PREMIER TOBACCO CASE

Hawke's Bay Tribune, Volume XXV, Issue 79, 16 March 1935, Page 7

PREMIER TOBACCO CASE

Argument for Defence DECISION RESERVED Py Telegraph—Press Association. AUCKLAND, March 15. Legal argument was heard in the Supreme Court case in which Liquidators of the Premier Tobacco Co.. (New Zealand) Ltd. took misfeasance proceedings against the managing director of the company, William Samuel Russell (Mr Moody). Mr McKay, acting for the liquidators, Messrs Chambers, Worth and Chambers, claimed to recover from Russell £33,820, made up et 15,000 £1 shares in the Premier Co., received by Russell, 15,000 shares which he allowed to go tc the Eeronne Syndicate although it was claimed that it had never carried out its contract, and £2820 received in cash by the defendant. Mt Mcody said he would endeavour to show that at the time the moneys were drawn and the company formed there was every reason to believe that the venture would be successful. Assuming that there was any liability on Russell’s part, it could not possibly be for £33,800 as claimed. If that claim were upheld, where shareholders had list at the worst only £lB,OOO they would receive back £33,800 and the shares would be worth double their face value. Russell was liable, if liable at all, ci ly for the net amount he had received, £2372, and not the gross amount. With regard to the shares, the com pany could not sell 50,000 shares as required, and so the 30,000 shares allotted to the promoters were of no value. The real question was whether Russell had itceived a commission that was net known to the other members of the syndicate. The contract was there and open to inspection by any intending shareholders. His Honour Jilted what had become of the £13,000 that had been lost. Air Moody: It is not suggested that wo got any moro than £3BOO. Even in the best managed companies share capital disappears. When Russell received payment he had every reason to believe that £lOO,000 capita] in London was assured, said Mr Meooy. Ho also had reports from salesmen that 50,000 shares or more would be placed in New Zealand. With regard to certain of the charges against Russell, even if true the company had no remedy against him but only the individual shareholder had. There could be no doubt, that Russell was a member of the Eeronne Syndicate, and that was disclosed in the prospectus; but even if he were not the commission was certainly not secret. Decision was reserved.