THE COURTS.

New Zealand Mail, Issue 691, 29 May 1885, Page 21

THE COURTS.

COURT OF APPEAL. - May 20 and 21, 1885. (Before their Honors the Chief Justice, Mr Justice Richmond, Mr Justice Gillies, and Mr Justice Williams.) THE BANK OF AUSTRALASIA V. WILLIAM WILSON. In this case there were cross motions by the plaintiff to set aside the judgment for the defendant and enter a judgment for the plaintiff, and by the defendant, in case the plaintiff’s motion was successful, for a new trial on the ground of misdirection ; and both motions were removed, by consent, into the Court of Appeal. The plaintiff sued the defendant upon two promissory notes, dated 15th July, 1883, drawn in favor of the plaintiff for the defendant for £SOO each. One defendant pleaded—l. That the promissory notes were given with others by other persons to guarantee the account of one F. R. Jackson with the Bank, and that attached to them was the following memorandum :—“I/we do hereby admit that my/our promissory note dated the fifteenth day of February, 1883, for the sum of £IOOO made by me/as in favor of and payable to the Bank of Australasia on demand was given by mt/us to the said Bank as a continuing security, until withdrawn with the consent of the said Bank in writing for the ultimate balance that shall remain due to the said Bank from Freeman Rayney Jackson (in respect of transactions with the Bank after the 12th February, 1883) (hereinafter called the said principal) directly or indirectly upon the account current or on any account whatsoever of the said principal aud whether on private, joint or partnersuip accouut, inclusive of Bank interest, accustomed Bank charges, and all expenses incurred by the said Bank in consequence of any default in paj-ment of the said promissory note or any part of the moneys thereby secured, and I/we further agree that the said Bank may advance any amount beyond the sum of £SOO to the said principal, and that no payment or dividend received by the said Bunk from the said principal or from his/their estate or from any assignee or trustee of his/their estate shall be taken 'to be in reduction of my/our liability on this promissory note, aud I/we do further agree that the statement of the accounts in the books of the said Bank signed by the manager or actingmanager for the time being at Wanganui, or any account settled or stated by or between the said Bank and the said principal or admitted by tbe latter shall be conclnsive evidence as well against nn/us as against the said principal of the state of the account between the said Bank and the said principal.’’ But the Bank had arranged with the said F. R. Jackson that his old account should be reduced to £6OOO ; that he bhould liquidate that amount by monthly payments of £125 ; and that any bills held to the credit of the old account .which were dishonored through the makers becoming insolvent simuld be paid by the said F. R. Jackson ; that it was material to the defendant to know these facts ; that they were not disclosed to him ; and that large sums were paid out of the new accounc after the 12th February, 1883, to the credit of the old accouut. 2. That if an account were taken of the new account without the money improperly paid out of it, the new account would be found to be not overdrawn, or not to the extent of the defendant’s guarantee. 3. That the opening of the new account was a mere book-keeping entry, and that the defendant and his co-guarantors became liable, if at all, for the amount by which the indebtedness of the said F. R, Jackson to the Bank might exceed what it was on the 12cb February, 1883 ; and that, as a fact, the whole sum had been reduced by nearly £BOOO. 4. That the defendant signed the guarantee upon the understanding and condition that other promissory notes, amounting altogether to £6OOO, should be taken by the Bank ; but that security to the amount of £5500 only was provided. At the trial held at Wanganui before his Honor the Chief Justice and a special jury, on the 27th and 28th March, 1885, it was proved that the defendant held no comuDications with the Bank, that the promissory notes were brought to him by Mr Jackson, who told him that the guarantee was onlv to secure future transactions, and that he could be one of a number to make up £6OOO. He did not tell him of his arrangement with the Bank, which was as alleged in the plea. The issues framed upon the pleas were admitted, except as affected by the evidence above referred to, and only two issued were left to the jury, which were—“ 7. Was the agreement (between Jackson and the Bank) such as the defendant might in the nature of things expect to exist, the defendant being aware that Mr Jackson was largely indebted to the

Bank? ’ answered, “No and 15, whether it was stipulated between Jackson and the defendant that the notes should be effective as security unless notes to the full amount of £6000.. should be delivered to the Bank, to which the jury answered, “ Yes.” Mr I ravers aud IMr A., de B. Brandon, jun., for the plaintiff : Jackson’s letters being subsequent to the date of the promissory notes to the Bank are immaterial, and Jackson was not the agent of the Bank to make anv representations to the defendant. No special reference was made in the memorandum as to what transactions the Bank should hold with Jackson, and he could have drawn a cheque for the whole £6OOO at once. The dealings of the sureties were with Jackson alone, and he had no authority from the Bank to make any representations. Wilson must depeud on the construction of the memorandum alone. There must be a judgment for plaintiff for the whole amount, or an account must be taken, there was no attempt to deceive ; such am attempt must be made designedly to help the defendant, As to whether the defendant is liable for the items paid to the old account is merely matter of account, and not of fraud. As to the further defence, there was no evidence to support the proposition, and the statement was not a material part of the transaction. Wythres v. Labouehere, 3 De G. and J., 593 ; Pledge' v. Buss, Johns., 663. in the agreement between Jackson and the Bank there is only a 3mall portion affecting the sureties. It is not stated that the £125 is to be paid out of the new account, and it might have been paid otherwise. The paying ol bills dishonored by the acceptors would be a new transaction ; Jackson would then for the first time become liable, This payment ' did not interfere with Jackson being carried in. North British Insurance Co. v. Lloyd, 10 Ex.', 535. The surety made no inquity of the Bank* Mr. Izard, for the defendant : The agreement between Jackson and the Bank released the sureties. I he intention of the agreement with the defendant and the Bank was that Jackson’s old account was to be liquidated by the securities then held against it,* and to be held over, I he statement that the sureties were to be only liable for future transactions is a direct representation. A mere non-com-munication of facts material for tbe surety to know vitiates the guarantee ; Railton v. Matthews, 10 Cl. & Fin., 934. The statements of Jackson to Wilson bind the Bank. [Mr. Justice Richmond : How. did the debitlog of these accounts to the new account hurt the sureties, if they have not got to pay them ?] It used up the amount of credit which the Bank-..agreed to give,' and so prevented Jackson carrying ' on. Hamilton vWatson, 12 Cl. and Ein., 109 ; Lee v. Jones, 17 C.B, 482 ; Williams v. Rawlinson, 3 Bing. 71. In re Sherry : Londen and County Banking Co. v. Terry, 25 Cb. Div. Mr Bell on the same side : Ths first defence is founded on the groundot non-communication. Issue 7 wai* carefully framed upon the case of Hamilton v. WAtson (übi sup). The question was for tbe jury and not for the Court. Jackson s letter to the Bank was material to the contract of suretyship. Unless the guarantee were held void, the clause making the Bank accounts final and conclusive would prevent the sutety opening the matter at all. The agreement to pay all dishonored bills, when the acceptors became insolvent, might use up the whole guaranteed amount. Instead of the account being a free account, as the sureties thought, it was a contingently heavily charged account. It is unnecessary to charge fraud; non-communication is sufficient. Raiitoa v. Matthews (übi sup.) ; Pidcock v. Bishop, 3 B. and C., 605 ; Glynn v. Hurteli, 8 Taunt. 208Very little not said prevents the contract becoming valid, Davis v.London, Provincial, and Mariue Insurance Go., 47 L J., Ch. 511 ; Story on Contracts, vol. 2, sec. 1125._There may be a question behind the verdict, viz., materiality, [Williams, J. : But that must be proved by a jury, and the case would have to go back for a new trial.] The surety must judge as to the materiality. Holme v. Brunskill, 3 Q.8.D., 495, and the Court cannot hold a guarantee good pro tanto. Whitcher v. Hall, 5 B. and C., 267. The misrepresentation was accentuated by the words “ transactions after 12th February, 1873,” being in writing ; Stone v. Compton, 5 Bing. W.C ; , 142. The promissory note with the memorandum was not a negotiable instrument, Cholmley v. Darley, 14 M. aud W., 344, but it was delivered upon a condition, viz., that promissory notes should be secured to the amount of £6OOO. An agreement of this kind can be made on a condition, and biuds’everyone with notice of it. Bonser v. Cox, 4 Beav., 379 ; Evans v. Brtmridge, 8 De G, M. and G., 100 ; Pym v. Campbell, 6 E. and 8., 370 ; Davis v. Jones, 17 C. 8., 625 ; Wallace v. Little, 31 L.J., 0.P., 101 ; Gogerty v. Cuthbert, 2 B. and P., N.R., 170 ; Bell v. Ingestre, 12 Q. 8., 317. A document signed by a person under the impression that it is something else is wholly void. Jackson could not pass to the Bank anything more than he possessed. Vorley v. Cook, 1 Glff. 230 ; Ogilvie v. Jeaffreson, 2 Giff. 253 ; Awde v. Dixin, 6 Ex. / 869 ; Daniells, on Negotiable Instruments, vol. 1, 706 ; Guan v. North British Australasian Co., 7 H. & N. 603. Mr Travers, in reply : It does not affect the surety that only £5500 of biils were given. Cooper v. Twynam, 1 Tur. & R. 426. Judgment was reserved. Friday, May 22. (Before their Honors the Chief Justice, Mir Justice Johnston, and Mr Justice Williams.) REGINA V. WILLIAM WARING TAYLOR. This was a case reserved by his Honor the Chief Justice at the criminal stssions held in January last. The prisoner was indicted under the 74th sec. of the Larceny Act, 1867, with having converted to his own use a sum ot money (£700) entrusted to him as a merchant aud agent by one James May, with a direction, in writing, to apply the money for a certain purpose specified in the direction, namely, to invest in first-class security in such way as the prisoner should deem best. The facts of the case were shortly these : James May was a merchant residing in London, and the prisoner was his agent, holding a power of attorney in the Colony, but no evidence was given of the power of attorney. May was the holder of a large number of shares in the Bank of New Zealand, and on the 16th June, 1881, wrote a letter to Taylor, which contained the following passage :—“ I wish to inform you that I purpose directing the Bank of New Zealand to pay the next dividend, September dividend, to yourself for investment. I suppose the dividend will be as usual, and, if so, it will amount to £760, which please invest in such way you may deem.

best in first - class .security. , I observe the rate of interest now obtainable rules lower than formerly, but will invest on most favorable terms.” The Bank received no instructions from May before the transaction next mentioned, but about six weeks before the half-yearly dividend would, in the ordinary course, have been payable, the prisoner called at the Bank and showed the above letter, saying he had a favorable opportunity of investing the money, and asked that £7OO might be advanced in anticipation of the dividend. This the Bank did, placing the amount to the credit of May immediately after honoring Taylor’s cinque for the amount. The accountant of the Bank said be believed instructions had been received at the head office from May after the issue of the money to Taylor. Taylor’s evidence given before the Official Assignee was put in. in which he admitted having received the .£7OO, and applied it to the payment of debts of his own. The prisoner was convicted, and the questions reserved were whether there had been any entrusting of the money by Mav, and whether there was any direction to applv the money in a specified manner. Mr E. Shaw and Mr Kirk appeared for the prisoner ; the AttorneyGeneral and Mr Jellicoe for the Crown. Mr Shaw opened the case, and contended that May did not entrust the money to the prisoner as alleged in the indictment. Maydid not authorise the Bank to make the advance nor to anticipate the dividend. The letter to Taylor in no way bound May to do as he said he intended. May did not therefore entrust Taylor with the money, but the Bank did it at its own risk. The entrusting of the money by a third person does not come within the statute, and the entrusting of the money must be contemporaneous with the direction in writing. Keg. v. Brownlow (14 Cox, C.C. 217) ; Reg. v. Tatlock (2 Q. 8., D. 157) ; Keg. v. Cooper (L.R., 2 C.C., R. 123) ; Reg v. Newman (8 Q. 8., D. 706) ; Rex v. White f 4 C. & P. 46). The second point is that there was no direction ; there was no purpose specific in the letter. Taylor may have imagined his own business to be a first-class security. He would have been justified in paying the money into his own account until be found an investment. The letter was merely a direction as to what he wished done in the happening of a certain event, and a direction must be a conditional one. Reg. v. Bred : n (15 Cox C.C. 412); Reg. v. Golde (2 M. & R.. 426). The Attorney-General : There was evidence on both points to support the conviction. The money was May’s, and Taylor got it from May’s account, and May ratified the action of the Bank. Taylor himself admitted that the I money was not invested, but that the £7OO was May’s money which he paid away for a debt of his own, and this admission concludes him. [Mr Justice Johnston : No ; he may have been wrong ; we must look at the facts.] But there may have been other facts that the Court does not know that Taylor did when he made the admission. If Taylor’s admission cannot be eliminated there was enough to prove that it was May’s money. The Court must take that admission, unless Taylor shows he was wrong. It could not ha?e been paid by May; if it was May’s money paid by auyone'else for him, that is sufficient. There is evidence that the Bank subsequently received authority to pay to Taylor, arid this should operate as a ratification. Burn v. Henman (2 Ex. 167). On the second point, the direction was to invest, which was not complied with, and that direction was sufficient. Reg. v. Fullagar (41 L.T. 448). Mr Shaw in reply. Judgment was reservsd. The remaining case in the same matter will be heard on Tuesday next. Tuesday, May 26. (Before their Honors the Chief Jnstice, Mr Justice Johnston, and Mr Justice Williams.) REGINA V. W. W. TAYLOR. This was the second case reserved in the trial of the indictments against W. W. Taylor. The prisoner was indicted under the 79th section of the Larceny Act for the fraudulent appropriation of a large number of Bank of New Zealand shares, of which he was alleged to be a trustee for the use and benefit of others. The indictment contaiaed 75 counts, charging the prisoner with the appropriation of the shares of the several legatees in different ways. The facts as proved were these :—• James May died in England possessed of 1014 shares of the Bank of New Zealand. These shares were by the will divided among a number of legatees, hut the numbers of the shares were not specifically mentioned. The prisoner obtained probate of the wiil in New .Zealand upon the production of the exemplification of the letters of administration, with will annexed, granted in England. It was proved that on the 14th June, 1882, the prisoner made a declaration for the purpose of obtaining a transfer in his own name, that James May was at his death the proprietor of the shares. Transfers of the whole of these shares were produced, some to purchasers who bought from the prisoner through a broker, some to persons to whom the prisoner was privately indebted, and a few to some of the legatees. A copy of the Bank’s deed of settlement was put in by consent, and the Bank share register from the head office, which contained entries «f the whole of these transfers, and had the mames of the transferrers registered as holders of the shares. It was also proved that some of the transferrers had since received dividends on their shares. There were entries in the prisoner’s books, in his handwriting, of the xeceipt of dividends (while he held the shares) on account of the several legatees. Evidence was also given that the prisoner had forwarded one of the legatees a transfer of certain of May’s shares—giving their numbers—to him to sign, and also a power of attorney to sign, in order that the legatee might be registered as proprietor of the shares. These documents were duly executed and forwarded to the prisoner, who did not register the transfer, but subsequently transferred the same shares to someone else. Evidence was given of the prisoner’s admission that he had not transferred aDy shares to the English legatees, but had used them for his own purposes, and that he had admitted in his examination in his bankruptcy proceedings that he became possessed of May’s shares, and that there was no necessity to sell them. The prisoner was convicted on all counts but four, in which the Judge directed an acquital. Counsel for the prisoner contended that the share register was improperly admitted in evidence, and this question was reserved for the opinion of the Court of Appeal. Another question as to whether the probate was properly admitted was reserved, but was abandoned in the arguMr Shaw and Mr Gully for the

prisoner. The prosecution was under the 79th section of the Larceny Act. The shares were specifically bequeathed to certain persons, the legatees, and Taylor acted either as executor or as trustee, not as both, [His Honor the Chief Justice : He acted as executor, and as such was properly described in the indictment as a trustee.] If he acted as an executor he could not be convicted, as he had power to realise the shares, and account for the proceeds afterwards. [Mr Justice Johnston : That point was reserved, and we cannot go into it.] The other point is as to the admission of the share register. The Bank of New Zealand is not a company under the Companies Act by which a share register is prima facie evidence of the entries contained in it, but ia incorporated under a special Act, which has no such provision. The register does not prove itself, and no evidence was given of the entries contained in it. The Bank deed of settlement requires that holders of shares shall sign the deed (section 23). [Mr Justice Johnston : If there is sufficient satisfactory evidence, the evidence objected to can be rejected. Russell on Crimes, 319 ] There are authorities against that. Preface by Mr Justice Henman to 1 Hen. C.C., Harling s case (Moo. C.C., 39). It is for the jury to say whether there was sufficient evidence, and this Court will not weigh evidence. The share register was simply an index to the shareholders. The execution of the deed of settlement was not proved. If the register was not legal evidence, the Court cannot eliminate this evidence and say that the jury must have come to the same conclusion without it. Some one juryman may have been nfluencsd by it. The Attorney-General and Mr Jellicoe for the Crown : The share register was admissible against the Bank that they had assented to the transfer. If it was admissible on one point, that is sufficient. After this entry the Bank could not declare a forfeiture. The entry as to the transmission to Taylor corresponds with his declaration, and it is relied on by the Crown as proving the transmission, to Taylor. IJpon the transfer cf the shares the commission of them was complete. The Bank books have been taken to prove the facts in English cases. Breton v. Cope, Peake 43 ; Marsh v. Collett, 2 Esp. 665. Taylor’s own admissions were sufficient, without the Bank register. Mr Shaw in reply : The execution of the transfers was not a conversion. It is merely an application to the Bank to transfer the shares. Judgment was reserved. This was the last case on the list, and the Court adjourned till Friday (to-day) at I I a.m., when the reserved judgments will be delivered.