AN UNUSUAL CASE.

Poverty Bay Herald, Volume XLIX, Issue 16213, 25 August 1923, Page 2

AN UNUSUAL CASE.

CLAIM' AGAINST COMPANY

A GIFT, A -MORTGAGE, AND AN

INVESTMENT

;V*:t Press Association.l WELLINGTON, this day. ■ In the case; 'Tulloek v. Dalgety and Co., judgment was reserved. " ■

(N.Z. Times.)

A claim of unusual interest, came hefore. Air. Justice Salmond at the Supreme Court, Wellington, when the plaintiffs we're members of a well-known Gisborne family, and the defendant Dalgety and Go.. Ltd.

The plaintiffs were Lawrence Boysen Tulloek and Charles Leonard Tulloek, executors of the will of Emma Boysen Tulloek, late of Los. Angeles, California, and Eunice, Arnold, wife of Charles Ellithorpe Arnold, of Los Angeles, for whom Sir John Find ay, K.C., appeared, and With him Air. J. S. ilanua.

"Mr. C. P. Skerrett. K.C., with Mr L T. Burnard, appeared for the defen dajit company.

A PROPERTY DEAI

The statement of claim showed that the plaintiffs, Laurence Boysen Tulloek and Cliarles Leonard Tulloek, sued, as the executors of the late Emma Boyden Tulloek, who at one time resided near Martinborough, Wairarapa, and in the Gisborne district. She died on May 4. 1921. and probate was. granted to her .sons on March 27, 1921. By an agreement dated June 26th, ISO 6. made between Mrs. Tulloek and her daughter Eunice (now Airs. Arnold), the latter agreed to advance, to her mother the sum of £IO3O, -which she undertook to repay within six months after the receipt of a written demand. Cntil payment, Airs. Tulloek agreed to pa'}' Airs. Arnold, on June 26th evenyear, a sum of money equal to the net profits attributable to the investment and employment of that sum during the previous year in certain leasehold" property, in which Airs. Tulloek then proposed to acquire a two-third.s interest. .Shortly alter this agreement. Airs. Tulloek effected the contemplated purchase of a two-thirds interest in a property in the Gisborne district. For many years she carried on. the property with her son, L. B. Tulloek, until December, 1917, when she bought out his, interest ;in the place. At that date his share was valued at £18,809 3s 4d, and that of Mrs. Tulloek at £37,857 10s 2d. The share of Eunice Arnold was held to be £3480 4s 4d (being £IOOO principal and £2480 4s 4d for interest). It was eontended that that sum, with further interest since accrued, is still owing to her. A GUARANTEE!!) ACCOUNT. Desiring to leave New Zealand before (he purchase of L. B. Tulloek's interest had been finally completed in 1918, Mrs Tulloek gave Charles Leonard Tulloek power of attorney. Purporting to act upon behalf of his mother, he executed in favor of the defendant company in 1919 a guarantee of the account of Lawrence Boysen Tulloek with them. The guarantee was executed by Cliarles Leonard Tulloek, it was submitted, upon the faith of a representation made to him by Dalgety's agent that it was a term of the arrangement made between Airs. Tulloek and Lawrence Boysen Tulloek for the sale of the hitter's interest that his mother should guarantee his account. The guarantee was executed without independent legal advice, and it was contended that such a representation was untrue. In December, 1919, the defendant company took from Airs Tulloek and L. B. Tulloek a current account mortgage of the leaseholds,-

When taking the . mortgage, it was held, the defendant company knew that the plaintiff, Eunice Arnold, wa.s the equitable mortgagee of the leases, and that her mother had no right to give any change in priority to her daughter's security; alternatively), the defendant company learned of Airs. Arnold's rights prior to the making of any of the advances which were outstanding upon the security of the mortgage at the date of the defendant's seeking to enforce its security. 1 COMPANY A"ND SECURITY.

On September 25th, 1919, the defendant company took from Airs. Tulloak tin instrument by way of security over the stock. It was submitted tha.t the defendant company knew that Airs. Arnold was entitled to require Mrs. Tulloek to execute an instrument by way of security over the stock in her favor. They knew also Airs. Tulloek had no right to execute an instrument by way of security in favor of the defendant company in priority to the security to which Airs. Arnold was so entitled.

The defendant company had now received, • or claimed to receive, the surplus compensation, for improvements payable under (he leases after the, first mortgagees had been satisfied. They had taken possession of the stock arid realised the same, and claimed to hold the proceeds in satisfaction of an alleged indebtedness of the Lite Mrs. Tullock to the company, and denied the right of Eunice Arnold to bo paid the amount owing to her under the agreement of June 26th, 1906. K WHAT PLAINTIFFS CLAIMED. 1 The plaintiffs claimed a declaration : (a) That the guarantee executed by C. L. Tullock in the name of Emma Boysen Tullock in favor of the defendant company is, unauthorised by the power of attorney and void; (2) that if it be held that such guarantee was authorised and otherwise • void, then that the execution of the guarantee was procured by a false representation made on behalf of the defendant company, and rally be rescinded ; (3) that the memorandum of mortgage and instrument bv wav of security taken by the defendant are subject to the agreement tp mortgage contained in the agreement of June 26th, 1906. , (STATEMENT DF DEFENCE. The defencj denied that at any of the times mentioned in the statement of claim they • were .aware of the existance or terms of the agreement referred to. They also denied that the agreement was ever carried into effect or acted upon by the parties, and declared that it had been rescinded. The defence' a^o ' declared that on and after August, 1906, Mrs. Tullock and L. "B. Tullock were the registered proprietors under the Land Transfer Act as tenants in common of the leasehold lands,, and after the acquisition of the share and interest of L. B. Tullock by Mrs Tullock, she was then the registered proprietress. The mortgage was duly. registered against the title of Krrtma Boysen Tullock without ground of Interest' of Eunice Arnold. The power oi attorney was authorised by Mrs Tullock to execute the guarantee. It wot also submitted that all acts and dealings executed by Mrs Tullock tfere done with the full knowledge and "acquiescence ,of the ' plaintiff, Eunice Arnold. The defendant company also contended that the causes of action alleged in the statement of claim arose more than six years before the commencement of the action, and' were barred by the Statute of Limitations. (EVIDENCE FOR PLAINTIFFS. Evidence was given by Mrs Arnold, who stated she was the daughter of the late Mrs Tullock. With her mother and' brother, tho witness wenfr t to England in 1906, and later to Canada, where they remained for two years. With her mother she later wertt«tO Los Angeles, California, where they made their home. She had written to Dalgety and Co. from Los Angeles, and had drawn in fill tho sum of approximately £SOO. Sir John Findlay : You did not draw a great deal ? Witness: No; my mother did not want mp to do that, as I was looking after her. She wanted me to save that. The witness admitted to Mr. Burnard that the £IOOO had originally 'been a gift to her from her mother, but denied that it was in recognition of her services. It was intended merely as some provision for her.

She did not remember any mortgage being given in 1909, as she did not do any "business for her mother then. The reason that her mother returned in 1917 was to settle her affairs, as she did not expect to live much longer. Evidence was given by Charles Leonard Tulloek, who said he had been advised by Dalgety and Co. that the guarantee foi' hi.s brother's account was ready to sign. He did not care to sign it. but was informed that his mother had made a promise before she left, for America. He had never heard of any such promise, and knew nothing about it until he arrived at the office that Further evidence was heard on Wednesday.

Charles Leonard Tulloek, continuing his evidence, stated that he knew nothing of the purchase of another property by his brother, or that his mother had promised to finance him into the place. Replying to Mr. Skerrett, the witness stated "that he had handed certain documents to Airs Arnold.

Counsel : What were they? Witness: Old station accounts that were there before I wa.s manager.

Did you give her anything else? — I cannot remember. '" ,

Did you or did vou not? —I do not think 1 did.

Did you send your mother copies of the statement forwarded by Dalgety and Company showing her position under the guarantee?—No. Why not?—l did not think it necessary.

Was it neglect of duty on your part?—No. But. you sent her copies of the- station bookkeeper's .statements?—Yes.

Exl laordinarv ! A SHARE OF THE PROFITS.

Lawrence Boysen Tulloek stated that he was aware that Ids' sister had an interest of £IOOO in the station, and that a- document had been drawn ■up directing that she should have a full share of the profits. If he had thought tlu' 1909 mortgage would have affected her interests he would not have signed it. After he had dissolved partnership with his mother in 1917, his brother Cliarles was appointed manager, and given power of attorney. When she left for America he did not know that his brother was going to sign a guarantee, which was a surprise to him. He had conversations with his mother regarding the guarantee. The evidence of this witness concerned the plaintiff's- case, arid Air. Skerrett then opened at considerable length for the company.