CIVIL JURISDICTION.

Colonist, Volume LII, Issue 12766, 12 April 1910, Page 4

CIVIL JURISDICTION.

IN RE COLEMAN AND OTHERS V ARNOLD AND OTHERS.

The above case, in connection with the Nelson Co-operative Dairy Company, has been before tho Court previously, and the present action was an application by Mr Maginnity (on behalf of Hugh Kenyan and others) for an order directing the receiver (J. Sharp, junr.) to pay out to the guarantors of the company the amount for whichhe had found security. The issues submitted were as follows: — (1) Are the guarantors parties to the motion (having with others paid the mortgagee bank) entitled, to rank as secured creditors ? (2) Was the meeting of guarantors held on the 29th day of July, 1908, convened by Mr Sharp, properly convened? (3) Was the receiver entitled: to "disburse the moneys in his hands' without first passing his accounts and without, obtaining the consent of the Court? (4) If the answer to No. 8 be In the affirmative, should the receiver.haye not first satisfied the claims of secured creditors as far as the funds in his hands would permit? (5) Has the receiver passed his accounts in proper form? If not, is he entitled to charge the moneys in his hands with commission for his services as such receiver? (6) Did tlie guarantors parties to the motion consent either expressly or by implica- j tion to the distribution of the proceeds' of sale of the mortgaged premises in the manner adopted by the receiver? (7) All other issues both law and fact shall be left to the Court, with right to draw any inferences from the evidence and the affidavits filed. .-•;

Mr C. R. Fell appeared for theTreceiver (Mr J. Sharp, junr.) Mr Maginnity recapitulated ' the proceedings leading up to the present application, and after some legal argument Mr Fell called evidence as follows :-—

William Coleman deposed : He was a farmer and a Justice of the Peace. He had been chairman of the Stoke Road Board -for 18 years. He was chairman of the Nelson Co-operative Dairy Company. He was also one of the guarantors who were sued by tlie Bank, and then sued the other guarantors. He remembered a. meeting of guarantors, which was held to consider what was to be done. Ho could not remember tlie actual date, The tradespeople were pressing for payment of their accounts. Mr Hayes was present at the meeting. .Witness was in the chair. It was a large meeting .Nearly all the guarantors were there, and the secrotary was taking the minutes. Mr Hayes and Mr Sharp were on the platform, and he believed Mr Dron waß also on the" platform. He asked Mr Hayes to address the meeting as to the position of the company in regard 'to winding-up, and' lie did so. There were several .resolutions. One was as to the payment of tradespeople's debts, and it was that all tradespeople's-ac-counts should be a first charge on the oalance or tae money alter puling tne DauK our. ic \va_ wearly unuert>t.ooa , that there Has a nist charge ol zAMU on what \va_ leeeued Irom xne sale 01. tno pioperty, and tne balance was to be paid to the ordinary creditors ol the company. Ho believed that tuo £I*oo was borrowed irom liingdon, Glasgow, and aayes to pay oil the bam. to prevent the issue of a writ. The pioperty brought -fcizuu. The balance after payment ot the first oharge was to be paid to tho guarantors who had previously paid £20 each. When the resolution was put to the meeting, no one voted against it, although ample opportunity was given to do so. iScither did any ono speak against it.

Cross-examined Dy Air luaginnity-. His memory was good. He could not tell tho date of the meeting. He tliough a list of the guarantors present was taken by the secretary. He could not say whether Mr Sharp was receiver of the- company at the time. He knew Mr J. W. Wiu. He was not chairman of the meeting; witness was He knew Mr Kenyon, who was present at the meeting. He never heard Mr Kenyon say at' the meetingj "Let the order of the Court be carried out." He was not responsible for Mr Win saying he w,as chairman. He had not been called'upbn to sign the minutes of the meeting, and he had not seen a copy of the minutes, but he heard part of them read by Mr Fell last Saturday in his office. He took the chair by virtue of his offioe as ohairman of directors of the company. He did hot take a show of hands. He was prepared to , swear that nobody said "No," when the resolution was put.' He could not , t remember how many (resolutions were put at the meeting. -He did no hear Mr Kenyon ask Mr Hayes to produce the order of the Court. Mr Kenyon was sitting on the right, about two seats from the platform. He asked if there were any proxies in the room, and, there was no reply. If there were no proxies handed up he would take it that there were none in the room. -

Re-examined: He could not 6ay whether anybody told tho meeting the amount of the. debts owing by the company.

John Patrick Hayes deposed that ho w*as a solicitor, and was solicitor for the Nelson Co-operative Dairy Company for some time. He acted for the seven plaintiffs in the action against the 72 guarantors. He attended the meeting oh July 29th. Mr Coleman aud Mr Sharp were on tho platform besides himself. He could not say whether Mr Coleman was chairman ; he believed he was. Ho went to the meeting to advise the whole of the guarantors as to the state- of the affairs of the company and the guarantors at that time. Witness then detailed the nature of th© advice he gave the- guarantors. He understood that, the; resolution meant that, the guarantors were willing that th© creditors of the company should be paid out of the money wliich otherwise, as he had explained to them, the guarantors were entitled to. No one spoke against the resolution, which was put to the meeting and carried. The meeting was quite orderly. Cross^examdned by Mt Maginnity;

It was not strange that he should remember the terms of the resolution, and not the chairman of the meeting. ae did not hoar any statement made at the meeting lo "'let tho order of the Court be l - " He would not

KUow'jVir Win it he saw him in the street. He could not remember how many resolutions were put to the meeting. He declined to answer whether he had advised Mr Sharp as receiver to maKo certain distributions unless directed to do so by His Honour.

Jidward Samuel Hoult said lie. was a director and guarantor oi: the Nelson Uo-operative JUairy Company. He attended the meeting of guarantors referred to. It was a good representative meeting. • it was generally understood, at the meeting chat tlio company would Day their, debts. There was plenty ot tinio for anyone to speak in opposition. The meeting was an orderly one. He could not remember who was on the platform. He might have spoken, at the meeting. In his opinion Mr Win was in the chair. He was the first- nominated, and he (witness) was also .uomiiiated; but he .aid he would retire in favour of Mr Win.

By Mr Maginnity: At the meeting there was no balance sheet producer, ao was prepared to say no one said, "Let the order of the. Court be read,"

By His Honour: He did not understand that as a guarantor he had a legal right to be paid before ordinary' creditors. He considered it only right that the - creditors should be paid first.

Edwin Francis Smith deposed that he was One of the guarantors of the company, and attended the meeting referred to. Mr Coleman was in the chair,. and the meeting was orderly. It was resolved at the meeting that after the factory had . been sold the creditors of tho company should bo paid. He did hot understand that the guarantors" were, entitled to be paid first. There was a chance for anyone to object to the resolution if they wished.

By Mr Maginnity :' He could not tell the wording of the resolution that was put to the meeting. He adhered to. his statement that Mr Coleman. was in the chair. The meeting was called to consider the winding up of the company; John Sharp, junr., deposed that lie was secretary to the Nelson Co-opera-tive Dairy Company. The minute book produced was that of the company. He ticked off a list of those who were preseut at the meeting of guarantors. There were about sixteen proxies banded up to him. Mr Cole--maii was in the chair. There was no show of hands on the resolutions, but they were carried ou the voices. Mr Hayes was present at the meeting,and explained to the meeting the position of affairs. The meeting was a large one, and was orderly. Witness produced the rough minutes of tlie meeting. The particular : resolution was carried unanimously. One or two accounts were mentioned at the meeting. He thought he told Mr Kenyon that it would take the unpaid calls to pay the small debts. No one voted against the resolution to pay the debts, although there, was an opportunity. He did not hear any objection to his action till December, and he had paid nearly all. the debts then. By Mr Maginnity : He did not know what the legal rights of the guarantors were under tho order of the Court. He knew Mr J. W. Winphe was - sure Mr Win was not chairman of the meeting. He was satisfied that the legal position was properly explained to those present. Mr Coleman took the chair by virtue of his office as chairman of directors of the company. Mr Fell intimated that that was all the evidence he wished to call, and tho Court adjourned until ten o'clock this morning.