LAW REPORTS.

Dominion, Volume 7, Issue 1896, 3 November 1913, Page 11

LAW REPORTS.

BANKRUPTCY COURT, THE SOMERVHIE CASE AGAIN. DISCHARGE ASKED FOR. STORY OF RUINOUS LAND DEALS. At the Bankruptcy Court on Saturday, before the Chief Justice (Sir Robert Stout); William George Somerville, late of Wellington and Dannevirke, and now residing at Taumarunui, applied for his discharge from bankruptcy. His petition wa/S filed in May, 1908. Since then ho had been suspended for three years from practice as a solicitor, an application to that effect having been brought to Court at the instance of the Lav/ Society on Saturday. Mr. 0. Beero appeared for bankrupt and the Offioial Assignee (Mr. Simpson) opposed the application. At the outset, Mr. M. Myers, who represented tho Official Assignee* in respect to a claim by Somervilio's relatives against the estate of Henry Hurrell, another bankrupt, said that since the adjournment on Octobor 4 they had gone thoroughly into Somerville's books and had found that there was a debt due to Mrs. Elizabeth Somervillo by the Hurrell Estate, and thdy had come to the oonolusion that a fair compromise would be to allow proof of £4-50 instead of the £808 16s. which the Official Assignee had rejected, and in addition there would bo a claim of £40 by the Somervillo estate against the Hurrell estate. Ho was satisfied that that arrangement, was fair to the Hurrell estate, and tho creditors had agreed to the oompromise. Mr. Lovi, on behalf of Mrs. Elizabeth Somervillo, concurred, and tho necessary order was made.

An Unfavourable Report. The Official Assignee, in opposing the application, said that he had no reason to alter his report, previously produced, which alleged that Somerville gave a bill of sale to his clerk to cover a loan which did not exist so as to retain the use of his office and books, that he attempted by circular to sell his properties after ho had been declared bankrupt, and_ that_ there was a charge brought against him by the Law Society in which there was a claim by Mr. Floekton that ho had used his funds. The Official Assignee added that the bankruptcy was a bad ono, and that largo amounts of money were involved. He thought there would havo been some creditors present, but tho case had been adjourned so many times they had perhaps got tired of coming to Court. If bankrupt questioned ina report as to the state of his books he had present the accountant who was employed by the Law Society to go into his affairs when his case was brought before them. Bankrupt's Dofenoo. Mr. Beero, in making the application for bankrupt's discharge, said that he fully recognised the difficulty ho had to faoj in view of the unfavourable report, but tho statements of the Official Assignee were merely his opinions, not substantiated by evidence, nnd might possibly be biased. The Court was entitled to assumo that no serious offence had been discovered during the four years since ho was made bankrupt, as otherwise ho would have been brought beforo the Court. The Chief Justice; The question of discharge is another thing. Mr. Beere proceeded to relate tho facts leading up to the bankruptcy. Debtor, he said, was in a responsible position as chief clork and accountant for a leading Wellington firm of soliciand had very complimentary testimonials for tho way in which he discharged his duties there. ; The Chief Justice: No doubt he got into gambling for the purchase of land. Mr. Beero replied that debtor started practice as a solicitor on his own account, and became attracted to a very lucrative but dangerous class of business; and acted as solicitor for the speculator and builder. He also at times dabbled in tho purchase and salo of lands himsolf. Ho failed to realise (as few people realised) that land and property was attaining an artificial price and' that a fall would follow. That fall came in 1903, and the result was that those who held second mortgages lost the money they had lent upon, them. The papers were full of mortgagees' sales. Tho result was shown by the Official Assignee's roport. Bankrupt's book debts proved worthless, his second mortgages realised nothing, and as a consequence it was impossible to get at the bottom of his affairs. It was not suggested that any extravagance of living or any vice had contributed to his downfall.

"A Mad Speculator." The Chief Justice: Ho was simply a mad speculator, speculating with other people's money. Very likely he did not think ho was injuring them —I do not think ho did—but speculating with other people's money, being a lawyer, is far worse than it is in the case of any other man. Mr. Beero added that debtor was reputed to bo a wealthy man, and if he had lost other people's money he had also lost £20,000 of his own, and had brought ruin to his wife, mother, and sisters besides. The Chief Justice; He has not given such a statement that the Official Assignee can say the, exact loss. Ho went on madly, not thinking that land would ; fall in, price. That has happened j all over the ivorld, and in New Zealand more thau onco. 1 saw a fall in 1860 when sheep woro selling at Is. 6d. a head. , ' Mr. Beere: The Official Assignee has i suggested that in not putting in a statement of his book dents bankrupt was not acting honestly. Tho Chief Justice: What ho 6ays is' that he put down debts of £5500 to fetch £3000, which have not fetched in 8000 ponce. Mt. Beero: That, was mistaken judgment, and no one realised tho depression. Tho Ohief Justice: This was after tho depression; it was when making up his statement. Mr. Boore replied that bankrupt thought his book debts wero good to that extent. Very few people 101 l into tho same error of imagining that tho depression was only a temporary one. Bankrupt had waited- over four years Wore applying for his disehargo and loss of status for so long wa6 sufficient punishment. No bonefit would accrue to creditors or public by 'any further dolay. which would inflict considerable hardship on debtor, who was not Well off. In tho roport, tho only charge of a t "rious nature was that debtor had given a bill of sale to his clerk to cover a loan (which did not exist) which was transferred in paymont of office rent, his landlord having refused , to allow liim to continue tho tenancy. S-jrhttt was merely a device to_ enable ."inkrupt to remain on tho premises and keep Ins Looks, and was not sufficient reason to suspend him from his discharge. Tho next .complaint was that debtor sont out circulars so as to sell his properties. Tho Chief Justice: Ho seemed to have interfered with tho Official Assignee after ho had hccome bankrupt, and lie had no right to do that and go behind his back to do it. Mr, Beero; Tiw-o hw boon friction JfovugfcouV

The Chief Justice: There ought not to have been. " Had Had a Sufficient Lesson." a^ r -n , B f ro submitted that debtor ««« cotild assist by soiling liis properties, ana he was endeavouring to wart m his own way. Tho third complaint was that m a case brought against hm by tho Law Society thlro " c al « h Mr. Flockt-on, but that An'LnT )K U r wl, if t}l ° Court of Appeal lud gone into the matter Mr. r U L d haTO from from r t waß ,'' lo WBS suspended n® • P f U . C 0 for 't'hroe years. Tlio Iwiwtv -\ ssl !? nOO mvited tho Court to prohibit bankrupt from going into business ngaui, but he hoped such a drastic action would not be taken, as bankrupt 3md had a sufficient lesson. He thought ho should ho allowed to go into business and maintain his wife ana widowed mother, who Were dependent on him The Official Assignee, in reply, said that when Jlr. Beea'e said he was biased no was making a gross mistake. Mr. Beero withdrew the expression, remarking that he did not mean his remark to imply that Mr. Simpson was biased, but merely that such a roport generally might bo biased. The Official Assignee added, that his report was_ really a mild ono. The creditors said they had lost their money and would not support him in £150 costs for prosecution. Bankrupt told him h<i n-ns owing his clerk (Mr. Haywood) certain wages, and gayo him the bill of salo to cover them, but Mr. Haywood's evidence, takon on oath by the Official Assignee at Dunodin, shoved that no wages were duo to liim, and that the bill of sale was given so as to get his books out of tho hands of the creditors. That was a false move. As to the circulars he had very great difficulty in getting bankrupt's books, and it was while bankrupt kept tho books that ho tried to sell his properties. Tlio Chief Justice announced that he would deliver judgment on Wednesday as he would liko to go through the papers again.