Case Name: Pugh and another, Appellants, vs. Christensen and others, Respondents
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1918-02-05
Citations: 166 Wis. 568
Docket Number: 
Parties: Pugh and another, Appellants, vs. Christensen and others, Respondents.
Judges: Owen, J., took no part.
Reporter: Wisconsin Reports
Volume: 166
Pages: 568–572

Head Matter:
Pugh and another, Appellants, vs. Christensen and others, Respondents.
November 14, 1917
February 5, 1918.
Real-estate brohers: Right to commissions: Bad faith: Concealment of material fact.
Where plaintiffs, real-estate brokers, in negotiating for defendant an exchange of properties and in inducing her to sign a contract therefor, intentionally concealed from her the fact that the other party, to the contract would be unable to carry it out unless they secured for him a large loan upon defendant’s property, with which to discharge incumbrances on the property which he was to convey to her, and because of their inability to secure such loan the contract was not consummated, such concealment of a material fact was an act of bad faith precluding a recovery by them of any commission from defendant.
Appeal from a judgment of the circuit court for Waupaca county: ByeoN E. Pabk, Circuit Judge.
Affirmed.
This is an action by the plaintiffs, Frank L. Pugh and Arthur W. Roegner, real-estate brokers, to recover $750 which they allege is due them on a land-sale contract which they claim to have effected between the defendants Carrie-Christensen and John and Jennie Kloeckner as agents of Carrie Christensen.
The defendant Carrie Christensen desired to sell or exchange for other property a farm she owned in Waupaca county valued at $30,000. Mrs. Christensen agreed to pay the plaintiffs a commission of two and one-half per cent, on the value of the farm if they made a sale or exchange of the farm. For this purpose they introduced to her John Kloeck-ner, who contracted with her in writing for a purchase of the farm and the personal property therein described. The consideration Kloeckner agreed to pay to Mrs. Christensen for her farm was a flat building and a house and a lot in Oshkosh and certain land- in Montana. The contract provided that Kloeckner’s property must be free of all liens and incumbrances and also included a penalty clause by which, if one party failed to fulfil his or her part of the contract within thirty days from the date of the contract, the other was to recover from the party defaulting the sum of $1,000. Kloeckner could not convey his property to Mrs. Ghristensen as he was unable to remove the incumbrance thereon. Mrs. Ghristensen began an action in the circuit court to recover $1,000 from the Kloeckners under the penalty clause of the contract. This action was settled by stipulation by which Mrs. Ghristensen received $300 to cover her expenses in the matter and a guaranty that Kloeckner would protect her against any claim for commission by the plaintiffs.
The defendants John and Jennie Kloeckner counterclaimed in this action, alleging that their inability to fulfil the terms of the contract between them and Mrs. Ghristensen was caused by the failure of the plaintiffs to secure for Kloeckner a loan of $15,000 for the purpose of paying the incumbrance on the property he had contracted to convey to Mrs. Ghristensen.
It appears, and the court found, that it was understood by. the plaintiffs at the times they negotiated with Kloeckner to make the contract with Mrs. Ghristensen for the sale and exchange of these properties that Kloeckner could not execute the transfer of his property to consummate the deal with Mrs. Ghristensen pursuant to the written agreement negotiated by the plaintiffs for Mrs. Ghristensen unless Kloeckner securéd a loan on the Ghristensen farm, within the thirty days specified in such contract, of $15,000 to pay the incum-brances on the properties he agreed to convey free and clear of all incumbrances, and that the plaintiffs agreed to secure such loan for him. This condition of the transaction the plaintiffs concealed from Mrs. Ghristensen while acting as agents for her in this matter. Their conduct as to this matter was manifestly pursued to induce Mrs. Ghristensen to make the contract with Kloeckner they proposed to her and which, she signed upon their solicitation and advice. There is no dispute in the evidence but that the plaintiffs failed to secure this loan for Kloechner and that he, by reason of their failure, was not able to make the transfer as provided for in the written contract.
At the conclusion of the testimony both parties to the action moved the court for a directed verdict in the case in their favor upon all the issues raised by the pleadings.
The court granted the plaintiffs’ motion dismissing the counterclaim of Kloechner and the motion of Mrs. Christensen to direct a verdict in her favor and for judgment dismissing the complaint, and rendered judgment accordingly, awarding Mrs. Christensen recovery of her costs and disbursements in the action. The plaintiffs appeal from that part of the judgment dismissing their complaint and awarding Mrs. Christensen her costs and disbursements.
For the appellants there were' briefs by David C. Pinher-ton, attorney, and Charles & Henry Barber and Franh B. Keefe, of counsel, all of Oshkosh, and oral argument by Mr. Keefe.
For the respondents there was a brief by Bouch, Hilton, Kluwin & Dempsey of Oshkosh, and oral argument by John F. Kluwin.

Opinion:
The following opinion was filed December 4, 1917:
SiebbcKER, J.
The evidence abundantly supports the trial court in the conclusion that the plaintiffs were fully informed and understood that Kloechner was unable to carry out the written contract he made with Mrs. Christensen through their agency for the exchange and transfer of properties as therein provided unless he secured a loan of $15,000 upon the Christensen farm to enable him to pay up the liens and incumbrances that existed against the property he contracted to convey to her. It sufficiently appears that the plaintiffs agreed to secure such loan for Kloechner within thirty days from the date of this contract and that the plaintiffs intentionally concealed from their principal, Mrs. Christensen, all knowledge of such loan to enable KloecJcner to carry out his contract with her. The materiality of the concealment of this matter pertaining to the deal negotiated by the plaintiffs for Mrs. Christensen is clearly shown by KloecJcner's inability to perform his part of the contract because neither he nor the plaintiffs were able to secpre such loan for him to pay off the incumbrances against his property and convey it upon the terms agreed upon in payment of Mrs. Christensen's farm which she agreed to convey pursuant to the plaintiffs' negotiations as her agents. It was known to the plaintiffs that KloecJcner's failure to obtain such loan made it impossible for him to carry out the agreement they had made with him as agents of Mrs. Christensen. It is manifest that the final result of their agency proved wholly fruitless to Mrs. Christensen on this very account. Under such circumstances it cannot be said that the plaintiffs had honestly performed their obligations in securing the contract to be made between their principal, Mrs. Christensen, and KloecJcner for the exchange of properties. Mrs. Christensen, under the circumstances, had the right to rely on the plaintiffs' representation that they had secured a purchaser for her farm who was able to pay the consideration agreed upon by them for her. Plaintiffs' concealment from her of KloecJcner's inability to pay was an act of bad faith as her agents in the transaction and taints their agency in negotiating this sale of her farm. Such bad faith precludes them from recovering a commission as her agents in the transaction. The plaintiffs could not put off on Mrs. Christensen as their principal a purchaser of the farm who they knew was not able to carry out the agreement they made for her under the circumstances within their knowledge and thus entrap her to obligate herself to them for the commission they are suing for. The principle is well recognized by the courts that an agent performing services of the nature the plaintiffs were rendering for.Mrs. Christensen is required to act in good faith in the discharge of his obligations and that his conduct in such transaction must be free from fraud or deceit or concealment from his principal. The record is clear that Mrs. Christensen acted upon the representation of the plaintiffs in accepting Kloechner as a purchaser believing that he was ready, willing, and able to pay for the farm as specified in the written contract the plaintiffs had negotiated and asked her to sign. Kloechner's inability to perform the contract is attributable to the failure of the plaintiffs to secure a purchaser ready and able to pay for the farm as they represented to her, and they have no standing in law to enforce payment of the commission for their services in the matter. Burnham v. Upton, 174 Mass. 408, 54 N. E. 873; Payne v. Ponder, 139 Ga. 283, 77 S. E. 32; Lockwood v. Halsey, 41 Kan. 166, 21 Pac. 98; Coleman's Ex'r v. Meade, 13 Bush (76 Ky.) 358; Ketcham v. Axelson, 160 Iowa, 456, 142 N. W. 62; 9 Corp. Jur. p. 566, § 67; Wiley v. Kraslow C. Co. 141 App. Div. 706, 126 N. Y. Supp. 879.
By the Court. — The part of the judgment appealed from is affirmed.
A motion for a rehearing was denied, with $25 costs, on Eebruary 5, 1918.
Owen, J., took no part.