IN BANKRUPTCY.

Poverty Bay Standard, Volume I, Issue 198, 1 August 1884, Page 2

IN BANKRUPTCY.

(Before G. L. Greenwood, Esq., Registrar.) YESTERDAY. In re Bloomfield. The following is the conclusion of the evidence which was taken after we went to press.] Mr. Kenny contended that this was not a case of facts, and could not be tried by a jury. They would very probably admit all the statements made by the other side. The questions involved were not pure questions of fact that could be sent to a jury, and suppose they asked to have this question tried by a jury. What question ? It would be impossible to frame any clear question of fact to send to a jury. Mr. DeLautour —The question of fact to send to a jury would be the facts attending the execution of this deed, and another thing they charge us with fraud, and that should be sufficient to send it tu a jury, The Registrar—Would not the best way be to eliminate the word “ fraud ” from the summons. Mr. DeLautour—No, certainly not. Mr. Kenny—l submit that it can be. Mr. DeLautour—My friend cannot get away from his summons, which charges us with fraudulently doing such things. Mr. Kenny—Then I will ask to have it amended. Mr. DeLautour—l shall object to it. Mr. Greenwood—Do I understand that you deny the allegations of fraud. Mr. DeLautour—The allegations are of fraud and of course we deny them. Mr. Kenny—There are no allegations of fraud. It is set out in the summons on the grounds of fraud.

In reply to Mr. Greenwood, Mr. Kenny applied to have the summons amended, which was accordingly done, the words “ as fraudulent ” being struck out. A note was taken of Mr. DeLautour’s objection to it.

The Registrar—The question now arises how can we find out whether there are any questions of fact in dispute or not. Mr. DeLautour—l should like to have your direct ruling on clause nine, as to whether the Court sitting in Chambers has a rigiit directly to question the deed as read with clause 19. The Registrar—l really must rule on the reading of the section that the Act gives power to the Court to question and set aside the deed without trial in open Court, unless facts arise that entitle the parties to a jury under section 11, which would oust a summary jurisdiction.

Mr. Kenny—l propose to begin by calling Mr. Shelton. 7 8

F. J. Shelton—l am a merchant in partnership with W. Common—trading as Common, Shelton and Co. I produce mortgage of stock given by T. E. R. Bloomfield to my firm, and dated 19th April, 1884. [Document produced marked A.] The mortgage was given in consideration of an advance of the sum of £lOl2 15?. 7d., paid by cheque on the Union Bank of Australia in the usual way of business. Several cheques were given to Mr. Bloomfield. They were all dated 19th April, and were all given on that day. One for £792 17a. was given to him, with which he paid an account. He handed back the cheque bodily, and did not cash it. I paid it into the firms account at the Union Bank on the 21st April. I am quite sure about that. Another cheque was for £lOO. This one was not handed back. The next one is for £46 9s. 2d. He retained this also. The next was for £73 9s. sd. This was held for some time by him, and then handed back tome after his giving a receipt for it. This was on the 19th. I paid it into our account. We sold some sheep to Mr. Bloomfield about December, 1882, for which he gave a promissory note. (Produced and marked B.) I handed the note to the Union Bank of Australia for collection. It was dishonored. Previous to dishonor the cheque produced (marked C), was not paid in. I fancy this cheque marked C, was received on the 3rd or 4th of April. It was accepted in payment of the note, and handed by us to the Union Bank. It was returned by the Bank of New Zealand endorsed “ refer to drawer.” I recognise the cheque produced (marked D), which is in my handwriting. I paid it to the Bank for the purpose of taking up the promissory-note B. Referring back to the cheques for £7B ss. 9d. and £792 17b. These cheques were handed back to us to pay an account which Bloomfield previously owed us for advances and goods, and for which cheques he took our receipt. There were separate receipts for each cheque. I took the cheque direct from Bloomfield in preference to paying it into the Bank to meet the promissory-note, because there was no money in the Bank to meet the bill.

Mr. DeLautour—Witness could not say whether the Bank would have paid the bill or not.

Witness continued—The cheque could have been held over from day to day, but the bill could not. The bill B was not presented at the Bank. It was retired by Bloomfield giving the cheque. That disposes of the large cheque. This £792 cheque was given to meet the dishonored bill. The cheque for £73 9s. sd. was given back in payment of on account for goods and cash. The £lOO and £46 9s. 2d. made up the consideration for the stock mortgage. The bill marked B was not presented at the Bank of New Zealand, having been retired as stated. It was taken up by us because our bankers had discounted it.

Some discussion ensued as to the propriety of producing certain Bank books. It was ultimately decided that they need not be produced. Mr. Kenny consulted his client and decided not to call any more evidence. Mr. DeLautour—Does Mr. Kenny dispute the cheques having been paid by the bank ? Mr. Kenny submitted they were not paid, being only landed in by the firm to their own credit.

Mr. DeLautour contended that as a matter of banking they were paid. Mr. Shelton handed in receipts (marked 1, 2,3, 4) for the four cheques already mentioned.

Mr. DeLautour, addressing the Registrar— It did not matter to them what the circumstances brought forward by the other side were. He relied on his contention already staled, that the whole case resolved itself into questions of fact, which could only be found by a jury. Tho case is exactly analogous to that of Bathgate v. the Bank of Otago, already quoted, and resolves itself into the question whether certain circumstances

connected with the case constitute a preference for the purposes of the Act. The 11th clause makes the matter plain, and we rely on our right to have the matter decided in open Court. The other side contends that the liability arose when the sheep were sold. We say the circumstances exhibit it in a different light. Common, Shelton, and Co. look up the debts of the bankrupt Bloomfield. It makes no difference whether the consideration money goes through their business accounts or not. They paid the money agree to be loaned and charged loan commission. We say that the Registrar has no right to decide in the matter. It was a question for a jury. If they had gone a stop further, and made the question a frauduk-ht one the Registrar could not po sibly have dealt with it, as it was a pure question of fact. He must deprecate the Registrar taking upon himself the right of arguing the balance of probablilies—whether the right was on the side of his client or that of the assignee. Wo consider the contention of the other side is decidedly incorrect, and we refuse to analyse the evidence as between the parties, and on that ground refuse to call any evidence, and simply because it is not a question for the Bankrupt Court at all. If you are pressed and decide upon clause 79 then Icall your attention to clauses 83 and 84 which proteiti bona l'i<le transactions in spite of anything in the Act. If the Bankrupt was dj udicated a debtor upon the the petition of a c -editor relating to a transaction taking place months before the bankrupt was proclaimed, even then subsequent proceedings should not be invalidated if they were made in good faith for a valuable consideration. How can there be any impropriety in Common, and Shelton, and Co. taking thesheip? , It was a bona fide transaction, and nothing at

that time was whispered about the debtor’s becoming insolvent. The case should go to a jury for trial. Mr. Kenny —A good deal of ambiguity has been made through the word ** trial.” This is not a trial. We apply for an order from you, the Registrar, under the 79th section, and have nothing whatever to do with the 78th, as Mr. DeLatour attempts to make out, nor have we anything to do with bona fdes, or with the knowledge of the debtor’s affairs on the part of Common, Shelton & Co. If the Registrar was to decline jurisdiction because this involved a question of fact, he would be entirely wrong, for there is no question of facts whatever. We put Mr. Shelton, one of the parties in the case, into the box, and we take it that what he stated was perfectly true, and upon that statement we say we are entitled to come to you, sir, and obtain your decision. From a point of law this consideration is purely antecedent. Supposing this case went to a jury and the matter was suspended, for that purpose, what would happen ? Mr. Shelton would again get into the witness-box and would give his evidence, and then the judge would direct the jury how to find, and they would return their verdict accordingly, and that would be the sum and substance of the trial, six months would be thrown away, and we would be in the same position as we are now. The question noW is one of law. pure and simple, and from the facts, can it be said that this consideration was not antecedent ? As regards the receipt that has been put in, that clearly shows that the cheque was made in order to meet the dishonored promissory-note. As I submit this is clearly within your jurisdiction, and is not a question of fact, I shall ask you to make an order setting aside this deed, and the property being in the hands of a third party, I shall also ask that an order be made for it to be handed over, or its full value, which is the amount contained in the mortgage of stock. As to the question of costs, the Court has power to award them to the successful parties.

The Registrar—This case has been broadly stated, and it has been urged that there are a number of facts in it, which I have no right to decide upon, and that it is imperative they should be tried before a jury, but as far as I can see, not one single fact has been mentioned, and to me it appears no facts, whatever, have been brought out, except by the evidence of the defendant, himself, and I don’t see that I can, on the strength of the eleventh section, refuse to deal with this case, and I, therefore will do so. Whatever way you look on the transaction it appears to be a clear case of preferential payment as under the 79th section of the Bankruptcy Act. Of course, if I am wrong, the matter can be quickly brought before the Judge at Wellington, and in the review then made, the Judge will, if he thinks I have decided wrongly, no doubt direct the case to be tried by a jury. I have enormous poweis given to me, but there is a magnificent safety valve in the way of an appeal to the Judge, which can always be taken, and no doubt when the Act was framed, it was contemplated that Registrars from their scanty knowledge of law, would frequently make mistakes, and owing to that, this remedy could be taken, which would set ail errors aright, but in a large number of instances the law is so clear that the Registrar can decide, and decide rightly, and so much to the satisfaction of all parties, that they would acquiesce in the judgements given, and a very great deal of time and expense would be effected thereby. I hold that this is a transaction which the 79th. section was framed to provide against, and for the means of upsetting a deed. I am, therefore obliged to declare the deed void, and as I don’t think that the proceedings to be taken under the 84th. section can effect it. Then with respect to the amount of the order for payment, I am a little perplexed about that, and would hardly like to decide upon it, as the evidence on the point is so meagre. In reply to a request made by Mr. Kenny that Mr. Shelton should state the amount he obtained for the stock, he (Mr. Shelton) said they received £730 6s. The Registrar.—l shall make an order for the amount asked for by Mr. Kenny, and if I am wrong in so doing, so much the better for Mr. Shelton. That is the form in which the order is made, for I consider I have enough evidence to show that that was about the value, or that it is not in excess of the value of the stock secured by the deed. The amount is £lOl2 15s. 7d.

Mr. Kenny asked for costs, which were allowed subject to taxation.