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Colonial Cases

The Comptoir d’Escompte v. Russell and Co., 1866

[conversion]

The Comptoir d'Escompte v. Russell and Co.

United States Consular Court, Shanghai
December 1866
Source: The North-China Herald, 29 December 1866

 

U.S. CONSULAR COURT.

December 27th.

Before G. F. SEWARD, Esq.

THE COMPTOIR D'ESCOMPTE v. RUSSELL & CO.

MR. EAMES appeared for the Comptoir d'Escompte and Mr. Myburgh for Messrs. Russell & Co.

This was an action to recover the sum of $12,000 advanced by the plaintiffs to one Foo-kee on the security of a godown order for forty boxes of lustres, lying in the Kin-le-yuen godowns, which Messrs. Russell & Co. had endorsed.  Foo-kee having failed to re-pay the loan, the plaintiffs proceeded to take possession of the cases, which were found to contain peas and shavings.  They accordingly sought to recover from Messrs. Russell & Co., on the formal pleas:-

That the defendants, though requested to deliver to the plaintiffs the said forty boxes of lustres, neglected and refused to do so, and wrongfully converted the same to their own use.

That the said forty boxes of lustres were of great value, to wit; of the value of $12,000 which sum had been lost to the plaintiffs by the said wrongful conversion of the said lustres by the said defendants.

Wherefore the plaintiffs pray relief as follows:

That the said defendants may be ordered to pay to the plaintiffs the said sum of $12,000, together with interest thereon till the day of payment, and the costs of this suit.

And in answer to the above plaint George Tyson a partner in the firm of Messrs. Russell & Co. says that they are not guilty as alleged; that on the first April 1866 Fokee deposited with them forty cases of merchandise stated by him to contain "lustres" and that they gave for them a receipt as bound to do so; that they kept these cases, but they deny that they ever refused to give them up to the plaintiffs, on the contrary they are willing to give them up on payment of all that is due in regard of them, and they declare that excepting as warehousemen they have no interest in the said cases.

E. MOREL. - This is a paper that was handed by a Chinaman Fokee to my compradore, then to me, to get a loan on.  In order to ascertain whether it was correct I sent a note to Messrs. Russell & Co., to ask them to counter-sign it.  They did so, and I advanced $12,000.  The money has not been repaid.  Fokee has absconded.  I demanded the goods and have not received them.  At the time of my advancing, the value of the lustres was equal to the amount of the loan.  Their exact value can be ascertained from the Chamber of Commerce.

To Mr. MYBURGH. - I advanced $12,000 in respect of these goods alone.  I advanced money on goods belonging to Fokee placed in my godowns.  I subsequently found out that these goods were not what Fokee represented them to be, when I made advances to Fokee some of the boxes were opened on which I advanced.  After one or two dealings with Fokee I had sufficient confidence in him to leave off examining the goods of his in my own godown, on which I made advances, and for other reasons.  I never sent to have goods inspected in my godown but my own.  I have advanced on tea.  Before making such advances it is not my practice to send a broker to inspect if I have confidence in the person to whom I am advancing.  This advance on the forty boxers of lustres was made after I had got confidence in Fokee.  I do not remember that Messrs. Russell & Co. have said they are willing to deliver the forty cases mentioned in the order.  Mr. Seligman, whom I sent to take delivery, will say what passed when he went to take delivery.

ALFRED PHILIP. - I do not know anything about the value of lustres.  I look for that in the Chamber of Commerce Report.  I found the price of them on the 8th October to be Tls. 6 each.  A case contains fifty pieces.

EMILE SELIGMAN. - I am employed by the Comptoir d'Escompte as clerk and accountant.  I remember having been sent to the godowns of Messrs. Russell & Co., by M. Morel in October, to take delivery of the goods named in the godown order No. 308.  I went to the Kin-le-yuen godowns and asked Mr. Butler for delivery of the cases in question.  Mr. Butler was in charge on that day.  He always is.  I first asked for delivery of the forty cases.  We went down to where the cases were lying and opened two of them.  They contained bags of peas, and straw with shavings to prevent the peas rattling about.  I asked them about the others.  He told me he had opened two cases before, and that they were filled with the same materials.  I declined to take these cases, but asked for forty cases of lustres.  He said these were the cases for which the godown orders were given and he had no other cases to give me.

To Mr. MYBURGH. - I refused to take delivery of the four cases that had been opened, and also of thr other cases that had not been opened.  Since then I have neither had the remaining cases opened or applied for delivery of them.  I have never before seen cases of lustres.  The cases pointed out to me were numbered and marked as in the order.  The cases looked as if they had not been tampered with.  The marks and numbers on the cases are those given in the order.  We have advanced on goods, some of the cases containing which were what they have been described to be, others not.

JOHN DAVID THORBURN. - I am a broker and auctioneer.  I know the merchandise called lustres.  They are packed in lined cases containing fifty pieces.  I have never seen them packed in any other way.  I know of none being sold in October under Tls. 6 a piece.  Since, they have declined, now the price varies from Tls. 5.60 to Tls. 5.80.

To Mr. MYBURGH. - It is not usual to open cases of lustres before sale.  A lower price would be got for cases that had been opened.  Frequently I have inspected goods on which advances have been made.

To Mr. EAMES. - To get a valuation I have inspected goods.

DAVID MACLEAN. - Manager of Hongkong and Shanghai Bank.  My bank has advanced on goods in godowns.  The orders are in this form, that of No. 308.  I believe other banks advance also.  When I advance on orders such as that one, if I were aware of the value of the goods, I would not send any one down to examine them.

This closed the case for the plaintiffs.

In opening the case for the defence,

MR. MYBURGH said - The defendants holding property of Fokee's are willing to hand it over to the plaintiffs, on being recouped for the expenses they have incurred in connection with it.It is not the business of a wharfinger to examine goods deposited with him.  I am placed at a disadvantage by my learned friend not having shewn his line of defence.

MR. EAMES. - The question is really whether the defendants can deny the statement on the receipt.  I hold that they are estopped from repudiating what is written on the receipt.  Baron Parke declares that where one by a statement causes a reasonable person to do any act, such a statement cannot be set aside.  Story, in his treatise on agency, lays down that he must be the sufferer, through whom or through whose agent a wring has arisen.

MR. MYBURGH. - The action is in trover, but no demand has been made for the goods, nor has any wrongful conversion of them been alleged.  Supposing the endorsement had been made ever so falsely by the plaintiffs, a contention not made, it would have been the ground of an action in the nature of deceit, and not in trover.  Again, in estoppel it is necessary to shew that one has taken action in consequence of the representation of some one else.  N this case, it will never be ptetended that the money was advanced by M. Motrel in comsequence of the endorsement of Messrs. Russell & Co.  Their endorsement merely shewed that they had what Fokee had deposited with them.  The Comptoir d'Escompte lent their money in reliance on the good faith of Fokee.  Therefore the plaintiffs cannot plead estoppel, more especially as they were in a previous matter deceived by Fookee.

GEORGE TYSON. - I have not stated that I would not deliver the cases of lustres.  I have expressed my willingness to give them up on payment of all charges.  I know nothing about lustres.  I have seen five of these cases in our godowns.  They are in perfect order.  I do not know of any warehouse here, where it is the practice to open and examine goods deposited with them.  All I did in the matter was, when directed to hold these chests to the order of the Comptoir d'Escompte, I endorsed the receipt.

To Mr. EAMES. - No demand was made at the office for the cases of lustres.  Recently, only, my agent said that an application had been made for them.  I believe my agent offered to deliver forty cases as mentioned in the receipt.  Forty cases of lustres as mentioned.

GEORGE A. BUTLER. - I am in charge of Messrs. Russell & Co.'s godowns, the Kunleyuen.  On the 16th April I remember to have receiver forty cases, in respect of which I signed the receipt.  The cases deposited with me bore the mark and number on this receipt.  As is customary, I was informed by the Chinaman what the cases contained.  They were received by me in good order and condition, and still are so in the Kinleyuen godowns.  This order has never been presented at the godowns.  I think I saw this paper when M. Morel came to take muster.  A couple of cases were then opened.  The gentleman who came was satisfied about their external condition.  On presentation of this order I would give up the cases.  At present I am cognizant of the contents of three cases only.  I have no knowledge of the contents of the other cases.  I have never been requested to open them.

To Mr. EAMES. - Mr. Seligman came to me some time in October, I cannot say whether he asked me for forty cases of lustres.  Some cases were opened before him.  I cannot swear that he did not ask for lustres, nor would I swear he did.  I am not sure whether Mr. Seligman asked for lustres or not.  No one ever came to me with that receipt and applied for delivery of the goods mentioned in it.

Mr. MYBURGH. - I have very little to add to what I have already said.  I have succeeded in proving that there had been no formal demand for the goods mentioned in that receipt, that there has been no unlawful conversion, and that my clients are still willing to give back what they received on being recouped their expenses.  No evidence has been brought forward to shew the contents of thirty-six of the cases.  Mr. Morel cannot say that he advanced money on the faith of the receipt.  The advance was made in reliance on the Chinaman.  With these remarks I leave my case with confidence in the hands of the Court.

Mr. EAMES. - The plaintiffs allege to have demanded the lustres and that they were refused.  The evidence of Mr. Butler will not weigh with the Court, his memory was so very convenient.  The plaintiffs went on opening box after box until they considered it useless to open any more.  I do not for one instant say that the defendants have been guilty of any fraudulent act, but I contend that their endorsement renders them liable for the contents of the cases.  It was in reliance on these contents being lustres that the Comptoir d'Escompte made the advance they did.

Judgment was reserved.

 

Source: The North-China Herald, 5 January 1867

U.S. CONSULAR COURT.

Shanghai, Dec. 20th, 1866.

COMPTOIR D'ESCOMPTE DE PARIS vs. Messrs. RUSSELL & CO.

The following Judgment has been delivered in this case.

On the 17th of August last, a Chinese named Foo-kee borrowed at the Comptoir d'Escompte $12,600 and deposited as collateral security a plain godown receipt signed by the Superintendent of the Kin-le-yuen godowns for which Russell & Co. are Agents, for B in a diamond, 3,421 to 3,460, (40) Forty Boxes Lustres.  The next day the receipt was handed to Russell & Co. by the Bank, with a notification that the goods "were pledged to the Bank as security for advances made" and the words "Enclosed the said Order which kindly transfer to this Bank."  The receipt was endorsed by Russell & Co. "Deliver to order of the Comptoir d'Escompte de Paris."

Subsequently Fookee made default in the re-payment of the advances.  The Bank sent to the godowns to procure a muster of the lustres.  A case was opened and found to contain peas and straw.  Two other cases were afterwards opened with the like results, and neither the Bank nor Russell & Co. seemed to doubt that all the others were similarly packed.  The Bank, therefore, comes into Court and claims of Russell & Co. "$12,000, with interest, &c.;" and Russell and Co. plead, in effect, that they are bound to deliver only the packages actually received, and that they are willing - and have always been willing - to do so.  The Bank, in response to this, say that Russell & Co. are estopped from such a plea by the admission on the receipt that Fookee had deposited lustres.

The issue is, whether that admission is a sufficient estoppel to the pleas of the defendants.

The first question is, was the bank assured, by the receipt, that the packages actually contained lustres.

There is nothing alleged in the pleading, and nothing declared in the evidence to the effect that the advances would not have been made, had the receipts been written "said to contain lustres."  On the contrary, it is declared by Mr. Morel, the manager of the Bank, in evidence, that he had advanced on merchandise of Fokee's, deposited in the godowns of the Bank, frequently; and that after the first few times he had so much confidence in Fookee that he did not examine the goods.  There is therefore every reason to believe that, had the words "said to contain" been inserted, the advances would have been granted just the same.  Indeed it is hardly to be conceived that Mr. Morel would have had any merchandise in hjis own godown, had he acted upon the general assumption that a warehouseman may be made responsible under all circumstances for the declared contents of packages.

The next question is whether, granted that the Bank advanced on the faith of the representation on the receipt, they were justified in attaching such faith to the receipt, either in fact or in law.

As to whether such faith was defensible in fact, it may be remarked that the Bank knew that the godown receipt was not negotiable, and that until endorsement they could not claim under it at all.  The representation contained in it was therefore, in a sense, no representation except to Fookee and, as between him and the warehouseman liable to such construction as the actual fact in regard to the contents of the cases should warrant.  Consideration of this point would have induced the Bank to remember that they were really advancing on the faith of Fookee's representations, supported it is true but not establisher by the statement of the receipt.

It may be further remarked that, as declared in evidence, lustres are packed in tin-lined cases, and that the price of them is injured, if the cases be opened.

As Russell & Co. had evidently received the packages upon storage and had no other concern in them, there was reason to believe that they had not inspected the contents, and that they could not speak with precision on that head, or to say the least, to doubt that they had inspected them.  Under these circumstances it was perhaps an important admission that notice was not given to Russell & Co. when they were required to endorse the receipt, that they were considered responsible that the contents were actually such as were declared.  It does not seem likely that they would have consented to endorse the receipt on such an understanding.

It should not be forgotten again that the receipt was not for "40 cases of lustres" but for 40 cases of certain marks lustres.  In the instance of a promissory note payable out of a fund, it is plain that there being no fraud the grantor cannot collect unless the fund be sufficient to meet the amount, and that the condition takes the note out of the class of negotiable documents against which the grantor is estopped from pleading non-responsibility.  So here when the receipt is granted for so many cases of lustres with certain marks, it is difficult to say that the Bank is entitled to lustres irrespective of marks.

As to whether such understanding was defensible at law, I may quite first Smith's Leading Cases Vol. 1 Doe v. Olivier,

The Courts have been unwilling to allow men to be entrapped by formal statements and admissions which were perhaps looked upon as unimportant when made and by which no one was ever deceived or induced to alter his position.  Such estoppels are still as formerly considered odious.

Also Greenleaf on evidence Vol. 1, para 22,

Estoppels must be certain to every intent, for no one will be denied setting up the truth unless it is in plain and clear contradiction to his former allegations and acts.

Also [Polmius] on Contracts, Vol, 11, 840,

It is necessary that "there shall be some default of duty by act or neglect as a ground for estoppel.  We are not willing to admit that a person entirely innocent in a moral point of view may yet be bound by his acts or sayings when if he be not bound, he will be permitted to cast an injury upon some one as innocent as he is, but who has been misled merely by justifiable confidence in what was said or done to him with the intent that he should rely upon it.  But when this confidence and dependence were not expected, and still more when they do not exist, we apprehend that an estoppel must be founded upon fault.  The whole doctrine of estoppels in fact originated in Courts of Equity and passed from them to Courts of Law, and the doctrine of Equity is often asserted in respect to them by Courts of Law, and when there is no violation or neglect of duty of any kind we apprehend that it must be a very strong case which comes within the law of Estoppel."

The text is supported by notes that are very clear, one of which is -

Thus in Welland Canal vs. Hathaway, 8 Wed. 48, Nelson, J., limits Estoppel to cases where a party in good conscience and honest dealing ought not to be permitted to gainsay his own acts and admissions.The estoppel urged does not seem sustainable under the principles indicated in these authorities.

The word "lustres": in the receipt was looked upon as formal and unimportant when inserted, and it is not shewn that the use of it had deceived anybody.  There is no clear or plain contradiction to former allegations and acts in setting up the truth.  There is no allegation of moral fault on trhe part of the defendants, no reason to believe that they knew or suspected that confidence and dependence would be placed in them as declaring the actual contents of trhe cases were lustres, no offence against good conscience and honest dealing on the part of the defendants in pleading the actual facts.

I therefore decree for the defendants.  The costs to be paid by the plaintiffs.  G. F. SEWARD.

Assented to

Signed C. D. NYE, F. H. B. JENKINS, J. P. ROBERTS, Associates.

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