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Decisions of the Superior Courts of New South Wales, 1788-1899

Peek v. Magrane [1841] NSWSupC 93

insolvency

Supreme Court of New South Wales

Stephen J., 29 September 1841

Source: Sydney Herald, 1 October 1841

INSOLVENT DEBTORS' COURT.

WEDNESDAY, SEPTEMBER 29.

BEFORE Mr. Justice STEPHEN

PEEK AND ANOTHER V. MAGRANE.
APPLETON AND ANOTHER V SAME.
COHEN AND ANOTHER V. SAME.

 

Philip Henry Magrane, the insolvent in this case, had been remanded on a former day to amend his schedule, and to allow time for the trust deed, which he had executed on the 29th of July last, to be brought from Maitland. Mr. Thurlow, who appeared for the plaintiffs Peck and another, and Appleton and another, examined the insolvent at great length, from which it appeared that he had been clerk to the bench at Dungog, but in November last, while without capital, he was recommended by a fried to open a store in East Maitland on his own account, and for that purpose applied to Mr. McDermott, of the firm of McDermott and Co., who gave him goods on credit to the amount of about £200; Peek and Co. also trusted him to the amount of £100; Appleton and Bourne at the same time trusted him to a considerable extent with property to sell in his store, and pay within a specified time; he had also received goods to the value of about £20 from Iredale, and had paid for them at the time specified; besides these creditors he, previous to leaving Sydney, got several smaller parcels of goods on credit from several other parties, and had been in business for about nine months; his debts at present amounted to upwards of £1,440, his goods and debt all of which were assigned to Mr. Mallon, of Maitland, on the 29th of July last, when the assignee sold off his property, produced not more than £250; the total amount of debts due him when he executed the deed of assignment was £624, which was the amount entered in his schedule; but as his books, from the date of executing the deed of assignment till last week had been in the hands of Mr. Mallon he could not swear whether they were all still unpaid, as Mr. Mallon might have collected some of them since the insolvent had been taken into custody. There were a great many of the debts in the schedule bad, or at least doubtful, although he reckoned them good on the 29th of July last. The reason why they were bad now was, that a great many of the people owing them had since failed. He had not contracted any debts as a solvent person, or by representing himself as such, since the time when he executed the deed. He considered himself solvent in May last when he came to Sydney and contracted some part of the debts he was now in custody for; but they were beginning to be embarrassed towards the end of the month, at which time, he was, however, sanguine that if time was allowed him he would have been able to have collected in as much as would have paid each of his opposing creditors in full, provided they allowed him time; and, accordingly, when the present actions were brought, in order to gain time, he pleaded to them, not being aware that by so doing he was either diminishing his own means, or unnecessarily increasing the costs of those who had sued him. The account which he gave of his filing these pleas was as follows:- In June last, when his creditors refused him time, while at the steamer with a friend, in a gig, who was coming to Sydney, when talking to him about the refusal, a third party came up, to whom his friend introduced him as being Mr. Sammon, chief clerk to Mr. Turner, the attorney of Maitland, when on being told of the refusal to grant more time, Mr. Sammon told him, if he would give the cases into his hand, he would defend them; obtain him plenty of time, as he had done for others; and swore that it was by Mr. Sammon's advice that the pleas were filed.

            His HONOR remarked, that such was most improper conduct in Mr. Sammon; His Honor then took down the insolvent's exact words, and directed that a letter should be written to Mr. Turner, stating what had been sworn before him, and requiring an explanation, as filing a false plea without instructions to gain time was a very serious offence.

            From the further examination of the insolvent, it appeared that Mr. Grace, the attorney, at Maitland, was, at the time when the deed of assignment was in contemplation, a debtor of his to the amount of about £[4]0; but that having been employed by the insolvent in two actions, the costs of which amounted to about £20; he considered that he was not his debtor for more than £20. The insolvent attributed his failure to the depression of the times in Maitland; to a great number of those he had trusted being unable, and in some cases unwilling, to pay, while others had bolted and left him, with all their other creditors, in the lurch; he also considered the extraordinary high prices which he had been charged for the goods he had on credit as being much against him; besides which, a great quantity of the bottled ale and porter which he had received from those he had purchased it from in Sydney, when it reached his stores, was broken to such a degree as to cause the speculation in these articles to turn out a dead loss. He denied ever being drunk, or that he was in the practice of drinking Champaigne, in his stores, with his friends, although he had it there for sale; he had married in April last, but had got no money with his wife, although before he wedded her he expected to receive between £400 and £500 with her as a marriage portion, but found that he was mistaken; before the nuptials were consummated he mentioned his expectations to some of his creditors in Sydney, particularly to Mr. M[c]Dermott who replied "As to the money, never mind that: if you like the girl, marry her." Since the deed of assignment had been executed, the insolvent and his wife had been supported by her mother, where she was now living. He denied that the set of China, which he had purchased, on credit, for £20, from Cohen and Co., of George street, Sydney, was intended as a present for his mother-in-law: the real state of the case was, that he received an order, when coming to Sydney on business, from his brother-in-law Dr. Harrington, to look out for and purchase a set of China for him, but not to go beyond £6 or £8; but when he made enquiry, he could find nothing like what was required, at such a price, when Mr. Cohen persuaded him to take it to Maitland, and if the gentleman it was for did not take it, he would readily sell it at an advanced price to some other persons, and when he purchased it he paid £9 on account of it, which left a balance of £11; that when the China arrived his brother in-law purchased it at the cost price, and it was still in the Doctor's possession, who was a creditor of the insolvent to upwards of £20, and had been lately a creditor to a much greater amount, which had been reduced by the insolvent paying over to him a bill, which he had received in payment of a debt due to him; he had not drawn above £250 in cash since he set up in business, the goods he sold being paid for principally by bills, which he paid away again to his creditors: the total amount he was in execution for was £457 17s. 1d.

            The insolvent was examined by Mr. JOHNSON for Messrs. McDermott andDixon, when he denied having any knowledge that by defending [?? He had increased] their costs from between £6 and £7 to upwards of £29 12s. 1d.

            Mr. Cohen appeared in person, and re-examined him as to his habits, and theChina being purchased for his use, but the insolvent adhered to his previous statement.

            A person presented himself requesting liberty to examine the insolvent respecting a debt of £148 due by him to Mr. Iredale, but the latter not being a judgment creditor, the application was refused.

            His Honor subjected the insolvent to a very searching examination on several points, which had been brought out by the previous examinations, particularly as to his books, which consisted of two parts, each of which were formed of a few sheets of foolscap, doubled over lengthways, and stitched into new cartouch paper wrappers, the first was full, and the only use they were for, was that of a waste book.

            The insolvent denied having ever had any other books since he began business, and although he had some money at time in the bank, he never had any bank book. His rent was between [£4] and £5 per month, and he had two assistants, whom he boarded and allowed wages at the rate of £35 per annum, part of which was still due.

            Mr. GODDARD declined examining the insolvent in defence.

            Mr. THURLOW submitted that his honor was bound by the 5th clause of the Act to remand the insolvent, because he had diminished his means by filing false pleas; had paid parties not suing him; had not kept proper books; and had not acted justly to his creditors, by obtaining goods from them when he had found himself deeply involved.

            Mr. JOHNSON considered that he should be remanded for his vexatious conduct in putting his clients to four times the costs they would otherwise have incurred.

            His HONOR considered, that the strongest circumstances against the insolvent were, his contracting debts without the least resemblance of a prospect of paying them; entering on a business of which he had not the least practical knowledge; going and commencing that business in a place where he had no acquaintance or friends to patronise him, and beginning business before he had even obtained proper premises, and then, according to his own evidence, giving a bonus of £10 for premises situate in a back street, which were, according to his own testimony, neither situated nor adapted for carrying on business in. He considered this, as the most wild-goose system of trading and speculating which had ever come before the Court; but had only thrown out these hints in order that Mr. Goddard, in his reply to what had been said, might direct his observations to them, as they were likely to affect his client's case more than some other adverted to by the plaintiffs.

            Mr. GODDARD was sorry to find that he was placed in so difficult a position as that of controverting what had fallen from his Honor; but still he trusted that he should be able to do so. As to his client contracting debts without reasonable prospects of paying them, that was more apparent than real, as he had the prospect of the [patronage of his country friends, and though] new in town, besides his own industry and diligence furnished him with a reasonable probability of paying those who had trusted him. The present case was an illustration of one of the many evils which the pernicious system of giving almost unbounded credit, had inflicted on the commercial part of the community. The mother-in-law of his client was a respectable and reputed a wealthy lady, and, therefore, there was no imprudence in the marriage. He thought, that his client had sunk, like many others, under the general commercial distress which lately visited Maitland. He was the more convinced of this, as no proof had been given against either his character or conduct. There was nothing uncommon in his client's trying a new line of earning a subsistence, as it was a matter of every day occurrence in this Colony.

            His HONOR remarked, that if one was to hold himself out as a surgeon, and by his unskilfulness cause the death of any one, he would be liable to be tried for murder.

            Mr. GODDARD resumed, that the case adverted to by his Honor, in his opinion was not in point, as that involved professional skill but it did not surely require professional skill to weigh a pound of tea. With regard to his client having put the plaintiffs to unjustifiable expense, he had acted in the belief, that if he could have collected only £150 before execution issued, and given each of them a part, this would have induced them to allow him to go on and pay by instalments, and concluded by submitting that justice would be done if a trustee was appointed and his client discharged.

            His HONOR reiterated the remarks he had alseady made, his mind remained unchanged; but as it was in some points unlike any other that had ever come before him in that Court, he should not then decide it at present. He then pointed out wherein it differed from Mr. Girard's case; but in order that he might not act harshly to the defendant, he would take time carefully to go over the whole case, and having done so, if necessary, avail himself of the assistance of his brother Judges. As he felt a repugnance at deciding such cases singly, and would like to have the assistance of a jury in deciding all cases like the present. In the mean time, he would remand the insolvent till Wednesday: which was accordingly done.

Published by the Division of Law, Macquarie University