220
THE HONGKONG WEEKLY PRESS AND
Applying these rules deduced from decided state of the advance account was as follows cases to the facts of the present case, I am of the indebtedness was, as above mentioned, opinion that the appellants' contention cannot $77,712.19, while the only security held by the prevail. It must, I think, be taken that the Bank was 500 shares in the China Sugar right to charge Kan Sing Toi's account was an Refinery Company, Limited, valued at $63,000, additional security, giren after the contract of It follows therefore that on that date there was surety ship was made, and therefore that the a deficiency on the account as against Kau Bank would not be justified in dealing with it | Sing Toi of $14,712.19. The shares held as in such a way as to prevent them from deliver security against the advances have therefore ing it intact to Cheong Kai in the event of his never yielded a surpins or balance available in paying Cheong Koon Sing's debt to them. But reduction of the sun of $97.222.23 and it is very let us consider what it was that the Bank did unlikely that they will ever do so.
It is not on the 3 th June, 1894-the act which, as the contended on behalf of the appellants that this appellaats allege, brings the case within the failure of the expectations which were originally operation of the above-stated rules of law. entertained as to the probability of a margin ou On that date the Bank wrote off in their the shares is due to any neglect or default on. books the debit entry of $97.222.23 in the the part of the Bank. The debit entry sub- advance account of Kan Sing Toi in respect of sisted without effect from the 31st May, 1892, the bills of the two banks with which be to the 30th June, 1891, and I am of opinion was conuected. This entry had been made in that when it was cancellel on the latter date the that account on the 31st May, 1892. But it is security to which it had reference was valueless clear that the validity of this additional security and practically non-existent, and further that taken by the Bank did not depend upon the this was or might have been known to the making of that entry in their books. This was purties concerned. But it is clear on the a mere matter of book-keeping. The security authorities that the securities to which the was created by an agreement, partly express above-stated rules of law apply must be sub. and partly implied, between the Bank and Kansisting and of some value: see the observatious Sing Toi, and it could have been realized at any of Lord Eldon C. iu Copis v. Middeltou, I Tucu. time by the Bank, whether or not there was any and Russ. at p. 229, and of Bramwell L.J. debit entry relating to it in the account. The Rainbow v. Juggins, Q.B.D. at p. 423. antry was not made until the expiration of two The second of the two points put forward by months after the making of the agreement, and
Mr. Robinson was founded on the doctrine of it cannot be doubted that during that interval estoppel by representation. He urged that of time the security might have been realized the words used by Mr. Darby to Cheong Koon by the Bank. Similarly, the cancellation of Sing at the conciusion of the interview of the the entry on the 30th June, 1894, was a mere 27th March, 1892, even it they did not actually matter of book-keeping. It was made by the amount to an express release of Cheong Koon Bank ou their own metion and not in pursuance Sing's liability for Kan Sing Toi's indebted- of any agreement with Kau Sing Toi or any one ness, were reasonably so understood by him; else, and therefore it appears to me that it did that he acted on that understanding by not not determine the security or affect it in any pressing the two banks with which Kan Sing way. As Mr. Francis put it in his argument. Toi was connected for promissory notes and the Bank acquired nothing by making the other securities in the same way as he pressed entry and they lost nothing by cancelling it." the other banks; that he forebore such pressure So far as I can see, there is nothing to to his loss and prejudice, since, if he had exerted prevent the Bank, if they think fit, from it, he would probably have received a large sum restoring the debit entry at any time, and in of money from the two banks in question; that such an event. I imagine nobody would be one all these circumstances were known to the Bank; penny the better or the worse for their doing and that they are sufficient to raise an estoppel 80. I think, therefore, that the Bank have not against the Bank by way of precluding them dealt with the security in such a way as to from denying the release. The principal case render themselves unable, on payment by the cited in support of this contention was the well surety, to give it to him in exactly the same known one of Freeman v. Cooke, 2 Exch. 654. condition as it formerly stood in their hands.
There are one or two other considera- tions bearing on this part of the case to which I may usefully refer. Supposing even that the cancellation of the entry had the effect, in .point of form, of putting an end to the security, it is yet pertinent to ask, was the security really at the time subsisting and of value ? It is evident that the security was in Its inception no more than a contingent security, or, in other words, its value or its worthlessness depended entirely on the fact whether or not the shares held as security for the advances made on that account, on being sold, would yield any surplus or margin beyond the amount of those advances. But we know that the con- tingency was never realized; the value of the shares was not at any time sufficient to cover the advances made in respect of them. On this point Mr. Darby's evidence, given in his de bene esse examination of the 10th April, 1896, is as follows:-" Nothing has been real- ized in respect of Kan Sing Toi's securites which can go in reduction of that debit of $97,222.23. A large number of the securities have been sold, but the amounts realized have not been sufficient to pay off the advances originally made on these securities. Kan Sing Toi's account was transferred on the 5th April, 1895, to the books of the new Bank, and there was due from him on the 31st March, 1896, $77,712.19, including interest up to that date, against which the Bank still hold securities which have been valued as of the 31st March, 1896. and press copy of which valuation I can pro- duce. That sum of $97.222.23 debited to Kan Sing Toi as previously stated was written off by being credited to him in account under date in the old lodger, the 30th June, 1894. The balance of $77,712.19 does not therefore include any liability in respect of these bill transactions but only loans on shares." Fr the press copy of the valuation to which M Danby referred appears that on the 31st March, 1896, the
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[September 15, 1897.
of Cheung Kai, who was surety to the extent of $100,000 for the due performance of his duties of one Cheung Koon Sing, the compiadore of the plaintiff Bank.
The claim is for $100,000, being partof losses sustained by the said Bank in the ordinary course of their business, for which it is alleged that the appellants as representatives of such surety as aforesaid are liable.
On the hearing of the appeal it was contended generally, amongst other things, that the evid- ence of the compradore was more worthy of be- lief than that of Mr. Darby, the accountant of the Bank, but on reading the evidence carefully I am strongly of opinion that where discrepancies occur in the evidence given by these two wit- nesses the evidence of Mr. Darby is far more worthy of credence. Again, it was contended that the compradore, being a Chinaman, was not properly acquainted with the true meaning and import of the various letters that passed betwed him and the Bank. I think, however, that this contention cannot be sustained for various reasons. Firstly, Mr. Darby states that he himself explained some of the letters to him. Secondly, the man from his then position and his previons history, as detailed by himself, was bound to have an ordi. ary business know- inledge of English and would not be likely to sign anything bedid not understand. Thirdly, the compiadore himself admits that he could write English and filled in a Bill of Ex- change (Exhibit Z) in English and Chinese; and fourthly, to suppose that the Bank got the compradors to sign these letters without his properly understanding them is practically to impate fraud to the Bank, an imputation which is not raised on the pleadings. Again, it was conteuded that the compradors. con- sidered himself released from liability with reference to the Kwong Fuk and Wing Tung Yan Banks in consequence of what happened at the interview between Kan Sing Toi and Mr. Darby on March 27th, 1892; this, however, is contrary to the evidence, as it is clear from the compradore's own statements that he collected moneys from the Kwong Fuk and Wing Tang Yan Banks, in both of which Banks Kan Sing Toi was largely interested, after March 27th, 1892, so that his statement that he collected no moneys from those Barks after March 27th, 1892, as he considered the matter settled, is distinctly untrue. In fact, it is clear from Mr. Darby's evidence that the compradore and his surety all along considered themselves liable; indeed, if you are to believe Mr. Darby, the surety (Cheung Kai) on more than one occasion asked him (Mr. Darby) not to press for a settlement in the hopes that there might be some margin in Kan Sing Toi's security. I therefore think that the security taken was additional and not substituted, and I must say that the impression left on my mind is that the whole defence is only an ingenious afterthought. Having thus expressed my opinion generally on the question I will now proceed to deal with the points raised more in detail. The first point taken was that the arrangement between KanSing Toi and Mr. Darby on March 27th, 1892, was in fact a giving of time, but there is no evidence in support of this view except possibly the postcript to the letter of April 1st, 1892 (Exhibit Ab), written by the compradore to the Bank and any inference of the kind is, I think, contradicted by the letters of May 31st, 1892, and June 3rd, 1892, (Exhibits Hl and H2). It was then contend- ed that the surety was discharged by taking sub- stituted security, i.e., that Kan Sing Toi was substituted on March 27th, 1892, for the com- pradore so far as the Kwong Fuk and Wing Tung Yan Banks were concerned, but as I have shewn before, this is contrary to the evidence, as it is clear that the compradore collected moneys from those Banks after that date. It was not of course argued that the mere taking of addi- tional security would discharge the surety, but it was argued that after additional security had been taken the relinquishing of such additional recurity would do so. (Pledge v. Buss, Johnson's Rep. at p. 668. Polak v. Everett L. R. 1 Q. B. D. at p. 676, and Forbes v. Jackson L. R. 19 Ch. D. at p. 620). This point was not taken at the original hearing; indeed if the answer and its various amendments is referred to it will be seen that the defence waivered backwards and forwards between substituted and additional security. It was sought to apply the principles
With regard to this argument it may be ob served that it is inconsistent with the proved facts of the case and further that it rests on a suppositious state of facts. In the first place, I am not satisfied that, in point of fact, Cheong Koon Sing understood the conversation of the 27th March, 1892, as resulting in a re- lease of his liability in respect of the bills of the two banks in question. This view is borne out by the fact that he did not in truth forbear to press these two banks; at any rate, as Mr. Follock pointed out at the hearing, he received from them, subsequently to the conversation re- ferred to, anms of $9,000 and $4,000 respectively. Secondly, even if these amonnts are laid out of view for the moment, there is no evidence to show that if Cheong Koon Sing had, in de fault of the arrangement of the 27th March. 1892, put pressure on the two banks referred to, he would have succeeded in obtaining pro- missory notes and other securities from them. There is no more than supposition for this suggestion. The pressure which he had used with these two banks before the interview was not successful; there is no reason to think that, supposing no interview had taken place or that it had ended with a different result from that suggested on behalf of the appellants, similar pressure could have been applied with more favourable consequences.
For these reasons I come to the conclusion
that the judgment of the Court below should be affirmed and the appeal be dismissed with costs. The Paisne Judge.-This is an appeal from the judgment of the Chief Justice in favour of the plaintiff Bank delivered on December 21st. 1896.--The appeal came on for hearing on June 28th, 1897, and lasted for over four days. The facts of the case have been set out so fully in the judgment appealed from that it will be use- less for me to go into them again further than may be necessary in considering the arguments of counsel which were founded on the facts. The appellants are the executor and executrix
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