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considerably in all sorts of speculations-in- vestments in hand and trafficking in shares and in 1887 he had got into such a state that he could not have commanded $50. Under these circumstances he applied to Mr. Chater for assistance. At that time Messrs. Chater and Mody were in a position of what they might almost call unlimited resources. They were both big speculators. Mr. Mody carried on a big business as a jobber in shares. Mr. Chater was largely interested in companies and land business, which he managed himself. Mr. Hughes went first to Mr Mody, who referred him to Mr. Chater. There was one thing which he might mention here and which be asked the jury to bear in mind. Mr. Mody had a thorough distrust of Mr. Hughes. He considered him a dangerous man to mix up with in speculations-as rash and obstinate. If Mr. Mody had been left to himself Mr. Hughes would not have received the least assistance. It was only with the greatest difficulty that Mr. Chater succeeded in inducing Mr. Mody to agree to what was subsequently dóde. Mr. Hughes went to Mr. Chater early in June. Mr. Chater asked him to produce a memorandum to show his exact position. This he did, subsequently producing another one as this was not satisfactory. The first memoran- dum was not dated, but the second was dated June 11th; and he would call the attention of the jury to the latter date because it was clear no agreement could have been made with Chater and Mody to pay off Mr. Hughes' June and September liabilities while they were still asking him what his position was and what security he could offer. After that statement had been handed in Messrs. Chater and Mody agreed to advance him money to meet his liabi- lities. Mr. Hughes had a very large quantity of shares involving the expenditure and pay- ment of an enormous amount of money for the end of September, and he was not in a position to meet those liabilities or to take up the shares he was liable to take up. He could not get any advance or any assistance from the banks. Therefore Messrs. Chater and Mody were undertaking to find money for him to take up liabilities in respect of these Punjom and Kowloon shares at very high prices. Mr. Francis proceeded to describe the way in which Messrs. Chater and Mody carried out the agreement. Certain shares were handed over to Messrs. Chater and Mody by Mr. Hughes, but a balance of $30,000 was still due, and for this sum Mr. Hughes gava a promissory note. They had heard for unfortunately Mr. Hughes had not been able to keep his tongue quiet, and had been talking about his state of affairs all over the colony-that he intended to dispute this transaction. If so they would be able to satisfy the jury that it was carried out and that it was a genuine operation. They con- tended that the account of the 30th June was not only a stated account but a settled account. Mr. Hughes denied, they understood, that he had ever received such account, and he had had
notice to produce it. The only copy of that account which apparently could be produced was the press copy. Mr. Francis proceeded to deal with the subsequent transactions which Messrs. Chater and. Mody had with Mr. Hughes in res- pect of the liabilities he was called upon to meet in September of 1887. Towards the end of the year he was ordered home, being in a bad state of health-it was not necessary to enquire why, as it was well known in the colony why-and he got away in April. Before leaving, however. he sent in for his account. That account was sent to him, and returned to have certain items added. The account was made out again to March 31st. It showed a balance of $419,923-93 against Hughes in respect other transactions taking place between them; another account was rendered showing a balance against Mr. Hughes of $318,000 odd; that account Mr. Hughes supplied signed, on each sheet, at Mr. Mody's special request. He asked them to consider how was it possible any man could come forward and say he did not know what he was doing and was entitled to come for ward and repudiate it without some strong case indeed. Messrs Mody and Chater provided him with money to leave the colony, getting a letter of credit for £1,000 for him. On leaving the colony he left his brother Jones Hughes with complete power of attorney. During his absence
THE HONGKONG WEEKLY PRESS AND
the Kowloon shares went up, and Mr. Chater recommended Mr. Jones Hughes to wire his bro- ther recommending him to sell at least half of his holding. Mr. Jones Hughes did so, and received a wire back instructing him to sell 500, which was done. The account was continued down to February, 1890, when it showed a balance against Mr. Hughes of $100,791-55. They were nct quite cl-ar in their minds on the subject, but it was believed that Mr. Hughes was back in the colony at the time this account was made out, but that he went away again. The next account rendered to plaintiff was when he came back in 1896, when through the enormous rise in the value of shares the balance on account of shares against him had been reduced to 894,361.
9th May.
Mr. Francis, continuing his opening, said that in the course of the afternoon the previous day he endeavoured to give the jury as clear a statement as possible of what he might call the broad features of the case, the nature of the transactions between Hughes and Chater and Mody in respect to which that suit had arisen, and he pointed out that Mr. Hughes had shares. to take up in Jane and September
in June to the value of $450,000 and in September to a similar amount. Against those he had a very small amount of shares to deliver and receive payment for and he was in such a position that he could not by any possibility have arranged with the banks for the necessary means to carry out these con. tracts. He had bought these shares at such a price, and the market had so fallen for both those descriptions of shares, in which he had been principally dealing-Kowloons and Punjoms-that to attempt to sell out would have left him with a very heavy liability, His only chance, to enable him to something like equalise his holdings, was to get some body to finance him for June and Sep. tember. Accordingly be applied to Mr. Chater, who induced his partner Mr. Mody to find the necessary money. The result was that Messrs. Chater and Mody disbursed very large amounts of money in respect of shares which they took up and for which they paid very high prices. These shares at the then depreciated value re- presented on the 30th September, 1887, a margin-only a nominal margin-of some $76,000 against Mr. Hughes. Defendants had to disburse large sums of money, and they only had in their hands these shares, which might or might not represent the values at which they were entered in the book. They were not in the position to get securities to the extent of $100,00 7 for an advance of 840,000 or $50,000, or $60,000. They had no security showing a large margin. They got some ad- ditional securities a little later on; but even then there was a very heavy balance against Hughes. He also pointed out the previous day that accounts were made up at different times. He then glanced over the items of the accounts from the 30th of September onward, showing that there were comparatively few share tran- gactions after that date and that on the whole the balance against Mr. Hughes had steadily diminished until 1896. He had now to go through with the jury the correspondence which took place between Mr. Hughes on the one hand and Mr. Mody on the other with reference to these accounts: Mr. Francis proceeded to deal with the correspondence, which was of a most voluminous nature, and then went on to point out to the jury the facts upon which it would be for them to come to a decision.
Mr. Francis had not concluded his speech when the court adjourned for tiffin. On resum- ing, Mr. Francis continued his criticism of plaintiff's replication, and in conclusion said they believed that if plaintiff had had to open the the case there would have been absolutely no evidence. The case would have been brought to an end very speedily indeed. Having been required, and he believed correctly required so far as the pleadings were concerned, to open the case, he had opened the case com- pletely. He had gone into the whole matter, though perhaps strictly speaking he might have confined himself to the stated and settled ac counts, But as the matter had been forced into court Mr. Chater and Mr. Mody wanted the fullest and most complete investigation. They
[May 13, 1899. wanted from the hands of the jury a full and careful examination of the facts of the case and their decision on questions of fact between them- selves and Mr. Hughes. They relied confidently upon this-that the whole of their transactions would be found from beginning to end to have been not merely thoroughly honest, straight- forward, and bona fide, but that their books and accounts and everything else had been kept i a thoroughly simple and straightforward manner, that there was nothing whatever-good, bad, or indifferent--which they wished to hide.
Evidence was then called.
The Hou. UP: Chater said—I am one of the defendants in this case and am in partnership with Mr. Mody as a dealer in shares. We have been connected since 1880 or 1881. Up to 1889 I was a bill and bullion broker, but I have ceased to carry on that business now. I am very largely interested in land in Hongkong. Mr. Mody is a bill and bullion broker, but
so far as shares are concerned he is not
a broker but a jobber. I take no part in the business so far as the buying and selling is concerned. In 1887 and the early part of 1888 I helped the clerk in supervising the monthly settlements. In 1888 I left for home and my nephew Mr. Mauuk arrived and took over the work. I have known Mr. Hughes a number of years-I think since some time in the 70's. He was in the share broking business, being in partnership with Mr. Bottomley first, After this he was in partnership with Mr. Legge. I first became connected with him in 1881. I was buying properties-mostly godown properties in Wanchai-and I gave him an interest in them. I made him a sort of manager on com- mission to work the godowns. After I started the Wanchai godowns I started something similar between 1882 and 1883 at Kowloon, buying land and erecting buildings, in conjunction with a syndicate. The total ex- penditure was about $600,000. Mr. Hughes had a fifth share, but he did not find a cent of the money. I had money of Mr. Hughes's in hand to the extent of $32,000, but I advanced the whole of the money due from him and me. Mr. Hughes was appointed manager of the Kowloon godowns, and continued such until the formation of the company in 1-87, when his brother was appointed man- ager. He was manager of the Wanghai go- downs from the commencement. He only settled up the Wanchai godown accounts the other day. I got Mr. Paul Jordan to go and examine his books and accepted his decision. This $24,506 claimed by Mr. Hughes was the debit balance. In June, 1887, Mr. Hughes made application to me and Mr. Mody for financial assistance. He came to me direct, and was not sent to me by Mr. Mody, At that time we were good friends and co-operating together in many things. When he applied to me in June, 1887, he said he was in difficulties and that he wanted me to help him. I asked him what was the matter and what help did he want. He told me he had been buying largely both Punjoms sod Wharves for June and September and that he could not get assistance from the Banks. I asked him how was that, as I had given him a thousand clean Kowloop shares a few months before. He said he had the shares in the Bank as margins and that he right. He added that he had margins all over the place and that he would keep us very safe if we helped him. I asked him what he wanted. us to do and that we should want to know his
was
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exact position. I told him that I could not do anything without asking Mr. Mody, and that the best thing he could do was to bring me
statement of his affairs to place before Mr. Mody. The memorandum produced was the one which Mr. Hughes brought to me a few days afterwards. When I got this statement I looked it over and I wanted a more detailed statement; I wanted to know what margin he had in the Bank to meet these liabilities. I showed this document to Mr. Mody. There is no date to it. A few days afterwards I re- ceived a farther statement from him. The statement produced is the same. It was dated 11th June, 1887. I must have got the state- ment on that date or a day later. On receipt of that paper I looked it over and I saw that if the statement was correct he would have a good margin. I asked him what he wanted us to do, and he said he wanted us to clear from him