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Legal Dispute: Bank's Good Faith

HSBC accepted negotiable warehouse receipts (quedans) from Otto Ranft that were endorsed in blank by the plaintiff, Siy Cong Bieng and Co, to secure Ranft's preexisting debts. Shortly after delivering the quedans to Ranft, he died suddenly. The court held that (1) HSBC acted in good faith in accepting the quedans from Ranft as Siy Cong Bieng represented Ranft's title to the quedans; and (2) Siy Cong Bieng is estopped from denying HSBC's valid title to the quedans since its actions enabled the loss by negotiating the quedans to Ranft. The judgment absolved HSBC from Siy Cong B

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214 views2 pages

Legal Dispute: Bank's Good Faith

HSBC accepted negotiable warehouse receipts (quedans) from Otto Ranft that were endorsed in blank by the plaintiff, Siy Cong Bieng and Co, to secure Ranft's preexisting debts. Shortly after delivering the quedans to Ranft, he died suddenly. The court held that (1) HSBC acted in good faith in accepting the quedans from Ranft as Siy Cong Bieng represented Ranft's title to the quedans; and (2) Siy Cong Bieng is estopped from denying HSBC's valid title to the quedans since its actions enabled the loss by negotiating the quedans to Ranft. The judgment absolved HSBC from Siy Cong B

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43. Siy Cong Bieng and Co. v.

HSBC, 56 Phil 598 [1932]


FACTS
Plaintiff is a corporation engaged in business generally, and that theDefendant HSBC is
a foreign bank authorized to engage in the bankingbusiness in the Philippines.
On June 25, 1926, Otto Ranft called the office of the plaintiff to purchase abaca hemp,
and he was offered the bales of hemp as described in the contested negotiable
quedans.The parties agreed to the aforesaid price, and on the same date the quedans,
together with the covering invoice, were sent to Ranft by the Plaintif, without having
been paid for the hemp, but the Plaintif’s understanding was that the payment would be
made against the same quedans, and it appear that in previous transaction of the same
kind between the bank and thePlaintif, quedans were paid one or two days after their
delivery to them.
Immediately these quedans were pledged by Otto Ranft to theDefendant HSBC to
secure the payment of his preexisting debts to the latter. The baled hemp covered by
these warehouse receipts was worth P31,635.00; 6 receipts were endorsed in blank by
the Plaintif and Otto Ranft, and 2 were endorsed in blank, by Otto Ranft alone.
On the evening of the said delivery date, Otto Ranft died suddenly at his house in the
City of Manila. When the Plaintif found out, it immediately demanded the return of the
quedans, or the payment of the value, but was told that the quedans had been sent to
the herein Defendant as soon as they were received by Ranft.
Shortly thereafter the Plaintiff filed a claim for the aforesaid sum of P31,645.00 in the
intestate proceedings of the estate of the deceased Otto Ranft,which on an appeal from
the decision of the committee on claims, was allowed by the CFI of Manila.
In the meantime, demand had been made by the Plaintiff on the Defendant bank for the
return of the quedans, or their value, which demand was refused by the bank on the
ground that it was a holder of the quedans in due course.
ISSUES
1. WON HSBC acted in good faith in accepting the quedans from Ranft
2. WON Siy Cong Bieng is estopped from denying that the bank had a valid title to the
quedans

HELD
1. YES. If the owner of the goods permits another to have the possession or custody of
negotiable warehouse receipts running to the order of the latter, or to bearer, it is a
representation of title upon which bona fide purchasers for value are entitled to rely,
despite breaches of trust or violations of agreement on the part of the apparent owner.
2. YES. Applying the familiar rule of equitable estoppel that where one of two innocent
persons must suffer a loss, he who by his conduct made the loss possible must bear it,
there is now no remedy available to the plaintiff. The negotiable quedans were duly
negotiated to the bank and as far as the record shows, there has been no fraud on the
part of the defendant. Disposition The appealed judgment is reversed and the appellant
is absolved from the plaintiff's complaint.

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