Opinion ID: 1235661
Heading Depth: 1
Heading Rank: 2

Heading: Defendants' failure to disclose the agreement to receive an assignment of the vendor's interest in the sales contract.

Text: Defendants make no contention that they originally informed plaintiffs of the agreement by which the vendor's interest in the contract under which this property was being purchased by the partnership would be assigned to International. Defendants contend, however, that in 1970 Harris spoke with each of the partners except [one] about possible acquisition of the vendor's interest and that none of the partners expressed any desire to purchase the interest, even though Harris apparently offered it at a substantial discount. Defendants also cite cases from other states in support of the contention that a partner may purchase the fee to the property which the partnership has leased, provided he practices no deception or fraud upon his co-partners. Again, we consider the better rule, and the established rule in Oregon to be that the absence of deception or fraud is not sufficient to justify a partner in acquiring such an interest in property being purchased under contract by the partnership. On the contrary, we hold that the acquisition by International (and subsequently by Harris and his wife) of the vendor's interest in the property being purchased under contract by the partnership of which Harris was a member was a benefit that was connected with the formation [and] conduct of the partnership and was subject to ORS 68.340(1), so as to require consent by the other parties and so as also to be subject to the duty of full disclosure to the same extent as the receipt of the commission on the sale, as previously discussed. The same result also follows under established rules of agency. Thus, as stated in Restatement 2d of Agency 208-09, § 390, comment a: One employed as agent violates no duty to the principal by action for his own benefit if he makes a full disclosure of the facts to an acquiescent principal and takes no unfair advantage of him. Before dealing with the principal on his own account, however, an agent has a duty, not only to make no misstatements of fact, but also to disclose to the principal all relevant facts fully and completely. A fact is relevant if it is one which the agent should realize would be likely to affect the judgment of the principal in giving his consent to the agent to enter into the particular transaction on the specified terms. Hence, the disclosure must include not only the fact that the agent is acting on his own account    but also all other facts which he should realize have or are likely to have a bearing upon the desirability of the transaction from the viewpoint of the principal.    (Emphasis added) Cf. Williams v. Pilgrim Turkey Packers, 264 Or. 36, 44-45, 503 P.2d 710 (1972). It follows that the trial court did not err in holding that Harris holds the vendor's interest in this contract in trust for the benefit of the partnership. [2]