SUPREME COURT.

Globe, Volume IV, Issue 416, 12 October 1875, Page 2

SUPREME COURT.

SITTINGS IN CHAMBERS. Monday, October 11. (Before his Honor Mr Justice Johnston.) His Honor sat in the Court Chambers specially at 11 a.m. EE MIDDLETON AND M'QUADB. In this case Mr Harper had obtained an order for the examination of Mr John Lewis Coster, Mr David Middleton, and Mr James M'Quade. The latter was unable to attend owing to illness. Mr Garrick appeared on behalf of the Bank of New Zealand, Mr Jameson for Mr D. Middleton, and Mr George Harper for the trustees, Messrs A. G, Wilson and J. Shand. Mr Harper called the following evidence: — John Lewis Coster—l am manager of the the Bank of New Zealand at Christchurch. During the year 1874 the bankrupts had an account at the Bank of New Zealand, and carried on business at Ashburton and Rakaia. I produce from Ist January, 1874, to Ist May, It 7 " The first is the current account ledger, discou.i. progressive ledger, local and inland, the t 11a for collection ledger, the security book, and the general letter book. I have not examined the books personally during that period ; up to March 1875 they were under the control of Mr Holt. I took charge after March. The object of the secuiity book should be to register securities giveu to the Bank. I am not able to express any opinion with regard to this book, as I nave not had any control over _it; the book must speak for itself. Bince my return 1 have not given instructions to have entries made. I produce original securities, copies of which are attached to my affidavit. I produce a security dated oth June, 1874, given by Middleton and McQuade andj David Middleton, 0 the Bank, and alluded to in affidavit of

2nd September last. [Security put in.J I have offered inspection of the originals to the trustees of the estate. I produce a documeutdated 3rd October, 1874,copyof which is attached to my affidavit of 2nd September last. I hand in a security dated 9th June, 1874, by McQuade only to the Bank. The one of the 3rd October is signed by McQuade, on behalf of Middleton and McQuade. I produce another security, dated 27 th October, signed by David Middleton and James McQuade and Middleton and McQuade to the Bank. The statement produced is only a portion of the debts due to Bank, and shows a balance of £587 13s 9d. There is another showing a debt of £llOB 15s 4d ; that is another current account in the name of Middleton and McQuade security account. The first I have referred to is in the name of Middleton and McQuade current account. The second is an ordinary account, the first being an account on which they could draw for special purposes, There is also overdue bills account £5lO 3s 6d. The two current accounts to which I have referred make £1690 in round figures. The balance in name of Mr Middleton due to the Bank on his separate account is £309 16s, Referring to the accounts I may say that if the statements have not been put in, it has arisen from some mistake in putting the documents together. As I hold press copies of the same I will put in the press copies if the Court will allow me. I refer to the debit side of account current marked D. There is an item—sec.urity account, £BOO, on the debit side. That shows that £BOO had been advanced by the Bank. That £BOO is passed to the credit of security account in the other account. The security account does not contain any credit item for proceeds of bond warrants subsequent to September 30th. The account starts with a debit balance on September 30th of £2OOB 15s 4d. That entry appears to be a debit of a promissory note to the Bank and interest. This is the first entry in security account. The proceeds of bond warrants does not appear in the security account, as it is a special account. I may state that there is no doubt that we have given credit for the bond warrants, but it does not appear in the security account because it will not show the realisation of any securities subsequent to the insolvency of the bankrupts, except the special securities affected. It seems to me that all realisations have been credited by the executive officers of the Bank to the old account of Middleton and McQuade. With regard to the bond warrants I can give no specific information of my own knowledge as the transactions took place while I was away. Between the 3rd Nov and 23rd Dec there are credits in the accounts aggregating £3OOO, but I cannot say that the proceeds of bond warrants appear therein. These principally consist of bills held on account of Middleton and M'Quade. The account of the Bank on the estate was made up by the accountant of the Bank, and I have every reason to believe that credit has been given for all realisations. I do not know what considerations were given for the overdue bills now held by us on account of Middleton and McQuade, Some of them were discounted, and some were held for collection from last endorsers to us. The bills amounting to £5lO 3s 6d, shewn in statement B, have been discounted by the Bank. I do not know what consideration was given to last endorser. I cannot say that they were given with agricultural liens. In the books before the Court, Middleton and McQuade get credit for these. Mr Garrick and Mr Jameson declined to ask witness any questions. David Middleton, examined by Mr Harper —I was carrying on business at the Rakaia with James M'Quade in 1874. The Bank of New Zealand were our bankers. We were in business as general storekeepers and dealers in grain. We both imported and dealt with merchants in Christchurch. My signature is attached to security dated 27th October, 1874, and the signature of the firm is also attached. I remember giving that security to the Bank. It was a letter undertaking to give over certain sections, &c, for the purpose of securing certain amounts becoming due, or due. Mr Holt stated that the Bank was secured when he got the security I speak of. I must have been in debt to the Bank, but I do not know how much, I was laid up for nearly a month, and did not attend to business. Mr Finnerty was managing my business at Rakaia, and Mr Buddie at Ashburton, during this time. Had a special accountant making up my balance-sheet before I gave the security. I employed Mr W. J. Lovell and Mr T, B. Craig to make up a balance sheet. The reason why Mr Craig was sent for was that Mr Lovell did not appear likely to bring out a balance sheet. I wanted the balance sheet, as I had premised the Bank to do it for nearly two months. Mr Craig got out a rough balance sheet abou 18th November. I gave the security to the Bank on 27th Oct. I remember calling a meeting of my creditors early in November. I did so because in Mr Craig’s rough balance sheet he showed a deficit of some £I3OO on the estate. The Bank also refused to carry us on. They returned one cheque dated 2nd October. Tney returned it on the 3rd October, To the best of my belief there was, I think, only one payment made by the Bank after getting the security, and that was to the railway. 1 saw Mr Holt before calling my creditors together. 1 gave the security of 27th October on the distinct understanding, to use Mr Holt’s own words, “ If you stick by the Bank, the Bank will stick by you.” I was under the impression that the Bank was going to carry me on. My balance sheet had not been worked out at this time, but the Bank knew that I was getting it done. When the balance sheet was done I took it to the Bank,and was then refused further advances. The result of the creditors’ meeting was a resolution that the estate should be assigned, and Messrs Shand and A, C. Wilson appointed trustees. Mr Holt was at the meeting of creditors. I do not recollect giving any security on 3rd October. I know nothing about that; that was signed by Mr McQuade. In October a writ was out against the firm for some £3OO, at the suit of Patrick Laurie. I had not examined my Bank pass-book from the beginning of October to the time of the balance JJsheet being made up. I have not seen my book since ; I think it went down to Christchurch, and never came back again. From memory, to the best of my belief, the overdraft at the beginning of October was over £4000; and bills were lying in the Bank to the amount of nearly £3OOO lo meet that—good trade bills. I was aware that my cheque of 2nd October had been dis honored at that time. Mr McQuade, my partner, was very little about the busines during the month of October. I recollect sending some bond warrants to Duncan and

Jameson for the purpose of using them with regard to my relations with the Bank, to be used as they might think legal. They were, I believe, sent for by the Bank to Messrs Duncan and Jameson, and handed over by them. It was after the 27th October that this occurred. The value of the bond warrants would be about £SOO, more or less. They were not endorsed by me to the Bank; but 1 presume my partner endorsed them in Christchurch in the name of the firm. I have not seen nor had access to the books of the Bank smce my insolvency, nor have I asked to see them. 1 know that the Bank received moneys on our account after the security was given. We paid money in ourselves on the same afternoon that the security was signed to the extent of about £IOO. I recollect giving the security now shown to me dated 9th June, 1874. I had some property at the Ashburton. Part of it was sold, and part is still in the hands of the trustees. The amount realised by that sold was about £9OO. It was sold by the firm. It included sections 110 and 111, They stood in Mr McQuade’s name alone. Portions of this was sold to the Bank. Including the sections sold to the Bank, and including the stock in the store, the property realised £2OOO. The sale was in October, about the beginning of the month. The sale was going on at the time the security was given. I sold the property because 1 could not manage the two businesses, and found I was losing money for want of personal supervision. The Bank were aware of the property being sold. I was aware that Mr McQuade had given security over the Ashburton property, dated 9th June, to the Bank of New Zealand. The sale was on behalf of the Bank, and took place under their security of 9th June. The Ashburton property has all been sold except one-eighth of an acre, and the proceeds paid over to the Bank, except £250 paid by Mr McQuade out of proceeds of the sale to meet a bill from Dunedin, we undertaking to cover the advance by paying in to that amount. The bills referred to in the statement now handed to me were discounted to the best of my belief. I should never have given the security of 27th of October if the Bank had refused to carry me on. It was on the understanding clearly that they would carry me on. There was no limit. It was quite understood that Mr Holt should carry us over the grain season, as he knew we had many grain bills and outstanding accounts. I understand that the Bank nas realised on the agricultural liens which were handed over to them. A cheque I gave on the 27th October to the railway was paid by the Bank. The cheque was drawn on the strength of the security having been given and moneys paid in on the 27th, The payment in was in excess of the cheque drawn On that date. I did not draw any more money on that account. I thought the matter over after I got home, and considered that I had given too much security in face of a dishonoured cheque. I therefore determined to send no more money to the Bank, but to send it to our solicitors, together with the bond warrants. I did not read the security before signing it. I had only about five minutes to do it in. I have seen the security since.

By Mr Garrick—ln the beginning of October I was aware generally of the state of my account, which was as I have stated. The transaction of the 9th June was a special security ; it appears to have been given in respect to a bill of £2OOO, discounted to cover an overdraft.

Re-examined by Mr Harper—Mr McQaade joined the firm in July, 1873, He put £2OOO in the firm before going home, and added £SOO in 1874, when he returned from England. I think he was in New Zealand during the best part of 1874. I think he paid the £SOO into the Bank in June or July of 1874, after the security of 9th June was given. The amount was paid into the Bank, and not employed as capital without passing through the Bank. Mr McQuade was not aware of the state of the firm. He never enquired into it and never drew much from the firm. In July two of the firms’ acceptances were dishonored, because Mr Holt was jamming us for money, and we were on the eve of selling the Ashburton property. I wrote home to Crosse and Blackwell, and Bernard, Lewis, and Co, who were the drawers of the bills, and told them that the money would be sent by next mail, which was not done.

This was all the evidence, and the case was adjourned.