May 28, 1898.]
of the syndicate in proportion to their several interests in the concern. Since that date, so far as the evidence goes at present, the shares specified in the "Margin Account" have re- mained in the possession of the defendant's firm, being dealt with in their books in the same way as shares owned by them, and the members of the syndicate have had nothing to do with them. In particular, with regard to G. L. Coxon's individual account, it appears that it was closed as on the 30th June, 1893, and on the 7th July 1893, he made a promissory note in favour of the defendant for the amount of his indebtedness as shown by the account, namely, $37,936.87. On the 7th February, 1894, this amount was transferred to the "Sundry Debtors' Acconut," where it has since remained. On a careful consideration of these facts and circumstances as they are presented before me on behalf of the plaintiff alone-I come to the conclusion that the defendant's firm-that is, "the defendant, for no attempt has been made to distinguish between the two-by their manner of dealing with the 50 shares in question in this case altered the character of their holding from that of pledgees to that of beneficial owners, and that this alteration was affected with the assent, express or implied, of the pledgors of the shares, I am therefore of opinion that the plaintiff has sufficiently sustained the burden of proof which lay upon him with regard to the interest in point of fact of the defendant in the shares, and that the nonsuit asked for on this ground must be refused.
But before passing to the consideration of the validity in point of law of the plaintiff's case, these are two questions of fact which mast be inquired into, because they may have a bearing on the position of the parties in point of law. These questions arise out of the payments of calls on the shares which are alleged to have been made by the defendant.
These payments were made or two occasions. In the month of January, 1894, the Bank of China, Japan, and the Straits, Limited, mad. a call payable in four instalments of five shil lings each on their new issue of shares. The plaintiff thereupon wrote the following letter to E. J. Moses, a clerk in the employment of the defendant's firm :
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Hongkong, 6th January, 1894.
My dear Moses,-I send for your perusal the enclosed letter received yesterday from the Bank of China, Japan, and the Straits, Limited. The shares therein referred to are traced to Messrs. Belilios & Co. who as holders of their applied for last dividend and cashed D/W for same in March, 1892.
There is reason to suppose that these shares are still in possession of your firm, who I trust will pay the call now overdue. this letter and enclosure to Mr. Belilios.
E. J. Moses, Esq.
Please show
Yours faithfully,
E. A. HARDOON.
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CHINA OVERLAND TRADE REPORT.
421
On the same day Mr. Moses replied in the | & Co. to the plaintiff and debited in their book following terms :—
as before.
Hongkong, 9th April, 1894. My dear Hardoon.-With regard to the summons you received in the matter of the Bank of China's claim against yon for calls de on the shares standing in your name, I have Bank payment of their claim in sterling at the Mr. Belilios' authority to ask you to offer the current rate of the day. From a hasty inspec- the exchange at which they computed your tion of the accounts given in the writ, I think liability is 28. You can fairly insist on paying them at the rate now ruling, which is I believe a halfpenny better, since according to the notices published by them in the local papers, shareholders have the option of paying their calls by Demand Draft où Londou.
know what sum you have to pay, I will arrange If you will kindly see to this, and let me the rest. Yours sincerely,
E. J. MOSES.
I return the writ herewith; excuse haste. It takes no notice of the statement contained in be noticed in passing that Mr. Moses may
the plaintiff's letter that the shares were
owned and held" by Belilios & Co.
16
ing reply:
To this letter the plaintiff made the follow.
Hongkong, 10th April, 1894.
of yesterday. Kindly let a party from your My dear Moses,-Many thanks for your note office attend to the payment of calls on the 50 Bk.f China shares.
I also particularly request that these shares be transferred out of my name as now there is able position.-Yours faithfully, no reason for remaining longer in my undesir-
E. A. HARDOON, following letter to the plaintiff :-
On the game day, also Mr. Moses wrote the To E. A. Hardoon Esq.
any-
your
Hongkong, 10th April, 1894. My dear Hardoon,-Mr. Belilios has read anything more for you than what I stated in your note just to hand and says he cannot do my letter of yesterday. He cannot send body from our office to pay the calls, nor under- take to get the shares transferred out of
The shares are not his, as he can easily prove; and if you had insisted on the transfer in the proper time, he would not have had to demanding that the shares be duly transferred offer any payment. The fault is yours in not out of your name before paying any dividends. --Your faithfully.
nanie.
E. J. MOSES.
occasion. The money was paid by Belilios & This letter closed the correspondence ou that Co. to the plaintiff and by the latter to the Bank's solicitors, and was debited to the plaintiff in an account in his name which was opened in the books of the defendant's firm in the month of April, 1894, with reference to these shares,
Now what is the effect of this correspondence?
On the same day Mr. Moses sent the follow-It does not, to my mind, conroy the impression ing answer :-
Hongkong, 6th January, 1894. My dear Hardoon,-It is no trouble. I shall submit your letter to Mr. Belilios as desired.
I don't think there is any need to write of ficially.
Yours,
E. J. MOSES. The plaintiff says that two days after he re- ceived this letter Mr. Moses came to see him and said that he came from the defendant, and that the defendant said he did not believe the Bank would press for payment, but if they did he (the defendant) would come to his (the plain- tiff's) rescue.
There would seem to have been some delay in attending to the matter, and the plaintiff there- after wrote to Belilios & Co. as follows:
Hongkong, 9th April, 1894.
Messrs. Belilios & Co.,
Present Dear Sirs,-The solicitors for the Bank of China, J., and the Straits have to-day issued against me a writ of summons for the claim of $391.87 in respect of calls due on 50 shares in that concern standing in my name in their books but owned and held by you. I enclose the document herein and will be glad to know your pleasure in the matter.
The hearing of the case is fixed for the 13th instant. Yours faithfully,
E. A. HARDOON.
either that the plaintiff demanded the payment of the amount of the calls as a matter of right or that the defendant made that payment as a defendant probably know that the plaintiff matter of obligation. It seems to me that the had no interest in the shares, and thought at that time that it
was proper for him-as the owner (as I have already found) of the shares-to go to the plaintiff's assistance. ently becomes more and more afraid of com. But as the correspondence progresses, he appar- promising himself. He not send anybody from his office to the Bauk to pay the calls, He vows that the shares are not his. And shares should be transferred out of his (the finally be meets the plaintiff's request that the plaintiff's) name with an explicit refusal. At the same time he bluntly informs the plaintiff undesirable position" in which he found himself was due to his own fault. These of any kind, and he allows his request for a statements the plaintiff receives without protest transfer of the shares out of his name to slumber.
that the "
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There was the fourth instalment of the call still to be paid, and on the 15th June, 1894, the plaintiff wrote to Belilios & Co. saying that he passed on to them, being the owners of the shares," the notice sent to him by the Bank Manager, and that he “had to call upon them to pay the amount due." No answer was sent to this letter, but the call was paid by Belilios'
1
On the 28th June, 1894, Mosers. Johnson, Stokes, and Master wrote on behalf of the plaintiff to Belilios & Co. requesting them to Lave the transfer from him of the shares which
Belilios & Co. wrote in answer declining to do taken out of his name.' they held registered, “so as to have the shares
this, on the ground that the shares were lodged On the following day
gentlemen were absent from the Colony. This with them by the Messrs. Coxon and those request for a transfer of the shares was not followed up by the plaintiff.
ence-beginning in July, 1895-between the It is unnecessary to refer to the correspond- parties with regard to the claim for contribu- tion in the winding up of the Bank-which commenced in December, 1894-because it is clear that the defendant from the first denied bis liability to make good any payments in such winding up.
pass now to the consideration of the objec- tion taken in point of law to the maintenance of the plaintiff's case.
This case is vested upon two grounds. It is said in the first place that is a trustee with regard to them for the bene- the plaintiff is a bare holder of the shares and ficial owner of them for the time being, and that such beneficial owner is in the position of his cestui que trust and is liable to indemnify upon to make in respect of the shares while he him for any payments which he may be called remains their registered owner. And next.it
is said that, if this principle of liability to indemnify is not admitted, yet in this particular case the defendant has so dealt with the plain- tiff with respect to the shares us to preclude indemnify the plaintiff in respect of calls upon himself from saying that he is not bound to
them.
To take first the earlier and larger of these plaintiff and the defendant do not stand to one two propositions, it is to be observed that the
and purchaser. So far as one can forman opinion another in the relationship of immediate vendor from the evidence, the purchaser of the shares from the plaintiff was G. L. Coxon. If this be so, the liability of Coxou to the plaintiff is clearly defined by the case of Hill v. Gomes, decided by the Full Court on the 28th May, 1895. In that case Gomes purchased certain shares in a share certificate and an instrument of transfer company from Hill, and received from him the in blank duly executed by Hill. Gomes subse- quently transferred the shares to another per- son, but Hill's name was allowed to remain on the register as the holder of the shares. On required to pay further calls upon the shares, the company going into liquidation Hill was and be sued Gomes to recover the amount which he had been compelled to pay. On these facts it was held by the Court that Gomes had. the conditions on which Hill held them, one of purchased the shares from Hill subject to all
ho which was the payment of future calls, and that
against all such calls so long as Hill remained was therefore liable to indemnify Hill the registered holder of the shares, even al- had parted with the shares. There are some though those calls were made after he himself observations made by the learned Acting Chief Justice in the course of his judgment which favour the view that Hill would not have had any such right of recourse against the pur- obaser from Gomes or any subsequent purchaser. Stock Exchange the original vendor and the ulti- It is true that by the custom of the London
tractual relations with one another, but we are mate purchaser of shares are brought into con-
custom. Unfortunately, however, nearly all the not now concerned with the incidents of that cuses on this head which are reported in the books have reference to this custom. In Hodg kinson v. Kelly, L.R. 6 Eq. 502, Lord Romilly, M.R., says The Stock Exchange, with its stocks, shares, and the like can be bought or ramifications, is the only body through which sold by the public. No doubt A may enter into a contract with B to sell shares to him. without the intervention of the Stock Exchange, bat such transactions are of very rare occur. rence, nor do I remember to have met with one which has been made the subject of any decision in any Court of Law or of Equity. It is
admitted that there is no express decision, question whether, irrespective of that cus- way or the other, on the
one
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