SUPREME COURT.-IN BANKRUPTCY.

Hawke's Bay Herald, Volume XXIV, Issue 8331, 6 April 1889, Page 3

SUPREME COURT.-IN BANKRUPTCY.

(Before bis Honor Chief Justice Sir James ' Preodergast. ) OFFICIAL ASSIGNEE V. J. G. KINROSS AND KINROSS WHITE. This was an adjourned application in -which the Deputy Official Assignee sought to have set aside two mortgages on the steamer Ahunri and lighter Admiral as . frandulentpreferences. . Mr E. H. Williams appeared for the Deputy Assignee, and Mr Carlile for Mr Kinross White. At the leqnest of Mr \\illianis Mr Kinross was re-called, and in answer to questions stated that at the time he gave the mortgage on the Ahnriri he had other property available as security. .- He had book-debts, stock, second mortgages, and the equity of redemption of his runs. He might have borrowed money from friends. Frederick William Bicknell, accountant at the. Union Bank of Australia, produced a copy of an extract from the books of the bank of July 23rd, 1887.. It was' taken from the ordinary books of the bank, and the copy was made in the ordinary way. It was a record of a dishonored bill for £502 2s 9d accepted by Kinross and Co. in favor of the Timaru Milling Company: The answer was, " Refer to makers." In reply to his Honor Mr Williams said his object was to show that this lull was" taken-up by Mr Kinross White. Mr Carlile 'said he admitted that Mr White paid £460 to Mr Kinross's account about that date, and no doubt it was used towards meeting the bill, but it was not i. a Bpecific payment for the purpose of taking-up the bill. That money was advanced nnder an agreement to mortgage. Mr Bicknell's examination continued : The bill was paid on July 25th, the money being paid in in two_ cheques for £460 on the Colonial Bank signed by Mr Kinross White. Mr Carlile. slid Mr Kinross wished to add to his last, answer that he had some unencumbered shares in companies. >Ue had 25 shares in the Hawke's Bay and North British Freezing Company, worth abont £6 each. This conelnded the case for the Assienee. Mr Carlile then opened the case for the defence. He said it had. been contended for the Assignee that the mortgage was void on the ground of insufficient execution and also of fraudulent preference. Aa to the first ground, it rested en the fact that the' English Merchant Shipping Act required that a mortgage of shipping Bhould be sealed, and there was no red seal or wafer on this document. But he (Mr Carlile) contended that. under New . Zealand law this was not necessary, or if it were necessary the declaration and the touching of the deed by a finger was euflicieut " sealing." (Cases cited.) As to the ground of fraudulent preference, it really rested entirely on the state of mind of Mr Kinross at the time he gave the mortgage. He had sworn that on the 11th October .he really believed that he could pay all his creditors in full, and based that .belief on valuations of his properties ■ made by third parties. He earned on' Business' for very nearly three months before bankruptcy, and had he gone on for eight days more the deed .would have had tho necessary currency of three months. But 'the point on which he really relied was that there was an agree-ment-to give this security. Mr Kinross had given evidence on that point, and Mr Whif» would be called to give further evidence. As to the mortgage on the ' lighter Admiral, it had not been registered, and the amount involved was so email— £4s— that he would abandon that part oi his case. a - William Kinross White, who was a clerk in Mr Kinrpss'u employ at the time of his bankruptcy, said he held a mortgage over the steamer Sir Donald, originally for £1000, but it was reduced to £800. When the Sir Donald was lost she was insured in his name for £800, and he re- : ceivea the money. It was not all .his - ownr-£6OO was, money placed in his ■ -".-'' -".' hands, for. investment. .The trust money . 'i ' was' paid into; a separate account in the V .?;:->^C/)lb^tBank.. ; : Mr Kinross was talking = ;--i\:;''-;aTOT't:fcnyi»&iMOther : -vewel .to replace i "•':%; ''tii6' : '&K; : iion&lii' and "-'asked witness

£800 on second mortgage. Witness S 6d V "m ««* WmentTS sw t r Kl " ross on J»'y 25th, ISS7, the amount being £460 m twn arntt by the builder of the new steamer Ihe amount of tl.o draft was £210 w£t he r 5"?! of £4 0^as transferred to witness's debit on the trustaccount a tl c MOD P M d 6£46 °- nia kin S atotalof *000. M r Kinross owed witness on account of others, interest a ? tl time ™! it was taken from the trust account Witness sent it Home to the parties interested, and credited Mr Kinross w tl. he payment. Mr Kinross was paying »ni interest on the £800, as, though all the money was not then paid, witness was held to make payments on account of the new steamer. The balance of £89 9 S 6d, necessary to makeup the amount of £800, was paid when the mortgage was r de w J h^ 89w(ls notact falfy paid havW naif-f K ; nr °^ Was "edited^th having paid it to witness for salary and . other moneys due.. Witness was receiving as salary £430 a year. His account was made up on the 31st March in each year, and in March, 1888, he was in debit some £3. From that time to the date of the bankruptcy his salary ran on, and he also paid out of his trnst account on account of Mr Kinross interest due to his friends at home. The total amount paid was £190, but that was not all on account of Mr Kinross. The insurance policy produced was a certified copy of the original policy on the Ahuriri. She was insured in his name with Mr Kinross's consent in the National Insurance Company for £500. The original policy had been lost. The insurance was dated 4th September, and the policy was issued in punedm. The insurance would have been effected earlier, if the Colonial Insurance Company, in which the Ahnriri was insured for £2100, had not raised objections until Mr Kinross made certaio explanations. He made other payments on account of Mr Kinross. Examined by Mr Williams : He could not say why the entry of £40 appeared in Mr Kinross's books in the space between two other entries which were on the lines iof tiie book. He had nothing to do with , the book ; lie instructed ths book-keeper what to do and left him to do it. There was no salary in the £40. His salary was credited only once a year, on the 31st March, when bis account was made up. The amount of £89 9s 6d included no salary as far as he knew. It was made up of moneys due to him by Mr Kinross, and some salary might have been included. He merely told the bsok- keeper to make up the amount advanced to £800 and ho was debited witli that amount in a running account which had been going oti for some years. Between October and the bankruptcy he advanced Mr Kinross about £1000 against bills, some of which had been met and some dishonored. He proved in the estate for £1300, and he had since had to meet certainly £500 in dishonored bills. The amount he proved for was unsecured. He could not say exactly when he first asked for an insurance policy over the steamer in his name, but it was when the Colonial policy was effected — that would be about January, 1888. He asked for it subsequently, and would have got it but for the objections raised by the Colonial Company. Witness wanted the policy as a mere matter of business ; he did not at that time think Mr Kinross was in a bad position. Mr Kinross once told him that he did not want to take out another policy until the steamer was classed, about which there was some delay. There was also delay in transferring the register to Napier ; the day after it was completed he took Mr Kinross over fco execute the mortgage. The vessel was before that registered in Wellington ; it did not strike him that he could have registered the mortgage in Wellington. He was not afraid of the security ; he had invested other people's money, but he was personally responsible, and look3d upon it as an investment of his own. He did not advance any of the £800 before the Ahuriri was thought of. The agreement to pnrchase the steamers was dated in August, and he advanced £460 bsfore that, but he knew that negotiations for the purchase were going on long before that. He did not know at the time for wuat purpose Mr Kinross wanted the £460, but it was advanced as part of the £800 he had agreed to lend against the steamer. He was all the time credited with interest at 8 per cent on the full £800. [Books produced.] On November 30tb, 1887, he was credited with £64, one year's interest, and on June 30th following with £32, These amounts were charged as against the Ahuriri in the books. The Sir Donald was lost in May, 1887, and he received the insurance of £800 on June 17th. He was consequently charging interest when he had the capital account in his possession. He j could not use the money in any way, because he had agreed to hold it free for Mr Kinross. Witness had taken up some promissory notes for Mr Kinross— one was for £120, in November last. In the mortgage on the Admiral Mr Goudy's name was crossed out and witness's put in before Mr Kinross signed it. Witness did not think much of it as a security, as the lighter was not insured, and he did not trouble to register the deed. He and Mr Goudy had been financing for Mr Kinross; in October he advanced £50, £12, and £160, all towards the end of the month. He bad not seen the Spit books for three years. He had conferred constantly with Mr Kinross, but the latter was not very communicative. Witness had heard outside rumors ns to Mr Kinross's position; bnt he thought that, though Mr Kinross had made a mess of his business, ho had sufficient properties at his back to pull him through. Witness knew that Mr Kiuross's bills had beea dishonored now aud then for several years, but they were always paid in the end. They might have been p.'iid by financing, but not with the assistance of Mr Goudy and himself until lately. Witness was manager ot the National Insurance Company for Kinross and Co., and he knew that the company had proved for a large amount — it might have been £800— in the estate. Prior to that time Mr Kinross owed the company as much as £2500, but it had been largely reduced. This concluded the evidence, and counsel addressed the Court. His Honor said the evidence, so far as it went, satisfied him that there was a bona fide agreement to mortgage the Ahuriri. The giving of the security had certainly been long delayed, but the reasons for that had been explained in evidence. No doubt if Mr Wnite had known nothing of Mr Kinross he would have insisted on getting his security at once, but Mr White knew what was going on, and he was not ns likely to insist on it being done at once by Mr Kinross as he would have been with a stranger. He (his Honor) found that there was no intention to defraud the creditors. As to the technical pomt — wh&tber the mortgage complied with the formalities prescribed by the law in the matter of the seal — he would reserve his decision on that. Mr Williams, who appeared for the Assignee, said he was instructed to state that as the decision was against the assignee on general grounds, he would not ask his Honor to decide the technical point. The assignee did not desire to succeed on a pure technicality. This concluded the business of the Court.