Lead Opinion
delivered tlie opinion of tlie Court:
The first question logically to be considered is what effect is to be given the answer of the defendants Davidson & Davidson. Answer under oath having been waived, and the hearing not having been upon bill and answer, the answer is not evidence. Baker v. Cummings, 4 App. D. C. 230, 263; Forrest v. Wardman, 40 App. D. C. 520, 529. See also Conley v. Nailor, 118 U. S. 127, 134, 30 L. ed. 112, 114, 6 Sup. Ct. Rep. 1001; Dravo v. Fabel, 132 U. S. 487, 489, 33 L. ed. 421, 422, 10 Sup. Ct. Rep. 170.
It is insisted, however, that inasmuch as answers to the interrogatories were required to be under oath, they are evidence. In so far as these answers are directly responsive to the interrogatories, the contention is sound, hut it is clear to us that a party, by interjecting statements not called for by the interrogatories, may not thereby render such statements evidence and avoid the danger of becoming a witness. Thus in Dravo v. Fabel, the court, speaking of the answers to the bill, said that they, “being directly responsive to the bill,” were evidence, since answers under oatb bad not been waived. In tlie present case the Davidsons were asked what commission the firm directly or indirectly received on account of the exchange of the properties in question. This question admitted of a categorical answer. Nevertheless, there was interjected into the answer a statement that the $400 paid by Simpson & Sullivan was received “with the full knowledge and consent of Henry Bradley.” To hold that this statement, which was not directly responsive to the question, is evidence, would he to countenance a mischievous practice and make possible in many cases the avoidance of sec.
Inasmuch as a discussion of the facts which were before the court when the motion of the defendants that the bill be dismissed was granted will be determinative not only of the question whether the ruling’ was right, but also of the question whether the plaintiff was guilty of ladies, and the related question whether she had a complete and adequate remedy at law, we now will consider that evidence. That the Davidsons occupied a confidential relationship towards their uncle clearly appears. That he relied, and had a right to rely, upon their representations and advice generally in making real estate investments in the District is equally certain. They made all their uncle’s investments, had authority to-take his notes out of bank and substitute now ones for them, and generally, according' to the express admission by one of the members of the firm, he accepted the firm’s judgment. These facts are very material, and must be kept in mind in the consideration of the evidence concerning the particular transaction here under review. Mr. Bradley owned this dwelling house free of encumbrance, and, under the evidence, we must assume it to have been worth about $12,000. 1 le received a letter from one of the Davidsons in which the statement was made that the firm had been offered “a very attractive apartment house * * * renting at $6,000 per annum,” and that “we would like you to see it, as wo think you would get from $1,000 to $1,500 a year net out of the property.” A few days thereafter the same nephew wrote his uncle that if he (the nephew) owned ■the Columbia Hoad
Notes (trust notes)
House
$47,000
This shows that the Davidsons were representing to Mr. Bradley that he would be paying $ (-7,000 for the apartment house, and inferentially, of course, representing that it was of that value. If is true that Mr. Bradley came to Washington and inspected the apartment house, but he inspected it with one of the David-sons, whom he had a right to assume was representing him and no one else in the transaction. The exchange was effected and Mr. Bradley' deeded away his unencumbered house, the value of which thus had been fixed by the Davidsons at $12,000, and received therefor an apartment house which, under the evidence, we must find was encumbered for about all it ivas worth. Mr. Bradley was injured within a very little time after this exchange was made, and his death resulted soon thereafter. His will was admitted to probate, but, as appears from the testimony of John C. Davidson, there was a contest over the will, which had not been settled in 1918.
When the trust notes came due in the spring of 1912 Mr. Bradley’s will ivas in litigation, hut a representative of Mrs. Bradley interviewed the Davidsons with reference to a renewal of those notes, and, as averred in the bill and admitted in the answer, the property was sold at public and ion for the amount of the indebtedness thereon. When asked by the court as to the relevancy of this evidence, counsel for plaintiff stated: “'This is when we discovered the fact the property was not ivliat it was represented to be.” It further developed that the income from the apartment house was less than it was represented to he at the time of the exchange, but it ivas not until the answer of these defendants was filed that plaintiff could have felt sure that thei-r representations as to the value of the apartment house and the advisability of the exchange were not made in good
It thus appears from the evidence that was before the court when this bill was dismissed, that agents sustaining a confidential relationship to their principal, who was paying.them for and entitled to their services and advice, grossly betrayed their trust by secretly representing the other party. Said this court in Mannix v. Hildreth, 2 App. D. C. 259: “Any attempt to occupy the relation of agent to two persons whose interests conflict, whether with or wdthout notice to them, is to be condemned as contrary to good morals and the principles of equity.” In Rawlings v. Collins, 36 App. D. C. 72, 77, this court, speaking through Mr. Justice Van Orsdel, said that “the principal will be protected against any concealed, undisclosed action on the part of the agent, whereby the agent or anyone whom he secretly represents may secure an unfair advantage or occupy a position where a possible fraud might be perpetrated. * * * This is especially true where the agent and the purchaser are either the same person or acting in collusion.” Again, in Fox v. Patterson, 43 App. D. C. 484, 493, this court said: “Instead, therefore, of Mr. Fox being in a position to act solely in the interest of Mrs. Fatter son, he had secretly assumed a position antagonistic to her. Stick, conduct cannot be too strongly condemned, and where it has occurred the principal may repudiate the entire transaction and enforce reparation for losses sustained.” In that case Fox was the agent and u^as compelled to make good the damages resulting from his lack of good faith. In Forrest v. Wardman, 40 App. D. C. 520, which
These adjudications settle beyond poradventure the right of the plaintiff to have the transaction under consideration set aside and the Columbia Iioad property restored to her if that now' may he done, and, if that is not possible, to fasten upon the apartment house owner a role thus far assigned to the straw man O’Neil, liability in damages for losses sustained.
Nor do we think there is any doubt, under the evidence before us, as to the liability of the Davidsons for the damages resulting from their breach of faith. In the Fox Case the agent was compelled to respond in damages because, as here, he secretly had assumed a position antagonistic to his principal, and injury had resulted therefrom. That case involved an exchange of properties, and it appeared that Fox secretly had acquired an interest in the property wdiich wTas to be taken in the exchange by bis principal, but the basis of our ruling was bis breach of trust which, as here, resulted in a total loss to his principal. The legal result is the same, -whatever may be the fruit of the agent’s double dealing. Tlie degree of his success or the particular means employed to effect his ulterior purpose cannot change the character of that purpose or afford the wrong
The suggestion, in the answer of the Davidsons, that it is a custom in this District “in cases of exchange óf properties to divide the commission between the two brokers,” may be summarily put out of view, for the reason that no custom will be permitted to override a positive and salutary rule of public policy.
It requires no citation of authorities to demonstrate that this peculiarly is a case for a court of equity, where all the facts may be brought to light, and, if the evidence warrants, the transaction may be set aside or those responsible for the wrong-may be required to respond in damages. To us it is perfectly clear that an action at law would not have afforded this plaintiff adequate relief. “The jurisdiction in equity attaches unless the legal remedy, both in respect to the final relief and the mode of obtaining it, is. as efficient as the remedy which equity woidd
Nor do we find any greater merit in the defendant s’ contention that plaintiff was guilty of laches. It is a familiar rule that the period of delay or neglect necessary to constitute laches varies with the peculiar circumstances of each case, and, unlike Hie Statute of Limitations, is not subject to an arbitrary rule. “It is an equitable defense, controlled by equitable considerations, and the lapse of'time must be so great, and the relations of the defendant to the rights such, that it would he inequitable to permit the plaintiff to now assert them.” Halstead v. Grinnan, 152 U. S. 412, 417, 38 L. ed. 495, 497, 14 Sup. Ct. Rep. 641. In George v. Ford, 36 App. D. C. 315, 333, this court, speaking through Air. Chief Justice Shepard, said: “So great is its abhorrence of fraud and the violation of fiduciary obligations, that a court of equity will look with some indulgence upon mere delay, from which no material injury has resulted.” See also Lewis v. Denison, 2 App. D. C. 387, 391; Baker v. Cummings, 4 App. D. C. 230, 273; and Ackerman v. McIntire, 7 App. D. C. 443.
In the present case it is averred in the hill, as previously set forth, that some time after the foreclosure of the trusts upon the apartment Al'rs. Bradley “became suspicious of the, character of said exchange and consulted her attorney in regard to the matter, and that, after an investigation of the same, plaintiff says that, upon information and belief, she recently discovered and therefore avers and charge's upon information and belief” the facts upon which she asks for a decree. Under rub' 30 of the equity rules of the Supreme Court of the United States, which of course are controlling in this jurisdiction, “averments other than of value or amount of damage, if not denied, shall he deemed confessed.” It, therefore, was incumbent upon tb(' defendants to make answer to the above averments of plaintiff's bill, and this they did not do. In other words, if the defendants were aware of any previous knowledge by Airs. Bradley concerning the' acceptance of double commissions by the Davidsons, it was their duty to say so in their answer. The
It is insisted next that, having called John C. Davidson as a witness, plaintiff was bound by his testimony, .and should not have been permitted to cross-examine him. In Dumas v. Clayton, 32 App. D. C. 566, 574, this court said: “In cases like this, it is generally necessary to call and examine the parties to the alleged fraud, and because of their adverse interest they may be treated as witnesses on cross-examination. The object of the right of such cross-examination is to draw out of an unwilling witness all'such circumstances as may tend to establish the perpetration of the fraud. * * * If a witness makes a direct statement, and then discloses circumstances inconsistent therewith, it is for the jury or court to determine what is to be believed.” In other words, while by calling Mr. Davidson as a witness plaintiff waived the right to impeach him in the ordinary manner permitted in cases of witnesses called by the opposing party, it was proper to elicit from the witness by cross-examination all germane facts and. circumstances, to the end that the real situation might be made to appear.
It was error for the court not to compel the testimony of the witness Bust and the other rñembers of the so-called Beal Estate
One other question requires notice. Defendants suggest (hat the suit should have been brought by Mrs. Bradley as executrix. Since she was sole devisee and legatee under her husband’s will, and, according to evidence introduced by defendants, the value of the personal estate wTas more (han $50,000, it could make no difference to defendants whether the suit veas brought in plaintiff's individual or representative capacity. But we think the question is determined by the decision in Webb v. Janney, 9 App. D. C. 41, where it was ruled that a suit in equity to rescind a conveyance of land for fraud must he brought in the name of the heirs at law or devisees of the injured party.
Decree reversed, with costs, and cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.
Dissenting Opinion
dissenting:
I dissent because I believe the action is barred by the Statute of Limitations, and, if not, equity has lost jurisdiction of the Davidsons. Our Code, says that no action of this character “shall he brought after three years from the time when the right to maintain such action shall have accrued.” Sec. 12G5 | 81 Stat. at L. 1389, chap. 854]. The properties involved were exchanged on December 9, 1910, and the representations complained of became effective on that date. This action was not commenced until April 28, 1915, or more than four years after the making of the representations. In equity “where relief is asked on the ground of actual fraud, especially if such fraud has been concealed, time Avill not run in favor of the defendant until the discovery of the fraud, or until, Avith reasonable diligence, it might have been discovered.” Kirby v. Lake Shore & M. S. R. Co. 120 U. S. 130, 136, 30 L. ed. 569, 572, 7 Sup. Ct. Rep. 430. Sec also cases cited therein, and Lewis v. Denison, 2 App. D. C. 387. The obligation to allege and prove the time Avhen tlio fraud was discovered is on the party Avho asserts it. In Wood v. Carpenter, 101 U. S. 135, 140, 141, 25 L. ed. 807-809, it is said: “A party seeking to avoid the bar of the statute on account, of fraud must aver and sIioav that he used due diligence to detect it, and, if he had the means of discovery in his poAver, he aa7ill he held to have known it.” And also: “In this class of cases the plaintiff is hold to stringent rules of pleading and evidence, ‘and especially must there he distinct averments as to the time when the fraud, mistake, concealment, or misrepresentation was discovered, and Avliat the discovery is, so that the court may clearly see whether, by ordinary diligence, the discovery might not have been before1 made.’ * * * ‘This is necessary to enable the defendant to meet the fraud and the timó of its discovery/” See also Hardt v. Heidweyer. 152 U. S. 547, 559, 38 L. ed. 548, 552, 14 Sup. Ct. Rep. 671; Stearns v. Page, 7 How. 819-829, 12 L. ed. 928-932; Moore v. Greene, 19 How. 69—72, 15 L. ed. 533, 534; Beaubien v. Beaubien, 23 How. 190, 16 L. ed. 484; Badger v. Badger, 2 Wall. 95, 17 L. ed. 838; Buckner v. Calcote, 28 Miss. 432-434;
if. lnnvovor, we assume, without allegation or proof, which we may not do. that Mr. Bradley had no knowledge of the fraud, bow is it with the plaintiff, Mrs. Bradley? She signed with him the deed of the Columbia Road property; therefore participated in the exchange. Under the will of her husband, all bis property became hors; hence, the right to maintain this action. The* will was admitted to probate in Maryland February 7, 1911, nearly four years before the inauguration of the present suit. Plaintiff alleges that some time; after April 8. 1912, “she became suspicious of the character of said exchange,” and that “after an investigation * * she recently discovered'’ that the value of the property had been misrepresented. It took ber then, according to this allegation, more than three years to make the discovery. This does not establish much diligence. The allegation, however, is in effect, denied, for the Davidsons in their answer charge laches, and assort that plaintiff’s “'cause of action did not occur within the three years prior to the filing of this suit.'’ But that apart, the allegation is not'sufficiently definite. The Supreme Court of the United States in Wood v.
.Even if her allegation were sufficient, her proof would not sustain it. Her counsel, in the course of the trial, said with reference to April 8, 1912: “This is when we discovered that the property was not what it was represented to he.” Here is a distinct admission that on that date she knew of the fraud. That was more than three years before suit was brought. The answer made to. this is that she did not then know that the Davidsons, Bradley’s agents, had accepted commissions from the other side a2id thereby committed a fraud upon her husband. Forrest v. Wardman, 40 App. D. C. 520; Fox v. Patterson, 43 App. D. C. 484; Mannix v. Hildreth, 2 App. D. C. 259. If this constitutes a part of her cause of action, she is in the same plight touching it as with respect to the misrepresentations. She has neither alleged nor proved that she was not fully aware of it at the time it occurred, and hence has not brought herself within the doctrine of the Wood Case.
Even if it were otherwise, knowledge that the Davidsons had received commission from the other side was not necessary to her cause-of action, and formed no part of it. Her suit is for misrepresentations. If she prevailed, her damages would be compensatory, not punitive. The fact that the misrepresentations were made by an agent who had been guilty of another fraud could not in any way affect the cause of action, or the amount of damages to which she would bo entitled. Fraud in fact is not essential to actionable misrepresentations. “Whether the party thus misrepresenting a fact knew it to be false, ór made the- assertion without knowing whether it were
After her husband’s will was admitted to probate, a caveat was filed against it. Long litigation followed. Finally appellant succeeded. It is said that while the prohate contest was pending she could not bring action against the Davidsons, because her right to do so came to her from the will, and that was in question. There are two answers to this. In the first place, under the laws of Maryland where the prohate contest was tried, the fact that a caveat had been filed, and the validity of the will thereby drawn into question, did not prevent her as sole executrix from suing to conserve the estate. Munnikhuysen v. Magraw, 35 Md. 280; Pacy v. Cosgrove, 113 Md. 315, 77 Atl. 1114. Even if this were not true, the statute was not suspended bv the litigation, because there is no provision in our Statute of Limitations which says so. The statute makes several exceptions, but that is not one of them. Since it is not, we have no right to read it into the statute. Many years ago it was said by Chancellor Kent: “The doctrine of any inherent equity creating an exception as to any disability, where the Statute of Limitations creates none, has been long, and, I believe, uniformly exploded.” Demarest v. Wynkoop, 3 Johns. Ch. 142. The same view is expressed in dille rent language by the supreme court of California in Tynan v. Walker, 35 Cal. 634, 95 Am. Dec. 152. “The clause,” said the court, “ ‘after the cause of action shall have accrued,’ does not, in our judgment, imply, in addition, the existence of a person legally competent to enforce it by suit. * * * Obviously, if the term Tight of action’ implies the existence of a person competent to commence an action, there was no occasion for special provisions relieving persons not competent from the operation of the statute.” This language is applicable to our statute. Considered, therefore,
But if it were not, the ease would have to be affirmed because equity lost jurisdiction over the Davidsons. The bill, as we have seen, charged that they misrepresented the value'- of the apartment house and induced Bradley to exchange his property for it; that, while acting as Bradley's agent, they secretly and fraudulently served as the agents of O’Neill, or the real owner of the apartment house, and were paid commissions by him or the real owner; that O’Neill was a straw man used by them as a channel to secure for their own use the Columbia Road property; that when O’Neill paid the commission he and those, representing him knew that the Davidsons were the agents of Bradley, and that, by reason of the fraud alleged, the Davidsons obtained for their own use the Columbia Road property, or an interest in the same, or a cash consideration in lieu thereof. I f the allegations that the Davidsons by fraud had acquired an interest in the property were true, equity would have jurisdiction- for the purpose of effecting a reconveyance and an accounting. The Davidsons, however, deny that they ever acquired the Columbia Road property or any interest therein, and no one testifies that they did. Nor did they have any interest in the apartment house. "When counsel for plaintiff was interrogated by the court as to whether he would endeavor to establish that they had, he answered: “I am not going to off er any testimony upon that point. I am going to rely upon this situation that they got a commission of $400 from the other side. * * * They necessarily had an interest in the Fillmore apartment to the extent of $400.” We cannot assent to this. Proof that the owner corrupted the Davidsons by paying them a commission was not proof that they had an interest in the property.
It was said that they were in combination with O’Neill, or the real owner, to the end that they might secure the title, and that since equity has jurisdiction ovOr O’Neill for the purpose of ordering a reconveyance and an accounting, if necessary, it also has power over the Davidsons. But there is no proof of any combination whatever between them and O’Neill. The
In saying this I do not forget the principle that, where equity has jurisdiction for one purpose, it will retain it for all purposes necessary to do full justice to the parties. It is also true that, where the equity asserted fails, the court will not retain
It is said that it was necessary for the plaintiff to go into equity for the purpose of discovering that the Davidsons had received commissions from both sides. If the fact that the plaintiff desired to obtain information from her opponents entitled her to maintain an equitable action against them, where otherwise she would have to proceed at law, it would be in the power of every plaintiff to make his action one cognizable in equity, and thereby deprive the defendant of his constitutional right to a trial by jury. Manifestly, this is not the law.
A court of equity will always punish fraud with an unsparing hand when the subject is properly before it, which is not the (¡ase here. If the plaintiff over had a cause of action against the Davidsons, a matter about which I express no opinion, it was in .law, not in equity; and were it not for the bar of the statute, the case should be reversed, with directions to the. lower court to permit the plaintiff, if so advised, to transfer her cause
A motion for a rehearing was denied February 25, 1918, but the decree was amended so as to remand the cause for a new trial. •