Case ID: ala_170/html/0473-01.html
Source: Caselaw Access Project
Author: {"author": "\n      McCLELLAN, J. MAYFIELD, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Messer-Moore Insurance & Real Estate Co. v. Trotwood Park Land Co.
    
      Assumpsit.
    
    (Decided Feb. 10, 1910.
    Rehearing denied Jan. 14, 1911.
    54 South. 228.)
    1. Principal amé Agent; Individual Interest of Agent. — An agent may be held to account for any profits or advantages secured by reason of his agency.
    2. Corporations; Liability of Agent; Joint Liability. — The Park association engaged the insurance and real estate company to sell certain realty for it, but the sale was actually made by M. who was president of the realty company, and had authority to make the sale, and M. paid over to his corporation commercial paper representing a part of the profits which belonged to the Park association, knowing that such amount did not belong to him or his corporation. Held, that M. was jointly liable with the corporation either in an action on the contract or in tort, for the amount so wrongfully paid over to his corporation in breach of the confidential relations resulting from the agency although he did not retain any of the money or the commercial paper representing it.
    (Simpson and Evans, JJ., dissent in part.)
    Appeal from Jefferson Circuit Court.
    Heard before Hon. A. O. Lane.
    Action by the Trotwood Park Land Company against the Messer-Moore Iusurance & Beal Estate Company, and Messer for money had and received. Judgment for plaintiff and defendant appeals.
    Affirmed.
    S. ©. & J. B. Weakley, Edward T. Wright, and N. L. Miller, for appellant..
    Before the agent can be held responsible he must be given notice of an election to hold him responsible before he pays the money over to the principal. — Eufemia G. Go. v. Mo. Bank, 118 Ala. 408; Crutchfield v. Wood, 16 Ala. 702; Norsioorthy v. Upchurch, 15 Ala. 705; Thompson v. Slickney, 6 Ala. 579. The court erred iu rendering judgment against either of the defendants, as the action was a joint cause of action and one of the defendants was not liable, and hence, a variance arose. — Mclsaac v. Wife, 120 Ala. 412; Garrison v. Hawyláns L. GoIll Ala. 308; Mo Anally v. Hawkins L. Go., 109 Ala. 397; Gobb v. Keith, 110 Ala. 614. Under the circumstances of this case the judgment must be reversed in toto. — Authorities supra, and Massey v. Oates, 39 Ala. 142; Huckabee v. Kelson, 54 Ala. 12.
    Frank S. White, & Sons, for appellee.
    The action was properly brought.' — King v. Martin, 67 Ala. 177; Planters Bctnk v. Tunstall, 72 Ala. 142; Barnett v. Warren, 82 Ala. 557; Bushton v. Danis, 127 Ala. 79. A secret profit made by an agent may he recovered by his principal iu an action for money had and received.— Humbird n. Davis, 59 Atl. 1082. An agent will not be allowed to assume a position which is inconsistent with his duty, or to acquire any rights by violating it.— Clark & Skyles on Agency, Sec. 404, 407; Waller v. Jones, 107 Ala. 341; Scottish U. I. Go. v. Dangey, 103 Ala. 388; Spratt v. Wilson, 94 Ala. 608; Walker v. Pal-mer24 Ala. 358. There is no such thing as principal and agent in wrong doing. All torts feasors are principals. — Lee n. Matthews, 10 Ala. 682; Jones v. Fort, 36 Ala. 449; Mayer v. Thompson Go., 104 Ala. 611; Luling v. Shepherd, 112 Ala. 588. Under the facts contended for by the defendant Moore was a sub-agent for the company, and acted for it, and is bound by the same rule and principles as govern agents. — 1 A & E. Enc. of Law, 1049; 47 L. R. A. 529; 78 Am. Dec. 192; 57 N. Y. 445; 16 W. Ya. 32.
   McCLELLAN, J.

This cause of action, set forth in counts for money clue on an account, or an account stated, and for money received by defendants to' plaintiff’s (appellee’s) use, proceeds, as appears from the evidence, on the theory that the Messer-Moore Insurance & Beal Estate Company, a corporation, of which the other defendant, Messer, was the president and active representative in sales of real estate, secured in breach of good faith, and loyalty, a profit in a transaction for the sales of a part of plaintiff’s “Trotwood Park” property while acting as the agent of plaintiff in the sale of said property. The theory and form of the action are good. —31 Cyc. 1434 et seq., 1608, 1609, and notes thereon. A breach of duty and obligation created by the relation of confidence existing between principal and agent is ■ involved, and, if the agent acquires profits, advantages, etc., during the existence of the relation, he may be held as a trustee and compelled to account or surrender in accordance with the law’s requirements in such cases.

There are only two questions, based on proper assignments, argued here. There was severance, both defendants having appealed. The corporation complains that no relation of agency was shown to exist with reference to the sale — transaction—out of which the alleged breach of good faith and loyalty grew. The court below, determining the issues of fact without a jury, resolved that issue against the appellant corporation. Subsequently, in disposing of the motion for new trial, the court again declined to adopt the stated insistence of nonagency.

It will serve no usful purpose to attempt a discussion of the evidence on this matter of agency vel non. All of it has been carefully read and considered, and, after this, this court is not convinced that the trial court erroneously concluded. There was evidence tending to show the agency of the corporation in accord with plaintiffs theory of right to recover. Besides, there was also evidence tending to establish a want of candor, good faith and loyalty in respect of the “option” secured from plaintiff by the defendant corporation, through its president. That that means was employed to obscure and conceal the real purpose entertained also finds support in tendencies of the evidence. The correctness of the conclusion below, in that particular, cannot be here disputed without ignoring evidence well calculated to lead the trial court to the opinion entertained by it.

The only other point of attack on the correctness of the judgment rendered is that there was an entire want of evidence tending to show that Messer individually ever had, in possession, the profit sought to be recovered, or, if so, that it was shown that he had paid it to the corporation; and that error affects the whole judgment in consequence of the failure to show a liability on Messer, the individual sued. In support of this contention a number of our cases are cited and may be found on briefs for both appellants.

Further, on the authority of Eufaula, Grocery Co. v. Mo. National Bank, 118 Ala. 408, 24 South. 389, it is urged, to state it quite generally, that the plaintiff, a principal, was bound to an election to hold the principal of Messer’s agency, viz., the corporation or Mes-ser, that corporation’s agent, and that an election to hold one renounced all remedy against the other. Assuming plaintiff’s theory to have been sustained in the finding of fact, it is quite clear that the bad faith, toward plaintiff, characterizing the acts of the Messer-Moore Company were committed through and by Mes-ser alone. He managed the whole affair. He was, for' all practical purposes, tbe agent of the Messer-Moore Company, and there is no denial of bis authorization in the premises. The active promoter of the breach of good faith, why may he not he held responsible, jointly with the Messer-Moore Company, for the profits retained from plaintiff at the expense of good faith and delivered by him to the Messer-Moore Company? Messer, acting for the company, received the money or its equivalent, knowing that the excess over $18,000, less the $250 already paid, and fair compensation to the Messer-Moore Company for its services in the premises, should have been paid over to the plaintiff. Can he claim exemption from his intimate participation in the bad faith charged on the ground that he has none of the money? If so, his own acts, through and by which alone his company touched the transaction and thereby increased its income, would be the exoneration from joint liability to restore that, in breach of good faith, retained. There is no basis for holding Messer innocent after he had placed the fund, in excess, to the company’s credit. His attitude, exhibiting in fact, that by his company, was that the excess belonged to his company. He denied its agency in the transaction when subsequently dealing with plaintiff, though affirming that agency, some of the evidence shows, when negotiating the sale to Dabb. To now permit him, on this theory of proof, to avoid joint responsibility for a breach of the obligation of a confidential relation, a wrong wrought by him for and in the name of his codefendant, on the ground that he had none of the fruits of the wrong would be palpably unjustifiable. His acts deprive plaintiff of the excess claimed, and he cannot exonerate himself from liability by the fact that the company of which he was the executive head, and, in this instance, its sole voice and instrument, has the fund that in equity and good conscience belongs to plaintiff. No line can be drawn between them. They are interwoven in wrongful act and benefit therefrom."

In Eufaula Grocery Co. v. Mo. National Bank, supra, the question was one of agency, purely, wholly free from any such bad faith as that which the testimony here tends, in some aspect, to color the transaction involved. The doctrine of election announced in that decision had no factor of bad faith to influence the conclusion.

The judgment is affirmed.

Dowdell, C. J., and Simpson and Mayfield, JJ., concur.

On Response to Application for Rehearing.

MAYFIELD, J.

Movants, on this application, have entirely misconceived the true nature of the cause of action, and have confounded it with the action itself. The cause of action is in tort, but the action itself is in contract. The tort is a deceit, consisting of obtaining plaintiff's money by active, actual, and intentional fraud. The action is in contract merely to recover back the money from those who so wrongfully procured it. If the plaintiff’s evidence is true, and the trial court so found, certain] j in part, such finding being by this court affirmed on appeal, the tort or cause of action was committed by both of the defendants; by one, because he committed the wrong, and by the other, because the Avrong was committed by its agent, and also because it received the fruits of the AAU’ong. But it should be said here that defendants and their counsel deny any wrong or fraud.

If Messer had received the fruits of his own wrong he Avould be liable in this action; but he seeks to escape liability solely because lie did not receive the fruits of his own wrong, and that no actual money and no negotiable paper representing it actually passed through his hands. No actual money of the plaintiff’s — that is, cur-ien cy or specie — passed through the hands of any one, but commercial paper which represented its money, the proceeds of the sale of its property, wrongfully procured by the defendants^ did pass through the hands of both, and nominally went to the credit of one of the defendants. The other defendant, an individual, was the alter ego of the one (a corporation) receiving the proceeds. No one represented the Messer-Moore Company lexce-pt Messer, who was its president. He was the sole individual who prepetrated the wrong complained of. He was the alter ego of the corporation. He cannot be allowed to escape liability in this action merely because the paper which represented plaintiff’s money was made payable, at its procurement, to his principal or to third parties. Of course, as a matter of fact, he has not now, and never has had, any actual money of the plaintiff’s,, but he has had that which represented it, and which was a mercantile substitute for it. It is no defense for him to say in this action, “I have not your money, I paid it over to my principal.”- The answer is, he knew it was plaintiff’s money, when he procured the substitute for it, and when he paid it over to his principal. This renders him liable for the money as well as for the tort. The Supreme Court of New Jersey, in the case of Bocchino v. Cook, 67 N. J. Law, 468-469, 51 Atl. 487, has stated the law in a similar case and in a similar action very concisely, and we therefore quote from that court: “It was argued that the defendant was only the agent, receiving no benefit, and that there was no promise, no contract implied on which this action can be maintained. When one extorts money from another,, and is sued for it, be cannot set up in defense tba,t be received tbe money as agent, and bas paid it over to another as principal. Tbe relation of principal and agent cannot exist for any sucb purpose. He bimself received tbe money. Tbe following rules are laid down in 1 Am. & Eng. Encyc. L. (2d Ed.) 1131, 1186: Where money is illegally demanded and received by an agent from a third person, by compulsion or otherwise, tbe agent cannot exonerate bimself from personal liability by paying it over to bis principal. Where tbe injury results, not from mere nonfeasance or omission of duty by tbe agent, but from bis positive misfeasance, or where, according to tbe better authority, it results from sucb omission of duty or act of negligence on tbe part of tbe agent as partakes of tbe character of a misfeasance, tbe agent is personally liable to tbe third person; tbe actual perpetrator of tbe positive wrong not being permitted to relieve himself by showing that tbe wrong was done while be was acting in tbe course of bis employment as agent for another. In all sucb cases be is personally liable, whether be did tbe wrong intentionally or ignorantly by authority of bis principal; for a principal cannot confer on bis agent any authority to commit a tort upon tbe rights or property of another. An agent will be held personally liable to third persons for all damages sustained by them in consequence of any fraudulent or malicious acts committed by him on behalf of bis principal, and in an action against tbe agent for fraud, tbe fact that be derived no personal profit or benefit therefrom is immaterial.—Horner v. Lawrence, 37 N. J. Law, 46. In Bennett v. Ives, 30 Conn. 329, it was held: ‘The actual perpetrator of a positive and obvious wrong can never exonerate bimself from personal liability by showing that be was acting as the agent or servant of another, or even by bis superior’s command.’ — Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287. Tbe money received by tbe defendant in tbis case can be regarded only as received for bis own benefit, because be could not be employed as agent to extort in tbe manner be did for tbe benefit of a principal. Tbe actions in Bennett v. Ives and Carew v. Rutherford, supra, were both for money bad and received, and we think that the action in tbis case was in proper form.”

The rule is well illustrated by our own case of Upchurch v. Norsworthy, 15 Ala. 705, relied on by appellant. In that case, the defendant, an agent, was sought to be held liable as for tbe value of certain slaves and certain cotton which be, as agent, bad converted, and tbe proceeds of which be bad paid over to bis principal. He was held liable as for-the slaves, but not liable as for tbe cotton,. which 'bis principal bad converted, and as to which be bad acted as a mere conduit to bring tbe money to bis principal after the conversion was complete. In .the latter case be did no wrong, and received no benefit- from bis principal’s wrong, and of course be was not liable. In tbe first case be himself converted tbe property, though under orders and directions of bis principal, and be was therefore liable; and the fact that be received no benefit was wholly immaterial.

It therefore -follows that tbe recovery was properly bad as against both defendants. They both committed tbe wrong, and one received tbe fruits of it — did so by the wrongful áet of its agent. Tbe principal being unable to authorize the fraudulent act, or tbe payment of the money to'it instead of the plaintiff, and tbe agent committing both wrongs, with full knowledge of all tbe facts, he is. liable to. the .same, extent- and in the same aw tions as. would be bis principal, and therefore jointly lia-bie with bis principal either ini tort or in' contract. '

We concede tba.t the agent ivould not be liable in this action, if the principal could have authorized him to do what he did, or if plaintiff’s injury had been the result of wrong committed by the principal instead of by the agent, or if it had been the result of a mere non-feasance of duty owed by the agent to his principal, and not (as in this case) the result of malfeasance on the part of the agent as to the plaintiff, and an act which the principal could not authorize.

The application is overruled.

Dowdell, C. J., and Anderson, McClellan, and Sayre, JJ., concur. Simpson and Evans, JJ., dissent.