CLAIM FOR £IOOO.

REGENT STREET CONTRACT

ACTION IN SUPREME COURT

An action in which the contractor for the completion of tho building of" the shops in Jtegent street claimed a total of £IOOO from two of the directors of Regent Street, Ltd., was heard in the Supreme Court yesterday before his Honour Mr Justice Ostler. Tho plaintiff sought to recover from the defendants £SOO each, which, he claimed, they had agreed to pay for debentures when he took over the contract. The plaintiff company was P. Graham and Son, Ltd., 166 St. Asaph street, Christchurch, building and engineering contractors, and tho defendants were David Manson, 302 Bealey avenue, Christchurch, company director, and Alexander Hamilton Forbes, Aynsley terrace, Opawa, Christchurch, company director. Mr M. J. Gresson, with him Mr H. Edgar, appeared for the plaintiff, Mr W. J. Stacey for the defendant. Forbes, and Mr L. W. Gee for the defendant Manson. The statement of claim set out that part of the financial arrangements wero between the plaintiff company and the defendants individually. Those defendants were two of the three directors of Regent Street, Ltd., and the other director was J. J. Dougall, of Christ-, church, solicitor, but he was not a defendant. A verbal agreement was entered into to tho effect that debentures for £BSOO should be issued by the company and held in Graham's name. It was agreed that, at plaintiff's request, each of the three directors should buy debentures for £SOO from him at par. A written agreement was then made. Mr Dougall had bought the Bhares, paying £SOO, but the other two directors — tho defendants —had not done so. Plaintiff asked for an order for rectification of the contract, ordering the defendants specifically to perform the agreement by purchasing £SOO of debentures each at par, and to pay the costs of the proceedings. An alternative claim was for £SOO damages against each of the defendants for breach of contract, and costs. Issue of Debentures. Mr Gresson said that the contract price between the parties was approximately' £24,000. The sum of £19,000 had been raised on first mortgage from the Government Life Insurance Department, and that was to be paid to the builder. That left about £SOOO owing to the contractor. For security plaintiff insisted on the issue of the debentures and an undertaking from the directors to buy £SOO worth each. Thus at least £ISOO would bo secured. The balance of the debentures could be disposed of as suited the plaintiff. Mr Dougall had paid for the debentures. Tho main point was whether it was a several or a joint undertaking. Sinister Humours Alleged. John Joseph Dougall, solicitor, of Christchurch, at ono time a director of Regent Street, Ltd., said that the first contractor for Regent street did not make a success of it. As a result there was much sinister rumour in Christchurch regarding the finances of the company. Fresh tenders were called, and P. Graham and Son's was accepted. It was desired to secure a contractor of good repute in order to restore confidence. Tho contract price was about £24,000; £19,000 was to come from the first mortgagee to provide Graham and Son with progress payments. At the final interview Mr Graham agreed to take on tho contract provided £BSOO worth of debentures wero deposited in the Union Bank. Graham was to be at liberty to sell the debentures on such terms as he thought lit. Tho three directors were each to take £SOO worth of debentures. The whole thing was arranged in a little over an hour. There was no question that the debentures were to be taken at par. Witness paid his £SOO and received the debentures, which to-day wero probably worth nothing. However the company was receiving very favourable treatment from the first mortgagee, the Government Life Insurance, and tho property might yet become very valuable. To Mr Gee, witness said that when ho discovered that it was a joint agreement he took steps to protect himself by sending a cheque for £SOO to Graham and Son in full settlement. The general opinion at tlie time was that sufiicicnt debentures could be sold to pay Mr Graham. There was never the slightest doubt that each director was to take up £SOO worth of debentures at par. | To Mr Stacey, witness said that Mr Graham was not at all anxious to take up the contract. Contractor's Evidence, i Peter Graham, director of P. Graham i and Son, Ltd., said that on being api prouclicd he had put in a tender for j £22,870. There had keen several intcr- | views with the directors, and he was I to receive an order for the £19,000 that ! was coming from the Govcrimcnt Life I Insurance. He was to bo secured by the directors finding £lsoo—£soo each. At first the debentures alone wore offered as security, but the firm would not take on the contract unless more money was found. Xo one raised any objection to the debentures being at face value. Mr Dougall agreed to draw up the agreoi ment. Later Manson informed witness that he was unable to find the money. He did not repudiate any liability. The debentures were still in the bank, but no name was filled in. To Mr Stacey, witness said that he considered that the £ISOO worth of debentures meant at par. Albert Georgo Aid ridge, accountant, auditor to P. Graham and Son, Ltd., said that Mr Graham had consulted him about the financial details. Witness was to endeavour to protect the plaintiff company, in the final payments. At the interview with Do,ugall, Forbes. Graham. Dunn (defendant company's secretary), and witness, an agreement was reached on all points. Tn cross-examination witness said that he was content to leave the legal interpretation to Mr Dougall. ■ Tlih closed the case i'oi the plaintiff. Non-Suit Moved. Mr Gee asked for :• non-suit. His application was refused on one point and reserved on two others. Mr Stacey made a separate application for a non-suit on thu grounds of the relation of the case to the Statute of Frauds, and his Honour reserved his decision on that point.Mr Gee said that the defence was :i denial of the specific us- of the words "at par" in regard to the debentures. Alexander Hamilton Forbes, a director of Regent Street, Ltd., said that the directors were supposed tr; take up 1500 debentures on the completion of the building. There was no mention of "par" ai\tho interviews. To Mr Gresson. witness said that under the arrangement he did not think at. the time that, he could be liable for £ 500. Mr Gresson; Are you sure?' In the event of tho other directors going .bankrupt or defaulting, wore you under the impression that you would not have to pay the whole £1500? Witness replied that he would' have been liable for £ISOO. Mr Gresson: You made lw o separate answers; take your choice.

His Honour: There is no need to labour the point. Mr Gresson: I forgot, for the moment, that there is no jury. David Manson said that he expected to be liable for £SOO. His Honour: That disposes of the joint or several agreement. I am equally certain that Mr Forbes was only expecting in the first place to be liable for £SOO. The main issue now is whether the debenture:) were to be bought at par or not. Cross-examined, witness said that he expected £SOO worth of debentures for hip £SOO. Frederick George Dunu, secretary for Regent Street. Ltd., said that the only time when the question of "par" was mentioned was after the agreement when tho disposal of the balance of the debentures held was discussed. Par wap not mentioned when the transactions betwoen Graham and the directors were being considered. The arranged terms of the contract were the same as those which stood in the contract at present. He was quite sure that the words, "at par," were never used in regard to tho directors' liability. This concluded the case for the defence His Honour's Eemarks. His Honour said that the plaintiff company had discharged all the onus upon it. He was satisfied beyond all doubt that there was no intention of joint payment, and that the intention was that each director should be liable to buy £SOO worth of debentures at face value. The idea of joint purchase owed its origin to legal ingenuity. Nn one would have asked for it as it would have been to the distinct disadvantage of each director. Graham and Son, Ltd.. were considering one irsue only. The defendant company particularly wanted Graham aDd Son to take the contract on account of their high reputation, hoping to borrow some of the lustre of that reputation and so make their undertaking more attractive. It was ridiculous to suggest that a hard-headed Scotsman like Mr Graham would agree to the sale of debentures without stipulating a prue. When Mr Forbes said that there was no discussion on price, and that the undertaking to buy the debentures vas joint, his memory must have played him false. The onus on the plaintiff company had been completely discharged. After lego.) argument, and a discussion on tho Statute of Frauds, hisHonour reserved judgment.