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Colonial Cases

In re Cunningham, 1898

[bankruptcy]


 

In re Cunningham

Supreme Court for China and Japan
Wilkinson ACJ, 1 March 1898
Source: North China Herald, 7 March,1898


 

LAW REPORTS.

H.B.M.'S SUPREME COURT.

(SITTINGS IN BANKRUPTCY.)

Shanghai, 1st March

Before H. P. Wilkinson, Esq., Acting Chief Justice.

Re A. CUNNINGHAM.

   This was a case in which Alfred Cunningham, editor and proprietor of the Shanghai Daily Press, had been adjudged bankrupt, and he now appeared for his public examination. Mr. Nelson and Mr. Hanson were present on behalf of various creditors, ad Mr. Ellis represented the debtor. There were also present other creditors, who had proved.

   After taking his seat, His Lordship explained that he sat there as Acting Chief Justice. The Bankruptcy Act gave power to the Registrar of the Court to do and assume certain duties, but the Law Secretary, the original Registrar, had ceased to exist, and the Order in Council which abolished him delegated the duties of the Registrar to the Assistant Judge. There was at present no Assistant Judge. It had been the practice in that Court for the Chief Justice or the Acting Chief Justice to conduct public examinations, and therefore he was there as Acting Chief Justice. 

   The Official Receiver (Mr. Burrows) said that according to His Lordship's order the account was only lodged on Monday and it had been impossible for the Trustee or the creditors to go very carefully into what was an extremely complicated statement. The creditors would doubtless like to exercise their power of examination so that an adjournment would be advisable.

   Mr. Nelson agreed with the Official Receiver that it was impossible to put to the debtor the requisite questions until a more careful examination of the accounts had been made. He had had an opportunity of looking through the accounts which in his mind appeared to be in many instances very vague. The accounts might be amended so as to include several items under one head. He suggested that the Official Receiver should put a few of the ordinary questions to the bankrupt, so as to have the examination opened and then adjourn.

   His Lordship concurred.

   Alfred Cunningham, the debtor, was then sworn. In reply to the Official Receiver he said he was 27 years of age and a journalist by profession. He was articled as a journalist in West London, afterwards accepting an engagement on the staff of the Straits Times of Singapore. He remained there two years and then removed to Shanghai where he was engaged on the Shanghai Mercury. At the time he left Singapore his liabilities amounted to the best of his knowledge to $112, to the manager of the paper, there being a question in dispute with regard to the salary due to him. He left the Mercury in March,1896, starting a printing business the following month, all which he was to purchase from Mr. Guedes for $6,000, it being arranged that he should go into partnership with Mr. Northey. The Daily Press was started in August of the same year. Mr. Guedes received the business $2,500 in cash, and received a promissory note for the balance. The partnership with Mr. Northey was agreed between them but no agreement was drawn up by a lawyer. He had no life policies on his own or other policies and no reversionary interests.

   This was as far as The Official Receiver proposed to go.

   Mr. Nelson drew attention to the fact that in the debtor's statement no deficiency account was visible.

   His Lordship agreed that it was customary. If Mr. Nelson could show him that the creditors were being prejudiced by its absence he would make an order for an account to be made up. The total on either side could be easily found.

   Mr. Nelson argued that it should show the net total assets and liabilities. As it stood the account did not show whether he was liable to pay 20s. in the £ or whether he was liable to pay anything.

   The Official Receiver then read the statement of affairs, which was follows:

Liabilities.

Unsecured creditors $14,474;

Creditors secured as per list $6,422;

Creditors for rent $160;

Creditors for rates $3,089;

Total Liabilities $24,146.

The assets are estimated to produce $10,800, made up as follows:

Cash deposited $50;

Stock in trade $200;

Machinery $850;

Trade fixtures $455;

New type $750;

Book debts $942;

And another list of book debts amounting to $4,729.

The leaves a deficiency of about $14,000.

   Mr. Nelson - But it does not say so.

   The Debtor - It shows by subtraction.

   Mr. Nelson - I can quite sympathise with Mr. Cunningham for I know the difficulty of making out a deficiency account. I have asked Official Receivers how to make it out, but they have always replied, "Oh. You have to make it out," but they have never been able to tell me how to do it. (Laughter.) I believe that the account could be easily put ship shape in this respect.

   Mr. Ellis - I don't know what Mr. Nelson wants a deficiency account for. There are the assets and liabilities, and if you deduct one from the other you can see exactly how you stand.

   Mr. Nelson - There is another matter, your Lordship, to which I should like to draw your attention and that is with regard to his position twelve months before the date of the receiving order. It is an offence under the Bankruptcy Act and it means that his discharge might be suspended. He makes out a deficiency of $3,700 twelve months before. He acknowledges that he was in difficulties.

   The Official receiver - With Your Lordship's leave the question of discharge lies with the Official Receiver and Trustee and they will take every care that justice is done.

   Mr. Nelson - It is for the creditors as well.

   The Official Receiver - Certainly. I think with your Lordship's leave the Trustee would like to bring to the notice of this meeting a certain point in connection with the estate suitably decided now and if the creditors are willing it would clear the ground a little.

  Mr. Nelson -Do you mean with regard to the assignment? I was just going to make an application. My client has made a communication to me and upon that I was going to address after you have adjourned this examination. If they like they can bring an action with regard to it.

   The Official receiver - When you say they do you mean the Official  Receiver and the Trustee?

   Mr. Nelson - Yes, or one of the creditors could do it in the Trustee's name if he likes.

   His Lordship - This has nothing to do with the public examination.

   Mr. Nelson - No, but you might give us an interview in your private room and perhaps my client will make some statement which might be beneficial to the interests of all concerned.

    His Lordship - That could be done if the Trustee and the Official Receiver are also present.

   Mr. Nelson - Yes, that is what I mean.

   His Lordship - Then I will adjourn this public examination and the bankrupt's counsel can make an application in Chambers with regard to this assignment.

   Mr. J. D. Clarke (creditor) - Shall I be allowed to be present at this discussion?

   Mr. Ellis - I think it would be more satisfactory if the matter could be settled in open Court.

   Mr. Nelson - Then I withdraw my application. I don't wish to tell everybody what I intend to do.

   Mr. Ellis - I leave the matter in your Lordship's hands. If it is more satisfactory to be dealt with in Chambers I am  quite willing it should be done so.

   Mr. Nelson - If valid it says.

   Mr. Ellis - We have to decide the validity.

   Mr. Nelson - If you would not keep putting objections in the way, I think a short private discussion would settle it satisfactorily. My client was prepared to make an offer.

   Mr. Clarke - I think there are others prepared to make offers.

   Mr. Nelson - My client says he is willing, without prejudice, to say that he will accept that assignment and will take the things over at the price of that assignment less the articles which cannot be delivered, and which I understand are covered by a Bill of Sale.

   The Official Receiver - I feel in an awkward position. The trustee has had suggestions made to him, from I believe more than one quarter, of a probable purchase of this concern, and it seems to me that with a purchaser present this is a favourable opportunity for going into the matter. A lot of these gentlemen here are engaged in business and in discussing matters a waste of time will be avoided. I cannot quite see what difference an adjournment of a week will make to the assignment. May I suggest to your Lordship that we proceed with the discussion as a Meeting of Creditors?

   His Lordship - That I think would be very wise.

   Mr. Nelson - I say that it would be absolutely useless now.

   His Lordship - A discussion could only take place at a Meeting of Creditors; if this matter of an assignment was now raised it could only be by way of evidence taken preliminary to a judicial finding thereon.

   The meeting then terminated, the further examination being adjourned for a week.

 

Source: North China Herald, 14 March, 1898


 

LAW REPORTS.

H.B.M.'S SUPREME COURT.

Shanghai, 7th March.

Before Sir Nicholas Hannen, Chief Justice.

RE ALFRED CUNNINGHAM.

   This was an application made by Mr. Leake, trustee, for leave to sell the plant, goodwill, etc., of the Shanghai Daily Press.

.  .  .  

11th March.

His Lordship gave judgment in an application by the Trustee, etc.

   His Lordship - This is an application by the trustee of the bankrupt Alfred Cunningham for leave to sell the estate by public auction. It is made by the Trustee and supported by the Official Receiver and several of the creditors stated that they did not object. On the other, the bankrupt himself and some of the creditors say that they do object. Under the circumstances I shall be very much inclined to follow the advice of the Official Receiver and the Trustee unless some very strong reason is shown against it. But more than that, it is quite evident that this assignment which has been mentioned cannot be enforced, without legal proceedings. The proceedings would be both protracted and probably expensive, and I do not think it would be for the benefit of the whole of the estate.

   Further than that, there is a bill of sale and the holder has threatened to sell his portion of the property which passes to him under the bill of sale That he plainly has a right to do so, and if the execution should take place the business as a newspaper and certainly as a job printing business,  would be stopped and there would therefore be no business at all; the business would disappear and under the circumstances I think this application should be granted.

   I therefore give the Trustee leave to sell the estate by public auction and it will be for the trustee under the advice of the Official Receiver to determine the best way of doing that. Whether the sale should be subject to the bill of sale or whether the estimated value of the security will be made a first charge on the estate, I leave to their discretion. Therefore, leave is granted to sell the estate by public auction.


 

Source: North China Herald, 28 March,1898

H.B.M.'S SUPREME COURT.

Shanghai, 24th March

Before Sir Nicholas Hannen, Chief Justice.

RE ALFRED CUNNINGHAM.

   The public examination of Alfred Cunningham, lately editor of the Shanghai Daily Press, was resumed. Mr. Ellis represented the debtor, and Mr. Nelson appeared on behalf of certain creditors.

   The Trustee (Mr. A. R. Leake) continued his examination of the debtor with reference to the somewhat intricate accounts. The debtor in reply to the Trustee admitted the hypothecation of certain property for various loans. The first allocation was made in favour of Mr.  Guedes, at his own request, who began to fear that they would have trouble with the compradore Chou, and in order to protect himself and the debtor he suggested that h should have a proper bill of sale, drawn up by a lawyer and stamped in the Consulate. This was for $3,500.

   When Mr. Guedes asked him for a bill of sale he told him that Mr. Northey had a note of hand for a specific sum, but Mr. Guedes pointed out after consultation with his lawyer that the note in question was not valid, and would not protect him or the debtor if Chou took proceedings against them. In reply to the Bench the witness stated that the amount of Northey's claim was $2,500, the document being delivered at the time he retired from the partnership. Debtor in answer to the Trustee said a similar note was given to Mr. Von Mollendorff, at his own request. The last named had knowledge of the holding by Mr. Guedes of the note previously alluded to, and his note had reference to the Shanghai Daily Press and the new plant and machinery which had been purchased since they started the newspaper.

   On the 12th of July,1896, he hypothecated certain property to Mr. Evans for Tls. 2,020. It was brought about in this way. Mr. Von Mollendorff wanted tio borrow from Evans Tls. 2,000 and witness approached Mr. Evans on Mollendorff's behalf. Mr. Evans said he would lend the money at twelve per cent, provided he had some security. Mr. Von Mollendorff wanted the money and expressed his willingness to hypothecate the goodwill and plant of the Chinese newspaper, Hua Pao, of which he was sole owner. Witness conveyed this decision to Mr. Evans, who declined to accept the security unless it was endorsed with the signature of himself and Mr. Von Mollendorff. This was eventually done, the value of the Shanghai Daily Press, goodwill and plant, being in witness' opinion over and above what was required to meet the bill. He did not tell Mr. Evans there was already a bill of sale on the property because he did not think it was necessary.  Mr. Evans knew all about it. He had never represented his business to be a profitable one. He might have said to the gentlemen who were undertaking the formation of a company that the job-printing was a profitable branch and that the newspaper at a certain period was just about paying its way.  With regard to the French newspaper, when that left them there was due to them about $1,700. This was reckoned in the job printing. He should say that they had lost much more than seven thousand dollars.  Certain private accounts might have been paid per contra by contracts for advertisements, editing, etc., but of this there should be a record in the books.

   By Mr. Nelson - The note of hand was given at Mr. Northey's request. He was informed by Mr. Guedes that the lawyer had stated that the document was not worth the paper it was written upon, but he did not say so to Mr. Evans because the document in favour of Mr. Evans was drawn up under his direction. In fact he believed it was dictated by him. It would be difficult to say who was really responsible for the loss on the French paper. He and Mr. Lemiere were the founders but Mr. Von Mollendorff writing repeatedly to them was admitted as a kind of third partner, because at the time money was dui to him, Lemiere had admitted responsibility for half the money advanced on account of the French paper by Mr. Von Mollendorff.

   With reference to private accounts squared by advertisements, etc., he night be able to furnish an account with respect to them with the assistance of his book keepers. Any account settled per contra was supposed to be entered by the book keeper as if it was a personal drawing by him. They had had about four book keepers and he had supervised their books as far as his knowledge of book keeping would permit and his duties as editor and general manager allowed the time. 

   At an informal meeting of his creditors in 1897 Mr. Clark was asked to value the business, but witness did not give him any figures at all. Mr. Clark made the valuation by himself, having with him his own foreman and printing overseer.

   By His Lordship - He simply put in the way of Mr. Clark the means by which he could obtain the information he required.

   By Mr. Nelson (continued) -  He did not tell him there were 500 subscribers. The partnership he held in the French newspaper ceased when Mr. Castilho went to Japan. There might have been a small amount due to him when Mr. Castilho left. He could not say how much money they had really lost during the course of the year, or what the monthly loss was. He had no money on deposit, and no other property except that disclosed in his statement of affairs.

   The Trustee asked that he might be allowed to call Mr. Evans, but some demur to the proposal being made,

   His Lordship said he must adjourn for a few minutes to consider the question inasmuch as it was admitted by the trustee that he had no more questions to ask and it did not appear that the creditors had anything else to ask.

   The Trustee said he would not press the matter.

   His Lordship, after retiring for a few minutes, said that this was an examination in which the creditors and the trustee were entitled to examine the debtor publicly. The Trustee had no further questions to ask, and as far as he knew the creditors had none, and therefore he thought that Mr. Ellis or the debtor was entitled to ask that the examination might be closed.

   Mr. Ellis thereupon asked that the debtor might be allowed to pass.

   His Lordship declared the examination closed.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School