SUPREME COURT.

Dominion, Volume 2, Issue 518, 27 May 1909, Page 9

SUPREME COURT.

iv .: IN THE WAKE OF A BIG BANKRUPTCY. t ' ASSIGNEE'S "PECULIAR POSITION." GREAT CONFLICT OF TESTIMONY Before Mr.:: Justico ,Cooper yostorday .tho ' hearing of the action between Georgo Tread- . gold and tho Official Assignee in: tho cstato t., : ' of . Albert Claronco .Elliott was resumed. f:.; Mr. Skerrett, K.C: (with him. Mr. v v-:<worth))-,appeared on behalf -of - plaintiff; Mr. ; Young for -.the 'Assignee; • and Mr. Neavo for Sir. J. J M'Grath. . This-was an action to iteat the'ivalidity of ••• , i fc a mortgago which Elliott - luul,' prior .to- his : ..bankruptcy, .- ;favour . ot; Treadgold '■ ~i': as security for a debt, of £400. When tho -properties ill :the estato of Elliott woro-'atic- ' tioned, Mr. M'Grath became tho purchaser i:ft; ; s:J,<)f/tlio ; ;'questiohifor £21p0." ( Plaiiitifi; i •' claimed that he was.'entitled to for of tho property /imterms of .. the agreo- . ) \mbnt.' Onrbehalf of defendant it was, alleged ;/■■•.: that4he agreement-had bceiii executed witlun ; v; sK.. threo months;; of^he.'dato of: Elliott!s bank'giviiig plaintiff, a i 1: . preference over tho other creditors,in tho os--1 tate. y v.-.-- , :J. J. M'Grath,' solicitor, deposed, that, on :-. . March : 31, Mr,: Lovvoy' (solicitor) handed :i. - ■ him an ordor: from . Elliott asking ; that, ho. i:, (witness) should, allow -him; t-o_ inspect:-tho ; title,-and give him any information lie might '' require. Mr. Levvey said that tho matter ho' . * was engaged upon was <of great importance.', He would, bo said, bo vory glad to pay .wit..Hess, a .fee'if he would: supply;: him-with', a : v'istatement..-'.Then-Mr. Lov.vey told hiiuthat • mm. he was .acting for; Treadgold, ■ who,; ho said, would loso a lot -of money if he did not get ~ ; # security, over, the : property. . Witness then ;, : inquired what:was tho matter, as Mr. Lovvoy ,' , . was .very excited. In reply Mr. Levvey said: ]['. -'s'Haven't yauheard/ahout, Elliottandthe v! .EHiottXlias -been; r, -.acting as secretary for tlicm,.has never kopt ' ; separate banking-account, and has paid the ..~i moneys which ho i has received on .tneir liehalf into his :: During; further ;; cMiyersation him jjiat ;Elliott ; had -misappropriated fundsbelonging to • the \ estate, ana that ;thoy had./had.; a great .deal. i S:/ ■"of. trouble > in ; getting, Jhem.:;6ut ;of'him. .VMr; [ ' ; levveyadded that aswitness' was .Elliott's 1 ! - : ;\:v; sblicitorjhe .'thought'that; he;''ought'to;;kriow'. . Witness had never .acted:for tho Official As- " , v him. To the. auctioneer lie had said that he •could - not act for the Official Assignee, be- > cause (1) ho wqs; a mortgagee un -connection ■ i' with'on#of ;tiie' : properties r : and (2),' there were i • no assets in the estate. . . W'itness 'gavo tho .auctioneer particulars ■ as;-ito' the .property, j : He had undertaken to indemnify the Ofhcial i" r'? "Assignee'; against/thb 'cost ; of-Odof ending'any,' ft;.;? action" i■' by he 'told ,Treadgold_: that.'he;, Obliged .toibid ■ (s;syfor.;ihe^'property ;to; protect'; the 4 mortgages , -. which he had .purchased.; Ho had 'paid the full .amount of principal,and interest on two -anco, etc., £50. W T hat ho said to Treadgold . was that -his (Treadgoldjs). agreement : to ■-mortgage 'must -come ovor and above' the .amount'duo to: lnm.-' Witness iwas bound to bid £2100, but if anybody had bid a pound ■ more ■■ they; could- have : nad "tho . property., ' ■■■:■ Treadgold :told him that >ho. had,been advised , ■ -by - w.'- : Levvoy not; to bid,- \ All: witness ! -wanted was the amount, owing to him,'£2loo, ;": .: and that was the:value.of i.tho property... • ; - His Honour: Then it seems- to that n-o ; •: matter what is result'there'is nothing in tho property for anyone. Mr. Young: We are asked to esecuto a , ' document,. which we.' say would be ;a iraudu-: lent preference. - - Mr. 'Skerrott: -This is the - position: The Official Assignee ■is allowing himself to be ' : tisod ,a3 a puppet ,by iM'Grath.i <i Wliy, the S VOfficial.: Assignee]'has pennyVof/in-: ■ -' . torest in'.the : matter. .. . i • His. Honour: Supposing , Trtedgold's ~ neis held to be a. fraudulent pieferv. -ence, the :benefit docs not'.go,to/:th©,,Official ;' , '." Assignee, but to. M'Grath. 1 , -It is;a- peculiar position -for i the Official .-Assignee to have i placed himself in. It may be that tho Official Assignee'.fwad, himselfin■? awkward;--jsiraiti '-.' because there .was.%? money; in .the, estato. There should be entitling the Official j h Assignee . to: get -costs ;;'but.'''of : ,the: Consoli-: i" dated Pund in such a case.:'. That would proV : vent, the Official Assigneo , being placed , in. ', ■' such an invidious positionr -He had no money :.; in hand to contest: a .claim which he believed' to bo a fraudulent transaction* and lie- sold • , the property on tho understanding; that, he BhouU.;be\sindemnified .brought,against ihim'f?^^Tho -peculiarityisinot'; less apparent when wo find that tho Official . i ;-"Assignee and M'Grath,are; in.direct conflict on certain material points.' ' t • ' --.Witness was then-cross-examined bv -Mr. Skerrett on behalf of plaintiff Ho said that he the first 1 meeting 1 -of''creditors 'at; the.' J 'rfn\^equest;br : >: ;:;he..found -that:', Elliottiihad. misled- him,' he . dropped him,- but' continued, ; .-Mrs. - Elliott. It was not a fact that, prior to'{the jbankrupteyV-'-he/iwas; 'iivtimatoly: cori-.-'p'l'fjiiedted',;'^withV:transac^ibns:..witK4Ellibtt.;-W'it:; :iness . niight :'ha've' beeii",Elliott's : soli- ' , .' citor.-; Ho purchased :the ■ first mortgago .on ' • '• . tho property shortly .after -Elliott filed his .'.petition, and thoithird mortgage, somo.time . before , th-i auction sale: ■ He: denied that, prior to tho sale, ho was in constant com- - munication with the .Official Assigneo with ,iegard to .Elliott's.affairs/ .andvthe proposed sale. Witness" told Treadgold at tho sals , -.that,ho had to..bid to<protect■tho mortgages which ho held ' , ; ' Did, yon.not tell Treadgold that you, wore ;'bi<3;:-"and that, if ho abstained from )., ; biddmg, .hi 3 £400 : would :bo . all' right,' and , .that in consequence Treadgold.did ,not bid? —No. , ..( .Replying to.further' questions, - witness : .;.: : : said; that he- hiid not ' had V; the; : propertj i . .valued recently for tho 'purpose of- a mortgago. He did, not know that recently the L property,;alone^,had;i,been,'valued!.; ut , :lri his; opinion, 'the houso property . ' - Was -Worth :£IS(JU,. and the . . KioO. Ho; did lend■ money; to Elliott:on h's .porsonal security, ...but it . was only ,in tho ; .belief:/th it ho .was. a. wealthy man;. The . • City Councd might have oiforcd £1200 for ' ..V the vacant : section; he was willing to ' lot. go for £(00; or oven £650. ■' ; ..i. :l^ if. 'you did not know.:.miiiih. Em o tt'sV.;,.affairsi > —1' 'was' not;, connected With tjio Sunnybank Estate. , . " itccalled,. Air. Simpson (the Official As- . 'Bigneo) ~said;' that, rafter -Elliott absconded,' .. he employed Mr. M'Grath jii regard to the . . estato, as ho knew .more than any other .solicitor - about,it., Mr.. M'Grath had told 1)1 m. ;that, -: in _ hia. opinion, the transaction ,;!', in. question was a • fraudulent ono; Witnnsn . had jhever- applied: to : him' for a,; written ; legul; i ; 6 cpinion* He understood that he would have • .. to pay for .the advice. . ■ i. Upon ,being l recalled, Mr; .Levvoy domed : that, ho- had mentioned . nny thing X about X-.Suniiybank ! Estate, ,br' ; misappi-opriatiohs,' o:i : ;;; the i part: 'of: Elliott, •' in ; hisaiiterviow;. with. M'Grath. To Mr. Neavo: M'Grath had made-a couilter proposal, to tho . ettect.: that Treadgo'd : , ought-, to ,buy the property, v:: .. - tl Y^a s .-Mr.. M'Grath; sinco; the ' salo,'. told lreadgokl, ithrougli ■ you,' ho would giyo ® transfer; ofthe property provided that. : ;-, v V .paid'the amourit' due; On the; threo. - mortgages, interest,;'costs, ratesj and ;insur- " Kind conVersafcion; '• ;V • i . To,.Mrf; Skorrott: Ho advisctl Trcndgold J : Purchase.'tho property .-if lie 'could get. ii7at .pricp.^' : that ': --wo - toJd .Al .Grathho was goirig to bid for' .. Jhe, property. :• M'Grath, he alleged, .-'aid abstained fromibidding, ho wonld ,'4); .Cive him .his. £100. ' Witness did npt. sav anything in reply,. but did not- bid, feeling : that he was safe .to get his rrioney, ; '.and;about •luu were present. ' V - How was it .v it Inn M'Grath's po» c,- t„ . t 0 "-' l 0 you would go', .; yoiir iilJO. if you did. not bid: when evorvbody else had tho right to bid?—Oh, I kw>w everybody could bid Then, don't, you think,. if M'Grath -had ' , that power, ho must havo Bpoken to tho I^T e1 ' 3 presentP—l never; gavo.it a' thought. Havo jou . ever , mado., application to •: i. r bis ; ;'tillegccl. promise 'to; . you; your,-:£400,' seeing / that he did • - ... become tho purchaser i'r-No. •' , ilas - jrour solicitor ?-rI caii ; t Bay. ' '

_ Is .that .not a very- strange circumstance, ill yieV.of tho fact .that twelve months have sirtvoplagsrklP—l expected .him; to. fulfil liia Word' of h'oiiour'. ",; •''■ -i ■ [■}"'•■ v , : '■'•• ; 1 Has. it ever occurred to'you 'that,-' by. goino; toM'Grath, you might got the'£4ol)?—}' have ..done, nothing' excepting .through ,niy Eoiicitpr.v;.'- : v. '-" •'.' ''■'.;.,'. ;'■,.:■;.■ "..■•• ~•■'■■■ ■ Was'it afair thiiig not to mako' application ?—lt -.would have boon a fair thing for -;ii'(irath 'to .briiig'ine my money. ';'■..', .■'.'Argument .had: not, been concluded ..when the Court adjourned .until' this morning. .