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Colonial Cases

Eastlack and Wong Cumming v. Shanghai and Hongkew Wharf Co., 1887


Eastlack and Wong Cumming v. Shanghai and Hongkew Wharf Co.


Supreme Court of China and Japan
Rennie CJ, 11 January 1887
Source: North China Herald, 19 January 1887

Shanghai, 11th Jan., 1887.
Before Sir R. T. Rennie, Chief Justice.
  This afternoon his Lordship delivered the following Judgment.

Shanghai, 6th Jan., 1887
Before Sir R. T. Rennie, Chief Justice.
THE SHANGHAI AND HONGKEW WHARF CO., and Messrs. JARDINE, MATHESON & Co., carrying on business under the style of the Shanghai and Hongkew and Jardine's Associated Wharves.
  This was a suit for the non-delivery of 1,000 cases of window glass.
  Mr. Wainwright appeared for the plaintiffs, and Mr. Wilkinson for the defendants.
  The defence was that the landing account for the goods held by the plaintiff Cumming was obtained by fraud on the part of Messrs. Postau & Co.'s Compradore.
  As the burden of proof lay with the defendants Mr. Wilkinson opened the case and called
  Mr. Henry Heyn who deposed that he was now a partner in the firm of Postau and Co. and was a clerk in the firm in July last.  The Company had a thousand cases of window glass at the wharf godown, which were sold to one Yuen Fah on the 6th July last.  On the 10th July witness had the lading account in his possession and gave it to the Compradore of the firm, Chun Chiu-san who having been afterward dismissed committed suicide by taking opium.  The compradore told witness that Yun Fah had taken over the glass and also informed him that he had paid 800 taels to him (compradore) upon which witness gave him an order to give to Yuen Fah for 400 cases. But he never brought witness back the landing account.  It was afterwards learned that he had pledged the consignment of glass to the plaintiff Cumming.  The compradore had no authority from Postau and Co. to pledge the window glass.  The firm took proceedings against him in the Mixed Court in consequence and he was sentenced to four months' imprisonment.  Witness was in Court at the time the sentence was passed.
  Mr. Wainwright objected and thought they might have the sentence in Court, as he could not accept as evidence the statement of the witness, although he might have been in the c Court at the time the sentence was passed.  That was not enough as the witness did not understand a word of the language in which the case was conducted in the Mixed Court.  He had a translation of the sentence, but it was a very vague document, and it was hard to make out what the man was sentenced for.
  His Lordship said he would take notice of Mr. Wainewright's objection.
  Mr. Wilkinson however did not press the point in evidence.
  Witness cross-examined by Mr. Wainewright - The glass was consigned to the firm of Postau & Co.  It was secured by a draft for 2,170 taels on the New Oriental bank.  The draft was payable on the 10th July, and was paid by the compradore between 10 and half-past in the morning,  I told the compradore something to the effect that I was hard up, as some goods had not been taken delivery of, and that he should help to pay the draft out of what money he had got.  When the draft came in I had not a sufficient balance at the bank to draw upon.  It was the compradore's duty when I told him that we had not the money in bank to meet the draft, to go and try to get the money from some of our customers or I would have to get a loan at the bank.  The compradore had a balance for us, that day, of some 1,700 taels.  He afterwards came and told me that Yuen Fah intended to ask delivery of the window glass and pay for it, and I endorsed the delivery order and gave it to him.  I said that money will pay the draft.  I afterwards got a memo stating that the draft had been paid.  I never suspected anything wrong about the compradore until he took opium. That was on the following Wednesday.  Between the 10th and 14th I asked Yuen Fah in presence of the compradore for the landing account which I wanted back, and he said he would send it.  The compradore was paid a salary of 50 taels and a commission.  He had a staff of two shroffs and two coolies, which he paid.  There is still an open account about per centage due to the compradore's representatives.  I spoke to Yuen Fah afterwards about the landing account and he told me that he had only said he would bring it to me, at the request of our compradore.
  The witness was directed to produce the voucher and after the adjournment for luncheon his cross-examination was continued as follows:- I have not been able to find the vouchers, and I am not sure that I did get such a memo.  As far as I was informed by the compradore the draft was paid.  If it had not the Bank would have insisted on payment.  I assumed it had been paid.
  To Mr. Wilkinson - Deducting the commission due to him by Postau & Co. the compradore owed us on the 10th of July taels 1,250
  YUEN FAH was next examined and said he was a merchant, and dealt in window glass, amongst other things.  He bought the 1,000 cases of window glass referred to in the sale note, on the 6th July last.  He was acquainted with Postau & Co.'s compradore Chun Chiu-san.  Four days after the purchase he came to witness's house and asked for payment of the glass.  Witness replied, "This one month affair and no can pay now."  The compradore then said he would allow him discount if witness paid at once.  Witness said he had no money and the compradore went away, leaving the landing account with witness, who said that he might be able to find the money.  Bur he was not, and gave the landing account back at 12 o'clock having had it from about 11.30.  Witness paid no money on account of the glass.
  Cross-examined by Mr. Wainwright - Witness never told Mr. Heyn that he had got the landing order.  "Chun Chiu-san no talkee me what for he wanted money so chop chop." Witness was able to take the glass as specified in his contract.
  Mr. Wainwright said that the facts he would bring before his lordship, although they did not differ very materially from these brought forward by the witnesses for the defence, would give a very different complexion to the case.  One of the witnesses had a draft to meet on the 10th July and in point of fact had no funds to meet it, except what could be got out of the compradore, who was left to get it as best he might.  After the purchaser of the glass had refused to take it up in Saturday 10th July, and as it was near 12 o'clock, the compradore appeared to have gone to a native bank, and there with the aid of a surety managed to borrow the amount necessary to take up the draft in the New Oriental Bank.  He would prove that the money from this native Bank went to pay th draft to the New Oriental Bank, and the native bank only made the loan on the condition that it was to be for a very short time.  Under these circumstances the compradore went to Wong Cumming supposing that he would do him a good turn and lend him the money to repay the native Bank, for a month.  Cumming had been told by Mr. W. S. Wetmore that he had some money to invest if he came across good security, but he did not think the present investment worth his while, and Cumming advanced the money himself at a moderate rate of interest, believing that it was a perfectly bona fide transaction. Postau & Co. thus had their draft taken up without having to pay a cent out of their own pockets, although it seemed the compradore owed them some money.
  WONG CUM-MING was then called and examined by Mr. Wainewright said he had been compradore to Messrs. Frazer & Co. for 16 years.  He knew Postau & Co.'s compradore for something less than a year. On 11th July he went to witness's house and said that he had 1,000 cases glass and wanted to borrow 2,000 taels upon that security as he had to take up a draft on the New Oriental Bank.  He left witness and went to the Chinese Bank, Dong Kung, and with the help of a surety named Yui Lou Tzu got the loan for the amount which he was to pay back on Monday.  On Monday the bank man brought the landing account to witness and he went to Mr. Wetmore, who said that the amount was too small for him and the time too short.  Witness next took the landing account and said he would get a loan for the amount from a China Bank, and told his (witness's) bank to pay the Dong Kung Bank the amount of the compradore's loan. The compradore told witness that the glass had been sold to Yuen Fah, who would take it away within one month and so he (compradore) would pay back the loan within hat me.  Witness charged interest on the amount at the rate of 8 per cent.  He thought the transaction was a proper one.  He often knew of compradores of foreign hongs borrowing money from native banks when drafts came in on a Saturday.  When the Wharves Company sent witness the new warrant they sent him a bill for 45 taels for storage.
  Mr. W. S. Wetmore examined by Mr. Wainewright said he was an American citizen and a merchant in Shanghai.  Cumming the complainant was compradore to Frazer & Co. for 15 years.  On the 12th July he came to him and said he had a warrant for 1,000 cases of glass, if witness wanted to advance some money.  He had previously told the compradore that he had some funds for investment on good security.  Witness told him that the rime was too shot and the amount too small to make it worth while to have anything to do with it.  Witness did not believe that if the compradore had any suspicions about the transaction he would have proposed to him to advance a loan upon it.  He would not say whether it was a usual way to do business here to raise money on these warrants.
  Mr. R. Eastlack deposed that he was a citizen of the United States and was in the employment of Frazer & Co. for 24 years.  On the morning of the 12th July the compradore brought witness a landing warrant for 1,000 cases of glass and asked him if it was all right; but he told him to send it down to the wharf to see.  The compradore then asked him to request the Wharves Co. to get a new warrant which he did, asking the Company at the same time to stop the goods in the hands of the firm's compradore Cumming.  He got an answer from the Wharf Co. saying "Will do so" the new warrant was sent the next day.  The compradore at the time told witness that he was going to advance a loan upon the warrant.  Witness had no suspicions about the matter.  Subsequently a letter was received from the Wharves Company stating that Messrs. Postau & Co. had requested the delivery of the 1,000 cases of glass to be stopped. Witness wrote a reply to the effect that the original landing warrant duly signed by Messrs. Postau & Co., and by the New Oriental Bank Corporation had been transferred to Cumming and that he could not consent to any interference with his ownership.  The Landing order was assigned over to him (witness) merely for the purpose of facilitating the processing and for no other consideration.
  Mr. JOHN RICHARD HAGGITT accountant of e New Oriental Banking Corporation was examined and deposed that the bank held an acceptance of Messrs. Postau & Co. for 2,170 taels.  It was paid in July 10th, the compradore receiving payment.
  SHEK SHUN shroff in the New Oriental bank deposed to the payment of the acceptance for 2,170 taels by the Hongkong Bank in sycee and notes on the 10th July some time after 3 o'clock in the afternoon.  Foreigners could not get into the Bank after 12 o'clock on Saturdays.  He gave no receipt for the payment.
  WONG CHIN CHOW a runner in the Dong Kung Bank said he knew Messrs. Postau & Co.'s compradore.  On the 9th day of the 6th mon (10th July) the bank at his request and on the surety of one Yui Lou Tzu paid the New Oriental Bank 2,`70 taels on his behalf.  The security as a warrant for some cases of glass.  Eighteen hundred taels were paid back on the 11th day of the same moon by Frazer & Co.'s compradore, who was debited with the other 370 taels.
  Yui Lou Tzu was examined and said he knew Postau & Co.'s compradore who was a friend of his.  On the 9th day of the 6th moon he came to witness and said he wanted to pay the Oriental Bank 2, 170 taels and had no money.  At the same time he said he had a godown order for 1,000 cases of glass and asked witness to assist him to raise the money on the security of the order.  Witness went with him to the Dong Kung Bank and obtained a loan of the money till the following Monday.  Witness went surety for him and had since to pay 370 taels.
  The further hearing of the case was adjourned till tomorrow.
7th January.
  The hearing of this case was resumed on Friday morning,
  Mr. Wainewright called Ho Tien-sun who was cautioned and said:- I have been employed as a compradore to several foreign forms in Shanghai.  I became a compradore about 11 years ago.  I have been in the employ of Messrs. John Forster & Co., and Chapman King & Co., and am now with Messrs. Barlow & Co.  I have frequently raised money for my masters on warrants.  I got the money from native Banks.  I have never had occasion to do this for Barlow & Co.  I found no difficulty in getting such advances when required.
  Cross-examined by Mr. Wilkinson - I only obtained such advances as I have been speaking about, for Mr. Butler of Chapman, King & Co. I only did it for him.  Chapman King & Co., failed in 1882.
  Mr. Wainewright said that this concluded the case for the plaintiffs.
  Mr. Heyn recalled by the Court:- When I said that on the 10th of July the compradore owed us Tls. 1,250 after deducting commission due to him, I did not debit him with Tls. 800 said to have been  received from Yuen Fah.  If the compradore had told me that he could get the money wanted (Tls. 2,170 (on the 10th of July from a native bank, I do not think I would have given him the Landing Account of the glass because we had heard he was in difficulties.  Yuen Fah had frequently asked for delivery of the glass, and we ultimately gave him delivery of 100 cases.  He has asked for the balance.  We charged Chun Chiu-san at the Mixed Court with defrauding us of the Landing Account, and by some mistake, he was convicted by the Court of having given us Tls. 1,000 short.  He was also short of some balance on the godown books.  He raised the same defence at the Mixed Court as has been raised here now.  I could have raised a loan on the glass from a Foreign Bank on that Saturday morning or even in the afternoon.  Our loss in respect of this is Tls. 1,000.
  Mr. Wainwright in summing up the case for the plaintiffs, said that Messrs. Postau & Co.'s offer was conditional on Wong Cumming giving up all claim on Messrs. Jardine, Matheson & Co., and his right to have his claim adjudicated on by a trained and experienced lawyer with proper legal assistance and in a language of which he understood something, and to take his chance with the German Consul where the proceedings were conducted in the German language and where Counsel (such as he could obtain) were practically useless.  Mr. Cumming and his friends therefore very wisely resisted Messrs. Pustau & Co.'s blandishments, and very foolish he would have been if he had yielded to them.  Mr. Wainewright then after making some observations upon the cases cited by Mr. Wilkinson referred to certain points in connection with the Factor's Acts and gave references to several cases, notably:- Hayman v,. Fletcher, 32 L.J., C.P.132. Johnson v. The Credit Lyonnais Co, 3 C.P. D. 42 and Rumball v. The Metropolitan Bank, 2 Q.B.D. 191, bearing upon his argument.  He contended that a compradore was not a servant within the meaning of Lamb v. Attenborough or Hayman v. Fletcher and pointed out several of the well known distinctions.  He was in fact a middle man and from one point of view he might be called a sort of tame banker kept on the premises.  His remuneration was generally by commission, he had his own staff which he paid, in many cases he bought and sold goods without the consent of his principals, &c.
  He then proceeded to argue that under the circumstance of the present case, Messrs. Postau's compradore had an implied authority to pledge the goods in question.  He was called upon suddenly on a Saturday to provide funds to take up an acceptance for which the firm had not provided in any way, and which they had no funds at their bankers to meet, and was virtually told to do the best he could.  What he had done had saved the credit of Messrs. Postau & Co., and he, Mr. Waindwright, could not see that they had lost anything on the transaction.  If Plaintiffs did not obtain judgment, Messrs. Postau & Co. would be the gainers of Tls. 950, as the following figures would show:-
Amount of draft................................... Tls. 2,170
Amount owed by Compradore ........   Tls. 1,250
                                                                    Tls.   920
Amount paid by Compradore storage  Tls.    30
Amount of Profit ..................................  Tls.  950.
In point of fact Messrs. Postau & Co. in defending this suit, were trying to make Mr. Wong Cumming pay the debt due to them by their insolvent and deceased compradore.
  Mr. Wilkinson in replying for the defendants, aid that he wished in reply to Mr. Wainewright's observation as to the value of wharf warrants to point out to the Court the position of the defendants, Jardine, Matheson & Co., acting on behalf of the Wharves.  They had, he contended, no option in the matter; they could not deliver the cargo in question to Wong Cumming without exposing themselves to a claim on the part of Pustau & Co., and it was for the convenience of Wong Cumming that the proceedings took the present form, instead of the Wharf Companies interpleading, which they might have done, and thereby have entailed Wong Cumming in additional expense.  
  After referring to Mr. Eastlake's connection with the case, Mr. Wilkinson stated that as to the issues between Wong Cumming and Postau & Co., his contention was that Wong Cumming had no title to the goods because:
First, - That the landing account had been obtained by the compradore by fraud.
Second, - That even if he had not obtained it by fraud, he had obtained it for a special purpose; he had no title in it himself, and could give no title to anyone else.
The facts of the case as disclosed by the evidence were that on the 10h of July, Chun Chiu-san, Messrs. Postau & Co.'s compradore, falsely and fraudulently represented to Mr. Heyn, salesman for the firm, that Yuen Fah had come to obtain delivery of the window glass. In consequence of this false statement, and believing it to be true, Mr. Heyn handed over the landing account for the glass to the compradore with the firm's endorsement in blank on it.  The case for the defendants is that the representation of the compradore, Chun Chiu-san, was false, and was a fraudulent device to obtain possession of the landing account.
  His Lordship said that he could see no proof of any intention on the part of the compradore to defraud anyone.  He had been left by Messrs. Postau & Co. to find the money to meet this draft at a moment's notice; in order to raise the necessary funds he pledged the landing account, and then immediately paid over the sum he had thus obtained in the liquidation of Messrs. Postau & Co.'s debt.
  Mr. Wilkinson said that his contention was that where a servant is given a document of title without authority to pledge it, but takes it with the intention of obtaining money upon it, and with the intention of not accounting for the money he received, he is guilty of intent to defraud.  In this case while the compradore may be said to have accounted for Tls. 800, he accounted for no other part of the Tls. 2,300 he got.  He (Mr. Wilkinson) would further contend that even though the compradore had obtained the landing account without any fraud at all, he obtained it for the purpose of handing it over to Yuen Fah against payment for the glass, and not only did he pledge it, but he concealed the fact that he had done so. The pretence that the bill had been met by the compradore of money due by him to the firm, and not by the pledge of the landing account, was fraud.  He (Mr. Wilkinson) would adopt the view of the matter taken by Mr. Wainewright, that Messrs. Postau & Co. wished their compradore to expend the money he had in his hands belonging to the firm in payment of the Bill, and that the action subsequently taken by him for the purpose of concealing the fact that he had not the money forthcoming.  It had been admitted by the other side that if it were shown that the compradore himself had no title to the chattel, he could give no title to any body else, and Postau & Co. would be entitled to recover it unless they authorized him to pledge it, and Wong Cumning certainly had no title in the landing account, and Postau & Co. gave him (compradore) no authority to pledge it.  He was not their special agent to pledge this particular landing account, and he was not their general agent to pledge landing accounts or wharf warrants.  He was not a factor.  According to the case made out by the evidence of the plaintiff the compradore in pledging the landing account, purported to do so as a servant of Postau& Co, and not as a factor. (Lamb v., Attenborough).  
  With regard to the fact that they money obtained by the compradore on the security of the landing account had been applied in payment of the draft, he would contend that it was not applied with Postau & Co.'s knowledge, by whom, and by the compradore the payment of the bill was treated as a payment by the compradore.  That the specific money cannot be traced to Postau & Co. follows from the ruling in (Miller v. Race), 1 Smith's Leading Cases, and the cases there cited under that head.
  On Tuesday evening judgment was given for the plaintiffs for Tls. 1,830 with interest from 12th July, the costs to be taxed.

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