TRANSFER OF WINE BUSINESS

Auckland Star, Volume XLIX, Issue 46, 22 February 1918, Page 2

TRANSFER OF WINE BUSINESS

BANKRUPT'S EXAMINATIONS. DEFICIENCY OF £3228. Elucidation of points connected with the bankrupt estate of Thomas Dawson Smith and his wife, Mrs. Brunetta Smith, occupied the Official Assignee (Mr. W. S. Fisher) and two solicitors from 2.30 p.m. until after (i p.m. yesterday, and the taking of the sworn statement was resumed this morning. The total deficiency in the estate of the husband was shown at £3,238. Tn the wife's estate an apparent surplus of £3,753 was shown. Mr. R. McVeagh appeared for the unsecured creditor. Mr. A. B. Crawford. The bankrupts were represented by Mr. R. W. McConnell, who explained that the item £254 had been omitted from the I schedule as due to Wendel's, Ltd., and Mr. Smith's assets should be increased by £2.>0, the value of 500 shares in Wendel's, Ltd. THE WIFE'S STATEMENT. Mrs. Brunetta Smith, having been sworn, stated, in answer to the Official Assignee, that she was a daughter of the late Mr J. Wendel, original proprietor of the wine shop. Her father had been dead for over 20 years. She had carried on the business since then. She could r.ot i tell what the average profits of the business wore, no annual statement having been drawn up. She always considered it was a good business. Until her Jiarriage with Mr. Smith she had practically the whole control of the business. Mr. Smith then assisted in managing the business. In September, 1810, when the business was lloatod into a limited liability, she loft all the arrangements in the hands of Mr. Smith, who explained matters to her, and she assented. She iiii not know whether or not a balancesheet was drawn up at that time, as she was then ill. The company was a family concern. By Mr. MeVeagh: Witness could not give an estimate of the average weekly housekeeping expenses. She paid cash for everything, ami conducted the house economically. Witness valued her shares in Wendel's, Ltd.. at 10/- each on her solicitor's advice. The business was still being carried on. She did not remember whether the company had dealt with any ; of its property. Wendel and Co. wa"n stiil carrying on business in Karangahape Road and in its other properties. The shop was rented from Dr. Warren. Witness believed that Mrs. Boric, a wine j maker, liiid taken over the license of tho winr shop. Mr. McConnell objected to any question being asked regarding the deliberations of tho directors of Wendel's, Ltd. Mr. McVeagh argued that the Official Assignee was really a shareholder in Wendel and Co.. and had a right to follow up the proceedings. Mr. McConnell .-aid all the Official Assignee was entitled to was information to furnish an estimate of the value of the shares owned by the bankrupt. Mr. Fisher said he considered the objection raised by Mr. McConnell rather far-fetched. Mr. McVeagh (to witness) : When was the business transferred to Mrs. Boric? Vi itness said she could not remember within a few weeks. Mr. Martin was licensee, and theiefore responsible., Boric owned the business of the wine shop, Mr. Martin being licensee. As a director s!ie signed the transfer of the I business to Mrs. Boric. She did not know why the transfer was made. She knew her husband would do everything ior the best. Mr. McVeagh: I ask again why that business was transferred to Mrs. Boric. Witness; f repeat I don't know why the business was transferred. Did you not discuss the reason with your husband?—Xo. Mr. McVeagh: Was Mrs. Boric to pay anything for the transfer of the business?—X'ow you arc risking mc questions I do not know. Mr. Smith can tell you all about it. Mr. McVeagh: When you formed the company, was not the license valued nt £s.ooo?—Yes, but that was before the war regulations, and legislation interfered with the business^ What did Mrs. Boric pay for tho business?— Mrs. Boric paid for the license, but I am not sure how much. What happened to that monev?—l don't know. Witness said it was a straight deal. She would not say whether tile reason was t» beat Crawford or not. Was that arrangement made to beat Crawford?:— Witne.se added: -'You can put it that way if you like." In answer to Mr." McConnell, witness said there was not any idea to take unfair advantage of Mr. Crawford when the business nas transferred to Mrs. Boric. THE HUSBAND'S STORY.

Thomas Dawson Smith, being sworn, said when the company was floated in 1016, no balance-sheet of Wendel and Co. wa.-> drawn up. There were no debts at that time, and all the shares held other than Crawford's were gifts from Mrs. Uaw.son Miiitli. Since the flotation of thi! company a statement had been drown up to December, 1017. Mr. Fisher: I shall require a copy of that balance-sheet. Mr. Smith: 1 don't know whether you arc entitled to it, but that is a question for the lawyer. In answer to Mr. McVeagh, witness said lie had disclosed all his assets. At tlf!= stage Mr. McConnell asked if there was a quorum. Mr. Fkher said there was not, but that did not prevent the power to e.viiniine bankrupts. The Official Assignee had power to examine at any time he liked.

Mr. JlcVcagh examined Mr. Smith at great length regarding the transfer of certain property at Birkdale. Bankrupt i-xplainecl that an arrangement had been made to pay X.\so a .year until a lump sum of £300 was handed over to a solicitor in connection with a threatened Blander action. He thought the arrangement a fair one under the circumstances. He handed over three acres at Birkdale and £450 cash in final settlement. He wae on friendly terms with the recipient, but the arrangement was through her bolicitor. Mr. McVeagh: Bid you tell anyone you were going to take steps to secure yourself in connection with these bankruptcy proceedings? —I cannot bring anything to my recollection. Did you advise your wife to protect herself? —No! In answer to further questions witness said his wife, and himself were the only directors of the company when the busines 8 was transferred to Mrs. Boric. lUs wife and himself discussed the matter. They did not connect any of the other shareholders before transferring the assets. Mrs. Boric paid f2OO. Mr. McVeagh: The license and goodwill of the business were valued at £5,000 when the company was floated, yet you isnld for ClW\. * Witness explained that the dufi.OOO included license, goodwill of business, wholesale bueineda ami hop beer and cider bufcincsc, which were taken in. when

; the company was formed. That was eetimated on pre-war values. Mr. McVeagh: In 1916 the company was formed. Witness: We thought the -war would be over that year. TO-DAY'S PROCEEDINGS. The examination was resumed this morning. T. Dawson Smith, in answer to Mr McVeagh, stated that there were 2,000 shares on the register of the company in the name of Mr Warnock, public accountant. The shares wore held for witness, to revert to Sirs Smith in the event of Mr Smith's death. Witness did not inform Mr Warnock that it was proposed to transfer the license to Mrs Boric, as that gentleman had no financial interest in the shares. The transfer included the license, stock in the shop, and the fixtures. The stock was taken at usual l trade prices, less 5 per cent. The right to use the name "J. Wendel and Company" was also included in the transfer. The resolution in the minute book regarding the transfer was dated December 24. Mr Prendergast prepared the transfer, and it was agreed to and fixed up during the holidays. Witness saw Mr Prendergast several times, and he sent up an aifitioneer to value the fittings and fixtures. Witness could not say whether Mrs Smith or himself signed the application for the transfer of the license. Mr McConnell explained that Mr Martin first held the license temporarily. Mr Martin now held the license for Mrs Boric, who also had the balance of the term of the leaße. The whole transaction was in a document, and Mr Crawford had been invited by Mr Prendergast to peruse it. That document showed money was due to Sirs Boric, and the transfer was part of the security given. Witness said the stock in the shop was worth about fIOO. Outside that was stock worth about £4000, a motor-car, property in East Street, and the cider store behind King's Theatre. Those assets of the company were not included in the transfer to Mrs. Boric. When the transfer was made £550 was owing to j Mrs. Boric, and the amount due from her for the license and the stock in the shop was £400. Mr. Prendergast did not press for security for Mrs. Boric until the hailitTs had been put in the business by someone else. Witness discussed the matter with Mrs. Smith and Mr. Martin, and ultimately lie proposed to Mr. Prendergast that he should pay out the bailiff and hold the business as security for Mrs. Boric's claim. At that time they were near the limit of their bank accommodation. Mr. Prendorgast agreed to theproposal, and thflyxansfer was made, as from December 28th, 1017. Witness suggested the date being the next day after the holidays. He did not? consult the company's silicitor, as the solicitor was away at the time, nor did he do so when the final document was prepared, as the company's solicitor had no say in the arrangement of that particular business. Witness said he explained to Mrs. Boric that Mr. Crawford's judgment was against his wife and himself, and had nothing whatever to do with the business. Mrs. Boric said she would leave it to her solicitor to protect her interests by getting ample security. Mrs. Boric said she did not wish the company to be pressed unduly. It was well understood that Mrs. Boric was to supply wines to the company in the future, as that was her only outlet. It was not to Mrs. Boric's interest to sec the business smashed up.' Mrs. Boric did not stipulate for security for future liability, as she did not wish to handicap the company. Witness, as chairman of directors of the company, received £10 per week for a little over 12 months. Of that £300 the sum of £150 was paid to the solicitor for a lady in the threatened slander action. His own wife got on the average between £4 and £5 per week. Then there were tram faros, rates and taxes. The house and furniture were sold, and witness paid £450 cash in the threatened action for slander, and £2:it> was expended to purchase a judgment and £50 was paid to a contractor for work at the malt house. The company was charged £4 per week rent for that malt house. By' Mr. McConnell: Witness had to continue paying £150 per annum until he paid £500 in a lump sum in the slander business. It was to suit him that £450 cash and the property at Birkdalc were accepted in full settlement of the claim. Notice of the annual meeting of the company was sent to Mr. Crawford. Mr. Warnock and others. Mr. Crawford did not attend. That gentleman had the right to nominate a director, but refused to exercise that power. In one case tb° bailiff was got rid of by witness paying the. debt of £236. He had offered to lend the money for that purpose to the company. Mr. Crawford declined to give any security. Mr?. Boric had acquire,) an absolute right to the wine license. Mrs. Smith and witness had no interest in the license. The transfer of the license was under pressure for satisfactory security. It. was not at the instance of witness that Mr. Chambers put. in the bail iff. This concluded the examination.