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Colonial Cases

Lemarchand v. Agra Bank, 1885

[company law]

Lemarchand v. Agra Bank


Supreme Court for China and Japan
Mowat AJ, 3 August 1885
Source: North China Herald, 7 August 1885

LAW REPORTS.
IN H.B.M.'s SUPREME COURT FOR CHINA AND JAPAN.
Shanghai, 3rd August.
Before R. A. Mowat, Esq., Assistant Judge, and a Jury consisting of Messrs. J. A. Cory, A. McLeod, A. B. Trodd, J. West and W. M. Harvie.
F. W. LEMARCHAND v. THE AGRA BANK, LIMITED.
  Mr. Wilkinson appeared for the plaintiff and Mr. Wainewright for the defence. A Jury having been empannelled as above.
  Mr. Wilkinson opened the plaintiff's case.  He said the plaintiff had been for some time manager of the Agra Bank.  He was no longer manager, but there was no necessity for him to go into the circumstances connected with his leaving, except to say that there was nothing connected with those circumstances which reflected anything but credit upon Mr. Lemarchand.  Mr. Wilkinson then read the paragraphs of the petition, and the defendants' answer to each, with running comments.
*  *  *
The Jury then retired, and returned after 45 minutes absence, when the Foreman (Mr. McLeod) read the following questions and the answers given to them by the Jury:
- Was the agreement between the plaintiff and Benjamin that Benjamin should merely retain the plaintiff's shares as security, or was Benjamin to have the right to pledge them?
Answer - Benjamin had only the right to retain the shares as security.
If it was agreed that Benjamin was to have the right to pledge them, did the plaintiff, when he demanded the shares from th bank, make any offer to the Bank of what was due by him to Benjamin?
No answer required.
- Has the Bank sustained any damage reasonably resulting from the representations of the plaintiff contained in the returns?
Answer - No.
- If s, was the representation of the plaintiff the proximate cause of the damage?
No answer required.
- If so, the extent of the damage?
No answer required.
- Did the plaintiff demand the shares from the Acting-Manager in June, 1884, and if so what was their value?
Answer - Yes; [$:50] per share.
- If he did not demand them in June, 1884, what was their value on the 2nd September, 1884?
No answer required.
- Do you find for the plaintiff or for the defendant; and if for the plaintiff for how much?
Answer - For the plaintiff, for $12,000, with 8 per cent interest to date, $13,120, less any amount that may be found to be due from plaintiff to Benjamin, after deducting therefrom the amount realized by the sale of the six Tins belonging to the plaintiff.
  Mr. Wilkinson applied for costs.
  His Lordship thought it a pity there had been any litigation in the case at all, and said it would perhaps be better that no application for costs should be made.  There might be an end to the litigation if the application were not pressed.  The question might stand over with that view.  Otherwise the plaintiff was entitled to his costs.
  Mr. Wilkinson, on these grounds, consented to make no application for costs at present.

 

Source: North China Herald, 11 September 1885
 

LAW REPORTS.
IN HB.M.'s SUPREME COURT.
Shanghai, 5th Sept., 1885.
Before Sir R.T. Rennie, Chief Justice, and R. A. Mowat, Assistant Judge.
F. W. LEMARCHAND v. THE AGRA BANK.
  Mr. Wilkinson appeared for the plaintiff, and Mr. Wainewright for the defendants.
  This morning their Lordships gave Judgment of the defendants' motion for a new trial, which was before the Court on the 2nd instant.
Judgment of the Chief Justice.
  This is an application for a new trial on the grounds of misdirection of the Jury by the learned Judge who presided at the hearing.  The action was brought for the recovery of the scrip of 86 shares of the Perak Tin Mining Co., or their value, and Tls. 12,500 for their detention, or in the alternative for the sum of Tls. 12,900, or such other sum as might be found to be the value of the said shares when the delivery of the scrip for the shares was wrongfully refused by the defendants, with interest thereon.  The jury found a verdict for the plaintiff for Tls. 12,000, with 8 per cent interest to date, Tls. 12,120, less any amount that may be found to be due from the plaintiff to one Benjamin; and the misdirection charged by the defendants is - the Judge having directed the Jury or given the Jury to understand that to enable Benjamin David Benjamin, in the pleadings mentioned, to mortgage or repledge the shares in the Perak Tin Mining and Smelting Company, in the pleadings mentioned, it was necessary that there should be an express agreement between the said B. D. Benjamin and the plaintiff that the said B. D. Benjamin should have a right to mortgage or repledge; and having left it to the jury to say whether the agreement between the plaintiff and the said B. D. Benjamin was that Benjamin should merely retain the said shares as security, or whether it was that the said B. D. Benjamin was to have the right to pledge them, and having also left to the Jury another question to be answered by them if they should find that it was agreed that Benjamin was to have the right to pledge the said shares; and not having directed the Jury that, if the said shares were handed to the said B. D. Benjamin as security for the plaintiff's debt to him, the said B. D. Benjamin had a right to repledge the  said shares in the absence of an express agreement to the contrary made at or before the time the said shares were handed over.  No other point than that of misdirection bring pressed as ground for a new trial, we have to consider:
  First, whether there was such misdirection or not;
  Second, whether if there was so, some substantial wring or miscarriage was thereby occasioned in the trial within the meaning of Rule 6, Order XXXIX of the Judicature Act;
  Third, whether or not we should exercise similar discretionary powers to those which are vested in the Courts at home under Rule 10, Order XL, of the Judicature Act, and finally dispose of the case.
  On the ground of misdirection, it was urged by the learned counsel for the defendants that upon the undisputed facts of the case it was clear that the circumstances under which the plaintiff handed the scrip of the shares in question to Benjamin showed that the transaction amounted to an equitable mortgage, or at any rate a pledge, as security for an advance of money, and that therefore the doctrine of law applicable to lien strictly so called could not apply to the case. He urged that therefore the learned judge should have directed the Jury that unless there was an express agreement between the plaintiff and Benjamin to the effect that the shares in question were not to be pledged, Benjamin would have had power to repledge them; and he complains that, so far from doing this, the learned Judge so directed the jury as to lead them to believe that in the absence of an agreement giving Benjamin special power to repledge, he would not have had the right or power to do so.
  It appears also that in course of the learned Judge's summing up, he (Mr. Wainewright) interrupted and expressly called his Lordship's attention to the point, saying, "Your Lordship has told the jury that it is a question whether there was an agreement that he was simply to hold the shares, or whether there was an agreement that he might pledge them. I submit that there was no necessity for an agreement that he might pledge them." But it does not appear that the learned Judge acted upon this suggestion; and the form in which he ultimately left the question to the Jury certainly seems to have been calculated to lead the jury to an opposite conclusion.  I cannot but think that here the learned Judge did in fact mislead the jury, and may thereby have induced them to find a verdict which, had they been correctly directed, they might not have found.
  The function of a Judge in summing up to a jury are thus defined in "Taylor on Evidence," p. 89.  "It is the duty of a Judge to distinctly explain to a jury the nature of any presumptions which may apply to the point at issue, distinguishing such as are conclusive from those which are liable to be rebutted by counter evidence, and again dividing the latter class into those presumptions upon which the jury are bound to act in the absence of conflicting testimony, and those upon which it is expedient or allowable to rely."  Thus, by omitting to explain to the jury the presumption which would in absence of any agreement to the contrary form a disposal of scrip such as was made by the plaintiff with Benjamin, it appears to me that the learned Judge made a serious omission, and that by subsequently leaving the question as to agreement or no agreement to the jury in the form he did, he clearly misdirected them.
  It is to be remembered that the principal, if not the only, evidence  given by the plaintiff as to the alleged verbal agreement between him and Benjamin was the plaintiff's own statement that the "understanding upon which Benjamin held the shares was that he was not to part with them without his (plaintiff's) consent or knowledge." Now it certainly does seem to me that if the jury approached the consideration of what that understanding was with an impression on their minds that the presumption of law was in favour of such understanding rather than against it, they could not have considered the matter from a proper point of view; and it is on this ground that the omission of the Judge to point out to them what the legal presumption in such a case should be, appears to me to have had a strong tendency to mislead them.
  I may say that after a careful consideration of the case of Donald v. Suckling, L.R. 1 Q.B. which was cited on both sides, but upon which especial stress was laid by the plaintiff's counsel, I have come to the conclusion that there is nothing in that case to show, as I understand Mr. Wilkinson to contend, that such a disposal of scrip as this would, in the absence of an agreement to the contrary, limit the rights of the depositee to that of lien alone.  Justice Mellor says, "It appears therefore that there is a real distinction between a deposit by way of pledge for securing the payment of money, and a right to hold by way of lien to secure the same object," and cites the dicta of Gibbs, C.J., in an earlier case to the same effect. Mr. Wilkinson cited a further passage in the judgment of the same learned Judge: "That upon the deposit by way of pledge, the express contract between the parties may operate so as to make a parting with possession, even to the extent of his interest before condition broken, so essential a violation of it as to re-vest the risk of possession in the pawnor," and argued that the doctrine was applicable to the present case; but the immediately following query put by Mr. Justice Mellor: "In the absence of such terms, why are they to be implied?" appears to tell more strongly against Mr. Wilkinson's point than the former dictum does in favour of it.
  Being thus satisfied, as I am, that the defendants have made out a clear case of misdirection, I have ow to consider whether we ought on that account to order a new trial, or, if not, whether we can finally dispose of the case.  I am satisfied that some substantial wrong or miscarriage was occasioned in the trial within the meaning of Rule 6m Order XXXIX, of the Judicature Act, by reason of the jury being misdirected, and thereby was led to consider the main issue of the case from an erroneous  point of  view; and I certainly do not think this is a case which we should be joined in finally determining all questions under such discretionary power as is vested in the Courts at home under Rule 10, Order XL, of the Judicature Act.
  I think therefore that we ae bound to accede to the application for a new trial, and in doing so I will now say further that it is, in my opinion, far the safer course, and more in the interests of both parties to the suit to order a new trial in this Court, where the validity of the verdict is doubtful, rather than to leave the dissatisfied party to an appeal to the Privy Council as his only remedy.
Judgment of the Assistant Judge.
  Having taken part in the hearing of this application, I feel bound to express my opinion on the subject, though I naturally do so with great diffidence.  In the first place I am in effect sitting in appeal from myself, which makes me seriously mistrust my judgment; and in the next place, I have the misfortune to differ from the Chief Justice.  The objection taken to the question left to the jury appears to me to be one of form simply, and not of substance.  What had to be ascertained was whether there was an agreement between Lemarchand and Benjamin that Benjamin should not part with the scrip. One way of getting the jury's finding on that point - and this is the way in which it is suggested the question should have been asked of them - was to ask them specifically, "Was there an agreement of that kind?" And to such a question they must have answered either "Yes" or No."  What I did ask them was - "Was the agreement between the plaintiff and Benjamin that Benjamin should merely retain the plaintiff's shares as security, or was Benjamin to have a right to pledge them?" Their answer ("Benjamin had only the right to retain the shares as security", taken in connection with my question, precluded the other alternative, and was therefore equivalent to the answer "Yes," to the suggested form of putting the question, and was equivalent to nothing else.  The two answers cover exactly the same ground, because they alike affirm the existence of an agreement precluding Benjamin from pledging the shares - the existence or non-existence of which was the point to be determined.  But it may be said that the form of my question suggested that there was an agreement one way or the other, and did not allow the jury finding that there was no agreement at all.  My answer to that is that it was not open to the jury to come to such a conclusion on the evidence.  The only evidence on the subject was that of the plaintiff Lemarchand and that of the witness Benjamin.  The plaintiff gave, in examination-in-chief, his version of the agreement, and he was not cross-examined on the point.  Benjamin, in examination-in-chief, gave the same version as Lemarchand did, but in cross-examination gave an opposite one.  How could a jury find on such evidence that there was no agreement? What the argument was, was open to discussion; but the jury have determined that, and their finding is not objected to (as indeed it could not be) on the ground that it was against the weight of evidence. If there was any preponderance of evidence, it was on the side of the plaintiff, whose evidence never varied, and was not impugned, rather than with the witness who gave two opposite versions; but even if there were no preponderance, even if Benjamin's account had been consistent and had differed from the plaintiff's, still it was for the jury to say which witness they believed, and they have said so.  What they could not say was, "We do not believe either" - which is the only ground on which could be based a finding that there was no agreement at all.
  For these reasons I am of opinion that the jury were substantially asked the proper question on the evidence.  Further, as I am satisfied that they would have answered to precisely the same effect the question had it been put in the way in which it is suggested I should have put it, I think that Order XXXIX, Rule 6 - "A new trial shall not be granted on the ground of misdirection *  *  *  * unless in the opinion of the Court *  *  *  *  some substantial wrong or miscarriage has been thereby occasioned in the trial" - applies.
.  .  .  .  
An argument ensued between counsel as to the form of the new trial, Mr. Wilkinson contending that it should be confined to that part of the case which was affected by the alleged misdirection of the learned Judge, while Mr. Wainewright argued that the whole case should be heard again.  Mr. Wainewright said he had only argued one point in applying for a new trial in order to save the time of the Court, and because he thought that was sufficient for the purpose; but he had never withdrawn the allegation that the verdict was against the weight of evidence.
  The CHIEF JUSTICE said he should like time to consider that point. An order was therefore issued for a new trial, the form to be settled afterwards; and it was agreed that counsel should argue the question as to the form of the trial before his Lordship in chambers.

 

Source: North China Herald, 11 September 1885
 

LAW REPORTS.
IN HB.M.'s SUPREME COURT.
Shanghai, 5th Sept., 1885.
Before Sir R.T. Rennie, Chief Justice, and R. A. Mowat, Assistant Judge.
F. W. LEMARCHAND v. THE AGRA BANK.
  Mr. Wilkinson appeared for the plaintiff, and Mr. Wainewright for the defendants.
  This morning their Lordships gave Judgment of the defendants' motion for a new trial, which was before the Court on the 2nd instant.
Judgment of the Chief Justice.
  This is an application for a new trial on the grounds of misdirection of the Jury by the learned Judge who presided at the hearing.  The action was brought for the recovery of the scrip of 86 shares of the Perak Tin Mining Co., or their value, and Tls. 12,500 for their detention, or in the alternative for the sum of Tls. 12,900, or such other sum as might be found to be the value of the said shares when the delivery of the scrip for the shares was wrongfully refused by the defendants, with interest thereon.  The jury found a verdict for the plaintiff for Tls. 12,000, with 8 per cent interest to date, Tls. 12,120, less any amount that may be found to be due from the plaintiff to one Benjamin; and the misdirection charged by the defendants is - the Judge having directed the Jury or given the Jury to understand that to enable Benjamin David Benjamin, in the pleadings mentioned, to mortgage or repledge the shares in the Perak Tin Mining and Smelting Company, in the pleadings mentioned, it was necessary that there should be an express agreement between the said B. D. Benjamin and the plaintiff that the said B. D. Benjamin should have a right to mortgage or repledge; and having left it to the jury to say whether the agreement between the plaintiff and the said B. D. Benjamin was that Benjamin should merely retain the said shares as security, or whether it was that the said B. D. Benjamin was to have the right to pledge them, and having also left to the Jury another question to be answered by them if they should find that it was agreed that Benjamin was to have the right to pledge the said shares; and not having directed the Jury that, if the said shares were handed to the said B. D. Benjamin as security for the plaintiff's debt to him, the said B. D. Benjamin had a right to repledge the  said shares in the absence of an express agreement to the contrary made at or before the time the said shares were handed over.  No other point than that of misdirection bring pressed as ground for a new trial, we have to consider:
  First, whether there was such misdirection or not;
  Second, whether if there was so, some substantial wring or miscarriage was thereby occasioned in the trial within the meaning of Rule 6, Order XXXIX of the Judicature Act;
  Third, whether or not we should exercise similar discretionary powers to those which are vested in the Courts at home under Rule 10, Order XL, of the Judicature Act, and finally dispose of the case.
  On the ground of misdirection, it was urged by the learned counsel for the defendants that upon the undisputed facts of the case it was clear that the circumstances under which the plaintiff handed the scrip of the shares in question to Benjamin showed that the transaction amounted to an equitable mortgage, or at any rate a pledge, as security for an advance of money, and that therefore the doctrine of law applicable to lien strictly so called could not apply to the case. He urged that therefore the learned judge should have directed the Jury that unless there was an express agreement between the plaintiff and Benjamin to the effect that the shares in question were not to be pledged, Benjamin would have had power to repledge them; and he complains that, so far from doing this, the learned Judge so directed the jury as to lead them to believe that in the absence of an agreement giving Benjamin special power to repledge, he would not have had the right or power to do so.
  It appears also that in course of the learned Judge's summing up, he (Mr. Wainewright) interrupted and expressly called his Lordship's attention to the point, saying, "Your Lordship has told the jury that it is a question whether there was an agreement that he was simply to hold the shares, or whether there was an agreement that he might pledge them. I submit that there was no necessity for an agreement that he might pledge them." But it does not appear that the learned Judge acted upon this suggestion; and the form in which he ultimately left the question to the Jury certainly seems to have been calculated to lead the jury to an opposite conclusion.  I cannot but think that here the learned Judge did in fact mislead the jury, and may thereby have induced them to find a verdict which, had they been correctly directed, they might not have found.
  The function of a Judge in summing up to a jury are thus defined in "Taylor on Evidence," p. 89.  "It is the duty of a Judge to distinctly explain to a jury the nature of any presumptions which may apply to the point at issue, distinguishing such as are conclusive from those which are liable to be rebutted by counter evidence, and again dividing the latter class into those presumptions upon which the jury are bound to act in the absence of conflicting testimony, and those upon which it is expedient or allowable to rely."  Thus, by omitting to explain to the jury the presumption which would in absence of any agreement to the contrary form a disposal of scrip such as was made by the plaintiff with Benjamin, it appears to me that the learned Judge made a serious omission, and that by subsequently leaving the question as to agreement or no agreement to the jury in the form he did, he clearly misdirected them.
  It is to be remembered that the principal, if not the only, evidence  given by the plaintiff as to the alleged verbal agreement between him and Benjamin was the plaintiff's own statement that the "understanding upon which Benjamin held the shares was that he was not to part with them without his (plaintiff's) consent or knowledge." Now it certainly does seem to me that if the jury approached the consideration of what that understanding was with an impression on their minds that the presumption of law was in favour of such understanding rather than against it, they could not have considered the matter from a proper point of view; and it is on this ground that the omission of the Judge to point out to them what the legal presumption in such a case should be, appears to me to have had a strong tendency to mislead them.
  I may say that after a careful consideration of the case of Donald v. Suckling, L.R. 1 Q.B. which was cited on both sides, but upon which especial stress was laid by the plaintiff's counsel, I have come to the conclusion that there is nothing in that case to show, as I understand Mr. Wilkinson to contend, that such a disposal of scrip as this would, in the absence of an agreement to the contrary, limit the rights of the depositee to that of lien alone.  Justice Mellor says, "It appears therefore that there is a real distinction between a deposit by way of pledge for securing the payment of money, and a right to hold by way of lien to secure the same object," and cites the dicta of Gibbs, C.J., in an earlier case to the same effect. Mr. Wilkinson cited a further passage in the judgment of the same learned Judge: "That upon the deposit by way of pledge, the express contract between the parties may operate so as to make a parting with possession, even to the extent of his interest before condition broken, so essential a violation of it as to re-vest the risk of possession in the pawnor," and argued that the doctrine was applicable to the present case; but the immediately following query put by Mr. Justice Mellor: "In the absence of such terms, why are they to be implied?" appears to tell more strongly against Mr. Wilkinson's point than the former dictum does in favour of it.
  Being thus satisfied, as I am, that the defendants have made out a clear case of misdirection, I have ow to consider whether we ought on that account to order a new trial, or, if not, whether we can finally dispose of the case.  I am satisfied that some substantial wrong or miscarriage was occasioned in the trial within the meaning of Rule 6m Order XXXIX, of the Judicature Act, by reason of the jury being misdirected, and thereby was led to consider the main issue of the case from an erroneous  point of  view; and I certainly do not think this is a case which we should be joined in finally determining all questions under such discretionary power as is vested in the Courts at home under Rule 10, Order XL, of the Judicature Act.
  I think therefore that we ae bound to accede to the application for a new trial, and in doing so I will now say further that it is, in my opinion, far the safer course, and more in the interests of both parties to the suit to order a new trial in this Court, where the validity of the verdict is doubtful, rather than to leave the dissatisfied party to an appeal to the Privy Council as his only remedy.
Judgment of the Assistant Judge.
  Having taken part in the hearing of this application, I feel bound to express my opinion on the subject, though I naturally do so with great diffidence.  In the first place I am in effect sitting in appeal from myself, which makes me seriously mistrust my judgment; and in the next place, I have the misfortune to differ from the Chief Justice.  The objection taken to the question left to the jury appears to me to be one of form simply, and not of substance.  What had to be ascertained was whether there was an agreement between Lemarchand and Benjamin that Benjamin should not part with the scrip. One way of getting the jury's finding on that point - and this is the way in which it is suggested the question should have been asked of them - was to ask them specifically, "Was there an agreement of that kind?" And to such a question they must have answered either "Yes" or No."  What I did ask them was - "Was the agreement between the plaintiff and Benjamin that Benjamin should merely retain the plaintiff's shares as security, or was Benjamin to have a right to pledge them?" Their answer ("Benjamin had only the right to retain the shares as security", taken in connection with my question, precluded the other alternative, and was therefore equivalent to the answer "Yes," to the suggested form of putting the question, and was equivalent to nothing else.  The two answers cover exactly the same ground, because they alike affirm the existence of an agreement precluding Benjamin from pledging the shares - the existence or non-existence of which was the point to be determined.  But it may be said that the form of my question suggested that there was an agreement one way or the other, and did not allow the jury finding that there was no agreement at all.  My answer to that is that it was not open to the jury to come to such a conclusion on the evidence.  The only evidence on the subject was that of the plaintiff Lemarchand and that of the witness Benjamin.  The plaintiff gave, in examination-in-chief, his version of the agreement, and he was not cross-examined on the point.  Benjamin, in examination-in-chief, gave the same version as Lemarchand did, but in cross-examination gave an opposite one.  How could a jury find on such evidence that there was no agreement? What the argument was, was open to discussion; but the jury have determined that, and their finding is not objected to (as indeed it could not be) on the ground that it was against the weight of evidence. If there was any preponderance of evidence, it was on the side of the plaintiff, whose evidence never varied, and was not impugned, rather than with the witness who gave two opposite versions; but even if there were no preponderance, even if Benjamin's account had been consistent and had differed from the plaintiff's, still it was for the jury to say which witness they believed, and they have said so.  What they could not say was, "We do not believe either" - which is the only ground on which could be based a finding that there was no agreement at all.
  For these reasons I am of opinion that the jury were substantially asked the proper question on the evidence.  Further, as I am satisfied that they would have answered to precisely the same effect the question had it been put in the way in which it is suggested I should have put it, I think that Order XXXIX, Rule 6 - "A new trial shall not be granted on the ground of misdirection *  *  *  * unless in the opinion of the Court *  *  *  *  some substantial wrong or miscarriage has been thereby occasioned in the trial" - applies.
.  .  .  .  
An argument ensued between counsel as to the form of the new trial, Mr. Wilkinson contending that it should be confined to that part of the case which was affected by the alleged misdirection of the learned Judge, while Mr. Wainewright argued that the whole case should be heard again.  Mr. Wainewright said he had only argued one point in applying for a new trial in order to save the time of the Court, and because he thought that was sufficient for the purpose; but he had never withdrawn the allegation that the verdict was against the weight of evidence.
  The CHIEF JUSTICE said he should like time to consider that point. An order was therefore issued for a new trial, the form to be settled afterwards; and it was agreed that counsel should argue the question as to the form of the trial before his Lordship in chambers.

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