TRADE CUSTOMS.

Patea Mail, Volume VIII, Issue 995, 9 February 1883, Page 4

TRADE CUSTOMS.

COMMISSION AND PROFIT ON A CANTERBURY GRAIN TRANSACTION. Daring the trial at Christchurch of the slander ease. Paxton v, Stead, some facts came out about a grain transaction, which is thus commented upon by the Lyttelton Times : It remains simply to state the pros and cons for both sides of the question ; to ask who is right and who is wrong ; and to enquire who is to decide on a matter which directly touches the pockets of the most valuable class in the community, the farmers. Mr Hobo t-i’ view of the position is, wo take it, that he entrusted Mr Stead, as his agent, with a certain amount of wheat to sell ; that the property in this wheat,- until it was actually sold, remained in hiinshf and nobody else: and that the price for which it was sold, and no lesser or greater sum, was due to himself from Mr Stead. The latter gentleman, oh the other hand, argues tint he actually sold the wheat to the first contractor, and paid Mr Roberts the price otfered for it ; that when the contractor repudiated the s'dc, the wheat was thrown back, not on Mr Ro’.erts’ hands at all, but’on his own—that the wheat, in fact, had become his own property ; and th it, as he would have been exposed to any loss resulting from its rc-sale, he was entit ed to pocket any profit that might accrue from the transaction. Viewing the affair in the light of the general law of principal and agent, we should at once pronounce Mr Stead’s position untenable. When property is entrusted to an agent for sale, the law has decided, over and over again, that the agent cannot by any round-about process, undisclosed to his principal, hirnsc f become the purchaser. Yet this, after all, is what Mr Stead in effect did. He bought the wheat from Mr Roberts at IBs 6d without disclosing that he was the buyer, and afterwards sold it at I3s. The difference, therefore, clearly belonged to Mr Roberts. The plea that the transaction was forced upon the agent through stress of circumstances, and that he had no intention whatever to buy the wheat himself, though possibly made with perfect lona fides. cannot be admitted to alter the position. But Mr Stead had another argument to bring forward, and it is here that the public interest is vitally touched. He says that there is a custom in the London grain trade which bears him out. If this be so, the proof of its existence is most important, for mercantile custom over-rides even mercantile law, or, to speak more correctly, the law always recognises custom. It might be remarked in passing, that it is a pity that Mr Stead, if aware of this custom, did not stand to his guns, instead of consenting to give up a sum of money which he considered justly his own. Still men often do illogical things, under the influence either of nervousness or of the “ anything for a quiet life ” feeling. What the grain dealing and producing class are interested to know is, does any such custom as this exist or not ? Here we have a clear difference of opinion. Mr Stead, an experienced merchant, and a leader in the grain trade, says it does; Mr Roberts, another shrewd man of business, and also a grain buyer, would seem to say exactly the contrary. In the transaction we have been discussing it seems to have been clear, by the admission of both sides, that the contract entered into between Mr Stead and the unknown Liverpool buyer, who afterwards backed out, was an entirely genuine one. But let us suppose a case of a bogus sale. John Smith is a farmer on the Ashburton Plains, ignorant of the rudiments of mercantile business, and with twenty thousand bushels of wheat to sell. These he puts in the hands of Mr Box, of Christchurch, com speculator. Box has reason to think that the price of wheat, then 5s 6d in London, will shortly rise to 6s. The wheat is shipped, and Cox, a friend of Box’s, is instructed to offer 5s 6d for it. This, Smith, on Mr Box’s advice, is fain to accept, and Cox is then duly instructed to throw up his bargain. Shortly afterwards, utterly unknown to Smith, who had gone away with his 5s 6d, minus the usual commission, the wheat is sold to the firm of Knox and Co., at a rate equivalent to 6s per bushel. How is Smith, inexperienced countryman as he is, ever to find out how he has been swindled ? How many Smiths, Browns, and Joneses have been let in in this fashion in past times in Canterbury? Mr Roberts is supposed to know what he is about when dealing in grain, yet even he only found out his position by sheer accident. Dozens of men are dealing in grain every day who don’t by any means know what they are about. The commonest justice demands that these men should be protected. If there is a custom in the corn trade by which their property may, unknown to themselves, come into the hands of their agents to be subsequently profitably disposed of by those gentlemen, they ought to know it, Mr Roberts wrote to the Lyttelton Times as follows I arranged to load “ entirely ” the Romeo, provided by Royse, Stead, and Co., and the cargo was to be sold by them on my account. I placed no reserve upon it, but intended to take my chance of European markets. Mr Stead saw me, stated he had a chance or placing a cargo at IBs 6d, and asked me would I , sell at that price. He advised me to do so, and I consented. Next day he wrote me that he had sold this cargo at IBs 6d, with which I was satisfied. I heard no more, but six weeks later the shipment was completed, and I received my cheque, less commission, £251. Mr Stead, when challenged, admitted that in the interim on April 3, and before shipment was completed, on April 25, he had, without consulting me, resold the cargo at Iss; I having no knowledge that the first sale had fallen through. Royse, Stead, and Co. were not at. liberty to resell in advance or afloat at a fraction under IBs 6d, without permission from me, nor could I have blamed them for the fii’st sale having fallen through ; they would bo still my agents, and earn the commission. I am convinced there is no such custom as stated, either in London or in Adelaide, where a commission agent is allowed to make a profit, in addition to a commission. The rule is that an agent can only make such sums as is in the knowledge of his principal. In this case Royse, Stead, and Co. charged £250 commission, and in addition £330, called profit. There arc, in London, brokers as distinguished from commission agents. They constantly buy cargoes, to be shipped by a certain date, as in my case, and at a fixed price. The broker is supposed to have an undisclosed principal, who gets the cargo at the purchase price. The brokers then render account sales to the commission agents (say Royse, Stead, and Cd.), who have already charged their commission. The fanners’ risk is less than you suppose. Farmers’ shipments, as a rule, form a mixed cargo, which cannot be sold in advance or afloat. They are usually sold in London, Lid the farmer can and should always ask his here to show him the London original account sales.—l am, &c„ ° __ Geo. Roberts. Qhristdiurch, Jan. 2-3 th, 1880.