UNUSUAL CLAIM

Evening Post, Volume CXXI, Issue 137, 11 June 1936, Page 11

UNUSUAL CLAIM

INDEMNITY GRANTED SALE OF SHARES An unusual claim for an indemnity and supplementary relief, brought by C. M. Saunders, of Christchurch, against Thomas H. Peet, was subject of a reserved judgment delivered by Mr. Justice Smith in the Supreme Court, Wellington. His Honour made an order that the defendant indemnify the plaintiff in respect of the sum of £1000. This, he stated, .was. equivalent to. judgment for the plaintiff for the sum of £1000, and judgment would be entered accordingly. Early in April, 1930, stated his Honour, the plaintiff was in Palmerston North and met there a friend of his, G. H., Adams, and also the defendant, T. H. Peet. These two were the directors of a private company named Midland Motors, Ltd. In the course of discussion, they informed the plaintiff that their company was shqrt of capital as the volume of its business had outgrown its original capital: The plaintiff, as a friend of Adams, was asked by the directors to assist,, and he was disposed to do so provided his assistance was of a temporary nature. Before he returned to Christchurch, the plaintiff had-signed an application for 1000 preference shares and he had agreed to pay thereon £200 in cash and £100 in each of the first and second months. From' 1930 onwards the company made a loss and an. increasing loss. This was, no doubt,, due very largely to the economic depression. In July, 1930, some three months after the plaintiff applied for his shares, the defendant Peet sold his 2500 ordinary shares of £1 each, paid up to,. 12s per share. The company struggled on during 1933 and part of 1934. During this period, Adams paid part of the plaintiff's interest from his own personal resources instead of from the funds of the company. Later the interest fell into arrear and the plaintiff sued Adams personally and obtained judgment on October 2, 1934, for interest amounting to £25. The company went into voluntary liquidatioh on October 10, 1934. On February 6, 1935, Adams became bankrupt. In July, 1935, plaintiff issued the writ against the defendant Peet, claiming that he be indemnified by the defendant in respect of money paid and to be paid by him as a shareholder; that the defendant be ordered to pay the plaintiff interest at the rate of 10 per cent; per annum on money expended by him as such shareholder; an order that accounts be taken, and the costs of the action. _ His Honour allowed the plaintiff an order that the defendant indemnify him in respect of the sum of £1000. The plaintiff' was also entitled to a declaration that the defendant was liable to pay interest to him at the rate of 10 per'cent, per annum on all money which the plaintiff had paid and should hereafter pay on the shares, less interest paid on account; and, having regard to this declaration, an inquiry and account was directed before the Registrar to determine what amount was payable for interest up to April 22, 1936, the date of the last hearing of the action. • The plaintiff was. given thei costs oi the action as on a claim for £1000, together with witnesses' expenses ana disbursements.