SUPREME COURT.

Otago Witness, Issue 2369, 27 July 1899, Page 7

SUPREME COURT.

j • IN BANCO. • (Before His Honor Mr Justice Williama.) SltlTH V. WATSON AXD ANOTStEB. 1 Claim £816 13s 4d, damages for breach of contract. Mr Hosking appeared for the plaintiff (Edmund Hindle Smith, of London) ; aiid Mr Sim for the defendants (Garden Watson and Alexander Brown, of Dunedin). The statement of claim set forth that in July, 1897, the New Zealand Co-operative and Agency Company (Limited), carrying on business in Otago as geueral merchants and j exporters of produce, entered into a contract j with the plaintiff that he should represent the company in England at a salary of £350 per annum, and travelling expenses; the terms of the appointment to be for three years. By a document dated July 12, 1897, Garden Watson, John Duncan, jun., and Alexander Brown, directors of the company, undertook jointly and severally that plaintiff's drafes of £50 on the company would be duly paid during the term of his engagement on presentation here. The. plaintiff proceeded to England, and, acting according to the company's orders and directions, drew monthly drafts upon the company for his salary and expenses. In or about the month of February, 1898, the company, being unable to fulfil its engagements! its shareholders passed a resolution for voluntary winding up of the company, and a Mr S. Keat, of Dunedin, was appointed the liquidator thereof, and th« fact that the company had gone into liquidation was notified to the plaintiff > in February, 1898. At the time of the liquidation the plaintiff was in London acting as the company's representative, and in pursuance of the contract entered into -with the company the plaintiff drew a draft for £29 3s 4d, dated March 11, 1898, being one month's salary at the rate of £350 per annum, which draft on due presentation thereof was dishonoured, and the plaintiff had subsequently to March, 1898, drawn drafts monthly on the company for the monthly instalment of the salary, all of which bad been dishonoured and v/ere still unpaid. Since entering the service of the company, the plaintiff had always been ready and willing fco continue in its servioa during the remainder of the term of three years, in accordance with the contract. The plaintiff . had lost the wages and advantages which he I would have derived from the said service, and i had remained unemployed for a long time. ! On the faith of the contract entered into with j the company, the plaintiff gave up remimeralive employment and position in the colony • and proceeded to England with his ivife and ! family, and had been left slrauded there, and ! was unable to obtain any employment. The [ defendants having, by the terms of the agree- : roeut with the plaintiff, jointly, aeverally, and personally guaranteed the due payment of , the drafts during the terms of his engagement, the plaintiff applied to them for payment thereof and for compensation for the breach of the contract of service, and for the loss which the plaintiff had thereby sustained, but the defendants refused and declined to recognise the plaintiff's claim, and alleged that j . they were under no liability to the plaintiff ! in respect of such matters. The plaintiff i claimed that the defendants were, by virtue of '< their signed guarantee, responsible for the. j i fulfilment of the contract "of service, and to I make good «'uiy loss tho plaintiff bad, or may. i sustain by reason of the breach or non-ful-J filmeni of tlie agreement. Wherefore the ! i plaintiff claimed £816 13s 4d as damages or j \ compensation for the non-fiilillinent of the j contract cf service, mid -\!ro *bo cost* of the j ! action. j j The defendants, in their statement of dei fence, admitted that the New Zealand Coj operative and Agency Company (Limited) en- ! tered into a contract with the plaintiff that i he ahould re-present tho company in England • at the salary and for the period mentioned in ! the statement of claim,luit they denied that the ! document, daled July 32. 1397, contained any ■ part of the agreement with tho plaintiff. They admiUed that the plaintiff drew the drafts I upon the company, but denied that ihe drafts \ were drawn in accordance with the terms of I any contract or eiigagement. There was also a general denial by the defendant** of the other allegations in the statement of claim. The defendants also paid that by reason of the company having, on February 28, 1898, passed a resolution to wiiid up, the plaintiff's contract for service was determined on that date. For a further -defence, the defendants said that they relied upon the provisions of section 4 of the Statute of Frauds. Mr Hosking said this was an agreement on questions of law before the trial of the action. In order to succeed, what he must affirm was that the document cf July 12 referred to in the statement of claim amounted to an undertaking on the part of the defendants to be responsible for' the plaintiff's salary for the term of three years — the term of his engagement, — and that it wa« not merely an undertaking that particular drafts should be jionoured by the bank on presentation. He 'submitted that upon the winding up cf j the company the company was not dissolved. The act of dissolution was dihtinet fiom the winding up. Tho winding up resolution operated as a notice of discharge of the ' company's servants, and the right of a servant * who was engaged for a term was cither to 1 prove at once for the damages he had sustained i or to wait for tho expiry of tho term. He ; could only recover damages, and could not ' recover for constructive service for the whole ; term. As showing that a bill might be pre- ; sented to a company after the resolution to < wind up had been passed, he had only to refer to the Companies Act, section 158, which showed that official liquidators, by sanction of the court, might accept a bill. Section > 193 showed that voluntary liquidators had all I the powers of official liquidators, without its ■ i being necessary for them to obtain thn sanc- > j tion of the court. He contended that after a ■ ! company had gone into liquidation bills might be presented, and might also be accepted, i With regard tcTthe construction of the con- , tract, he submitted 'that the substance of it I was that the salary would be duly paid during , the term of three years. This document, of E July 12, was a joint contract, not only by the i directors, but also by the company. The first - documents purported to be only nn engagel ment on the part of the company. They were I all executed for the Co-operative Agency Company by the secretary or managing direcr tor. Tho undertaking of tho 12th of July was a contract which bound the company quite f ns much as the directors. If a contract at all, it would have to be taken to be a variation, so far as the company was concerned, of t tho contract contained in previous documents ; and he submitted that it was a contract which a bound botli the company and the directors r personally. The phrase in the document that t bound the company was: "We hereby, as di- - rectors of the company." It was a joint conf tract on behalf of the company, by which 'a 3 salary for the term of three years was cxc pressly agreed to be paid; and what he said c was that it did not amount to a mere under- - taking to honour particular drafts. He i (counsel) did not contend that the plaintiff t could 0a aa, tkatring the bills for the term

' of three years to the full amount. What he* 'said the plaintiff was entitled to recover was | exactly the same amount of damages as he ' cauld prove for against the company. In any view of the matter, the plaintiff could only sue for damages, and not for debt. The question of the Statute of Frauds Lav been raised on the ground that there was no consideration expressed in the document. He submitted that it was not necessary to have a consideration, expressed. If it could be concluded by inference from the documents that was sufficient ; and he contended that a consideration was to be inferred from the documents themselves. The plaintiff had a good right of action upon the documents. Mr Sim submitted that the alleged guarantee was not binding on the defendants, because it was not supported by any consideration. It was not necessary for consideration to appear on the guarantee itself, but it was still necessary for the guarantee to be supported by proper consideration, and if no consideration could be made out in the present case he submitted that the court would come to the conclusion that there was no consideration that could support the guarantee. No consideration could be spelled out of the other documents. It was clear that the engagement of Mr Smith, as the representative of the company in London, was completed in July, 1897. The letter written on May 20 stated the terms of his engagement.. On the 12th of July, when the alleged guarantee was written, Mr Smith was actually in the company's service, and all the terms of that service were fixed. The letter of the 12th of July was simply a statement by the directors of the company of the arrangement which had been made with regard to the payment of Mr Smith's salary and expenses, and was not in any case a variation of the contract that had already been made. If the letter of the 12th of July was to be treated as a contract between the paortieej then the company would be bound to pay his salary by draft, and he could refura to accept payment in any other way. That, he (counsel) submitted would be a most unreasonable construction to put on the document. The letter of the 12th of July was simply a statement by the directors of the financial arrangements made, but there 1 was no consideration stated in the document, and it could not be treated as part of the engagement of Mr Smith, because that engagement had already been completed by the Ist of July. On that aspect of the case the plaintiff must fail. The plaintiff must I also fail because the effect of the resolution to • wind up on February 28. 1898, was ipso facto | 'At determine Mr Smith's engagement, and | after that date Mr Smith had no right to ! draw any drafts on . the company, as the liability of the guarantors was expressly limited to the period of his engagement. As soon at the resolution passed to wind up the company was communicated to the plaintiff, his right to salary was gone. What he had then was a right simply to damages. The amount of the damages depended upon whether he could g.et employment or not. In order that the plaintiff would be entitled to demand payment from the directors on drafts it would be necessary for him to show first of all that he had a right to draw drafts. That right depended upon his continuing in Ihe company's -service, but his engagement | I was terminated by the resolution- to wind j up. On the ground of want of consideration | and on the construction of the document he (counsel) submitted that the defendants were j not bound by the document. _ j His Honor reserved bis decision. CIVIL SITTINGS. (Before his Honor Mr Justice Williams.) Wednesday, Jtjxy 19. inder and otheks v. sievwbight and~~ OTHEBS. Action to set aside two deed 3of assignment. Mr Solomon and Mr Skerrett (of Wellington) appeared for the plaintiffs (the plaintiff in one case being Alice Jane Inder, wife of William Francis Inder, of Gore, and the plaintiffs in the other case being Colleen Shawn Laraach and Donald Guise Larnach) ; Mr W. C. MacGregor and Mr James for Basil Sievwright and Douglas John Larnach, trustees under the deed ; Mr Sim and _Mr Woodhouse for Walter Hislop, the administrator. Mr Solomon put in a number of documents relating to the case, and intimated that the case for the plaintiffs was then closed. Mr W". C. MaoGregor said that he did not intend to address the court on behalf of the defendants he represented. They submitted to the judgment of ihe court. Mr Woodhouse, in opening the case for the administrator, said the transaction which the court whb now considering had peculiar characteristics, which made it different in many respects from any case which had been cited to his Honor. Th° points to which he wished to draw attention were: First, that this property comprised in the settlement, the assignment of which was now impeached, was origiually Mr Larnach's own. It was originally a voluntary settlement ou his part made on marriage, and the children of a former marriage were made the beneficiaries under it; and they were volunteers-'. lie referred to that, as it was material. Mr I.amach, in asking his children to give back lo him what he had alread3 r given to them, was not asking a very great thing. The reason for making this settlement was that there was financial pressure ahead of him, and he wanted to preserve this Camp property for himself and children against tuch pressure. When that procure was over it was not an unnatural thing to ask the children to cancel the gift, nor for them to do so if he asked them. The settlement conferred very large powers in favour of Mr Larnach. Under it he had power to require tLe trustees to lend him money to the extent of £30,000, and Ihe trustees had power to mortgage the property for the purpose of providing the money which Mr Larnach might call upon them to advance. So, practically under the settlement, Mr Larnach could have had. £30,000 upon the property if he had wished. Of course Mr Larnach was the person who could give the very best evidence about these transactions ; but he was now dead. He (counsel) submitted that the court would take that into consideration in dealing with tho evidence given by the children regarding the circumstances attending the execution of these deeds. The first grounds on which the deeds were attacked were on the grounds of misrepresentation and fraud. All three children eaid the same thing — that it was represented to them that the document they were asked to sign was an authority to collect rents, instead of being a deed of assignment, which it really was. In each case the statement rested on their own unsupported testimony, and he (counsel) submitted that it was a most unlikely thing, under all the circumstances, for Mr Larnach to have made such a misrepresentation. It was admitted on all hands that he was an honourable man — not a man likely to deceive, — and that he was a down-right, outspoken man, more likely to say what he meant than to conceal it. He had been described as an extremely honourable mam suid

as the "soul of honour," arid he (counsel) asked the court to consider him so still, not-* withstanding what the children said about him. He asked his Honor to believe that Mr Larnacih was, in regard to these transactions, the honourable man he was known to be, and that ho was not guilty of any such deception as was alleged. And why should Mr Larnach have""re3orted to misrepresentation or fraud? Under section 4- of the" deed of settlement, if he had wished the children to re-assign their interests to him when he thought it was the proper time to do so, he could practically [ have got the whole of the Camp for himself. Why, then, should he resort to deception? [ Then his Honor had been told that Mr LarI nach could get the children to do anything he wanted them to do, so there was absolutely no reason whatever for Mr Larnach resorting to any fraud or misrepresentation. He (counsel) would further "point out that the evidence of the two daughters as to any misrepresentation was entirely unsupported. Looking at all the circumstances it was far more likely 1 that the daughters misunderstood what Mr Larnach said to them than that^ he misrepresented anything to them. He (counsel) would say this with regard to the evidenca of the j ladies : Although they were so very clear about what took 'place with regard to the signing of the deed, their recollection — particularly that of Mrs Inder — was not at all clear |as to what happened afterwards. From Mr j Inder's evidence it appeared that some of the j things that Mrs Inder did not recollect actually happened. She did not recollect anything about the present Mrs_ Larnach'B settlement. Mr Inder also mentioned this subject [ being discussed with Gladys Larnach, and Mrs Inder did not recollect anytlung of that sort taking place. Then Mrs Tnder's e\idence as to what took place with regard to the signing of the deed did not, agree with that of Mr Kettle, the attesting witness. Mr Douglas Larnach would give his account of what. took place, "and that, it would be found, would" differ very considerably from that of the girls. Donald" Larnach l s account of what took place rested upon hjs own testimony. There was nothing but his own- word with regard to it, and at the time he signed the deed he was a man of 27, aud practically a. barrister, having only to keep a term to pass his examinations. He was also in a salaried position, quite independent, and well able to tako care of himself. .Mr Donald" Larnach told the court that he was aware of the provisions of the Camp settlement, and it seemed inconceivable with his knowledge of that, and with his knowledge of the law, that he could have imagined any such document as an authority to collect rents vas ntceEsary, or chat he should not have looked nt it, or glanced at the document; he signed, or at ony rate seen what was in it. -He (counsel) had pointed out that there was no necessity for Mr Larnach to report to deception in the matter. It was again extremely unlikely that he did what .his son said he did, and he (counsel) asked his Honor not to accept Mr Donald Larnach's ovidence on that point. Mr Donald Larnach knew that he had a reversion, and although he was under great financial pressure from time lo time he never attempted to borrow money on this valuable reversion. He said ho knew that the property cost something like £80,000, and that must have in his mind rej presented the value of the property. His Honor; The children cake a vested interest in it? Mr Woodhouso : Ye.«. They take a veated interest in it at 21. That point has been considered under the settlement. '■ ■ Mr Solomon : I think my friends and T agiee that they do take a vested interest. Mr Woodhouse proceeded to say that Mr Donald Larnach never attempted to raise money on liis reversionary interest; and he (counsel) submitted that it was because he knew he had parted with it to his father. Mr Solomon said he did not assent to the proposition, that such a document as Mr Woodhouse had referred to as au authority to collect rents was unnecessary. Mr Woodhouse: You mean that the trustees would have to collect them? Mr Solomon : Yes. His Honor: "Who has power to collect them? Mr Solomon : During Mrs Larnach's lifetime she had power to collect them ; but at her death the trustees bad to collect the rente and hand them over to Mr Larnach Mr Woodhouse went on to say that he could not contend that the girls had independent advice at the time when the deed was signed, nor could he call Mr Larnach to vay what explanation he gave them, or whether he exercised any parental influence or control. There was, however, no evidence that he tried to make them sign the deed. If the mere fact of the deed being an assignment gave the children any rights, then they had waived those rights by acquiescence and delay. The evidence given by the girls showed that .they had for a considerable time doubts with regard to the document which they executed r- and Mr Inder's evidence showed that they were expressly told that the document could not be what they said it was, and that he was more than j>csilive that it must bo an assignment. Mr Inder also eaid the girls stated that they must see about it, and Mr Inder remarked, " You will do no such thing," and explained to them Mr Larnach's powers under the settlement, mentioning that if they took any steps then they would be " hoist with their own petard." The ladies were put on their guard, and knew the position, and they deliberately elected not to pxercise any rights which they had to set the deed aside. Their conduct amounted to such delay and acquiescence a-s would preclude them setting aside the deeds. With regard to Mr Donald Larnaoh, he (counsel) said that he did not come within the rule of parental control. He was 26 or 27 years of age at the time he signed the deed, and was living away from his father. He then had an appointment of £150 a year, and he shortly afterwards ha/1 a profession. He almost had a profession at the time, and he afterwards became a barrislp.r and practised his profession in Melbourne, where he made an income for some time. Ho was free from parental control when he signed the deed, and had been free from it ever since. If he had wished to take any steps with regard to this deed he might have taken them long ago. He (counsel) submitted that Mr Donald Larnach must have known the contents of the deed, and he asked his Honor not to accept his statement that he did not know. He was better able to understand than his father was, or he should have been. It had been shown from Mr Donald Larnach's evidence that he had been in receipt of considerable sums of money from his father since the date of the deed. If his Honor should be of opinion that Mr Donald Larnach was entitled to any relief, he (counsel) would ask his Honor to make an order charging him with any voluntary gifts or allowances that he had received. He (counsel) would also ask that accounts be taken of what had been spent by Mr Larnach in permanently improving the property, and that the estate should be recouped if the court thought that either of the deeds should ba set asido.

Douglas John Larnach, who was t' c firaff witness called for the defence, said when his father wanted the children who_were present at " The Camp " to sign the deed he told them that, it was to give! him back *' The Camp." Kate Larnach signed the deed first. Witness signed it next, and then Colleen signed it. Witness read part of the deed before signing- it, and knew what it was about. He always understood -.that " The Camp " was his property. Florence Taggart and Walter Hislop also gave .evidence for the defence. Mr Sim then addressed the court, and Mi Solomon having replied, His Honor intimated that'he would reserve his decision.