THE COURTS

New Zealand Times, Volume LIV, Issue 9867, 25 March 1893, Page 2

THE COURTS

SUPREME COURT—CIVIL SESSIONS. Friday, March 24. (Before His Honor tne Chief Justice.) Colonial Bank v. T. K. Macdonald and Wipe (Frances R, Macdonald). Mr Edwards (instructed by Mr Chapman) f or the plaintiff bank. Mr Gon. Hutchison for Mr T. K. Macdonald, and Mr Jsliiooe for Mrs Macdonald. Tiis hearing was continued at 10 a.m. B. J. Reid, manager of the Wellington branch of tho Colonial Bank, under crossexamination by Mr Jelltcro, o i-i it was not an uncommon thing for tho bank to make advances on real Oitsta. They woo'd lend up to three-fourths of tho value of tho security to a person of good credit. It was not their practice to accept securities in real estate which wore more or leas of a speculative oharaoter ; they would only make ad. vancea on property which had a fixed value. In the present case ho did not employ a valuer. Even had he done to he would probably have valued the property for him elf. Tho io&n to Mrs Macdonald was made on the basic that it was to* be ropay. able on demand. Afterwards, at the request of Mre Macdonald’s solicitors, it was made repayable in tvo years. In his report on 18th August, 1890, to tho head office of the bank, advising the advance of £4',OJ to Mrs Macdonald, tho securities were staled as being valued at £SCOO. 1 hia valuation was accepted both by himsiif and the bank’s inspector (Mr Wafaon). Up till March, 1891, when he left for England he had made no demand upon Mrs Macdonald for interest, and ha did not remember leaving any instructions with his successor. It was true that in hij half-yearly report to the head office (23th February, 1891) ou the value of the securities held by the Wellington branch ho stated tb .t the Icverloohy House property was fair security for £4509, and that if oat up inlo building loti they would fetch a high price; a* :o tiiat the lessee’s interest iu tile leasehold property in Church street wco worth at least £iooo. These values were based upon Mr Macdonald’s statements to him ; he saw no reason why he should not incorporate them in his report. Ho did not obtain any independent valuation. Mr Jelliooe then lead an extnot from the next half-yearly report to the head office (made by Mr Burns, Mr Reid’s successor), stating that the value placed against the Inverloohy Bouse property was far too buy at £ISOO, while as regards the Church street property this statement was made—‘On this property are built six bouses all bringing iu rent, about £2OO clear pet annum; this property is certainly worth £15.0.’ Cross examination continual : In his reports to the head office he did not mention that Mrs Macdonald's interest was in arrear. Tho next ha f-yearly report (made February 29th, 1892) was made by witness. He did not find that the securities had decreased in value during his absence in England. Leasehold property, of coura-, decreased year by year in value as the term diminished. Mr Jelliooe ; I cee that in your halfyearly report, dated 2Slh February, 1892, you state that ‘ the Inverloohy House property should bo worth £SOOO, though it might not fetch eo nsuoh just now,’ Now bow is it that the valuation went np in the preceding six months from £4500 to £5003 ? —1 don’t know. I suppose In preparing your report you referred to Ur Burns’ previous report?—l suppose so. And I presume it was in consequence of Mr Burns' report tbat the valuation at £450.) was far too low tbat you ino-eased your valuation by £300?—I don’t think so ( bad always thought it was worth about £•000. Then why did you not say eo before yon went to England, when you reported the value at £4500? These are cot strict values. Bat the information contained in your report must not be misleading ? —it ohould not b.*. Then as regards the Church street pro perty, did you on your return from England take tho trouble to ascertain if the six houses were let or empty ? -I don’t know tbat I did. And yet your report of the 29th February. 1892, states tbat these six houses are bringing in a rent of £IOO per annum clear. In spite of this, you say you don’t know whether those houses wore empty or not? —No, I can’t lay. Now, in thia rame report 1 find that you say with regard to the Cburoh street lease hold : ‘ Tbs present value of the lease, 35 years to run, may still ha looked upon ae worth £1509.’ So that your report does not indicate any depreciation in tho value of tho leasehold, while the freehold had increased £SOO in value during your absence in England, The value of the security had therefore Increased to £5500 ? It is not quite oirreat to say I raised the valuationof the Inverloohy House property to £SOOO. You will cee the estimated valus carried forward iu the columns as £4500. Thtro arc no columns in this report. But here is your plain statement that ‘it should bo worth £5000.’ Cross • examination continued : In the interview ho had with Mrs Macdonald on the 9tb June, 1891, he bad reason to doubt the values given in hia report, and to think that the securities had decreased in value. This arose Lom what Mrs Macdonald told him. Ha Ascertained that the tennis court end the light of way from Ingeatre street did not form part of tho freehold, and were not therefore included in tho mortgage. Thia considerably lessened tho value of the security. Then, too, from a statement shown him by Mrs Macdonald he found that the bouses on the Chnr Ji street leasehold wore not bringing in £2OO clear rest per annum. In addition Mrs Maodonald told him she had been unable to find a purchaser for Inverloohy House at £4500, that the Church street bouses were dilapidated aud only brought in £l7B gross, and that she wished she bad never seen tho Church street leasehold.

Here ia your letter cf the 16th June, ISS2, to the general manager of the bank at Puuedin, acknowledging receipt of hts letter of the 14th June, in which ho tells you that the moneys owing by Mrs Macdonald are not due till the 15th of August, that you are then to call them up, and in your letter of the I3th June you ray th’.s matter will be attended to ? -Quite so. Why did yuu not communicate to the general manager and directors year g ave suspicion of the value of the security, as some of the property was not included in the mortgage?—l did communicate it to them. How ? —Voi bally. To whom ?— I The general manager. Where ? —At Wellington. ! When ?—Oh, I can’t tell you. Will you swear that between the 9fch and tho 10th June, 1892, you saw the general manager, Mr McKerzle?—No. ' Will you swear you saw him at all in June, 1892?—I will swear I saw either him or the inspector. I can’t recollect the dates Then you did not report to the directors your conversation with Mrs Macdonald on the 9th June, whioh led you to gravely suspect the value of your eecuritioj ?—I did not think It necessary t> report it. Bid you in your report of the 31st August, 1892, state that the securities which you had so many reasons to suspect were still worth £5203?—1f you say it is there, 1 ask you, did you ? '1 can’t say. la view of the circumstances you say you had ascertained, would such a statement of valua bo true ?—lt might be a rough estimate. Mr JelUooe then read the witness’ report of the 31st August, 1£93, which stated, re Inverloihy House: * Tho bouse and buildings are insured fo? £4OOO, and the property ought to be worth more than that sum. But there seems to be no prospect of getting rid of it at tho present amount. We think we should lose no opportunity—lf one presents itself—of selling it at £4009. We should bu glad to got a good tenant at £l5O a year/ There ia no word there'about the decreased value, omission from tho security, or of any olhor, matter whioh you say was the result of your conversation with Mrs Macdonald. Then jas regards tho Church street property, your report states that it ia a valuable leasehold property, with 35 yean to run and let for £175 a year, which gavo the bank /.bout £l2O a year. ‘lt difficult to arrive ut a valuation of this property, probibly it is worth from £I2OO to £1300.’ Now this makes up your then estimate of the value cf tho security to £5200, ia spite of all Mrs Macdonald bad told you. What was tbs fall amount of your claim ? X don’t know. Did it exceed £5203?—1 don’t think it did.

Mr Jellicoe proceeded to cross-examine the witness as to the auction silo of the mortgaged property and tho powers contained in the Colonial Bank Act for carrying on the bank's business. Questioned as to the bank’s dealings with Tnvcrlochy House after it fell into the bank's hands, the witness admitted that ho made an arrangement with n Mrs Moore to enter into occupation of tho house at a rental of £153 pec annum, bnt that the directors of the bank refused to concur, and as a consequence the house still remains empty. He had heard that Mrs Mooro, with a view to entering into possession, had gone so far as to send up a contractor to effect some alterations. W. J. norland, assistant accountant at the A.M P, Society’s office, produced cheque for £393 paid to Mrs Macdonald on mortgaging a policy on her husband's Uio. Air E. J. Reid then ro entered tbs witness box, and was croas*osnminod by Mr Hutchison. Re-examined by Mr Edwards: Four members of the Legislative Council were directors of tho Colonist Bank, viz., the Hons George MoLeao, R. Oliver, W, D. Stewart and W. S. Reynolds, and in Angajt, 1892, they were in Wellington attending to their Parliamentary duties. Witness verbally placed them in possession uf the facts connected with Mrs Macdonald’, case anojthe value of the securities. Oswald Stephen Watkins, accountant ia tfia Colonial Bank at Wellington, produced records of Mis Macdonald’s account with the bank. James Ames, City Vainer, said he had valued Inmlocby Bouse for rating pur-

poises. Hg placed the rental value at £l5O a year, and tLo freehold value at £3COO, It nouM tiofc pay to £3 / 100 for it for speculative purposes. There were six hoaaea ou tho Church street property (the seventh was rated to aMr ChriVoEon); the property was held under a lease, and was rated at £I3S a year. The total rents were £176 a year, and th 3 outgoings were about £125 o year. The leasehold value might be put down at £3OO or £4OO. and then It would not be a very wise investment. By Mr JelHcoe : The freehold value ot tho properly m ! ght be £ISOO to £2OOO. Kobert K. Richmond, surveyor, produced plans of the Icver'ooby House properly, which he testified were in accord with particulars supplied. H- race D B*feer, estate agent, said bo ra’u-d tho Tnvt r’ochy Homo property atfrom £275 )to £3OOO. The value of the lease of the Church str-et; property he put down at £soo.—The Court at 5 40 p.m. adjourned until 10 o’clock ibis morning.