MONEY-LENDING

Evening Post, Volume C, Issue 37, 12 August 1920, Page 8

MONEY-LENDING

LOAN AND INTEREST

BORROWER'S SECURITY

MONEY-LENDING TRANSACTION

reviewed;

CASE BEFORE SUPREME COURT,

A .money-lending transaction with aspects..pf interest was: the subject of proceedings in the Supreme. Court ito-day, before his Honour, Sir■ Bassett Edwards. Tlie plaintiff was Henry John Simpson, of Kilbirnie, storekeeper, and the deleridant, Lazarus Wolle Balkiiid, of BoiUcott-street, Wellington, moneylender. Mr. A. Dunn appeared for the plaintiff and Mr. J. 0. Morrison for the defendant. The statement of claim set out that in April, 1918, the plaintiff borrowed the sum of £250 from the defendant, and by way of securing'repayment thereon the plaintiff executed to the defendant two instruments or bills "of sale,' daied trie I.Bth April, 1918. Under these instruments the plaintiff covenanted to repay the sum of £250, together with.the sura. of £229 for' interest,' making together the sum of £479, by the following instalments :—Under the first instrument seeming £324, £8 per month from 24th April, 1918, until 24th April, 1919, and thereafter £20 per month; and under the second instrument, securing £155, £3 per week, first payment on 25th April, 1918. By way of collateral 1 security, the plaintiff executed, in favour of defendant, promissory notes for the sums. of £324 and £15,5, payable on demand. The bills of sale covered practically. all the chattels other than stock for sale in the plaintiff's dwelling-house, and shop in Coutts-streetj .and also the plaintiff's shop in Onepu-road, Lyall Bay. It was submitted that the . chattels included - under the bills were of the value of £600, at least. .The plaintiff paid to the defendant on account .of the said instru ments the sum of £100. On the 6th May, 1919, the defendant recovered judgment against' the- plaintiff in the S.M. Court, Wellington,' for the sum'ot £60, being three months-instalments of £20, together with £4 3s Court costs. The defendant had issued execution oit the judgment, and distrained-the chattels of the! plaintiff.': It" was"sMbimtfed" that the rate of interest charged by do fendant on the advance was excessive, regard being had to the security and all the circumstances of the loan, and the transaction, was . harsh and unconscionible. ' The plaintiff sought that the transaction should be reopened-and reviewed, > <->nd, thirt he bs "entitled to redeem the 1 chattels on payment of the balance of the principal and interest as fixed by the Court, an injunction to restrain the defendant from enforcing the judgment in the S.M Court. In presenting the case, Mr. Dunn said that the plaintiff's business as fruiterer and confectioner was prosperous, and the necessity for borrowing arose out of a- betting transaction. The loan of .£IOO v.ms to be charged £55 interest in addition to the principal being reduced at the rate of £3 a week. He estimated the effective interest at, 110 per cent. „ Considering the security; cpunsel.,submittecV the charge was - exorbitant--and -extortionate. The defence was generally a denial of the allegations. Had the plaintiff strictly observed' the -terms-of---his-rontracts with the defendant he would have paid defendant by 25tli May, 1919, the sum of £271 as follows:—Fifty-one-v/eekly payments of £3, one payment of £2 due 18th April, 1919, twelve monthly payments of £8, one payment of £20 due 24th May, 1919. The plaintiff never made any payments of £3 weekly, but paid the following sums:—24th• May, 1918, £20; Ist July, . 1918, £20; 30th July, 1918, £20; 3rd September, 1918, £20; 30th September, 1918, £20; sth November, 1918, £20; 9th December, 1918, £10; 3rd January, 1919, £30; total £160. , The plaintiff \£as ..therefore, in arrears £111. Theplaintiff ha'dneVer offered payment of the balance of the principal still due. The defendant was willing to allow the balance of. the loans to remain and be repaid afc the instalments agreed on—£2o a month. The defendant counter-claimed for the sum of £51, being £271, the amount of the instalments due to 25th May, 1919, less the sums amounting to £160 paid by the plaintiff, and £60 the amount for which defendant had already obtained judgment in the S.M. Court. .., ".' . Andrew Gellatly, of the firm "of Messrs. J. H. Bethune and Co., valuer, Btuted that he had valued the stock and fittings in- the shop at Coutts-street, Kil-'' birnie, at £498 in August, 1919. The value put on £he goods was the price expected to be obtained.at auction. William Alexander Thomson, 1' auction-' eer, of the firm of Messrs. Thomson, Brown, and East, ..said he valued'the same property at £532 17s 6d. He would expect to get a bigger value at auction on account of competition. It was a class of furniture for which there was a great demand. Considering the security, he thought 10 per cent, would be quits enough to pay as interest for a loan. ,- , The plaintiff detailed.the transactions into -which he' had entered.' He valued ioio Se£ U"ty at £60°- U P to January, 1919 he had kept his payments to defenoant up to date. After that he was unable to maintain payment,,and he had been sued for arrears. He had let judgment go by. default, expecting another method of procedure. He was prepared to pay back the balance with reasonable interest to be fixed by the Court. ; To Mr , Morrison.: He had been in business over nine years, but he had reduced the rate of interest the defendant was charging him when he borrow- : ed the money to a percentage. In'the 1, state of mind he was at the time all he worried about was getting the • money. He did not understand the transaction as he did now. He had borrowed money before. The terms on which he took the loan were suggested by Mr. Balkind; he did not consider them; he rushed them. _ _ Mr. Morrison.: "Mr. Balkind was entitled to presume: you-knew your way about?"—"l suppose he was." "You were satisfied with the terms of the loan for some months?"—" Yes, until I could not pay." .... . "Really, then, you are asking the Court to break a contract into which you have entered?" . "No, I am of opinion now the interest 1 was too large." ■ ■ ■ - "If you had to borrow this amount again, you would not go to ay moneylender?"—"l mio-ht go to a. moneylender, but I would not go to Balkind."" "You appreciated what the amount, of interest was?" —"Yes." "If you made a contract in goods, you ■would attempt to carry'it 0at.?."4-.".Yes, "' I would do my best." " At this ptage th» case was adjourned, his Honour suggesting counsel . might come to a settlement. ' On resuming after tile luncheon adjournment, Mr. Dunn stated that, followiun; the direction of the Judge,., he had conferred" with counsel for ;the"ot,ber Bide, but as- the dif)'preircc*-bet\yeen"the"j parlies were & great, there was no possible chance of a- settlement.' ITi^poilit-' e<] out tliab'in May last plaintiff offered Balkind the-balance owing; ,phw niter-' est at the", rate of 20 per cent. ' That Otiov was now renewed. . . A [lev hearing; furthev argument, his Honour he'd -that the rate of interest was .excessive, 1 ami that the plaintiff's offer of 20 per cent, was a reasonable ccc. He gave judgment accordingly.