DISTRICT COURT, GREYMOUTH.

Inangahua Times, Volume V, Issue 9, 14 December 1877, Page 2

DISTRICT COURT, GREYMOUTH.

MOSDAT, DeCEMBEB 10. (Before His Honor Judge Weston.) His Honor delivered the following judgment : — THE OOLDBN TBEASUBE GOLD MINING CO., BEGISTBKED, IN LIQIDATION. Mr Warner for the .National Bank : Mr L. G. Reid for the .liquidator, Mr M'Lean. The Nation i\ Bank of New Zealand, a creditor in this liquidation, seeks to re-, cover interest accrued upon its proved debt sabseijuent to the date of the winding up order. TUe facts, simple in tbeciselves are, that an' ordinary account be* tween banker and customer was opened and carried on between the parties. Tbe company was allowed to "or&rdvaw,'' nnd in tbe absence of a special agreement -interest upon the daily balances- was as« sessed. Upon this principle the passbook was prepared and handed to the company. On tbe 27th March, 1576, tbe bank being creditors to the extent of £1171, unified to tbe company its intention to apply to tbe District Court fora winding- up order. Upon tbe Gtli ot tbe following month the petition was filed, and on tbe l&tb tbe order was made. Tb& bank by affidavit formally proved for tbe £1171, but find* ing that the uncalled capital was enough to pay interest! on tbe debts, tbe manager upon- the 16th May last.jmoved tbe Court for an> additional sum. of £144 as interest Ito tllat date, and to that date only- The I duly of a liquidator, th& responsibility of a shareholder is cleanly prescribed in tb& East of England Banking Company's case 3& L. J., cb 12a. The former is an officer appointed to wind up the affairs of tbe company,, which, by being placed in liquidation, has virtually ceased. He is bound to apply the, assets iv discharge of tho debts of tlie company as they, existed a& tbe date of tbe order j the tthareliolck r in turn is responsible solely and. exclusively fur liabilities which were legally incurred by the company, together with tbe costs or the-proe«eding,s. Tbe rights and position of creditors towards eacb other in a liquidation were well considered in the Warrant Finance Company's, case, 38, L.J., cb 712. In the argumunt aad judgment, a distinction was drawn between a solvent and insolvent company. Seltvyn L. J. was of opinion that in the farmer a dividend should be devoted firstly in the reduction of interest* and secondly in discharge of the principal;, that in tbe case of an insolvent company the assets should be treated as' "property,, imoiediaiely re* aMsable,. thus to- prevent, oae. section of creditors being prejudiced by the accidental delay which the observance) of the forms and proceedings of the, Court, would occasion, ia the sale and collection. Upon realisation the. estate would be applied equally and vateably in payment of the debts as they existed at, the winding up, interest Being added to the date of the winding up- order, in cases where it was allowed by virtue of ibe contract. Gifiard, L. J!> tersely remarked that •' dividends ought to be paid oa the debts as they es» isted 'at tbe time the winding up com< menced^ for when tbe estate is insolvent, that rule haß the effeatof diatvibutiog the assets in the fairest way: When the estate is solvent the rule worka' with equal fair« ; ness, because so soon as. it is ascertainedthat there is a surplus the creditor whose debt carries iiitei'est is remitted to his original right under his contract ; oa.tbe dtherhand, a creditor who is not entitled' by his contract to interest does not get it." It will thus be seen that in both classes of cases tho creditors are held strictly to their contract, and that tbe character of the claims remain unaffected by the liquid dation ;— -indeed (in the Hei eford Banking ' Company's cuse, 3(>, L. J., cb 806, ifc wag held that a winding«up order though a decree, was not a judgment, in favor of creditors, whoso position remained unaltered, and who must abide by their contract, but ouly as between the partners amongst themselves. As then the company is admitted to be solvent, we have to consider the contract between tbe bank and its customer. Now upon the question of interest generally, and for tho circumstances under which, it may be oul< *

ciliated, I cannot do better than refer l learned counsel to tbe judgment of Vice- ( Chancellor Woods, in .Rhodes v. Rhodes ' 29 L. J., eh 418. He says :— " It is quite clenr from the authorities that yon cannot get interest unless by virtue of some contraefcj •■■express or implied, or by the operation of snme particular custom and course of dealing. In implied contracts the authorities go no further than this, that if a ceriain day bo fixed for payment of the money, the (Jourt will imply a con« tract to pay interest from that date ; or if you find that by the contract or deal* ing interest is not payable, a contract will be implied," See also Frubling v. Schrce ler, 4 L. J., eh 291, upon the same subject. The evidence in the present matter is, unfortunately, meagre. The period over which the transactions extended 1 was not stated, exact particulars of the account were not furnished 1 , whether the Company directly assented or dissented to the payment of interest, and whether the passsbook itself was received by the Company before the issuing of tbe winding- up order was not | made mani est. Clearly there was not» however, in this instance, an express con* tract to- pay interest - r there was no date fixed for payment, there was no notice given, and but for the usages and customs of bankers, which the Court can rocog« ahe, the present would not, in my opinion, differ from a case of goods sold and j delivered, upon which, ordinarily speaking, interest cannot be charged. To- what extent then will usage and the mode of dealing avail the National Bank ? The position of .banker and customer is peculiar. So long as an account remains current and is treated ns an ordinary mercantile account, is wMch its debits and credits are regularly made according to the circumstances of the case, it is, regulated by the'e'ustom of bankers and the. particular dealings between the parties — the banker and customer. The banker's right to c'/argo interest; upon the fluctuating balance is established as an usage, but upon the death, bankruptcy, retirement from busiuess of either party, or upon the closing of titie- account as an ordiuary mercantile one, the ..character of the account is change*?, and in the absence of a spec-iiil contract theretofore or thereafter made tlie interest ceases, and the banker is lelt to his remedy for th« recovery of tbe bill »nce — Crosskill v. 13 wen. Moo*e v- Suit, 32 L. J. eh. 540 ami 75 >. "When, then, we inquire 1 , was the account closed ? In my opinion the notice- changed its character and filtered the pnsiiion o^' both h»Kkcr and customer \ thenceforth the I former became a creditor fo? an ui.liquiil ited sum upon which interest could not be calculated. The bawls admittedly doubted the position, stability, and credit of the Company, aud in face of that n 'tk'e it cannot be assumed, I imagine, that its manager would have allowed the overdraft to be increased. So iar as the Com* pany is concerned, it is- reasonable toinfer that it was no longer a going concern. At all events I a>pprehend the presentation of the petition* aud the pro* curing of the wiuding-u-p order must place the closing of the account beyond all doubt. It is contended, however, that until payment the account must, of necessity, remain open, and being so interest must accrue. 'Jhafc point can be doubtless- disposed of by reference to the judgment of the Master of the liolls in Crosskill v. Bowen r he remarks :— " It is said on behalf ef the defendant that a banker's account is not closed until it is paid ; and this, is undoubtedly true in one sense of the term, but its character isessentially altered j but whea a merchant who keeps an account current with his banker dies, it ceases to be a commea current mercantile account, and becomes a simple contract debt due from his estate, on which, in the absence of any binding eon tract, no interest would bs charged." As I have before stated the wiuding*up order cannot be treated as a Judgment upon which interest might be added under rules*, or recovered as dansages. If then death or bankruptcy closes tho account between bank and customer, if a creditor taun voluntarily close his account, and if tie effect of such action is, "upon tbe authorities stated, 1 fco deprive the banker of his right to charge interest upon the balance in the absence of a new contract, it seems to me that/ in an action by the bank for such balance his right would be limited to it specific pmouut. It might possibly be argued, however that such reasoning would work an!injustice ; that at all events interest, cbuldHe' recovered as damages'-for-the 1 " wrongful MthhoUing" of the debt, Abbott v. Kedferu S, JBing 358> being relied upon., The notice of the 27th March cannot, I con« ceive be taken as an application,, foe. payment upon which' to base an action for damages. It referred to no account, to no sum, it made no demand, and there is no other evidence upon tbe point to guide the Court. How then could the "wrongful witbolding" be proved ? Again iv Abbott v. lied fern ; in Blackmore v. Henry 7T. R. the actions were upon judgments, liquidated debts due and payable, the former carrying interest under a judgment of a Scotch tribunal respected by our own Court. Iv Hillhouse v. Davies 1 M. and S. the proceedings were similar to the last mentioned, yet they were based uponaCommissioners's award, [t was a case of some hardship, inasmuch is there were no means devised by the statute for the enforcing of the award made under it, there was no time fixed ivithin which the amount was to be paid,

payment was intentionally resisted ; the Court was therefore disposed to grant interest if possible to prevent undue injury —in shcrt, to ensure, to compel a sesttlemenfe. Lord iSllenborowgh nevertheless appeared inclined to draw a grave distinction letween a judgment and other v li(juid»ited" claims, and to refase the demand 1 , for inclosing his judgment he remnrlceii : — " We cannot indeed call it properly a judgment, it being rather a a statotable asssessment, for damages ; bot, with some dnni.t, and for myself I confess eonsidei-abfe dms'it in so pronouncing, we tliinfe ili«t wo shall bfl best sustaining the justirp of flic rnsp by allowing the. plaintiff the amounS of the interest assessed." But, once agnrn, the argument would prove, I think, a fallacy. Assuming for the moment that the wind* tng-up proceedings were a demand for payment: then inasmuch ns upon the authority of tbe Warrant Finance Company's cose the estate is to be treated as immediately divisable, as against those whose debts do not in terms of tbe contract itself carry interest, the delay in the realisation could not be taken advantage of, thus there could be no M wrongful withholding," and hence the eluim for dnroages' must, I think, fa'l to- the ground. Whether tbe National Bank could, or could not have improved therr position under tbe Statutes which regulate tbe payment of interest (upon this point see East of England Banking Company the Herefordshire Banking, and State Fire Insurance Company eases), it is not for me at this moment to express an opinion ; it is enough to say that upon the above reasoning, and regarding tbe fact tint the proof was limited to tbe principal, and that it was not until after the receipt of one or more dividends on account of the claim that the demand for interest was preferred, I feel constrained to refuse the order, and wtih costs £6 6s.