STOCK FIRMS AND FARMER

Dominion, Volume 14, Issue 300, 13 September 1921, Page 7

STOCK FIRMS AND FARMER

• DEALINGS BEFORE BANKRUPTCY OFFICIAL ASSIGNEE SEEKS CANCELLATION I j By Telegraph.—Special Oorreenondont. Masterton, September 12. In, the Supreme Court to-day, the Official Assignee asked for an order declaring null and void antecedent transactions between Wright, Stephenson and ,Co. and the bankrupt estate of Thomae Hardy, sheepfarmor. Mr. H. C. Robinson, with Mr. H. E. Hart, appeared for the Official Assignee, and Mr. H. R. Biss represented Wright, Stephenson and Co.

On behalf'of the plaintiff, Mt. Robinson said that they were asking for an, order for restraint on the following moneys, etc., held by the defendant company £3533 3s. 3d., payment of which was alleged io have been made by fraudulent preference; -61037 25., amount realised for sale of stock held under stock mortgage and land mortgage over property valued at -61000. Counsel said that when Wright, Stephenson and Co had financed Hardy to enable him to take over the property, his capital was only -6200. Hardy had been financed without security, and within three months of his bankruptcy he owed defendants -65335. After this and before the bankruptcy was filed on May 10, 1921, Wright, Stephenson and Co. hail been paid -63527 16s. 6d., not including the mortgages over land and stock which were prepared on April 16. After these payments and securities had been, made over, the only money left for division amongst the other creditors was -69 9s. 6d. Counsel contended that the cash payments by Hardy were made by fraudulent preference; .and that if this were so, then the mortgages over land and stock given later on by Hardy were fraudulent preference securities, and therefore could not hold in law. Detailing the history of Hardy’s land transactions, Mr. Robinson said that in November, 1918, bankrupt left the employ of E. C. Holmes and leased a farm, Wright, Stephenson and Co. financing him. In July 1919, Hardy purchased Hancock’s property, valued at -64228. As he had no. capital, the defendants again advanced him money, and his total indebtedness to them was then -61132 sa. Bankrupt conducted extensive transactions in stock. He bought from I Wright, Stephenson and Co. a total of | -610,000 worth of stock, while his sales I to thq company amounted to -63000; on I February 7, 1921, his indebtedness to defendants was -65334. Counsel put in correspondence, which he submitted showed that defendants had known for some time previous to the bankruptcy that Hardy was bordering on insolvency. Though they 'had known this, they had deliberately allowed Hardy to trade extensively with other ttock firms, who were unaware of his real position. Hardy’s position to-day was due to the slump. Ho had told the Official Assignee that when some lambs bought through the W.F C.A,. arrived in England he knew he had lost -63000 or -64000. Ton years previously Hardy had been caught in a similar slump in the South Island. On the present occasion Hardy , had speculated too freely in land and i stock and had lost. On January 6, 1921, i Wright, Stephenson and Co. had ample warning 'that the lamb market was in a bad state, yet a week later Hardy owed them -64190. At that time he did not owe anything to other stock firms. The large debts to Murray, Roberts and Co., New Zealand Fanners’ Distributing Co., and the W.F.C.A. stock department were all contracted after January 13. Though defendants knew in , November that Hardy's liabilities exceeded his assets, and despite the fact that he was selling on a falling market, they had, for some reason unknown and in some manner not apparent, improved his position on their books by -61000. Why did the company show this improved position? The securities taken over by the company were filed on April 22, the day the other fjms found out about Hardy’s position, and went as a deputation to Wh’ight, Stephenson and Co., from whom they inquired about the matter. The defendants would suggest that they took the securities on behalf of the other firms, but from April 9 until April 22 they said absolutely nothing about the proposed transactions to the other firms. Counsm suggested that if the deputation had not waited on the defendants on April 22, the existence of the mortgages would not then have been disclosed. In older to allow the firms concerned ample time to come to an agreement, the Official Assignee had stayed the proceedings as long ti possible. No settlement had been reached, however, and the case had to proceed. Lengthy evidence was given by the managers of stock firms on the lines of the foregoing statement. Thomas TV. Hardy, the bankrupt concerned in the case, was then placed in the witness box.

His Honour Mr. Justice Salmond, addressing the witness, asked: When you bought these sheep from Wright, Stephenson and Co., did you pay cash for them?

Witness': No. How did you pay for them, then? —“I paid for them when the proceeds of the sale came to hand."

Didn’t you have a limit, say seven days ? —"No-." Then you could keep stock practically as long as you liked? —"Yes." The ease was adjourned until to-mor-row morning.