Lum v. McEwen , 56 Minn. 278 ( 1894 )

Mitchell, J.

It is only necessary to consider one of numerous questions argued by counsel.

The defendant McEwen was the superintendent and general manager of the business of the Northern Mill Company. That company had a sawmill on Gull river, eight miles from Brainerd, and also a logging railroad extending from Kilpatrick lake, 25 miles from Brainerd, some distance out into the woods. The mill company had under consideration a plan for remodeling its mill, and extending its logging road to G-ull river, where the mill was situated.

At this juncture of affairs, in consideration of McEwen’s agreement to use his influence and authority as superintendent and manager of the mill company to secure the removal of its mill and the extension of its road to Brainerd, the plaintiff executed the obligation in suit, by which he promised to pay to defendant Clark $5,000 nine months after date, on condition that within that time the mill company extended its logging railroad to Brainerd, and built within the limits of that city a sawmill of a specified capacity. This note was given for the benefit of McEwen, but was made payable to Clark, in order to conceal McEwen’s connection with the matter. That this contract was illegal and void on grounds of public policy will not admit of a moment’s doubt. Loyalty to his trust is the first duty which an agent owes to his principal. Reliance upon an agent’s integrity, fidelity, and capacity is the moving consideration in the creation of all agencies; and the law condemns, as repugnant to public policy, everything which tends to destroy that reliance. The agent cannot put himself in such relations that his own personal interests become antagonistic to those of his principal. He will not be allowed to serve two masters without the intelligent consent of both.

Actual injury is not the principle the law proceeds on, in holding such transactions void. Fidelity in the agent is what is aimed at, and, as a means of securing it, the law will not permit him to place himself in a position in which he may be tempted by his own private interests to disregard those of his principal. In the matter of determining the policy of removing the mill and extending the road, McEwTen, in the discharge of his duties, whether merely that of making recommendations, or of exercising authority to act, owed to his principal the exercise of his best judgment and ability, uninfluenced by any antagonistic personal interests of his own. His attempt to secure $5,000 to himself was calculated to bias his mind in favor of the policy upon which the payment of the money was conditioned, regardless of the interests of the mill company. It is not material that no actual injury to the company resulted, or that the policy recommended may have been for its best interest. Courts will not inquire into these matters. It is enough to know that the agent in fact ¡haced himself in such relations that he might be tempted by his own interests to disregard those of his principal.

The transaction was nothing more or less than the acceptance by the agent of a bribe to perform his duties in the manner desired by the person who gave the bribe. Such a contract is void.

This doctrine rests on such plain principles of law, as well as common business honesty, that the citation of authorities is unnecessary. The doctrine is perhaps as clearly and concisely expressed as anywhere in Harrington v. Victoria Graving Dock Co., 3 Q. B. Div. 549. The fact that the validity of such transaction is attempted to be sustained in courts of justice does not speak well for the state of the public conscience on the subject of loyalty to> trusts in business affairs.

This was an action by the maker of the instrument to have it surrendered up and canceled. In view of the relation which he bears to the transaction, there may be some doubt whether courts should give him affirmative relief. But defendants do not raise the point, and we only advert to it in order that this case may not be considered an authority on the question.

Order affirmed.

(Opinion published 57 N. W. Eep. 662.)