Rothchild v. Duffield

Rothchild v. Duffield

The contract was a mandate; the mandate only terminated upon the buyer's delivery and payment obligations under NYSE Rule 109 (i.e. on actual settlement), so the July 3 telephone settlement was provisional; unforeseeable exchange‑rate loss incurred in proper execution of the mandate must be borne by the mandator, and appellants were not negligent as the exchange change was unforeseeable.

Citation
[1950] SCR 495
Parties
Appellants (plaintiffs): Louis F. Rothschild and Co.; Respondent (defendant): Alfred R. Duffield
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 March 1950
Procedural Posture
Civil Appeal / Appeal to the Supreme Court of Canada From the Court of King's Bench, Appeal Side, Province of Quebec
Outcome
Appeal allowed; judgment of the Court of King's Bench (Appeal Side) reversed and judgment of the Superior Court restored.
Legal Topics
Mandate, Mandatary Liability, Settlement Finality, Exchange Rate Risk, Broker Duties, Negligence
Source Language
English
Agency Securities Foreign Exchange Mandate Mandatary Liability Settlement Finality Exchange Rate Risk Broker Duties +1 more

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Parties

Louis F. Rothschild and Co.

Appellants (plaintiffs)

Alfred R. Duffield

Respondent (defendant)

Procedural Posture

Civil Appeal / Appeal to the Supreme Court of Canada From the Court of King's Bench, Appeal Side, Province of Quebec

Legal Issues

  1. 1 Whether the brokers acting under a mandate are entitled to indemnification for unforeseeable losses incurred in executing the mandate due to exchange‑rate changes
  2. 2 Whether a settlement between broker and client made prior to delivery and payment of sold shares is final or provisional
  3. 3 Whether brokers were negligent in failing to protect the exchange position

Ratio Decidendi

The contract was a mandate; the mandate only terminated upon the buyer's delivery and payment obligations under NYSE Rule 109 (i.e. on actual settlement), so the July 3 telephone settlement was provisional; unforeseeable exchange‑rate loss incurred in proper execution of the mandate must be borne by the mandator, and appellants were not negligent as the exchange change was unforeseeable.

Court Disposition

Appeal allowed; judgment of the Court of King's Bench (Appeal Side) reversed and judgment of the Superior Court restored.

Orders

  • Respondent Alfred R. Duffield to pay appellants Louis F. Rothschild and Co. the sum of $1,155.43 with interest from July 8, 1946
  • Costs to appellants in this Court and in the Court below