A Share Broking Case.

Otago Witness, Issue 1816, 10 September 1886, Page 12

A Share Broking Case.

In the R.M. Court on Friday, before Mr E. H. Carew, R.M., the case of J. A. Chapman v. D. M. Spedding came on for hearing, in which the plaintiff claims £15, loss on the re-sale of certain shares bought by the defendant of which he refused to take delivery. Mr Denniston appeared for the plaintiff, and Mr F. R. Chapman for the defendant. Mr Denniston, in opening the case, stated that the plaintiff and defendant had entered into a transaction for the sale of 200 Just-in-Time gold-mining shares at 6s 9d, and that when the scrip arrived from the Coast the defendant refused to take delivery. The shares had therefore to be sold at current rates, and defendant was now called upon to pay the loss resulting. The evidence would disclose that a day after the sale the market fell, and the defendant then displayed a greatamount of anxiety to have his scrip. Of course it was impossible that the scrip should be at once forthcoming, and the custom which prevailed in town of allowing 14 days for delivery must be held to be binding in law. The facts would show that Mr Spedding had done all he could to avoid taking the shares when they went down in price, and that he had used Mr William Watson as a valuable stalking-horse for his purpose. The plaintiff, J. A. Chapman, stated that there was ten days allowed by the Brokers' Association for the delivery of scrip in the town and fourteen days from the coast. Mr F. R. Chapman: But that is a matter between the brokers. Mr Denniston said the defendant was bound by the practice. Mr Carew : If a man employs a broker to go into the usual market he is bound by the rules of that market. Witness went on to say that he had a conversation with Mr Spedding in the early part of last month about Just-in-Time "shares and offered him 300 at 5^ 3d. He said he would do nothing without first consulting Mr William Watson. The latter was a local director of the company and received all telegrams direct from the legal manager on the Coast. On the 20th August witness met Mr Spedding at the Postoffice, and he said "Have you got any Just-in-Times on hand." Plaintiff said no, but if he wanted any he would try and get them. Mr Spedding then said if he could get 200 at 6s 9d he would take them. Witness went round and finally got the shares from Mr T. Grose at 6s 9d, the latter allowing him a commission. He got the sale note produced, dated 20th August. On the same day he gave Mr Spedding a sale note— immediately after the purchase. On the following morning he found a memo, in his box at his office from Mr Spedding. Shortly after he found the shares easier (no demand for them), and the gold returns came down very poor indeed. Mr W. Watson was the man who received the returns and posted the telegrams in Watson's Hotel. The memo, witness received from Mr Spedding was as follows ;—

11 Be Just-in-Time. Send scrip and transfer this forenoon for the 200 bought on my account. The cash awaits you. Transfer in blank." Witness : Plaiutiff had made no arrangement whatever with Mr Spedding by which he undertook to deliver the scrip out of the ordinary way of business. He went and told Mr Spedding he could not get the shares by that time, as they were coming from Reefton. Defendant then said, "Who do they belong to?" and witness said he could not tell till the transfer came. Defendant said he must have it settled, and must have the shares that day. He said he did not care what was usual — he had adopted a course of his own. He kept on saying that the money was there for witness, knowing that) the shares could not be to hand yet. He then said he must know the seller's name, that the shares were not in Dunedin, and he knew shares were sold on the chance of getting them. Witness said that was not so in his case. He had got a sale notice, and only got a small commission out of the transaction. Mr Spedding' said some of his best friends had let him in — men of standing in this town. They had recommended him to buy shares and he had afterwards found they were selling him their own. Plaintiff could not get the information from Mr Grose as to the seller's name, and wrote to Mr Spedding telling him it was strictly a brokerage transaction, and that he got only a very small commission. He sent the following memo, to defendant : — "23rd August. In reply to your memo., transfer for your 200 Just-in-Times is on the road from Reefton. I expect it to arrive this week, when it shall be handed to you. — J. A. Chapman. Strictly a broker in the transaction. My commission is only a little over 1£ per cent." Witness in reply to this got the following note from Mr Spedding : — " I received your memo, through post re Just-in-Time scrip. I sold the shares to Mr W. Watson on Saturday, to be delivered by lunch time to-day] Monday), so forwarded your memo, to him. He telephones me now that he has been in his office to meet me since 1 o'clock, and can get the scrip independent of me from a broker. He awaits his answer. I have asked him to wait till to-morrow, but he won't. You had better see him, perhaps, as I have depended on you to deliver." Witness after this met Mr Spedding near the National Bank, and told him the shares would be down the following morning. Witness tendered the shares and transfer to him next morning, but Mr Spedding refused to take them. He subsequent'y tendered them before a witness, with the same result. Plaintiff afterwards gave him notice that the shares would be sold in the open market at his risk ; and they were so sold at a loss of £15, but at a shade higher than the current rate. Cross-examined by Mr F. R. Chapman : Mr Grose and witness divided the commission. The person who sold the shares was Mr John Quiggley, of Reefton. Witness was Mr Spedding's broker in the transaction, not the vendor of the "hares, and he was bound to let Mr Spedding hive the shares at the price he paid for them. He did not tell Mr Grose at the time who he wa<* buying for ; it was not customary. But on *fon Monday he told him Spedding was trying to wriggle out of the shares. Plaintiff certainly did not, in the conversation on Saturday, undertake to deliver the shares at 12 on Monday. He did not ask Mr Spedding to give him till the beginning of the week to get the scrip. He told him on Saturday he was getting them from Reefton, and then Spedding asked him to telegraph for the name of the seller. It was most positively not agreed that witness should deliver the scrip at 12 o'clock on the Monday. Witaess tried to borrow the scrip in Dunsdin on the Monday from Mr Grose and Mr Gage. On Saturday he told Mr Grose he would be glad if he had a transfer, as he wanted to supply the shares if possible to save any bother. That was in consequence of Mr Spedding's letter. When the transfer came down it came down blank, as usual. Witness afterwards handed it to Mr Gage, who bought the shares on 'Change. Mr Chapman asked whether Mr Spedding's name was in the transfer which witness tendered. Mr Denniston objected to the question without the production of the transfer, and it was not allowed. Witness, in further cross-examination, said he did not know Mr Spedding would not take the 3hares until he tendered them. He sold the .a on Saturday, 28th August, to Mr Gage at 5s ihd each. There were sellers at 5a 3d dirjetly afterwards. To Mr Denniston : Witness sold at the first meeting of the Stock Exchange held afterwards. Mr Denniston proposed to call Evidence to show the custom among the brokers here, but Mr Chapman said he did not dispute the custom. This therefore closed the plaintiff's case. Mr Chapman said he should leave any Question of law for subsequent argument. His case turned upon the terms of the arrangement between plaintiff and defendant, and he should call Mr Sppdding to state what actually passed. His version would differ materially from Mr Chapman's. Mr Carew : lam only sorry that there is no jury to decide the point. Donald M. Spedding, the defendant, an auctioneer, gave evidence that he had a conversation with plaintiff some weeks before the 20th August about Just-in-Time shares; on Friday, 20th August,°he met the plaintiff at the Post Office. He asked witness if he had any Just-in-Times. Witness said he had about 300 and didn't feel inclined to sell — he was a holding man. Plaintiff said he was very wise, as the shares were being bought up for the Coast. Witness then asked if there were any to be bought in town, and he said he thought he knew of 200 or 300 that might be purchased at 6s 9d, the price they were giving for the Coa3t that morning. Witness said if there were any in town he might let him know if he could get 200 to make up his quantity to about 500 shares. Late the same afternoon in Princes street plaintiff came up to him and put an envelope into his hand. Witness went on and didn't open the letter till he got home, when he found the sale note in it. Directly he got to his office next (Saturday) morning he wrote a memo, to plaintiff. The latter on receipt of ifc came to his office at about half-past 10, and said he could not give the transfer and scrip, as they were not here. Witness then referred to the conversation" of the day before, and said he had given him authority to buy 200 shares, which he said were in the city. Plaintiff said he did not understand that, and these shares would have to be delivered from the Goast. Witness then said for a long time back he would buy no shares from the Goast unless he had got either the transfer or the scrip. His reasons were that he had found out there must be bogus sales in many instances, and that double the amount of scrip was sometimes sold and bought than waß issued by the directorate. He asked, therefore, either the name of the vendor or the number of the sorip, or a transfer. Plaintiff then said he would not give the name.

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of his principal, bub would get the Borip during the day. He turned back again and said, "Will you allow me till the beginning of the week ?" Witness said he would allow him till 12 on Monday to give vendor's name, a transfer of scrip, or the numbers of the scrip that might be lying at the Coast. He said there would be time for him to telegraph. Witness met Mr Watson on Saturday evening and told him he had bought 200 shares from Mr Chapman at 6s 9d, and said he (Mr Watson) could ha\e half if he liked. He said he would, and asked if ha had got the transfer. Witness said no, but that Chapman had guaranteed it on Monday. Witness got no delivery of the shares on the Monday, but Mr Chapman told him through the telephone he I would have to wait till the scrip came from the I Coast. Witness then said he must consider the transaction "off." Watson also told witness that the transaction was "off" on his part. When plaintiff some days afterwards stopped him in the street and told him the scrip would be here directly, witness told him it was off some days ago, and when plaintiff brought the scrip to his office he told him the same thing. Mr Chapman returned with a bailiff named Johnson and demanded the money. Cross-examined by Mr Denniston: On the Monday afternoon, after 2 o'clock, witness told plaintiff through the telephone that the transaction was " off." Shares had not fallen on the Monday that witness knew The telegram from the coast did not come down to Mr Watson the Saturday, as far as he knew, saying that there was only 920z. Witness remembered no newspaper information on Monday Morning. Witness subsequently said that he very likely did read the telegram published in the Daily Times of Monday, but there was no fall that he knew of on the Monday. There might have been afterwards. Witness must have had some telephonic communication with Mr Watson before lunch on Monday, and between 1 and 2. Mr Watson had expressed anxiety to get the scrip on Saturday evening. William Watson, coal merchant, said he saw Mr Spedding about some Just-in-Time shares several times during the week of the purchase. Some two months before they bought 200 from Mr Quick, and Mr Spedding asked him if he had any objection to make it 200 each. Witness said no ; that if he bought 200 more he was quite willing to take half. The 200 shares bought previously were in Spedding's name. -On Friday, August 20, Spedding told witness he had bought 200 shares from Chapman, and on Saturday morning witness went to Spedding's office, and he said he had demanded the name of the seller or the scrip. He stated that he had made up his mind in buying stock to get either the name of the seller or the scrip, as there was a lot of sales made not bom fide. On Saturday evening witness met Spedding, and he said he had not got the scrip but that plaintiff had called on him and said he would try to get it. Witness saw Mr Spedding again on the Monday morning at about half-past 11, and he said he had given Chapman until 12 o'clock to deliver the scrip or get the name of the seller. He afterwards telephoned to witness and said the scrip was not delivered. Witness said after taking a stand and not getting it at the time he should refuse to take it. Witness had an idea of the price ruling when he spoke to defendant on Saturday, but did not know it was falling. - It was early on the Saturday evening when he saw Mr Spedding in the" street opposite the Grand Hotel, and before the telegram came from Reefton. Witness was local director of the company and had dealt in shares for about eight years. The previous transaction in which he bought 200 shares as a joint affair with Mr Spedding was their first transaction together. It was arranged beforehand that half the second lot of 200 to be bought from Mr Chapman were to be for witness. ■ It was a verbal sale between witness and Mr Spedding. It was arranged beforehand that Mr Spedding should buy the shares on their joint account. Witness had no particular desire personally for a rapid delivery. Witness, when shares were coming from a distance, was generally satisfied with a sale note from a good man. Mr Spedding telephoned on Monday morning and said he had made a demand for the scrip and wanted to see witness. After half-past 11 that morning he had no communication with witness, except when he telephoned to say that the scrip was not delivered. Before Monday morning Spedding had given witness no reason to believe that delivery was to be at 12 o'clock that day. " He then intimated that he had given Chapman until 12. ;Mr Denniston : Is this true in Mr Spedding's memo, to plaintiff — "I have forwarded your memo to him (Watson). He telephones me now he has been in his office since 1 o'clock and can get the scrip independent of me from a broker. He awaits his answer " ? Witness : No. I did not telephone anything of the sort. I had no broker round the corner waiting, and I never tried to sell the share. I telephoned to Spedding after I heard he had not got the scrip to say he had better not take the shares. I agreed to all Spedding's suggestions. It is not correct that he suggested I should wait until next day for the scrip and that I refused. I was not a purchaser in the ordinary course of business waiting for delivery. Re-examined : I have no doubt I could have bought shares in Dunedin on the Monday, but I did not tell defendant so, and I did not try to get any. I could probably have got them for less. \ Mr Denniston said he would call evidence to show that there was a notorious fall in the shares at this time. Thomas Grose, sharebroker, stated that the prioe of Just-in-Time shares on the Thursday was 5s 3d. There was a sudden rise on Friday, when the price went up to 6s 6d and 6s 9d. Witness offered the defendant some at 6s 4£d on Saturday afternoon. After Saturday evening's telegram there were sellers at any price down to ss. This closed the case. Mr Carew : The point in dispute is a question of fact — whether the shares were sold in the usual terms or to be delivered at some particular time. I have only the evidence of Mr Spedding and Mr Chapman, and as Mr Spedding's evidence is so much weakened by the evidence of Mr Watson, I must prefer to give credeace to Mr Chapman's account. Judgment for the plaintiff for the amount claimed, with costs.

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The North Otago High School. A special meeting of the Education Board wag held on Thursday morning for the purpose of considering the Rev. Dr Macgregor's report on secondary education in North Otago. The following members were present : — Messrs M. Fraer (chairman), H. Clark, J. F. M. Frasor, A. C. Begg, J. Green, J. M'Kenzie, Dr Brown, Rev. Dr Macgregor, and the Hon. T. Dick. Dr Macgbegob read a lengthy statement on the subject, dealing with it from the follow ing points of view : — 1. The posi6ion of the board in relation to this 1 matter, as indicated by ita relative action hitherto. I 2. The question what notion (if any) ought now to be taken by the board in connection with the forthcoming inquiry petitioned for by the board. j 3. Other things thit may call for consideration at this meeting, e.g., (1) the committee's request regarding the Grammar School property, and (2) the question whether the board ought now to give an opinion about,a constitution, for a North Otago high school. The following findings were then resolved upon at the request of Dr Macgregor :—": — " (1) From the time of resolving to disrate Oamaru District High School the board have proceeded upon the view that the board ought to be relieved of all burden of secondary education in North Otago by means of the Waitaki endowment. (2) The board afterwards agreed to support the District High School for two years, but under express protestation that the Waitaki governors are not applying the endowment to its proper use. (3) In view of a representation made to the board, the board unanimously agreed to send a delegation to North Otago to confer with representative educationists there about a settlement of the matter on the basis proposed on the board's part of having only one high school for better accomplishment of the purpose than the existing two ; and, at the conference, all the delegates of the board concurred in the unanimous resolution of conference, to the effect that in order to real accomplishment of that purpose it is indispensable that the one school be at Oamaru. (4) The board thereafter unanimously agreed to concur in petitioning Parliament for an inquiry into the whole matter of secondary education in North Otago, but in so doing did not further commit themselves to approving any views or proceedings of those concurring in the petition, and in particular are not to be held as having engaged to approve any plan of constitution from North Otago High School, the constitution of the one school having by that resolution of conference been left over for determination to Parliament." Dr Brown suggested that as the statement of facts had been agreed to, the proper time had arrived for the consideration of the motion of which he had given notice. It had been his intention that it should be the first business. He would therefore move, in accordance with notice — " That this board thank Dr Macgregor for his exhaustive report on the subject of the Waitaki High School, and, in answer to his request for an expression of opinion, desire to state that the manner in which the Waitaki High School endowment be used for providing secondary education in North Otago is not a subject for this board to discuss." As to the first part of the motion, he was sure they were all agreed that Dr Macgregor deserved thanks for the trouble he had taken and the very large amount of industry he had displayed in the matter. Dr Macgregor had said that he had not asked for an expression of opinion ; but if he had not, then he (Dr Brown) must confess to being under a very grievous misunderstanding regarding the use of ordinary words in the English language. At all events, Dr Macgregor had reported upon this subject time after time, and had asked them to meet together about it. Surely the object of meeting then was to ask their opinion and not merely for the purpose of talking himself. The boarcl's relationship to this matter was limited to its being a contributor to secondary education in the district and one of the governors of the High School. The board had therefore to look to secondary education iv the districb being provided for bobh boys and girls hi a satisfactory manner —firstly, to the governors of the trust ; and seconly, to the Education department of the Government. If the governors of the trust and the Education department were satisfied with the manner in which the endowment was carried out, that ought to satisfy the board. There was another class interested in the question — namely, the people of North Otago, but he presumed that whatever satisfied the governors of the trust, who were their representatives, would satisfy them. The principal reason he had given notice of this motion was because at last meeting Dr Macgregor had brought up a scheme going into details concerning the salaries of teachers (the fees to be paid, &c), and he considered that those questions were quite beyond tho province of the board ; in fact the fitness of the board to deal with the subject might very well be raised as an argu ment against its discussion aparb from the question of interfering with the functions of a trust in a manner which could not be deemed as otherwise than impertinent. He hoped the board would agree with his motion, and might remark that he was at one with Dr Macgregor in looking at the present method of utilising the Waitaki High School endowment as one of those maladministrations of money that were common enough in the old world, but that had not yet been successfully acclimatised here. Mr Fbaser seconded the motion pro forma. ! i Dr Macgbegob repeated that he had not asked for the opinion of the board, and asked that the assertion should be withdrawn from 1 the motion. Mr Begg agreed with nearly every word Dr Brown had said, but thought the board should affirm a resolution on the subject to make its position clearer than Dr Brown's motion would make it. He agreed that the board should take no part in suggesting or asking for any alterabion in the administration of the Waitaki High School endowment or of interfering with it, but the board was entitled to say that it looked to the endowment made by Parliament to relieve the board of the annual expense of maintaining secondary education iv North Otago. He thought the resolutions he intended to submit would make that clear as the intention of the board, and would throw the onus upon the people oi North Otago to bring j such pressure to bear upon the Board of Governors as to cause themsto utilise the endowment more for the benefit of the district. He would move the following resolutions as an amendment on Dr Brown's motion : — " (1) Thab the board adhere to their position hitherto, as indicated by the above findings, in particular as regards the view that the board should be relieved of all sort of secondary education in North Otago by means of the Waitaki endowment, and the views that the right basis of settlement of the matter would be to have only one high school in place of two. (2) With reference to the committee's plan of a high school constitution, the board adhere to their position as not pronouncing on any plan of

• ______ — . _ — . i_ school constitution, and therefore refrain from offering any suggestion on the subject. (3) With reference to the committee's request regarding the Grammar School property, the board, having formed no opinion as to the merits of the whole plan, refrain from dealing with a detail whose desirability may depend on its connection with the whole. (4) With reference to the approaching commission of inquiry, the board instruct their secretary to hold himself at the call of the commissioners in readiness to furnish all information to be found in the records of the board." Mr M'Kenzie seconded the amendment. The amendment was carried, the voting being: — Ayes — Messrs Begg, Clark, M'Kenzie, and Dr Macgregor. Noes — Dr Brown, the Hon. T. Dick, and Mr Green. Mr Fraser declined to vote. On the resolution being put as a substantive motion, Mr Dick said he agreed that it was expedient the board should be relieved of all responsibility of supporting the District High School, but he did not think that it would be fair to Oamaru that they should carry the resolution; because it indicated that the board would adhere to the position it had taken up that it would cease to supplement the secondary school so as to make it a primary school. Dr Macgregor remarked that the motion did not involve that. Mr Dick believed that ib would be expedient that that should be done ; but it seemed to him that it would be unfair to Oamaru. It was posi sible the Board of Governors would say : " You may do what you like with the high school at Oamaru; we shall not give additional facilities to the Oamaru people." The people ought not to be made to suffer because the Waitaki High School Board insisted upon maintaining their position. If the Oamaru people could so work matters that they could compel the Waitaki Board of Governors to bring the school into Oamaru or to make arrangements whereby the funds which support the Wai baki school should also support the Oamaru High School, he could understand the motion; but they could not compel that arrangement, as the matter was entirely apart from the control of the people of Oamaru. Dr Macgkeqob was contented with the resolution, as he believed the Oamaru people were sufficiently guarded. Mr Green could not support the amendment. In his opinion the Oamaru people had ample power to deal with this matter if the responsibility of dealing with it were left to them, and the board had simply acted as a clog upon them. So long as the board was content to contribute to the support of the school, he had no doubt the people of Oamaru would be quite willing to have two high schools in their district. The Board of Education, in his opinion, ought to cease to act as a buffer between the people of Oamaru and the Board of Governors. If the Education Board had the backbone and nerve to adopt a proper resolution the matter would soon be satisfactorily settled. They had special charge of primary education. In the North Otago district there was a board specially charged with the duty of providing secondary education, with an endowment sufficient to meet the claims for secondary education, and if left to themselves the people of Oamaru would exercise their power so that secondary education would be provided. Mr Fraser : Then move a proper resolution. Mr Green said that it would be of no use doing anything of the kind, as the elections were coming on, and that fact would prevent the resolution being carried. The £300 per year granted from the funds for primary education for the support of a high school was money misapplied. He was strongly of opinion that the board should have refused to discuss the question. Mr Fraser regretted that a gentleman who had spoken so strongly as the last speaker should not have had the courage to support his views by a motion. Mr Green had spoken of seats on the board being imperilled, but if he was an independent member and did not dread the loss of his seat ho should have brought down a motion to give effect to his opinions, aud settle the question once and for ever. There was a certain element of doubt left by Mr Begg's resolutions which it was desirable to remove. As one of the members who had originally granted an extension of life to the Oamaru High School, he wished to say that he regretted that act, and should give expression to his opinion by a motion on the subject. Dr Macgregor's threat that the law would be 6et in motion if the school were disrated he treated as idle. Too great prominence by far had been given to this matter, and it was high time it was settled. In the whole of Oamaru this year only three boys and six girls had passed the sixth standard, and it was for these f aw children that the nine members of the board had been pestered meetiug after meeting with this question. If Mr Begg would not adopt it as part of his series of resolutions, he would subsequently move, as a separate motion — "That the status of the Oamaru High School be reduced to that a£, an ordinary district school on the 17th April 1887." Mr Begg said he would support Mr Fraser's motion, but thought it should come as a separate resolution. The resolutions were agreed to. Mr Fraser then moved the resolution which he had stated he would move, namely — " That the status of the Oamaru District High School be reduced to that of an ordinary district school on the 17th April 1887." This motion was seconded by Mr Begg, and carried without a discussion, Dr Macgregor protesting against it.