customary remuneration paid by the other party if his principal is aware that a remuneration is paid to him by the other party (Baring v. Stanton, 1876, 3 Ch. D. 502; Great Western Insurance Co. v. Cunliffe, 1869, L. R. 9 Ch. 525). Liability to Third Party.-As a general rule a broker, known to be contracting as such, is not liable to the other party on the contract (see Fleet v. Murton, 1871, L. R. 7 Q. B. 126). But if he contract without disclosing, and without the other party being aware, that he has a principal, he is personally liable, and the principal is also liable (Benjamin, p. 255), and can both be sued and sue (ibid.) on the contract. And if, it being known that he is an agent, he chooses to sign a written contract, or a memorandum required by the Statute of Frauds, in his own name, he will be personally liable (Higgins v. Senior, 1841, 8 Mee. & W. 834; 58 R. R. 884). If the contract is verbal (subject to any custom such as is next referred to), it is a question of fact whether the broker's contract was made by him personally or as agent (cp. Jones v. Littledale, 1837, 8 Ad. & E. 486; 45 R. R. 542). Signing an invoice does not necessarily bind the agent personally (Holding v. Elliot, 1860, 5 H. & N. 117, distinguishing Jones v. Littledale). And by custom, where the broker is known to be contracting as agent only, but does not disclose the name of his principal at the time of the contract, he may be held personally liable as well as his principal (Pike v. Ongley, 1887, 18 Q. B. D. 709). In the absence of such custom a broker who signs a bought or sold note "as broker," or referring to his principals (although without naming them), is not personally liable on the contract (Southwell v. Bowditch, 1876, 1 C. P. D. 374). See generally on this head. the notes to Thompson v. Davenport, in 2 Smith, Leading Cases, and PRINCIPAL AND AGENT. A commission merchant has no power, unless expressly so authorised, to pledge his foreign principal's credit, and he (the agent) is solely liable, and solely entitled to sue upon the contracts he makes on his foreign principal's behalf (Armstrong v. Stokes, 1872, L. R. 7 Q. B. 598; Hutton v. Bullock, 1873, L. R. 8 Q. B. 331; 9 Q. B. 572; cp. Malcolm v. Hoyle, 1893, 63 L. J. Q. B. 1). As to the liability of the broker as being in part his own principal, and for breach of warranty of authority, see [Starkey v. Bank of England, [1903] A. C. 14, where a broker who bona fide induced the bank to transfer stock by presenting a forged power of attorney was held to impliedly warrant that he had authority, and was therefore liable to indemnify the bank against the claim of the stockholder for restitution; and see] PRINCIPAL AND AGENT. As to a broker's liability in an action for conversion, see CONVERSION, and Hollins v. Fowler, 1872, L. R. 7 Q. B. 616; 7 H. L. 757; and Barker v. Furlong, [1891] 2 Ch. 172, [and Consolidated Co. v. Curtis, [1892] 1 K. B. 495]. Rights against Third Party.-Where a broker gives a contract note describing himself as acting for a named principal, he cannot sue personally on the contract (Fairlie v. Fenton, 1870, L. R. 5 Ex. 169), and semble not even if the principal is undisclosed (Benjamin, p. 211; Sharman v. Brandt, 1871, L. R. 6 Q. B. 720). In the latter case he can show that he is the real principal, and consequently can sue (Schmaltz v. Avery, 1851, 16 Q. B. 655; Pollock on Contracts, 6th ed., p. 106). In Sharman v. Brandt, supra, there are dicta to the contrary which are adopted by Benjamin (p. 211). The actual decision in that case was that a memorandum signed by the plaintiff was not sufficient to satisfy the Statute of Frauds, and if he were a principal it is obvious that he could not be the other party's agent to sign it. But if a broker contract in his own name, even though he is known to be an agent, he may sue and be sued (Benjamin, p. 211). An insurance broker may, by an exception to the ordinary rule, sue in his own name for premiums (Power v. Butcher, 1829, 5 Man. & R. 327; 34 R. R. 432). Rights against Principal.-A broker is entitled, in the absence of agreement, to be paid the customary commission in respect of the work he does, or upon a quantum meruit if there is no customary remuneration. But he is not entitled to commission merely for introducing another broker who, upon an independent employment, carries through the transaction, and a custom to charge commission under such circumstances would be unreasonable (Gibson v. Crick, 1862, 1 H. & C. 142). If the principal revoke the broker's authority before he has carried through the transaction for which he was employed, and the broker's remuneration depended on his completing the transaction, in the absence of an agreement, express or implied, to the contrary, the broker will have no claim to remuneration or damages (see Simpson v. Lamb, 1856, 17 C. B. 603), though he may recover his actual expenses (l.c.). In a case where the plaintiff was employed as the stockbroker of a company to sell a quantity of their shares, and he was to be paid a lump sum for selling them all, it was held in effect that there was an implied agreement that his employment should not be revoked till he had had an opportunity of selling all the shares, and the company being wound up before all the shares were sold, he was held entitled to recover a sum proportioned to the shares he had actually sold (Inchbald v. Western Neilgherry Co., 1864, 17 C. B. N. S. 733). No commission can be claimed for effecting an illegal contract (Allkins v. Jupe, 1877, 2 C. P. D. 375); and by the Gaming Act, 1892, any contract to pay money by way of commission, fee, reward, or otherwise in respect of a gaming contract within 8 & 9 Vict. c. 109, or of any services in relation thereto, or in connection therewith, is void (see GAMING). [A broker's contract notes must be properly stamped. See BOUGHT AND SOLD NOTES.] A broker is entitled to be fully indemnified by his principal against all liabilities properly incurred by him in the course of his agency (Smith v. Reynolds, 1892, 66 L. T. 808, affd. in H. L. 9 T. L. R. 494), but not against liabilities in respect of illegal contracts (Ex parte Mather, 1797, 3 Ves. 373), or gaming contracts (see last paragraph, and Thacker v. Hardy, 1879, 4 Q. B. D. 685; Read v. Anderson, 1884, 13 Q. B. D. 779, the actual decision in which is no longer law), or liabilities due to his own default (Duncan v. Hill, 1873, L. R. 8 Ex. 242; cp. Hartas v. Ribbons, 1889, 22 Q. B. D. 254), where the principal elected to ratify the contract in respect of which the broker had made default, and accordingly was held liable to indemnify him. A broker (other than an insurance broker) has a particular lien on property which comes into his possession on account of his principal for what is due to him in the transaction in connection with which he receives the property (Thompson v. Beatson, 1823, 1 Bing. 145); and an insurance broker has a general lien in respect of all moneys due to him from his principal on the policy moneys (Mann v. Forrester, 1814, 4 Camp. 60; 15 R. R. 724; Smith, Mercantile Law, 11th ed., p. 773), unless he has notice that his principal is himself only an agent (Mildred v. Maspons, 1883, 8 App. Cas. 874; Man v. Shiffner, 1802, 2 East, 523), in which case he has only a lien to the extent of his principal's balance against his principal's principal (l.c.), but in any case he has a lien for the premiums he has paid and his commission (Mildred v. Maspons, supra). A stockbroker has a general lien on all securities deposited with him (Jones v. Peppercorne, 1858, John. 430; 28 L. J. Ch. 158, [In re London and Globe Finance Corporation, [1902] 2 Ch. 416]). As to pledges of his customers' securities by a stockbroker, see BANKER AND CUSTOMER (Lien). As to the employment of a broker by a trustee, see Speight v. Gaunt, 1883, 9 App. Cas. 1, and Trustee Act, 1893, s. 24. See generally on brokers, Bowstead on Agency (to which the writer of the above article is indebted for reference to a number of the authorities). For Distress Broker, see DISTRESS; see also BROKER (INSURANCE); and STOCK EXCHANGE. Broker (Insurance).-Marine insurance is generally effected through the medium of insurance brokers, who get the insurers or underwriters to insure risks on behalf of the assured, and are the middlemen between the assured and the underwriter." "The broker is, however, not merely an agent; he is a principal to receive the money from the assured and to pay it over to the underwriter" (Bayley, J., Power v. Butcher, 1830, 10 Barn. & Cress. 329; 34 R. R. 432). The course of dealing between the three parties is thus concisely stated by Phillips: "The premium on a marine policy is due from the assured to the broker, and from the latter to the underwriter. The broker has an action against the assured for the premium, and the underwriters against the broker. All other claims and liabilities arising on the policy are between the assured and the underwriter" (Insurance, 507). The legal position of the three parties thus resembles a triangular duel; for the underwriter can only have recourse to the broker for his premiums, the acknowledgment in the ordinary policy of having received the premium being conclusive as between the assured, for whom the policy is made, and the underwriter (Dalzell v. Mair, 1808, 1 Camp. 532); and this rule of law, founded on the custom of Lloyd's, applies to a company's" policy "containing a covenant by the assured to pay the premium to the underwriter as well as to the ordinary Lloyd's policy (Univ. I. C. of Milan v. Merchants M. I. C. L., 1896, 2 Com. Cas. 28, Collins, J.; 1897, 2 Q. B. 93, C. A.; and see Arnould, 56, 106). The broker, in his turn, can only resort to the assured for the premiums; while the assured can sue the underwriter directly for losses and returns of premium for short interest. The course of business between the parties may, however, alter this, if, as is generally the case, running accounts are kept between the broker and underwriter, on the one hand, and between the broker and the assured on the other: and the rights of the assured against the underwriter may be materially qualified if the assured allows claims which belong to him to go into the account between the broker and underwriter, eg. if the policy be left in the hands of the broker for adjustment, the custom of Lloyd's allows the underwriter to be discharged from his liability on its being passed into the account between him and the broker, and the assured can then only have recourse to the broker for the money owing to him (Scott v. Irving, 1830, 1 Barn. & Adol. 605; 35 R. R. 396; Macfarlane v. Giannocopoulo, 1858, 3 H. & N. 860; Sweeting v. Pearce, 1861, 9 C. B. N. S. 534). As between Broker and Underwriter.-The course of business (as described in the cases Beckwith v. Bullen, 1858, 8 El. & Bl. 685; Great Western I. C. v. Cunliffe, 1874, L. R. 9 Ch. 525) was for two accounts to be kept, the parties arranging into which the premium on the particular policy was to go. The one was called the credit account: if the premium went into this, it was not payable before the end of the year, and the account was made up by debiting the broker with premiums and the underwriter with the losses and returns of premium, the broker receiving a brokerage of 5 per cent. on the premiums and paying any balance against him under a discount of 12 per cent. The other is called the cash account if the premium went into this, the account was settled up at the end of each month, the broker paying the balance against him, receiving a discount of 10 per cent. for ready money, and a brokerage of 5 per cent. on the premiums (Baring v. Stanton, 1876, 3 Ch. D. 502). The effect in law of this is that the underwriter gives the broker credit for the premium when the policy is made, and he is regarded as having paid it to the underwriter and then having it lent him again; and for this reason the premium is always taken between the assured and underwriter as paid, except in the case of fraud between the assured and the broker (Mavor v. Simeon, 1810, 3 Taun. 497; Foy v. Bell, 1811, 3 Taun. 492; 12 R. R. 691: per Lord Wensleydale in Power v. Butcher, ante; Blackburn, J., Xenos v. Wickham, 1864, 33 L. J. C. P. 18). The broker stands in the shoes of the assured as regards liability for premiums to the underwriter; and can avail himself of any defence which the assured would have had, eg. that the insurance is illegal (Edgar v. Fowler, 1813, 3 East, 222; 7 R. R. 433). The present prevailing custom is for the broker to keep monthly accounts with insurance companies and quarterly accounts with Lloyd's underwriters. The broker owes no duty of care or skill to the underwriter (Empress Ass. Co. v. Bowring, 1905, 11 C. C. 107). It follows from the rule that the broker is the underwriter's debtor for premiums, and the underwriter the assured's debtor for losses, as well as from the fact that a policy of insurance, even after adjustment, is still a contract under which no fixed sum can be recovered, that the broker and underwriter cannot, as a rule, set off losses against premiums, and vice versa. They can only do so in the event of one or the other going bankrupt if they have had mutual credit or dealings with each other (Bankruptcy Act, 1883, s. 38). A series of decisions on this point establish the general principle that if the broker insures in his own name, whether on his own account or on that of his principal, and whether acting under a del credere commission or not (i.e. guaranteeing the solvency of the underwriter), provided that he has a lien on the policy either by the general course of business between himself and the assured, or because he has made advances to the assured against the goods insured and consigned to him, he can, in case of the underwriter's bankruptcy, set off losses against the latter's claims to premiums; or, put shortly, the contract must be made in the broker's name, and he must have an interest in the subject of insurance. "The acceptance of bills on the credit of the consignment gives them an interest and a lien, and having a right to retain the policies, and the policies being in their own names, and the contract of the underwriter originally with them, they may bring the action in their own names; ... they may have an interest not only by a del credere commission, but also by a lien" (Lord Ellenborough, Parker v. Beasley, 1814, 2 M. & S. 425; 15 R. R. 299; Koster v. Eason, 1813, 2 M. & S. 112; 14 R. R. 603; Cumming v. Forester, As between the Broker and the Assured.-The ordinary course of business is for an account current to be kept between these two parties, the broker crediting the assured with losses due upon the insurances. effected for him, and debiting him with the premiums on those insurances; and either settling up a month after the adjustment of a loss, or, if their mutual dealings are extensive, letting the balance go into a general account (Stewart v. Aberdein, 1838, 4 Mee. & W. 211). The present practice, however, varies considerably. The usual commission for effecting a policy is five per cent. on the premium (Power v. Butcher, ante). The broker may, if he acts del credere, get a higher commission in consideration of his guaranteeing the underwriter's solvency: this is payable at once when the contract is made, and not merely when the underwriter goes bankrupt, "that event being perfectly collateral" (Lord Ellenborough, Caruthers v. Graham, 1811, 14 East, 578; and see generally as to the present usual course of business, Arnould, ss. 102-105). As regards the broker's liability to the assured, the following points may be noticed. He is liable for breach of contract to the assured if he does not effect a policy for which he has received commission; for this purpose the assured must prove his loss just as he would have to in an action against the underwriter, and the broker may make use of any defence which the underwriter would have had (Harding v. Carter, 1781, Park, 4, Lord Mansfield). Even if he has undertaken gratuitously to effect an insurance, he is liable if he does it so ill that the assured gets no benefit from it, i.e. for misfeasance, though not for non-feasance (Wilkinson v. Coverdale, 1793, 1 Esp. 75; and see Arnould, 146-149). He must show the reasonable and average amount of skill to be |