BANKRUPT DEALER

Greymouth Evening Star, 23 June 1923, Page 5

BANKRUPT DEALER

H. H. SMITH’S EXAMINATION TRANSACTIONS OUTLINED. Before His Honour Mr. Justice Adams this morning, 11. H. Smith, formerly a motor dealer, was publicly examined regarding his bankruptcy. Mr. H. F. Doogan appeared for the Deputy Official Assignee (Mr. A. Naylor), Leyland Motors, Ltd., and Texas Oil Coy. Mr. F. A. Kitchingham appeared for the Dominion Motors, Ltd., and bankrupt was represented by Mr. W. J. Joyce. Smith, examined, said that he had been declared bankrupt in October last, the amount of his debts being about £3OOO. He commenced business in 1919. He was a motor dealer, insurance and general agent. He started dealing in motor trucks about July, 1920. The statement of the Leyland Motors showing that he had gone back to the extent of £1776 15/3 was correct except that there were one or two items which he did not think he should have been debited with. The statement also showed that he was credited during that time with commission amounting to £948. “Is the statement there?” asked Smith. “Yes,” said Mr Doogan, producing it. “It was put in with the company’s proof of debt.” “You got that money in addition to < what you owed them?” asked Mr Doogan. “The statement is practically correct,” said witness. “There are two items with which I should not have been debited.” . “What are they?” asked his Honor. “There is one concerning a Mr Wylie, to whom I sold a Leyland truck. The company allowed Wylie £l9O and

debited it to me,” said witness. Continuing, he said, in answer to Mr Doogan, that had he not been credited with £948 commission, his debit between July, 1920, and the date of bankruptcy, would have been £2,700. He commenced to deal with the Texas Oil Company in August, 1921. Between then and January, 1922, he was behind to the extent of £215 3s 9d. The statement also showed a credit of £39 on commission, which was right. He was behind to the extent of £261 16s 7d, without commission. The Savage Tyro and Rubbber Company debited him with £325. At the time these various debts were being contracted, he believed he had a reasonable expectation of paying them and his other debts. He bought the house in which ho was living in in May. 1919, raising a loan under the Discharged Soldiers’ Settlement Act to buy it. The price was either £lO5O or £llOO. Between then and the time of his bankruptcy he paid off only £4l 10s. The debit on the date of bankruptcy amounted to £958 10s. The house had since been sold by auction. He. had had two Chevrolet cars, one of which was mortgaged for £3OO in May, 1920. Up to the date of bankruptcy he Had paid only £5O off the principal. There was no furniture in his house belonging to him. It belonged to I'.is wife and was mortgaged. \ He accounted for getting behind by the fact that the trucks were big things to handle whereas he had only £2OO capital and did handle them on commission but straight-cut. The bills were in his name and he nc nnt. ■nnirl in mnnv infit.nnp.p.R 110

was not paia in many instances, jlu financed one man for a truck to the extent of £lOO and another to the extent of £lOOO. He got so much "behind that he did not know where he ■ was. Leyland wanted £lOOO on account, and witness had to go to a moneylender for the money.' He. used to send whatever he could. He bought a truck from Mr Steer for £2OO, which was a dead loss and sold him another for £l3OO. He took Mr Steer’s truck in part payment. He sold the truck he bought'from Steer at £250 “on the bills,” but got no money. Since the bankruptcy Mr Naylor sold a roadster car for about £2OO which had cost him £3OO. The demonstrating of the Leyland lorries cost him 2/- a mile. He was demonstrating them right through' to Westland and Westport. It cost more to sell one than the. profit was worth, and he could not carry on. He got £6OO worth of tyres from the Savage Tyre Company and when he told them they were so useless that *he had to replace them. He sent £3OO worth back. The Barnett Glass tyres were guaranteed for 10,000 miles ana they averaged 3,000 miles, with the result that he had to make, up the difference. The firm stated that the West Coast Toads and the heavy loads of timber carried were not covered by the guarantee. He admitted having owned a race horse. He bought Missland in July 1921, for £4O and sold it in January, 1922, for£Bo. At the meetings in which Missland ran from to the sale it ran three firsts, two seconds and a third. He got about £2OO. Mrs Smith bought the horse. He did not think horse racing or gambling had anything to do with his bankruptcy. Sometimes he lost and sometimes he won. From the time he started business until 1920 his books were kept in Mark Sprots. When he left, he got Mr Wimsett, manager of Mnrrish and Co to fix up the books. Afterwards witness carried on. Unfortunately his car caught fire at Paroa and he ran it into a pond. His books and samples were either burned or they had fallen in the pond. There were four different books. “Do you know anything about books?” asked his Honour. “Not much,” said witness. “What is a ledger?” asked the Judge.

“Where a man’s account is kept,” replied Smith. Witness was then questioned by Mr Doogan as to where he would enter in a cash book the receipt of £lOO. He said he would just “write it in the book.” “And if you paid out £5 what would you do?” asked Mr. Doogan. “I would just put it underneath,” replied witness. He had never tried to keep books before he went into this business. He knew nothing about books, but he could “sell anything.” He kept the invoices for some months and had a “clean up” about every three months and put them in the. fire. “That’s where your books got too, apparently, said his Honour. “I’m not quite sure whether they’re burned or in the pond,” said witness. Mr. Kitchingham: You Wore away at the war some time —how long? “Which one?” asked witness. “You have been at two?” asked Mr Kitchingham. “At three,” said witness. He had been in the Boer war, the Zulu rebellion in 1906 and went to the Great War in 1915. He had been a salesman practically all his life. He had been in a solicitor’s office in his youth. In the Boer war he was a

quartermaster, but did not have to keep accounts. As a salesman he had been employed by other people. When employed by other people, he sent in his orders and got his commission. He could tell if a statement was right or wrong. He could do things in his head but could not write it down. As far as what was called bookkeeping he knew nothing about it. He sold about £5OOO worth of cars and he ■ sold > a truck to Wylie, two to Orr Bros., one to the Kokatahi Sawmillers, one to Hackell, one to Searle, one to Allan, one to Steer, one to Hahn, one to Chhpman and one to Bansgrove. He handled tyres and petrol as well. A great amount of cash and bills went through his hands. Leyland’s account was about £lO,OOO. While he was with Mark Sprot’s, he made some sales on his own account. He did the business in the life insurance, but it went through Mark Sprot’s as agents. The commission was paid to Mr. Lynch, who then transferred to witness’s account. “The question is what was your relation with Mark Sprot’s,” asked his Honour. Witness said that if he sold tyres, etc., the commission or profit went into Mark Sprot’s books. He drew £lO pex 1 week and expenses and at the end of every three months the credit balance was divided equally between Mark Sprot and Co. and witness. He paid for the cars and the amount was charged to his account. When he left in April, 1920, Mr Lynch and he had a general clean-up and witness walked out practically free of debt. There were some commissions to come and some debts owing, and they called the matter “clear.” After the cleaning-up his only liability was about £35 for petrol used by him. 1 He alsq owed the Dominion Motors Ltd. , about £3OO. His business did not require much bookkeeping. Il he sold a tyre to a man he entered it on the ledger. < ‘Did vou enter the ledtrer in the same 1

.L7ICI you enuei 1110 lecigci iel liic Sciiiic way as you entered the bash book?” asked the Judge. “No,” said witness. “I would put what a man owed on one side and what he paid on the other.” “You did that in the ledger, but in the cash book you simply entered one thing under another,” said his ‘Honor. “He did know how much he had outstanding when he lost his books. Many of the people whom he thought owed him money said they had paid him. “Do you ask the Court, seriously, to believe that you ever had the books opened up for you, that you had the car, and that they were lost in the manner you describe?” “I’m on my oath, Mr Kitchingham ’. ’ said witness. “You swear it?” “I do I” replied witness. He rememebred receiving notice fiom the Official Assignee to produce bis books. He did not tell the Official Assignee what had happened. He did not think it mattered. He produced his bank bo )k. T’e could not remember if the Official Assignee saw him personally. He could not remember being being asked about the books at the creditors’ meeting. He thought the bank book showed everything, He was there three hours, and did nut remember all that happen’d. “I have a newspaper report here,” said Mr Kitchingham, “and I was there myself. Did you say anything about Mr Wim sett?” asked Mr Kitchingham.—l don't

i — ; ; ier: ember. ■ “Did you say anything about the • books?”—“I don’t remember!” ! “I have a newspaper report “I don’t think that can be admit- ■ ted,” said Mr Joyce. ' “It may be used to refresh the witness’s memory,” said his Honour. Mr Kitchingham read extracts from tho report, which drew from witness admissions that he had said in reply to Mr Naylor’s questions as to where his books were, that he. kept rough notes. He remembered Mr Naylor’s saying that he was disappointed, but witness did not think the. books were important. He did not say anything at the meeting about the books being burned. He mentioned the matter that day only because the matter suddenly occurred to him. He had not made out any income tax returns. He did not take out any balance-sheets either. He was running his business at a loss, but he thought he would come out all right. He could have made a good living and good money out of the business had it not been for the heavy expenses. He was al- rf ways living in hopes of “doing a good thing out of it.” “You were simply living in hopes?’’ said Mr Kitchingham. “Most people are,” said Mr Joyce. When the Savage Tyre Company started bankruptcy proceedings, confined the witness, the banks would not pay his bills. Fie. owed a lot but the thing would have worked itself right. He knew now that he was in debt to the extent of £3OOO, but he did not know at the time. From April, 1920, to the time, of the bankruptcy, he thought he was doing well. It was only when the presure started and everybody wanted the money at once that he realised the position. From the time that the Savage Company got judgment against him in Wellington all his debts came down on him at once. He owed at that time a little bit more than he owed at the finish, but nevertheless he kept on buy and selling, but had to pay cash. To Mr Joyce : He. was dealing with the Bank of New South Wales, Hoki- ' tika, and had no difficulty in obtain- . ing an overdraft from the manager, , Mr Hickson. Sometimes Mr Hickson

was “all right” and sometimes he wasn’t. The overdraft ran up and down in the vicinity of £2OOO. He never had a credit balance. When Mr Hickson left the new manager called in witness’s overdraft and would not give him anything. The former manager had told him that everything would come out right. Witness used to consult him on his business affairs. His Honor asked whether Mr Doogan proposed to ask for an order under section 124 sub-section 7 of the Act to the effect that the bankrupt had passed his public examination. Mr Doogan said that the question was whether further proceedings would be taken. After consulting with Mr Naylor, he said that the examination had been satisfactory to his client. “But it is not the examination, said his Honor. “It is'the affairs of the bankrupt that have to be considered, and I don’t think they have been sufficiently investigated. I cannot make an order without some evidence that the affairs have been sufficiently investigated.