SUPREME COURT.

Evening Star, Volume VIII, Issue 2409, 21 December 1870, Page 2

SUPREME COURT.

Tins Dav. (Before Mr Justice Chapman.) BATHGATE V. THE BANK OF OTAGO (LIMITED). This was an action to recover certain monies alleged to he wrongfully retained by the defendants. Mr Barton appeared for the plaintiff, John Bathgate, trustee in the estate of Louis Court, hotelkeeper ; and Mr Smith, with whom was Mr Macassey, for the defendant. The declaration alleged that on the 12th January last, Louis Court committed an act of bankruptcy, and while in insolvent circumstances, voluntarily, and without pressure, gave possession to the defendants of all his goods and chattels, thus giving him an undue preference over his other creditors ; and that defendant afterwards sold such goods, the proceeds of the sale amounting to Ll7 17s 4d, and L2.SSS His4d. A second count alleged that on the same date the defendant wrongfully converted to his own use the goods and chattels referred to, and a third count charged the defendant with retaining wrongfully the proceeds of the sale, ; wherefore the plan Riff elainisJ’tlie sums of LI 7 17s Id, and 1 /MSS IPs 4d. The defendant by his pleas, denied all the material allegations in the declaration; and for a further plea it was set up that Court, on the 12th January last, was justly indebted to the Bank in the sum of L 1941 7s 7d ; that the due payment of that sum was secured by a bill of sale ; that the demand for payment was not complied with ; in consequence of that non-compliance the defendant took possession of Court’s goods and chattels, as ho lav,dully might; for a further pica that the goods were not Court’s, nor the trustee’s, in proof of whuh the bill of sale was cited. The plaintiff replied, denying the truth of the allegations contained in the pleas, and for a further replication in regard to the second, third, and fourth picas, he said, not only did he claim for wrongful conversion of the goods purported to bo assigned by bill of sale, but also for the wrongful conversion of other goods ami chattels which were not assigned by it, but which were in Court’s possession at the time ho committed an act of bankruptcy. Notice was given that the plaintiff intended to dispute the validity of the bill of sale. Mr Barton, in opening the ease, said so far as tho Province was concerned, the present was the first case in which the questions which had to be discussed had arisen. In 18PS Louis Court was lessee of the Provincial Hotel, which he purchased from MiBird, the former proprietor ; he went into it entirely without capital, and bought the hotel by hills which were guaranteed by Messrs M’Landross, Hepburn and Co, Not being able to meet these bills, he applied to the Bank of Otago, and obtained an advance of LISOO, which was secured by a hill of sale. Accordingly on the 10th December, 1808, Court executed g bill of sale to the bank, which hill of sale not only transferred all the existing stock-in-trade, &c., hut covenanted for the transfer to the Bank of all future acquired property. The legal effect nf it was that it conveyed one .set of goods which were his property, and also conveyed a set of goods which were not, and might never be in existence as hia property, It

would be proved by the bill of sale Court not only gave to the Bank all the available assets he was posse iscd of, but secured all the property he might afterwards become possessed of with the avowed object that the loan was to pay off a particular pre-existing creditor, viz., JDLandrcss, Hepburn and Co. It would bo contended on behalf of the plaintiff that the legal result of the deed was that the transaction from the moment of its inception was an act of bankruptcy. It would be contended no such deed could bold good in law. Had it been made for the purpose of obtaining consideration intended to be applied for the benefit of the general boffy of creditors, it would have been perfectly good and proper, but it having been mailc in favor of a particular person, and that to the knowledge of the Bank, it then amounted to a fraudulent preference. Another matter which arose was this—goods in existence passed to the grantee immediately upon a formal delivery being taken, but with non-existing property it was different ; it was only a matter of agreement to deliver. Applied to the present case, the moment the Bank clerk went down to the Provincial Hotel on December 10, and received possession in the name of the Bank, all the goods in the hotel at the time of the assignment became the Bank’s property, but with afteracquired property no such thing took place ; it only amounted to an agreement that whenever Court got possession of the goods ho would allow the Batik to take possession or would do such things as would entitle it to property in the goods. But the pith of the ease was this—at the time Court committed an act of bankruptcy, the goods—clearly and beyond dispute the stock-in-trade, if iot the furniture—were in Court’s order and disposition ; he appeared to the world to be then the ostensible owner therefore they passed to the assignee, and the proceeds were divisablc among the creditors. 'i’he questions for the jury to determine were : Did Court commit an act of bankruptcy ? at the time he committed that .act of bankruptcy did not the Bank permit him to be the reputed owner of the g >ods? The fac's of the case were these : —On the 12th January, IS7O, Court was overdrawn at the Bank of Otago to the extent of L 1914. Court was sent for by Mr Larnach, the manager, and told by him that, considering his overdraft, be (Larnach) did not feel himself justified to pay two bills of Court’s then due. Court thereupon said if Larnach refused, the result would be that bo (Court) would be insolvent. Some further conversation ensued, during which Larnach advised Court'to try and got the money elsewhere, and Court replied lie could not do so honestly, seeing that the bank held the whole of his property ns security. Court returned to the hotel, locked himself up in a room, and denied himself to his creditors, giving instructions to the barmaid to state that he was not at home. (This was relied upon as an act of bankruptcy.) On the following day he showed Mr Larnach a statement of his affairs ; that afternoon he voluntarily gave up possession of the property, and committed certain other acts which it was contended were acts of bankruptcy. It was contended that he kept open house to delay creditors ; and Mr Barton concluded by stating that if it were shown that any one of the alleged acts of bankruptcy were committed, the jury would have no difficulty in finding for the plaintiff. The trial will in all probability last two days.