UNLUCKY EXCHANGE.

Auckland Star, Volume LVI, Issue 190, 13 August 1925, Page 8

UNLUCKY EXCHANGE.

MORTGAGE* , FOR PROPERTY. PROVES TO BE WORTHLESS. BASIS OF COURT CLAIM. An exchange by Alfred M. Griffiths, commission agent, of a property at Howiek, for a second mortgage of fICOO on a property at Te Aroha from James K. Popple, merchant, was the subject of a case before Mr. Justice Herdman at the Supreme Court to-day. The plaintiff, Griffiths, claimed that the transfer be set aside, or, alternately, he claimed £1000 special and £200 general damages. The case was heard before a special jury. In setting out the claim for plaintiff. Mr. Finlay stated that, in reply to an advertisement offering a well-secured second mortgage in exchange for a property, the plaintiff got into touch with an agent of defendant, on whose representations that the £1600 second mortgage on US acres at Te Aroha was a well-secUred investment mortgage, he exchanged his property of six acres and a house at Howiek, burdened by , a mortgage of £SOO, for this second mortgage, paying £150 to boot. Hardly had the deal been put through and plaintiff entered into possession of this "wellsecured second mortgage" when the property was sold on behalf of the first mortgagee, and bought by a third party at a price which gave plaintiff not a penny for his second mortgage. Counsel stated that the property was about two miles out of the Te Aroha township, but only 35 or 40 acres of the land was level, and the rest went up the mountain. The land wa9 '"as poor as Lazarus," and a farmer who was on it at" the time could not run more than 21 cows on it. which would not enable him to pay interest on the first mortgage of £2100. or on the second mortgage of £1575. Counsel went on to detail the history of the property to show that the holder of the second mortgage had consistently to pay the interest on the first mortgage in order to keep his rights safe. The defendant stated that his arrangements were made with defendant's agents. Stratton and Whittaker, the former assuring him that the property carried 40 head of milking cows, and the latter that the land was worth £35 per acre, and would be wortli more as a •cutting-up proposition. Defendant said he was also assured that the interest was paid up. The deal was completed on February 0, witness paying £150 in addition to the exchange of his Howiek property. A month later witness was informed that the tenant (Cawkwell) | was walking off the farm. He went on April 3 to see the place, and found 20 cows and a few calves on it. Only . about 40 acres of the place he considered payable. "Form of Money-lending." To Mr. Xorthcroft (for defendant), witness said lie was a commission agent, who issued orders on merchants in the city on the time-payment system on drapery and other tilings. His interest averaged 12\ per cent. He also did a little money-lending. Your order business is only a form of money-lending: you get goods for people who haven't the money, and get the money back in instalments?— Exactly. In reply to specific questions witness said he dealt chiefly in drapery and boots. Mr: Northcroft: Then you are more of a money-lender than a commission agent ? Witness said lie did not look at the Te Aroha property oecausa at the time lie had other business, and wasn't well at the time. Whittaker had asked linn to look at the property. He took the others as decent business men. You as a money-lender can't be a simpleton, yet you took the word of men you say were strangers to you? — I thought their explanations were sufficient. Were you inrtieed of money at thattime? —No. * Did you raise ' money on Popple's mortgage?—Xo, it could not be raised. Witness never told Whittaker or Stratton that lie could not get a tenant for the Howiek property, and it was "eating its head off." He said he eigned an authority for Stratton and Whittaker to sell the Howiek property on his behalf. At the first interview lie did that. He considered 25 per cent margin was needed ito make a second mortgage well secured. He knew the first mortgage was £2100 and the second mortgage £1000, and was told it was worth £35 an acre. His margin, certainly was not there at £35 an acre, which made the value £4100, but he was assured it would come later into greater value as a cutting-up proposition. . You knew then it was over-mort-gaged?—l believed on the figures it was well secured. Witness said he had been told the interest had been paid. He could not recollect that he was told that the interest had "been paid in cash." It was not that, the interest "had been adjusted." <He was certain he was , told the interest had been paid. A Former Exchange. Frank W. Gawkwell, farmer, stated that in Xovember, 1923, he gave for the Te Aroha property a house and section of Horotiu, valued at £050, on which there was a mortgage of £250. He got £200 in cash, and took over the Te Aroha property, subject to a first mortgage of £2100, and a second mortgage of £1600. He was to pay no interest on the mortgages for 18 months. His ■ return for milk etc., the first season, was £12? and the second year was £143. There was plenty of feed the first season, but very little after that. He had 21 cows, and their condition was very low in the winter time. He wrote to defendant to the effect that the place had been | misrepresented, and he could hot pay the full interest on the second mortgage. Plaintiff said, he ' would make i a reduction for cash, but nothing definite was done. In. February, 1925, he gave notice that he could not carry on, and last week he left the place. Mr. Xorthcroft : The £200 cash he received when he. went in, was the only capital he had. Witness had taken the property over at £33 an acre, and another man last year took an option for a month at £34 an acre. Witness considered that 80 acres of the farm was worth while ploughing. On a, sheep run on the Mil behind the property the stock were doing well. Witness missed part of the first season, in 1923: ' Wm. Montgomery, farmer, described the farm as 30 acres grass land, of a poor quality, the vest bush 'and fern. >lost of the land ho considered no good. He would not consider the property good security for a i\rnt mortgage of £2100. The farm would hav.ij to be well topdressed every year to carry 20 cows. He valued the place at £15 an acre all, round as an outside value. In that he computed 30 acres at between. £40 and £42 an acre and the rest at £1 an acre. The case is proceeding. ;