BANKRUPTCY COURT.

Manawatu Standard, Volume XLI, Issue 8300, 3 June 1907, Page 2

BANKRUPTCY COURT.

A DRAPER BEFORE COURT

Two informations under the Bankruptcy Act were preferred at the Wellington Magistrate's Court on Friday afternon, against Arthur Eley Waugh, formerly of Palmerston North, draper, but noW of Awahuri, i who was adjudged a bankrupt on 6th February. 1907. The informations alleged (1) tl la t; bankrupt could not have had, at the time his debts were contracted, any reasonable Gr probable ground of expectation of being able to pay them, as well as other debts; (2) that by a false bal-ance-sheet he obtained property oil credit from Archibald Clark and Sons, Ltd., and other creditors, and had not paid for them. Mr Myers prosecuted, and Mr Harden defended. In opening the case for the prosecution, counsel said that defendant started business in Palmerston North in October. 1905. wi£ pra otieftlly no vw_al. He borrowed something like £150. Subsequently he represented to one of his principal creditors that he had a balance-sheet prepared, and made use of it to obtain further credit. The balance-sheet showed he had been making a profit, and it showed a surplus of something like £522. As a matter of fact, defendant had been carrying on business at a lass, and instead of there being a surplus there was a deficiency The borrowed money had disappeared, and part of the creditors' money as well. Defendant went on getting credit after that date, and on the strength of the balancesheet. Archibald Clark and Sons, counsel said, would never have given him any further credit but for the apparently healthy condition of affairs. Defendant, according to counsel, went on incurring debts of which there was no prospect of' his being able to pay. Defendant had been publicly examined, and the notes of his evidence at the public examination would be produced in these proceedings and used as evidence. After several witnesses had been called, tlio proceedings were adjourned until 11 o'clock next morning.

On resuming, Mr Harden, for the defence, submitted that the defendant had practically no case to answer. His Worship would realise that the main evidence against accused was that given by himself in public examination. Defendant had secured goods to the volue of £140 since September to 6th February, the date of his bankruptcy. In September defendant secured the services of an accountant in Palmerston North and paid him in goods and cash to go into his affairs. This balance sheet showed him £522 to the good. Subsequently he found that his position was not as good as the balance sheet showed, he at once communicated with his creditors in Wellington. One firm asked him to come to Wellington regarding his affairs. He did so and acting under its advice filed the schedule. According to the evidence taken at the public examination defendant was misled by the accountant whom he engaged. His Worship observed that the acdid not certify as to the stock, but relied upon some expert. He was not supposed to go round the stock and see that it was equal to the value represented. Counsel, continuing, said the balance sheet was made up on a false basis. A certain amount of stock was in transit and an assistant of the defendant took stock from the shelves and from the invoices—thereby "double-banking." Defendant had had no commercial training. No doubt he was foolish and did not face his position properly, and did not take his stock properly, but at the same time he was not guilty of a criminal offence. Whatever fault he did make was one of error.

His Worship said he was satisfied that defendant knew he was unable to go on, and he was sorry to say that defendant had the leading hand in drawing up the balance-sheet. The auditor had to depend on someone else; in this case he was depending on Waugh. In complying with a request from one of his creditors, he furnished the balance-sheet, and, as pointed out by Mr Myers, he should then have been exceptionally careful in preparing it. Defendant would bo convicted and ordered to come up for sentence when called upon. Mr Harden said he hoped to announce in future some repayment would be made to the creditors. His Worship expressed the hope that defendant would be in the position. He would not be the first to do that. Many honourable men in business had lain by for years, and, working hard, eventually paid everybody.—Post.