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Lincoln International Ltd v Seymour Feldstein

Judgment Cited authorities 12 Cited in Precedent Map Related
Vincent
Judgment Date07 June 1973
Year1973
Judgement NumberHCA1324/1973
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA001324/1973 LINCOLN INTERNATIONAL LTD v. SEYMOUR FELDSTEIN

HCA001324/1973

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 1324 OF 1973

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BETWEEN
LINCOLN INTERNATIONAL LIMITED Plaintiff
and
SEYMOUR FELDSTEIN Defendant

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Coram: Blair-Kerr, S.P.J.

Date of Judgment: 7 June 1973

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JUDGMENT

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1. In December 1971 and January 1972 Cordine International Corporation (hereinafter referred to as "Cordine") placed with the plaintiffs orders for merchandise, the total invoice value of which was US$77,615.60. The merchandise was subsequently supplied by the plaintiffs to Cordine. Details of the invoices and the terms on which it was purchased are as follows :-

Invoice Monies owed Terms Due date
L/4917 US$30,459.60 150 days D/A 7/6/72
4928 17,366.40 90 " " 20/4/72
4940 16,554.40 " " " 30/4/72
5072 5,635.00 " " " 12/8/72
5173 1,919.52 " " " 23/9/72
5188 1,540.08 " " " 1/10/72
5215 1,005.00 " " " 8/10/72
5229 1,688.40 " " " 14/10/72
5248 1,447.20 " " " 23/10/72
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Total

 US$77,615,60
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2. In April 1972, the defendant, who is President of Cordine, informed the plaintiffs' manager (Mr, Prior) that Cordine was unable to pay for the merchandise; and in August 1972 the defendant, as President of Cordine, signed 5 promissory notes each for US$14,386.98 [totalling US$71,934,90] in favour of the plaintiffs; and he personally endorsed each of the notes as guarantor. The notes matured on 1st, 8th, 15th, 22nd and 29th December 1972; and were made payable at Long Island Trust Co., Garden City, New York. They were given by the defendant to the plaintiffs by way of collateral security for the monies due on invoices 4917, 4928, 4940, 5072 and 5173.

3. In October 1972, the defendant signed a further 5 promissory notes each for US$14,386.98. Again, he signed the notes as President of Cordine and endorsed each note as guarantor. The notes matured on the same dates viz. 1st, 8th, 15th, 22nd and 29th December 1972. The intention was that they should replace the 5 notes signed in August 1972. The reason given by the defendant was that the bank account of Cordine had been transferred from Long Island Trust Co., Garden City to Long Island, International Bank of Hicksville.

4. On 21st November 1972 (i.e. before the due dates of any of the 5 promissory notes), the plaintiffs and 2 other Hong Kong companies [viz. Manning Trading (H.K.) Co. and H. Cheong-Leen & Co. (H.K.) Ltd.] instituted proceedings in New York against the defendant, Cordine, and 2 other corporations for US$136,315.52. According to the summons issued by the American court, the object of the action was

"to recover payment of promissory notes and bills of exchange; to require defendants to account for fraudulent transfers of assets; and to recover damages for fraud."

It would appear that in this one action the plaintiffs were suing Manning Trading (H.K.) Co. in respect of US$48,655.92 due on various bills of exchange, Cheong-Leen & Co. in respect of US$10,043.20 due on another bill of exchange, and the amounts due to the plaintiffs on the 9 invoices viz. US$77,615.60. These 3 figures total US$136,314.72. The small discrepancy between that figure and the figure on the U.S.A. summons (viz. US$136,315.52) would appear to be due to a small arithmetical error. However, according to an affidavit sworn by the defendant's solicitor on 22nd December 1972, it appears that the plaintiffs' New York solicitor informed him that the plaintiffs also intended to sue on the 5 promissory notes falling due on 1st, 8th, 15th, 22nd and 29th December 1972. At that stage the first 3 promissory notes had been presented for payment and had been dishonoured.

5. On 19th December 1972, the plaintiffs instituted an action in Hong Kong (O.J. 3249/72) in which they claimed as against the defendant as guarantor and endorser of the first 3 promissory notes the sum of US$43,160.94. It appears that the plaintiffs cabled their New York solicitor requesting him to delete from the New York proceedings the claim in respect of these 3 promissory notes which fell due on 1st, 8th and 15th December.

6. The defendant, who resides in the U.S.A., was in Hong Kong at this time on business; and on 19th December the plaintiffs applied to bring under o.44A for a warrant to issue requiring the bailiff to bring the defendant before the Court to show cause why he should not give security for his appearance to answer any judgment that may be given against him. In the supporting affidavit, it was alleged that the defendant had told Mr. Prior that he was about to leave the Colony and that he had no intention of paying the amount due under the 3 promissory notes.

7. The defendant was brought before me on 20th December to show cause why he should not give security for his appearance to answer any judgment that may be given against him in the action. The defendant failed to show such cause and under r.3(2) of 0.44A, I ordered him to give bail in the sum of US$43,000 for his appearance at any time when called upon while the action is pending and until the execution of any judgment that may be given against him in the action. But, as a temporary measure, provided he surrendered his passport to the bailiff, I agreed to release him till 2.30 p.m. on 21st December upon his depositing with the Court nominal bail of HK$500.

8. On 21st December the parties agreed that this nominal bail should be extended to 27th December to enable the defendant to make arrangements for the bail of US$43,000; and on 27th December, the parties again agreed that there should be a further adjournment to 29th December on the same terms at which time, it was anticipated, counsel for the defendant would ask me to review my order of 20th December made under r.3(2).

9. As regards the surrender of the passport, I feel bound to say that the defendant behaved less than honestly. First of all he tried to "fool" the bailiff by handing him an expired passport. When the bailiff told him that this was unacceptable, he then surrendered his current passport; but he immediately, asked the U.S. Consul-General in Hong Kong to provide him with another one. I did not accept his assertion in evidence later that he had no intention of departing from Hong Kong. I have no doubt but that he would have left the jurisdiction if steps had not been taken to prevent him doing so.

10. Be that as it may, he gave his solicitor certain instructions, the result of which was that on 22nd December 1972 another action (O.J. 3291/72) was instituted by the defendant against the plaintiffs. This action was really by way of counterclaim to the claim in O.J. 3249/72, the defendant's claim being for alleged defects in the merchandise supplied by the plaintiffs under the 9 invoices I have mentioned, alleged short shipments, late delivery and also an alleged breach of some agency agreement.

11. On 29th December, Mr. Oswald Cheung applied for an order discharging the order for bail made on 20th December; alternatively for a review of the quantum of bail ordered. Mr. Jackson-Lipkin agreed that I had jurisdiction to review the quantum of bail, but his submission was that I had no jurisdiction under the rules to discharge the order for bail made under r.3(2).

12. According to the record of the proceedings, I gave no ruling on the point because the matter was further adjourned to 30th December; and, as counsel had not completed their submissions, I prefer to express no concluded view except to say that, apart from rr.5 and 6, it seems doubtful whether a judge has any jurisdiction to discharge an order made under r.3(2). On the face of it, r.4(2) gives the Court a measure of discretion; but whether the word "comply" means" comply "fully" or whether a partial compliance with the order would justify the Court in not sending the defendant to prison seems an open question. One the defendant is in prison, the rule does give the Court jurisdiction to release him at any time.

13. The parties came before me again on 30th December. By that date, the other 2 promissory notes falling due on 22nd and 29th December had been dishonoured; and the parties asked me to make a consent order. The order, as drawn up and filed, (so far as relevant), reads as follows:-

"Upon hearing counsel for the plaintiff company and counsel for the defendant and upon the plaintiff company by its counsel undertaking not to make any further application to this Court in respect of promissory notes drawn by Cordine International Corporation in favour of the plaintiff company and endorsed or guaranteed by the defendant and upon the defendant under taking by his counsel not in anywise to pray in aid this action to defeat to delay to prevent or to stay and to permit the plaintiff company to continue to sue him in an action in the Supreme Court of the State of New York, County of New York entitled 'Lincoln International Limited Manning Trading (H.K.) Co, and H. Cheong-Leen & Co. (H.K.) Ltd. plaintiffs against Seymour Feldstein Cordine International Corporation Enchanted Products Corporation and Toy Traders Co. defendants. And By Consent, it is hereby ordered that :-

1. Should the defendant pay into Court on or before the 12th day of January 1972 the sum of 20,000 United States dollars or its equivalent in Hong Kong currency;
(a) the warrant issued herein pursuant to the order made here in on the 19th December 1972 shall thereupon be discharged.
(b) the Chief Bailiff of this Court shall thereupon be authorised to return to the defendant his passport or passports surrendered by the defendant
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