The Northern Daily Times.
Liverpool, Merseyside, England, 1857-05-26 00:00:00

LIVERPOOL BANKRUPTCY COURT.

(DETORE MR. COMMISSIONER STEVENSON )
In re M'LARTY AND C ~—Yesterday was fixed for the
argument on the certificate. Mr. Danson, instructed by
Messrs Duncan. Squarsy, and Blackmore, opposed on ba•
half of Mr. Ale auder Denny, shipbuilder. of Dumbarton,
and Messrs A.mi, Bost, and Co,ef Gleseew, creditors, the
first of whom proved for £ll,OOO, and the other for about
£1,600. He said before entering on the special grounds
of opposition of those creditors, he should first have to
draw the attention of the court to ,he general grounds of
opposition, became he conceive that they would not only
justify, but stree gthen the special ebjectiona which he would
afierwsrds urge. The general grounds of opposition which
he would mention were, firer—that the bankrupts had
traded without capital, and in a reckless manner;
secondly, that they had continued to trade not cede after
they were hopelessly insolvent, but after they had already
ost a large amount of the capital of others ; and, thirdly,
that they gave an untrue preference to the bankers by whose
aid, chiefly, they had so long been enabled to assume the
appearance of solvency. Mr. Aspinall, who, instructed by
Mr. E. Bennet., appeared for Mc. Lemont, of to Mr.
Danson being allowed to enter on the general grounds of
opposition, which would be urged by right, and in the proper
course, by the gentleman (Mr. Fletcher) who appeared for the
assignees. He held that Mr. Damson should be coefired
to tee special grounds of opposition, he opposing for indi-
vidual creditors, one of whom, moreover, (Mr. Denny) was
virtually represented by the solicitor for the asdgnees.
His Honour agreed that Mr. Danson C uld not urge the
general grounds of opposition, but that he was entitled to
refer to any part of the evidence having the slightest re-
ference to his special grounds Mr. Danson replied that
that was all he would do. And new, as to the special
groends ; in the me of Mr. Denny he would submit that'
within the meaning of the third clause of the 256th section
of the act, the bankrupts had attained the forbearance of
Mr. Denny as a creditor by false pretences ; and in the
ease of M. Bost, he would show that they had contracted
debts when not only in a state of insolvency, but when all
reasonable prospect of surmounting their difficulties had
sea. ed. The bankrupts had filed two balance sheets—one
by Mr. M•Lsry, and the other by Mr. M‘ Kean and Mr. La-
mont. Teey knew that b lance-sheets as now filed were in
general fictitious, not facts that they were in truth the
romance of figures, and rarely disc'oaed the true state of
affairs. In This cate the balance sheets, commenced in
March, 1854, and were brought down to the time of the
failure of the bankrupt in August, 1856. In L =out and
MlCean's balance sheet the debts due from the firm
in March, 1854, were, as per the captital account,
£71,691; due to the firm, £56,236, showing an excess of
debts due from the firm of £15,41j0. In the other balance
sheet, that of Mr. M'Larty, the debts from the fidu at
that time were put down et £75,390, and the debts due to
the firm at £53,890, leaving a balance against them of
£21,500. If the balance sheete sopped there it would be
a confession of insolvency to that extent, and so to avoid
that the hankrutts placid on the credit side of the account
for dame on, and expectations from, the Canadian
Steam-hip Mail Contract an item of £17,200, which
was made up of £7.200 and £lO.OOO, the first being, as he
understood, the amount of cemmissien which the company
agreed to ray on the subsidy of £24,000 a year for the six
years the contract bad to run, which the bankrupts trans-
ferred, and the other the estimate value of the commission
on the ships at two years purchase. Looking at these items
by the light of subsequent experience, they could see
how far the bankrupts were justified in putting them
down as capital. when they did not receive one farthing
either of the £7,200 or of the £lO,OOO, nor, as he was in-
formed, were they 1 kely to do so. Mr. John Yates, who
appeared for Mr Naomi, denied that that was the case.
The ba;4tropis received, in fact, for commission, during
the fh-er eight months of the agreement with the Canadian
Corataete about I:4,800. As to what remained to be paid,
the gnestion was in abeyance, but wet by no means disposed
of. Mr. Danson observed that in another page of the
balance-eheet the £l7 200 was returned as part of their
assets, and contended that the item had no right whatever
to have been introduced. Mr. Yates said that-it was it-
traduced into the assets because a portion of it had gone
into the asset@ of the firm, and because it was necessary
to carry t through the accounts to make their balance.
Mr. Danson then referred to the differentia between Mr.
lif‘Larty, and Mr. NeKean and Mr. Lamont, as to
debiting Mr. M'Larty, senior, with a share of the
losses on the Cleopatra, and passed on to the rum-
mary of their affairs as shown on Mr. M'Larty's
balance-sheet. On she one side would be found
creditors. £77,525; creditors holding security, £45,299;
and liabilities, £17,695—in £140,000. On the other
side of the account good and doubtful debts, £15,000 ;
property. £5,061; and property held by creditors, £13,607,
so that exeepring the disputed item of .9-17 000, there was
only £33 600 to balance the £140,000. Having adduced
these figures in support of the general opposition, Mr.
Danson proceeded to state the special opposition of Mr_
Denny, which arose out of the circumstances attending the
purchase and sale of the Sardinian. She was to be paid
for in four instalments, two in cash and two in bills, each
bill to be renewed once. The first renewed bill was dis-
honoured, and the Sardinian was subsequently sold for
£19,250. Before the sale, the bankrupts offered to pay
out of the proceeds what was due to Mr. Denny, but
counsel contended that, after the 19di June, 1856, when
the bill was dishonoured, it was impossible for them -to
carry out that undertaking, inasmuch as the Bank held
already a bill of sale over the vessel dated April, 1856 Mr.
Yates : They offered to pay Mr. Danny £5.000 in cash, the
amount which was alone then due, and to give him security
for the remainder. Had Mr. Denny not foolishly rejected
that offer he would have been paid his money, and need
not now have proved. Mc. Denson maintained his view of
the case, and in conclusion contended that Mr. Bost's debt
was contracted during the period the bankrupts held their
position in Liverpool on the forbearance of Mr Denny,
who, the moment the ..bill had been dishonoured on the
19th June, might have proceeded against them. The first
letter was written to Mr. Best on the 9th June, and the
first order fir iron given on the 20th June. These facts, -
he urged, called for a stringent exercise of the judgment of
the court. Mr. Fletcher followed also in opposition. Ho
took -ix grounds of opposition—trading without capital;
recklese trading; largeness of accommodation bills ; pre-
feren e; negligent bookkeeping; toad the different account
given by the partners of certain transacions. The losses
of the bankrupts had been £92,048 in two and a half years'
trading; their trading expenses, £14,183; personal ex-
pensee, £2,050; and profits only £31,631. Their
dial ilities on hills were nearly £90,000, and although
he did nor mean to say that all these were aceommo-
dation bills, yet r. numbcr cf them were. He con-
sidered that the ground of preference was established
by the bill of sale el the Sardinian to the Bank, and
by the money subsequently paid into it, and that the
conduct cf the business and the negligent bookkeeping
were shown in the diffetancee between the partners as to
certain trareaciene. Mr. Almond addressed the court on
behalf of Mr. ISl•Latty.- He said that he wonld confine
'himself to one main fact as applicable to two. of the bank-
rupts on the one side and Mr. NPLarty, junior, on the
other, because it was cue which Mr. Fletcher adverted to
as a prominent ;ter, in the case. That fact arose cut of the
Cleopatra, and Me M‘Lerty senior's connection with that
vowel. The keeps upon thet vessel were something like
£9,000; but, according to Mr. M'Larty, junior, Ids father,
though his name was on the register, had no desire to be
a co.owner. He war= merely a mortgagee ; but as that
would atire a tendency to interfere with the credit of the
firm he was c.,g4.tered as a cc-owner. His Honor,
however, wotdd have seen, from the decisions in the
courts of law from time to time, that a person
appear or a ehip'e regiwer as an owner, and yet be by no
sneers liable for debts conireetett. ; and it was equally clear
the:: a, eersen might rake-city at-pear es an owner, and
yet, at the same time, be merely on the register
as a mortgagee. Mr. elm end cited a cane to that.
&Mat, and corvioned -. That was the - ease here----at
least that was Mr. Mciesety, junior's impresion, 8111 it
wa, because of he belief that his father had no intention cf
berernieg, a eo-eweee that the difficulty arose as to the
disposieion of the loeees on that vessel. The court would
see that the bar krupts
started
in business originally with
no view of hvoming shipov,--iers. For a period they con-
fined their letainees tperattaws to these. of cometasetes,
merchants, and ferwardirg agents, but in course of time
they thought it expedient to bineme, steamship" owner:
and the court would recollect that when they Became such
very little treffie of that description was in operation. In,
becoming steamship owners they were actuated by ti 3
jest and laudable desire—the desire equaly felt by others,
of employing their energies and ir..duetr> to the
best adractage. They cut 'heir intentions with
the 1 ,a s, probably of Mr Denny himself,
and their views strr. ctioned. They purchased vessels
pertty te!l:4, but he Oelr. Almond) would
ask if that wart
art extutto.rdinary mode' oc doing business,
either in ttafliceig In or tn buying chips? -He would refer
the (tenet to the case of
hthe great
, 'Leviathan" of Liver-
pool, for the answer. Lie Purcria6ed ships wholesale on
his own pacer, and that was a course which, in this
breech of commerce, was adopted to. a, very large
extent. The banknote_ cenceidl,:lg, /did; at the
time, with every probability in. their favour, that, their ex_
pectations would be fully readeed, entered en this enterprise,
ant! ex=actinglarge gales ;new red large responsibilities,
httee &earning at the time that the war, on the con-
tinuance of which, like many others they based their
calculations, would so soon cease and peace be so SOOl
restored. When the war broke out their time s. were
taken up for the purpose of conveying soldiers to
the East. At that time their prospects were of
the best. and they little anticipated the misfortunes