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Colonial Cases

David Sassoon, Sons and Co. v. Chen Ying-Tang and Fan Te-Sheng, 1885

[debt, wages]

David Sassoon, Sons and Co. v. Chen Ying-Tang and Fan Te-Sheng

Mixed Court, Shanghai
Shao and Hughes, 1885
Source: North China Herald, 15 May 1885

Before SHAO, Tai-t'ai, and P. J. HUGHES, Esq., H.B.M.'s Consul-General, Assessor.
  Mr. Wainewright appeared for the plaintiffs and Mr. Drummond for the defendants.
  This is an action brought by D, Sassoon against Ch'en Ying-t'ang for money owing; and Ch'en Ying-t'ang prays that Sassoon may be ordered to repay him a sum made good by him and the balance of wages due to him.
  It appears that in 1868, Ch'en Ying-t'ang had become Messrs. Sassoon's head compradore.  At that time the head of the firm, old Gubhay, lost a sum of Tls. 12,500 by the failure of the Yu-sheng opium hong.  He therefore told Ch'en Yin-t'ang to make good this sum.  He at the same time promised him that he should be permanent compradore, and that if he lost money in that position, it should be deducted from the sum which he had to make good; and if he were dismissed, it should be refunded to him.  Ch'en Yin-t'ang accordingly did as he was told, and paid the whole sum to the head of Sassoon in yearly instalments.  In the year 1860 the old head of the firm wished to dismiss Ch'en Ying-t'ang and replace him by Chou Yung-ch'un, the former receiving an annual pension of Tls. 1,500 for 10 years, Tls. 15,000 in all.  To this Ho-fung and Te-shun, two opium houses bear witness.  Because Ch'en Yin-t'ang wanted Tls. 15,000 ready money, the head of the firm told Chou Yung-ch'un to pay this sum but he declined to do so. No change was therefore made in the compradore.  Of this the letter of the old head of the firm is witness.
  Ch'en Yin-t'ang's compradore received a monthly allowance of Tls. 100, which was stopped at the beginning of 1879, and not given later.  At the time of his dismissal a balance was due to him of Tls. 4,900, as is shown by his books.
  Ch'en Yin-t'ang being compradore to D. Sassoon, on the 29th May, 1878, the firm of Te Sheng-chen signed a security paper, in which it was declared that in case of any deficiency, the surety would be responsible for its settlement.  In 1883 the new head of Sassoons entered into a new agreement with Ch'en Yin-t'ang.  This was no signed by the surety, Fan Te-sheng.  In 1884, the firm dismissed Ch'en Yin-t'ang.  Ch'en Yin-'ang being indebted to the firm to the amount of Tsl. 12,000, wished to set against this a portion of the Tls. 12,500 made good by him on behalf of the Yu-sheng opium hong, which was bound to be repaid to him, and of the Tls. 4,900 due to him for back pay.  The firm would not consent to this and brought an action in the Mixed Court.  The Magistrate gave judgment ordering the surety Fan Te-sheng to pay the Tls. 12,000 due to the firm, and in the meantime at once to pay into Court a note for Tls. 6,000.00.
  Fan Te-sheng being dissatisfied with the decision, appealed to the Taotai.  The Taotai having in due course reported the case, he was instructed by the Minister Superintendent of Trade that on its reference to the Tsung-li Yamen, they and the British Minister decided that we the Consul-General and Taotai should sit together and decide the case according to its merits.
  Accordingly the parties and their witnesses were summoned and the case heard by the Consul-General and myself at two sittings when the above facts were elicited.  It is our duty therefore at once to clear the records by giving a just decision and terminating the case.
  It is shown by the evidence that the head of Sassoons himself dealt with Yu-sheng and lost by the latter's bankruptcy Tls. 12,500; that the business was not transacted through Ch'en Yin-t'ang and therefore it did not concern him, so that by rights he should not have made good the loss.  But the firm promised him that he should be compradore permanently, and further that if, after making good the money, he ceased to be compradore, it could be either set against his debt or repaid to him, and the case thus was just like one of depositing money.  He therefore consented to do as was desired.
  In 1880, the head of the firm wanted to dismiss Ch'en Yin-t'ang and employ Chou-Yung-ch'un instead, it being promised to Ch'en Yin-t'ang that an allowance of Tls. 15,000 should be made to him by the new compradore Chou Yung-ch'un for the term of ten years, Tls. 15,000 in all.  It must have originally have been because Ch'en Yin-t'ang had made good the debt of Yu-sheng that it was decided to pay him the allowance.  But because Ch'en Yin-t'ang wanted the whole sum of Tls. 15,000.00 at once in ready money instead of ten annual instalments, Chou Yung-ch'un would not consent and no change was made; nor did Ch'en Yin-t'ang insist on the return of the money he paid for Yu-sheng.  Messrs. D, Sassoon having now dismissed Ch'en Yin-t'ang they ought to keep their word and pay him in full the Tls, 12,500.00 made good by him when Yu-sheng failed.  Or else, as was agreed in 1880, the new compradore should pay Tls. 15,000 of ready money as a gratuity.  This would be justice.  But Messrs. Sassoon with great unfairness entirely disregarded Ch'en Yin-t'ang's former payment on behalf of Yu-sheng, and simply demand the money now owed to them by him.  They also seek that his surety should refund it for him.
  Further Ch'enYin-t'ang as Messrs. Sassoons' head compradore had an allowance of Tls. 100.00 per month, which he actually received up to the beginning of 1879, and then cased to do so.  It should therefore be paid to him for the further period from March 1879 to when he was dismissed in 1884.
  In 1883, Messrs. Sassoon entered into a fresh agreement with Ch'en Yin-t'ang.  As Fan Te-sheng's name was not mentioned in, nor his signature affixed to the agreement, it cannot affect him in any way.  The security paper signed by Fan Te-sheng in 1878, merely employs the two words, li, she, li being 'to arrange' and she "to consent."  There is no phrase meaning "payment of money."  In the first place therefore Fan Te-sheng cannot be made to repay money on behalf of Ch'en Yin-t'ang.  But further, against the debt of Tls. 12,500.00 which Ch'en Yin-t'ang acknowledges himself to owe to Sassoons there should be set the Tls. 12,500.00 he formerly repaid for Yu-sheng, and the Tls. 4,900 back pay, which leaves a balance in his favour.  There is therefore no need for Ch'en Yin-t'ang to raise funds and pay anything, still more Fan Te-sheng need not pay it for him.
  The note for Tls. 6,000.00 deposited in the Mixed Court should be at once returned to Fan Te-sheng, and the original agreement should be annulled and cancelled in Court.
  The Tls. 12,500.00 for money advanced and Tls. 4,900.00 for wages, Total Tls. 17,400.00 after deducting the sum of Tls. 12,600,oo owed by Ch'en Yin-t'ang, leave a balance due to Ch'en Yin-t'ang of Tls. 4,800.00.  As an act of grace the payment of the balance is remitted, in order to prevent further litigation and terminate the case.
SHAO, Taotai.
Reasons for Dissenting from the Judgment of the Taotai.
  The Plaintiff in this case are the British Merchants Messrs. David Sassoon, Dons & Co., and the Defendants are their late compradore Ch'en Yin-t'ang and his surety, a Merchant named Fan Te-sheng.
  The position of the compradore to Messrs. Sassoon is according to the evidence much sought after, in consequence of the commission to which he is entitled, amounting to Tls. 5,000 to Tls. 6,000 a year.
  The Plaintiffs claim Tls. 12,600, which sum is admitted to have been owing to them by their late compradore Ch'en Yin-t'ang at the time he left their service.  The compradore being unable to pay this, their claim is made against the surety.
  But the Defendants allege that -
- Plaintiffs promised to repay the compradore, if they dismissed him, Tls. 12,500, which it is admitted were paid by him to the firm in 1868 and following years.
- The plaintiffs owe the compradore Tls. 4,900 for wages.
- It is further alleged that the surety is not liable under the terms of his bond to pay the compradore's debt to the firm.
The evidence which the compradore produces in proof of his first contention (that the Plaintiffs promised to repay him Tls. 12,500) consists of (1) his own statement, (2) a paper signed by himself, (3) the fact that in 1880 Messrs. Sassoon wished a candidate for the office of Compradore to pay him Tls. 15,000.
  On the other hand it clearly appears that the claim for repayment of Tls. 12,500 was not put forward when the defendant compradore made up his accounts with the firm on leaving their employment in 1884.  Nor was it mentioned in 1883, when a written agreement with the firm was discussed between the parties and signed, nor had the claim been previously heard of by any of the witnesses.
  It appears from Mr. Nathan's evidence that a payment of Tls. 12,500 was required from Ch'en Yin-t'ang in 1868, because that sum of money had been lost through his negligence when acting for the old compradore, who was ill and at the point of death; and he was confirmed in his post only on condition of making good the loss.  Mr. Nathan was then in the employment of the plaintiffs' firm.  He is now a partner in another house.  His testimony as an independent witness is valuable and gives a reasonable explanation of the transaction in question.  Ch'en Yin-t'ang paid the money, because it had been lost through his default, and because otherwise he would not have been appointed to a post worth in commission alone Taels 5,000 or 6,000, sometimes even Taels 8,000 a year.
  The paper produced by Ch'en Yin-t'ang was not heard pf till the first trial at the Mixed Court, when it was properly held to be of no value.  It purports to be an agreement that Ch'en Yin-t'ang should pay to Plaintiffs Tls. 12,500 in five yearly instalments on condition that he be retained permanently as compradore, or be repaid the amount in case of dismissal.  It is not signed by the Plaintiffs, but only by the defendant Ch'en.  It is in the Chinese language, which the Plaintiffs do not understand.  To hold a document of this kind to be binding upon the Plaintiffs would open the way to endless fraud.  I may add that under the agreement which he signed in 1883, Ch'en could be dismissed without notice and without compensation (Clause 14). This he would not have signed had he been entitled to a repayment of Tls. 12,500.
  With regard to the willingness of the Plaintiffs in 1880 to allow the compradore in the event of his retirement at that time to receive from a new compradore Tls. 15,000 it is admitted by the Plaintiffs that some arrangement of this kind was contemplated, and that they would have been glad to get rid of Ch'en Yin-t'ang.  But it is plain that they themselves did not propose to pay him a retiring allowance, and that neither then nor at any other rime did they acknowledge that any money was owing by them to the compradore.  The proposed arrangement fell through.  Ch'en was retained as compradore, apparently because he was a favourite with opium dealers, who according to Mr. Gubhay's evidence, had threatened in the event of his dismissal to cease doing business with the Plaintiffs. This explanation is confirmed by the tenor of the letter written at the time by the plaintiffs to their Bombay house.
  Apart then from the verbal statement of Ch'en Yin-t'ang, the truth of which is denied by the Plaintiffs, the only evidence of Tls. 12,500 is contained in the paper signed by the defendant compradore, which for reasons before stated may be left altogether out of consideration.  I am therefore of opinion that Ch'en Yin-t'ang has failed to prove his claim to repayment of Tls. 12,500.
- To come now to the claim of Ch'en Yin-t'ang for Tls. 4,900 on account of pay and allowances.
  It is proved by an independent witness Mr. R. Gubhay that in 1880, when he was a partner in plaintiff's firm, he first reduced the wage of the compradore to Tls. 50 a month, and later in the same year stopped them entirely.  This was because the compradore was sufficiently remunerated by the large sums amounting sometimes to nearly Tls. 8,000, which he received as commission.
  The fact that there is no mention of wages in the agreement of 1883, shows that he commenced to receive only the foregoing remuneration, which was continued to him by Art. 13 of the said agreement.  This agreement is full and minute, and if wages were payable, they would have been mentioned.
  I am therefore of opinion that the compradore's claim for wages cannot be maintained, and he must be held to be indebted to the plaintiffs in the sum of Tls. 12,500.
- It only remains to examine the liability of the surety Fan Te-sheng.
  The agreement which he executed styles itself a deed of security.  Its general tenor is undoubtedly to assure the plaintiffs against loss from their compradore's defalcations.  If the guarantor incurred no pecuniary liability the bond was no protection to the assured, and was worthless from the very beginning.
  If it be said that according to the exact terms of the document the surety is only bound to arrange matters; in the case of pecuniary deficiency, how can this be done except by making good the money?
  In recognizing the validity of the guarantee, I coincide with the opinion of the Mixed Court Magistrate, who accepted it at the trial in the Court, and with the original opinion of the Taotai, who on appeal ordered Fan Te-sheng to pay Tls. 6,000.00.
For these reasons I hold hat the surety Fan Te-sheng is bound to pay the sum owed by the compradore to the plaintiffs.
(Signed) P. J. HUGHES, Consul-General.

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