SUPREME COURT.

Otago Witness, Issue 2013, 22 September 1892, Page 20

SUPREME COURT.

IN BANKRUPTCY. Monday, September 19. (Before his Honor Mr Justice Williams.) RE JOHN BEATXY.

Motion for order of discharge. . The Assignee said that the position in this matter was still the same, excepting that he now had Home pro3pect of getting money with which to pay the wages. The case was ordered to stand over. KB ARTHUR. THOMAS Jt'DONALD. Motion for order of discharge. Mr Solomon appeared on behalf of the assignee ; Mr Eraser for Low, Sons, and Bedford, of London ; and Mr Hosking for bankrupt. ■ Mr Solomon said that this matter had stood over from the Bth of August in order that the assignee might, if possible, obtain a reply to his communications with the English firm of Brooks and Co. No reply had been received, but the assignee was prepared to go on. The objections he had before were now removed. Tee assignee took it that the firm referred to remained neutral. Mr Hosking said that they had an attorney here, Mr Donald Reid, and he did not oppose. Mr Solomon said that the position from the assignee's point of view was this : Bankrupt was a wool and rabbitskin merchant carrying on in a large way, and up to 1890 he apparently did remarkably vrell and was in a strong financial position, being worth from L 12.000 to L 14.000. Mr Hosking remarked that the correct amount wasLlß,soo.' Mr Solomon : But early in 1891, the year in which he went to England, bankrupt lost all he had and found himself indebted to the extent of L 22.000, to meet which he had but a trifling amount. He communicated with his creditors in England, and they, being aware of his position, consented to an arrangement by which bankrupt was allowed to go on purchasing wool and skins in New Zealand, and, strangely enough, they allowed him to draw against the purchases the price paid for the goods and also his private and personal expenses, so that, if the goods purchased did not realise sufficient to cover cost and M'Donald's expenses the English creditors would be loser 3. His Honor : You say that he was in England in 1891. What was his position then ? Mr Solomon : He was hopelessly insolvent. His Honor : Did the creditors know that ? Mr Solomon : They knew it. Mr Hosking : The real position is that no losa was made when the creditors were communicated with ; but owing to a sudden fall in wool— tho result of the American duties— M'Donald saw that not only would all his capital be absorbed, but that there would be a large loss.

Mr Solomon said that the view he put before the court was gathered entirely from bankrupt's evidence and the evidence of his clerks, and he (Mr Solomon) thought his Honor would lind that view preity well borne out— that M'Donald was insolvept in!B.')l.

His Honor : And that he knew it, and that his creditors knew it I—that1 — that is the point. Mr Solomon : Yes, your Honor. His Honor : And, notwithstanding that, they made advances?

Mr Solomon : Yes ; and the cost of living as well. Mr Hosking : They agreed that his indebtedness should stand over, and be covered by surpluses that might arise at tho other end. Mr Solomon agreed that that was so, but the assignee held that there were circumstances arising from that state of affairs which made it proper to bring bankrupt before the court. The first of these was the bankrupt's grossly extravagant private living. M'Donald knew then that he was existing commercially at the mercy of those persons in England. Ho knew that whatever money he expended in living was supplied to him by those persons and came out of their pockets. That being so, M'Donald lived at the rate of LIOO9 or LI2OO a year ; he had a large house, kept several servants, and lived in a style which, the assignee submitted to the court, waa wholly improper umW the circumstances. The direct consequence was that the creditors were creditors to a much larger extent than was necessary. If M'Donald had lived prudently the creditors would have suffered to the extent of L7OO less than they now did. Another objection the assignee made, which he submitted was much more serious, was that during this time, when M'Donald knew his position exactly, he made gifts and settlements to his wife. He purchased goods in New Zealand— he purchased goods with his creditors' money and shipped them to England in his wife's name. The consequence of that was, that when M'Donald became bankrupt the official assignee, having ascertained that these goods had been sent to England, communicated with the agents, and was told that the bankrupt had no connection with the matterthat the goods belonged to the bankrupt's wife. Further" than that, he purchased the house in which he lived, and within the two years— during this time when, as he knew, the money that he expended belouge4 to his creditors— he improved and beautified' the house ; and in all, during the period that he (Mr .Solomon) spoke of, the bankrupt spent a'sum,of about LIOOO in improving and beautifying bis place. Hi 3 Honor, :, That was since he returned from England?

Mr So'oraon replied in the affirmative, and said tho official assignee felt called upon to submit to the court that there was pure fuiud iv both of these cases. When hu became bankrupt and his affairs were inquired into, WD<>naM felt compelled to abandou these gifts, and they were all handed ba 'k.

Mr Hnsking :'Thcy were voluntarily offered by Mrs M'Donald independently of advice. Mr iSolomon wished to put it as fairly as possible. The matters were inquired into and the bankrupt repaid these moneys. His Honor': Everything? House and all .' Mr Solomon : House and all. The estate gets no benefit by the house because it was mortgaged, but the money went into the house and the mortgagee Rets the benefit of it. Mr Hosking said the money was offered before the bankruptcy— before the bankruptcy was instituted and before the petition was lilcd. Mr Low was offered his share, but as he wanted more the matter fell through. Mr Solomon eaid the assignee's point was, that ho objected to bankrupt's in'cutiun at the time, and whatever was the position, this had happened : that the LIOOO had gone at any rateit had been spent on the house, and could not be recovered. M'Donald was asked how he had come to band- moneys to his wife when hi was insolvent, and the explanation given was tint in the interval ho had embarked in another Im--m« i ss with Mr Rhodes, of Timaru, by which he shipped oats to England and made profits. M'Dou.ild told the assignee that in those oats transactions wera apart from his ordinary bnt-iness he thoujr'nt himself justified in handing fcbc profits to his wife to keep. The two points made by the assignee up to that stage were, i.h -n, extravagance in living and fraudulent gifts to Mrs M'Monald. Ihere was also tins objection that the bankrupt conducted his business hazardously, anil went into rash speculations. M'Uonald bought a place called the Roseville Dairy Factory at an extreme prirp, which he was certainly not justified iv giving. The assignee offered no comment upon thN. but merely laid the matter before the court. There was another matter that was difficult of explanation. M Donald ha-l a propeitv which was mortgaged to a Mr llemshardt for LSOO, and while the mortgage was current these gentlemen were oppusod in business, nnd were on the reverse of friendly terms. M'DonaM paid to iienuihardt the amount of the mortgage, but Remshardt did not waut the inouey — he w is averse to taking it— and M'Donald was compe"'l $cl togjvehirn throe months' interest in order to induce him to accept theLSOO. Mr Hosking : The mortgage was repayable at throe mouths' notice.

Mr Solomon sai-l thurc was only one other matter to which he_ need refer. At the time of bankruptcy complaints ware made that M'Donald had been guilty of false packing. A charge was made against him by Messrs Low and Sons' representative, and if proved to be true it ceitainly would have been a matter proper to bring before tho court on application for discharge being made. The assignee therefore took steps to inquire into the truth of the charge ; and the result the assignee wished t « place before the court was that in his opinion the charges were not sustained, and there was no reason to suggest to the court that discharge should be suspended on that ground. John Hobbs Kirk, accountant for the bankrupt up to the date of the bankruptcy, was called by Mr Solomon and examined and cross-examined at

con-ilenble length respecting tho bankrupt's business transactions. After this witness had been examined, Mr Solomon said he would not call further evidence, but he would like to say a word as to the position of the official assignee with regard to the charges of false packing. The official assignee had sifted the evidence as far as he could, and he did not presume to ask that the court should be guided by his finding, but what he said was that from the inquiries he had made, he did not see that there was any objection to be taken, but if the court saw fit to go any further/he would place all the evidence he had before the court.

Arthur Thomas M'Donald, the bankrupt, called by Mr Hosking, deposed that at the time of the oats transactions he had no idea of bankruptcy. The Roseville Factory purchase was made with his wife's cheque for L 620 and his own for LIBO, the latter to be debited to the oat commissions. The money did not come out of the business. Witness had no thought of bankruptcy at the time he paid off Remshardt's mortgage. It was paid before Mr Low canie out. ' In answer to a question from his Honor, Mr Solomon said it had been suggested that .the object in paying off Remshardt, a rival whom M'Donald did not like, Was to get rid of a possibly hostile creditor, who might make things 'hum.' Bankrupt further said, in answer to M r Hosking, that if he had filed in 1890, when the losses were made, the estate would have paid about 2s in the pound, whereas it would now pay 6s or 7s.The Assignee : Hardly that ; it will be about 4s 3d. . . .. Bankrupt : After the heavy expenses of winding up. The Assignee : Not so very heavy Bankrupt, further questioned by Mr Hosking, said that when Low came out he .asked him (bankrupt) to give the firm of Low and Sons a preference, and when that was refused Low decided to make him a bankrupt and put his confidential clerk in his phoes. Since the bankruptcy the lease of the premises was sold toJ.'H. Kirk (the clerk) privately, and the code book was also sold to Kirk, and the new firm of Kirk and Co. immediately advertised their business. By Mr Solomon: Bankrupt did not consider that he was doing wrong in making over to his wife the profit on the oats transaction whil6 at the same time his creditors were losing by him. If he bet Mr Solomon half a crown, and won it, he would not be supposed to put it through his business books. By Mr Fraser : He had oat transactions before he went Homo in 1891. The profit on No. !1 transaction in oats (LIOOO) was applied topaying his principals. He did not recognise that they were entitled to it ; he gave it them. He did not give them to understand that they would get profits from other transactions in oats* They did not give him further facilities in consequence of anything he had said to induce such a belief. He might as well have put the first LIOOO in his wife's pocket as send it Home. When he opened the private banking account in his wife's name he took 20 signed cheques from her for his own purposes. He had been a large buyer since his bankruptcy. Mr Fraser : Where did you get the funds with which you bought ? Bankrupt : I refuse to answer. I'll answer any question in connection with my own affairs or any question connected with the estate of Arthur M'Donald and Co , but to divulge any secrets in connection with anyone else's lousiness I must decline. The object of this question is, I take it. to ascertain how the business of A. R. M'Donald and Co. is being conducted, for the information of opponents to that firm. If the assignee or Mr Fraser think there are any undisclosed assets in connection with my own affairs let them ask questions, and I'll answer them. His Honor : I understand you are carrying on business in your wife's name ? Bankrupt : Not carrying on business. lam merely acting as manager. Mr Fraser pointed out that the bankrupt had advertised that he was reappearing in business.

Bankrupt : That was only an advertisement. Mr Fraser explained that the reason for his question was this : here was the bankrupt— and M'Donald, after all, was only an ordinary bankrupt—after filing for a large amount, feappea'ring in business under a bogus name— in his wife's name, which was admittedly a bogus name, for she had no resources. These circumstances made him (Mr Fraser) naturally suspicious. It might be that he was on the track of fresh assets. ' lie purposed to ask whence came the moneys for this business— perhaps they belonged to the estate, for it was absurd to suppose that the bankrupt could get credit. " Bankrupt : It is not absurd to suppose that. Mr Hosking said he had no knowledge as to what the bankrupt's mode of business was now, but he must earn a livelihood. Even in regard to this matter he would ask, did Brooks and Co,, the largest creditors, object? They had nptinade'a single objection, though the extraordinary proceeding were taken in this a case by. the official assignee of communicating with Brooks and Co., while they had an attorney here, Mr Donald Reid, who was known to be favourable to the bankrupt. Mr Fraser respectfully asked leave to press tho question. Mr Hosking &aid he did not advise the bankrupt to refuse to answer.

Mr Solomon remarked that the assignee had no right to object to the bankrupt being employed by his wife; but if there was any reason to suppose that the funds used in the b-isiness were the property of the bankrupt, the asbignee had a,right to object. Mr Hosking suggested that the quebtion should be put in this form : Were the funds his own that wore employed in the business ? Were they funds that were left to the wife?

His Honor : The assignee has a right— and probalily any creditor— to ask any questions which might divulge any assets. Well, the bankrupt's wife has got no money. I do not know that he need mention the names of the persons.

Mr Fraser did not wish that he should. He wished to find out from the bankrupt how he was trading, and whence his capital came. ,He wanted to rind out the footing on which 1 the bankrupt stood. His Honor : That you have a distinct right to ask. When a bankrupt carries on business in the name of bis wife the presumption is that there is something wrong. Mr Fraser (to bankrupt) : Where does the capital come from for carrying on the business? Bankrupt : It is borrowed capital. Borrowed ?— Yes. In whof-c name?— Mrs M'Donald's. B irrowe-l from an institution oi'an individual? — N'pvtT mind : it is borrowed. His Honor : You ought to answer that. Bankrupt : Tfc is borrowed from individuals. Mr Fraser : From how many V Bmknipt demurred to answering. His Honor : The circumstances aro full of pu'-lrici-m when an undischarged bankrupt carries' (Hi l>i!.-,iness in the name of his wife; and if it is necessary that names should be divulged it ia only light that they bhould be divulged. Mr Frasev (to bankrupt) : How many, if there are mure than one ? Ihnkinpt : If Don't argue with inc. but answer my question. If theie are moie than one, how many?— There are several. , ' , How many do you mean by several ?— Maybe half a dozen. ~ Are there h If a dozen?— Maybe half a dozen. U that the exact number?— About half a dozen. Are there just six guarantors?— Well, I am pledged— l have taken an oath— not to mention the names of those gentlemen. You have already taken an oath to tell the trn th. I have not asked for the names.— You are trviusr to find it out ; it is not fair. Is six the exact number ?— I won't swear to it. Are there more than six?— Maybe; I don't Don't you know ?— I don't know the whole of And yet you say you have taken an oath not to divulge the names ?— Of some of them. The thing is perfectly square and honest, and I am not going to say anything which is not correct. Is it a guarantee to a bank?— l'll not answer that ; it is not a fair question. I told you it was borrowed money. ... It is not a guarantee to the bank, is it?— 11l not answer that. Is it a guarantee at all ?— l ll not answer that either. 1 am not asking you to mention names. — It is money advanced, lent. On a guarantee ? Is it money advanced by a

bank on a joint and several guaiantee by several guirautors?— No } it is not.

Is it by a company ?— Well, if you want to find out— this is not a fair thing to ask; it is not right. I am here standing on my own rights, and I propose to exercise my rights, subject to the direction. Is it the company thftt has advanced the money?— No; individuals. What is the nature of the advance— money lent in cash or a guarantee ?— I told you it was money lent ; that is all lam going to tell you. How is the repayment of it secured ?— Never mind. Well, is it cash lent, or is it a guarantee ?— Well, it is both. By a body of people?— l don't know how many people. I think I sliould get the protection of the court against these questions. To what amount aro you entitled to purchase?— I can't divulge that secret. It ia not a secret.— lt is nothing to do with Arthur M'Donald and Co. His Honor : What is your interest in this business ? Bankrupt : lam working for a salary. Mr Fraser : Who pays the salary ? Bankrupt: The firm of A. R. M'Donald and Co. His Honor : Who is the firm of A. R. M'Donald and Co. ? You must certainly say that ; for every penny you geWntil you are discharged belongs to the assignee, and the assignee has full right to get it. Bankrupt : lam not one of the firm. Mr Fraser : Who are the firm? Bankrupt : I don't think that is a fair question. His Honor : I think it is quite a fair question. Bankrupt : Well, it is my wife. Mr Fraser : And anybody else ? Bankrupt : That is her name, at all events. Is there anybody else, beside herself ? Is she the only member of the firm ?— There is no one else. She is the only member of the firm. What is your remuneration ?— L4 10s a week. Paid by your wife ?— Yes ; paid out of the firm's account. Who signs the cheques for the firm ?— I sign the cheque* for the firm. Mr Hosking : Is there authority to the bank ?— Yes ; a power of attorney. Mr Fraser : Has she come into contact with any of theEe guarantors ?— I don't see that I should answer. His Honor : Oh, yes, you mmt answer. Mr Fraser : Has she come into contact with a single ono of them ?— Yes. To what amount have you purchased since the bankruptcy ?— I think about LBOOO altogether. Would LBOOO cover all the purchases ?— Yes. Mr Fraser submitted that he had so far established tho matter that he had a right to ask the names of the actual guarantors. His Honor : I don't see that. Mr Fraser : I don't propose to do so, but I could adduce a very good argument. Mr Hosking : Was not the offer of your friends largely induced by the stepping into your shoes of J. H. Kirk and Co. ?

Bankrupt : It was. I should not under ordinary circumstances have entered into business till I was discharged but for the unfair and unmanly attempt to rob me ; and this attack of Mr Fraser' s now is simply in their interests. Thomas Kew Harty deposed that the original cost to the Roseville Dairy Factory Company of the section and buildings was LBOO, and the plant cost close on L3OOO. Witness sold the property to M'Donald for LBOO net. To Mr Solomon : He was trying to sell again now, and he had offered the property on behalf of the official assignee for LJSOO to two persons. There was some of the plant away, James Ashcroft, official assignee, called by Mr Hosking, said he had had communications with the English creditors in connection with the bankruptcy of Arthur M'Donald. Prior to the bankruptcy he wrote a private letter to his brother, who was manager for Robert Brooks and Co , but he did not think there was any reference in that to charges of false packing. The first meeting of Mr M'Donald's creditors was called for the 13th June, but, at Mr Hosking"s request, was put off till the 14th, and he believed the reason for not putting it off further was that on the 15th June there was an English mail going, and it was desired to send Home the newspaper reports of the proceedings. Mr Hosking : Did not, in your opinion, the charge of false packing of wool utterly break down ?

Witness : Yes. I think you will find my opinion summed up there (in the report). Mr Hosking remarked that, in the bankrupt's interest, it was right that the court should know that in that year M'Donald shipped 8000 bales, and the sum total of the bales complained of was 169, which were put up while M'Donald was in Eugland ; and the men denied that M'Donald had given instructions that the bales should be packed m that way. His Honor : As to the rabbits?

Witness read an extract from a letter addressed by him on the Ist July to Messrs Robert Brooks and Co., in which he summed up his conclusions of the evidence on the point, to the effect that five shipments of high-class skins— mixed bucks and does— were rightly catalogued, and one shipment was wrongly catalogued, yet all were branded the same. The evidence with regard to the inferior classes was f o confusing that witness could not express an opinion. On the 6th July witness further wrote to Messrs Robert Brooks and Co. requesting; them to cable whether they considered M Donald's explanation satisfactory or unsatisfactory ; but though he had received an answer to a later letter, tie received no cable message such as he askei, and he concluded from that fact that thty did not wish to take any further steps. Mr Donald Reid was the attorney for Messrs Robert Brooks and Co., and witness had discussed tho matter with that gentlemen, and his (Mr Reid's) opinion was that the charge of false packing had broken down. Mr Hosking : And that is the general impression in town ?

His Honor : Well, that is not evidence.

Witness continued : Mr Fraser did not suggest that he should insert an advertisement on M'Donald reappearing in business. Mr Fraser wrote to him very strongly objecting to M'Donald, an undischarged bankrupt, flourishing about in business, and witness thought it was at his own suggestion that the advertisement was inserted. To Mr Solomon : Witness had no private feeling in the matter beyond the fact that at the beginning he thought M'Donald was a " bad lot." He thought he had acted with perfect fairness throughout. He had dealt in the ordinary way of his office with this bankruptcy. The only suggestion of partiality that could be made was that from his old connection with Robert Brooks and Co. and his brother's connection with them he bad some feeling with them.

John Hobbs Kirk, recalled, stated he had been shipping to Low and Sons since he commenced business. It was merely optional on his part whom he employed in his business, and he employed men who had been in the employ of the bankrupt. AVitness understood that Mr Remshardt was now attorney for Low and Sons. He had nothing to say as to whether he had to account to Mr Remshardt.

Mr Solomon then addressed the court on behalf of the assignee. He submitted that one matter which had not been explained was that the bankrupt, while hopelessly insolvent, wilfully abstracted from the coffere of his business large sums of money and placed them under his wife's control.

Mr Fraser, who followed, .said in the course of his address that with regard to the false packing, he did not know whether Mr Hosking intended to wring from his Honor a finding upon that point. He (Mr Fraser) dissented from the assignee's finding, but it was really apart from the present case. He did not wish it to be understood that he was shirking the question because it was a matter tha+ could be gone into. Mr Hosking : If my friend does not insist on the charge of false' packing, I shall ask the court to consider the charge as never having been made.

His Honor : Upon the evidence before me it is quite clear how I should deal with the charge of false packing — that there is nothing to show that the assignee s conclusion is wrong. That is all that I can say upon the evidence that has come out before me. I have not gone into the evidence exhaustively to Bay that I am perfectly satisfied that the assignee's conclusion is right. Mr Fraser admitted that there was nothing to show that the assignee's ruling wa3 wrong. Mr Hosking, in replying, eaid the charges

against the bankrupt had narrowed down to twotfie charge of extravagance in living and the charge of placing property in his wife's name. He submitted that the first of these formed no ground for suspending the discharge, for the Bankruptcy Act provided that the bankruptcy must be attributable to extravagant living before that could be made a ground of suspension ; and as > to the putting away of property in the the wife's name, he invited the court to take the view of the matter that was put forth by the bankrupt. His Honor said : So far as the charge of false packing is concerned, I can only repeat what 1 said just now: that nothing has been brought before me to-day to show that the decision of the assignee that the bankrupt was innocent in the matter is error eous. I do not think, however, it can be fairly said that the charges originated out of trade rivalry, because there were the complaints of false packing not only from Low* but also from Brooks and Co. It is quite possible there may have been exceedingly good grounds for initiating the inquiry, but of course it is quite consistent with that that on investigation it should bo found that after all there is nothing in it.- No doubt, as was suggested by Mi Hosking, the circumstance that charges of so grave a character have been made against the bankruptand not been established may properly be taken into consideration by the court in determining what course should be taken with respect to any other charges. Apart from the false packing there are the two charges of extravagance in living and that the bankrupt has put away certain property in the name of his wife. So far as the chaiges of extravagance in living are concerned, it is, I think, the fact that the bankrupt has been spending a great deal more of his creditors' money on keeping up his establishment than under the circumstances ho ought to have spent. The Bankruptcy Act.however.makesextravagance in living an offence only where the extravagance has in some way conduced to the bankruptcy. That has not been the case here, and it is obvious that if the bankrupt had lived at the rate of LSOO a year instead of at double the amount for the period in question he would have been bankrupt all the same. If, therefore, that charge stood alone I do not think there would be sufficient to withhold an immediate order of discharge. The other charge, however, is of a much more serious character, and even if, as is suggested, it was the case that the charge was preferred by the creditors from some indirect motive, yet here the matter is brought directly under the notice of tho court by the official assignee, who has no other duty or object than to have the act administered in tho interests of commercial morality. That the bankrupt has done wrong in this particular, and has acted in a manner that this court cannot for a moment pass over, I have no doubt. Ho was hopelessly insolvent. Ho had arranged with his two creditors that the amount he owed them should remain over and should be reduced by the profits inado on consignments of produce, for the purchase of which they were to find the money. He had, however, on a previous occasion brought into account couiiiiission? on transactions in oats, and the creditors would nitu rally and reasonably suppose that, if in the Ojurse of his business he made commissions, the commiss'ons ho made would be brought into the b'isiness and placed to the credit of the business in the usual way. That was not done. The fact that it was not done was concealed from the creii'ors by the bankrupt. He sent Home balance sheets from which this oats transaction wai excluded, and the bankrupt's excuse is that he treated thi3 commission, which he had earned, in the same way as if he had found a sum of money, and he considered himself justified in treating it as his own and putting it in fact out of the reach of his creditors. Of course ho was not justified in that; and of course any person with ordinary business capacity and the slightest commercial experience would be quite aware that. he wa3 not justified in that course, and the bankrupt is a man of considerable business capacity and commercial experience. If the bankrupt, for instance, had a legacy of L3OOO or L4OOO, it is absurd to suggest that in his insolvent position he would have been justified in giving over that inouey to his wife. It is suggested that his motive in giving it to his wife was an innocent one ; but it is difficult to see, unless the intention on his part was to put it out of the reach of his creditors, what he handed it to his wife for. It is very probable that, as the bankrupt says, he did not think that he was then and there to become bankrupt, but it appears that during the time that this was going on, according to the bankrupt's own statement, the wool and rabbitskin business was getting worse. I have no doubt at all that what the bankrupt did it for was to provide against possible contingencies—contingencies which he did not think were going to happen, but still were within the bounds of reasonable probability. No doubt the case might have been a great deal worse. The money which he had put away was not money derived from the capital of the creditors, but was money derived from his own earnings. No doubt iv an indirect way, as was suggested by Mr Fraser, the status which the bankrupt had obtained by reason of the advances made to him by the English creditors may have enabled him to carry out his transactions, but that is a very different thing from making use of his creditors' capital directly and misappropriating the proceeds. There is also tho further consideration that the transaction was known to the bookkeeper in his, office, and that anybody investigating the books— although the books would not directly show it was madcon behalf of Mrs M'Donald — must in the course of investigation have discovered the facts. There is also the further consideration that when Mr Low found out the position the bankrupt offered to hand Over, and in fact has handed over, to the assignee the whole of this money. All these circumstances, however, though they maybe very well taken in mitigation, do not get over the fact which seems to me to be conclusively proved that the bankrupt, being a capable man of business in a hopelessly insolvent position, paid what was nothing more nor less than his creditors' money into his wife's Dame. If such a man under such circumstances does that, can it be assumed by any ordinary business man that his intention is innocent? I think the answer must certainly be in the negative. This probably would have been the case if Mr Low had not come out, and if the thing had gone on fora little longer and the bankruptcy had taken place a year or two hence : this property would by the lapse of time, by the lapse of a period beyond that prescribed by the Bankruptcy Act, have been put altogether out of the reach of the creditors. As I have said, there are a number of mitigating circumstances, but this is not a case where the court should grant an order of immediate discbarge. The order of discharge will be suspended for 12 months. Mr Hosking applied for an order for an increase of the costs of the bankrupt's solicitor. It was agreed that an order should be made for the payment of 20gs beyond the sum mentioned in the act.