MR T. K. MACDONALD’S BANK RUPTCY.

New Zealand Mail, Issue 1032, 11 December 1891, Page 16

MR T. K. MACDONALD’S BANK RUPTCY.

Mr T. K. Macdonald’s statement of assets and liabilities was sworn before Mr J. Dransfield, J.P., on Saturday, and was filed in the Official Assignee’s office at 1 p.m. It is as follows : Debtor Unsecured creditors, £2918 6s 3d; secured creditors, £24,839; less estimated value of securities, £31,032; surplus to contra, £6193. Creditor—Stock-in-trade and cash in hand, nil ; book debts estimated to produce £I4OO ; furniture, nil ; surplus from securities in hands of secured creditors, £6193. Total assets, £7193. Surplus, £4674 13s 9d. The unsecured creditors are as follows : Personal debts —W. T. L. Travers, £500; E. G. Jellicoe, re E. P. Wilson, £180; Scoullar and Archibald, £53 lis 7d ; Francis Sidey, £ls 10s ; A. Warburton and Co., £l2 2s 7d ; D. Kobertson and Co, £ll 18s 9d ; W. McLean, £5 2s 6d : Tustin Bros, £4 12s ; B. and E. Tingey, £4 7s lOd ; F. G. Bolton, £1 Is. Maori Hemp Company liabilities — Holmes and Bell, flax merchants, Blenheim, estimated, £1950 ; Johnston and Co., merchants, Wellington, estimated, £IBO. Total, £2918 6s 3d. Then follows the list of secured creditors, viz. : Wellington Trast, Loan, and Investment Co., debt £9370, security £16,300 ; Colonial Bank of New Zealand, debt £8412, security £15,517 ; Frances B. Maodonald, debt £5007, seaurity £1000; Frances B. Mac. donald and E. Greenfield, debt £750, security £945; Thomas G. Maoarthy, debt £450, security £6130; James Gear, debt £350, security £IOOO. Total amount of secured debts, £24,839. Total estimated value of securities, £40,892; less deductions re secured mortgages shown twice, £9860. Balance, £31,032. The value of the debtor’s real estate is set down at £26,542, viz., £20,932 for freeholds and the balanca

for leaseholds and interests in various lands. The freeholds are as follows : Exchange Buildings,Lambton quay, £15,000; two residences, Abel Smith street, £3S6'- ; doctor’s residence, Willis street, £2OOO ; right-of-way off Abel Smith street, £3O ; four sections, Vogeltown, £4O. MEETING OF CREDITOUS. BREEZY EPISODES. EXPRESSION OF SYMPATHY PASSED. The first meeting of Mr T. K. MaodonalcPs bankruptcy was held in the Assignee a office on Tuesday afternoon, the Assignee himself presiding. Mr Jellicoe appeared for E. P. Wilson, an English creditor, Mr Skerrett for Messrs Holmes and Bell, of Blenheim, Mr Dean for the Karori Syndicate, and Mr Hawkias for Mrs Macdonald. The Chairman having read out the debtor’s statement of assets and liabilities (already published) then read an explanatory statement from the debtor of the circumstances which had brought about his in solvency. It alleged that tho bankruptcy had been brought about by the action of Mr Thomas Bell, liquidator of the firm of Holmes and Bell, lately carrying on business at Blenheim as flax and general merchants, who filed, a petition in the Supreme Court to declare him a bankrupt on the ground that he was indebted to them in the sum of £1941 17a lid. As no never held that he was so indebted he would explain the facta. Daring 1889 Mr Matthew McOredie made overtures to him with the view of inducing him to purchase Mr Oattell’s half interest in the lease of certain flax lands at Tologa Bay, and guarantee the payment of certain bills, McCredie being the owner of the other half interest. He replied that under no circumstances could he become a partner, but that if the representations were correct something might be done for McCredie. He subsequently saw Mr Cattell ou the subject, and this gentlemen spoke of the venture so glowingly that he (Macdonald) both verbally and by letter submitted the matter to Mr John Holmes (of Holmes and Ball), and stated that if he was satisfied it was a good thing and was prepared as a flax merchant to find the funds necessary for working the mill, he (tho debtor) would go into the matter and possibly take half an interest. After iuterviewa with Mr McCredie, and getting full information from him, Mr Holmes agreed to make the advances necessary on open account. Deponent then agreed with Mr Cattell, and upon his distinct representations n 3 to the quality and extent of the raw material, to purchase his interest for £lO9, and to guarantee payment of the acceptances he had given for machinery. He also entered into an agreement with Mr McCredie that in consideration of doing so he should receive one half of the net profits, if any, but that under no circumstances should he ba a partner, and if his advances were not liquidated in three years he should have a mortgage for same. Since then certain correspondence had been held by Holmes and Bell to render him liable for the first £3OO or £IOOO advanced, and to constitute a constructive liability on an alleged partnership with McCredie in respect to the balance of the money lent to this individual. He could not do lesa than resist this attempt to hold him liable as a partner. Subsequently he declined to endorse or guarantee McCredie’s paper, when Holmes represented that his bankers would not otherwise discount it, but said he would have no objection to allowing Holmes to take a mortgage over the concern if he advanced further funds. This was agreed to. Some time after this, at Holmes’s request, deponent assisted him to get one of the wholesale houses to take the account off his hands, Holmes being willing to supplement it with personal securities if necessary. These efforts failed. The next that deponent heard of the matter was a demand from Holmes’ solicitors for payment of McCredie’s account, on the ground that he was a partner. This was followed by a writ, and he Instructed his solicitors to defendAction was postponed by intervention of the Speaker’s warrant, as, quite apart from his Parliamentary privileges, he was hopeful of making arrangements that would be advantageaus to all parties concerned. For that purpose he sent an agent to Tologa Bay to report on the quantity aud quality of flax available, but the report was bo unfavourable that the projected arrangements were impossible, and, at the same time, that he had been misinformed in the first instance as to the quantity of flax, which had been the chief factor in his taking the matter up. On tho day of the trial his solicitor declined to nppear, on the ground of not being sufficiently instructed, and he had to confess judgment. He declined to accept this as proof of admitting his liability. Ha had never received one penny of Messrs Holmes and Bell’s advance, and of his own moneys had expended nearly £IOOO, not a farthing of whioh he had ever received back. While expressing his regret that Messrs Holmes and Bell should be losers in this transaction, he could not altogether acquit them from some share of the responsibility. Had it not been for Mr Bell’s petition ho could have arranged for payment of all his other debts with ease. Tho fact of there being but a limited sale for properties iu and about the city, and that he was carrying over £30,000 worth of them ou his back, had hampered and crippled him for ready money; but although he had lost some thousands during the past four years in consequence of his faith in the development of the city of Wellington, he would have surmounted all these matters but for Messrs Holmes and Bell’s petition. .

Mr Dean said that the debtor had omitted to include in his statement of liabilities the claim of three members of the Karori Syndi oato, amounting to between £IOO aud £2OO, and which would be proved later on. Mr Skerrett stated that the debtor’s account of his dealings with Messrs Holmes and Bell was neither candid nor ingenuous. He could prove that tho debtor opened the negotiations by assuring Messrs Holmes and Bell that he and his partner, Mr McCredie, could give full guarantee with regard to

I advances. Mr Holmes and the debtor were on terms of personal friendship, end the debtor was e*pressly warned by Mr Holmes to be sure the quantity of flax represented to be at the mill was really there before entering into any venture. Tho learned gentleman then proceeded to read from the correspondence iu order to contradict the debtor’s statement. In September, 1889, the debtor wrote to Messrs Holmes and Bell, stating that McCredie was fully convinced that the flax land would yield 40 or 50 tons to tho acre, and that he (MoCredie) was determined to make an early start under the title of the Maori Hemp Company. *’ The question therefore put to you is, wilL you arrange that the drafts of the Maori Hemp Company of Now Zealand will bo honoured ou you for an amount not exceeding- such advances, to be liquidated not earlier than June 39, and all badness connected with the sals and agency of the flax to ga through your firm. The advances to be given from time to time as required by the business. If you desire, the Company will open an account in any hank with whioh you may arrange for their cheques being honoured to that amount, and our Mr Macdonald and Mr McCredie will outer into the joint and several undertakings that may be required on be.ialf of the Company."’ This letter was signed “T. Kennedy Mao. donald.” In face of this letter it was both disingenuous and dishonest for tho debtor now to say that he never led Holmes and Bell to believe ho had a partner. Mr Holmes replied, “I am prepared to assist yoursolf aud Mr MoCredie to the extent of £IOOO, but for your own sake it would bs wise to secure Seymour or other equally good man.” On the 26th October, 18S9, Mr Macdonald, writing to Holmes aud Bell, said : “The arrangement made iu this connection was, as wo understand, that the official signature of the Company to all bills aud cheques was to be that of the managing director, Mr McCredie. Under the-e circumstances, the bill in question being sigued in the authorised form, it appears to us that the addition of Mr Macdonald’s signature would be superfluous, and even irregular.” This was in reference to a bill for £4OO (part of tb'e £IOOO advance), which Messrs Holmes and Bell had forwarded to Mr Macdonald for his signature. Now this could only mean oni of two things : either that his signature wa3 not worth a twopenny curse, or that as a partner in tho firm he was already bound by the firm’s signature. This liability to Messrs Holmes and Bell was as much a debt ou Mr Maodouald’s part as a debt to his baker or grocer, and it was discreditable for him to try and wriggle out of it by casting imputations upon Messrs Holmes and Bell. Again, it was absolutely uutruo that Messrs Holmes and 801 l had foioed the debtor into bankluptoy by refusing further advances on tho flax. What they did was merely to withhold the advance until a boat note showing tho shipment of the flax was produced. He (Mr Skerrett) did not believe the debtor would have disputed the liability if he bad been able to pay. At any rote, be had been indulgently treated by Messrs Holmes and Bell, and had rewarded that treatment with a most unreasonable attack upon them. Iu answer to Mr Jellicoe, the Assignee said he had no statement of the debtor’s liabilities.

Mr Jellicoe asked that the debtor might be required to furnish a statement of hia expenses for the past 12 months. The debtor asked aud obtained leave to reply to Mr hkerrett. He said that gentle. man’s remarks were to a largo extent unfair. The plain facts were set forth in hia written statement. He knew nothing whatever about the flax venture until it was submitted to him, and he at onee submitted it to Holmes, upon whose advice, as an expert, he acted. If Holmes had thought it, was not a good thing he would have advised him (Macdonald) to that effect, and he would not have lost his money nor Holmes his, but upon Holmes’ assurauce that it was good enough Holmes himself went into it. The correspondence waa to be read in the light of the verbal conversations.

Mr Skerrett : There were absolutely no verbal conversations on the subject between you and Mr Holmes. Mr Macdonald : I beg your pardon ; there were.

Mr Skerrett : After tho letter of September 3rd and before the subsequent month of May ? Mr Macdonald: Certainly. We had many chats together on the subject. The debtor, continuing, said that after he agreed to take a half interest in the concern McCredie visited Holmes at Blenheim and between them they changed the whole aspect of the case. It was idle for Mr Skerrett to blame him for losing Holmes’ and hi 3 (Macdonald’s) own, seeing that it was wholly upon Holmes’ advice he embarked in the affair at all. He wanted his creditors to understand that he had never had a shilling of Holmes’ money. Why then Bhould Holmes turn round and abuse him through his solicitor? At the outset of the negotiations he distinctly declared that he was not going as partner, and was ouly to receive half the net profits of the undertaking, and in the event of his not being repaid in three years he was to have a mortgage. Mr Skerrett as a solicitor knew ho wa3 legally responsible. At any rate, it was a lesson to himself and others not to commit oneself in any such way. Holmes was familiar with every detail from the beginning, while he (Macdonald) repudiated all responsibility in connection with the matter. Mr Skerrett: Mr Dean says you admitted to him you were morally responsible. Why did you sign on behalf of the Maori Hemp Company ? Mr Macdonald : I nesd ; not enlarge further. I hope we are not going to wranglo over the matter.

Mr Jellicoe understood that the debtor was willing to file a balance-sheet showing all his transactions for the last 12 months. Mr Skerrett said the banking books ought also to be handed over to the Assignee. The Assignee explained that the debtor had stated that he had now no books of his own. The only books he had had were in tho hands of tho Limited Liability Co.,

which had taken over his business, but they were to be at his (the Assignee’s) disposal to any extent he thought fit. The debtor ooiroborated this, adding that tho vouchers also, and everything else, were open to the Assignee’s investigation. Mr Skerrett : At this rate a man has only to got hia cousins aud his aunts to take up shares in a limited liability company formed to work his business, and his books cannot be taken over by the Assignee. Mr Macdonald : That is not the case here.

Mr Skerrett : I did not say it was here, but I think the Assignee should get possession of your books. The Assignee said the question had not been discussed hitherto. He did not know his own legal position in the matter. Mr Jellicoe : You will also have to enquire iato the question of the legal sale to this Company. When was this Company formed ? Mr Macdonald : Ie was formed in July, and registered in Ootober. I sold every, thing on the composition of the Company. Mr Jellicoe : Who constitute the Company ?—Six individuals. Who are they ? —Messrs Greenfield, Cameron, Miller, Graham, Cave, and Truebridge. At what price did you sell to the Company ?—The Company was to take over all current book debts up to the amount of the consignments and rental accounts, and pay over to mo the balance found to be due. What was the capital of the Company ? Nominally £25,000. 1 am obliged to ask you why did you not file at that time instead of arranging with six individuals to sell everything you possessed in the world on the terms you have mentioned ? Had you any reason for not filing at that time?—None whatever, except to conduct the business better. I found that as a member of Parliament I could not transact business in mauy directions so well as I could as manager of an incorporated company. Are you managing director of the Company ? —I am manager. Then the books aro in your custody ? What difficulty is there about the books ? Tho Assignee explained that the debtor had told him that the bonks were at his disposal, but they had not been handed over because they wore being used by the Com' pnny. He had not yet ascertained what were his legal rights in the matter. Mr Jellicoe suggested that the further examination of the debtor should stand over until tha promised ba'ance sheet had been filed.

The Assignee said he could not accept any suggestion from Mr Jellicoe, as he had no looua standi at present, not having proved. Mr A. Warburton moved, ‘‘That the creditors at this their first meeting desire to express their sympathy with Mr Macdonald at the circumstances which have forced him into bankruptcy, and recommend for the favourable consideration of the Court Mr Macdonald’s application for , an immediate discharge,” Mr W. McLean seconded. He had been looking into the debtor’s statement, and failed to see that there were any assets at all in hand. If there were £2OO or £3OO there would be something to work on, so that Messrs Jellicoe and Skerrett could have a good go-in and fight it ont. Where there was money to bo scrambled for—dry hard cash —the lawyers were very active, and the oreditors got nothing in the end. He had several times pointed out at these meetings that if there was no money to be divided it was useless delaying matters. Mr Jellicoe : Do I understand from Mr McLean’s observations that Mr Macdonald has waited until the whole of his assets have been exhausted before be filed ? If so, and matters are in oonsequenca not to be delayed, then it must go forth to the world that directly a man has exhausted his assets the creditors will not fight him. Mr Macdonald said this was not a fair statement of the position. There were assets in the shape of book debts estimated to be worth £I4OO over and above what were mortgaged to the Company, and these ho would assist the Assignee to realise. In answer to questions he also said that he had no furniture, as it all belonged to his wife. He owned the paddle steamer Colleen a year ago, but not now. Mr Skerrett opposed tha resolution. A gentleman in the debtor’s position should not be allowed to pass through the Court without a satisfactory enquiry into his affairs. Besides, a number of oreditors had not yet had time to prove their claims. Mr Jellicoe took a similar view, as did also Mr Dean. After sains further discussion the resolution was passed, Mr Skerrett’s being the ouly dissentient voice. At his request the vote 3 wore taken down as follows :—For : Robert Archibald. A. Warburton, F. Sidey, Frances R. Macdonald, W. G. TustiD, F. G. Bolton, David Robertson, Riahard TiDgey, Wm. McLean. Against : Holmes and Bell. Mr Skerrett said that, with the exception of Mrs Macdonald, all the consenting creditors did not represent £IOO. _ Mr Macdonald said it was unfair to put it iu that way, as the whole of the creditors excepting Holmes and Bell fully approved of the resolution. The meeting adjourned after the Assignee had deolared the resolution carried by a majority both in number and value.