34 Barb. 276 | N.Y. Sup. Ct. | 1861
Lead Opinion
The facts of this case, so far as they are necessary to be understood to present the question of law arising from them, are very few, and without dispute. They rest in part upon documentary evidence, and in part upon testimony which is unimpeached and uncontradicted. They are embraced substantially in the following brief statement. In January, 1857, the defendant was the owner of a number of shares of the Oswego River Starch Company, and the
What occurred subsequently it is unnecessary, in view of the question presented by the case, to allude to. It is only requisite to state that the defendant did not in fact purchase any stock from the company, or from any outside party, but caused 10 shares of his own stock to be transferred jfco the plaintiff ; that he did not communicate this fact to the plaintiff,
Upon the trial, these facts, with others, appeared, and the presiding justice found that the transfer was made in good faith, hy the defendant, believing that the stock was worth the price he received for it, and with no intent to defraud the plaintiff; that upon the facts the plaintiff was not entitled to rescind the sale; and he ordered the complaint to be dismissed, with costs.
It is undoubtedly true that the action in this case is based mainly and prominently upon the theory of an actual fraud perpetrated upon the plaintiff by representations of the value and condition of the stock, made by the defendant, with knowledge of the falsity of such representations. This theory, however, cannot he supported. The evidence wholly fails to connect the defendant with the company in such a way as necessarily to have made him cognizant of its affairs. On the contrary, he had every assurance from the active officers and agents of the concern that they were in a palmy-condition, and I concur entirely in the finding which acquits the defendant of any actual intent to deceive the plaintiff into the purchase of a worthless stock. Granting this, however, the case has another aspect which is clearly stated in the complaint, and sustained by evidence which was received without objection; and upon the case thus made the plaintiff has a right to ask relief, if by the rules of the law he is entitled to it. Upon principles well settled, both here and in England, I think the plaintiff is entitled to call for a rescission of this contract.
The principle I have alluded to as applicable to this case is as well settled upon authority, as it is consonant with the elementary principles of fair and ingenuous dealing among men. In The Utica Insurance Co. v. Toledo Insurance Co., (17 Barb. 132,) this court held that a person cannot act as the agent of both parties in the making of a contract, when he is invested with a discretion, and is bound to exercise his skill and judgment in behalf of each.
It is a fundamental principle, says Justice Allen, applicable to both sales^and purchases, that an agent employed to sell cannot make himself the purchaser, nor if employed to
The English decisions are uniformly to the same effect, especially in reference to transactions between trustees and their cesiuis que trust, and in respect to all employments of a fiduciary character, and, where a special agency is created, the courts exercise a most jealous scrutiny. The case of Gillette v. Peppercorne, (3 Beav. 78,) may be taken as illustrative of the extent of the rule, and as presenting features strikingly analogous to the case at bar. The plaintiff employed the defendant, who was a stockbroker, to buy some canal shares. He apparently bought them of a third party who was the ostensible owner, but who it afterwards turned out held them in trust for the defendant. The court, after tjhe lapse of several years, and without entering into the question of the fairness of the price, held the transaction void upon grounds of public policy. It was insisted in that case that the defendant was not acting in his capacity of broker, or as an agent in any sense, but gratuitously, and as the friend of the defendant; but the master of the rolls said that if that were so, and the act was gratuitous, it made no difference as to the result of the transaction.
Where an agent is employed, he remarked, it is in the
These cases, and the reasons and principles upon which they are founded, are decisive as to the rule which must govern in disposing of the rights of these parties. Without passing upon, or even lo'oking into' the question of actual fraud, the transaction complained of is one that cannot be upheld in the light of the simple and plain duty that every agent, however limited and circumscribed may be his employment, and irrespective of all question of benefit or advantage to himself, owes to his principal.
The judgment must be reversed, and a new trial granted, with costs to abide the event.
Mullin and Morgan, Justices, concurred.
Dissenting Opinion
The question of fraud in fact, was disposed of by the judge at the circuit, and his conclusions, sustained as they are by the evidence, final. The circumstances mainly relied upon by the plaintiff, to wit, that the stock transferred was the property of the defendant, aqd was not a purchase by him from a third person for the plaintiff, as the latter supposed, would have been an important item, in the evidence to establish actual fraud, had there been any evidence of fraudulent intent, or any circumstances upon
The only ground upon which the plaintiff can hope to succeed, is that which was mainly taken by his counsel upon the argument, to wit, that the defendant, in acting for the plaintiff in the transaction, could not at the same time act for himself, as that would be to act as buyer and seller of the stock; that having as buyer represented the plaintiff, and as seller acted for himself, the sale is void. The law of agency is well settled, and the principles contended for are well established and elementary. But to make them applicable, an agency must be shown. It must appear that the defendant was employed, with or without compensation, to do some act for the plaintiff in which a trust or confidence was reposed in him and in his discretion, and in the performance ,of which his judgment was called into action, and his duty to the plaintiff was inconsistent with his own interest, as the other party to the transaction. The negotiation was concerning the purchase by the plaintiff of ten shares of the capital stock, one share in which was worth as much as any other share. The price was agreed upon by the plaintiff, upon being told by the defendant the price at which the ten shares could be bought. It chanced that the stock which the defendant supposed could be bought by the plaintiff was sold by the holder before the receipt of the letter of the plaintiff directing the purchase; so that there was no alternative on the part of the defendant except to transfer ten shares of his own stock or disappoint the plaintiff, and he chose the former. On the 31st of January, 1857, the defendant wrote
The judgment should be affirmed.
Judgment reversed, and new trial granted.
Bacon, Allen, Mullin and Morgan, Justices.]