COURT OF APPEAL

Star (Christchurch), Issue 5871, 13 May 1897, Page 3

COURT OF APPEAL

- « [Per Presb Association.l WELLINGTON, Mat 13. The case of Langston's Sheep Medicine Company, Limited, was argued in the Court of Appeal this morning. This was' an appeal from the decision of the Chiel Justice. ■ The directors of the above-named company arranged for an overdraft for the company with the National Bank of New Zealand) at Wellington, which they personally guaranteed. It was alleged that it. was verbally agreed at the time that a mortgage over the uncalled, capital of the company should be given to the directors who were becoming sureties, and lodged with the bank. This, however, was not done at the time. Afterwards, and shortly before an order to wind the company up, security was given over the uncalled capital — not, however, to the sureties, Wt to the bank direct. The official liquidator attacked this as a fraudulent preference of the bank. The Chief Justice held that although one of the motives for giving the security was the desire of the directors to protect themselves as guarantors, yet the motive of giving preference to the bank in compliance with the demand by it for further security, was also a substantial motive in moving the company, or directors, and that the security was void as a fraudulent preference of the bank. The bank, now appeals from this decision, on the ground that! the evidenc* shows that the only real motive for giving the bank security was to protect the sureties and not to prefer the bank, and that there was therefore no fraudulent preference of the bank. The Court reserved its decision.