SUPREME COURT.

Evening Star, Issue 3332, 24 October 1873, Page 2

SUPREME COURT.

Thursday, October 23. (Before His Honor Mr Justice Chapman and » Special Jury.)

THE OTAGO AND SOUTHLAND INVESTS!EK'f fOTIPANY V. BURNS. Tips was an action to recover L 225 interest. Mr Janies ftn.ivb, with him Mr Btont, for the plaintiffs; Mr Barton mpj. Mr Stewart for the defendant. .At the outset Mr objector! to certain , of the issue's; and after argument his Honor ; granted leave to hoth parties to taljo advantage of any amendments or otherwise, which might have been applied for to the Judge at wf-w. pri a*. The declaration set forth that by agreement with the plaintiffs under date December 2J, IS7O, the defendant Arthur John Burns obtained in England a loan of LJ,OOO, at ten per cent, iter annum interest, and that under that agreeme),'* t);’'eo quarters’ interest was payable. The defendant 1$ i,U pleas denied all the material allegations contained in f)m declaration; for a second plea denied that jdamfdls performed all thy coipl'thms'necessary Mo enfitto them to the payment of the money claimed, i because before the said interest or any part of it became payable, and during the currency of the bill of exchange mentioned in the_ agreement the plaintiffs’ manager or committee of management elected themselves dissatisfied with the securities proposed, and with the value of those securities, whereupon defendant became exonerated and discharged from the performance of his agreement; that & Iter notion of such ejection, and at the proper time, defendant ; tender rcpayipuijt of the loan with wherefore plaintiffs were yuf entitled to tlmmuiipys claimed in the'present The plaintiffs by their replication replied that limy iiad fulfilled all the empfitjons mentioned iff tile (second plea; and that the whole of the present defence had been raised when a Uaiffi tor one quarter’s interest was heard before Mr Strode, and decideil by him in plaintilfs’ favor; which judgment still subsisted. The fact«, ns shortly stated by Mr .Smith, were' these;- Plaintiffs carry on business in London as the (ffago and Southland Investment ('ohjpany (Limited), "and .defend;; nt is proprietor of the M.osgiel Woollen 1 actor y. Mr Lams was in l/oiidon at the end of LS7O, with the intention of pupimyiiig jpadiineiy for a woollen factory at Mosgjel I s ;of having the means with him at that time lie applied through an Kdinbiirgh solicitor to the plaintiffs for a loan of L.’ViOO. An agreement was come to that the advance should he made upon the defeiul.y id lodging with the dimeters, as temporary security,’ hjs aceoptaiicu for L 3,000 at nine months, endorsed, ’by M r (J. Bums, a wealthy relative, who rotoded ip hehppl, :.mk) upon his undertaking to give plaintiffs during the .currency of the bill the security of a mortgage over his Taicri property. That arrangement was completed in the form of a letter sent from Edinburgh on December 28, 1870, in which Mr Burns in consideration of an advance of Lff,OUU to be made gp January 1, 1871, for five years, to execute a mortgage of his property in New Zealand during the currency of tire bill—such mortgage to be to the satisfaction i, r l;]jp, plaintiff's’ manager or Committee of Mauageipeiff, jn .Dunedin ; and he further agreed to pay interest quarterly at the rate of 10 per cent, per annum;‘and if the management of the Company in Dunedin was dissatisfied with the security offered he agreed to repay the amount of the loan, with interest to date when the hill matured, Both parties had misread this clause, the meaning of iyhjcff Iffey took to be that if the manager or Committee of Management was dissatisfied with, and refused the security, then Mr Burns had a rigid to return the money. It was not necessary for the jury to decide whether the agreement meant that op not; plaintiffs’ counsel would have another opportunity of satisfying the Court that it meant no such tiling. Tor the plaitiffs it was contended that even if the security had been absolutely refused, which it had not -if their manager in Dunedin had said “ 1 won’t take the security, 1 don’t think it sufficient the Company was entitled to say notwithstanding, “ We hold vou to y.ogr bargain ; we are content with your personal sevuriiy ; v ou must continue therefore to pay interest'.” 1 ft was imf, necessary, howeyer, to ask the decision or tin j,cry pn that point; but an important matter for tht-in to notice was that jffppt clause of the agreement ! really meant tins ; That Mr Burns would repay • the money on the maturity of the nine months’ j bill, if the security should be declined; and therefore supposing the jury came to the conclusion that the security was not declined, they would also have to come to the conclusion that there was no ground whatever for treating the agreement as having fallen to the ground, and considering Mr .Burns released from the obligation'to'pay interest under it. Having taken this loan from the 'plain,tiliV. jn London, for which he undertook to giver Security ever the Taieri property, Mr Burns sailed for Dunedin. Ho arrived here on the Hist May, 18/1- Mr A. vV. Morris was manager for the Company, and was on the point of leaving for England a day or two after Mr Burns’s arrival. The hitter saw Air Morris, and merely referred in a casual way to the fact of his having arranged with the Directors for this loan. Mi M orris stated that lie was making his arrangements to go to England, Mr Laniach would he acting-manager in bis absence, and that Mr Borns, therefore, would have to % settle with him. It appeared that either before Mr Burnsanived hero, or a few

(lays afterwards, Ml' G. (look, who was then, and still is, Mrs Burns's solicitor, happened to have an interview with Mr Larnach ; and that was a point to which the particular attention of the jury was necessary, hecause it was a point upon which there would be a considerable contrariety of evidence. Tie interview between Mr Larnach and Mr Cook, according to the evidence of the former, took place at the Bank of Otago, but the subject of the interview was not connected primarily with the business of the defendant in regard to the Company. Tt was really connected with Mr Hankey's business, and upon which Mr Cook was then employed. Mr Cook casually remarked that Mr Burns hud arranged for this loan from the Company, and asked, in effect, whether he (Mr Larnach) had received any advice that Mr Burns had arranged with the Company for a loan. Mr Larnach replied in the aflirmative, and added that the Manager might possibly require further security, or, that it was not likely he would be satisfied with the security offered. Mr Larnach casually asked whether Mr Burns would be prepared to throw in further security -the (Jrant's Braes property, for instance. Mi- ('ook replied that he did ii"t feel at liberty to disclose what property Mr Burns could claim under his father's will. Mr Cook then went away, and the next thing heard was that Mr Bums had procured elsewhere a loan of Ijo,(M0 on his Taieri property, winch he had undertaken to give as security to the Company. Mr Larnach would deny that he said he considered the security was or was not sufficient; he merely expressed a doubt as to whether it would be sufficient. He could not have stated whether it would be sufficient or not. because he had not then seen the property. Mr Smith here called attention to the correspondence which passed between Mr Cook and the Company's solicitors. The Acting Manager, he continued to say, had thought proper to treat the agreement as existing, and to claim interest under it, as he undoubtedly had a right to do. Mr Burns was ultimately sued in the Resident Magistrate's Court for one quarter's interest, in the name of the Company. Mr Burns appealed against the judgment, but the Court above upheld the judgment. It was necessary to refer to that matter, because in this action Mr Burns sought to set up precisely the same defence against the judgment of the three-quarters' interest, which had accrued since the quarter's interest became due ; and therefore the plaintiffs had put upon the record an answer to that pretensiqn. Inasmuch as those same questions were decided by the Resident Magistrate, who had full jurisdiction, they had been set at rest for ever: tor it had been held that it was for the public good that where parties had referred their disputes to a competent tribunal, and the judgment remained undisturbed, those questions should bo considered as permanently set at rest. Therefore one issue the Jury would have to try was—whether or not the same questions raised in this action were raised in the Resident Magistrate's Court, and decided by the Magistrate ; whether or not the Acting Manager of the Company elected to be satisfied with the security ; whether he gave sufficient notice of that election to Mr Burns ; and whether, consequently, Mr Burns became exonerated from his agreement to pay interest. The Jury would he asked in point of fact whether those questions were raised before the Magistrate ; whether he had jurisdiction to decide them ; whether he decided them finally, and whether . that judgment still subsisted. In reality they would have to try two sets of issues—first, whether or pot Mr Larnach, as acting manager for the Company, do'bned thtf security, and so released Mr Bums frotn all obligation to pay the interest on his agreement ; and next, whether or not, as regarded that' same question— for jvvjlly it was' virtually only one question—Mr Lnriinch declined the security; whether, in fact, that question had licen decided by a Court of competent jurisdiction, namely, the Resident Magistrate's Court. Certainly, according to bis''(Mr Smith's) instructions, the evidence would abundantly support t'lc affirmative of these issues. Mr Strode, KM'., proved that at thu hearing of the case before him in February, 187-, the defendant's contention was that Mr Larnach had refused the security, whereby Mr Burns became exonerated from his agreement. A. W. Morris, manager for the plaintiffs, said nothing of importance took place between Mr Burns and himself. Witness made no examination of Mr Burns's pioperty, hut reported td'tlieVbUipaiiy in London that, at first sight, his ('Mr 'liur'hsN) Valuations appeared too hh;h ; was under the impression at'tile time that the value.of the land had been much over-estimated. Was not piepared to say he was dissatisfied with the security. W. J. M. Larnach, acting manager for the Company during Mr Morris's visitto England, deposed : -The conversation between myself and Mr Oouii v,as worried on, I believe, in my room at the Bank; ' it" v.is ",w r » t,,<; omce for tne Company. ' I coiil'd'not'-actr for the then. Mr Cook asked if 1 Was aWare o't'any .vjij;i?}ruiK"iuoii j n reference to a loan to be granted to M.i, Bums by the Investment Company. " I said I wks ayare the Company had received information, but thai I thought All" Moriis, , y i} tlje first blush of the thing, considered the scuinjty jnsj;ffiejeiit. ' I believe I did ask if Mr Burns had further ageuuty—the Grant's Braes property, left him ".nd.&r hjs father's will. Mr Cook said lie did not feel .it liberty to say what property Mr Burns had under his father's will. Nothing more passed. The whole thing did not last more than live or si\ uiu f 1 did not say anything to the effect, "that unless i'ythcr security, and particularly tlie (Jrant's Braes to f,lie Taieri property, the security offered i,y jSJ'.r. Bums wqwhl not 'be taken. ' I did not express dissatisfaction W s)s security, I repeated only what Mr Morris sn.i<j. Mf- Cook did. not say that Mr Bums refused to give furfhir security, and that he would seek a loau elsewhere.' I had not at this time been on Mr Burns's Taieri property. Mr ('ook afterwards rolled upon me about '.July, 1871, in the Company.'s ofjjec, in. reference to taking payment of the original sui« ini?&.t.n:ad i J-3,000 and interest. I declined to receive 'p'aynfent. Mr Burns was present. I don't recollect Mr Burns saying auj thing on that occasion as to what he had understood from his solicitor, Mr Cook. That was the only occasion I saw Mr Burns. I think we i'«f(,c;ved interest up to the 30th September. The interest to Heceinher was recovered by legal proceedings. Crojs-examined by Mr Barton; i'revious k the (ith of April, 1071, the date upon which Morris left tile Colony, he and witness had not fi/i n;ed any definite estimate as to the value of the property. I'), to the date when the Bill became due we had a right either tp accept the L.'V-OO or the property as security. jhfe (witness} never declined to take the property as security, lie might have written that it was not exactly tin; security that might suit. Had the proposed security been 'formally Ijefore him lie would then have considered it necessary to inspect tlie property, and in that case would have been in a position to decline it if he did not approve of it. He was aware that it was Mi Morris's opinion that the value of the property had been overestimated by Mr Burns, and lie (witness) was of the same opinion as Air Morris in that respect. Had he been called upon to decide the matter, however, he would have inspected the property, ami in that case his ideas might altogether have been changed. Two days after the bill baeame due, he kuew that the deeds of the property were not in the hands of defendant. He was not aware that Mr Burns had applied tr; Mr Rattray's company for the money, and offered let per cent, for it. He had heard that he had gohe'to anothu investment company for the money. "He'tirst 'heard of the d,veds having boon parted with by defendant by letter froif. Mr Cook, _ Tjiis Day. The cross-examination of Mr Larnach was continued, and Mr Barton submitted as nonsuit points that the present action had not been brought byauthority of the nominal plaintiffs. That there was no evidence that the plaintiffs in this case had within a reasonable time before the bill fell duo or at all, intircrated their intention of adopting the security for making'tlie advance for five years; that there was no evidence to show that Mr ; Larnach was authorised to make advances upon ■ personal security ; that the action ought not to ' be for interest but for general damages, and that it was a fraud upon the Court below to bring the action in the form in which it was done. Mr Stewart followed on the same : ide. He quoted the 47th suction of the Kutddeut Magfe* '

trate’s Act to show that the strict rules of law, more particularly as regards the taking of evidence, did not require to be observed in arriving at their decisions. He contended that the judgment in the Resident Magistrate’s Court could not therefore he pleaded in this Court. Mr Smith was about to reply, when the Judge remarked that there was sufficient evidence to semi the ease to the Jury. At the same time he reserved the right to the defendant to move for a nonsuit on the grounds stated. Mr Barton then stated the case for the defence. He argued that the conespondence showed that the action had been brought against the express instructions of the nominal plaintiffs. Ho far from any instructions having been given to raise this action, it was shown that the hoard of Directors in England made the positive statement that they considered it the duty of the local Company to announce what they intended doing before the bill became due, and that having failed to do so, Mr Burns had a right to go elsewhere for the money. The preliminary arrangements for the loan were made in London, and all that was left for the local manager to do was to inspect ami value the property. If dissatisfied with the property, then the Lo,ooo was to be rep.ded at the expiry of the nine months. Ha therefore contended that it was the duty of the plaintiffs, through their servant hero, within a reasonable time before the hill fell tine, to intimate whether they were satisfied or dissatisfied with the security. The correspondence showed plainly that they could come to no other conclusion than that the Company deemed that it was Mr Larnach’s duty to ascertain what was the value of the property, and that having failed to do so he had neglected his duty. It was quite true that Mr Larnach had told them, when in the witness-box, that he differed in opinion from the Company in that respect, and added that he thought and still thought that up to the moment the bill fell due, he was entitled to keep his mind undisclosed on the point, and have Mr Burns walking into his office with the LJ,OOO in one pocket and the deeds in the other; and that he (Mr Larnach) had a right to say whether he would take the one or the other. Goo. Cook, solicitor, examined by Mr (Stewart —I first saw Mr Burns in reference to this loan two or three days after Ids return from England—that was Monday, the 3rd April. He gave me the necessary particulars to see Mr Larnach, with whom 1 had ap interview on the (ith. I inquired if any instrqctiqns had come from Home in reference to this loan. He told me he had received a communication on the subject. I then explained to him that I had called to see what was next to be done. He asked if Mr Burps was entitled to Grant’s Braes under his father's will. I replied that I did not consider I was at liberty to say what Mr Burns was entitled to ; that it was upon the Taiori property the loan was required. He said he formed a very different estimate of the property —meaning the Taie.ri —from what Mr Burns did, and that unless he had the Grant’s Braes property thrown in the proposal would sorry for that, as he wanted to retire the Bill, and send it Home to his uncle as soon as he not be entertained. I said Mr Burns would be could; and then he would have to seek the money elsewhere, as the Grant’s Braes property would not be thrown in. No other business was mentioned on that occasion but that of Mr Burns ; nor was the name of Mr Morris mentioned, nor was he referred to in any way. Mr Larnach said he had formed a different estimate. 1 did not attend to any business for Mr Hankey on that day. The daily record of my business transactions bears me out in that respect. I communicated to Mr Burns what took place between Mr Larnach and myself. I saw Mr Burns a few days afterwards, and took further particulars of his property with the view of applying elsewhere for the' mniiey.' I applied in several quarters for the money, amongst others to the New Zealand Trust and Loan Company. I know that M r Burn§ was prepared to pay 10 p*r cent for the ipopey. At the tiipe I had the interview with Mr "Larpaoh, I Ipad go idea or prospect of getting the money I wrote Mr Larnach'op the oOtli Jpne that Mr I Pirns was prepared to pay the money, and in pursuance of that letter I, in company with Mr Burns, waited upon him. We then offered to pay the amount. Mr Larnach said he would take payment of the interest, but refused to take the principal. I then referred to the interview of the (ith April, as to his (Mr Larnach's) refusal to take the security unless the Grant’s Braes property was thrown in. He said that no formal proposal for the loan had been made, to which I replied that after Ids absolute refusal to accept the security, no proposal tyas needed. He said he would consult the Company’s solicitor and give an answer next day. lie took ’ payment of tiie interest, for which we got a receipt. Cross-examined : Neither at the first nor before the second interview with Mr Larnach had I seen a copy of the agreement. The mem. I made a few’hours after the interview does not contain ary reference to Mr barnach’s statement tliiit iie wwiuu the [Grant’s Braes property to'be'thrbivriTri, and my reply that fl;* money must he obtained elsevvhri'ti.-' I joidt make a note of everything. I did swear in the K. M. (’uurt t n the fact of telling Mr Larnach that Mr Burns would seek a loau else\vh6re. hi my diary I merely stated the result of the interview. I copld riot afford to give an nnliiiffted number pf sljects of paper containing nbties in respect to a 6a 8d ipi6rvigw.--(]yanghter.) Robert Gillies, of the firm. of Lillies qml Street, was instructed in April, 1871, by Mr Burns to obtain a loan. He was prepared to give an interest; but witness held out no hopes that lie would get the money under ten per cent, because at first sight lie did not consider the securii,.V ;; gqod one. Witness got the loan from the New Zealand Mercantile at the grid' of May.—By Mr" Smith :Oh seeing tljo security offered, his iinpresLoh as tb |ts not being a gobd qne was altered. A. J. Burns, the was under examination when our reporter left the Court.