DEALING IN SHARES.

Dominion, Volume 4, Issue 960, 29 October 1910, Page 12

DEALING IN SHARES.

THE STAMP ACT.

AN'IMPORTANT JUDGMENT,

A decision of considerable interest tfl brokers and others engaged in share transactions was delivered by the Full Court yesterday. ■ The Chief Justice (Sir Robert Stout), and Justices Edwards, Cooper, and Chapman were on the bench.

The case was that of Gaulter, Dykes, and Co., sharebrokeis, of Wellington, v. Andrew Beggs, of Wellington, storekeeper, on appeal from a decision of Mr. Hasoldeii, S.M. The appellants,' in buying and selling certain Ross Goldfields shares at the instructions of tho defendant;, had made a loss amount-; 'ing, after giving credit for profit on other shares, to £154 10s. Id, TVjy sued for this amount, and wore nonsuited by tho Magistrate on. the ground that they had not proved that duly stamped ooutraot notes were oxchanged between buyer and seller, as required. to Section 133 of the Stamp Duties Act. It was pleaded, as ground of appeal, that this judgment was erromo om, in point' of law. . -%e appellants were represented by Mr.\C. I\. Skorrett, K.C., with him Mr.'X}. Toogood, and the defcndanti by Mr. H. D. BeU, K. 0., with him Air. Q. H. Fell.

Chlof J ustlco's Opinion

The Chief Justice, in his judgment, said thaV no question arose about thr of the contracts mada They weiV duly executed, and th« shares tr-iusferred. The only ! thing that "had 'recurred. was that there was a . loss . on \the transaction, and the money adVraiced by the appellants lot' the respondeat had not been recouped by the sale, \and the respondent de-!; A clined to pay\the money paid, on' hit''behalf. In fakt, he had. gambled in shares and losy and ~he wished tho sharebrokers to suffer'the loss. Th« :.'■'■ morality or immq-ality of the respond- '• cent's conduct not, however, tho question at issue. \ It was whether h«":,': could get rid of hi\ liability by meana '. of. the defence whijh ho had raised. .■< Was the transaction \so entirely illegal ' that a collateral contnet connected with it'.was wholly void aitl illegal?- Thero" , i were many transaction : in this category such as agreements to commit ■'•'. crimes, to live in illicit intercourse, 1 , etc. .The_ question hereV was whethei V non-complianco.; with a:statutory pro-. .■ vision in a rcvemio Act si tainted th«'.■.-' transaction that a collateral,agreement was illegal and void; Th*s;transao* ■•'•.■'*' tion was not one in which public safety : / or morality, was. .involved; only consideration! that arose was is-to -the . protection of the revenue; If, \owcver, the transaction had been decided, il-: ■.:.'. legal then''money lent for the lurposa/'.v of complementing an illegal,transition/, could not be .recovered... ' .-. : \"''--- A Reluctant Conclusion." V:, . ; If, there had been no other sectiiaj '. in"--the. Stamp 1 Act than"■:'Section 13L' \ his' Honour doubted whether'the of shares riot evidenced as, required.by that! section .could have been' dcemed\ ■■'•. a wholly illegal transaction; He would \■; have come to )the conclusion, though \ not without some doubt,, that the aim ;\ of the statute being one to!-secure re-'v : ,p venue, ' that tho noncompliance .with,;;; the rfiquirements of. Section. 133. did': \ not stamp the .transaction'with /illegal- '■'," ity.. .There, were, however/ other see> ' tions in the Act, 'and they seemed to. him to- be something , in ' addition to,and to'he! more far-reaching in their' - effects, than: Section 133;:. Section ,134' ', made it an offence to execute'; a ;tratisl"' iIJ fer if the provisions of Section 133. had !; not been complied with. Section 135, punished a sharcbrbker by depriving 1 ,/ him of his commission,if -tbp contractwas' not in compliance with Section" 133.,' Section 137 was passed, to. further safe-.!, - guard the revenue- by compelling !,»''• sharebroker to keep a duplicate of con- .., tract notes, that is of the notes men-.-.,'' tioned in Section' 133. Then came Seo- ; tion 139, which showed-that, even in:.--.* a suit regardiug !a contract; collateral ■'-. to a sale,. certain things" had' to be! proved.' There is no doubt, through .'• a slip in the correcting -of the proof of ~ tho -draft - statute, Section. 137'■'. Had.' . been substituted-for Section "133/' but : ; even if this error could not be oor- '-•■•' rected, strictly tho appeal; must: fail,- \ as' there .was no proof of' complianoo'.', with Sectibn, 137 before tho Magistrate.. The statute was aiming at the safeguard of the revenue by providing that no suit, either in'a contract for).tho-, sale of shares, or on a collateral contract—as' hero—where the .existence of .■'■: a contract of purchase had to be proved,, would be valid if not in complianoo'. with tho provisions of Section 133. He ' > : \ had come to this conclusion reluctantly, !j. and not without some' doubt, as- ho.'!': realised that a collateral contract, such If ; as this, should not be lightly set asido;';.-'-,' by-the I provisions'; of a revenue statute;'-,-., The other judges concurred with this -•" ■ decision. The appeal was dismissed. -.':