3
98
2
been in the habit of sending produce home to the consignment of a firm in London called J. C. im Thurn and Co.; and in the year 1874 he received from Messrs. im Thurn and Co. a letter of credit dated the 26th of February in that the terms of which are as follows: "We
year.
፡፡
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beg to confirm to you a credit of 5,0007.
We say
"five thousand pounds sterling to be availed of against consignment of produce to our address drafts at six months sight, representing
in your
up to 85 per cent, real invoice value. Shipping "documents to accompany advice of drafts and "insurance covered by our open policy. And
we agree
with you, the endorsers and boná fide
**holders of all bills if issued under this lotter of credit, that the same shall be duly honoured on After presentation and paid at maturity."
44
the receipt of that letter of credit, namely, on the 30th of July 1874, the Respondent drew a bill of exchange of that date upon Messrs. im Thurn and Co. in the following terms: Hong Kong, 30th July 1874. At six months after sight of this first of exchange, second and third of the same tenor and date not paid, pay to the order of myself the sum of five hundred "and twenty-five pounds sterling value received, and place the same to account of your letter "of credit dated 26/2/74 at shipment T., No. 2,
**
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1 case musk por P. and 0. S.s. Malwa.' J.
Lembke.-To Messrs. J. C. im Thurn and Co., London." The bill was drawn by Respondent expressly on the terms of the letter of credit re- ferred to. He subsequently drew another bill on the 14th August 1874 in the same terms for the sum of 3801. sterling value received, and the terms being the same, and the circumstances connected with the two bills the same, they form together the transaction which gave rise to the suit between the parties.
The first bill of exchange on the day of its
date was taken for discount to the Appellants at their bank in Hong Kong, and was left at the bank, together with the letter of credit and a bill of lading of the cousignment of musk against which the bill had been drawn; aud on the same day a memorandum was sent by the Appellants to the Respondent in the following terms : "In connection with your drafts 5257, we require <insurance letters and L Hypothecation, forms "for which, in duplicate, we herewith forward to be filled up signed and returned, when we will pass proceeds to your credit and return letters of credit in due course."
C
E
On receiving that memorandum, the Re- spondent signed the letter of hypothecation. which was so sent to him, prepared by the Appellants, and returned it to them. The effect of that letter of hypothecation has formed the subject of much discussion in the argument upon the present occasion. It was addressed to the Oriontal Bank Corpora- tion, and as far as is material is in these terms: "Having this day negotiated to you one "bill of exchange drawn by me on Messrs. J. C. im Thurn & Co. of London, the particulars of which are noted at foot, and having at the same time handed to you as collateral securities for the due payment of the said bills the bills of lading and shipping documents of the seve-
+
44
46
66
66
ral goods also stated at foot, my agreement
" is understood to be as follows: I authorise the Oriental Bank Corporation, or any manager
41
46
or agent thereof, (but not so as to make it im- perative,) to insure the above goods from sea risk, including loss by capture, &c." This first clause relates to insurance and what was to happen in case of loss. The next clause is : "I also hereby authorise the said Corporation,
A
1C
and the holders of the above bills for the time being, to take conditional acceptances to all or