DISTRICT COURT.

Temuka Leader, Issue 2393, 1 September 1892, Page 3

DISTRICT COURT.

TIMAIVU —Tuesday, August 30th

(Before His Honor Judge Ward.) IN BANKRUPTCY.

Be Roas, Sims, & Co.—Mr Kinnerney, with him Mr C. Terry, for Official Assignee and Supervisors; Mr Hay for Mr Ross, Mr White for Mr Sims. His Honor, on the case being called, said he observed that the charges were laid entirely against Ross. Something was said on the previous occasion, but he was not aware at that time how far the charges as admitted could be substantiated by other witnesses. Mr Kinnerney said there would be considerable difficulty in substantiating some of the charges by other witnesses. His Honor did not see why Sims was omitted from some some of the charges. There was no doubt, from the statements of both parties, that Ross was the master rogue of the two, yet he did not see why iShns was to escape all penalty, simply Sieeause he was Ross's tool.

Mr Kinnerney said he had given notice of charges against Sims, but proposed to proceed at present against Ross only. A considerable number of charges affected Jioss only. His Honor said a ntunbsr of them must go together, i'ov instance, 4ho charge in respect of book-keeping. Sims was practically chief book-keeper, and it would be absurd that Ross only should be charged with keeping improper books, when Sims was the keeper of the books. Mr Kinnerney said the charges were rather in respect of Ross's own books, not the firm's, and resolved themselves into Shears's and Bonner's accounts, which Ross himself admitted Sims did not know were fictitious.

His Honor: They ought not to have been unknown to him. If there were wrong entries in the books Sims was just as answerable as Boss. If he did not know they were wrong ho ought to have known.

The question of the admissibility of the evidence of one partner against the other was raised; Mr Kinnerney submitted that it was perfectly admissible. His Honour then pointed out that neveral of iho charges implied more serious offences uuder the common law, and it was a principle of law that the graver and not the m'inor offences should be the subject of prosecution, , This matter was discussed at some length. Mr Kinnerney said he could only act for the creditors generally, and under the Bankruptcy Act, Any other charge? must be laid by individual creditors or by the Government, and as it was possible that neither a creditor nor the Government would take any proceedings, it was his duty to bring all these matters before this Court. His Honour could eliminate any charge showing a grave offence and direct other proceedings. .tlis rionour closed the discussion by saying he would go on with these proceedings, and if the evidence disclosed a heavier offence ho would lay the circumstances before the Government and ask them to direct a prosecution on the higher ground. Mr Kinnerney : Then if the Government do not direct a prosecution the man would bo free, although he had committed a grave offence against the law of bankruptcy. Witnesses were ordered out of court, and tho charges were read over to the, accusod, D. M. Ross, and to each of them Jje pleaded " Not Guilty."

I Mr Kinnerney briefly opened his c;i.m\ I mentioning the principal sums "absorbed ' into the firm's account, about £6OOO, and Ross also absorbed an equal amount in his private account; and then referred to the two fictitious accounts of Shear!; and Bonner, referred to in the charges. These, together £J4SO, appearing in a statement of the firm's position submitted to a banker as credits, as they were submitted, were fictititious capital. The charge of keeping books was a very important one under the bankruptcy law. He would prove that Ross had made no attempt to keep books, and it was utterly impossible to ascertain how his aibdrs stood. The creditors could not tell now whether Ross had made a proper disclosure of his iitfairs, whether he had given jup all his property or not. Up to 1880 he appeared to* have kept something lik e an account, though imperfect, and after that date there was practically nothing, nothing except a few isolated jottings in private memorandum books, which might enable Ross himself to guess at his position, but as far as an investigation by an accountant went they were absolutely valueless. Even the books kept before 1880 were of an extraordinary character in regard to the account of Mrs Mary Ross. There were no entries showing that capital was invested by her, but there were a number of payments to her credit; nothing at all to show what capital she commenced with. This account was palpably incomplete on the face of it, so far as it went, and there was noting at all since 1880. There was nothing about important subsequeut transactions, the purchsse of the Arcade, and other large transactions stated to have taken place. Then with regard to Mr McKoown, of Balymeua, there were no entries in the books since 1887. This account was fairly complete up to that date then it ceased. With regard to the moneys of Mrs Bower, Ross had kept no proper account, nothing to show what moneys he had in hand. Especially with regard to £llOO paid into his private account and out of which;he paid off a mortgage of £IO4O to Mr Cabot; there was no entry in the books at all about that. With respect to Mr Sinclair Gunu's account there was only a few jottings. There was no proper account of a supposed advance of £SOO to R. Stansell, and no entry of £l5O collected on StanselPs account. There were no entries as far as could be found properly showing the cost of the buildings in the Arcade, nor what had been spent on them. The creditors were entirely in the dark about them. With regard to Bailey's estate, of which Ross was a trustee, there was an account in the books, and there were two other books purporting to give an account; but these appeared to have been got up for some special purpose, ond were false and fradulent on the face of them. With reference to the charge of obtaining credit by means of false pretences and frauds it would be unnecessary to go into details, and the general statements were sufficiently clear in the charges. Mr Kinnerney then called W. M. Sims as a witness, but Mr Hay at once objected that as a partner he could not be called. His Honor supported Mr Hay, and though Mr Kinnerney was not convinced, rather than imperil the proceedings he determined to do without the evidence of Sims.

Mr Hay then raised an objection to the charges under clause 171 being gone into at all by this court. Clause 171 gave authority to the court to hear them, but clause 65 said that no statement by a banrupt could be used against him, and they were now proceeding on the bankrupt's own statements before the same court and in the same proceedings. His Honor overruled the objection, whilst admitting that the two clauses taken together made a complication. P. McGregor, accountant, was called, and stated he was clerk to Ross, Sims & Co. from February, 1890, till the bankruptcy. He produced a list of all the books he could find. [The witness was then examined as to details of entries in various accounts. His evidence bore out Mr Kinnerney'a statement as to the mixed state of the various accounts in the books. For the most part, too, his evidence only amplified the Deputy Assignee's report, already published by us.] The witness said on May Ross's private bank-book showed a deposit by ■' self" of £714. A cheque dated the 17th was put in, filled in by Ross and signed by Henry Durand, " Pay Goldie's mortgage or bearer seven hundred and fourteen pounds." The pay-in slip of the £714 was filled in and signed by Ross. His Honor suggested that this was a case of " specific direction in writing " by Mr Durand.

Mr Kinnerney doubted whether it was, as the cheque was filled in by Ross. His Honor thought it was a case of deliberate robbery. The witness showod from t]\e bank book that on the day this cheque was paid Ross's account was overdrawn £3BO, and on the same day it was paid in £403 10s was paid out to McKay. D. M. Ross's " loan account " had a memo, on top of it, " Bower." On July Ist, 1890, there syae a journal entry, "D. M. Ross, loan account, I** to, B, M. Boss power of attorney, £850." Tlie' same day'Rqwp? private account with the firm was credited with £BSO. These are specimens of the facts elicited. The witness stated that interest jy&s vpniifted. t<? Mrs Bower, and entered in the bopks, and spatemen|s pf her accounts were sent her.

Mr Kinnerney remarked that there was no evidence that the statements prepared were actually sent to her. His Honour asked if there were no letters accompanying the remittances from Mrs Bower, and it was stated that there wore very few letters found, but there were press copies of lettors sunt with the statements" and these, were, produced. His Honour looked at some of them, and said there was not much to be learned from them.

Mr Kinnerney called for the power of attorney given to Ross by Mrs Bower, and it was produced by Mr Hay, who however objected to its going in unless it were proved to be tl)o one wanted by Ross.

His Honour overruled the objection and the document was put in. The witness then si)owed that J. Shears account stood in thfl linn-' books books at the close (June 1302) in debit £IOBS Ga ILL The amount had been sijuareii in December L 587 and tiie debit r-.ip tip W y.irtfiiis payment. (Mr Kinnerney explained thai, this was one of the fictitious »iebit balances charged. It was evidently fictitious ; Ross admitted it by afterwards debiting l)injK<df with it.) In reply to His Honour Mr Ki inerney said Shears was not comeatable, being in a distant land.

In the Bailey account the "witness, "said the account in one book purported to begin in 1889, and other accounts before it began in 1892. The accounts appear- to have been made at one time, but different pens, different inks, ar d a change of hand were discernible. (Mr Kinnerney suggested, to. the court that this account was " made up " to show that a proper account had been kept ; and fax that purrjos.3

different pen* and different inks had been vi'sed) Another book was produced purporting to give an nccunt of the Bailey estate, A press copy! iad been t .ken from the pace and witness said this would hardly bo possible if the entries were not nil made at the same time. The first entry was dated 1889, and the previous account began in 1892. The witness' evidence also dealt with McKeown's, Stumbles', Morrison's and other accounts. In reference to Morrison's account, ho said he had probably seen copies of statement prepared for Mr Morrison; had never prepared one; miodit have copied some. (A number of statements were put in, and witness said that they were in Sims' writing ; one was in his own, he must have copied it.) Mr Morrison did his business with Mr Ross chiefly. ,„. T _. In reply to His Honour Mr Kinnerney said that in these statements a number of mortgages and loans which had been paid off were shown as subsisting liabilities, with interest regularly received from them. . Witness stated that the hrm s bank account was overdrawn £1507 Us, at the time of the bankruptcy. In cross-examination by Mr Hay, witness found from the books that interest on Mrs Bower's money was paid by the firm's cheques, but was debited to Ross, and that there was no entries respecting H. McKeown. At ten minutes to five the Court adjourned till 10.30 next morning, His Honour afterwards doing some business in Chambers.

Wednesday, August 31st. The Court sat again on Wednesdey, when the examination of P. McGregor was continued, but his evidence consisted chiefly of details concerning book-keeping. In the course of the inquiry, t His Honour the witness said the valuation reduced Ross's own valuation by twothirds. His Honour remarked that there was a deficiency of £3401 on the firm's account; (a surplus of £2027 on the private account left a net deficiency of £1374.) The Avitness said most of the transactions were in Sims's hand-writing. Mrs Annie Bonner stated that Ross leased land from her in 1870 for 21 years, at £65, or £l6 5s per quarter. Ross and Sims had £451 of her husband's when he died, but a cottage was bought out of it. A month after her husuand's death she went to Ross for some money. Ross advised her to do with as little as she could, as it "would be added to," and he gave her £11—" that was the odd." Asked him, and he told her that £l5O remained. Told him she thought it was more, and he said "No." Ross said he would give her ten per cent, interest for it. One or two years later he reduced it to seven. Used to go to him for the rent —(Rent Book produced)—and she got the interest once a year. When Ross reduced the interest to 7 per cent, he said he could not afford to give any more. She asked him to give her the principal, and he said he would no*. Ross always paid the rent regularly until the last two quarters, and then he said he could not let the place and did not see why he should give so much, so she took off £5 a year. Had learned that he was reallv getting £OO a year for the place. Was*living in Charles street on a i roperty bought by her husband four years before his death. Never borrowed any money from Ross : did not need any. Had sometimes said to Ross she hoped he would not deceive her or take any advantage of her, an old and lonely woman, and he said no, he had never done a dirty trick in his life. Ross had the deeds of the Creek property for a good many years. She got them back after the bankruptcy. She had asked for them several times, but he would not give them to her. Onco he frightened her by saying he would not give them to her so long as he had a drop of blood in his heart. So she did not ask him for the deeds again. Had not Ross's copy of the lease. Her husband made no alteration in the conditions of the lease in any way. Ross never told her he had done so. The payments of £l6 5s and £lO 10s were her own moneys, due to her by Ross. Mr Kinnerney produced the results of a search: First was a lease, of 28th March, 1876, Bonner to Ross, rent £65 a year. Then an assignment of the lease, 17th October,' 1876, D. M. Rqls to Mary Ross, widow. Then a sub-lease from Mary Ross to E. Cornish, 24th November 1876, at £125 a year, Next a dopument of 17th June 1970, Bonner to D, M, Rosa, whiviU recites the lease and then purports to reduce the purchase money from £BOO to £SOO, payable a* any time—(Witness interjected : u It's a regular swindle.") —The date of registration was not noted. Another document of February 7th, 1880, was registered purporting to be from -Bonner and addregsijd to, '•'•■ P- M. Ross for Mary Ross," and set forth that in consideration of Mary Rosa endorsing a holding and undertaking to pay a promissory note for £l7O 15s, that amount might be taken off the purchase money of the Saltwater Creek property, £SOO. Witness : He was going into it nearly free then. It's t\ proper swindle. Mr Ross did not expect I'would be here so long to know about it, but he's mistaken. To Mr Kinnerney : Was sure that she had never seen or heard of a.ny moh agreements as lip,en registered, and was sure her husband would have told her of such things.

F, Dierck, Geraldino, stonemason : Had a piece of land in Timaru mortgaged to Morrison for £l5O. That was twelve years ago. The mortgage was sift! in existence; the money whs still owing. Did not fjet another £l5O from " Morrison," or'from Ross, Sims & Co. In October last applied to Ross for money. (Letter from Ross, October sth, '92, that he " could have the money at 7 per cent-) Called on Ross, who told him ho « would make it all right," but he never did so. Wanted t> got the money on the Genddine property. Had never blamed Ross for not getting the money for him, Had not inquired why, tfei\t in. interest on .CuOO, J aujpe.*xiig Ross had it all right. The Timaru property was still under mortgage, through Woollcambe & Clulee.

To Mr Hay : They paid the interest to iVooUcombc and Cluke.

The evidence of Thos. and 'i'roi.ij Work Morrison, for which we have -•.oi room in this issue, wms ;dso takey,. Tho case is lioi expected t;> bo fhlsh'v*! 10-d;'y.

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