Hunter Realty Co. v. Spencer

The principal contention of plaintiffs in error is that the trial court erred in overruling their motion for a new trial, and under this head contend that the judgment is contrary to the law and the evidence. Let us see how this is. There was a general finding in this case by the trial court in favor of the defendants in error, plaintiffs below. When this is the case, the rule is as laid down in the syllabus in Brewer v. Black,5 Okla. 57, 47 P. 1089:

"A general finding includes the finding of all necessary facts to constitute the claim of the party in whose behalf the judgment is rendered; and upon appeal the court will not review the evidence upon which such finding was made, to determine its sufficiency." (See, also, Meyer Bros. Drug Co. v. Kelley,5 Okla. 118, 47 P. 1065.)

It goes without saying that Horner was guilty of the grossest fraud, while acting as the agent of Martha Spencer, to induce her to believe that it was to her interest to trade her farm, worth $3,500, for the hotel property of Daisy Hutto, worth $1,500, and agree to give her a mortgage thereon for $960, $460 of which was to reimburse her for paying certain indebtedness of Mrs. Spencer. She had a right to and did rely upon his judgment in the matter, and executed a deed to Cooper with the understanding that the same was not to be delivered until she could be further advised by her brother. It also goes without saying that, when she later visited Horner's office and left instructions for the sale to be proceeded with no further, the subsequent recording of her deed by Horner passed no title to Cooper, for the reason that no title will pass by a deed which is not delivered by a grantor or one duly authorized by him.Fitch v. Bunch, 30 Cal. 209; 1 Devlin on Deeds, §§ 261, 262. Neither did the title pass from Daisy Hutto to Mrs. Spencer for the reason that the terms of the escrow were not complied with. 1 Devlin on Deeds §§ 322, 323; Hogueland v.Arts, 113, Iowa, 634, 85 N.W. 818; Fitch v. Bunch, supra, It follows that the minds of these parties did not meet, and that their respective deeds constituted a cloud upon their respective titles.

But, independent of anything we have said, it is apparent from the record that Harry N. Horner and J. E. McCarty, partners doing business as the Hunter Realty Company, were acting as agent for all concerned in this "triangular transaction." In fact, Horner expressly admits such to be the case, when he testifies:

"Q. You were agent for Daisy Hutto in this transaction, were you?. A. Yes, sir; for them all, Mrs. Spencer, Daisy Hutto, and Cooper."

That being true, this entire transaction, independent of the question whether any of the parties thereto were injured, was against public policy, and voidable in equity at the suit of any of the parties thereto.

In Am. Eng. Enc. of Law, p. 1073, it is said:

"When an agent acts for both parties in making a contract requiring the exercise of discretion, the contract is voidable in equity upon the application of either party. * * *" (Citing authorities.)

In Ramspeck v. Pattillo, 104 Ga. 772, 30 S.E. 962, 42 L. R. A. 197, 69 Am. St. Rep. 197, the court, quoting approvingly from Farnsworth v. Hemmer, 1 Allen (Mass.) 449, 79 Am. Dec. 756, says:

"It is of the essence to his [the agent's] contract that he will use his best skill and judgment in promoting the interest of his employer. This he cannot do where he acts for two persons whose interests are essentially adverse. He is therefore guilty of a breach of his contract. Nor is this all. He commits a fraud on his principals in undertaking, without their assent or knowledge, to act as their mutual agent, because he conceals from them an essential fact, entirely within his own knowledge, which he was bound, in the exercise of good faith, to disclose to them. Storey on Agency, § 31;Copeland v. Mercantile Ins. Co., 6 Pick. (Mass.) 198-204; Pugsley v. Murray, 4 E. D. Smith (N.Y.) 245; Rupp v.Sampson, 16 Gray (Mass.) 398, 77 Am. Dec. 416. See, also, Mechen on Agency, §§ 66, 67."

In McKinley v. Williams, 74 Fed. 94, 20 C. C. A. 312, the court said:

"To permit the agent of a vendor to become interested, as the purchaser or as the agent of a purchaser, in the subject-matter of the agency inaugurates so dangerous a conflict between duty and self-interest that the law wisely and peremptorily prohibits it. An agent of a vendor; who speculates in the subject-matter of his agency, or intentionally becomes interested in it as a purchaser, or as the agent of a purchaser, violates his contract of agency, betrays his trust, forfeits his commission as agent, and becomes indebted to his principal for the profits he gains by his breach of duty." (Citing a number of authorities.)

In N.Y. Central Ins. Co. v. Nat. Protection Ins. Co., 14 N.Y. 91, Mr. Chief Justice Denio, speaking for the court, says:

"It has been settled, by a long course of adjudications in the courts of equity, that a trustee or agent of one person cannot make a valid contract respecting the subject-matter to which the trust or agency relates, where he has a personal interest. His constituent, it is said, is entitled to have all his skill and judgment employed in his service, but if he is himself the other party to the contract, the utmost which could be expected from a very honest man would be the ordinary fairness of an umpire. * * * The courts of this state have followed the principle of these cases with great consistency, and the rule may be considered perfectly well settled.Torrey v. Bank of Orleans, 9 Paige, 663; Van Epps v. Van Epps, Id. 237; Hawley v. Cramer, 4 Cow. 736; Bostick v. Adkins,3 N.Y. 53. * * * The precise case of one person assuming to act as the agent of both parties has been considered as within the rule. Copeland v. Mercantile Ins. Co., 6 Pick. (Mass.) 198; Story on Agency, § 211; Paley on Agency (by Dunlap) 33, and note 3; Ex parte Bennett, 10 Ves. 381."

In Blood v. Le Serena L. W. Co., 113 Cal. 221, 41 P. 1017, 45 P. 252, the court say:

"That a broker cannot represent both parties to a contract of sale, in which discretion, judgment, and skill had to be exercised by him, unless they have knowledge of his double capacity, and consent to be so represented, and that a party led unwittingly into a contract by means of such double agency may avoid the contract by methods suitable to the circumstances of the case are propositions not to be denied. Empire State Ins. Co. v. Am.Cent. Ins. Co., 138 N.Y. 446, 34 N.E. 200, and cases cited;Cassard v. Hinman, 6 Bosw. (N.Y.) 8; Hunsaker v. Sturgis,29 Cal. 142; Davis v. Rock Creek Co., 55 Cal. 359, 36 Am. Rep. 40."

In Black v. Miller, 71 Ill. App. 344, the court, quoting approvingly from Story on Agency, § 211, says:

"Hence, it is well settled that an agent employed to sell cannot become the purchaser, and an agent employed to buy cannot himself be the seller. And upon the same principle it is held that a contract, made by one who acts as the agent of both parties, may be avoided by either principal. * * * 'The question in such cases does not turn upon the point whether there was an intention to cheat, or whether the purchaser has suffered an injury. It is upon the ground of public policy that the law declares such a purchase fraudulent. * * *' And for that reason our Supreme Court has repeatedly held that an agent cannot, either directly or indirectly, have an interest in a sale of property of his principal which is within the scope of his agency, and that it is immaterial in such case that no fraud was actually intended."

Mechem on Agency, § 66, says:

"An agent owes to his principal a loyal adherence to his interests, and it would be fraud upon the principal, and would contravene the public policy, to permit an agent, without the full knowledge and consent of his principal, to enter into a relation involving such a duty, when his allegiance had already been pledged to one having adverse interests. * * *" (Citing authorities.)

It follows that the decree of the lower court must be affirmed, and it is so ordered.

All the Justices concur.