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Colonial Cases

Oriental Bank Corporation v. Olyphant and Co., 1879

[bill of exchange]

Oriental Bank Corporation v. Olyphant and Co.

United States Consular Court, Shanghai
Bailey, 28 April 1879
Source: The North China Herald, 6 May 1879




Shanghai, 28th April.

Before D. H. BAILEY, Esq., Vice-Consul General.


   Mr. MYBURGH appeared for the plaintiffs.

   Mr. WAINEWRIGHT appeared for the defendants.

   This was an action to recover the sum of £2,000, under circumstances which are fully set out in the pleadings.

   The petition of the plaintiffs was as follows:-

  1. - That the defendants W. W. Parkin, H. S. Geary, Talbot Olyphant, F. W. Talbot, and J. D. Seaman, are citizens of the United States, and together with the defendant Tobias Pim carried on business as merchants in Shanghai and elsewhere in China and Hongkong, under the style or firm of Olyphant and Company, and J. D. Seaman, one of the defendants, is within the jurisdiction of this Court.
  2. - That the defendants, on the 15th day of May, 1878, at Hongkong, by this foreign Bill of Exchange, now overdue, directed to Hoffman Atkinson, Esq., or Olyphant and Co.'s agent, to pay to them, the defendants, or their order, thirty days after sight, the sum of £2,000, and the defendants endorsed the said bill to the plaintiffs, and before the said bill was presented for acceptance, the defendants, or their representative in London, requested the plaintiffs not to present the said bill of acceptance and discharged the plaintiffs from presenting it, and the said Hoffman Atkinson, Esq., or Olyphant and Co.'s agent, have not paid the said bill.
  3. - That the said bill has been duly protested, and the defendants have had notice of the premises, but did not pay the said bill.

   The plaintiffs therefore pray -

   That the defendants may be decreed by this Honourable Court to pay to the plaintiffs the said sum of £2,000, with interest thereon, and the costs of the suit.

   That the plaintiffs may have such further or other relief as the nature of the case may require.

   In reply to the above petition, Mr. J. F. Seaman, the only partner of Olyphant and Co., now in Shanghai, filed the following answer:-

  1. - That he admits the allegations contained in the first paragraph of the petition, save that he says that the name of his partner sued as F. W. Talbot is George Washington Talbot.
  2. - That he admits that he has not paid the bill mentioned in the petition, but save as aforesaid he has no personal knowledge as to the several matters and things mentioned in the 2nd and 3rd paragraphs of the petition, and leave the same to be proved.
  3. - And for further answer in this matter the defendant says that by an indenture duly recorded on the office of the Clerk of the county of New York, and bearing date the 7th day of December, 1878, and made between all the defendants of the first part and Henry M. Olmsted, of Morristown, in the county of Morris and State of New Jersey, in the United States of America, of the second part, and after reciting that the said parties of the first part are justly indebted to divers persons in sundry sums of money which they are unable to pay in full, and are desirous of making a fair and equitable distribution of their property and effects among their creditors, they, the said defendants, for considerations in the said indenture mentioned, have granted, bargained, sold, assigned, transferred, and set over unto the  said Henry M. Olmsted, his successors and assigns, all and singular lands, tenements, hereditaments, appurtenances, goods, chattels, wares, merchandise, bills, bonds, promissory notes, book accounts, debts, claims,  demands, judgments, evidence of debt, property and effects of every nature and description, wheresoever the same may be, of them the defendants, which is held or owned by them, as copartners, or in which their copartnership has any right, title, or interest whatsoever, to have and to hold the same and every part and parcel thereof, with the appurtenances thereto belonging, unto the said Henry M. Olmstead his successors and assigns, upon certain truss in the said indenture, set forth for the benefit of the creditors of them, the defendants, as by the said indenture, when produced, will more fully appear; and the said defendant says that the said indenture is a good answer and defence to the plaintiff's claim so far as he, the said defendant, and his copartners are concerned.

   The plaintiffs demurred to the defendant, J. F. Seaman's plea, or statement of defence, set out in the 3rd paragraph of his answer, and  said that the same was bad in law, on the ground that the bankrupt laws of the State of New York, under and by virtue of which the indenture, or Deed of Assignment mentioned in the 3rd paragraph was executed, have no operation in Shanghai, and that, therefore, the said Deed of Assignment cannot be pleaded as a defence to the plaintiffs' claims, as set out in the petition, and on other grounds sufficient in law to sustain this demurrer.

   It was on this demurrer that the case now came before the Court.

   Mr. MYBURGH explained that he demurred to the plea in the third paragraph of the defendants' answer to the petition relating to a certain Deed of Assignment made between themselves and Mr. Olmsted, by which they assigned him all their property for the benefit of the creditors, on the ground that the Deed of Assignment was executed in New York under the Insolvency Laws of that State, and those laws not being in operation in Shanghai, the deed itself could have no operation here.  It was not his intention to argue the point at any length, inasmuch as he had founded the demurrer on the decision his Honour had given in the case of the barque Vesuvius against Messrs. Olyphant and Co., the defendants in this case.  In that case, Mr. Myburgh pointed out that his Honour had decided this very point, and had quoted a paragraph showing that the "insolvent laws of one State cannot discharge the contracts of citizens of other States, because they have no extra-territorial operation," which was, in fact, a decision that the laws of a particular State were confined to that State.  Having quoted that decision, he had nothing more to urge, having based his application on it.

   Mr. WAINEWRIGHT, in supporting the plea on behalf of the defendants, maintained that there was a great distinction between the facts of the present case and the facts in the case of the Vesuvius.  That case was between two American citizens, whereas this case was between a foreigner, a British subject, and American citizens; and in the case of the Vesuvius defendants could not prove anything - they could not prove a deed because they had no means of proving it at the time, and they could only infer what their position was from a certain brief telegram sent to them; they had no positive proof to offer, and they asked the Court to suspend any decision until they knew the actual position of affairs.  In this case, however, they had proof of the deed, and it was an assignment that was valid according to the laws of the United States; and all he could do was to lay before his honour the law bearing on the subject.

   In the first place, he would point out that Shanghai was not a State of the union.  There were no laws in Shanghai conflicting with the laws of any State in the union.  There were no local laws except those imposed on the Court by the Act of Congress relating to treaties and the jurisdiction over citizens living in foreign countries; but it was not a case parallel to the case of a person living in one State sueing a citizen of another State.  Here, as it were, there were no laws; and, moreover, this was not a suit between American citizens at all - it was an English company proceeding against American citizens.  He took it that the laws under which American citizens were governed here were defined in the 4,086th section of the Revised Statutes, which provided:

That jurisdiction in both criminal and other matters shall in all cases be exercised and enforced in conformity with the laws of the united States, which are hereby, so far as is necessary to execute such treaties respectively, and so far as they are suitable to carry the same into effect, extended over all citizens of the United States in this country and over all others to the extent that the terms of the treaties respectively justify and require.

   He (Mr. Wainewright) took it that the effect of that section was to give to every citizen of the United States in China all the protection he would have if he were living in his own country, that is, that he was entitled to appeal to the laws of the United States in defence of any claim made against him. The question then arose what was the law of the United States. Not only were there the Revised Statutes of the United States, but also the State laws of the United States, so far as they did not conflict with the general law, and a citizen living in Shanghai was entitled to have the law of his own State applied on his behalf.

   In such a case as the present one, where the defendants were citizens of New York, they were entitled to call upon his Honour to sit in the position of a competent judge of a Court in the State of New York - his own State.  If the defendant was living in his own State, if he was in the State where the deed was made and  where his domicile was said to be, he would be able to plead the deed in defence of an action, and he maintained that defendant, because he lived in Shanghai, was not in a worse position; that, in fact, his Honour could sit as president pr judge of the Court as if  he were sitting over a court in the State of New York, and that the defendant, under the  section he had read, was entitled to the protection of all the laws just the same as he would be if he were living in his own State.

   But even supposing that his Honour was not with him on that point and did not see his way to deal with the case as if he were sitting as judge in the State of New York, and that he (his Honour) did not think the defendant was entitled to avail himself of the laws of the State of New York, even then he submitted defendant was still entitled to succeed on the ground that the Deed of Assignment he had pleaded, if it could not be considered under the bankruptcy or insolvency laws of the State of New York, it was a deed which, under the Common Law of the union, was valid and effective, and must take precedence over any judgment obtained after it was executed.  It was a good assignment of property at Common Law, and there was nothing in the bankruptcy laws to limit or prevent such a deed being made.  He enlarged on this point at considerable length, and finally, on the two grounds named, he submitted that the demurrer should be over-ruled.

   Mr. MYBURGH, in replying, thought in regard to Mr. Wainewright's first point, that the plaintiffs were Englishmen and therefore not on the same footing as Americans, it would not hold for a moment.  The contract was not made in the State of New York, and he took it that if the case was entered in one of the Courts of that State, on the authority quoted by his Honour in the case of the Vesuvius, they could not plead the Deed of Assignment as a defence to the claim.  He believed that this court administered not the general law of the United States, but the law of the State of Massachusetts.

   His HONOUR explained that this Court conformed to the practice of a Federal Court.

   Mr. MYBURGH maintained that the plaintiffs were on the same footing as if they were Americans.  In regard to Mr. Wainewright's other point, as to the Deed of Assignment being good at Common Law, he could only say in his experience of deeds executed by persons wishing to assign their property for the benefit of their creditors, the consent of all the creditors must be obtained, and there was no proof that this had been done in this instance, and therefore the deed could not be pleaded as a bar to the claim.

   Mr. WAINEWRIGHT - That is the bankruptcy law.

   Mer. MYBURGH - No, the Common Law.

   The COURT - But this Deed of Assignment was made under the Insolvency Laws of the State of New York?

   Mr. MYBURGH - Yes, and those laws have no operation here.

   The COURT - That is the question to be considered.

   Mr. MYBURGH - I say you have virtually decided that point in the case of the Vesuvius.

   The COURT said it was a matter to be well considered.  He did not think that Mr. Wainewright's attention had been drawn to a provision of the constitution, stipulating that no State should pass laws impairing the obligation of contracts, and that was one of the points to be considered here.

   Mr. WAINEWRIGHT read the section, which was handed to him by the court, and then repeated the distinction he had pointed out between this case and the case of the Vesuvius, and argued that he failed to see the defendants were deprived of any of the rights they would have had if the case had been taken to New York.

   His HONOUR pointed out that it was doubtful whether the Deed of Assignment would have been a good defence to the action in the State of New York.  It was almost universally the practice for attorneys to take actions between citizens of different States into the Federal Court.  The State law might even then be applied, but it would not be if it was held to impair the obligation of the contract.

   The discussion was continued, and ultimately his HONOUR said there were serious points involved, and he would take time to consider his decision.


Source: The North China Herald, 20 May 1879


Shanghai, 12th May.

Before D. H. BAILEY, Esq., Vice consul-General.


   Mr. MYBURGH appeared for the plaintiffs.

   Mr. WAINEWRIGHT appeared for the defendants.

   This case was before the Court on the 28th ult., on a demurrer filed by the plaintiffs against a plea in the defendants' answer to the petition, and on that demurrer the Court bow gave its decision.

   The COURT said - In this case I have looked into the points raised by the Counsel for the defendants with considerable care, and I see no reason for changing the ruling in the case of the Vesuvius against Messrs. Olyphant and Co., in so far as it applied to this case.

   The Deed of Assignment, under the Insolvency Laws of New York, was dated New York, and I do not consider it a bar to the action of the plaintiff, and the demurrer will be sustained.  The plaintiffs may now prove their claim in the usual way.

   Mr. WAINEWRIGHT asked, in the event of the defendant desiring to appeal on the point, which was a very important one, what time was allowed?

   The COURT thought the time fixed was five days, but notice of appeal could be given now, and the appeal perfected afterwards,

   Mr.  WAINEWRIGHT was under the impression that he had twenty-four hours to consider the question of appeal; therefore he would not give notice of appeal now, having to act under instructions from New York.

   The COURT said, of course, the claim must be proved before the plaintiffs would be entitled to judgment; he simply sustained the demurrer now, and the case would be heard before Assessors.

   Mr. MYBURGH said he should apply for the hearing of the case to take place in the ordinary way.

   The COURT referred to an authority under which Mr. Wainewright had until three o'clock today before giving notice of appeal, which then had to be perfected within five days.

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