W. J. SUITER AND CO'S BANKRUPTCY.

New Zealand Herald, Volume XXV, Issue 9103, 11 July 1888, Page 6

W. J. SUITER AND CO'S BANKRUPTCY.

MR. SUITER'S STATEMENT. HOW THE FIRM'S LOSSES WERE CAUSED. A meeting of the creditors in the joint estate of W. J. Suiter and F. L. Protheroe (W. J. Suiter and Co.), brewers, was held yesterday at the office of the Official Assignee, Mr. Lawson presiding. The debtors were present, with their solicitor, Mr. T. Cotter. There was a large attendance of creditors :—Messrs. C. Sutton (Sutton and Co.), L. Ehrenfried, W. Morjan, M. Gallagher, Thomas Mahoney (E. Mahoney and j Son), W. Edgerley, Morrison, Burton (Colonial Bank), Bailey, Carpenter, R. Stevenson, Swinnerton, and others being present. Dr. McArthur appeared for Messrs. Sutton and Hancock, Mr. S. Hesketh for Mr. Ehrenfried, and Mr. J. B. Russell for the Colonial Bank. Mr Lawson read the sworn statement of Mr. W. J. Suiter, which was very long, and showed that in October, 1881, conjointly with Mr. Duncan Macnab, he commenced the erection of a small brewery in Newmarket, upon an acre of land obtained upon a lease of 40 years from Mr. Thomas Hancock on a sliding scale rental, and they commenced business under the style of D. Macnab and Co. He (witness) had no capital at that time, having been previously employed for two years at Messrs. Brown, Campbell, and Co.'s brewery, on wages, upon which he had a large family to maintain. To start business he borrowed £150 from his wife, who had money left from some properties she formerly owned in Eden Terrace. The balance of the money required to make up his share of the requisite capital, viz., £250 or thereabouts, was procured from the sale of his library, some of his wife's furniture, and also bis daughter's piano. Mr. Macnab put in a similar amount. To this capital they added £600 borrowed from Messrs. Hancock and Sutton, who were then, and are now, carrying on the business of maltsters. This money was lent on the conditions that Suiter and Macnab paid 10 per cent, per annum, gave a mortgage or bill of sale over the plant and stock, and dealt exclusively with them for malt. They consented to this upon a further condition that the mortgage or bill of sale should not be which was agreed to. A start was made to brew in the month of December, 1881, but owing to the quality of the malt being inferior, slow progress was made. It, however, improved as time went on, and the prospects seemed good, but only a few months elapsed until they were induced to purchase a 9£ years' interest in the lease of the Bricklayers Arms Hotel, in Chapel-street, for £1000 cash, upon the understanding that it was doing a large retail beer trade. On completion of the purchase, however, they ascertained that the retail trade of the hotel was, comparatively speaking, small, but that instead the then proprietors had been doing a large wholesale business, and that, too, principally at night by the removal of casks from one hotel to another, which discontinued immediately they (Suiter and Macnab) took possession. They therefore lost not only their purchase money, but suffered many subsequent losses of various amounts, from £60 to upwards of £300, besides being compelled to pay more than double the rents they bavs latterly been able to let it for. £500 of the money required to complete the purchase of this hotel was borrowed from or through Messrs. Hancock and Sutton, and this increased their liability to that firm. In the summer of 1882-3 they (Suiter and Macnab) had a run of bad malt to brew from, which proved disastrous to their business, and was the means of enormously increasing their liabilities much so, that in May of 1883 Messrs. C. Sutton and Co. threatened to wind up the firm. On the 30th June a meeting took place between Messrs. Hancock, Sutton, Macnab, and witness, at which the latter was pressed by the three to take over the concern. He at' first refused, seeing there were pressing liabilities to the extent of £850 requiring immediate payment, besides bills payable, and C. Sutton and Co.'s large amount, and nothing to pay with, excepting £160 book debts and £100 stock-in-trade. When, however, witness ascertained that Messrs. Sutton and Co. had secured the services of a new and experienced maltster from England, and that a friend was willing to lend £700 to witness, he (Mr. Suiter) consented to take over the business with all the liabilities. He recommenced business as W. J. Suiter and Co., and he soon succeeded in increasing the sales to £1200 per month. Mr. Macnab, however, had refused to sign the transfer, and. having failed in business at Gisborne, had put down as an asset for his creditors his interest in the brewery, valued at £1400. Witness disputed his claim, and subsequently purchased his bankrupt estate. The business flourished after Mr. Macnab's retirement, and in May, 1886, with a view to increasing the business by introducing more capital, and probably securing a few tied hotels, witness Bold onethird interest in the concern to Mr. F. L. Protheroe for £1700, between £1300 and £1400 of which he (Mr. Suiter) lent to the business at 5 per cent; £200 he paid to his wife in repayment of the loan by which he started in business, and the other £100 he had not yet received. Advances had been made to various hotels, but with one exception had resulted in loss, and the firm had suffered U. the extent of £1400 by this means during the past two years, irrespective of the £1500 lost in connection with the Bricklayers' Arms Hotel, and their bad trade debts for the same period had been £1000. During the twelve months preceding April of the present year the firm had been supplied with very inferior -grown malt, it being impossible to produce saleable beer, and this resulted in a very large number of returns, on which a duty of 3d per gallon had been paid, and other heavy expenses incurred. On two occasions, in the presence of a Customhouse officer, there were run out into the gutters of the brewery 157 hogsheads of ale, to the value of nearly £600. The firm estimated their losses during the past 12 or 15 months from the use of bad malt at about £5000. While thev were receiving good malt they did a very large bottling business, their beer in bottle being considered excellent; and so great was the demand for it that they could not get it ready quickly enough. Another loss of over £1000 was occasioned by the sale of the Carlton Club or Jubilee Hotel. Through the .determined opposition of opposing parties, the first license granted was quashed, consequently, money could not be borrowed upon the building, and a large expenditure was necessary for legal expenses, besides the heavy cost of land and building, amounting to nearly £5000. The immediate, of the firm's filing is owincr to Sutton and Co. having entered into possession of their brewery, under a bill of sale given by Macnab and Co., in 1881, and which had never been registered. They closed the premises, forbid any business to be transacted, and refused admission to any of the employes to clean the plant, or do anything in connection with the brewery. Messrs Ehrenfried, brewers, obtained judgment against the firm for rent and insurance on the Bricklayers' Arms Hotel, but having entered execution in the private houses of Suiter and Protheroe, they found that in each instance the furniture belonged to the debtor's wife. They then, conjointly with Messrs Sutton, filed a petition in the Supreme Court, to have Suiter and Protheroe adjudged bankrupts. In justice to the general body of creditors the latter took the initiative, and themselves petitioned. They had previously offered 10s in the £1 cash to their creditors, the principal of whom however, refused to attend the meeting at which the offer was made. Owing to the action of Messrs. Sutton and Co., the plant would necessarily, for want of cleaning and attention, depreciate in value, and become musty, and. meanwhile the business was simply ruined. Debtors were advised that there was a good action at law for damages against Messrs. Sutton and Co., but they preferred to submit the matter to their creditors' consideration. Iheir liabilities were as follow — Unsecured debts, £5754 17s 2d ; secured £2043 • the estimated value of the securities being £4220. he assets were estimated to be •— btock-m-trade and bond warrants, £850book debts, £1500 ; plant, working gear' sundry shares, and fourth mortgage en the Carlton Club Hotel, £2603 13s 6d ; and the surplus from securities in the hands of secured creditors, £2177: total, £7130 13s 3d, or a surplus of £1375 ICs Id. lie last balance was struck on the 31st December, 18S7, when a loss was shown. By reason of the depreciation of the property and business, caused by the recent I

action of Messrs. Sutton and Co., debtors were not now inclined to "renew their offer of 10s in the £1, but "they would make mx offer, if desired, subject to being free to purchase malt where they pleased. During the year 1886, they purchased the freehold of tn<S brewery site and the house in which witness lived, and hence their indebtedness to Mr. Thomas Hancock, who was secured to the amount of £1656. Witness owned 250 shares in the Victoria Gold Mining Company, Coromaniel. / . Mr. Protheroe had confirmed this statement, though he could not vouch for the figures given. His (Mr. Protheroe's) private debts amounted to £54 17s id, and his only asset was a portion of the furniture in his dwelling-house. - ' . The Chairman said that Mr. Sims, the bookkeeper, was posting up the books, and would be ready with them on Friday. Until this was done, he (the chairman) did nob ace that they could do anything until then; except to generally discuss the business. With regard to the action of Messrs. Sutton and Co., he had sought the advice of Mr. Cave, and the latter had reported to him. Mr. Cave read this; report, which was to the effect that, unless an act of bankruptcy had been committed prior to the seizure by Messrs. Sutton and Co., the claim of the latter to the property and - goods was established, but not to the book debts. Mr. Suiter was examined by Mr. Russell as to the encumbrances upon the property known as the Jubilee Hotel He said that there was £2000 first mortgage upon it in favour of the Charitable Aid Board, executed some time at the beginning of the year. There were second and third mortgages, amounting to £700, both considered to be one mortgage. . , , Mr. Russell: It appears that the mortgage to the Charitable Aid Board was made on the 25th of April; on the same date, a mortgage was made from Suitor and Osborne to Osborne. How much was that for? Mr. Suiter: £200. Mr. Russell: There is a conveyance, Suiter and others to Alfred Burgess Griffiths. r "-- ■ Mr. Suiter : That was a conveyance of the freehold. The total consideration was £3650, including two mortgages, and Mr. Griffiths was the gentleman who bought the property. " Mr. Russell: When this conveyance of the freehold was made to Griffiths there was a mortgage of £2200. If the consideration was £3650 there would be a balance of £1450. Did that balance come to you ? Mr. Suiter : Not in cash. £500 were advanced out of a trust estate on this hotel; prior to that there was another £200 taken from' the same source to purchase Osborne's interest, which would make £700. Mr. Russell: On the same date it was mortgaged back to you, Suiter, Peter Stuart Brown. On the same day also a mortgage was made from Griffiths to Suiter and Protheroe. What was the mortgage to Suiter and Brown ? *

Mr. Suiter: £500, money received by instalments for the purpose of assisting to build the hotel. The mortgage from Griffiths to Suiter and Protheroe was given to cover the balance of purchase money. This was the fourth mortgage, £950. After some further questions, Dr. McArthur said he thought Mr. Suiter should be put on oath. Mr. Russell said he was quite satisfied to take Mr. Suiter's statement without oath.

Mr. Suiter was examined by Dr. McArthur, and said that no demand was made under the bill of sale by Sutton and Co. or Hancock. He agreed on June 11 that Sutton and Co. should enter into friendly possession of the brewery, and that Sims should go in on behalf of Sutton and Co. On the Ist of June he placed before Sutton and Co. a document to the effect that he wanted to consolidate their debts with them, and take other securities. : Mr. Suiter was questioned at some length as to the value of the stock-in-trade in the brewery, and replied that he did not know. With book debts its value was £2000. The malt was not worth much, but in the bottling department there should be value for about £1000. \

Dr. McArthur: You offered Sutton and Co. a third mortgage over the stock-in-trade, value £2000. Now, there is a grave discrepancy in the value as then put down and as it is stated now. ..

Mr. Suiter: I cannot tell you what it is worth now.

Dr. McArthur: Is it worth £500 ? ' Mr. Suiter : I wouldn't like to give £500 for it. - ■ -'

After other questions, Dr. McArthur asked: To what cause do you attribute your losses within the last two years ? Mr. Suiter: Well, one of the chief reasons was the using of malt from Sutton and Co., which was returned as unfit for use. ■ ■ '

Dr. McArthur: Did you complain of thi bad malt?

Mr. Suiter: Yes; Mr. Protheroe and I repeatedly complained, and Mr. Price, Mr. Sutton's maltster, came over and looked at the malt. One hundred and thirty sacks of malt, returned by Brown and Campbell as unfit for use, were . sent to auction and bought by Sutton and Co., and sent to us to make good beer of. More than one-half the time the malt was bad,

Dr. McArthur: Then why didn't you leave Sutton and Co ? >, .

Mr. Suiter: Ah, that's the point. Why didn't I leave Sutton and Co. , , Mr. Lawson thought that there was no good in detaining the meeting whilst this evidence was being taken. He suggested that the meeting be adjourned for a week, and in the meantime the debtors could be further questioned. Mr. Suiter here pointed out that the total debts during the past year were £3044 ss, and the loss from the use of bad malt was £981, or a total of £3925 3s. The meeting was then adjourned ; till Wednesday, the 18th instant, at eleven o'clock a.m.