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Colonial Cases

Melchers and Co. v. The China Navigation Co., Ltd, 1898



Melchers and Co. v. The China Navigation Co., Ltd

Supreme Court for China and Japan
Hannen CJ, 6 July 1898
Source: North China Herald, 11 July, 1898




Shanghai, 6th July.

Before Sir Nicholas Hannen, Chief Justice.


   In this case Messrs. Melchers and Co. shipping and general agents, sued the defendants for the recovery of Tls. 1,650 alleged to be in consequence of shortage on a shipment of coal.

  Mr. C. Dowdall, (Messrs Dowdall, Hanson and NcNeil) appeared for the plaintiffs, and Mr. Stokers (Messrs. Johnson, Stokes and Master) defended.

   The petition and answer which by consent were taken as read, were as follows:

   The petition of Melchers & Co. the above-named plaintiffs, shows as follows:-

   [1.] The plaintiffs are a German firm and the defendants are a British Company and both carry on business at Shanghai.

   [2] The defendants agreed with the plaintiffs to store for them a cargo of coals which arrived at Shanghai by the defendants' steamer Hangchow in April 1897 last, and the defendants further agreed that the weight of the coal should be taken to be 1,900 tons and that they would be responsible for that weight and the defendants' wharf manager at their Wa Tung Wharf gave the plaintiffs a landing account for that quantity of coals.

   [3.] The defendants from time to time down to the 22nd of April last on the orders of the plaintiffs delivered 1,800 tons of the coals and on that day the plaintiffs gave a delivery order for 100 tons but the defendants delivered only 34 tons and offered to pay for the balance of 66 tons at Tls. 13 per ton.

   [4.] The short delivery was made on the 29th of April last and the market value of the coal on that day was Tls. 25 a ton which for 36 tons would amount to Tls. 1650.

The plaintiffs therefore pray:

   [1.] That the defendants may be ordered to pay to the plaintiffs the sum of Tls. 1650 and the costs of the suit.

   [2.] That the plaintiffs may have such further or other relief as the nature of the case may require.

In answer to the said petition the defendants say as follows:

   [1.] They admit the truth of the allegations contained in paragraphs 1, 3, and 4 of the plaintiffs' petition.

   [2.] In answer to paragraph 2 of the plaintiffs' petition the defendants deny that the allegations therein contained correctly set forth the matters in question between the plaintiffs and defendants in regard to the cargo of coals ex s.s. Hangchow and they say that the following are the facts of the case.

   On the 17th of March 1897 the plaintiffs and defendants entered into an agreement in writing whereby the defendants agreed to carry from Hongkong to Shanghai about 3,000 tons of Cardiff coal, at the rate of $13 per ton less 2 ½ per cent, the Steamer to sign for weight only if cargo discharged at the defendants' wharf at Pootung or Wahtung. The defendants crave leave to refer to the said agreement as may be necessary.

   [3.] A Bill of Lading for 1900 tons of the said cargo shipped on Board the s.s. Hangchow was handed to the plaintiffs and on the coal being landed on the defendants' wharf at Shanghai the plaintiffs sent to the defendants on the 8th day of April 1897 a claim for Tls. 1351.35 for short delivery of 103 tons being at the rate of Tls. 13 per ton less one per cent. The defendants however pointed out that they were only liable for the shortage on the coal on same being weighed out to the defendants and the actual shortage ascertained. The defendants agreed to the price claimed by the plaintiffs viz. Tls. 13 per ton and have always been willing to pay that price.

   [4.] The defendants admit that they gave to the plaintiffs a landing account of the said cargo as mentioned in paragraph 2 of the petition and the plaintiffs on that day took delivery of the coal but the plaintiffs well knew at the time of receiving the said account that there were not 1900 tons of coal as mentioned therein.

   [5.] The defendants believe that the plaintiffs entered into a contract for the sale of the said cargo at Tls. 13 a ton and the defendants say that Tls. 13 per ton is full compensation for any loss or damage which the plaintiffs have sustained. The defendants have paid into Court the sum of Tls. 916.63 in full satisfaction of the plaintiffs' claim.

   Mr. Dowdall in opening the case referred to the petition into which one or two trivial mistakes had crept but which he said did not affect the issue. The circumstances of the case were shortly that the plaintiffs had selling, a sailing ship's cargo of about three thousand tons of coal. This was to arrive at Hongkong and a contract was entered into with a Chinaman - Cheap Jack - for the purchase of the same to be delivered at Shanghai at Tls. 12 per ton less one per cent.  As soon as that contract was completed they made a contract with the defendant company for two steamers the Hangchow and the Tamsui to convey the coal hither, the two together holding the cargo of the sailing ship; and a part of the contract for freighting was that the steamers were to sign for weight of coal and in case the steamers were allowed to land the coals at the wharves then they were to be responsible for the weight as well. The only cargo they had to deal with was the cargo by the Hangchow. It came up and was landed at one of the wharves of the defendant company. The defendant company then reported to the plaintiffs that the cargo of 1900 tons was as much as 105 tons short. The plaintiffs then sent in a bill to the defendants for 105 tons at Tls. 13 a ton which was the rate of the market at that time.

   It would be noticed that the contract to sell to Cheap Jack was Tls. 12 but the debit note sent into the defendants was a tael higher in consequence of the rise in the market but it was not paid. The defendants sent in a debit note to the plaintiffs for $3,800 for freight. The plaintiffs then asked for a landing account showing that they were responsible for 1900 tons, and in the delay which resulted the dollar went up from 73 to 76 whilst the price of the coal also increased.  In the end the plaintiffs paid the freightage and from time to time gave delivery orders to the purchaser of the coals and he got all the coals he had contracted for except 66 tons on the last delivery there being only 34 tons left, a fact which was notes on the back of the order. Cheap Jack naturally claimed upon the plaintiffs to deliver this 66 tons due upon his delivery, and by this time the price of coal had advanced to Tls. 25 a ton, upon coal which he had only paid Tls. 12 a ton for. He now prepared to call before his Lordship witnesses to show that some of this coal was taken away by somebody on the wharf.

   His Lordship asked why he should do this because he did not understand that there was any dispute as to the shortage.

   Mr. Stokes agreed with this suggestion and referred to the amount paid into Court.

   His Lordship considered that it was simply a question as to whether the defendants paid at the rate per ton when they acknowledged shortage or at the rate on the day when the last delivery order was given and the amount not fulfilled.

   Mr. Dowdall pressed his point as to the illegal removal of the coal from the wharf and remarked if somebody took away say a ton of coal valued at Tls. 25 at that time according to defendants they were to be satisfied with Tls. 13 and lose the difference. Cheap Jack had claimed for the balance on the delivery order but had not brought any issue. Counsel quoted Randall v. Worker, 27 L.J.Q.B., p. 27, in support of his contention that they were entitled to the full market value of the coal at the time when the last delivery order was not fulfilled and also read from Mayne on Damages referring to a similar case and substantiating his submission.

  His Lordship thought that it was merely a question of legal argument, as to whether they were to reckon the price of the shortage when the notice was given and the defendants declined to pay or at the time when the actual shortage was ascertained and the price per ton increased. He preferred to hear Mr. Stokes' arguments before witnesses were sworn.

   At this stage of the proceedings the documents dealing with the case were put in showing that the amount of coal altogether was 3,108 tons for the two ships and that the plaintiffs had paid freight and wharfage on the whole 1900 tons entrusted to the Hangchow, whilst 66 tons of coal were short on the last delivery to the purchaser Cheap Jack.

   Mr. Stokes then briefly addressed the Court on behalf of the defendant company. He took it that the market value of the coal in April,1897, was agreed at Tls. 13 a ton. Then with regard to the contract between Melchers & Co. and Cheap Jack as His Lordship would see from that document it was contracted to deliver about 3000 tons and therefore he did not understand how his learned friend could possibly claim for shortage when the intention of the contract was to deliver 3000 tons more or less. He wished to know whether His Lordship wanted to hear him upon any special point or on the cased generally.

   His Lordship expressed a desire to hear him generally upon the points raised. The plaintiffs said his clients were bound to pay something for the shortage. He (Mr. Stokes) said it was at the rate of Tls. 13 per ton whilst plaintiffs claimed for the price per ton in the market value at the time the actual shortage was ascertained.

   Mr. Dowdall, interposing remarked, that they claimed this or else let the defendants give them the coals.

   Mr. Stokes said the remedy was simply one of damages and the only question was as to the amount to be paid. Their case was that they were not liable for more than Tls. 916.63 paid into Court and he asked that judgment should be given for the amount with the costs of the suit to be paid by the plaintiffs. The plaintiffs had failed to show that they had sustained any damage which was not amply compensated for by the amount they had tendered into Court and that having regard to the contract with Cheap Jack they certainly on that head could not say they had suffered any damage.

   By the wording of that contract no legal liability could be shown to have been established against the plaintiffs.

   His Lordship did not consider that the sub-contract had anything to do with the case. It rested as to the value of the coals when notice of shortage was given, and the value when the actual shortage was ascertained.

   Mr. Stokes argued that the Tls. 13 per ton referred to in the debit note was fixed by Messrs. Melchers & Co. and it was regarded by the defendants as the price which was to be considered as taken by both parties and the only matter in dispute was as to whether there was 105 tons short, or less as it turned out to be. It merely resolved itself into a matter of account and a question as to the amount to be actually paid being ascertained later on. The amount due by the defendants could not be determined until the coal was weighed out and he submitted that the measure of damages was the market value of the goods at the time when, and place where, the contract was to be performed.

   He quoted from Mayne on Damages, O'Hanlon v. The Great Western Railway Co. (L.J. vol. 34, Q.B. p. 157), and other decided cases to uphold his conviction. Counsel laid particular stress on "the time when, and the place where, the contract was to be performed," as mentioned in the cases cited, as being the amount per ton to which they were indebted, and added that as the plaintiffs had entire control of the cargo when it was landed it was in their power to immediately fix the extent of the shortage. Consequently the delay had nothing to do with the defendants, and was entirely the fault of Messrs. Melchers. In conclusion he remarked that although the defendants had paid interest on what they considered was due there was no necessity to have done so as the plaintiffs had means of determining the shortage and should have done so.

   His Lordship while agreeing with the legal arguments of Mr. Stokes felt that the defendants had made a mistake in refusing to pay the debit note in the first instance at Tls. 13 per ton, thereby fixing the time at which their liability had to be met. He therefore thought that the plaintiffs were entitled to Tls. 25 per ton and judgment would be entered  for them for the amount claimed beyond the amount paid into Court, with costs.

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