Supreme Court Judgments

Supreme Court of Canada

Boultbee v. Gzowski, (1898) 29 S.C.R. 54

Date: 1898-10-13

Alfred Boultbee (Plaintiff) Appellant;

and

Casimir S. Gzowski, Jr. (Defendant) Respondent.

1898: March 8, 9; 1898: October 13.

Present: Taschereau, Gwynne, Sedgewick, King and Girouard JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Principal and agent—Broker—Stock exchange custom—Sale of shares—Marginal transfer—Undisclosed principal—Acceptance—“Settlement”—Obligation of purchaser—Construction of contract—“The Bank Act,” R.S.C. c. 120, ss. 70-77—Liability of shareholders—“Stock jobbing.”

The defendant, a broker doing business on the Toronto Stock Exchange, bought from C, another broker, certain bank shares that had been sold and transferred to C by the plaintiff. At the time of the sale C was not aware that the defendant was acting for an undisclosed principal and the name of a principal was not disclosed within the time limited for “settlement” of transactions by the custom of the exchange. The transferee’s name was left blank in the transfer book in the bank, but it was noted in the margin that the shares were subject to the order of the defendant who, three days after settlement was due according to the custom of the exchange, made a further marginal memorandum that the shares were subject to the order of H. The affairs of the bank were placed in liquidation within a month after these transactions and the plaintiff’s name being put upon the list of contributories, he was obliged to pay double liability upon the shares so transferred under the provisions of “The Bank Act,” for which he afterwards recovered judgment against C and then, taking an assignment of C’s right of indemnity against the defendant, instituted the present action.

Held, that as the defendant had not disclosed the name of any principal within the time limited for settlement by the custom of the Exchange and the shares had been placed at his order and disposition by the seller, he became legal owner thereof, without the necessity of any formal acceptance upon the transfer books and that he was obliged to indemnify the seller against all

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consequences in respect of the ownership of the shares, and the double liability imposed under the provisions of The Bank Act.”

APPEAL from the judgment of the Court of Appeal for Ontario^[1] reversing the judgment of the Divisional Court of the High Court of Justice^[2] which had reversed the decision of the trial court and ordered a judgment to be entered in favour of the plaintiff.

The plaintiff sued under an assignment from one Robert Cochran of a claim against the defendant which arose in respect of the sale of twenty shares of the Central Bank of Canada. The plaintiff, prior to the sale, was the owner of the shares and sold and transferred them to Cochran, who shortly afterwards sold them to the defendant. Within thirty days of this transfer the bank went into liquidation, and the plaintiff was placed on the list of contributories and compelled to pay double liability on the shares. The plaintiff claimed that Cochran was bound to indemnify him against such payment, and Cochran, while admitting such liability contended that Gzowski was in turn bound to indemnify him, and having assigned his claim to the plaintiff an action was brought by him against them both. In an action judgment was recovered against Cochran, but the action as against Gzowski was dismissed without prejudice to the rights of the plaintiff upon the ground that at the time of the assignment by Cochran he had no judgment against Gzowski, and that the right was not assignable at that time. The plaintiff obtained a new assignment from Cochran subsequent to the judgment against him, and then brought this action, which was dismissed with costs at the trial by Mr. Justice Meredith. On appeal to the Divisional Court, composed of Armour C.J. and Falconbridge and Street JJ., the trial

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court judgment was set aside and a judgment ordered to be entered against the defendant, Gzowski, for the amount of the judgment recovered against Cochran with interest and costs. The plaintiff now appeals from the judgment of the Court of Appeal which reversed the decision of the Divisional Court and restored the trial court judgment dismissing the plaintiff’s action with costs.

The facts of the case and questions at issue on the present appeal are stated in the judgments now reported.

H.J. Scott Q.C. for the appellant. The contract in this case may be summarized as being an offer by one party of a price for the stock and an acceptance by the other. This constituted a complete contract between the parties, and is the contract upon which this action is brought. It is a contract of the simplest kind, the purchase and sale of stock unaccompanied by any special terms and conditions. There was no necessity for any written contract nor was any entered into. The legal results of such a contract are: First, the duty on the part of the vendor to deliver the stock; Secondly, the duty on the part of the purchaser to take the stock when delivered, to pay for it and to accept it cum onere, that is to indemnify the vendor against all the consequences of ownership. It is upon this latter part of the contract that the appellant relies. Both Cochran and Gzowski are brokers and members of the Toronto Stock Exchange, which, unlike the London Stock Exchange, has no rules governing sales, and the rights of the parties depend upon the general principles of law apart from any special regulations, Maxted v. Paine^[3]. All the judges agree upon this. See judgments of Meredith and Street JJ.^[4]; and of Burton C.J.O., and Osler

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J.A.^[5] See also the cases cited in the various judgments, and particularly Kellock v. Enthoven^[6].

Cochran was therefore entitled, and appellant, as his assignee, is entitled to be indemnified by the respondent, for the amount for which judgment has been recovered against Cochran. The fact of acting for an undisclosed principal does not relieve the respondent from personal liability. The transfer to Henderson was really made by the respondent and he cannot by his own act be relieved from liability. As to transfers in blank see Lindley on Companies (5 ed.) pp. 471 and 472. The equitable ownership of shares, agreed to be sold, depends on the contract of sale and not on the form of transfer; consequently where there is a binding agreement for the sale and transfer of shares it is comparatively immaterial, as between the buyer and seller, whether a transfer in blank has been executed or not. Cases like Loring v. Davis^[7] involving the doctrine of trustees and cestuis qui trust do not depend upon privity of contract and cannot affect the rights of parties under contracts.

I refer also to Cabana, Money Securities, (2 ed.) p. 516; and the case of Hughes-Hallett v. The Indian Mammoth Gold Mines Co.^[8]

Aylesworth Q.C. for the respondent. The plaintiff’s liability as a contributory arose while he himself held the shares, and in consequence of his having held them within one month before the bank’s suspension; but his recourse was preserved under the Act as against Henderson, to whom the shares had been transferred, and who, as the registered holder of the shares at the date of the bank’s suspension was also made a contributory; R.S.C. c. 120, ss. 70 and 77. The

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master’s decision upon the effect of these marginal transfers was considered and upheld In re Central Bank of Canada; Baines’s Case^[9], and the judgment of the master forms a complete bar to the plaintiff’s claim and, under the present circumstances, there cannot be any liability on the part of the respondent towards the appellant. The obligation to indemnify is to be implied from the circumstances of the case in the sense of being the tacit agreement between the parties and not as being imposed by law whether the parties agreed to it tacitly or not; not to be forced upon them by law or in equity nolens volens.

The learned trial judge found that it was not contemplated that the defendant should in any case become the transferee, and that the real contract between the two brokers was, that defendant’s firm should be personally answerable for the payment of the price of the shares on the day following the purchase, and that upon such payment Cochran would transfer them to any one defendant’s firm might name, or by way of “marginal transfer” put it in that firm’s power to transfer the shares to any competent transferee, and that it was never contemplated by either that defendant should be in any case bound to take a transfer of the shares, or otherwise come under any personal liability in respect to them, beyond payment of the purchase money, and procurement of a valid transfer of them. The implied obligation was not that the transferee of the shares was to indemnify plaintiff against the double liability which arose whilst he was the holder of them but, more consistently with the principles of indemnification, it was that the purchaser had the right to call upon the plaintiff or upon Cochran, if he were really the vendor, for indemnity in respect of this liability. Humble v. Langston^[10]. The principle

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of the case of Burnett v. Lynch^[11] does not apply, and although Grissell v. Bristowe^[12] deals particularly with the usages of the London Stock Exchange, note the remarks by Cockburn C.J. at page 50 of the report.

The evidence in no way warrants the conclusion that there was at any time a completed transaction of sale and purchase of these shares as between Cochran and the defendant. The effect of the adoption of the form of transfer used in the transaction was to prevent personal liability in respect to the shares from attaching to defendant, and the purpose and intent of the parties was that the shares might be transferred directly to and accepted by the real purchaser, Henderson. The transfer executed by Cochran became, as was intended, a transfer from him directly to Henderson, the real purchaser, establishing direct privity of contract between them. The marginal transfer executed by Cochran was a power of attorney from him to defendant’s firm to put forward the person to whom the shares might be sold as the final purchaser, instead of the firm, and this is what was done, he was accepted as the transferee, and he became the shareholder, subject to the double liability, and liable, if any one was, to indemnify Cochran. A novation took place which precluded Cochran from asserting any demand against defendant in respect of their agreement. In Walker v. Bartlett^[13] the defendant was the real purchaser, and yet was not bound to take a transfer of the shares in his own name, but could cause the shares to be registered in that of some other person to be named by him as the owner thereof, the seller having signed an order for a transfer of the shares, leaving a blank space for the name of the transferee.

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See also Hawkins v. Maltby^[14] and Re Central Bank of Canada, Baines’s and Nasmith’s Cases^[15].

The new Bank Act^[16], in more clear and precise language makes plain the intention, that the “recourse” of shareholders who had transferred their shares within the prescribed time before the bank’s suspension is and was intended to be against those only by whom such transferred shares were actually held at the time of the bank’s suspension.

The cases relied upon by the appellant turn upon the view that under the rules of the English Stock Exchange the purchasing broker was held liable, not because he was deemed a purchaser, but because having under the Stock Exchange rules entered into an engagement to produce a purchaser within a certain time and have his name entered as the transferee, he had failed to perform some of the terms of the engagement and was to be held liable as if he had been the purchaser. The rules and usages of the London Stock Exchange are set out in Lindley’s Law of Companies, (5 ed.) pp. 548 to 557. See also Fry on Specific Performance, (3 ed.) pp. 655 to 671, and the rules are given in full in a foot note to Grissell v. Bristowe^[17] begining at page 53. The inquiry in these cases was, who was the purchaser, and if the court is not able to find any other purchaser at all competent to deal with the vendor, then the person who assumed to make the contract with the vendor is deemed to be the purchaser. I refer to remarks on the case of Kellock v. Enthoven^[18] in the judgment of the learned trial judge and the cases there cited by him in that connection. The cases referred to by Mr. Justice Street are inapplicable to the circumstances of this case, because the

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liability (if any) of a purchaser to indemnify his vendor lasts only as long as the purchaser is the registered owner or holder; Shaw v. Fisher^[19]. The respondent never held the shares at all; or, if he ever held them, he had parted with them before the liability in respect of which he is now sued, arose; the liability (if any) which arose during the time defendant held the shares, (if he ever held them,) was a liability on the shares in respect of which Cochran might or could be held liable, and not a liability on the shares in respect of which defendant could be rendered liable which arose while he held them, if he ever did so. Lastly it is found and determined as against the appellant in such a manner as to be res judicata against him and to estop him from now contending the contrary, that Cochran was not damnified until after the commencement of the action in which judgment was recovered against him; therefore, the liability in respect of which the appellant is sued did not arise while he held the shares, if he ever held them. Henderson, as the real purchaser and transferee, became directly responsible and liable to the vendor Cochran in respect of any liability or obligation against which the purchaser of shares is liable to indemnify his vendor, and Cochran’s remedy was and is against Henderson. Brown v. Black^[20]; Evans v. Wood^[21]; Maxted v. Paine^[22]; Coles v. Bristowe^[23]; Grissell v. Bristowe^[24]; Paine v. Hutchinson^[25]; Bowring v. Shepherd^[26]; Loring v. Davis^[27].

The effect was that Cochran as vendor accepted Henderson either as the original purchaser or as a

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sub-purchaser from the appellant, entitled to a transfer of the shares, and transferred the shares to Henderson at the respondent’s request; and this dealing put an end to any liability on the part of the respondent to indemnify Cochran, if any ever existed. All liability of the respondent (if any ever existed) ended with the payment of the purchase money and the transfer to Henderson accepted by him, and this remedy being against Henderson, he is not entitled also against the respondent Gzowski, who only acted as intermediary between the real parties to the transaction, and the appellant has no higher or better right than Cochran, who by his own act, made the transfer directly from him to Henderson. See Castellan v. Hobson^[28] also Coles v. Bristowe^[29]. Moreover the right (if any) of the appellant was and is barred by the proceedings and judgment in the former action referred to in the judgments in this action.

The rules of the Toronto Stock Exchange provide for the settlement of disputes arising between members in reference to any transaction entered into between them in the exercise of their profession as stockbrokers by arbitrators, members of the board, and the matter of defendant’s liability (if any) was and is a matter to be determined between him and Cochran according to the rules of the Exchange, and no assignment by Cochran could put an end to this right to have the matter determined and disposed of in the domestic forum. At all events there is no recourse to the courts until after the domestic forum has been invoked. Field v. Court Hope of A.O.F.^[30]; Essery v. Court Pride of the Dominion^[31]. In fact this question was before the assignment by Cochran duly dealt with and determined by the Toronto Stock Exchange in favour

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of the respondent, and both Cochran and the appellant are bound by that decision or determination.

TASCHEREAU J. (dissenting).—I would dismiss this appeal. I concur in my brother Gwynne’s reasoning.

GWYNNE J. (dissenting).—In the conclusion arrived at by the learned judge who tried this case, and by the Court of Appeal for Ontario, unanimously, that this action must be dismissed, I entirely concur.

The plaintiff Boultbee, who was examined as a witness on his own behalf says that upon the 21st or 22nd of October, 1887, being desirous of selling some shares, paid up in full of the capital stock of the Central Bank which stood in his name on the stock registry book of the bank, he employed a Mr. Cochran, a practising broker on the Toronto Stock Exchange, to sell twenty of such shares for him, and he then signed a printed paper which Cochran presented to him for his signature. He does not think that he read the paper, and he cannot say what it was save that he supposes it was a power of attorney or some authority enabling Cochran to sell the shares for him. He says that on the following day he went to Cochran to see if the shares had been sold, and that Cochran then informed him that he had not succeeded in selling them; that he again went the next day for the like purpose, and was again informed that the shares had not yet been sold, and that a short time after he called again, and in fact that he called every day until the affair was completed by Cochran giving him his cheque for $1,940, being at the rate of $97 per share for the twenty shares. He never signed any paper whatever save that above spoken of when he employed Cochran as his broker to sell the shares for him; after the receipt of the said sum of $1,940 as the proceeds of the

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sale of his shares, he never heard anything more of the matter until the failure of the bank, when there arose a discussion as to who was liable to the liquidators of the bank for the statutory double liability on the shares.

Now upon Saturday, the 22nd day of October, 1887, a Mr. Henderson employed Messrs. Gzowski and Buchan, who were also brokers practising on the Toronto Stock Exchange, to purchase for him thirty shares in the capital stock of the said bank. Upon the next business day namely, Monday the 24th of October, 1887, the secretary of the Stock Exchange in the ordinary manner according to the usage and practice of the Toronto Stock Exchange, called up Central Bank stocks for transactions on change when Gzowski and Buchan acting as brokers for Mr. Henderson, bid $97 per share for ten shares, which Cochran, acting as vendor’s broker, agreed to accept, and the transaction on change was thereupon closed at that price. The usage and practice of the Toronto Stock Exchange for brokers purchasing stock for their principals is to pay upon the next business day after the transaction on change, the amount fixed by such transaction to the vendor’s broker, and subsequently, within a reasonable time, for no time is limited for that purpose by any rule of the Toronto Stock Exchange, the transaction is closed by a formal transfer of the shares by the vendor in the stock transfer book of the bank, and upon the purchaser signing underneath the transfer an acceptance thereof, the transfer is effected. There were no certificates of shares in the Central Bank transferred by the vendor’s broker to the purchaser’s broker leaving it to the purchaser to have his name entered as owner upon the stock registry book; the only transfer of shares in the Central Bank stock was effected by the above formal transfer and the acceptance thereof in

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the share transfer book of the bank. Upon the 25th day of the said month of October, Messrs. Gzowski and Buchan, in accordance with the usage and practice of the Toronto Stock Exchange, gave their cheque to Mr. Cochran for $970, the price of the ten shares bid for by them on the preceding day, and upon the same 25th day of October, they in like manner as upon the 24th, bid $95 per share for twenty-five other shares in the Central Bank stock, which bid Cochran, also acting as vendor’s broker, accepted, and this transaction was closed at that price in the ordinary course of the stock exchange as on the preceding day. For these twenty-five shares Gzowski and Buchan gave their cheque to Mr. Cochran upon the 26th of October for $2,375, according to the usage and practice of brokers purchasing shares for their clients upon the Toronto Stock Exchange. There is in these transactions so closed on change no mention made of any particular shares, nor of any particular owner or owners of the shares contracted for. These are matters which, as is well understood by the contracting brokers, are never disclosed until shares in fulfilment of the vendor’s broker’s contract come to be transferred in the share transfer book of the bank. But although it never is disclosed on change who a broker is selling or purchasing shares for, still there can be no doubt now upon the evidence in the case that in point of fact as to thirty of the thirty-five shares so bid for and paid for by Gzowski and Buchan, they were purchased and paid for on behalf of Mr. Henderson, the actual purchaser through his brokers Gzowski and Buchan; and it is equally clear, I think, upon the evidence, that as to twenty of those thirty-five shares, Mr. Cochran was acting merely as broker for Mr. Boultbee, the actual owner and vendor of those shares. Mr. Cochran’s evidence was not given with that precision which one would expect

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from a broker who could, or at least should, have no doubt whether in his transactions on the Stock Exchange he was acting as a vendor of his own property or as broker for a client. Still however, notwithstanding his want of precision, the fact I think does abundantly appear that he was acting as broker for Mr. Boultbee who was the real owner and vendor of twenty of the thirty-five shares. It is proved by the evidence of Mr. Boultbee himself that he never signed any paper relating to the shares unless it was a power of attorney to Cochran to sell the shares for him, and that upon several days after conferring such power upon Cochran he was informed by Cochran that the shares had not yet been sold, and upon a subsequent occasion he received a sum of money from Cochran as the proceeds of the sale of the shares; it is established therefore that Boultbee had never executed any instrument purporting to transfer himself the shares to any one. Mr. Cochran on his examination as a witness for the plaintiff admitted that in his dealings with Gzowski and Buchan on the said 24th and 25th of October, he was pursuing his ordinary calling of a broker buying and selling on the stock exchange, and that he then sold twenty shares of Central Bank stock for Mr. Boultbee; in another place he says that he believes he sold them for him; that he did so, is abundantly apparent from other passages in his evidence. He produced a book containing entries as to these transactions. It contained an entry of a charge “to Central Bank stock, 20 shares at $97, from Boultbee.” That entry he said might be read either that he sold for Boultbee or possibly that he bought for himself; but he added that he did not think the latter was likely and he repeated that it was not likely—that it was not what he was in for. This book also shewed two payments on the 24th October, and he

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said that he gave Mr. Boultbee a cheque for $1940 representing as he said 20 shares at $97 per share; as shewn above he had contracted with Gzowski & Co. for the sale of 10 shares at $97 per share, and he himself had also stated that he had sold 10 shares on the 24th and twenty-five on the 25th October to Gzowski & Co. He was asked then to explain how he came to pay Boultbee on the 24th, to which he answered that he did not know how he paid him more than he had sold for, and added that “it was very foolish.” This was all the explanation that Mr. Cochran could give, or at least did give, that it was very foolish for him to give Mr. Boultbee more for his shares than he had sold them for. An explanation might possibly be found in the fact that the sale of the ten shares to Gzowski & Co. on the 24th having fixed the price on change on that day, and as Mr. Boultbee was, as appears by his own evidence, very urgent upon Mr. Cochran to effect a sale, the latter may have given his cheque for the 20 shares at the rate at which the ten had been sold to Gzowski & Co. not doubting that he would be able to sell the other ten shares for the like amount; in this however, he was disappointed, for the 25 shares sold on the 25th realized only $95 per share, or possibly he might have sold ten shares to some one else of which we have heard nothing. Then being asked to fix the day on which he sold Boultbee’s shares he could not say for the reason that as he said he could not tell which were Boultbee’s shares “because all that stock” (namely the thirty-five shares sold to Gzowski & Co.) “was probably in my own name,” an expression the significance of which will appear later. The evidence as already shewn, clearly establishes that Cochran and Gzowski and Buchan were respectively acting as brokers for undisclosed principals in accordance with the usage and practice of the Toronto Stock Exchange, which

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usage and practice is, like the usage and practice of the London Stock Exchange “not dissimilar,” as is said in Torrington v. Lowe^[32] “to the usage and practice of other branches of commerce,” and the question which remains simply is: What was the nature and effect of the contract entered into between Cochran as vendor’s broker, and Gzowski and Buchan as purchaser’s brokers, in respect of the said thirty-five shares at the time of the respective transactions which took place on change being there closed in relation to such thirty-five shares? And the plain construction of such transactions, as was well understood and intended by the contracting brokers, in my opinion is, that Cochran as a vendor’s broker thereby undertook upon receipt from Gzowski and Buchan, acting as purchaser’s brokers, in accordance with the usage and practice of the Toronto Stock Exchange, of the monies agreed by them to be paid for the shares to cause thirty-five shares to be transferred in the transfer share book of the bank unto the nominees or a nominee of Gzowski & Co., so that such nominees or nominee could become legal owners or owner thereof on the shareholders’ list in the bank; and Gzowski and Buchan upon their part contracted to pay the price agreed upon for the shares on change in accordance with the usage and practice of the Toronto Stock Exchange, and further to provide a person or persons to accept such shares in the share transfer book of the bank. When Gzowski and Buchan paid, as they did pay, the price agreed upon for the shares nothing remained for the completion of their contract by Gzowski and Buchan but to produce a person or persons who should accept a transfer or transfers of the shares in the transfer book of the bank as provided in section 24 of ch. 120 R.S.C. and who should

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thereby assume all responsibility attached to being owners or owner of shares so transferred, which liability, as the shares were all paid up in full, consisted wholly, in so far as the vendors or a vendor of the shares or any of them were or was concerned, in an obligation to idemnify the vendors of the shares so transferred against any loss which might be occasioned (in the event of the bank becoming insolvent) by force of the provisions of section 77 of the said ch. 120 which enacts that

persons who, having been shareholders in the bank, have only transferred their shares or any of them to others, or registered the transfer thereof within one month before the commencement of the suspension of payment by the bank, shall be liable to all calls on such shares as if they had not transferred them, saving their recourse against those to whom they were transferred.

Now the proceeding adopted by Mr. Cochran for the purpose of fulfilling his part of the above contract appears to have been, as to twenty shares, for we have no information as to the other fifteen, balance of the thirty-five shares, that he went to the bank and signed in the share transfer book of the bank a blank transfer of twenty shares fully paid up in the capital stock of the bank, at the foot of which entry in the bank transfer book is subjoined the acceptance following by Mr. Henderson for whom Gzowski and Buchan had acted as purchasers brokers.

I do hereby accept the foregoing assignment of twenty shares in the stock of the Central Bank of Canada assigned to me as above mentioned at the bank this 29th day of October, one thousand eight hundred and eighty-seven.

(Signed)J.D. HENDERSON.

From the time of the signing by Mr. Henderson of this acceptance he has been accepted and entered on the books of the bank as the owner of twenty fully paid up shares as so transferred, or intended so to be, and as such owner he has been entered on the list of

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contributories upon the winding up of the bank, and as such transferee he has assumed the burthen imposed by ch. 120 R.S.C. upon transferees of shares in the bank. The circumstances under which Mr. Henderson thus became the acceptor, transferee and owner of these twenty shares were that, in the margin of the blank transfer which Cochran had signed in the share transfer book of the bank, he inserted the words “subject to the order of Gzowski and Buchan. R.C.”

Mr. Cochran in his evidence says that this was the ordinary mode adopted by the bank for enabling transfers to be perfected; the ordinary way, he said, was to give the above order the object being, as he explained, that Gzowski and Buchan might either accept the shares themselves in the share transfer book of the bank, or nominate somebody else who should so accept them without Gzowski and Buchan themselves becoming transferees of the shares. This was the mode adopted by the bank of complying with sec. 29 of the ch. 120 R.S.C. which enacted that no assignment or transfer should be valid unless it is made and registered and accepted by the person to whom the transfer is made in a book or books kept by the directors for that purpose.

Now this marginal order so made by Mr. Cochran had no further operation than to direct the bank to accept as Mr. Cochran’s transferee of the twenty shares whomsoever Messrs. Gzowski and Buchan should nominate, and accordingly Gzowski and Buchan with this intent inserted on the margin of the blank transfer signed by Cochran in the share transfer book of the bank below the marginal order signed by Mr. Cochran with his initials “R.C.” the words following “subject to the order of J.D. Henderson, G. & B.” In accordance with this order Mr. Henderson signed the acceptance of the shares and thereby became Cochran’s

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transferee and the owner of the shares covered by the blank transfer in direct succession to Cochran on the bank books, and thereby also Gzowski and Buchan fulfilled in every particular their contract made with Cochran in so far as 20 shares of the thirty-five contracted for were concerned.

This case is to be governed by the usage and practice of the Toronto Stock Exchange just as much as transactions on the London Stock Exchange are governed by the usage and practice of that exchange, and there is no necessity that such usage and practice should be evidenced by written rules. By Mr. Cochran’s own evidence it is sufficiently established that he inserted the marginal order in the blank transfer in accordance with the ordinary usage and practice of brokers on the Toronto Stock Exchange, and for the express purpose of enabling Gzowski and Buchan to nominate the person to accept the transfer and who upon acceptance thereof in the share transfer book of the bank should become transferee and owner of the twenty shares. Upon the London Stock Exchange there is a certain class of persons called “jobbers” who purchase shares on change for speculation, and who are allowed to pass their contract through various hands before ever any person is found to accept and become the actual purchaser of such shares; a day is fixed which is called the name day, by which the jobber must name a person who shall accept and hold the shares so dealt with. Whether there is any usage or practice upon the Toronto Stock Exchange in relation to such “jobbers” does not appear, nor is it material that it should appear in the present case which was plainly one of a purchase by Gzowski and Buchan as brokers for their client a purchaser for investment, and not at all a purchase by themselves for “jobbing”

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and speculative purposes. The name day in the case of “jobbers” in England, is fixed for the purpose of closing the further “jobbing” with the shares so purchased. By this day the “jobber” must find a person to take the shares as the actual purchaser and owner, or be himself held to his purchase. When a person is so produced to accept the shares as the purchaser, the transaction with the purchasing jobber on change is brought to the same point as in the case of a bonâ fide purchase on change by a broker for his client, who is the real purchaser and as such accepts and takes a transfer of the shares contracted for by his broker. Merry v. Nickalls^[33] must govern the present case. It lays down the law as now finally established after much contrariety of opinion. The case was one where shares were purchased on change by a “jobber,” but an actual purchaser had been found for the shares by the name-day.

Now that judgment and the rule of law thereby established is in its principle precisely applicable to the case of a broker who purchases for a client who pays for and accepts a transfer of the shares and therefore can be equally applied to the circumstances of a transaction like the present. It is there said in the House of Lords that

it is to be considered as now settled that if the jobber in performance of his contract gives to the broker of the seller the name of a person who is able to contract and is willing to be named as purchaser of the shares and the name is accepted on the part of the seller, the jobber is discharged.

Now applying the principle of that rule, so said to be established as settled law after much difference of opinion, to the case of a contract like the present, as made between Cochran as vendor’s broker, and

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Gzowski and Buchan as brokers of an actual bonâ fide purchaser for investment, it seems beyond controversy that when Cochran entered in the margin of the transfer in blank signed by him in the share transfer book of the bank the order and direction that Gzowski and Buchan’s nominee should be accepted and entered as transferee, and when Henderson who was such nominee signed the acceptance of the transfer in the share transfer book and was entered in the bank books as transferee and owner of the shares mentioned in the blank transfer, Gzowski and Buchan became thereupon absolutely discharged from their contract with Cochran or his principal and from all responsibility whatever in respect thereof. This, as it appears to me, is the true and rational construction of this transaction construed as it must be by the usage and practice of the Toronto Stock Exchange where the transaction took place by the intention and understanding of the parties to the contract, and by the mode of transfer in the share transfer book of the bank adopted by the bank; and it is the construction which is in conformity with the principle of the rule applicable to the case as now finally established by the House of Lords in Nickalls v. Merry^[34].

This mode of effecting transfers of shares from a vendor to a purchaser upon a purchase contracted through brokers on change by means of these orders inserted in the margin of transfers in blank signed by the vendor appeared in the winding up proceedings of the Central Bank to have been much abused for the purpose of purely jobbing transactions upon a most extensive scale, being thereby carried on by the bank itself and its officers and other persons, passing from hand to hand through divers persons, the original contract made on change for jobbing and speculation solely before

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ever any person should become transferee of the shares, and these jobbing transactions were carried to such an extent as to cause the failure of the bank, and its affairs to be wound up in liquidation; but such abuses so practised cannot effect a case like the present in which the purchasing broker’s client, and for whom alone in point of fact the brokers acted in contracting with Cochran as a vendor’s broker for the shares in question, accepts in due form of law in the bank books the transfer in blank therein made and signed by Cochran, who thereby assumed for the first time in the transaction the position of vendor. It is perfectly clear upon the evidence that Gzowski and Buchan did not nor did either of them, ever intend to become or contract to become, or in point of fact become transferees or transferee of the shares in question, or of any of them. They never in point of fact acted in the transactions relating to these shares or any of them in any other capacity than as brokers for Henderson, who has accepted the transfer of the shares as made by Cochran, and all the obligations attached by law to such transfer.

If Gzowski and Buchan had failed to nominate a person who should accept a transfer thereof in the bank transfer book as they had by their transaction on change contracted with Cochran to do, they would doubtless have been liable in an action at suit of the vendor for all damages accruing to him by such their breach of contract, but that is a very different thing from the liability which is attempted to be imposed on them in the present action, which is simply in effect that a broker acting on change for a purchaser is bound to indemnify a vendor against all damage, in the event of his client after acceptance of a transfer of the shares on the books of the bank fail-

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ing to discharge the obligations imposed upon him by his so becoming transferee of the shares.

The Divisional Court of Queen’s Bench in their judgment which reverses the judgment of the learned trial judge whose judgment the Court of Appeal for Ontario have restored, proceeded, first, upon the misconstruction of the contract made on change between Cochran and Gzowski and Buchan, holding it to be similar to that in Walker v. Bartlett^[35], which was a contract not made on change at all or even between brokers, but between the actual owner and vendor of the shares and the actual real purchaser thereof for his own use and benefit, and holding further that the transfer in blank executed by Cochran is to be regarded as having been so executed for the mere convenience of Gzowski and Buchan in the sense that the blank transfer in Walker v. Bartlett, which was shown in evidence to have been so executed by the direction of, and solely for the convenience of the defendant, who was himself and for himself alone the actual purchaser of the shares. The court thus assumed that Gzowski and Buchan were the actual real purchasers and intended transferees of the shares on the bank books, thus ignoring altogether the evidence in the case, and the usage and practice of brokers on the stock exchange, subject to which the brokers were contracting, as was well understood by them and as is explained and admitted by Mr. Cochran himself in his evidence. The court seems to have assumed that brokers practising on the Toronto Stock Exchange could not be governed in their transactions on change by any usage or practice not evidenced by written rules, but there is nothing to prevent persons contracting, wherever the contract may be entered into, namely, whether on change or elsewhere, from

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contracting in accordance with the usage of a particular trade, or with any well understood usage in relation to a particular matter. All transactions must be construed in accordance with the plain intention of the parties to the contract with relation to contracts on change. Merry v. Nickales^[36] is a conclusive authority that they must be construed in accordance with the usage and practice of brokers, and that such usage may be evidenced partly by oral evidence, partly by written rules. As to the practice and usage of the Toronto Stock Exchange, as affecting the transactions in question here, there is no conflict of evidence. The contract entered into on change by Gzowski and Buchan as already shown was not in relation to any particular shares, nor as to the shares of any particular vendors, but that they would pay for (which they did) thirty shares in the Central Bank to be transferred by Cochran to some persons or person to be nominated by Gzowski and Buchan, who should accept such transfer in the bank transfer book, and relieve the owner from, and indemnify him against all the obligatians imposed upon him as vendor and transferor of the shares. Now that Walker v. Bartlett^[37] has no application to the present case is apparent from this, that there the defendant was the actual purchaser of the shares who had himself contracted for the purchase for his own sole use and benefit, but as it was necessary that as purchaser he should be entered as such upon the stock registry of the company whose shares he was purchasing, he requested that the vendor should deliver to him a transfer in blank so that he might substitute the name of some other person as the transferee, and accordingly the vendor (at the purchaser’s request and for his sole convenience, not for the purpose of doing anything which was part of the vendor’s contract to do) delivered to

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the defendant a transfer in blank, and the defendant having failed to have the name of any other person inserted as transferee, and having thus suffered the vendor’s name to remain on the stock registry list of the company, was held bound to indemnify the vendor from obligations to which he was subjected so long as his name appeared on that list. But in the present case, Gzowski and Buchan never put themselves forward as the actual purchasers of the shares or any of them, nor was the transfer in blank executed by Cochran at their request, or in point of fact for their mere convenience, but in accordance with the well known usage and practice of the bank in relation to the transfer of shares bought and sold on change from a vendor to the purchasing broker’s client, and to enable such purchasing brokers to nominate their client the actual purchaser of the shares and the person to be inserted transferee thereof in the bank book, which they did, and he in the usual form accepted the transfer and the obligations incident thereto.

The Divisional Court also relied upon the case of Kellock v. Enthoven in the Exchequer Chamber^[38]. That case also, as pointed out by the learned trial judge, has no application in the present case, for there, the person made liable to indemnify the plaintiff, the vendor, was a person to whom the shares had actually been transferred upon the stock registry and who although he had sold and in like manner transferred the shares to another, was made liable to the vendors who had so transferred the shares to the defendant under sec. 38 of 25 & 26 Vict. ch. 89. In precise accordance with this judgment is sec. 77 of ch. 120 R.S.C. which alone imposes upon the persons therein mentioned who have ceased to be shareholders in a bank, the same liability as is imposed by sec. 70 upon the share-

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holders at the time of a bank becoming insolvent, as if the persons affected by the sec. 77 “had not transferred their shares saving their recourse against those to whom they were transferred,” but as Gzowski and Buchan never were, nor was either of them, such transferees or a transferee of any of the shares in question, this case of Kellock v. Enthoven^[39] is inapplicable in the present case.

Secondly, the Divisional Court proceeded upon the ground that in their opinion the double liability under sec. 77 of the ch. 120 is a liability inseparably attached to the shares themselves which are transfered precisely in the same manner as the liability to pay a mortgage upon real estate is attached to the assignment of the equity of redemption in the estate mortgaged and becomes imposed upon every assignee of such equity of redemption, but if this ratio decidendi should prevail, then first, the liability to indemnify a vendor of shares against the double liability which is imposed by sec. 77 of ch. 120, would pass to and upon the ultimate transferee of the shares “within the month preceding the commencement of the suspension of payments by the bank,” which would be contrary to the express provision for recourse which, by the section, is reserved to the transferor against his transferee, which transferee must be the person to whom the transfer of shares is made under sec. 29 of the Act. And secondly, if the liability by sec. 77 is attached to the shares transferred in the same manner as the liability to discharge a mortgage upon an estate is attached to the assignment of the equity of redemption in the estate mortgaged then of necessity the identity of the shares to which such liability is attached must needs be unequivocally apparent on the instrument transferring them, but in the instrument executed by Cochran as a transfer which Henderson accepted there

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are no shares mentioned so as to be capable of identification by numbers or otherwise, as having been shares which Boultbee ever owned. How the bank determined what shares should be appropriated by them to Henderson as representing the shares which he had bought through Gzowski and Buchan as his brokers, we have no means of knowing, nor are we now concerned to inquire, but what we do know from Cochran’s own evidence, is that he could not distinguish which of the thirty-five shares which he contracted with Gzowski and Buchan to sell belonged to Mr. Boultbee, for the reason that as he said, all those shares—not were his own property—but “probably were in his name.” What he meant by this expression is not apparent, for there is proved to be in the share transfer book of the bank a paper purporting to be a transfer not of any particular shares capable of being identified by numbers or otherwise, but of “twenty shares,” in the stock of the bank as from Boultbee to Cochran executed by Cochran himself as attorney for Boultbee to Cochran himself, and accepted by him and dated the 22nd October, 1887, the day on or about which Boultbee had given to Cochran a power of attorney to sell twenty shares for him. Of this instrument by way of transfer it is plain upon Boultbee’s evidence that he was not aware when several days after having giving the power of attorney to Cochran he received from Cochran the proceeds of the shares as sold for him by Cochran on change—a sum in excess, to Cochran’s surprise, of the amount for which as he says he has sold the shares and had gotten for them. In fact Boultbee could have had no knowledge of this instrument purporting to be a transfer to Cochran until after the failure of the bank, for he says in his evidence that from the day of his receiving the proceeds of the sale of his shares on change for him by

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Cochran, he never heard anything in relation to the matter until after the failure of the bank, when as he says, discussions arose as to who were liable for the double liability. Then for the first time it would seem that he heard how the transaction had been carried out by Cochran, and then he took proceedings in the liquidation of the bank against Gzowski and Buchan claiming that they, as purchasers of his shares, should indemnify him against his statutory liability. In that proceeding he failed, but now for the purpose of effecting what he then failed in, through the intervention of Cochran he adopts the document so executed by Cochran bearing date the 22nd October, 1887, as evidencing a sale made by him to Cochran, while his own evidence and also Cochran’s, plainly proves that no such sale ever took place; Cochran says in his evidence that in dealing with Gzowski and Buchan in respect of the thirty-five shares he was dealing as vendor’s broker, and that he could not tell which of the thirty-five shares were Boultbee’s for that all were probably in his own name, and he could not understand how he did such a foolish thing as pay to Boultbee as the proceeds of the sale of his shares on change, more than he had sold them for. His practice appears to have been that upon receiving from his client a power of attorney to sell shares for him he put them into his own name by permission of the bank authorities. By this mode of dealing with his client’s property without his authority it is not strange that he should be unable to distinguish what shares were intended by a sale when the shares were not identified by numbers or otherwise. When he executed the blank transfer which Henderson accepted he may have had fifty or one hundred shares standing in his name, but all really belonging to different clients, or partly to clients and partly to himself as the real

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owner; when then he transferred or executed an instrument purporting to transfer shares not identified by numbers or otherwise, it is natural that neither he, or any one else could say to what particular shares any such transfer related; what loss to his clients and what complications would be created by this mode of conducting the business by a broker, in respect of shares which he was authorised to sell for his clients and by this absence of identification of the shares sold by him and professed to be transferred by him, we are not concerned in the present case; all that is necessary for the present purpose is to show that adopting the ratio decidendi upon which the Divisional Court proceeded, it is impossible for the plaintiff to succeed in the present action, for the onus probandi wholly lies upon him, and upon the evidence in the present case it is impossible upon this record judicially to say that any shares of which Boultbee had been the owner were ever transferred to any one by Cochran.

Then again, Cochran was not in the liquidation proceedings charged with any liability to the liquidators of the bank under sec. 77 of the Act, as a person who had been a shareholder within the month preceeding the commencement of suspension but who had transferred his shares before the suspension, so that his transferee does not seem to have been liable to any action for indemnity at his suit in virtue of the provisions of sec. 77. If his transferee could be liable in any action at his suit it must be independently of that section; and the liability is assumed to be of this nature—that Cochran’s transferee by force of the transfer from him is under an implied obligation to indemnify him against an implied obligation which it is contended he lies under to Boultbee to indemnify him under sec. 77 as being the transferee from Boultbee of his shares. But as it appears in evidence

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that Boultbee never did in point of fact transfer any shares to Cochran a grave question would arise whether or not Cochran’s irregular and unauthorized dealing with Boultbee’s shares, which he was authorised to sell and professed to have sold for him on change, created any liability to indemnify Boultbee under the provisions of sec. 77 against the obligation imposed upon him by that section or whether Cochran’s liability to Boultbee would not in such case arise rather out of and by reason of his irregular dealing with Boultbee’s shares; and in the latter case, whether or not his transferee, who had no knowledge that he was acquiring by a transfer from Cochran any shares in which Boultbee had any interest, would be under any obligation to indemnify Cochran in the interest of Boultbee against such his obligation to Boultbee. But it is unnecessary to consider these points further now, or to do more than suggest that these questions would seem to require more consideration than they have received if the case must needs be decided upon the ratio decidendi upon which the Divisional Court proceeded. But for the reasons first above given, I am clearly of opinion that the judgment of the learned trial judge and of the Court of Appeal for Ontario should be affirmed, and this appeal dismissed with costs.

SEDGEWICK J.—There is little or no dispute as to the facts of the case, and they are very simple. The appellant Boultbee, prior to the 26th of October, 1887, was owner of twenty shares of the stock of the Central Bank of Canada, and he sold them to Robert Cochran, a stock broker, doing business in the Toronto Stock Exchange. On the 24th of October they were put up for sale by Cochran on the stock exchange and were purchased by a firm of stock brokers, Messrs. Gzowski

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and Buchan, according to the usual course of business on the exchange. Cochran sold as principal, and Gzowski and Buchan purchased for an undisclosed principal, one J.B. Henderson, who it would appear was neither then, nor has he been since, a person of any means. On the 26th of October the buyers paid Cochran for the shares so purchased whereupon the latter went to the office of the bank and signed a transfer, leaving out of the body of the transfer the name of the transferee, but writing in the margin opposite the blank where the transferee’s name under ordinary circumstances would be: “subject to the order of Gzowski & Buchan.” Subsequently Gzowski went to the bank and wrote under the marginal note initialled by Cochran the words “subject to the order of J.B. Henderson, G. & B.” and subsequently, on the 29th of October Henderson signed an acceptance of those shares, all of the documents so far as the present question is concerned, being as follows:

(Sgd.) ROBERT COCHRAN.

Witness: (Sgd.) A.B. ORDE.

Within thirty days from the time that Boultbee made his transfer to Cochran and Cochran made the transfer just set out, the Central Bank of Canada went into liquidation, and Boultbee was placed on the list of contributories and compelled to pay the liquidators of the bank $2,125 as double liability on his shares pursuant to the provisions of the Bank Act. He

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thereupon sued Cochran and obtained a judgment against him for the amount so paid to the liquidators. Cochran thereupon transferred his claim of indemnity against Gzowski & Buchan to Boultbee, and Boultbee, brought this action as such assignee for the purpose of obtaining indemnity from the latter.

There is, as I have said, practically no dispute about the facts. The transaction on the boards of the Stock Exchange of the 24th of October was an ordinary transaction of the simplest kind, Cochran offering for sale the shares in question, Gzowski purchasing them at the price named and a memorandum being made of the transaction by an officer of the exchange. There was nothing more, nothing less than this; no special terms or conditions of any kind. There is not much doubt in ordinary cases as to the legal results of such a contract. They are (1) the duty on the part of the seller to deliver the stock; (2) the duty on the part of the buyer to take the stock when delivered, to pay for it and to accept it cum onere, that is to indemnify the seller against all the consequences of ownership. It is so laid down by Blackburn J. in Maxted v. Paine^[40].

On the other hand the buyer would be bound not only to pay the price and to accept the benefits of ownership, but also to relieve the seller from all the burthens of ownership.

And in Lindley on Companies, 5 ed. p. 492:

The obligation of the purchaser is to pay the price agreed upon and to accept a transfer of the shares and to indemnify the vendor from all liability in respect of them accruing after the purchaser has become their equitable owner.

And at p. 493:

The obligation of the purchaser to pay the price, accept the shares and indemnify the vendor against liability in respect of them, was recognised at law even before the Judicature Acts and for a breach of such an obligation an action will lie.

There was not any denial at the argument of these

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elementary and fundamental propositions, but it was contended that under all the special circumstances connected with the transfer there must have been within the contemplation of the parties an intention to absolve the brokers, Gzowski and Buchan, not from responsibility to pay the purchase money, but to give them an immunity from double liability in respect of the shares under the provisions of the Bank Act.

The Toronto Stock Exchange is an ordinary incorporated association having certain rules and customs which all members of the association as between themselves are presumed to know, and upon the faith and understanding of which they are presumed to contract, but there is no express rule dealing with the subject of indemnity or with the respective rights of the buyer and the seller of shares upon the exchange, nor as far as I can see is there any evidence whatever of any custom or of any understanding as between the members of the exchange upon this question of indemnity. Special provision has been made for it in the rules of the London Stock Exchange, and every contract there made is of course made subject to those rules, but in Toronto a contract such as this was must be governed by the general provisions of the common law apart from any custom or convention varying that law.

The learned trial judge in dismissing the plaintiff’s action, and the learned judges of the Court of Appeal in reversing the judgment of Divisional Court which had maintained his action, found in the transfer from Cochran above set out evidence that there must have been, within the contemplation of the parties at the time of the sale upon the Exchange, an intention in the minds of both parties that the buyer was not to be held responsible for any liability that might ever arise in respect of the shares purchased under the Bank Act.

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The only substantial oral testimony, as far as I can see, affecting the question is the evidence of Cochran, and it is as follows:—

Q. Do you recollect when it was that you gave this marginal transfer?—A. It must have been the same day that I got paid by Gzowski and Buchan.

Q. Why didn’t you give him an assignment, an actual transfer on the books?—A. The ordinary way is simply to give the order.

Q. Why?—A. So that they can give it to any one, or accept it themselves.

Q. It puts them in the position of enabling somebody else to accept it?—A. Yes.

Q. And puts them in the position of not being acceptors of the stock?—A. Yes, in the books.

Q. They do not become transferees of the stock on the books?—A. No.

Q. It is to enable them to deal with it without becoming transferees?—A. Yes.

HIS LORDSHIP.—Can the witness help us in that? There is the document.

It seems to me this is evidence, not of any custom of the stock exchange, but of an irregular practice which the Central Bank of Toronto had permitted to grow up by allowing transfers to be made in this, what I would suppose to be an unusual and extraordinary fashion. But it does not suggest the idea that there was any intention that the common law rights of the parties arising from the simple contract when the shares were up for sale should in any way be altered. But looking at the transfer itself, it is not I take it in any sense a transfer in blank, as that phrase is generally understood. The name of the buyer was not set out in the space where ordinarily it is set out, but the buyer’s name was indicated in the margin, and it was impossible for any other name to be filled up in the transfer than such as the seller might approve. No disposition could specially be made of the shares without the signature

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and transfer of the buyers Messrs. Gzowski and Buchan, and the document is to be construed as an ordinary mercantile instrument like a delivery order or a dock warrant for goods. The seller by placing the shares subject to the order and disposition of the buyer, enabling the buyer to do as he liked with them, ceased himself to have any possession or control in respect of them, and as between him and the buyer the latter cannot dispute that he is a legal owner and liable as such owner to all the consequences which his contract of purchase entails. It made no difference to Cochran whether Gzowski and Buchan were acting for themselves or for an unknown principal. The moment the contract of sale was made on the 24th, in my view Cochran possessed of all his rights as a seller, and Gzowski likewise become subject to all the obligations of a buyer, Cochran fulfilling his obligations by the transfer of the stock to the order of Gzowski, and that altogether independently of whether Gzowski ever formally indicated his acceptance of the stock upon the transfer books of the bank. There is no indication in the evidence that there was any intention that the common law obligations of the buyer should be split up, one of these remaining the personal obligation of the buyer himself, and the other the personal obligation of somebody of whom the seller knew nothing and never did know anything until long after the whole transaction had been completed. I venture to say with great submission, that the judgment of the court appealed from has made a contract for these parties which they themselves never dreamed of. Special terms and unusual conditions not within the contemplation of the parties, and not made by them, have been forced into it by giving a fallacious efficacy to the terms of the transfer which was not any part of the contract but simply giving effect to the

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contract so far as the seller was concerned. As stated in Lindley on Companies, pages 472‑473:

The equitable ownership of shares, agreed to be sold, depends on the contract of sale and not on the form of transfer * * * Consequently where there is a binding agreement for the sale and transfer of shares, it is comparatively immaterial, as between the buyer and seller, whether a transfer in blank has been executed or not.

I am clearly of opinion that Messrs. Gzowski & Buchan (the name of Mr. Buchan has been eliminated from the case by consent of parties) are as purchasers of these shares liable to indemnify the plaintiff in respect of them.

I do not deem it necessary to refer to the further points raised by the respondent as they were substantially disposed of at the argument. In my opinion the judgment appealed from should be reversed and the judgment of the Divisional Court restored, the whole with costs.

KING J. concurred.

GIROUARD J.—The whole question seems to be: Was Gzowski a transferee of the Boultbee or Cochran shares or was he acting as a mere broker? It is admitted that brokers on the Toronto Stock Exchange, standing in this respect very differently from brokers in the London and European Exchanges, buy and sell on their own account. According to the custom of the Toronto Stock Exchange, all transactions must be “settled” not later than the following day, and on the Monday following if the sale be made on Friday, the exchange being closed on Saturday, a custom which seems to be reasonable. It is not proved what this settlement fully means; it certainly means the payment of the purchase money and the transfer of the shares by the vendor; but does it also comprise its

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acceptance by the client of the broker or the real purchaser? It is alleged that it is sufficient to accept and disclose his name within a reasonable time. I find no evidence of any custom to that effect, and to my mind the word “settlement “must mean everything that is necessary to complete the transaction, that is the payment of the purchase money, the transfer of the shares and its acceptance either by the broker or his principal, who must be disclosed not later than on the day of settlement, if the broker wishes to free himself from any personal responsibility. The committee of the Toronto Stock Exchange, who were called upon to report on this transaction at the request of Cochran, admit that the brokers are bound to disclose their principals, but omit to mention when this should be done, although it is conceded it is never done at the board at the time of the sale. But in this instance, the disclosure was made on the transfer book of the bank three days after the day of settlement, and I easily understand why the committee would not decide whether, as a matter of fact, the two brokers, or even one of them, had acted as mere brokers or on their own account. In the absence of any custom to extend the time of the acceptance of the transfer, and consequently the disclosure of the real purchaser, beyond the day of settlement, I feel that I am bound to apply the ordinary principle of law, that a broker buying on a stock exchange, without disclosing his principal within the delay fixed by the regulations of the association, is personally responsible for the transaction, just as if he had acted on his personal account. It seems to me therefore that, as no transferee’s name other than that of the buying broker, was mentioned on the day of settlement, the transaction was closed, “settled” on his behalf and for his own benefit and subject to all the burdens attached to the same.

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Any other conclusion would lead to any amount of uncertainty which is not consistent with stock exchange operations. I am therefore of opinion that the appeal should be allowed, and the judgment of the Divisional Court restored with costs.

Appeal allowed with costs.

Solicitor for the appellant: Boultbee & Boultbee.

Solicitor for the respondent: Barwick, Aylesworth & Franks.