BANKRUPTCY CHARGES.

Evening Post, Volume LXXIII, Issue 129, 1 June 1907, Page 5

BANKRUPTCY CHARGES.

A DRAPER BEFORE COURT. Two informations under the Bankruptcy Act ware preferred at the Magistrate's Court, yesterday afternoon, r.qainst Arthur Eley Waugh, formerly of Palmerston North, draper, but nov/ of Awahuri, who was adjudged a bankrupt on 6th February, 1907. The informations itlleged (1) that bankrupt could not have had, at tho time his debts wero contracted, any reasonable or prpbablo ground of expectation of being able to pay them, as well as ether debts • (2) that by a false balance-sheet he obtained proporty on ciedit from Aichibald Clai'l: and Sons, Ltd., and other creditors, and had not paid fo* thorn. Mr. Myers prosecuted, and Mr, Harden defended. In opening the case foi? the prosecution, counsel said that defendant ftartcd business in Paln^svston North \n Oetobov, 19(55, with practically 110 capitnl. Ho borrowed something like £160. Subsequently he represented, to one cf his piincip.il creditors that ho had a capita' of J3200. Ho carried on business until September, ISO 6, then ho had a balance-sheet prepared, and made uso of it to obtain further credit. The balance-sheet showed that ho hed been making a profit, and it showed a surplus of something , liko £522. As a matter of fact/ dofendant had been arrying on business at a loss, and instead of there bMng a surplus thrvp •.VH3 r. deficiency. Tho borrowed money had disappcircd, and part of the creditors' money ns well. Defendant >\ent on getting credit after that date, and on the strength of tho balance sheet. Archibald Chi-k raid Sons, counssl said, would .:evcr hivo gn'iD him any further credit but for the apparently healthy condition ol affairs. Defendant, -according to counsel, went on in- | curring debts of which there wa3 no prospect of ni3 being able to pay. Defendant had been publicly examined, nnd tno notes of his ovidepec nt the public examination would bo produced in these procajdings and used as evidence. After several, witnesses had beon called th(s proceedings wero adjourned until XI o'clock this morning. On resuming to-day Mr. Harden, for ths defence, submitted that tho defendant had practically no caco to answer. His Worship would realise that the main evidence against accused was that given by himself in public examination. Defendant had sscursd goods to the value of £140 since September to 6th February, tho dato of his bankruptcy. In Soptombsi- defendant secured tho eci vices of an accountant in PalmsrEton North ond paid him in goods and cash to go into his affaire This balance sheet showed him £522 to the, good. .Subsequently he found that his position wns not as good as the balance sheet showed, ho at once communicated with his creditors in Wellington. Ons firm asked him to como to Wellington rogarding his affairs. Ho did so and acting under its advice filed tho schedule. According to the evidence taken at th? public examination defendant was mis* led by tho accountant whom ho engaged. His Worship observed that tho accountant did not cortify as to the stock, 'but relied upon somo expert. He was not Supposed to go round tho stock and sco that it was equal to the value represented. Counsel, continuing, said the balance shcet_ was inado up on a false basis. A certain amount of .jtock was in transit ami an assistant of the dofendant took atock from tho shelves and from the invoicos — thorcby "double banking." Defondant had had no commercial training. No doubt hi was foolish and did not face 1 his position properly and did not tako 1113 stock properly, but nt the same timo ho* was not guilty of a | criminal ' offence. Whatover fault ho did innkc wan one of error. His Worship said he was satisfied that dpfendant knew he was unable to go on, and he was sorry to say that dc-f-endant had tho leading hand in drawI ing up the balancc-rhqot. Tho auditor had to depend on sonic one else ; in this case ho was depending on Waugh. In complying with a request from ono of his creditors, ho furnished tho balance ehcot, and, r.s pointed out by Mr. Myers, ho should then havo been exceptionally careful in preparing it. Defondant would bo convicted and ordered to como up for sentence when called upon. Mr- Harden said ho hoped to announce in future some repayment would bo mado to the creditor?. His Worship expressed tho hopo that dofendant would be in tho position. He would not* bo tho first io do that. Many honourable men in business had lain by for years and, working hard, eventually paid everybody.