Messer-Moore Insurance & Real Estate Co. v. Trotwood Park Land Co. , 170 Ala. 473 ( 1910 )

On Response to Application for Rehearing.

MAYFIELD, J.

Movants, on this application, have entirely misconceived the true nature of the cause of action, and have confounded it with the action itself. The cause of action is in tort, but the action itself is in contract. The tort is a deceit, consisting of obtaining plaintiff's money by active, actual, and intentional fraud. The action is in contract merely to recover back the money from those who so wrongfully procured it. If the plaintiff’s evidence is true, and the trial court so found, certain] j in part, such finding being by this court affirmed on appeal, the tort or cause of action was committed by both of the defendants; by one, because he committed the wrong, and by the other, because the Avrong was committed by its agent, and also because it received the fruits of the AAU’ong. But it should be said here that defendants and their counsel deny any wrong or fraud.

If Messer had received the fruits of his own wrong he Avould be liable in this action; but he seeks to escape liability solely because lie did not receive the fruits of his own wrong, and that no actual money and no negotiable paper representing it actually passed through his hands. No actual money of the plaintiff’s — that is, cur-ien cy or specie — passed through the hands of any one, but commercial paper which represented its money, the proceeds of the sale of its property, wrongfully procured by the defendants^ did pass through the hands of both, and nominally went to the credit of one of the defendants. The other defendant, an individual, was the alter ego of the one (a corporation) receiving the proceeds. No one represented the Messer-Moore Company lexce-pt Messer, who was its president. He was the sole individual who prepetrated the wrong complained of. He was the alter ego of the corporation. He cannot be allowed to escape liability in this action merely because the paper which represented plaintiff’s money was made payable, at its procurement, to his principal or to third parties. Of course, as a matter of fact, he has not now, and never has had, any actual money of the plaintiff’s,, but he has had that which represented it, and which was a mercantile substitute for it. It is no defense for him to say in this action, “I have not your money, I paid it over to my principal.”- The answer is, he knew it was plaintiff’s money, when he procured the substitute for it, and when he paid it over to his principal. This renders him liable for the money as well as for the tort. The Supreme Court of New Jersey, in the case of Bocchino v. Cook, 67 N. J. Law, 468-469, 51 Atl. 487, has stated the law in a similar case and in a similar action very concisely, and we therefore quote from that court: “It was argued that the defendant was only the agent, receiving no benefit, and that there was no promise, no contract implied on which this action can be maintained. When one extorts money from another,, and is sued for it, be cannot set up in defense tba,t be received tbe money as agent, and bas paid it over to another as principal. Tbe relation of principal and agent cannot exist for any sucb purpose. He bimself received tbe money. Tbe following rules are laid down in 1 Am. & Eng. Encyc. L. (2d Ed.) 1131, 1186: Where money is illegally demanded and received by an agent from a third person, by compulsion or otherwise, tbe agent cannot exonerate bimself from personal liability by paying it over to bis principal. Where tbe injury results, not from mere nonfeasance or omission of duty by tbe agent, but from bis positive misfeasance, or where, according to tbe better authority, it results from sucb omission of duty or act of negligence on tbe part of tbe agent as partakes of tbe character of a misfeasance, tbe agent is personally liable to tbe third person; tbe actual perpetrator of tbe positive wrong not being permitted to relieve himself by showing that tbe wrong was done while be was acting in tbe course of bis employment as agent for another. In all sucb cases be is personally liable, whether be did tbe wrong intentionally or ignorantly by authority of bis principal; for a principal cannot confer on bis agent any authority to commit a tort upon tbe rights or property of another. An agent will be held personally liable to third persons for all damages sustained by them in consequence of any fraudulent or malicious acts committed by him on behalf of bis principal, and in an action against tbe agent for fraud, tbe fact that be derived no personal profit or benefit therefrom is immaterial.—Horner v. Lawrence, 37 N. J. Law, 46. In Bennett v. Ives, 30 Conn. 329, it was held: ‘The actual perpetrator of a positive and obvious wrong can never exonerate bimself from personal liability by showing that be was acting as the agent or servant of another, or even by bis superior’s command.’ — Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287. Tbe money received by tbe defendant in tbis case can be regarded only as received for bis own benefit, because be could not be employed as agent to extort in tbe manner be did for tbe benefit of a principal. Tbe actions in Bennett v. Ives and Carew v. Rutherford, supra, were both for money bad and received, and we think that the action in tbis case was in proper form.”

The rule is well illustrated by our own case of Upchurch v. Norsworthy, 15 Ala. 705, relied on by appellant. In that case, the defendant, an agent, was sought to be held liable as for tbe value of certain slaves and certain cotton which be, as agent, bad converted, and tbe proceeds of which be bad paid over to bis principal. He was held liable as for-the slaves, but not liable as for tbe cotton,. which 'bis principal bad converted, and as to which be bad acted as a mere conduit to bring tbe money to bis principal after the conversion was complete. In .the latter case be did no wrong, and received no benefit- from bis principal’s wrong, and of course be was not liable. In tbe first case be himself converted tbe property, though under orders and directions of bis principal, and be was therefore liable; and the fact that be received no benefit was wholly immaterial.

It therefore -follows that tbe recovery was properly bad as against both defendants. They both committed tbe wrong, and one received tbe fruits of it — did so by the wrongful áet of its agent. Tbe principal being unable to authorize the fraudulent act, or tbe payment of the money to'it instead of the plaintiff, and tbe agent committing both wrongs, with full knowledge of all tbe facts, he is. liable to. the .same, extent- and in the same aw tions as. would be bis principal, and therefore jointly lia-bie with bis principal either ini tort or in' contract. '

We concede tba.t the agent ivould not be liable in this action, if the principal could have authorized him to do what he did, or if plaintiff’s injury had been the result of wrong committed by the principal instead of by the agent, or if it had been the result of a mere non-feasance of duty owed by the agent to his principal, and not (as in this case) the result of malfeasance on the part of the agent as to the plaintiff, and an act which the principal could not authorize.

The application is overruled.

Dowdell, C. J., and Anderson, McClellan, and Sayre, JJ., concur. Simpson and Evans, JJ., dissent.