"DEBTS FIRST DUTY."

New Zealand Herald, Volume LXV, Issue 19932, 28 April 1928, Page 14

"DEBTS FIRST DUTY."

A BUSINESS OBLIGATION. FARMERS FROM KEREPEEHI. OPPOSITION TO DISCHARGE. " The first duty of a man in business is to pay his debts," said Mr. Justice MacGregor in the Supreme Court yesterday when dealing with the application of William George Hopping, farmer, Kerepeehi (Mr. Leary), for discharge from bankruptcy. " Hopping changed his assets into another form," said Mr. Leary. "Very well,'' responded Kis Honor; " lie had no right to do so. There is far too much of this sort of thing. He should have paid his debts first." Hopping's was the second of two very similar cases that came before the Court, in which two farmers at Kerepeehi, after getting into difficulties with their mortgagee, walked off their farms and entered into arrangements for the purchase of other farms. The first case was that of Ronald George Mcintosh (Mr. Leary), whose application for discharge was opposed by Mr. Ilaigli on behalf of a creditor.

Mr. Haigh said that at a time when bankrupt must have well known his financial position was bad ho entered into an agreement to purchase a now property. Ho paid a £2OO deposit and gave a bill of sale over stock worth from £7OO to £9OO, and also over his furniture, and, indeed, over everything he Having completed all these arrangements he promptly walked off the property and took his stock to the new property. Last October he was declared bankrupt o::i petition. Writ by Official Assignee. As a result of his examination by the official assignee a writ had been issued against the man from whom the new property had been purchased, claiming that he held property on behalf of the official assignee. His Honor said that if the official assignee had issued a writ he could not give the man a discharge until that writ had been dealt with.

Mr. Leary said the debtor told a very different story. It was a case of a mortgagee who refused to readjust prices in accordance with the deflation of land values. Altogether, debtor had 6unk £3OOO in the property in different ways. The creditors had security virtually equal to their debt. The ostate would pay in any event over 10s in the £. Mr. Haigh said Mcintosh had endeavoured to make away with his property. Instead of calling his creditors together lie gave his property away to a third party. His Honor said it would bo wrong for him to grant a discharge before the action by the official assignee to recover the proceeds of certain stock and chattels sold by bankrupt shortly before the bankruptcy had been decided. It had been suggested this was a fraudulent device to defraud creditors. The man might be quite innocent, but he would adjourn the matter for three months pending the result of proceedings already taken by the official assignee. " Only the Mortgage Left."

Mr. Leary's application for the discharge of Hopping was.also opposed by Mr. Haigh. Counsel said the circumstances were the same as in the other case. The man walked off the farm and gave away stock worth £4OO. When he left the property he took practically everything. Hi's Honor: Everything except the mortgage, I suppose. " That was about the only thing ho left, sir," said Mr. Haigh. The bailment over stock valued at £4OO was going to be the subject of an action, as in the other case, on the ground that the bailment was defective. It was quite clear the man endeavoured to defraud his creditors of his assets, and with that end in view he took his chattels and entered into an agreement to purchase a new property. Mr. Lcary characterised as incorrect the statement that the stock had been given away. Finding that; his mortgagee would not meet him Hopping bought another place and put in his stock as deposit. His Honor: He goes away without paying his mortgagee and buys a new farm. Surely that is wrong. The very thing an insolvent should not do. Mr. Leary: But is it an offence? His Honor said he could not; say it was an offence until it had been tried, but he had to look at the whole conduct of bankrupt. He walked off his farm and bought a new one with assets which really belonged to his creditors. Until this transaction had been cleared up he was not' going to grant a discharge. He would adjourn the application for three months to allow further inquiry as to the conduct of bankrupt. By that time the official assignee would be in a position to put in a more specific report.