BANKRUPT SOLICITOR.

Otago Daily Times, Issue 20388, 20 April 1928, Page 6

BANKRUPT SOLICITOR.

HEAVY MISAPPROPRIATIONS

MONEY PUT TO PRIVATE USE,

FURTHER ACTION PROBABLE,

(Special to Daily Times.) AUCKLAND, April 19,

“In March of this year I was faced with the payment of large sums which I had received on behdlf of clients, and I then had no option but to make public my position. 1 cannot make any excuse for my present position. I had the opportunity early in my career to make good, but 1 think that my initial success imbued me with an optimism which led to my downfall. Had I had the courage I would have made public my affairs two years ago. Apart from my assets, I have no offer to make. My career is blasted, and I do not know to what I can now turn my hand. I can only say that, if given the opportunity, I will do my utmost to make good, in time, any deficiency which may arise out of the realisation of my interests.” These sentences were contained in tne sworn statement jf John Henry Victor Mansill, solicitor, of Auckland, when he Iftet his, creditors in the official assignee’s office this morning. Standing room only was the order at f the meeting, over, which Mr G. N. Morris, official assignee,'presided. The bankrupt was represented by Mr L. P. Leary. Mansill’e schedule showed that £BIB2 6s 5d was owing to unsecured and £3210 to secured, creditors. The estimated value of securities was put down at £5400, and the total debts at the value of the amount owing to unsecured creditors. On the assets side, book debts were placed at £1533 15s Si', (and estimated to produce £1200). cash in hand at £l6 8s lOd, property £5684 15s, and surplus from secured creditors £3190. The total assets were represented to be £9091 3s lOd, and bankrupt showed a surplus of £9OB 17a sd. In his filed statement Mansill set out the reason for his failure as follows: — “In July, 1923, I commenced practice on mv own account as a solicitor in the National Bank building in Shortland street, Auckland. I had no capital, but a friend guaranteed me an overdraft of £3OO with the National Bank. This overdraft was paid off within two years, From the commencement I improved my financial position: but in March, 1925. 1 found that I was behind to >a very small extent. In view of my previous success, however, I felt confident that I could make up the deficiency. Within-this period I had purchased a property in Devonport for my wife at a cost of £1450, subject to a first mortgage of £9OO, and I was making her a w e ®h , -’ r allowance of £5, besides paying interest on the first mortgage and rates. During the ensuing, 12 months business slackened off appreciably, and I found at the end of the next financial year that I was further back than ever. In November, 1925, I had at the instance of a client arranged to purchase a property of 18 acres at Birkenhead, and although the title was taken in my name, the client and I were equal partners. I paid all rates and interest, as well as survey fees, until last year, when I could not keep up the payments any longer, and the mortgagee exorcised his powev of sale. This property cost me about £3OO, but half of that amount is due by the client. 1 considered this a safe investment as a valuation made for mortgage purposes placed the value at £5400. A sale was made of a portion, but the purchaser defaulted, and instead of deriving any revenue from the property I was forced to meet heavy outgoings. “In the meantime, I had been in the habit of making advances to clients in my own name, sometimes taking a mortgage as security and at others merely advancing as on a current account.- In the latter class is included the money which I have advanced to my father, but in my dealings with him i treated him as I would any other client. Although I have not taken from mm a mortgage to secure the amount due, , he lias always expresses himself as willing to give security upon my preparing a statement showing -the moneys payable by him. My lease of the premises in Shortland street expired in 1926, and I remained on as a weekly tenant until September, 1927, when I into new offices in the Dilworth Build ing at a rental of £5 per week. 1 sincerely hoped that this change would result in a large increase of business, but I was mistaken,, and the heavy rent, together with the cost of fittings and furniture, about £250, was not warranted. It is not now of much avail to say how sorry I am that the present position should have arisen.” . , . zc • t Under examination by the omciai assignee, the bankrupt stated that the sum of £l6 8s lOd shown as cash in hand on the schedule represented the whole of the trust funds now in. his possession It was impossible for him to identify that m< The' Official Assignee: That means you have misappropriated some £7ooo. Bankrupt: Yes. . . . The Official Assignee: During the past three years you have used up the £7OOO. Bankrupt said the loss on the Birkenhead deal was about £3OO to £4OO. The Official Assignee: Do you drink. Bankrupt: I am not a teetotaller, but I do not sp«4id more than 10s to izs a week on liquor. Clients sometimes come into the office and ask me to have a drink. ,„ What about gambling? Bankrupt; I have been to. the races now and again, perhaps five or six times in 12 months. I never bet more than lion a race. I never play cards. None ot the money has gone through personal folly. The bulk of the trust funds have gone into various private assets. The Official Assignee; But, surely, that is a most unusual thing to do over a number of years. .You say you did it tr increase your business. Is that it.

Bankrupt: Yes. The Official Assignee: Your statement shows a surplus, but there is not going to be any surplus. ■ The Bankrupt said that all sums advanced to his father had been repaid. There were no assets other than those described. , To Mr M'Kenzie (for one of the creditors) : All sums for interest had passed through the trust account. Other solicitors examined the bankrupt concernin'’' various details of the business transacted on behalf of their respective Morris said that the estate was very involved, and he would require some assistance. A committee, consisting or Messrs Hogben, Jacob, and White, had been appointed before the bankruptcy, and had done most useful work in supplying details as to values. Messrs Hogben, White, and M'Kenzie were appointed a committee to assist the official assignee in realising the assets. Mr Hogben said ho represented the biif-o-est creditor, the sum involved being about £1685. , -x a Mr Thorne; It looks to mo as if the wife will be the biggest creditor. “ Tho position is quite plain,’ said Mr Morris. “ The bankrupt has made a clean breast of everything. fcome 30 to 40 clients have suffered to the extent of £7OOO to £BOOO, that being the amount involved in the trust account. I l;nmv that some of those clients could not afforc. such lasses. Not only has bankrupt brought shame upon himself, but he has brought shame on an honourable profession and has raised doubts in the minds of many people. Not only has ho damaged his clients, he has also damaged his profession. That hein" tho case, it is my duty to bring the matter before the proper authorities. Mr Terry, on behalf of a trainer who tends bankrupt’s racehorse, reminded tho official assignee (hat there was a claim for training foes prior to the bankruptcy, and in the’ meantime expenses for feeding were mounting up. “I do not know the value of this horse. I believe it is a third cousin of Boan Cavalier or something like that ’’—(Laughter.) “ Ho values the horse at £40,” said MiMorris. “We shall go into the matter.” Mr Hogben said it would be of interest to know that the committee had investigated all the assets of which they had knowledge, and without going to an v great expense had made full inouiriea and had arrived at a valuation. "there were certain assets which could not be valued and those assets might yield £3OO to £4OO. The ssects capable of being valued were worth £3025. The total would not exceed £3500. “ Mr conclusion is that there should be a good dividend from this estate, but the.-a is no possibility of paying 20s in the £. ’ said Mr Morris, a* the meeting adjourned.