Court Opinion

ID: 9514599
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:50:37.888978+00
Date Added: 2024-06-11T09:06:19.153068
License: Public Domain

SABERS, Justice
(concurring specially).
[¶ 27.] I write specially to take issue with the dissent which, although very well written, clearly misses the mark. It would approve a rule which would allow the bank, as an inadequately secured creditor, to foist its debts upon the people of the United States, through the federal government (SBA), and upon an unsuspecting, trusting couple with a ranch for collateral. The bank did this through its officer, agent and realtor, who knew the crucial details of the delinquent business. The evidence indicates that this bank officer knew that these “investors” would not and could not succeed and yet, never disclosed the real conflict of interest, the self dealing on the part of the bank, or the crucial financial details.
[¶ 28.] The rule proposed by the dissent would result in a “license to steal” for the bank and ignores the law that officers, *600agents and realtors have a fiduciary duty to disclose under these circumstances. The dissent concedes that this bank “took an uncommonly active role in the sale” but attempts to excuse the same because it was a “rural bank.” Nonsense. The rules are the same for rural and urban banks and realtors. This “rural bank” could have arranged for the debtors to hire an independent realtor rather than use its own officer, agent and realtor to sell the property.
[¶ 29.] I also take issue with the dissent’s prediction of the dire consequences from the holding in this case. Even if the dissent were to be right on this “inevitable” “chorus” of lawsuits, I submit the best practice, in both the short and long run, is to follow the law as done in this case.
[¶ 30.] As further support of the above and the duty to disclose, I submit the following quote from our recent case, Dinsmore v. Piper Jaffray, Inc., 1999 SD 56, 593 N.W.2d 41:
After careful review of South Dakota law, we hold that the district court’s decision to instruct the jury that a fiduciary relationship exists between brokers and their customers was not fundamentally deficient in analysis or otherwise lacking in reasoned authority. Eighty years ago, the South Dakota Supreme Court held that real estate brokers owe a fiduciary duty to their clients. The court held as follows:
The relation of an agent to his principal is ordinarily that of a fiduciary, and, as such, it is his duty to act with entire good faith and loyalty for the furtherance and advancement of the interest of the interest of his principal in all dealings or affecting the subject-matter of his agency. And this rule is just as applicable to an agent whose duty it is to find a purchaser for the real estate of his principal as any other. Such an agent owes to his principal the obligation of securing for the principal the highest price he can obtain for such property.
Durand v. Preston, 26 S.D. 222, 128 N.W. 129, 131 (1910) (citation omitted). The South Dakota Supreme Court recently reaffirmed that the relationship between a real estate broker and his or her clients is a fiduciary one, holding that the broker owes clients ‘a duty of utmost good faith, integrity, and loyalty.’ Hurney v. Locke, 308 N.W.2d 764, 768 (S.D.1981). The Humey court reasoned that a fiduciary duty should be imposed on real estate agents or brokers because ‘[a] real estate agent is a licensed professional holding himself out as trained and experienced to render a specialized service. Clients rely on the agent’s expertise and expect the agent to act in their best interests.’ Id. (citation omitted). Likewise, securities brokers such as Marks and Ulrich at Merrill Lynch are ‘licensed professionals] holding [themselves] out as trained and experienced to render a specialized service.’ Id. Like the clients of real estate agents, securities customers ‘rely on the agent’s expertise and expect the agent to act in their best interests.’ Id. Because we see no significant difference between real estate brokers and securities brokers, we believe that if confronted with the question, the South Dakota Supreme Court would find that securities brokers are fiduciaries that owe their customers ‘a duty of utmost good faith, integrity and loyalty.’ Id.
Dinsmore, 1999 SD 56, ¶ 18, 593 N.W.2d at 46 (quoting Davis v. Merrill Lynch, Pierce, Fenner, and Smith, 906 F.2d 1206, 1215 (8th Cir.1990)).
[¶ 31.] Therefore, I join Justice Amund-son’s writing to reverse and remand for a fair trial.