SUPREME COURT

Otago Daily Times, Issue 22122, 28 November 1933, Page 5

SUPREME COURT

Before His Honor Mr Justice Kennedy. CLAIM FOR MONEY LENT His Honor Mr Justice. Kennedy was occupied yesterday in hearing a clairn by Henry Henderson against Francis Bernard Francis for £393 Is, money lent. _ Mr A. G. Neill appeared for the plaintiff and Mr J. S. Sinclair for the defendant. 1 ■ . ... Mr Neill said that the basis of the action was a claim for moneys due by the defendant to the plaintiff under a deed of covenant dated September 31, 1927, whereby the defendant covenanted to pay £251 0s 5d together with interest at 8 per cent. On October 28, 1927, according to the statement of defence filed by the defendant, the defendant had held a meeting of creditors, and a further meeting had been held apparently on March 1933. He had been advised that morning of another meeting held between those two dates—on December 15, 1927. Certain moneys had , been repaid by the defendant to the plaintiff, and the amount now owing was £393 Is as at June 17, and the plaintiff claimed this amount together with interest from the date ot judgment. ~ Counsel said he would recite the facts leading up to the loan. About the beginning of 1927 the plaintiff had joined the firm of Messrs Francis and Taylor as a salesman. After being there for Some months, the defendant . Francis, approached him and told him he was in financial trouble. At the same time the defendant showed the plaintiff the balance sheet of Francis and Taylor. It showed a profit of £3OOO. Henderson asked the defendant what he should worry about, seeing the huge profits shown. The defendant had replied that they were in stocks and book debts, and that he could not get hold of cash. Certain other representations had been made by the defendant in regard to his financial position, whidh subsequent events had proved to be false. Induced by these fraudulent figures the plaintiff had raised a mortgage on his own house for. £250 and advanced, it to the defendant. The mortgage was still on the defendant’s house... The only security or acknowledgment that the plaintiff received was a deed of covenant, and this would be produced. Plaintiff felt that at all times he was protected if at any time there was an assignment to the creditors. About six months after the money had been advanced plaintiff received a notice calling a meeting of defendant’s creditors. Prior to the meeting of -creditors the defendant had told the plaintiff not to worry, as he, the defendant, owing to the particular t circumstances under which the money ’ had been raised,- would personally pay, the plaintiff eveiy shilling he, owed. At the first meeting of creditors plaintiff had putdn a statement of the amount owing to him, as he felt he was compelled to do this. He had attended each meeting of/creditors —three in all. In the intervals between the various meetings he had received payments from the defendant. The plaintiff had sworn that he had not voted one way or the other at the various meetings of creditors. The minutes of the second meeting, said counsel—which he had seen for the first time that morning—and the various resolutions passed, specifically stated that the plaintiff had not voted one way or the other. . Plaintiff would say that it was never hig intention at any time to _ grant a clearance to the defendant until he had received all that was owing to him. _ The last payment, received by the plaintiff from the defendant was in February of this year. The defence relied on the deed of assignment, and claimed that the plaintiff was bound, thereby. The onus was on the defendant to prove the plaintiff’s assent to the assignment. So far as the deeds of assignment were concerned they, would be the subject of argument later on.

Henry Henderson gave evidence corroborating Mr Neill’s statement. Plaintiff was cross-examined at some length by Mr Sinclair regarding hia attitude at the meetings of creditors. Mr Sinclair: Did you,move the follbwing resolution at the second meeting of creditors: —“That Francis be required to assign his furniture for the benefit of his creditors”? Will you deny that you moved that motion? Witness: Yes, I will deny it. Mr Sinclair:’ Do you suggest that -your, name was wrongfully used as the mover of the motion?

Witness: There may have been a - mistake. He would swear definitely that he never moved any resolution; He did not . vote one way or the other. Witness said he would deny that the jninutes —in which *we was stated to move, and Mr Lousley to second, that the previous resolution that the assignment for the benefit of creditors be confirmed —were correct. Each and all the references to him in the, minutes were wrong. He would contradict Mr C. J. Payne if he said that they were correct. He had told Mr Sellars, just lately,, that -he : jypuld not sign anything. He had told him that he had a deed of covenant, and Mr Sellark said, he did not know that. He had not been represented at any meeting of creditors, > although Mr Smith, : of Messrs Smith and Lousley, had accompanied him into a meeting. Mr Sinclair said that the third meeting -of creditors had been held on March 28 of this year., Mr Payne, the chairman of the committee set up, had said that the committee recommended that Francis be released from his covenant of 10s in the £ and that a receipt of a dividend estimated at about 4d that the creditors giw* him a complete discharge. Did I witness remember about this meeting? : _ _. -''l' . Witness said he had a recollection ahput 4d in the £. He, however, had not been prepared to take that as the deed of covenant protected him. He would deny saying to Francis jutt after the meeting that it was a “ bit hot only receiving 4d in the f.” Francis had said to him, “You are a white man; and I’ll see that you don’t lose anything.” He had never disclosed to' the creditors that he had a deed of covenant. H e had told Sellars about it in October, 1933. He did not recollect ever meeting Mr Sim at Mr Sellar’s office. He had never agreed to or dissented from the assignments. He had net voted at the meeting on March 28. John Edward Marshall, a solicitor employed by.Mr A. G. Neill, produced a statement showing the amount owing to the plaintiff. Mr Sinclair, in opening the case for the defence, said it was admitted,that before October 5, 1927, the defendant was\ indebted to the plaintiff under a deed of covenant. On October 28, 1927, the defepdant’s creditors were called together arid the plaintiff was represented at that meeting by Mr B. J. Smith. At that meeting resolutions had been passed that the bankrupt assigp his estate, with the exception of his furniture, and that Mr Burdehin be appointed a trustee under the assignment. A committee had been set up to act with Mr Burdekin, and they had met on, a great many occasions. The bankrupt’s affairs had been very, involved and some very difficult questions of law had to be considered.- It had been a very difficult- thing to ascertain the real position. Certain illegal acts on the part of the defendant had been discovered, and for these he had paid the penalty. In view of these discoveries the trustee and the committee had desired to call the creditors together again. At that meeting Mr Payne had explained the position very fully and the estimated value of the estate. A motion had been moved in his name (Mr Sinclair’s) that Francis be not given his release until he had paid not less than 10s in the £ and that a further agreement be drawn up to incorporate this condition. Five creditors did not vote on that motion, according to the minutes, and one of them was the plaintiff. But the plaintiff had moved a resolution at that meeting that Francis be required to assign his furniture for the benefit of his creditors, this asset being expressly excluded from the first assignment. There was no record in the minutes that the plaintiff on that occasion desired his vote to be recorded for or against. His counsel said his witnesses would swear that the resolution had actually been moved by the plaintiff, and yet it appeared from the minutes that he, desired that his vote be not recorded. The meeting had then terminated, and following that a second deed of-assignment had been prepared. The plaintiff had not signed either of these assignrrients. It would be submitted in the law that even although the plaintiff had not actually signed the deeds of assignment he was. bound by them—that he had assented, and that lus signature to the deed was not necessary, under the law, if they established that assent. Plaintiff’s subsequent conduct had been consistent, and consistent only, with assent. A further meeting had been held on' March 28, 1933. The gomrnittee had gone into the whole position carefully.

The defendant had been severely punished by imprisonment, and he was a broken man —and he had no prospects whatever of carrying on ms covenants under the assignments. It was thought it would be fair to give him a chance by giving him a complete release and let him try to reinstate himself in the community. . At that meeting a resolution was carried —the wording was rather peculiar —but the real contention was that the creditors should give Francis complete relief on receipt ot whatever dividend there, might be available. . The estimate was somewhere about 4d in the £. The resolution had been put and carried. The only dissentient had been the official liquidator through his solicitor, Mr Green, who had given technical reasons why he should not assent without the approval of the court. The plaintiff had kept silent, and his assent had been recorded. _ Following this, on more than one occasion defendant had attended at Mr Sellars’s office making inquiries as to when the dividend was to be paid. On one occasion Mr Sim happened to be at Sellars office when the plaintiff called. They submitted that under the law plaintiff had assented to both of the deeds of assignment, and that accordingly he must be restrained from pursuing the action. Furthermore, that by the resolution at the meeting on March 28 the plaintiff joined with the other creditors in giving the defendant a complete release on receipt of the diviFrancis Bernard Francis said he could not state whether Henderson had or had not moved the resolution referred to. Henderson had said to him that “ it was a bit hard, or a bit tough, that he was to get only 4d in the £.” He had replied that he was very sorry; that,he had done bis best. . ~ To Mr Neill: He could not say whether Henderson had signed either deed of assignment. He had handed moneys to Henderson because he had demanded them. He could not have paid other creditors if they had demanded money because he did not have it. - He did not realise that it was a fraud to pay Henderson. He did not read the deed of assignment. His intention was that Henderson was to be treated as an ordinary creditor. He was not responsible' for what Mr Henderson had said in evidence. Mr Neill: Will you contradict what he says? , Witness: Quite a lot of what he says. Witness said he* had always found Hendersoi} to be an honourable man. Charles Joseph Payne said that on October 28, 1927, he had attended,a meeting of creditors, and had been elected chairman. He was satisfied' that, the minutes of the first meeting were correct. He could not say whether Henderson was present at that meeting, but he remembered he was at one meeting because Henderson had complained of the unfortunate position in which he had been placed. Henderson was present, at the meeting in December, and had moved a resolution regarding the defendant’s furniture, and it was carried. .... Mr Neill pointed out that the. minutes of the second meeting—in December—had not been signed by Mr Payne. Mr Payne said he saw nothing wrong with Henderson moving a resolution and not, voting for it. . ' , His Honor: Who has the custody of the minutes? Mr Payne said he did not know. On resuming after the luncheon adjournment: Mr Payne was examined by his Honor i regarding the document relating to the proceedings at the second meeting of creditors —in December, 1927. His Honor then said he intended to reject it. William Robert Sellar, manager of the Otago and Southland Finance Corporation, Ltd.,' said he succeeded Mr A. p; Btirdekin as manager. Witness said that Henderson had not put forward no objections at the last meeting of creditors. The plaintiff had repeatedly asked him when he was to jret his (jlividena. He had no knowledge that Francis wag making payments to Henderson until Henderson told him. To Mr Neill: So far no dividend had been paid out. ~ John Anderson Sim said he was acting for Francis in 1927, and also for the trustee in the assigned estate. He had prepared the deed of assignment. He was in close touch with Mr Bnrdekm over the business. He had attended the three meetings of creditors., He could recall that it was Henderson who proposed that Francis should be asked to "•ive up bis furniture. That resolution was carried. Henderson did not take any part in the meeting in March. Mr Bnrdekin took records of the meeting on December 15. , , , Mr Sinclair; From your knowledge would yon say that this paper is a fair record of what took place at the meeting on December 15? His Honor: No. His Honor said counsel must elicit what he wished to know from actual evidence. Cross-examined, witness said he was not the solicitor for the defendant. He had had the minutes of the second meeting of creditors for about a month. Mr Sinclair had asked him. as the solicitor of the assigned estate of F. B. Francis, to get him copies of the minutes of the three meetings of creditors. Witness said he had nrepared the two deeds of assignment. Of the six parties who had signed the original assignment five had signed the second assignment. Mr Sinclair addressed the court, which was adjourned till 10 o’clock this morning.