SHARES TRANSACTION

Taranaki Daily News, 10 June 1929, Page 13

SHARES TRANSACTION

FAILURE OF FARMER’S CLAIM TRANSFER BY. CORRESPONDENCE. NON-SUIT AGAINST PLA.. TIFF. .Whether certain ehares had. been transferred to the late Mr. Newton King as security or had been sold to. him was a question decided by Mr. Justice Ostler in the Supreme Court, at New. Plymouth on Saturday, when he non-suited Harry Truman Lysaght, Tauranga, on his claim against Eliot and Truby King, trustees in the estate of Newton King. His Honour held that a purchase had been made and that Lysaght could not, therefore, succeed in his claim for “dividends accrued on shares in the Ilawera Electric Light Company held as .security,” .or for an order that 303 shares should be transferred to plaintiff, on payment of £303. Judgment was given for defendants on a counter-claim for £lll 13s 9d, the balance of a current account and interest at 8 per cent. On the non-suit Lysaght was ordered '' to pay costs on the middle scale,-as on • a claim for £3OO, witnesses’ expenses and disbursements, and costs on the counter-claim according to scale,; except a hearing fee, and disbursements. Lysaght was represented by Mr. A. K. North, with him Mr. J. H. Sheat, and j defendants by Mr. A. H. Johnstone. i Mr. North said the case centred round i one point, whether shares were transferred as security to Newton King in 1921. At that time he was owed a large sum of money by Lysaght, there being no security. Lysaght had been carrying on business in a very large way for a number of years on property bought before the boom. Ho was a farmer in substantial circumstances, worth probably £30,000 fo £40,009. When ill-health andthe slump overtook him in 1921 ho found i himself financially embarrassed. The j Lyeaghts were then in Tauranga, so that ’ the whole transaction in wak carried out by correspondence. HISTORY OF THE CASE. ■j Reading from a voluminous fife of i correspondence, counsel traced the-; hisi tory of the affair. Newton King had I written to Lysaght early in 1922 ' ad- ; vising that the sooner his estate was wound up the better it.would bo for .the creditors. Lysaght had written that he Was" having a hard time and was doing his best and he offered as security 54 shares in the Ilawera Electric Light Company worth about £8 each and 30 shares in the Farmers’ Austioncering Company, Waikato. The Farmers’ Company had been given security over sonic , t . of the shares in the Electric Company, but not over those in the Auctioneering , 'Company. Further letters passed between the parties and Lysaght denied that he had . had any intention of offering preference to any creditor. Regarding a suggestion that the sooner ho went bankrupt the better, ho pointed out that if there were a forced sale the bank and the Government Life Insurance Office would get everything in satisfaction of mortgages and there would be nothing left for any Of the other creditors

In November Newton King wrote sending Lysaght a transfer form for the shares. “Now, vre do not wish to buy these shares at one penny less than they are worth,” he said, adding that ho had filled in the form at £5 10s a share and was -willing to take them at that price. This was in reference to an offer by King to pay off the Farmers’ Company, and a request that Lysaght should transfer the whole of his 154 shares. King’s letter said that if within 12 months they could be sold at a . higher price the difference would be credited to Lysaght, or else he could have thornback if the cash could be found.

Lysaght wrote putting the value of the shares at £8 to £lO and saying he would very much like them held as security pending the payment of dividends and the rise in value. He said he hoped King would do this and expressed appreciation of his offer to allow anything over the £5 10s. His Honour remarked that it looked as though Lysaght were offering to accept, with a suggested variation 7 to which King was invited to agree. Mr. North said the transfer was made, the intention of Lysaght being that the shares were to be held as security, and on December 18, 1922, King acknowledged receipt. MONEY FROM ENGLAND. On December 29, 1923, Lysaght wrote mentioning that the shares had been taken as security and saying that as his wife had received money from England and they were in need of income, they thought the best way was to buy the shares back at £5 lbs, equalling £847, plus the expenses of the transfer. On January 3, 1924, King wrote that they had wanted to hold the shares as further security against Lysaght’s account. There was no doubt, continued Mr. North, that the Electric Company’s shares had been a gold mine. Lysaght was just an ordinary farmer and Mr. King was a keen business man, one at least of whose letters showed he treated the shares as security. Mr. P. W. Lamb, manager of the Electric Company, had said he would buy any shares offering at £5 10s, and this was what King had based his offer on. Lysaght had never looked upon King as a purchaser and there had been no repudiation of Lysaght’s offer in express words. EvWence concerning the value and issues of shares -was given by Percival \V. Lamb, general manager of the Ilawera Electric Light Company, lie said that Lysaght was an old director of the company. Lysaght said his wife drafted a good many of tho letters and he was in the habit of discussing the terms of them with her. Witness was examined on his intentions when writing the letters. To Mr. Johnstone: e received a let41 . V 4-K- -.1 .

To Mr. Johnstone: e received a lettor saying the value of the shares was £5 10s, and this price was put in the transfer. He understood that profits on the shares over £5 10$ would be returned to him. From then till December, 1928, he had never made a claim for anything over tho £5 10s.

He admitted 'giving the farmers’ company 100 shares as security for a small sum at a time he was indebted to King, without security, for a large sum. On the sale of the shares he was satisfied with the price obtained. He received a statement of account showing he still owed £l6O. During a conference in Eliot King’s office in New Plymouth in April, 1928, he did not think he remarked that lie thought lie had no claim on the shares. He made some remark he was sorry for 7Ar wards.

AGREEMENT HONOURED. Counsel: I put it to you, there was no need to be sorry about it because, there and then, they told you they intended to honour any promise made by the late Newton King, and they did honour that agreement?—Yes. All you expected to get was the money you did get (£847), until the lawyers raked it up? Now honestly? —Yes. Mr. North: Did you not believe you were entitled to the dividends? —Well, I really thought I ought to have got them. That was what you meant to say?— Yes. Mrs. Lysaght said her husband had been an invalid since 1911. He had poor eyesight and was deaf. She did not think he had heard all the questions put to. him by counsel. She was familiar with all the transactions regarding tho shares. When Newton King wrote that they could have anything over the £5 10s a share, she thought it was meant that they were actually to have the money itself to work with. Their idea was that Newton King was to get the shares, keep the dividends, pay himself interest on £847 and that anything over that -was to be put against their account. She was sure that was what Newton King meant. Had ho been still alive she was sure this trouble would not have arisen. His Honour said he did not see how Mr; North was going to succeed in the face of the evidence by Lysaght himself. He had said he did not expect to get any more money. Mr. North asked if His Honour were going to rely on the evidence of an old and infirm man on that point. He was deaf. When the question was first put to him he had mentioned his expectation of dividends, but this was not put down and Mr. Johnstone had proceeded with the questioning. His Honour:• Do you seriously suggest he did not understand the question? Mr. North: Yes, 1 do, Your Honour. THE OTHER SIDE HEARD. The judge said that although lie thought the proper course was to nonsuit plaintiff, he did not want to do that altogether at that stage. , Mr. Johnstone submitted Lysaght was not entitled to any relief, as the transaction was in accordance with the terms of the contract. He had received a considerable sum of money and he had admitted in cross-examination that he did not expect to get a penny more. It was contended tho transaction was a sale, even though the word “security” had crept into the correspondence in some unguarded way. The books showed that Lysaght’s account had been credited with £847 and whatever he would have liked or hoped for he had unconditionally accepted the terms. In his letter of January 18 Lysaght had shown he appreciated the offer to purchase at £5 10s. If the shares produced more than that Lysaght was to get it, but if they brought lees King would get no more. Mr. Johnstone applied for a non-suit. Mr. North felt there was a real chance of an injustice being done Lysaght through his reading of King’s letter as an offer to take the shares as security. The Lysaghts were lay people and the correspondence was entitled. to be taken as a whole and not' in the terms of any one letter. He contended that they had been lulled into a. sense of security by the letter of January 3 and that they were entitled tn the profit-’

His Honour said he had come to a clear conclusion, and in his opinion the letter of January, 1922, made a complete contract. He thought it must have been perfectly clear’ to the Lysaghts that King was buying at £5 Ids and that if they were sold for more ■within a year the balance would ’be credited to their account in further diminution of Lysaght’s debt to King.