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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Mackenzie v. Blakeney [1879] ScotLR 16_770 (18 July 1879)
URL: http://www.bailii.org/scot/cases/ScotCS/1879/16SLR0770.html
Cite as: [1879] ScotLR 16_770, [1879] SLR 16_770

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SCOTTISH_SLR_Court_of_Session

Page: 770

Court of Session Inner House Second Division.

[Sheriff of Forfarshire.

Friday, July 18. 1879.

16 SLR 770

Mackenzie

v.

Blakeney.

Subject_1Agent and Principal
Subject_2Sale of Shares by Stockbroker
Subject_3Non-Disclosure by Principal
Subject_4Commission — Loss on Difference Purchase.
Facts:

B instructed M, a broker, to sell through his London correspondents certain bank shares, which proved to ben ot transferable in this country. B knew this when giving the order, but did not disclose it. The shares were sold, and M in order to give delivery in accordance with the rules of the Stock Exchange had to purchase other shares of the same bank capable of transference. Held, in an action at the instance of M against B for payment of the difference of price and for commission, that M was entitled to recover.

Headnote:

Thomas Blakeney, the defender in this action, called with a Mr Ross on the pursuer William Mackenzie, stockbroker, on 6th December 1877, and employed him as a stockbroker to sell 20 shares of the Bank of Victoria and 130 of the National Bank of Australia, through his London correspondents. The shares were sold, but when the time came for delivery, it appeared that they were registered in the Colonial register of the banks, and consequently were not transferable in London, and incapable of passing as delivery on the London Stock Exchange. The rules of that body entitled the buyer in these circumstances, on the defender's failure to deliver, to buy in against the defender or his brokers shares of these banks standing or registered in the London registers, or to insist against the defender or his brokers for delivery of such shares. After an unsuccessful effort to arrange the matter

Page: 771

Mackenzie had to buy shares registered in London, but had to pay for them a larger price than what Blakeney's had been sold for, and he now sued Mackenzie for the difference, for brokerage, for time, and for travelling and personal expenses, &c., incurred in the conduct of the negotiations. The summons concluded for payment of £196, 14s. 6d., and the action was brought in the Sheriff Court of Forfarshire at Dundee.

After a proof, the nature of which sufficiently appears from the terms of the interlocutor and of the opinions of the Court, the Sheriff-Substitute ( Cheyne) gave the pursuer decree for £190, 8s. 6d., being £168, 7s. 6d., the difference in the price plus commission, and the balance being for the other items charged, and on appeal the Sheriff ( Maitland Heriot) adhered.

The defender reclaimed.

At advising—

Judgment:

Lord Justice-Clerk—In this case I think that the judgments given by the Sheriff-Substitute and the Sheriff are well founded. The pursuer, we have it in evidence, himself told the defender that he did not know anything about these stocks; at that very time the defender knew of this difficulty or peculiarity as to their transfer, and presumably of their consequent depreciation in value in the London market, even if a sale could be effected. Yet the defender never said one word indicating his knowledge of this fact, but suffered Mr Mackenzie to go on with the matter and to sell the shares. The broker acted according to the orders he received, and the fault lies with the person whose concealment, or whose silence at least, caused the difficulty.

On the matter of expenses, however, I cannot think Mr Mackenzie is entitled to travelling expenses to London, which were incurred really in support of his own claim against the defender, and not in the latter's interest. Again, his personal outlays, time, telegrams, &c., are either covered by brokerage or they fall under the same category as the travelling expenses. With this change I should propose to your Lordships to adhere to the interlocutor reclaimed against.

Lord Ormidale—I quite concur in the views expressed by your Lordship in the chair. It is important to keep before us the fact that Mr Mackenzie was a young stockbroker commencing business in Dundee, and not likely there to have seen transactions in these particular stocks. But there is besides this a statement by Mr Ross, who introduced the defender to him, that he told Mr Blakeney that he knew nothing of this stock, and would through his London correspondents sell it for him. Now this being so, it appears to me that the silence of the defender was, to say the least of it, remarkable—indeed it was unaccountable when he knew, as we have it in evidence from the correspondence that he did, how matters truly stood and how the shares of these banks were unsaleable on the London Stock Exchange, or at least unsaleable in the usual way and with the ordinary rules as to delivery, transfer, and so forth.

This brings us to another question, whether Mr Mackenzie failed in any way to do his best to save the defender from loss so far as lay in his power? He bought at once, as he was bound to buy, other and saleable stock it cost more, but he delivered it to the purchaser and closed the transaction, and now he sues for the difference. I think he did all in his power, and I entirely concur with your Lordships in that result, and also as to the matter of the travelling and other expenses.

Lord Gifford—I am of the same opinion, and think the Sheriffs are right. Had this action been one brought under the civil law, it would have been one of those termed actio contraria ex mandato. Now the question is, did Blakeney authorise and instruct the sale? If so, he must pay, unless Mackenzie gave to his London correspondents different instructions from those which he received from the defender. But he did not do so. As to the fault committed by the pursuer in not sending copies of the certificates to London, if fault there was at all, it was of the nature of a culpa levissima, but the fault of Blakeney in concealing his knowledge I should class as culpa lata. The expense in going to London must be disallowed as really being a journey undertaken as to a question between a broker and his client.

The Court pronounced this interlocutor—

“Find that the stock in question was not saleable on the London Stock Exchange, being registered in Australia, as the certificates for the same bear: Find that this was well known to the appellant, and was not communicated to the respondent when the order in question was given: Find that the sums for which this action is brought, with the exception of the charges for expenses of a journey to London and for telegrams and postages, amounting to £21, were incurred solely in consequence of the conduct of the appellant: Therefore, and under deduction of the said sum, dismiss the appeal, and affirm the judgment appealed against, and decern: Quoad ultra recal the same: Find the respondent entitled to expenses,” &c.

Counsel:

Counsel for Pursuer (Respondent)— R. Johnstone. Agents— J. Smith Clark, S.S.C.

Counsel for Defender (Appellant)— Balfour— Darling. Agents— Lindsay, Paterson, & Co., W.S.

1879


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URL: http://www.bailii.org/scot/cases/ScotCS/1879/16SLR0770.html