1. The first plaintiff was the owner of 161 shares in the Indian Specie Bank which were held for him in the names of the 2nd, 3rd and 4th plaintiffs. In April 1913, as he was leaving for Europe he directed the 2nd plaintiff', his Secretary, to sell the shares. He had only receipts for the certificates which had remained with the Bank ever since the shares had been bought in 1910. On the 17th May, the 2nd plaintiff took these receipts with blank transfers duly signed to Chunilal, the Managing Director of the Bank and asked him to sell the shares. It was part of the Bank's business to sell shares for their customers and a Register was kept of securities handed to the Bank for sale. Chunilal said the Bank would sell the shares and asked 2nd plaintiff to come back in a few days. On the 22nd May, he went to the Bank and was told the shares had been sold at Rs. 66 and was paid Rs. 6000 on account for which he passed a receipt. He was asked to come back in a few days when the account would be settled. He returned on the 29th when he received a further sum of Rs. 4,500 and passed a receipt in the same form as before. The gross sale proceeds were Rs. 10626 and a rough calculation was made of expenses for stamps and trans-fer fees but it does not seem that the exact amount was arrived at, as the amount of stamps required depended on the number of shares sold on each transfer. As a matter, of fact 2nd plaintiff never went back to have the account settled. The sums of Rs. 6,000 and Rs. 4,500 were debited in the Bank's books to suspense account. On the 6th August, they were credited to suspense account and debited to the plaintiff in the Miscellaneous Ledger as if the money had been advanced by the Bank as a loan on security of the shares. In August, warrants for dividend on the shares for the half year ending the 30th June were sent to plaintiffs 2, 3 and 4. The 2nd plaintiff took these to Chunilal who asked him to get them signed and returned to him as the purchasers were entitled to the dividends, As a matter of fact the amount of the dividends was credited to the plaintiff's account in the Miscellaneous Ledger. After the Bank went into liquidation plaintiffs 2, 3 and 4 were placed on the list of contributories by the liquidator and they then discovered that the shares had never been sold so that their names still remained on the register IN of share-holders. Their claim to be removed from the list was disallowed and when the liquidator under an order of the Court made a call of Rs. 50 per share the first plaintiff had to pay Rs. 8250.
2. The plaintiffs have now filed this suit to recover that amount on the ground that the Bank became their agent for the sale of the shares and on account of the neglect and misconduct of the Bank's Managing Director the shares were not sold, so that as the direct consequence of that neglect and misconduct they had to pay the liquidator the amount of the call. The liquidator in his written statement disputed the facts which I have set out, relying on the entry in the Miscellaneous Ledger, but considering the entry in * the Register of shares lodged with the Bank for sale and the receipts given to the Bank for the payments of Rs. 6000 and Rs. 4500 it cannot possibly be contended that the Bank made a loan on the security of the shares. It has also been contended that because in the Register the column ' Rate at which the shares are to be sold ' was not filled in in ink with ' Market rate ' but contained an entry in pencil ' ask the Sheth' the plaintiffs lodged the shares to be sold only when Chunilal thought fit. I believe the evidence of the 2nd plaintiff and reject this contention. It is common knowledge now that Chunilal was interested in keeping up the price of the shares and it did not suit him to put these on the market. I think that when the 2nd plaintiff' asked Chunilal to sell the shares without fixing any limit it cannot be taken that it was implied that the shares should be sold at the market rate, but the question is immaterial as I am satisfied that Chunilal represented to the 2nd plaintiff that the shares had been sold.
3. It is not suggested that Rs. 66 was not the proper market value of the shares in May 1913.
4. The direct consequence, therefore of Chunila's conduct was that the plaintiff's had got the money value of the shares While they still remained the owners of them. Mr. Desai admitted that if it was a question only of negligence on the part of the agent, the plaintiffs could not recover what they had to pay to the liquidator as contributories and that seems clear from the case of Neilson v. James (1882) 9 Q.B.D. 546 where, through a broker's negligence in failing to make a complete contract for sale of certain shares the purchaser repudiated the trans-action, so that the seller did not get the purchase price and had to pay calls which were afterwards made on the shares. He was held entitled to recover from the broker the purchase price but he gave up his claim for the amount which he had to pay for calls. The learned Judges in appeal were unanimously of opinion that the plaintiff had acted wisely in so doing. But Mr. Desai argued that as Chunilal was guilty of misrepresentation the damages suffered by the plaintiffs must be assessed on a different basis. But even in the case of fraudulent misrepresentation there must be a natural and proximate connection between the wrong done and the damages suffered. See per Thesiger L.J. in Waddell v. Blockey (1879) 4 Q.B.D. 678. Blockey had represented to one Peter Lutscher that it would be profitable to buy 5 1/2 per cent rupee paper and was authorised to buy to the extent of 200000. Lutscher thought that Blockey was buying for him in the ordinary course on the Stock Exchange. As a matter of fact Blockey was selling his own rupee paper. Prices fell and Lutscher sold after five months at a loss of 43000. The action was brought by Lutscher's trustee under a liquidation by arrangement. It was held by the Appeal Court that Lutscher's ultimate loss was not the proper measure of damage. He voluntarily retained the paper and if he elected to remain owner after the paper began to fall in price his loss was not owing simply to his having purchased it but to his having purchased and retained it. The plaintiff was entitled to the difference between the purchase price and the price he would have realised if he had resold it in the market forthwith after purchasing it. Or according to Baggalay L.J. the damages might have been assessed upon the basis of the difference between the price the insolvent paid and the price at which he might have bought in the market assuming he could have bought at a lower rate.
5. Now the direct consequence of Chunilal's misrepresentation was that the plaintiffs 2, 3 and 4 remained the owners of the shares in the Bank's Register. They had got their money and therefore there was no loss to them in so remaining owners. Ostensibly they had got Rs. 10500 for nothing. The real measure of damages would be the difference if any between Rs. 10,500 and the amount that would have been realised by an actual sale. The liquidation was due to the Bank having suffered losses and the call ordered by the Court was due to the facts that the Bank's assets were] not sufficient to pay the creditors in full. Supposing they had been sufficient and there had even been a surplus the plaintiff's would have been entitled to share with the other share-holders.
6. I may also add that the 2nd, 3rd and 4th plaintiffs had direct notice that their names remained on the Register long after they thought the shares had been sold, at any rate, when the dividend warrants were sent to them in August. The 2nd plaintiff' is an educated and intelligent man and he at least ought to have known that dividend warrants are made out in the names of those whose names appear on the Register when the transfer books are closed prior to the payment of a dividend.
7. It would be a very strange contradiction if the plaintiff's having been placed upon the list of contributories in spite of certain facts and having paid the call, should be entitled on the same facts to recover the amount so paid to the liquidators in an action.
8. I think the Liquidator was wrong in contesting the facts and in relying on an obviously false entry in the miscellaneous ledger. The matter could well have been brought before me on a case stated. Therefore I dimiss the suit without costs.