LAW REPORTS.

Dominion, Volume 4, Issue 1098, 10 April 1911, Page 3

LAW REPORTS.

SUPREME COURT.

PRESS PROPRIETOR AND LESSEE

THE DEED BETWEEN THEM. PROFITS AND COGNATE THINGS. The working agreement between William Henry Smith, proprietor of the "Manawatu Times," and Ernest Denis Hoben, lessee of the paper, came under review at a Chamber sitting of the Supremo Court on Saturday morning. The Bench was occupied by. the Chief Justice (Sir Robert Stout). Tho questions which the Court was asked to consider were:— (1) Whether, upon the true construction of the deed of bailment, tlie plaintiff Smith is (as ho claims to ue) entitled to one moiety, ot the net realised profits irrespective of the drawings of deiendaut as against anticipated prouts, such drawings not being chargeable to, nor deductible from, such net realised profits; or whether the defendant lichen is entitled to claim (as he does claim): (a) That ho (Hoben) should bo allowed to draw per week in lion of salarv for editing and conducting the business, and that the drawings are a first charge upon all profits when realised, and iurther that the division of profits is to be made equally between tho parties after the drawings have been allowed for; (b) in the alternative, that the defendant Hoben ' is entitled to anticipate throvgliout the period of the bailment at the rate of £W per week, this sum .■ being charged against his drawing account in the books on account of profits; all profits, when realised, to be payable to plaintiff until lio has.received in profits a sharo equal to tho total draws of defendant Hofcen in anticipation. (2) Whether the plaintilf Smith is . entitled (as he claims) to receive, at the end of any half-year, a moiety of the net realised profits earned during that half year; or whether (as defendant llobcn claims) so long as there are any undischarged liabilities outstanding at the end of any halfyear, there cannot be any net realised profits available for division. (3) AVhether the expression "net realised profits" means the surplus of receipts over expenditure properly chargeable to the business; or whether the liabilities (if any) properly chargeable to the business in account outstanding between plaintiff and defendant, at the end of the half-year, are to be provided for out of such surplus before'division of the same. (4) Whether defendaut Hoben is entitled, in his account with the plaintiff Smith, to charge to working expenses: (a) Interest on money borrowed

by defendant to assist him in carrying on tho business; (b) defendant's income tax; (c) subscrip- ■ tions and donations paid in cash by defendant not being rebates or discount on advertising. Mr. E. B. Collins appeared for plaintiff, and Mr. ' C. A. Loughnan for defendant. Counsel for the plaintiff reviewed the conditions set out in the statement of the caso at considerable length, and gave his definition of "net realised profits"— a term in the bailment on which tho parties disagreed. He (Mr. Collins) objected to the whole form of the balancesheet as between the parties. The plaintiff Smith desired a statement showing the profits from the business, and held that Hoben should not draw in anticipation of profits. After lengthy argument, liis Honour remarked that the deed in. question did not provide for a lot of things that might have been provided for. Tho defendant Hoben claimed that hs was entitled to debit tho interest on borrowed money, b.ut, against this, plaintiff urged that, having got assistance from the' bank, defendant was not entitled to charge plaintiff with the interest on the money borrowed.

After further argument, Ivis Honour, addressing counsel for the plaintiff, said: "To put it shortly, you do not admit that defendant is entitled to charge either the. interest, income tax, or donations and subscriptions?" Mr. Collins: "That is so." Mr. Louglinan, for. the defendant Hoben, submitted that tho construction of the whole document justified tho contention that Hoben was entitled to assume profits up to .£lO a week, and to retain that sum fnr his own use irrespective of results. The true intention of" the, parties, lie urged, was to be discovered by the fact that, at the end of six years, when the agreement terminated, the book debts belonged to them in equal proportions. The .CIO draw was to go on until tho end of the six years, whether there were profits or not profits. It was impossible for defendant to carry on the business without borrowed money, and therefore it was urged that ho was entitled to interest on this. It was agreed (hat thfi items "subscriptions" and "donations" and "income tax" be struck out. His Honour reserved his decision.