A FARMER'S FAILURE.

Taranaki Daily News, 18 January 1922, Page 8

A FARMER'S FAILURE.

BANKRUPT ESTATE. DEFICIENCY OF £ll,OOO MEETING OF CREDITORS. A bankrupt estate in which the deficiency was estimated at over £ll,OOO was the subject of much discussion at a meeting of creditors held in New Plymouth yesterday. The estate was that of George S. Hobbs, farmer, of Waitoitoi, who was adjudged a bankrupt in December. The deputy official assignee (Mr. J. S. S. Medley) presided over an attendance of about fifteen. The statement of bankrupt’s position showed, that liabilities to unsecured creditors amounted to £7647 Is Id, secured creditors were £23,800 (less estimated value of securities £21,960, leaving £1840), and making the total debts £9487 Is Id. Property wtfs set down as £l2O, and the deficiency was £9367 Is Id. Unsecured creditors were as follows: Levin and Co. (Feilding) £2822 Is Id, J. C. Hobbs (Hawera) £6OO, W. A. Duckworth (Hawera) £6OO, J. J. Patterson (Manaia) £7lO, Lynskey and Evans (Hawera) £230, Palmer and Grey (Waverley) £l9B, W. H. H. Young (Stratford) £2OO, Graves and Co. (Hawera) £B4. I. M. Kidd (Inglewood) £lOO. Fairbrother and Pickering (New Plymouth) £l4O, C. C. Stunners (Eltham) £4B, Mortlock and Co. (Hawera) £2O, Palmer. Sladden and Horner (Stratford) £4O, N. McKenzie (Waitara) £55, W. O’Callaghan (Hawera) £2l, F. A. Moore (Hawera) £3OO, S. Blake (Hawera) £2OO, W. McDonald (Stratford) £2OO. Bennett and Sutton (Hawera) £lO, H. Rodger (Hawera) £25. Adamson and Croft (Hawera) £lO, Tapp and Son (Hawera) CIS, G. Butler (Hawera) £4. W, O'Connor (Toko) £26, Waitara Carrying Company (Waitara) £l2. H. W. Horner (Waitoitoi) £6O, Ewana and Martin (Urenui) £175, W. Marshal] (Maketawa) £l3, Mrs. M. E. Hewitt (Stratford) £3OO, W. A. Parkinson and Co. (Hawera) £4; Land and Income Tax Department £B7; Goldstone and Patterson (Eltham) £1 10s. J. McLeod (Waverley) £1 10s, J. Lynskev (Waverley) £lO. N. Watkins (Hawera) £1 10s, H. F. Atkinson (Inglewood) £3OO.

The list of secured creditors was as. follows: Newton King £7500. Newton King, Ltd. £-21X10. C. J. Hawken (Mokoia) £5OOO, N.Z. Loan and Mercantile An-ency (Stratford) £3BOO, Welsh, McCarthy and Beechey (Hawera) £l2OO, Bank' of New Zealand (Inglewood) £1200; total £21,960. The estimated value Of the securities was £23,200, leaving a surplus of £lB4O. In a supplementary statement of the investigations the D.G.A. said there was between £lBOO and £2OOO owing to the Bank of New Zealand, and unsecured, which was left out of the list, and tins would bring the total deficiency up to £ll 287. The assets of £l2O comprised 200 shares in the New Zealand Home Builders, seven shares in the Farmers Co-operative Society, and a motor ear in Newton King, Ltd.’s garage, Inglewood, which was valued at £6O. Lt had been put down at this price because it had been badly smashed up as the result of an accident. He did not know what the shares were worth. BANKRUPT’S DEALINGS. The D.O.A. said the meeting Field on January 5 Wai adjourned in order to enable ' bankrupt to . consult his solicitors (Messrs. Welsh, McCarthy ana Beechey) and. secure their help in preparing a statement of his position. Since then "the solicitors had advised that thev were not able to act for Hobbs, but* had offered to supply information. It might be necessary to summons Mr. Beechey to give evidence. Mr- Medley said be had gone into the position, and endeavored to get at bankrupt’s position as far as possible. From what he had gleaned the history oi Hobbs’ dealings was that three years ao-o he was living at. Hawera, and he owned a farm at Inglewood, and lived bv dealing in cattle and sheep. The farm consisted of 241 acres, worth about £10,109. About two years ago he sold this. His equity was about £5OOO. He received £lOOO down and £4OOO remained on second mortgage. This mortgage was now held by the New Zealand .Loan and Mercantile Com pan v. and there was a snb-mort.-o-a"c of’ £7OO. Hobbs next purchased a bouse in Hawera for £1278, paying £3OO cash, and the balance was on mortgage. He built a motor garage on the place costing £l5O. He also had a farm back of Eltham. with an area of 780 acres, leasing this with a compulsory purchasing clause at £6 15s per acre The lessee had to go to the war, and in order to see him through Hobbs agreed to a sub-lease to a neighbour. The farm was neglected considerably, and was eventually sold at £5 15s per acre. He purchased 530 acres at Waverley for .£3O per acre in February. 19-20 and the deal was to be completed in d’ulv. He exchanged this farm for Mr. C.' McLaren’s property of 391 acres at Toko. He subdivided the Toko farm into fhree properties, and sold them at over £2OOO profit. He exchanged the house in Hawera and the mortgage lor £1250 on the farm back of Eltham and £l2OO eash for a farm of 44 Wcres at Eltham. Next he exchanged the 44 acres at Eltham for the farm he now held at Waitoitoi, 218 acres at £o7 10s per acre. He paid no cash into the Waitoitoi place, and got rid of the liability of £l2OO on the previous deal. Bankrupt interjected that there was a certain amount of cash paid which was found by Newton King. , . , , The D.0.A.: Well, I have tried to delve into this; it’s fairly well mixed UP Bankrupt was then put on oath and was subjected to a lengthy cross-exam-ination. “It doesn't matter how sore you people feel.” he remarked, you don’t feel as hurt as I do. THE CROSS- EX AMI N AT I ON. Mr. Kellow, representing. Levin and Co., put a number cf questions to bankr pt regarding transactions in 1919, and said 111" object was to ascertain if Hobbs was solvent nt the -tune of tne The D.O.A. (to bankrupt): Were yon solvent at that time’—Bankrupt: I certainly was. . Mr. Kellow: You weren't being pressed bv anv other auctioneering firm? — No; it was not till about ten months ag You promised ns securities from the sale of the. Toko place, bnt you bought two farms after that. You should have consulted us.—lt didn't affect the posttion. , “You haven't lost anything because you never had anything to lose,” remarked Mr. Kellow. In reply to the D.O.A. bankrupt said he had no books with him; they were •t W«lsU McGartkJ, »nd Beechey’s of-

fice, Hawera. Though he had instructed that the books be forwarded they had not come to hand. x Mr. Kellow: I think you could have got the books if you were at all ■anxious. Mr. J. 0. Nicholson (representing the Bank of New Zealand): In 1918 you owned a farm at Inglewood and a farm at Eltham; what did you owe Newton King then? —I can’t tell. Can you say approximately?—-No. You had better make a note of some of these things, as we will want .to know. You sold the Inglewood farm and toolc a £4OOO second mortgage and gave a deed of lien over that in favour of the Bank of New Zealand ?—Yes. You also gave a Second lien to the Loan and Mercantile?—Yes; it was my mistake. When you came to deal with McLaren in -Tune, 1921, you gave a mortgage to Newton King, which was the first occasion you had given him security ?—Yes. What were you owing to King then? ■—.Somewhere between four and five thousand pounds. Indebtedness on stock purchased?— Yes. Questioned further about the McLaren deal, bankrupt said McLaren owed Mr. King £3OOO, which witness also tdok over and gave security for, that, with his own private indebtedness, making the total between eight and nine tnousand pounds. Subsequently those securities were released. in order to put the deal through? —Yes.

And you then gave a replacing se' curity?—Y«s.

You also got some more cash, £1650, bringing the total to £10,600. In September you had notice from the Bank of New Zealand that you were going, to be made bankrupt?—Yes. You gave that security two months after you knew you were going to be made bankrupt?—l had no option.

As late as September last you gave a statement to the Bank showing a surplus of £4OOO. Do you wish to correct that or give any explanation ?—Of course, there must be an explanation; the equity is gone. Mr. Kellow: In September you wrote Levin and Co. promising to give securities. (n view of the fact that you gave King all the equities, what could you have given? —I could have got some released. I also had private credit to the extent of £3OOO, but I could not use it after I was made bankrupt. Mr. Kellow (to D.0.A.): I think this estate wants very careful examination, and the unsecured creditors should be given a chance to attack these securities. The D.0.A.: How would you attack I them?

Air. Kellow: Mr. Nicholson’s cross-ex-amination appears to show that the securities were given under circumstances that were npt too good. Mr. Nicholson said the question of' whether the securities could be successfully attacked would be gone into by him after consideration' of the facts adduced by the examination and of other information he hoped to get. It ; was a question of whether preferential | security had been given.

Mr. Kellow: You stated in October. 1920, that you owed the bank £350; it was more than that? —Yes, but outside my guarantee. How much was that?—£l2so. Well, you owed the bank £1550? Yes.

It was decided to leave further investigation to the D.O.A. and Mr. Nicholson (representing a number of creditors). and they were empowered to call a further meeting if necessary.