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Colonial Cases

In re Evans and Hutchinson v. Chartered Bank, 1867

[bankruptcy]

 

In re Evans and Hutchinson v. Chartered Bank of India, Australia and China

Consular Court, Hankow
29 July 1867
Source: The North-China Herald, 31 August 1867

 

LAW REPORTS.

IN HER BRITANNIC MAJESTY'S CONSULAR COURT AT HANKOW.

29th day of July, 1867.

In re Joseph Henry Evans and Alfred Hutchinson, Creditors' Assignees, Plaintiffs;

versus

The Chartered Bank of India, Australia and China, Defendants.

REASONS FOR JUDGMENT.

The Plaintiffs, Joseph Henry Evans and Alfred Hutchinson, Creditors' Assignees of the estate and effects of John Mackellar and William Grant Gordon, trading under the style or firm of Mackellar and Company, bankrupts, have requested us to specify the reasons for my judgment in the cause the above Plaintiffs brought against the Chartered Bank of India, Australia, and China, Defendants.

Our reasons are three, embodied in the following three questions:-

In the first place, was the mercantile transaction fair and honest?

In the second place, did the agent of the Chartered Bank know that Mackellar and Co., were going to fail?

In the third place, did the Plaintiffs succeed in proving a fraudulent transfer on the part of Mackellar & Co., of their money to the Chartered Bank?

The answer to the first two questions, we held, in accordance with the evidence, warrants a judgment in favour of the Defendants; while a reply to the third query, beside the question as it is, exhibits the absurdity of a contrary judgment.

We will examine these questions most briefly.  In the first place, was the mercantile transaction fair and honest?

Not only the evidence adduced by the Defendants, but the evidence adduced by the plaintiffs, prove that it was.  There was absolutely no sale for the tea at Shanghai; the market was very low; the bills drawn by Mackellar & Co., on parties at Shanghai were numerous; and on these grounds the Chartered Bank requested Mackellar & Co., to give them an additional margin on the Tea bills equivalent to 15 per cent.  This was a perfectly justifiable mercantile transaction, as the evidence of every one of the witnesses examined upon the case abundantly proves.  There was no trickery, dishonesty, or fraud on the part of the defendants.  The whole transaction is plain and simple.

In the second place, did the agent of the Chartered Bank know that Mackellar & Co., were going to fail?

Mr. Macreath, agent of the Chartered Bank, examined by one of the plaintiffs, swears that he had no idea that Mackellar & Co., were likely to suspend payments until the 28th June, and he further asserts that the Messrs. Gordon never hinted at such an event to him.  William Grant Gordon's evidence goes to prove that Mackellar & Co., entered into that transaction with thr Chartered Bank on account of a request for a higher margin made by the agent of the bank to them officially.  The transaction was completed on thr 27th of June.  Macreath, the agent of the bank, swears that he had not received a single hint that Mackellar & Co., were going to suspend payment until the 28th of June, and William Grant Gordon swears that Mackellar & Co., did not contemplate bankruptcy until the 28th of June; the bank's agent, therefore, could have no notice of Mackellar & Co.'s intended failure on the 27th of June, a\t least from Gordon.  Did the agent of the bank know that Mackellar &* Co., intended to suspend payment from Shanghai or any other quarter?  We find no reason to believe that he did.  His letter from the manager of the bank at Shanghai, which he has submitted, is written with that open fairness, which men can but rarely indulge in if they are acting with dishonesty of motive and duplicity of conduct.  We therefore believe, in accordance with the evidence, that Mr. Macreath, the agent of the Charter Bank,  did not know, or even had no presumption, that Mackellar & Co. were about to fail on the 27th of June.  Suppose Mackellar & Co. committed a fraud, the fraud was totally subjective; it was committed previously to declaring themselves bankrupts; the agent of the bank carried out the mercantile transaction with fairness and impartiality; he had no notice, when he covered the property of the bank, that Mackellar & Co. contemplated an act of bankruptcy; and the Taels 10,000 he set to as special agreement as security for the debt owing at the time by Mackellar & Co. to the Chartered bank.  The whole transaction was done, as the evidence proves, bona fide on Mackellar & Co.'s part, and on the part of the agent of the Chartered Bank truly bona fide. {12 & 134 Vict. c. 106, 126, 133.  Edward v Gabriel 31 L.J. (N.S.), Exch. 113.  Hutton v. Cooper, 6 Exch. 159.  Christie v Winnington, 8 Exch. 287.  Hope v Meek, 10 Exch. 743. Bryan v Child, 5 Exch. 368.]

Having discussed those two questions, we might stop.  Legally and equitably the judgment is for the Defendants; but the Plaintiffs, as they explain their petition, accuse Mackellar & Co. of actual fraud.

In the third place, did the Plaintiffs succeed in proving a fraudulent transfer, on the part of Mackellar & Co., of their money to the Chartered Bank?

This is the whole gist of the question as the Plaintiffs explain their petition. The evidence, however, only proves this - that if the Commercial Bank pressed Mackellar & Co. for the bill, they would have come to some arrangement with their creditors.  Did the plaintiffs prove that the Commercial Bank would press Mackellar & Co. for the bill, or did they prove that Mackellar & Co. had a presumption that the Commercial Bank would press them for the bill on or before the 27th of June?  The plaintiffs did not prove either of those positions.  Look at the evidence.  The query is embodied in the word "if."  Would he, Cameron, the liquidator of the Commercial Bank, press them or not?  The plaintiffs have not proved that he would, nor even raised a presumption that he would.  That 'if" runs through the evidence of W. G. Gordon, Jerdein, and G. G. Gordon, and each of those witnesses say they were in doubt.  W. G. Gordon swears what I have asserted previously, that Mackellar & Co. did not contemplate bankruptcy till the 28th; and Macreath says, in his evidence, that he did not hear a word, or even a hint, of it till the 28th of June.

But W. G. Gordon, the head partner in the firm of Mackellar & Co., raised a presumption that Cameron would not press them for the bill on account of the vast amount of business Mackellar & Co. had previously done with the Commercial Bank.

It is a rule in Law as well as in Equity that fraud is not to be presumed; but neither in Law nor in Equity is it positively necessary to prove fraud.  Where is the presumption that Mackellar & Co. had committed any fraud, according to the evidence adduced in the arranging of this mercantile transaction?  If fraud is not to be presumed, and if it is unnecessary to prove fraud, where is the presumption that fraud has been committed?  We have studied the evidence, and out decision is that there is no presumption of fraud in the evidence adduced.

We do not consider it necessary to cite any authorities for our arguments on the third question.  We could cite them at Common Law.  We could cite them in Equity; but the discussion of the third query is entirely irrelevant and beside the question.

Judgment for the defendants, in accordance with the fourth division of the Defendants' answer; the plaintiffs to pay the costs.

JOHN GIBSON, Barrister-at-Law, Interpreter in charge of H.B.M. Consulate.

We assent to the above judgment.  A. Downie, J. M. Ringer, Assessors. (Hankow Times.)

 

Source: The North-China Herald, 9 October 1867

[EDITORIAL: MACKELLAR, GORDON'S BANKRUPTCY, & also full account of proceedings.]

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