Rawlings v. Collins, 36 App. D.C. 72

Rawlings v. Collins

36 App. D.C. 72 | D.C. Cir. | 1910

Mr. Justice Van Orsdel

delivered the opinion of the Court:

It will be observed from an examination of the written agreement that the Frank T. Kawlings Company was acting as agent both for the vendor and vendee; and that, when the defendant approved the instrument as owner of the property, there was no disclosure upon its face of the name of the vendee, and it appears by the evidence that no disclosure was at that time *76made. Subsequently, it was disclosed that tbe vendee was in fact the vice president of the agent company.

It is contended that this instrument, executed under the com ditions above stated, is not such a contract as a court of equity will specifically enforce. It is unnecessary to enter into an extensive discussion of the duty of an agent to his principal under circumstances such as are presented in this case. As this court said in Mannix v. Hildreth, 2 App. D. C. 259 : “An agent’s duty is to obtain 'the best price that he can for his principal, and scrupulously to avoid placing himself in a situation which may conflict with his duty. And any attempt to occupy the relation of agent to two persons whose interests conflict, whether with or without notice to them, is to be com dernned as contrary to good morals and the principles of equity.” In the present case, plaintiff was not only the purchaser, but one of the chief officers of the agent company. This brings the transaction within the condemnation of an ancient and well-established rule of equity. “The rule of equity is, in every code of jurisprudence with which we are acquainted, that a purchase by a trustee or agent of the particular property of which he has the sale, or in which he represents another, whether he has an interest in it or not, — per interpositam personam,■ — carries fraud on the face of it” Michoud v. Girod, 4 How. 503, 11 L. ed. 1076. It is also well settled that specific performance is not a matter of right, and will never be decreed when it is inequitable to do so. Willard v. Tayloe, 8 Wall. 557, 19 L. ed. 501.

Where it appears that an agent in the sale of real estate is acting for both parties, and induced the vendor to approve a contract for the sale of property to an undisclosed vendee, the whole transaction should be scrutinized with the utmost care. Especially is this true where it subsequently develops that the purchaser is one of the chief officers of the agent company.

It is the duty of an agent to disclose fully to his principal every step taken by him in the transaction of the principal’s business. If it be the sale of real estate, he should keep nothing concealed in his efforts to bring the owner and prospective pur*77chaser together. The identity of the purchaser and the true consideration should be instantly disclosed. Under such circumstances the courts afford ample protection to the agent against any attempt on the part of the principal, through direct dealing with the purchaser, to eliminate the agent from the transaction and escape compensating him for his services. On the other hand, 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. The actual commission of fraud in such case is not necessary. If one of the parties has created a situation affording an opportunity for its perpetration, whether fraud in fact exists or not, courts of equity will refuse to extend such party any relief. This is especially true where the agent and the purchaser are either the same person or acting in collusion.

The instrument before ns is assailed on the ground that it is not a contract of sale, but a mere option with a time limitation; that while its provisions are drastic as to the vendor, it leaves it optional with the vendee to either proceed to carry out the term of the agreement or forfeit the cash payment of $100. This court in Lenman v. Jones, 33 App. D. C. 7, held a similar agreement for the sale of real estate to constitute a valid contract of sale for which specific performance could be enforced. In that case, however, the agent represented the purchaser only, and the contract was signed by the vendor and the vendee. But that is not this case. Here the agent represented both vendor and vendee, the agent being in effect the purchaser. No disclosure of the name of the purchaser was made to the vendor until a deed was presented for execution. Neither was the instrument, which it is here sought to have declared a contract of sale, signed by the actual purchaser. The execution of the deed by defendant is not material in this connection, since he elected before delivery to repudiate the transaction. Without expressing any opinion as to whether or not the instrument before us is an option or a contract, it may *78be treated as a contract without improving in the least the equitable status of the plaintiff. For the same reason, it is unnecessary to determine what standing plaintiff would have in a court of law. It is sufficient for the purposes of this appeal to suggest that he appears in an atmosphere so contaminated with secrecy and opportunity for unfair dealing, and so foreign to the proprieties of agency, that it shocks the refinements of equity.

The decree is affirmed with costs, and it is so ordered.

Affirmed.