7
144
SUPREME COURT.
19th February:
CRIMINAL SESSIONS.
BEFORE SIR JOHN CARRINGTON (CHIEF
JUSTICE.)
THE HONGKONG WEEKLY PRESS AND
GOBHAM V. BENJAMIŇ, KELLY, AND POTTS, The hearing of this case was resumed. The plaintiff claims (1) that an account may be taken of all sales and purchases of shares by the defendants for the plaintiff as his brokers, and of all monies received and paid by the defen- dants for or on account of the plaintiff from the 1st April, 1896, to 15th March, 1897, and (2) that the defendants may be ordered to pay to the plaintiff such amounts, if any, as upon the taking of such account shall be found to be due from the defendants to the plaintiff with interest on the severed amounts from the dates
when the same became respectively due and payable.
Mr. J. J. Francis, Q.C., and Mr. M. W. Slade (instructed by Messrs Wilkinson and Grist) appeared for the plaintiff and Mr. W. V. Drummond and Mr. H. E. Pollock (instructed by Messrs. Johnson, Stokes, and Master ap. peared for the defendants.
The special jurors were-Messrs. N. A. Siebs, H. H. Kirch, J. Andrew, G. C. Anderson, J Thorburn, H: N. Mody, and W. Poate.
Mr. N. B. Polishwalla was called. He said he was a cotton and yarn broker and had been in business in the colony upwards of twenty years. He was not a sharebroker. He had speculated in shares since he came to the colony. He commenced in a small way, but for the last few years he had done a large share business. He had done business with members of the defendant firm for the last fifteen years. Since 1895 he had done most of his business with this firm. He was in the habit of seeing Mr. Kelly twice a day since October, 1895, except when he was absent from the colony or when witness was. sick. When Mr. Kelly informed him of a transaction he always accepted it, and some- times gave him special instructions about the stock. In October, November, and December, 1895, witness gave him a margin of $11,000, giving the firm shares to that amount to enable them to get money from the Bank. He pro- duced three orders to the Bank to receive shares from Messrs. Benjamin, Kelly, and Potts and to pay them money. One order was for $2,000, the second for $7,500, and the third for $1,500, In April, 1896, he intended to do a larger business and Mr. Benjamiu said, You must give a further margin." Witness gave the firm about $31,000 worth of shares, and they paid $19,000 into the Bank and kept $12,000 as margin. He had a counterfoil of the orders and the Bank's account of the shares so given. Since April, 1896, he had not been called upon to supply a margin, as since that time the de- ~fendants had always had a margin in their hands to his credit. When dealing with other brokers they have given him a memorandum with cash transactions and a contract with time transactions. He had had time contracts with the plaintiff. He produced documents showing transactions with other brokers-almost all the brokers in Hongkong. He did a large business with the defendants in 1896, and at the end of every month they gave him a settlement account of time contracts and at the middle of every month an account of the cash transactions for the previous month. They gave him a memo of transactions every day. The balance at the end of May, 1896, was $65,945.94 against him Against that amount the defendants, held shares which were set out at the foot of the account. That was the course of the business between the defendants and himself, He received the accounts regularly every mouth and chequed them over. The May account showed that he owed the defendants $4,683.50 on time transactions, and against this amount the defendants held 350 Punjom shares.
*
Mr. Drummond was about to put in a number of accounts showing transactions with other brokers, but his Lordship thought it was not necessary to do so.
Mr. Drummond said the plaintiff's allegation was that Polishwalla was a dummy, and he
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wished to prove that that was not the case, and that Polishwalla had dealt largely in shares not only with the defendants but with other brokers in the colony,
Mr. Drummond replied that he was bound to put in the documents if ne admission was made by the other side.
These documents as well as many more were handed round to the Judge, the counsel, and the jury, and considerable time was occuiped in examining them.
One bundle of accounts was banded to this
Lordship, who, after looking at them, said,
Gentlemen, do you wish to see these ?" The jury with one voice replied "No, my Lord."
His Lordship-Perhaps you would like to look at the January account?
The jury (as loud and unanimous as before) -No, my Lord.
Accounts relating to transactions between defendants and witness were afterwards passed round to the jury, and after ex- amining them they intimated that they were not satisfied with them. The balance of the June account did not tally with the balance carried forward to the July account.
Mr. Francis said he would get that point ont in cross-examination.
21st February.
Mr. N. B. Polish walla's examination-in-chief was continued. Witness said that the balance owing by him in the firm's April (1896) account was $65,945.96; in the May account, which did not include the balance carried forward from April, the debit balance was $38,380.60. The total amount of the debit balance for April and May was $104,326.56.
There was no balance carried forward to the June account. The balance owing to the firm on the June account was $42,456.98; so that the total debit balance for April, May, aud June was $146,783.54.
[February 26, 1898.
said he had been able to place only 100 at $40.75 and he would try his best to place the others on the following day, which he did at the same rate. Mr. Kelly charged witness quarter brokerage on the 150 shares instead of half brokerage, so- that witness did not lose anything. He had no partner in his business, nor had he any interest at all in the defendants' business. He specu lated entirely at his own risk. He had never lent them the use of his name in connection with their business in any way.
Cross-examined by Mr. Francia-Witness had dealt with Benjamin and Kelly about ten years before the firm of Benjamin, Kelly, and Potts was started. It was abont March and April, 1895, when he gave Mr. Kelly general authority to buy and sell shares for him. Witness did not recollect how much he owed Benjamin and Kelly at that time. He did not know in what Bank all the shares they held were deposited. He had not paid cash for any losses; they had all been debited in the monthly account. His yarn broking business occupied him from 9 o'clock in the morning until 5 o'clock. in the afternoon every day, and he did his share business at odd intervals. He suffered very heavy losses in 1891, but he paid all his liabilities at the time. When he gave instructions for the sale of 150 Indo-Chinas he held 100 more of those shares, but he thought they were sold ahead, The defendants always charged him interest at the rate of 6 per cent., but he never checked it in the accounts, as he relied upon the accountant. They charged him half brokerage sometimes because "it was their pleasure; if they had always charged full brokerage he would have allowed it; sometimes they charged him double brokerage. He kept his current account in the Bank of China and Japan.
By his Lordship-Witness had not had any definite settlements of accounts with the defen- dants, but he intended to have a settlement this year as he was going to Bombay. He bought the 100 Indo-Chinas for $40 and sold them for $40.75, but he did not make anything out of them.
Mr. Harry Wicking was called with the object of proving that he had had no dispute with the defendants respecting a transaction in Olivers, but his Lordship thought that Mr. Drummond might rest contented with the denial of Mr. Potts. His Lordship would tell issue. Mr. Wicking therefore left the box.
e jury that that was entirely a collateral
Mr. Drummond said that this was the system -it might be good or bad-of supplying the accounts. No balance was carried forward until the end of each quarter, when the total balance was put into the first month of the next quarter. Witness went on to say that at the end of July the sum due by him was £17-4,850.54. that being the total balance for the previous four months. The balance due at the end of August was $231,166.19, or a total of $406,016.73 for the previous fire months. No balance was
Mr. Van Neirop, book-keeper in the employ. carried forward to the September account, whichment of the defendant firm, was tendered as a showed a balance due to witness of $13,805,23, witness for the other side, but Mr. Francis
asked him no questions. so that at the end of September he owed the firm $392,211.50. In the October account this last item was carried forward, and the total balance against him at the end of the month was $457,858.27. No balance was carried for- ward to the November account, which showed a balance in his favour of $9,893,27, so that the total balance due by him at the end of that month was $447,965. The total balance due by him at the end of December was $557,248.06 for nine months' business. No balance was carried forward to the January account. Witness pointed this out to Mr. Van Neirop, the firm's accountant, and he promised to carry the balance forward in the next account. The January account showed a balance due by him of $79,480, making a total balance of $636,728.06. The February account showed a balance in his favour of $67,658.82, and the March account a balance against him of $95.901.23. The total balance due by him for the twelve months' transactions was there-
fore $664,978.47. This balance was carried forward to his debit in the April account, as was promised by Mr. Van Neirop. The latest account furnished to witness was up to the 31st December, 1897, when the total balance due from him to the defendants was $167,265.24. Against that amount defendants held shares the value of which would exceed the balance by about $30,000 or $40,000. The shares were 110 Straits; 50 Unions; 133 Balmorals; 500 Cements (new); 200 Cements (old); 675 Sugars; 200 Luzons; 600 Steamboats; 220 Indos; 155 Nationals; 200 Hotels; 100 Wharves; 61 Raubs. Witness then referred to the purchase of 150 Indo-China shares on the 6th November. Mr. Kelly told him of the purchase at $40 and witness replied that the shares were likely to go down and told Mr. Kelly to sell them without loss, if possible. Later in the afternoon Mr. Kelly
Mr. G. S. Sharp, of the firm of Messrs Gibb, Livingston, and Co., spoke to a transaction in shares with the defendants. in February, 1897. He agreed to sell at $1871⁄2 and the price in the memorandum was $187. He went to the defendants for an explanation, and they said that the price agreed upon carried double brokerage. He was satisfied with the explana- tion, as he had momentarily forgotten that he had consented to pay double brokerage because the shares were sold to a broker.
Mr. E. S. Kelly, sharebroker, also gave evidence of a transaction in which double brokerage was allowed by Mr. M. S. Sassoon.
In answer to Mr. Francis the witness said
the Stock Exchange rules did not affect the charging of double brokerage.
Mr. M. S. Sassoon corroborated the last wit- ness's evidence.
Mr. Drummond Bere intimated that Mr. Benjamin was the only remaining witness, but he was ill in bed and perhaps it would be con- venient for the Court to adjourn until Wednes. day, when Mr. Benjamin "would doubtless be well enough to attend.
His Lordship granted the application.
23rd February.
Mr. Drummond said he was sorry to say that Mr. Benjamin was still unable to attend. Dr. Rennie had furnished a certificate stating that in his opinion Mr. Benjamin was not sufficiently well at attend the Court. Counsel regretted that he could not therefore call Mr. Benjamin. He would like to have called all three defend. ante in the case, and Mr. Benjamin would have been glad to do his part, but as that was im- possible owing to circumstances over which he