147 Iowa 270 | Iowa | 1910
The negotiations between the parties leading up to the contract for commissions on which plaintiffs sue commenced with the sending of a circular letter by plaintiffs to defendant exploiting a scheme "for securing the insertion in newspapers of advertisements of defendant’s manufactures, to bé paid for by duebills of defendant issued to the publishers of the newspapers inserting the advertisements, by which duebills the defendant should promise to deliver to the publishers for each advertisement specified quantities of defendant’s manufactures for a cash price to be paid, which was much less than the price at which the article was offered on the market. The material parts of this circular were as follows:
We become a part and parcel of your business when you engage us, interesting ourselves in the making of actual sales — working in harmony and enthusiastically with your selling force. . . . The manufacturer is supposed*272 •to offer each publisher a limited' amount of goods for which the manufacturer agrees to accept as pay for same part cash and part advertising, the cash amount to be a sufficient sum to cover the cost of goods offered, and the difference between the cash amount charged and regular retail price of the goods to represent the six months’ advertising. . . . It is an admitted fact that publishers are always anxious to procure additional advertising, but nowadays it is not an easy task for them to fill the columns of their papers with cash advertisements; consequently they are placed in a position where they look favorably on our duebill proposition which we will admit calls for some extra work on their part in trying to find a buyer for the goods offered. But through us they procure a lot of business that they wouldn’t get in any other way. We know in many instances where publishers have made more money on our duebills than they received for the same amount of space payable in cash. The publisher makes the best kind of salesman, as he is acquainted with every dealer and individual in his section, and being backed by his paper, he has considerable influence that a traveling salesman does not possess. . .» . In order to introduce them [your goods] would you not be willing to offer a limited amount of such goods and agree to accept as pay part cash and part advertising? The cash amount that you name is supposed to be a sufficient sum to cover the cost <Jf. the goods offered, also our commission which we charge the manufacturer for our services. . . The day is past for creating a demand for goods by newspaper advertising alone; by our duebill method the manufacturer has in addition to his advertising being inserted regularly for a term of six months the publisher acting the part of his representative and the goods offered for sale in the town which makes success assured, as they work hand in hand together. We attend to everything by taking upon our own shoulders all ,tAe labor and trouble involved. We design advertisements, and print the duebills. We mark, check, and attend to each advertisement during the period it runs, and keep records and papers at our office for inspection.
The defendant entered into correspondence with the
Within a few months after this contract was entered into, plaintiffs submitted to defendant, as they alleged, copies of one hundred papers in which defendant’s advertisement was contained and contracts signed by the publishers of such papers, in which the publishers agreed to continue the advertisement of defendant according to the duebill plan, and demanded payment for their services and for expenses of electrotypes in the sum of $320. Although defendant, denied in its answer the performance by plaintiffs of their obligations under the contract, there
We think, therefore, that the evidence conclusively showed that the publishers inserted defendant’s advertisements, not in consideration of the privilege which was given them under the duebills, but in part consideration at least of premiums or other inducements offered to them by plaintiffs without defendant’s knowledge and not contemplated in the contract, and the only question which we have to determine is whether this fact showed fraud and concealment on the part of plaintiffs such as to defeat their right to recover their compensation.
It plainly appears that plaintiffs were the agents of defendant for the purpose of procuring advertising, and that they led the defendant to believe that under the due-bill plan the publishers would be entirely dependent for payment for the advertisements upon selling defendant’s manufactures, which they would have the privilege of buying at greatly reduced rates for cash. As a matter of fact, it was not the purpose of plaintiffs to procure the insertion of advertisements for defendant on this sole consideration; but their plan was to procure publishers to insert such advertisements at least for the part consideration of compensation to be given by way of premiums offered by plaintiffs, and the fact that no duebills were ever presented by publishers for defendant’s advertisements would, as it seems to us, conclusively show that the consideration in fact relied upon by the publishers was the advantage of the premiums offered by plaintiffs.
The excuse given by the members of plaintiffs’ firm, as witnesses, for offering premiums to secure the pres
The arrangement which plaintiffs had with the publishers to give them premiums which should serve at least as part compensation — and we think it conclusively appears as sole compensation — for the insertion of the advertisements, was calculated to defeat the material inducement held out to defendant for entering into the arrangement, which was that they should be able to sell to the publishers at a reduced cash price quantities of their manufactures, which should be put on the market by the publishers -and thus make known to the public the merits of such manufactures, and create a demand for them which would bring additional business to the defendant. It is clear, without further argument, that, in thus depriving the 'defendant of a material advantage relied upon by it, the plaintiffs acted in hostility to defendant’s interests and were guilty of a fraudulent concealment. An agent owes to his principal the utmost good faith, and is bound to disclose to him every material fact relating to the conduct of the business intrusted to him.
The facts, as we find them on the record, bring the case clearly within the reasoning adopted in Allen v. Pierpont (C. C.), 22 Fed. 582, and Hofflin v. Moss, 67 Fed.
The judgment of the trial court is therefore affirmed.