Public Examination.

Horowhenua Chronicle, 13 April 1911, Page 2

Public Examination.

IN THE BANKRUPTCY COURT PALMERSTON. ESTATE OF T. A. B. HUDSON. Yesterday afternoon at Palmerst North, the public examination bankruptcy of T. A. B. Hudson, Levin, was conducted before Mr , D. 'fliomson, S.M. Mr Findlay, of Wellington. : peared as counsel for the Official j signee (Mr A. Simpson) tlie Depi Official Assignee (Mr J. G. Scot and Mr B. R. Gardener, who if creditor in tlio estate; Mr Har< Cooper was counsel for tlie bankru and Mr Guy Marriott, another ere tor and formally a member of i firm of Hudson and Marriott, wat ed tlie case on his own behalf. Blenkhorn was present as Levin preventative of the Assignees. Mr Simpson, Official Liquidator tlio estate of Hudson and Marric Ltd.. intimated that lie was pres< in tnat capacity personally, a? claimant against tlie private est at Thomas Arthur Bertram Hud< was examined by Mr Findlay. ter answering formal questions garding his adjudication as a bai rupt, witness said ho made a sta mont on 6th July, at Levin Con house concerning his estate and bai ruptcy. At a later meeting made a statement on oath. Duri that intervening period ho had 1 time to investigate his affairs, if ? further investigation was neeessa but did not go into them fully. 1 wife died during that time'and was upset. He submitted nccoui of his expenditure to a meeting 7th November. 1910, regarding dealings wfth the firm of Hu<kand Marriott. Had gone into affairs fully before that date; it a only at certain intervals he got : cess to the books. He still adhei to those statements as correct, his accounts were kept in the. bor of Hudson and Marriott, Ltd.. whi were in the custody of Mr Blenkhoi the Official Assignee's solicitor. H access to them during office, hou and they were never refused to hi Mr Blenkhorn had been witnes solicitor. Witness first discovei he was bankrupt when A. S. Pat son and Co.. of Wellington, press him (in June, 1910.) This time synonymous with the time when discovered the insolvency of Hud.s and Marriott. That was when t liquidation of that company to place. It may have been on 17 May that company went into liri dation. on the petition of I). J. \ Donald, a Wellington storekcey (Mr Simpson: He is now living Potone.) Was not sure of the d; of his own discovery as to hankru] cy (it might have been May. r June). SOME FINANCIAL HISTORY It was true the company was su frequently in the Magistrate's Coi during the last eighteen months its existence. Mr Findlay: And in some ca.< execution was issued? Bankrupt: I can't say that. Mr Findlay: Well, distress w: rants? Bankrupt: .1 don't think so. Mr Findlay: You confessed a ■ of cases? Bankrupt: I did; that, certainly, Mr Findlay (fo the Magistral There were amounts aggrcgati £1800 concerned. I see from the official papers. Mr Findlay : During that time y were sued freouently, personally? Bankrupt: Yes; but I think I pa all my own personal debts except t one due to A. S. Patcrson and Co. Mr Findlay: Here is a list f C4OO 9s lid due by you personal! Ts that correct, -approximately? Bankrupt: Yes. Mr Thomson, S.M. : Does that i elude A. S. Patenson's debt? Mr Findlay: No. it not there. Mr Thomson. P.M.: Tt is for Ct their account. Mr Findlay: And these £400 or of accounts were not disputed n counts, and they wore confessor' Yet you consider yon were solvent r this time. WAS THE FIRM BANKRFPA 1 1908-1909? Mr Findlay here handed up statement of affairs in ]008-1 {.'OO, ar asked if it did not show tlie com par to be Bankrupt an.swe ed "No." Counsel then asked ho that could ho contended when th 1) a In nee sheet showed a loss of .£'Bl 4s sd: for the period, ended 31st Oct ber. 1909, following on a loss of I'f lis. Bankrupt: That is not an actu; loss ; the assets of the firm were writ en down very severely by Mr Ma rifttt and myself. £256 of tin amount was written off bonk debt; (Mr Findlay : "That's allowed that's here!") And the whole < the land, plant, buildings and stoel sot down at £1258, had been writtc down fully 20 per cent as regarrle the plant and buildings. Th stocks were written down, but not r much as 20 per cent. A balanc sheet was taken for each year, an there should be one for 1908. Couj not say where it was; witness did nr keep the book. Mr Findlay: That accounts fo about £450? The Magistrate: Practically £50( Bankrupt,: I know something wa ivritten off the «tock--10 per cent, i he usual—but I can't say how muc' "was" written off. These writing. l : iff left clear margins. Mr Findlay: Tlie land is of n jelling value; it is only a leasehold. Bankrupt: One part of the proper ;v was a ten years' lease, with optioi >f a further term at a higher rental r have not tthe remcftest idea wha >he lease, buildings and stock fetch ;d. Mr Findlay: £100. Bankrupt: I know "that's" no correct, for some of the buildings an lot yet sold! Examination, continued: After tin valance sheet now before liim wa; )reparod one of the assets in it wn: old for about £200; it was the least if a butcher's shop, and that cor ainly showed value. It was 1101 rue, as counsel suggested, that thi; ras the only asset of value that wn.hown in the balance sheet. 01 his £200 a sum of £150 went intr ho bank at about Christmas time, nd the balance of £50 at a later ime. Mr Findlay : There doesn't seem to e any payment shown in your bank ookator about December or Janur.V. Bankrupt: Perhaps it was afosorbd in another amount? Mr Findlay: But there is no total lm banked in those months which 'as anything like the £200. THE 1909 BALANCE SHEET. Mr Findlay: You discussed your alance she'et in 1909 with Mr Kcmer, auditor of the company?— Yes; 3 recommended us to sell a portion : tho business (the grocery) as the >mpany could not carry on under dsting conditions. We sold the ■ocery. T think it was the grocery isiness that was losing the money'; think Mr Kembc particularised iat; but wo could not tell, as all le branches of our business were in together, and no .separate ac>unts kept. _ Did 1 not think the itehery business was losing money; d not think it was losing money >fore his firm took it over; the forer owners had over-capitalised it. id not take it over at the former raer's capitalisation. ' Did' not ink Mr Kember used the words, ter the balance sheet in 1909 that s firm "was practically bankrupt." e told us that We mast have more oney to carry on with. Did not

T think he mentioned any specific amount. Witness still said that although ho and the company were bein* sued all this time the company was lolvont. Had not the remotest idea what the company would pay; but know that it ought to have paid under different liquidation! Mr Findlay: You suggest that the liquidation has been incompetent , Bankrupt: "Well, it has been long drawn out! It is nearly nino mon- ., ths since these stops were begun, and i between one thing and another the liquidation has'boon strung out, and nothing done yet! ( . Mr 'Findlay: Why? Don't you know that? '" bankrupt: No. ;■ Mr Findlay: Tt is because they ' can't do it:'they can't get things 'i straightened out. EDUCATION BOARD LEASES. '- Counsel went on to examine 'bankc nipt regarding moneys unpaid (for '" rent) in regard to Education Board v leases which were owing by the firm -" in respect of lenses appearing as assets in the estate. Bankrupt )f slated that- there wore disputes bofc, > tween 'his firm and the Education lt Board regarding these rents: it was a not that'they could not pay. Mr Findlay : But there were other n amounts. Were there, nob trust f" moneys yon were unable to pay (to -" Mr B. R. Gardener, for instance).? :_ Bankrupt: Ido not admit we were '" unable- to pay them! ''- Mr Thomson, S.M. : I don't know : " how much further I can let this 0 branch of tho examination go;_ this £ is an examination into the affairs of Hudson's private bankruptcy. v Mr Findlay: But he is protesting '.' regarding his own solvency when afs fairs boween himself and the firm 0 were in this state! :s The Magistrate: His contention is n that until he found the firm was s bankrupt the salary ho was drawing n from it was sufficient to save him s from bankruptcy. 1 HIS OWN EMPLOYER. rl Mr Findlay: As a matter of fact, II were you not your own employer s (Hudson, Marriott and Co.) as-from h Ist January? Bankrupt: No: T understood Mr el Marriott's retirement was illegal. :. To the Magistrate: I bought Mr . Marriott out in January, 1910, and s there was then no one else left in cl the business. T Arevr the £20 per •- month from the firm, still, as my :1 personal salarys To Mr Findlay: Tt was true that e. the company was unable to pay Mr n Gardener the money ho got from Mr e Wa'k'-r for land it sold as agent for c Mr Gardener. • h The Magi.strn.te: But that's a com- - pany matter Mr Findlay: T want to show that r he used this money himself, knowing i that the company (himself) wa.s in 0 difficulties. ;- Bankrupt: T knew that if t J the company had to go into liquidation T would become embarrassed, but T did not think the cornpa nv was bankrupt then. I drew , £130 from the company between January and April. 1910, hut that !, was not all salary : the company owed me other money. Walker's payment of money for Gardener's land went s into Hudson, Mnv'-tt and Oo.'s general account. By this time some of the comp.inv's cheques mav have been dishonoured ; did; not think thev had been. Didn't think any bad been dishonored before April. Mr Findlay: Tt could not have been a very exceptional thing to hare cheques dishonoured, or yon ; would remember. - A cheque given to Collie and Co. may have been dishonoiu'ed before April, but could not say. Gave 1 them two cheques: one was paid and . one was not. Krom cash hook (producer!) witness found he gave cheques 1 for C? 9 and CM. respectively, to Collie. A part of Walker's money was paid in nn 2«th March (CfiO 10s). There was a sum of about £28 due fo Walker for a contra. Mr Findlny: You were in difficulties- at this time, and \ put it to von that at Ibis lime you put Mr Giird-ener's trust money into your firm's account and drew it out for . yourself. 1 ' Bankrupt: No! ; Mr Findlay: But T submit it's ob- , vious! Tho Magistrate: Tn March (by this cheque book) there woro no large amounts drawn bv Hudson ; they total loss than £20 for the month. ' Mr Findlnv: He doesn't say he got iho money by cheque. MRS OWEN'S MONEY. To Mr Findlay: A cheque for £100 given to Mrs Owens was in discharge of money lent to the firm about twelve months before liquidation. There were two amounts of £50. One amount of £50 was for money collected, for her 'by his firm ; the other for money lent by her to his firm. That was before the balance sheet of 1.909. Two balance sheets were sent, in to Mrs Owens by witness: the later one corrected some slips. Tt wa.s quite correct that his statement showed £831 cash advanced to the company, and £340 salary due to me. for period 31st December, 1908, to June Ist, 1910. T)'\(\ not credit himself with £250 capital account; he debited , that amount, and it was included in tlio £831 9s lid. Would swear he paid tho firm €834 9s lid and had £340 duo to him for .salary. Tt was substantially correct, and if Mr Findlay said the amount of £340 had been paid to witness, previously, witness would think Mr Findlay was wrong. ABOUT £210; AND OTHER SUMS Mr Findlay pointed, to entries in a copy of the firm's ledger, and asked witness to admit that these wiped off considerable portions of the £340. One amount of £240, witness answered, was included in the £340, but ho would deny positively that it was included in tho £800. Mr Findlay: Then show me how the £840 is made up. I say that in the whole of that ledger account your salary is made up in full! Win-ess: I say that on the day concerned in this ledger the company owed me £1200 less the amounts to my debit; and the effect of that was that at this time the company owe-i me about £70. On 31st October, 1909, the amount of £218 Gs lOd was transferred to my credit from the company's books, that being the amount due to me as salary. Mr Findlay: And in that'book you are credited also with £240 salary. Witness- But the £218 goes to another account; T don't receive both amounts! Mr Findlay: I'm not suggesting that for a moment! On November Ist, 1909, to March Slsfc, 1910, £100 salary is credited in your ledger; so there's your £340. " I say that is credited to you and contained in your amount of £810. Now considering your debit, how is this £840 to be made up to your credit? Bankrupt ': That's just where you're wrong. It isn't a result; I show my debits on the other side. Mr Thomson, S.M. : But where do you get those amounts fronv? . Bankrupt: They are in the ledger. The Magistrate: But where? Bankrupt: All through it, sir! Mr Findlay indicated several entries, and asked bankm.pt what they referred to. (These were items showing advances by bankrupt to the company aggregating £250 or so. Bankrupt answered that ho did not know; ho did not keep tive books himself. Could not say where tho " bookkeeper got the items from. Mr Findlay: W« suggest that they are fictitious amounts, supplied by Hudson. . ■ , Bankrupt (to the Magistrate): All my hooks were kept by the clerk to the firm, in the company's hooks; I liad- no private books. • Tho Magistrate : But if that is so, ' where are the entries covering this total.

,Mr Findlay: Doesn't your hank book show itP Bankrupt: I don't know; 1 can't fay. >Mr Findlay: I suggest to you that this item of £284 7s is a duplication of an ite-in already credited in the account as the amount of advances made by me (as shown, in the cash book) and previously credited in tho ledger, under various items called "cash." Bankrupt: I don't admit it'; not for an instant. I don't think they are the items making up this amount of £280. Mr Findlay: Well, if that's not the case, you can't show me where th'oy are! Now, can you, tell me why certain amounts (indicated) are credited as cash paid by you, to the cmvpruv. and then this item of £280 as another single item? Bankrupt: t can't explain: I didn't keep the books. AN" ADVANCE TO THE COMPANY. Mr Findlay: In July. 1009, you appear to have advanced to the company a sum of CIOL "Whore- did yon get that money from? - ' Bankriint: CVoHv from Mrs Hudson, in tho .sum- shown by the books. They n< r<- necessary tr? ke;>p the company going. When w<. • ••(» «iMvt i ,, 'I , :- !>:i;-!\ i used to jrot ii.rv , V r-,,n v fro-U llPl , . Got it VII cash, not by way of a cheque. She did not draw the money* out of the bank. Do yon soriouslv Ili.it during the month of Julv vou went to. Mrs Hudson and got all tlic.sp moneys in cash, from time to time? Bankrupt: Yes; Mrs Hudson ni that time kept a good deal of money in the house. Mr Findlay: The story you tell is very improbable: it may be correct. but Examination, continued: Never handled Hudson. Marriott and Co.'s money at all. Tt was impossible for anyone to find a single penny paid to him for the firm that had not been ■.accounted for bv him to the firm. Remernborod naviit" one Tlnsther a sum of rnonev in M:irc!> last.. Tn all he received C-18 If'.. Kd : did not think it was all paid in one sum. Never at anv time received a cheque on behalf of the firm and cashed it in pay accounts on behalf of the firm, i Amounts of unpaid capital in the firm were due "by both partners in the firm, and by two other persons who were to have taken up .shares in the company, but did not do so. THE LTCVTN AFOTTOVF.FR TTTG COMPANY. Witness said he was not trading now on his own aocovm! : be w;is tradinsr for »)ino of hi.-; frfpiuiw. Mr Findlav: Wlio are they? Bankrupt: T'm not «>l»li.eocl to answer that! The Magistrate: T'm not here to inquire into that now. You can ask him if anv portion of his estate has teen applied to ihi." new oompanv. Mr Findlay: Well, answer tli.it! Bankrupt: T have no estate: not one penny piece. T have only my salary as manager. Bankrupt's examination, continued : Borrowed some £200 or C 250 on his furniture. Everv ponnv of that went into the ennmanv. At n later date he borrowed monev. .nud the firm got- that. Tt was mit a fair inference tha+ at tbU time HOOS.fn the firm wa.s in <rreat difficulties; it was developing its business, nnd needed money. Another borrowing transaction, in May. 1000. M-n> for witness's own purno«cs. Tt w.ns quite true fhnt of thnt tlnv be bad tx> borrow monev tn ineef bis own liabilities. During the time fV>f he was borrowing nwiwv from i.-jc wife (IPOW ho was ].oM..r sMf . f 7 f PI . debt, and the in+e-,- nn v {< l m was in arrear. Tt accumulated, finallv. to the sum of COO. Mrs Owens' advance wa« ci-p-iifn/i to his firm, an'l it v,- ( o>f into the banking account. Tt vie m•>/!.-> In a. nunrV>r of s'<i m <- nin"i!i" iHo - i lone; period. BANKRUPT'S rOFXRFJ. FXAMINES HIM. To Mr Cooper: Tho books of the company were audited each year by Mr Keinber. Mr Keiubcr never expressed _ dissatisfaction. Mr Marriott joined the company in January, 1910. He paid C">()0 nnd owned half the shares. AVlien lie went < out witness wa.s to pay him £230 and take over all liabilities. Paid him partly in cash and gave- bills for the balance. Of the Jinn's assets, the •butchery business was .sold for about £300. Hefore the liquidation of the company, the lease of the shop in which tlio butcher's business was carried on was sold to a Mr Bowen i'or £200. This transaction was a proof that the firm's assets wore not unduly inflated. The grocery business, sold before liquidation, brought about CfiOO. Witness never made a single ontiy. in the firm's books ; they were kept by an employee, and audited yearly. The firm's books and witness's private banking account should show all his transactions. Had j no external source of incoine. His total liabilities altogether excluding the claim of .{MOO by the Official .Liquidator, came to "a little under £1500, but of these ho disputed the firm's liquidator's claim of G4OO and more than £100 of B. R. Gardener's claim. Paterson and Co.'.s claim was on account of witness's private guarantee of Hudson, Marriott and .Co. s debt; his wife's illness cost him a lot of money in doctors', nurses' and chemists' bills. Re-examined by Mr Findlay: Wa.s an experienced book-keeper himself The young man who kept .his books was over twenty years of age at the present time, he should tlunk. The house property (in his wife's name) was transferred to witness's name when his wife went under an operation. When she got better it was re-transferred to her. Tt wa.s sold by the mortgagee, three or four months ago. and bought in by the second mortgagee, 'whose mother now occupied the house. It was on 30th September, 1909. that witness transferred the house back to his wife. To Mr Cooper: An offer to the estate, by Miss Bo wen, to purchase the property at a sum sufficient to pay off the mortgages on the house, the interest due, and leave £150 for payment of other creditors, was refused J J+ by a meeting of creditors in bank- J rupt's private estate. His Wors'iij: f 1 :!-) dr-larcl the I P't'blic examination closed. I