St. Paul daily globe., 1896-04-26
IMPORTANT DECISION OF THE
UNITED STATES COURT OF
APPEALS
MINERAL LANDS INVOLVED.
THE DULUTH CASE OF JOHN NC
kINLEY AGAINST j. Nj. WILL
sAMS.
LOST HIS RIGHT TO CONFIRMATION
Through Failure to Deliver to His
Principal His Share of Pro-
Geeds.

The decision filed in st. Louis day or so
ago by the United States circuit court of ap-
peals in the case of John Mckinley, appellant,
against John NJ. Williams, appellee is of more
than passing interest to the people of Mime
scta, especially those of Duluth, inasmuch as
it is quite an important case, and Mckinley
lived in Duluth. The facts are these:
Mckinley was the agent Of Williams, of Chi
cago, to sell leases upon his mineral lands in
Minnesota, under agreement that he should
receive one-ffth, and his principal four-ffths,
of the revenues he derived from these lands.
He sold leases and interests in the lands of
his principal from which he obtained moneys
and stocks in mining corporations, which were
worth more than $1,000 when he received
them, but he did not disclose the fact of their
receipt or deliver these proceeds to his prin-
cipal, and when the latter discovered that he
had received them he refused to account for
them. Meanwhile, the market value of these
stocks had advanced until the proceeds this
agent thus received became worth S160, S27. 49,
and then the market value receded, until they
were not worth as much as $1OO, 900, when the
principal discovered all the facts and his
agent ) refusal 10 account
An action was brought to compel Mckinley
to render an accounting, and to have annulled
the contract. The defendant answered that
the formal lease was actual and under it he
became liable for the rents, and he was, there
fore, entitled to all the profits he had OBJ
tained by selling any part Of the leasehold or
subletting part Of the land; that plaintiff knew
of the profits he had been receiving when the
lease was made, but he assented to the leases
and contracts through which they had been
obtained.
The lower court granted Judgment against
Mckinley for the full value of the stocks and
other property he had withheld, fixing that
value at the highest market price it had
reached during the time he had possession of
1t. An appeal was taken, and the court of ap-
peals sustained the lower court, holding that
the agent, by his breach of trust. and failure
to report and deliver to his principal his share
of the proceeds when he received them had
lost the right to, his compensation, had taken
the risk of the t1uetuations in the market upon
himself and had become liable to his principal
for the highest market value Of this prop
erty, which was $160, S2743
The opinion was written by Judge Sanborn
and in discussing the question as to whether
the lower court had erred in fixing the amount
on the basis of the highest price the property
would have brought during the time Mckinley
had possession of it. he says the rule is to
fix the damage at the amount that could be
realized on the property, in all except this
particular class of cases, and that here the
fluctuations of the market would enable an
agent to wrong his principal by taking ad-
vantage of these fluctuations if the other rule
were applied. The supreme court took this
position in 1S88
Following is the syllabus:
United States circuit court of appeals:
John Mckinley appellant, VS.. John NJ Will
lams, appellee. Appeal from the circuit
court of the United States for the district
of Minnesota. Affirmed. Opinion by San
born, j.
Syllabus:
Agents breach of trust:
An agent of a vendor who speculates in
the subject matter of his agency, or inten-
tionally becomes interested in it as a pur-
chaser or the agent of a purchaser violates
his contract of agency, betrays his trust, for
1elts his compensation as agent and becomes
indebted to his principal for the profits he
gains by his breach Of duty.
Contracts between principal and agent
When void:
An agent who conceals. or fails to dis