August 7, 1909.]
SUPREME COURT.
Tuesday, 3rd August.
IN APPELLATE JURISDICTION.
BEFORE THE FULL Court,
A COMPRADORE'S LIABILITIES. In the action in which S. J. David and Company were appellants and Chan Ut Chin was respondent, Counsel, at the request of the Court, attended for the purpose of discussing certain points on which their Lordships wished to bear further argument.
Mr. McNeil, from Shanghai, instructed by Mr. Gedge, of Messrs. Johnson, Stokes and Master, appeared for the appellants, and Mr. Blade and Mr. Alabaster. instructed by Messrs. Ewens & Harston, appeared for the respondent. Mr. Slade pointed out that the net result of such mortgage was that a sum of money was owed to the mortgagee, but it was not owed to the mortgages by or from anybody. There was no personal liability at all under the deed. It was quite correct to speak of the money as owing, but it was not owing from anybody. What was owed was owed on the security of the land. It might be said there was a debt owing to the mortgagee, but it was not owing by anybody. It was merely a security on the land. Mr. McNeill said that with great respect he flatly contradicted the assertion that there was no liability on anything or anybody except on the property. Such assertion was begging the question. The whole point was that the executors incurred no personal liability.
The matter was argued at considerable length and the Court was adjourned sine die.
Wednesday, 4th August.
IN ORIGINAL JURISDICTION.
HONGKONG MILLING COMPANY V. ARNHOLD, KARBERG & co.
The Chief Justice (Sir F. Piggott) and his Honour the Puisne Judge (Mr. H. H. J. Gompertz) sat to hear an action at the instance of the Hongkong Milling Company, of which Mr. H. Percy Smith is liquidator, against Messrs. Arnhold, Karberg & Co., plaintiffs claim- ing a sum of $100,000 for damages for alleged breach of warranty by the defendants under an agreement dated 23rd March, 1907. Sir Henry Berkeley, K.C., and Mr. M. Slade, instructed by Mr. John Hastings, appeared for plaintiffs, defendants being represented by Mr. McNeill, of Shanghai, and Mr. Alabaster, in structed by Mr. Deacon, of Messrs. Deacon, Looker, and Deacon.
The statement of claim set forth that under the agreement mentioned the defendants agreed to sell and the plaintiffs to buy an ice plant with a manufacturing capacity of 24 tons per day for the price of 95,650 marks, German currency, and the defendants agreed for that sum to deliver the plant at the company's premises aud to erect and complete the same with all proper accessories. Under the agreement the defen dants guaranteed that the plant would manufacture ice of the same clearness and quality as the ice being then manufactured by the Hongkong Ice Company. The defendants supplied the plant, but did not manufacture ice of the clearness and quality warranted. In stead it produced an inferior quality of ice. By an agreement, of which the defendants were aware, made between the plaintiff company and Messrs. Jardine, Matheson & Co., the plaintiff company agreed to sell and Messrs. Jardine, Matheson & Co. to buy for a period of six years all surplus ice manufactured by the plaintiff com- pany over and above such quantity as might be required for their own consumption, such surplus not to exceed 6,300 tons per annum, at the price of five-eighths of a cent per pound, which price would have given large profits to the plaintiff company over and above the costs of manu. facture, and by this agreement the plaintiff company agreed that the ice to be so sold to Jardine, Matheson and Co. should be in quality, purity and clearness equal to the ice then being made by the Hongkong Ice Company. Owing to the breach of the warranty by the defendants the plaintiffs had been unable to perform their contract with Mesare, Jardine, Matheson and
CHINA OVERLAND TRADE REPORT.
Co., and had lost the profits which they would | have made thereby and had suffered other heavy damages. The plaintiffs claimed as damages the cost of the plant, together with the expenses incurred in erecting an ice factory and store, less the estimated value of the ice-making plant. They also claimed for loss of profits.
Mr. McNeill - Is it rotting away?
119
Sir Henry Berkeley-My friend suggests it is rotting in the cellars of the Ice Company. It is not in cellars, but in the cold storage. Ice only rots when it is brought into contact with air.
The Chief Justice-I have never heard the word "rot" applied to ice. Does it mean
Sir Henry Berkeley-Well, not exactly, I think.
Chard, a partner, would be called. The Milling Company possessed at Junk Bay a large supply of water which was necessary for. milling operations, and it occurred to the active mind of Mr. Rennie that this water might be utilised to great advantage in the making of ice if he could obtain a good market Defendants in their amended statement of for it. He approached Messrs. Jardine, Mathe- defence said their attention was not drawn at son and Company, the Managers of the Hong- the time the agreement was signed to the | kong Ice Company, and in October, 1907, an inclusion in the agreement of any terms agreement was signed between the partners by. different to those contained in the written which Messrs. Jardine. Matheson agreed to correspondence. They signed the agreement purchase ice of the quality manufactured by in the honest mistaken belief that the agreement the Ice Company. The Hongkong Ice Com. contained in effect no terms other than those pany was an old established Company and its which were contained in the written correspon- standard of ice had been maintained for dence. There was a duty cast upon the plain years. Counsel then dealt with the tiffs to draw the attention of the defendants to allegation made by defendants that they ware the fact that the plaintiffs or their solicitors not aware of certain terms in the agreement, had inserted in the agreement a term or terms as they relied on the written correspondence, which had not been mentioned during the and read letters to show that the stipulations preliminary negotiations. The plaintiffs were inserted in the agreement were known to estopped by their conduct and breach of the defendants before the agreement was signed, duty from setting up or relying on any terms Moreover, the agreement had been in defendant's not contained in the written correspondence. possession practically a week before it was Defendants asserted that the warranty as to the signed. Counsel remarked that some 2,000 clearness and quality of the ice, of which the pounds worth of the ice made by the plant was plaintiffs complained, was not included in the deposited in the cold storage rooms of the written correspondence. Defendants declared Hongkong Ice Company, where it still was and that the plant had not been taken over by the could be seen. servants of the plaintiff company in full working order as agreed. As a matter of fact it had not been taken over at all by the plaintiff company. Alternatively, if, which the defendants denied, the plant had been taken over in full working order by the plaintiffs no attempt had been made by the plaintiffs or their servants between the taking over and the date of the writ to manufac-melting? ture ice with the plant. The defendants did not admit that the ice plant failed to manufacture ice of the standard manufactured by the Hong- kong Ice Company. They alleged that no fair or complete trial had been made of the plant, and that owing to the action of the plaintiffs or their servants the defendants were not permitted to run the plant for a full week as required by the agreement, and any inability on the part of plaintiffs to perform their contract with Messrs. Jardine, Matheson and to. was not owing to any breach by the defendants of their alleged war- ranty, but had been owing to the wrongful action of Messrs. Jardine, Matheson and Co. in refusing to accept the ice manufactured by the plant. Defendants averred that such inability (if any) had, owing to the fact that the plaintiffs had put it out of their power to earn the large profits referred to, by reason of the fact that on or about March 18th, 1908, the plaintiff company had agreed in writing to execute and deliver to the Chartered Bank of India, Australia and China a mortgage of the premises whereon the plant was then being! erected, and by reason of the fact that in pursuance of the agreement the plaintiff com- pany and its official liquidator on or about July 9th, 1908, had assigned by way of mortgage the premises, together with all erections thereto; belonging. There were still large sums due to the Bank by the plaintiffs under the mortgage, and the Bank were now engaged in negotiations with a view to the sale of the plant. The defendants also stated that such inability (if any) had been owing to the fact that the plaintiffs had in consequence of the complete failure of their flour milling business gone into liquidation, and consequently had become and were still unable to manufacture, any ice whatever, inasmuch as such manufacture of ica was to be conducted as an accessory to the milling of flour and was to be carried on with power derived from the flour milling plant and machinery.
Mr. Slade haring read the pleadings,
Sir Henry Berkeley opened the case at length. He said that the failure to supply machinery capable of turning out ice of the same quality. as that manufactured by the Hongkong Ios Company was the cause of action The los manufactured by this plant was inferior both in olearness and quality.
Mr. McNeill-Do yon produce the ice? Sir Henry Berkeley-I will produce the silent testimony of the blocks of ice themselves Proceeding, he described the circumstances which led up to the agreement. Negotiations were conducted by Mr. A. H. Rennie, on behalf of the Milling Company, and Mr. Arndt, on behalf of Messrs. Arnhold, Karberg and Com. pany. Mr. Rennie unhappily was dead, but Mr.
Mr. Slade-It is the effect on ice of water which may be of about the same temperature as the ice, which eats into the ice and makes it more liable to melt when exposed to air. Ice melts much faster in water than in air.
Sir Henry Berkeley then went on to state that plaintiffs had nothing to do with whether the machinery could or could not turn out ice. What they had to establish was the fact that s warranty was made that this particular ice could be turned out. If the machinery could not produce the ice which the defendants warranted that it could produce, then defendants must stand the consequences.
Mr. Alabaster then applied that the special damage paragraphs in the statement of claim be struck out. ø did BO on the ground that the plaintiffs had not said that they would prove what they ought to prove, and that was that the defendants knew that the contract with Messrs. Jardine, Matheson and Co. contained а warranty as to the clearness and quality of the ice. Certain letters read by Sir Henry Berkeley might show that defendants knew that ice had been sold to Messrs. Jardine, Matheson and Co, but they clearly did not know that it was a term of the Jardine, Matheson and Co. contract that the ice should be of a particular quality and clearness.
Mr. Slade said that if a party made a contract with a man and informed him that it was for the purpose of fulfilling a contract which the first had made, and in consequence of the second party failing to carry out the contract whereby the first party was unable to carry out his contract, then he was liable for all losses and damage resulting.
The Chief Justice thought the letters showed knowledge by defendants of the contract, which which was in itself sufficient.
Mr. McNeill-Not a knowledge of the contract-a knowledge that there W&S H contract.
The Court rejected the application.
Mr. Slade, who followed, read several letters which were put in, and the hearing was adjourned.
Thursday, 5th August.
The action was resumed in which the Hong- kong Milling Company, of which Mr. H. Percy Smith is liquidator, claimed $100,000 from Arnhold. Karberg and Cc. for damages, for alleged failure to supply au ice- making plant according to stated ro- quirements. Sir Henry Barkeley, K.C.,