Lead Opinion
At the times relevant to these appeals, Rudolph Johnson was the sole shareholder of Johnson Realty, Inc., and his son, Michael Johnson, was employed by the company as a real estate agent. Michael Johnson inquired of Byron Hand whether he wished to sell certain property. Hand responded that he would be willing to sell his property for a specified net price. Shortly thereafter, Michael Johnson returned with a sales contract which he presented for Hand’s acceptance. The sale price was sufficient to net to Hand the amount that he had specified. Michael Johnson did not disclose, however, that the purchaser who was named in the sales contract was his own father-in-law. Hand signed the contract.
When Hand arrived at the closing, he was informed that the purchaser named in the sales contract could not be present. Instead, Michael Johnson’s wife, Mrs. Rae Johnson, was present and prepared to “sit in” for the absent purchaser. According to Hand, there was again no disclosure that the absent purported purchaser was Michael Johnson’s father-in-law. Hand agreed to the transfer of title to the property to Rae Johnson and she, in turn, subsequently did convey the property to her father. Shortly after title to the property had been transferred from his wife to his father-in-law, Michael Johnson was successful in his efforts to sell the property to a third party for a price that was significantly greater than that which Hand had been paid. A
When Hand learned that the property had been resold for a price greater than he had been paid, he brought this action against Johnson Realty, Inc., Rudolph Johnson, Michael Johnson and Rae Johnson. It was alleged that Michael Johnson had breached the duty owed to Hand as Hand’s agent for the sale of the property. See Kellett v. Boynton,
Case No. 76958
In this case, Michael Johnson appeals from the judgment entered on the jury’s verdict against him and in favor of Hand.
1. Michael Johnson enumerates the general grounds.
“The law is uniform and well settled that an agent, who has been engaged to sell real estate for the owner, may not, either directly or indirectly, purchase it himself, without the express consent of the principal after a full knowledge of all the facts. This is so declared by our Code, [OCGA § 10-6-24].” Dolvin Realty Co. v. Holley,
It follows that, although the evidence would not demand a finding that Michael Johnson had breached the duty he owed to Hand as Hand’s agent for the sale of the property, it would authorize such a finding.
2. The trial court admitted into evidence testimony and documents relating to the original sales contract presented to Hand wherein Michael Johnson’s father-in-law was named as the purchaser. The admission of this evidence is enumerated as error, the contention being that it was irrelevant because the only sale of the property which actually closed was that to Michael Johnson’s wife.
The original sales contract was clearly relevant to show the initiation by Michael Johnson of an undisclosed effort on his part to earn a secret personal profit on the eventual resale of Hand’s property by first attempting to purchase it indirectly through his father-in-law. “ ‘ “An agent owes to his principal a loyal adherence to his interests, and it would be a 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 been already pledged to one having adverse interests, or when his own personal interests would be antagonistic to those of his principal.” The rule has also been thus stated: “An agent will not be allowed to place himself in a position in which his duty and interest conflict, or be permitted to make a secret profit out of his agency.” ’ [Cits.]” (Emphasis in original.) Spratlin, Harrington & Thomas, Inc. v. Hawn,
3. Over objection, the trial court gave several charges with reference to the rules and regulations promulgated by the Georgia Real Estate Commission. The giving of these charges is enumerated as error.
“Where an agency or commission is granted the authority and power to adopt. . . rules and regulations within the scope of the legislative enactment, such rules and regulations have the same force and effect as that of a statute. [Cit.]” (Emphasis supplied.) Panfel v. Boyd,
Accordingly, the rules and regulations promulgated by the Supreme Court, through its inherent power, and by the Public Service Commission, through its delegated authority from the legislature, supplant the necessity for enactment of statutory provisions with reference to the manner in which the applicable profession is actually to be conducted and, having the same force and effect as the supplanted statutes, those rules and regulations become the controlling legal standards of professional conduct. However, unlike the Supreme Court, the Georgia Real Estate Commission has no inherent power over the real estate profession in this state and, unlike the Public Service Commission, the legislature has not delegated to the Georgia Real Estate Commission plenary quasi-legislative power over the general conduct of the real estate business. The General Assembly has determined that it will retain its legislative power to control the manner in which the real estate business is actually to be conducted, and has granted the Georgia Real Estate Commission only the limited quasi-legislative power to determine who is qualified to practice the real estate business in this state. Pursuant to OCGA § 43-40-1 et seq., the Georgia Real Estate Commission is authorized only to promulgate rules and regulations which are “regulatory in nature. [Those rules and regulations] are limited to action by the Georgia Real Estate Commission in the exercise of its licensing powers.” Campagna v. Sara Hudson Realty Co.,
The present case involved no regulatory issue concerning licensing. Compare Diversified Holding Corp. v. Clayton McLendon, Inc.,
4. Over proper objection, the trial court admitted into evidence a collection of checks written on the account of Jonesboro Plaza, Inc. Hand apparently owned this corporation and the corporation in turn owned a small shopping center. Johnson Realty, Inc., managed the shopping center and, in its capacity as manager, was authorized to write checks on the Jonesboro Plaza, Inc., checking account.
It appears that the management by Johnson Realty, Inc., of the shopping center had no relevancy to any issue involved in the trial of
5. The trial court did not err in charging the provisions of OCGA § 10-6-24 to the jury. As discussed in Division 1, the principle of law enunciated in that statute was clearly applicable under the evidence.
6. The trial court did not err in charging the jury on the principles of law regarding confidential relationships. As discussed in Division 1, those legal principles were clearly applicable under the evidence.
7. The trial court gave the following charge: “Misrepresentation of a material fact made wilfully to deceive or recklessly without knowledge and acted on by the opposite party or made innocently and mistakenly and acted on by the opposite party constitutes legal fraud.” (Emphasis supplied.)
The charge states a correct abstract principle of law. See OCGA § 23-2-52. In its emphasized portion, however, the charge relates to the principle of constructive fraud and that principle has no applicability to the fraud claim for damages asserted by Hand in the present case. “To establish the tort, which was the fraud, actual fraud must be shown and constructive fraud will not suffice. [Cit.]” Southeastern Greyhound Lines, Inc. v. Fisher,
In the present case, Hand was not seeking the equitable relief of rescission of the contract, and he was neither suing on the contract nor defending against an action on the contract. Hand was asserting the tort of fraud and deceit. Accordingly, the applicable legal issue under the pleadings and the evidence was whether Michael Johnson, as agent for the sale of Hand’s property, had committed actual fraud by failing to disclose a material fact in connection with that transaction. “ ‘Where a person sustains toward [another] a relation of trust and confidence, his silence when he should speak, or his failure to disclose what he ought to disclose, is as much a fraud in law as an actual affirmative false representation. [Cit.]’ [Cit.]” Sutlive v. Hackney,
Hand urges that, although an objection to the charge was raised below, this particular ground was not preserved for appellate review or that, if the objection below was sufficient, any error in giving the charge was harmless. However, any consideration of the adequacy of the objection below, the question of harm vel non, or of the applicability of OCGA § 5-5-24 (c) would have no bearing on the ultimate disposition of this case. Since the judgment must be reversed on grounds which have been previously discussed, we need not determine whether the giving of this erroneous charge on constructive fraud constitutes an independent basis for reversal. The charge was erroneous and should not be given in the retrial of this case.
8. There was no error in admitting documentary evidence over an objection which was subsequently withdrawn.
9. There was no error in the giving of a charge to which no timely objection was raised in the trial court.
10. For the reasons given in Divisions 3 and 4, the trial court erred and a new trial must be held.
11. Remaining enumerations of error relate to the admission of evidence and the giving of jury instructions regarding Hand’s OCGA § 18-2-22 claim. These enumerations need not be addressed. The jury returned a verdict against Hand as to this claim and he has filed no appeal from the judgment entered on the jury’s verdict. Accordingly, the OCGA § 18-2-22 claim will not be an issue at the retrial of the case.
In this case, Johnson Realty, Inc., appeals from the judgment entered on the jury’s verdict against it and in favor of Hand.
12. The trial court did not err in admitting into evidence testimony and documents concerning the original sales contract presented to Hand wherein Michael Johnson’s father-in-law was named as the purchaser. See Division 2.
13. The trial court erred in admitting testimony concerning the rules and regulations promulgated by the Georgia Real Estate Commission and it also erred in giving any charge which was predicated upon those rules and regulations rather than upon the applicable principles of the law of agency. See Division 3.
14. The trial court’s giving of a charge on the principle of ratification is enumerated as error. Johnson Realty, Inc., urges that the charge was erroneously given because there was no evidence which would authorize a finding that it had ratified the acts of Michael Johnson in connection with the sale of Hand’s property.
It would appear that there was no evidence which would authorize a finding of Johnson Realty, Inc.’s ratification of the acts of Michael Johnson. Under the evidence, however, Johnson Realty, Inc.’s legal liability would not be dependent upon its ratification of the acts of Michael Johnson. “ ‘Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.’ [Cits.]” (Emphasis supplied.) Greene v. Golucke,
Accordingly, the trial court did err in charging-the jury on the inapplicable principle of ratification. The error was, however, beneficial to Johnson Realty, Inc. The jury was erroneously instructed that Johnson Realty, Inc.’s liability was dependent upon its subsequent ratification of Michael Johnson’s unauthorized acts rather than upon its initial capacity as Michael Johnson’s master.
15. Johnson Realty, Inc. enumerates as error the trial court’s failure to give the following request to charge: “[W]hen an agent ceases to act for his principal and begins to act in his own interest, and to the detriment of his principal, then any knowledge that the agent may have gained is no longer imputed to his principal.”
The charge states an abstractly correct principle of law. See OCGA § 10-6-59; Pursley v. Stahley,
16. The trial court’s refusal to give the following request to charge is enumerated as error: “I charge you members of the jury that [Hand] contends, among other things, that Michael Johnson was acting in the capacity of a ‘dual agent.’ I charge you that in Georgia, the theory of dual agency does not apply if . . . Hand knew of Michael Johnson’s interest in the transaction.”
Assuming without deciding that the refused request was a correct statement of the legal concept of dual agency (but see Spratlin, Harrington & Thomas, Inc. v. Hawn,
17. Over objection, the trial court allowed one of Hand’s expert witnesses to give an opinion in response to a hypothetical question. This evidentiary ruling is enumerated as error.
As propounded, the hypothetical question had assumed, as one of its factual predicates, the presentation to Hand of the original sales contract wherein Michael Johnson’s father-in-law was named as the purchaser. According to Johnson Realty, Inc., that original contract was not relevant to any issue in the case and it objected to the inclusion of the presentation of that contract to Hand as one of the elements of the hypothetical question. As discussed in Division 2, however, evidence concerning the original contract was properly admitted as against any objection to its relevancy. Accordingly, the trial court did not err in allowing the expert witness to answer the hypothetical question which had assumed, as one of its factual predicates, the existence of a relevant fact which was properly in evidence. “The opinion of an expert witness may be given in response to a hypothetical question based on facts placed in evidence either by the testimony of other witnesses or by competent evidence of any nature.” Mutual Benefit Health &c. Assn. v. Hickman,
18. There was no error in admitting documentary evidence over an objection which was subsequently withdrawn.
19. For the reasons discussed in Division 13, the trial court erred and a new trial must be held.
Case No. 76959
In this case, Hand appeals from the judgment entered on the jury’s verdict returned in favor of Rudolph Johnson.
20. Hand enumerates as error the failure to grant his motion for a directed verdict as to the vicarious liability of Rudolph Johnson, in his personal capacity, for the acts of Michael Johnson.
Rudolph Johnson was the sole shareholder of Johnson Realty, Inc. Michael Johnson was employed by the corporation, and not by his father. Accordingly, Rudolph Johnson could not be held vicariously liable for the acts of his son unless the evidence authorized a finding that the corporate veil of Johnson Realty, Inc. should be pierced. See generally Jenkins v. Judith Sans Intl.,
Hand relies upon the provisions of OCGA § 43-40-1 et seq. as authority for holding that Rudolph Johnson is vicariously liable for the acts of his son without regard to the concept of piercing the corporate veil. As previously discussed, however, those provisions are merely regulatory in nature and do not have the effect of changing the substantive law applicable in a civil action to recover for a real estate agent’s alleged misconduct. See Campagna v. Sara Hudson Realty Co., supra. Nothing in OCGA § 40-43-1 et seq. obviated the necessity for Hand to pierce the corporate veil of Johnson Realty, Inc. in order to recover against Rudolph Johnson in her personal capacity. The trial court correctly denied Hand’s motion for a directed verdict as to the vicarious liability of Rudolph Johnson for the acts of Michael Johnson.
Judgments reversed in Case Nos. 76956 and 76958. Judgment affirmed in Case No. 76959.
Concurrence Opinion
concurring in part and dissenting in part.
I concur fully except with regard to Divisions 3 and 8, involving Michael Johnson’s appeal, case no. 76958, and Division 13, involving Johnson Realty, Inc.’s appeal, case no. 76956.
These divisions relate to court charges in connection with the Georgia Real Estate Manual and testimony about it. Michael Johnson enumerates as error the giving of four charges, three regarding the Georgia Real Estate Manual and one regarding the Georgia Real Estate licensing law. He also enumerates the admission of the manual into evidence. Johnson Realty joins Michael Johnson in enumerating as error the admission of the manual and the giving of the charge in
As to the admission of the document, objections were withdrawn and consequently the issue dissolved and the manual was admitted into evidence. About this appellants cannot complain, having acceded.. The majority addresses the court charges in Division 3, and both the charges and the testimony in Division 13. In order to properly consider the charges and testimony, we must understand what the manual is and the limited purpose for which it was offered and, in obedience to the court’s charge, used.
The manual was published by the Georgia Association of Realtors, Inc., under authorization of the Georgia Real Estate Commission, a statutory agency which regulates the profession. OCGA § 43-40-2. The foreword, by the Commission, states that “[t]he Commis- ’ sion is responsible for preparing the contents of the manual.” It also states that, in addition to its being a preparatory aid for license examination, “[t]he Commission also intends that current licensees may utilize the contents of this manual as an aid to legal and ethical brokerage activity.” A caveat is added to warn that it is not intended as a substitute for legal advice or service. The manual contains Title 43 Chapter 40 of OCGA (the licensing law), the Rules and Regulations (Chapters 520-1 through 520-5), and procedures and explanatory notes regarding various aspects of the real estate practice.
The court charge about which both Michael Johnson and Johnson Realty complain, and which is controlling here, states:
“I charge that a person holding a Georgia real estate license may not be sued for his failure to comply with statutes governing real estate brokers, but those statutes set out the relevant standards and may be referred to in determining whether the broker has violated or fulfilled his fiduciary duties.” Thus the court limited the use to which the jury could put the manual. Plaintiff had introduced this docu-" mentary evidence and the testimony in connection with it for the limited purpose of serving as a guideline of the minimum standards in the real estate profession.
While of course a great portion of the manual is not relevant to the standard of behavior required of Michael Johnson and Johnson Realty in dealing with Hand, the objections go to the heart of the relevancy of any of it to this issue. Since the court expressly circumscribed the use of it to what was relevant, there was no harm in admitting the whole thing so as to provide the context.
“Where evidence is offered and objected to, if it is competent for any purpose, it is not erroneous to admit it. [Cits.]” Gordon v. Gordon,
Much of the dispute here involved the fiduciary relationship between plaintiff and defendants and the duties of each of the latter to him in their professional capacity. At issue was whether each had lived up to the standards of the profession in dealing with plaintiff, or whether they had violated their professional standards and in addition committed fraud. In aiding the jury to determine what the professional standards were, the minimum standards required by the agency which regulates the profession would be relevant albeit not determinative.
Just as expert testimony on the subject would aid in giving the jury a measuring stick, so would the law, rules and regulations, and practices outlined in the manual for the proper practice of the profession. It would be akin to evidence of custom in the trade. See City of Macon v. Yaughn,
The minimum standards set by the law and the agency are not recognized in law “solely for the regulatory purpose of licensing,” as ruled by the majority. As quoted from Campagna v. Sara Hudson Realty Co.,
The agency is empowered to “do such acts and things as may seem advisable to the commission in the advancement of the profes
“ ‘Questions of relevancy of evidence ... are for the court, and in the absence of an abuse of judicial discretion, this court will not interfere. [Cit.]’ ” Wages, supra at 15. There was no abuse of discretion in applying OCGA § 24-2-1 as it relates to the testimony concerning the manual, which document was in evidence, particularly in light of the limiting instruction. The charge on the subject was proper and did not supplant but rather supplemented the court’s extensive charges on the principles of agency.
Since I find no error in the matter ruled upon in Division 13, I dissent to the reversal of the judgment against Johnson Realty, Inc., Case No. 76956.
I am authorized to state that Judge Pope joins in this opinion.
Concurrence Opinion
concurring specially.
The dissenting opinion relies to a great extent on the case of Gordon v. Gordon,
I concur in Divisions 1, 3, 4, 5, 6, 9, 10, 11, 12, and 14 through 18 and in the judgment of the majority opinion.