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Colonial Cases

Choo Yu Chow v. Sassoon, 1859

[banking]

Choo Yu Chow v. Sassoon Sons and Co.

Consular Court, Shanghai
1859

 

Source: The North-China Herald, 10 September 1859

A CASE of considerable interest to the Mercantile Community of Shanghai has been before the British Consular Court during the week, involving the question of the responsibility of holders of Chinese bankers' orders.  A report of the same will be given in our next issue.

 

Source: The North-China Herald, 17 September 1859

H.B.M. CONSULAR COURT, SHANGHAE.

CIVIL SIDE.

5th September 1859

CHOO YU CHOW v.  D. SASSOON SONS & Co.

Before T. T. MEADOWS, Esq., H.M. Consul,

Messrs. R. REID, R. JARVIE, Assessors.

This was a claim for taels 2,046.7.5. being balance of account.

The Plaint being read to the defendants, they were asked whether they admitted or denied its truth in whole, or in part.

DEFENDANT denied the claim and said they had paid the whole amount they owed to the Plaintiff.

CHOO YU CHOW, being duly warned to speak the truth said; - I do not remember my former transactions, but this time I sold 500 Taels weight of gold, worth 8,150 Taels silver, on delivering the gold, there was short weight 8 mace 3 candareens.  I have not brought my book.  I have not done any business this year, the books are at Soochow.  This sale was made on the 25th of the 5th month last year.  On delivering the gold, I received bills for the whole amount, but two were not paid the bank having broken - (the total amount of the two bills was Tls. 2,046.7.5.) - I received the bills on the 25th of the 5th moon, I presented them on the 2nd day of the 6th moon.  I handed them to a banker Fung Yuen to receive for me.  They were payable on the 2nd day of the 6th moon, it was specified on them.  They were not paid.  I took them the same evening to Sassoons, and saw the compradore, who told me that his master was asleep and that I must come next day.  On next morning I saw defendant, who remarked that they had the cancelled mark (chuen) on them, and they must go with me and see the Banker about it, and examine his books.  On the 6th day of the 6th moon, the compradore sent for me, I found the compradore and Defendant together, they refused to pay the bill but wished me to go and see the banker with them.  The compradore then took the bills and they told me to go on to the Banker's and they would follow in chairs.  On getting to the Banker's I met Sassoon's compradore, another compradore named Chin, and a foreign clerk; we found only a coolie in the place, who stated that the firm was bankrupt.  We called the Tepaou, in whose presence the books were examined and we found the bills had not been paid.  On the 7th I went again to Messrs. Sassoon, and was told in Defendant's presence by the compradore, to come in 5 or 6 days when I should get paid.  I was then informed that Messrs. Sassoon were going to apply to the Consul to recover the amount through the Native Authorities, I have not had the bills since the 6th day odf the 6th moon.

I delivered the gold to defendant.  The bills were also given me by the Defendant.  The compradore named Loo, acted as Interpreter.  Then bills were guaranteed to me by Defendant, foreign characters were written on them at the time they were given me by Defendant now present in Court.  The writing was on all of them.  On receiving these 2 bills on the Fung-ho Bank, I objected to the compradore that it was not a safe concern.  He then spoke to Defendant who said he would guarantee them.  I was told that the foreign characters were a guarantee.  I am alone here, my shop is at Soochow.

Recalled.  I went to Sassoon's to report non-payment about 11 o'clock at night on the 2d of 6th moon.

Mer. GUBBAY, (representative of D. Sassoon Sons & Co.) being duly sworn, said: - On 29th June 1858, we settled to buy gold, it was bought on the 5th July.  We paid in bankers orders amounting to 16,274.5.8 Taels, the orders were guaranteed up to maturity (date of payment) not after.  I stated at the time, if there were any cancel marks I would not be answerable for them.  On the next day after they fell due, he came to my office bringing the orders.  I said as it is only presented to-day I cannot say if it is paid or not.  They were brought a day too late, they had the cancel mark on them.  He understood that the responsibility did not rest on us but he asked us to try and recover the amount for him, I spoke to him through our compradore Loo.  I refused to have anything farther to do in the matter.  I never directed any one to go to the bank witrh him.  After some days he came and requested me to lay claim through the British Consul to recover the money, which I decidedly declined.  I did not see him for a week.  Since then we have had three separate transactions with him, averaging six or eight thousand Taels.  He has never referred to this case since.

On 21st May, 1859, I again heard of the case through Mr. Harvey (letter produced).  I saw Mr. Robertson two days after, and explained the matter to him.  he said it was all right.  The Plaintiff was not then to be found.  I heard noting more till I received a summons last Saturday to attend to-day in court; my compradore told me that morning that the Plaintiff had called on the night of the 2d.  I heard of it afterwards.  I have never seen the bills since the 13th of July, my compradore has not got the bills, I believe Mr. Benett has them.

Mr. BENETT, being duly sworn, said: - I know the Plaintiff, he last summer gave me two Chinese orders to try and collect for him, they are in the Taoutai's hands, placed there through the American Consulate.  I am an Englishman.  I knew that the Bills had been given by Sassoon to Plaintiff, the bills amounted to Tls. 2,046.7.5.  I have a receipt from the American Consul for the two bills.  I believe it states the amount.  I could produce it if necessary.  I was promised by Plaintiff 100 dollars on the amount if I gained the day.  This was all arranged through the same Interpreter; he was known to me as having been connected with Sassoon & Co. I met him then frequently.  I don't know his connection with Sassoon.  Nothing was said to me as to the responsibility of Sassoon, the Plaintiff told me the bills belonged to him.

I caught the chief cashier in the Bank, he offered to make a composition, he was a voluntary prisoner in my house for 3 days.  He is now in the Taoutai's house, he offered to pay about half.  I spoke to him through the same Interpreter.  I don't know whether this Interpreter is now employed in Sassoon's house.

CHOO YU CHOW re-examined. - On the 6th day 5th moon, when we went to the Banker's shop, the last witness was the foreign clerk I mentioned as being with us.  I have been twice at the last witness's house with the compradore Loo, who told me that Messrs. Sassoon had told him to ask me there.  I did not give the last wiriness the two bills and I don't know if Loo gave them to him.  I am ignorant that the last witness ever had the bills in his hands.  I never went into the [city] to see any partner of the bankrupt house.  I never had any offer of composition made me.  I have heard of two, but I do not know any partner of the broken bank.  The bills had the cancelled mark on them when I returned them to Sassoon.  It is the custom of Shanghai when a bill is presented at a bank to have them marked with a half circle.  The bill is then retained by the banker, and the money sent about 10 o'clock at night to the holder's house.  If large capitalists the money can be sent earlier.  In this case my banker not receiving the money, went and got back the bills, and gave them to me at about 10 p.m.  It was agreed, when I received the bills from Sassoon, that they guaranteed them whether marked or not.  I repeatedly asked for this money during other later transactions on some occasions I was told that the steamer was going and they were too busy to attend, at others, that they wanted to send all their money home.

(I now hand in a tracing.)  On 3d month of the present year, 8th day, in Sassoon's Hong, a piece of writing on foreign paper was handed me by the defendant in presence of compradore Loo of which I now hand in a tracing.  On 6th I had applied for money.  Nit receiving it, I reported the matter to my employers who pressed me to do something to recover the money when the paper was given me with the assurance that the American Consul guaranteed the matter and that the paper mentioned was proof of it.  The paper was left in my custody for two days to understand its meaning, on the 9th I took a tracing and on the 10th I returned it.  When Loo went to Japan I had the before mentioned Chin as interpreter between me and Sassoons.

(Copy.)

Received of P. Bennet Esq., four bankers' orders on "Joon Hou" Bank for three thousand seven hundred and sixteen Taels 5m. 5c, which are to be handed to the Taoutai.

FREDK. JENKINS.

Tls. 3,7816.5.9.

DEFENDANT re-examined. - I never handed to Plaintiff any paper from the American consulate.  (The tracing being read to him) I know nothing about it, except that I heard that the bills were in the hands of Mr. Benett.  Loo is our regular compradore, but he does business for us and gets percentage, he is a private broker, and does not work for other firms.

BENETT re-examined. - I received from Jenkins a receipt to the same effect as the one I have now heard read.  I gave it at once to Sassoon.  I don\'t know whether they have it now.  I don't know to whom I gave it.  I don't know if I received it back again.  I don't know whether I have it or not.  I am in the habit of seeing Mr. Gubbay when I go to Sassoons.  I have seen him on this very transaction.  I cannot state to the Court was passed, as I do not recollect.I remember some 3 or 4 months ago Mr. Gubbay asked me how that affair with a Chinaman was getting on.  I said it was in status quo or something to that effect.  Messrs. Sassoon had no connection  with the bills whatever, Mr. Gubbay told me so himself, and  said that he would pay me nothing for recovering them and that he would have nothing whatever to do with them.  When I wished to see the Plaintiff I had to go to Sassoons to have the Interpreter.  I don't know what his name was, I knew where he lived in the house and always went there myself, he was a fat man.

[Case adjourned till Friday 9th September, the parries being all warned in court to appear on that day.]
Friday, 9th September.

CHANG PAU CHOO of the Chin Ta bank, being duly sworn to speak the truth, said: - When a Bill is presented enquiry is made who is the holder and his name is entered in a book and also oln the Bill, and the mark (chuen) is made.  The bill remains in the shop, the money is sometimes paid at once, but more generally is sent on the evening of the same day.  This is the custom between bankers.  If a person, not a Banker, goes to cash a Bill the money is either given at once or the Bill is returned to him without any mark r writing on it, and he is told to come at a certain hour when the money and bill are exchanged.  The name of the presenter and the mark (chuen) are then put on the Bill.  It is the fact of the bankers being in the same line of business, well acquainted with each other and having a great many reciprocal transactions, that enables them to retain the Bill without giving the money.  If later in the day the money is not paid by the Bank which has retained the Bill, it is returned to the presenter, of course with the aforesaid marks on it.  If foreign compradors go to receive money, the rule is the same as with other strangers not Bankers.

The money which is sent in the evening consists chiefly of balances arising from the exchange of various Bankers orders.  The instruction to pay the amount of a bill which has been retained in the forenoon is usually given verbally, he balances are usually plaid between 8 and 10 p.m. rarely later than 10.  In the foreign settlement the latest time is 10 o'clock p.m., but at the two East gates the bankers keep sending in till 12 at night, if later than that it is considered that the Bank is not capable of meeting the order.  For trifling balances, the non-payment is not considered of consequence, but if the balance is of importance, say 2, 3 or 4 thousand taels, it is not unusual to begin sending every ΒΌ of an hour after 10 p.m.  If suspicion is awakened, the managing partners of several banks will go to the defaulting Bank, examine in each other's presence its books and stick of unpaid and retained notes, and each withdraw his own.  It sometimes happens that the notes are taken off by the defaulting bank, but during the 30 years I have been at Shanghai, I never heard of the books being taken away. 

In this case the persons who have presented bills and not received money, fall back on the Bank from whom they have received them, and make good their claim by reference to the books of the failing Bank.  This is the more easily done as each day there is a general clearance.  Among all the Banks the entry of actual payment is made when the money is despatched, for which entry a separate book is kept; the shops which are called Opium Banks do not belong to the regular order of banks.  If they issue notes they are only for small sums.  The Fung Ho Bank was a regular Bank.  When a Bank is asked to get a bill cashed for the holder, and the issuing bank fails that day, he returns it to the person  who gave it him, who also returns it to the man  who gave it to him.

As to the time for returning guaranteed notes to the parties who guaranteed them, is possible they must be returned the same day, but if there are any obstructions to returning them that day - such as the city gates being shut or the distance being too great - they can be presented the following day.  That has hitherto been the custom, and cases occur every year of this kind.  It has never been considered that the ("chuen') mark gives the knowledge of the Bill having been paid.  The object of the (chuen) mark is merely a mark for the accountant of the bank.  On the bill being presented to him and found good by him he writes the name of the presenter, marks the (chuen) mark and passes it on to a file.  The (chuen) then means that he has to repay the money to the man whose name is on it.  The chuen-mark in addition to the name is an old Shanghai custom, no farther mark is made on the bill at the time the payment is made.

A-MEW, being duly sworn to speak the truth, said:-I am comprador to Dent & Co.  Last year the custom was for the banker to make a mark (chuen) - not to write the name of the holder, he enters it into his book, or the name of the house, and tells the man who brings the bill when it can be paid in the afternoon; sometimes 10 p.m. before it can be paid.

This year the custom is changed among several of the houses; it was changed about China New Year.  The custom now is not to give up the bankers order or allow the mark to be made, until the money is plaid.  The bill must be returned the same day it is dishonored, the (chuen) mark goes for nothing.  If it is absolutely impossible to return the bill that night the next morning may be allowed.  The refusal to allow the chuen mark to be placed on the banker's chop before the money is paid, is not the general custom.  Some bankers consent not to put it, but some insist on putting it, and therefore if a banker's order which I had guaranteed is returned dishonored the same day it is due on, I would consider the guarantee binding whether the chuen mark was on the bill or not.

JUDGMENT.

That the defendant pay the amount claimed by he plaintiff together with interest on the same, at the rate of one per cent per month from this date till the day of actual payment. 

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