DISTRICT COURT.

Lyttelton Times, Volume LXXIII, Issue 9050, 12 March 1890, Page 3

DISTRICT COURT.

, ASHBURTON. Tuesday, March 11. (Before his Honor Judge Ward.) IN BANKOTPXCr. IST BE JOSEPH CLARK. Motion for public examination. Mr G. Harper for the Deputy Official Assignee, Mr Fisher, with him Mr Crisp, for the bankrupt. . In connection with the examination the following charges were formulated against the bankrupt: —(1) That he had, with intent to conceal the true state of his affairs, wilfully omitted during the year 1889 to keep proper books and accounts. (2) That he had within three months before the commencement of his bankruptcy failed to keep usual and reasonable books and accounts setting forth truthfully the state of his business transactions. (3) That ho had, in incurring debts and liabilities with the Union Bank of Australia, the Bank of New South Wales, George Gilmour, of Ashton, farmer; Andrew Dawson, of Waterton, farmer; and G. W. Body, of Tinwald, farmer, obtained credit from the said Banks and persons under false pretences and by means of other fraud, to wit, by falsely pretending and representing to the said Banks and persons that be was possessed of certain quantities of wheat and other grain, and by giving to the said Banks and persons for and on account of the said debts and liabilities divers receipts purporting to show that such grain was stored and held by him in his warehouse at Tinwald, and would continue to be kept, held and stored on account of the said Banks and persona until the debts and liabilities were discharged, liquidated, or otherwise released. (4) That his bankruptcy was attributable to rash and hazardous speculations.

Joseph Clark, the bankrupt, was called and examined by Mr Harper. He said that he had been carrying on business as a grain merchant for nine or ten years. Oa Feb. 1, 1889, about the beginning of the grain season, he was indebted to the Union Bank for £SOO, the Bank being secured by mortgages over . bis residence and stores. About April 10, as he wanted accommodation for £12,000 or £13,000 to enable him to purchase grain, he arranged with the Bank Manager for further advances, the security to be. given by him being the storage receipts for the grain which he purchased. He then commenced buying grain, and gave the Bank the storage receipts for 13,000 sacks of wheat and 2000 sacks of oats. Some of these receipts he had since got back. From the beginning to the end of the 1889 season he purchased 19,618 sacks of wheat and 5539 sacks of oats, and he received 8565 sacks of wheat and 1888 sacks of oats on storage for farmers. The grain received on storage was covered by receipts given to the Bank and other people. Witness stated the firms to whom he sold the grain, and said that he had paid the whole of the proceeds into the Bank. The petty cash taken in the Tinwald retail store was not banked, hut paid away in wages, &c. Witness kept the cash books of his business. His books were not balanced before he filed. Was not aware that he had received £2659 during the past grain season which he had not paid into the Bank. He had paid into the Bank every farthing he had received on account of the sale of grain. Witness purchased grain from Andrew Dawson, the price agreed upon being £I2OO. Had paid £3OO on account. The grain not paid for was to be held in the store to Dawson’s order till paid for, and witness was not to deal with it in any way. Bought -grain from George Gilmour, the price to be £505. It was arranged that he was to sell the grain and pay Gilmour out of the proceeds, notwithstanding that the storage receipt specified that he was to hold it to Gilmour’a order. Sold the grain and paid Gilmour £325 19s Bd. Bought wheat and oats from Tirwl» on similar terms tothose arranged with Gilmour Had paid for the wheat but not When he filed he had about SOT sacS of wheat and 1888 of oats in the store. All this was practically covered by farmers’ storage receipts, and there was no •_ tiinrn Missssiit that set forth m aadt^by

Dawson, Gilmour and Body. That wheat had been shipped to Clark Bros, his sons, in Sydney and the proceeds paid into the Bank in reduction of his overdraft. Paid nothing to Dawson, Gilmour or Body on account of the grain he shipped to Sydney.Had informed the Manager of the Bank that some of the grain shipped to Sydney represented the Bank’s grain. About <£2700 had been paid into the Bank on account of the grain sold, hut witness had drawn cheques on it, therefore his overdraft was only reduced by about £7OO. Gave a receipt to the Bank of New South Wales about June to cover five hundred sacks. Dealt with the grain and paid the proceeds into the Union Bank. Did not give either of the Banks to understand that the grain was to remain in store till the amounts were paid. Did not let the Bank of New South Wales know till the end of December that their grain was not in store, but he never shipped or sold grain without letting the Union Bank know. Knew one Smith, over whose he held a second mortgage, the first being held by Harman and Stevens. Got a bill from Smith to pay the interest on the first mortgage. Discounted the bill and paid the proceeds into the Bank. Did nob pay the first mortgage, because the arrangement was that he should not pay till the bill had been met. The wheat held for Dawson and others was mixed with that of the Bank for purposes of grading, and could not bo identified by the owners. Gave his son and his storeman to understand that the wheat was his. [A letter was here put iu, written during the absence of the witness in Sydney, by his son and the storeman, to the effect that they would not move the Bank’s wheat without the Manager’s authority.] Witness kept no letter book. By Mr Fisher: Kept a copying contract boob, but took it with him to Sydney to asssist him in squaring up a difference with Dalgety and Co. Had no direct authority to deal with Dawson’s grain, but could only pay him by selling the grain and paying him out of the proceeds. Up to May 2 last, witness had no difficulty with the Bank, but the Manager told him then that he could nob pay any more of his cheques on account of grain. Witness had then made all his contracts, and he said some arrangement would have to be made to pay the farmers. That day witness paid in a draft for £IOOO, and he succeeded in making an arrangement that ha should be allowed to draw cheques to that amount and to the amount of any future payments into the Bank. Told the farmers, Dawson, Gilmour and Body among them, the position, and communicated the arrangement to them, by which ho was to sell their grain, and pay them as the sales were made. At the commencement of the last season, witness considered he was worth £3500. His purchases were made when grain was high, but the market soon after collapsed, and, as a consequence, he lost about ninepencea bushel on his purchases of wheat, and more than that on the oats. If the opening prices had been maintained iu Sydney, he would have come out with a small profit. Kept the same books in his business as when he was employed by a large firm of East India merchants. Eelied on the arrangement made with the Bank on May 2 to pay farmers as the wheat was sold, and proceeds were paid in, otherwise he would not have shipped Dawson’s wheat.

A. H. Shury, Manager of the Union Bank at Ashburton, said that Clark had arranged for accommodation to purchase grain, the overdraft to be covered by grain receipts to the value of £IOOO over the amount of the overdraft. Clark was to deal with the grain as he pleased. He was to pay the proceeds into the Bank, and receipts were to he released to a corresponding value, the Bank still retaining receipts for £IOOO worth more than the amount of the overdraft. To his Honor: Clark had full freedom of the disposal of the grain as he thought beat for his account.

To Mr Harper: The receipts retained by the Bank on August 31 were for 5500 sucks wheat and 2000 sacks of oats as against an overdraft of £4600. Clark gave witness to understand that this grain was in his store. The account was finally stopped in November, when Clark refused to deliver the Bank’s gram. Witness went to the Tinwald store, and saw the storeman and Clark’s son, and found that some of the Bank’s gram had been shifted. The witness was cross-examined at great length by Mr Fisher. In the course of the cross-examination witness said that he had discovered that Clark must have received somewhere about J 22000, for which he had not accounted to the Bank. Knew this from payments which Clark’s books showed he had made. Evidence was also given by G. Gilmour and A. Dawson, who sold their wheat to Clark, by W. Horne, who investigated the bankrupt’s affairs, and by the DeputyOfficial Assignee. Mr Fisher called John Clark, son of the bankrupt, and J. A. Clothier, storeman for the bankrupt. E. W. Jenkins, Manager of the Bank of New South Wales at Ashburton, was called by the Court. TTia Honor characterised some of the proceedings of the bankrupt as most reprehensible. The evidence led did not, however, bring the bankrupt’s case under the heads of any of the charges brought against him, and the charges would therefore be dismissed.

Mr Harper asked that the examination be kept open. Mr Fisher strongly objected, but his Honor directed that the examination should be kept open.