having been made before the day on which the jobber was entitled to name the person willing to be the purchaser, the contract for sale was repudiated by the ultimate purchaser, in consequence of which the plaintiff remained on the register of shareholders, and was obliged to pay calls. It was held, in the Court of Appeal, that the defendant had committed a breach of duty in not making a valid contract for sale, notwithstanding the custom of the Stock Exchange to disregard the statute, as such custom was both unreasonable and illegal, and that for such breach of duty the plaintiff was entitled to recover from the defendant by way of damages the price at which the shares had been sold. An indemnity against the calls was also claimed in the action, but subsequently abandoned by the plaintiff's counsel. This case was decided according to the rules and customs of the Bristol Stock Exchange, where it did not appear that the contract was subject to the final arbitrament of any committee or similar body.1 In London there is not only the same custom to disregard the statute, but this custom is upheld by the Committee, in so far that they will not entertain any application to annul such a bargain unless upon some specific charge of fraud, or wilful misrepresentation. 1 In an action now pending by a broker in London against his principal for the price of bank shares purchased and paid for by the broker, but of which the numbers had not been given at the time of the contract, leave to defend, on the ground that under this Act the contract was not binding, was only granted conditionally on payment into Court of the amount. Barclay v. Pearse, Court of Appeal, August 2, 1884. The order given by principal. How interpreted. CHAPTER II. PRINCIPAL AND BROKER. THE first step in the transaction we propose to follow out is the order given by the principal to his broker. And in accordance with the general rule of law that a person who deals in a particular market must be taken to deal according to the custom of that market,1 the principal will be taken as intending that his order shall be carried out according to the general usages of the Stock Exchange, assuming, of course, that they are not illegal or wholly unreasonable; and it has been further held that the order itself may, as between the principal and broker, be explained and interpreted by evidence of those usages. 2 4 In the case of Mitchell v. Newhall, a principal had given an order to his broker for the purchase of "shares" in a company of which at the time no shares existed, but letters of allotment were commonly bought and sold on the Stock Exchange as shares; the broker accordingly bought a letter of allotment, which the principal refused, but, on action brought, he was compelled to accept, Pollock, C. B., saying, that the defendant could not avail himself of his supposed ignorance of the mode of business on the Stock Exchange; the broker had received an 1 Wigglesworth v. Dallison, 1 Sm. L. C. 598; Fleet v. Murton, L. R., 7 Q. B. 126. 2 Sutton v. Tatham, 10 A. & E. 27; Bayliffe v. Butterworth, 1 Ex. 425; Grissell v. Bristowe, L. R., 3 C. P. 112. 3 As in Neilson v. James, 9 Q. B. D. 546, ante, p. 34. 4 15 M. & W. 308. order from his principal to purchase for him something, and it was for the jury, after hearing evidence of the usage, to say what that something was.' And in the case of Stewart v. Cauty, a contract for the purchase and sale of certain shares in the Great Western Railway had been made among parties who were none of them members of the Stock Exchange; and still, evidence of the rules was held admissible in interpreting the contract as a guide to the determination of what was a reasonable time for delivery of the shares, but not, it is true, as being binding upon the parties. On the other hand, a custom which is contrary to the law of the land will not be allowed to control the law; nor will a person who is not a member of the Stock Exchange be allowed to be prejudiced by any usage which is not reasonable, unless specially assented to, so as to form part of the contract; and it may further be that some of the usages of the Exchange, which relate rather to matters of practice and mutual convenience amongst the members themselves, might be held to be not of such general nature as to bind third parties who are not aware of them.3 Conversely, a broker cannot bind his principal by transacting business in any other than the ordinary method, unless by express consent. Thus, for example, if stock be usually sold for ready money, he cannot bind his principal by a sale upon credit unless specially authorized, although by giving credit he may be acting bonâ fide with a view to benefit his principal; or if stock be usually sold for the ensuing 1 See also Morris v. Hunter, 14 L. T., N. S. 897. 2 8 M. & W. 160. 3 See Sweeting v. Pearce, 7 C. B., N. S. 449; Meyer v. Dresser, 16 C. B., N. S. 646; Grissell v. Bristowe, L. R., 3 4 Wiltshire v. Sims, 1 Cam. Where eviusage not dence of admissible. Duty of act in ac broker to cordance with usage. Special terms. Where order illegal. account, he cannot bind his principal by dealing for a future account, or by carrying over, unless authorized to do so.1 Questions may still arise as to the extent to which private instructions given to the broker would be allowed to limit the general authority which he receives to deal according to the custom of the Exchange; but it is submitted that no such instructions would affect the rights of third persons who, without notice, have dealt with the broker in the usual course of business in the House.2 Still, it seems clear that there is nothing to prevent a principal making with his broker any contract they please so as to be binding as between themselves, even though expressly contrary to the rules made by the Stock Exchange for the regulation of contracts between their own members. It would not be out of place here to notice a curious case which occurred in the winding-up of a banking company, the directors of which had given orders to their broker to buy on behalf of the bank a round number of their own shares, with a view to keep up the price. This order was wholly ultra vires, but was executed by the broker in due course, some of the shares being taken and paid for by the directors and their friends, but the rest were transferred to a trustee for the company, and the broker's account with the bank was credited with the price. The question which came before the Court was whether this amount could be proved for in the winding-up. Lord Romilly, M. R., thought that the proof should be admitted,3 for it was not the duty or the business 1 Maxted v. Paine, L. R., 4 Ex. 81; Maxted v. Morris, 21 L. T., N. S. 535. 2 See Crabb v. Miller, 24 L. T., N. S. 219. 3 Re London, Hamburg and Continental Exchange Bank, Zulueta's claim, L. R., 9 Eq. 270. of the broker to decide whether the directors were or were not exceeding their powers; and, moreover, the transaction was concluded and the money paid; so that the only remedy of the shareholders should be to require the directors personally to refund it. This decision was, however, reversed on appeal.' The transaction was held to be wholly and totally void; the broker had dealt with the directors as agents of the company; the directors were bound to act within the scope of their authority; and the broker was bound to know that they were acting ultra vires. The proof was, therefore, disallowed, and it seems that even if the money had been actually paid over to the broker by the directors he would have been liable to refund it." of order. There is clearly no duty cast upon a broker to Acceptance accept every order that may be sent to him. What would amount to an acceptance must depend upon the circumstances of each individual case; and no doubt where there have been previous dealings. between the parties, and the address of the principal is known to the broker, very slight delay in declining the order would be evidence of its acceptance. It is customarily understood that an order given to a broker authorizes him to execute any portion of it, whether he accepts it to that extent only, or finds himself unable to execute the rest. contract of Having accepted the order, the broker becomes Implied the agent of the principal, and all the ordinary and indemnity. general principles of the law of agency apply as between them; although, in the Stock Exchange, as we shall see hereafter, this agency is not recognized and the broker deals as a principal. a principal. There is, accordingly, a request implied by the principal to the 1 L. R., 5 Ch. 444. pany, see Josephs v. Pebrer, 3 |