MEETING OF CREDITORS.

Press, Volume LI, Issue 8838, 6 July 1894, Page 3

MEETING OF CREDITORS.

RE HARPER AND CO.

The adjourned special meeting of creditors iathe estates of L. and G. Harper and T. W. Maude was held at the office of the Official Assignee at 11 a.m. yesterday. The following creditors and representatives of creditors were present; —Messrs \V. P. Cowlishaw, R. J. iS. Harman, H. J. Beswiek, H. Slater, U". ii. Lewis, S. Hallamore, W. H. Wynn-Williams, George Harris, Thomas .Maude, T. D. Hartnau, Charles Clark, A. E. G. Rhodes and H. H. Lougbnan. Mr T. W. Striuger appeared as legal adviser t-o the Official Assignee. The Official Assignee explained why the meeting had been called the previous week and adjourned till that day. In order to assist them he bad got as full information as he had been able to get. He had a statement snowing how the balance of the £31,09518 a 8d transferred on November 17lb, 1886, was made up. It showed against each item what had become oi the money, whether the amount had been settled, re invested or left undisturbed. He found that the amount undisturbed was smaller than he thought, and was about £1900. Mr Hallamore asked whether those persons who were interested were claiiniug through the Official Assignee. The Official Assignee said yes ; they had proved ou the estate for large amounts. If they wished it, he would read out the accounts referred to in detail. Mr Hallamore asked who prepared those accounts. The Official Assignee said Mr Millar had prepared them, but they had not been checked by anyone. He was preparing to read the statement relating to the balance of the £31,000 transferred on November 17th, 1886, when objection was taken tbat the information was not relevant to the business in hand. Mr Lewis asked why the Official Assignee had not obtained a legal opinion instead of calling them together. The Official Assignee replied that the supervisors were strongly against it. Mr Hallamore pointed ont that they were met that day in accordance with the resolution passed at the last meeting. Mr Cowlitshaw said the meeting bad been adjourned because certain information was not before them, The Official Assignee said the only report he had to lay before them was tbe documents in his hands. He then read the following statement showing the position of Messrs Harper and Co.'a four accounts ad the Union Bank immediately before the investment or trust account was closed on November 17th, 1886 :— Dr. to amount of overdraft on No. 2 account £23,657 8a 7d, overdraft on investment account £1670 Is 4d. Total £25,327 9s lid. Cr. by amount to credit of No. 1 account £1588 16s lOd, do No. 3 account £11,155 6s Id, balance being net overdraft £12,583 7s. Total £25,327 9s lid. Statement showing position off the accounts after closing investment account:— Cr. by amount transferred from investment account to No. 2 account £31,095 18s Bd. Dr. to net overdraft of the three accounts as above £12,583 7s, less overdraft on investment account £1670 Is 4d—£10.913 5s 8d j amount placed to credit of investment account, £12,766; balance to credit of Harper and Co. on these accounts on the evening of November 17th, 1386, £7416 13s; total, £31,095 18s Bd. Statement showing how the investment, account was closed ou the evening of November 17th, 1886 :— Cr.—By amount of fixed deposit placed to credit, £20,000; amouut paid iv by No. 2 account, £12,766; total, £32,766. Dr.-—To amount of overdraft as per No. 1 account, £1670 Is 4d; balauce transferred to No. 2 account, £31,095 18s 3d; total, £32,766. Mr Beswick said they were only wasting time in going through these figures. Mr Hallamore asked that the letter from the Bank should be read. Mr Cowlishaw Baid they wanted an official statement, and did not want to hear the other side. ""Mr '-~,* "*"' Mr Cowlishaw—You are the other side. The following is the letter referred/to by Mr Hallamore, which was, however, not read at the meeting:— *'G. L. Greenwood, Esq., Official Assignee in Bankruptcy, Chriatchurch. "Dear Sir,—-Witn regard: to the resolution passed by the creditor* in this estate authorising you ' to prepare a concise statement as to the transfer of the " Trust account" and the securities held by the Union Bank at the time of bankruptcy,' I have pleasure in furnishing the following information :—l. In 1886 the firm kept four current accounts with the Bank, viz. : Harper and Co. No. 1 account, Harper and Co. No. 2 account, Harper and Co. No. 3 account, Harper and Co. investment account. Some of the accounts were overdrawn ; the others were in credit. 2. The following was the position of the respective accounts on the morning of the 17th November, 18S6, the day on which the cheque for £31,095 18s 8d was drawn :— Overdrafts — No. 2 account — Debtor, £24,467 9s 2d ; investment account, £1,670 Is 4d—£26,137 10s 6d. Credit balancesNo. 1 aocouat—Creditor, £1,577 14s lOd ; No. 3 account, creditor, £11,153 4s 3d — ! £12,730 19a ld-£13,406 lis sd. 3. I It will be observed that, excluding the investment account, the firm's indebtedness to the Bank on the 17th November, 1886. was £11,736 10a Id. The Bank did not demand payment of this amount or any other sum ; on "the contrary, Messrs Harper i and Co. were informed they might continue to overdraw up to a limit of £15,000. They did so, continued to do so, and their iudebtedness on the account in question at the date of their bankruptcy in 1893 was £18,383 3s 2d. 4. Investment Account —The following were the operations on this account on the date on which Messrs Harper and Co. closed it, by drawing the cheque for £31,095 18s 8d: —It was overdrawn £1670 is 4d. Messrs Harper and Co. p_id in a fixed deposit for £20,000, also a cheque for £12,766 on their No. 2 account, a debtor one. This was obviously a mere cross entry. At the same time they drew a cheque for the balance, £31,095 18s Bd, which they paid to the credit of the No. 2 account. Upon the affaiis of the firm being placed in bankruptcy, I expressed to you tne desire of the Bank to give all possible information to yourself and the supervisors in regard to the firm's transactions with the Bank ; it only now lemaius for mc to again express the Bank's willingness to do this, and to invite you to investigate the above transactions or any other masters _ hich you may consider the creditors' generally are interested in. " I am, dear sir,. " Yours faithfully, "S. Hax_a_obk, ■'-'-' "Manager." Mr Beswick suggested that Mr Ollivier be asked to. report upon the statements made as to*" transactions that took place between Harper and Co. and the Bank at the time of the transference of tne trust accounts. He understood that the popular view on the subject was not the correct one, and that the view the Judges took in the Court of Appeal was noo correct. He thought tbat the only persons who had a claim against the Bank were those who had sustained losses through the transactions that had taken place. He moved that Mr Ollivier be appointed, as he had previously suggested. The Official Assignee read a letter from the Hon. E. W, Parker, stating that he v/as unable to be present. Mr R. J. IS. Harman aaid the popular opinion was that Messrs George Harper and Maude had opened a trust account, and then transferred money from it to their own account. Be referred to a paragraph published in a Wellington paper which stated that the Hob. Mr Cadman had said, in reply to a questian, that he found matters relating to transference of trust funds by Messrs Harper and Co. were not as had been represented in the public pjjgsa. He {Mr Harman) •wished to call pent ion to the fact that the popular idea of the matter was not correct. Ha g&va notice of a motion for the appointment of a Committee of enquiry, which helpoulii move at a later stage.. In reply to remarks of other creditors, Mr Harman said there could be but little doubt that the facts as stated by the Judges in the Court of Appeal with refer•ucs to tbe trust accounts were incomplete.

What the creditors wanted to know were the circumstances under which the trust funds were transferred.

Mr Hallamore pointed out that Mr Greenwood and one of the supervisors had made the inquiry into tho matters referred to by Mr Harman.

The Oificial Assignee stated tbat tbe Hon. Mr Parker and himself had beon to the Bank aud obtained certain information from Mc Hallaiuote. They fouud that Nus. 3 and 1 accouuta were always in credit. Tne No. 2 aec-ouni was ihe working account. On Dacembsr 15th, a month after the transfer it wis in debit £15.337 lis Id, and on the same date No. 3 account was in credit £10,_-U. Beture Mr Leonard Harper weuc tv England iv 133s he arranged on AugusD 2ist witii Mr Moore, the manager of the Bank, that the Bank should allow advances to £l5 ; 000. It was understood that the account* as a whole might overdraw to thai amount. Mr Moore had ofren objected to a trust account as contrary to the practice of the Bank. It was agreed by the tirm prior to L. Harper leaving that the trust account should be closed. Mr Cowlishaw thought the time of the meeting was being wasted by the reading of this information. The Official Assignee s»id the Hon E. W. Parker thought the information should be givep. Mr Cowlishaw said they had asked for a certain report as to the transfer of the money. Mr Hallamore asked if the OfEcial Assignee had ascertained whether tbe £31,000 was owiug at tue B-uk at tho time of the transfer. The assumptiou was that Harper aud Co. owed the Bank £31,000 and made use of other money to pay off this overdraft. Mr Cowlishaw said they wanted to know the Btate of the firm's accounts at the Bank on November 17th, ISB6. Mr Wynn-Williams asked if counsel's opinion were obtained what facts were to be put before him. Mr Harman then moved his motion, after a verbal amendment, as follows—"That an accountant be appointed by the supervisors to enquire and report to a future i meeting of creditors by whom the trust account was dealt wiih during its existence and under what circumstances it was I closed." I Mr Beswick seconded the motion. Mr Wynn-Williams asked how could they expect a man to inquire into a matter when < he might have to call upon a possible de- ! fendant to state a case. Mr Hallamore said sworn information j had already been given as to how the i various accounts had been operated upon. Mr Stringer said that haviug had a good deal to do with the Court of Appeal pro- I ceedinj-s in which the question of deal- j ing with the trust accounts was gone ; into, he thought he could explain j the position iv a very few words. The j statements contained in the affidavits filed were substantially, if not literally, correct, aud had not been challenged by Mr George Harper or Mr Maude. What happened was this : Messrs Harper and Co. bad an investment account with the Union Bank, which waa to the amouut of £31,000, and was made up of trust funds. Out of this account they drew £12,000, and had placed on deposit £20,000, which left the investment account overdrawn to the extent of £1600. On November 17th, 1886, they drew a cheque for £12,000 on their No. 2 account, thereby increasing the overdraft on that account by th-it amount, and paid that cheque to the credit of the investmeut account. They then uplifted the £20,000 on deposit, and paid that also into the investment account, thereby restoring that account to a credit of £31,095 18s Bd. On the same day they drew a cheque on the investment accouut for the £31,095 18a Bd, and paid it into the credit of the overdrawn No. 2 account. Mr Wyuu-Williams said it was stated in the affidavit of Mr Moore that tho money was paid under pressure. He asked if those facts were to be put before the accountant. Mr Stringer said that the statements of both sides wouid to be put before the accountant. Mr Hallamore pointed out that it was the Bank's rule to object to trust accounts. Mr Cowlishaw said if there was a public. "examination' of .-tha bankrupt- these nt-tteis*" would be 'elucidated. The ordinary course of procedure had not been followed in this case. Mr Wynu-Wiliams said it seemed to him to be a perfectly hopeless case to follow up. It was a question between the statement made by Mr Maude and that made by the Bank. Mr Cowlishaw asked if the resolution would result in any practical good. The best thing would be to obtain a legal opinion and settle the thing once for all. Mr Hallamore said it was useless to spend money to ascertain if the real beneficiaries had any claim ou the Bank. Mr Cowlishaw pointed out that if individual creditors could establish a claim against the Bank it would be for the benefit of the estate. Mr Harman's motion was then put and lost. Mr Cowlishaw then moved—" That a legal opinion be obtained by the supervisors and Official Assignee as to the claim of the Official Assignee as separate creditors i_ respect to the transfer of the trust funds in question." Mr Wynn Williams seconded the motion, which waa agreed to. The Official Assignee made an explanation as to the instructions given to Mr Ollivier when appointed to make a report upon the accounts of Harper and Co. and j said he was sorry to think that he should have to explain that he was incapable of giving instructions to Mr Ollivier to give a . certaiu colour to his report, or that anyone who knew Mr Ollivier should think he would take such instructions from him. |

The proceedings then terminated.