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Colonial Cases

Hodgson and Helland v. Pun Kee, 1880

[company law]

Hodgson and Helland v. Pun Kee

Supreme Court of China and Japan
French C.J., 5 July 1880
Source: The North China Herald, 13 July 1880



Shanghai, 5th July.

Before G. FRENCH, Esq., Chief Justice.


   Mr. DOWDALL appeared for the appellant.

   The respondent was absent and unrepresented by Counsel.

   This was a case of an appeal from a decree of the British Consular Court for the district of Foochow, by which the appellants had been ordered to pay to the respondents the sum of $9,926.14, the value of certain bonus warrants of which Mr. Hodgson had retained possession and declined to pay their value.  These bonus warrants had been endorsed to Pun kee by Mr. William Mackenzie Bradley, to whom he was compradore.  When these documents were presented, Mr. Hodgson, the acting manager of the Hongkong and Shanghai Banking Corporation, took them and refused to give them up, on the ground that as Pun Kee held the shares the warrants formed part of the security the Bank held against an overdrawn account. The Chinaman brought suit at Foochow against Mr. Hodgson, from the decision of which the latter now appealed.

   It appeared that Pun Kee became compradore to Mr. Bradley in 1877, and on the 1st May of the following year Mr. Bradley's account was overdrawn to the extent of $7,000.  Five shares of the union Insurance Society of Canton, one share of the North China Insurance Company, and two shares of the Chinese Insurance company were in possession of the Bank, ands subsequently they had some lead.

   His LORDSHIP observed that there was no evidence produced to show how the lead was secured to the Bank.  That appeared to have been assumed in the Court below.

   Mr. DOWDALL said it sis seem so.  He had a copy of the document by which it was hypothecated to the Bank, but he did not think it mattered.  The property his clients were interested in was the five shares of the union Insurance Society of Canton.  Mr. Hodgson had said in evidence that he believed notice had been given to the Society on the 1st May, 1878, of the hypothecation of these shares, but subsequently he said positively that he notified the company as soon as he took charge.

   His Lordship asked if he said that in evidence.

   Mr. DOWDALL said that Mr. Hodgson averred that he gave notice on the 20th January.

   His LORDSHIP observed that the record seemed to be very imperfect, and that if the matter did not stop in this Court, it was doubtful whether it would go higher in a satisfactory manner.

   Mr. DOWDALL said it was a pity that the papers had not been sent up properly, but he had not thought that his instructions would have justified him in making any difficulties.

   His LORDSHIP said that if the matter went further, it would not be satisfactory to the Court to have complaints made of the record of appeal having been sent up in an improper way, and of the Court not having before it the material for a decision.  The case might not rest in this Court.

   Mr. DOWDALL remarked that the sum on dispute was a large one, and one of the parties was a Bank.

   His LORDSHIP agreed with Mr. Dowdall that the sum was large, and added that the question arose as to whether there were not important principles involved in the case.

   Mr. DOWDALL said that doubtless it would involve some principles that had not yet been very clearly laid down, and after His Lordship's remarks he thought it would be desirable to have the papers put in proper order.

   His LORDSHIP considered the better course would be to send the case back to Foochow with directions to have the record of appeal made up according to the rules of the court.

   Mr. DOWDALL said that it might save going into the case twice over.  The Bank was very anxious to find out to whom the money belonged.

   His LORDSHIP replied that it might have been suggested to the Bank to hold the money, and call upon the parties to interplead.

   Mr. DOWDALL thought there would be a difficulty if that course were adopted between a British subject and a Chinese.

   His LORDSHIP asked if that was the point that had been raised?

   Mr. DOWDALL did not think it was.  He was not advising the Bank at that time.

   His LORDSHIP asked whether the Bank claimed the money.

   Mer. DOWDALL said that it did not want it at all; the money had actually been paid long ago to the Trustee in bankruptcy.

   His LORDSHIP asked of the bank said that it never had any claim to the money?

   Mr. DOWDALL said that it affirmed it had a claim to the money once.  The Bank had held the shares as security against an overdrawn account.  It laid claim to the dividends on the ground that they belonged to the shares, and when the warrants were presented they were retained, and their proceeds were placed to Mr. Bradley's account.

   His LORDSHIP presumed that the securities held by the Bank were more than sufficient to cover the deficiency, and that they had the surplus in hand that had been paid to the Trustee in bankruptcy?

   Mr. DOWDALL replied in the affirmative.

   His LORDSHIP supposed that the bank claimed as equitable mortgagee.

   Mr. DOWDALL - Yes, as equitable mortgagee.

   His LORDSHIP asked of there had been a transfer?

   Mr. DOWDALL said there was a certificate in blank.

   His LORDSHIP observed that there was no evidence of the certificates of those shares.

   Mr. DOWDALL believed there had been certificates.

   His LORDSHIP pointed out that noting was said about certificates, and Mr. Dowdall must see that it was a very important element who held them.

   Mr. DOWDALL said that the Bank doubtless held them.

   His LORDSHIP remarked that the evidence was silent on the subject, and he could not assume that against the Chinaman on the facts before him.

   Mr. DOWDALL replied that Mr. Hodgson had stated that the Bank had the certificates.

   His LORDSHIP said upon the evidence all the Bank had was a transfer in blank, and he could not assume that the security was unimpeachable.

   Mr. DOWDALL thought that the Court might certainly take it that his clients had the certificates of the shares as well as the blank.

   His LORDSHIP asked how he could decide against the Trustee in his absence if there existed a question between him and the Chinaman as to who was entitled to the money.

   Mr. DOWDALL admitted that was a great difficulty.

   His LORDSHIP said he could only decide as between the Bank and the Chinaman.

   Mr. DOWDALL remarked that if the decision of the Court was against the Bank, that Corporation would have to pay $9,000 over again.  The Bank was in an unfortunate position, but was only anxious to do right.

   His LORDSHIP said it seemed to him that the matter had better stand over, and if Mr. Dowdall saw no objection, he would suggest that the record should be sent to the Consul at Foochow to be amended, and meanwhile efforts might be made that a special case should be stated to place the rights of all parties before the Court.  It might so happen that when the record was amended, the Court might not be in a position to decide as to the rights of the parties.  If theatre was a question between the Chinaman and the Trustee, how could the Court decide against the Trustee in his absence?

   Mr. DOWDALL observed that the Court could not do it.  The question was, how to bring the Trustee into the suit?

   His LORDSHIP said the only way would be to have a special case.

   Mr. DOWDALL observed that it would have to be agreed to by the Chinaman.

   His LORDSHIP said if the Chinaman would not join in a special case, it would have to proceed without him.  He should be represented by a professional man.

   Mr. DOWDALL said there seemed to be a difficulty there.  A foreigner, however, was putting the facts together for him.

   His LORDSHIP observed that if the Chinaman were represented by Counsel a special case should be stated in a short time; and that he would remit the case with the suggestion that it would be the better course to let the present action drop, and state a special case.

   Mr. DOWDALL suggested that his Lordship should add that it would be a more expeditious course as well.

   The record was accordingly ordered to be sent back to Foochow to be amended.

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