LAW. SUPREME COURT.—THURSDAY. - INSOLVENCY OF RAWACK AND COMPANY. - The Sydney Morning Herald (NSW : 1842 - 1954) - 1 Aug 1856 (original) (raw)

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Fri 1 Aug 1856 - The Sydney Morning Herald (NSW : 1842 - 1954)
Page 4 - LAW. SUPREME COURT.—THURSDAY.

i.NSOL.VENCy OF RAWACK AND COMPANY.

The following is the judgment of the CHIEF JUSTICE

in this matter, after argument in Chambers on six

Appeal respecting the Allows < ce of a Debt.

This is an Appeal by the Representatives of Theodore

Rawuek, late of Hamburgh, deceased, who was formerly

a partner in the firm now insolvent, from the disallow-

ance (in part) of a Debt by the Chief Commissioner.

The proof sought was of three Bills of Exchange,

amounting to 5000, or thereabouts, inclusive of

damages for dishonour, notarial charges, and interest ;

which Bills, (dated in February, 1854, were drawn by

the Appellants, in Hamburgh, upon the Sydney Firm,

and accepted in its name by Leopold Rawack, one of

the insolvents, who was then residing in Hamburgh.

The Chief Commissioner, however, has allowed only

about £2800 (the exact sums are not material I, on the

ground that the amount for which the Bills were

drawn supposed at the time, in Hamburgh, to be the

balance due to the deceased, was not in fact due ¡

that Leopold Rawack accepted them under a mistaken

belief that it was due, but with an understanding that

the exact amount should afterwards be ascertained and

that a Mr. Van de Portion, representing these

Appellants, and having power from them to compromise

matters, did in May 1854 (in Sydney), arrange

with Sir. Lippmann, the other partner, and adjust the

accounts at the sum above specified.

On the hearing of the Appeal, the evidence before

the Chief Commissioner was put in, together with

certain letters which had passed between the parties and

Messrs. Rawack and Lippmann were personally

examined, and also the gentleman who was their

book-keeper in 1853 and 1854 but who was not with

them at the time of the supposed settlement with De

Porter in the latter year : having been otherwise employed,

from February to August in that year. The

account current also was produced, made up from the

books of the firm. I am therefore in Ml possession, it

may be taken for granted, of all

the evidence and facts which the Sydney

Assignee, or Creditors, can adduce in opposition to the

claim. And I understand the material facts to be the

Leopold Rawack had left this colony in 1843, in

order to make certain arrangements in Hamburgh.

On his arrival there, the brother (who was largely in

advance for the firm, and was entitled to one-half of

its profits, if any, with interest also on his advances),

having been some months deceased, the latter's Representatives

called on him for a settlement. The Sydney

house had previously remitted £1000, it appears, to

Theodore Rawack to be paid to one Nathan ;

but the money was retained by the Representatives,

(they claiming a right to do so, on some ground not

explained, nor to be explained without reference to

them), and Nathan sued Rawack for the amount. In

this state of things, the accounts between the firm and

the deceased's representatives were gone into, by them

and Leopold Rawack mutually j the amount of advances

was settled at a certain sum ; the profits, which

up to that time were known to be large, were put at

another sum and the following arrangement was entered

into for the liquidation. The Representatives,

who had claimed three items of additional charge

against the firm, reserved those for future discussion

; they agreed to hand over the £1000 to

Nathan, and they have (I am satisfied fully of that (

fact) handed it over and then they agreed to take '

these Bills, payable at distant dates in Hamburgh, for the

then ascertained or acknowledged debt. The a

rangement was subject to approval, however, by the

creditors of the deceased. of which approval I find sufficient

This, then, being a transaction of stated and settled

accounts, except only as to certain further items

claimed, which were left open, and the creditor having

thereupon given time for payment of the balcony

and, on the strength of the settlement, and in consideration

of the Bills given, parted with a large sum,

without contest, which possibly he had a legal right

to retain the question is whether that settlement can

now be defeated, and the accounts be anew entered

into and, if so, on what ground, and on what terms,

the inquiry is to be made. On the one hand, we must

place the clear prima facie evidence afforded by the

Bills, and the admitted settlement of accounts in Hamburgh

; with the immediate consequences, so

beneficial to the Sydney firm, and now

irreparable. On the other hand, we have to consider

the injustice of permitting these Appellants, if there

really was a mistake made to profit by the error - to

the injury, not of the insolvent firm, but their other

creditors ; whose expected dividends are already

Having duly weighed these considerations, and the

arguments urged before me on both sides, and availed

myself not only of time taken to deliberate, but of the

assistance of two of my. learned colleagues, my conclusion

is as follows. I determine, first, that the

three Bills shall be admitted to proof,

(deducting of course all payments,) with such exchange,

damages, and charges, on their dishonor, and

such interest, as shall be in accordance with mercantile

usage, respectively. am of opinion, secondly, that,

as this Court in its Insolvency jurisdiction is one canally

of Equity as of Law, it would be competent to me to

direct that,-retaining that proof in the meanwhile, and

ordering a dividend to be set apart to meet the full

amount, subject to the final result, the assignee (on

behalf of the creditors generally) be let in to " Jiir

charge) andfalsifq" the settlement ; if I found any such

facts before me, as to justify that interposition.

If, however, I permitted such an inquiry, it could

only be at the expense of those creditors for in the

absence of all fraud (none being suggested) why

should the Appellants defrayed contribute to it? Why

should they assist with their funds, or with their share

of the mills of the insolvent estate, an attempt to defeat

on the ground of a mistake, for which the Ap-

pellants are not responsible-a bona-fide settlement of

accounts, made by a man perfectly able to deal with

them, or at the least to procure all necessary information

concerning them, (or who should have waited till

he had procured it), and followed by bills of exchange,

intended to close (so for) all transactions between the

But I am of opinion, thirdly, that a case is not established

to justify the equitable interposition contemplated.

It was admitted, that those Appellants are

honourable persons, occupying a fiduciary position,

who really believed themselves to be entitled to what

they claimed. It was admitted further, that the

settlement was (as to the sums discussed) final and

after reference to all accounts accessible in Hamburgh.

The only ground, it is admitted, on which are investiga-

tion can be obtained, is mistake a mistake, not of any

specific fact or facts, but of a result. That is to say,

Mr. Rawack computed the balance of advances, at a

sum much greater than, according to his own books,

he now finds was due and he was at the time content

to calculate the profits, at an amount which subsequent

events have shown was subject to serious deduc-

tion. If, on such grounds as these stated and settled

accounts are to be reopened, and the consideration of

Bills given on such settlements questioned, commercial

affairs will I apprehend be much embarrassed,

and the interests of merchants, after years

of imagined safety, be greatly and unjustifiably prejudiced.

It is possible, nevertheless, that the Tribunals

might interfere to rectify such errors, if other circumstances

did not oppose. But there are here such opposing

circumstances. In April 1854, Mr. Leopold

Rawack being then on his return to Sydney, the Ap-

pellants write to the firm here to communicate, that,

as stipulated by the terms of their arrangement, the

approval of the' creditors had been obtained : - they

forward the account current, on which the settlement

had been based and enumerating the bills accepted,

express a hope that the three outstanding items will

be adjusted with equal friendliness. In reply

to this, Messrs. Rawack and Lippmann, on

the 21st July, (not the one partner only, but both,)

while " reserving to a future day the examination of

the accounts," distinctly promise to remit by the next

mail, to meet the liabilities contracted by Sir.

Rawack, the first instalment falling due Not a word

about any adjustment with Mr. Van de Portes : not a

word in repudiation of the settlement by Mr. Rawack.

There is, no doubt, an intimation that the accounts

could not then be examined ; but the natural

construction of this is looking at all which

the matters referred to. It is to me quite unintelligible

and scarcely credible, that Messrs. Rawack and

lippmann should at that time have dissented from,

much less have obtained a complete reversal of the

settlement which resulted in the Bills in question. If

it were so, why did they not at once announce the

fact ; protest against the settlement as altogether

erroneous and require one of those bills, at least, if

not two, to be given up? On the contrary,

on the 20th September following,

the firm write again-not in any manner

repudiating the settlement. Advising a remittance

of £1000 in gold dust, and dwelling on their difficulties

and losses, from fallen markets and the like, they only

request time offering to pay " £1000 every four

months, until the liquidation of the actual debt, and

about £1500 for the profit share to the end of 1859."

It is true, that the letter purports to inclose an account,

and alludes to discrepancies ; but no such account in

fact was sent, and the balance stated

is in blank. Such letters, in my opinion,

under the circumstances, amount to a ratification

rather than a disapproval-of the settlement and

effectually bar all claim to re-investigation, at this

late period, whether at the insolvents' own instance,

or that of their other creditors.

This being my conclusion, it is needless to consider

whether such an application could succeed, having regard

to the fact that the settlement was founded on

good consideration ; first, in the payment to

Nathan, and secondly in the giving of time.

Assuming those matters not to disentitle the parties to

come in and falsely, as in an ordinary suit for that purpose,

I think the subsequent assent coupled with

the absence of all evidence of mistake, in the proper

sense of that word, quite enough. If the general

body of an Insolvent's creditors have rights, irrespective

of the Insolvent, so has each particular creditor.

I think that the Appellant's case has not been

answered, and that the settlement, and bills founded