ALLAN HOPKINS’S BANKRUPTCY

Star (Christchurch), Issue 16555, 14 October 1921, Page 6

ALLAN HOPKINS’S BANKRUPTCY

; BANK APPLIES FOR DECREE An aspect of the affairs of William Allan Hopkins was before his Honor Mr Justice Adams in the Supreme Court in banco yesterday afternoon. The Bank Zealand applied for a decree to determine whether it could bring debts owing to it by Hopkins for rent, interest and repairs under securities given by Hopkins against his current account at the bank, which was secured by three memoranda of mortgage. The rent claimed, £OBO 5s 7d, is for a suite of offices formerly occMpied by Hopkins. The second item is interest on that sum at 7 per cent from November 1, 1920, to April 22, 1921, a total of £l9 2s 9d ; and th© third item is £452, for necessary repairs to the premises. The block in which the offices stand, some years ago, were owned by Hopkins, but he sold it to the bank and became its tenant. Mr W. J. Sim appeared for plaintiff and Air A. T. Donnelly for defendant, the Official Assignee in bankruptcy in Hopkins’s estate. Mr Sim said that it was an originat- | ing summons and a petition lor a declaration deciding certain questions in regard to memoranda of lease and to a lien between the parties. An overdraft to Luther Hopkins was included in the securities given by Allan Hopkins to the bank. The controversy was as to whether certain moneys due by Hopkins to the bank under the tenancy should be included within the securities. Mr Donnelly said that it was solely a question of principle. Hie arithmetic of the case might be dealt with later. Mr Sim said that Hopkins, in one document, gave security for moneys advanced by the bank. The security held good in regard not only to banker and customer, but also to landlord and tenant. The document giving the security said that it should cover “all accounts whatsoever.” It covered any rent that might be due and owing to the bank, as well as advances mad© by the bank. It was an express recognition of the possibility of some debt arising from the relation of banker and customer, in every manner of thing whatsoever the security was to remain in force as long as the relation of banker and customer between the parties subsisted. Wide terms were used, stating that the security was extended to cover any sum that might be owing by Hopkins to the bank. The position of landlord and tenant between the parties had not arisen at the time .but the bank might have contemplated other relations than those of banker and customer, and thought that it would have full security when entering into any further arrangement with Hopkins. The third mortgage said that the security would be against “ such account or otherwise.” The inference was patent that at the time of preparing the third document the relation between banker and customer and between landlord and tenant, with a possible liability by Hopkins’ was considered, and it was reasonable to suppose that as lie had fo*und it necessary to obtain from the bank an overdraft, the bank would be apprehensive about the payment of the rent. Hopkins set out that “ I will pay to the bank all sums that may be owing by me to the bank.” Those words must be interpreted in the light of the relationship between landlord and' tenant, in the light of the possibility of rent being due and owing. As to the deed of lien, Hopkins was becoming involved with the bank. It was possible that his indebtedness would extend outside the current account between banker and client, and the lien was given over a certain security mentioned in the schedule. The only clause in the deed to which counsel wished to call attention was the first clafiise, in which were the words: “In consideration of the loans or other banking accommodation.” The words “on all accounts whatsoever ” meant to give security over any moneys whatever owing by Hopkins to the bank, in whatever capacity he was regarded, whether as a customer of the bank, which was admitted, as guarantor of Luther Hopkins’s account, which also was admitted, or as tenant, which was disputed. The question was a definition of the word “ accounts ” in the term “ all accounts whatsoever.” Authorities said that the word must be given its natural and ordinary meaning unless that led to some absurdity. “ Accounts ” mufet be taken in its widest sense. It meant simply a statement of ona man’s indebtedness to another. Mr Donnelly said that each document in the case was on a printed form, used by the bank, in the ordinary relations with its clients, in giving them advances. His Honor said that the lien was characteristically a banker’s deed. Mr Donnelly said that the printed J forms were kept in stock in order that the bank might make advances to any client, in the ordinary way. The fact that those documents ordinarily were signed by customers who had no other relations with the bank, and were used only in those circumstances, was an important element in their construction. The first document was signed by Hopkins before the relation of landlord and tenant was entered into. The words “ all accounts whatsoever” limited the liabilities between the bank and a mortgagor in the course of the bank’s business. The illustrations showed clearly that th© general words were intended to be limited to tiiat relation. Th© recital clearly confined the liability to the ordinary banking relation between banker and customer. Th© word “ otherwise ” confined the liability in the same way, and did not enlarge the i words “on all accounts whatsoever.” The scope of the operative portions of the documents was doubtful, and the recital and references might control those portions. His Honor, in reply to a remark by Air Sim x asked if, in a case in which there was a credit in an account for £SOO, for instance, and £SOO was due for rent, the bank would bo entitled to dishonour the client’s cheque for £SOO and debit the account with £SOO in respect to rent. Mr Sim : I think the bank could do so. His Honor: It would be a dangerous experiment for the first time, I dare say, but Mr Sim: Suppose £250 fell due for rent, the bank could increase the indebtedness and charge interest on the current account. His Honor: It seems easy when the account is in debit only,. but if it is in credit and cheques are drawn against it., and the credit is swamped by bringing, in rent under a lease, it would bo a. little startling. That may be disposed of according to the custom of banking, without affecting the construction of the securities, but I don’t think any banker would say it was a good banking custom to debit rent under a lease in a current account without express authority. A jury would be inclined to differ from him if he said so, I think. His Honor said that as the questions raised were important ones to the parties he would take time to consider them.