1. The plaintiff who describes himself as a dealer and broker in stocks and shares, sues to recover the sum of Rs. 40,875 as damages suffered by him in his firm of N.L. Roy & Co. by reason of the defendant having neglected and failed to deliver certain shares which he agreed to sell to the plaintiff. In the first paragraph of the plaint the plaintiff alleges that between the 7th August and 13th September 1919, the defendant entered into various contracts with him in his firm of N.L. Roy & Co. by which the defendant agreed to sell various lots of shares in limited companies at various rates. A statement is annexed to the plaint giving particulars of the contracts and a specimen form of the contract in suit is attached. The plaintiff further pleads that the time for delivery of the shares was extended by mutual agreement to the 16th October 1919, and that on that date he made a tender of the price, and thereupon, the defendant having failed and neglected to deliver the shares although the plaintiff had offered to pay for them, the plaintiff alleges that in accordance with the custom of Calcutta Stock Exchange Association he bought against the defendant. He alleges that he has sustained damages in the amount already stated.
2. The defendant pleads that the contracts were gambling transactions. The plea of wagering has been abandoned and nothing was said about it at the hearing. He denies the alleged extension or that the plaintiff has sustained any damages. At a comparatively recent date the written statement was amended and by the amendment the defendant pleads that though the plaintiff entered into the contracts in the character of agent or broker for an undisclosed principal, in reality there was no principal. When the amendment was allowed, I was told that the plaintiff proposed to rely upon usage in answer to the plea. According to the system of pleading in vogue in this country, there is no reply and consequently to avoid all ambiguity, when I allowed the amendment to be made, I directed that an additional written statement should be filed on behalf of the plaintiff by way of reply which has been done.
3. The following issues were submitted on behalf of the defendant and accepted:
i. Was there an extension of time as regards the due dates for delivery of the shares in suit from time to time by mutual consent as alleged in paragraph 2 of the plaint?
ii. If not, what were the due dates under the contract in suit?
4. (Note.--Mr. Pugh says that he does not rely on custom on this part of the case.)
iii. In what character were the contracts in suit entered into by the plaintiff?
iv. If the defendant entered into the contracts with the plaintiff in the character of agent, (a) was the plaintiff acting in reality on his own account, (6) is the plaintiff entitled to any indemnity?
v. Is there a custom as alleged in paragraph 2 of the additional written statement?
Is evidence thereof admissible?
vi. Is there a custom to pay interest at 12 percent, per annum?
vii. To what damages, if any, is the plaintiff entitled?
5. The points involved in the 3rd, 4th and 5th issues are in a groat measure related and cannot conveniently be separated. I propose therefore first to enquire into the relative positions of the parties under the Indian Contract Act, passing therefrom to the question of the admissibility of evidence as to usage or custom, the existence and effect of which I shall then consider, and then proceed to the question of fact which Section 236 contemplates. It may be that a solution of each of these questions is not necessary for the determination of the suit, but as they have all been argued and the case is one of some importance, it is as well that I should state my views on them all.
6. The contracts in suit are worded as follows:
7. Sold this day by order and for account of Babu Gurupada Haldar to selves for principals etc'. They are signed by the plaintiff over the word 'brokers'.
8. Unless this is a contract entered into by the plaintiff on behalf of his principal he cannot personally enforce it under Section 230. If it is such a contract it is equally clear that the principal is undisclosed in which case there is the further question whether under Sub-section (2) he may enforce it.
9. The suit has been argued upon the footing that on the face of it from the limited point of view of Section 230 of the Act, the plaintiff entered into the contracts on behalf of an undisclosed principal. It was rather assumed that in those circumstances the plaintiff was entitled to sue, and until I invited argument on the point it had been overshadowed by the case based on custom to which the plaintiff had committed himself. But the assumption is by no means one which may be made as a matter of course.
10. In Patiram Banerjee v. Kanknarrah Co., Ld., (1915) I.L.R. 42 Calc. 1050, Jenkins C.J. deprecated a solution arrived at by describing the plaintiff as an agent with an undisclosed principal and finding out what the Contract Act says about a person in such a predicament, which he described as a superficial mode of investigation.
11. In this case, even apart from usage, the learned Chief Justice's observation cannot be ignored, and I have grave doubts whether in any event, again apart from usage, the plaintiff is entitled to sue upon the contracts.
12. A number of authorities have been cited by Mr. Sircar on behalf of the defendant in support of the proposition that evidence of the usage alleged may not be given. That question I shall have to consider later, but to study the cases induces the view that in England, according to English law, the plaintiff would not be entitled to maintain this suit.
13. In Fleet v. Murton (1871) L.R. 7 Q.B. 126, the terms of the contract note were: 'We have this day sold for your account to our principal, etc'. and it was signed by the defendants as brokers. That case was decided upon a question of the admissibility of evidence to establish a custom of a particular trade whereby brokers who do not disclose their principals are themselves liable on the contract. The learned Judges seem to have been of opinion that without the evidence of the custom the defendants would not be liable on the ground that they were contracting as brokers.
14. Pike v. Ongley (1887) L.R. 18 Q.B.D. 708 was another case which depended upon the admissibility of evidence of usage to establish the liability of the brokers. The terms of the sold note were: 'Sold by Ongley and Thornton to Messrs. Pike Sons & Co. for and on account of the owner, etc...' Day J. in delivering the judgment in the Queen's Bench Division began with the words: 'The document upon which this action was brought is a sale note of the defendants who purported to sell thereby certain hops to the plaintiffs for and on account of the owner.... It is clear from a series of decisions that where the contract sued upon has been made by a broker 'for' or for and on account of an undisclosed or foreign principal, the broker is not primarily liable'. Wills J. expressed the same opinion, saying: 'It is clear that the brokers did not in fact bind themselves'. The judgment of the Queen's Bench Division was reversed on appeal, but on the ground of the admissibility of evidence of custom, which does not affect the value of the observations quoted.
15. Robinson v. Mollett (1875) L.R. 7 H.L. 802 also was a case in which it was sought to incorporate a custom into the contract whereby the brokers could enforce liability. The orders of the appellant to the respondents were to buy tallow for him. The brokers did not buy the specified quantities from any person but sent bought notes in the form: 'We have this day bought for your account' and signed the notes with the addition of the words 'Mollett Ball and Unsworth, sworn brokers'. The brokers bought large quantities of tallow from various persons in their own name proposing to allot to the appellant the quantities the latter desired to buy. The appellant refused to accept and the respondents sued for differences. The right of the brokers to recover on such contracts apart from the custom alleged was neither argued nor considered; it seems to have been assumed that no such right existed.
16. Southwell v. Bowditch (1876) L.R. 1 C.P.D. 374 is a case of considerable importance on this point. The defendant was a broker and signed and sent to the plaintiff a contract note in the terms: 'I have this day sold by your order and for your account to my principals, etc.,... W.A. Bowditch'. That the Court regarded this as a purchase by the defendant as an agent appears more clearly from the judgment of Kelly C.B. than from that of Jessel M.R., the passage being: 'On the plain language of this contract I am of opinion that there was no purchase by the defendant as principal or otherwise than as agent'. The learned Master of the Rolls states the ways in which the broker can be made liable: 'There is nothing whatever on the contract to show that the defendant intended to act otherwise than as broker. No doubt it does not absolutely follow from the defendant's appearing on the contract to be broker that he is not liable as principal. There are two ways in which he might so be made liable: first, intention on the face of the contract making the agent liable as well as the principal, secondly, usage'.
17. The fore going authorities appear to regard it as settled law that a broker who enters into a contract for and on behalf of his principal is not entitled to sue upon the contract even though the principal be undisclosed, the ground being that the broker has expressly contracted as a broker.
18. In Fleet v. Murton (1871) L.R. 7 Q.B. 126, Cockburn C.J. observed that even though the principal is not named so long as it appears on the face of the contract that the broker is contracting as broker for a principal and not for himself as principal he would not be liable. Were the position otherwise it is not clear why evidence of custom to establish the broker's liability should have been offered.
19. In Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449, a broker gave to a seller for whom he was employed a sold note in the following terms: 'Sold this day by order and for account of E.E. Gubboy to my principal, etc'. The seller sued the broker for damages for failure to take delivery and the case turned upon the short point whether or not the presumption under Section 230 of the Contract Act was rebutted by the form of the note. In the result the broker was held to be liable.
20. This case was distinguished in Patiram Banerjee v. Kanknarrah Co., Ld. (1915) I.L.R. 42 Calc. 1050, in which the plaintiff who was a broker sent to the defendant company a note in which the material words were: 'We have this day bought by your order and for your account from our principals, etc'. After examining the bought note and the surrounding circumstances the conclusion to which the learned Judges arrived was that the plaintiff was employed to negotiate a sale and to be an intermediary, not to sell on behalf of another. Woodroffe J. appears to have concurred in the order with some hesitation and in the course of his judgment makes the observation: 'A broker may however make himself a party to the contract of sale or purchase for he can go beyond his position of mere negotiator or agent to negotiate and by the terms of the contract make himself the agent of his principal to buy or sell'. The section therefore refers to contracts 'entered into by him on behalf of his principal'. The ratio decidendi and the grounds upon which this cage was distinguished from Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 are to be found in circumstances extraneous to the terms of the note itself, for otherwise these two cases would fall into the same category.
21. The distinction is more than a mere verbal distinction: it introduces a fundamentally different course of investigation.
22. That the note is not conclusive is clear [per Lord Esher M.R. in The Stock Share Auction and Advance Co.v. Galmoye (1886-87) 3 T.L.R. 808] and in Re W. Wreford, deceased--Carmichael v. Rudkin (1897) 13 T.L.R. 153, a creditor claimed against the estate of the deceased who was an outside broker, in respect of shares which he had instructed the deceased to boy. Upon the note were the words 'Where no commission is charged this contract is issued by us as principals and not as brokers or agents'. Romer J. in his judgment said he believed the applicant's story and proceeded: 'Now when a person was instructed to act as broker it was not a right thing for him to act as principal. If it were such person's intention so to act it was his duty to make it perfectly plain to the person employing him that he declined to act as broker and was only acting as a principal in the transaction. Merely putting such words as were found on the top of the contract note hero was not sufficient.' Nor did his Lordship think that the words in the note 'sold to' in place of the words 'bought for' were sufficient to inform persons not experienced in stock exchange transactions that the broker was not acting as broker but as principal.
23. I cannot reconcile the decision in Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 with the English authorities. In Patiram Banerjee v. Kanknarrah Co., Ld. (1915) I.L.R. 42 Calc. 1050 Woodroffe J. seems to have bean disposed to follow the latter case but as it was distinguished on other grounds he concurred in the order. The point whether in the circumstances the presumption was rebutted did not arise and there was no need to consider the effect of the decision in Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 in that respect.
24. Further more, the decision makes the situation more difficult, for if, as was there held, a broker is but an intermediary employed to negotiate a sale and is not employed to sell on behalf of another he is not entitled to sue upon the contract which he has negotiated.
25. Mr. Pugh has contended that even apart from usage the plaintiff was not merely an agent but that he was at the same time a principal. He has referred to Ireland v. Livingston (1871) 5 H.L. 395 as an authority for the proposition that a man may at the same time be both principal and agent. I cannot agree that the case goes the length of so laying down the law in a case of this kind, and unless that is so Mr. Pugh's argument that the plaintiff need not rely on the usage, and as a principal himself is not affected by Section 236, falls to the ground.
26. In the circumstances of the case I have--very great doubt whether the plaintiff was more than art intermediary employed to negotiate a sale but that has not been argued.
27. I also entertain considerable doubt whether even as a broker for an undisclosed principal the plaintiff in entitled to sue. He undoubtedly was a broker, the defendant knew him to be such. According to the terms of the contract he entered into it as a broker on behalf of a principal and he signed as broker.
28. Even if, as Mr. Pugh contends, Indian law differs from English law in that in this country there is a presumption that the agent for an undisclosed principal is liable and may enforce liability, whereas in England it must be shown that he intended to be personally bound, can it be said that the presumption is not rebutted? It is of no consequence that the defendant said that he regarded the plaintiff as bound to him because the buyer was undisclosed, because that, apart from usage, can only depend upon the defendant's view of the law which may be wrong, and he gives no reasons for such a view.
29. But for Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 I should have been prepared to hold that in a case such as this where the plaintiff is a broker, and signs the contract as such and is known to be a broker by the defendant, it is not open to the plaintiff to invoke the presumption to be found in Section 230(2), or perhaps I should say that it was rebutted.
30. But not only was it held in Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 that the presumption was not rebutted but it is beyond doubt that that decision has long been followed and acted upon. No Judge exercising original jurisdiction in this Court can have failed to have decided suits by or against brokers for differences where the principal was undisclosed, and the assumption was made as a matter of course that the plaintiff was entitled to sue. I do not regard such cases as authoritative, for so far as I am aware this point has never again been argued. But nevertheless, whether I am bound or not by a judgment delivered on a reference from the Small Cause Court, which is questionable, for it has been held that the Court in its Original Jurisdiction is not bound by the judgment of a Division Bench on the Appellate Side, I cannot decline to follow a course of decisions based on that judgment, even though not authoritative in the sense that a judgment considered after argument is authoritative.
31. According to the view which I take the plaintiff therefore is not entitled to sue upon this contract, apart from any custom or trade usage which he may be entitled to raise and may succeed in establishing, but I do not decide the suit upon this ground for reasons which I have expressed.
32. I do, however, hold, apart from the issue as to custom or usage, that the plaintiff entered into the contracts on behalf of his principals who were undisclosed and that he did so in the character of broker or agent.
33. The next question to be considered is that of custom as it has been termed, though usage would be the more appropriate form of expression.
34. It will be seen when I have stated the usage alleged that, assuming Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 correctly to represent the law, there is no need for usage to have been pleaded in this suit unless the plaintiff's situation is such that in the absence of proof of the usage his suit must fail by reason of Section 236 of the Indian Contract Act.
35. On the other hand it Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 is not a correct exposition of the relative legal positions of a broker and his principal in these circumstances, whether by reason of the circumstance that the broker is a mere intermediary, or the other that he has expressly contracted as a broker and signed the note as such the usage becomes of first importance for without its aid the broker cannot sue at all. This is clear from Southwell v. Bowditch (1876) L.R. 1 C.P.D. 374 and Patiram Banerjee v. Kanknarrah Co., Ltd. (1915) I.L.R. 42 Calc. 1050.
36. The usage which it is desired to prove is formulated in the additional written statement filed in circumstances already stated.
37. I will quote it at length and it runs as follows:
Alternatively the plaintiff states that there is a well established custom and usage of the Stuck and Share market in Calcutta by which in all contracts for sale and purchase of shares the names of buyers and sellers are not disclosed and the broker is treated as principal, that is, as buyer or seller as the case may be and held responsible for performance of such contracts and entitled to require performance as principal and whereby the broker is taken to contract as principal and entitled to deal with the shares sold or purchased as his own and to sell the same at a profit or loss as the case may be. The seller or buyer dealing with such broker has not any concern with such dealings but lOOKS to the broker for performance of the original contract.
38. The essentials of the foregoing statements are that the broker is treated as principal both by buyer and seller alike, both of whom he may hold and by both of whom ho may be held liable under the contract that the broker is taken to contract as principal and is entitled to deal with the shares at his own and sell them at a profit or loss: that neither of the parties has any concern with such dealings but they look to the broker alone.
39. More is here stated than attempt has been made to prove, in particular the statement that the broker may deal with the shares as his own.
40. Before considering the evidence as to the alleged usage I will deal with the objection that the evidence of such usage is not admissible.
41. The principle on which this objection is founded is that though evidence of a usage augmenting the responsibility of a broker is admissible as consistent with the contract, evidence of a usage inconsistent with the terms of the contract is not admissible.
42. Among the authorities cited Fleet v. Murton (q. v. s.) and Pike v. Ongley (q. v. s.) are instances of the former: and I need go no further than the words of Lord Esher M.R. in the latter case, where be says: 'Is the fair meaning of such evidence to say that where a broker says in the contract that he is acting for a principal though an undisclosed --one, the buyer is to look only to him and not to the real principal? Such a custom would be in direct contradiction of the terms of the written contract'.
43. This is the very thing which the usage preferred in this suit purports to achieve, and it makes no difference that the suit is against the seller.
44. Fry L.J.'s judgment was based upon the consideration that a usage whereby a broker shall also be liable is not inconsistent with the contract, though it would be inconsistent if the usage were to exclude the liability of the owner.
45. In this case, however, there is a further inconsistency. If the broker himself may enforce this contract under Section 230 of the Indian Contract Act the usage entitling him to do so carries his rights no further. If on the other hand, he has not that right under the law the usage is inconsistent with the contract in that it confers on him a right which he otherwise does not possess and imposes on the other party a liability to a person to whom he is under no such obligation.
46. The observations of the learned Judges in Robinson v. Mollett (1875) L.R. 7 H.L. 802 which I shall quote later in a different connection have an application to this point as well.
47. In my judgment, the usage which it has been sought to prove is inconsistent with the contract and evidence of it is inadmissible.
48. I admitted it, however, subject to this objection as though I was willing to hear argument and decide the point as it arose, learned Counsel on both sides preferred to have it decided after the case had been fully heard.
49. The evidence as to the alleged usage varies both in quality and substance.
50. Mr. Turle, who was one of the witnesses called to prove it, is the President of the Calcutta Stock Exchange Association, and if any person is liable to state with clearness and precision what the custom is, it should be he.
51. He said that according to the usage of the Calcutta Stock Exchange Association the name of the buyer or seller is not disclosed to the other party: the broker is responsible to both parties: neither party has a claim on the other if he should find out who he is.
52. Mr. Gubbay said much the same, but Purno Chunder Dutt did not go quite so far nor did Ramkumar Bangar. Mr. Gregory gave similar evidence, but said nothing about the parties not remaining liable to each other. Mukunda Lal practically confined himself to saying that the broker was responsible to both parties. Alibhoy's evidence for what it is worth is on the same lines.
53. It is curious that these witnesses all say that the broker is responsible, but do not expressly say that the broker alone may enforce the contract against the parties. No doubt they meant to imply that, but it is curious that they should have omitted to say so.
54. But when one considers their evidence as to the generality of the usage the case made begins to break down.
55. They agree in their evidence that the usage obtains among those who belong to the Calcutta Stock Exchange Association. As regards what are called 'outside' brokers and the public generally some assert that the same usage is followed though, Mr. Turle says that the Committee of the Association does not adjudicate, by which I understand him to mean does not enforce these rules, as between persons who are not both members. Mr. Gubbay said the same and went further and said that he would not say that the usage was binding upon people or brokers outside the Association. Many of the witnesses said that they knew of no instance where the question had arisen with regard to people who were not bound by the rules or usages of the Association, and the explanation of the absence of evidence of the question having arisen no doubt is that as long as transactions are conducted without friction there is no reason why it should. And if it does not arise and parties deliver shares to and receive payment from the broker there is still no reason why they should be aware that even among members of the Association there is a rule or usage that the broker alone shall enforce liability or be responsible. There is no occasion for them to learn of it.
56. It is for this reason that I am prepared to accept this statement of the defendant that he knew of no such usage. He is but a member of the public and when the evidence is so vague as to the knowledge even of 'outside' brokers I see no reason for imputing to him knowledge of a usage which it is not proved that even all brokers invariably follow.
57. The usage is not one by which I should hold the defendant to be bound unless the evidence was of the clearest possible description both as to its notoriety and as to the defendant being aware of it.
58. The functions and purposes of a broker were stated by Woodroffe J. in Patiram Banerjee v. Kanknarrah Co., Ld., (1915) I.L.R. 42 Calc. 1050: 'I think a bicker is an agent. For what purpose he is an agent is another question. Primarily and for some purposes he is the agent of the party by whom he was originally employed. He is also generally the agent of each of the two parties for whom he negotiates. The engagement of a broker is like that of an ordinary agent, but with this difference, that the broker being employed by persons who have opposite interests, he is as it were agent for both the one and the other to negotiate the commerce or affair in which he concerns himself. Thus his agreement is two fold and consists in being faithful to all the parties in the execution of what each of them entrusts him with. A broker when he closes a negotiation as the common agent of both parties usually enters it in his business book and gives to each party a copy of the entry or a note or memorandum of the transaction which as given to the seller is the sold note and as given to the buyer is the bought note. Prima facie a broker is employed to find a purchaser or seller and as such is a mere intermediary. He is thus an agent to find a contracting party and as long as he adheres strictly to the position of broker, his contract is one of employment between him and the person who employs him and not a contract of purchase or sale with the party whom he in the course of such employment finds'.
59. The facts in Robinson v. Mollett (1875) L.R. 7 H.L. 802 and the usage upon which reliance was placed in that case resemble those is this so closely that I shall quote freely from the report. Opinion was divided in the Exchequer Chamber and on appeal to the House of Lords the Judges were summoned for the assistance of the House.
60. The first passage is from the opinion of Mellor J: 'The custom with regard to the mode of buying and selling is described in the case and I submit with deference to your Lordships' consideration that it would be difficult to conceive any practice or custom of a market so opposed to the well-understood character and authority of a broker'.
61. Said even more: 'When considerable numbers of men of business carry on one side of a particular business, they are apt to set up a custom which acts very much in favour of their side of the business. So long as they do not infringe some fundamental principle of right and wrong, they may establish such a custom; but if, on dispute before a legal form, it is found that they are endeavouring to enforce some rule of conduct which is so entirely in favour of their side that it is fundamentally unjust to the other side, the Courts have always determined that such a custom, if sought to be enforced against a person in fact ignorant of it, is unreasonable, contrary to law, and void. An example has lately been before your Lordships in an alleged custom on the Stock Exchange. Nickalls v. Merry (1875) L.R. 7 H.L. 530. The question, therefore, I submit, in the present case is, whether the alleged custom is not too much in favour of the brokers who set it up, whether it does not pass beyond due freedom and degenerate into injustice. If the custom which exists in fact is not unjust, as against principals ignorant of it, your Lordships will uphold it however much it departs from the rules hitherto recognised by the Courts as applicable to the contract of employment between principals and brokers, but if it so far breaks from those rules as to be unjust to such principals in such contract, your Lordships will pronounce it to be void as a custom.... If the custom be adhered to, I can see no business reason for its establishment by brokers, except its giving to them facilities for earning more commissions on easier terms. I fail to see any advantage to the merchants who employ the brokers adequate to the loss of a carefully selected principal. It is a custom, therefore, invented by the body of brokers for their own exclusive advantage. It therefore, as it seems to me, falls within the observations with which I commenced this opinion. To hold it binding on a merchant, ignorant in fact of its existence, seems, to me to be contrary to justice'.
62. In the opinion of Grove--J. I find: 'The question in the case is, can this ordinary duty be varied by the custom of a market of which the employer is ignorant in fact and from the circumstances of the case cannot reasonably be presumed to know? This custom appears to me not merely to change modes or incidents of the sale as, e.g., mode of delivery, time and manner of payment, degree of credit, rate of discount, etc., but to change substantially the nature of the employment and the relations of the parties to the contract. I do not think a person dealing in a market of the customs of which he is ignorant, though he may be bound to enquire as to usages such as those I have referred to, or if he do not inquire into them may fairly be deemed bound by them, is bound to inquire into a usage by which a broker is in fact not a broker or is to be bound by the acts of a supposed broker when he has not all the correlative advantages resulting from the performance of a broker's duties for which he pays commission'.
63. Finally, in delivering the judgment of the House of Lords, Lord Chelmsford said: 'But the usage is of such a peculiar character, and is so completely at variance with the relation between the parties, converting a broker employed to buy, into a principal selling for himself, and thereby giving him an interest wholly opposed to his duty, that I think no person who is ignorant of such a usage can be held to have agreed to submit to its conditions merely by employing the services of a broker, to Whom the usage is known to perform the ordinary and accustomed duties belonging to such employment.'
64. There is hardly a word of these extracts but applies with equal force to the usage which I am asked to recognise.
65. The effect of the usage if it exists is to remove safeguards which the law provides for the protection of a principal against his agent.
66. A party not only is not informed with whom he is dealing but he may not enquire and the information will be refused if he does. That may be permissible because a person may legitimately instruct his broker to conceal his identity. But if the name is ascertained aliunde it does not avail the party, because according to the usage he may not enforce the contract against the other party to the contract. This leads to the result that it is impossible for a party to know or ascertain whether the broker to whom he has confided his business is acting as a broker or selling to him shares which are his own, or selling to him or buying from him at the price which the other party will take or give, or whether the broker is or is not making a secret profit as the shares pass from one party to the other, if there is another party in fact.
67. These things are all inconsistent with the duties and functions of a broker, but the usage affords facilities for doing them and may even be said by implication to recognise them as legitimate.
68. Mr. Turle in the course of some questions put by myself appreciated the point but seemed to think the result was unobjectionable. His reason was that no one was misled. I will not suggest for a moment that with a firm of brokers of the standing of that of which Mr. Turle is a member the effect of the usage in practice is aught but entirely satisfactory and convenient. But a usage such as this cannot be considered from the standpoint of a firm of repute but must be regarded from the standpoint of its inherent potentialities irrespective of persons.
69. It is not necessary that I should in this case consider whether or not the usage is void. I must, however, before leaving this part of the case draw attention to the circumstance that the blank contract form attached to the plaint which is alleged to be the form of the contracts in suit does not correctly set out the latter.
70. On that attached to the plaint I find the words: 'Subject to the rules and customs of the Calcutta Stock Exchange Association'. These words are inserted by means of a rubber stamp. They do not appear on the contracts in suit. I must guard myself against expressing any opinion in this case as to whether such words would have any and what effect in a case in which they were to be found on contracts in suit, even assuming it in such a case to be established that a usage such as it has been sought to prove here is established and found to be a valid usage among members of the Calcutta Stock Exchange Association.
71. For the purposes of this case it suffices to say that I hold that there is no custom or usage in the Stock and Share market in Calcutta as is alleged in paragraph 2 of the additional written statement of the plaintiff. I also hold, though possibly superfluously, that so far as it may have been established that there is such a custom or usage among members of the Calcutta Stock Exchange Association the defendant was not aware of it.
72. The question of usage being eliminated, the plaintiff's position, upon the footing of Gubboy v. Avetoom (1890) I.L.R. 17 Calc. 449 is that of an agent who has entered into a contract on behalf of an undisclosed principal which he may personally enforce.
73. Assuming, as therefore I will, even if not bound to do so, that the plaintiff is himself entitled to sue for damages for breaches of the contracts in suit the next question is whether though he entered into the contract in the character of agent he was in reality acting not as agent but on his own account, for if he was, his suit must fail on that ground by virtue of Section 236 of the Contract Act.
74. As has been seen the usage which it was desired to establish is one the effect of which is to get rid of the other party to the contract and confine the seller or buyer as the case may be to contractual relations with the broker alone; and, in short, convert the latter into not merely the principal but the sole party contracting with buyer and seller respectively.
75. That was what the plaintiff sought to establish by his own evidence as well as by that of his witnesses. His evidence is replete with statements both that he was broker and that he was principal. It would be waste of time to attempt to reproduce his answers, they are so many and so conflicting. But that many if not most of them, were due, I will not say to a desire to establish the usage so that he might succeed in his suit, but to his rooted conviction arising from his notions of the usage that he was in fact and law a principal is to my mind a matter which admits of no doubt.
76. If that was his state of mind, when he entered into the contracts, and it is impossible to suppose that it was not, though it is not sufficient to justify me in holding against him on that ground alone on the question arising under Section 236, it must not be overlooked in considering the facts.
77. In a succession of replies, the first two to myself, and the remainder to learned Counsel, be admitted that in all the contracts in suit he bought from one party and he sold to the other, and in these he said he did not act as broker in the transactions. These replies seem to me to be conclusive upon the point but if more is required it is provided by reference to the contracts themselves.
78. The variations in rates where the difference between the buyers' and sellers' contracts amounts only to the brokerage, is, I think, sufficiently explained and if the differences in rates were limited to that and stood alone without any other evidence they too, would not be enough on which to find against the plaintiff. But the differences are not so limited and in some instances they are considerably more.
79. Mr. Turle has said that where charges have to be made against one party they are added to or deducted from the price as the case may be. The practice does not seem to me, if I may say so, a very desirable one, as the duty of the broker is to deliver notes to each party in similar terms. The practice of arranging for brokerage by a difference in price limited to the amount of brokerage is not necessarily in conflict with such duty for the omission from the seller's note, where a space is provided for the brokerage charges, will explain the difference. But further to increase the difference by including or excluding, as the case may be, charges to be paid by a party, involves a departure from the broker's duty of which there is no explanation apparent on the face of the notes. As a matter of accountancy such a method may have much to commend it but it involves a conflict with the duty of the broker to deliver bought and sold notes to his principals as evidence of the transaction between them.
80. Taking it however that such a practice exists I should require very clear evidence that it had been followed where the rates differ to an extent beyond the brokerage charges. The plaintiff has endeavoured to explain the differences in such a manner, but I am not disposed to pay much attention to mere verbal explanations on the point in view of the case made and which ho knew he had to meet. I should have expected him if he relied upon a case of having been a broker acting on behalf of a principal to have been ready to prove the transactions with the buyers up to the hilt, but no attempt has been made to do any such thing.
81. With reference to the shares in the Auckland. Jute Co. he sold 50 for the defendant and bought 75 for Parikh. But for 25 of these shares there was no bought note at all. This is quite inconsistent with a broker's business. It involves that the plaintiff would buy or sell as the case may be and then distribute notes according to orders received. The aggregate number of shares sold would no doubt correspond with those bought, but where this course was adopted it is impossible to say that there was a contract between the parties evidenced by bought and sold notes. The only solution is that the plaintiff in such a case himself was buying and himself was selling; the absence of corresponding notes precludes any other conclusion.
82. There is no suggestion that the various transactions differed in any respect. The suit has been heard upon the footing that no distinction should be made between any of them. In all these circumstances, I hold that the plaintiff, though he entered into the contracts in suit with the defendant in the character of broker was in reality acting on his own account.
83. The issue as to an extension of time only becomes essential to be decided if the plaintiff is entitled to recover damages from the defendant, which in my opinion he is not entitled to do. But, nevertheless, I will briefly consider the evidence upon the point and state my conclusions.
84. The plaintiff has stated that he saw the defendant from time to time and they agreed to extend the time for delivery of the shares. Though his evidence in chief purported to affect all the shares in the course of his cross-examination it became apparent that that could not be so in any case, and eventually he was reduced to saying that there was an agreement on or about the 18th of September extending the time for delivery of the Kamarhatty Company's shares till four or five days after the Poojah holidays which date would be about the 16th October. On the 16th October a tender of over Rs. 1,63,000 is alleged to have been made accompanied by an attorney's letter.
85. The defendant says that he was away at Deoghur all through October and he denies the agreements for an extension of time.
86. There is a direct conflict of evidence. Had I to choose between the two, I should prefer the evidence of the defendant to that of the plaintiff but I am not driven to this extremity for the purpose of forming my conclusion.
87. The due dates are stated on the notes and with reference to those where scrip had not been issued the date has been agreed as the 20th September.
88. The market rates of the shares on the due dates were on the whole in the favour of the defendant. That is quite consistent with an agreement for an extension of time for it is not unusual for a speculator who has made a profit to wish to increase it. But no suggestion is made by the plaintiff in his evidence that the defendant wished to extend the time with that object.
89. But more significant is the correspondence and where there is a conflict of testimony contemporaneous letters afford the more certain guide to a solution.
90. The letter of the 2nd October is inexplicable if on the 18th September a definite agreement for extension to the 16th October had already been made. Even more inexplicable is it that the plaintiff should have written 'as our buyers are pressing much', a statement itself untrue which he must have known would leave the defendant unmoved in the circumstances of such an agreement.
91. The evidence of the alleged tender is also barely consistent with the existence of such an agreement, as the date it bears was the very day to which he says time had been extended, and is unlikely that a man who had shown so much forbearance up to that point would, without warning when the day arrived, go through the formality of a tender accompanied by a letter signed by his attorney. I am not at all satisfied as to the evidence of this tender. I should have attached far more weight to this evidence had it been shown that in accordance with the usual practice of attorneys the letter had been press-copied in its due order in the attorney's press--copy letter book. But no such evidence has been forthcoming.
92. I find as a fact that there was no agreement for extension of time.
93. As the result of my conclusions the suit will be dismissed with costs on scale No. 2 and reserved costs, if any.