Chapter 50

There was in the earlier part of the 19th century considerable discussion in the courts as to whether the entry in a broker's book, or the bought and sold notes (singly or together), constituted the statutory memorandum; and judicial opinion was not unanimous on the point. But at the present day brokers are no longer regulated by statute, either in London or elsewhere, and keep no formal book; and as an entry made in a private book kept by the broker for another purpose, even if signed, would probably not be regarded as a memorandum signed by the agent of the parties in that behalf, the old discussion is now of little practical interest.

Under modern conditions of business the written memorandum of the contract of sale effected by the broker is usually to be found in a "contract note"; but the question whether, in the particular circumstances of each case, the contract note affords a sufficient memorandum in writing, depends upon a variety of considerations--e.g. whether the transaction is effected through one or through two brokers; whether the contract notes are rendered by one broker only, or by both; and, if the latter, whether exchanged between the brokers, or rendered by each broker to his own client; for under present practice any one of these methods may obtain, according to the trade in which the transaction is effected, and the nature of the particular transaction.

Where one and the same broker is employed by both seller and buyer, bought and sold notes rendered in the old form provide the necessary memorandum of the contract. Where two brokers are employed, one by the seller and one by the buyer, sometimes one drops out as soon as the terms are negotiated, and the other makes out, signs and sends to the parties the bought and sold notes. The latter then becomes the agent of both parties for the purpose of signing the statutory memorandum, and the position is the same as if one broker only had been employed. On the other hand, if one broker does not drop out of the transaction, each broker remains to the end the agent of his own principal only, and neither becomes the agent of the other party for the purpose of signing the memorandum. In such a case it is the usual practice for the buyer's broker to send to the seller's broker a note of the contract,--"I, acting on account of A. B. [or, "of my principal,"], have this day bought _from_ you, acting on account of C. D. [or, "of your principal"],"--and to receive a corresponding note from the seller's broker. Thus each of the parties receives through his own agent a memorandum signed by the other party's agent. These contract notes are usually known as, and serve the purpose of, "bought" and "sold" notes. In all the above three cases the broker's duty of compliance with all formalities necessary to make the contract of sale legally enforceable is performed, [v.04 p.0630] and both parties obtain a written memorandum of the contract upon which they can sue.

The broker, on performing his duty in accordance with the terms upon which he is employed, is entitled to be paid his "brokerage." This usually takes the form of a percentage, varying according to the nature and conditions of the business, upon the total price of the goods bought or sold through him. When he guarantees the solvency of the other party, he is said to be employed upon _del credere_ terms, and is entitled to a higher rate of remuneration. In some trades it is the custom for the selling broker to receive payment from the buyer or his broker; and in such case it is his duty to account to his principal for the purchase money. A broker who properly expends money or incurs liability on his principal's behalf in the course of his employment, is entitled to be reimbursed the money, and indemnified against the liability. Not having, like a factor, possession of the goods, a broker has no lien by which to enforce his rights against his principal. If he fails to perform his duty, he loses his right to remuneration, reimbursement and indemnity, and further becomes liable to an action for damages for breach of his contract of employment, at the suit of his principal.

_Relations between Broker and Third Party._--A broker who signs a contract note _as broker_ on behalf of a principal, whether named or not, is not personally liable on the contract to the third party. But if he makes the contract in such a way as to make himself a party to it, the third party may sue either the broker or his principal, subject to the limitation that the third party, by his election to treat one as the party to the contract, may preclude himself from suing the other. In this respect the ordinary rules of the law of agency apply to a broker. Generally, a broker has not authority to receive payment, but in trades in which it is customary for him to do so, if the buyer pays the seller's broker, and is then sued by the seller for the price by reason of the broker having become insolvent or absconded, he may set up the payment to the broker as a defence to the action by the broker's principal. Brokers may render themselves liable for damages in tort for the conversion of the goods at the suit of the true owner if they negotiate a sale of the goods for a selling principal who has no title to the goods.

_The Influence of Exchanges._--The relations between brokers and their principals, and also between brokers and third parties as above defined, have been to some extent modified in practice by the institution since the middle of the 19th century in important commercial centres of "Exchanges," where persons interested in a particular trade, whether as merchants or as brokers, meet for the transaction of business. By the contract of membership of the association in whose hands is vested the control of the exchange, every person on becoming a member agrees to be bound by the rules of the association, and to make his contracts on the market in accordance with them. A governing body or committee elected by the members enforces observance of the rules, and members who fail to meet their engagements on the market, or to conform to the rules, are liable to suspension or expulsion by the committee. All disputes between members on their contracts are submitted to an arbitration tribunal composed of members; and the arbitrators in deciding the questions submitted to them are guided by the rules. A printed book of rules is available for reference; and various printed forms of contract suited to the various requirements of the business are specified by the rules and supplied by the association for the use of members. In order to simplify the settlement of accounts between members, particularly in respect of "futures," i.e. contracts for future delivery, a weekly or other periodical settlement is effected by means of a clearing-house; each member paying or receiving in respect of all his contracts which are still open, the balance of his weekly "differences," i.e. the difference between the contract price and the market price fixed for the settlement, or between the last and the present settlement prices.

As all contracts on the market are made subject to the rules, it follows that so far as the rules alter the rights and liabilities attached by law, the ordinary law is modified. The most important modification in the position of brokers effected by membership of such an exchange is due to the rule that as, between themselves, all members are principals, on the market no agents are recognized; a broker employed by a non-member to buy for him on the market is treated by the rules as buying for himself, and is, therefore, personally liable on the contract. If it be a contract in futures, he is required to conform to the weekly settlement rules. If his principal fails to take delivery, the engagement is his and he is required to make good to the member who sold to him any difference between the contract and market price at the date of delivery. But whilst this practice alters directly the relations of the broker to the third party, it also affects or tends to affect indirectly the relations of the broker to his own principal. The terms of the contract of employment being a matter of negotiation and agreement between them, it is open to a broker, if he chooses, to stipulate for particular terms; and it is the usual practice of exchanges to supply printed contract forms for the use of members in their dealings with non-members who employ them as brokers, containing a stipulation that the contract is made subject to the rules of the exchange; and frequently also a clause that the contract is made with the broker as _principal_. In addition to these express terms, there is in the contract of employment the term, implied by law in all trade contracts, that the parties consent to be bound by such trade usages as are consistent with the express terms of the contract, and reasonable. On executing an order the broker sends to his client a contract-note either in the form of the old bought and sold notes "I have this day [bought / sold] for you," or, when the principal clause is inserted, "I have this day [sold to / bought] from you." These are not bought and sold notes proper, for the broker is not the agent of the third party for the purpose of signing them as statutory memoranda of the sale. But they purport to record the terms of the contract of employment, and the principal may treat himself as bound by their provisions. Sometimes they are accompanied by a detachable form, known as the "client's return contract note," to be filled in, signed and returned by the client; but even the "client's return contract note" is retained by the client's own broker, and is only a memorandum of the terms of employment. The following is a form of contract note rendered by a broker to his client for American cotton, bought on the Liverpool Cotton Exchange for future delivery. The client's contract note is attached to it, and is in precisely corresponding form.

AMERICAN COTTON

_Delivery Contract Note._

Liverpool,................

M................

DEAR SIRS,

We have this day.............. to/from you .............. lb American Cotton, net weight, to be contained in .............. American Bales, more or less, to be delivered in Liverpool, during .............. on the basis of .......... per lb for ............ on the terms of the rules, bye-laws, and Clearing House regulations of the Liverpool Cotton Association, Limited, whether endorsed hereon or not.

The contract, of which this is a note, is made between ourselves and yourselves, and not by or with any person, whether disclosed or not, on whose instructions or for whose benefit the same may have been entered into. Yours faithfully,

...................

The contract, of which the above is a note, was made on the date specified, within the business hours fixed by the Liverpool Cotton Association, Limited.

......... per cent to us.

Please confirm by signing and returning the contract attached.

The above form of contract note illustrates the tendency of exchanges to alter the relations between the broker and his principal. The object of inserting in the printed form the provision that the contract is made subject to the rules of the [v.04 p.0631] Liverpool Cotton Association is to make those rules binding upon the principal, and if he employs his broker upon the basis of the printed form, he does bind himself to any modification of the relations between himself and his broker which those rules may effect. The object of the principal clause in the above and similar printed forms is apparently to entitle the broker to sell to or buy from his principal on his own account and not as agent at all, thus disregarding the duty incumbent upon him as broker of making for his principal a contract with a third party.

It is not possible, except very generally, to state how far exchanges have succeeded in imposing their own rules and usages on non-members, but it is probably correct to say that in most cases if the question came before the courts, the outside client would be held to have accepted the rules of the exchange so far as they did not alter the fundamental duties to him of his broker. On the other hand, provisions purporting to entitle the broker in disregard of his duties as broker himself to act as principal, would be rejected by the courts as radically inconsistent with the primary object of the contract of brokerage and, therefore, meaningless. But it is undoubtedly too often the practice of brokers who are members of exchanges to consider themselves entitled to act as principals and sell on their own account to their own clients, particularly in futures. The causes of this opinion, erroneously, though quite honestly held, are probably to be looked for partly in the habit of acting as principal on the market in accordance with the rules, partly in the forms of contract notes containing "principal clauses" which they send to their clients, and perhaps, also, in the occasional difficulty of effecting actual contracts on the market at the time when they are instructed so to do.

A _stockbroker_ is a broker who contracts for the sale of stocks and shares. Stockbrokers differ from brokers proper chiefly in that stocks and shares are not "goods," and the requirement of a memorandum in writing, enacted by the Sale of Goods Act 1893, does not apply. Hence actions may be brought by the principals to a contract for the sale of stocks and shares although no memorandum in writing exists. For instance, the jobber, on failing to recover from the buyer's broker the price of shares sold, by reason of the broker having failed and been declared a defaulter, may sue the buyer whose "name was passed" by the broker. The employment of a stockbroker is subject to the rules and customs of the Stock Exchange, in accordance with the principles discussed above, which apply to the employment of brokers proper. A custom which is illegal, such as the Stock Exchange practice of disregarding Leeman's Act (1867), which enacts that contracts for the sale of joint-stock bank shares shall be void unless the registered numbers of the shares are stated therein, is not binding on the client to the extent of making the contract of sale valid. But if a client choose to instruct his broker to buy bank shares in accordance with that practice, the broker is entitled to be indemnified by his client for money which he pays on his behalf, even though the contract of sale so made is unenforceable. For further information the reader is referred to the article STOCK EXCHANGE and to the treatises on stock exchange law.

An _insurance broker_ is an agent whose business is to effect policies of marine insurance. He is employed by the person who has an interest to insure, pays the premiums to the underwriter, takes up the policy, and receives from the underwriter payment in the event of a loss under the policy. By the custom of the trade the underwriter looks solely to the broker for payment of premiums, and has no right of action against the assured; and, on the other hand, the broker is paid his commission by the underwriter, although he is employed by the assured. Usually the broker keeps a current account with the underwriter, and premiums and losses are dealt with in account. It is only in the event of the underwriter refusing to pay on a loss, that the broker drops out and the assured sues the underwriter direct. Agents who effect life, fire or other policies, are not known as insurance brokers.

_Ship-brokers_ are, firstly, "commission agents," and, secondly, very often also ships' managers. Their office is to act as agents for owners of ships to procure purchasers for ships, or ships for intending purchasers, in precisely the same manner as house-agents act in respect of houses. They also act as agents for ship-owners in finding charterers for their ships, or for charterers in finding ships available for charter, and in either case they effect the charter-party (see AFFREIGHTMENT).

Chartering brokers are customarily paid by the ship-owner, when the charter-party is effected, whether originally employed by him or by the charterer. Charter-parties effected through brokers often contain a provision--"_2½% on estimated amount of freight to be paid to A B, broker, on the signing of this charter-party, and the ship to be consigned to him for ship's business at the port of X_ [inserting the name of the port where A B carries on business]." The broker cannot sue on the charter-party contract because he is not a party to it, but the insertion of the clause practically prevents his right from being disputed by the ship-owner. When the broker does the ship's business in port, it is his duty to clear her at the customs and generally to act as "ship's husband."

A _bill-broker_ was originally an agent who, for a commission, procured for country bankers the discounting of their bills in London. But the practice arose of the broker guaranteeing the London banker or financier; and finally the brokers ceased to deposit with the London bankers the bills they received, and at the present day a bill-broker, as a rule, buys bills on his own account at a discount, borrows money on his own account and upon his own security at interest, and makes his profit out of the difference between the discount and the interest. When acting thus the bill-broker is not a broker at all, as he deals as principal and does not act as agent.

AUTHORITIES.--Story, _Commentaries on the Law of Agency_ (Boston, 1882); Brodhurst, _Law and Practice of the Stock Exchange_ (London, 1897); Gow, _Handbook of Marine Insurance_ (London, 1900); Arnould, _On Marine Insurance_, edited by Messrs Hart & Simey (1901); J.R. Dos Passos, _Law of Stock-Brokers and Stock Exchanges_ (New York, 1905).

(L. F. S.)

BROMBERG, a town of Germany, in the Prussian province of Posen, 32 m. by rail W.N.W. from the fortress of Thorn, 7 m. W. from the bank of the Vistula, and at the centre of an important network of railways, connecting it with the strategical points on the Prusso-Russian frontier. Pop. (1900) 52,082; (1905) 54,229. Its public buildings comprise two Roman Catholic and three Protestant churches, a Jewish synagogue, a seminary, high grade schools and a theatre. The town also possesses a bronze statue of the emperor William I., a monument of the war of 1870-71, and a statue of Benkenhoff, the constructor of the Bromberg Canal. This engineering work, constructed in 1773-1774, by command of Frederick II., connects the Brahe with the Netze, and thus establishes communication between the Vistula, the Oder and the Elbe. The principal industrial works are iron foundries and machine shops, paper factories and flour mills; the town has, moreover, an active trade in agricultural and other products. In view of its strategical position, a large garrison is concentrated in and about the town. Bromberg is mentioned as early as 1252. It fell soon afterwards into the hands of the Poles, from whom it was taken in 1327 by the Teutonic Order, which held it till 1343, when the Poles recaptured it. Destroyed in the course of these struggles, it was restored by Casimir of Poland in 1346, and down to the close of the 16th century it continued to be a flourishing commercial city. It afterwards suffered so much from war and pestilence that about 1772, when the Prussians took possession, it contained only from five to six hundred inhabitants. By the treaty of Tilsit it was transferred to the duchy of Warsaw; in 1813 it was occupied by the Russians, and in 1815 was restored to Prussia.

BROME, ALEXANDER (1620-1666), English poet, was by profession an attorney, and was the author of many drinking songs and of satirical verses in favour of the Royalists and against the Rump. He published in 1661 _Songs and other Poems_, containing songs on various subjects, followed by a series of political songs; ballads, epistles, elegies and epitaphs; epigrams and translations. Izaak Walton wrote an introductory eclogue for this volume in praise of the writer, and his gaiety and wit won for him the title of the "English Anacreon" in Edward Phillips's _Theatrum Poetarum_. Brome published in 1666 a translation of Horace by himself and others, and was the author of a comedy entitled _The Cunning Lovers_ (1654). He also edited two volumes of Richard Brome's plays.

BROME, RICHARD (d. 1652), English dramatist, was originally a servant of Ben Jonson, and owed much to his master. The development of his plots, the strongly marked characters and the amount of curious information to be found in his work, all show Jonson's influence. The relation of master and servant developed into friendship, and our knowledge of Brome's personal character is chiefly drawn from Ben Jonson's lines to him, prefixed to _The Northern Lasse_ (1632), the play which made Brome's reputation. Brome's genius lay entirely in comedy. He has left fifteen pieces. _Five New Playes_ (ed. by Alex. Brome, 1652?) contained _Madd Couple Well Matcht_ (acted 1639?); [v.04 p.0632] _Novella_ (acted 1632); _Court Begger_ (acted 1632); _City Witt; The Damoiselle or the New Ordinary. Five New Playes_ (1659) included _The English Moor, or The Mock Marriage; The Love-Sick Court, or The Ambitious Politique; Covent Garden Weeded; The New Academy, or The New Exchange_; and _The Queen and Concubine_. _The Antipodes_ (acted 1638, pr. 1640); _The Sparagus Garden_ (acted 1635, pr. 1640); _A Joviall Crew, or the Merry Beggars_ (acted 1641, pr. 1652, revised in 1731 as an "opera"), and _The Queenes Exchange_ (pr. 1657), were published separately. He collaborated with Thomas Heywood in _The late Lancashire Witches_ (pr. 1634).

See A.W. Ward, _History of English Dramatic Literature_, vol. iii. pp. 125-131 (1899). _The Dramatic Works of Richard Brome ..._ were published in 1873.

BROMELIACEAE, in botany, a natural order of Monocotyledons, confined to tropical and sub-tropical America. It includes the pine-apple (fig. 1) and the so-called Spanish moss (fig. 2), a rootless plant, which hangs in long grey lichen-like festoons from the branches of trees, a native of Mexico and the southern United States; the water required for food is absorbed from the moisture in the air by peculiar hairs which cover the surface of the shoots. The plants are generally herbs with a much shortened stem bearing a rosette of leaves and a spike or panicle of flowers. They are eminently dry-country plants (xerophytes); the narrow leaves are protected from loss of water by a thick cuticle, and have a well-developed sheath which embraces the stem and forms, with the sheaths of the other leaves of the rosette, a basin in which water collects, with fragments of rotting leaves and the like. Peculiar hairs are developed on the inner surface of the sheath by which the water and dissolved substances are absorbed, thus helping to feed the plant. The leaf-margins are often spiny, and the leaf-spines of _Puya chilensis_ are used by the natives as fish-hooks. Several species are grown as hot-house plants for the bright colour of their flowers or flower-bracts, e.g. species of _Tillandsia_, _Billbergia_, _Aechmea_ and others.