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Colonial Cases

Da Silva v. Lane, Crawford and Co., 1875


Da Silva v. Lane, Crawford and Co.

Supreme Court for China and Japan
20 February 1875
Source: The North China Herald, 25 February 1875




Shanghai, Feb. 20th.

Before Sir EDMUND HORNBY, Chief Judge.


   Mr. HANNEN for the plaintiff.

   Defendants were unrepresented by counsel.

   The Plaintiff, as official liquidator of the estate of Pedro Loureiro & Co., sued John Wilson, James Alexander Harvie, and Henry Relph, trading under the form of Lane, Crawford & Co., to recover Tls. 250, money received by them for the use of the plaintiff, being balance of the proceeds of sale of the Evening Gazette printing office, and deducted by them as commission, they being the mortgagees of the said printing office.  In his petition, the Plaintiff set forth that the defendants applied to have formal possession of the property given to them, and that the same was given under the guarantee that any surplus realised by the sale of the property, over and above Tls. 4,500, the amount of mortgage, was to be handed over to the estate; that before possession was given to the defendants, the  sale of the said property was a settled affair between the purchaser and the owner, but as formal possession was to be given to the defendants, the purchaser was referred to them with regard to the transfer of the property and the payment of the purchase money; that the defendants, after collecting the proceeds of sale of the  said property, amounting to Tls. 5,000, less amount of an order for Tls. 150, making Tls. 350, the balance above referred to, rendered an account as proceeds only Tls.. 100, by crediting themselves with five per cent, or Tls. 250, as commission on sale of the property, which never originated with them; that H.M.F.M.'s Consul on the 19th ult., demanded on behalf of the estate of Loureiro & Co., payment of the Tls. 250, and that n o answer to his demand was given.  The petitioner, therefore, prayed that the defendants might be ordered to pay to Plaintiff the sum of Tls. 250 Shanghai sycee together with the costs of this suit.

   The defendants' answer set forth their admission that they were the mortgagees of the estate of Loureiro & Co., but  denied the allegation as to their giving a guarantee that any surplus over Tls. 4,500 was to be handed over to the estate; that on the 24th November, 1874, they took possession in the terms of a letter addressed to them by A. H. de Carvalho, Esq., H.M.F.M. Consul for Portugal, in which they nitrified their taking possession under powers granted them by a duly registered deed of mortgage, and, "would dispose of the business publicly or privately, whichever may be to the best advantage, holding balance of funds, if any, to your (the Consul's) order, after recouping amount of mortgage and other indebtedness."

   On the same day, Mr. de Carvalho replied, by letter, "you, as privileged mortgagees of the property, can have the said property formally transferred to you on your giving me a letter guaranteeing that you will sell the said property to the best of the mortgagor's advantage, and that any surplus over and above Tls. 4,500 you will hand into his estate at the Consulate, without prejudice to any other claim you may have against Mr. Loureiro or Loureiro and Co.," Defendants further admitted that, as mortgagees of the property, they were endeavouring to find a purchaser when they applied for possession, but they denied that they had concluded a sale until three days afterwards, in support of which denial they produced a letter from the ultimate purchaser, dated on 27th Nov., 1874, withdrawing all previous offers and making a new offer to them for the purchase of the property, which was accepted.

   Defendants admitted having sold the property for Tls. 5,000, but did not admit the plaintiff's statement that the sale never originated with them.  In the final clause of their answer, the defendants said, "The mortgagees, in their capacity as commission agents and auctioneers, effected a sale of the property for the benefit of all concerned, and in charging commission of 5% did merely what any other commission agents or auctioneers would do, it being the establish and customary rate for such business."

   Mr. HANNEN, after stating the plaintiff's  case, as contained in his petition, said he believed the whole of the facts were indisputable, accept as to the guarantee.  He should not, however, rely upon the fact whether a guarantee to return the surplus of the proceeds of the sale had been given or nor, but simply rely on the law of the case.  The defendants said that no such guarantee to hand over the surplus had been given.

   Mr. WILSON (one of the partners) said they gave no guarantee to hand over the balance.  There was a reason which at first caused them to think they could retain the surplus, which was that Mr. Loureiro was indebted to them otherwise to some extent; but after reading over the mortgage-deed, they found they could not do that, and so charged commission in order to recoup themselves.

   Mr. HANNEN said the only question for the Court was whether a mortgagee could charge commission.  It was a well known principle that a mortgagee, after selling, and recouping the amount of the mortgage, stood in the relation of a trustee.

   His LORDSHIP - You do not contend that if they had employed another auctioneer, and charmed his fees, they would not have been entitled to do so?

   Mr. HANNEN said certainly not; but they did not do that.  He quoted Harrison's Dig. Vol. 3, under the heading Trustee Remunerations, to show that the Trustees were not entitled to charge any commission for trouble; and in the Supplement, vo. 2., under the same head, in column 3,591, a later case again laid it down that trustees could only be allowed costs out of pocket.  He would further refer his Lordship on that point to "Fisher on Mortgage," page 956, under the head of the mortgagee's right to costs.  He now came to the question of mortgagees, and cited the case of "Thomas v. Rumball, 3, Jurist,"  and notes to "Robinson and Pett," leading cases in equity, in which the same principle was laid down that a trustee was only entitled to his costs out of pocket and could not charge commission.  Then came "Kirkman v. Booth," 11, Bevam's Reports, 273; and, in fact, there followed a whole series of cases, some of which were exactly similar to that before the Court, he submitted the plaintiff was entitled to a judgment.

   Mr. WILSON said the defendants simply con tended that they took possession and sold the business in their capacity as commission agents, and on rending their account they charged their usual commission.  If they had employed another auctioneer, they would have had to pay his charges.  They had had a great deal of trouble in the matter, and looked upon it that they were entitled to their commission as agents in the sale.  He had no law cases to cute, but would simply repeat that they considered themselves entitled to their commission.

   His LORDSHIP said he thought the cases cited by Mr. Hannen were conclusive.  There would be no doubt that mortgagees were not entitled to anything more than the bare expenses out of pocket, and that nothing in the shape of commission accrued.

   Mr. Wilson - That is to say, we are to charge all #actual expenses out of pocket?

   Mr. HANNEN - But that cannot affect this case.

   His LORDSHIP - You stand towards the other creditors now in the position of a trustee; and as a trustee you are bound to hang over everything.

   Mr. HANNEN - This amount of money will be distributed among the employees, who are nearly all Portuguese, for their wages.  It is very hard upon them, and I hope your Lordship will make an order as to the costs of the suit now.  You have the power to do so, and it will shorten matters greatly.  I venture to say that if Mr. Wilson had made a statement to his lawyer, and taken an opinion,  for which he would have had to pay some Tls. 10 or Tls. 15 perhaps, he would not have been put to these costs.

   Mr. WILSON - If I am to pay costs, they must come out of the estate.  I cannot be expected to pay them out of my own pocket.

   His LORDSHIP - In cases which involve a doubt, it is much better to ask legal advice.  The amount is Tls. 250, and I will fix the costs at Tls. 50.  I do not wish Mr. Wilson to think I am fighting the battle of the lawyer's, but, in all cases where there is any doubt as to the bearing of the law, It is better to have legal opinion.  In the end it saves money.  The Court then rose.

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