508
Hongkong, 1st April, 1892. Manager, the Bank of China, Japan, and the Stra L., Present.
In reply to your letter of 30th March stating that you hold me responsible for Taels 150,000, being amount of drafts on insolvent firms in Shang hai, I now beg to hand you promissory notes to the value of $71,800 made out in your favour by respon sible Chinese firms. Please return me later on dis honoured acceptances for a like amount.-Yours faithfully,
****
CHEONG KOON SING.
I-shall shortly hand you further cover, ¿e, as soon as possible, but I hope the Bank will not press me too much.
C. K. S.
There is no evidence on the point, but it seems to me probable that the postscript of this letter was added at the instance of Cheong Koon Sing,
Subsequently, Mr. Darby-at the request, as he says, of Cheong Koon Sing-wrote and Cheong Koon Sing signed the following letter:
The Bank of China, Japan, and the Straits, Ld.,
Hongkong, 31st May, 1892. The Manager, the Bank of China, Japan, and the
Straits, Ld., Present.
THE HONGKONG WEEKLY PRESS AND
words in pidgin English," With regard to the second of the three letters, he says that “it was not explained to him that he was asking the Bank to debit Kan Sing Toi's account with Tis. 70,000 and that he was still to remain liable for it," and that "if he had known that all this was in the letter, he would not have put his signature to it." With regard to the third of the three letters, he says Mr. Darby said a few words, but in substance he asserts that it was not explained to him. With respect to each
the three letters he makes the statement that he thought it was "of no importance, so he 'signed it."
+
Now, as Mr. Francis argued, there is no allegation of fraud or misrepresentation made against the plaintiffs in the pleadings, nor is there in the evidence of Cheong Koon Sing any express charge of bad faith or misrepresentation made against Mr. Darby. But certainly these assertions of his go very near such a charge. For the reasons, however, which I have already given with respect to the relative oredibility of these two witnesses, I accept the state ment of Mr. Darby that he explained the letters to Cheong Koon Sing. Further, I am Dear Sir,-With reference to the Chinese bills of opinion that Cheong Koon Sing is too shrewd purchased by you from me, drawn by the Wing and experienced a man of business to put his Tung Yan and Kwong Fook banks on Shanghai, signature to a letter of which he did not under amounting to Taels 70,000 and for which Kan Sbing stand the purport. I am also of opinion, from Toy is liable either as drawer or guarantor, I shall be much obliged if you will debit Kan Shing Toy's various features of evidence in the case, especi- ercount in your books with the amount now stand-ally from the account given by himself of his ing at my debit in respect of these bills, and such education, training, and business career, and entry shall not in any way release me from my re- from my observation at the hearing, that Cheong sponsibility as your compradore in the matter.- Koon Sing has minimized his knowledge am, dear sir, yours faithfully,
of the English language, both as spoken CHEONG KOON SING. and as written. It is also matter for obser- Next Mr. Darby wrote and Cheong Koon vation that there is nothing unfair or un- Sing signed the following letter. Mr. Darby conscionable as regards Cheong Koon Sing in states that Cheong Koon Sing got this letter the letters; they merely give effect to the ar- written because he was afraid that the letter of rangement which Mr. Darby says was made be- the 31st May, 1892, might let him in for liability tween the three parties concerned on the 27th on any deficiency that might arise on Kan Sing March, 1892. On the other haud it may be asked, is it fair or reasonable of Cheong Koon Sing to desire or endeavour to disclaim an ad- mitted liability in respect of the bills of the two banks in question because the Bank, in his aid and for his advantage, was making an effort to get that liability discharged with the moneys of Kan Sing Toi? It was even, for his benefit, going (according to Mr. Darby) beyond the au- thorization given by Kan Sing Toi, because the Bank was charging on his account the Wing Tung Yan as well as the Kwong Fuk bills. At the same time I cannot help thinking that it would have been more prudent for the Bank to have allowed or directed Cheong Koon Sing to have the letters written by some person not in their employment.
Toi's account.
Hongkong, 3rd June, 1892. The Manager of the Bank of China, Japan, and the
Straits, Ld., Present.
Dear Sir, Referring to your having debited Kan Shing Toy's account with the following entries:-
$27,777.78 equivalent at 72 of Tls. 20,000
27,777.78 13,888.89 27,777.78
17
**
11
20,000
27
37
71
10,000
31
11
11
20,000
$97,222.23 equivalent at 72 of Tls. 70,000 being unpaid bills drawn by the Wing Tung Yan bank and the Kwong Fook bank, for which Kan -Shing Toy is liable as drawer, endorser, or guarantor. and payment of which was guaranteed by me, I agree that my position towards the Bank remains the same as if no such debit entry had been made on your books, and I also agree
(1)-To make good any deficiency-up to but not exceeding the above mentioned sum of $7,222.23 which there may be in Kan Shing Toy's account after realisation of the securities held by you, which securities you may dispose of whenever you please, without reference in any way to me.
(2)—To make good to the Bank, should they call upon me to do so, the deficiency shown by the Bank's books in respect to the aforesaid unpaid hills on the date on which such call is made, such payment to release my guarantee of Kan Shing Toy's account as given in para. 1.-I um, dear sir, yours faithfully,
CHEONG KOON SING, Compradore.
These four letters, then, are consistent with and support the contention of the plaintiffs as to what took place at the interview of the 27th March, 1892; they are inconsistent with and tend to rebut the contention of the defendants with respect to the same matter.
In accordance with the request made in Cheong Koou. Sing's letter of the 31st May, 1892, the Bank on that date debited the account of Kan Sing Toi with the sum of $97,222.23, being the amount in local currency of Tls. 70,000, the face value of the bills drawn by the two Banks with which he was connected. The Bank was empowered to make this charge by I will presently consider what is the effect of the terms of a general letter of hypothecation these four letters. But it is necessary in the given to it by Kan Sing. Toi on the 25th first instance to determine whether any effect August, 1891. "It is material to observe that at all should be allowed to the three of them the entry was not accompanied by any cor- which are written by Mr. Darby and signed by responding entry in the Compradore's Liabi Cheong Koon Sing. Mr. Darby says that he lity Account, reducing pro tanto the amount fully explained these letters to Cheong Koon Sing of his liability, as it would have been before they were signed, and in particular that if the Bank had intended to relieve him from he" went over the first of them line by line liability in respect of the bills in question. with him." With regard to this letter Cheong Interest on the amount was charged in the Koon Sing at first said, in reply to Mr. Drum. Compradore's Liability Account and not-ex- mond, that Mr. Darby "explained the contents of cept in an isolated instance-in Kan Sing Toi's the letter to him in pidgin English; he told account. Mr. Darby says that Cheong Kai him something about Tls. 70,000." At this point on more than one occasion asked the Bank not Mr. Francis interposed with an objection that, to press him for an immediate settlement, in the the defendants not having pleaded any defence hope that there might be some margin on Kan of fraud or misrepresentaion on the Sing Toi's securities." There was never any part of the Bank, evidence could not such margin, and the liability of Cheong Koon be given to show that this letter had been Sing was never in any way reduced by the obtained by any fraud or misrepresentation on arrangement for debiting Kan Sing Toi's ac- Mr. Darby's part. The Court, however, al- count. On the 30th June, 1894, the entry lowed the examination to continue, and Cheong was, apparently in accordance with instructions Koon Bing then modified his previous statement received from the head office in London, written by saying that Mr. Darby "said only a few off the account,
During the years 1892
sums of mon
Sing to the and there we the parties, espe in Saigon, of wh obtained an assignmen Kung Tai Ban
[ December 81, 1800,
necessary for me to refer to th detail
uary
Cheong Kai died in the month 1894, and probate of his will was defendants. Not long afterw notice in writing to the Bank to bond. The notice expired on ber, 1894, and the Bank furni the defens dants with an account, made up as on that date, showing the particulars of their claim the estate of Cheong Kai. The writ w some days before the expiration of but it was agreed between the par hearing that the accounts should if they had been made up on the date issue of the writ.
the
Cheong Koon Sing remained ment of the Bank as their compradore liquidation of the old Bank on the 28th ber, 1894, according to Mr. Darby, and the 4th October, 1895, according to hin He admitted that he had not during that time taxed Mr. Darby with bad faith in
from the agreement of the 27th March 1892, although he must have known by October, 1894, what the claim of the plaintiffs and the defence of the defendants were respectively
These are the facts of the case as I find them. It remains to consider what are the rights and obligations in point of law of the parties as growing out of these faots.It was well said by Mr. Drumond in the course of his address that "the law formed a very small part of the case, and that the main diffi- culty was in deciding as to the effect of the evidence." The position of the parties in the suit may be broadly stated as follows. The defendants do not deny the execution by their. executor of the bond of suretyship, nor do they dispute that the losses on the dishonoured bills and note come within the scope of the bond and that they are therefore in the first instance liable to the Bank for those losses, but they contend, first, that the Bank has, by its con- duct in the matter, discharged them in con- struction of law from that liability, and, secondly, that, if they are not so discharged, on the true state of the accounts between them, Cheong Koon Sing is not indebted to the Bank but the Bank is indebted to him, and therefore they in turn are not indebted to the Bank...
1
The first of these defences was formulated by Mr. Drummond in the following terms:
That the effect of the arrangement made between the creditor (the Bank), the debtor (Cheong Koon Sing), and Kan Sing Toi was to discharge the surety, Cheong Kai, first, by de- priving him of a remedy to which he was entitled, or, in other words, by making & material alteration in the debtor's position without the assent of the surety and without any reservation of the rights of the creditor against him; secondly, by giving time to the debtor; and, thirdly, (a) by discharging_the debtor and (b) by taking substituted security
With regard to the point as to depriving the surety of a remedy to which he was entitled, was said, in further explanation, that before agreement the debtor could have sued Sing Toi, but that the effect of the agr was to preclude him from doing that wards.
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Let us take these points in their o de Colyar's Law of Guarantees, second 351,funder the heading of conduc ditor which discharges the süre the following passage variation of the ter the creditor and the ways dischar variation of will also dise pears that he origin parti
given to th
ween the and after such he is held to
the
and
!
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