DISTRICT COURT.

Oamaru Mail, Volume IV, Issue 1031, 9 August 1879, Page 2

DISTRICT COURT.

THIS DAY. (Before His Honor District Judije AVard.) IN BANKRUPTCY. In Re J. T. Evans & Co.—Argument of order of nisi. This was ail application for an order of the Court restraining certain action which had been brought by creditors against J. T. Evans, James Lees, and Charles Gifford Moore, trading as J. T. Evans and Co., on the ground that they had filed a deed of arrangement in the District Court. Mr. Newton appeared for the arranging debtors, and Mr. O'Meagher, for certain creditors, appeared to show cause. At the sitting of the Court on the 7th instant, on the application of Mr. Newton for the arranging debtors, an order nisiwas granted restraining the actions for fourteen clays unless cause should this day be shown. Mr. O'Meagher proceeded to show cause, and called evidence to show that since the filing of the deed of arrangement J. T. Evans had, attempted to dispose of his household furniture. George Greenfield, an auctioneer, de- ' posed that he had had a conversation with Mr. J. T. Evans after the filing of the deed of arrangement. He went to witness' office, and said he wished to raise money, asking him (witness) for his acceptance on his furniture, and to repay the amount in twelve months. Witness replied that he did not see how he could do it, as he had failed. Mr. Evans replied that it was his private estate, and he could deal with it. The amount asked for was L 250. Witness declined to do as asked. To Mr. Newton : Mr. Evans did not offer to sell the furniture, but wished to raise money upon it ; giving a bill of sale over it, and receiving witness' acceptance. Mr. Newton said that evidence could be produced rebutting the statements contained in the affidavit referred to by Mr. O'Meagher. Mr. O'Meagher said that since the aflidavits had been filed, ho had received information that another of the debtors had endeavored to raise money on his private property. Mr. Newton said that he had had no time to answer the affidavits. _ and he would like, if convenient to his Honor, to have the case adjourned until Tuesday next. Mr. O'Meagher said he was prepared to set aside the affidavits filed, and argue the matter on the deed of arrangement and the viva voce, evidence of Mr. Greenfield. This course was agreed to. Mi - . O'Meagher then proceeded to deal with the deed of arrangement, and pointed out that it merely provided that the joint estate of Messrs. Lees, Moore, and Evans should be handed over to the creditors in satisfaction of the joint debtors of the firm, and sought to protect the separate estates of the debtors from claims of joint creditors who had taken proceedings in the Supreme Court. It was not shown that there were any separate creditors to satisfy from the separate estates of the arranging debtors. If it were desired to protect the separate estates of the debtors for the benefit of the separate creditors, the three debtors should have tiled declarations in the Court separately. He contended that the debtors had i;o right to sell their separate property at any sacrifice for the purpose of satisfying their separate creditors. He held that, any balance remaining from the sale of the separate estates of the debtors, after paying the separate creditors, should be available for the payment of the debts on the joint estate, and therefore, it was not right for the debtors to sacrifice their private estates, no matter how their joint creditors might fare. He then proceeded to quote authorities bearing out his contention. He held that there was nothing in the Debtors and Creditors Act preventing a creditor in the joint estate of the firm from issuing execution against the separate estate of any single member of the firm for the amount of a' joint liability on an instrument obtained against them jointly. The debtors had not come before the Court in a proper manner to be dealt with. They should have each filed separately, and if a balance rqinained from the separate estates of the debtors after paying their individual debts, it should be available for the payment of the joint creditors. The deed of arrangement practically shielded the separate of the debtors from being used for the payment of the joint debts of . the firm, and in this matter a portion of the Act Was negatived. The Act provided for the protection of the joiiit estate, which was the only estate that had been brought to the knowledge and under the jurisdiction of the Court. There was nothing in the Act to preserve the separata estates of the debtors that had not been b^ought under its operation. The application seejned to him to have been made for the purpose of protecting their separate estates, and preventing those creditors who had taken proceedings against them from putting in executions to enforce their rights. They had seen that one of the debtors had actually sought to dispose of his separate estate. . He had carefully looked over the authorities, but could find nothing in support of the application. He admitted that if the separate estates had been included in the deed, the proceedings might properly be restrained ; but as no separate creditors and no separate estates were before the Court, it would be most unfair to those creditors who had taken proceedings to have the order njjjcJe absolute. And finally he contended that tjie Court should only interfere to prote&t the property of those who.come under the Act, and ill doing so bring" all their separate and joint estates with them. He * was of opinion that if Lees'arid. Moore were solvent, process agains't their separate estates could nbt affect them seriously, arid if they were not solvent then their first duty would be to meet their creditors, and the most

speedy way of compelling them to do ao was to allow the proceeding creditors to issue executions and levy on such property as had not been brought in under tlm deed.-' therefore that the or ; der should' be: discharged. Mr. Newton replied. He pointed out that under Clause 33 of the Debtors and Creditors Act the Court have power to restrain proceedings against the separato estates of the arranging debtors. The question arose as to whether the Court would consider it expedient to exercise its discretionary power, as the separate estates were not brought under the jurisdiction of the Court. He argued that it would be most unfair to the creditors in the separate estates of the arranging debtors if creditors in the joint, estate were permitted to put in exceut\->n against the separate estates of the deb' L\.

The separate creditors had a first c1a,..,. upon the separate estates, and should not be deprived of their rights. Of course joint creditors had a right at common law to put in execution against the separate estates ; but he thought they shouldbe restrained from doing so until the joint creditors had been afforded an opportunity of agreeing or otherwise to the deed of arrangement. An arrangement might be made with the joint creditors without the introduction of the separate creditors, and if such arrangement were made, and the joint creditors agreed to take the joint estates in satisfaction of their claims, the separate estates of the arranging debtors would become free, and the absolute bankruptcy of tho arranging debtors be avoided. It was merely to give the joint creditors an opportunity of agreeing to tho deed of arrangment that ho wished the actions restrained until the meeting was held. If tho parties were allowed to proceed with their executions, it, of course, meant bankruptcy, and this he might state frankly was what they wished to avoid, if possible. Unless tho firm, of Lees and Moore became bankrupt the creditors in their separate estates would be unjustly dealt with if these proceeding were not restrained. The only new thing introduced by the learned counsel on the other side was the action of Mr. J. T. Evans in endeavoring to dispose of his furniture ; but Mr. Evans' object was probably to raise money to satisfy his separate creditors. He would certainly be accountable to the Court if he attempted to apply the money to any other purpose. What he asked the Court to do, and it was a fair thing to ask, was that the joint creditors should have an opportunity of saying yea or nay to tho arrangement proposed, as it was for tliem to say whether they would accept the composition ; whether they would be content with the joint estate, and allow the separate estate of Messrs. Lees, and Moore to go free. If desired, the members of the firm were quite prepared to come into Court and give an assurance that tlioy would not dispose of their separate estates until after the proposed meeting. His Honor thought the order should be discharged. As tho deed filed dealt only with the joint estate, and as the separate estates had not been brought into Court> there should be an honorable understanding that the separate estates . should not be meddled with in any way. Mr. Newton : There is.' no evidence, your Honor to show that the separate estates have been dealt with. His Honor : No ; but there is evidence to show that an attempt has been made to deal with a portion of them. Mr. Newton : Then I shall ask your Honor to grant- an order protecting the separate estates for two days at least, to give the whole of the debtors an opportunity of filing a declaration of insolvency. Mr. Q'Meaghcr : There is no necessity for that; they can file at any time —to-day if need be. His Honor : I should be sorry to force Messrs. Leos and Mooro to be 'Mn-. solvent through tho misconduct or Evans ; but the order must be discharged, The order was discharged accordingly with costs.