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Colonial Cases

Evans and Co. v. Harvie, Sampson and Co., 1894

[trade law]

Evans and Co. v. Harvie, Sampson and Co.

Supreme Court for China and Japan
Hannen CJ, 12 July 1894
Source: North China Herald, 13 July, 1894

LAW REPORTS.
H.B.M.'S SUPREME COURT FOR CHINA AND JAPAN
Shanghai, 12th July.
Before N. J. Hannen, Esq., Chief Justice.
EVANS & CO. v. HARVIE, SAMPSON & CO.
  Mr. H. P. Wilkinson appeared for the plaintiffs, and Mr. G. K. H. Brutton for the defendants.
The petition of the above-named plaintiffs showeth as follows:
The plaintiffs are a British firm carrying on business at Shanghai in the Empire of China.
The defendants are a firm of British merchants carrying on business at Shanghai aforesaid.
The defendants in the course of their business received orders from Chinese traders for goods to be shipped from Europe, the drafts to pay for such goods being drawn by the shipper or manufacturer upon the Chinese indentor and such drafts were presented for acceptance by the Hongkong and Shanghai Banking Corporation, who carry on banking business at Shanghai, Hongkong, and elsewhere, and the goods and merchandise to pay for which the drafts were drawn were shipped through the said bank.
Payment of all such drafts so drawn for goods shipped on account of the defendants was guaranteed to the said Bank by the plaintiffs, the said Bank having refused otherwise to deal with the defendants than as represented by and guaranteed by the plaintiffs.
The Tuck Tai Yuen hong of Shanghai aforesaid in the year one thousand eight hundred and ninety-three ordered various goods through the defendants. Drafts to pay for such goods being drawn as aforesaid on them by the manufacturer or shipper were accepted by the said Tuck Tai Yuen hong, and on due date dishonoured by the said hong who refused to take delivery of the said goods.
The said Bank thereupon claimed against the plaintiffs for payment of the amount of the said drafts as guarantors of the defendants and the dishonoured drafts were handed to the plaintiffs together with documents relating to the said goods in order that the plaintiffs might recover the amount of the said drafts, and compel the said hong to accept the goods on which the said drafts were drawn, or in the alternative to claim and demand from the said hong the loss occasioned to the said Bank by their refusal to honour the said drafts and accept the said goods.
The defendants on the said hong refusing to honour drafts drawn upon them requested the plaintiffs to negotiate loans upon the goods shipped from Europe, and under lien to the said Bank, and the plaintiffs thereupon did negotiate loans thereon.
The plaintiffs at the request of the defendants handed to the defendants a draft for £55.3.2 falling due on the eighteenth day of November, one thousand eight hundred and ninety-three, and being one of the drafts dishonoured as aforesaid, and the plaintiffs handed to the defendants at their request the contracts entered into by the said hong to enable the said defendants to claim payment of the said sum of £55.3.2 and all other sums paid by the plaintiffs on behalf of the defendants in regard to the contracts entered into by the said hong.
The defendants thereupon filed their petition against the said hong in the Mixed Court at Shanghai aforesaid on the twenty second day of November, one thousand eight hundred and ninety-three, claiming inter alia on the said draft for £55.3.2 the amount of which was on the 28th November 1893 paid by the plaintiffs to the said Bank, and after various sittings, a final arrangement was come to, whereby the said hong accepted judgment against them for Taels five thousand the same to cover all losses on drafts dishonoured by them as aforesaid.
Under the said judgment the defendants received the sum of Taels two thousand four hundred as agents for the plaintiffs.
The defendants agreed to pay the said sum and all sums recovered from the Tuck Tai Yuen hong aforesaid to the plaintiffs or to the said Bank to meet payments made by the plaintiffs to the said Bank in respect of their said guarantee.
The defendants have failed to pay the said sum so recovered, or any sum on account therefore, to either the plaintiffs or the said Bank, and refuse so to do, and have otherwise disposed of and paid away the same.
  The plaintiffs therefore pray
That the defendants may be decreed to pay to the plaintiffs the sum of Taels two thousand four hundred being money payable by the defendants to the plaintiffs for money recovered by the defendants for the use of the plaintiffs with interest thereon at the rate of eight per cent per annum until payment, together with their costs of suit.
That the plaintiffs may have such further or other relief as the nature of the case may require.
  The answer of the above named defendants to the petition of the above named plaintiffs is as follows:-
The defendants admit paragraphs 1 and 2 of the petition.
The defendants admit the statement conta8ned ibn the first part of paragraph 3, but state that they did business through another bank as well as through the Hongkong and Shanghai Banking Corporation.
The defendants admit the truth of paragraphs 4 and 5.
In answer to paragraph 6, the defendants say that they do not know whether the allegations contained in the first part thereof are true, but they say that the plaintiffs have or had no right to proceed against the Tuck Tai Yuen hong to recover the amount of the drafts in the said paragraph mentioned, or to compel the said hong to accept the goods on which the said drafts were drawn, or to accept any goods, or to claim from the said hong any loss occasioned to the Bank by their refusal to honour the said drafts and to accept the said goods.
The defendants admit the truth of paragraph 7.
In answer to paragraph 8 the defendants admit that they obtained the contract made between them and the said Tuck Tai Yuen hong from the plaintiffs to enable them (the defendants) to recover all sums of money due to them on account of losses on goods sold to date, duties, storage and other sums due to them by the said hong, and to compel them to take up all cargo still remaining unsold. But they deny that the plaintiffs have paid any sums on their behalf, or that if they did lay any sums, they did so on their own responsibility, and without the consent of the defendants, and they deny that they sued for any such sum or sums on behalf of the plaintiffs.
In answer to paragraph 9 the defendants admit that they filed a petition in the Mixed Court against the said hong, but they deny that they sued for any sum or sums of money on behalf of the plaintiffs, and deny that they recovered judgment to the sum of Tls. 5,000 and state that if judgment had been so recovered the amount was not to cover losses on drafts alone, but other sums paid by the defendants on behalf of the said hong.
In answer to paragraph 10 the defendants deny that they received the sum of Tls. 2,400 as agents for the plaintiffs.
The defendants deny the allegations contained in paragraph 11.
The defendants admit the truth of paragraph 12 and state that they were, and are, under no obligation to pay the said sum of Tls. 2,400 to the plaintiffs or to the Hongkong and Shanghai Banking Corporation, and state that they have from time to time paid various sums as margins on loans to the plaintiffs, and are willing to pay the usual margin on such dishonoured drafts as have not been put on loan.
Save and except as aforesaid, the defendants deny all and every allegations in the petition contained.
Mr. Wilkinson stated that the action was for money recovered by the defendants from the Tuck Tai Yuen hong, and which they should have, but had not, paid to the plaintiffs. The plaintiffs reserved to themselves the right to recover damages at a later period, and this action was brought siply to recover the money received by the defendants from the hong through the Mixed Court. If the defendants would say what they had done with the money it would save some trouble.
  Mr. Brutton denied that the plaintiffs had the right to ask for such an account, as the defendants were not acting as agents for the plaintiffs in the Mixed Court.
  Mr. A. M. A. Evans, sworn, in answer to Mr. Wilkinson, stated - I am trading in Shanghai as Evans & Co. I guaranteed the payment at maturity of bills for goods ordered through the defendant firm by Chinese. This agreement (handed in) was written by me, I agreed to finance for Messrs. Harvie, Sampson & Co., as the Hongkong and Shanghai Bank would not otherwise do business with them. I was to guarantee bills accepted by the Chinese, and discounted by the Bank, and, in the event of the hong refusing to accept the goods, I had to pay the Bank and recover the goods from the defendants as security. The indents for these goods for the Tuck Tai Yuen hong were signed by me and ordered by me of my home firm. This agreement is between J. A. Harvie and myself, dated the 17th February, 1892. Mr. Sampson has been admitted to the firm since then, and I was notified in writing. In this agreement it is agreed that I accept no liability to loss through Chinese firms refusing to take up goods on arrival.
  These goods were procured through Messrs. Caldwell, Watson & Co. When the bill against these goods was dishonoured by the Tuck Tai Yuen the Hongkong and Shanghai Bank came to me as the guarantor and I had to pay the bill. I have written demands from the Bank, and I have memos of the amounts of the drafts, from the Bank. A demand was made for Tls. 1,627 and paid by Evans & Co. (Draft handed in.) Harvie, Sampson & Co.'s name does not appear on that draft. It was drawn on and accepted by the Tuck Tai Yuen. There are three drafts claimed up. The letter (handed in) only refers to one draft, a like letter asking for payment, was received with each refused draft. I pressed defendants to sue Tuck Tai Yuen in the Mixed Court, and gave them the contracts, which I had received from them on ordering the goods, in order that they might make their claim good at the Mixed Court. On the 10th May we received a letter from the Bank saying that they had been informed that the defendants had been paid the money and asking us to take up the loan we had effected on the goods. I sent a copy to Harvie, Sampson & Co., but as Mr. Sampson was away, they asked me to wait a few days as he did all the financial business for the firm.
  There was a promise by Mr. Sampson to pay all money recovered to me through the Bank. He said that Tls. 2,400 had been paid into Court, but he had been advised not to touch it until the balance of the Tls. 5,000 had all been paid. I asked the Bank to wait a few days on this account. Mr. Sampson sad the case was not settled. I understood the money was not paid. The defendants never denied having to pay all money recovered at the Mixed Court from the Tuck Tai Yuen. I would not, after having paid the money to the Bank for goods, have given them the contracts to enable them to get the money and use it as they liked. They now owe me between 11,000 and 12,000 taels. I am told they received Tls. 500 or Tls. 600 before they took the case into the Mixed Court.
  By Mr. Brutton - They owe me between eleven and twelve thousand taels. This amount is not secured. I have cargo of theirs but do not know its value. Mr. Sampson refused to give me the invoices. They gave me the contracts for the goods. The contracts are to show me the goods are indented for, and to enable me to enforce payment if the bills are not paid at due date. The Bank will not recognise Harvie, Sampson & Co., They will accept money from them paid into my account, and notify me. I look to Harvie, Sampson & C o. and Tuck Tai Yuen. The Bank looks to me. I can sue on the documents in the Mixed Court even though my name is not on them. I never considered that Caldwell, Watson & Co. looked upon defendants aa principals. They only supplied goods to them through me.
  When Harvie, Sampson & Co. took proceedings in the Mixed Court they acted as agents for me. I have always asked them for money recovered, under similar circumstances and all such money has been paid me on previous occasions. In the agreement I am to assist them to recover any loss occasioned by the shipper's failure to supply goods as per indent. I have surveyed goods for them and given them certificates. I do not know whether I ever charged them for surveying. On one occasion when I was assisted by another person and it took us a long time to survey, I charged a fee. The fee was charged to the home people. If I act as a surveyor I charge the home people, even on my own cargo. The indents are sent home by the defendants, after I sign them. That is, they pay postage. I look upon Harvie, Sampson & Co. as agents for collecting money I have advanced, and to get orders for goods. That is, for themselves.
  The Tuck Tai Yuen orders were on their account and I financed them. Under the agreement, I am not liable for loss. I should recover from the Tuck Tai Yuen. I don't know whether an agent gets commission or profit. Agents are paid in different ways. I paid them two-thirds of the profits. It may be that they pay me one third of the profits.
  Mr. Brutton - I say they are not agents and that they did not promise to pay.
  Mr. Evans - I got one third of the commissions. As for the loans on cargo, I guarantee payment.  If the Chinese refuses payment, the Bank comes to me for payment. If the goods are not taken up, the defendant asks us to make a loan. This is the only case of just this nature. We were compelled to pay this money. As we did not expect to have to pay this large payment we had to arrange with the Bank for an overdraft. When the Bank heard that the money had been paid, they made us take up the loans effected on the goods. Mr. Sampson told me they had used the money in various ways. We have paid loans for them before. I had to threaten to take proceedings against the Tuck Tai Yuen myself, to get them to do so. They said it would hurt their business. The compulsion was by Mr. Fobes.  I am suing for this money, which is ours. A promise was made to pay this money. I have suffered no loss as yet, because the case is not finished.
  By His Lordship -  I have paid the money to the Bank. The defendants have paid 15 per cent margin on bills.
  By Mr. Brutton - The loans were on behalf of my clients. I make these loans to Harvie, Sampson & Co., and hold the cargo as security. If I hypothecate it to the Bank, that is my business. I did not know that the Tls. 2,400 had been paid on the 10th of May. I heard it first from Chinese. Mr. Sampson promised to pay the Tls. 5,000 into the Bank, and take delivery as he liked. I did not deny my liability to the Bank. I told the Bank that Harvie, Sampson & Co. were sueing on my behalf.
  By His Lordship - There was no agreement to pay except by inference from the letters, saying it would be paid in a couple of days. Mr. Sampson came on many occasions when money was due and promised to pay as soon as possible. The original agreement, I think, covers the case.
  Mr. Wilkinson - The promise is two-fold. It is contained in the agreement, and by inference in the letters. The money is directly owing to the plaintiffs. It is their money.
  The Court then adjourned until 10 a.m. on Saturday.

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