Undue Influence Used In P.N. Transaction

Sun (Auckland), Volume III, Issue 851, 20 December 1929, Page 1

Undue Influence Used In P.N. Transaction

IRREGULAR DOCUMENT EX-SOLICITOR’S CLAIM FAILS Because undue influence was exerted by a Sydney ex-tiolicitor, to obtain a promissory note for £775 from his client, James Ernest Gear, of Auckland, and the document itself was irregular through the non-initialling of an alteration of the figures from £275 to £775, Mr. Justice Smith, today gave judgment for Gear in an action brought against him by Edward Joseph Flood for the value of the note and interest to date. FLOOD claimed to be the holder in due course of a P.N. made by Gear to John McLaughlin and Son, I,ls Sydney solicitors, payable on May 23, 1923. Tho note was endorsed to V. A. Wawn, who in turn endorsed the document to plaintiff. Flood, therefore, sought to recover the note’s value and interest from due date. Gear based his defence on the allegation that the P.N. was obtained from him by McLaughlin, then acting as his solicitiy, by undue influence, on the understanding that it was merely for accommodation and was not to be negotiated. He claimed the notes were given to McLaughlin, who declared he was so financially embarrassed as to be unable to accompany defendant to New Zealand to investigate the latter’s business affairs. He alleged that Flood knew the note was overdue and dishonoured and did not take it in good faith or give value, and that it was materially altered without the assent of all parties. IDENTITY NOT INVESTIGATED The Judge remarked that the alteration in this note from £275 to £775, together with the fact that Gear admitted having made a note for £775, indicated that identity of the two notes had not been investigated. He held that the note in Court was not Proved to be the one on which plaintiff based his claim. His Honour then proceeded to relate what he described “the disgraceful story the documents revea : .” The evidence showed that before leaving for New Zealand with Gear, McLaughlin's financial position was desperate, and it was desirable he should go to the Dominion, bacause, if he could bring Gear and his estate to New South Wales, a prize bird could be Plucked. His Honour was of opinion that the P.N. now presented in Court as the one signed by Gear in Sydney was not the bill in question. He held that Flood had not proved the identity of the note on which he 'lad based his claim and considered that on this point plaintiff should be non-suited.

Apart from this his Honour held that McLaughlin had exerted strong Pressure on Gear to extract P.N.’s for substantial sums for his private benefit, and this undue influence constituted illegality in the making of the note.

Plaintiff had not established his honesty in the transactions, nor that he took the note in good faith. “It follows that the plaintiff is not a holder in due course and he has no better title than the person from whom he took the note. Wawn could not recover it, and neither could McLaughlin, as both acted in bad faith,” stated his Honour. “I am of opinion, also, that the plaintiff is not a holder In due course because the hill is not ‘complete and regular on the face of it.’ ” added the judge, who asserted that it "would be contrary to banking practice to hold the bill was complete and regular, when the alteration in the figures was not initialled.

Judgment was entered for the defendant with ccsts.