and Wales. these charges would deprive the manufacturer and mer. Failures and Bills of Sale in England chant of a very large proportion of their customers. We do not consider that a company should have any greater facility for borrowing than an individual, and we think that while a company should have unrestricted power to mortgage or charge its fixed assets, and should be allowed to contract that other fixed assets substituted for those charged should become subject to the charge, and the company should also be capable of charging existing chattels and book debts or other things in action, it ought to be rendered incapable of charging after-acquired chattels, or future book debts, or other property not in existence at the time of the creation of the charge. We recognise that this would to some extent reduce the amount which a company will be able to borrow on the security of debentures, but we do not think that this is undesirable, being of opinion, as before indicated, that at the present time companies are tempted to exercise their borrowing powers to an unduly large extent, and we think further that, by the restriction on the capacity to borrow, companies will obtain a larger general credit by reason of trade creditors no longer having the fear that the whole of the assets will be swept away by the debenture-holders. Moreover, the manufacturer and merchant who supplies goods on credit is a very important member of the community, and his protection is a question well deserving the solicitude of Parliament. The proposal we make would also put an end to a very grave scandal, to which attention has been called more than once-namely, that an insolvent trader should be able to sell his business to a company formed by himself upon the terms that it should pay the existing debts of the business, and issue to him, as further consideration, debentures charged on all the assets, so that when, by means of goods obtained by the company on credit, he has paid off his own debts he can re-seize the business under the powers contained in his debentures, and also would render impossible the very objectionable if not dishonest practice of debenture-holders standing by after they know their debtor company is insolvent, and stepping in to take possession when large quantities of work have been done or goods supplied by strangers who have not received payment. F. GORE-BROWNE, W. H. HOLLAND. MESSRS. HART, Moss & Co., Chartered Accountants, of 22 Moorgate Street, Rotherham, announce that they have taken into partnership the son of their Mr. Moss, Mr. ARTHUR Herbert Moss, A.C.A. The style of the firm will remain unchanged. ACCORDING to Kemp's Mercantile Gazette, the total number of commercial failures recorded in England and Wales during the week ending Friday, July 13th, was 141, viz. :— New Bankruptcy Proceedings published in the London Gazette, 72; Deeds of Arrangement registered, 69. The respective Bankruptcies, 86; Deeds of Arrangement, 71-total, 157: numbers in the corresponding week of last year were: being a decrease of 16. The total number of commercial failures recorded during the 28 weeks of the present year is 4.611; the total number recorded in the corresponding 28 weeks of last year was 4,884, showing a decrease of 273. The number of Bills of Sale, including Re-registrations, filed in England and Wales for the week ending Friday, July 13th, was 162. The number in the corresponding week of last year was 171, showing a decrease of 9. The total number filed during the 28 weeks of the present year is 4,202; the total number filed in the corresponding 28 weeks of last year was 4,622, showing a decrease of 420. Debentures. The Mortgages and Charges registered by limited companies in England and Wales during the week ending Friday, July 13th, amounted to £1,932,891, by way of addition to £2,008,351, previously issued by the same companies. The amount registered in the corresponding week of last year was £511,313, showing an increase of £1,421,578. The total amount registered during the 28 weeks of the present year was £45,926,583 (in addition to the issues in previous years by the same companies), as compared with £41,030,454 for the corresponding 28 weeks in 1905, showing an increase of £4,896,129. liquidation, and Alan Drummond, accountant, Edinburgh, liquidator of the company, for payment of £55 10s. 3d. Lord Johnston remitted to an accountant to examine the books and papers in the liquidation, and report upon the true state of the liquidator's intromissions. His Lordship said that the pursuer sued for two accounts for business done in the liquidation on the employment of the liquidator. The liquidator did not deny the employment or the performance of the business. On the other hand, the pursuer did not seek to hold the liquidator personally liable on the employment, but only in consequence of his having intromitted with the assets of the company in liquidation and of his having paid other accounts of a similar nature to the pursuer's in preference to him. The pursuer's accounts had on remit in the present process been taxed at the sum of £54 5s. id. The liquidator maintained that he had no funds, and could not pay until he had made further realisation. The pursuer maintained that whether the liquidator made further realisation or not, having given preferences so as to disappoint him in his just claims, the liquidator was bound to place him at least in the same position in which he would have been had a fair distribution of the funds which had come into the liquidator's hands been made. On taking up the case in succession to Lord Stormonth-Darling, the information given his Lordship on one side and the other led him to think it proper to require the liquidator at once to lodge accounts of his intromissions to the date of the summons, and to allow the pursuer to lodge objections thereto. The accounts lodged by the liquidator prima facie supported the pursuer's contention. On his own showing the liqui. dator had paid other accounts of a similar nature to the pursuer's, and, in particular, an account incurred to Messrs. Robertson & Wallace, S.S.C., for the large sum of £175 19s. 11d., without making any provision for payment of the pursuer's much smaller account of some £50 odd. And if his Lordship was to judge the liquidator's case on the apparent footing of his accounts lodged, he would give effect to the pursuer's minute and ordain the liquidator to make payment to him of the sum of £46 IS. d. necessary to give him the pari passu ranking for his account which he ought to have had on a fair distribution were the liquidator's accounts accepted as meaning what they represented. But consideration of the liquidator's accounts showed that it was impossible that he could have paid Messrs. Robertson & Wallace, for instance, out of proper realisations in the liquidation. If he had paid them at all it must have been, as he himself explained, by setting their claim in the liqui dation against some private debt due by them to himself, leaving him a right to recover in the liquidation as if he were their assignee. But the necessity of such an explanation, and the doubt attaching to it, showed that the liquidator's dealings in the liquidation had been irregular, and that his accounts were unsatisfactory, and his Lordship was therefore not the least inclined to accept either his accounts or his explanations in disposing of the pursuer's claim. But his Lordship was the less disposed to accept the liquidator's accounts, and his assertion that he was really without funds to pay either Messrs. Robertson & Wallace or the pursuer by the consideration that the liquidator had been for a considerable time carrying on the business of the old company. His realisations had been largely expended, according to his own account, in wages, materials, and other expenses of carrying on a manufacturing business, and he alleged that he had incurred other accounts for the same purpose which were yet unpaid. Now, while he took credit on the discharge side of his account for these large outlays, which practically swamped his realisations, there was not the slightest hint on the charge side of his accounts of any returns from the business, whereas on the scheme of his accounting he should have debited himself with the gross returns. In these circumstances, while his Lordship was much disposed to take the liquidator's accounts as he stated them, and accordingly give decree in favour of the pursuer, in terms of his minute, he thought it would be more just to both parties, and more to the advantage of the liquidation, if he made a remit to an accountant to examine the books and papers in the liquidation and report upon the true state of the liquidator's intromissions, that it might be ascertained, as it could not be from the liquidator's accounts, what was the measure of payment which ought to have been meted out to the pursuer had he been fairly dealt with. (Scotsman.) had been AUCTIONEERS, SURVEYORS & VALUERS. Extract from Auditing, by LAWRENCE R. DICKSEE, F.C.A. Licensed Houses present some rather special features. The goodwill attaching to the license gives the lease or freehold of licensed premises market value greatly in excess of their real value as buildings. To be properly considered, the value of the premises and the license must be separated. The former should be depreciated in the usual way, leaving the license alone to be considered. A license on freehold premises does not depreciate, but a license on leasehold premises passes away with the premises and must therefore be depreciated like a lease. A license may at any time be lost-either for misconduct or for no rea300-but this is a contingency outside the scope of depreciation. It may, however, be provided against by Insurance, which would appear be a most prudent course to adopt. For full particulars as to LICENSES INSURANCE apply toThe LICENSES INSURANCE CORPORATION AND GUARANTEE FUND, Limited, 24 MOORGATE STREET, LONDON. merely side-issues, to dispose of them at once before approaching the main question. In the ordinary course of events, neither directors' fees nor managing director's salary could begin to accrue against a company until the appointments had been completed, which, in the nature of things, could not be until some date after the actual registration of the company. Under normal circumstances, therefore, a contract upon the part of a company to employ the vendors as directors or as managing directors, or as both, at an agreed salary, could only operate as from a date when it was possible for the company to make such make such appointments. Although we cannot speak positively upon the point, as we have not a copy of the contract in this case before us, we think it quite doubtful whether either managing directors' salaries or directors' fees are chargeable against the company's Profit and Loss Account save in respect of the period commencing when the appointment was actually completed, which under no circumstances could be earlier be earlier than the 11th February 1906, and ending the 31st March 1906. It is quite possible, however, that an effective contract may have been entered into by the company under which the agreed purchaseprice was loaded by a sum representing additional interest thereon at the rate of £1,100 per annum to be calculated as from the 31st March 1905, and the same contract may have provided that the amount payable under this clause was to be payable in equal halves to each of the two vendors. If that be so, the ultimate effect of such an arrangement is, of course, still that the company has to pay a further £1,100 in addition to the purchaseprice, but the proportion thereof accrued prior as to the date when the company is entitled to commence business must be treated purchase-money, and not as a charge against the profits earned by the company subsequently to its incorporation. These same remarks apply mutatis mutandis to debenture interest and to interest on vendors' unpaid purchase-money. An agreement to pay interest on debentures as from a date prior to their actual issue is pro tanto an issue at a discount, and such discount is not chargeable against current revenue, although it is very desirable that it should be written off out of revenue as soon as possible. Certainly, however, it cannot in reason be charged against a period of somewhat less than seven weeks' duration. With regard to interest on unpaid purchase-money, it would almost appear as though the vendors were receiving interest twice over if they take interest on debentures and also on unpaid purchase-money; but, if the contract of sale clearly so provides, the arrangement would appear to be binding upon the company. The position would thus appear to be that, assuming our surmise as to the effect of the contract actually entered into by the company is correct, the interest on debentures from Ist April 1905 to 10th February 1906 should be treated as discount on issue of debentures and written off out of future profits extending over, say, three years. Interest on vendors' unpaid purchase-money from the 1st April 1905 to 11th February 1906 should be carried to Purchase Suspense Account, and the interest from the 11th February to the 31st March 1906 charged against profits for that period. Managing directors' salaries and directors' fees should be dealt with in the same way as interest on unpaid purchase-money. In compiling the Revenue Account it is necessary for the directors to determine what profit (or loss) was made prior to the 11th February 1906, and what was made in the ensuing period. If stock was not taken on the 11th February the directors must assume the responsibility of making the apportionment upon a reasonable basis, in some such manner as that explained in DICKSEE'S "Advanced Accounting." The balance of the Revenue Account for the period ending the 10th February 1906 may be transferred to Suspense Account, while against the Revenue Account for the following seven odd weeks must be charged interest on debentures, interest on unpaid purchase-money, managing directors' salaries, and directors' fees attributable to that period. If this last-named Revenue Account then shows a credit balance it will be legally available for distribution as representing profits for that period, although the expediency of paying a dividend under the circumstances named may well be questioned. If, on the other hand, the account shows a debit balance, it must be carried forward to the next year. With regard to what we have called the Purchase Suspense Account, this will show a debit balance representing payments that have had to be made by the company under valid contracts entered into by it, in addition to the £20,000 stated by our correspondent. The account may be properly closed by transfer to the debit of Goodwill Account, and, indeed, should be so treated in the first instance, for in point of fact, if our surmise as to the facts is correct, the company must have paid in one way or another considerably more than £4,000 for the goodwill of the business acquired. We now come to the second part of our correspondent's inquiry. The vendors, appar ently considering that they are being paid too much for the business which they sold to the company-and perhaps more than they expected to receive, there having possibly been some misapprehension as to the practical effect of the agreement actually entered into-are desirous of surrendering to the company two thousand fully-paid £1 shares. The question arises as to how such a surrender can in point of fact be carried into effect. Prima facie what is desired is a reduction of the company's capital; and it would no doubt be an easy matter to secure the approval of the Court to a scheme for reduction under such circumstances, in which event Share Capital Account might be debited and Goodwill Account credited with £2,000, and the whole matter regarded as brought to an end. Very possibly, however, the expense and perhaps even the publicity of a reduction of capital may be regarded as undesirable; but it is doubtful whether shares can be otherwise surrendered except as a short cut to forfeiture, and thus the expediency of attempting anything of the kind seems open to question. Certainly no such surrender should be carried through by a company without first obtaining proper legal advice. In giving judgment in Trevor v. Whitworth, Lord HERSCHELL said: "The "authority of each case of surrender of shares "must be decided upon its merits. Possibly a "surrender to the company by way of donation may be free from objection, and there may "be other causes." This dictum, so far as it goes, would justify such a surrender as that contemplated by our correspondent, but it hardly appears to be sufficiently definite to remove all doubt with regard to the matter. 66 If it be desired to carry through some arrangement with the vendors of the nature |