DEAL IN SHARES.

Star (Christchurch), Issue 17572, 24 June 1925, Page 7

DEAL IN SHARES.

A BANKRUPT ESTATE. IS IT A DEBT? Mr Justice Sim to-day heard an application for an order reversing a decision by the Official Assignee that Richard Ilenry Smith, Papanui, salesman, was not entitled to prove as a creditor in the estate of Frank Pcrcival Claridge, bankrupt. The Official Assignee held that Smith was a partner with Claridge in a company to be entitled Claridge's Saleyards. Ltd. Mr Sim, with him Mr Olliver, appeared in support of the motion, and Mr Donelly, for the Official Assignee, opposed it. Mr Sim said that Smith had applied for proof of debt for £llO3 6s Sd. Claridge induced Smith to enter into an agreement to pay Claridge £IOOO for 1000 shares in Claridge's Saleyards. Ltd. The company never was formed, and the shares never were allotted, but the Official Assignee had suggested that some kind of partnership arose. The question was whether the agreement was carried out. and whether there had been some acquiescence in the partnership by Smith. The fact was that Smith was induced to believe that C'laridge’s business, to be converted into the new company, was £IOOO in credit, and that it was prosperous, but both of those statements were false. If the representations were false Smith was entitled to receive his money back, whether the statements were innocent or fraudulent, and to prove in the estate. The company contemplated would have only three shareholders. Claridge, Smith and William P. Thompson, all of whom would have specific duties. Thompson dropped out, and now was somewhere in North Auckland, but could not be found. He failed to find cash for the shares, but Smith raid £IOOO to Claridge. Smith did not know that the company had not been registered. When Thompson failed Smith demanded his £IOOO ba~k or 1000 shares. Claridge said that Smith’s shares had been sold to Herbert 11. Cook and refused to discuss the matter before he consulted his solicitor. Smith, to Mr Donnelly, said that he was a general merchant in Timaru for about seven voars before ho got into touch with Claridge. to whom bo was introduced by Thompson, who was a land agent at the time. A. Nicholson, an accountant, showed witness a balance-sheet of Claridge and Co’s business. Thompsou was to go in with witness in taking over Claridge’s business, but witness told Claridge that he would have nothing to do with a partnership with Claridge, whom he did not know. Witness had been in picture companies previously. The arrangement was that Thompson and witness should put in £IOOO, but Thompson was to pay in only £2OO, the balance of £BOO to come to him out of the first year’s profits. Mr Donnelly : What profit did yon expect?- I was led to believe there would he £3OOO a -ear. One hundred per cent?---Yes. Did you honestly think Thompson would be paid £BOO out of the profits at the end of a year?—Yes. What did the picture companies pay you?—Twenty per cent. And you believed this company would pay 100 per cent? You describe Claridge as an optimist, but you are a much bigger one. Witness continued that Claridge threw Thompson out, and witness then -aid to Claridge that he also wanted to get out. Witness was employed in Claridge.’s business, with Thompson, but witness did only menial work. lie took no part in conducting the business. Claridge. to Mr Sim, said that sums in the assignment due to the D.1.C., Ballantyne and Co. and Strange and Co. were his private debts. '1 he trustees of the estate offered Smith £3OO to settle his claim, but witness had nothing to with with it. ITe thought when Smith went in that he was worth £ 10(H). To Mr Donnelly: He was a horsetrainer now. he alwavs had been used to horses, hunting with the hounds and His Honor said that there was no evidence that there was a partnership. Smith was entitled to prove against the estate for £IOOO.