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Colonial Cases

Mosely and McCulloch v. Emens, 1887

[sale of shares]

Mosely and McCulloch v. Emens

United States Consular Court, Shanghai
Kennedy, 3 February 1887
Source: North China Herald, 9 February 1887

Shanghai, 3rd February, 1887
Before General Kennedy, Consul-General, Acting Judicially, with Messrs. W. R. Eastlack and W. S. Wetmore, Assessors.
  The petition of the plaintiffs who are described as merchants' clerks in Hongkong, read by Mr. Wainwright, their solicitor, set forth that on or about the 21st l March, 1883, they, through Messrs. Chater and Vernon of Hongkong, stock and share brokers, contracted with Mr. Samuel D. Robinson to sell to him fifty shares in The Luzon Sugar Refining Company, Limited, for the sum of $5,400, with delivery on the 31st July, and on or about 23rd April following a further hundred shares in the same company for the sum of $10,100, with delivery August 31st. But Mr. Robinson never completed any of the purchases, and in consequence of his inability to perform his part in the said contract the plaintiffs about the end of July 1883, agreed to take back the shares, on the condition that he should pay them $3,050 the difference between the agreed price of the shares and their market value at the time of this arrangement. The arrangement was subsequently embedded in letters which passed between the plaintiff John Alex. Mosely and Mr. S. Robinson, but the amount has never been paid, and the plaintiffs therefore sought that the defendant as administrator of Mr. Robinson's estate might be ordered to pay the $3,050 together with interest at 8 per cent since July 1883.
  The defendants answer was in effect that there was no sufficient proof in writing of the purchase of these shares; that such claims were barred by the Statute of Frauds; that the action was not commenced till more than two years after the accrual of the claim, whereby such actions are barred by the regulations for United States Consular courts, and finally that another judgment having already been given against the estate, there would not be funds to meet the amount in the present case if judgment were given against him.
  Mr. Wainewright said that the first thing he should have to prove was that there was a sale of the shares to Mr. Robinson, that they had never been paid for, and that the claim that the debt should be paid out of his estate was a reasonable one. The sum claimed was the difference between the contract price of the shares and their value when they were taken over by the plaintiffs.  He had to meet the pleas advanced by the defendant, the first of which was that he (Mr. Wainewright) was barred by the Stature of Frauds, and the other that under the Consular regulation it was barred by lapse of time.  Mr. Wainewright then read the declarations of the plaintiffs and of their brokers deposing to the sale of the shares to Mr. Robinson, and  said that the next evidence  he would adduce was a copy of a letter written by Mr. Robinson in reply to a letter from Mr. Mosley dated 11th August, 1883, to Mr. Robinson, which said:-
Messrs. Chater and Vernon inform me that owing to heavy reverses in business you find yourself unable to take up the 150 Luzon shares purchased from me.
  I much regret your unfortunate position, and have taken over these shares at $83, the market rate ruling on the 31st ult.  The shares were sold to you 50 at 108 and 210 to 101, which leaves a loss to me of $3,050.  I am assured by Messrs. Chater & Vernon that you are quite unable to liquidate the difference now and taking into consideration the losses you have lately incurred I intend leaving the matter open until you feel yourself in a position to pay me, and I hope you will send me instalments against the above as you are able to.
  Mr. Emens, who defended the suit, read Mr. Robinson's reply to the above, dated the 20th August as follows:-
I have received your kind favour of the 11th, and in answer to the same I would write that my prospects are so gloomy that I cannot hold out any hopes with regard to the future.  If I should be so lucky as to have it in my power to do anything in the matter you can rely upon my doing my utmost.
  Mr. Wainewright said that these documents were the only evidence that he was in a position to adduce, but he submitted that they were sufficient for the purpose, and that they proved the statements in the petition as far as these were material; namely, that the shares were sold on a certain day at a certain price, that the contract had never been completed, and that the plaintiffs afterwards made an arrangement with Mr. Robinson by which he was to pay the $3,050 when he could.  The letters he (Mr. Wainwright) submitted furnished sufficient evidence of the promises to pay although Mr. Robinson did not undertake to pay at any particular time.  But he did not repudiate he contract, and admitted that the sum demanded was owed by him to the plaintiffs.  If he had lived it was probable that they could not have sued him then upon the letter, but that however was a matter which he Mr. Wainewright) need not discuss, for when a man died the estate became charged with all his debts, and the time had arrived when the executor was able to pay the money or, at any rate some part of it.  They did not seek to obtain payment in full, but only wanted to have their claim placed upon the estate and paid pari passu, with the claims of the other creditors.   It was plain that the time had arrived when they might expect fulfilment of the promise that Mr. Robinson would do his utmost, and that they should have a share of his estate.
  With regard to one of the defences set up, that upon the Statute of Frauds, he supposed that it must be section 17 to which the defendant referred as there was no other section of the Stature upon which he could rely.  He contended that the section could not be applied to the shares in a company like the Luzon Sugar Refining Company.  The provisions of the section were that after the 24th day of June, 1677, no contract for the sale of any goods, wares or merchandise should be allowed to be good except the buyer should have received some of the goods, or given something in part payment thereof, or that some note or memorandum of the transaction should have been signed.
  His Honour observed that American law somewhat differed from English on the point.  Some of the States held that shares did not come under the Statute of Frauds, while others held that they did.
  Mr. Wainewright said that the law of England was very well defined on the point, and he took it that the Court would not regard American law on that particular point, for it was really the law of Hongkong they had to consider.  The question was whether a written contract was necessary.  They were at a disadvantage as to the formal proof of the law in Hongkong, as there was only one lawyer in Shanghai, Mr. Drummond, who had practiced in the Hongkong Court.
  When Hongkong was acquired it took over the law of England as it existed at the rime, including the Statute of Frauds, and all the decisions which had taken place up to that time; the question was whether Hongkong had done anything since to alter the law. He could, if his Honour wished, bring the skilled witness referred to, to show that Hongkong followed British legislation.  It often made an Ordinance for its own purposes, but it never made one which was in conflict with British law, and there was no ordinance in Hongkong which destroyed in effect the Statute of Frauds.  He had there the titles of all the Ordinances, but he did not think it was necessary to go through them.  He contended that Mr. Robinson's letter was really a written contract, for in it he admitted the claim to Mr. Mosely and he quoted from Benjamin on the Sale of Personal property to prove that the 17 sec. of the Statute of Frauds did not apply to shares, and also cited a number of cases in support of his contention, that of Humble v. Mitchell (11 Ad. & E.) amongst others.  He had not the broker's book to produce, but he had their sworn declaration proving that the contract was entered into and that they sold the shares to Mr. Robinson.
  His Honour - You have not been able to find anything like the original contract and you rely upon the letters from Mr. Mosely and Mr. Robinson?
  Mr. Wainewright contended that in the letter of the latter he really signed something which amounted to a contract; he admitted that it looked like a paradox to say that Mr. Robinson had become in a position to pay by dying, but it was true.
  In regard to the Statute of Limitations, the U.S. Consular regulation fixing the time at two years after the cause of the action began was void because it was ultra vires.  It was made by a minister with the consent of the U.S. Consuls; but he contended that a Minister could only make regulations within the power conferred on him by Congress. All the minister could do was to define rules of practice; he could not make a new Statute of Limitation.
  His Honour - The court sitting here is a subordinate Court.  The minister's is an appellate Court.  How far is it competent for a subordinate Court to overrule the jurisdiction of its superior? (Laughter.)
  Mr. Wainewright said he would leave that to his Honour.
  His Honour - I have my own opinion as a lawyer, but I would like the question taken up and decided.
  Mr. Wainwright contended that his clients were not to be bound by the consular regulations because the time stipulated in the letter had not run out.  Mr. Robinson now being dead did not require any more money, and his estate should therefore be applied to pay his creditors.  The contract began to take effect the moment of his death.  He pointed out the consideration of forbearance in the contract, which was recognized in Mr. Robinson's letter to Mr. Mosely, who forbore to exercise his strict legal rights when Mr. Robinson promised to pay when he could.
  Mr. Emens said he was sorry that he was not empowered to employ counsel, but was obliged to defend the suit himself. The first question was as to the purchase of shares and it would seem that the same brokers Messrs. Chater and Vernon acted and were agents for both parties, the plaintiffs and Mr. Robinson.  He a sked that the contract be produced; else he did not think he would be obliged to pay the claim.  He found in paragraph 21 of Storey on Agency that the same broker acting for both parties was evidence of fraud, for a broker could not conscientiously do justice to both vendor and vendee.  He could not see how if a man were not liable when he was alive, that he became liable after his death.  Nor could he see how Messrs. Mosely and McCulloch exhibited forbearance, because they could not sue Mr. Robinson in Hongkong.
  Mr. Wainewright - Oh yes, they could have sued him.
  Mr. Emens replied that he could prove that they were debarred by 7 and 8 Vic. Cap. 119 and was proceeding to argue the point, when
  Mr. Wainewright objected to its being raised then as it had not been raised in the answer.
  The Court however gave the defendant leave to amend his defence by adding the following paragraph in his answer.
That the plaintiffs ought not to recover he amount for which they sue, as in Hongkong where the alleged contract was made, transactions of this nature were made void by the Statute 8 and 9 Vict., Ch. 109 Sec. 18.
Mr. Emens quoted from Benjamin on Sales page 134 to show that there was no remedy at Hongkong on a contract as to time bargains or as to the difference in prices of shares at a contract time and future time.
  His Honour asked did Mr. Emens say that the shares were not to have been delivered to Mr. Robinson.
  Mr. Emens replied that the letter of August 11th showed that Mr. Mosley agreed to take the difference and "call it square," which he contended showed that the shares were not to be transferred. Messrs. Mosely and McCulloch knew that their petition would not be received in Hongkong, but would be kicked out of court.
  Mr. Wainewright - That is a new proceeding.  I may inform you that British courts always hear petitions and don't kick them out unheard.
  Mr. Emens then quoted a number of authorities from Parsons on Contracts to prove that shares were to be considered as merchandise and so within the Statute of Frauds. As to the change in the Statute of Limitations, he thought that the court should be bound by the two years duration of the minister who had probably had very good reason on account of the migratory nature of the American people in Hongkong and Shanghai, for the alteration from six years.  He urged the Court to consider that no date was named in Mr. Mosely's letter, and the price of the shares at the time of the alleged sale had to be proved.  He argued that the whole transaction was a gambling one and therefore the suit upon it was barred by the Act of Parliament before quoted.
  Mr. Wainewright in the course of his reply said that with regard to the statement that a broker could not act for the two parties in the sale and purchase of shares, it was directly contrary to the experience of every man who knew anything about business.  It was perfectly legal for him to act for both.  As to whether Mr. Robinson intended to take the shares or not, the Court could not go into the question as to how far he went into the business as a gambler or as an investor.  It lay upon the defendant to prove that it was not a bona fide claim.  The claim was for damage to the plaintiffs in the transaction, for the difference between the price of the shares at the contract time and their price at the date when the contract was to be performed.  There was no evidence whatever to show that there was anything illegal or irregular in the transaction.  It was not uncommon for a man to say he would pay for his shares at a certain date and then find that he was not able to take delivery.  
  The statement of the defendant that the suit could not be brought in Hongkong, he was unable to prove in any way.  8 and 9 Victoria c. 109 did not apply in Hongkong, and even assuming that I did, it would not apply to a case like the present. Mr. Wainewright quoted a number of cases mentioned in Stutfield on the Laws relating to Betting, Time Bargains, and Gaming, including that of Wells and Porter [3 M. and W. 722], Williams v. Toye [23 L.J. C.C. 860] Thacker v Harvey [L.R. 4 Q.B. Div.] He thought that the defendant's suggestion that shares should be differently treated in Hongkong and Shanghai, from shares in London and New York, and regarded as wares and merchandise, was absurd.
  His Honour said that he still had a lingering doubt about the contract implied in Mr. Robinson's letter, and as to whether the plaintiffs could have sued him upon so vague a promise as regarded time.
  Mr. Wainewright - Fate has fixed it so that they can now sue him.
  His Honour - The question is whether the forbearance did no rescind the contract.
  Mr. Wainewright urged that it did not.  The contract was there in writing and the regulation as to Limitation did no commence to run until the day arrived on which Mr. Robinson could pay, and that was not till the day of his death.
  Judgment was reserved.
8th Feb.
  His Honor in giving judgment said - The petition in this cause alleges that on or about the 21st of Mach, 1883, the plaintiffs through Messrs. Chater and Vernon, of Victoria in the Colony of Hongkong, Stock and Share brokers, contracted with the said Samuel Dealy Robinson to sell to him for delivery on the 31st day of July then next fifty shares in the Luzon Sugar Refining Company Limited at or for the price or sum of $5,400; and that om or about the 23rd day of April, 1883, the plaintiffs through the said Messieurs Chater and Vernon, contracted with the said Robinson to sell to him for delivery on the 31st of August then next a further one hundred shares in he said company at p for the pic of sum of $1,100.  When the 31st of July came, Robinson did not comply with his contract for the fifty shares.  Thereupon the plaintiffs wrote to him as shown by letter of date August 11th, 1883, offering to take over the 150 shares (although the due date of the lot of one hundred had not matured) and claimed the sum of $3, 050, alleging that sum to be the difference between the agreed price of the said shares on the 31st day of July, 1883.  Robinson's reply to said letter, dated August 20th, 183, was introduced by plaintiffs together with a declaration of Vernon the broker and a declaration made by the plaintiffs.  
  No evidence was introduced by the defendant who, for lack of means of the estate to employ counsel, defended the case himself. He relied on three legal positions. 1st - that the contract was void under the Statute of Frauds. 2nd - That under the Statute of 8 and 9 Victoria, prohibiting wagers by way of stock transactions, it was an illegal contract, and plaintiffs should  not recover. 3rd - That the claim was barred by the Statute of Limitations.
  Hongkong being the place of contract and performance thereof, the contract under established rule of construction, is not to be construed by the law there of force.  Shares in joint stock companies do not by the law in force at Hongkong, a British Colony, come within the Statute of Frauds. (Benjamin on Sales Sec. 111.) This defence is overruled.
  As to the contract being illegal under 8 and 9 Victoria, it depends upon how far such transactions (Stock Exchange) are in the nature of wagers. Was there anything in this transaction to show that it was not intended that the said shares should be bought and sold, but as a mere wager?  The only evidence adduced is that of the broker and the Plaintiffs, and there is nothing to show that there was not to be a delivery of the shares on the completion of Robinson's part of the contract.  It was not a contract for differences, and hence not embraced under said Statute. (Thacker vs. Hardy 42 B. D. 685, and ex parte Grant, 13 Ch. Div. appear to be leading English cases on the construction of this Statute.) The second defence is also overruled.
  Bu when we come to the plea of the Statute of Limitations the case presents difficulties.  The 83rd paragraph of our Regulations for Consular Courts in China is as follows:-
Civil actions based on written promise contract or instrument must be commenced within six years after the cause of action accrues; others within two.
What is this action based on? Is it on the parol contract made by the Brokers between plaintiffs and Robinson, or on the letter of the plaintiff Mosely dated August 11th, 1883, and that of Robinson dated August 20th, 1883?  It appears to the Court unquestionably on the former.  The allegations of the petition show this.  It is based on the amount claimed of defendant as damages, for Robinson's non-performance of contracts of 21st March, 1883, and 23rd April, 1883, and the letter of plaintiffs' is simply a proposal to leave the matter open and for Robinson to pay up by instalments as  he became able.  And as it takes two to make a contract, if it be held that the letter and Robinson's reply together form the contract, then Robinson's assent must be shown. It is not shown by his letter.  On the contrary he says,
"if I should be so lucky as to have it in my power to do anything in the matter, you can rely on my doing my utmost."
If Robinson had assented to the instalment proposition, and fixed or intimated dates, when he would pay, the letter might be held as a contract.
  The learned counsel for the plaintiffs stated with the frankness which always characterises him, that during intestate's life time plaintiffs could not have sued him on his letter as a contract between then, but contended that now he being dead, plaintiffs have a right on the letter to come into Curt and recover pro rata share among intestate's other creditors.  If his letter did not afford ground to sue him on during his lifetime, the court fails to perceive how his dying gave it any more validity. "An Administrator can only be held for the contracts of his intestate and not his proposals." (Shipps v. Jones, 20 Penn. State Reports 708.) Robinson proposed to pay if he got able, but did not contract to do so.
  The Court is of pinon that the claim is based on a parol contract there being no writing or memorandum signed by Robinson at the date of making the contract, nor any promise in writing to pay the amount claimed at any time; and the right of action having accrued more than two years before suit was brought the plea is sustained.
  It was forcibly argued by the learned Counsel for the plaintiffs that section 4086 of the Revised Statutes of the United States under which in conformity with section 4083 the Minster and consuls placed [in] the regulations for the government of consular courts in China, paragraph 83, had no power to make a Statute of Limitation and in that a remedy was provided by the common law the exercise of such authority was ultra vires.  Whether this be sound reasoning or otherwise, it does not become this court to undertake to abrogate the said regulations, but as a tribunal governed by those regulations for its guidance and direction, however imperfect and faulty in some respects they may be, yet they have the force of law and on the principle, as it were, of stare decisis until the appellate Court - the Minister - and in some cases the U.S. District Court for the District of California pronounces any one of them illegal or unconstitutional, the consul general and Consuls in China must be governed by them.  They have the force of decisions, and an inferior Court cannot overrule the decisions of a superior, or abrogate the rules made for its government by its superior.
  The letter of Robinson would have the effect of preventing the bar of the statute if it had been written just before the duration of the two years from then to have paid plaintiffs, if he was able, yet in that they permitted the mater to run along until the Statute had barred the claim, and then after the death of Robinson instituted this suit his Administrator was right in interposing his plea.  As Judge Story has forcibly expressed it in the case of Bill v. Morrison, 1 Peters 351) a leading case on the Statute of Limitations):
It is a wise and beneficial law not designed merely to raise a presumption of payment for a just debt from lapse of time, but to afford security against stale demand after the true state of transaction may have been forgotten or be incapable of explanation by reason of the death, or removal of witnesses.
  The judgment of the court is that the complainant be dismissed with costs.
  His Honour intimated that he would be willing to assist Mr. Wainewright in every way, if his clients wished to appeal to the U.S. Minister as to the consular regulations affecting the Statute of Limitations.


Source: North China Herald, 29 April 1887

27th April.
Colonel Denby, U.S. Minister, had a seat on the bench.
Before General Kennedy, Consul General Acting Judicially.
With Messrs. W. R. Eastlack and W. S. Wetmore, as Assessors.
  This was an application for a new trial by John Alex. Mosely and David McCulloch, which was decided in favour of the defendant Mr. W. S. Emens on the 7th February last.
  Mr. Wainewright appeared for the plaintiffs.
  M. Emens defended the suit in person.
  Mr. Wainewright said that before making his application it might be well if he recalled the facts of the case to the minds of his Honour and the assessors.  This was an action instituted on behalf of two gentlemen in Hongkong, British subjects, against the administrator of the state of the late Mr. Samuel D. Robinson for compensation for failure to perform certain share contracts which he entered into in the months of March and April, 1883.  Judgment went against his (Mr. Wainewright's) clients on the ground that no written contract was proved, and that as more than two years had elapsed since the alleged contract, the regulations of the U.S. Consular Court in China barred the proceedings.
  Now he had filed his application for a new trial on the ground that his clients were ignorant of the particular Consular regulations which differed from the ordinary law of Great Britain and the United States, and that they had since becoming aware of it, found evidence of a written contract.  He then read the petition of the plaintiffs which in addition to the ignorance of the Consular Court regulations, stated that by reason of such want of acquaintance with said regulations they did not prior to the hearing of the suit, take such steps as they would otherwise have taken to prove that the contracts for the sale and purchase of the shares mentioned in the pleadings were in writing, and they did not communicate to their attorney in Shanghai that they had any means of giving such proof.  Furthermore that since then they had found proof that there was a written contract as appeared by the affidavits of Henry Arthur Herbert and John Alexander Mosely sworn to on the 2nd March, 1887.
  M. Emens read his answer which pleaded that the regulations of the U.S. Consular Courts in China had been printed and issued to the public, and that if the plaintiffs had exercised due care and diligence they might have been acquainted with the said regulation, and that consequently their ignorance was owing to their own negligence. It also stated that in consequence of the inability of the said Samuel D. Robinson to perform the said contract an arrangement was entered into between him, and the plaintiffs whereby they should take back the said 100 shares, and that Mr. Robinson should pay them $3,050, the difference between the agreed price, and the marker value of the shares on the 31st July 1883, and that by the  said arrangement the alleged contract was rescinded and discharged; and that further that certain books filed with the plaintiff's present petition existed within their knowledge, at the time and could have been produced at the first suit and that therefore they could not be received in evidence now.  In conclusion the answer submitted that there was sufficient evidence at the opening of the suit to justify the judgment.
  Mr. Wainewright said that he based his claim upon the 43rd of the Regulations for U.S. Consular Courts in China which stated that for within one year after any judgment involving more than $800, the Consul who tried the case might upon sufficient security grant a new trial where justice manifestly required it.  The U.S. law relating to new trials was inapplicable in the present occasion, because as far as federal Law went a new trial could only be granted where a jury had heard the case, and where for such causes as they had heretofore been granted for, such as misdirection, or that the verdict was against the weight of evidence, and so forth.
  His clients were residents of a foreign country as they were resident in a British Colony, and they were presumably unacquainted, and were not bound to be acquainted with the regulations of the United States Consular Court in Shanghai.  In support of this he cited a passage from the 10th Ed. Kent's Commentaries Vol. 2, P. 683.  He contended that the court was a court of equity, as well as of common law, and all courts of equity had ever held themselves entitled to give relief in cases of ignorance of facts, and he asked the court to give his clients relief inasmuch as they had found that they had lost their case through not furnishing evidence on a point which would not have been necessary under their own law, or the common law of the United States.  They had proved a verbal contract, but they did not prove the existence of the written contract; therefore they failed in their suit.
  He then read the following affidavits:-
  We Henry Arthur Herbert of Victoria in the Colony of Hongkong Manager of the New Oriental Bank Corporation 'Limited' at that place and John Alexander Mosely of the same place Assistant in the firm of Messrs. David Sassoon Sons and Company Merchants severally maketh oath and say as follows:-
  And first I, the said Henry Arthur Herbert for myself says as follows:
- I am the manager of the New Oriental Bank Corporation Limited at Victoria aforesaid.
- I have referred to the share Ledger of the Oriental Bank Corporation for July 1883 and I find that on the 31st of that month 50 shares in the Luzon Sugar Refining Company Limited part of the Luzon shares held by the Bank on account of the above named John Alexander Mosely in his account Numbered 2 were delivered out from the said account but that the same were subsequently returned to the  said account by the above named David McCulloch as per the note made in the said share Ledger of which the following is a copy "not now used returned by D. McCulloch."
- The shares held under the said No. 2 account belonged jointly to the said John Alexander Mosely and David McCulloch.
    And I the said John Alexander Mosely for myself say as follows:
- On the 21st March 1883 Messieurs Chater and Vernon of Victoria aforesaid Brokers signed a contract on behalf of myself and the above named David McCulloch for the sale to the late Samuel D. Robinson of 50 Luzon shares at $108 for delivery on the 31st July 1883.  This contract which was duly confirmed in writing by the said Samuel D. Robinson was in my possession but although I have made most diligent and careful search for it I cannot find it and it is lost or mislaid.  I have no idea where it can now be.
- The said 50 Luzon shares with other shares belonged to myself and the said David McCulloch on a joint account which account was kept by the said Bank under the style of John Alexander Mosely No. 2 account.  Sometimes we sold shares in my name and sometimes on his.
- On he said 3rd July, 1883, 50 Luzon shares were withdrawn from my sais account at the (then) Oriental Bank Corporation (now) the New Oriental Bank Corporation, Limited, and tendered on behalf of the sellers to the said Samuel D. Robinson by the said firm of Chater and Vernon but the said Samuel D. Robinson did not take them up and they were therefore returned to my said account at the said Bank.
- On the 23rd  April, 1883, the said Messrs. Chater and Vernon signed a contract on behalf of myself and the said David McCulloch for the sale to the said Samuel D. Robinson of 100 Luzon shares at 81 per cent premium for delivery on the 31st August 183.  That contract which was duly executed in writing by the said Samuel D. Robinson was in my possession, but although I have made most diligent search for it I cannot now find it and it is lost or mislaid.  I have no idea where it can now be.
-The said 100 Luzon shares belonged to myself and the said David McCulloch on the same joint account.
  I John Yardly Vernon Vernon of Victoria in the Colony of Hongkong Broker make oath and say as follows:
- I am a Broker carrying on business at Victoria aforesaid under the style of Chater and Vernon.
- On the 21st March 1883 my said firm as agents for the concerned signed a contract for the sale from the above named David McCulloch to Samuel D. Robinson now deceased of fifty shares in the Luzon Sugar Refining Company Limited at one hundred and eight dollar for delivery on the 31st July 1883.The contract was numbered 572 in my said firm's book of contracts.  The counterfoil produced and shown me at the time of my swearing this affidavit and marked with the letter A is the counterfoil of the said contract.  The said contract must have been duly confirmed in writing by the said Samuel D. Robinson for it was duly entered in our books as a complete contract and it was and is the invariable practice of my said firm to get all share contracts duly confirmed and delivered to the sellers and buyers.  We paid special attention to this practice.  The present contract was made in the form of contract note produced and shown to me at the time of my swearing this affidavit and marked with the letter B.
- On the 23rd April 1883 my said firm as agents for the above named John Alexander Mosely signed a contract for the sale from the said John Alexander Mosely to the said Samuel D. Robinson of One Hundred Luzon shares at one dollar per cent premium for delivery on the 31st August, 1883.  This contract was numbered 693 in my said firm's book of contracts.  The counterfoil produced and shown to me at the time of my swearing this my affidavit and marked with the letter C is the counterfoil of the said contract.  The said contract must also have been duly confirmed in writing by the said Samuel D. Robinson for the reason given in paragraph 2  of this affidavit and was made in the said form of contract note marked B.
     By the affidavits he submitted that they now succeeded in proving that their claim was found upon a written contract.  Upon this evidence he asked the court to grant a new trial, and he thought that he could satisfy the Court that the evidence would be sufficient.  He might incidentally cite a passage from Vol. 2 Wharton on the Law of Contracts, to show that where a contract was lost, secondary evidence of its existence might be given.  He submitted that he had shown by these affidavits that his clients, the plaintiffs, were in a position to prove that there was a written contract which took the case outside the consular regulations upon which they were defeated.  
  The answer of the defendant stated in effect that the contract was included in the letters which passed between the parties, but this was not the view taken by the Court.  His Honour had distinctly stated that in the opinion of the Court the action was based upon the final contract, and Mr. Waimewright quoted the words of the judgment to his effect.  The court held that the contract was a verbal one, but if a new trial were granted he would be able to satisfy the court that there was sufficient evidence to support the theory of a written contract, and consequently that the regulation as to limitation did not apply.
  As regarded the equity of the case he submitted that it was one where justice manifestly demanded a new trial.  If it was shown that his clients made a written contract with Mr. Robinson, they were clearly entitled to compensation for his breach of it.
  His Honour asked how far were the plaintiffs bound by the action of their attorney.
   M. Wainewright replied that in his original instructions his clients told him they had no evidence of the written contract, but when it tuned out that the written contract was necessary, they found it.  But such evidence would not have been necessary under the ordinary law of the United States where a written contract was not necessary, and moreover his clients would have had 6 years in which to bring their suit.
  Hi Honour - Am I to understand you as saying that he 43rd regulation is so broad as to give the Court power to grant a new trial without any reference to the strict rule of procedure?
  Mr. Wainewright read the regulation which stated that the Court might upon sufficient security grant a new trial where justice manifestly required it.  The whole machinery of the consular court was different to that of Courts in the U.S. or England.  It was in the position of a Court of Equity which could step in whenever it was necessary to rectify the consequences of a bona fide mistake.
 The Defendant, in reply, said that he understood that the plaintiffs based their application upon their ignorance of paragraph 84 in the Regulations, prescribing the time for written contracts to be brought into Court.  That ignorance might very well have been expected in Mr. Mosely, who according to the evidence was ignorant of a great many other things.  In his (defendant's) answer he referred particularly to that paragraph, in fact based one of his arguments upon it.  In paragraph 5 of his answer he had pleaded that the plaintiffs should have commenced their action within two years after the accrual of the claim.  He merely referred to that now to show how long their ignorance of the regulation existed, and to prove that though the plaintiffs might have been ignorant on the point, their attorney was full acquainted with it before he went into Court.  And that he had knowledge of it was further proved by the mode in which he conducted the case.  He built up his strongest point upon the correspondence which took place between the plaintiffs and Mr. Robinson.  Their books were evidently not lost, as was stated, for they were on the present occasion brought into Court.  That he submitted was proof that due diligence was not exercised in producing them at the first trial, and they could have been produced if the plaintiffs had taken cognizance of the regulations.
  It was true that paragraph 53 of the regulations, as Mr. Wainewright had said, provided for a new trial where justice manifestly required it, but he submitted that any injustice in the case was manifestly the fault of the plaintiffs themselves. They failed to produce their books, they lost the contract, and went into Court without such evidence as they showed by now producing it they could have got.
  His Honour asked Mr. Emens whether if the court had been in possession of the facts upon which the plaintiffs sought to establish a new trail, did he think the judgment would have been different?
   The Defendant said that he thought that neither the law or the evidence at the former trial had been impeached.
  Mr. Wainewright said -This is not the time to do it.
  The Defendant submitted that the contracts the plaintiffs now sought to establish had been discharged by the correspondence between the plaintiff Mosely and the intestate Robinson.  This correspondence is dated previous to the time fixed for taking over the shares, clearly showing plaintiffs intention, and while amounting to a discharge of the contracts as not sufficient to form a complete contract and the parties had not shown a mutual intention.  Mosely proposed to Robinson that the latter should pay him in instalments.  Robinson did not agree to this but said he would pay when he was able.
  Col. Denby - Do I understand you to say that this correspondence between plaintiffs and Robinson which wanted mutuality superseded the original contract?
  Mr. Emens - That is what I am contending.  Mosely said "You may pay me by instalments." Robinson said "I will pay you when I am so lucky as to be able."
  Col, Denby - Was that part of the evidence in the original suit?
  The defendant - yes, and it is now filed with the record before the court.
  His honor - In the former trial the case did not turn upon that at all.  The plaintiffs contended that the letters of Mr. Robinson promised to pay $3,050, the difference between the market value of the shares, and their value when bought by him.  The defendant contended that the regulation of limitations barred the action as there was no written contract between the parties and that more than two years had elapsed in which he suit on the unwritten contract should have been begun, and that consequently the plaintiffs were bared by the Consular Regulations.
  Mr. Wainewright said that he had been driven out of his original line of attack.
  His Honour asked did the correspondence alluded to discharge the original contract.
  Mr. Wainewright said that he relied in making this application, upon the Court adhering to its judgment.
  His Honour said that in giving the judgment he relied upon the fact that there was no written contract.
  Mr. Wainewright said that the contract which the regulation talked about was the contract for the shares.  The correspondence only fixed the amount of the damages.  His case was that his clients were ignorant of this particular regulation. And that consequently they were misled in giving their instructions before the suit was heard.
   His Honour said that if the court decided that being in possession of those new facts would not have influenced its judgment, no new trial would be granted.
  Mr. Wainewright  contended that from the judgment it was evident the point upon which he had been defeated was the  absence of a written contract, now he thought he could show that there had been such a document in existence, and to prove this he was entitled to bring secondary evidence.  He believed however that his friend, Mr. Emens, was now in possession of one of the contracts which he had unearthed in some mysterious way.
  Judgment was reserved till the next day.
Thursday, 28th April.
  The Court further reserved judgment till tomorrow at 2.30 p.m.

Source: North China Herald, 6 May 1887

Shanghai, 29th April.
Before Gen. Kennedy, Consul-General, Acting Judicially.
With Messrs. W. R. Eastlack and W. S. Wetmote, as Assessors.
  The Court made the following order:-
  Having ascertained since the argument on motion for a new trial in the above case that the question of the validity of the regulations limiting the time for commencing Civil actions not based on written instrument, contract, or promise, for two years from accrual of right of action is under consideration by higher authorities, no judgment will be ordered on this motion until I learn the conclusion.
  The case will be continued on the docket and notice will be given by the Clerk of the Court when a judgment will be rendered.


Source: North China Herald, 1 July 1887

Shanghai, 27th June, 1887
Before J. D. Kennedy, Esq., Consul-General, Acting Judicially.
And W. S. Wetmore, W.R. Eastlack, Assessors.
  Mr. Harwood appeared, for Mr. Wainewright, for the plaintiff.
  Mr. Emens, Administrator of the estate of the late Samuel Robinson defended in person.
  Before proceeding to give judgment His Honour said that the court had not given its decision before because the question of the validity of the regulation of limitation arose, and the case was to a large extent decided upon that point.  Mr. Wainewright argued that it was not valid.  The U.S. Minister was present at the trial, and the case was referred to the State Department at Washington, who ratified the regulation, on the principle that it being a rule of Court, and Courts in China were governed by their own regulations.
  Judgment as follows was then delivered by the Court.
  On the 8th day of February 1887, a judgment was rendered against plaintiffs in above action.  Plaintiffs now come into Court, and move for a new trial on the grounds
   1st that they were unacquainted with the regulation of the U.S. Consular Court in China which prescribed that "civil action, unless based upon written promise, contract or instrument must be commenced within two years after the cause of action accrues;" and, by reason of this ignorance they did not take such steps as they would otherwise have taken to prove a contract in writing for the sale and purchase of shares as alleged in the pleadings.
  2nd that since learning of this regulation, they have found such proof as to show that there was a written contract and consequently justice requires that a new trial should be granted them.
  By the rules which govern the granting of new trials in Courts in the United States, the motion of plaintiffs cannot prevail.  Ignorance of the regulation is illy pleaded when their learned and astute Counsel had the answer before him for two months prior to the trial of the cause in which the plea of the Statute of limitation was set forth and relied on.  The citation in argument from "2nd Kent" that ignorance of foreign law "is ignorance of fact" is not applicable in this instance as the learned counsel knew the regulation and was here to keep his clients posted.
  There has been, too, a signal failure to exercise due diligence in procuring this evidence; on the contrary, plaintiffs do not aver that any effort was ever made until after judgment to ascertain its existence. Nor do they come within the rule that this evidence was unknown to them at the time of the trial, and discovered subsequently thereto.
  The learned Counsel contends that Court Regulation 43 over-rides all mere technical rules and permits this court to grant a new trial on the broad principle of "where justice manifestly requires it." This is too s weeping.  There is much discretion allowed, but this regulation was never intended, as we construe it, to go as far as to over-ride the rules which inure in the United States Courts as is clearly implied in Section 4086 of our Revised Statutes.
  The plaintiffs have failed to bring themselves within the rules for granting new trials, and while the application of these rules may in some instances work a hardship yet their observance is essential to the proper conduct of business in all Courts and in the  case at bar there has been a failure  to bring themselves within the rules.
  The motion is refused with costs.

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