the auctioneer to pay the pro- ; ceeds to T.- Horton, Ltd., who were my biggest creditors. "UNIQUE" BUSINESS. Surely that's a unique way to do business? Mr. Christie was helping to pay your debts? — No. The furniture was mine. I purchased it. Yes; without paying for it. That's a good way to pay your debts surely. The Deputy Official Assignee: A new way of paying old debts. Mr. Duff: Have you done that to anyone else? — No; not that I know of. T. Horton, Ltd., were the biggest creditors m the estate, T. Horton being the father of bankrupt. This firm was represented by Lawyer H. Holderness. To Mr. Holderness bankrupt stated that m 1919-20 his father was manager for Horton's, Ltd., and m 1920 he (bankrupt) was m their debt to the extent of £ 205 12s Gd. It was not arranged that this account » should be set aside as No. 1 account, and that a fresh account, to be N called No. 2, should be opened. This was actually done, but Horton's, Ltd!, did it without making arrangements with him. On the No. 2 account he again got into debt to the extent of £276 10s lid. Mr. Holderness: They then told you they could not go on under the existing conditions? — No; it was my own suggestion. Well, what were the arrangements made then? — It was arranged that I should act as an agent for the firm, and when I took an order I was to supply them with the name and address of the person ordering the goods. The account would be sent to the buyer, but I was to be credited with the commission. Who was to collect the money? — I was entitled to do that. Did you collect £197 for Norton's, Ltd?-r-Yes, something like that. It was Horton's money? — Yes. Did you give it them?« — I gave £100. Yes, later; but m January, 1923, you owed them £480 odd for goods supplied, and you had collected £197 of their money and not accounted for it? — Yes. At that time you were being pressed by my firm for a settlement of the account? — Yes. HOPELESSLY INSOLVENT IN FEBRUARY, 1923. In February, 1923, you were hopelessly insolvent? — Yes. And you stated to me that your assets consisted of furniture worth between £200 and £300?— Yes. And that your shop fittings and stock were worth about £80? — I don't remember that. I don't think so. You arranged to sell your furniture through Gill Bros, and gave my firm an order for the money due to T. Morton, Ltd.?— Yes. After making that arrangement you went round to Gill Bros, and got £50 on account of the furniture you were going to sell, after giving me an order on them? — Yes, and didn't you get the £50? Wait a minute. When I found out about It I made you disgorge it, didn't I? — Yes, but you didn't knew what I was going to do. It was some time after you got the money that you gave it to me, wasn't It? — Yes. I paid it into my bank. I think you handed over to F. Cooper, Ltd., a Ford car? — They bought It for a traveller of theirs. When?— ln 1921. I owed them about £300 and they took the car and gave me credit for £150. What about the goods you had stored at Kummer'a? — I took them back when I recommenced business m 1921 and the saleable goods were disposed of during the season. The others had to be thrown out. SHOULD HAVE FILED EARLIER. What about the chest of seed drawers you had? — I handed those to Mr. Q. A. Wilson m 1923 and got £25 credit, squaring my account with him. Was that fair to your other creditors? — I realise now that had I filed 12 months ago, as I should havo done, all would havo boen treated alike. Whnt about your shop and lease? — [ handed the shop to my brother, who paid up my buck rent of about £11. The lease was transferred to Mr. Manson, and my brother gut £75 for the goodwill. Quite a nice arrangement. Did you owe your brother any money? — Yes, he lent mo £50 about two years ago. This was free of interest and no receipt was given, it being Just a brotherly transaction. Very nice. In the summons issued by Mr. Christie, It was alleged you obtained the money by fruud. Did you defend that? — No. The same with Horton's, Ltd'.t summoiiH, wasn't it? — Yes. You borrowed some money, didn't you?— Yes. I got £25 from Mr. Burns m February, 1923. Did you disclose your position to Mr. Burns?— No. My father guaranteed the promiesory note and Mr. Burns accepted it.

Did you get money from anyone else? — Yes. Mr. Garrett. Did you tell him that you were hopelessly insolvent? — No. HOW THE EGG CIRCLE GOT ON. Do you know of any other actions m which fraud was alleged— No; there were rumors m connection with the Egg Circle. Yes, we would like to^hear about that. — The bankrupt explained that he had been secretary of the Egg Circle and had a free hand to sell or buyeggs for the Circle. He owed that body £100 for eggs bought \by him for the Circle. Mr. Holderness: You sold them for yourself and never paid the Egg Circle for them? — Yes. • ">•'■ - Did you tell the Egg Circle that you were selling them to yourself ?— I did at* a later meeting. ' ' You told us you had paid £100 to Horton's m reduction of the amount you had collected for them?- 1 - Yes; You got £50 of that from Gill Bros. Where did you get the other £50?— From Slater and Co. When you were hopelessly insolvent? — Yes. I got an advance of £50 from Mr. Slater on fruit I was to send him. Did you send the fruit? — About £10 or £12 worth. ' Lawyer McLean, who appeared for the bankrupt, said, that Horton's, Ltd., were almost as much to blame for allowing so much credit. They had only sued for the balance of the amount collected, so it looked as if they had abandoned the claim for the other money. Rir. Holderness: It has not been abandoned. A PUBLIC INQUIRY. Mr. Holderness suggested that the case "was one m which bankrupt should submit to a public inquiry as the circumstances were entirely unsatisfactory. The D.O.A. admitted that the whole thing was unsatisfactory, but it was up to the creditors to make any move they desired. A lot of talk took place on what should be done, and the upshot was that the bankrupt's wife is to be handed all her furniture and the D.O.A. is to realise on the book debts if possible. It is on the cards, however, that the last has not been heard of this strange business bungle. > j