A BANK OF NEW ZEALAND APPEAL CASE.

Otago Witness, Issue 2045, 4 May 1893, Page 15

A BANK OF NEW ZEALAND APPEAL CASE.

AN INCIDENT OF THE CHILIAN WAR.

The Bank of New Zealand has jjast had a slice of good luck in winning an action which involved a large sum of money. When the Chilian war was being waged in 1891, and provisions were necessarily high, it was considered a good spec to ship New Zealand flour to Lima. In July 1891 the London Bank of Mexico and South America requested the Bank of New Zealand to instruct their Dunedin branch to hold at the disposal of the Hon. W. H. Reynolds £15,000, payable ak9o days' sight, by drawing upon the London Bank of Mexico, &c, against delivery of shipping documents and policy of insurance for 11Q0 tons of flour and 300 tons of barley shipped per 8.8. Crusader,

and the bank undertook to honour the billon presentation, whether drawn by the Dunedin branch of the Bank of New Zealand or by Mr Reynolds. The saaie day the Bank of New Zealand, at the request of the other bank, sent a cable message to Dunedin in terms prepared by the London Bank of Mexico and South America. The goods were shipped, and Mr Reynolds's draft was honoured at Dunedin. When the vessel reached Chili the war was over, and flour was down in value. The London Bank of Mexico and South America further complained that the "tons" of flour shipped were really 1100 tons of 20001b each, which it seems is the usual New Zealand ton, instead of the Imperial ton of 22401b. They also declared that the agreement with the Bank of New Zealand implied that the bank should not advance the whole of the £15,000 without making provision for the freight, and that having advanced the whole, the value of the flour and barley as security for the advance was reduced by £2000 in respsct of freight payable at the port of discharge. They therefore declined to honour the draft of the Hon. W. H. Reynolds for £15,000, which was drawn at Dunedin on July 24, 1891. The Bank of New Zealand therefore brought an action in the Court of Queen's Bench before Lord Justice Bowen. They contended that they had done all that could be demanded of them in honouring the Hon. W. H. Reynolds's draft, as requested, at Dunedin, and in forwarding sufficient shipping documents, according to the usages of the New Zealand trade. The defendants contended that the contract was an English one, made in England, to be decided by English law, and that the "tons" meant tons of Imperial measure, and not the smaller New Zealand capacity, and that this short delivery justified them in declining to honour the draft. Lord Justice Bowen, in delivering judgment at the conclusion of the argument, said it was not necessary to pause to consider his judgment, as his view of the law was clear. He thought that the defendants were responsible because of the ambiguity of the telegram which they caused to be sent to Dunedin. The plaintiffs' manager there had acted without any impropriety or negligence, and fulfilled his contract in forwarding the documents to Lima according to the recognised mercantile and business method. The defenI dants might have known if they had chosen to inquire, that flour was not sold in New Zealand by the ton, or indeed, anywhere, certainly not in England ; and he thought the loss ought to fall on the defendants' shoulders, though unwitting, as the mistake had arisen through the ambiguous wording of the telegram. There would be judgment for the plaintiffs for £15,000, with interest from the due date of the bill, December 19, 1891, at 4 per cent. On the application of counsel, execution was stayed till the first day of next sittings, with a view to consider an appeal.