Case Name: SAMUEL J. GOWER et al. v. JOHN ANDREW et al.
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1881-07
Citations: 59 Cal. 119
Docket Number: No. 6,881
Parties: SAMUEL J. GOWER et al. v. JOHN ANDREW et al.
Judges: 
Reporter: California Reports
Volume: 59
Pages: 119–129

Head Matter:
[No. 6,881.
In Bank.]
SAMUEL J. GOWER et al. v. JOHN ANDREW et al.
Agent — Fiduciary Trust — Injunction. — Plaintiff's, as warehousemen, were occupying premises of which the lease was about to expire, and were negotiating with the lessor for a renewal at a reduced rental. Defendant A was their clerk or agent, and had access to their books and papers, and knowledge of their business, and pending the plaintiffs’ negotiation, without their knowledge, applied to the lessor and obtained a lease of the premises for himself and the defendant R., who had notice of the facts. In an action to compel the transfer of the lease, an application, made upon the above facts, for an injunction pendente lite to restrain the defendants from proceeding to recover the premises, was refused. Held, That the injunction should have been granted.
Id.—Id.—Id.—An agent or sub-agent who uses the information he has obtained in the course of his agency as a means of buying for himself, will be compelled to convey to the principal.
Appeal from an order refusing to grant an injunction in the Twelfth District Court, City and County of San Francisco, Dajngereield, J.
Alfred A. Cohen,.for Appellants.
The defendant Andrew, by reason of his relation to the plaintiffs as above stated, was precluded from taking the lease from the defendant Hopkins for his own benefit. (Wood on Master and Servant, 221; Dieringer v. Myer, 42 Wisc. 312; Thompson v. Havelock, 1 Camp. 527; McDonald v. Lord, 26 How. 404; Ward v. Beeton, 19 L. R. Eq. Cas. 207.) Everything which an employer acquires by reason of his employment, except the compensation, if any, which is due to him from his employer, belongs to the latter. (Civ. Code, § 1985; Edmonstone v. Hartshorn, 19 N. Y. 9; Civ. Code, § 1988; Evans on Law of Principal and Agent, 243; Massey v. Davies, 2 Ves. Jr., Sumner ed. 317 and note; Williamson v. Barbour, 37 L. T., N. S., 698; Note 1 to Ewell’s Evans on Agency, *243, 333, and cases cited; Dodd v. Wakeman, 26 N. J. Eq. 487; Story on Agency, 207 et seq.; Dutton v. Willner, 52 N. Y. 312; Stoner v. Weiser, 24 Iowa, 435; Bain v. Brown, 56 N. Y. 285; Gillett v. Peppercorne, 3 Beav. 83.) The possession of the premises, and the consequent reasonable expectation of renewal, was a valuable asset in the plaintiffs, which Andrew, from his position, was not permitted to interfere with. (Grumley v. Webb, 44 Mo. 446; Rawe v. Chichester, 2 Amb. 719; Zilkin v. Carhart, 3 Bradf. 376; 5 Bacon’s Abr., tit. Leases, 677, cited James v. Dean, 11 Ves. 383.) From the fiduciary relation of Andrew to the plaintiffs, the obligation rested upon him to make a full and frank disclosure of what he was doing in the procurement of the lease. (1 Story’s Eq. § 316 a; Rubidoex v. Parks, 48 Cal. 219, 220.) The agent owes to his principal the like fidelity which the trustee owes to his cestui que trust. (Cooley on Torts, 526.)
The general principle of equity is, that trustees and others sustaining a fiduciary and confidential relation, can not deal on their own account with the thing or the persons falling within that trust or relationship. (Thorp v. McCullum, 1 Gil. 625 and cases cited; Wickliff v. Robinson, 18 Ill. 146; Dennis v. McCagg, 32 id. 444-445 ; 39 id. 608-609.) No agent is permitted to make a secret profit out of the conduct of his agency. (Evans’ Agency, 215; Paley on Agency, 34-36, 51; Murphy v. Sloan, 24 Miss. 658; Tate v. Williamson, Law R., 2 Ch. Ap. Cas. 61; Bispham’s Prin. of Eq., § 232.) The rule applies to all who occupy positions of trust and confidence. (Bispham’s Prin. of Eq., pp. 298, 299, §§ 92, 93; Barron v. Rhinelander, 1 Johns. 550; Parkest v. Alexander, id. 394; Paley on Agency, 10 et seq.; Hamilton v. Wright, 1 Bell’s Ap. Cas. 574.) The knowledge which he acquires as a trustee is of itself sufficient ground of disqualification. (Hamilton v. Wright, 1 Bell’s Ap. Cas. 591; Norris v. Tayloe, 49 Ill. 18; Casey v. Casey, 14 id. 112; Tipping v. Clarke, 2 Hare, 393.) A person acting as agent, or in any similar capacity, for a person having an interest in a lease, can not renew for his own benefit. (Lead. Cas. Eq. 68; Edwards v. Lewis, 3 Atk. 538; Ex parte James, 8 Ves. 345; Davoue v. Fanning, 2 Johns. 252; Note to Ex parte Bennett, 10 Ves. 381 a.) The defendant Ross, having knowledge of the relation of Andrew to the plaintiffs, is under the same disability as Andrew. (Bigelow on Frauds, 242; Parker v. Brooke, 9 Ves. 587; Hawleg v. Cramer, 4 Cow. 718; Murray v. Ballou, 1 Johns. 566; Shepherd v. McEvers, 4 id. 136; Lockwood v. Mills, 39 Ill. 609; Norris v. Tayloe, 49 id. 18; Cumberland Coal and Iron Co. Sherman, 30 Barb. 553; Story’s Eq. Jur., § 256; Hugenin v. Baseley, 14 Ves. 273 and notes. Opinion, p. 289.) The relief prayed for, viz., that the defendants Andrew and Ross be decreed to hold the lease as trustees of the plaintiffs, and to assign to them, is the proper remedy. (Hill on Trustees, *144; *160, *161; Brown v. Lynch, 1 Paige Ch. 147; Pickett v. Loggon, 14 Ves. 234; Keech v. Sanford, known as the Rumford Market Case, reported in 1 Lead. Cas. Eq. 65; Grumley v. Webb, 44 Mo. 444; Anderson v. Lemon, 4 Seld. 239; Gillenwater v. Miller, 49 Miss. 166; Charter v. Trevelyan, 11 Cl. & Fin. 714; Story’s Eq. Jur., § 218.)
P. G. Galpin, for Respondent Hopkins.
The Court can not construct a new contract between the lessor Hopkins and the plaintiffs, nor compel him to accept them as his tenants. Defendant Ross is an innocent pur chaser for a valuable consideration, and his rights can not be interfered with. Plaintiffs failed to get the lease, not through any action of Andrew’s, but through their own laches and bad faith. There was no such relation between Andrew and the plaintiffs as would authorize the Court to fasten 'a trust upon the lease. As between the plaintiffs and Hopkins and his co-defendent Ross, the equities are clearly equal, and therefore the legal title must prevail.
Jolm Trehane, for Respondents Andrew and Ross.
. A Court of equity will not restrain a person from the assertion of title to real estate unless the case is entirely free from doubt. Where there is the least doubt the injunction will be denied. (High on Injunctions, 1st ed., §§ 63, 65, 68, 77, 257, 261, 324; Hilliard on Injunctions, c. 6, §§ 1 (p. 267), 5, 24, 48.) Before a constructive trust could be decreed in the case at bar, it must be made to appear beyond a doubt. (Paley on Agency, 34, 263; Bigelow on Fraud, 229.) The rule that an agent can not make himself an adverse party to his principal while the agency continues, applies only to such agents as are relied upon for counsel and direction, whose employment is a trust as well as a service. (Bigelow on Fraud, 231; 1 Parsons on Cont. 87; Paley on Agency, 12; Deep River Mining Co. v. Fox, 4 Ired. Eq. 70.) It affirmatively appears here that Andrew was not employed to get the lease, but that the plaintiffs undertook that business themselves; that so far from counseling with him, they never mentioned the matter to him at all, and that he never assumed or pretended to act for them in the matter. "An employee is an agent only within the scope of his employment.

Opinion:
Myrick, J.:
This is an appeal from an order refusing to grant an injunction. The facts as presented by the pleadings and affidavits are substantially as follows:
The plaintiffs were warehousemen, and as such occupied certain premises as tenants of the defendant Hopkins. The defendant Andrew was their clerk or agent in and about the business, and had access to their books and papers, and knowledge of the business and their customers. The lease under which plaintiffs held the premises, at a monthly rental of four hundred dollars, was about to expire, viz., on the 1st of November, 1879. During some month or two prior to the expiration of the lease, plaintiffs were negotiating with Hopkins for a renewal of the lease at a reduced rental, but their minds had not met as to whether there would be a renewal. During the same time the defendant Andrew was, without the knowledge of plaintiffs, negotiating with Hopkins for a lease of the premises to himself and the defendant Eoss. During such negotiations, defendant Andrew, without authority from plaintiffs, told Hopkins that plaintiffs would probably give up the warehouse, and if so he would take it at four hundred and fifty dollars per month. Hopkins, without receiving definite information from plaintiffs that they intended to surrender the premises, but believing that such would be the case, gave to the defendants Andrew and Eoss a lease of the premises for four years from November 1st, 1879, at a monthly rental of four hundred and fifty dollars. Andrew's object in obtaining the lease was to enter into the business of warehousing Avith Eoss on their own account; and Andrew solicited from some of the customers of plaintiffs at the warehouse their storage business, stating that " he had become the lessee of the warehouse because Gower & Gilman did not want it any longer." During all this time Andrew was in the employ of plaintiffs. As soon, however, as they learned that he had taken the lease he was dismissed.
We think the injunction should have been granted. The granting or refusing to grant an injunction is very much Avithin the discretion of the Court to which the application is made; and an appellate Court will not interfere unless a right clearly appears to exist. We think, however, that the facts before us clearly show a case where the plaintiffs, if they shall finally substantiate those facts, will be entitled to relief. We understand it to be the duty of the employee to devote his entire acts, so far as his acts may affect the business of his employer, to the interests and service of the employer; that he can engage in no business detrimental to the business of the employer; and that he should in no case be permitted to do for his own benefit that which would have the effect of destroying the business to sustain and carry on which his serv ices have been secured. An agent should not, any more than a trustee, adopt a course that will operate as an inducement to postpone the principal's interest to his own. An agent or sub-agent who uses the information he has obtained in the course of his agency as a means of buying for himself, will be compelled to convey to the principal. (Elliott v. Merryman, 1 Lead. Cas. Eq. 91.)
It may be said that Andrew was not the agent of plaintiffs so far as concerns the obtaining of a renewal of the lease; that he was not charged with the duty of obtaining a renewal; it must, however, be said that he was, by virtue of his employment, charged with the duty of furthering their interests, and with the duty of not using the information obtained by him as their employee to their detriment. It seems to us that if Andrew desired to engage in the same business as his employers, on his own account, a very plain and very proper course was open to him, viz., to state to them all the facts, and ask them to determine whether they desired a renewal. By pursuing the course which he did, he gave to Hopkins an inducement not only not to give plaintiffs a renewal at a decreased rental, but also an inducement not to renew at the then rental; and he compelled plaintiffs to have an unknown competitor who based his action upon knowledge acquired by him while in their employ. We do not think that this is equity or good conscience.
The order refusing the injunction is reversed.
Boss, J., McKee, J., and Morrison, C. J., concurred.
Sharpstein, J., and McKinstry, J., dissented.