A WARNING TO INSOLVENT TRADERS.

New Zealand Herald, Volume XXIII, Issue 7826, 21 December 1886, Page 5

A WARNING TO INSOLVENT TRADERS.

[BY TELEGRAPH — ASSOCIATION.] Dunkdin, Monday. In the Bankruptcy Court to-day, Hugh Mitchell, of the firm of Morrison and Mitchell, lately carrying on business, was sentenced to seven days' imprisonment for a breach of the Bankruptcy Act. They started business with a capital of £100, and that was borrowed, and out of it £50 was paid for a license. Daring seven or eight months they incurred liabilities amounting to £735 with assets of only £100. Justice Williams said at the time Mitchell contracted the debt of £35 to Lightband, Allan, and Co., on 12th October, the firm of Morrison and Mitchell was, as a matter of fact, hopelessly insolvent. The liabilities amounted to £742, and the assets consisted of stock which had realised some £70, and book debts which were nominally set down as worth £150, but which would not realise anything like it; in fact, the total amount which the estate was likely to realise was under £100. Under these circumstances Mitchell contracted the debt in question on behalf of the firm. It could not be said that he could hare any reasonable or probable ground of expectation that they would be able to pay the same> He therefore came within the terms of sub-section 2 of section 117 of the Act of 1883, and to bring him within the terms of that section it did not appear to be necessary that he should have known the state of the firm's affairs. The section made it an offence if a debt was contracted when at the time the debtor would have no reasonable or probable ground of expectation of being able to pay the same. With regard to the other partner the case seemed somewhat different. No doubt Mitchell was agent for Morrison, bat it did not follow that because one partner is agent for the other he is such an agent as to bring him within the clutches of what is practically the criminal law. In order to make the section apply to Morrison, it must appear that he possessed a knowledge of the transa* tion, or took some part in it, or afterwards assented to it. He might have done so, but they had no evidence of it. The order would be that Mitchell be imprisoned in the common gaol at Dunedin for the term of seven days, without hard labour.