PUKEKOHE FINANCES.

New Zealand Herald, Volume LIII, Issue 16268, 29 June 1916, Page 9

PUKEKOHE FINANCES.

BOROUGH'S LOAN POWERS.

RELATION TO BANKERS.

SUPREME COURT ACTION.

[BY telegraph. special CORRESPONDENT.]

Wellington, Wednesday. The borrowing powers of municipal corporations was discussed before Mr- Justice Hosking in the Supreme Court to-day, when an originating summons brought under review the position of the Pukekohe Borough and the Bank of New Zealand. Mr. 'I. F. Martin appeared for plaintiff borough, and Sir John Findlay, C., and with him Mr. J. L. Stout, for the Bank •£ New Zealand. Mr. P. S. Macassey appeared for tho Crown.

Mr. Martin applied for a declaratory order to say whether tho borough could legally borrow money from the bank, and the bank could legally allow plaintiff council to borrow to the full extent permitted ny the Municipal Corporations Act. Tho Court was also asked to say if ratepayers had power to authorise and raise a loan to pay on the overdraft of the corporation, a -j ~ not ' had the amount of overdraft paid off out of the loan to be treated as Still owing for tho purpose of estimating the amount the corporation is now entitled to borrow on overdraft; and whether tho limit imposed by the Act may be lawfully exceeded, provided that the overdraft upon March 31 does not exceed that limit. Mr. Martin pointed out that the limit of overdraft as fixed by the section referred to was the amount of the income ot the . previous year. The corporation had paid off its overdraft, £485, out of a fresh loan, amounting to £830), and haying expended the loan money, it was desirous of overdrawing its account for the current year up to an amount not exceeding the limit imposed by the Act. But doubts had been expressed by the bank, with which the borough still*had its account, as to tho right of the council to so overdraw- its account. Mr. Macassey said the Crown was interested m go far as it desired tc maintain the statute which circumscribed the powers of borough councils in tho interests of ratepayers. Sir John Findlay said the bank was only desirous of safeguarding it* own interests", and si the bank made advances in anticipation of loan 3 biing raised, and the ratepayers did not legally concur, the bank tack V ° r ° ' e n getting its money The Judge considered that in such a case —a risk of the bank would be due to the soilness of the bank's manager. Sir John Findlay said the point, as far as the bank was concerned, was whether the overdraft, having been once paid off out of loan moneys illegally raised, might t^xs.* 5 a habi ' iir fhe The Judge reserved decision.