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A LEATHER DRESSER AND HIS CREDITORS. Why a Tylwch Factory Did Not Pay Ten Per Cent. on Mortgage. For five years Henry Hampson Batten had conducted the business of leather dres- ser and fellmonger at the Factory, Tylwch, near Llanidloes. On the 20th of last month he filed his petition in bankruptcy, and when he made up his statement of affairs it was found that he had E146 to pay un- secured creditors S:687 14s, thus leaving a deficiency of £ 540 18s 4d. The cause of failure the debtor attributed in his state- ment of affairs to loss in purchase of skins cost of plant and machinery at Tylwch Factory want of capital." The Registrar (Mr William Watkins) pre- sided, and a number of creditors were present in court. The following observations were penned by the Official Receiver (Mr F. Cariss): (1) The debtor, who is 55 years of age, was formerly in business for a number of years at Rhayader as a fellmonger and leather dresser, first on his own account, and afterwards as managing director of a company to whom he sold his business. Debtor ceased his connection with that com- Danv in 1904, and in 1905 he purchased the Tylwch Factory and eight acres of land at Tvlwch, by means of money advanced upon mortgage of the property by the National Benefit Trust, Ltd. (2) Debtor had no capital at this time, and for the purpose of starting in business at Tylwch he borrowed £ 200, which is still owing. In addition to the mortgage exe- cuted to the National Benefit Trust, Ltd., debtor became a bond-holder in that society, taking up two bonds of E300 each, upon which he has paid E144 subscriptions these bonds are held by the trust as col- lateral security for the mortgage debt. WHY HE "FILED." (3) The debtor has been at considerable expense in fitting up machinery and plant at Tylwch Factory for the purpose of his business, and to this cause, together with the want of capital, he chiefly attributes his insolvency. He has for some time been unable to meet his trade accounts at ma- turity, and pressure by creditors, followed by legal process, caused him to file his petition. He has no offer to make, and has been adjudicated a bankrupt. (4) The unsecured creditors in the above statement. are as follows:—Eight creditors, hide and skin dealers for goods supplied, E216 5s Id two creditors, for cash lent, zZ327 12s one creditor, bankers, on over- draft, F.63 17s 15 creditors, for household and general accounts, £ 47 19s four credit- ors, for work done and materials supplied, £ 32 Is 9d total, S:687 14s lOd. The amount due to the bank, Y.63 17s, includes a pro- missory note for P-40, signed by the debtor and a surety, and since the bankruptcy taken up by the surety. A "DOUBTFUL" ASSET. (5) The fully secured creditors are the mortgagees of Tylwch factory and land, from which a surplus of E50 is estimated by debtor, but this should be treated as a -doubtful asset, depending as it does upon favourable realization of the property. It will be seen that beyond the P-50 estimated surplus from the security, the debtor has not brought to credit any amount in re- spect of his interest in the two bonds re- ferred to in paragraph 2, and the value of such interest has not yet been ascertained. (6) The liability on bills discounted represents the amount of customers' ac- ceptance discounted by the bankrupt, and in respect of which no liability is expected to fall upon the estate." In reply to the Official Receiver, the debtor stated that he hf d been fri- about 20 years a fellmonger and leather dresser. For about 11 years he carried on the busi- ness successfully, and then a brother of his turned it into a company. Debtor received £ 300 worth of shares in the company ,and was managing director. The company traded under the name of Batten and Co., Ltd. Later they disagreed and sold their shares, and the company was re-formed. The Official Receiver: Did you cease to be managing director ?-A grievance arose and they stopped me at once. The company was supposed to have been wound up, but I went out of it. I had £79 for my 9300 worth of shares. £50 FOR £126. When you gave up your connection with this company, had you any debts ?—Yes, I daresay drawing on for EIOO. There was £ 50 for Mrs Hughes and Evans E9. You had then private debts amounting to Eloo ?-Yes. You had nothing to do with the second O-Orxipany -Oh, yes, it was the second com- pany that I got stopped in. I was manager, but had no shares, but simply a salaried servant. When I finished up I had £50 in- stead of zCl26 for money I had laid out. When you got your £50 you severed your connection ?- Yes, but the company is still trading under the same name. That was in 1904. The debtor further added that he was owing certain debts when in 1905 he de- cided to start his new factory, a water- power mill, which at one time had been a woollen factory. To make the place suitable he had to put machinery in and make water pits. There was little machinery required for the fell-mongery it was the leather dressing machines that cost the money. He bought the premises and eight acres of land with it, for which he paid £ 350. It was rather an inaccessible place, but he thought it was worth £350. A DOUBTFUL BENEFIT. He entered into negotiations with the National Benefit Trust, Ltd., for raising the money on mortgage. He used to pay pre- miums yearly to this Association, which issued bonds repayable after a certain num- ber of years. He had two bonds of P.300 each in this Society, and that was how he came in touch with them. After five years payment of premium he was entitled to a loan. The Company had a double security 'they had the two bonds and the mortgage of deeds of the property, on which they ad- vanced the money. He thought he had paid £ 146 on those two bonds, but he was in arrears to the extent of F-12 in his instal- ments. He had not noticed that the bonds could be forfeited through not paying the instalments regularly. Although he had put in C146 he could not raise money on this, and was entirely in the hands of the Com- pany, and they could be forfeited if he was in arrears. The Official Receiver Did you not con- sider that that was a disadvantageous ar- rangement for a man in your position to make ?-I should think it rather hard for them to swallow the whole thing up. What benefit was the connection to you, U man who had no capital ?—Well, when •>nce you started in a thing of that kind it is hard to get out of it. THE RESULT OF BORROWING. Suppose you had gone to a respectable ^rm and borrowed the money, you would have been under no further obligation than to pay the interest ?—That is so. How much did you pay ?—I3s a month 0li each bond. If you became in arrears for one month, bey had power to cancel those bonds ?—I believe they allow you a longer limit than that. You had no capital at all ?-No. You borrowed £ 200 from Mr Horsfall ?— Yes. You had P-300 from this trust, and you started putting in the machinery and plant. What did that costF-About £ 150. Is any of that owing now ?—About £ 9. Isn't that really a main reason for your insolvency, spending money in fixing plant, paying interest on borrowed money and subscriptions on bonds; which are irre- deemable ?—Yes, that might be one cause, but there are other causes as well. Why did you continue the payments in the bonds ?—Because you could not have the other loans unless you are a holder of the bonds. If your number happens to be drawn, then you can borrow from the trust free of interest. So if you draw a lucky number you can NOT A LUCKY ONE. have a loan free of interest ?—Yes. But you have not been one of the lucky ones ?-No. What interest did you pay on the loan ? —Five per cent. Have you any accounts showing what your purchases and profits have been ? No, I gave the list to you that came off my bank pass book. Here you buy a number of skins in the year you deal in them either by selling or dressing the pelts cannot you tell whether those transactions have resulted in a loss or gain ? Can you point to any ac- counts ?-Perhaps I could if I went into it. Have you carried on at a profit or not ?- I reckon I have made about 30s a week, but that has been taken up, and really I have been trading at a loss. Why have you gone on so long ?-Be- cause I was expecting it to become better all the time. But you did keep on, and I daresay you would not have filed your petition if it had not been for these writs ?—Yes, that £ 63 from the bank did it. Why have you gone on all this time if you have been trading at a loss ?-I have been expecting things to come better all the time. But you did not take any steps to find out how you were going on ?—Oh, yes, I was taking account of a lot of skins and what I was losing. THE FULL STOP. Why did you incur debts recently after you had been stopped buying from certain firms ?—Because I should have gone to the market again, only the bank stopped me. Debtor added that on September 8tli he paid into the bank Z64 19s lid. When he paid in this sum they closed his account and shut up all at once. Why have you continued till the very last moment to incur debts to these gentlemen who are your creditors now ?—Well, what would you do if you fancied you could get things to come better if you went on ? But there is a deficiency of your own showing of t540 this could have only been gaining time, temporizing. What was the good of purchasing goods in the posi- tion you were in ? If the bank had al- lowed you to continue another six years, you would have been just as badly off ?— No if I had been left to go on, I should have pulled straight, I think, in time. When the bank pulled you up, what did you do then ?—Nothing. Debtor, in answer to further questions, said that from the time the bank stopped him until the petition had been filed he had done nothing. TWO PONIES AND A PIANO. To file your petition you had to sell something ?—Yes, I sold two ponies to Mr Horsfall for £ 10. Was Mr Horsfall down on the day you filed your petition ?—Yes. Mr Horsfall advised him that it was the best way to wind up his affairs. He had come down to see him at Llanidloes. What became of the £10 ?-I gave it to Mr Davies (the Llanidloes County Court registrar). What else did you sell ?-A piano. Fur- ther questioned ,debtor said that he had sold it the day after he filed his petition to Mr O'Neill, of Llanidloes. He received 4:9 in cash for it. Was this the day you filed your petition ? -I cannot say whether it was the day or the day before When did you have the £ 9 from Mr O'Neill ?-It was towards the week-end he gave me the money after the thing was taken in. Your petition was filed on the 20th. On the same day you sent a draft to Mr Hors- fall for E5. and he would receive that on the following morning, when your petition was cn the file ?—After ? Yes, very well. What was that £ 5 ?—Money that was com- ing to me under an agreement. "A VERY KIND FRIEND." Mr Horsfall had lent you E200 to start with, and £ 150 in 1907, and then he took a life policy of yours. You had agreed to pay him interest on this money. Now why aid you let him have this £ 5 ?—Because I promised to let him have some interest on some low wools. Mr Horfall ought to have had some part of the proceeds that went into the bank ?— Yes, and it ought not to have gone into the bank. So to put this right you sold him the Ponies, and let him have the £5 ?—Yes. Mr Horsfall has really been a very kind friend to you ?—Yes. You have given no consideration to him beyond this life policy ? It has been merely an act of kindness on his part to you through his having known you for a number of years ?—Yes, for many years. You had, I believe, some time during these five years a partner trading with you, a Mr Rogers. How long was he with you ?-For twelve months up to February, 1909. Who was be ? That I cannot tell you very well. Was he a practical man ?-He adver- tised himself as such, but he turned out a bit of a mystery. He came from Birming- ham. PARTED PARTNERS. But he put P,100 into the business ?—Yes, but he simply came to make a market of it, and after he had been there a bit he was advertising that he would sell his share for £200. Debtor added that he had had a dispute with Rogers, and the dis- pute had been referred to arbitration. Mr Martin Woosnam had been his solicitor, and Mr Cooke the arbitrator. The result had been that he had had to pay £ 63 al- together. Did you change the name of your firm while he was trading with you ?—No, but the invoices were headed Batten and Rogers." Was the partnership or the dissolution gazetted ?-No. There are no debts existing now incurred in Batten and Rogers' time ?—Not that I know of. You lodged a cash account showing as nearly as you could the turnover in this business. It apparently shows that your receipts for wool pelts and so forth have amounted to S:2,102, and your payments are for a similar sum so apparently you have accounted for all the money you have received;?—Yes. On a turnover of £ 2,000 a year, should there not be a profit shown in your trade ? —They won't get it in these days. Perhaps not as you have been carrying on business ?—No, but I know of others though. What men have you employed in the place ?—Sometimes two and sometimes three. FATE OF THE FURNITURE. Now with regard to the furniture. I see Mrs Patten claims a number of articles, in fact the bulk of the articles at your resi- dence, and she has lodged a declaration stating what she claims and why. Have you seen it P—Yes. When were you married ?—Thirty-four years ago, I think. But I may tell you that I am a poor hand at dates before you start on that job (laughter). I know that already. The date of your marriage would be about 1876 ?—I could not tell you exactly. I see the bulk of these articles, in fact everything of any value, are the property your wife had in 1876, and were given to her then by her mother, her brother, and by a Mr Smith. Is that so ?—Yes. Were not you aware that at that date, whatever chattels your wife possessed passed to the husband as his property ? Perhaps you were not aware of that ?—No. I am.afraid that a great number of those articles would not in law be your property ? -If they give them to her, then they pass on to me. Yes, they belong to you then. What are you doing now ?-I haven't been doing any- thing till yesterday, when I was doing some work for Mr T. P. Hamer. "IN THE GRIPS." Do you consider there is anything to be done in the leather working ?—Yes, you can do something now, but for over two years you could hardly give the pelts away. It is coming better now. You have been in an insolvent position for a number of years, and you started Tylwch factory insolvent, and you have made matters worse by continuing. Now have you made a true statement of your affairs ?—As near as I possibly could. Mr Horsfall: They were asking you about the profits, is it a fact that you have been buying futures ?-Yes. Mr Horsfall: Then may I take it that you have been in the grips of the skin dealers simply because you have owed them money ? I have complained time after time when the skins have come. The Registrar: From Mr Horsfall's ques- tion, I understand that many of the goods delivered to you have not been up to sam- ple when delivered ? Mr Horefall: I am not referring neces- sarily to the gentlemen in this room. The Registrar: Then I take it Mr Hors- f all's second point is that owing to your being in a certain financial condition you have not been able to make the com- plaints ? Oh, I have made plenty of com- plaints and sent the skins back. DIDN'T BOTHER WITH BOOK- KEEPING. Mr Davies (of the Swansea Butchers' Company) • When Mr Rogers joined you, did you Prepare a balance sheet of your affairs showing how you stood then ?—No, I didn't. I didn't bother in that kind of book-keeping. Did you ever prepare a balance sheet ?— No Mr Rogers tried, but he made a regu- lar muddle of it. As long as you had plenty of skins in you didn't mind ?—As long as I had skins in and paid my way. But you haven't paid your way ?—Oh, if I had bought the skins from the market I should. Do you know that you were paying E15 12s on the investment and £17 10s interest, and thus you were paying 10 per cent. on a loan of E350 ?-No. Then you believed that this money would be returned to you at the end of thirty years ?—Of course I believed it. When did you join the society first About eight or nine years ago. How did you come to join ?—Well, how do you join an insurance company ? A gentleman came round and persuaded me to join, and gave me to understand that if the lot fell to me I would get the loan free of interest. Did you think it was going to fall to you ?- Well, some appears to get them. A CREDITOR SAYS H NO." On the 8th September your solicitor wrote to us to say that your debts were about £250. Was that correct ?-I could not say. Mr Woosnam: I was not the solicitor. Mr Davies: Oh, no, you were not the solicitor there it was Messrs J. and A. Davies, of Llanidloes. Did you tell them that you owed only about E250 ?—I have nothing to do with what they put down. What I meant that for was the skin mar- kets. You didn't put your private debts into that, then ?-No, they only asked for skin markets. In the whole of your letters to my com- pany you have constantly stated that you had seven or eight times more than enough ■ to pay all you owed ?—I never put seven or eight times I may have said two or three times. That, of course, is as far as skin markets are concerned. Then, of course, if Mr Horsfall is willing to stand by- Mr Horsfall: May I say, on behalf of myself, Mr Davies, "No." Mr Davies: You may, sir. He gave us to understand that he would follow the usual custom in our markets, pay for one week's goods and take another week's. He has been insolvent the whole time. Mr Woosnam: With regard to this so- ciety, supposing you had intimated to the society that you wished to cease to be a member, would you have got any of your contributions back ?-I did write to them to ask if they would sell the one bond. POINTS TO BE CLEARED. But would you have been entitled to the return of any of your contributions ?-No. So practically this society is a lottery ?- Yes. The Official Receiver: The contributor is entirely in their hands. Mr Woosnam: With regard to this arbi- tration, have you paid anything under that award ?--Yes, I paid £63 under the award to clear Rogers' account. Where did you get the money to pay that ?—From the bank as an overdraft. Well, you haven't been kind enough to pay me for my work ?-No, Mr Woosnam. Have you any offer to make to the cred- itors ?—No, I have no offer. Can you get anyone to help you ?-No, I am afraid I can't. The Official Receiver: There is a feeling, sir, that the examination should not be closed in this case. The wife's claim has not been disposed of yet. It may be neces- sary to ask further questions. Mr Davies: I should think it would be advisable to have. it adjourned sine die. It has been very unsatisfactory altogether. Mr Horsfall: We may get a few pence in the £ now the longer it is delayed the worse it will be, and the less we shall get. The Registrar: There is the point of the furniture to be cleared up. The Official Receiver (to Mr Horsfall): There will be no expense*so far as you are concerned about the adjournment. The Registrar: There are certain points still to be cleared up. especially with re- gard to the furniture. Therefore, the ex- amination will be adjourned till the 14th of December.