ORDER DECLARING VOID

Taranaki Daily News, 25 August 1931, Page 7

ORDER DECLARING VOID

SECURITIES FOR ADVANCES BANKRUPTCY OF M. A. ROWLANDS. MOTION BY OFFICIAL ASSIGNEE. A motion in bankruptcy to set aside Securities given Frank Mourie by Montague A. Rowlands was granted by Mr. Justice Blair in New Plymouth yesterday. He made an order declaring void ■ (I) a chattels security over the furniture and effects taken to secure moneys owing amounting'to £360 and a further present advance of £150; (2) and a collateral security by way of an assignment of an interest in an estate; (3) and requiring Mourie to pay to the. Deputy-Official Assignee £l6O Ils 6d, being the proceeds of the sale of the furniture and effects. Mr. A. K. North supported the motion on behalf of the Deputy-Official Assignee at Hawera and Mr. J. Houston represented Mourie. the holder of the security. ' Rowlands was adjudicated bankrupt on October 9 on an act of bankruptcy on July 4, 1030. The petition was filed on September 1. The securities attacked were taken on August 20. ' •- z - His Honour said that according to the court records the summons to the debtor was sealed on September 1. The matter was down for. hearing on September 11 and was adjourned till September 25. On September 24, however, an application was made for a' further adjournment till October 9. The bankrupt, said Mr. North, was a trader in business with offices at Hawera and New Plymouth. He had a typewriter and stationery - agency. Bankrupt had had very large sums from an estate in England, but •’he rapidly got into very serious difficulties. Mourie had been in close and intimate touch with Rowlands and it was submitted there had been a gradual securing to Mdiirie of every conceivable asset held by Rowlands. ; On ■ November 19, 1929, there ’ was made a deed of. assignment to Mourie to secure- £5OO at the Bank of New Zealand; that was probably the. beginning of. Mourie’s relationship as a creditor. Before that Rowlands had had

©ver £6OOO in three years from the

English estate. On December 23 there .was a cash advance of £360 and security was taken to secure this and further advances over book debts and fittings and chattels. Mourie obtained se- • curity over the bulk ot the stock-in-trade capable, of identification, such as steel safes and filing cabinets. On the '■> same day he took a. transfer of a registered security held by bankrupt from a man named Treweek. This transfer was not registered and as a result was ■ the cause of ■ considerable complications. , THE SECURITIES TAKEN. ... .. ... ■ . On March 13 there were transfers of shares in the Hawera Mineral Water Company in which both Moitrie and Rowlands were interested. On August 20 the two securities attacked were executed. A chattel security was taken over the furniture and, as collateral security, an assignment, subject to prior assignments, was taken over Rowlands’ interest in,his father’s estate, then believed to be £lOOO. “We say the, securities were taken in an attempt to get everything,” said counsel. Rowlands, he added, owed about £2OOO to 69 firms. His Honour asked Mr. Houston to advance'his affirmative defence. “ Mr. Houston said Mourie was a Manaia farmer. Rowlands had played many parts. When Mourie first knew him he was a Native agent with a fairly extensive business, though he was not a licensed interpreter. Then he set up in business as a commission agent, a vendor of steel office furniture, and he had typewriter agencies in Hawera and New Plymouth. Apparently he continued with the Native work to some degree. Rowlands met Mburie over some Maori matter. At a later stage they were in touch in 1928 over the taking of shares in the Mineral Water Company. Rowlands mentioned that he received sums from his father’s estate. In three years he had received over £6OOO. His unsecured bankruptcy indebtedness totalled over £2OOO, so'that he must have gone through over £BOOO. Mourie .was led to believe Rowlands had considerable monetary' interests. He told Mourie he had put. £lOO9 into steel goods and had paid hundreds in connection with the New Plymouth business, li was known he lived in a Hawera flat, .which he had furnished.--He said he had advanced £3OO to a woman in Wellington and £BOO or £9OO to Natives.

In August, 1930, Rowlands represented to Mourie that he was temporarily embarrassed and asked for a loan, On August 19 they met in a lawyer’s office. Mourie was not content merely to make inquiry into Rowlands’ position. He and the lawyer interrogated him about his assets and liabilities and" notes were taken. The result disclosed Rowlands was solvent.

Mourie made it clear that unless'the Advance was to put Rowlands on his eet he would not advance a penny. . . Mourie throughout acted in complete good faith. He did not for a moment believe Rowlands was insolvent; he thought he was substantial, but temporarily embarrassed owing to fairly ‘ large sums having been laid out in steel goods and other things relating to his - business. He had no reason to suspect any act of bankruptcy. NO IDEA OF INSOLVENCY. Called by -Mr. Houston, Ernest Mansfield Beechey, barrister and solicitor, Hawera,. who advised Mourie, detailed the transactions between Mourie and Rowlands. On August IQ or 20, 1930, he said, he had no idea that Rowlands ■was in an insolvent condition, or had committed an act of bankruptcy. To Mr. North: He acted both for Rowlands and Mourie. He certainly thought Rowlands was solvent on August 20 and he had accepted his statement that he could meet his obligations as they fell due. He had been consulted by Rowlands on nothing except his father’s estate. He did not remember upon what the petition in bankruptcy was based. He. had no knowledge of the payments Mourie was making. The fact that trade debts were given him at only £lOO did not cause him to make further inquiries. He maintained that the only reason Mourie agreed to make the advance of £l5O in August was to enable Rowlands to carry on business. To His Honour; When he became aware of the bankruptcy petition he did J not advise Mourie that Rowlands had i deceived them. ■ He! realised that he himself had been deceived, and. he later on advised Mourie to make no further

advances and that the securities had been taken. His Honour said he' would have thought that if a confidence trick had been worked on witness and another man the’ first thing witness would have done on realising the position would have been to tell the other man.

To Mr. North; A member of the staff of his office frequently attended the Hawera Court on debt case days. He had not been informed that Rowlands’ name was frequently Galled. Francis Mourie gave details of his loan transactions with Rowlands. On August 19 and 20 he, had no reason to believe Rowlands was insolvent, had committed an act of bankruptcy, or was pressed by creditors. Witness was getting a “bit short” of money himself ana did not want to lend Rowlands any further sums; he told Rowlands that he would not make this last loan unless it would set him on his feet.

To Mr. North: He knew some years ago that Rowlands had money coming from an estate in England. He admitted he obtained security over the bulk, of Rowlands’ assets. . Rowlands had not told him he owed £l5OO in debts before he received the money from England. He had not had the least suspicion •that Rdwlands was insolvent. He knew nothing about summons against Rowlands, though he knew the • bailiff was in the. shop. He saw him there. • That was before the interview in Mr. Beechey’s Office. His knowledge of the bailiff being in the shop was not the direct cause of . the interview in Mr. Beechey’s office.- He admitted he proved at the bankruptcy for £6OO. He had. paid Rowlands’, debt to Shaw (Mr. L. A. Taylor’s client) because he wanted to save Rowlands; he did not want him to go bankrupt because he was a member of the Hawera Mineral Water Company. '

“TO KEEP HIM FROM STARVING.’’

To his Honour Mourie admitted pay ing Rowlands two lots of £2 to keep him from starving; Rowlands had said he had nothing in the house. Further evidence was given by Alexander Reid, manager of the Hawera Mineral Water Company. When he interviewed Rowlands in Wellington in 1928 he thought he was a man of means, he said. . To Mr. North: He did not know Rowlands was in a bad way until six weeks or two months before the bankruptcy. Rowlands put £2so' into the mineral company and witness £250. Rowlands was general manager and witness -was manager.

This concluded Mr. Houston’s evidence. Mr. North submitted that the defendant had not discharged the onus resting on him under section 82 and therefore that there should be an order declaring both documents void and for the payment of £l6l Hs Cd., His Honour said he would like to .hear some of Mr. North’s witnesses.

Laurie Andrew Taylor, solicitor, Hawera, said that on December 0, 1929, instructed by Shaw, he issued a summons against Rowlands for £34 10s 9d. Judgment was obtained. He received no money as a result of a distress warrant.

Francis David Buckley, who was employed by Rowlands as a clerk for three years, said the bailiff w;ent ‘in in August; Mourie came in while the bailiff was there and knew his purpose. At

the instance of Reid he later showed •Mourie a list showing £3O in wages owing, . In July witness and Mourie discussed unpaid, wages. Both thought then that' it was not legally possible to claim for more than three weeks’ wages, and witness thought they were referring to possible bankruptcy proceedings. Mourie said he need not worry as he would be paid at any rate. He advised Mourie to get as much security as he could as there was another month’s rent owing. Later Mourie told witness to take the steel goods around to the Mineral Water Company,

Cross-examined, witness said he had known, in connection with Rowlands’ affairs, that accounts. were not being paid. Witness had proved in bankruptcy .for £6O or '£7o.

His Honour remarked that Mr. Beechey . would-have some difficulty in supporting these securities. It might be implied that Mourie was not aware of Rowlands’ position, but His Honour could not impute to Mr. Beechey.a want of an ordinary lawyer’s knowledge of the man’s position.- “It seems to me,” said .the judge, .“as if things were pretty dicky.” He said there were things one might not inqu'- - about because one did. not want to know. He could not see how the . securities could, be supported. Costs. totalling £lO lbs, with disbursements and witnesses’ expenses, were allowed.