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CH. XX. s, 6.

Stock Exchange Contracts. Rigging the market. Scott v. Broun.

“ Outside brokers and “ Tape prices." Erchange Telegraph ('0. y. Gregory.

An agreement between two or more persons to purchase shares in a company in order to induce possible future purchasers to believe, contrary to the fact, that there is a bonâ fide market for the shares, and that the shares are at a premium, is illegal, and may be made the subject of an indictment for conspiracy (h); and no action can be maintained upon such agreement. This was held in Scott v. Brown & Co. (i), in which the defendants were stockbrokers, and were sued for rescission of a contract to buy the shares and recovery of the purchase-money, on the ground that the defendants had delivered their own shares to the plaintiff, instead of purchasing them on the Stock Exchange.

Much buying and selling of stocks and shares is done by brokers who are not members of a Stock Exchange. In Exchange Telegraph Co. v. Gregory & Co. (), under a contract made between the plaintiffs and the London Stock Exchange, valuable information as to the prices of stocks and shares from time to time during any day was collected on the Stock Exchange and supplied to the plaintiffs, and printed on tapes and sheets of letterpress in their office. It was part of the terms of the contract between the plaintiffs and their subscribers that the information should not be communicated to non-subscribers. The defendant, an outside broker who had once been a subscriber, but with other outside brokers had not been allowed so to continue by the plaintiffs on the request of the Stock Exchange Committee, obtained the information from a subscriber, and posted it up in his office. He was restrained by injunction from continuing to publish it, and from continuing to induce any subscriber of the plaintiffs to supply him with it in breach of the subscriber's contract with the plaintiffs.

SECT. 7.-Club Contracts.

Definition of “club."

A club is defined in Johnson's Dictionary as an assembly of persons meeting under certain conditions for a common object." The Licensing Act, 1902, which requires premises habitually used for the purposes of a “club” if intoxicating liquors are supplied therein, contains no definition of the term, but the Friendly Societies Act, 1896, which allows among other societies “working men's clubs” to be registered under that Act and

(h) See Reg. v. Aspinall (1876), 2 Q. B. D. 48.

(i) Scott v. Broron & Co., (1892] 2

Q. B. 724, C. A.

(k) Exchange Telegraph Co. v. Gregory & Co., [1896] 1 Q. B. 147, C. A.

tion of

thereby obtain certain privileges, by sect. 8 (4) defines such clubs CH. XX. s. 7.

Club as “societies for purposes of social intercourse, mutual helpful

Contracts. ness, mental and moral improvement, and rational recreation." For the consequences of registry of such clubs, and the numerous Friendly

societies. other societies (often popularly styled “clubs ") which may be registered under the Friendly Societies Act, reference must be had to the Act and to the rules of each club (1), but it may be mentioned here that by sect. 23 the subscriptions of members, except in the case of cattle insurance societies and such specially authorised societies as the Treasury may allow to take the benefit of sect. 31, are not recoverable at law; and that by sect. 36 minors above one year of age may be members; that by sect. 39 the club property is vested in trustees without personal liability except for sums absolutely received. It is also material to point out that by Determinasect. 68 disputes between members and their societies, or between

disputes "any person aggrieved who has for not more than six months ceased between

members and to be a member of a registered society or branch, or any person their societies. claiming (m) through such person aggrieved, and the society or branch, or an office thereof," must be decided under the rules without appeal, except that reference may be made by consent to the Chief Registrar of Friendly Societies if the rules do not forbid it, or to justices of the peace or the County Court if the rules allow it. Moreover, sect. 68 (6) of the Act of 1896 enacts that

Where the rules contain no direction as to disputes, or where no decision Jurisdiction is made on a dispute within forty days after application to the society or of Co. ct. branch for a refe nce under its rules, the member or person aggrieved may

or J. P's. apply either to the County Court or to a Court of Summary Jurisdiction, and the Court to which application is so made may hear and determine the matter in dispute; but in the case of a society with branches, the said forty days shall not begin to run until application has been made in succession to all the bodies entitled to determine the dispute under the rules of the society or branch, so, however, that no rules shall require a greater delay than three months between each successive determination. In the absence of any express rule (and such express rule Ordinary

social clubs. seldom if ever exists) the members of an ordinary social club are Members not not personally liable to indemnify the trustees or committee of personally

liable. the club against any liabilities incurred by them as such trustees

Wise v. or committee, the liability of each member being confined to his Perpetual yearly subscription so long as he continues his membership, which the rules usually determine upon non-payment of any subscription within a short limited time (n).

(1) See Friendly Societies Act, 1896, (1879), 4 A. C. 182. 59 & 60 Vict. c. 25 (Chit. Stat., vol. xiv.), (n) See Wise v. Perpetual Trustee Co., ss. 23-31, and Brabrook or Fuller on [1903] A. C. 139, P. C.; Flemyng v. Friendly Societies.

Hector (1836), 2 M. & W. 172–West(m) As such, see Mulkern v. Lord minster Reform Club; Todd v. Emly

35

Trustee Co.

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CH. XX. s. 7.

Club Contracts.

Nature of a club.

Expulsion of
members.
Dawkins v.
Antrobus.

“Clubs are associations of a peculiar nature. They are societies the members of which are perpetually changing. They are not partnerships; they are not associations for gain ; and the feature which distinguishes them from other societies is that no member as such becomes liable to pay to the funds of the society or to any one else any money beyond the subscriptions required by the rules of the club to be paid so long as he remains a member. It is upon this fundamental condition, not usually expressed, but understood by every one, that clubs are formed; and this distinctive feature has been often judicially recognised. . . . This may be hard upon the trustees; but they have only themselves to blame for their own improvidence in not seeing to their own safety.” The above extract from the single judgment of the Judicial Committee of the Privy Council in Wise v. Perpetual Trustee Co. (c), though its effect may be varied by rules, is believed to be of very general application throughout the British Empire.

Club rules generally give a power, either to the committee or the members, to expel a member for dishonourable conduct, and the Courts have frequently declined to interfere with the exercise of this power of expulsion. For interference of the Court against such exercise, it must be shown either that the rules are contrary to natural justice, or that what has been done is contrary to the rules, or that there has been mala fides or malice in arriving at the decision (p). If the club be a “proprietary " one, i.e., a club which belongs to individuals, and the members have no property in it but merely a right of user on payment of their subscriptions, the Court will not interfere by injunction even on proof of irregularity in the proceedings for expulsion, but will leave the expelled member to his remedy in damages (9).

The expulsion of a member, however, is legal only if it take place after full inquiry, with strict adherence to the rules of the club, and after due notice to the member; and if the member be expelled by an insufficient majority or otherwise in contravention

Injunction to restore unjustly expelled member. Labouchere v. Wharncliffe.

(1841), 7 M. & W. 748-Alliance Club ;
St. James's Club, In re (1852), 2
De G., M. & G. 383.

(o) Wise v. Perpetual Trustee Co., on
appeal from and reversing New South
Wales Sup. Ct., [1903] A. C. 139.

The liabilities of trustees on leases of club premises to which they were parties, would primâ facie be heavy upon subscriptions being discontinued in consequence of a club being broken up ; but it is conceived that the trustees might reimburse themselves by subletting for other than club purposes.

(p) Dawkins v. Antrobus (1879), 17

Ch. D. 615; 44 L. T. 557; 29 W. R. 511, C. A. –Travellers' Club. And see Hopkinson v. Exeter (Marquis of) (1867), L. R., 5 Eq. 63; 37 L. J., Ch. 173 ; 16 W. R. 266 -- Conservative Club; Lyttleton v. Blackburne (1875), 33 L T. 641-Junior Naval and Military Club ; Richardson-Gardner v. Freemantie 1870 , 24 L. T. 81; 19 W. R. 56-Junior Carlton Club; Lambert v. Addison (1882), 46 L. T. 20-Junior Army and Navy Club.

(9) Baird v. Wals (1890), 44 Ch. D. 661-Pelican Club; Lyttleton v. Blackburne, supra (P).

a

of such rules, or without having had due notice of the charge CH. XX. s. 7.

Clubs. against him, he will be entitled to a restoring injunction (r).

The rules of a club cannot be altered except in pursuance of a Alteration of rule giving power to alter them, so that in the absence of such

rules.

Harington v. rule the subscription fixed by a rule cannot be altered. This

Sendall, was held by Joyce, J., in Harington v. Sendall (s), the club being the Oxford and Cambridge University Club, which was established in 1830, on the occasion of a new rule for increasing the subscription from eight to nine guineas having been carried at a general meeting, but repudiated by Sir Richard Harington, a County Court judge, and 112 other members, of whom 52 refused to pay more than eight guineas, with the result of erasure from the list of members, but reinstatement by injunctions in an action by Sir Richard against Sir Walter Sendall and the other members of the committee of the club. The hardship of this case, whether or not correct in point of law (t), in the face of (1) the increased expense of living since the first establishment of the club in 1830 and (2) of the subscription, originally five guineas, having been three times previously raised, seems to be very great.

(r) Labouchere v. Earl of Wharncliffe power therein expressed, be altered by (1879), 13 Ch. D. 46, per Jessel, M.R. — any inherent power of a majority of the Beefsteak Club ; Fisher v. Keane (1878), members to bind a minority : see per 11 Ch. D. 353, per Jessel, M.R. -Army Jessel, M. R., in Dawkins v. Antrobus and Navy Club.

(1881), 17 Ch. D. at p. 620, and per (8) Harington v. Sendall, (1903] 1 Joyce, J., in Harington v. Sendall, Ch. 921.

[1903] 1 Ch., at p. 926. ; (0) Club rules cannot, if there be no

CHAPTER XXI.

OF ILLEGAL, VOID, AND VOIDABLE CONTRACTS.

PAGE 1. Generally

548 2. Unconscionable Bargains 552

Money-Lenders Act, 1900 553 3. Illegality at Common Law

554 (a) Immorality

554 (b) Restraint of Trade

557 (c) Prejudice to Revenue....... 563 (d) Restraint of Marriage.. 563 (e) Contracts as to Wills......

564
(1) Sale of Offices

564
(g) Interference with Justice 565
(h) Maintenance and Champerty 568
(i) Agreement to Fight and
other Cases

571
4. Avoidance for Fraud...

573 (a) Generally

573 (b) Misrepresentation

575

PAGE (c) Fraud on Third Parties 580 (d) Action for Deceit

582 5. Illegality or Nullity by Statute 584 (a) In General

584 (b) Wagering, &c., Contracts 586

Definition by Hawkins, J. 587
Gaming Act, 1892 .... 590
Lotteries, Sweepstakes and

Competitions (Barclay
v. Pearson)

593 (c) Purchase of pretended titles 594 (d) Illegal Companies

594 (e) Sale of Offices

595 (f) Charge on Benefice....... 596 (8) Miscellaneous Cases of Con

tracts statutably void ... 597

Sect. 1.Illegal Contracts in General. Etfect of WHENEVER the contract which a party seeks to enforce, be it illegality in general.

express or implied, is expressly or by implication forbidden by

the common or statute law, no Court, either of law or equity, Cope v. Roue- will lend its assistance to give it effect (a). For although, in lands.

general, the agreements into which parties enter have the force of laws over those parties—because Modus et conventio vincunt legem ; yet this rule does not apply where the interests of the public, or of morality, are affected by the agreement, and may be

injured by the observance of its provisions. Foreign The cases on foreign legal contracts which are illegal here

have been recently reviewed by Wright, J., in Kaufman v. GerKaufman v. Gerson. son (b), holding that the English Courts will not be prevented by

considerations of public policy from enforcing a compromise of criminal proceedings to be performed in a foreign country, if it be valid by the law of that country; but that decision was reversed by the Court of Appeal (c).

(a) Per Parke, B., Cope v. Rowlands (1864), 16 C. B., N. S. 73; Hope v. Hope (1836), 2 M. & W. 149, 157 ; per Giffard, (1857), 26 L. J., Ch. 417, App, and L.J., Re Cork and Youghal Rail. Co. Rousillon v. Rousillon (1880), 14 Ch. D. (1869), L. R., 4 Ch. 748, 762 ; Sykes v. 351, and p. 556, post, and disapproving Beadon (1879), 11 Ch. D. 170.

a dictum of Turner, L.J., in Hope v. Hope. (6) Kaufman v. Gerson, [1903] 2 (c) Kaufman v. Gerson, [1901] 1 K. B. 114, distinguishing Grell v. Levy K. B. 591, C. A.

contract,

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