THE HARPER BANKRUPTCY.

Temuka Leader, Issue 2547, 26 August 1893, Page 3

THE HARPER BANKRUPTCY.

Christchurch, August 23,

Before Mr H. W. Bishop, KM., George Harper, solicitor, was charged on the information of the Official Assignee in Bankruptcy, Mr G. O. Greenwood, that prior to his bankruptcy on the 9th March, 1893, he had contracted debts to the amount of about £10,945, without reasonable expectation of paying the same.

Mr Stringer appeared for the Crown and Mr Wilding for defendant. Mr Stringer said the information was laid under sectiod 137 of the Bankruptcy Act, and set out the case the Crown intended to establish against Harper & Co. He would lead evidence to show that in January 1892, the firm was hopelessly insolvent with at least £146,000 of a deficiency. The present information fixed January 1892, as the time at which to start, as there was no possible doubt of the insolvency of the firm since that day. Debts were contracted, and money received on deposit had been appropriated, by being paid into the firm’s bank account which was overdrawn, and securities had been transferred to the bank. The information was confined to only bankruptcy offences, A. R. Bloxam, Registrar of the Supreme Court, Christchurch, produced George Harper’s declaration of insolvency dated 9th March, 1893. A. M. Oliivier, accountant in Christchurch, investigated the books of the firm of Harper & Co., and made up a balancesheet to 31st January, 1892, which showed a deficiency of £146,296 18s 4d. Alexander Millar, formerly in the employ of Harper & Co. as accountant, deposed that the firm had funds of Miss Tottenham’s for the purpose of investment. Miss Tottenham was represented by power of attorney, held by some member of the firm. The original sum held by the firm on her account witness believed was £2OOO. The firm mortgaged a property to Miss Tottenham to secure £BOO of the amount, and they sold the property included in the security to a man named O’Brien, who paid £3OO in January, 1892, and the balance of £SBB Iss in June, 1892. The money was paid into the firm’s account, which was then largely overdrawn, and the sum was lost to the client. Mias Tottenham was returned as a creditor for the same in the statement of assets and liabilities filed by the firm. C. F. Bailey was another client, and the firm had money of his for investment. £250 of his was invested in mortgage, which was paid off in January, 1892, and paid into the firm’s banking account- The firm invested two separate sums of £2OO on mortgage for Mrs Frieston. The mortgages were paid off in February and April, 1893, and the sums were paid into the firm’s account, as in the former cases. The sum of £1925 was invested on mortgage for Mis? Wise. The mortgage was paid off in February, 1892, and the money lodged with the firm’s general account. Similar evidence was given by witness in respect of sums received by the firm for investment for O. L. T. Paterson, £SOO ; Admiral Hoskins, £250 6s 3d; executors of A. H. Bradshaw, £1500; H, H. Gillett, £1000; Right Hpp, A. J. Balfour, £1205 (of which £SOO was shown as transfer of mortgage); A. Holland’s trustees, £800; Thornhill’s trustees, £250; A. D. M. Allan, £4OO (money deposited with the firm to meet a mortgage to a client, the mortgage nqt being due when the firm failed) ; J, Bradshaw, £400; J, B, Fowler, £230; 0. J. Robins, £sooj; Captain Watson, £200; H. T. J. Jonkinson, £150; and Alexander Thorburn, £460. In each of these cases the money had been received by the firm since January, 1892, and the clients on whose account the investments were were returned as creditor iu the firm’s statement qf and liabilities. In jqqsf Pf t hP s 9 £4 B 9 Witness said the firm pr sopie member of the firm field a power pf attorney from the clients. jSdward Parkerson, for many years manager of the financial department of Harper and Company, stated that the firm received sums of money from English clients to invest iu New Zealand. While the moneys remained uninvested they Were paidfotfie ojf-dinary banking account pf the firm known as No 2 account. They Were Dot earmarked as trust moneys. George Harper was aware of the system and raised objections to it. George Harper generally objected, and on various occasions. On account of those objections an alteration was made in the system in July, 1885, when a separate trust account was opened. Several years ago the firm became financially embarrassed. Leonard Harper went to England in July 1891. The firm at that time was perfectly insolvent. The deficiency approximately ascertained was about £150,000. Witness at that time interviewed George and Leonard Harper, concerning the position of the firm, which was shown by a short tatewenti This statement showed

various difficulties likely soon to arise iii the position of the firm, and the estimated amount of clients, money in hand. Leonard Harper went to England to finance the firm.

To Mr Wilding : No 2 department of finance was under Leonard Harper's supervision. The land department was under George Harper, and for that department a separate account was kept. This closed the case for the Crown. Defendant reserved his defence, and was committed for trial. Bail was allowed, defendant in £2OO, and two sureties in £l5O each. The case of T. W. Maude was then taken, Mr Joynt appeared for defendant. Alevander Millar gave a list of the liabilities incurred by the firm at the time defendant was a member. The evidence regarding the disposal of clients’ moneys since January 1892, was similar to that in George Harper’s case.

Edward Parkerson, Harper and Company’s financial manager, deposed as in the previous case. Maude was only generally aware of the firm’s embarrassments. He had nothing to do with the details of No 2 department. He knew that the firm had difficulties, but did not know that they were becoming greater. When Leonard Harper left for England, Maude was away from town. Witness thought that Maude knew of Leonard Harper’s contemplated trip to England. Witness could not say whether Maude was aware of the deficiency then existing, but thought that he was not. Maude was aware of the system of dealing with trust moneys. This closed the case for the Crown. Defendant reserved his defence.

The Magistrate said that this case was very different from the first one. He saw a very weak spot in the case, and were it not that he had doubts as to how far he would be justified in presuming no knowledge on the part of defendant he would dismiss the case. There were certain circumstances in connection with the whole affair which it appeared to him made it preferable that that the matter should be decided in a higher Court, but he had grave doubts whether there was a case against defendant at all. He presumed also from the silence of defendant’s counsel that defendant would like the case to go to a higher Court. No knowledge by defendant of the position of the firm had been shown. The only doubt was how far he (the Magistrate) was justified in assuming that knowledge, or assuming that defendant should have had knowledge of the affairs of the firm, and it was this doubt that caused him to commit defendant. Knowledge had been proved on the part of George Harper, but not on the part of P. W. Maude, flow far such knowledge rendered them amenable to the law was a matter for the Supreme Court. In Maude’s case actual knowledge, was only presumable. Mr Joynt said that under ordinary circumstances he should have raised a defence, and probably a successful one, but as things were, his client wished for the fullest investigation. The Magistrate said that he had thought that was the attitude assumed, but he could not sit in silence and permit the case to go to trial without saying what he had said. He committed defendant only on the single legal point of presumptive knowledge. Bail was allowed as in the previous case.