DISTRICT COURT.

Colonist, Volume XXXII, Issue 5523, 18 June 1889, Page 3

DISTRICT COURT.

YESTERDAY.

[Before His Honor Jubcie Bboad. [ IN BANKRUPTCY. He the Estate of Jesse Hovnseu.. Mr Fell appeared for Mr Henry Hounsell, to move that, the Deputy Assignee in Bankruptcy should hold the whole proceeds of an execution issued out of the Supreme Court in an action in whioh he as such >psignee was plaintiff and Henry Hooihll defendant and which are new is

his handi and standing to the credit of Jesso Hounsell, a bankrupt, and shall not distribute or apply the same or any part thereof for tht purposes ef the said estate, but shall apply the same in payment of a certain debt owing by the said Jesse Hounsell to the I Colonial Bank, payment whereof has been guaranteed by the said Henry Hounsell, and for which the aaid Henry Hounsell has been sued by the said Bank. Mr Pitt appeared for tho Official Assignee. Mr Fell, in opening the case said that the action was. brought under rather peculiar circumstance's, which he,would briefly relate. Mr Jesse Hounsell kept'a banking account at tht Colonial Bank, and Mr Htnry Hounstll at the Union Bank. Thiy were brothers, in business in Nelson, and had each become

security to the Backs for the other's overdraft, to the amount of £800 and £500 respectively. In May, 1888, Mr Henry Houn, sell called a meeting of bis creditors, who, on hearing the state of his affairs, agreed to give him his discharge in full on receiving payment of 5s in the £, Jesse Hounsell having guaranteed his brother Henry's overdraft at tbe Bank. In December, last Jesse Hounsell became insolvent, and filed a petition; in bankruptcy, whereupon the Union Bank claimed on his estate for a settlement of the guarantee for Henry Hounsell'a overdraft. At the time of his becoming insolvent, Jesse Hounsell was overdrawn at the Colonial Bank

to the amount of £54115s 9d. The Deputy Official Assignee paid the claim in respect to Henry Hounsell'a overdraft of the Union Bank, amounting in all to £375. Shortly after this time Henry Hounsell became entitled to a sum of £309 for the fire insurance policy on some premises over which he held a mortgage at the Owen, which were burnt down Before this fire had taken place Mr Scaife, the Official Assignee, sued Henry Hounsell for the amount paid by his brother's estate on account of his (H. Hounsell's) overdraft, and when it was known that he was to receive the insurance money, Mr Scaife issued proceedings and attacked it. The cheque for £300 had been oashed on May 11, sinoe whioh time Mr Scaife had held the money, and had not dealt with it in any way. These proceedings of attachment were alleged to have been taken to ensure the proper distribution oi the money, and yet nothing had baen done in the matter.

- Mr Pitt said that Mr Scaife aa Official Assignee in the estate Of Jesse Hounsell, paid to the Union Bank the sum of £375 which was the anticipated dividend in the (state on the amount far wbich the bank had proved, viz. £540. Whan Mr Scaife received the £300 front Henry Honnsell through the attachment ho wrote to him as follows:—" Be Jesse Hounsell- estate,—l am prepared to accept the sum of £70 cash; in settlement of this estates claim against y_u, provided that you hand me at the same time an undertaking from the Colonial Bank that their claim has been satisfied, and that they will not rank in this estate for any further dividend," which sum would put the mattter in question straight. Mr Hounsell subsequently saw Mr Scsifa who agreed to take £00, provided that the Hfttttf was closed,! and the undertaking of the Bank given, but j Mr Hounsell bad not gone to the Sank nor had he again seen Mr Scaife. As Jesse Hounsell was a bankrupt the guarantee to the Colonial Bank by his brother Henry must be paid in full, and Henry could prove in the estate receiving an equal dividend with the other creditors. Henry Hounsell was not a bankrupt, and as his brother Jesse had guaranteed his overdraft the Official Assignee had paid to the Union Bank the sum of £375 which was about their dividend on the amount for which they had proved. His Honor said that the whole matter appeared to have arissn out of the failure -of Henry Hounsell to carry out the verbal agreement with the Official Liquidator, which was confirmed by the letter of Mr Scaife as read. Ha ruled that the Official Liquidator was entitled to cost 3in the first action under which judgment was entered up and a charging order obtained. It was also the opinion of the Court that the agreement made by Mr Hounsell and the Official Liquidator should ba carried out, and an order would bs made to tbat effect, less the •sum of £10 by which it was agreed to be reduced. Each party wonld pay their own costs in tbe present action, as he considered the Official Liquidator was quite right to ask for an order of the Court beforo he did anything in the matter.