DISTRICT COURT.

Temuka Leader, Issue 2394, 3 September 1892, Page 2

DISTRICT COURT.

TlMAßU—Wednesday, August 31st. (Before His Honor Judge Ward.) His Honour took his seat at 10.30 a.m. IN BANKRUPTCY. Re Ross Sims and Co.—Mr Kinnerney with him Mr C. Perry, for Official Assignee and Supervisors : Mr Hay for Ross, Mr White for Sims. The hearing of the charges against D. M. Ross was continued. The following is the most important of the ovidence: — John Goldie, Totara Valley, said he had, mortgaged 103 acres to W. Bush, of which he paid off £2OO. He sold the land afterwards and the mortgage was paid off. Never heard of the £7OO mortgage until Ross's bankruptcy. Peter Rowe, Cannington, to Mr C. Perry : Owned a piece of freehold there. When he bought it there was £2OO left on mortgage, and was told by Thomas Hall that it was Morrison's money. Subsequently got notice to pay interest to Ross, Sims & Co. (Receipt produced for principal and interest, dated 3rd April, 1891.) Got the deeds as well. W. Baird, carpenter, Timaru, to Mr Perry: Owned a freehold in Timaru mortgaged to the Bailey estate. Ross, in August last year, wanted the mortgage to be transferred to the Building Society and he refused. Ross told him to go and see Mr Morrison. Saw Morrison and told him he wanted £IOO on his property. Morrison said he would see Ross, who was his business agent. Had no further conversation with either Ross or Morrison about it. T. Chamberlain, farmer, Pareora, stated he was a creditor of the firm for £334 and cf floss f)r £IOO. Asked Ross if he ronlri place for him. and Ross said . he could do so on a property in North street. Gave Rosa the money. (Receipt put in, August 29th, 1891, for two years 7 per cent). Understood it was to be secured on that property in North street, i but so far as he knew all the security he had was the receipt. Trusted Ross, as he ' had never found anything wrong with i him before.

To Mr Hay : Had had money on deposit with the firm. Took it out of the Building Society and was going to put it in the bank, but they told him he might as well leave it with them; he could get it at any time and if he left it a year they would give him 7 per cent. Did not make any enquiries about the property in North street; expected Ross to look after his interest ; trusted him altogether.

Strongwork Morrison stated that he had done business with the firm from 1882. Did his business chiefly with Ross. Went to England in December, 1884, and whilst away gave a power of attorney to Ross. Made many advances through Ross and the firm on freehold security pointed out by Ross. Never at any time intended to make advances on personal security. There was only one advance he made that he did not get a security for. That was entered to D. M. Ross in his book, £4OO, in 1887. He was to have got a title deed but did not get it. What he did not himself get mortgages for, he understood Ross held the securities for him, Kept titles and mortgages chiefly in the bank, and what he had not in the bank understood were safe with Ross Sims and Co. Was accustomed to get half yearly statements from them—at the end of December and June. Sims generally made them out, and witness took most of them into Ross's room and went through them with Ross, Remembered advancing £SOO to Ross by cheque for three different clients in March, 1889 (The cheque put in was not signed by witness but marked with across). Did not remember marking a cheque with a cross, but he would not say he did not mark that one. But how game the bank to accept it'/ It puzzled, him. He might have arranged about it with the bank, but he could not recollect it. There were times when he could not write. Got the other mortgages, but not Nelson's for £IBO. Supposed Ross had it all right. Got interest on it all right from the firm. Mr Sims made put the statements. Finajly when going over his affairs with Ross was told that this money was " gone ; " £IQO advanced to lift a mortgage in the Bailey estate was also gone. Had an old mortgage from Diorck for £l5O. Made a further gf. £IOO gu property at

Geraldine (cheque filled in by Ross, October 12th, 1891, produced). Had no more further conversation about it till he asked for his deed, lately, in May or June last, and Ross then said Dierck would not take the £l5O. Gave up the old mortgage to Ross to have a new one made for £3OO to include the old advance. Nothing had been done about this. Rowe’s mortgage was an old one. Loft it with Ross, with a release, because Ross said Rowe had been in wanting to pay it off. Told Ross not to part with the deed until he got the money. Some time after (when he went for his deeds) Ross told him he got the money from Rowe, and had used it—it was “ gone.” Could not remember speaking about it before that. Signed the release of Rowe’s mortgage in Ross’s office, only Ross being present he believed. (The statement of December last showed interest received from Rowe to 2nd August, 1891. Rowe paid off the principal in April, 1891.) Thought he had a conversation with Ross, asking him for Rowe’s money, and Ross said something about a bill that had to mature. There was something said about a bill in connection with Rowe. Lent Mrs Wadlow £7O in 1883. Gave the cheque to Ross, and he was to prepare a mortgage. (Receipt from Boss put in.) This loan appeared all along, and in the latest statement, as a subsisting loan. Never got any security for this. Rosa asked him to let it remain in his hands as he had a second mortgage on it, and ho did so. Made a number of small advances to various persons in 1889 through the firm. They were all written down in witness’ book by Ross—Cornish, Campbell, Mahoney, Puttick, Dowdeswell, and Glue—£l63 in all. These loans were taken out of interest moneys in the firm’s hands. Understood that these people handed in their titles as security, and that they were held in the firm’s safe, without mortgages. Understood that from Sims, who said he would keep the deeds, as it would be troublesome to go to the bank. The names and loans continued to appear in the statements, and in his book. Never heard that any portion of them had been paid off. If moneys were paid off or any money advanced was not lent, expected it to be paid back to him. (His Honor ; There is no question about that. If a man receives money for investment and the matter falls through as a matter of course he should hand it back at once.) Advanced £250 to be lent on property in Theodocia street. That business was done through Sims, and a crooked piece of business it was. Never got any mortgage. Asked Ross about it, and he said he did not know that Sims had mortgaged the section to witness. The Court, at 4.55, adjourned till 10.30 next morning, Mr Morrison’s crossexamination being postponed. Thursday, Sept. 1. On Thursday, Mr Morrison was crossexamined by Mr Hay, but nothing fresh was elicited. He said he never lent money to the firm itself except one £4OO. There never was any arrangement that he should leave money in their hands at 8 per cent. Many mortgages fell in, and he got the money right away; if he did not he understood that the money was still on the security. J. H. Sutter gave evidence to £59 13s being deposited by Ross and R. Stansell with the Building Society for a man named Watson, who could not produce his scrip in the Timaru Steamship Company. The money was afterwards, withdrawn by Ross and Stansell, redeposited by Ross, and finally withdrawn with interest by Ross. Remembered Stansell mortgaging his property to the Building Society for £750. Henry Durand, formerly a gunsmith, Timaru, now out of business, stated that in May 1888, Ross applied to him for a loan to take up a mortgage over Goldie’s farm at Washdyke. Ross said Bush had a mortgage over the farm, and wanted to transfer it on account of the “ Smith and Bssery affair,” that Austin, a lawyer, was down making enquiries, and he (Hoss) wanted to secure Bush, for whom he was acting as attorney. Understood Ross to say that he wanted the loan to make Bush secure. Agreed to give the loan. -l-v /»11 1 • t » • 1

Ross filled in a cheque and witness signed it (cheque for £714, 17th May 1888, put in.) The cheque was filled in by Ross himself " for Goldie's mortgage," and he wrote the same on the butt of the cheque. Did not get the mortgage. Asked Ross for it a month or six weeks after he gave the cheque, and Ross said "it was not down;" understood he meant, from Ohristchurch. Finally, after consulting with a friend, on finding that the money was not advanced to Goldie, he demanded his money back, and after a lapse of some weeks he got back £4OO. He also got jfc'2so from Rosa a few before lie filed. Ross gave him a valuable old pistol, aud ottered him. a gmt but he 1 declined it. Offered Boss £SO for two guns and a French gig. Tctepeated -the offer, and Ross said, " Will you ? You pay—" and nodded towards his daughter, who was then sitting beside him. Paid her £45, all he had on him then. Had not since paid the balance of £5, and did not intend to. At that time Miss Rosb gave him a gold watch for Bower. Ross said it was Bower's watch. Received also a silver albert chain, locket, aud necklace. Witness was to make buttons of them. Subsequently, or before, received a fishing reel and line, and some other small articles. Valaed the guns at £lO each, and the gig at £3O; these were ample values. Voluntarily handed all these things to the Assignee, except the two guns; intended to keep them if he could. In cross-examination by Mr Hay the witness said he paid Miss Ross the £45 in at Pearson's, before the meeting of creditors. He did not say anything about it being for the housekeeping. (Witness turned to Ros 3 and said : " Why don't you speak, Ross, and tell them what it was for ?'') The old silver was, not worth' more than 3s or 4s, and the old watch, 7s 6d. Was a creditor for interest collected on other accounts He found all his other deeds correct.

W. Bush, examined by Mr Perry; Was formerly a contractor. Returned from England Ist November, 1891. During his absence Ross, acted as his attorney. Before leaving for England, in February, 1889, held a mortgage from one GolcUe for £SOO. Saw Ross the day of hia return, and Ross said (Joldie had paid off his mortgage, and that he had got the money fixed up all right, and if witness would come to the office in a day or two they would talk it over. Went down and Ross told kirn he had a second mortgage over Stansell's property. Witness would not accept that, and Ross Anally made over 100 £5 shares in the Timaru Building Society to him. Pound afterwards they were part of the Baileyestate. Was unable for some time to get a statement of his account from Ross Sims & Co., and when he ddi so he marked several items which he thought jnaorect, among them being two items of £4O each for interest to the Timaru Building Society, One was not then due. Sims said one was paid, and promised to pay the other when due. Sims afterwards told him that all was " square," but lie ultimately found that the amounts (£80) were not paid. E. L. England, Timaru, said he formerely had a, wviiftomwy interest \%

seme property in London. In 1889 he came to Timaru to try and raise some money, and asked Ross to lend him £2O on some silver-plate he had. Ross said he did not do business that way. Mentioned the papers connected with the perty at Home, and Boss advanced him the money on the plate till witness fetched the papers. Brought the papers to Ross in January, 1890, when Ross offered to lend him £2OO on his interest. Agreed to that, but he did not get the money. Signed a document of some sort giving Ross half his interest. His letters from Home stated the property was worth £llOO. Received £3O on the day he signed tnat paper, and from time to time afterwards got money from Ross until he got £l2l in all. Signed another document, a power of attorney to get the money, and a third. (The third document was produced by Mr Hay, dated 7th November, 1891—an absolute assignment or sale to Ross of England's interest in the property at Home in consideration of his dsbts to Ross.) Only received £125. Could not get the £2OO, because Ross was always short of money; he could only get a little at a time. For the sake of his interest he was supposed to be released from all advances, all expenses, and to get a 100-acre farm at Opihi valued at £4OO. Ross told him the farm belonged to a man named Leggott. Was to get the farm clear of encumbrances. Had the farm now, in a way. Had had to ray for it. He ought to have it clear on Ist July, but it wast not, it was mortgaged to the Building Society. (To Mr Hay : He mortgaged it himself.) There was £SOO on it to the Bailey estate. Could not understand himself how it came about. Could not tell how it came to be mortgaged to the society. One thing he was sure of—he was to get the farm clear and £2OO. He mortgaged it himself to the society to raise money to buy a section and house in Timaru from Ross and Sims. Did not hear of the death of his step-father—who had the life interest in the London property—till after the assignment to Ross. Got £l5O more in advances this year, but that had been paid back. Ross said that he would give him £SO, and £l5O, besides the £125, on account of the reversionary interest. Had supposed this £2OO was mentioned in the sale agreement. He got the £l5O in January and Ross said he was to get £l5O more. Got £154 of this £2OO, but when he mortgaged the farm to the Building Society he paid it back to the bank again for Mr Ross. Got £550 from the society; he got £26 4s—-and Ross got all the rest. Got his silver-plate back from Ross's house shortly before the bankruptcy. Mr Hay read from the firm's books accounts against witness totalling £523 6s 2d, including £350 for the purchase of the Theodocia-street property. Against this was put £550 arranged with the Building Society, leaving a cerdit balance of £26 3s lOd. A cheque was given for this to witness, who gave a receipt for it in full settlement.

To Mr Kinnemey : Certainly understood that he was to get £2OO more. The farm was to be clear, and Ross was to hold the deeds until he got the estate from Home.

R. A. Chisholm, manager of the Bank of New Zealand, Timaru, the firm's Bank, stated that about March, 1891, he asked both partners for an approximate balance-sheet of their affairs, and Sims brought him the sheet produced about the end of March. The sheet was in Sims' writing and showed a balance of asssets over liabilities of £3642. Shortly after the Bailey case, saw Sims, and he told him the firm's position had not materially altered since the balance sheet was made out.

To Mr Hay: The firm's account was guaranteed by Mr Ross by means of a security over a property at Dunedin. Understood when he received the deeds that the property was good value for the advances to be made to the firm. The valuation on the local rate roll was over £2BOO. On that ground gave the firm a margin of £ISOO. 0. S. Fraser, accountant, who had examined the book of the firm and of D. M. Boss for the assignee and supervisors, gave evidence in much detail of the state in which he found the books, with references to his report to the supervisors. The books had not been balanced, Sims (bold him, for twelve years, and were not bal&nceable. In consequence of this no accurate statement of the firm's position could be toade. The subsidiary books were well kept, but the ledger, the key of the rest, was not. Balances were not brought forward properly. In Morrison's account, for instance, both debit and credit balances were left behind, and bringing them forward properly increased Morrison's balance by about £4OO. Mrs Bonner's account. might be correct as far a 3 the firm was concerned, but the items ought to have been debited to Ross. Mrs Bonner was debited with her own moneys and charged interest on them. Shears' account was £IOBS in debit- Assuming that Shears' left £I2OO with Ross at the commencement of the account, as sworn to by Ross, the account should be in credit £s46with simple interest only. Compound interest would increase the credit considerably. Ross' books began in 1878, and went no further than 1880, and eyen those were not a complete record. There were some rent accounts and memoranda later, Mrs Maiy Ross' account was the principal one, It began with practically nothing, and in 1880 when the record ceased it was in credit £2451. Had endeavoured to trace the properties referred to in this account, but had not been very successful. In Mrs Ross' account the principal credits were rents, and tlifire virtually no outgoings shown—a total of about £3O for repairs, rates, and insurances. Mr Kiimerney produced a transfer of the Arcade property from Mary Ross to D. M. Rasa, with a mortgage on it for £IOOO, D. M. Ross to Mary Ross dated 6th June, 1887. There was nothing in the books about this, as the books did not! come down so far. On December 29th, ! 1887, when £OOO was paid in to meet Shears' cheques, the firm held about £9OO of Mrs Bower's and Ross about £2500. At the time of the banki'uptpy the firm had £250 and Ross £3150 of M*s Bower's. At the latter time the firm had about £SOOO of clients' moneys on which they paid 8 per cent. ; and the average annual overdraft for the Inst six years has been about £I2OO. The Court there frll 10.3 U next morning. Fiuday, September 2. On the Court resuming C. S. Fraser* gave further evidence, and Captain Sutter was recalled. J. S. Gibson : Was one of the supervisors in the estate. Knew Shears when he was in Timaru, and was on friendly terms with him. In consequence of something he heard he had a conversation with both Ross and Sims in July last. After the Bailey case ho called upon Sims. Mr Hay objected to any evidence of conversation with the partner of the accused. Witness : Asked Sims to allow him to see Shears' account in the firm's books. Was shown it in the ledger. Saw a debit

of £IOBS against Shears. Asked Sims had he no credit, no securities to show, and he said " No." Said then : As a partner of the firm why d > you allow no large a debit as this without any credit or securities ? Do you know what part of the world he is in, or whether he is dead or alive? Sims said, "No." Sims then said he had often spoken to Mr Ross about this account, and that Ross said it was all right, and Sims added that he was under the impression that there was a private understanding between Shears and Ross. Then went to Ross' private room, and asked Ross why no credits appeared in the firm's books to Shears, "as he left a large sum of money with you." Ross replied "he never left any money at all. I have been doing his dirty work for nothing." Went again next day and asked Ross if he adhered to his previous statement, saying that he, witness, knew that Shears left a large sum of money for the use of his wife and children and his father and mother. Ross then said "he left me £1100." He then said : "You are strong—be merciful." Asked him " What mercy have you shown towards Shears' wife and children '/ and his blind mother and crippled father 'I " That closed the interview. Shears left his wife and three children in Timaru, and his father and mother, both of advanced age, close on 80. To Mr Hay: The debit in the book consists of payments to the family, insurances and other things, but there was a good deal of interest in it. Ross was to pay Mrs Shears £8 a month and £1 a month to his father, but he stopped the payments. When he talked of mercy to Mrs Shears, alluded to that, stoppage of supplies. Knew that they were stopped because MrsJShears told him so and that Ross had referred her to him. They were left destitute and were so now. Shears did not leave any money with witness when he left the colony. P. McGregor was called to put in certain receipts for £250 from Morrison, in Sims' writing, and £IOO from T. Chamberlain in Ross's writing. Found no reference in Ross's books to the purchase of England's reversionary interest. (There was a heading "E. L. England" in one of the books, but no entry under it); no record of the receipt of £46 from Durand for guns.

Mr Hay produced, but did not put in evidence, a promissory note for £l7O 16s, in connectian with Bonner's account, and asked witness to find if there was not an entry of its payment in one or other of the bank books. He found a cheque for its amount, payable to a number, was debited to the firm's account on 13th April, 1880, and the butt of the cheque, which was also found, was endorsed "Bishop's p.n. re Bonner." Mr Kinnerney remarked that this was paid four years before Mr Bonner's death, and after some argument said he did not believe there was a genuine promissory note transaction.

Various books and documents were put in and the case for the proseution closed. Mr Hay declined to call any evidence, and Mr Kinnemey then addressed the Court. He said he would make no comment upon the charges under section 183, making certain material omissions from his filed statements by not setting out therein liabilities to Mrs Bonner and to Watson for and in respect of moneys fraudulently misappropriated by him, and being privy to making false entries respecting Stansell's account. His Honor said on these charges the accused should be committed for trial, and if Mr Kinnerney decided to go on the accused could be brought before the Resident Magistrate's Court. At a quarter to five o'clock His Honor delivered judgment. With regard to the charge of trading with fictitious capital he was not prepared to dispute the contention of the defenoe, but as regards concealment of goods and failing to keep proper books, there was no doubt but the books were kept disgracefully. As regards Robs' own private accounts there was no pretence made of keeping books at all. Large transactions had been carried on, and large sums of trust moneys had been dealt with, while only mere memorandum's could be shown for them, and certainly there was evidence that he had concealed the state of his affairs. His Honor then dwelt on Shears' account when there was a loss to the family of £4OO, and also on Mrs Bonner's case, where she was debited with money which ought to go to her credit. He also dealt with the transactions with Mr Durand and the, other frauds, winding up by saying that he was a perfect pest in the district. He could not understand how any human being could be so foolish as to trust him after coming from Dun» odin with the record he made there. After a few more remarks His Honor sentenced Ross to nine months' imprisonment with hard labor.