BROKER'S COMMISSION.

New Zealand Herald, Volume LXVIII, Issue 20978, 15 September 1931, Page 11

BROKER'S COMMISSION.

SALE OF NEWSPAPER. PURCHASERS RECOVER £250. VENDORS' PAYMENT TO AGENT. [FROM OUR OWN CORRESPONDENT.] „,. . HAMILTON, Monday. iho receipt of £2.50 commission .by a firm of brokers from (ho vendors of'the Rotorua Chronicle newspaper, while they were employed by the purchasers to float a company, formed Ifae basis of a claim or the recovery of the amount heard before Mr. Justice Smith in the Hamilton Supremo Court to-day. The plaint»ffs were the Rotorua and Bay of Plenty Publishing Company, Limited, Edward Grace Guy and Lionel George Ashton, and the defendants were Thomas Lawson and Sidney James Sawell, brokers and land agents, Wellington. Mr. J. D. Davys appeared for plaintiffs, and Mr. E. Parry represented the, defendants. The statement of claim set out that Guy and Ashton were the promoters of the plaintiff company. On or about August, 1930, Guy engaged defendants <o act as agents for the promoters and defendants agreed on the payment of £SO to send Mr. Sawell to Rotorua, first to endeavour to obtain an option on the Rotorua Chronicle, Limited, and if successful, to proceed to the flotation of a company for the purpose of completing tho purchase. The brokerage'payable to tho defendants on flotation was to be at the rate of 5 per cent., the foe of £SO to bo an offset on the total brokerage. An option was secured in favour of Ashton as one of the promoters to purchase the company's business at tho price of £IO,OOO. Arrangements Finalised. The arrangements were finalised and tho company went to allotment in December. Plaintiffs stated that Sawell, acting as agent in the employ of plaintiffs, without tho knowledge or consent of plaintiffs, obtained on behalf of his firm from the Rotorua Chronicle, Limited, an undertaking in writing that in the event of a sale of the business the Rotorua Chronicle. Limited, would pay defendants £250 commission. This money was ultimately paid to defendants by the Rotorua Chronicle, Limited. Plaintiffs contended that this commission was a secret one and immediately becoming aware of this, they demanded from defendants payment of the money, received by them. This was refused and plaintiffs now claimed the benefit of the commission. Defendants admitted the receipt of £250 commission from the Rotorua Chronicle, Limited, but said this payment was made with tho knowledge and consent of Guy and Dr. J. D. C. Duncan, whom they believed to be the promoters of the new company. At an interview with Guy and Duncan, defendants agreed to accept brokerage on the flotation of the company at 5 per cent., instead of the usual 7i, per cent., on the undertaking that they were to be allowed, if possible, to obtain commission for the sale of the business from the vendors. J. D. C. Duncan, medical officer in charge of the Government bath-house at Re*orua, said he and Guy decided to employ Sawell as broker to purchase the paper. Sawell mentioned that the usual brokerage fees were 7£ per cent., but owing to peculiar local conditions it was agreed that 5 per cent, commission should be paid on shares lie sold, and 2£ per cent, on shares already* taken up. Witness said that owing to his position in the public service, he withdrew. Ashton took his place as promoter of the company. No Suggestion of Commission. Cross-examined, witness said he did not know that Sawell was a land agent. He would strongly disapprove of Sawell receiving commission from the vendors when he was employed as broker by the purchasers. Edward Grace Guy said there was no suggestion whatever that Sawell should receive commission from the vendors. Witness said he explained to Sawell that Dr. Duncan had dropped out and that Ashton had taken his place. Witness did not know until January, when the newcompany had taken possession, that Sawell had received commission from the vendors. Lionel George Ashton gavo corroborative evidence. . . At this stage Dr. Duncan was joined as a plaintiff in the action. Mr. Parry .asked for a non-suit as against the plaintiff company, as Sawell's duty was toward the promoters and not toward the company. Counsel also asked for a non-suit against either Dr. Duncan or Ashton. Counsel submitted that no breach of duty had been committed by Sawell and that so long as his principals knew that the agent was receiving the commission from another source they could not complain. His Honor described the transaction as an extraordinary one. The defence would have to show very, very clearly that the plaintiffs knew that Sawell was going to receive commission from the vendors, otherwise His Honor would be infringing the fundamental princples of the law ol agency if he allowed defendants claim. The non-suit points were reserved. Evidence lor the Defence. For the defence, Sidney James Sawell said when he first agreed tp act as broker for Plaintiffs he asked for; 7* per cent commission. The plaintiffs «ud they could not afford to pay more than 5 pei e°nt Witness then said 2* per cent wonid payable by the vendors and the arrangement come to was that the promoters ß of the purchasing company should pay him 5 per cent and that he should collect per cent from e vendors. Witness arranged to buy the business for the new company for £IO,OOO and the old company agreed to pay him £250 commission. No secrecy was obSvcd about the matter. Witness understood that Ashton was Dr. Duncans "witness said tho arrangement for the navincn of the vendors' commission was r m : r ,, r hi* arrangement witn mem. confirming hi* an j, represented To His Honor: Iho W* " f land audits' commission at tho rare o 2i per cent, on £IO,OOO on the sale of %is b HonoTsaid he found it impossible His Honor »»'".. f ; vto separate from a practical pointMrt v g^ the payment of 11.> £*> o£o lhe duty to his f om acceptt He was employed by ing this paying"- Tipwsnancr at „,; plaintiffs to ta?;;^], 11,0 least possiMo puw •'""'' Hi H r '-'! K »ati fie &?S«2 »» ". Si vendor Wing^nU •„., i.. raises whore uie <i n <-"" commission in cas e3 J\ ■ „ n less there lhe parties providing for such grt p ublish . The Rotorua and Bay -oftlß y j," B C rd P Sn he a" ion and judgment Jr g iven f Tr tlie plain* Guy and Ashton, for £250 and costs.