STUBBS v. SLATER. equivalent to interest for fifteen days; that a broker in a NEVILLE J. speculative transaction like the plaintiff's was entitled to 1909 charge an opening and closing commission, but it was usual instead thereof to charge on the carry over a commission of per cent. or a net rate; that the net rate was well known on the Stock Exchange to represent the jobber's contango plus a small charge for the broker's remuneration; and that where a net rate was charged a closing commission was not charged. Butcher, K.C., and E. Lunge, for the plaintiff. The defendants were entitled to charge an opening and closing commission, but could not also make a charge for all the intermediate continuation accounts. It was their duty as the brokers of the plaintiff to pass on to him in its entirety the continuation contract they made with the jobber, shewing the exact charge made by the jobber, and they could not charge any remuneration for themselves for carrying over the shares without a definite agreement with the plaintiff to that effect: Strange & Co. v. Lowitz (1); Nicholson v. Mansfield & Co. (2); Schwabe and Branson's Law of the Stock Exchange, pp. 61, 135. [NEVILLE J. referred to Baring v. Stanton. (3)] That case stands alone, and, moreover, there the plaintiff knew, or ought to have known, of the alleged commission. Here knowledge of the meaning to be attributed to the "net" rate cannot be imputed to the plaintiff. The case most like the present is Johnson v. Kearley. (4) The price which the continuation accounts represented that the brokers had paid the jobber was more than they actually paid, and they thus made a secret profit. They must account for that secret profit and are not entitled to any remuneration for carrying over the shares : Salomons v. Pender (5); Andrews v. Ramsay & Co. (8) It is not a case like Hippisley v. Knee Brothers (7) and Nitedals Taendstikfabrik v. Bruster (8), where the transactions were severable. (1) (1898) 14 Times L. R. 468. (2) (1901) 17 Times L. R. 259. (3) (1876) 3 Ch. D. 502. (4) [1908] 2 K. B. 82, 514. (5) 3 H. & C. 639. 1909 STUBBS ". SLATER. NEVILLE J. Next, as to the wrongful conversion of the gas shares, the deposit of the shares was an equitable mortgage, and the defendants could not validly exercise their implied power of sale until they had given the plaintiff a proper notice requiring payment of the amount due and fixing a day certain for payment: Deverges v. Sandeman, Clark & Co. (1); and a demand for an excessive sum is bad: Pigot v. Cubley. (2) Here they never gave a notice requiring payment of the 691. 10s., but, if the letters relied on were a sufficient notice, the demand was excessive, because the actual amount due (if we are right on the first point) was 697. 10s. less the 177. 17s. 10d. The plaintiff therefore is entitled to damages which are not limited to the value of the shares at the date of the sale: Greening v. Wilkinson (3); Michael v. Hart & Co. (4) Further, whether a power of sale is exercised reasonably depends on the circumstances of each case: Kennedy v. De Trafford. (5) Here the defendants acted recklessly and without regard to the plaintiff's interests. Shares are separable, and they ought to have completed the transfer to themselves and then sold only enough to satisfy their debt, but they sold the whole block without considering the plaintiff at all. Jenkins, K.C., and J. F. Galbraith, for the defendants. This is not a case of secret profit. The first continuation account received by the plaintiff contains a charge of "8d. net," which the plaintiff says was not usual. There is no evidence that that charge meant only the contango. On the contrary, to every one conversant with the Stock Exchange it represented the contango plus a small charge for the broker's remuneration. The plaintiff has dabbled on the Stock Exchange before and must be taken to have some knowledge of the customs and practice of its members, and if he saw anything unusual on the contract note he would be put on inquiry, and the observations of Farwell L.J. in Johnson v. Kearley (6) are in our favour. It is not suggested that the defendants were dishonest, but only that the plaintiff did not know what profit they were making. The case falls (1) [1902] 1 Ch. 579. (2) (1864) 15 C. B. (N.S.) 701. (3) (1825) 1 C. & P. 625. (4) [1901] 2 K. B. 867; on appeal, [1902] 1 K. B. 482. (5) [1897] A. C. 180. (6) [1908] 2 K. B. 514, 532. 1909 STUBBS v. SLATER. within the rule that a party contracting with a member of the NEVILLE J. Stock Exchange must be taken to know that he is dealing subject to the usual terms, i.e., a reasonable commission, and cannot afterwards complain: Baring v. Stanton. (1) Here the net rate charged was reasonable. It was only 171. 178. 10d., which is less than a commission of per cent. The case is really on all fours with Hippisley v. Knee Brothers. (2) The defendants did not divide the contango with the jobber, but made an honest bargain with him. Andrews v. Ramsay & Co. (3) and Salomons v. Pender (4) are cases of fraud. [NEVILLE J. referred to Williamson v. Barbour. (5)] That was also a case of fraud. This is a case of honest mistake. The defendants thought the plaintiff would know the meaning of the net rate. They offer to pay the 17l. 178. 10d., but submit that, on their counterclaim, they are entitled to reasonable remuneration for carrying over the shares. Then as to the alleged wrongful conversion of the gas shares [NEVILLE J. I do not require to hear you upon that.] E. Lunge, in reply, on the question of wrongful conversion, referred to Massey v. Sladen. (6) NEVILLE J. In this case the arrangement with the brokers was that the brokers should purchase certain specified shares for the plaintiff, and it was understood that the shares would not be taken up, but that when the settling day arrived they would be carried over. No cover was given at the time the transaction commenced, and it appears to me that the obligation between the parties was this, that the plaintiff was bound to put the brokers in funds as each settling day approached in order that the transaction might be got through. In my opinion no special agreement was made with regard to the brokers' remuneration. Now the settling day arrived, and the shares were duly carried over, and, taking the account of the first carrying over sent on December 13, 1904, by the brokers to the plaintiff, it is in this form. It is addressed to the plaintiff : "Dear Sir,-We beg to advise (1) 3 Ch. D. 502. (3) [1903] 2 K. B. 635, (4) 3 H. & C. 639. (5) (1877) 9 Ch. D. 529. (6) (1868) L. R. 4 Ex. 13, 19, 1909 STUBBS v. SLATER. NEVILLE J. continuation of your account of the under-mentioned stocks, subject to the rules of the London Stock Exchange." Then there is the notice on one side, "Bought for settlement 30th inst.," and on the other side "Sold for 15th inst.," and then appears the number and description of the shares with the price and amount of the shares purchased and the price and amount of the shares sold. Looking at the price of the shares bought, there appears an entry, beyond the making up price, of "8d. net," and in the other case it is "8d."-that means "8d. net" again. Now to me it is clear that that entry purports to represent the contango, that is, what is paid, or to be paid, to the jobber for carrying over the shares. But it is known to members of the Stock Exchange that when you see 8d., or a calculation in pence, followed by the word "net," that means that in the contango is wrapped up a charge made by the broker to his customer in respect of his services for arranging the carrying over of the shares. Of course, a person well knowing with what he is being charged could not afterwards complain, and I have no doubt there are some people -customers I mean, not members of the Stock Exchange-who do know what they are to understand by seeing "8d. net" in such a transaction as this. But I am also clear that there are a very much larger number of people who know nothing of the kind; and I am satisfied from the evidence of the plaintiff in this case that when he saw the "83d. net" he did not know what it meant. He says his attention was not particularly called to it, and if it had been he would not have known from it that it included the brokers' charge. Upon the evidence it appears that it is an arbitrary charge, that is to say, that to the amount agreed to be paid to the jobber is added an amount, at the discretion of the broker, which he adds to the contango proper with the word "net" to indicate that he has done so. In my opinion, the word "net" in this connection, would convey nothing of the kind to the mind of any ordinary member of the public; and, as I said before, I do not think it conveyed any such information to the mind of the plaintiff. But it is said that, at all events, it was a charge in a form which ought to have put the principal on inquiry, and that, if he had made inquiry, he would not have had any difficulty in 1909 STUBBS SLATER. finding out what was intended by the "8d. net." In my NEVILLE J. opinion, it is not enough to put a principal on inquiry. If authority is wanted, the case of Dunne v. English (1) is explicit to that effect. In my opinion, an agent is not entitled to make a secret charge against his principal any more than he is entitled to make a secret profit which he does not disclose in his accounts. It appears to me the two things stand on precisely the same footing; and when I look at this account I can come to no other conclusion but that concealed in the amount 454l. 178. 11d. is a charge which the brokers made for their services in the carrying over. I do not think in the present case that the accounts were rendered, in the form in which they were rendered, with any dishonest purpose; but that is immaterial. I do not think that it was intended specifically to mislead, and it is quite possible that the brokers might have supposed the client would know. But in my opinion it is a dishonest system, because it conceals from the principal the amount which the agent is charging. It may not be primarily intended to cover exorbitant charges, but that it is intended to conceal from the principal what the charge is, and that it is being made, is, I think, quite clear; otherwise why is it adopted? All these devices which one comes across again and again in dealings between principal and agent have one object, and one object only, and that is to conceal from the principal what the agent is doing. There are many reasons why it may suit the purposes of the broker to avoid being explicit, but the rule of the Court is without exception that secret charges cannot be made by an agent to his principal, and, in my opinion, without regard to the question whether the charges are reasonable or not. It is said, "It does not matter in the present case, because, even if you hold the charge to be concealed, it was less than what might reasonably have been made, and consequently the agent will not benefit by the transaction." But I think that the agents cannot take up that position. In my opinion the principle of Salomons v. Pender (2) and Andrews v. Ramsay & Co. (3) applies, and not that of Hippisley v. (1) (1874) L. R. 18 Eq. 524. (2) 3 H. & C. 639. (3) [1903] 2 K. B. 635. |