SUPREME COURT.—IN BANCO.

New Zealand Times, Volume XXXV, Issue 5870, 24 January 1880, Page 3

SUPREME COURT.—IN BANCO.

Friday, January 23. (Before his Honor the Chief Justice and his Honor Mr. Justice Richmond.) BUCKB V. ATKINSON. This was a demurrer on the part of the Hon. - Major Atkinson to the declaration of the plaintiff, who appeai'ed in person, while Mr. Bell appeared for the defendant in support of the demurrer. It appears that when the matters in dispute arose the present Chief Justice was Attorney- ; General, and he yesterday stated that if the plaintiff wished to have the matter argued before two judges he (the Chief Justice) would not feel justified in taking any part, or in hav* ing the arguments heard before him. His Honor then left the Bench, and the arguments took place before Mr. Justice Richmond. Ultimately the demurrer was allowed. SCHULTZ V. WELLINGTON CORPORATION.' This was an argument on a special case stated. . Mr. Ollivier for the appellant; Mr. Travers, with him Mr. Martin Chapman, for the respondent* The matter was argued at great length, and was not concluded when the Court rose at six o’clock. Argument will be resumed at ten o’clock this morning. (Before his Honor Mr. Justice Richmond.) BROWN Y. WELLINGTON CITY TRAMWAY COMPANY AND OTHERS. Mr. Ollivier, with him Mr. Bell, for plaintiff; Mr. W. T. L. Travers, for the company and for defendants, T. K. Macdonald, W. T. L, Travers, Henry Mace, R. Greenfield, E. W. Mills, H. W. Diver, and W. Conyers. Mr. Gordon Allan appeared to watch the ca?e on beha’f of Mr. Toomath and the other defendants (Messrs. J. Sheehan and representatives of Messrs. Henderson and Schultz) did not appear.

Mr. Bell opened the case. The action was brought against the company and the second promoters to enforce the performance on the part of the defendants of the contract between plaintiff and defendants in connection with the maintenance of the line. Plaintiff had contracted io maintain the line for twelve months, security for this being provided for by defendants retaining 10 per cent on the amount of the construction money (£12,060) until the year of maintenance was completed. At the expiration of this term the percentage (£1260) had not been paid, and it was to enforce the performance of this portion of the contract that the action was now brought. The sum due was reduced by £25, which had been deducted for some slight repairs necessary when the line was taken overby the company, leaving £1235 still unpaid. The line had been projected in 1876 by Messrs. T, K. Macdonald, J. Henderson, and 0. O’Neill. These gentlemen were the original promoters, and were authorised by the City Council to construct the line. The original promoters contracted with plaintiff for the performance of the work in twelve months, and in 1877 they became directors with others, and took over the agreement of 1876, with the liabilities. They also contracted with plaintiff for certain extra works, and judgment for the latter b '.d been obtained by the plaintiff in July, 1879, against the company. Mr. Ollivier addressed the jury, and stated that Mr. Brown was seeking to recover from the company a sura of money relating exclusively to the maintenance of the line. Mr. Travers here interrupted, and stated that the action was not really for the recovery of money—although that was the effect of it--but for the specific performance of a contract. Mr. Ollivier said of course he was merely stating facts to the jury, not technicalities, and a fact the action was oae in which plaintiff sought to recover money. The facts were not at all complicated, but were very simple. The position was really this : In March, 1876, Messrs. Henderson, O’Neill, and Macdonald obtained concessions from the City Corporation permittirg them to construct a tramway in the city. These gentlemen having got these concessions- called for tenders, embracing rolling stock as well as permanent way. There was, however, a difficulty in the way of obtaining tenders in this way, so it was concluded to accept separate tenders for the work. Mr. Brown’s tender of £13,000 for the construction of the nermanent wav and buildings was ac-

ot tne permanent way ana nauainga was accepted—the contract being that he was to complete the work by December 29, 1877. He had twelve months in which to do the work, and he then had to maintain it for a further period of twelve months ; ten per cent, of the construction money to be retained as security for the latter work. Plaintiff commenced his work in December, 1876, and had hardly begun before he was requested by Messrs. O’Neill and Macdonald not to hurry with his work, or he would have the line completed before the rolling stock was out. So also with reference to the buildings, he was asked not to hurry, a letter being sent him in January, 1877, stating that there would be no necessity to occupy the buildings for twelve months to come. Upon Mr. Brown objecting to delay on the score of expense he was told, “ Never mind the expense, send us in a memo ot it, and we will soon adjust that.’’ He consequently proceeded slowly with the work to accommodate them. In May, 1877, Mr. Brown became entitled to receive some £7OO, and he got a cheque for that amount from the original promoters. Shortly after this the rails came out, and Mr. Brown asked for a progress payment on the material, and he sent in a certificate, but a cheque was not forthcoming. Mr. Brown ultimately took a short dated bill, which was dishonored when due, and then renewed for a month. This was handed to those who had indented the rails, and no more had been heard of it. About that time (August, 1577), arrangements were being made with several gentlemen of substantial means to join the promoters in carrying out the work. The next payment to Mr. Brown was certified to by Mr. J. E. Davis, who had been engineer of the line since January, 1877, but who had not taken the active superintendence of it till September, 187/. This certificate was given in October, and was for £l4ll 16s. The company had not yet been incorporated, but when Mr. Brown ■ asked for a cheque he got it without difficulty. The cheque was not signed by the promoters, but by Messrs. Tooraath, E. W. Mills, and H. W. Diver, for the Wellington City Tramway Company. It appears that the company had been incorporated between the giving of the certificate and the signing of the cheque. On October 8 Mr. Henderson wrote to the City Corporation, stating that Messrs. O’Neill and Macdonald had transfered their interest to him, and ho was about to transfer to a company, and asked the consent of the Council to transfer. He also asked for an extension of time for opening the line on account of several reasons given. Inconsequence of this letter an extension was made to June 28, 1878. When the latter date arrived, Mr. T. K. Macdonald, acting as secretary of the company, wrote stating that the whole of the rails had been laid, and the permanent way completed, but the company regretted that in consequence of the long time taken in completing the orders from England and America, they had to ask for a further extension of time. This was granted for three months, and the line wae opened for traffic in August, 1878. During the time the line had been under construction, Mr, Brown had not cared who paid him, so long as he got paid, but there was certainly some room for confusion in the matter. The gentlemen who «.rmed the company wanted money, and they went to the Bank of New Zealand, which was presided over by a liberal manager—in those days at least—and an overdraft was arranged for on a guarantee, which was signed by the representatives of the company, including one of the original promoters. The company was incorporated the day after this arrangement with the bank, and the guarantors became the pro.

vi-ional directors of the company. It was a Mllicult matter to say what these gentlemen wore during these changes, but it was known what they did. Up to a a certain point the plaintiff got his money, and therefore he did not care a rash what they wore. But when Mr. Brown wanted a cheque for the £1260 it did matter what they were, for they refused to pay it. Air. Brown had hud to sue the company in the meantime, aud possibly that had something to do with it. The action referred to had been brought by Mr. Brown to obtain payment from the new company for alterations ordered by them, and the company found that they had to pay a little more than they expected. After some further remarks from Air. Olliver,

•Air. Travers said it would save the time of the jury if he admitted that the amount-was payable. The main point was the question as to who was liable. The individual defendants had never had anything to do with the contract, and had never adopted it. The company also had never adopted the contract. Air. Ollivier concluded by reading extracts from correspondence which, he contended, connected the acts of the original promoters with those of the second promoters and the company. He called Air. S. Brown (plaintiff), Air. J. R. Davis (0.E.), aud Mr. Page (City Treasurer), who deposed to the main facts as narrated above, and produced correspondence. Mr. Sisley’s evidence was to the effect that the present company had purchased the entire property, for a lump sum of £40,000. from Mr. John Henderson. His receipt for that amount was in existence. It appeared from the books that Mr. Henderson had shares in the company to the extent of £13,000, leaving a balance of £27,000. There was no entry in the bank-book of the payment to Air. Henderson of the latter amount, or of a lodgment of £13,000. When the question had been discussed at the meetings it had been understood that Mr. T. K. Macdonald was the responsible party for the original liabilities ; and he had heard Dr. Grace say that it was his business to protect the shardholders, and that he had nothing to do with the original promoters. Dr. Grace had purchased the interest of Air. Toomath. The property was now mortgaged for £27,000. All the capital was not yet called up. Including arrears of calls, there were still some £6OOO due on capital account. The amount of debts in addition to the mortgage was £4OOO or £SOOO. By Air. Travers : These debts did not include Air. Brown’s claim. Air, Brown was not regarded as a creditor of the company. It was generally considered that the original promoters were responsible to Air. Brown.

Wm. Valentine Jackson deposed that he was manager of the company from August to December, 1878. Witness had been instructed to draw certain cheques on the bank in favor of Mr. Henderson, amounting to £27,000. There were two accounts at the bank. One was the promoters' account, and was called No. 1; the other (No. 2) being the actual account of the company. He thought the cheques were drawn on the No, 1 account. The cheques were given pro forma to Air. Henderson. They did not appear by the bank book to have heen paid.

By Air. Travers : The transaction would be entered in the cash-book.

This closed the plaintiff’s case. Air. Travers then addressed the jury for the defence, and contended that there was nothing to justify them in saying that the company was responsible for the amount. He went fully into the history of the formation of the company for the purpose of showing the part the second promoters had taken in the matter, which was merely for the purpose of forming a company. The company having been formed, they agreed to purchase the whole concern from Air. Henderson for £40,000, of which £27,000 was estimated as the actual cash outlay, and the balance of £13,000 was to her paid as the value of the concession, preliminary expenses, &c. Shares (fully paid up) to the value of £13,000 were given to represent the latter. There wa a purely verbal arrangement to the effect . that the company should supply money to enable Air. Henderson to meet his engagements with Air. Brown, and with London and New York creditors. The transfer was not to take place until the whole concern was in working order, and then the accounts were to be audited and the transfer to be made. Air. Alills had audited the accounts, and when he reported that all was in complete working order, then the transfer was made from Air. Henderson to the company. Alessrs. O’Neill and Macdonald had both previously transferred their interest as original promoters to Air. Henderson, leaving him the sole owner, and under all the liabilities at the time. The company had never taken over any of his liability, nor had they intended to do so. Air. Henderson had since died, having first become insolvent, and no doubt Air. Brown thought as he could not get at Air. Henderson ho would .have a shy at the company. He called Thomas Kennedy Alacdonald, who deposed that at the meetings of the second promoters nothing bad ever been said or done with reference to the liability of Mr, Brown. Mr. Henderson was the entire owner of the affair at the time of the transfer to the company. . Air. Henderson had made arrangements with the company to make progress payments to Air. Brown, and under that arrangement the company had to pay the drafts on the rolling stock as they matured, and on completion the £40,000 was to be paid to Air. Henderson, deducting from that sum the moneys paid on Air. Henderson’s account during the interval. That agreement had been carried out. ‘

Witness was cross-examined at some length with reference to the £13,000 worth of shares which had been divided amongst the second promoters. Hia own bad not been paid for in hard cash, but would go against Mr. Henderson’s account with him. The promoters’ account at the bank was that of the original promoters. He did not think cheques were drawn for large amounts on that account, Mr. E. W. Mills was called in corroboration, and deposed that the £13,000 worth of shares was to be divided amongst those who took the responsibility of obtaining the guarantee at the bank. They had become fully liable for the advance at the bank, and were responsible for the whole amount, which responsibility had since been increased by the death of one or two. Nothing had been paid for these shares, which were given in consequence of the liability. The second promoters had had no claim upon them until the guarantee was given by the bank. Prior to that they were all the property of Mr. Henderson. This concluded the case, and counsel addressed the jury on either side. His Honor then went through the issues very carefully with the jury, and pointed out a number that had been admitted, and which they would not therefore require to consider. His Honor ruled against the plaintiff on one of the important issues, on the ground that though the plaintiff was legally entitled to be paid by somebody, and though the defendants were the proper persona to pay, yet there was no direct remedy by the plaintiff against them, there being no evidence of defendants having contracted the liability with plaintiff. The jury having retired at 6 45 to consider their verdict, a discussion arose between his Honor and the counsel, and it was agreed that on the motion being made in Banco for a decree the documentary evidence produced that day be put in. It was also agreed that should the Court find his Honor's ruling to be an erroneous one, the Court should have power to increase the damages, and to reply to the issues as the jury ought to have done but for his Honor’s ruling. The jury returned into Court at 7.5 p.m. with a verdict upon the issues, generally in favor of defendants.