SALE OF A NEWSPAPER

Northern Advocate, 18 August 1931, Page 8

SALE OF A NEWSPAPER

CLAIM FOR £2OO DAMAGES COURT PROCEEDINGS. LENGTHY HEARING. The hearing of a claim for £2OO damages was commenced in the Whangarei Magistrate’s Court yesterday, when Victor Ree, a journalist of Whangarei (Mr Trimmer), proceeded against Vernon Venables, a printer of Whangarei (Mr -Baird). Plaintiff claimed that on January 13, 1931, he entered into an agreement to purchase from defendant the business of the defendant known as the ‘ ‘ Argus” Printing and Publishing Company, being carried on at Whangarei. The sum of £IOO was paid in cash and the further sum of £250 was secured, by an instrument by way of security over the chattels purchased.

The plaintiff stated that he was induced to enter into the transaction by the representation of the defendant that the average weekly profits from the business were £l2, that he was further induced to enter into the transaction by the” representation of the defendant that the average turnover for the business was £ll3 a month for the six months prior to the sale and that the average turnover during the period of business up to the time of the sale was £llO a month. The plaintiff stated i that he was further induced to enter into the transaction by the representation of the defendant that the valuation of the business was £6OO. and also that the plant was in good order and complete with all accessories. Furfhef inducements were said to be that there was a goodly list of persons who paid for the newspaper, that there was a substantial goodwill in the business at the time of the negotiations between plaintiff and defendant, and that the greater part of the receipts were from regular customers. Plaintiff asserted that the representations were, to the knowledge of the defendant, false and fraudulent, and were made by him the intention of inducing the plaintiff to enter into the transaction. The plaintiff was said to have suffered .grave loss and damage by reason of alleged misrepresentations, in that Ee had entered into a business entirely different from that represented and warranted by defendant.

Accordingly plaintiff claimed the sum of £2OO damages, costs and expenses incidental to this action, and such further other relief as the Court may seem meet. The hearing commenced at 9,30 a.m, and continued with one adjournment till 5.30 p.m. Mr Trimmer said the action was for misrepresentation which was claimed to be fraudulent. He outlined the general facts of the case.

Victor Bee, the plaintiff, was then called, and testified as follows: "I first got into touch with Venables just before last Christmas, when I saw an advertisement in the Auckland ‘Herald' of a jobbing business and weekly newspaper for sale. I wrote to the address given in. the ‘Herald’ for particulars, and on January, 2 received a reply from Venables, setting out particulars of plant (letter produced), and stating that the business and plant were at WhangareL He gave the, valuation of the. business as £6OO, and stated that the ‘monthly turnover of the business was £ll3. The price he .asked was £375. He stated the business was regular and steady. I wrote to him on the same date, asking if he were prepared to accept terms, the number of subscribers of the paper, the number of hands employed and what they were paid, . what were his reasons for selling, what he had drawn weekly out of the business, and what the actual profit was. In this letter I told him I was* not a compositor, and asked him to state what the business would return if I had to employ someone to do that portion of the work. “He replied stating he had a girl at £3 per week employed and a boy at £1 5/. But he did not mention that ho had Mr Thornton also on his salaried staff. Ho stated he had drawn £7 per week out of the business, and that the actual profit was £l2 per week. He did not state in the letter his reasons for selling, but on reading the paper he had sent T saw that he had marked the death notice of his wife. (Paper produced). He also stated that he had purchased a home out of the business. ‘ ‘ The proposition did not appeal to'

me at the time, and I decided to go no further in the matter, < A few days later A r cnables rang me up, and said I was missing the opportunity of a as, since the death of his wife, he could not concentrate on the business, and would be glad if I would iiome up, when he would convince me that it was a great proposition. “I came to Whangarci on January 13, and met Venables at the office. He told me again that he had cleared £l2 per week out of the business. He sent (he boy out of the office while he talked to me. I thought the matter over that night, and decided not to buy the business. When I told him this next morning he took me along to a seat, and told me he was not a journalist, but if a good writer got hold of the paper it would be a gold mine. He referred to the death of his wife, and said it had been a frightful blow to him, and that he could never be the same man again. He spoke so much in this strain that I thought he had a genuine reason for selling. “He said he would drop the price to £350, and that I could have it on a

deposit of £IOO, with two and a half years to pay. Ho said he would not dream of selling the business only his wife’s death had upset him so much,* 1 paid him £5 to clinch the sale, the remaining £0") to be paid the following Monday, when I would take possession, and pay the business ■ off in quarterly amounts. He said ho would remain with me for six months, so as to ensure the business remaining with me. It would bo bettor for me to employ him, lie said, than a stranger, so an arrangement was fixed up accordingly.

“I went back to Auckland, and came back on January 17. The first week I let him run the business in order to have a look about. The following week, when I asked him to lot me see the contracts which he had told me he held, all of them for twelve months, he could only show me one. When I asked him about the -other big advertisements which he had said he had on a twelve,months’ contract, he said they were' quite all right, but I would have to see the advertisers. When I did see the -advertisers they told me they had never had contracts with the paper at all.

‘‘During February, which time Yen-' ables was working for me, I found things most unsatisfactory. He, was the laziest and most, careless worker 1 had ever seen. When, at the end of February, I found the business had' produced only £l9 7s 8d in jobbing, U taxed him about it, and also about the paper.

‘‘l had found out in going around that the ‘Argus,’ which was the paper he sold me, was looked upon with contempt, so much so that I had hurriedly to change the name to the ‘ Mirror. ’ Most of the advertisements he. had in the paper when I took it over were dummies.

‘‘l told him the business was not what he had represented it to be, and that he would have to get out. I told him, too, that I was going to see what I could do as regards getting my money back.

“About a fortnight before this he had shown me a job, a tourist’s guide to the North, which was being j>rodueod by him when I bought the business, but of which he told me nothing at the time. The job and the revenue which would come out of the advertisements in it (about £6O I should say) rightly should have been mine, as I had bought the business and all connected with it. Ee told me it belonged to another man. This I afterwards found out to be incorrect. He asked mo how much X ■would charge to do the job, s but I told him I would not give him a price, but would charge him what the job was worth when he had finished it. The materials cost, over £6 and he took eight or nine days to do the job, so 1 charged him £ls. . “He left''my employ on March 7, and some days later I got a letter from Messrs Connell, Trimmer and Lamb, asking me in my own interest to pay any money due on tire business to them, as they had a bill of sale over the plant.

“ The manager of the Bank of N.Z. called on me, and wanted me to pay the money to him, but I told him 1 could not pay the money to anyone without written authority from Venables. He went away and came back with a letter he had got from Venables, authorising me to pay the moiiey to Connell, Trimmer and Lamb (letter produced).

“IVhen the account for £ls went to Venablesi he sent it back, stating it should be only £l2 10/, which he said was the contract price. I wrote him (letter produced) that there never had been a contract price, and that the £ls must stand. Letters addressed to the business were arriving almost every 'mail, and bn opening them I found them to be letters threatening legal action if long-standing accounts were not paid. On one occasion a demand notice came through the bank for £l2, which was due to a firm in Auckland by Venables. I was very much disturbed by these.”'

Books and Circulation. Cross-examined, witness said he did not know where Venables’ books were, and he only left the subscription book and receipt book. He showed him the Christmas number, but did not tell him no papers had been published since December 17. When ho took over the paper he altered the style from four columns to five, but it did not take more type, as he was getting some set in Auckland by linotype. He tried to make the paper more new r sy and interesting. Venables told him it was mostly an advertising sheet, for the main part delivered but he had several hundred subscribers and was printing about 1800 papers. The first issue of the “Mirror” was 2400 and delivered free, but witness then said that if the paper was worth reading it was worth paying for. The circulation was now about 400 paid, but it had dropped, though the paid circulation had increased.

He took over the concern as a jobbing and newspaper business. He had a canvasser on the job. On Venables’ advice he got Mr Brainsby and afterwards Mr Price. He told them to concentrate on the advertisements and pick up what jobbing they could.

Plaintiff said there had been a number of changes in the staff in the last six months. He denied, however, that he was difficult to get on with, and if good work - was done there was no trouble. Counsel for defendant said be would put it to plaintiff that Venables said he had ceased publication and would sell the plant, but not the good will. Plaintiff said the letter of December 30 disproved that. Venables did not disclose that he was being pressed

by the bill of sale holder over the plant he was selling to plaintiff. Second-hand Type.

E. E. Wright, of Whangarei, foreman of the jobbing department of the ‘‘Northern Advocate,” said he had been in the printing trade for 54 years. He said he inspected the plant and it would be correct to say that some of the plant was before his time, one machine being made by a firm that had been out of business for 35 or 40 years. The type was nil secondhand stuff.

Witness had worked- out the value of the plant and estimated it at about £lO2 10/. If contemplating buying, he would not give more than abo’ut £IOO for it. He had seen better machines sold for a mere song. The plant was also incomplete. The goodwill attached to such businesses, from what he knew of the. jobbing trade in Whangarei, depended on a question of price* As far as Mr Venables was concerned, witness had only come into contact with him in business, and he instanced a case of pricecutting from which he did not think much profit could have been made. Cross-examined, witness, said that on the small platen fair work could be produced. About half of the matter in one issue (produced) • was linotyped, bought ready made up. He could trace in the other matter defective founts.

Another Estimate. D. Wright, known as Ken Wright, a printer of Whangarei, said he had had 25 years’ experience.. He had been using the plant concerned in the meantime while negotiating for another business, and as the plant stood he would not care to give more than £IOO or £125 for it. The type was incomplete. He was under the impression that told him once the cylinder- machine cost him £2O, An Outside Man. C. R. Thornton said that on j about August 2, 1930, he was employed by Venables as an outside man. His wages were £3 a week, and iqovc if times became better. Venables: spoke to him ‘ twice about not being able to increase the amount owing to business not paying well enough. Witness thought that Miss Nathan, who was on the staff, was off for a few days on one or two occasions. Two or three times Venables said he could not pay witness’ wages, and asked him to wait. On one occasion witness lent Venables money to pay wages. ,

From what witness could see, the business was not earning £l2 a week (tyring the time he was there. There would not be much substantial profit, and he would not describe the business as prosperous. Venables’ prices were heavily cut. Witness did not know of any contracts* for more than a month, with the exception of one. The public did not likp the irregular publication of the paper. In December it “went to pieces,” and canto out late two 01 three times. He did not think there was any goodwill attached to the business.

It was not a live, going • concern when Ree bought it. Witness brought in about 30 subscribers, but he would consider a goodly list at between 300 and 500 subscribers at least. Venables was so careless about jobs that people complained that he did not retain custom. The work gained was intermittent and would not turn over anything like £ll3 per month. Witness estimated it at about £OO a riionth for everything.

•Cross-examined, witness said he knew Venables remarried two or three months after his first wife died.

BUI Of Sale. Phillip Connell, a solicitor of Whangarei, gave evidence in regard to the bill of sale. Fluctuating Employ. Nell Nathan said she was last year employed by Venables, though her employment was not continuous. There were a few occasions when she was put off because business was bad. She could remember that on one or two Occasions there was no issue of the paper. She could not say when they were missed.

No more evidence was submitted for plaintiff. Defendant’s Testimony. Vernon Venables, a printer of Whangarei, defendant, said when Eee viewed the plant all the books were on the table for his inspection and Ree later agreed to buy. This was put in writing. Defendant was selling the plant in the office as it stood. He had explained that a paper had not been published for some time, and when Eee paid the deposit plaintiff asked defendant to bring out an issue. This ho did on December 17, gnd it was issued gratis to everyone. »No charge was made for the paper or advertisements. On December 24 another issue was published under Eee’s direction. The next issue was by Eee as the “Mirror,” and Eee had then taken control.

Defendant said lie was with Eee for about six months, and Eee said nothing about the plant or lack of type. Eee said he was not doing much good on subscribers. Defendant assured Eee that the “Argus” was put through the jobbing books, 'and made no pretext that it was a paper, but merely an advertising sheet. In reference to the contracts, some were running on and were standing advertisements. He did not say he had any contracts. He had one contract in writing. There were nine firms which advertised continuously. In reference to arriving at the figure of £l2 per week, defendant produced

books showing that iu the period Juno

—December, 1930, the turnover was £725, a monthly turnover of £lO3 11/5, and the statement had been audited by Ramsay and Surinam The total weekly outgoings were £l3 0/3.

In the matter of the business being worth £6OO, he had had offers at £SOO, but was thou not prepared to sell. In his opinion, it was worth £6OO. It was wrong to say the cylinder machine had cost hhn £2O. He paid £55 for it, which was a cheap price, but he was. prepared to take a risk on it. He had had considerable experience in printing plants, and it was a good investment for the price.

The plant was in good order when Ree took over and had been doing defendant’s work satisfactorily. On the jobbing side alone, the average incoming per month over seven months was £42 16/. Ho had had no complaints- about jobs being late. Also in reference to borrowing type, it was a custom among printers to lend lines of type, as each man could not possibly carry all lines. He had had the plant three years and had had no trouble. When Ree. took over there was no shortage of type. He had any amount of type to do the work. In reference to subscribers,. Mr Thornton’s performance, in getting 46 subscribers was a creditable one, but defendant had never asked anyone to buy the paper. With 20 subscribers at the office, there was a total of 66, instead of the 27 alleged. Mr Thornton thought it a waste to give the paper away, but defendant was running it as an advertising sheet and had no time to keep ■ subscription books.

Defendant denied that he ever told Ree he had several hui/dred subscribers. He guaranteed to the advertisers about 2000 copies per week, and the advertisements were maintained well;throughout 4 the period. He did not sfell Ree. the goodwill. The first issue Ree put out was 1400 free, and he reduced the number to 375, saying if the paper was worth reading it was worth paying for. Ree also put the price of advertising up., Defendant said he ran the paper only as an advertising medium, but Ree changed it and made a great increase in the cost, of -production. Defendant’s issues averaged from to 9 columns qf hand-set matter, but Ree’s, first issues , contained 275, 30, 30, and 24 columns respectively. He increased the cost of setting three times. .

When someone complained about irregularity of publication, defendant pointed out that the paper was not paid for. , “Some Trouble.” Cross-examined, defendant said he was a discharged bankrupt. He had a business in Cambridge, which he sold. He admitted there had been some trouble over the sale of this, and as a result the agreement was cancelled and he agreed to pay back the £SO deposit. It was not correct that this man wag now threatening Mm. A judgment was taken 'out against him, but no order* made. Defendant stated at the time he was drawing £5 per week |ind had a home to maintain. He had personal, but no business liabilities. He had never owned the business, it be-' ing registered in his wife’s name as owner of the newspaper, so he could not sell the goodwill. He owned the plant, but not the business. He was the owner of the chattels.

“In His Wife’s Name.” Defendant was examined by Mi Trimmer in regard to the bill'of sale in this connection. Defendant said he' had a banking account in connection with the ” Argus” in his wife’s name. All the moneys did not' go through the bank. My Trimmer: “The position is Wht you did not make £l2 per ■ week profit?”—“Yes, but I never had more than £5 for myself.”

Mr Trimmer reminded defendant that six weeks later he told Bee he was drawing £7 per week.

Defendant said he did not know how he told him that.

Mr Trimmer also said that defendant told Ree was £350 insurance on the business, though it had lapsed.

Mr Trimmer asked if defendant wanted the Court to believe that it was because of his bereavement he desired to sell the business. Defendant said that was his reason, and not because he was being pressed by the mortgagee. He did not tell Ree lie wag being pressed by the mortgagee. He could not carry on, following his bereavement. He had married again. “Not Satisfactory.” Defendant was closely examined in reference to his books and the Magistrate said it was obvious that the books were not entirely satisfactory. Defendant admitted that in the bill of sale he said there was 12001bs of type and told Ree there was 1400 lbs, though there was no intention to defraud. He also admitted that he owed several small accounts for materials, etc. used .on his house. Mr Trimmer claimed it was misleading to say that defendant had renovated ami purchased a house out of his earnings. Defendant claimed that cofitras were earned.

At this stage defendant’s re-exam-ination was reserved pending the production of hi s bank pass-book. Canvassing Work. The next witness was then called. Arthur Todd Brainsby said he had worked for Eee, canvassing for advertisements and was partly successful, but struck a bad time. Eee gave him a guarantee of circulation of 1400 V .

for his first issue, "but none for tlio others. People did not advertise, because they did not ktiow the papei. Pee was opposed to a free circulation. The paper had not got a very good reputation. There was a suggestion that the concern might be turned into a company at £ooo as a going concern. Witness was pre-

pared to put money into it, and was satisfied good business wag being done. Venables was a very good eonr positor. Witness asked Ree if there was any opportunity of getting an interest, but Ree gave the impression he was going to build up a good business and did not want a partner with

a share. He thought the business was wbrth £3do to him. Adjourned; At this stage the hearing was adjourned till the next sitting of the Court, When defendant’s examination will be continued and Mr Surmanwill also be called.