DEALING IN SHARES.

Dominion, Volume 4, Issue 948, 15 October 1910, Page 10

DEALING IN SHARES.

IMPORTANT CASE. REQUIREMENTS OF STAMP ACT. An appeal against a decision by Mr.W. R. Haselden, S.M., in a case which is of considerable interest to brokers and those-engaged in share transactions was heard by the Full, Court yesterday. Tho Chief Justice; (Sir Robert Stout), and Justices Edwards, Cooper, and Chapman, were on tho bench.'.

The 'appellants were Gualtor, Dykes and Co., of Wellington,, sharebrokers, who had been nonsuited bj; tho magistrate in an action in which they claimed to recovor from Andrew Beggs, of' Constable Street, storekeeper, the sum of £154 19s. Id., which plaintiffs alleged was due to them for work dono and moneys 'spent, at defendant's and on his, behalf, in connection with the sale and purchase of shares iii tlio Ross, Now Sylvia, and Waihi Grand Junction Goldfiolds. Defendant' entered a counterclaim, but offered no evidence in support of it. ■ . . ~ 'Tho plaintiffs purohased for- the defendant, on May 21, 1910, 500 Rosb Goidfield's shares, for £310;55., and "'on June 16, 300' of tho same company's shares for £312"195. ; 2d % A loss .was: made on theso shares, which amounted, after giving credit for a. profit made On other; shares, to' £154-,195. Id., .being the amount sued for by the plaintilfs. , ' .

Defendant's counsel had moved for a nonsuit on two grounds : (1) That plain•tift' had liot proved that. the, requisite contract note was transmitted in each case within 24 hours from the time of sale; and (2) that. plaintiff had not proved that duly .stamped, contract notes were .exchanged; between./buyer and seller. . ' ' . . .; , !( r Mr. Haselden y s Judgfiient.; ( : /The -Magistrate remarked that . in Keesing v. Eccles the learned Judge '(Mr.'■' Justice Ed-wards)- 'held that' Sec-, tion 139 of: the . Stamp . Duties. Act throws in direct terms upon the sharebroker who claims to recover commission from his principal- iii respect- of the salo or purchase of shares, or who Claims indemnity from his principal in respect of sale or purchase. of shares, ;the .onus of-proving a strict compliance with the, provisions, of Section 133. It is reasonable that .it should bo so, said tlio learned Judgi, for where a salo or purchase of share's was effected: through a sharebroker, ..the; 1 sharohrokor alono can know whether, ho has'complied, with ;the provisions of tlie statute.' ' For these, .reasons, - said his. Wbrihip, the plaintiffs' must be'nonsuited; .but,as it. was admitted,. that - the counter-claim couldi not succeed, he thought - that ;no costs' should bo-allowed on'either side.;

'The grounds;of. appeal- wore that the Magistrate's,judgment was erroneous'in point of law. \, '; The appellants were represented by Mr. C. P. Skerrett, K.C., and'with him Mr. G. Toogood (instructed by Messrs. Field, Luckio, and Toogood), and the respondent by Mr. H. ! D. Bell, K.C., with him Mr. G. 11. Fell (instructed by - Mr., I'. 11. Putnam). ~

Contract Void, But Not Illegal. ■ Mr.. Skerrett, in his argument,; laid, stress on the:,fact that, the-purchaso and this, sale of the shares )v'ere. ; affected on -the express instructions of the respondent, .. and' were- completed transac-; tions. -Under;Section ,133 of 'the Stamp'; Duties Act,' the omission to- transmit a- seller's noto.-to : ;tho; : sellihg ;broker , in; .a" safe.of '.niiiiing; shares,'; merely ;made, tho contract void and,'unenforceable; and did not.-;.(c6unstel. submitted) make it. 'illegal. • The; appellants! were not .gu-l ing under that .contract,: but-made a separate and independent. contract .between. principal ;ahd agent;.: jThevappel-. lants i had- >iiot r| "defrauded' tlio ' revemie of sixpence. They had merely sent v stamped .contract' noto to. their; : prin-. cipal,'-'lnstead;'of to the . vendors,-. and they .had.sent'; an unstamped' "Bought'' : note to. the vendors; ' In- this they were, wrong, .but' they had undoubtedly. intended to comply with the-statute.. It was conceded {hat . Section'l3s of tho Stamp .Duties Act prevented them from claiming, commission, and they, had . not-sent the contract noto to tho right party'. . ; All .that theyV claimed " was .-the monoy which was paid by them for- the > respondent, at. his.express, for which; he, had received'benefit.* If, the judgment wero :upheld,the extraordinary result would follow that a-person who received .full -benefit: from a contract-to .purchase- shares: and then' 'resold those shares. and received, .(ho-, money for the, sale could escape slia-" bility.'for the money spent in buying thoso shares for him.

• Mr. Justice Edwards: Even if the consequences,. are onerous, that does not. show .that such was ~not, the in-; t-ention of tho statute. It would, liave . been easy,.to. comply with it. Mr. Skerrett, continuing,- said that tho mandate given- by tho; respondent to tho appellants was to purchase certain shares and. those/instructions had been completely .earned- out. - Authority to .toy. the; ■ subsisted, and the' only, question was: Was there anything in tho Act which would prevent• recovery of the :money? . Ho.. > submitted..that' there-was'not. Appellants claimed ~tljat) contract at law between. principal and. agent, tlie :agent-was entitled 'to'.-'W - reimbursed for 'money paid for the principal during tlio.'cburse of the agency. : . Shares Not Legally Bought. Mr. Bell, submitted thiat 1 the;intention of the. Stamp-, Duties Act was to sub-, stitute,',stamped contract' notes for ;.ii" stamped transfor. A bought noto and a sold note required to bo'stamped and transmitted in connection with, each saloof mining shares, and each would pay, for stamping,'about half what-it would 'cost to stamp a transfer.' The statute imposed a. penalty on anyone., who contracted' otherwise than was' dictated by Action 133.'. '-.It was' admitted that in ..this' case, the statute, was not complied with, v thus a; prohibited. offence had been! committed- by tlie ' sbarebrokors,. and there was no.evidence:,that; spondont knew ,of that', offence.- . Tho statute contemplated that tlie sharebroker would bo the only person who would know of such a thing, and made him ; the., person; who -would lose,, if its provisions ; were, not. complied with 'by him. What , the -appellants wero employed to do was. to" make a purchase of shares —a valid and legal purchase— for tho respondent. Tliat had not boen. done, the, only:' cpntr'act: ''of. purchase, being a void and unenforceable contract,. They wore, similarly ,at fault in tlie sale of shares, and' thus they preceeded' to debit tho respondent-witli the result of two illegal ; transactions... .They . had never legally bought the respondent-a share, nor entered into an. enforceable . contract, and had -moreover - entered, into. a contract that could not 1 bo' enforced. Tlio magistrate's judgment .was," tlioreforo, correct. ' " 'vThe Object of the Law. . Mr. Skorrett, in reply, said that Mr. Bell's whole argument was that the purchase was illegal under the Stamp Act, 1908. _ - Tlio Chief Justice: That is the wliolo point. ... Mr. Skerrett said there were no' words in tlio statute actually' prohibiting tlio making of such a contract as was made: in tho casd. Tlio penalty was imposed for not .doing something after the. coii-! tract. A. : contract' could I>6 entered .into by word of mouth, and was valid and legal for 24 hours, at all ovents,. He submittedj therefore, t-liat tho omission to send tlie duly stamped note would not make it an illegal contract. Further, a'provision for the protection of tho rovonue' could not bo lieid to imply a proliibition of tlio contract. Counsel had not concluded when tho Court adjourned until 10.30 a.m... ou. Monday,