DISTRICT COURT.

Oamaru Mail, Volume II, Issue 492, 26 November 1877, Page 2

DISTRICT COURT.

T.IIS DAY. (Dehors His Honor Did'rkt Judirc Ward.) IN IVVNlvltf J'TCY. 7?e Thomas lliliiker. T .is was an order calling upon tho trust o in tho estate (Mr. J.unes Sconlar) to appear and verify his report. Mr. 13. C. Ilav'jriff. (-f Dun-die) np pea- don Ik-' alf <.f the trustee ; and M < I'M -a,g ier f .r t io bankrupt an I a numIkl' of creditors. Mr. Ua.ggitr, sulmiif t< d fat tl c summons had Ifoii improperly granted. T:r Court could only interfere whore lli creditors, at a properly co-is'rn.-f d mei tiiiL', d.eliivd them-a;!\vs di.-,sa',is(i j I with tho report. This I ail not heon done. II quoted from the affidavit of Mr. Thomas Austin, setti::g forth that ho had :tt tended the meeting representing various creditors to the amount ol L47:j 10s. 4d., while tho total amount r. presented I>y tlio whole of the Oaniaru oivditors was' L3S2 84. Gd. With the claim of Messrs. \V. an 1 J. Sconlar, tho amoutP represented at the una tin-j against the Ouiiaru creditors was L 1,819 10-. The affidavit of Mr. Austin al-.i set, forth that ho had been pr vented from voting for a number of creditors on the ground that the proxies were informal. Tip" informali'y c insisted in th" fact frit, the pi-oxi. s for varhms linns lad only been signed by one of the partn rs, and that the words " a creditor" appeaivd in them instead of the word " oreddo-s." lie (f, e learned counsel) maintained that it was competent for one partner to sign a proxy for tlio whole linn, wailo it was never intended that proxies s' ould bo st aside on such a trifling quibble. On these grounds he ask al that the order calling upon the trustee to verify his r port should be rescind'd. They should have had any opportunity of slmwing cause against the granting of the

summons At tliu inciting in qmstion, Mr. Scnular was pivparul to verify his report, but had not !>• en called upon to do so. In paying the dividend to Messrs. W. and J. Scnular <>» the total amount of their claim, notwithstanding that a portion of it was secured, the trustee had acted bona fide upon the advice he had received from Mr. Cook. A number of Dmu-din creditors had at first been dissatisfied with t!ie preceding, but on being s' own the advice upon which he had ac'ed . xpressed tln-ms. Ives contented. Mr. O'.Mea,' er said the grounds set f..rt:i inM\ Austin's affidavit were sn liciently answered by te affidavit uf Air. llic'.ard L ig'\ With rif-rmc to tie statement that Mr. Scnular had acted upon legal advice in regard to the payment of the dividend to Messrs. W. and J. Scoiilar on the total aniount of th.'ir claim, Mr. S toiilar ha 1 d clined to produce that legal opinion, although called upon todo so. Ti.eeredu.rs weivuot bound to acc.pt the bare statements of the trustee as to t! e existence of suc'i a legal opinion. It was in consequence of tliis t at t!ie creditors b cone d ssati.sfi d, ami decided to cdl upuu the tiiiatee lo verify Lis report. With reference to the statement as to the aniount said to lave been represented by Mr. A us in at t'.e meeting he pointed out that Mr, Austin had been called up n to produce his pow-. r of attorney frein M-ssrs. Liu.'O and l'i o-ie-inan, but i ad rei lud that it was in LMiiiidin, and he also fukd to prodne; a proxy from the linn, s> that, t'.e total amount represented by him was reduce I coiisidi rably below the amount stated. Mr. L'-igli in his affidavit swore that at tlie nietting Mr. Sc ular stand that he had sold some property belonging to the estate, whicii was held by Messis. W. and J. Scuular as security, uii long terms of

/_y ~ - —.- payment, trnt "Woclt-ed to state the pnco or the name rind address of t!io purchaser; I and Mr. Leigh avcred that ho believed the sail'"property had been sold considerably btlow its value. Mr. O'Meazhcr also read portions of the affidavits of Mr. T iom.'ia Spratt and Mr. Janus Crave, in winch they declared that they had read the affidavit of Mr. Richard Leigh, and believed every word of it to bo true. Ho also read ail affidavit, made ly himself in which he stated that the trustee bad grossly mismanaged the estate. An affidavit by Mr. Hugo L ; ppi«rt was also read by Mr. O'Meagher, that he had not receivi d any dividend from the estate, although the trustee had put him down in tlis statement, of :>ccounts. Me would bo prepared to put Mr. Lippertin the box to swear that, lie twice applied f«-r the dividend, and had been n fused it by tho trustee, who d clared that the funds were exhausted. Mr. Lippert was not tho only.* creditor in the same position. Ho maintabled that the resolution calling upon tho trustee to appear and verify his report was properly passed, and it camo with a very bad grace from the trusteo to resist tho motion.

Aft r some discussion with reference to the rejection of the proxies att'.'e meeting, and the ability of the Oaiuarn creditors to pass the resolution calling upon the trustee to verifv hisreport, his Honor decided that the affidavits had been properly ivjt cted, and that the resolution had been properly cirried.

James Sconlar was then examin d, and deponed : I am trustee in the estate of T lomas Hi Hiker. The r. p »rt and balancesheet produced were prepared by me. The statements contained in them are true.

Cross-examim-d by Mr, O'M 'agher : ] have returned Mows'. W. and .J. Scouhir, as creditors, for LI .'M3 BK 81. I have paid t,hi) linn tin- dividend on tho titlal amount. T f dividend paid was L 172 24 31. Tho dividnd was at the rate «'f 24. OJd. in tho £. I p-iid tin! dividend to Monhim. W. Miid J. Sconlar on t!io 21th April. Tho linn at that time held a mortgage over tin! pr.p-rtv of 110 bankrupt for T/>Of), .ind other advanc h. We have; h >!d Hillikcr's propi-rtv to Mr Junes Johnston S-ii'iii;.' f..r t e .sum of LfHK). Tho 0 imam Mutn d Bidding Society had a mortgage over tho propertv, and our linn pud tho Society L 22 9s! G l. for aec uunlatoil uioiit'.lv payments which were duo befovo tho bankruptcy, and wo afterwards repaid .nra.lv. s out of tho estate. T paid 1,28 18-<. to tlio Mntroipal Council which tlio lulifor o vrd at t io time of his iusolvoney. : J ..rt of t.lii.s was for rent, of ;i Corporation

;. etion. '''ho creditors all .wed mo ."> per •mil-, as commission. 1 pud Mr. ftsk lale, Lli 4s. 4 I. f.r h.l iMcing the br.okn and :ir. paring tho s'oek t'>r silt!. U}» 'l isual proeadiog. Eslolalc vnrv nod Pi !) iina.ai 2\ d lys. I paid him LI a day and .is hotel expenses. The hoi.'l ex;ienins amou-.teil to LI7 1 1 -t. 1 could not have obtained a (rust worthy man lor less than ibis. 1 paid LI 10<. 81. <>ut of tie estate for insuring the pro .. y in tho South British Insnrauc" Company. The goods and book-debts were sold by teidor for Ll3l to Mr. George Sumpter. Wo took poss'ssiou of fie propel ly in Ililliker's ■ state on f>o Ist February, an I let a portion of the building for w:.ich wo obtained LlB b, fore selling the property. I paid the dividend to \V. and J. S oular bel'oro the property was sold, and before 1 attempted to have tho h curity held by Messrs. W. ami J. Sconlar valued. I have not pahl tho dividend to Mr. lingo Lippcn, but, Iho cheque has been drawn, and is in our office at Duinalin. 1 never told l.im that 1 would not pay the amount, as fm funds were 1 xhausli d, and that I would pay no more. The roamm I gave Mr. l/'pp'ert for not paying him was that I would pay no nit.ru until tho matter in dispute with some of to creditors was settled. I was very much annoyed at tho time, and had l-.st my temper. There is no such name on my list of crediloi'H as W. .1. Steward and Co.

lte-ixnnined l>y Mr. llaggilt : Iconsidercd that Mr.'lCskdale rendered services cquival nt to ilio amount paid to liim. Mi! \\'ii.s in Oamaru 28 days.

To Mr. O'M. nghi r : I never made any attempt to get the bankrupt to collect the book debts iii the estate.

M". O'Meagher ask u for an order calling upon Mr Scnular ton fund to the estate the w o!e of the aniount which had been paid to.]a s Eskdale, with the exception of a far mm say a wei k\s pay; that tho amount, paid for insurance should also bo refunded, as it was for insurance on tho building which was iimrl'iaged to M'-nsm. W. and J. Scnular, and not on the goods and chattel* of thcen'atcj that the sum >.f h'2'2 {U (11. paid to tie Building K, ci.-ty lie refund d, as that payment was calculated to improve the security,'"id not the i state ; also that the sum of L'2B 18», be r. funded, as it was for vent. Me contended that bef.fc the tnnteo paid any dividend to Mi ssrs. W. and J. Scnular," he should have taken steps to lave the securi'.v lield by them valued. M.-ssis. W. and .1. Senulir had first ].roved their claim in fill!, and hail received a dividend nil their full iiinnutit, wile holding a seoui jty nvi i' the whole na'ate. If- ' i j ' l ' tluit tins «as a nuitti r of piinc pie in wliieh the Court might verv pr<']».. rly int. rfere. lie InM that it was" in cessary for the trustee to ha«'e the property held by a won red creditor v.ilued,'mid the seenr d vr> ditor should cither ha\e it valued or I and the security to the trust. •-, and tin n stand in uh all ordinary crulitor in the nutate. The amount . f the security s oiild have been dedncteit from the total amount claimed by M. ssrs. W. and .1. . v c.-ular, who should have received a divid ml on LSl.'} L'ts. 81. instead of on LK54.'3 l.'Js. 8.1., and ho would therefore move that the amount received on the L'.OO of secured <h bt slmiild be refunded to the estate for the benefit of tho whole of the creditor*.

He would also ask that the trustee should v be called upon to pay the costs of the ..proceedings. / Haggitt'-'contended that Messrs. w.and J. Scoular were entitled to prove the whole of their clann as a debt due to them. He held that it was only necessary for a security to be valued in order to determine the voting power. He intimated that under the Act the trustee was compelled to pp.y the dividend upon the amount of the debt as proved, while it was nesessary that a creditor sbould prove the whole of bis claim. "Whatever might have been the feelings of •i the creditors in regard to the payment of the dividend, the course adopted under the present proceedings was not a proper one at all: ' If any creditor or creditors desired to contest the matter, proceedings should have been taken under Rule 30, when the Court might .have reduced the amount on which the dividend could be paid by such sum as it might think fit. He contended that the only thing that could be done under the clause was with regard to the verification of the report and balancesheet. The Court had no power to say the trustee should not have paid a dividend to any person, or to make other payments. His Honor differed from Mr. Haggitt, and held that if a payment had been made which the Court thought wrong, it had the power to order the money to be refunded. Mr. Baggitt thought he could show that . the Court had no power under the Act, except that which was specified in the Act itself. He then dealt at some length with the subject to show that the Court could not exercise the powers exercised by the Court of Chancery at Home in regard to bankruptcy, and said that the Court must therefore rely entirely upon the Act itself. He contended that,, under the Act. there was no power given to the Court to make such an order as t'at applied for. Seeing that the trustee had acted upon leiral advice, he did not think t'at he could be charged with improper conduct in paying to Messrs. W. and J. Scoular the dividend upon the total sum of their claim, and it was in order to have the whole facts of the matter brought to light that he had resisted t ese proceedings. He contended that Mr. Scoular was justified in paying the sums for insurance and to the Building Society, and argued at so.ne length to show tiat it was the trustee 's duty to make these payments. He also conk nd d that the trustee was justified in employing Mr. Eskdale to take an inventory of the stock and make up the debtor's buokt, and th» payment made by the trustee was a perfectly justifiable one. Jt wuld he too much to t-xpt ct the ti n-t<-e to undertake the wl ole of thes • duties for the five ptr cent, aliowi d to Inm. - His Honor said that the trustee might have obtained some person to have ' er-fornif-d the work for a muc : less sum than had been p.-.il. Mr. Haggitt urged that tho Court had no power to inquire into ev.ry expenditure made by the trustee. A great deal of discretion must be placed in the hands of the trustee. Mr. George Sumpter was called, and stated that he was a certificated accountant in bankruptcy, and had employed persons to take stock. He had paid LI Is. per day remuneration for the performance of the work. He considered the amount paid by Mr. Scoular to Mr. Eskdale was excessive. After Mr. O'Meagher had replied, His Honor reserved his decision until the sitting of the Court to be held in January. The matter was one of very great importance.