in turn taken proceedings against the broker, the measure of damages would clearly have been the difference between the 25 and 28, and not between the 25 and 291. The majority of the Court assumed that the case was concluded by the decision in Duncan v. Hill,* but there is nothing to shew that the sum claimed in Duncan v. Hill was not a sum equivalent to the difference between 25 and 28 in Ellis v. Pond, and that the refusal of an indemnity in the former case did not place the defendant in the precise position he would have been in had the contract been completed. Indeed, the statement in the argument of counsel for the defendant, "that if the plaintiffs could succeed in this action, the defendant would be entitled to recover back the same amount from them in an action for breach of their duty," leads to the conclusion that that was the case, the argument of the opposing counsel on this point appearing rather to relate to the general principles applicable for fixing the measure of damages than to be a denial of the fact that the sum in question was the correct amount in the particular instance. But the real bone of contention in Ellis v. Pond was the additional sum constituted by the difference between 28 and 29 on £45,000 of stock. To come now to the question of the period at which the right to an indemnity becomes effective, it will be observed that the members of the Court of Appeal were very much at variance on the point. "If the plaintiff," said Lord Justice Smith (p. 440), "does not establish that the defendant has refused or neglected to perform his contract with him, in my judgment he clearly fails in his action for indemnity, for it is only upon proof of such refusal or neglect that the right to indemnity arises." "I think," said Lord Justice Collins (p. 458), "the simple ground which I have stated, * (1873) L.R. 8 Ex. 242. namely, that the plaintiff did not prove, and, indeed, put it out of his power to prove, any breach by the defendant is decisive of the case." "Here," said Lord Justice Rigby (p. 453), "the plaintiff's claim for indemnity does in my judgment quite plainly arise out of the original contract, and not out of the attempted closing of the accounts by the wrongful sale, which transaction is only relevant in so far as it may be available as a defence or as a separate ground for damages." Which of these opinions is correct? The position which a stockbroker occupies in relation to his principal is, it has been held, that of a trustee,* and his right to indemnity clearly arises, as does that of a trustee, by implication of law and not by express contract. The right of an express trustee to be indemnified out of the trust estate is certainly not dependent upon any breach of contract; for, unless the maker of the trust is alive and is also a cestui que trust, there is no one towards whom the trustee stands in a contractual relation. The right, is, it seems, in this instance inherent by operation of law in the person who undertakes liabilities on behalf of another from the moment when he puts himself into that position, and why should there be a difference in this respect between the position of an express and an implied trustee? It is true that in the latter case the right creates a personal liability, while in the former it is attached more particularly to property, though there may be personal liability as well.† But the difference in liability does not seem to afford a reason for making a distinction in the time when the right accrues, and since we find that in one case it must accrue ab initio, while in the other it may or may not, it is, I submit, a fair presumption that it does accrue ab initio in *Ex parte Cooke, (1876) 4 Ch. D. 123; Knatchbull v. Hallett, (1880) 13 Ch. D. 696. + Jervis v. Wolferstan, (1874) L.R. 18 Eq. at p. 24; Fraser v. Murdoch, (1881) 6 App. Cas. at p. 872, the second case as well as in the first, especially if the result of the presumption is to obtain a fairer settlement between the parties. If that is so, then immediately a man assumes a position at the request of another which places him under a liability that otherwise would have fallen upon that other, and that liability either has been paid or is a definite future debt of ascertained amount, it would seem that the party who is primarily liable is entitled to be indemnified in the present, or to the declaration of a right to an indemnity in the future, at the hands of the party in whose place he stands.* The liability which the broker assumed on November 10th was not a liability to pay differences in case the stock was not taken up on the 26th. It was a liability to pay 29 per cent. for the stock on the settling day, and the jobber would have been perfectly entitled to insist on the broker's carrying out his undertaking to the letter, and under ordinary circumstances would probably have done so, if he had had the stock on his hands and had been unable to get rid of it elsewhere on the 26th. The broker had no right to enforce any other terms on the jobber; the principal could demand nothing else from the broker.† There might be a breach of the contract, or the parties. might enter into some new arrangement which would dissolve the former one; but until the actual occurrence of one of those contingencies the performance of the contract must, it is submitted, be contemplated as its natural and probable result, and that being so, there was, on the * Fraser v. Murdoch, supra ; Evans v. Wood, (1867) L.R. 5 Eq. 9; Hodgkinson v. Kelly, (1868) L.R. 6 Eq. 496; Wooldridge v. Norris, (1868) L.R. 6 Eq. 410; Hobbs v. Wayet, (1287) 36 Ch. D. 256; Wolmershausen v. Gullick, (1893) 2 Ch. 514. In Hughes Hallett v. Indian Mammoth Gold Mines Co., (1882) 22 Ch. D. 561, a declaration of indemnity was refused on the ground that the liability was not ascertained inasmuch as it was not clear that any further calls would be made on the shares which the plaintiff was holding. ↑ Bramwell, L.J., in Thacker v, Hardy, (1878) 4 Q.B.D., at p. 691. principle of Wolmershausen v. Gullick and the other cases cited, a definite and ascertained liability from November 10th onwards, in respect of which the broker was entitled to an immediate declaration of a right to indemnity. The defendant's liability to pay for the shares, and to indemnify the person who was primarily liable to pay, was an incident of ownership, and the beneficial ownership of the stock passed to the defendant on November 10th when the contracts were effected. In any case to hold that the right does not arise until there has been a breach of contract, is to reduce an indemnity to a claim for damages for breach of contract, but the distinction between the two remedies was clearly stated by Lord Justice Bowen in the Birmingham and District Land Co. v. London and North Western Railway Co. "But it is quite clear to my mind that a right to damages, which is all that the defendants. have here, if they are entitled to anything, is not a right to indemnity as such. It is the converse of such a right. A right to indemnity as such is given by the original bargain between the parties. The right to damages is given in consequence of the breach of the original contract between the parties. It is an incident which the law attaches to the breach of a contract, and is not a provision of the contract itself." The case suggested by Lord Justice Mellish in Scrimgeour's case appears to be exactly in point, and is, I submit, the correct view. "I am not aware," he said, "that there is any difference between the purchase of stock or shares and the purchase of wheat or cotton. If a broker has purchased a quantity of cotton, or other goods, and has paid for it out of his own money"-the personal liability to the jobber comes, I suggest, to the same thing-" and has * Hodgkinson v. Kelly, (1868) L.R. 6 Eq., 496. † (1886) 34 Ch. D., at p. 274; see also Fry, J., at p. 276. got an order from his principal that he may sell for the purpose of recouping himself the amount which he has actually paid, but the principal has told him: 'I think you had better not sell till the 1st of August,' and he, being afraid the market will fall, sells a fortnight too soon; that, upon the ordinary principles of law, would not entirely deprive him of his right to recover. He would still be entitled to recover the money he had laid out on behalf of the principal; but the principal would have a counterclaim against him for damage, if any, which might have resulted from the fact of selling a fortnight earlier than he ought to have done." SPENCER Brodhurst. IX. OBITUARY: THE RIGHT HON. SPENCER HORATIO WALPOLE, Q.C. IN N this year's law list, but for the last time, at the head of the non-official members of the Bar, appears the name of the Right Hon. S. H. Walpole as the senior Queen's Counsel, according to the date of his appointment, by no less than eight years. It is a very long time indeed since the late Mr. Walpole actively exercised his profession, though he remained strongly attached to it until the close of his life, and held to the friendships which he had formed at the Bar, of which, however, death had severed by far the greater number, before he himself was called away. Even the political career of Mr. Walpole may be said to have passed into history some while since. It is now nearly thirty years since the great leader of his party, the Earl of Derby, died at the age of three-score. His Government had fallen in the previous year: before this fall Mr. Walpole had ceased to be a Home Secretary: and never afterwards did he |
