BANK AND CLIENT.

Dominion, Volume 4, Issue 941, 7 October 1910, Page 5

BANK AND CLIENT.

A RUNHOLDER'S OVERDRAFT,

AN ESTATE VALUED AT £139,000 BOUGHT IN FOR £5,000.

DEAL SEVERELY CRITICISED,

The Hamilton Claims Committee ' reported to the House of Representatives yesterday on. the petition of George Douglas Hamilton, of- Mangatoro, near Dahhevirke, for compensation for loss sustained through the; sale of the Mangatoro Run by the Bank of Now Zealand in 1889. The finding of the committee is that petitioner's property became mortgaged .to the Bank of New Zealand on account of money owing and -advanced, oh which interest at the rate, of' 8" per cent per annum was charged: On various occasions: dating from 1881, when a demand for ,£44,904 3s; was made, the bank pressed", for . payment of the amount. On February G,' 1889, the Registrar of; the Supreme' Court' was applied.to under the provisions of the Property. Law Consolidation •: Act, 1883, to sell the estate, and on March 25 the.property was.sold. It was known that petitioner- was heavily •' indebted to the bank, the amount being i!b'B,ooo,. and it is assumed that this fact,: united with the. terms:, advertised, "cash in one month/'' rendered competition, at a time when money was scarce and pastoral property depressed, virtually hopeless. The-.property '.- was ' consequently knocked down to the Bank -for- .£SOOO, or a'.fraction, of-its value. :

:.The .bank treated the sale as genuine, took possession' of- the .'property, and retained petitioner as manager for a time. The nature of -the sale transaction, says the committee,, may .be. judged-from: the 1 valuation. of: the .property made, among othere.lby the bank's officers.. In August,, 1883, Messrs.. J; N.-Williams and Chas. Beetham valued the Tun at ,£75,000. In March, .1888,.. it was valued by Messrs.' M'Caw and Walter Hunter, inspectors for the bank's estates, at ,£BO,OOO and .£94,000 : respectively; - -The;: valuation . made by Mr. Ferrier .Walker, public accountant, on the 1 date of sale was ■ .£125,662, and in May, .1890,:the.Hon.-J. B. 'White,valued it at .£l39,ooo—the. figure at which it was transferred .to the Bank of: New. Zealand Estates Company, in August, .1890. '

'■v •::;-.: Without Legal Remedy.'; ■•• Between four and five months after the : sale,-: arid : - three '• months, before the' deed was executed by the Registrar to the bank ' (August. 2,-. 1889),. the. Legislature passed 'the New Zealand Bank Act, 1861, Amendment. Act, 1889; "This measure, was introduced :as a private Bill; by Mr. Lance, and, passed without, much discussion. Its prbyisions' gave the bank power to- puf.'chaseahd hold freehold or leasehold land if-exercised under the power 'pf.'sale.con.tained, in any: mortgage.. Section 6 was retrospective,- and validated such proceedfar 'back, as; October .11, 1888.; The; effect of this measure was to cover;' the sale.'and seizure of the Mangatoro Esfate, and 'deprive.: petitioner;of any.legal,-re-medy :tjiat,he .niightiipqssess; . ;'-' '-• , The" committee, submitthat the issues that'remain, to be determined ,are:-rr{l) Was -the sale 'of: petitioner's property and -its;purchase by,the Bank at.a frachon of its value a''.legal transaction?; arid (2) 'did the gassing of the 'New Zealand .Bank ■Act, -.11861,.' Amendment;: Aot, 1889,', pre-•jiiihce'-'lh'e petitioner's position?"! , ,;' ' . The;coinniitt«e expi'ess the opinion that ithe .'petitioner, through, "the seizure by andVsale' of his property; to. the Bank' at a mere: fraction of. its lvalue and.the subsequent validation of that transaction by the; New Zealand Bank,Act,,lß6l, Amendment''Act, '.1889, .has suffered a;serious .wrong,-'and .it-.recommends his claim for redress to the favourable consideration of the'; Government- '.'..; j' '-~ ;;- ',''.:-" !. -i;: "Shameful.Treatment.'''; " 'jlr. ! ;t'Hall '-(Waipawa), in. .urging ;that Captain- Hamilton's case was worthy .-of the' niost said' th'at the treatment-meted out to him-by the Bank .of: New Zealand was' shameful, and .it was shameful for the: House to pass f; Bill that covered up. an action that was?almost a; crime. The. Bank of New Zealand Amendment Act- been 'read a first tiirie:'.and- a .'second ' time . without protest,, and \on- its; third, reading only one man rose ih.-protest.,..,'.' '■ ■: Mr. \sT: H. ..Taylor (Thames); said it had; -been almost'painful, to. sit. on-, the committee that'considered,!this case'./.. Mr; Hamilton had occupied his .land in 1857. -At that'-time it produced 'iEloo"a' vear,' biitjby'his industry and skill he brought it:-up,'to. a year; .After, twenty years of occupation he had borrowed from the.;Barik,'of. New..Zealand, sums 'amounting in' all (with interest) toabout This; was ;.secured..by a . mortgage, oyer land : and :'stock of a total value \ol 'About 1885'--'-',Captain Hamiltonwas offered.by- another bank sufficient'to piiy .off;the.mortgage : .and carry-on.-.im-Erovemcnts,:but .he was, advised by : the :ank of New Zealand that it w6uld : .6tand by.him; ; 1n,1889 the/Bank^of New Zealand demanded payment of the. whole '.sum ."right away, action of the Bank was such as practically' to deprive Hamilton of his interest in the property,: which was worth'at least- ,£60,009 more-than the debt. ..There was financial stringency',at the time; and.Captain ,Hamilton could not make the necessary, financial' arrangements'. There- had 'been realised by the Barik;of New Zealand -'after-"paying the principal arid • interest at- least' .£200,0.00. Putting it in its mildest'form, the transaction : with the: Bank of: -New;; Zealand had been.anything-but clean from beginning to" end, and Mr; Hamilton was. entitled.to compensation .from the-State.

.-Mr."Hogg.(Masterton) said the amending Bank .Act covered up this transaction, which was almost illegal and fraudulent. If .ever a.man deserved sympathy it was .this man'.; He. had never known a more 'flagrant; case of a man, who. should now have been one of the. .wealthiest men in the country being. ■ ruined through no 'fault] of his own, but because he happened to: get into the power of a merciless financial institution, ■■' which was in difficulties' itself, v --.....- ; ; ,-■'- ■ '.-.-■<,.