A TANGLED TRANSACTION

Taranaki Daily News, Volume LIV, Issue 79, 23 September 1911, Page 6

A TANGLED TRANSACTION

TO BE SIFTED BY SUPKEME » COURT JUDGE. I \ MOUTOX v. BILENNERILVSSETT AND I

SONS.

In the -Supreme Court yesterday, be fore I lis Honor Mr. Justiec Sim, George Morton sued Arthur William Blenuerliassett, William Leonard Blennerhassett, and Richard Giles Blennerhassett (Blennerhassett and Sons), of Eltham, for £&)0 lodged with defendants as stakeholders in connection with an agreement for sale and purchase of land, which agreement was not carried out. Mr. A. 11. Johnstone (with him Mr. W. p. Anderson) appeared for the plaintiff, and Mr. J. E. Wilson (with him Mr. Gow) for the defendants. Herbert Halliwell, of Hiawera, solicitor, to whom the debt had been assigned, was joined as a plaintiff. Plaintiff Morton deposed that for some i time lie had had negotiations concerning sections 3 and 4, block 7, Huiroa. It was on May 7, 1910, when he was at' Blennerhassett's private house at Eltham that W. L. Blennerhassett suggested he should purchase the property from Hepj pell. On May 9 they visited the place. After having dinner with Blennerhassett at Stratford, witness wrote out an offer •to buy the place at £8 per acre, and gave Blennerhassett a cheque for £lO to bind the offer. Witness was told by the Blennerhassetts in Eltham two days ] later that Heppell had refused the offer. Later Heppell crime from Stratford, and witness offered £8 2s (id per acre. No mention was made of any deposit to be paid. Leonard Blennerhassett was present. Witness left the room. When he returned- Blennerhassett said, "If you will pay £250 deposit. Heppell will complete." Witness asked, "Why should 1 pay such a big deposit?" Blennerhassett replied that they were financing Heppell out of some trouble he had got into, and they wanted money to enable them to do so. Witness asked "Will my money be safe?" and Blennerhassett replied, "Yes, we can guarantee that it will be safe. Heppell is not handling the money." Witness then agreed to enter into a contract for s:ile and purchase. (The agreement was produced.) He paid Blennerhassett a cheque for £240. Just aifter he wrote the cheque he suggested to W. L. Blennerhassett that the lattei should pay interest on it. Blennerhassett -replied that they were not charging Heppell interest, and tluat if they paid witness interest they would have to charge it against Heppell. Nothing further was said then. Four or five days later he met W. L. Blennerhassett in Stratford. Blennerhassett said they luid got Heppell fixed all right, and had taken a third mortgage to themselves from him over the property, and everything would be all right. Witness asked, "Are you" sure it won't spoil the settlement?" Blennerhassett replied, "No," and that they would see that witness got a title to the'place. On tlie Beaconsfield road a little later witness met the elder Blennerhassett, who men Ironed, that Heppell had gone away for some time. Witness was not sure whether Blennerhassett said Heppell had gone to H&w-k-e's Bay or Palmerston North. He said to Blennerhassett, "As long as he's not flying round with my money I don't suppose it matters much." Blennerhassett replied, "No, we only made an advance against your deposit, Juki we're going to get the balance out of what's coming." August 1, 1910, was the date fixed for'settlement. When that date drew near witness's solicitor, Mr. W. D. Anderson, said there would •be, some shortage owing to the adjustment of the first two mortgages. The third mortgage on the property had to be paid off, and the balance of purchase money under the agreement wasn't enough. Witness had taken some cattle on to the place in July. Some time later Blennerhassett, sen., sent word that he wished to sec witness, who then called at his office. Blennerhassett offered to sell witness the place as third mortgagee. Witness said "All right, a--. long°as its on the same terms as my original agreement with Heppell." Witness returned to Blennerhassett half an hour later, and Blennerhassett had an agreement drawn out to sell witness the property. Blennerhassett said, "We don't want to go near -any lawyers afoout it." Witness read through this agreement, and found in it a clause stating that he should pay all hack interest on the first two mortgages. Witness asked how much it amounted to. Blennerhassett replied, "Roughly speaking, about £4-0 or £50." Witness askod, "Are you sure?" Blennerhassett then said. "Well, no. not to a few pounds." Witness refused to sign. He knew what the shortage was, from Mr. Anderson. I Later, he met the two Blennerhassetts and Mr. Gow (solicitor) at Mr. Anderson's office in Stratford, by 'ap]K>iitlment. The Blennerhassetts refused to release | the mortgage. Witness offered £35 over and above what he had paid, but they did not accept. Witness told them that was the best he could do, and that if they did not get the mortgage taken off and get him a title he would sue them I for the deposit. They met again about a. week later at the same place, and they still refused to release the mort-; gage. Witness walked down the street with the Blennerhassetts afterwards.: Blennerhassett senior told witness tkat if he refused their terms the place would be sold by the mortgagees, and he, would have to pay dearly for not taking their advice, as they would trot witness up to MK-ure the third mortgage. He told them he had done his best, and again told them an action would take place if he didn't get his title. Since then he had had conversations on the subject with the Blennerhassetts on several occasions, hut he had never got his title. On August 10 last he met W. L. Blcnner- . liassett a-t Inglewood. Blennerhassett said. "We've got word from Mr. Anderson to say that you have thrown the place up." Witness replied, "1 have thrown the deal up, not the place." Witness explained that when he could not get his title to the place he saw the first and second mortgagees and bought their mortgages, lie then sold to the Registrar, and obtained a title in that way. lie had paid all back interest and rates, and they were pretty considerable, lilciinci-lia-sett replied, "If it goes up to public auction, we are prepared to buy fhc property in ourselves, as we are not, stuck for a few hundreds." Witness told him that whoever bought the place by

public auction through the Registrar would 'get «, clear title to the place, and not be handicapped as he had been. Witness determined his contract with Heppell in writing through his solicitor. In the interview at Inglewood, W. H. Bleiiiierh.issett said, "Now, weren't you aware when v<m paid that £250 deposit that it was to 'be paid to Heppell?" Witness replied, "No; the money that you lent Heppell. which 1 understood was about £450, was at your risk as financial agents." Blennerhassett said, "Well, we've got a receipt out of Heppell for £250. and. thank dod, it's in our safe now." The £250 had not been repaid. Cross-examination by Mr. Wilson: Witness understood' Heppell was in trouble liiuincially, and understood that Heppell had to complete the purchase of the pnqicrlv in order to make good his lorgaiii wii.li the paintiff. He didn't l;unv, how much money he required. Rlcmicrhas-iclt did not. 'lu his recollcc-

Hon, ask him to pay over £450 to enable Heppell to complete. The sum of £450 was not mentioned. Before the deal was made, Blennerhassett did not explain that they would have to advance £•200 in addition to plantiff's £2OO deposit to enable Heppell to complete. Blennerhassett explained that Heppell was in difficulties, but plaintiff said, ■•What has that got to do with me purchasing the farm?" and the answer was, *]f we can sell the farm it will enable us to finance Heppell out of his trouble." He didn't know how much Blenncrhasoett was going to lend Heppell. Mr. Wilson: Whose agent were the Blennerha-ssetts? Mr. Johnstone: That's the question at issue. His Honor: So far they appear to havo been the agents of the vendor to I sell. The date of the assignment to Halliwell was 20th October, 1010. He was aware of a. re-assignment from Mr. HallLwell to himself and Heppell. Mr. Johnstone said that this re-assign-ment was not operative yet. Mr. Wilson said he was in an unfortunate position. He had accepted verbal notice of 're-assignment, but now Mr. Johnstone said the assignment was not operative because it was not made in writing.

His Honor: Do you want Heppell joined as a plaintiff? Mr. Wilson: No, your Honor, Heppell is an undischarged bankrupt. His Honor said that the assignment or re-assignment did not prejudice the defendants' position. His Honor: You have Mr. Halliwell's authority to destroy that? Mr. Johnstone: Yes.

Ilia Honor: Then tear it up. Put it in the ire.

The document was crumpled up, and thrown into the fire.

His Honor: That's right. Now see that it is burned. You are relieved from anv further anxiety on that score, Mr. Wilson.

•Cross-examination continued: The Blennerhassetts had been personal friends of his for 1(5 years. He did not consider himself a creditor of Heppell's at all. As far as he knew, Heppell's trouble was with regard to paying back interest on the first and second mortgage.l!. He had not been out of possession of the place. He was not paying any rent, but he cofildn't work the property. He had purchased the place at the commencement of this month, through the Registrar, for £3200, which was less'than the amount of the mortgages and the interest. Under the previous negotiations he had to pay up back interest. He had made all arrangements with the bank to get a clear title in August of last year, but as he could not get a title he was placed in an awkward position with the bank. His estimate of value, for the purposes of the stile bi r the Registrar, was £3350. To His Honor: His cheque for £250 was handed to W. L. IJlennerhassett in the presence of Heppell.

To Mr. Johnstone: As he was writing the cheque Blennerhassett said to him, '•'You're writing the cheque in our name, of course?" and witness answered, "Yes, of coiiT.se."

Reginald Noel Heppell, farmer, residing at Inglewood, said he had held this land under agreement for sale and purchase. Before that he had been in com- : munication with the Blennerhaasetts to, raise money. His financial position wa* ] very shaky. He was being pressed, and the Blennerhassetts knew of his position. That firm had undertaken to raise £(X)0 (or him. Offered the property at £9 an acre, was offered £B, and said he would bake £8 ss. W. L. Blennerhassett told him he could get £8 5s with £ 100 deposit, or £8 2s Od with a £250 deposit. Witness demurred, but Blennerhassett urged him to take the £8 ss, a« they had arranged with Morton to pay the £250 into their trust account and advance against it.. He never handled the deposit of £250 provided for in the agreement. Shortly after that he executed a mortgage over the property, and that blocked the sale to Morton. Witnens did not complete, partly on account of the third mortgage, but also because Blennerhassetts were holding some money of his, and he told them that rather than complete he would file, so thsit his creditors could get some money. He filed on 29th November last. To Mr. Wilson: When he made this agreement he needed more than £450, more like £91.10, to complete the purchase. When Blennerhassetts raised the! £SOO for him, they charged him £5Ol procuration fee. which was the amount to have been charged for getting £OOO. He only got ,C 450, and was told the man was to'get another £SO from his bank at Ohnkunc. He had no recollection of signing a mortgage. His solicitor looked through everything, and told him to sign whatever he initialled. He admitted his signature on the mortgage produced. Blennerhassetts had told him they were advancing him £2OO against Morton-s deposit, and they held £375, stock monevs, of his. He gave a receipt to Blemierlias.setts for £2OO, but Blennerhassetts told him that it was Morton-s desire that ho should sign as a receipt for the deposit as they were taking a big risk in financing him. And Blennerhassett further offered to give him a cheque for £lO if he signed that receipt, and to see Coplcstone (who had ; bought .some of witness' cattle) to get more money for him. Blennerhassett | told him he was going to pay Morton's cheque into the firm's trust account,

and would advance witness money to! complete other deals. Mr. Wilson: Ho you suggest that you' connived with Blennerhassett to use, Morton's money to pay your debts? ! Witness: No. He said to me, "George is an old friend of ours, and he has agreed to assist us." Air, Wilson: So you agreed to this improper use of Morton's money? His Honor: Not necessarily. It the money were used in the completion of tiiis sale to Morton in getting him a clear title, Morton would get the benefit of his money. Mr. Wilson: Didn't Blennerhassett endorse Morton's cheque and hand it to you?

Witness: 1 have never to this day seen Morton's cheque. Further questioned, witness .said that the money given by Blennerhasselts was against stock and not against land at all. He hadn't received any money on account of the stock sold, and if Mr. Wilson held a receipt for the money it had no business to be in existence. A man named Coplcstone was'to pay £375 for 75 cows, less commission and a small amount owing by witness to lileinierhassett's, who made the sale. His Honor: You say that you paid the money to the witness, Mr. Wilson? Mr. Wilson: The money was paid to his credit, and his acknowledgement taken.

The witness said that Blennerhassett had always told him that although Coplcstone was a man of means he was short just then, and they were advancing money for Coplcstone. He always understood that the money advanced to him on May 11 was against those cows. The reason why he didn't complete the deal was because blennerhassett held moneys of his which he could not obtain, and on his solicitor's advice lie decided to allow the D.O.A. to square up his estate. Re-examined by Mr. Johnstone: He had seen Blciinerliassett's commission claims against, him. The firm had hudj nothing to do with the sale of his Wai-

tarn, road farm, and nothing to do with the sale of his stables at Stratford, so at least £2OO of their charges had no business to be on the bill.

To Mr. Wilson: He had given the firm authority to sell the Waitara road farm, but Kemp and Sawle sold it. •This completed the plaintiff's case. In opening the case for the defence, Mr. Wilson said the whole point was whether Blennerhassett and Sons were agents for Heppell or stakeholders for both parties. He contended that they were agents for Heppell. The position was this, that Heppell was in difficulty m. completing the purchase of a property he proposed to sell. They "found" Morton, brought the parties together, and asked Morton for a deposit of £450, and later for £250. They explained to Morton that Heppell's position was that he must have £450 to complete the purchase of the property. If Morton was not prepared to advance £450 they would advance £2OO, making with a deposit of £250 from Morton the £450 required by Heppell. The defendants said that Morton paid the money to tjiem as' agents for Heppell. The references made by Morton to Blennerhassett saying that the money would not get into Heppell's hands were right, because the Blennerhassotts were going to pay the £450 to the vendor, and so the money would not go through Heppell's hands.

William Leonard Blennerhassett, one of the defendants, deposed that he negotiated the salo of Heppell's property to plaintiff Morton. Heppell's position with regard to the property at the time of the sale was that Heppell came into the office one day and asked how money matters were. Witness replied, "Oh, if you can find the security 1 think we can find you a fair amount of money." Heppell replied, "I can put you on a good deal if you can finance it." Heppell also said then that Kemp and Sawle could effect an exchange of the stables and the farm at Waitara, Kemp and Sawle would give witness' firm half the commission, and ho (Heppell) would give witness an extra £SO if he could get the deal financed. Witness' firm went further into the matter to see what they could do about it, and got the money partly promised by a certain moneylender. However, that fell through. His Honor considered it necessary to jo into the whole history of the financial relations of the firm and Heppell.

I Witness, continuing, said that Heppell required £450 to enable him to com- ; plete the deal. They sold the property to Morton on the terms that he was ! to take over the first and second mortgagee. The sale was finally made at £8 2s (id, and Morton was to pay cash over and above the mortgages. Morton paid a deposit to witness'' lirm of £250, which they placed to Heppell's credit, receiving a, receipt for it. When the deposit was : paid, witness asked Morton to pay the ' whole £450, but Morton didn't agree to that. He asked Morton to .pay £450 , because if Heppell didn't get that sum Morton couldn't get the property, as Heppell would not be able to complete the previous deal with Jaekao.ii. Witness made Morton aware that his £250 , would have to be used by Heppell. He 1 explained tlra.t when the day of completion came the only way in which the thing could be fixed W'as for them to lend Heppell £2OO until that date. That 1 was done and the mortgage was signed jin Mr. Anderson's office. Witness paid in a cheque for £450. Both Mr. Go* and witness gave Mr. Anderson clearly to understand that this £450 was not to l>e paid until everything was in order and the mortgage regular. Mr. Anderson honored the cheque, completing the financial transactions vesting the property in Heppell, wiko then had a clear j title except for the iback interest and rates.

His Honor said he understood tht title had never been completed.

Mr. Wilson replied that Heppell's title was completed and the mortgage of £2OO to defendants registered. Witness, continuing, said that he added the £2OO advanced on the mortgage to Morton's cheque, and handed the lot to Mr. Anderson, who was acting in the completion of the previous purchase. Ho had never led Morton to believe that the money was not going to be used by them to complete Heppell's previous purchase. He gave Morton clearly to understand that the more cash he paid the easier it would be for Heppell to complete. Cross-examined, witness said he did not know exactly what Heppell's financial positron was at the time of the negotiations. He knew things were not too well, but not tliat he was being pressed by the creditors. Heppell was at the oll'icc half a. dozen times asking for money, and witness gave him £l7 in all. Kemp and Sawle were in conjunction with witness in putting the deal through. Mr. Johnstone: How was it you charged Heppell £2OO then? Witness: We wero charging 2% per cent, on £OOOO.

Mr. Johnstone: You charged full commission?— Yea. Why?—We were going to divide it. How?— Well, we were going to "contra." it. Mr. Johnstone: They-ve been waiting eighteen months for it. Witness: Have they? In the course of further cross-examina-tion, Mr. Johnstone asked, "You knew Heppell was in a dirty position?" Witness: Yes. Mr. Johnstone: Why did you take reoeipts from him and pass no money? Witness: It was credited to him. Witness admitted in regard to the £375 for Hie cattle that Heppell did not get the money. It wa.s the usual thing with stock and station agents. They accounted to him for the money. Mr. Johnstone pointed out that all the defendants had to pay out for Heppell was £450, yet they had £825 crudited to him. Witness replied that they had their commission to protect. Mr. Johnstone: Why not take a mortgage for your commission? or you could, sue for it. Witness: A bird in the hand is worth two in the bush. Mr. Johnstone (flourishing a paper): There's £335 fur commission on this little liill. Witness, in reply to another question, said it was not in order to protect their commission that they stopped the deal from going through. , Witness admitted that part of the commission was due to Kemp and Sawle. Mr. Johnstone: In other words, to secure your commission you collared Morton's £2oo?—No. The firm was merely advancing £2OO against Heppell's equity in the farm, the £2OO to come from Morton. I Resuming: Morton made an offer 'and paid a .ClO deposit. They explained to Morton that if he paid £250 it would be easier for lileiinerhassett to get Heppell financed in bis deal with Jackson, lint they were not financing Heppell. They were helping him us far as possible, and , had promised to raise money for him. 'They were Heppell's agents. Mr. Johnstone. Then why wasn't the money paid to Heppell!—Wo accounted to him for it. Mr. Johnstone: But, why didn't you hand the money to him? He was there. Do you think, as an honest man, that Morton would have paid it to him? —No, Defendant said that .the reason v/hv they were handling tho deposit was that

thore were so many deals on one after 1 the other. Agents often handled the deposits, deducted their commissions, and paid over the balance. As a matter of fact, they were not taking much risk for they fully expected the deal to go through. Morton knew the £450 was being paid to enable Heppell to complete with Jackson and enable Morton to get his title. Morton never intended to finance Mcppcll, and didn't know that the money was going to Hoppell. lie didn't know .lackson either in the matter. His Honor: Whom did you consider you were holding this money 'for? Witness: For Ileppell. His 'Honor: Then, if he had demanded the money, you'd have paid it over? — I suppose we would have had to if ho demanded it.

Mr. Johnstone: You've found that out since?

To His Honor: He did not think he would have paid to Heppell in the circumstances. Counsel addressed the Court at some length, and His Honor reserved his decision.