LAW REPORTS.

Dominion, Volume 4, Issue 1008, 24 December 1910, Page 19

LAW REPORTS.

■ SUPREME COURT. THE VINEGARD-BUSINESS.. ■■■■■>:■ . A SALE SET ASIDE.. ■ : i ,The;Chief'Justice" (Sir Robert Stoui)- v : . 'delivered judgment yesterday ill the ■;A r iiiegard case, which had been before . liiin oil several occasions.. , v This was a motion for ail order -to set' aside and declare , fraudulent and . .void a' certain sale • made by * Jack (or Isaac): Vinegard to Abraham Vliicgard, ':. his.'brother, or to declaro'that the-goods 1 and dhattels. in. the possession of. Abra- ..\ ham Vinegard in t-he. clothier's- shop in. Manners Street; formerly .occupied by - Jack'c(or. Isaac)- yinegard, belonged to the..Official Assignee. ... ~ . , - His Honour-said tllat tlio'first point £rV that-lie had to. decide was whether the ... baiikfupt:;had" committed an act or. . ' bankruptcy prior to the dato, of tnp al- " -iegedisale. The alleged sale was mado v .oh September.-.27, 1910, . the. petition - was lodged by creditors asking for the ' adjudication of tho bankrupt on' October 24 1910, aiid the' adjudication wat made on' November"l,. 1910. "' Tho ground of ' tho adjudication'was. that he .had, with : ' iritbnt to vdefeat. .or' delay his creditors, departed from- his dwellinglwuse, and othter.yvise. absented himself . The Court, howeyor/ w-as hot restricted to the act of bankruptcy on which - the petition - was grounded. -Under the statute, anj* . • act of bankruptcy , : committed'.- three i' . months before the order, of .adjudication might be relied on, and_ on this motion / tho Official Assignee" relied on the fact, as'he 1 averred, -that the -debtor committed an. act -of bankruptcy prior to . September .27,. the. date ou which the sale ."was ..said.to liaye" been, "' effected, namely, that lie w<l's-'then 'about to deparfcout of New-Zealand with intent to • defeat or delay his creditors. . AVhat became of tho bankrupt after September's/'was not.kn.owji, or, at all events, ' wasviiot'.proved m'Court. His brother, . tho; purcfe&cr; of- his goods, said that .bo -left' tlie : tftfjxt' day, .and':, that ho. Un- ; ' - had'ileft-for'Rotorua./; He not ■sebm:-.to-have.'h.eeii. seep .ill the ci-ty;-fat :alL;cventsV;after September 27.- ' ,If> he'-committed'.'an-act -of-bankruptcy. ' \ bfefore tlio sale, then it was clear tho .. title of' tho.- Assignee'related ■ back<';to. '■' 'thatfkcfribf: bahfa;uptcy,:,,and';tho goods^ ' chaser'-fta's-saved bySfctioii:;B2of:tho ' ' Bankruptcy Act'.' Now,'Section 82,0f. tho Bankruptcy. Act . provided,.'...inter ''alia/ -that-any - conveyance ' or:'. assign- • menfc by tlio bankrupt for valuable con- ' sideration was not invalidated provided that ' ceTtaiiii conditions aro complied . witiu- The first was that the assigu- . meht,-took, pla'oo^rbefare-.the date of the 'adjudication, and,...second, that tho person ..other than the debtor who got . . the-assignment, had not, at the time of tho'assignment, notice of any available act of oomtaittgd by- bankrupf;.before !/,{. >■ •. i'Thesole question,'therefore, was:-Did tho evidence show Vine- . gardij'jfnew; that his brother was. alidut ■ to. quit. New-Zealand;' 1 a'nd that- lns ' ' brother/-was owing debts.at-tho'.-time, and that his object'in disnosing of his property was to avoid paying his credi-'\tors'-or.'delaying their payment? His Honour'was of opinion that Abraham Vinegard must have known that his ' brother was about to' quit-Ne.w Zealand. He. ;could'not\ pg'ssibly vhsfei believed ... . that'"lie was going.merelyjfqr.altrip-for a; forihislifc or. .so"' ; to-< Rotorua.S; His

brother had had A business for some , yearsjin Manners Street;'if his brother ■ was'taking merely a trip'to. Rotorua for bis liealth, it was not at all likely that would have disposed .• of _ his business;. and disp^sed^of : jjj&Jjmsiness • witho&t; and without. acquainting"~-!ihis creditors. - There" was no"'oxp!artation thatyoould be giveittof'tho disposition of his business • .". except the one/that was quitting '. New jZealand, and quitting New Zea-i - land ito- defeat or delay his creditors. That'he had creditors even appeared ' receipt which Abraham Viriegardi* took from, his . brother. ' The re-, cejpir ended as follows:—"Mr. A! Vinegar<l,te takin2 ; over c tho sa?tl'- sftop, but •is iri'!no;w ; ay responsible' for, any debts du'e by:me." 1 '.'Why was that put in if iti'was.not an arrangement really be- ' . -tweetf/the. brothers to; pass, over the 'propfcrtyi to Abraham Vinegard, and t-o defeat and delay the' creditors ? It v,™ said tliat tlie Court must assume . that ' Abraham Vinegard paid his brother, the £240 mentioned in 'the receipt, ,-and. that tho money was Abraham Yine- , . gard's; ow , n. .' It, might -be so; though it strange that lie should have; had ; . that 7 largo sum of money. without ever haying. Had it'in a bank, aiid having kept it in a. box in his bedroom;. but assuming, for tlie; purposes of this case, that,' Abraham Vinegard l . did pay the money, that was hot sufficient. If the , , purchase; was . made after an act of bankruptcy, bb was not. protected, unless' .-■l>e did not. know' of that act of bankruptcy, and in his Honour's" opinion, he knew that his brother had debts, . and 'he knew that his brother was about, to quit New Zealand, and that was'an act. of, bankruptoy on which tho Official'; Assignee can rely." Tho: whole thing turned out really to. 'btTa question of fact, and .he had .the conclusion, that. Abraham' 1 . Vinegard's- knowledge ,;odiisi ,'.brother being about toiquit", aiid .being in debt, was; shown by the whole transaction, and by what happened ■: afterwards, bis statement' to the creditors,' etc. ' ' Incidentally,- his Honour stated that Abraham Vinegard was not without his remedy for his money. ■ He had a righti.to d6riiand" from his brother the amount .of money that he paid lihh, and no doubt his brother would communicate with him,, and he would be able to get from,his brother the money that he gave him for the goods, which now belonged, to the < Official Assignee! Judgment was 'given accordingly, and costs -allowed the Official Assignee of Ms., and witnesses'' expenses and , disbursements. " Mr. G .ToogoOd appeared for the Offi- : fial 'Assignee,, -and' Mr.- HiiidmarsVfor the defendant, Abraham Vinegard.

, VVINQiNC UP A COMPANY. . JUDGE'S DECISION. - - : The; proper and best method 'for the liquidation of the business of J. D. - Crmckshank and Co., - Ltd., merchants and-commission agents, of Masterton, was the thomp of a judgment delivered in .the Supreme Court yesterday morn- - ing by-Mr.-Justice Cooper/- -, "J. I). Cr,uicl;'shank and Co., Ltd., Was ■ . incorporated in the year 1902, with a }J ; -nominal capital of £10,000, divided into 2000 shares of £5. each, to take over ; ..thc'busiiiess of Jauies Dnflr Cruick'sliank. 'An agreement for the voluntary winding. up,of tbe company was entered into -oil (jctobor 19, 1910, between the coinpany; and George Henry' Perry, of Mas•terton, merchant: This did not meet ■with! tlie approval of some of those interested, and hence the Supreme Court proceedings,'which originated in a petition byl Johnston'and Co., Ltd., of .Wellington', (who are paid-up shareholders in .'the; company), praying' that J. D. . Crnidkshank and Co., Ltd., might 'be woiuid.:up compulsorily .by the Court. 1 - Thepetitioners were-.represented 'at the hearing by Mr.-H. D. Bellj K.C., with him Mr. H. F.Johnston, the respondent coinpany by Mr. C. B. Morison, 43 opposing creditors b.y Mr. H. F. •Van Haast, and several fully-paidrup shareholders by Mr. D. K. Logan: His. Honour, in his judgment, .said that a-petition-, by a fully-paid-up shareholder -for the' compulsory winding up of the company in which lie was a shareholder, was notj as-a rule,- entertninril, unless he could show that after full, payment of all the debts and liabilities of the company there would remain . b',surplus divisible among: the share-

holders of sufficient value to authorise him to present a petition; The - mere allegation of a . surplus, or'of a probablo surplus,.-. would "not be" sufficient.. lie must show, that there would bo a surplus' in w-hic-h. lie had a tangible interest. In the-present ease, tho first question lie bad to determine, was whether the petitioners had established a sufficient interest to support,the petition. In other words, if. tho affairs of tbo company p-ere compulsorily- liquidated, would there bo a surplus, and; if so, would the-share of such surplus bo of "tangible" value to tho petitioners ? , : . 11l determining this question; his. Honour relied largely . upon the investigations of Mr. Sellars, accountant and valuer, of Masterton, who went into the; affairs of the 'company in October, 191.0, and stated its position as follows: —' . ' Liabilities: Trade creditors, includingbills payable, £2260.185. pd. duo to debenture holder, £3827; Banjc; of New South AVales,-;-,,£2415 155..- 7th ? total, £8503 14s. . ..The company's bilities had, theroforo,:. increased from June 30, 1910, by the sum of nearly £1300. - - '

: Assets (exclusive of unpaid capital) :; —Stock, £2725 IGs. ad:; plant, 'etp., £160 Bs.; petty cash, £oi book debts, (£6320 2s. 4d., less allowance for bad, and doubtful debts, • £157 iT 2s. 4d.),. £■1743; total, 4s. 3d. '.-■ Assuming that t-ho estimated value of, the stock and of the bqolt debts was. correctly stated,. tho true value of _ the. assets (exclusive;. of uncalled capital) was, on October 31, less by, £1300 than it was estimated -at on Juno 30, 1910. ' If Mr: Sellars's figureswfere" approximately correct, the position ;of tho' oompanj- on October - 31: was, in round figures,. £2600 worse..than:-the .directors represented it to' bb by - the; balancesheet .of Juno 30, 1010,. and .therefore more than the total'contributed capital had boon lost.

His Honour was'.of;-opinion,- after carefully considering the 'numerous, affidavits filed, that if there was a forced liquidation, there wero substantial reasons for tho opinion expressed by Mr. Sellars that not . only would there be no tangible surplus, even if the uncalled recoverable capital was collected, but thero was a -real 'danger- that there might - be insufficient to .pay the creditors ifi full. Ho " thought that, tho statement in tho'- 1 joint affidavit of .Messrs'. Miles and Shirtcliffo (who represent a' largo. majority of the AA'ellington creditors, and who had been act-ing-as'a committee of tliose creditors) "it is -practically certain'.that a forced'realisation of- the assets of the ■ compaily will involve a. loss to .'ithe. ■creditors" was founded upon siibstan-"' -,tial grounds. - This conclusion was supported by the affidavit of Mr. Chennells "(who is acting at present as liquidator of the company under tho resolutions for a voluntary liquidation), and it was not' without some significance that the petitioners, who wero AYelling- ■ tori merchants carrying on 'an' extensivo business, had declined to purchase the assets of the company, upon tho terms offered by Mr. Perry, tho debentureholder, and to pay as Mr. Perry, offei-s to pay 20s!'in the £to creditors. 'In 'his"Honour's' opinion, therefore, the petitioners .had not sustained the onus which was-'upon .them, land their petition must, bo dismissed. :His Honour; nest, considered Mr. Morison's- motion for ahvprder" that tho liquidator bo at liberty to sell, convey, and assign to Mr. Perry all tlio assets of the 1 company on tho' terms of an agreement made by the company shortly before the commencement of the. voluntary liquidation. These terms were, shortly; that the -iviiole pfvthe assets of tho company/- were ito-,136 'assigned to Mr. Perry, the debenture-holder, and whose receiver was in possession, and that Mr. Perry, before such assignment ■was.made, anU in consideration of such assignment, should pay into the hands of tho liquidator a sum sufficient te pay all the creditors of the compipjkWli and. all costs and -.expens® liquidation of the'company, and that, the shareholders' who; holtl "B" shares should be'discharged from'--their -liability to pay the uncalled capital upon those shares. These terms had been approved by : a majority of three-fourths in number and value of the shareholders of the company. If the liquidator was authorised -to sell upoi).; these terms, tho ; creditors •of ■ the' company would forthwith be paid 20s. in 'the '£; and the "B" shareholders 1 released from their liability in respect of the unpaid capital in these shares.

His Honour summarised the proposal thus:—Perry will have to pay, to meet the liabilities of '.'the company >to tho general creditors of !tho company £2260; and ' to. tho bank, £2415; the debt duo to him is £3027 (viz., £3827, less the amount for. which he is liable on "B"- shares held by him, £807.); total, £7602. This was really the consideration for Ins proposed, purchase. If his proposal was not acceded to, and tho assets were realised by the winding-up of the company's business, tho probable result would be:—Proceeds of book debts, £4500; stock,. £2200; plant, £150; uncalled capital,. £660; total, £7520. And irrespective of costs and expenses thero wpuld be a probable deficiency of £100.' The paid-up shareholders had, of course, nothing" to lose if the proposal was rejected, but on the other hand "they had 'nothing.' to' gain, while the creditors would lose tho certainty of receiving 20s. ill the £, and might probably receive, less. . .. . Sir.. Chennells has sworn,: and- his Honour thought with good reason, that lie would not as liquidator bo justified jn taking, the-responsibility of carrying oil the. business of the company for the purjiose, of' a. gradual, realisation, tho . nature of the stock and book debts of the company being such that an indefinite time would be expended in realising the same. Ho bad*also. sworn that in the circumstances," and treating the rights of the creditors as entitled to tho first consideration, he should in the exercise of his own judgment accent tho proposals of Mr. Perry as the only safe ' course to pursue. "That /is imy own opinion," said his Honour, "found after a full consideration of', all. tho evidence placed before men, and therefore I feel justified in holding that the Court ought to sanction the .proposal,'_ and T order accordingly." ;- • ■

The petitioners were ordered to pay five guineas costs to the'"parties~repre-~ sented b.y Mr. 'Jlorison, and the same amount to those' represented 1 by .Mr. Von Haast. His Honour said it was entirely unnecessary for the paid-up shareholders represented by Mr. Logan to appear. They had no possible interest m opposing the petition. DIVORCE. " DECREE NISI GRANTED. Tho Chief Justice (Sir Eobort Stout) heard..yesterday-the petition, of Mary Louisa Hartnell, of. Wellington, for divorce from' her husband; Walter Charles Hartnell, of Christcburch, labourer. Petitioner stated that they wero married at Christchurch in- January, 1895, and lived there together.. There vras one child of the marriage. • Slio left her husband in 1903 owing to his drunkenness and cruelty, and she-had since, maintained herself and so». : Sho allegedmisconduct on the-part of-Her husband in' March, 1909, as the ground of the petition. :, , - . . A decree nisi was granted with the usual conditions. " Mr. I'. Levi appeared for tho petitioner. The case was not defended. A DANNEVIRKE BANKRUPTCY. TERMS OF A SALE. The bankrupt estato of Edward Pawsoil, of Dannevirko, was tho subjoct of a further application heard by the Chief Justico (Sir Robert- Stout) yesterday morning. On a previous occasion the Deputy Official Assignee' was granted ah extension of the caveat against any-dealings

in . 300 acres of land at Dannevirko, forming parfc-of-the estate-of the bnaikrupt, who, it was alleged, fraudulently and, ill ~conspiracy with, others- dispossessed himself of the land in order 'to defeat his creditors. It was stated that Pawson had left tlio district, and that a warrant was-out for-his arrest; also, that the alleged purchaser had paid an altogether inadequate price, and . had tried to sell the land to a third party at a high figure. Yesterday's proceedings originated in an application by. tho Official Assignee ■for.a further extension of the caveat. Mr. D. M. Findlay appeared for tlio Official Assigned and Air. I'. B. Fitzherbert, of Dannevirko, for Anderson and .Co., EUd. ' , - ...Mr;. Eindlay .'said the object of tlio ■ Official Assignee - ill socking a further .extension; .of.-': tho caveat "was to tost tlw 'iiucsßoii' as to what: moneys were (.dtoWfroiri'-'.tße* bankrupt. : '.to the defends int cconipan.v,: as questions had arisen . ai/to jvhat.l money's were secured under a- pr.qyision.3or. 'further, advances against a' niortgage. ■ It appeared that a sale ' had: bwjii"' liiado under a-mortgage held •by - defendant,- .-but the terms of the sale other tlian the price—£22 or over --had not beeii communicated to the Official Assignee. . , Mr. Fitzlierbert had; now informed him (Mr. Eindlay) : that; tho bulk of the purchase money would not be 1 paid until a date;and this would enablo tlio question of ■ what :wero further advances against tho mortgage to be decided on an originatiiig; ;summons, i issued - for • that purpose. Certain creditors supporting • the claims: of the-defendant company had . threatened to withdraw from the guarantee as to.'costs in other, important litigation connected with tho '' estate, should tho caveat bo extended. In view of'this fact; although application for tho'caveat was a proper proceeding, the-speaker had agreed with Mr. Fitzherbert' to allow it to lapse.

Mr. Fitzherbert said tho land, which consisted of.ill acres, had been sold by tbe', ; mortgagees -at the best price obtainable,' namely, £22 per acre. His Honour concurred in the arrangements made. DANCEROUS MOTOR DRIVINC, APPEAL DISMISSED. ■ Reserved judgment was delivered yesterday by' the Chief Justice (Sir Robert Stout), in tho case in which C-harlcs Pynn, chauffeur to Mrs. Jacob Joseph; appealed against a decision of Mr. AY. It. Hasclden, S.M., who had fined him £2 and costs for driving a motor-car at- a 'speed, dangerous to tho public, and'.-for-not 1 ' ringing- a bell or other means' of warning people on the Great North-Eastern Road. Tho appeal was on tho grounds .that the prosecutor (Constable Mah.oney, of Upper Hut't) had . failed to prove tho weight of the car, and whether or not' it came vrithin' the'definition of-motor in tho-Motor Regulation. Act.

His Honour,' in dismissing the appeal, said tho -Magistrate bad found, that it was proved . that the car was an ordinary and did not exceed three tons in weight. . The Magistrate had also held'that as there was, some evidence that tho car had a-num-ber, it-must-'be"inferred that it was registered under the Act-. Tho point: was raised that the prosecutor was not bound to prove the weight of tho car,, and, his ! Honour held' that .Jt was' for the defendant in 'the. original action to prdve-the-weight, if he desired to claim exemption. In his opinion,. the appellant would have-been'convicted if lie' bad be6ii charged, under ;; sub-section .(d)' of section 4 of tbo Police' Offcricc3 Act, 1908. . ' ' At the\bearing Mr.-T.'M. AVilford re-' jiresente'd tho appellant,: and : Mr;' H;: H. Ostler the respondent.