CONTRACTING WITHOUT CAPITAL.

Auckland Star, Volume XLVI, Issue 60, 11 March 1915, Page 7

CONTRACTING WITHOUT CAPITAL.

£ BUILDER'S BANKRUPTCY.

rxEMPTATIOXS OF UEX SYSTEM.

■"The evils of contracting on a noeapital basis with the aid of liens given -to timber merchants and others were strongly condemned by the Official Assignee "(Mr. W. S. Fisher) yesterday afternoon at a meeting of creditors in tie bankrupt estate of Francis William Forrest, of Auckland, builder.

; The bankrupt stated, inter alia, that Jie came to Auckland in 190S and worked Jor of years as a journeyman mpenter. He then undertook to build several cottages in camerated concrete, under an arrangement with Mr. A. P. iriend. The latter agreed to finance Jim, as did Messrs. j. J. Craig, Ltd., •srho supplied the building material, and "he gave them liens over the jobs, which turned out a loss. He afterwards built a house at Remuera. but through errors in his estimates he lost £ISO en the job. He was much troubled by ill-health, and tearly all his subsequent contracts left a balance to the bad. There was also sickness in his family.

The schedule showed liabilities to gecured creditors. £335 10/3; to unsecured creditors. £015 2/6; estimated value otsecurity. £950; assets £7617/6, leaving a nominal deficiency of £258 18/9.

"Asked why he had estimated bis Viaiflity to Mr. Friend as £50. while the latter had proved for £534. bankrupt said that the balance was in dipute be•tireen'them. -NOT OVER-PERSUADED. After reading the statement, the Official Assignee said that bankrupt apparently wished to -convey that he would lot have gone in for contracting if Mr Friend had not persuaded him. Mr. Friend demurred to this, and mentioned that he had lost £500 over defendant's contracts.

The. Assignee observed that there were practically no assets, and so far as the unsecured creditors were concerned, it would probably be a total loss. " I've no wish to be hard on the bankrupt." he continued; *' but the judge in a case I-had before him at Hamilton said that smith without capital had no right to go ia for contracts. He also suspended the bankrupt's discharge for six months.''

Mr. A. McGoll: It's the old trouble of ■ocapitaL They all come to grief sooner er-later.

The Official Assignee: The trouble is ' with the Workmen's Lien Act, Mr. McGM. Under that Act you give credit to ■men xou shouldn't touch with a 40ft. J<fl]. "Mr. McCoQ: Yes; it ought to be done t*rav with. ■ £50.000 WORTH OF PROPERTY. At the suggestion of a creditor, the "ankrupt was asked if he had ever been insolvent before, and replied that he -tas involved in a bank smash in the ■Isle of Man about 1901. 'He had an overdraft on the bank when it went down. At that time he had property '(houses he had built) worth £50,000 or '£60,000. but values dropped so after the bank failure that he had to make an arrangement with Ms creditors.

Creditors expressed surprise that with such large should have c,ome to piief. but the .bankrupt explianed that tRe propgrtv was mortgaged for about *£26,000.' He had put the whole matter -into the hands of the bank's liquidator, as trustee, and it was-still in his hands when h e left for New Zealand, seven years later. He did not know what dividend he paid.

The Assignee: Do you mean to say that you never wrote home abont it?

The Bankrupt: No, I never did. T don't think ■ there's any chance of gettine anything out of it.

Aslced if he could make any offer, the Bankrupt said that he would willingly make ong if be could, but he could not.

The meeting was adjourned indefinitely.