"EXPECTATIONS"

Evening Post, Volume CX, Issue 104, 29 October 1925, Page 15

"EXPECTATIONS"

FURTHER EVIDENCE HEARD

CASE FOR THE DEFENCE

Further evidence was heard yesterday afternoon by his "Honour Mr. Justice Ostler in the case of the Official Assignee v. Levin and Co., in vhich the Official Assignee attacked as a fraudulent preference an assignment given to that firm over his interest in his late father's will by Alexander M'Kay, a Masterton fanner. Sir John Findlay, K.C., with him Mr. O. N. C. Pragnall, appeared for the Official Assignee; and Mr. M. Myers, X.0,, with him Mr. 11. R.,Biss, for Leviu and Co.

Alexander M'Kay, farmer, Mauriceville, continued his evidence. Questioned by Mr. Myers, witness repeated that he had not told Mr. Summere! I, whom ha had known for many years as a thorough gentleman, an upright, honest man, that ho had squared matters with the W.F.C.A.. Ho might have told him that M'Kenzie hud agreed to reduce his debt to him to £300. He told him that M'Kenzic would not press for payment until he got his legacy ; but M'Kenzie pressed him right through. At that time ho thought (no value of his legacy was £3000—sufficient to pay both M'Kenzie and Levin and Co. He estimated his equity in his farm at £850 over and above the first mortgage; and tic. hoped, by getting the second mortgage released, to be able to carry on the Eketahmiii {arm. Ho was quite sure that at the time of the talk with Air. Surninerell nothing was said about the release of (Jio second mortgage. On a later date, however, he asked .Mr. Summci'vel! to release the mortgage in order that he could take up another piopcrty. He did nut remember that Mr. Summerell at once telephoned up his 'head office and saill that the mortgage would be .released. He did not remember telling Mr. Gawith on 14th May that ha had arranged with .Levin and Co. to release the mortgage. He had not made such an Arrangement. He had not had their reply. He did not remember Mr. Gawith lulling' him that if he signer! the assignment it would be held until the prior securities were released. Sir John Findlay : "That should have been in writing." Mr. Myers: "You had known Mr. Gawith.manv vcars?"—"Yes."'

By Sir John Findlay : The condition in which iM'Kensue agreed to wait-was that he should give him a first charge on tlie legacy. He did not tell Mi. Sumvnerell that, but he told Mr. Osivvith before he signed up. Mr. Gawith was acting lor him as well as for Levin and Co. 1

Ju reply to his Honour,. M'Kay >aid that at no time before the signing of the assignment did ho tell Mr. Summcrcll. that he had squared matters with the W.F.C.A.

Arthur David Lowe (Deputy Official Assignee at Masterton) said thai M'Kay was adjudged a bankrupt on. his own petition on . llfh August, 1f.'24. Tlie unsecured debts amount-ed-to. ii 2845, including the .unsecured, balance (&1G10) of- the Wairarapa .Vennci's' claim. He found "it difficult to give any estimate of the present value of the bankrupt's interest in'his late .father's, will. He. had made up his .mind that it was' very doubtful whcth.or JM'Kay had really aiiy equity in' his"faVui. over and above tl.u. first.mortgage,, and that iL' ho had to deal with the property his only course .would be to. abandon it. lutcrc'st: : wiis running on. Tlie furniture, etc.,' were listed in the assets as worth £100. ■, . . ,

Richard Brown, valuer, etc., Masterton, valued ill. £150 the bankrupt's equity over and above•the first morC gage, in the farm over which he gave Ijfivm. and Co.: a 1 second mortgage; the value of the farm being £230(3 and the first mortgage £2150. By Mr.. Biss : The farm,. 23J acres, used to bo within the borough,- and was now within a quarter of a mile of the boundary—near the railway but across the river from Masterton. Ho valued the land alone at £45 an. acre. It was a soven-roonied house, and there was an orchard of some proportions on the property. The. adjoining land was leased at £5 an acre for market gardens. ........ .. . -

. His-Honour: "Is it .the fame quality land?"—"No; there is a good deal of shinjle about it." By Sir John Findlay: He valued M'Kay's land at £10 an acre less. It would require fully. £300 to put the buildings on M'Kay's farm in. a good state of repair. The adjoining land was let to Celestials — Chinamen. (Laughter.) ' Mr. Myers contended that the defendants, if they acted in good faith, as they claimed, were protected under sections 59 and 82 of the Bankruptcy Act. For the purposes of section '82, it had been absolutely decided over and over again that so long, as the beneficiaries under an assignment did not know of any pervious act of bankruptcy that instrument did not constitute a fraudulent preference, even though the assignment itself was an act of bankruptcy. Mr. Summer-ell's evidence would leave his Honour in no doubt, he ventured to say, that after- the clearing sale by the Wairarapa Farmers' and the transfer of the mortgage to them, Levin and Co. were' assured and honestly believed that M'Kay was no longer under any obligation to the W.F.C.A. RELEASE OF SECURITIES.

On 11th May M'Kay told Mr. Summcrell that ho -would not give the mortgage on his interest under his father's will until the previous securities wore, released. Mr. Summerell telephoned his head office, and on 14th May he told M'Kay that his head office had agreed to release the existing 1 securities, and asked him. to go over to Mr. Gawith's office and sign the assignment. M'Kay told Mr. Gawith of this, and the latter said that he would hold over the assignment until the existing securities were released M'Kay signed on that condition. There was a sharp conflict o? evidence on these points, and he submitted that M'Kay's memory was at fault. I.evin and Co. wanted to protect themselves as far as (hey legitimately could, but were.not anxious td override the rights rit' (itluT creditors. Mr. Summon*!] at that time believed that I lie value of M'Kav's interest in tl.o legacy was more'lban JJ3000: iW'Kay having, in- understood, an interest in the residue of the wliile over and above the £3000. lie therefore believed that M'Kay's share would easily cover all debts he then knew of. He also valued M'Kav's equity in the then existing securities "at some £700.

George Charles 'manager at Masterton of Levin and Co.) • <»ay«; evidence bearing out Mr. Myers's statement. J| fi hnvl known M'Kay some twenlyfivo ••msi'ow.iT.n to kf, woirrn £1.4,000." Ry his ri'-moiir: M'Knv did not lr!| liHn'Uml. iM'Knu.ir'.', nffeii" Irj re^ucr hid claim Iq £500, and uol pjcjs ior it

until the legacy was paid, was conditional on M'Kenzie getting a first charge on the legacy. By Sir John Findlay: In 1921 witness knew that M'Kay was in financial difficulties, but did not ask him for a list of his debts or the amounts due. He did not communicate with the W.F.C.A. to ask if they had abandoned the balance of their claim on M'Kay. nor did he ask M'Kenzie what was the true position in regard to M'Kay's indebtedness to him. lie did not know that hu had made such' an inquiry in the lasL ten years. He had had no occasion lo do so. He thought that £500 ;-) £600 could be raised on second mortgage on M'Kay's farm. His Honour: "But you would not be prepared to find the "money yourself?"

Witness: "No." (Laughter.) lie added that ho had heard recently that there was a chance of selling the farm at £2600. In 1919 M'Kay was reported to be worth some £14,000. Sir John Findlay: " Imputations for wealth must be easily gained Masterton way."

Mr. Myers: "That was in 1919." His Honour: "Plenty of people were worth £14,000 in 1919 who are not worth much now."

By Mr. Myers: When M'Kay told him of his indebtedness to M'TCenzie and one or two others, witness though!, that M'Kay had given him a full list of his d<;bts, except small unpaid tradesmen's accounts. M'Kay was not, in the habit of running big accounts. "PLENTY FOR EVERYBODY." lfy his Honour: Apart from the £3000, M'Kay wquld have been insolvent in 1924; but with the £3000 witness thought that there was still plenty for everybody, and a surplus for M'Kay. Ho had no reaso-i to disbelieve Mr. MvKay's statements as to the W.F.C.A. and M'Kenzie, and did. believe them.

Stanley J. W. Gill (assistant manager, at Masterton to Levin and Co.) gave corroborative evidence, as also did Samuel Roy Gawith (of Gawith and Logan, solicitors, Masterton). He had known M'Kay in a friendly way for some twenty years, and M'Kay had from time lo time been a .client of his firm, :

By Sir John Findlay: lie knew that M'Kay would not wilfully mis-state anything on oath. Francis William Binto (accountant and land valuer, Masterton) said he had valued M'Kay's farm ,at £2615 in March, 1924, for mortgage purposes. He would bo prepared to" recommend a mortgage up to. two-thirds of that amount.

Edgar L. Holmwood (land valuer, Masterton) valued the property nfc £2455, and said that in the .future it would become a' subdividing proposition. ■

By Mr. Pragnall i He thought it would be a pood .speculation at £2150. His Honour: "You are not prepared to make a sporting offer for it at that figure •yourself.?"

Witness: "1 am not in a- position to do so, your Honour." •' •

At 5 p.m. the Court adjourned to 10 o clock this morning.