BANK AND CLIENT.

Dominion, Volume 4, Issue 954, 22 October 1910, Page 10

BANK AND CLIENT.

THE MAKGATORO, ESTATE. ■ '.THE BANK KEj?LIES TO ME. HOGG. Sir,—ln your iss'.tto of 17th instant Mr. J 'A. ~VY. Hogg, M.P-, replies to my letter of Lflthjdem on the subject of: the Hamilton icase. V'■ .. -■ ■' ■'' / Mr. Hogg travdrsii's my defence qf tlio ibank, and in a'plausible manner cnideaYours to disprove it, ! . and, conse- :• ouently, to justtfy the unfair comments' ? ; vVmatfoiin' the House'-of''Representatives to which I took such strong exception. Mr. ' . Hogg says that I do: not. appear to chal- " lenge the accuracy of tho Committees To this I ■ reply that I have not yet'seen tlie'Comniittßo's report, and havo i: not. challenged. anything /but the conclui": 610113 they are. reported to liave v arrived ; 'lilt:"; My concern is - nith tho reputation ! jof .'the bank, and I could not permit the !- -bank's clients generally to be left under - a falso and damaging impression m xo t . Lgard to its treatment of one of its cus- : jtoniers. It was principally ;on _ this [ground that I felt called upon to lnterf.vene and give publicity to the facts from : khe: bank's standpoint. All I know. ot ■i'tliei. Committee's, report lias been Kather- ' led from the press summaries, which stati Ud the Committee's.. lecommendation .as "•[follows:— " . ' ! '"That -the petitioner through the soizuroby and tlio.so.lo . of.hisjiro- . : perty to'the bank at a . mere frtveI ition of its value, and tho subso- . . quent validation of tliat transaction -. ~])y the New Zealand Bank Act, 1861,-' ■ .'Amendment Act, 1889,; has. suffered a i.' : serious-wrong, and it recommends j.llis claim for redress to the favourable . }consideration of the Government. Assuming this to be a. correct _ state-. ;,. (iineit" 6£ the Committee's conclusions, I'tfnii : bound, in the interests of both the 1 fcank and the State, to impugn them, and ; lido so most distinctly. ', .. r 7.! I? have no desire or intention to aslc t you to allow ,me to : continue a correS'.J.6pq'ndence/with ;Mr. .Hogg through the Imodium of your columns, but,\thG matter 'Ifceing of some public interest and' lmport'ar.ee,. I would liko to be permitted to - (trespass Upon your-space- once more for • ftW; purpose of ; dealing with the points iraised by Mr. Hogg. ; • , „ . T-"-Exception' is ' taken.-totmy remark'that (Captain Hamilton was hot dealt with in 1 e. harsh or precipitate manner,.by the tank, and.;the. ; text;;o'f "the demand made .'' f upon : him'-on Juno 17,:. 18Si, is quoted as • (furnishing a refutation ,of my ciaiin ;tnat ■iHamilton-was treated by ,the bank",with fair and woper considesration.- - As: to ithis, I need only say that the demand was ■ ■<i legal' document,' made for legal purjposes, and framed in such language as to Ictfect those purposes; and I. have only to ipoint to the course of events following, S e .) during'the five years that elapsed (between tho date/'of the demand and the ' -Sat'o of the sale in-order to establish my case. I summarise. these from '.the, judgement of his Honour the Chief Justice, delivered on November 17,. 1903,v-as folJuno ,17,. 1881: 'Formal demand for! fjSM.MVSa. . : : • November 21, 188-1: Four months fur- , thftr time allowed on application of 'ilton's solicitor, who stated ho would then " -be in a position to pay off the bank. May, 1885: Actipn threatened by Ham- ■ ; -ilton's creditors, - and 'bank informed '• lHainiltbn----.it, might/be forced to. sell '•the land. . ,'L ; ■'''■„■■ '••'■ ~ • April EO,f 1886: t on % Hamilton's rapphca,tion, bait- agreed to',,postpone )■ thesale, ; . sfoi sis' Months/ . v '■<• ' l December 80, 188f>: Hamilton appointed of the estate, without prejudice fto'the power of the bank at any time to •exorcise its power of sale. 1887 br 1888: Hamilton's solicitor visited lUngland, hoping ~to obtain 1 a loan for' ' (Hamilton's'l'requirements. ' v '< January, 1888/' Property advertised for , : Lsale, with Hamilton's consent. Negotia- ' [lions for raising ,£40,000 iviiioli bank • was to permit on certain conditions. ~~|Eno6avour/raade to get a company to ' 'finance tho business. Y - : . ■ 'February'-6, 1880 made : for - ssale through Eegistrar. Further. fruit- . less negotiations. March 25, 1889: Sale through Eegistrar. .^Property,bought in'by'bank at i65000.'\ : V , The; «bove_ will, I think, satisfy most -reasonably-minded people -that every ■ consideration wa<s extended to Captain .' and every facility afforded him . fte redeem his.property from the Bank. .■ ; '- Captain Hamilton, on the "other hand, .carmol; .be.said. to bave displayed cor- ; '.Tcsponding; consideration l for the .interests, • '.of .the- Bank. At-one-time,- he'"was doing(•his utmost to increase the Bank's diffii jculties -and expenses in dealing: with-'the j-proper.ty. Mr. Justico in tha . Icourse. of his judgment, remarks:— "He (Hamilton) was then (in July, 1891) .. , engaged in throwing his-weight, his in- ., jfluence, and liis information oh> the side' jof,the. Natives , who jwere endeavouring to; i.upset the title'of the -Bank to the pro®ertv, on the faith ■of whioh title the pank had advanced its to him." " Mr. Hogg reiterates that the Baak paid .only for' the Mangatoro Estate, jfy , , iJetter of the 7th inst. made it quite clear (:that the estate cost the bank <£65,C00. Tho t-fioOOO. was tho Bank's bid at auction, and i.was'tha-only bid made. It<'was open-to. , ; Captain Hamilton and his friends to have'. ,entered into competition with tho Banlc ; at the auction and to have rup up tho " price" to whatever' figure they considered :. jihe property 'worth. That' they did 'not ,do so .indicates .'that ; they irecognised, jit ; a, useless proceeding, and that ; Vthey regarded the debt to the Bank as - /being in excess of the valuo of tho pro- '. /perty. This is brpught out'clearly in the -[judgment of the Court.of Appeal, which v p-ecites Hamilton's own evidence. I quote .■from his Honour Mr. Justice- Edwards's •judgment, entirely c.onourred in by. the " , iother; ..Judges .of Appeal:—' - 1 ™ ." A-mortgaged property. rarelj, : ;if ever, coines into the market under a (gale through the Eegistrar unless the security is deficient and the,mortgagor in-' .solvent. The present,is in that respect ,a typical case. The plaintiff owned the ;equity -of redemption in properties of every large/value, but the titles Wore defective,' or, if not defective, were open to . 'doubt,','as .'all/transactions with ■ Natives' 'are, more or;less. .The defendant Bank ./•appears not -to have been indisposed to deal with tho plaintiff for re-salo of pro-, •perty after the sale-through tho Eegistrar, and he seems to have niado-some 1 v tentative proposals to. that end. These came to' nothing. The plaintilf says himself The. real difficulty was the nature of the leasehold.'.l knew.'-that Maata. was . contesting the validity of the lease, and . was refusing to accept rent, and has not /since accepted rent.-; Maata was'one of. • the principal persons interested in this ,land. I do not know that it . was well , "Jtnown in Napier the conditions under ,which I had the lease. If I had been asked by-any probable purchaser, I would have told him. I have' no doubt, -that .Hoadley's application'for "a guaranteo of (title was duo to rumoured defects in the .Jease. I say that a man lvould not have jbeen, found, to buy the property, including 'the stock, ' for ,i£GO,OOO. 'It was a large sum, and it was difficult to find that sum at.once.- -Very,few--..people-had- the cash to put down for such a purpose.' The . plaintiff's .debt to- tho defondant Bank was; over i' 68,000. According, to his own .. evidence, : therefore, upon the best .realisation that could have been hoped'there •was deficiency in the valuo of the .security .of from .£BOOO to J!10,000. The defendant Bank' was clearly entitled to realise its security at once. If the defendant Bank had bid .£60,000 for the mortgaged pro- . , perty, it would, have had to pay iUoO in stamp duty, and .the. officers of. the Bank were naturally anxious to avoid adding this unremiinerative expenditure to the cost of a bad investment." Mr. Justico Denniston, in delivering his own separate concurrent .'judgment, re'marks:— "It must be perfectly obvious that the .sale by the mortgagee was made in. jfcrifectly good faith, with full notice and ; public advertisement, and with a [punctilious regard.to tho requirements of the Conveyancing Ordinance' Amendment Act, 1860. If_ it was in any way defective or-irregular, it .was so, on tho. mortgagor's , own' contention, only on the ground that ' j the property should -not. have been sold ; under a reserved 'price. .The highest 1 possiblo reserve which could ■ reasonably ; havo been placed'on it .would not have obtained the property-for'the mortgagor, or have prevented thb mortgagee from acquiring if. It is abundantly clear that he'suffered no appreciable loss by ' tho --Sieged irregularity."-

I need add no moro. The above quotations suffice. One other point. Mr. Hogg quotes from statutes and from tho Chief Justico's judgment in l;is effort to disprove my statement that tho passngo of tho New Zealand Bank Act, ISGI, 'Amendment, 1889, "did not in, tho slightest degree affect Captain Hamilton's position' with tho bank, or his' rights and - 'remedies against it." I do not," of' course, know what was in his Honours mind when ho [Said:' It. seoms!doubtful ivhethor_ thoro was power in tlio bank to buy in as mortgagees when;this salo was made." I do know, however, that Clauso G1 of tho bank's deed of settlement gives it power "to tako and accept absolutely, in satisfaction, .liquidation; or'discharge of any dobt previously due to tho' company, any lands,, houses,, merchandise, -.'ships, and any other real or personal proporty, and to -causo the samo to bo conveyed or assigned'and delivered to tho company" (i.e., tho bank).' It would appear, therefore, that there was no ground for the doubt expressed by his Honour, tho Chief Justice, particularly as it was not referred to by tho judges of tho Appeal Court in their judgment. ' I therefore • affirm my previous statement that tho . passage of . the 188'.) statute ;di<l not in. .the slightest degree affect " Captain - Hamilton's! position. Mr. Hogg asks: Why'was tho Act of 1689 mado retrospective? Tho answer can: bo found iii the preamble to the Act itsolf, and 1 iii the; retrospective clauso in the Act (No.'C)i which is as follows:— "G, Tho powers and provisions contained in Section 5 of this Act shall have a retrospective operation, and shall be. deemed to. have been in force' as from tho 11th day .of October, 1888, so as to validate anything • which may have been done by tho bank or tho board between that dato and the coming into operation of this Act." ;. • . /' . The resolution of the -'bank's' shareholders establishing tho. "in globo" account became operativo on tho 11th October,, 1888,. and the. operation > of: tho confirmatory statute had necessarily to take effect from that date, in order to validate what .had been done in tho way of setting up the "in globo"- account. lo contend that the passage of th» statute • by: l the Legislature gives Captain "Hamilton a claim against -the State for redress, seem? absurd. ...Captain, Hamilton suffered- no injustice; but if. he had so suffered (which I cannot admit) then an equal injustice has been done to every other, obligant whose property the bank had- been forced,'to take over in satisfaction of indebtedness; and if tho State recognises a chiim on Captain Hamilton's part it' can hardly refuso to recogniso claims by -others who were'at that time similarly situated, and Who had, unfortunately;' by force of circumstances; to bo treated., ,i ! , • If it ,wero legally ' possible to call up for review the validity of.'past transactions:'such as this, the effect would be as pointed- out' by.: Mr. Justice Edwards " . ... to throw the titles to innumerable properties into doubt and confusion." This letter closes the correspondence as far'as lam concerned, and I will not trespass further , upon your space beyond quoting tho concluding portion of Mr. Justice Denniston's - judgment on tho case, viz.:. '. .• . "The plaintiff (i.'O. Hamilton) asks a Court of Equity to say, that, .owing to an .alleged irregularity, the bank has, Since. the- ; sale, held : the property, completed the titjo.'i spent large sums of. money, and taken the risk of fall in values, for his benefit, .ar.d that ho is. 'entitled to .take-advantage; of the great increase of land values in the interval and of the skill and judgment ~of tho bank's managers, and that lie is, in fact, 'to"-put a very large sum of.money into his pocket owing to an irregularity caused by an erroneous interpretation of an Act shared in by himself and his legal advisers,'- hei was, in; fact in no way injured. Such conclusion seoms' to hie ..toy.bov Tepugnant to- commonrsense arid justice, anil to' .have been arrived afr'bj; invoking/'and misapplying familiar doctrines ;of equity to work- a manifest injustice." I thank you for the facilities you have afforded me in making public the facts of the case.—l;, am, etc., s AV I E. .MILLS, i. , . : Pro General Manager. October 20.