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THE COURTS.—TO-DAY., Issue 7935, 17 June 1889
SUPREME COURT-CIVIL SITTINGS.
(Before His Honor Mr Justice Williams and a special jury of twelve.) Bank op New Zealand r. Wilson, Taine, and Co. —ln this case the bank claims L 2,507 15s 1 Id, due on an overdraft and on bills. There is also a cross-action in which the defendants claim from the bank LIO.OOO damages for injury to their credit through the bank’s having dishonored their cheques for wool bought while their wool account was in funds. The two actions were, for the sake of convenience, heard as one.
The case was heard at Invercargill at tbs recent civil sittings, but the jury there were unable to agree, and a change of venue to Dunedin was then granted. Mr Haggitt, with him Mr F. B. Chap* man, appeared for the bank ; Sir B. Stoat, with him Mr J. Macgregor, for Wilson, Taine, and Co. His Honor: Is the claim admitted ? Sir R. Stout: Yes; we have admitted all the claim. His Honor; Then it is for you to eemmence, I presume Sir B, Stout, in addressing the jury, said that the case, as it would be presented to the jury, was practically this: The bank sned defendants for L 2,507 15s lid, money due on an overdraft and on bills, and defendants admitted that this amount was due; but they put in a counter-claim for LIO.OOO damages. This counter-claim was founded on an agreement entered into in December last, by which the bank was to open a special account for defendants for wool purposes, and it was arranged that so long as defendants continued to pay money into this account they could draw cheques against it. Suddenly, however, and when this account was about LI,OOO in credit, the bank dishonored various cheques of defendants. The bank in their S leadings said (I) that no such agreement as efendanta set forth was made, and (2) that on December 11 they agreed to lend certain moneys to defendants to make advances on wool, and that it was to be opened for that purpose only. Also, that loans were duly made and liquidated, but that when ths cheques were dishonored, although No. 8 account was in credit to the extent of L 899 13s sd, there was an overdraft of L2,4G3 on the ordinary account, and therefore there were no moneys of defendants’ in the bank’s hands. The bank also alleged that defendants had not suffered any injury through its action. Now, the position ef the defendants had been this: they were stock and estate agents, commission agents, and auctioneers, doing by far the best business in Invercargill—indeed, to show hew good their business was, he had only to say that, although things in Invereargill had been dull of lata years, the firm was in gohl credit, and their badness was actually so extending and increasing in size that their animal turnover amounted to over L 60,000. fa 1886 the firm had an ordinary aooonnt (No. 1) with the bank, and also a “guano ” account (No. 2), and they went to the bank and said that they wanted to open a wool account, any balance 6f which remaining at the end of the season should be paid to (he credit of No. 1 account. The account was duly opened and operated op, and was ultimately cleared off and closed. In December last defendants agin went to the bank and said that they wished to open a special wool account (No, 3), they still having the original accounts, Nos, I and B. This was agreed to, and, as defendants’ wool camp (p from the country for them to sell, paid the proceeds into No. 3 account, which at oqo time reached nearly L 3.000, but when, in February last, they went to pay some of the farmers for their wool that had been sold, and gave cheques on No. 3 account, the bank dishonored the cheques. And the bank did this although No. 3 account was at the time L 920 18s 5d in credit—they declined te allow the defendants to pay for the wool they had sold, and said : “ We will sefye the money belonging to the farmers and ajply it to defendants’ overdraft on account No. l. ! ’ Counsel would submit that the law was that if one went to & bank apd it was agreed that a special acoonnt should be opened np and operated on by him in a certain way thp bank could not interfere with it in any way or apply any balance that might accrue te it in any way other than the special purpose for which it was opened. If there was ne agreement of the kind the bank conld, pi course, treat the special acconnt and thp client’s ordinary account as one, bat where it was agreed that the pew account was to be operated on for a special purpose only, the money to its credit was sacred to the purpose for which it was arranged, and not a single shilling - of it could the bank touch. The pleading* of the bank in this case were toot only comical, bnt were also untrne. They said that defendants “ continued to pay money into No. 3 account, and to draw cheques against it.” Why should they not ? Thp wool transactions for the season were not yet over, and therefore they conld still operate on the account. Bht what did the hank do ? They waited until defendants paid in cheque for L 1,500 that they knew waa coming, and the moment they' got this cheque into their pockets sent defendants a letter intimating that the whole of thejr accounts were to he treated as one, and that the money to the credit of account No. 3 would be applied to reducing the overdraft on account No, 1. Defendants went to tho bank and begged and prayed them to honor their wool cheques, promising if they did so to pay in several hundred pounds as against account No. 1, and fn the coarse of a fortnight to have the amount dne on bills wiped off. They urged that their business would be ruined if their cheques to the woolgrowers were not honored, but the bank were obdurate, and having got hold of defendants’ cheque kept it. dishonored their wool cheques, and ruined their business; And the only reason given for this extraordinary conduct was that “our directors” required it done. The jury would, counsel felt certain, by their verdict tell this bank and every other bank that they were not to be allowed to break promises and seize the farmers’ money and put it in their owA pockets. It was a dishonest transaction, and as such the jury would doubtless brand it. They would, he hoped, give defendants ample damages—sufficient to start them in business again, and let the poor fanners who had been defrauded of their wool money be paid.
Alexander Lorimer Wilson, one of the firm of Wilson, Taine, and Co., stated that
tlity had been iu business since Jauuavy, }S£O. and bad been banking with the Bank of New Zealand nil tho time— up till February Id of the pwwt year. Twin* the last three years- tho worst limes of Um whole period—their turnover ranged from LuO.OOO to LGO.OCO per annum. This last year their business looked better than it had ever been. Witness interviewed M'Kay, manager of the bank, and told him ho wished to open a No. wool account) and to work it in the same way as the previous year. This was for the bank to make all advances on the wool account, the firm to pay into it all the proceeds of the wool sales, them to pay from it the farmers’accounts for wool sold, said the balance to bo passed over to No. 1 account. Witness added that he thought 1300 would be enough, M'Kay help them in the manner suggested. WitHess continued at considerable length to give evidence in support of counsel’s opening address, and concluded his examination-in-«bief by saying that since the bank dishonored his firm’s cheques they had done no business, for people would not entrust their goods to a firm of auctioneers that was ia bad credit. He gave a large number of instances in which their clients had withdrawn their business, and stated that their sales of stock, hides and skins, horses, wool, ate.—which used to spread over a wide district—had been entirely put a stop to, the producers refraining from sending their goods to them for sale. To Mr Haggltt; All the firms transactions did not go through their books, because with many largo sales the money did not pass through their hands, they simply receiving their commission. The sale book would show them, however. They had no balance-sheets, but used at times to go through their books and see how they stood. Their bank balances might have shown a falling off during ISB7 and 1888, but not to tho extent of LIO,OOO, he thought. They were during that time not pressing business very much, things being very bad in Invercargill and they wishing to keep out of bad debts. They were, however, doing a safe business, and things were looking up a good deal this year. Witness acted as salesman, and Taine looked after the accounts and tho bank business. The overdraft allowed them by M'Kay was elastic—it ranged from L 2.000 to L 2.500, but M'Kay wished it not to go beyond L 2.000, That did not include outstanding bills, which Were always extra.—The witness was still under examination when we went to press.
THE COURTS.—TO-DAY., Issue 7935, 17 June 1889
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