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Colonial Cases

Bank of China, Japan, and the Straits, Limited v. Hjousbery, 1894

[company law, banking]

Bank of China, Japan, and the Straits, Limited v. Hjousebery

United States Consular Court, Shanghai
Jarnigan, 12 and 19 June 1894
Source: North China Herald, 15 June, 1894

UNITED STATES CONSULAR COURT.
Shanghai, 12th June.
Before T. R. Jarnigan, Esq., Consul-General, and Messrs. D. C. Jansen and A. S. Fobes, Associates.
BANK OF CHINA, JAPAN, AND THE STRAITS, LIMITED v. HJOUSBERY.
  This was an action by the Bank of China, Japan, and the Straits, Limited, against Mr. Edward Hjousbery, for payment of calls on 700 shares in the Bank, standing in his name. M. J. C. Hanson (Messrs. Dowdall and Hanson) appeared for the plaintiffs.
  Mr. Hanson in opening the case said -
  The plaintiffs in this case are the Bank of China, Japan, and the Straits, Limited, and the defendant is Mr. Hjousbery, who is a shareholder in the company, and the action is one for calls due on shares held by Mr. Hjousbery. The petition states that the plaintiffs are a company incorporated under the English Companies Act; that the defendant is an American citizen; that he is the holder pf 700 shares; that these shares are of the amount of £10 Sterling each, of which only £1 5s, has been paid;  that these shares are held by the members of the company upon the terms prescribed by the registered articles of association of the company, and that when Mr. Hjousbery accepted the shares held by him he accepted them on those terms.
  The articles of association, amongst other things, prescribes that calls may be made from time to time by the Directors of the Company,  and that when calls are made they hall be paid by the shareholders, at the times made by the Directors.  A call of £1 Sterling has been made by the Directors, in accordance with the articles of association; the call is made payable by instalments, of which the first instalment became due on the 1st of November last, and the 2nd instalment on the 1st of February last; due notice of the call has been given to the defendant; the defendant thereupon became and is now indebted in the sum of 10s, in respect of each of the 700 shares; demand has been made but he has refused payment. The plaintiffs therefore ask that the defendant may be ordered to pay the amount of the calls.
  To save time Mr. Hjousbery and myself have signed and agreed to certain admissions, which I will hand into the Court. You will see from that that Mr. Hjousbery admits all the allegations in the petition except the allegation that the call was made in pursuance of the articles of association, so that the real  question comes as to whether the call was made for the purposes for which it was authorised by the articles of association. I understand Mr. Hjousbery's objection to be that the call was made in order to enable the bank to do what is called exchange business, and I understand Mr. Hjousbery to say that that is not one of the purposes for which the company is authorised to do business, and of course I shall have to leave Mr. Hjousbery to prove that.
  Of course, if he can prove that the call is made for business which the bank is not allowed to do, then we cannot succeed in getting the call. [The learned advocate referred to clause 3 of the memorandum of association of the company and continued.]  I say under these sections there is ample authority for the company to do what is known as exchange business, and that being so, they are fully authorised to make this call which has been made, and as with that exception Mr. Hjousbery admits all the rest of the paragraphs of the petition, except No. 9, I shall leave him now to address the Court  to show how he makes out that the call is made for purposes which are not authorised by the Company's charter.
  Mr. Hjousbery submitted a written defence and certain documentary evidence connected with it, which Mr. Emens, at His Honour's request, proceeded to read. The first was an affidavit by the defendant. The affidavit was as follows:-
  Edward Hjousbery affirms as follows: - he is a citizen of the United States of America, at present residing in Shanghai, he is the defendant in a matter now pleading before the United States Court for the Consular jurisdiction of Shanghai entitled the Bank of China, Japan, and the Straits, Limited v. Edward Hjousbery.  He is the owner of seven hundred shares of the stock of said company, five hundred of which he bought in 1891 and the remainder in 1892. The conditions on which he purchased said shares were, that the said company held out that they were going to conduct a trust and loan business in China, Japan, and the Straits, as per prospectus.
  The said Company's prospectus stated that recent events in China were expected to lead to important changes in that country, and to a new era of commercial prosperity; that there was no such company as it was proposed to organise in China, Japan, or the Straits Settlements, and that they were to enter upon a new and exciting field for the investment of capital.
  The public were invited to apply for shares through the Hongkong and Shanghai Banking Corporation, (a corporation doing a general banking business in the field in which the plaintiffs, i.e. the Trust and Loan Company of China, Japan, and the Straits, Limited, proposed to occupy) and the understanding thus given to the public, and the inducement which caused the deponent to purchase stock in said company was that they were going to conduct a trust and loan business with special powers for the investment of capital not usually possessed by banking corporations, as the original name of the company, namely the Trust and Loan Company of China, Japan, and the Straits, Limited, implied, and that they had the support and co-operation of the Hongkong and Shanghai Banking Corporation, which it is not reasonable to expect  would assist in the formation of a competing company, which was made further patent by said two companies having at least two Directors in common.
  The said prospectus, and the memorandum and articles of association of said plaintiff company ware such as a trust and loan company would properly adopt, and are not such as would be adopted for a banking company.
  For these various reasons the deponent purchased the shares of said company, believing that a company conducting the usual business of a trust and loan company in China, Japan, and the Straits Settlements would be successful.
  In the first annual report of the said company, which is dated 29th January, 1891, appears the following:-
  "It is considered by the Directors desirable to change the name of the Company into the Bank of China, Japan, and the Straits Limited, as a more appropriate designation, although the business of the company will continue on the lines which have hitherto been followed."
The deponent believing such statement was assured that the company, notwithstanding the change of name, was to continue as originally intended as a trust and loan company.
  Since the above date the said plaintiff company have addressed the deponent through their Shanghai office as follows:- "I am instructed to inform you that in consequence of the bank having arranged to do a general exchange business in China and Japan, as well as India, the board have decided to make a call of 20s. per share."
  The deponent believes and therefore alleges that said "call" is made without authority, and that said company have no power or legal right to engage in a "general exchange business," a class of business which is foreign to the prospectus of the company as well as to their memorandum and articles of association, which constitute the authority of said company, and that by so doing said company have violated the condition under which deponent purchased his shares, as under no circumstances would he have risked his money in a new banking company which would have to compete with the banks already established in China, Japan, and the Straits Settlements, or in a concern which would be involved in hazardous operations in exchange.
  The deponent further alleges that the accounts of said plaintiff company as placed before the shareholders are notoriously garbled and incorrect, and that they have been attacked in the public Press, namely in the North-China Daily News newspaper published in Shanghai, and circulated in China and elsewhere, in its regular issue of March 29th, 1894; and in its regular issue of March 29th, 1894; and in the Investors' Review, an authority on financial questions, published in London, and circulated throughout the commercial world, in its issue for April, 1894.
  The deponent believes and therefore alleges, that said accounts are fraudulent and false, and are prepared with the view of concealing the serious condition of the company's financial condition; that said company in their second annual report, dated 29th February, 1892, made a statement grossly misrepresenting their profit for the year 1891 - said statement being as follows:-
  "The net profit, after deducting all expenses at head office, branches and agencies (including interest on fixed deposits,) writing down securities to the prices current on 31st December, 1892, and providing for bad and doubtful debts amounts to £17,146 11s. 7d."
  The deponent believed this statement at the time it was published and was influenced thereby, but he now alleges that it was false and intended to mislead him and other shareholders, and conceal from them actual and serious losses through the great depreciation of silver, into which currency a large part of the company's capital had been converted and invested. That the last account of said company, and for the year 1893, furnished the deponent and other shareholders, occurs the following item under the list of liabilities:-  "Fixed deposits and current account in gold and silver, £1,334,898," a statement obviously worded for the purpose of concealing the truth as to how much of said liabilities are in gold, it being reasonable to believe that if the greater part of said liability is on a gold basis, the company are hopelessly involved, if not already insolvent.
  The deponent finally alleges that said company have broken their contract with him in departing from the conditions which led him to buy their shares; and that the before-mentioned misrepresentation and false statements of profit have been made recklessly and fraudulently.
Ed. Hjousbery, &c.
  The exhibits to this affidavit were the reports of the second, third and fourth annual meetings of the company; the prospectus; the North-China Daily News of the 29th of March, 1894; and the Investors' Review.
  Mr. Hanson objected to the Investors' Review going in as evidence, but he did not oppose the North-China Daily News.
  Mr. Emens proceeded with the reading of the arguments, which were to the following effect:-
  The plaintiffs seek to compel the defendant to pay a certain assessment or "call" in respect of seven hundred shares held by him in their company, the nominal value of which is £10 each; £1 5 paid up.  The present call is for £1. The company was incorporated in England on the 6th February, 1889, as the Trust and Loan Company of China, Japan, and the Straits, Limited. In February, 1892, by special resolutions, the plaintiffs altered their name to the Bank of China, Japan, and the Straits, Limited, and at the same time cancelled articles 56 to 59 of their articles of association, which had reference to raising debenture capital. Otherwise the original memorandum and articles of association remain unchanged. The plaintiffs allege that the defendant admits that he is a member of said company, therefore the plaintiffs are without remedy in law against defendant as "it is an invariable maxim of the common law (although not respected in Courts of Equity) that no man shall sue himself, or any partnership of which he is a member."
  "A joint stock company, the capital of which is divided into shares, so as to be transferable without the express consent of all the members, is a partnership."  "In general, however, an action cannot be maintained by a member against the company, or by the company against the member, on a contract between him and the company." The powers of the plaintiff company are enumerated in its memorandum of association. "A corporation has no power except what is given by its Incorporating Act, either expressed or as incidental to its existence  .   .   .    It is a sound principle that the specific grant of certain powers in a charter is an implied prohibition of other distinct powers." The "call" which forms the basis of this suit is made because "the Bank having arranged to do a general exchange business from 1st November next (1893) in China and Japan as well as India, the Board have decided to make a call of 20 shillings per share," yet their memorandum of association, while granting many specific powers, fails to enumerate "business of bankers" or "buying and selling exchange." Article "H" in their memorandum states that one of the objects of the company is "to make, accept, endorse, and execute promissory notes, bills of exchange, and other negotiable instruments." But this cannot be construed into what is known in Shanghai and elsewhere as doing a "general exchange business."
  Mr. Emens was about to put in a copy of the memorandum of association of the National Bank of China with the object of showing that if the Bank of China had intended doing exchange business they would have had similar articles, when
  Mr. Hanson objected to the document going in as evidence.
  Mr. Emens urged that if powers to do exchange business were taken the memorandum of association would have been differently worded.
  His Honour - That is rather far-fetched, is it not?
  Mr. Emens - It is for the Court to decide; I don't consider it far-fetched.
  His Honour - I don't think the memorandum of the National Bank of China has anything to do with this case. You cannot attack one bank by showing what another bank has done.
  M. Emens - The defendants did not contract to buy shares in a banking company. Blackstone defines a contract as "an agreement, upon sufficient consideration, to do or not to do a certain thing. The minds of the parties must come into complete accord, the one consenting to exactly the same thing to which the other does." The plaintiffs made offers to the public by means of a prospectus and reports. The language of the prospectus leaves no room for doubt as to the motive of the promoters. It sets forth that there was no such company in China, Japan, or the Straits. If the company was to be a bank, they could not have made it an inducement that they were pioneers in the field. The defendant waited till he saw the first annual report which he believed to be truthful and favourable. Defendant then bought shares and thus completed the contract with plaintiffs. Plaintiffs' representations were : " We propose to start a trust and loan company in China, Japan and the Straits. We are going to take advantage of a new and extensive field. We are the first company in the field. Apply for shares through the Hongkong and Shanghai Banking Corporation; they are in sympathy with us and will give us friendly support. Two of their Directors will be members of our Board."
  How have these representations turned out? The trust and loan company was a great success during the first year of the business, and with ordinary care and judgment might have had a career of unbroken prosperity, but in an unlucky moment they went into the realms of banking, trenching on Hongkong Bank preserves, and the results have now to be chronicled. The plaintiff company have broken faith with its shareholders; have ceased to be a trust and loan company; have made fraudulent statements of account; have concealed their liabilities; and instead of working in concert with the Hongkong and Shanghai Bank, have lost their support and are working in opposition to them. The published accounts in themselves prove a fraudulent concealment of facts. Take the account for 1893; one of the items of liability is : "Fixed deposits and current accounts in gold and silver" £1,334,898. The obvious intent of this items needs no explanation. A review devoted to financial questions has published a statement to the effect that the plaintiffs' net loss and deficiency during three years ending 31st December, 1893, is £941,225, and this statement remains uncontradicted, while the total losses shown by the company's accounts amount to £396,632.
  Mr. Emens concluded by referring to a number of cases and argued that even if misrepresentations were made without fraud the defendant was entitled to rescission of the contract and repayment of his capital.
  Upon resuming after the adjournment for tiffin,   
Mt. Hanson put in a copy of the prospectus of the company.
  His Honour said it had been stated that some of the Directors of the Hongkong and Shanghai Bank were also Directors of the corporation now suing the defendant. The Court would like to have that fact either established or denied.
  Mr. Hanson - That is referred to in the report of the last meeting of shareholders. One of the shareholders had said: "I believe that you (Mr. Keswick) and Mr. McLean are both on the Board of this bank and on that of the Hongkong and Shanghai Bank?" and the Chairman said this: "The position is this, that when the Bank of China undertook exchange operations and became a bank in the proper sense of the term, it was deemed advisable that Mr. McLean and myself should not act in the double capacity of representing both banks. We do not attend the meetings of the committee of the Hongkong and Shanghai Bank, and we hope to make this bank the success we anticipated when it was established." I believe they still remain nominally Directors of the Hongkong and Shanghai Bank, but they do not attend any of its meetings; they prefer to be on the committee of the Bank of China.
  Proceeding to sum up on behalf of the plaintiffs,
  Mr. Hanson said - The first point in Mr. Emens' argument was that the plaintiff could not sue the defendant because, he said, it was a partnership, and one partner could not sue another.  But this is not a case of an ordinary partnership. This is a case of a company Incorporated under the English Companies Act, and therefore a corporation, and always at common law a corporate body could sue a member of it. The only thing requisite is that if the corporation wished to sue a member, it must sue in its corporate name, which it has done in this case.  Besides that, I would remind the Court that it is a Court not only of common law but of equity as well, and of course, in equity one partner can take proceedings against another.
  With regard to the prospectus which has been put in, I submit there is nothing in that prospectus which is misleading, but as a matter of fact, I say that the prospectus itself does not form any part of the contract between the plaintiff and the defendant. Mr. Hjousbery did not apply for any shares direct from the company and no shares were allotted to him by the company. When he bought the shares, the company had already been formed and was in existence for upwards of a year and a half. The terms of his contract are stated in his transfer form, which has been put in. In that he undertakes when he buys the shares, to hold the shares upon the same terms as the person from whom he bought them, that is to say, subject to the memorandum and articles of association, so that the terns of his contract should be looked for in the memorandum and articles of association.
  It is, of course, no excuse for him to say that he did not know what was in the memorandum and articles of association, because he could easily have found out if he had wished to do so.  Of course, I know in perhaps 999 cases out of a thousand when a man buys shares in a company he does not take the trouble to look at the articles of association, but if he does not choose to do so, of course, he must take the risk of his not doing so.  Of course, it was his duty to make himself acquainted with the conditions on which he held the shares. At the time he bought the shares, the title of the company had been altered from the Trust and Loan Company to the Bank of China, and if you look at the form of transfer which he signed and accepted, you will see that it is headed the Bank of China, etc., so that he knew at the time he bought the shares that that was the name of the company, and of course if a man buys shares in a company which calls itself a bank it must be assumed that he knew at the time, or thought at the time, that it was intended doing the business, or part of the business, of a bank.
  Obviously the course of business changes so much that it is impossible to foresee exactly all the directions in which a company, of this kind particularly, may do work a few years hence, and it is impossible to lay down very precisely the exact line upon which a company of this kind may do business, and consequently we find that in the articles of association of  companies of this kind the powers are purposely put in rather general form, so as to cover any possible business that it [every] be in the interest of the company to do.
  When this company was first started about 1889, I believe what is called exchange business was then comparatively, one might say, in its infancy, and it is quite possible that the promoters of this company when they first started it did not contemplate doing exchange business.
  But that is not the question. The question is whether exchange business is included in the powers of the company as laid down in the memorandum of association, and I submit that these articles which I have pointed out - G, H, and J, - in the memorandum of association clearly authorises the company to do what is known as exchange business, as they expressly authorise the company to do all kinds of financial transactions and invest in or advance money on bills of exchange.  In a case which has very recently been decided, the American Trading Co. v. the Bank of China, which was recently decided by the Privy Council -  a case in respect of exchange contract s - it was never suggested by anyone at any time in the course of the case that the bank had no power to do exchange business.  The fact of the company doing exchange business has been brought from time to time before the notice of the shareholders at their general meetings and has been sanctioned by them, and if you look at the report of the meeting which was held in February, 1892, you will find that it was one of the shareholders, Mr. Adamson, I think, who suggested that the exchange business should be extended not only as it was done in India, but should be extended to the bank's field in China as well. Therefore, I say, the fact of the bank doing exchange business has received the sanction of the shareholders at their meetings.
  As a matter of fact the chief loss which the bank have no doubt sustained has not been so much from the fact of doing exchange business as the heavy fall of silver. The bank have received large sums of money in gold in London which they have lent out there in advances on property, mortgages, and other securities. Of course, these loans have to be paid back in silver, and, of course, silver having fallen, there is a very large loss when they have to pay their depositors in gold. With regard to the accounts, it is said they are misleading. I can see nothing in the accounts which is misleading. The accounts certainly put the dollar in the last accounts at a higher rate of exchange than it is at present, or than it was at the time when the accounts were presented, but there is nothing unusual or wrong in that.  Where you have cross-entries it is often very convenient to take exchange at a fixed rate, and as long as you state clearly what is the rate you take it at, as is done, and what is the actual rate, anyone looking at the accounts can see the amount of it. The accounts have always been presented each year to the shareholders at their general meeting. They have been discussed by the shareholders and criticised, and finally passed and approved by them.
  If Mr. Hjousbery or any other shareholder is dissatisfied with the accounts, it is for him to attend the meeting personally or by proxy and raise objection.  It is, of course, no excuse for him to say that the place where the meeting of the company was held was so far off, because, of course, he knew that at the time he bought his shares. I say these accounts have been passed and approved by the shareholders, and if Mr. Hjousbery wished to object to them it was for him to attend, either personally or by proxy, and discuss the matter there.  Everything the company has done has received the sanction of the shareholders. The shareholders have sanctioned the doing of the exchange business; they have also sanctioned the making of the call, which we are now suing for, as will be seen by the printed reports which have been put in.
  Mr. Emens wished to put in an article from the Investors' Review, but I objected to that because it is the view taken by Mr. Wilson, a man who is well known at home for always taking the very worst view of everybody and every company; in fact it was only in the Review for the month before that he wrote a very sensational article on the Bank of England.
  His Honour - I think the Court ruled that article out.
  Mr. Hanson - Yes. Then it is said there is a case of fraud. Of course, an allegation of fraud is a very serious one, and ought not to be put forward unless it can be very clearly substantiated, and I submit that in this case there has been no case of fraud at all.  The company has undoubtedly lost money by the heavy fall in silver. When the money was remitted out here exchange was somewhere about 4s. 6d. of 4s. 5d. and now it is about 2s. 9d. or 2s. 10d. But that is not fraud on the part of the company, but simply due to circumstances over which they, and most people out in China, had no control. It is, no doubt, a hard case for Mr. Hjousbery to have lost money over this bank, but of course it is equally hard on the other shareholders, and it would be still harder for them, after they had themselves paid the call on their shares, that Mr. Hjousbery should not have to pay his.
  It really amounts to a case of contract, and the plaintiffs in coming to this Court - which is a Court of the State the very constitution of which is founded upon the inviolability of contracts - believe with great confidence that they will have judgment in this case in their favour.  There is just one thing I should like to ask Mr. Hjousbery, and that is whether or not it is a fact that he has received a dividend on his shares since he bought the first lot.
  Mr. Hjousbery - I have received a dividend on the first 500 I bought in 1891, but it was then due and I had to pay more for the shares in consideration of it.
    Mr. Emens, on behalf of the defendant, said he should like to know whether it was admitted that the two Directors of the Hongkong and Shanghai Bank, were also Directors of the plaintiff company at the commencement.
  Mr. Bremner - I believe they were.
  Mr. Emens pointed out that in the original prospectus Mr. McLean's occupation was set out as of the Hongkong and Shanghai Bank. On the same document the memorandum of association was printed, and he wished again to emphasize the point that the memorandum of association and the prospectus must be read together. With regard to Mr. Hanson's remarks concerning the basis of the contract, he would contend that the contract was based upon the prospectus, together with the report of the first year's working.  The defendant read both these documents, as well as the report of the meeting when it was proposed to change the company's name, at which the Chairman said:
 "At the same time a resolution will be proposed to change the name of the company into that of the Bank of China, Japan, and the Straits, Limited, a change of designation that will more appropriately indicate the financial character and general scope of the objects of the company. As mentioned in our report, the change of name does not imply a change of the intended business of the company and no alteration in the articles is necessary on that account. It is not the object, and it is not the intention, of the company to interfere with the business of banking establishments in the East with which the Board have worked in most friendly accord, and your Directors will continue to aim at working in perfect harmony with existing institutions."
  Mr. Hjhousbery believed the statements in the prospectus, and, as a man of experience in China, realised the opportunities of a trust and loan company. They would be the pioneers in China, Japan, and the Straits, and there certainly was open to them a new field, and the prospectus was a very fair statement of affairs at that date, 1889.
  As to the remarks that because the company called itself a bank it must be assumed to do banking business, he contended that the company must abide by its memorandum of association. The Directors might think it advisable to engage in some other business, and shareholders might agree, but their agreement did not carry anything with it. If the company had no right to do banking business no special resolution or altering the articles of association could give them that power. Exchange business was not exactly in its infancy when the company started. Exchange business, he would point out, could not be carried on successfully except by a large institution with extensive connections. A small concern might be able to do a certain amount of telegraphic transfers, but for credits or doing business in an extensive way it would be beaten by the older banks.
  In regard to making out accounts wrongly, his learned friend had sought to establish it was sometimes advisable to make out accounts at a rate of exchange which was not truthful.  However convenient that might be, it must strike the Court as more proper to put the rates down to the average. The auditors' certificate to the accounts for the year 1891 was of somewhat peculiar significance. It was: "We have examined the above Balance Sheet and Profit and Loss Account with the books in London, and with the audited statements received from the several branches and agencies, and we are of opinion that they exhibit a true and current view of the company's affairs as shown by the books. The assets at the branches are valued at the same rate of exchange as in last year's accounts, the Directors claiming that such rates are the average, though considerably in excess of those current on 31st December last."  That was an admission on the part of the auditors that the assets were put in at a fictitious value.
  It had also been said fraud had been proved, and beyond putting in that statement he was not going to make any great attempt to prove fraud. He would rely upon the accounts themselves, and let the Court put its own construction on one account involving £1,250,000, where gold and silver were not discriminated. The Court had the benefit of Associates who were acquainted with these exchange transaction, and the fluctuations of the last three or four years, and they would fully understand the absurdity, and he would put it plainly, the fraudulent character of the accounts, which concealed the actual liability.
  The defendant had never consented to the company undertaking exchange business. He might not have raised any objection, but why should he, when he had the assurance of the Chairman that the same course would be pursued as heretofore.
  Mr. Hanson had said the case was one of contract, but in a contract the two parties must be of one mind. In the present case the defendant had no intention at any time of holding stock in a banking corporation. He was quite content to have the case regarded as one of contract, and in that event he contended that there had been concealment of truth and misrepresentation of fact sufficient for the action to be dismissed.
  This concluded the hearing.
  His Honour announced that judgment would be reserved.

Source: North China Herald, 22 June, 1894

U.S. COURT FOR THE CONSULAR DISTRICT OF CHINA AND JAPAN.
Shanghai, 19th June,
Before T. R. Jernigan, Esq., Consul-General, and Messrs. D. C. Jansen and A. S. Fobes, Associates.
BANK OF CHINA, JAPAN AND THE STRAITS, LIMITED v. HJOUSBERY.
JUDGMENT
was today filed in this suit in which Mr. C. Dowdall (Messrs. Dowdall and Hanson) appeared for the plaintiff bank and Mr.  Emens for the defendant. The judgment was in the following terms:
  The plaintiffs, in their petition against the defendant, allege:-
[Not transcribed; quotes in full sections 19-21, 34 and 36.]
  The defendant, in his amended answer to the petition of the plaintiff in this action, says:
[Not transcribed.]
  The evidence is documentary and the readiness with which it was admitted by both sides would cause less hesitancy in passing judgment upon it, were it not for the embarrassing issues presented by the pleadings.
  On August the 7th, 1862, the British Parliament passed an Act entitled "An Act for the Incorporation, Regulation, Registration and Winding-up of Trading Companies and other Associations," with a proviso that it should not go into operation until November the 2nd, 1862. This Act is cited for all purposes as "The Companies Act, 1862." Other Acts of an amendatory and kindred character have been subsequently passed by Parliament; and by virtue of the original and amendatory Acts, and under the provisions of the same, J. S. Purcell, the Registrar of Joint Stock Companies, certified, under his hand at London, on December the 6th, 1889, that the "Trust and Loan Company of China, Japan, and The Straits, Limited, is this day incorporated under the Companies Acts, 1862 to 1883, and that this Company is limited."
  Deriving its legal existence and powers from said Acts, the "Trust and Loan Company of China, Japan and the Straits, Limited" issued a prospectus, setting forth therein the nature and objects for which the company meant to be incorporated and publishing, in connection therewith, the "Memorandum of Association."
  In Lindley on Companies the principle in regard to a prospectus is thus stated (page 19): "One of the first steps in the formation of a company is the publication of a prospectus, setting forth the nature and objects of the proposed company, the number and value of the shares intended to be created, and the amount of capital supposed to be required. The public is then invited to subscribe to the company them proposed to be formed - in other words, persons are invited by advertisements, circulars, etc., to enter into an agreement to take shares in a company, such as that described."
And again.
  "The prospectus issued to the public must, in the absence of evidence to the contrary, be regarded as the basis of the agreement which results from an application for shares by a person who has seen the prospectus, and an allotment to him."
  Describing the effect of a company not adhering to its prospectus the same authority, on the same page, says: "If a person applies for shares in a company upon the faith of a prospectus issued by the formators or directors, and he receives in answer to his application an allotment of shares in a company to which the prospectus does not apply, he is at liberty to decline to accept such shares; for they are not in truth what he asked for."  In support of this doctrine, page 20, several decisions of the British Courts are cited. One will be quoted: "The prospectus of the Scottish and Universal Finance Bank described the objects of the company to be general banking purposes or specie. The objects of the company as formed went far beyond this, and included, amongst other things, obtaining concessions for the building of railways and other works and the leasing or working of such undertakings and the transaction of the business of a merchant, contractor, and capitalist, as principal or agents, in any part of the world. It was held that a person who applied for shares on the faith of the prospectus, and to whom shares were allotted, had not agreed to become a member of the company; he never having been aware that the company was formed for purposes so materially different from those stated in the prospectus."
  The authorities on these points are thus quoted somewhat at length at this stage of the case to aid in a better understanding of it, and in elucidating principles which enter as governing elements in its decision.
  Viewed in the light of the sound principles announced, the prospectus of the plaintiff throws no shade across them. If these principles have been violated, further examination will disclose some subsequent act to render the company amenable to their condemnation.
  The prospectus explicitly and clearly sets forth the nature and objects of the company. It gives the amount of capital supposed to be required and the value of the shares intended to be created, and invites the public to subscribe. As an inducement for subscribers the prospectus reminds the public that recent events in China are expected to lead to important changes in that country and to a new era of commercial prosperity. Not only should a fresh impetus be given to trade generally, but the introduction of capital into China, which must necessarily follow, will cause such a development of the vast natural resources as can scarcely be over-estimated."
  As an additional inducement the prospectus adds:
  "The company will enter upon a new and extensive field for the investment of capital, and its resources should find employment outside of the operations which have hitherto been undertaken by the existing banks and the local insurance offices in China, Japan, and the Straits. These, from the nature of their constitutions, have been unable to avail themselves of many profitable and sound investments that are offered in those countries. This company will be able to take up branches of business hitherto neglected, and thus supply a demand for new capital, which has long been felt and is daily increasing."
  And as if to leave no doubt of the scope of the powers of the company - the business lines upon which it would move - the memorandum of association is printed on the same sheet as the prospectus and both are submitted to the public at the same time.
  It will be seen from these public declarations that the company did not propose to do a banking business; it did not intend to impress upon the public that it would ether such a field for the investment of its capital - but it negatived by an express declaration any such inference when it declared that its capital and its resources should find employment outside of the operations of existing banks and local insurance offices, in China, Japan and the Straits, but that the company solicited subscription to it because of its intention to operate outside of the lines of those banking institutions, disclaiming the right to exercise the prerogative of any of their functions. And when the memorandum of association was also placed before the public, in proof of the good faith of the declarations, a memorandum in which, in such a connection, no authority to do a banking business, by any rule of construction, can be found, the defendant, among others, became a purchaser of shares.
  These comments would seem an implied impeachment of the good faith of the company, if attention during the trial had not been directed by the plaintiff to sub-division sections (G), (H), and (J), defining the objects for which the company was established, and construed by the plaintiffs, as empowering it to do a banking business. These sections are:
  "G. - To invest in or to advance and lend money on real, personal and mixed securities, on cash, credit or other accounts, on policies, bonds, debentures, bills of exchange, promissory notes, letters of credit or other obligations, or on rates or tolls duly authorised to be made or levied by any Government or local, municipal, or other authority, on the deposit of title deeds, goods, wares, merchandise, and other personal property, bills of  sale and loading, delivery orders, warehousemen and wharfingers' certificates, notes, dock warrants or other mercantile indicia, or tokens, stocks or shares."
  "H. - To make, accept, and indorse and execute promissory notes, bills of exchange, bonds, debentures, and other negotiable instruments."
  "J. - To contract for public and private loans and to negotiate and issue the same and to manage financial transactions on commission or otherwise, and generally to transact the business of financiers, contractors, concessionaires, and capitalists."
  These sections should not be construed alone. The ambiguity that may lurk in their phraseology will not be allowed to confer a power upon the company with which the company itself, when seeking the sale of its shares, declared it was not invested. When there is ambiguity every principle of law interprets it against the agency responsible for it, and the principle of law is not less universal in that no person, no corporation, shall take advantage of its own wrong acts.
  It appears, from the evidence that two of the Directors of the Hongkong and Shanghai Banking Corporation were in this company and the Hongkong and Shanghai Banking Corporation were the brokers of the company. Is it for a moment to be supposed that gentlemen, whose names are the synonyms for upright dealing, would have accepted the inconsistent position of being Directors in two rival banking institutions operating in the same city or anywhere?  Is it to be supposed that a bank, which has the confidence of every financial circle, would foster into existence a rival institution? If proof were wanting of the construction given by the public to the nature and objects of the business of the company, when seeking markets for the sale of its shares, the fact that two Directors of the Hongkong and Shanghai Banking Corporation became Directors of the company, and that this Corporation became its bankers, would be of such potency as could not be overlooked; and certainly, when cited on the trial and admitted as evidence, is entitled to weighty consideration  in aid of a proper construction.
  The authorities are substantially a unit in support of the rule of construction here adhered to. Some leading rules on the subject are stated in Bishop on Contracts (Sec. 379.) "The rule, most conspicuous and wide reaching, is that a written contract shall be interpreted as, if possible, to carry out what the parties meant.   .  .  .  The parties are bound by the language voluntarily employed.  And since they cannot plead ignorance of the law, neither likewise can they, of the effect of their language. Within this rule, a stipulation for a thing will not be satisfied by something else presumably as good.  .  .  .  The whole of the written instrument, whether on one piece of paper or on detached pieces, constituting one contract, and all writings on the same subject, whether together forming one agreement, or more than one, if made simultaneously, or sometimes when even executed on different days, should be looked at in interpreting each particular part. .  .  .  The language and terms of the contract will be understood in the ordinary popular sense."
  Writing of the general duties of all bodies politic, considered in their corporate capacity, Blackstone says that they may, like those of natural persons, be reduced to this single one, "that if acting up to the end or design, whatever it may be, for which they were created by their founder." (Book 1, Sec. 480.) And on the powers of corporations Chancellor Kent held this language, "As to whether a charter is to be strictly or literally construed, the true rule would seem to be, that it is to be strictly construed when the object is to determine the extent of the franchise granted; that is, the scope or the objects of the corporation."
 (Kent's Comm., vol. 2, p.287), lays down the rule in these words: "So the contracts of joint stock banking corporations must in order to bind the shareholders, be made in pursuance of the authority, in that behalf, contained in the deed of settlement; for the parties who became shareholders, do so under the agreement contained in that deed. .  .  .   The contracts of joint stock companies, incorporated by the Act of Parliament for the purpose of carrying on undertakings of a public nature, are now regulated by the provisions of 8 and 9 Vict. c. 16, s. 97; and as to these the rule is, that they can only contract according to the terms in which the contract is authorised to be entered into by that Act or the special Act by which they are controlled."
  The rule is stated in Parson on Contracts with characteristic clearness: - "A corporation is the creature of the law, and is only what the acct of incorporation has made it, and derives all its powers from the Act." (Vol. 1, sec. 141.)
  The rule for the proper interpretation of a charter of a corporation or a memorandum of association has been adjudicated by the Supreme Court of the United States, and the decision in the following cases settle the doctrine: "Charters of corporations must be construed favourably to the public, and against the grantee." (Commonwealth v. Erie R. R. Co.)
  "The enumeration of powers conferred implies the exclusion of others." (Thomas v. West Jersey R. R. Co.)
   "A corporation, being a creature of the law, possesses only those properties which the charter of the creation confers upon it." (Dartmouth College v. Woodard.)
  "A corporation has no power except what is given by the incorporating Act." (Council of Montgomery v. Plank Road Co.)
  "It is a sound principle that the specific grant of certain powers in a charter is an implied prohibition of other and distinct powers." (New York Fire Insurance Co. v. Elly.)
   "If, on a reasonable interpretation of a charter, it is fairy doubtful whether a power burdensome to the public has been granted, that power cannot be exercised." (Perrine v. Chesapeake and Delaware Canal Co.)
  From the above decisions of the highest Court of the United States and the opinion of the ablest British and American writers, the conclusion appears irresistible that a corporation cannot construe in its favour a doubtful provision in the articles of association, especially when the provision so construed would confer a power contrary to any claimed at its organisation and injurious to shareholders.
  But the company has not left its meaning in doubt. If the prospectus, in view of all the authorities, did not remove all questions as to the purpose of organisation, the official act of the company, as organised under the memorandum of association, has.
  The record shows that the first annual general meeting was held at the Cannon Street Hotel, London, on the 12th February, 1891. At the first annual general meeting the Chairman gave notice of an extraordinary general meeting to be held at the conclusion of the general ordinary meeting, and that then a resolution would be proposed to change the name of the company into that of the Bank of China, Japan, and the Straits, Limited. The resolution was:-
  "That the name of the company be changed to the Bank of China, Japan, and the Straits, Limited."
The name was to be changed, and instead of the Trust and Loan Company of China, Japan, and the Straits, Limited, it was thereafter to be known as the bank of China, Japan, and the Straits, Limited. The substitution of the name "Bank" for "Trust and Loan" must naturally have given rise to the query if by the change of name a departure from the original scope of the association was not contemplated? This was anticipated by notice "that the business of the company would continue on the lines which have hitherto been followed," and by the explanation of the Chairman:
  "As mentioned in our report, the change of name does not imply change in the intended business of the company, and no alterations in the articles is necessary on that account.  It is not the object and it is not the intention of the company to interfere with the business of banking establishments in the East, with which the Board have worked in the most friendly accord, and your Directors will continue to aim at working in perfect harmony with existing institutions."
  At their annual general meeting a resolution of thanks to the Chairman and Directors was unanimously passed for the favourable report at the end of the first year's operations, "the accounts disclosing the splendid results of about seventy-five per cent profit on the year's operations."
  In the complaint, it is alleged that the shares held by the defendant, "are held upon the terms prescribed by the registered articles of association of the company, and when the defendant acquired the shares registered in his name he accepted them upon these terms."
  To this allegation the defendant answers that he does hold his shares by the registered articles of association  of the company, and that he acquired and accepted them upon the terms of the "articles of association," and avers that the plaintiffs are now a banking company, doing the business of a bank having no existence and no rights under the said articles of association, and that by reason of engaging in a business ultra vires the same, the ends of the articles of association have been defeated with ruinous losses to the shareholders.
  It is admitted that the plaintiffs are a bank doing banking business in this city, and with its head office at London. And it is contended that the plaintiffs have the right, under the articles of association, to engage in the banking business.
  Upon the construction of these articles it is deemed that sufficient authority has been found to warrant the conclusion, guided by the general rules of construction and the act and declaration of the plaintiffs that they do not confer upon the plaintiffs the power to engage in banking.
  What safety, what security would there be in any business if the Directors of a corporation could organise it within clearly defined orbits, and then go outside of them without observation of the terms of organisation? "With respect to those acts," says Lindley on Companies, "which Directors have no power to do at all, it must be borne in mind that trading and similar corporations are created for certain definite purposes which have no greater capacity than is conferred upon them by their constitutions.  They exist for certain purposes more or less defined in the instrument incorporating them, but they exist for no other purpose; and a corporation created for one purpose cannot lawfully do anything which is foreign to the purpose for which alone it was created." (p. 162.)
Adds the same author:
  "The constitution of a company as settled by its charter, Act of Parliament, memorandum of association, or deed of settlement, limits, to a certain extent, the purpose of its Directors; for whatever it may or may not competent for all the shareholders to do, it certainly is not competent for the Directors of the Company to bind it by entering on its behalf into transactions not warranted by its constitution as settled for the time being." (page 163.)
  There is no evidence, in this case, that the memorandum of association, by virtue of which shares were sold and a dividend declared, were ever amended to relieve the company of the moral and legal obligation not to do a banking business. There is no evidence that such a material change was ever made in the articles of association, and they could not be legally changed in such a material aspect in utter disregard of the law of registration applicable to incorporated companies. The record shows no new registration; and examining the articles of association for information, no amendatory provision appears, so no new act of incorporation was offered to legalise the radical evolution from a Trust and Loan company to a full-fledged banking institution - an evolution essentially Darwinish in its character.
  On the trial the defendant was asked, in view of the allegations in his answer, why he did not protect his rights. The answer is, the defendant had before him the prospectus of the company, leaving no doubt as to the nature of the proposed business; he had before him the articles of association , in which the power and limitations of the company were defined, he had before him the record of an extraordinary general meeting at which the Chairman, in the  presence of the Directors, with their approval, re-affirmed the resolution cited that there would be no departure from the business demarcation prescribed by the articles. Were not these sufficient to put to rest any disquietude? If re-assurance were needed, what greater could be required; and can such an interrogatory successfully be put on behalf of those who would have the defendants to answer a call on shares owned in a Trust and Loan company to be utilised in sustaining an institution foreign to it?
  It is true that the plaintiff argued that the same shares were bought when the title of the company had been altered from the Trust and Loan Company of China, Japan, and the Straits to the Bank of China, Japan, and the Straits, but the force of the reasoning is not clear when the fact is recorded that the change of title in no sense changed the business of the company, nor impaired any of the rights of the shareholders. This fact was recorded at the meeting of the Directors at the time the title was altered, and published in their reports of such meeting. Another argument of the plaintiffs, is that the right of the Bank of China, etc., to operate an exchange business had been sanctioned by the shareholders at their meeting, and their report of February 9th, 1893, is referred to and narked exhibit B. This is the first report, the late date of which is noted and when the shares had been sold, that apprised the public, after the event, of the purpose of the company to engage in a general banking business. On the first page of said report the apprisement is made as follows:
  "Investments made in London, £38,718 present various things in which, as a Trust and Loan Company, we became interested before the institution became a bank."
  Even at this meeting of pardoners after execution, a shareholder reminded his colleagues that there might be "impediments" to "carrying on legitimate banking business," and the reminder caused the Chairman of the meeting to admit the existence of the impediments. The passing of the accounts of the Bank after their meeting was also urged in support of the authority now claimed by the company to exercise banking privileges; but is it good law that the mere passing of an account changes the character of a corporation, materially alters the articles of association, and supplies the place of registration. Such a reconstruction of charters and the law of registration is proposed at a time when opposing legal precedents have been too firmly established by British and American authorities.
  The judgment of the Court is that this suit be dismissed and that the plaintiffs pay costs.
[Signed.]

 

Source: North China Herald, 5 October, 1894

U.S. CONSULAR COURT.
Shanghai, 1st October, 1894
BANK OF CHINA, JAPAN, AND THE STRAITS, LIMITED v. E. HJOUSBERRY,
Before T. R. Jernigan, Esq., U.S. Consul-General, acting judicially, and Messrs. D. C. Jansen and A. S. Forbes, Associates.
  The following is the Judgment:
  The plaintiffs apply for appeal from the judgment against them in this case.
  They ask that the appeal be granted to the Circuit Court of the United States in and for the District of California; but should it be held that the appeal will not lie in that Court, then they ask that it be granted to the Ministerial Court of the United States at Peking.
  If it were in the discretion of this Court to grant an appeal, no application therefor would be refused, for the Court would feel less embarrassed in rendering a judgment with the knowledge that no legal principles intervened to prevent such judgment from passing under review by a higher tribi8nal.
  The important principles involved in this case, and which have been decided against the plaintiffs, only add to the embarrassment of the Court when, after mature consideration, it finds that the application for appeal should not be allowed. Section 4,003 of the Revised Statutes of the United States provides: "On any final judgment in any Consular Court of China or Japan, where the matter in dispute, exclusive of costs, exceeds the sum of two thousand five hundred dollars, an appeal shall be allowed to the Circuit Court for the District of California."
  The language of this section is no less plain than mandatory, and if there should have been any doubt as to its meaning such doubt has been removed by the judgment of the Circuit Court of California in the case of The Ping-On against Clement Phinney Blethen and others.
  In this case the whole doctrine of appeals from the Consular Court of China and Japan is exhaustively reviewed by Judge Hoffman, with the conclusion that "in suits for more than twenty-five hundred dollars the appeal lies to the Circuit Court of California."
  With the unambiguous language of the statutory provision quoted, accented by the equally plain interpretation of the Court, to which this Court must look for instruction and guidance, it follows that the only question presented, in this connection, is the amount of the matter in dispute.
  The plaintiffs, in their petition in the case, leave no doubt as to the amount of the matter in dispute. They name it in the last section of the petition in these words:
  "That the defendant pay to the plaintiffs' company the sum of 350 Pounds Sterling, together with interest at the rate of ten per cent per annum, on one half of that sum from the first of November, 1893, and on the other half from the first of February, 1894."
  The aid of a simple rule of arithmetic need only be invoked to show that the plaintiffs themselves, having named the amount of the matter in dispute, and taking the amount to be all that was due them, as greater could not have been named, and that it does not exceed two thousand five hundred dollars.
  The application for appeal to the Circuit Court of California is not allowed.

  Having failed to reach the appellate Court first designated by them, the plaintiffs now ask that they be allowed to appeal to the United States Ministerial Court at Peking.
  It is the practice of the Courts of the United States to construe most liberally the doctrine of appeals. There are statutory provisions in American law enjoining the allowing of applications for appeal when such allowance would not be in direct conflict with some prohibitory provisions of the law applicable to the particular case under consideration, and in which the application for the appeal was made.
  But it is not understood that the liberal interpretation of the doctrine of appeals, thus enjoined, should be so far advanced as to neutralise the rules for the construction of statutes, which have been so long entrenched in the highest legal authorities.
  However much the Courts may encourage liberality in allowing appeals, the principle that a statute should be construed to give it effect, if possible, and without rejecting any part, remains unshaken.
  There are two sections in the Revised Statutes of the United States that bear upon the application of the plaintiffs for appeal, and the construction of which must determine its allowance or non-allowance.
  In section 4,092 it is provided that "in any final judgment in a Consular Court of China or Japan, where the matter in dispute exceeds five hundred dollars and does not exceed two thousand five hundred dollars, exclusive of costs, an appeal shall be allowed to the Minister in such country as the case may be."
  If Section 4.092 stood alone the right of the plaintiffs to appeal to the Ministerial Court could not be successfully denied. But this section does not stand alone, and by no rule of statutory construction, can it escape the effectual force of the conditions and limitations of section 4,107 of the Revised Statutes.
  In this section it is provided that when the matter in dispute before the Consular Court, "exceeds five hundred dollars, the Consul shall summon, to sit with him on the hearing of the case, no less than two nor more than three citizens of the United States, if such are residing at the port, who shall be taken from a list which had previously been submitted to and approved by the Minister and shall be of good repute and competent for duty. Every such associate shall note upon the record his opinion, and also, in case he dissents from the Consul, such reasons therefor as he thinks proper to assign; but the Consul shall give judgment in the case If the Consul and his associates concur in the opinion, the judgment shall be final."
   In this case the Consul and his associates concurred in opinion, and the matter in dispute exceeded five hundred dollars, but is less than two thousand five hundred dollars. It is true that section 4,092 is part of the Act of Congress passed July, 1870, while the act of Congress embracing section 4,107 was passed June, 1860; but for more than twenty years these two sections have been republished in the "United States Consular Regulations," a book published under the supervision of the Secretary of State, and placed in the hands of the Consuls of the United States for their instruction and guidance. If this fact was not sufficient to cause Consular Courts to hesitate in nullifying the operation of the provisions of law thus receiving the sanction of the Department, it will still be the duty of such Courts not to depart from the adjudicated rules for the government in the construction of statutes.
  The Supreme Court of the United States has construed thee rules to mean that a statute must be so construed as to give effect, if possible, to every portion of it, and will not suffer it to be defeated, if it will reasonably admit of being so construed.  (Regburn vs. Bracket, Parkinson vs. State, American Decisions.) And if text writers, one, ever high as an authority, states the rule when applied to written instruments, and the same is true when applied to statutes, to be, that a liberal construction should be put upon written instruments, so as to uphold them if possible and carry into effect the intention of the parties. (Co. Litt. 36 a.).
  In Peter vs. Daniel, 5 C.B. 579 the principle was thus announced: "If a plea admits of two constructions one of which gives a sensible effect to the whole, and the other makes a portion of it idle and insensible, the Court is bound to adopt the former construction." And the same principle is upheld by Judge Cooley, in this language: "That the Court, if possible, must give the statute such as construction as will enable it to have effect." (Cooley's Constitutional Limitations, pg. 220).
  A similar principle of construction being invoked in Dow vs. Norris (14 N.H.), the Supreme Court of New Hampshire decided that an Act of the Legislature should be construed to make it consistent; and, says the Court of Appeal of New York, "Before proceeding to annul by judicial sentence what has been enacted by the law-making power, it should clearly appear that the act cannot be supported by any reasonable intendment or allowable presumption." (People vs. Supervisor of Orange, 17 N.Y.235, 241.)
  The principle of construction to guide in construing a statute is so plainly and authoritatively established by text writers and the Courts that it should not be violated in the interests of the doctrine of appeals.
  The question now arises, Can section 4,092 and section 4,107 be construed together? Can these sections be so construed as, by giving to each its full intended meaning, to make them consistent?  Can these sections be used to stand together, giving each its effective meaning, at the same time preserving a complete and harmonious system for the exercise of appellate jurisdiction from Consular Courts?
  If this can be done, then, in the face of the authorities quoted, it should be done.
  By section 4092 appeals to the Minister are limited to cases involving amounts not less than five hundred dollars, and not exceeding two thousand five hundred dollars. The especial office and purpose of this section is to prescribe the jurisdiction, and in filling this special office it is not different from that part of section 4107, which also prescribes the jurisdiction. In these regards the two sections are substantially filling the same office, when but one only would be necessary were it not for the fact that section 4107, in one respect, materially differs from section 4092, in that section 4107 prescribes the conditions and limitations under which the jurisdiction provided for by section 4092 is to be exercised. Reading the two sections together it is clear that the conditions and limitation so provided mean, what the language of the statute says. Substantially, the two sections would read thus:
     When the matter in dispute is more than five hundred dollars, assessors should sit with the Consul at the trial, and if the matter in dispute should not exceed twenty-five hundred dollars, and the Consul and his associates concur in opinion, the judgment shall be final.
  The conclusion thus reached is warranted by the analogy of the jurisdiction of Consuls and the system of appeals, provided for, in criminal cases, by statute.
   Section 4105 of the Revised Statutes of the United States, provides "that any Consul, when sitting alone for the trial of offences or misdemeanours, shall decide finally all cases where the fine imposed does not exceed one hundred dollars, or the term of imprisonment does not exceed sixty days."
  Section 4106 provides, "that when the Consul is of the opinion that severer punishments than those specified in section 4105 will be required, he shall summon to sit with him on the trial one or more citizens of the United States, not exceeding four, and in capital cases not less than four," (as provided by statute.) "If the Consul and his associates concur in opinion, the decision shall, in all cases, except in capital offences, and except as provided for in section 4105, be final."
  It is evident that the purpose of the statute is to provide a system of jurisdiction and appeals investing Consuls with the power to finally determine a class of civil and criminal cases according to the amount of the matter in dispute, the fine and imprisonment imposed, and, in cases where assessors are required to sit with the Consul, to give to the Consular Court, so constituted, a finality of judgment also.
  Fortunately, the whole statute upon the subject of Consular and Ministerial Courts of China and Japan was reviewed and construed by the Circuit Court of California in the case referred to. There, the question before this Court was not directly before that Court, but, if the opinion can be modestly advanced, the conclusion of the Circuit Court of California is an addition only to the long line of authorities in its favour.
  After an exhaustive review, Judge Hoffman, in the Ping-On vs. Clement Phinney Blethen, et al., concludes as follows:
"The only plausible way of reconciling these seemingly contradictory provisions, which occurs to us, is to construe the provisions of section 4107, which makes the judgment of the Consul final when concurred in by his associates, and allowing an appeal to the Minister when there is a difference of opinion, as referring only to cases in which the matter in dispute does not exceed twenty-five hundred dollars, the provision of the Act would thus be made harmonious and consistent and its principle features preserved; viz. to make the judgment of the Consul or Minister final in all cases where the matter in dispute does not exceed twenty-five hundred dollars, and to allow appeals to the Circuit in all cases where it is in excess of that amount."
  The whole statute upon the subject of the Consular and Ministerial Courts of China and Japan must be construed together, and, if possible, so that there shall be no conflict between its various provisions. A complete and harmonious system for the exercise of appellate jurisdiction from those Courts has been provided, and sections 4092 and 4093 prescribe the jurisdiction. By the former, appeals to the Minister are limited to cases involving amounts not less than five hundred dollars and not exceeding twenty-five hundred dollars. By the latter appellate jurisdiction is given to the United States Circuit for the District of California in "any final judgment in the Consular Court wherein the amount of the judgment, exclusive of costs, exceeds twenty-five hundred dollars, etc." The special office and purpose of those two sections is to prescribe the jurisdiction. Section 4107 only prescribes to a certain extent, the condition and limitation under which the jurisdiction provided for by the previous section shall be exercised.
  Its provisions must be construed in subordination to the system and provisions of the act specially defining the jurisdiction. So construing Section 4107, we have no doubt that appeals to the Minister are allowed by its provisions under the circumstances therein indicated, only in the class of cases over which appellate jurisdiction is given to that office by section 4092, and that in any case wherein the judgment exceeds twenty-five hundred dollars, etc., an appeal lies to the Circuit Court for the District of California."
  In this conclusion the Circuit Court of California has closely adhered to the doctrines laid down by British law writers and subsequently maintained by the decisions of the Supreme Court of the United States.
  One part of a statute must be construed by another. (1 Blackstone Com., 80, Bac. Abr. Strat., (1) 2.3.)
  A statute will be construed in the light of every word in it being presumed, where such a presumption is possible, and the legislature meant what it said. (Montclair vs. Ramsdale, 107 U.S. 147.)
  If the language of a statute is plainly susceptible of two constructions, both equally obvious and reasonable, one of which will bring it into harmony with the construction, while under the other it is invalid, the former construction is to be adopted. (Grenada County Supervisor vs. Brigdon, 112 U.S, 261.)
  The judgment of the Court is that the appeal cannot be allowed.
T. R. Jernigan, Acting Judicially.
Assented to:
D. C. Jansen, A. S. Forbes. Associates.

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