There are such quibbles and such quirks
Between attorneys and their clerks,

Their Clients to confound;

That all their study, day and night,
Is to make wrong appear like right,
And ring the changes round.

Since lawyers are such common pests,
Avoid them as you would the nests
Of hornets nearly flown;

And whilst you live, beware of law,
It is the hungry lion's paw

That tears the flesh from bone.

But hold, my muse, let's not run on
As if we never would have done,
But seek what to defend :

Oh yes! (in justice be it said)

They will (when all their fees are paid)

A ref'rence recommend.

It is interesting to learn that the art of "smashing the lists," the practice of compelling litigants to compromise, or refer to arbitration, cases which it would be tedious to try, was known so long ago as 1778.

(To be continued.)

THE

VIII. STOCKBROKERS' RIGHT TO INDEMNITY. HE case of Ellis v. Pond, which is reported in the March number of the Law Reports,* is instructive as shewing that our tribunals may occasionally be confronted with the dilemma either of allowing the claim of one of the parties to a contract to be indemnified in respect of a loss. which might possibly not have occurred but for a wrongful act of his own, or, in effect, of giving to the other damages for breach of the contract at a rate considerably in excess of the normal measure.

In Ellis v. Pond the question was whether a stockbroker who had wrongfully sold out his principal's stock before the arrival of the settling day for which it had been bought, had any claim for indemnity against his principal for loss which had been incurred in consequence of a fall in the price of the stock since the date of the purchase. The majority of the Court of Appeal (Lords Justices Smith and Collins) considered that to acknowledge any right in the broker to indemnity under such circumstances would amount to allowing an agent to claim indemnity from his principal for the consequences of his own wrongdoing; but, as will presently be seen, to refuse an indemnity altogether was equivalent to granting the principal exemplary damages for the broker's breach of contract, since he was thereby placed in a more favourable position than he would have enjoyed had the contract been carried into effect. The method of settling the rights of the parties adopted by Lord Justice Rigby in the Court of Appeal, and by Mr. Justice Mathew in the Court below, would certainly seem to be more in accordance with the usual rule as to the measure of damages; and clearly if large quantities of stock have been purchased and a heavy fall in value has occurred previous to the wrongful sale-it is of course only in case of a fall in price that such a sale is likely to occur-it may, and probably will, be most material to the broker whether his claim to an indemnity is allowed subject to a deduction for loss caused to his principal through the wrongful sale, or is held never to have arisen at all. The whole question appears to turn upon the date of the accrual of the indemnity. If it is essential to the creation of such a claim that there must have been a previous breach by the principal of performance of his contract, then no doubt an indemnity cannot be claimed by the broker where, by breaking his own undertaking before the time arrives for fulfilment of the principal's promise, he has himself put it out of his principal's power to make such

a breach. If, on the other hand, it can be shewn that there are cases in which a claim to indemnity will arise, although there can be no breach of contract because there is no contractual relation, and that the relation between a stockbroker and his principal is, to some extent at all events, equivalent to the relations of the parties in such cases, there will, I submit, be a presumption in favour of the views held by the dissentient Judges.

The material facts in Ellis v. Pond were as follows:The defendant, Pond, shortly before November 10th, 1896, the carrying-over day on the Stock Exchange, bought through the plaintiff, who was a broker on the Exchange, large quantities of Metropolitan District Railway stock, of which an amount to the nominal value of £105,000 had been taken off the market by the help of money supplied, for the most part, by the plaintiff. In respect of the stock thus taken up, all the Judges were agreed that the plaintiff was entitled to an indemnity, and it therefore may be dismissed from consideration so far as the present paper is concerned. In addition to the £105,000 stock, the plaintiff had on November 10th, by the defendant's instructions, carried over £35,000 stock, and purchased a further £10,000 at a price which may, with sufficient accuracy be stated to have been 29 for each nominal £100, and this £45,000, according to the undisputed finding of the jury, he agreed with the defendant that he would not sell before the next settling day, November 26th. A heavy fall, however, occurring before that date, the plaintiff became alarmed at the state of the market, and on November 19th, after requesting instructions from the defendant and failing to receive any, he sold the stock at a price which may approximately be stated as 25. He then forwarded the "sold" notes to the defendant, who immediately wrote in reply returning the notes and stating that the plaintiff had no instructions to sell. On November 24th the plaintiff

issued a writ in the action, claiming to be indemnified by the defendant for the expense to which he had been put.

On the above facts Mr. Justice Mathew, before whom the case was originally tried, left to the jury five questions, of which, in view of the answer given to the first, only the first and last are of importance. The first question was, "Did the plaintiff agree not to sell the stock before November 26th?" Answer: "He did." The last question was, "If the stock had not been disposed of to Smith" (the jobber to whom the stock was sold at 25), "for what amount could the plaintiff have sold it?” Answer: "£28." It will be important to bear in mind that the jury found that 28 would have been the market price on November 26th, although they were invited to find that but for the wrongful sale, the price would have been above 30 on that day. On these findings Mr. Justice Mathew gave judgment for an amount, which was determined by allowing the plaintiff's claim to an indemnity, but deducting therefrom the loss suffered by the defendant through the wrongful sale-by allowing, that is to say, the broker's claim to the difference between the price of purchase, 291, and the actual price of sale, 25, amounting on the entire sum to £2,025, and deducting as damages for the wrongful sale the difference between 25 and 28, the price obtainable on the 26th, amounting on the same basis to £1,350. On this computation it will be seen that the broker would receive from his principal a sum of £675. With this decision, when the case came before the Court of Appeal, Lord Justice Rigby agreed, but the majority of the Court held that the right to an indemnity did not arise until there had been a breach of contract by the principal, and that since the principal had not had an opportunity of refusing to accept delivery of the stock, the broker was not entitled to be indemnified. The upshot of the decision, of course, was that the broker lost, and the principal gained, £675 more

than would have been the case if the judgment of the Court below had stood.

Looking at the matter from a purely non-legal point of view, it must be admitted that the result was a little severe upon the broker. He was in a distinctly difficult position. On the 26th he might, under the regulations of the Stock Exchange, be compelled to pay for and take up the £45,000 of stock whether the defendant fulfilled his part of the contract or not, and in case of the fall in value continuing he would, if the defendant failed him, be saddled with a very heavy loss. As he had already supplied a large part of the money to take up the £105,000 stock he may possibly have thought that the defendant neither intended, nor was in a position to take up, the £45,000, if such a course became imperative, but was relying upon the occurrence of a rise in price above 29 before the 26th, or at the worst, on the probability of being able to sell out before settling day and merely paying differences. But it is possible that had the fall in value continued a panic might have occurred and the stock have become unsaleable, when, if his principal had been unable to take up the stock personally, the broker would have found himself in the position of being called upon on settling day to pay down a sum of £13,000 and having a right to sue his principal for reimbursement-not a very satisfactory right if in the meantime he was unable to find the money and was in consequence declared a defaulter on the Stock Exchange. Of course that is not a probable result where transactions are in such a security as railway stock, but it is obvious that if there had been a fall of, say, ten points instead of four and a-half the broker might have been put to serious inconvenience. It is easy to say that prudence should have dictated to him that in purchasing such large amounts of stock it would be well to protect himself by making special stipulations as to his right to cover and to sell out in default of