LAND TRANSACTION

Hawera Star, Volume XLVII, 21 May 1928, Page 9

LAND TRANSACTION

AN INVOLVED CASE.

A QUESTION OF GUARANTEE.

JOLL v. 4 PEASE AND' PREECE

(.BY TELEGRAPH—SPECIAL TO “THE STAB.") NEW PLYMOUTH, May 21. A very involved case of transactions in connection with the sale and purchase of a property at Riverlea 111 1920, its second sale and the subsequent guaranteeing of the account of the last purchasers, was opened in the Supreme Court this morning before Mr Justice Reed. The plaintiff in the case was. Bruce Langdou .1011, of Hawera, and the tlci'emhuits were Arthur Clifford Pease, and George Preece, on whom a claim was made lor £9OO and interest.

Mr W. H. Treadwell (with him Mr R. H. Quiiliam) appeared for the plaintiff, and Mr A. K. North represented the defendants Mr Treadwell opened the case for plaintiff at considerable length, in the course of which it was shown how involved the position was. In 1920 Joll was carrying on business as a land agent in Hawera in conjunction with a Mr Treweek. He received instructions to sell a Iliverlea property on be-’ half of Mr Malone and it was sold to the present defendants for £65 per acre. When the transaction was completed the defendants, who evidently bought in a speculative spirit, placed the property in the hands of the same agents for resale at £/5, an increase at which figure t(iey stood to make a profit of £3096. Joll sold the property some time before July 1, 1920, but the agreement was dated August 9. Moreland'Bros, were the purchasers of the property, .toll’s commission on the first transaction was £293 15s and on the second £340 ss, making a total of £634. In view ol the fact that the fact the second sale took place so soon after the first, Joll agreed to reduce his commission to £509. The defendants then agreed to finance Moreland Bros, through the Bank of Australasia and an account or Moreland Bros, was opened, supported bv a guarantee with a fourth mortgage for £7509 and further advances and a stock mortgage. At that time Joll was a wealthy man and, counsel added, perhaps a foolish man, and had signed guarantees for upwards of £30,009. Preece met Joll and told him of the arrangement for financing Moreland Bros, and asked time to join i*ca.s6 mid himself in the guarantee to the Bank. Joll was not to be called upon under the guarantee, Pease and Preece undertaking to shoulder the whole responsibility. ,His support was wanted merely to satisfy the bank, who wanted three guarantors to the amount to be guaranteed, which was £4OOO. The guarantee was prepared: on a form which is now obsolete, and it was signed' by 1 Joll with the others. Without any reference to Joll and without his consent the other parties asked, for the guarantee to be' increased to £SOOO. That guarantee remained in force from July 1, 1920, to September 3, 1922, when it was discharged by .lie substititutkin of another guarantiee, under which Pea.se became the. .principal debtor. This account of Moreland Bros, was operated on by Pease, and not by Moreland Bros. In dealing with the operation on the guaranteed account-, counsel pointed out that the first item on the second', was the payment of £SOO commission, out of ‘ that account, which was not owing by Moreland brothers,, hut by the defendants to Joll/ This incidentally made Joll liable for part of his own commission in the event of the bank having to call upon the guarantors. Counsel submitted that such an account should; be kept within the. limit of the guarantee,, and should be operated on only by Moreland brothers. In effect the account was that of Pease and Preece, who had bought the property for the purpose of making money. Under the guarantee the amount of the' advance was to he reduced by £SOO per annum. At the end of the first year Pease was reminded of this by the hank manager, and he made certain payments, hut Joll was not asked for any contribution of a share of this, a® he would have been if he had not been indemnified by the other guarantors, and lie was not acquainted with any of the .dealings going on in connection with the account. It was at the end of the second term that the bank informed Pease that the account, could not be continued. It was then that the new account was opened in which Pease became the principal debtor, supported by the guarantee of Preece and 1 Joll. The account was opened in Pease’s name as a No. 6 account, but it was in reality the account of Moreland brothers. It was' stated by counsel that Moreland brothers’ account was closed on September 4, 192-2, by the payment by Pease of £4OOO drawn on the new account and his own cheque for £6l 11s 6d. Joll signed the second guarantee, still believing that lie was indemnified by the co-guarantors. The defence was that the payment of the £909 was a compromise made by Mr. Blake, the trustee of .Toll’s assign'd estate over the claim under the guarantee. There was no reference; in balance sheets or minutes to any liability bv Joll on account of Moreland ;}ros account.

Evidence was-then given by plaint iff ,vho said his first knowledge of the fact •hat he was being held liable and that tin? £9OO lmd been naid. was when endeavours were being made to purchase the residue of his estate. His liability on account of Moreland Bros was newer discussed by him with his trustee or the icc'untants or ah any meeting of Toditors. He was not consulted in any way about the liability for the £9OO on account- of Moreland Bros.

Counsel then tlealt with the operations on the new account, showing that it had been used to pay off various sums under the original mortgages. There were three of these, and the balance of the purchase money in the deal with .Moreland Bros, was to be secured by a fourth, mortgage. On the figures

given the balance Avas £SOOO, but a mortgage Avas taken for £7500, Avhich perhaps defendants would explain. When the original mortgages Avere discharged, the defendants took transfers to themselves, and they had in no 'way endeavoured to account to Joll for any interest in the securities which they took <yver. It was: obvious that the account was not in the strict sense the account of Moreland Bros., hut of these other tAvo gentlemen who Avere trying to establish their position, and it Avas all done at the expense of Joll, from whom they had taken £9OO. The second guarantee Avas still in existence and had never been, discharged, and, said counsel, “avo are told that the matter aa'UiS being held over until, to use a colloquialism, they see which way the cat jumps.” His Honour: “.And in the meantime I am the cat.” Mr. TreadAvcll: “I liaAm appeared too often before your Honour to say that, but I will say that Mr. Joll appears to be the mouse.” Counsel then proceeded to deal with the affairs of plaintiff’® estate, Avhich was assigned for the benefit of his creditors in February. 1924, and it Avas not until then that plaintiff kneAV anything of the dealings by Pease Avith the account of Moreland Bros. Of that he was to be hold liable for a. share of the guarantee. The claim Avas therefore made on the ground that, the sum of £90(1 had been A\rongfully paid by the trustee in the assigned estate of Joll to the defendants, and that ii Avais paid under a, misstatement of fact. Further, that Pease had become the principal debtor and Avas not entitled to claim compensation from his sureties. (Proceeding.)