Jeffery v Pollak and Freemantle

• Jurisdiction: South Africa
• Judge: Curlewis CJ, Stratford JA, Beyers JA and Watermeyer AJA
• Judgment Date: 07 October 1938
• Court: Appellate Division

Curlewis, C.J.:

I have had the advantage of reading the judgment prepared by my brother STRATFORD and agree with the conclusion at which he has arrived and with the form of order to be given by us as suggested by him. However, in view of the importance of the matter I would like to state my views on the issue before us and in what aspect the matter presents itself to me. I do not propose stating the facts, because they are set out in great detail in the judgment of TINDALL, A.J.P., facts which are taken from the affidavits of the parties and which do not seem to me to be greatly in dispute; the real dispute between the parties is the inference and conclusions of law to be drawn from those facts. I am also prepared to accept the assumption of the learned Acting Judge President that Hunt had bought 65 Sub-Nigel shares for Jeffery in October 1933, and that, though those shares were never allocated to Jeffery by Hunt, they must be taken to have formed a portion of the 100 Sub-Nigel shares which respondents bought on Hunt's instructions in that month - called by the learned Acting Judge-President the "October" shares as distinguished from the 100 Sub-Nigels which respondents bought on Hunt's instructions in January, 1934, and spoken of as the "January" shares. I am prepared to adopt that assumption because in my view it will make no difference in the conclusion a+ which I have arrived, although I would point out that in the absence of the evidence of, or an affidavit from, Hunt, it is possible that that assumption may not be well founded. And I may here state that owing to this absence of an affidavit from Hunt, it appears to me that when the learned Judge in the first instance heard this application in the Witwatersrand Local Division, and when he once found that Jeffery's name had been removed from the register of the Company on a transfer form on which Jeffery's signature as transferor had been forged, it would probably have been the better course merely to have ordered Jeffery's name to be

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restored to the register in respect of those shares and to have left the question as to who had the better right to those shares as between Jeffery and the respondents to be decided by action. But I agree with my brother STRATFORD, that, as the case has been presented to us, it is desirable that we now decide that question the more so as neither party apparently attaches any importance to the absence of the evidence of Hunt for the purpose of such decision.

The case presents itself to me in this light. When in November, 1933, Hunt sent a transfer form to be signed by Jeffery as transferee in respect of 65 Sub-Nigel shares, Hunt had already sold through respondents the 120 Sub-Nigels which he had bought, through them in October. Whatever 65 shares out of those 120 Hunt may have intended to be for Jeffery, he had sold them without Jeffery's knowledge. He had by the end of October forwarded the respondents all the share certificates for the 120 shares together with the necessary transfer forms in blank, the same certificates and transfer forms which he had received from respondents. It is most unlikely, therefore, that the transfer form which he had sent in November to Jeffery for signature as transferee would have referred to the 65 October shares. We are in the dark as to this transfer form, - whether it had been signed by any transferor, whether the numbers of the shares had been filled in, or what became of the transfer form after Jeffery had signed and returned it to Hunt. All we know is that when Jeffery signed the form as transferee and sent it to Hunt he did so solely with the intention and for the purpose that Hunt should have 60 Sub-Nigel shares registered in his (Jeffery's) name. Hunt failed to have 65 Sub-Nigel shares transferred into Jeffery's name although he had been paid for the shares.

As I understand the argument for respondents, it was contended that after Hunt had sold the October shares and had failed to carry out his mandate to have 65 of those shares transferred into Jeffery's name, his mandate from Jeffery had ceased and he could not again buy shares for Jeffery, and Jeffery's only right as against Hunt was an action for the shares and damages or for damages alone. But it seems to me that as Hunt had received a mandate not only to buy 65 shares for Jeffery but also to receive them and to have them registered in his name, Hunt having failed to carry out his mandate was from and after October under an obligation to deliver to Jeffery 65 Sub-Nigel shares or to have 65 shares registered in Jeffery's name as owner, an obligation which Jeffery could have

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enforced by action. It makes no difference whether we base this obligation on a breach of mandate or on misappropriation. When, therefore Hunt in January, 1934, bought 100 Sub-Nigels through the respondents and had 65 of them transferred on 1st February into the name of Jeffery in the register of the Company, he was merely carrying out his legal obligation to Jeffery to make him owner of 6.5 shares. And though in carrying out that obligation he was transferring his own shares and not shares which he had bought for Jeffery from someone else in October, the transfer as between him and Jeffery was not an invalid act, it was not void, though Jeffery might have had the right or option to repudiate the transfer if and when he became aware that Hunt had transferred his own shares to him. Hunt could never thereafter have contended successfully as against Jeffery that the 65 shares were still his property and that he was entitled to have them re-transferred into his name. This is so because, apart from any question of estoppel, Hunt by having the 65 shares registered in the name of Jeffery, thereby ceded and transferred, or must be taken to have ceded and transferred, the ownership in the 65 shares to Jeffery in fulfilment of the obligation which he owed Jeffery to make him the owner of 65 Sub-Nigel shares. He could have had no other object in transferring the shares. And Jeffery thereafter became owner of the shares and could have demanded them at any time from his agent Hunt if he did not want to leave them with him for safe-keeping any longer. Nor could anyone deriving title from Hunt be in a better position as regards these shares than Hunt himself. And if that be the true legal position, as I think it is, it really would conclude this matter, because whatever right or title respondents may have, or may assert, to these 65 shares is derived by them from Hunt by means of the forged signature of Jeffery as transferor.

But even if this is not conclusive of the dispute between appellant and respondents, let us consider the grounds on which respondents claim that they must be regarded as having better title to the shares than appellant. But before doing so I would state that we must be on our guard not to misapply the principle laid down in Cohen's Limited v Finance Corporation Limited (1906 T.S. 585) where it was held that a pledgee of scrip blank endorsed, but identified by numbers, is not entitled in the absence of express agreement to sell the scrip and to tender equivalent certificates in its place. Just as a broker may not sell his own shares to his client without the

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latter's consent, so he may not speculate with his client's shares and substitute other shares in their place. But this does not necessarily mean that in every case of sale of shares or of a loan of shares for purpose of delivering within the time limit, one lot of shares may not be regarded as being as good and valid as another lot. Otherwise share dealings on the Stock Exchange might be unnecessarily hampered. As was pointed out by INNES, C.J., in that case (p. 591) - "To no further or greater extent could it (the pledgee company) deal with the shares as its own property. The fact that all shares ate of the same value does not affect the question. No doubt a man may, in fulfilment of a contract of sale, ordinarily tender to his buyer any scrip certificates which are in order, and one who has borrowed such certificates for use may return similar and equivalent certificates to the lender, he would not as a rule be bound to send back exactly the same shares."

It was urged that when Hunt had the 65 shares transferred into the name of Jeffery he did not intend to transfer the ownership thereof to Jeffery but remained the owner, (1) because he did not deliver the scrip to Jeffery, (2) he used the shares for his own purposes by pledging them to the Bank in July, 1934, and leaving them so pledged until he sold them in October, 1935, and (3) he transferred the shares into Jeffery's name by means of a forged transfer form. As regards (1), it is quite clear that when Hunt received the mandate to buy the shares for Jeffery, he also received the mandate to have the shares transferred into Jeffery's name and after transfer to retain the shares for safe-keeping for Jeffery. Jeffery clearly intended to allow the scrip to remain with Hunt for safekeeping both before and after the 1st February, 1934. He made no demand for the scrip prior to that date. Nor did he make a demand after that date, when he realised by receiving Hunt's cheque for the dividend that the shares had not been transferred into his name and notified Hunt to have them registered and was informed that they had in fact been sent to Johannesburg for registration. And Jeffery left the shares with Hunt for safe-keeping and continued to draw the dividends on the shares direct from the Company, until October, 1935, when Hunt's estate was sequestrated, and Jeffery found it necessary to make inquiries about his shares. As regards (2), the fact that Hunt did not pledge these shares to the Bank until July, 1934, rather goes to show that for the period between 1st February, when they were registered in Jeffery's name,

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