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Colonial Cases

Sun-Yuen v. Mackintosh, Dudgeon & Co., 1883

Sun-Yuen v. Mackintosh, Dudgeon & Co.

Supreme Court for China and Japan

Mowat AJ, 28 May 1883

Source: North China Herald, 1 June 1883



Shanghai, 28th May 1883

Before R. A. Mowat, Esq., Assistant Judge.



 In this case the plaintiff bought from the defendants on the 29th March 100 tons of Sohier nail rod iron at Tls. 2.05 a picul, to be delivered on the 10th April.  They were unable to deliver the iron on the day named, and the plaintiff now seeks to recover from them as damages for their breach of contract the sum of Tls. 420, being (as he alleges) the amount of the excess of the prices at which he had, on the 3rd April, contracted to resell the iron above that at which the defendants had sold it to him. The defendants by their answer admitted the breach and paid into Court the sum of Tls. 84, as being sufficient to satisfy the plaintiff's claim.

  At the hearing it was conceded by their Counsel that there was no iron of the kind procurable in  sufficient quantity in Shanghai on the 10th April, and, that being so, that the measure of the plaintiff's damages was the amount of profit on a bona fide re-sale.  The case was thus narrowed to the one quesion, Were the contracts of re-sale bona fide contracts? The defendant's Counsel contended that they were not, and that they had been entered into with a view only to this case.  He suggested that the plaintiff had conspired with the two native dealers who were put forward as sub-purchasers, to enter into fictitious contracts with him for the delivery of iron on a given date at a price considerably higher than the true market price, in order that the defendants might have to pay to him higher damages for the breach of contract which, at the day of such fictitious re-sales, it was known must take place.

  Now in all cases where mala fides is alleged, the burden of proof is cast by the law upon the person who alleges it.  Fraud is never presumed, and any  one therefore who sets up mala fifes as a defence to an action must establish its existence.  Direct proof of such is, of course, hardly to be expected, and it is rarely forthcoming, but the circumstances given in evidence must be such that the mind is compelled to draw the inference from them of its existence.  

  How then, in this case, does the defendant's Counsel seek to establish mala fides? He relies mainly, I think, upon a certain portion of the evidence of Mr. Dudgeon, one of the defendants,  He relies in a less degree, I think, upon the probability that, on the 10th April the market price for Sohier iron could have been as high as Tls. 2.30 per picul. The particular statement of Mr. Dudgeon to which I refer is the assertion that before the 3rd April (the date of the alleged re-sale) the plaintiff told him he had re-sold the iron. If that be so, it would throw very great doubt on the plaintiff's case because there would thus be a serious inconsistency between that circumstance and his evidence at the trial. But I am not satisfied that Mr. Dudgeon is quite right on this point. After seeing the plaintiff he wrote to his vendor, and by the date of that letter (3rd April) he fixes the date of his conversation with the Plaintiff as being not later than the 3rd.  But what makes him positive about its being earlier than, say, the morning of that day, he does not succeed in making so clear to me that all chance of error on his part was eliminated.  It is an obvious remark, too, that it, as he says, it was earlier than the 3rd that he saw the plaintiff and gave him to understand that the iron could not be delivered, one would have thought that had the plaintiff been guilty of the alleged fraud, he would have been astute enough to have dated the transaction on the day when he first heard from Mr. Dudgeon that the iron could not be had, and so not have left himself open to contradiction and consequent suspicion.  There is the further observation that no question was put to the plaintiff in cross-examination on this subject and thus we are without his evidence - which in fairness he should have had the opportunity of giving - on so material a point.

  Next, as to the improbability that, on the 10th April, the market price for Sohier iron was so much as Tls. 2.30.  It certainly does seem strange that the price should have gone up to that figure when cargo was expected in eight days' time, when of course the price would fall. The defendant's own witness, however, stated that his price on that day (though for a small lot) would have been Tls. 2.27 1/2 to Tls. 2.30.  This same witness, it is to be remembered too, also stated that he himself sold on the 18th, - that is, after the expected cargo had come to hand and prices had consequently fallen - to one of the sub-purchasers in this case Sohier iron (bought at 2.07 1/2) at Tls. 2.22 1/2.  From this we see, first, that there is a considerable difference in the prices at which the iron is sold by the foreigner to the native dealer and by him re-sold, and, in the next place, that the sub-purchaser might well have been willing to give Tls. 2.30 at a time when, unless cargo did come to hand, there would be a scarcity in the market.

  At one time indeed, in considering the case, I was much struck with the circumstance that, though what was undoubtedly a high price (Tls. 2.40) was offered by the plaintiff for iron, none of the native dealers who had any would sell except in very small quantities, and that they expressed themselves as not willing to buy either. But upon further consideration I think it not at all unlikely that knowing that there was none then in the market but what they had, and that there might be some further delay ion the arrival of the expected cargo, they might think it worth while as a speculation to hold.  On the other hand, they would not care to buy at that price, because if the cargo did come to hand, the market would drop.

  I was struck, too, with the anxiety that the plaintiff showed to buy iron at even a higher price than that at which he had contracted to sell it.  I at first thought that he would have contented himself with telling his purchaser that he could not get it from the foreigner, and that when the foreigner paid him (the plaintiff) his loss, he (the plaintiff) would pay the sub-purchaser his.  But it may well be that the plaintiff was, from an ordinary business point of view, desirous if getting iron ay any thing under the price that the sub-purchaser told him it had been re-sold at, viz, Tls. 2.45, for it would have recovered the additional amount by the defendants and would have had nothing to pay to his sub-purchasers, while as it is he has.'

  I have gone, as will be seen, into the case at very considerable length, because questions of bona fides are very difficult to decide.  They are peculiarly questions for a jury, and from their nature (depending so much, as they do, on conflicting presumptions) are more likely to be satisfactorily determined by a tribunal of several minds than by a single Judge.  For that reason I could have wished that the parties had applied for a jury in this instance. As it is, I find for the plaintiff for the full amount claimed, resting my decision on the broad ground that the allegation of want of bona fides - which the defendants, on the pleadings and admissions, must make out in order to succeed - had not been made out.  I do not say that the case is altogether free from doubt; different minds will view the facts differently according to the bent of each mind and according to each individual's experience.  But to give effect to that doubt by deciding for the defendants would be to substitute mere surmise for reasonable conviction.

 As to interest and costs.  The plaintiff claims 12 per cent on Tls. 420 from the 10th April, the defendants ask that it should not exceed eight.  I fix it at eight. The costs must follow the event.  Had the plaintiff failed, I should have demned him in costs; succeeding, he is entitled to them.  There is no reason, however, for taxing them on a higher scale, as asked by the plaintiff's Counsel.

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