SUPREME COURT.

Otago Daily Times, Issue 7930, 22 July 1887, Page 4

SUPREME COURT.

CIVIL SITTINGS. 'X'nuiisuAr, Jur.v '21, (Before his Honor Mr Justice Williams.)

AI.I.KN V. TIIK NEW ZUAI.AND LOAN AND MRKCANTII.K ACKN'CY COMI'ANV (l.lMITHIl) AND TIIK lIANH 01' NKW /.KALANI), An ei|»ity suit to recover, in the alternative, from the company or from tlio bank, ii portion, claimed to bo due to this bankrupt estate of Charles Stanley AUtn, of a inortisagu debt of £5000 over tlio St. Clair estate. Mr Duiinistoii, with him Mr Wooclhousu, nppcareil for thu plaintill'; and MrNuwton (of Oiimarii), with him Mr Husking, for the defendants. The ease i'or tlio |)!iiinli/r in thi:) aotioji was in substance as follows :-The plaintiff (Win. I. Allen) claimed as the, assignee of tlio bankrupt estate of Charles S. Allen, formerly manager of the Uanlc of New Zealand at Oaiiiuru. At the beginning of the year 1877 Mr 0. !d. Allen was interested, along with Messrs Fleming and Iledley and Mr Corniack, in v property known as Eslibank, in Canterbury. That property comprised -1800 acres, and it was then valued at from £■15,000 to £48,000. l'lemiug and Hedley had a three-sixtliß interest, Cormack two-sixths, anil Allen one-sixth. There wan, however, v mort-

gago over it lor £21,000 to Mr Allan M'Lcau In the same year Allen, Uormack, and A Maude (also of Oarnaru, commission agent) purchased what is known as the St. Clair property, consisting of 100 acres, :\t a cost of about £25,000; and £4000 of the purchase money had to lie raised by discounting bills, Allen giving to the Bank of New Zealand his own mortgage of one-sixth interest in Eskbank for the purpose. In April 1879 a further part of the purchase money, about £5000, had to bo paid, and the money was borrowed from Mr John M'Lcan, of Kedcastle, an arrangement having been previously come to that Allen, Maude, and Cormack should mortgage their interest in this St. Clair property to secure tho amount. But Mr M'Lean was dissatisfied with that security, and it was stipulated that Cormack was to mortgage his share, two-sixths interest in Eskbank, for tho same amount. This last mortgage was given on the Bth April 1879. Tho Bank of Now Zealand had had to advance money to Messrs Fleming and Hedley, and to tho other parties, on account of Kskbank; and in June 1579 Allen and Cormack agreel to buy out Fleming and Hrdley, giving in exchange some other properties they had. That transaction, however, was not completed (as the bank would not permit it) till December 1879. On tho sth December another mortgage between Fleming and Hedley, Allen and Cormack was executed; and it re-cited the debt of all the parties to the bank in the sum of £5982 on the station (Bskbank) account, and of £4111 liability of Cormack and Alien. On December 6, the following day, Fleming and Hedley transferred to Cormack and Allen their interest in Eskbauk, two-sixths of the whole property going to Allen and four-sixths to Cormack. In February 1880 Mr Allen M'Lean's mortgage became due, and, after negotiations, it was transferred, on the Ist March 1880, to tho N.Z.L. and M.A. Company. It was stated by the defendants in their defence that everything that had been done by the company had been done by them as trustees or agents for the bank. In the middle of May 1880 the position was this: Allen's interest in the Eskbank property was one-third, and Cormack's two-thirds; there was £21,000 due on the first mortgage to Mr Allan M'Lean, and transferred at that time to tho N.Z.L. and M.A. Company; it was subject to a second charge of £4111 on a mortgage by Allen on his original one-sixth over Eskbank; it was also liable to a second charge of £5000 over Cormack's two-sixths to Mr John M'Lean; aud there was the general mortgage of the bank over the whole to secure £5082 and further advances. Plaintiff said that in addition to the property there was £11,000 worth of stock and cut grain on the farm, 'which was not secured. About tl'o end of May Mr Murray, the bank inspector, passed through Oamaru,and with Mr Dowling, had a conversation with Mr Allen; the result being that a written agreement was come to between the parties. The solicitors for tho bank and for the company (Messrs Newton and Mirams, of Oamaru) had written Allen ns follows: —"With reference to the mortgage held by the N.Z.L. and M.A. Company over the Eskbank estate, and the other mortgages thereon, we are instructed to inform you that we have received instructions to foreclose under the mortgage; but, with a view of the saving of expense, tho company are willing to accept the transfer of the equity of redemption on the estate, including stock, grain, and plant, at a figure to cover the existing mortgage. Please let us have an immediate reply, as one or other of the courses above mentioned must be taken at once." This offer v/m accepted by Mr Allen and a transfer was executed in pursuance of it. The transfer set out that—

" In consideration of the sum of £22,251 now 1 owing by us to the N Z.L. and M.A. Company, i we hereby transfer to the said company all our , interest in the said land " (Eskbank). The ', ( transfer was made subject to the other mortgages—namely, Allen's to the bank of his onesixth, Cormack's to John M'Leau of two-sixths, and all the other parties to the Bank of New Zealand. The plaintiff contended that the effect of this was that the bank or the loan company was bound to indemnify the transferors against all the mortgages, including that to Mr John M'Lean, which was also secured by the mortgage over the St. Glair estate. Mr Allen subsequently gave a mortgage to the bank over his one-third interest in the St. Glair estate, and the bank eventually sold through the registrar ol thu Supreme Court the property comprised in this mortgage, and bought it in themselves. The sale was made subject to the first mortgage to the original vendors, which had never been completely discharged, and also the mortgage to Mr Johu M'Lean, the amount due upon which was stated at the time of sale to be £8000 odd. The contention for the plaintiff was that that mortgage should have been discharged, which would have increased the value of the St. Glair property by the amount of £8000 odd, and the claim was therefore for Mr Allen's share of that sum. For the defence, tho defendants did not admit the agreement relied upon by the other side, and pleaded that if the transfer or any other document had the effect contended for by the plaintiff (which assumption they denied) there had been i mistake, and that the proper agreement come to between the parties had not been given effect to. The agreement the plaintiff alleged was that the loan company should take over the Eskbank property, but should retain the security over the St. Glair property given by the mortgage to Mr John M-Lean, which mortgage they subsequently obtained a transfer of. Mr Denniston opened the case for the plaintiff, and the rest of the day was taken up with the examination of Mr O. S. Allen, whose crossexamination was not concluded when the court rose. The court adjourned at 5.30 p.m.