receiving the cover. That, no doubt, would be the prudent course. But commercial men find that speed is essential to the successful conduct of business, and they prefer the risk of being involved in a possible legal difficulty to the practical certainty of losing a good bargain should they attempt to provide against the improbable contingencies which the caution of a lawyer might suggest. Having elected to take the risk the stockbroker had perhaps no great reason to complain if, on suddenly taking fright at the position into which he saw a possibility of drifting, the law proved to be a little hard upon him when he attempted to obtain, at a late stage of the transaction and without very much regard to the rights of his co-contractor, the protection for which from a legal point of view he ought to have bargained at the time when he entered into the contract. Nevertheless, since it is in the public interest that the principles of law should as far as possible be construed so as to harmonize with the necessities of commerce, it will, I hope, not be considered presumptuous if I suggest a few reasons for doubting whether the ultimate decision was entirely correct.

With the question whether the writ in Ellis v. Pond was prematurely issued, I do not propose to deal, because it is evident that in future actions of this kind that defect, if it is one, can very easily be remedied. The only other question of general importance appears to me to be: what is the effect of a wrongful sale upon the normal relations of a broker and his principal? In this connection it will be instructive to ascertain what was the actual damage which the defendant suffered in consequence of the broker's wrongful act. In the first place, it is to be observed that, if the defendant had been desirous of actually taking up the stock, he could have bought the same amount through another broker at some price between 25 and 28 at any time between November 19th and 26th. He was not bound

to take that course, but had he instituted proceedings for non-delivery of the stock on November 26th, his damages could not have been increased by his failure to do so.* Supposing that the defendant had purchased the stock at 28 on the 26th, he would then have been in precisely the same position as if the original contract had been duly carried out, except that he would have been obliged to pay a small sum for commission, &c., on the second purchase, and that sum would have been the measure of the loss which he had sustained through the wrongful sale and the amount which he could have claimed from the broker as damages for breach of contract.

But assuming that after receipt and rejection of the sold notes on November 19th the defendant still expected that the plaintiff would offer to deliver the stock on November 26th, what, if the offer had been made, would have been the defendant's position? He would either have been obliged to take up and pay his broker for the stock, or he would have instructed the broker to sell out or carry over the stock, and would have been obliged to pay the differences. If he had elected to take up the stock he would have received a security worth, at the market price of the day, £28 per nominal £100, a total sum of £12,600, and would have paid his broker therefor at the rate of £29 10s., a total of £13,275—in other words, he would have paid £675 more than the then value of the stock. If the stock had been sold out or carried over, he would have paid as differences the same sum of £675, plus the broker's commission on the second sale, or commission and contango on the carry over, and this sum of £675 is, it will be observed, the amount which the broker would have obtained under the judgments of Mr. Justice Mathew and Lord Justice Rigby. The defendant's actual loss, therefore, from the wrongful sale was the difference between 25 and Samuel v. Rowe (1892), 8 T.L.R. 488.

28, or 3 per cent. on the nominal value of the stock, with the very remote possibility of being unable to place himself in a position, by means of a second purchase, to retrieve his present loss of the difference between 28 and 291 in case of a future rise in the price of the stock. But by the judgment of the Court of Appeal he in effect received the difference between 25 and 291, or 4 per cent. on the nominal value of the stock-a sum of £675 more than the amount required to place him in as favourable a position as he would have occupied had the contract been duly executed. An obvious result of the judgment is that the heavier the fall in the price of the stock the more will the wrongful sale be to the interest of a principal.

The most important point, then, to be ascertained would. appear to be the precise period at which the stockbroker's right to an indemnity accrues. Lord Justice Smith was of opinion (p. 439) that the broker's claim would be found to be a case of an agent asking his principal to indemnify him against the consequences of his own wrong. But, as has been shewn, the sum which the broker was claiming was the identical sum to which he would have been entitled if he had sold rightfully on November 26th,* for Lord Justice Smith himself points out (p. 436) that the broker does not dispute that he is liable to his principal for the damages that the latter may sustain by reason of his breach of contract; and therefore if it can be shewn that a breach of contract is not necessarily a condition precedent to a right to an indemnity, I would suggest that the broker's claim was a claim to be indemnified for what he had done rightfully, namely, the purchase on November 10th at 29, with a deduction for what he had

By the custom of the Stock Exchange the broker would have been entitled, even after carrying over, to sell out the principal's stock if he had delivered an account shewing the amount of differences due and the principal had not put him in funds to pay them: Davis v. Howard, (1890) 24 Q.B.D. 691.

made by the sale on the 19th and the damage which his principal had suffered by that sale being wrongful.

Before coming, however, to that question it may be worth while to ascertain whether after the sale on the 19th the defendant continued under any liability to the jobber. As to this Lord Justice Smith says (p. 440): "By selling to Smith stock of similar amount to that in respect of which the plaintiff had contracted with the jobber to pass to him the naine of a purchaser upon the settling day; the broker (the plaintiff) by passing Smith's name performed his contract with the jobber, subject of course to his liability to make good to the jobber any difference there might be between the contract price and that agreed to be paid by Smith. That the contract with the jobber was thus fulfilled appears to me clear, and he had no claim or remedy whatever against the defendant, the original principal. The real truth is, that when the broker (the plaintiff) sold against the defendant, upon November 19th, he substituted Smith as purchaser in the defendant's place, and by passing Smith's name to the jobber, the broker's contract with him was performed." And Lord Justice Collins says (p. 458): “But as a great point was made by the plaintiff's counsel that the act of the broker in selling could not affect his right to the indemnity claimed unless he had thereby debarred the jobber from claiming performance of his contract, I will add that I think the inference is inevitable, that by the sale 'to close,' he did so debar the jobber. The object of a sale 'to close' is to close the whole transaction with the jobber as well as with the customer;* and if the name of a new vendee is given by the broker and accepted

*It is submitted that the words "to close " are really used to differentiate the transaction from a "bear" sale which would be a sale "to open," and do not, and are not intended to make any alteration in the rights and liabilities of the jobber.

by the jobber, the latter will perform his contract by delivering to the new vendee."

But what was the right of the jobber previously to the sale on November 19th? It was to receive payment at the rate of £29 10s. for the stock which he was to deliver, and for such payment he was at law entitled to proceed against either the broker or his principal. When he accepted the liability of Smith instead of the liability of Pond he surely accepted it only to the extent of 25, and reserved his rights as to the other 4 per cent. It is clear that he did so against the broker, and what had occurred to destroy his right against the principal? If the broker had resold the stock on the 19th to the same jobber from whom it had been bought on the 10th, can there be any doubt that the jobber could have claimed the 4 per cent. from the defendant? And whether the name of a fresh purchaser was given to him on the 26th, or the stock was resold to him at 25 on the 19th, can surely make no difference to the jobber's right as to the 4 per cent. If the sale on the 19th had been by the defendant's instructions, it is obvious that the jobber would have had a valid claim against him, and why should the agent's wrongful act affect the position of the contracting party whose agent he is not? The sale was within the apparent scope of the broker's authority, and there was no obligation upon the jobber to inquire whether it was in fact rightful or not, and there would surely have been no such obligation even if the stock had been resold to him and had been identifiable as the actual stock which the broker had previously bought. The rightfulness or wrongfulness of the sale was, it is submitted, a matter to be settled between the principal and his agent-a matter for which the principal would have a right of recourse against his agent, but which could not affect a third party's rights against the principal. And if the jobber had succeeded in such an action against the principal, and the principal had