BANKRUPTCY COURT.

Taranaki Herald, Volume XXXIX, Issue 8792, 30 May 1890, Page 2

BANKRUPTCY COURT.

ESTATE OF READ BROTHERS, FLAXMILLERS.

OPUNAKE,May2B. — Before R.Gr. Bauchopo,

Esq., Deputy Official Assignee

Mr R. Clinton Hughes appeared for the bankrupt, and Mr Barton for Messrs Newman Brothers, and other creditors.

Mr Hughes said Messrs Read Brothers commenced business as flaxmillers about eighteen months ago. They leased the mill at Opunake from Mr Rogers, and also the Opua and Oeo mills. When they leased the mill at Oeo, flax was about £28 per ton. They took a contract to supply Mr N. King, of New Plymouth, and Mr Johnston, of Wellington, with flax, at £16 per ton. This contract was cancelled by Mr King, who afterwards acted as their agent for the 6ale of flax. The advances received on account of the flax were not sufficient to keep things going, and accommodation was obtained from the Bank of New Zealand. They also mortgaged their private farms, and got their father to become security for £200. About the end of last year, the sudden fall ,in flax caused a diminution in advances, and as flax still continued to go down they were unable to keep on for want of money.

Walter Read, examined by Mr Corkill, said : As to the statement showing how the £375 received from Mr N. King, on security of the bill of sale, was expended : £5 of the £6 paid to Wharehaka was borrowed from my father. Out of the same amount of £375 we drew £30 for our own purposes; £41 to Mr Lewis Read, and £36 5s 3d to my father, Mr Robert Read. In addition to these, we made two payments of £15 15s and £4 13s 9d respectively, in respect of our liability on the leasehold now held by our father. These liabilities were incurred during our tenancy. Neither myself nor my brother said, on sth May, in Mr Corkill's office, that the whole of the £375 was paid away. Mr C. Messenger and Wharehaka were present at this interview. I may have said that the £5 which I paid to Wharehaka that afternoon I had to borrow from my father, but I did not say that we were absolutely without funds.

By Mr Barton : The £375 was paid in notes at Mr Samuel's office, New Plymouth. The £4 11s costs of bill of sale was paid on the same day in notes. All the £375 was handed to me in notes, 'and I handed back £4 11s. Part of the £375 was paid in silver. Mr CaverhilPs lease was bought in the names of my brother and myself. :It was paid for by cheque drawn on Walter Read's account at the Bank of New Zealand, Manaia. We s^ld the lease to our father for £50, and subject to a mortgage »f £350 to the Investment and Loan Society. We did not receive the £50, as we owed our father money. It was transferred to him in consideration of money we owed him. The transfer was made early in Feb. last. Our father paid the £15 1 5s to the Society. In accounting for the £375 just now, I have stated the £15 15s had been paid out of it to Mr C. Rennell as interest on Caverhill's lease. This should have been paid to my father as re payment of what he had paid to Mr Rennell. The sum of £4 13s 9d rent is in the same position — it was a repayment to tmy father. Prior to the bill of sale I received £25 from Mr N. King — about a month before the bill of sale. Previous to receiving the £25 we received a p.n. for £300 and cash £100 from Mr N. King. I can't tell how I disposed of that sum of £425 Avithout tracing it in the bank. I paid £100 to the credit of the firm with the : bank. I also discounted the p.n., and paid | the proceeds to the credit of the firm; also the £25. Before I paid in these sums the overdraft was £1743 8s 7d. The overdraft at date of filing was £1654 16s 7d. Mr King asked me for a statement of our liabilities. I stated they were £300 or £400, or might be a little more, in addition to the bank, making our total liabilities about £2100. He asked me about my private creditors. I told him some of them. I made them to be about £150. I did not tell him all of them. I did not tell him my father's claim for interest. That was about £200 at that time. Nothing occurs to my mind as having been omitted except my father's claim. Mr King knew of that from prior conversations I had with him. He would not admit it as a debt. He enquired about the position of my brother Lewis. I did not tell him anything about it. I withdraw the statement that he asked me about Lewis' position. Ido not know why I said so. I told him the assets of the firm. The assets consisted of flax (33 tons) in Opunake, Oeo, and Opua. He knew that the flax mills belonged to us from private conversations. I also mentioned a trap horse called " Woodlands." I may have told him there were more, but it would be inadvertently. Ido not remember telling him of anything more. Ido not remember whether on any prior occasion I told him what the assets of the firm were. I got the £400 on account of the flax. Flax was then selling iv London at about £21 to £22 per ton. My father spoke to Mr King about the advance of £400. My father went with me to Mr King. My father did not guarantee anything. I got the advance on the 3rd March last. I hold a deferred payment section ; the license has about six or seven years to run before a Crown grant can be applied for. I decline to give up the section to my creditors ; £380 or £390 has been expended on this section. We bought from Messrs Nolan Tonks & Co. a waggon and five horses — about three or four months ago. We expected to pay cash for it when we bought it. About six weeks afterwards I did not see my way to pay for it without mortgaging it or selling it. I told Mr Nolan 1 would let him have it back again and pay rent for the use of it. I have not paid any rent for it. I produce a statement made at a private meeting of our creditors, held on the 15th May. In that statement we showed my father as a creditor for £1,100. My father does not claim on the firm now. The statements marked " A," " B," &ai "C " were produced at the private meeting, alterations on statement marked " B " were not on it when produced. According to this statement my father had a claim for £1,055 4s lid, Some of it is still in existence. In Walter Read's statement my father is shown as a creditor for £130, and in my brother Lewis' statement he is shown as a creditor for £104 13s 6d.

By Mr Barton : Can you explain the difference between the statement made at the meeting of creditors on May 15 and your brother's statement on 24th May, there being a difference of £800 between the two ac to your father's claims against you? Bankrupt I My only explanation i§ that wt would ;, olio w oar &fchw to port in, -wi * Ji^ > «_*.*^ v . *&&?&.

Examination cantinued : We kept no journal ; we kept no cask book. We kept a bule book And a wages book. We did not keep a profit and loss account. Wo did not keop a capital account. Wo kept t.o account that would show which way the business was going. We knew it was a speculative business. At first wo looked upon it as a "moral," and plunged into it. In my evidence answering Mr Barton's questions I said that tho £375 was partly paid in silver. I now wish to correct this. The money was paid in notes, and I changed £1 to pay Mr Samuel's account. Lewis Read, examined by Mr Corkill, said : I did not state in Mr Corkil's office on May sin the presence of Mr C. Messenger and Wharehaka that all the £375 received from Mr King was paid away.

By Mr Barton : The document produced and marked "D " was prepared by Moreland, cur clerk, and was a statement of interest clue to Mr Robert Read, by the owners of the different properties mentioned therein. The Rahotu property belongs to me. My father lent me £1525 Us Id, thia represents tho purchase money of the sections and cash advances. £630 was purchase money of cash section. 1 cannot tell you how much out of the £1525 was paid for the land. I have no book, that can show it except my bank book. I had the deferred payment land 3 or 4 years before I capitalised. All the instalments wero advanced to me by my father. On June 30, 1882, I paid the Land Board £29 3s 7d, also on January 8, 1883, £29 3s 7d ; these piyments can be traced through the bank book. My impression is that my father advanced me the money to meet them. All that I was not paid of the £1,525 for purchase of Rahotu land and deferred payment lands was general cash advances. I have not repaid any portion of the £1.525, because I was not in a position to do so, except £25 paid in February, 1890, as shown in his proof of debt. The reason why I have not shown £1,525 11s Id on my liabilities is that ray father gave me the land on condition that I paid him interest only tilL his death My liability for the £1,525 11s Id would then cease. My father gave me the principal, and I was to pay him interest during his life. This last statement applies to all moneys my father advanced to me. This also applies to advances to my brother Walter. The rate of interest was to bo 5 per cent. No periods were fixed for payment of interest. I cannot tell whether I made a profit or loss on the farm in any single year. lam approaching 30 years of age. I think I made a los 9on my farm last year. I cannot say whether I mado a profit at all during the last ton years, but I think I could tell by my bank book how I stood. I find I cannot tell from my bank book. Ido not know whether my brother made a profit by his farm or not. I did not pay my father one shilling of interest till February, 1890. He never asked me for it, except once, some years ago, at Pihama. It was at the house at Pihama. He said Walter had been paying interest. ! I said I could not pay anything, and ho had better sell the farms. He said it could go on till I could afford to pay him interest. The £25 in February, 1890, was not paid by cheque or by- cash. Thia ia half the consideration for Caverhill's lease transferred by us to him. I never paid interest in cash to my father. I don't think my father keeps books of accounts. He keeps a diary. I have not paid my father excepting the £25. In March, 1890, I sold a lot of sheep and cattle to Nolan, Tonks and Co. I don't know what they fetched, possibly from £300 to £450. I paid the proceeds to the Bank. At least I paid in £290. This sum is the full amount. At the same time I sold 60 head of cattle through Nolan, and the proceeds is included in the £290. I have 46 acre 3 leased at Rahotu. The lease has about 18 months to run. Mr J. C. George is the lessor, and the rent is £10 per annum, and the last half-year's rent i 3 paid up. I don't think the goodwill is worth anything. That is why I left it out of niy assets. I have a lease of 168 acres — that is, I had it for seven years free on condition that I fenced and grassed it, but that term has run out. I have leased my ftcehold, leasehold, and d.p. land at Rahotu to Mr Philips. It was leased about two or three months ago for twelve months at 5s per acre. My overdraft is guaranteed by my father. It was given when the overdraft began. I paid no money into the bank from August, 1889, to February 5, 1890. On February 5 my overdraft stood at £297 19s 4d, and itia now reduced to £200. On March 8 I paid Budge and Good £101, and on April 2 £205 18s 6d. These payments were for p.n.'s given for the purchase of sheep. The p.n. for £101 was renewed once. It was originally a four months promissory note. It was renewed for another three months, and the last renewal for one month. The £205 18s 6d was also a renewal; the original currency was for either three or four months. The renewal was for three months. The original arrangement with Budge and Good was to renew the bills till the sheep' were sold. I have had no bills or cheques returned by the Bank. The reason I sold the sheep and cattle and leased my farm was oecause I hud to sell the sheep to meet Budge and Good's p.n.'s. I had no money in hand with which to pay. I did not ask the Bank for money to meet them. I had to sell the sheep because I had no money to meet the p.n.'s otherwise. I sold the cattle in order to lease the place. I leased the place to Mr Philips because I had business to attend to at the mills, and it did not pay me to keep a man On the farm. It was not because I was getting into deep water. I first realised that we would have to stop payment about a week after we got the £375. My brother came down to Opunake to pay the wages, but as he found everybody rushed him I decided to go to New Plymouth and consult further. I did not know we were insolvent till after that time. The deficiency on my estate is £87 18s Bd, and on my brother Walter's £92 6s, and on the firm's £803. Although we are thus £1000 short I did not know we were insolvent until a week or two after we got the £375. Our wages to the men first fell in arrears about a month before we got the £375. I believe the wages were punctually paid till that time. We paid wages once a month. Our payßheet for Opunake and Oeo was about £110 per month. The pay day was the first of each month. I do not think that any wages were paid on March 1. With the exception of about £20 or £25 the wages due on March 1 have not yet been paid. I find, since giving this last answer, these wages were paid on March 25. The wages due on April 1 have not been paid yet. I attribute our bankruptcy to the fall in flax and insufficient advances. At the date of our bankruptcy the price in London was £20 or £23 per ton. It had been below that for some time before. It had been gradually falling for some time before that. I had no idea, notwithstanding the foregoing, that we were insolvent till the time stated above, I sold 60 head of cattle a few weeks ago to Mr Bayly — about a fortnight or 3 weeks ago. I had no idea we were insolvent then. It was before, I think, my brother came to Opunake that I sold the cattle. I sold them in two lots — one about a week or a fortnight before that. The first lot consisted of 32, which realised £1 Is each, and the second lot of 30 1 sold for 12s each, which is not paid yet. The firm was in the habit of giving promissory notes, The firm had no promissory notes returned till thiß year. We had one small cheque of £4 returned dishonored, which had been current for about three months, It iB impossible for me to say at what period this £800 was lost. By Mr Newman s I am opt prepared to feaacl ov§r my deferred payment isutiojjf

for tho benefit of my creditors, as I consider tho property is due to my father, as I have lost enough money for him without losing any more. By Mr Corkill : I consider that I am acting honestly in keeping this land. By Mr Hughes: There are about 180 tons of flax consigned to London of which we have got no returns. The market for flax is rising. The quantity of flax for the London market is likely to be greatly diminished by tho recent stoppage of so many mills, and so lead to an increased price. If the flax was to go up to the price it was at this time last year, the pro ceeds of this consignment would clear us and our difficulties. This sudden drop in the price of flax has been disastrous to other mill owners besides ourselves. The difference between the two amounts for which my father proves as a creditor and tho amount stated in my private statement of liabilities is a £200 guarantee which has been omitted as he has not paid anything, and the amounts mentioned in my statement of personal liabilities was that he would forego the difference. At the same time he reserved the right to piove for tho full amount.

By Mr Rogers : I sold Mr Brown 4 horses, but on account of remarks made by several people, and after consulting my solicitor I took tho horses back again. By Mr Ching : I sold more cattle to Mr A. Wells, and the proceeds were placed to my private account in the Bank. It was proposed by Mr Newman, and seconded by Mr Victory — " That, in the opinion of this meeting, the conduct of the bankrupts in retaining ag.iinst their Creditors their interests in valua 1 le farms held by them on terms of deferred payments is, though legal, deserving of the severest censure, they being thus possessed of assets worth several hundred pounds, while their creditors — many of them laboring men, of little or no means — aro heavy losers by the bankruptcy, and have but a Bmall dividend to look forward to. That the Deputy Official Assignee is hereby requested to arrange for a public examination of both bankrupts at an early date, and that their father be summoned to give evidence before the court as to his dealings •with the bankrupts." — Carried unanimously. It was also resolved, on the motion of Mr Rogers, seconded by Mr Newman — * 'That the D.O.A. is hereby requested to offer tho farms mortgaged to the Bank of New Zealand for sale by auction."

The meeting then adjourned till 11th June.