The Sun.
London, England, 1845-08-26 00:00:00

G, AUGUST 26, 1845.

of our contemporary, the United Service Gazette, is al-
ready most numerously signed by veteran officers of
all ranks.

THE LAW RELATING TO SHARES
AND SLIAIIEBROICERS.
(From the Leeds Mercury.)
[We have thought it would be extremely useful to the
numerous classes of persons now interested in shares,
to know what kind of dealings are legal an I what il-
legal—what liabilities accompany these transactions—
and what is the exact position occupied by share-
brokers in the immensely numerous operations of
which they are the medtunss. We therefore submitted
some questions to one of the most eminent solicitors
in Yorkshire, John Hope Shaw, Esq., of this town,
and have obtained from him a regular professional
opinion upon them, very carefully prepared, and
which he has taken every means to render as aecurat.
as the present state of the law will permit. Mr.
Shaw's opinion is as follows t]
The right and liabilities resulting from contracts for
shares are subject to uncertainties. Some of these un-
certainties arise from unsettled questions of law; others
from the rules or customs of brokers, which may
vary in different places, or in the same place at different
times. The rules of an Exchange. when not in them
selves illegal, or varied by the terms of a particular con-
tract, bind the brokers who belong to that Exchange.
and through them their principals. They are considered
as engrafted on the contract, and becoming part of it
When the contracting parties are not members of any
Exchange, or not both members of the same, the rule..
of any particular Exchange are not binding upon
them, unless adopted either by express agreement
or by their course of dealing with each other ; but
local customs, if known to them, and general custom',
win Cher known to them or not, are considered as en
grafted on their contracts, provided the customs are
legal in themselves, and are not inconsistent with the
terms of the particular contract.
For these reasons it is impossible to frame direction,
specifically adapted to every case that may occur. All
that can be done is to state the general law so far as it
has been settled. It must be left to each individual to
ascertain fur himself how far the application of that
general law to his own case may be modified by the rules
or customs of the particular Exchange or district where
his contract was made.
The general law applies to three distinct stages in the
progress of a railway share from its inspection to its
completion. The first of these stages is the formation
of the project, usually announced to the public by a
prospectus—the second is the allotment of scrip—and
the third is the passing of the Railway Act.
In the first stage (1. e. prior to the allotment of scrip).
no valid sale can be made. Even with respect to any
joint-stock company commenced before Ist November.
1844, the validity of such a sale was extremely doubt
ful ; and the Joint-Stock Companies Registration Act
(7 and 8 Victoria, chap. 110, sect. 26) provides, " with
regard to subscribers and every person entitled or
claiming to be entitled to any share in any joint stock
company, the formation of which shall be commenced
after the Ist November, 1844, that until such joint-stock
company shall have obtained a certificate of complete
registration, and until any such subscriber or person
shall have been duly registered as a shareholder in the
said registry office, it shall not be lawful for such person
to dispose, by sale or mortgage, of such share, or any
interest therein ; and that every contract for sale or
disposal of such share or interest shall be void, and, that
every person entering into such contract shall forfeit a
sum not exceeding 101." Registration must therefore
precede sale ; and, as it is required by the 7th section of
the Act that the registered deed shall state in a
schedule, " the number of the shares which each sub
scriber holds, and the distinctive numbers thereof;" the
allotment of hares must precede registration.
In the second stage (that of scrip) the 26th section of
the Registration Act continues to operate until the regis-
tration both of the company and of the individual share-
holder has been completed. Whether contracts for scrip,
after registration, but prior to the passing of the Railway
Act, are valid or not, does not appear to be yet settled
by any express decision. In the case of Jackson v.
Cocker, decided by Lord Langdale in 1841, and reported
in 4 Beavan 59, his Lordship said of scrip that it was
"commonly, but very erroneously, called shares," and
that " the Act alone, when passed, constitutes shares,
and makes them transferable." He added, that the
legality of sales of scrip was " a question worthy of the
most serious consideration," and that he was "by no
means disposed to treat lightly the " suggestions of
Lord Tenderden in Josephs v. Pebrer" (3 B. and
C. 644). Lord Langdale, however, did not decide,
the question of legality in Jackson v. Cocker, as it
was unnecessary to do so ; and the decision in Josephs
v. Pebrer was founded on the 18th section of the 6th
Geo. 1, chap. 18, which was soon afterwards repealed by
the Ist section of Geo. 4, chap. 91. But one of Lord
Tenterden's suggestions in Josephs v. Pebrer (and it
was probably to this suggestion that Lord Langdale
recant chiefly to refer) is, that " trafficking in thes+
shares may very possibly have been illegal at common
law, as it was a bargaining and wagering about an Act
of Parliament to be obtained in future." The ques-
tion at common law remains still open. The 6th
Geo. 4, only repeals the statutory prohibitions of
6 Geo. 1 ; and it does so on the express ground
(stated in its preamble) that "it is expedient"
that such matters "should be adjudged and dealt
with in like manner as the same might have beet•
adjudged and dealt with at common law, notwithstanding
the said Act." But the common law objection appear:
at present to rest chiefly upon Lord Tenterden's sug
gestions in Josephs v. Pebrer ; and his Lordship's ge
neral doctrines on this class of cases have been con-
sidered unsound by very eminent judges. The Joint-
stock Companies' Registration Act, which passed in 1844.
may also strengthen the argument in favour of sales of
scrip after registration, as it expressly provides that the
contract shall be void when made before registration,
which provision would have been unnecessary if it were
void already. The question, however, cannot be con-
sidered finally settled till it has been judicially decided.
It was expected to be raised in a case at the last York
assizes, but the case was compromised.
In the third and last stage (1. e. after the Act has
passed) a contract for shares is clearly valid.
A contract for the delivery of shares at a future day
is not in itself illegal, nor does it become so merely be-
cause the seller does not actually possess the shares at
the time of the contract. The contrary doctrine war
once laid down at nisi prius by Lord Tenterden, with re-
ference to a sale of goods (Bryan v. Lewis, Ryan and
Moody, 386) ; but the case went off on a different point;
and in the case of Hibblewhite v. M'Morine, 5 Meeson
and Welsby, 462, (which was upon a contract for the
delivery of railway shares at a future day,) Barons Parke,
Alderson, and Maule overruled Lord Tenterden's dictum
and held the contract legal.
The buyer and seller of shares have various remedies
against each other. The usual one is, that the party
who was ready and offered to perform his part of the
contract in due time recovers from the other the diffe-
ren:e between the contract price and the market price at
the time when the shares ought to have been delivered
or accepted.—Gainsford v. Carroll, 2 B. and C. 6`24.
Boorman v. Nash, 9 B. and C. 145.—Startup v. Cortazzi,
2 Crompton, Meeson, and Roscoe 165. An actual sale
or purchase in the market of the shares contracted for.
if made within a reasonable time (see Stewart v. Cauty.
8 Meeson and Welsby, 160), and after notice to the de
faulter, is the most satisfactory test of this difference.
But (except where required by the terms of the con-
tract, or by some special rule or custom binding on the
parties), it does not appear to be indispensably neeos-
,;ary for-the purpose of supporting an action.—Leigh v.
Paterson, 8 Taunton, 540.
In all Railway Companies formed since Ist November,
1844, and in any other companies to which the Registra-
tion Act may apply, the liability of a registered share-
holder to the debts and engagements of the company.
continues after he has sold his share, until the transfer
of it to the purchaser has been registered. See 7 and 8
Victoria, chap. 110, section 13. In companies to which
the Registration Act does not apply, the liability de-
pends upon the particular Acts by which each company
is regulated.
A broker is personally liable for the fulfilment of his
contracts, unless his principal be named or known to the
other party at the time the contract is made. The mere
fact of his being a broker does not exempt him from per
sonal liability, if the contract be made in his own name, and
without disclosing his principal ; nor can he relieve him-
self from liability, when once incurred, by disclosing his
principal afterwards—Magee v. Atkinson, 2 Meeson and
Welsby, 440. In such a case, however, the other con-
tracting party has the option of proceeding against
either the broker, or the subsequently disclosed principal,
though he may have originally debited the broker--
Paterson v. Gandasequi, 15 East, 62. And this option
is not lost, though he knew at the time of the contract
that the broker was acting for a principal, unless he also
knew who the principal was—Thompson v. Davenport,
9, B. and C., 78. But if he knew at the time of the con-
tract who the principal was, and with a full knowledge
of that fact chose to debit the agent, he cannot after-
wards resort to the principal ; or if in such a case he has
debited the principal, he cannot afterwards chargo the
agent (per Littledalo J. in Thompson v. Davenport, 9,
B. and C. 90).

NEW METHOD OF PROTECTING WOOD FROM SEA-
WATER INSECTS.—Captain Sir Samuel Brown, R.N., in a
letter to Admiral Sir Byam Martin, dates that from numerous
experiments and observations, he is satisfied " that at present
there is really no specific remedy against the attacks of the in-
sect called by entomologists teredo navalis, or sea-worm, ex-
cept iron nails." He proposes to encase the pile with broad-
headed iron nails, resembling scupper nails, but considerably
larger, and says that in the course of a few months corrosion
takes place and spreads into the interstices. He further sug-
gests the adoption of square-headed nails, which leave the
smallest possible extent of the surface of the pile exposed. Ex-
periments tried at the Trinity Pier, Newhaven, and Brighton
Pier, have fully established the effectiveness of Sir S. Brown's
method.— The B.ilder.

FULFILMENT OF PROPHECY.--It is very remark.
able that Monsieur Arago, the French astronomer, whose
prediction that the Seine would be frozen over, this year, on
the Bth of March, was so singularly realised, has been equally
right in his anticipations as to the very day when the wet
summer (which he also predicted) would end. He foretold that
the weather would change on the 20th of August, and so it
did, after a st.,rm, which has left behind it fearful traces
in France. If the brilliant September, which Monsienr Arago
now announces, come true, there will be nothing to retard ih?
development of British industry in the dearth, or dearness, of
ford, tor never was the ground so loaded with produce,—the
green crops, vegetables, and fruit, being even more abundant
than the grain.— Freckly Chronicle.
THE it El 3 ECCAITE CO Zti VICTS.--Active measures
are now in progress in the town of Neath, for the purpose of
petitioning her Majesty praying for a remission, or at least an
amelioration of the punishment now being undergone by the
unfortunate and misguided individuals who were engaged in
the Rebeccaite disturbances. A committee is forming of
many influential parties in the neighbourhood to forward the
object of the memorialists, and we cannot refrain from wishing
success to their endeavours, since in many cases the violators
of the laws were no doubt led to the commission of the crimes
for which the y suffered by the excitement which prevailed at
the time.— lrelehman.