OVERDRAFT CALLED UP

Sun (Auckland), Volume III, Issue 830, 26 November 1929, Page 11

OVERDRAFT CALLED UP

DIRECTOR SUES FORMER COLLEAGUE

CLAIM FOR GUARANTEE A sum of <£469 representing half the overdraft jointly and severally guaranteed to the National Bank of New Zealand by two directors of the unsuccessful Karaka Printing Company was claimed by "Walter Martin Neumegen, solicitor, against Douglas Stuart Wylie, accountant, before Mr. Justice Blair in the Supreme Court today. Neumegen and Wylie, who were codirectors in the firm, entered in a joint deed of guarantee for an overdraft of £I,OOO, and plaintiff claimed he had been compelled to liquidate this liability when the bank called up the overdraft on November 25, 1927. He therefore sought to recover half the amount he had been compelled to pay, £4G9, and interest to date. Mr. Singer appeared for plaintiff and Mr. Hunt for the defendant. Conducting plaintiff’s case, Mr. Singer said that when the business got into financial difficulties, the directors put in a receiver, Herbert F. O. Twigden, in May, 1926. The receiver advised Neumegen that the , business should be carried on, as there was no sale for the plant, and that it must be disposed of as a * going concern. Twigden borrowed sums amounting to £1,150 from Neumegen from time to time to carry on, and only £2OO of this debt was repaid. The plaintiff was compelled to meet the liability when the bank called up the overdraft. Evidence was given by Walter M. Neumegen to the effect that Twigden, who had been auditor to the firm, was appointed receiver. At that time. Twigden was the confidential agent of defendant and attended directors’ meetings on the latter’s behalf. Witness said that the receiver did not want to realise on the business and carried it on, believing he could sell at a profit later on. To continue the business, Twigden borrowed a total of £1,150 from witness from time to time and repaid only £2OO. Under cross-examination. witness said that he had received no proceeds from the sale of the plant, which was disposed of piecemeal. During further questioning, his Honour said that he could not understand the nature of the defence as there was no allegation of negligence against Neumegen. Frankly, he did not consider there was any defence at all. For the defence, Herbert F. O. Twigden. the receiver, gave evidence that when Le took over the receivership the business was passing through a bad period, and he delayed disposition of the assets, believing that it could be profitably sold later. Business did not improve, however, and eventually the plant was sold piecemeal, £1,543 being the proceeds of the realisation. During the receivership he obtained advances from Neumegen. who, he said decided that the business should be carried, on, witness acting under plaintiff’s instructions. (Proceeding.)