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credit was, as it were, put aside, and the letter of hypothecation substituted for it; but it appears to their Lordships plain that the intention of the parties was that those two documents should subsist together, and further that they are by no means inconsistent the one with the other. Indeed, when looked at in their plain and mercantile sense, they appear to be perfectly consistent and quite natural. Here were parties living at Hong Kong having correspondents in London. The Respondent has a letter of credit authorising him to draw within a certain limit upon his correspondent in London, but against shipping documents. Wishing to negotiate the bill with the Appellants, he takes the bill to the Appellants, also residing in Hong Kong having their correspondents in Lon- don, and proposes to them in the first instance to negotiate the bill simply upon the letter of credit. Now, had the negotiation taken place upon the letter of credit, the course pursued would have been precisely that of which alone in the present suit the Respondent complains; because, according to the course of things indicated by that letter of credit, the delivery of the shipping documents would in pursuance of it have taken place at the time of the acceptance by im Thurn & Co. in London of the bill of exchange, and their Lordships see no reason to suppose that the Appellants intended to do anything else than to increase their security by obtaining the letter of hypothecation. Taking into account the distance of Hong Kong from London, the Appellants might naturally desire to have the letter hypothecation, giving them a control over the goods, and allowing them to take those proceedings at their option which might become necessary in events not impossible to happen. In other words, the object of it was to give them power to act according to circumstances.
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The Appellants accordingly discounted this bill, and paid over the amount of it to the Respondent. They forwarded the documents to London; and upon that day, the 30th July 1874, the Respondent communicated with im Thurn & Co., his correspondents in London, and, amongst other things, in that communication he alludes to this bill of exchange, and says: Against the above consignment I have this day taken the liberty of drawing upon your "esteemed firm, under your credit of February 1874, bill No. 1/88, 5251., 6 m/s own order, which draft I commend to your kind protection. "The bill is in the hands of the Oriental Bank Corporation, and documents, namely, bills of lading, abstract of invoice, letter of hypotheca- tion, and insurance letter, are attached thereto; the draft was sold documents against pay- "ment." Meaning no doubt that the Oriental Bank Corporation had the power to hold the documents as against payment. Then he con- tinues: "I believe however that your esteemed "firm may also obtain the documents against
acceptance only."
•
The belief that he so expressed in the letter coincided with what took place, because the Oriental Bank Corporation in London, probably satisfied on the spot with the solvency of im Thurn & Co., took their acceptance of the bill, and handed over to them the shipping documents. In other words, they gave up the option secured to them by the letter of hypothecation. and proceeded as they would have proceeded had there been no such letter. Having done so, the transactions between the parties continued for some time; im Thurn & Co., having obtained the shipping documents, sold the goods, and seem to have passed the proceeds in account with their correspondent, the Respondent; but unfor- tunately they failed before the bill became
N 41.
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