Thе minor beneficiaries of three trust Agreements have appealed from a judgment denying recovery against a real estate brdker for breach of fiduciary duty.' • '■
The facts may be summarized from the findings of the trial court. In 1957, Juan Iriart, owner of the forty acres of land involved, conveyed the land to trustees for his minor daughters. Mr. Iriart had been trying to sell the land for $1500 per acre. Aft,er conveyance to the trustees, Iriart- continued to deal with the property as -his own, including its listing for sale in his name and its assessment for taxes in his name. -Defendant Johnson, an Albuquerque, realtor, discovered the land from the tax rolls and secured a listing on it from Mr. Iriart for $70,000. Johnson and his employee, Pierce, decided that Pierce would buy it, and through Johnson offered Iriart $60,000, payable $5,000 down and the balance in monthly payments without interest. . Th.e Iriarts accepted the offer. The existence of thе trust was not disclosed to Johnson. During the course of the proceedings, Johnson advised Mrs. Iriart, who in turn told her husband, that he was the actual purchaser and that Pierce was only a “straw man” in order “to make the papers legal.”
A subsequent title examination revealed the deed to the trustees, and Johnson thereupon requested their approval of the bindér agreement which was given after their. coiF sultation with the Iriarts. The transаction was closed and some nine months later John-! son sold the land for $160,000. The Iriarts’ trustees took a passive attitude at'all times (actually took no active part in the management of the land). This action agаinst Johnson was brought by Mrs. Iriart, as next friend of the minor beneficiaries, demanding rescission of the deed from the trustees to Johnson, or, in the alternative, for the profit made by Johnson.
A broker is a fiduciary, holding a position of grеat trust and confidence, and is required to exercise the utmost good faith toward his principal throughout the entire transaction. Thus, one employed as a real estate broker to purchase property for another is prohibited from purchasing it for himself, Mitchell v. Allison,
A fact is relevant if it is one which the agent should realize would be likely to affect the judgment of the principal in giving his consent to the agent tо enter into the particular transaction on the specified terms. Hence, the disclosure must include not only the fact that the agent is acting on his own account (see § 389), but also all other facts which he should rеalise have or are likely to have a bearing upon the desirability of the transaction from the viewpoint of the principal. This includes, in the case of sales to him by the principal, not only the price whiсh can be obtained, but also all facts affecting the desirability of sale, such as the likelihood of a higher price being obtained later, the possibilities of dealing with the property in another way, and all other matters vahich a disinterested and skillful agent advising the principal would think reasonably relevant.” (Emphasis added.) “ * * *
We do not reach Johnson’s very interesting contention that because the Iriarts, by their continued active management of the real estate, including their activity in the sale, with full knowledge and consent of the trustees, acted as agents of the trustees and, consequently, their knowledge that Johnson was the actual purсhaser was the knowledge of the trustees. This is so because the trial court found that in addition to the question of whether the trustees knew that Johnáon was the real purchaser-, other' breaches ’of hi's fiduciary relatiоnship oc-' curred:
“20. Competent realtors testified that the fair market value of the land in question in January of 1958 was in the . neighborhood of $1,500 an acre, or a total of $60,000., While some adjacent land, and land in northeast Albuquerque, where subject land is situate, sold , at about the same time and later in 1958 for much greater prices per acre, the market had been slow and was just picking up in early 1958. Likewise, most of the properties offered as having produced greater prices per acre had individual features that could have affect.ed the price, as better street connections, closer. utilities, or equivalent advantаges. Nevertheless, Johnson failed to disclose to the Trustees or to the Iriarts considerable information that he had concerning, the general real estate market in northeast Albuquerque, or what might be considered . to be the fair market value of property in that area.”
We think the trial court was in error in concluding that notwithstanding the broker’s failure to make full disclosure concerning the fact that he was -the purchaser in fact and his failure to disclose to his principal facts- within his knowledge concerning land values and market prices, such violations of his duty as a broker were of no'consequence because the trustees and the beneficiaries received the full market value of the land as of the date of its. transfer. Perhaps the trustees would have sold to Pierce even if they had known the facts concerning land values and mаrket prices which Johnson failed to disclose fo them, but that is not the controlling consideration. Neglect to communicate to his principal all facts which might influence the principal’s action renders the broker liable to his principal. Canfield v. With, supra; Schepers v. Lautenschlager,
The record discloses that this real estate was sold to a subdivider so thаt the property could not be reconveyed. However, the plaintiff is not limited to rescission where that remedy is inadequate, as here, but may recover damages for the broker’s wrongful acts. Mitchell v. Allison,
We are not persuaded by defendant’s argument that this action must fail because, legal title to the property being in the trustees, the beneficiaries cannot maintain an action at law with respect to it against third persons. Rule 17(a) of the Rules of Civil Procedure (§ 21-1-1(17) (a), N.M.S.A.1953) requires every action to be prosecuted in the name of the real party in interest and continues:
“ * * *; but an executor, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in his own, name without joining with him the party for whose benefit the action is brought; * *
The enumeration is in the form of a “but” clause, and while an' inference may be drawn that the right to maintain an action is limited to those enumerated, unless such fiduciary is derelict in his duty, the courts have nevertheless generally adopted the construction that such enumeration does not qualify but merely supplements the statement that the action shall be brought in the name of the real party in interest and thus also makes those enumerated real parties in interest within the meaning of the rule. 3 Moore’s Federal Practice (2d Ed.) pp. 1365-66. Statutes having similar provisions have been construed to permit a suit on a contract mаde for the benefit, of another to be brought by either the trustee or the beneficiary. Rogers v. Gosnell,
The trial court was wrong as a matter of law in finding that Mrs. Iriart, as mother and next friend of the minor beneficiaries, was guilty of laches because of her delay in bringing this action for a period of eighteen months with knowledge that Johnson was the real purchaser. This action is not one by Mrs. Iriart, but actually by the trustees and the minor beneficiaries who, beсause of infancy, must institute an action by their guardian or next friend, §21-1-1(17) (c), N.M.S.A.1953. The defense of laches is predicated upon the doctrine of estoppel, Sharpe v. Smith,
A commission paid to the broker employed to sell real estate is treated as a profit and may be recovered back by the principal. 4 Scott on Trusts, 2d Ed., § 502.
It follows that the case must be reversed with instructions to vacate the judgment and to proceed in'a manner not inconsistent with this opinion.
It is so ordered.