DISTRICT COURT.

Oamaru Mail, Volume IV, Issue 952, 7 May 1879, Page 2

DISTRICT COURT.

, THIS ,DAY. (Before hia Honor Judge Wap.d.) Ei EE JOHN LEWIS. This was a petition by E. C. Smith, a to have John Lewis, a farmer, carrying on business at Maerewhenua, adjudged a bankrupt. Mr. Hislop appeared on behalf of the petitioner, Mr. O'Meagher for the defendant, and Mr. Newton watched the case for the Bank of New Zealand and NewZealand Loan and Mercantile Agency Company. The petition set forth that John Lewis, on the lGth April last, and for, six months previous, had resided and carried on business as a farmer at Maerewhenua ; that on the 16th April he was, and is now, indebted to several persons in large sums of money, and was then, and is still, indebted to the petitioner in the sum of LB7 14s lid ; that, on the 16th April, John Lewis executed a bill of sale and stock of mortgage between himself and the New Zealand Loan and Mercantile Agency Co., whereby, in consideration of advances which had previously been made by the Company to Lewis, and of still further advances which, it is stated by the deed of mortgage of stock and bill of sale, the Company had agreed to make to Lewis, he assigned to the Company all his horses, agricultural implements, stock, plant &c. ; that the property comprised in the bill of sale comprises the whole of the property of John Lewis, except 13 acres of land near Oamaru, mortgaged to the Company to secure the sum of LSOO ; that, on or about the 2Gth April, the Agent of the Company at Oamaru seized the goods under the bill of sale, and advertised them for sale on Saturday, 10th May; that previously to the bill of sale being made, John Lewis was and still is indebted to the petitioner and others in large sums, and since the bill was executed he had applied for payment to Lewis, who had informed him that he was unable to pay him, and had since called a meeting of his creditors ; that from the statement laid before his creditors and his explanations, it appeared that the debtor was unable to pay 20s in the £ ; that the petitioner verily believed that by the said deed the said Jolin Lewis made a fraudulent conveyance of a part of his property, and the petitioner verily believes that by so doing the said John Lewis has committed an act of bankruptcy within the meaning of " The Debtors and Creditors' Act, 1876," and prays that he may be adjudged a bankrupt. Mr. Hislop opened the oase at some length, and quoted authorities bearing upon it, Edward Charles Smith, storekeeper at Duntroon, deposed that he remembered being at meetings of the debtor's creditors on Saturday and Monday. He remembered him producing an account from the New Zealand Loan and Mercantile Agency Co. He was asked on what authority money was paid, and he said that he had never given the Agency authority to pay the amount into the Bank. Witness remembered debtor stating that the last sum received from the Agency was obtained just before the mortgage was given. The debtor produced a statement of his liabilities. He stated that the land had been previously mortgaged, witness believed, to the Loan and Mercantile Agency. Tlxe greater portion of the amount owing to witness was due to him last December. Mr. Allen, of the Bank of New Zealand, was aware that the money was due to him. He had demanded payment from Lewis several times, and he had made various excuses, the last of which was that the Loan and Mercantile Agency Co. would not let him sell his grain. C. S. Allen, manager of the Bank of New Zealand and agent for the New Zea-' land Loan and Mercantile Agency Co., produced a bill of sale made by Lewis to the Agency. He remembered a bill given by Lewis to Mr. Smith being dishonored in December last. Lewis had been in debit to the bank until April. He had taken possession under the bill of sale on the 28th April. He produced the voucher for L 475 8s 2d paid in by the Loan and Mercantile Agency Company to the credit of Lewis. He knew at that time that Lewis was then in want of money to carry on, but he could not say that he was being sued at the time. He knew that Spence and Bee held a bill of exchange of Lewis', and that it was dishonored on the 13th March, but he was not aware whether or not that bill had been paid. He could not say whether he had been consulted as to the renewal of the bill. He was not aware on 25th April thatSpence and Bee had obtained judgment against Lewis in the Resident Magistrate's Court. He was not aware of it until now. He sometimes read the papers. He was aware that Lewis had applied for money, and obtained some from the company. On the 15th April he had been paid Lllo, which was distinctly understood to be an advance under the bill of sale, besides insurance on the crops. The Llls was given to meet Lewis' cheques, given for the expenses of harvesting. He was aware that at this time the company held a memorandum of lien over the crops, and they refused to give him any more money unless he gave a further security. The money was actually advanced to get in the crops over which the Company held a lien. The Company's object was to get security for any further sums of money that might be advanced. He did not understand that the mortgage was obtained in order to get better security for the money previously advanced. There was also a large amount of rent due to the Company. The reason for the Company taking possession was that Lewis was hanging about Oamaru doing nothing. He was not aware that he was wanting to get money for fear of judgments on fraud summonses. To Mr. O'Meagher: The L 470 odd was paid into the bank by the Loan and Mercantile Agency Company in consequence of a letter from the bank calling upon the Company to pay up advances made, The Company held an authority to pay money on Lewis' account. That authority was signed on the 3rd April, 1879. He could _ not say why that authority was not obtained sooner. He was not aware that on the 3rd April Lewis' affairs were in a shaky condition. He had not enquired into his private debts. A demand had been made tgainst Lewis. The bank had taken possession because Lewis was hanging about, and would not work his farm himself. Mr. O'Meagher : Are you not aware that he was waiting about three days, in order to get his pass book from the bank? Witness :I am not. The matter was only a small one, and if Lewis made a demand to have his book made up he would have got it next day. Witness continued—He was present at the interview when the bill of sale was made. There might have been several interviews on the subject. He was quite certain that no further advances could have been made unless he agreed to it. The bill of sale was obtained as security for the Llls and for further advances promised to be made. Lewis had been told that further advances would be made to him—some L 320 odd for rent The demand for a bill of sale Was made by the Company because Lewis had applied for further money. The Company refused to grant any further money unless they obtained further security. To the best of his knowledge, he would swear that no demand for a bill of sale was made previous to Lewis applying for further advances. The seizure was made on the 28th April.

To Mr. Hislop: He could not say whether it was intended that the security | taken by the Company should be obtained to protect both the Company and the Bank. It was very likely that the authority to receive money given to the Bank was mentioned when the instructions were given for the preparation of" the bill of sale. He was positive that the Llls was advanced upon the distinct understanding that it was to pay cheques drawn, or that might be drawn. The money having been paid into the bank, it was liable to be held for any money advanced by the bank. Edward B. Burburv, in charge of the store and business generally of the N.Z. L. and M.A. Company, stated that the negotiations with Lewis in reference to the bill of sale were partly made by Mr. Allen and partly by witness. He believed Mr. Allen first spoke to Lewis about the bill. This was about the first few days of April. Instructions for the bill of sale were given about the 3rd April by Lewis. The bill of sale was obtained to secure Llls advanced, for the rent coming due, and other expenses. His idea in getting the bill of sale was to obtain security for future advances. He had taken possession under the bill of sale, by order of Mr. Allen. The Company, in addition to Lllo, had paid the Bank L 475, in accordance with a letter given by Lewis to them. It was distinctly understood that when that letter was given, the Company would have to pay the money to the Bank. The Company had given a guarantee to the Bank for the overdraft given to Lewis. The letter was presented to them, and they agreed to pay the amount to the Bank. °To Mr. O'Meagher : He did not remember anything having been said to Lewis to the effect that he should give further security for the money previously advanced to him. He believed at the time the letter was written the Company was sufficiently secured for the advances it had previously made. He had made the seizure under the bill, and had made a demand for payment to Lewis. He estimated the value of the property seized at about L 550. The guarantee to the bank was to be secured by tho bill of sale, as well as the Llls and the rent which was coming due. The guarantee was given to the bank on the 14th January. The witness was further examined by Mr. Hislop. D. S. Montagu said that the cheque for Llls was paid into the bank 011 the 15th.

Mi-. O'Meagher said that so far as the debtor was concerned, it was a matter of no consequence whether he were adjudicated a bankrupt or not, as he would have to go through the Court under any circumstances.

Mr. Hislop argued that an act of bankruptcy had been committed by the debtor, and that the case was one that clearly came within the cases cited in his opening remarks. He contended that the bill of sale was actually obtained to secure advances previously made, and that the subsequent advances were simply sham advances. He also argued that the debtor did not receive the full benefit of the Llls advanced, but had partly gone to pay the Bank a portion of the LSOO previously guaranteed to the Bank. His Honor, in giving judgment, said the position of the case simply was that, Lewis, being in debt to the Bank of New Zealand for~Ll79, and having had sundry bills of exchange dishonored there, applied to the Loan and Mercantile Agency Company for a further advance, Mr. Allen, manager of the bank in question, being also the manager of the Loan Company, and the Company having already a lien over the crop, and already a mortgage over his only froehold to the extent of its full value. The Loan Company having guaranteed to the bank Lewis' overdraft to the extent of LSOO, requested him to give a bill of sale over all his remaining property of every description for securing future advances. They then paid into the bank Lllo for him to pay harvesting expenses, without which their crop could not have been got in; next, by agreement with Lewis, the Company paid off the bank overdraft ; and then took possession of all chattels. It appeared that the rent was due and would have to bo paid by the Company, but they would have to do that in any ease in order to secure their crop. From the facts as proved, he drew the conclusion that the Company were fully aware of Lewis being in difficulties ; that the advance made by them of Llls was in effect merely to enable Lewis to secure the crop, mortgaged to them by him, and the sum of L 470, in effect an antecedent debt. He could not sever the identity of the manager of the Bank of Now Zealand and the agent or manager of the New Zealand Loan and Mercantile Agency Company, but must hold the knowledge of the one to be the knowledge of the other ; and he held that they knew the debtor to be hopelessly entangled, for Smith stated that Allon told him the debtor could pay nothing but cheques for wages. As for the debtor, he must be taken to have contemplated what was the natural consequence of his own acts. He may have been wholly confused about his affairs, but it had not been deemed worth while to examine him that day. He assumed that he knew himself to be in the position in which he really was, and consequently knew that this bill of sale would inevitably cause the whole of his property to pass into the hands of the New Zealand Loan and Mercantile Agency Company, and defeat his other creditors. An order of adjudication of bankruptcy was granted as prayed.