THE DARBY BANKRUPTCY

New Zealand Herald, Volume XLVIII, Issue 14689, 25 May 1911, Page 6

THE DARBY BANKRUPTCY

FORMAL CONVICTION

RECORDED.

ENDS OF. JUSTICE SATISFIED.

AN OVER-SANGUINE TRADER.

A FEW months ago Walter Francis Darby, well known in business circles in Auckland, found himself in financial difficulties, and had to file his schedule. The result of a keen scrutiny of his affairs was that a prosecution was entered upon the grounds that ho had committed two breaches of the Bankruptcy Act—one that lie did not keep such books of accounts as are required by the statute, and the second that he had incurred -certain debts without having reasonable or probable grounds of expectation of being able to pay those debts, in addition to his other liabilities. When tried before the Supremo Court in Auckland the jury found him guilty as charged ; and when tin- matter was referred to the Court of Appeal, Their Honors the judges sustained the conviction.

Yesterday the defendant was brought up for sentence before His Honor Mr. Justice Chapman.

Mr. J. A. Tole, K.C.. appeared for the >own, and Mr. F. Earl, with him Mr, £. W. Burton, for the defendant.

A Statutory Impropriety.

Mr. Earl, addressing His Honor, said ho felt a keen sense of his responsibility to the Court, as well, as to the prisoner, in approaching this case. At no time during the progress of this case had there boon any suggestion of fraudulent, conduct on the part of Darby. There was ho attempt made to prove fraud, concealment, or trickerv, and there was nothing involved other than the. statutory impropriety that was charged against him. As to the other charge, in regard to the books that were kept, the answer was that books sufficient for the purposes of the business were kept, at first by " single entry,'.' and it appeared that during that period the business was not only solvent, but qui to prosperous. Latterly, "double entry" books were kept, and they were found to be all right, although they were somewhat behindhand. The bankrupt had always kept persons who were presumably competent to look after his books, and as ho was not a book-keener himself, ho relied upon them for the accuracy of his accounts. He was a salesman pure and simple—not a book-keeper— it was his success as a salesman that induced him to go into business on his own account. These books had not been kept with the object of concealing the bankrupt's position, or to -benefit any particular creditor to the disadvantage "of others. When financial disaster overtook the bankrupt, it was found that a full Bet of books, an accountant, and also a supervising accountant, had been kept. It seemed somewhat hard in such circumstances that a trader should find himself called upon to answer a criminal charge, ■ created by the Bankruptcy Act. Not a Case for Punishment.

Counsel submitted that it was a case in which no punishment at all should be inflicted. The learned Chief Justice had remarked, in dealing with.this matter, that it was not a bad case, and that, "although the reauirements of the statute were not fulfilled, thev were very nearly carried out, and that the failure of bankrupt's accountants had been more a misfortune than anvthing else." . The evidence showed that there had been no fraudulent intent, and no attempt to benefit himself or any of his creditors. Bankrupt was "carrying on a large business, which had outgrown his capital, and also his ability to manage it. He started with a small sum, but in four years' time his business had largely increased. The investigating accountant's report showed that he had lived a clean, orderly life, and took from the, business only what was absolutely necessary for his support. His business had been progressive throughout, and he had gained the confidence of merchants all over the Dominion on account of his excellent character, his known ability as a salesman, and his moderate mode of living. Counsel submitted that the conduct of the bankrupt in incurring debts simply amounted to the conduct of an over-sanguine man, but did not suggest that at the time the debts were incurred the bankrupt had no intention of paying them and there was not one of his creditors who really believed that the defendant did not mean lo pay all he owed. It was true there were large debts; but there were also large assets, even although there was a deficiency. There had been no attempt at absconding, or anv attempt at the embarrassment of the creditors of the estate, and also no falsification of the books or concealment of any kind nor any preferences given. The bankruptcy was a clean one, and the examining accountant had said "I find nothing shady in the business except the bad book-keeping." The bankrupt was not a dissipated man nor a gambler, but was hard-working, clean-living, decentminded ; one who had come to financial grief simply because he was over-confident and over-sanguine as to the prospects of his business. In conclusion, Mr. Earl pointed out that the amount of suffering the bankrupt had undergone and his mental distress were really out of all proportion to the offence he had committed. A Doctor's Evidence. Dr. Bedford, colled by Mr. Earl, gave evidence as to defendant's state of health. He said tho bankrupt was in a state of nervous prostration. He could not sleep nor eat, and was in a continuous state of restlessness and had lost two stone in weight. Dr. Bedford added that imprisonment would inflict lasting injury upon the defendant's health. Recently it had been necessary to watch him closely, and it had been impossible to tranquilise him without having recourse to drugs If he was subjected to any further suffering it would have a very serious effect upon his nervous system and bodily condition. A Man of Unimpeachable Character. Mr. Earl produced a document signed by 120 of Darby's creditors, representing some £9000, which stated that for the last 15 months the bankrupt had had to endure the real punishment of suspense, and that he bore an unblemished character. His Honor: 1 shall assume that he is a man of good character—that is not disputed, is it Mr. Tele? .Mr. Tole: No sir; we say lie is a man of unimpeachable character. A Sentence Recorded.

His Honor, in passing sentence, said he did not think it. necessary in this ease to inflict further imprisonment; but ho did think it necessary to record a sentence. The accused having hitherto borne an unblemished character, no doubt felt his position very keenly. The offence was one which the Legislature for wise and good reasons had chosen to treat as of a penal character, notwithstanding that- in this case it was committed without fraudulent intent. The finding of the jury did not show fraud, but that there was carelessness. The accused was himself deceived by his own books. But prisoner's action in dealing in accommodation bills was reprehensible. The mitigating circumstance was that while Darby was struggling along lie was doing his IxVst for all his creditors. It struck 11 is Honor that it must have been a very painful experience for a conscientious man of prisoner's somewhat high-strung nervous temperament, to pass through what had befallen him during the past 12 or 15 months. The statement of Dr. Bedford that prisoner had lost two stone in weight was indicative of the distress Darby had suffered. He had already been severely punished, and His Honor did not think the intention of the law called upon him to do anything more than record sentence against tho prisoner.

Sentence of Iwo months' imprisonment, without hard labour, to date from the conviction (now some three months ago) was recorded.