IN THE SUPREME COURT OF HONG KONG
ACTION NO.1340 OF 1968
|ARTHUR A. SEIDMAN & COMPANY (a firm)
|WINNER COMPANY (H.K.) LIMITED
Coram: Pickering J.
Date of Judgment:
1. The trial of this case occupied a week and during its course several hundreds of yards of a cotton grey cloth known in the textile trade as "Osnaburg" were inspected in Court foot by foot by the managing partner of the plaintiff firm and by an expert witness called on behalf of the defendant Company. Almost all the cloth so examined formed part of the contents of a bale of Osnaburg opened for the first time in Court and which had been chosen at random from a consignment of 300,000 yards which had been shipped by the local defendant Company to the order of the New York plaintiff firm in the U.S.A. The basic purpose of the examination was to compare this randomly-selected portion of the bulk with that of a 44" x 16" piece of Osnaburg which the plaintiffs claim is the remaining portion of the sample submitted to them by the defendant company in connection with the sale of the 300,000 yards. I say "the remaining portion" of the sample because it is the plaintiffs' case that approximately one half of the original sample was cut off by them and handed to a customer of their own to whom the plaintiffs had resold the whole consignment but who subsequently, after attempting to process (that is to dye and print) some five or ten bales from the bulk, rejected the goods as being the same "Singapore trash" which they had previously rejected from another source. Similar rejections from various other customers were experienced by the plaintiffs.
2. In parenthesis I would add that the material was in fact woven in Singapore by an associated Company of the defendant Company.
3. There was evidence as to the course of dealings between the plaintiff firm and the defendant Company both for some years before the entry, in 1966, into the contract which led to the present dispute and during a subsequent period. It is unnecessary to say any more about that evidence than that it revealed an earlier history of mutual trust and amity the plaintiffs having purchased millions of yards of various types of cloth from the defendants without ever previously having submitted any claim against them.
4. The existence of the contract, which was for the sale of 300,000 yards of Cotton Greige Osnaburg 40 x 30, 12s/10s 45" wide at 16 1/2 U.S. cents per yard C.I.F. New York or Charleston from Singapore, is not in dispute; additonally the parties are agreed that the contract was a contract for sale by sample as well as by description; further, the plaintiffs do not complain that the goods delivered do not accord with the description Cotton Greige Osnaburg 40 x 30 (a reference to the number of warps and wefts per square inch) 12s by 10s (the count of the yarn), 45" wide. The gravamen of the plaintiffs complaint is that the bulk Osnaburg delivered was of inferior quality to that of the sample submitted to them. Whilst the defendants' admit that it was an implied condition of the contract that the bulk should correspond with the sample, it is their case that the 44" x 16" piece of cloth (exhibit P.1) produced by the Plaintiffs in Court as the remaining portion of the sample submitted by the Defendants is not in fact a portion of such sample and the managing director of the defendant Company went so far as to suggest that the plaintiffs' claim was fraudulent.
5. On the evidence of that same witness the plaintiff firm is one of the biggest - if not the biggest - importer of cotton grey cloth into the United States of America. I have already referred to the history of mutual trust and amity between the parties in the course of previous dealings in very large quantities of cloth. It is against that background that the suggestion of fraud on the part of the plaintiff firm and with it, the true identity of the piece of cloth, Ex. Pl, falls to be examined.
6. Mr. Arthur A. Seidman, managing partner of the plaintiff firm, said that he received the sample by airmail on May 4th 1966 and that on a date which he placed as being either the 4th, 5th, 6th, 7th or 8th of that month but probably the 4th, the date of receipt, he endorsed upon it in his own handwriting the words
"Received May 4th, 1966 from Winner 45" - 40 x 30 - 12/10 Singapore C.I.F. Charleston 16.5"
and added his signature. He was satisfied with the quality of the sample and considered that on the basis of the weaving, texture, colour, roundness of yarn and lack of "thick and thin" places he could sell the entire consignment immediately at a profit. On May 4th, 1966, he cabled the defendant company accepting their offer. The goods were duly paid for and in due course arrived in the port of Charleston, U.S.A.
7. The witness then took the sample to a New York firm, Rose Textile Corporation, which he described as one of his biggest customers for osnaburg. Rose Textiles bought the whole consignment at 20 cents per yard giving the plaintiffs, who estimated their own landed cost at 18.8 cents per yard, a profit of about 6 per cent. The witness cut the sample and left half of it with Rose Textile Corporation.
8. Subsequently Rose Textiles caused a small number of bales from the bulk to be sent to their processor and as a result of the difficulty experienced in processing the cloth Rose Textiles cancelled their contract with the plaintiffs who thereupon instructed the warehousemen in Charleston to break bulk and send them a 50-yard piece of the osnaburg for cutting into samples in order to sell the goods elsewhere. Later one bale of 1,186 yards was sold to Louis Hornick, a very large curtain goods converter, who did not...