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Colonial Cases

Yachi Kerosene Oil Hong and Hung You Bank, 1899

[fraud]


 

Yachi Kerosene Oil Hong and Hung You Bank

Mixed Court, Shanghai
Went and Framke, June 1899
Source: North China Herald, 12 June 1899


 

AN IMPORTANT CASE.

   At the Mixed Court in Saturday before Mr. Weng, magistrate, and Dr. Framke, German assessor, the case of the Yachi Kerosene Oil Hong and the Hung Yu Bank charged, by Messrs. Reuter, Brickelmann & Co. with conspiracy to defraud plaintiffs of a number of Bank orders paid in advance as purchase money for kerosene oil, was brought up on remand from Saturday before last's sitting.

   The Hung Yu Bank, one of the accused, was defended by Mr. Duncan McNeill (Messrs. Dowdall, Hanson, & McNeill) but the plaintiffs were not represented by Counsel. It is necessary at this point to give a resume of the incidents which gave rise to the above action, details of which appeared in these columns in the early part of May last, in order to make the case clear to our readers.

   In January last Messrs. Reuter, Bricklemann & Co. through their compradore, paid Bank orders aggregating in value over Tls., 10,000 to the Yachi Kerosene Oil Hong for the purchase of a large cargo of kerosene, the custom always observed in such transactions being for the would-be purchaser to pay Bank Orders, at five day's sight, in advance to the dealer, who in turn is bound to hand back, on the same day, kerosene godown orders covering the quantity of oil thus purchased.  It appeared that on this occasion the Yachi Hong failed to give the necessary number of kerosene godown orders on the day of purchase, some Tls. 7,200 of the purchase money having been kept back, which, of course, excited the suspicion of the plaintiffs, who immediately took steps to stop the payment of these Bank orders. It was well that this was done so promptly, as shown by subsequent events.

   For, according to the statement of the proprietor of the Yachi Kerosene Oil Hong, a man named Tsou Kin-seng, it seemed that he, as proprietor of another hong - a sundry goods hong - owed something like Tls. 20,000 to the Hung Yu Bank, which the Bank had been pressing hard for. The sudden advent of nearly Tls. 17,000 worth of Bank orders then gave rise, so it has been stated in evidence, to a conspiracy between the proprietor of the Yashi Hong and the manager of the Hung Yu Bank, to  divert a portion of the debt of the Sundry Goods Hong to the Bank.  This having been agreed to between the conspirators, the first accused in this case was forced by the manager of the Bank, the second accused, to abscond, the said manager undertaking "to settle all matters arising from the use of the bank orders, etc." The Yachi Hong proprietor, Tsou, then absconded and the manager of the Hung Yu Bank at once set about to get the Bank orders he had got possession of properly identified at the issuing banks, as if the orders had been obtained in the usual course of business.

   Fortunately, however, Dr. Framke, the German assessor, had, in the meanwhile, caused payment to be stopped through the former Mixed Court magistrate, Mr.  Chang, and the Hung Yu Bank was unable to cash the orders. This led to a great hubbub by the Bank declaring that the orders were bound to be paid, that the stoppage of payment would create panic in the market, and that business people would not be able to transact their business, if Banks could at any person's dictation dishonour their own money orders, etc., etc. The other members of the two Banking Guilds of this port, not knowing the pros and cons of the affair, were naturally influenced by the Hung Yu Bank  to make a big outcry also, and a general closing of Bank door was even threatened if the orders were not paid when they fell due. But Dr. Framke still remained firm, and prohibited the issuing Banks from paying out money on the orders. Gradually, however, the true state of affairs began to leak out, and the Kerosene Dealers' Guild, which is also called the Sundry Goods Guild, took the affair up and backed Messrs. Reuter, Bricklemann & Co. 's compradore in the matter. 

   The Executive Committee of the Guild, of which Mr. Yeh Ching Chong is the head, accordingly petitioned the native authorities that, as the custom of the kerosene trade was always for the purchaser to pay in advance in Bank orders, dishonest dealers could easily divert these orders to other uses than originally intended, hence it would never do to allow men like Yachi and the Hung Yu Bank to succeed in their designs, and prayed that a proclamation be issued empowering purchasers of kerosene to stop payment of their Bank orders if kerosene godown orders were not handed over in return the same day.

   All this while the absconding proprietor of Yaschi was being unsuccessfully searched for, and it was absolutely necessary for this man's presence to set matters at rest, and the Hung Yu Bank had claimed that the order had been obtained by them in the usual business way and no by fraud. The absconder at last turned up, after about six months' absence, giving himself up to the Mixed Court magistrate, confessed, in a written petition, that he had been noted and coerced by the Hung Yu Bank to give up the orders in part payment of the debts of the Sundry Goods Hing, of which he (prisoner) was also a member. 

   These facts were adduced in evidence on Saturday before last, the 3rd instant, before Mr. Weng and Dr, Ramke,  and it was then decided to send the case to Thursday, 8th instant, at which sitting the Hung Yu Bank was ordered to produce to the Bench the Bank Orders in question.  On Thursday, however, the magistrate had to accompany the new Taoitai Tseng to call in the foreign Consuls and the matter was again remanded until last Saturday (10th).  On this occasion the Bank orders were produced by the Hung Yu Bank manager as ordered, who, in handing them over to the magistrate , declared that, although he gave them up he (the manager)  desired to insist that the Bank had not been guilty of fraud or conspiracy. Upon this the magistrate said:

"ON Saturday last (3rd) Tsou, of the Yachi Hing, himself gave evidence that you conspired with him to defraud the plaintiff and that it was you who pressed him also into absconding from Shanghai - if this is not conspiracy to defraud what else it it?

   As you, however, belong to a respectable establishment and no great harm has been actually done, I will use the prerogative of imercy and not sentence you according to your desserts."

Having said this, the Bank orders were handed by the magistrate to the plaintiffs in Court, the proprietor of the Yachi Hing being kept in custody until he had settled the Hung Yu Bank's claim upon him.

   Before the Court arose representative members of the Sundry Goods Guild presented a letter to Dr. Framke, by Mr. Ching Ching and his colleagues, on the Executive Committee of the Guild, thanking Dr. Framke for the prompt manner  he had dealt with this ... fraud, and attesting the gratitude in that, had payment of the orders not been  summarily stopped, the kerosene trade would have been thrown into panic, and a state of suspicion would have prevailed disastrous to all connected with local trade. In fact, Dr. Framke's action had saved the trade from considerable trouble and a dangerous precedent. A similar petition in Chinese was presented to Mr. Weng, the presiding magistrate. 

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