THE LAW AND PRACTICE OF THE STOCK EXCHANGE. WITH APPENDICES. CONTAINING THE RULES AND REGULATIONS ANNOTATED, A MORTGAGE OF SECURITIES. BY B. E. SPENCER BRODHURST, M.A., B.C.L. OF THE INNER TEMPLE, BARRISTER-AT-LAW. 27, FLEET STREET. 1897. AT the present day, operations upon the Stock Exchange are conducted upon so vast and complex a scale, and so intimately affect the interests of the public, that a fresh attempt to explain the rules which regulate the conduct of business between member and member, and to elucidate the legal principles which govern the relations of members with the public, perhaps scarcely requires an apology. If an apology is needed, it must be found in the various new cases dealing with this branch of the law which have been decided by the courts during the last three or four years. Among the most important of these is that of the Metropolitan Coal Consumers' Co. v. Scrimgeour, in which the Court of Appeal have held that payments made to a broker in consideration of services rendered in placing the shares of a company, do not amount to issuing those shares at a discount, and are not illegal payments-a decision which it is now proposed to supplement by statute. Attention should also be drawn to those cases, such as Walter v. King, Petre v. Sutherland, and Sachs v. Spielmann, which seem to show that of late years the courts have relaxed something of the stringency of the rule which forbade a broker to deal with his principal in any other capacity than that of agent. For where a principal fails to take up stock which his broker has bought on his behalf, it seems that it is permissible for the broker to take over the stock himself, provided that he has previously had a fair 149691 valuation made, and then to charge his principal with any loss occasioned by his refusal to accept delivery. And, further, it appears that if a broker receives instructions to carry over his principal's stock, he will be allowed to carry over personally, provided that it is for the principal's interest that he should do so, and that the principal on receiving notice of the transaction does not repudiate it. In fact, the rule at present seems to be that a broker is on all occasions bound to use his best endeavours in his employer's interests, and that if, in doing so, he is occasionally compelled to abandon the position of an agent and take up that of a principal, he will not be held to have acted wrongfully. In Forget v. Ostigny the distinction between gambling and legitimate speculation, enunciated by Lord Justice Lindley and affirmed by the Court of Appeal in the case of Thacker v. Hardy, has received further confirmation from the Judicial Committee of the Privy Council. In Strachan v. Universal Stock Exchange, the question of cover has received consideration; and the Court of Appeal have drawn a distinction between money or securities which have been lodged to abide the event of a wager, the property in which passes upon the decision of the wager, and money or securities which have been lodged to secure the due observance of a contract by the person who lodges them, and as to which appropriation or realization and appropriation, as the case may be, is or are necessary before any property in them passes to the depositee. The law relating to wagering contracts so rarely affects bargains in stocks and shares, that it is perhaps almost superfluous to point out here that the principle laid down in the famous case of Read v. Anderson is no longer good law, and that an agent who, since the Gaming Act of 1892, makes a gaming contract by his principal's instructions and pays it to save himself from loss, is not entitled to recover the amount from his principal, although, if the bet has been won and the money has actually been paid into the agent's hands, the principal obtains a title to it which he may enforce by process of law. It has been my endeavour to render the book useful not only to the legal profession, but also to members of the Stock Exchange and to the public generally. Consequently I have cited many of the cases at a length which would perhaps have been unnecessary had the book been intended only for those to whom the legal reports are readily accessible. It is chiefly, too, with a view to the convenience of the public, who generally have little opportunity for acquiring an intimate acquaintance with the manner in which the business of the Stock Exchange is conducted, that the chapter which illustrates the usual method of "doing a bargain" has been inserted. The rules of the Stock Exchange with short notes will be found in Appendix A. Reference has been made to them throughout the text, but it must not be forgotten that they are subject to constant revision at the hands of the Committee, and that the numbers are also liable to alteration. I have to acknowledge my indebtedness to Mr. Francis's Characters and Chronicles of the Stock Exchange for much of the information contained in the introductory chapter. I also desire to acknowledge the great obligation which I am under to those members of the Stock Exchange who most kindly assisted me with the fourth chapter, and to Mr. R. Crèmieu Javal, of the firm of Messrs. James Mason and Son, for a very careful revision of the glossary and other portions of the book which deal with the practice and management of the Stock Exchange; to Messrs. B. Perks and W. V. R. Fane, of the Inner Temple, for assistance with the references and index; and to Mr. F. M. Abrahams, of the Inner Temple, for |