PAGE 2-HONG KONG DAILY PRESS
JUDGMENT FOR BROKER IN
CLAIM FOR DAMAGES
Breach Of Contract On:
On Sale
Sale Of Old Telephone Shares
LENGTHY REVIEW OF CASE BY HIS HONOUR THE CHIEF JUSTICE
At the Supreme Court on Saturday His Honcur the Chief Justice. Sir Atholl Mac Gregor. delivered judgment in the case in which Mr. F.U. Silva claimed $1535 damages for breach of a contract from Mr. J.J. Guterres.
Plaintiff was represented by Hon. Mr. Leo D'Almada e Castro, Jnr.. instructed by Mr. D. H. Blake, of Messrs. Wilkinson and Grist, whilst Mr. H. G. Macnamara, instructed by Mr. F. X. D'Almada, Jar., of Messrs. D'Almada and Mason, appeared for the defendant.
"It was allered that plaintiff suffered damages through defen- fant's refusal to accept and pay for 500 (Old) Telephones shares. which he had contracted on March 31. 1937 and delivered on June 20 He bought the shares for defendant at. $32.40 each, and on the latter's non-acceptance, he had to sell them at $29.75, thus incur- ring. A loss which formed the claim,
The claim was for damages for breach of contract, and although the sum involved was small, the principle was an interesting one and possibly of some importance with regard to share transactions generally.
Delivering judgment his Lord- ship said:--
On 31st March 1937 the Defendant contracted to purchase from the Plaintif Arm who are members of
Hong The
Sharebrokers Kong Association 500 Old Hong Kong Telephone Company Shares at the price 832.40 per share. The con- tract note was in the usual printed form. subject to the Rules Regula- tions and Customs of the Hong Kong Sharebrokers Association. Typed at the foot of the contract
the words note
*Scrip appear numbers to follow." It is agreed that on 8th April the Plaintiff communicated to the Defendant
the Scrip Number 186 and the
GENERAL
MONDAY, MARCH 21,
1938.
STILL ON
ON INCREASE
HONG KONG TRADE STILL
The total values of Imports and
exports of merchandise by coun- | FIGURES FOR JANUARY
tries for the month of February, | 1938 are shown below, the figures |
| for February, 1937 being given in
brackets:-
U.K.
EASILY PASSED.
LATEST FIGURE REVEAL BIG JAPANESE LOSSES
"OMBINED VALUES OF IMPORTS AND EXPORTS of merchandise (excluding Treasure) as declared during "the month of February, 1938 totalled $79.9 millions (C49 millions) as compared with $59%C millions (C4.3 millions) in February, last year, according to a re- port covering this period of Hong Kong's trade issued by the Statis- tical Branch of the Imports and Exports Dépariment yesterday,
In terms of local currèncy the total visible trade of the Colony (excluding Treasure) Increased by 15.1 per cent in February, "1938 as compared with February, 1997, and by 14.0 per cent, in terms of sterling:
The total values of imports and
| exports by main groups of com- modities (including Treasure), during the month of February,
1938 are riven below, with the figures for February, 1937, in brackets:
$
Imports
Experts
$
Animals, Live
'602,298 (553,185) 348,113
Building
Materials Chemicals & Drugs Chinese
· (487,898)
584.900 (732,424) 1,310,743
4,100
*(9,770>
350,249 (217,494) 560,268
: (338,538)
894,728
Medicines Dyeing
(1,876,427)
572,230
(1,182,265)
Materials (454,193)
Foodstuffs
Imporis
Exports
$
S
2,974,240
1,409,935
Australia
Burma
Canada
Ceylon
(2,420,203)
813,925 (1,208,090)
329,589 . ($53,887)
432,800 (414,264)
13,504 (32,823) 14,469
(1,893,044)
247,345 (134,904)
(77,244) 065.294
183,340 (228,328) 384,525 (287,672)
80,936 (79,358)
9,520 (14,948) 241,709
(638,143) (451,978)
80.411
B.N. Borneo
1,013,288. 2,749.672
(700,693) (2,590.863)
6.388
42.359 (4,517) (40,995) 105,013 28,561 (166,111) (71,675)
106,800
66.707 (6,117) 105,889 29.369 (69.593)
(678.988) (43,372)
D
392,070 (443,869)
175,668
(369,412)
4
Imports of merchandise in February, 1938 Increased by 7.5 per Liquors cent in terms of local currency, and by 8.3 per cent in terms of sterling. Exports of merchandise in February. 1938 increased by Machinery & 782,648
Engines 24.6 per cent in terms of local currency, and by 26.3 per cent in
Manures terms of sterling.
397,191
128,323
(380,137)
(82,223)
(901,228)
247,976 (212,006)
39,982
736,087
(201,991)
(349,103)
could it be argued that the, broker, relying on the obligation imposed E, Africa by the Rule, could repudiate the
India contract and resell the shares at a' higher price? I fear that even Mr. Macnamara's Ingenuity would be overtaxed were he called upon to draw a Statement of Defence in such circumstances,
British
Malaya New Zealand
Mr. Macamara has invoked the analogy of Leeman's Act (the S. Africa Banking Companies (Shares) Act, 1887) which provides that a con- 'w. Africa tract for the sale, or transfer of
shares or stock in any joint stock (W. Indies banking company must set forth in writing the numbers of the shares | Br. Empire or stock on the regisister of the Other company. I cannot imagine that Belgium of force majeure, such as the in so doing Mr. Macnamara was. disappearance from the Colony or Inviting me to hold that the Rules China, Fank dishonesty and repudiation of the Association had the force North
or death of the seller, the "Com-of an Act of Parliament, So far China. mittee, on being informed, will Leeman's Act, in common with the Investigate the case and if satis- | Association's rule is A laudable China. fed of the physical impossibility attempt to control speculative · South of delivery of the same shares | gaming transactions I am with Mr. Cuba as declared in the Contract Macnamara, but no further. For- Notes, will issue a certificate re-tunately the question for decision C. America leiving the Member selling the is not without direct authority. In shares from the obligation of Levitt and another v. Hamblet Denmark delivering identically the same (1901) 2 K.B. 53 the Defendant shares. and such certificate will employed a broker to purchase for Egypt be valid and applicable to all him certain shares on the Stock transaction arising from Exchange and afterwards directed|France original one."
him to carry over the shares to the
TO PREVENT SPECULATION
the
duplicate contract note is endorsed It is common ground that the ob-
next account. The broker in ac-Indo-China cordance with the regulations of
the Stock Exchange, purchaser the Germany. shares in his own name fom rthe
186 under the Initals of Mr. Silvaject of the Rule is to prevent specu-Plaintiffs who were jobbers on the Holland' of the Plaintiff firm. The contract lative short selling. The first ques- Stock Exchange, and afterwards wis for delivery on the June
tion which I have to decide is carried ever with them the same Italy Settlement day 22nd. June! The whether the terms of this rule are shares. The Defendant's name was Plaintiff firm duly purchased on binding only on members of the
disclosed Before nol
the next Japan account of the Defendant. 500 Old
Sharebrokers' Association; or
Telephone Shares from another whether equally bind members of Arm of Stockbrokers, and were by the public who have dealings with them informed that the scrip.num such members. The Hong Kong
of the shares was "186; in-
Sharebrokers' Association was re-
ber
setting day the broker was declar-
ed a defaulter on the Stock Ex-Kwong
Imports of merchandise in February. 1938 totalled $41.4 millions Fuels (£2.6 millions) as compared with $38.5 millioris (£24 millons) in February, 1937, and exports $38.5 millions (2.4, millions) as compared Hardware with $30.9 millions (£1.9 millions).
204,065 INCREASE IN IMPORTS AND EXPORTS Metals
During the Arst two months of 1938 imports of merchandise Minerals & totalled $103.1 inillions (6.4 millions) as compared with $78.3 mil- llons (£4.9 millions) in the corresponding period of 1937: and ex- ports. $77.8 millions (£4.8 millions) as compared with $85.0 milions (£.0 millions).
Imports of merchandise increased by 31.7 per cent in terms of local currency, and by 30.6 per cent in terms of sterling: exports increased by 19.7 per cent in terms of local currency, and by 20.0 per cent in terms of sterling.
COMPARATIVE
FIGURES
The following table shows comperative figures of imports and exports of Merchandise and Treasure during the months of Febru-Tobacco ary. 1937:-
158)
43.314 (22,154)
517,128
(485,465)
6,531.930
(279.078) 159,848 *(237,090)
31.428 (13,678) 6,885.087
(5,712,062)
(2.831,310)
372,117 2,834,772 (684,138) (1,047,892)
7,857,939 7.443,873. (8,261,923) (8,157.423)
9,470
(6,623)
82,148
(113,607)
27.798 (417,502)
376
18.896
(8,398)
17.013
(11,361) (15.723) 210,389 886,695 (197,141) (137,713) 2,388,029 1,456,979 (2.860,954) (1,582,938) 1,787,936 1,982,018
(2,155,638)
432.838
-360,161
(494,100)
9.239,703 8,728,721 (10,593,883) (7.691,315)
1,374,257
4,913,660 5,176,842
(205.243) (118.864)
(3,308,323)
(3,784,905)
477.440
1,742,018
(301,999)
(408,255)
Nuts &
1,272,259
725.295
Seeds
(578.505)
(308,755)
Oils &
Fats
Paints
4,778,094 (2,482,228)
212,156
6.568,629
(4,533,515)
173,110
Paper
1,005,864
721,261
(1,095,585) (606,438)
Piece
4,850,321 3,241,507
Goods
(5,937,809) (3.178,933)
Railway
14,888
04,680
Materials
(3,111)
(-)
524,813
962.946
11
(919,910)
(425.166)
15
Merchandle Treasure
IMPORTS February 1938 February 1937
$38,451,201 ..$41.398.890
856,767
Treasure
1,073,824
'i
Vehicles
Total
1,073,824
$42,472,714 $39.308.028
Wearing
Apparel
SUNDRIES
EXPORTS February 1938. February 1937
.$38,451,624 $30,004,672
12,977.964
3,228,179
Bags
112,271
226,733
Electrical
Apparatus
572.393
658,761
"Hildes
.$51.429.588
$33.132,851
Leather.
(290,725) 1.248.862
(416,570)
84,932
(218,360)
3,423.677
(4,773,821 425.841
(119.717) Merchandise
40.387 (20,561) 474.092 (2,201,914)
399.324
Treasure
Total
Chow Wan (467,704)
(633,099) 902.733 2,097.535 (685,271) (1.057.281)
Portugal
112,582
65,543 Siam
2,755,475
(37,060)
(15,363)
1,684,128
(2,233,687)
422,318 S. America (787,368)
41
137,463
641,851 Sweden (137,503) (914,770)
(2,100,345)
408,289 (236,134)
96.255 (68,737)
37,954 USA. (236,729)
41,711 Others (10,249)
change and in accordance with the
of that body his contract Macao
rules
formation which, they iminediate-gistered as an Association under" with the Plaintiff was closed at a
ly communicated to the Defendant. the Companies Ordinance 1911 anal price,fixed by the official assignee Norway
REFUSED ACCEPTANCE
The selling firm of stockbrokers wore in error in communicating that number, as they had already on 23rd, March appropriated these shares to the order of another client, whose account was guarani teed by the Defendant. That firm therefore, on 23rd, June. made avaliable to the Plaintiff firm an- other block of Old Telephone Shares Scrip No. 6618, which were duly tendered to the Defendant, but he refused to accept them. claiming that his contract was to receive shares of the scrip No. 188 and no others.
It further agreed that in the event of the Plaintiff frm succeed- ing the measure of damages 154 $1535,00.
The sale contract, as I have al- ready stated, was subject to the rules of the Sharebrokers Associa tion, and it is therefore necessary to consider one of their Rules which is in the following terms:-.
As from 1st. April 1935 no member shall be permitted to transact business for forward delivery except in the case of stocks in such companies
·
67, Whenever It shall have come to the notice of the Com- mittee:-(vi) that any member
of the Stock Exchange. The
between
the plaintiffs
in
POSITION NOT ALTERED..
any way
Switzerland
44,280
(24,834)
2,956
(8.587)
17.632 (13,620)
(1,076)
$34.504 Spain
(1,082,833)
containing 30
tibs each
+
5,053,548 3,075,677 (1,793,168) (3,075,852)
413,334 141,594 (200,909) (113,292)
12,977,964
(858,767) (2,228,179) 2,633,587)
587,293
(320.137) (548,060)
148,544
1,090,197
(177.602) (1.140,323),
(442.852) (271:296)
(212,137) (519,737)
533,696
251.209 (All Kinds) (259.897)
Matches
Others
Total
341,807
(844,803) (583,638)
49,996
(83,737)
25.445
93,201
(88,542)
(79,892)
3,072,294
3:429,885
(4,388,557) (3,303,762)-
42,472,714
51.420,588
(39,308.028) (33.132,581)-
MONTHLY FLUCTUATIONS
Since February, 1937 monthly values of imports of merchandise
December, 1937.
Details are given below, with the
sterling equivalents, at monthly average rates of exchange, in
brackets:-
1937 IMPORTS EXPORTS $38,451.261 $30,904,672 "(£2,378,170). (£1,911,422)- $53,355,278 $40,605,991 (£3,209,068) (£2,516,388). $54,839,318 $34.144,114
the relevant provisions of their Plaintiffs having ascertained that Neth East New Articles of Association are as the broker was acting for the De-
Indies follows:--
fendants in this transaction: called Philippines 44. The Committee shall also upon him to take up the shares. have power from time to time | He declined to accept any re- not inconsistent or contrary to ponsibility for them: and the these Articles to make alter and Plaintiffs, on the settling day. circumstances have fulfilled their In the former in a contract for its being disregarded by the Court: Into Hong Kong fluctuated from a repeal such Rules and bye-laws tendered the shares to the De- contract with the defendant. the sale and purchase of tins of that the finding as to measure-low Hong Kong dollar value (38.5 as they may think expedient to fendant. and, on his, refusing to
conned fruit, the buyers stipulated ment showed that the goods were millions) in February, 1937 to a govern the transaction of all accept them. sold them for the business in stock, shares, bonds, best price then obtainable. In a contract, the defendant's only de- cases
On 31st March, the date of the that they should be packed in not those contracted to be sold, high of 64.7 millions in September, and that it was those goods and 1937; whilst export values fluctuat- debentures or other securities by action to recover from the Defcnsire was to be put in possession, The sellers tendered the whole not their commercial equivolented from a low of $30.9 millions.in members of the Association fordant the difference between the the regulation of the Association | price at which the shares had by settlement day, of 500 Old Tele- quantity ordered, but about one that the buyers were entitled to
each demand." In that statement and the opening and shutting been carried over and that at Phone Shares at the agreed price half was packed in cases thereof and for the conduct of which they had been sold the So far as, on that date, he was containing 24 tins only. The um- find a clear distinguishing line be- persons transacting business Court of Appeal held. affirming concerned, the scrip number was pire held that the market value tween the cases relied on for the
quite immaterial for he could of the consignment was not affect defence and the present case. therein, and generally for the the Judgment of Mathew J. that
CASES IN POINT good order and government of the defendant was llable as prin- neither choose his number nor de-ed thereby. On the hearing of a members and theregulation of the cipal on the contract made for cline to accept shares bearing the special case Rowlatt J. held that
Two other cases, however, are reb. scrip number communicated to the buyers were entitled to relect methods in which the business him by his broker with the
the whole consignment and this directly in point. In Hopkins v Him. of members is to be conducted. plaintiffs and that the privity of
When on 8th April the incorrect decision was ppheld on appeal. Hitchcock (1883) 14 C.B. (N.8.) 65 March 45. All rules and bye-laws so contract
the firm
of April long as they shall be in force and the defendant was not affect scrip number was communicated Counsel for the buyers submitted the plaintiffs Hopkins & Company
the finding of the umpire had succeeded to shall be binding on all the mem-ed by the Rules of the Stock Ex-to the defendant was the position that
altered? I do not that the value of the consignment Snowden & Hopkins, tron manu- bers of the Association, and the change as to the compulsory clos-
think that it was, for to hold was not affected made no diner-facturers who were in the habit May same shall be posted up in the ing of the transactions of a de-
otherwise wou'd be to allow that ence the reason being that the of stamping their iron, "S & " faulting broker. Association's premises.
crown.. The defendants June the contract was for the sale of buyers might have made their ar- with
rangements with their customers through a broker ordered sixty- specific goods by description. ANOTHER CASE CITED
"If the circumstances of the case in contemplation of the goods seven tons of the iron, and the July
delivered Ponsolle v. Webber (1908) 1 Ch. were that the description given to being
packed as broker made the bought note for J. sald-It "sixty-seven tons 8 & E crown August case in point specific goods was essential to ordered. Rowlatt has..... violated.....the rules of 254 is another the Association the Committee Brokers on the Stock Exchange their Identity as the subject mat- seems to me clear that on the con- common bars." The iron on az- shall Investigate the matter at acting for an undisclosed outsideter of the contract, in other words struction of the contract the rival was marked " & Co." and Sept. an Extraordinary meeting of the principal pledged share certificates that the buyer contracted for them bayers were entitled to say We was rejected by the defendants. Committee, and......may either with a jobber on the exchange as as described, so that the falsity of must have the goods packed in The jury found the variation in October expel such member from the a security for a loan to be repaid the description made the goods the way we have contracted for. the brand to be of no consequence,
gave Д verdict for the Nov. Association or suspend him for the next settling day. The out- substantially different things from I cannot speculate as to the effect and such period as may be deemed side principal failed to put the those that were described, so as this alteration in the mode of plaintiffs. On
to set Dec. expedient, or take such other borkers in funds to repay the loan, to constitute a fallure of con-packing would have in the trade. trial the Court refused
buyers may have their aside the verdict, holding that on disciplinary action as the Com-whereby the brokers made default sideration, the sale was by descrip- The mittee may think proper.
and hammered and the jobber. tion." That is
1938 the classic de- particular reasons for preferring the special facts of the case the under the rules of the Stock Ex-finition of Blackburn J. Kennnedy to have their goods packed in a letters "S & H.", did not show that Jan change, was obliged to take overv. Panama Mall Co. (1867) LR-2 certain way, and I cannot see on the contract was for iron of any the shares at the official price of Q.B. 580. Such a test can have what grounds it is said that they particular brand but showed the Feb. From a perusal of these Articles the day. Afterwards the shares no relevancy in circumstances are bound to take them packed in quality as being the same as that
(£2,585,889) (£2,383,200) Any infringement of the above and the rule in question it is clear rose in the market, and the jobber such as these which I am con- another way The fact that in formerly made by Snowden &
rate of exchange for rule will be dealt with in accor-that the jurisdiction exercisable by sold them at a profit, and was sidering. One" Old Telephone this case the value of the goods Hopkins. and the `jury' having February, 1938: HK$=1s. 27d.. dance with the provisions of the the Association is domestic only. then sued by the outside principal Share is in every way and for all on the market, no packed, was negatived that the mark was of Articles of Association.
limited to its members who by for an account of the proceeds of purposes the same as another. unaffected, making no difference." any consequence, the plaintifis their membership here agree to ale on the footing that he was They are indistinguishable ode
THICKNESS OF STÁVES FORWARD CONTRACTS
had delivered the goods in con- and subject themselves to
their only mortgagee of the shares. from another except by numbers
In the latter case the contract formity with the description in the HERBERT HOOVER: affect members of the pubile deal- mortagor and, mortagee existed be no distration rerence in the was for sidves for making cement contract.
barrels each stave to be of a The other case is Parsons v. N.S. tracts made before 1st, April ing with members of the public tween the outside principal and nature or value. the numbers be prescribed thickness. The staves Shipping Co. (1901) 1 QE. 648 in 1935 in which no share riumbers dealing with members of the the jobber: that the Stock Ex-ing in no sense descriptions, but delivered varied not inconsiderably which the Court of Appeal held. The former United States Pre- are given, and to any subsequent Association. Indeed on any other change rules did not apply as be-at most mere indica of title
in thickness and were rejected, that the marks in question were aldent, Mr. Herbert Hoover, ar- set-off against such contracts, construction the concluding para- tween, thom, and that the jobber |
Lord Buckmaster in his judgment Immaterial as being only for Hived in Croydon yesterday from provided the transactions are graph of the Rule would be mean was bound to account. proved to be bona fides when ingless. If, in such a case as the
Mr. Macnamara relies on two cited with approval the words of identification for purposes of de- Amsterdam on a private visit to
Britain (British Wireless), such proof is required by the present one shares had been ap- From my finding on the scope cases Morre & Co. Ltd. v. Landauer Wright J. in the Court of. Arst in-livery.
In the circumstances of this case Committee.
propriated with a scrip number of the rule, It follows that the de- & Co. (1921), 1 KB, 22 affirmed on stance "Wright J.-in his judgment
whose registers are not in this
Colony unless particulars, as to
the distinctive number of the
shares bought and/or sold cre are Inserted in the contracts. such numbers must always be supplied by the seller to the buyer of the shares within two working days of the transaction, and shares delivered in full- ment of any forward contracts must bear the identical numbers
as those stated in the contracts.
A DOMESTIC RULE
The aforesaid rule however provisions, and cannot extend to Neville J. held that the relation of and a variation in number Imports does not apply to forward con-
VALUE NOT AFFECTED
motion for new
Mean
(£3,391,755) (£2,111,778)
$49,843,843 $40,118,383 (£3,076,300) (£2.475,935) $50,064,338 $38,919,728 (£3,070,352) (£2.386,874).
$50,189,072 $36.190,851 (£3,058.397) (£2,205,380) $54,905,536 $38,251,126 (£3,436,966) (£2,359,577)^ $64,710,603 $39,439,887 (24,010,709) (£2,444,452)- $51,792,365... $43,585,875 (£3,210,048) (£2,701,416) $59,675,204 $45,224,324 (£3,690,849) (£2,797,077)-
$49,342,058 $45,781,460
(€3,051,755) (£2,831,530)
€1,700,050 $39,363,561 (£3,824,118) (£2,439,7211
$41,398,890 $38,451,624,
IN ENGLAND
London, March 19.
In case of any dispute arislag other than that originally com-fendant cannot, rely on its provi appeal (1921) 3 K.B. 619, and Arcos decided in favour of the buyers. And that the Defendant was not with regard to the bye-law re-municated to the customer, and stone for success, in realsting, this Ltd. v. EA. Romassen & Son (1933) upon the ground that the differ- Justified in repudiating his con- must therefore be judgment for quiring the insertion of numbers before due date for delivery these claim. I turn now to the wider AC 470 Both of these cases.ence in sizes was not of such a tract and refusing to accept the the Plaintiffs for the sum of $2 in the Contract Notes or in case shares had appreciated in value, Issue whether the plaintiffs, in the however, are easily distinguishable, trivial character as would justify shares delivered to him and there 535.00 with costs.