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Mr. Kong Sing argued that it was an action raised in the Colony on a promise specifically given to return these notes to the plaintiff; the promise was given in the Colony, and also the document in writing.
Evidence was called. Plaintiff in the witness-box stated that he was to pay 600 taels on account of these docu. ments. He paid that amount in Hongkong. Defendant promised to return these documents to him when he was in Hongkong, but had not done so.
Cross-examined-The two notes were made in the names of different people; they were made in his native village of Kauhau, San Un district, near Canton. Defendant had a business there. Plaintiff had a business in Hongkong. When the settlement took place he payed over 600 taels out of a total of 610 taels payable to defendant.
After other evidence, His Lordship made an adjournment until this forenoon at 10.15 o'clock, when the case for the defence will be heard.
Thursday, 7th July.
IN BANKRUPTCY.
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THE HONGKONG WEEKLY PRESS AND
1904, our books show $99,000. received." The petitioning creditor, Chau Kam Chiu, of the Po Tseung Chan firm, states in his affidavit that the bank owes his firm $20,000 for money lent on 4th March 1904, and that on 14th March he received notice that the bank had suspended payment with liabilities of about $120,000.00. Although the nominal assets are alleged to be more than that, there does not apper much chance of collecting any great proportion of them. Now, AA it appears that Cheung Kai Yu. one of the managing partners, had advanced out of the bank's funds or deposits some 851,000 to his own shop, the Yee Cheung, and $14,000 to his father's shop at Kongmoon, it is not surprising that the creditors who had deposited money and found themselves such heavy losers by the bank's failure, should be indignant at such an applica- tion of the bank's assets-indeed, it seems that the last instalment of $24.000 to the Yee Cheung was actually advanced by Cheung Kai Yu on 26th February this year. Cheung Kai Yu ad- mits this in his examination, and also that it has not been repaid. Conduct of this sort may well explain why his statement that he and Kwong Kam Nam were the only partners, is not deemed at all conclusive by many of the bank's creditors
whether the three others who have been named were also partners in spite of their denials of that assertion. It may be well in the first place to make some general observations as to the law in force in Hongkong. The law of partnership in this Colony is clearly stated by Ordinance No. 2 of 1897, entitled "an Ordinance to declare and amend the Law of Partnership." That law is practically the same as the English law, and it in no way recognises the notion of limited liability as regards the partners in a private firm. The principle of limited liability so well hown in connection with Companies formed under the Companies' Ordinances, where proper modes are provided for winding-up such companies and apportioning the liability of members in case of insolvency and failure. does not apply to private firms.
BEFORE HIS HONOUR SIR W. M. GOODMAN and, in the result, I have to decide the issue
(CHIEF JUSTICE).
THE PO FUNG BANK.
The case was again called in which upon the application of the Official Receiver (Mr. Bruce Shepherd) the Court had ordered that an issue be tried as to whether Lo Yuk Shang. Kwong King Tong and Kwong Yik Lam were partners in the Po Fung Bank at the date of the petition in bankruptcy being filed, or at such other date as the Court may determine.
Mr. John Hastings, solicitor, appeared for the Official Receiver; Mr. H. W. Looker, solicitor. of Messrs. Deacon. Looker and Deacon, appeared for the men alleged to be partners in the bank; and Mr. S. W. Tso, solicitor, and Mr. O. D. Thomson, solicitor, represented certain creditors. The action was the outcome of the Bankruptcy proceedings re the Po Fung Bank ex parte Po Tsung Chan, it being alleged that certain persons were partners in the Po Fung bank, an allegation they denied.
His Lordship in delivering judgment said :- This was an issue directed to be tried to determine whether Lo Yuk Shang, Kwong King Tong, and Kwong Yik Nam. were partners in the Po Fung bank, which failed last March and was adjudicated bankrupt on the 2nd day of June, 1904.
A system of limited partnership or part- nership en commandite or in commendam is recognised by French law, which. I believe, requires all partnerships and companies to be registered. In that system the contract is between one or more persons who are general partners and jointly and severally responsible. and one or more other persons who merely furnish a particular fund or capital stock, and thence are called commandataires, or commendataires, or partners en commandite. The busi- Mr. Sharp, K.C., and (in his absence) Mr. ness is carried on under the Social Hastings for the Official Receiver argued that name or firm of the general partners only. the above named were partners, while Mr. Slade the partners en commandite being liable to appeared for the alleged partners and argued losses only to the extent of the funds or capital that they were not and never had been partners furnished by them. But, as I have said, such a in the Bank. The trial lasted for four days. system with regard to private firms is not The question which I have to decide is recognised by English law, or the law of whether Lo Yuk Shang, Kwong King Tong Hongkong. I mention this because I believe and Kwong Yik Nam, or any of them were that among the Chinese of means these are partners in the Po Fung Bank on 24th many who wish to limit their liability to the March, 1904. the date when the bankruptcy amount of their share in the business. They petition was filed. It has not been suggest dislike being liable for unknown amounts ed that any of the three resigned before resulting from the contracts which the man- that date. On the one side it was contended aging partner may enter into on behalf of the that they never were partners in the bank hong, and as. under British law, all partners at any time, and on the other side it was are liable for the debts of the firm, when they contended that they were partners and had at wish to evade this obligation they take different times distinctly told the witnesses who care that their names shall not openly ap- deposed to it that they held shares in the Popear as partners, even in cases where their Fang bank. If they were, at any time, part-friends know that they are really partners ners it would, therefore, appear that they were having shares in the business, and on that so in March last, so that the really important ground are more ready to give credit to the question is were these persons, respectively, part-firm. In case the firm should become insolvent, ners at any time in the Po Fung Bank. It seems that the managing partners were Kwong Kam Nam and Cheong Kai Yu. That is admitted by both sides. The bank was started about September or October, 1901, and according to the statements of the managing partners it appears that Kwong Kam Nam put in about $38,000, and
Cheong Kai Yu contributed about $5,000, making a capital of $43,000, with which to start and carry on the Bank. It seems that shortly before the 25th of February of this year certain people be came suspicious of the bank's solvency. Indeed, Kwong Kam Nam, when examined, stated:
The run on the bank began on 25th February and onwards. We borrowed money to stave off the run. From 1st February to 9th March,
such persons probably honestly believe that they have discharged all the obligatious imposed by integrity and commercial morality if the share they have contributed goes towards meeting the liabilities of the firin. They feel practically secure against further liability because of the great difficulty of proving them legally to be partners. Such is the view I entertain from the experience I have gained in this Colony from the numerous cases of disputed partner ship which have come before myself and other judges in the courts of law. I only refer to this difference between the English law of partner. ship and the Chinese view of the subject because it may possibly partly account for the remarkable I contradictions by one side of the evidence given on the other so often met with in cases of dispat
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(July 11, 1904.
ed partnership. If every witness would really try to speak the truth, one would suppose there could be no difficulty in ascertaining whether A B and C were partners in a given firm. First one wou'd naturally refer to the partner- ship agreement or to the book containing the partners' names, usually kept by respectable Chinese firms. But here, not only was there no written partnership agreement, but the manag. ing partners say there was no book kept at all with the partners' names in it.
It was alleged there was such a book and that it was at Kongmoon, but I do not think that was satisfactorily proved and the managing partners denied it. An examination of the ordinary books of the firm throws, I am informed, little light on the question. It is not stated who the people were who put in the capital No yearly balance sheets shewing profits and losses were made out, and the profits if any at the end of the Chinese years in 1902, 1903 and 1904 do not seem to have been paid over to any of the partners, and we are left, therefore, to consider the conduct and statements of the admitted partners and of the three alleged partners, and of the witnesses.. If the evidence for those who allege that Lo Yuk Shang, Kwong King Tong and Kwong Yik Nam are partners is to be be- lieved, the case is abundantly made out against them. But, as the witnesses called on the other side contradicted most of the relevant evidence given by the witnesses for those whom for con- venience I will call the plaintiffs, the case requires careful consideration, and that I have bestowed upon it. The Official Receiver, I think very properly, wished the question to be decided one way or the other, and it was threshed out for four whole days during which an extraordinary amount of absolutely contra- dictory evidence was given. I think that the burden of proof lies on the plaintiffs, those who allege the partnership. Have they brought forward such a body of credible evidence as to turn the scale against those who deny that the three persons mentioned were partners?
Taking the case of Lo Yuk Shang.
Lui Fu Ngam deposed that Lo Yuk Shang asked him to deposit money in the Po Fung Bank and told him he had a share in it, and that, accordingly, he did so, and the insolvent Bank now owes him $1.350. Wong Yut Man (or Kwong Yut Man), mister of a rice shop at 195, Wing Lok Street, deposed that Lo Yuk Shang came and asked him to “ patronise our Bank the Po Fung" and stated that he had a share in it." The witness did deposit accord- ingly and the Bank now owes him $2000.
Tsui Pak Yu, who was for some time a part- ner with Lo Yuk Shang in the Shung Shing shop, deposed that Lo Yuk Shang stated that a few Sunning people had started the Bank, and that he had a few thousand dollars in it," and thus the witness was induced to deposit money, and now the Bank owes him $600.
Lau Sing Kin, managing partner of a firm at 127. Wing Lok Street, stated that, at his shop. Lo Yuk Shang said It is a genuine Bank, my friends are carrying on the business and Kwong King Tong is a partner." That afterwards he saw Kwong King Tong, who told him that Lo Yak Shang was also a partner, and he was in- duced to deposit and the Bank now owes him $2,000. He added that after the Bank got into difficulties, he saw Lo Yuk Shang who said when the accounts are made up, we shall pay you all."
Then Chan Yam Cheung, a partner in a firm at 73. Wing Lok Street, deposed that he knew Lo Yuk Shang, who used to live in the country close by his place, and that, about the begin- ning of January this year, Lo Ynk Shang called and said he had a share in the Bank and asked the witness to deposit money in it. This he did and is now owed $500 by the Bank. When he went to the Bank, about 8th March, he was told by Lo Yuk Shang he would get paid when the accounts were made up. In face of the evidence of these five witnesses and the direct statements of Lo Yuk Shang deposed to by them. to what conc'usion is one forced to come ? Either that the evidence is false or that Lo Yuk Shang was a partner. Sir Nathaniel Lindley says, in his standard work on Partnership, at p. 95:-
An admission made by anyone that he is a member of a particular partnership is evidence of that fact against him; and such an admission renders it unnecessary, for the purpose of fixing him with the liabilities of a partner, to show
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