THE J. G. WARD FARMERS' ASSOCIATION.

Tuapeka Times, Volume XXVIII, Issue 4350, 10 June 1896, Page 3

THE J. G. WARD FARMERS' ASSOCIATION.

The following evidence was led in the above case in the Supreme Court, Dunedin, on Friday last : — William Brown Vigers, cross-examined by Mb Young, said he did not know of any disagreement among the liquidators as to the advisability of the sale. He did not assist in making np the balance-sheet of the Ward Farmers' Association for June, 1895. He did not know the financial position of Messrs Smith and Beid, and he could not say if the Bank of New Zealand was assisting them.

Mr Young: What was your capacity in June, 1895— at the time when the balancesheet of the Ward Association was prepared ? — I was inspector of the Colonial Bank. Were you aware of the bogus draft for £30,000 ?— What do you call a bogus draft ? A draft which never went on. — I was aware of a draft that never went on. Ido not know that it was bogus. Is it not the same thing?— l do not think

so. Why did it not go on ? If you have no objection, I shall be glad if you will explain what the transaction was.— l have no objection. The draft was drawn on a credit for £30,000, supported by warrants for oats that went to the credit of the Association.

A draft on whom ? Do you remember ?— A draft on John Connell and Co., Limited.

His Honor : That amount was placed to the credit of the Ward Farmers' Association with the Colonial Bank ?— Yes.

Mr Young : It was practically a discount ? —Practically a discount. What was the date ?— About the 29th or 30th June. I cannot be certain.

On the balance day, apparently ?— lt was one of those two days. His Honor : It was not the bank balance day. That had the effect of reducing the overdraft to £1185 4s Id ? The draft did not appear as a liability ?—lt? — It became a discounted bill. They did not put discounts in at all. His Honor : But, then, against that they had the warrants for the oats.

Mr Young: Would it not appear on the other side of the balance-sheet as a draft against shipments ? — I had nothing to do with making up the Ward Farmers' Association balance-sheet. You cannot ask me about that.

I am asking you, as an expert, under ordinary circumstances. — If it was not SUOVTQ on one side it would not be shown on the other.

What became of the draft ?— lt was afterwards re-charged to the Ward Farmers 1 Association. Was it cancelled ?— Yes.

The transaction was written back ? — Yes.

Can you say how soon after the 29th June it was written back ? — I should say about the 19th October. It was some considerable time. It was the 13th October.

Should it not have gone on to London in June ?—lt? — It did not go.

It was kept in the bank safe, I suppose ?—? — Yes.

Do you know why it did not go on ?— Yes. It was not quite clear as to the terms of credit. It was done under cable.

Do you know what was the value of the oats? — No. They were supposed to be worth £30,000.

What became of the warrants for the oats ? — They were handed back, I understand.

Mr Macgregor : Do you tell us that the draft and documents were held by the bank from the 29th June to the 13th October ?— Yes. That is from memory, of course.

You have no personal knowledge of the value of the oats ? — No ; I suppose it would be the fair market value.

That had the effect of making the Ward Association's balance-sheet considerably more favorable than it otherwise would have been ? — Yes. It did not show the contingent liability. Do you know at whose suggestion the transaction was carried out ?— The bank's.

Which individual officer of the Bank?— Myself. And you are one of the liquidators ? — Yes. I acted under instructions.

From whom? — The general manager, Mr Mackenzie, who had the cable.

Were the directors aware of this transaction? —I do not know, I am sure.

Whom did >ou advise to do this?— The manager, in conversation at Invercargill.

You were in communication with the head office by wire ? — No ; I went down. How did it happen that this transaction occurred on the balance day of the Ward Association ? — Beoause the cable came that morning,

Was the cable in reply to a nother cable ?— I do not know.

Is it a fact that what you went to Inveroargill for was to insist that the account should be reduced as nearly as possible to credit ? — Very possibly we wanted the account in credit.

And this providential cable arrived on the day on which you went down ? — On the morning before, I think. I understood that arrangements were made in London to have those credits established.

Arrangements with Mr Ward ?— Probably.

There is an extraordinary coincidence as to the date. Do you know where the cable was from ?- I could not say.

How was it that this draft remained hung up for so many months without the transaction being settled? — I suppose because it wa3 not convenient to Had the OiltS.

The oats were not forthcoming. Where were the oats which were represented in the warrants ? — They were supposed to be in the stores.

Were they ? — I do not know.

Have you any reason to believe that they were? — Afterwards I had reason to believe that they were not. So that this £30,000 debt was lying in the bank safe with a parcel of worthless bonds attached to it ? — We did. not know that.

His Honor } Were the bonds worthless when you got them ?— They were not so to our knowledge.

Were they aT a matter of fact ?— I believe

so. Mr Macgregor : Do you mean that the oats were never there at all to represent the warrants ■?-*■! think not, from what I subsequently learnt. What did you subsequently learn ? — That there was considerable difficulty in getting the oats.

Was it Mr Ward's bond they were supposed to be stored in ? —They were supposed to be in different places.

Did they duplicate the warrants ? — I think the man gave the warrants when the oats were not there.

The bondkeeper ? — They do not have bondkeepers at these plaoes.

His Honor ; They would he free stores. Mr M.acgregor : Who signed the warrants ? — Witness : The manager of the company. The manager of the Ward Company ?— Yes. And you took his word that the oats were there?- -Yes,

And th.c Ward Company had the use of this £30,000 from June until October on the strength of this draft ?—lt? — It simply wiped off the overdraft.

It saved interest, I suppose ? — The interest would be charged back. His Honor : If the oats had been there the. account would have been £30,000 to the good.

Mr Macgregor: Were oats rising at the time ? — Witness : J tktnl; they were.

At tt>e ti)ffte p4 ii*e transaction Mr Mackenzie was in Dunedin, and he instructed you to proceed tolnvercargillto arrange this ? —Yes.

further examined, Mr Vigers said that he made a thorough inspection of the company's books in November. He heard about the oats some time after September. He took out a balance-sheet and made out the position to be pretty bad, but not so bad as Mr Cook's

(Continued on our fourth vaqe.\

statement did. He had not taken steps to find whether he could cet another offer. He did not first receive word of this offer through the Bank of New Zealand. He did not know that the bank was finding a shilling.

Satubday, 6th Juke.

Messrs Vigers, Ward, and Cook were reexamined to-day. The first-mentioned said, in cross-examination, referring to the oats transaction, that He made a suggestion to h&Vhnce JBSO.OOO against Ike oab on the instructions of the general manager. He did not know whether the directors of the bank knew of the transaction. He did not know at the time that the oats were not in store, but from what he learned afterwards he believed that they were not.

The Judge : Can you give any explanation or reason why the bill was taken by the Colonial Bank from Mr Ward on October 19th?

Witness : I cannot give any explanation at all. It did not come withiu my province.

The Judge : It would not, but I ask you as a banking expert whether you can offer any explanation ?

Witness : Ido not think it comes within the range of ordinary banking.

The Judge : You are a liquidator as well as a banker. Have you any notion what paragraph 18 of the agreement meaus? What is the point of writiug off the amount of this partifulav bill, for the bill was not given on that day ?

Witness : My own impression is that was the amount the account was supposed to be short. The rest was supposed to be good. The Judge : That is what puzzles me. The account is supposed to be hopelessly bad. Next day a promissory note is taken by the bank for that amount. Ordinarily when a promissory note is given by a man of business it is supposed at the time that he believes he will be in a position to meet it. Also, when a promissory note is takpn by a man of business, as the representative of the Colonial JBauk was, it may be presumed, that he looks at ik as a valuable security. As the circumstances were probably known to both parties, this was simply a farce perpetrated between Messrs Mackenzie and Ward for no understandable object. Can you, as a banker, suggest any explanation ?

Witness : Not as a banker. I can give you my impression. I think it was taken by Mr Mackenzie just to retain a hold over Mr Ward for the amount.

The Judge : But Mr Ward was not liable to the bank before that ?

Witness: No; but he was to the Company. It was written off, but the Company were credited.

Mr Young then addressed the Court, urging that the compromise should not be agreed to until every remedy had been exhausted against the Association and Mr "Ward himself. Further examination might cause other matters to transpire and other assets to be disclosed.

Mr W. C. Macgregor briefly addressed the Court, and was followed by Mr Woodhouse, who said the purchasers would derive no benefit from the sale.

His Honor asked if he really meant to say they were going to pay £62,000 without hope of Di'oiit for mere friendship ?

Mr Woodhouse repeated tbat they did not expect to make a profit for themselves, but for the Ward Association. Nothing was to be gained by forcing Mr Ward into the bankruptcy court, as he bad given up everything. There was no suggestion of any impropriety on his part beyond being extremely speculative.

Mr Haggict having replied on behalf of the liquidator, his Honor said he would give judgment in a day or two.