IN BANKRUPTCY.

Auckland Star, Volume VI, Issue 1662, 16 June 1875, Page 3

IN BANKRUPTCY.

Re George TJioxne, jun.

The Case concluded— Judgment.

MrWhitaker, in commencing his address in reply to. Mr McCormiok, remarked upon the circumstance that after nearly eighteen months' investigation they had arrived at nothing further than a conclusion wnicn had been come to over four months^ ago. The fact that the|bankrupt had] attempted to make the Bank his sole creditor had never been disputed. On the .contrary; Mr

a moral obligation to do so, whether he was breaking the law or not. He assumed that the real charges brought against the bankrupt were contained in tbe counts two and three brought forward by Mr McCormick yesterday. He could not avoid expressing his opinion that the Court had been kept for an unnecessary time by purposeless and useless investigation. To establish the charge brought against his client, it was necessary to show four things : fraud, anticipation of bankruptcy, without pressure of creditors, and undue preference. He was not prepared to state that Mr. Thorne had not commit ed fraud within the meaning of the Act. He was glad to have heard his learned friend on the other side admit that there was no foundation for any charge of moral fraud.

Mr McCormick interrupted Mr Whibaker' He did not say there was no foundation for any moral fraud. What he said v.as that there was no necessity for imputing moral fraud.

His Honor : So far as the bankruptcy is concerned.

Mr McCormick : Yes, your Honor. Mr Wliitaker continued : Fraud in bankruptcy cases was always interpreted in the Courts to be a contravention of the Bankruptcy Act, nothing more. Fraud in the pridnary sense of the word meant much more. The accounts showed clearly that the bankrupt had not made away with any of the money for his own benetit. He did not act dishonestly in any way. He felt morally bound to repiy certain creditors, and he had paid them. The charge that he had acted as he did in contemplation of bankruptcy was eatily rebutted. The whole proceedings showed that on the contrary his actions had been guided by a desire to avoid bankruptcy. The fact was that the bank wanted to get hold of the securities and talk of arrangement afterwards, whereas the bankrupt would not consent to such a method of settlement. Had he done co there is not doubt what the result would have been. The bank would have had the money and no one else anything. There was no indication that the precedure of Mr Thorne was shaped by any intention to diminish the sum available for his creditors, but simply by a desire to repay money which he had borrowed, and which he felt as he had said morally bound to refund. Aa regarded, therefore, fraud and contemplation of bankruptcy, it could not be said that the bankrupt had brought bitnaelf within the meaning of the provision of the 2nd section of the Act, as the list of charg s made it out. No doubt he had exercised, to a certain extent, a preference. Ihis at the time he felt he had a peifect rijht to do, in fact considered himself called upon to do. It would be harsh to say that the bankrupt had acted even imprudently. When a young man just opening in business finds himself in command of large sums of money it was not extraordinary that he should use them. If there existed any blame for imprudence it must.be sharedby the bank whohad given him such facilities. It had been said that the bankrupt owed everything to the Bank. That might have b'en so ; but for all that the Bank had themselves to thank for the mischief that followed. They had allowed the bankrupt to be liable to them at one time for over £IG,OOO, secured only by bills drawn by Geoigo Thorno jua , on John Robertson & Co , and vice versa.

Mr MacCormick said this had beea explained ; the learned c v lsel making a further interruption.

Mr Whitaker said it was too bad. He had been listening to Mr McOormick patten'.ly for eighteen months, and now when he wanted a little time to talk himself his learned friend would not allow it him For all this long while had he endured his learned friend's eloquence, he had sat quite still; if he had put in a word he had been snapped up at once. rfe must really implore his friend to let him alone for ono little hour and he would be eternally obliged to him.

Mr. Whitaker then made a rapid review of the transactions of the bankrupt which bore upon the charges brought forward by Mr. MacOormick, contending that he had been guided all through by considerations of moral obligation. The allegation contained in the ninth count was a very serious one. He maintained that there was no evidence to show that the books had been kept in such a manner as to conceal the state of bankrupt's affairs. There was not a single transaction which had been referred to throughout; the lengthy investigation which was not to be found recorded in the booka There was no concealment. Nothing for the bankrupt to be ashamed of. Then there were the different statements of accounts. He averred that the first statement was to all intents and purposes as correct as the last.

Mr McCormick again interrupted. He had already said, and he was prepared to say it again that he considered the bankrupt had furnished a wilfully false statement of accounts. What Mr Whitaker was now maintaining, reflected upon the late Chief Justice.

His Honor said he declined to say anything upon the point. He thought the subject had better be avoided by both sides. Mr Whitaker was here about to make an observation to the Court, when Mr McCormick commenced speaking also.

Mr Whitaker: Pardon me a moment please. Mr McCormick : No, I will not. Ido think —

(Here both gentlemen addressed the Bench rapidly together for some minutes, during which their remarks were unintelligible.)

When order was restored Mr Whitaker continued. He considered even if the bankrupt had done wrong he had been more than adequately punished by the badgering te had undergone for the last eighteen months. Mr McCormick here left the Court, apparently in anger, and remained out for some time.

Mr Whitaker considered there was an obvious explanation of all the troublesome investigation and enquiry that was the fact of the trustee being an official of the Bank. Had he been an independent man, afgreat saving of time and trouble would have resulted. There had been really no trustee. It had been throughout the opposing creditor against the bankrupt. What had they seen every day the case had been on ? There was a regular row of them—the manager, the inspector, the subinspector, the trustee, the trustee's accountant, and Mr MacOormick, and all against one miserable bankrupt (laughter). In conclusion Mr Whitaker said he felt every confidence that his Honor would agree with him : that there had been no charge established against the bankrupt sufficiently serious to hinder tho Court giving him hiß discharge. For that discharge he now appled. His Honor said he should be prepared to deliver judgment at two o'clock, His Honor reviewed the circumstances of the case at great length, and, in consideration of the unnecessary length during which the bankrupt had been kept in the Court, suspended his Certificate for twelve months, which he considered equal to two years, and wished it to be so understood. His Honor delivered a very elaborate judgment, in which |he traced the whole course of the bankrupt's transactions from the time when he commenced business in 1870. At that time he was in a very small way as a commission agent, and practically without capital. He banked with the Bank of JSew South Wales, and his account was covered by a cash credit bond from his father of £1000. In July 1872 he leaseed the more extensive business of John Roberton and Co. The Bank had then ample means of knowing his business and means. He required more capital and the Bank shewed a strong desire to secure the account of Roberton's business, which had been held by the Bank of New Zealand previously. This was^ shewn by Mr Hill's telegram to the bankrupt ••Don't co to another bank. We will gim. you *» Jittckjtco^iamodgtign aa »oy

history of the losses on the wool which led the bankrupt into inso'vency, and hi 3 subsequent action in payiDg off his other liabilities .in order to leave the bank his sole creditor. His Honor thought tbe bankrupt was actuated in this step hy t.vo reasons, first, to saddle the whole loss on the Bank, and secondly tlinfc most probably if he did so the Bank would be bound to carry him on. While exp:»=ss!Eg reprehension of' the enormous accommodation granted by the Bank to a man without capital, and also of the sj'stera pursued by the Bank of honoring Mr. Thome's bills drawn upon himself, his Honor could not but hold that after the 10th of December Mr. Thome must have had co hope of retrieving his losses, and his payments after that date constituted undue and fraudulent preference. It was not for him to consider whether tho bankrupt had grounds for believing himself morally justified (as Mr Thorne believed and some might think) in paying those who had been led into giving him credit through the lar^e appearance of business sustained by the bonk, in peference to the bank which was acquainted with his position, but he was there to administer the banknipt la'-vs. Taking the whole circumstances iuto consideration, and looking at the high handed defiance ly the bankrupt; of the insolvency laws, but also looking to the unn cessarily long time duung which he hud been kept in Court, the Court would order that his certificate re suspended for twelve months, which he considered equal to two years, and desired it to be so considered. Mr McGorinick then made an application to examine tbe bankrupt rela'ive to his transactions with his father ia order to lay the foundation for an action under another clause of the Bankruptcy Act. His Honor ruled that application mu-st be made by arfi. iavit.

This concluded the business