Page
[February 12, 1898.
that the shares were purchased from the defendants. He waited a couple of days and Mr. Potts came to him on the 9th and got an order on the Bank for the delivery of the 100 shares, and afterwards ho sent in the account. It was dated 7th November and related to the sale of Indo-China's at $40 per share. Later in the afternoon plaintiff went to Perry's office and in the course of conversation asked if he might see the shares which he had bought from the defendants at $41 per share for Shanghai. He did this professedly for the purpose of ascer- taining whether they had actually been bought at $41. He saw the shares, which were the identical ones he had handed to Mr. Potts to be disposed of, the numbers being 4,726 to 4,825. Astonished at these facts plaintiff took legal advice and consulted Mr. A. B. Johnson. In consequence of that advice he took steps to test the correctness of the defendants' dealings, and on the 18th November he in- structed Mr. Potts to sell 50. or 100 West Point
Land shares, telling him, having a special object in view, not to press the market, but to sell them if he could. Very shortly afterwards Mr. Potts returned and reported a sale of 100 shares at $184, giving at the same time the name of the purchaser. This sale took place before plaintiff had been able to take any further steps, and on the 19th be told Mr. Potts to sell 100 more. He also instrusted Mr. Perry to purchase 50 West Points, but of course did not give him any indication of what was on. On the 20th Mr. Perry reported the purchase from the defendants of 50 West Poiuts at $181, and in completion of the pur- chase plaintiff got back from Mr. Perry precisely the same shares that he had sold through Mr. Potts. On the same day Mr. Potts reported to the plaintiff the sale of the shares at $184, at which rate he paid the money into the Bank. On the evening of the 21st November plaintiff instructed Mr. R. C. Hurley to purchase through Mr. Perry soine more West Point shares and he also instructed Mr. Potts to sell another 25 or 30 shares. Ou the 24th November Mr. Perry, acting under instructions from Mr. Hurley, applied to the defendants for West Point shares and be purchased from them 50 shares at $183. Mr. Potts rendered to the plaintiff an account of the sale of these 50 shares and paid in at the rate of $18 per share. Payment of the transaction through Mr. Perry was made by Mr. Harley's cheque, plaintiff having previously been to the Hongkong and Shanghai Bank and arranged with them to honour, on his responsibility, Mr. Hurley's cheque. Payment for the first trans- action-the shares sold direct by the defendants to Mr. Perry-had been arranged with Mr. Joseph, so that the defendants had no reason to suspect that the plaintiff was the real pur- chaser, or they. would have been put on their guard. Those were the facts in regard to the three transactions on which the jury would have to make their findings. The plaintiff con- tinued to do business with the defendants, but to a very limited extent, up to March, 1897. His reason was that he had been advised to
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allow their annual accounts and books to close and not to take action until the year was over. There was a second reason that he had pending with the defendants at that time, a rather large transaction in Bank shares in Shanghai which he did not wish to endanger in any way. On the 17th March Mr. Gorham wrote the follow- ing letter to Benjamin, Kelly, and Potts :-
.. Hongkong, 17th, March, 1897. Messrs. Benjamin Kelly & Potts, Hongkong.
Gentlemen,Some months ago certain facts came to my knowledge causing me to entertain grave doubts as to whether you had been dealing fairly with me in your capacity as my brokers in re the sale and purchase of stocks for me. The belief was forced on me that you had not properly accounted to me for monies received for my account and my suspicions have since become so far confirmed that I now, feel compelled to request you to submit your books, containing all the entries in which I am interested, for the inspection of myself and my accountant. An early answer will oblige, yours faithfully.
C. L. GORHAM. In consequence of that letter Mr. Kelly made his appearance in the plaintiff's office on the
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CHINA OVERLAND TRADE REPORT.
97
until he indicates which transactions he disputes. As to such, on his stating where they appear to him to be incorrect, full explanations will be forthcoming.
The transactions with Mr. Gorham have, our clients inform us, been very numerous and to now make out a full and detailed account will take some time, certainly longer than from the time they received your letter until 3 p.m. to day, but in the face of Mr. Gorham's letter of the 17th instant our clients do not feel disposed to render this account until Mr. Gorham affords them some prima facie proof that he has any right to make such statements as those containe in his letter of the 17th instant.
following day. They had a conversation and in the result plaintiff wrote again as follows:→
Hongkong, 18th March, 1897.. Messrs. Benjamin Kelly and Potts.
Gentlemen,-Referring to my conversation of yesterday with your Mr. Kelly, in which he stated that he was prepared to supply me with a full account of all the transactions in which your firm have acted as my brokers, I would ask you to be good enough to let me have this in the course of to-day. The account should show not only the amounts paid to you by the pur- chasers of the shares but also the names of such purchasers.-Your faithfully.
CL GORHAM. The result of that letter was a visit by Kelly If Mr. Gorham had, when he first commenced. and Potts to the plaintiff, particulars of which to feel dissatisfied, stated this to our clients and would be given in evidence. On the 12th March asked them in a friendly way to show him their Messrs. Wilkinson and Grist, plaintiff's solici-books and explain such items as he was not toys, wrote as follows to the defendants :- satisfied about the request would bave been cheerfully and readily complied with, but now! that he demands an account as of right, and with the evident intention of trying to find some flaw in it upon which to base legal pro- ceedings our clients prefer that he should at once commence such legal proceedings as he may be advised.-Yours faithfully,
Hongkong, 19th March, 1897. Dear Sirs, We have been instructed by Mr. C. L. Gorham to apply to you for a full account of all transactions between you and himself in which you have been employed by him as his brokers for the purpose of buying or selling shares. We understand that he has already himself desired you to render him this account and that your Mr. Kelly undertook to supply him with it but afterwards appeared unwilling to do so. Our instructions are that unless a
complete account showing the names of pur- chasers from and sellers to our client and the actual amounts paid and received by them re- spectively be rendered before 3 o'clock this afternoon legal proceedings must then be com- menced against you to compel compliance with our client's demand. We sincerely trust that the unpleasantness to us of having to proceed to extremes may be rendered unnecessary by your sending us the account required before the time we have named. We understand that
our client's transactions have not been so num- erous us to make it difficult for you to prepare the account in one or two hours at most.-Yours faithfully,
WILKINSON & GRIST. Messrs. Benjamin Kelly & Potts. The defendants then seemed to have placed the matter in the hands of their solicitors, who wrote as follows to the plaintiff's solicitors
12, Queen's Road Central Hongkong, 19th March, 1897.
Messrs. Wilkinson & Grist.
have handed us your letter to them of this date Dear Sirs,-Messrs. Benjamin Kelly & Potts
written on behalf of Mr. C. L. Gorham and in- structed us to reply to it as follows:-
On the 17th instant they received from Mr. Gorham a letter of which we beg to enclose a copy.
7
This letter appears to them to contain a charge with Mr. Gorham, and you will see from the let- of dishonesty on their part in their dealings ter that the facts upon which Mr. Gorham ap- pears to rely, whatever they are, came to his knowledge, as he says, some months ago.
Notwithstanding this he made no communica- tion whatever on the subject to any member of our clients' firm but continued to transact share the 1 th instant. business through them up to as récent a date as
On receipt of Mr. Gorham's letter of the 17th fustant Mr. Kelly called and saw him upon it and offered him inspection of all his transac- tions in the firm's books and to compare the same with his books and added that it would not take him half an hour to do so. This offer Mr. Gorham stated he would consider and would call on the following day but he did not do so and on the 18th instant wrote a second letter of which we also enclose a copy.
Messrs. Kelly & Potts saw Mr. Gorham on the subject of his second letter the same after noon and again offered him inspection of his transactions in the firm's books.
This offer is now repeated to you and through you to Mr. Gorham and you alone or you and Mr. Gorham together can call and inspect his various transactions in the books upon an appointment being made for that purpose. Any entries which Mr. Gorham may sub- sequently question or desire information upon will be explained.
As Mr. Gorham has received a full account with each transaction it appears unnecessary that his present request should be complied with
JOHNSON, STOKES, & MASTER.
defendants' own solicitors of what had occurred The first part of the letter was a resumé by and of what had been offered up to that time, but the latter part of the letter was rather inconsistent and yet was probably capable of, explanation.
that
the
offer contained in the letter the plaintiff and In consequence of the express Mr. Wilkinson attended at the defendants' office on the following day, but the defendants refused to show the books unless the plaintiff in the first instance stated what particular transactions they questioned. The letter first plaintiff could see the firm's books and if
of all expressly stated
on examining them he wished for an explana tion the explanation would be given to him, but the offer was afterwards narrowed down to à refusal to allow him to inspect any portion of the books unless he specified the complaint he had therefore nothing to do but to commence legal against the defendants, and the plaintiff had proceedings. The claim which the plaintiff was making was not a money claim. He was asking for certain accounts, and the only question before the Court and the jury was whether or not he was entitled to an order from the Court that the defendants should render to him accounts of their transactions from the 1st April, 1896, to March, 1897. The foundation of the case was the relationship between the parties. The plaintiff was the principal and the defendants were his agents, and in law and in equity also the very strictest good faith was required to exist between the agent and the principal, and the principal was entitled at any time to call upon the agent to render full and complete ac- counts of all his dealings and transactions with. the principal. It was evident that accounts had been rendered by the agents to the principal in this case in respect of each transaction and that those accounts had been accepted as being perfectly bona fide, the plaintiff having placed full reliance upon the defendant firm up to the date of the first discovery. The defendants set up in their answer that the accounts were settled accounts, Plaintiff admitted that to the fullest extent. It was a rule of law applicable in all cases that where there were set accounts between parties the Court would not order them to be re-opened or re-examined unless it was proved to the Court that there was in those accounts either frand or grave error. Plaintiff's case was that there was in the three accounts mentioned either a very grave mistake which justified enquiry, or deliberate fraud. It would be for the Court to say after the jury's finding on the facts whether or not there was a fraud or an error in the a
: counts sufficiently grave or of such a character as to justify the Court in directing the opening the accounts. The only questions for the jury were whether there were errors in the accounts or not and whether the plaintiff authorized the charge for double brokerage.
ac.
of
The plaintiff was then called and he bore out- the opening statement of counsel. He spoke of the interviews he had with the defendants, with Mr. Perry, and with 1
Mr. Hurley. Witness denied that he had authorized the defendants to