Court Opinion

ID: 9832328
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:49:26.024666+00
Date Added: 2024-06-11T07:43:45.686685
License: Public Domain

On Motion for Rehearing.
The appellee Astle quite urgently insists that, as to the question of fraud and double agency discussed in the main opinion, denying a recovery in Astle’s favor constitutes serious error. We think it clear from the record in this proceeding that Astle is in effect saying:
“A contract existed for my benefit, by the terms of which Jines and Spencer were to submit an offer of $5,000 cash, for which I was to pay 5 per cent, commission, but, in the event the landowner refused to take that amount of land, an offer of $7,040 will then be submitted to said owner, and with reference to which we will attempt to bind the owner, through Spencer, his agent, by written contract for that purpose.”
When the transaction between Astle, Jines, and Spencer was completed as to the manner and method to be pursued by Jines and Spencer, for the purpose of procuring the land for Astle from the owner, the evidence conclusively shows that Spencer (at least as between Jines, Spencer,, and Astle), was acting for the owner of the land, and that Astle was using Spencer for that purpose; and the evidence really discloses that an agency in reality existed between Spencer and the *1086owner of the land for the submission by the latter to the former offers for cash as well as upon terms. As between the three, Astle, Jines, and Spencer, while the name of the owner was never disclosed to Astle, the transaction as a whole, and as" finally consummated, was to procure the particular tract of land through Jines .and Spencer (particularly the latter) by either one or the other of the two methods mentioned; and while the latter method (the $7,040 offer) was used by the agents, and though It may be to the detriment of Astle and the owner of the land, and though the agents procured from said owner some $2,000 in money and in notes, in excess of $5,000, which latter amount would, if it had been submitted by Spencer, have been received, but with all this the question nevertheless remains: Does Astle, when the whole transaction as to the method these parties agreed to pursue to obtain this land, have to deraign his recovery through a void contract? One of the phases of ap-pellee’s argument, if we understand it correctly, is: First, that, because Jines and Spencer intended to and did perpetrate a fraud upon him by not submitting the $5,-000 offer (which would have been received), the whole undertaking is a void transaction and, second, “even if all parties to the matters here presented were to some extent involved in an illegal undertaking, yet they •are not in pari delicto, * * * ” or, in other words, as to the latter proposition, the fraud of Jines and Spencer, intended and perpetrated by them upon Astle, is so much greater than the fraud, by virtue of the fact that he was willing to use Spencer, the landowner’s agent, to submit an offer (true for cash) $2,000 less than he was in reality willing to give, that Astle should be permitted a recovery, and we might add the conclusion notwithstanding that said recovery is through the medium of a void contract. The contention is, viewed in another phase, Spencer should have submitted the $5,000 offer, and should not have submitted the $7,-040 offer, which Astle was in reality agreeing should be submitted, and hence, because the owner would have taken the $5,000, he is entitled to a recovery of said sum.
How does Astle establish his right to the $2,000 from Jines and Spencer? If the contract is as stated, he establishes it by proving that Jines, and Spencer collaborating with him, agreed to submit the offer of $5,-000, and, as a part of an agreement in obtaining the land from the owner through one whom he knew was acting as the owner’s agent, to keep secret another offer, $2,000 more in amount, only to be disclosed in the. event the $5,000 offer is rejected by the same landowner. How we can eliminate and make several the $5,000 part of this contract from the other terms, as to methods to be procured to obtain this land, when the whole transaction was finally agreed upon, is beyond our discrimination; and, why such a contract and transaction as finally made has not a fraudulent tendency, we are unable to debate. We are not concerned with the question whether such a contract, in its final development, was an injury or a benefit to some third party; the question is one of tendency. The case of Rice v. Wood, 113 Mass. 133, 18 Am. Rep. 459, decided by the Supreme Court of that state, disclosed that a broker had certain real estate for disposition, and that said broker afterwards, without the knowledge of said owner, made an agreement with another party by which said broker was employed to act for said other party in exchanging corporation stock to the owner of the real estate. The owner of the stock knew that the broker was entitled to a commission from the owner of the real estate if the same were sold; however, when the corporation stock was exchanged to the landowner, though the owner of the stock agreed to pay a commission, he refused to do so. Thé broker sued the owner of the stock, and, notwithstanding the latter had knowledge of the whole transaction, the Massachusetts Supreme Court said:
“A contract by which one is placed under a direct inducement to violate the confidence reposed in him by another is of this character. * * * No one can be permitted to found rights upon his own wrong, even against another also in the wrong. * * * Nor is it necessary to show that injury to third persons has actually resulted from such a contract, for, in many cases where it had occurred, this would be impossible to be proved. The contract is avoided on account of its necessarily injurious tendency.”
The case of Everhart v. Searle, 71 Pa. 256, disclosed that an owner of land employed a real estate broker to sell the property, agreeing to give the broker all that the latter could obtain over $125 per acre. The broker had several applications to purchase the property, one of whom agreed to pay said broker the sum of $500 for a preference. The latter was sued by the broker, and the contention was made that the owner got his price for the land, but the Supreme Court of Pennsylvania said in effect that the transaction is to be regarded as against the policy of the law, and it matters not that no fraud was meditated and that no injury was done. The rule is not intended to be remedial of actual wrong but preventive of the possibility of it.
The Commission of Appeals (Armstrong v. O’Brien, 83 Tex. 649, 19 S. W. 268) also held contracts of a double agency void on the ground of their tendency.
Circuit Judge Taft said in the ease of Continental Trust Co. v. Toledo, St. Louis & K. C. Ry. Co. (C. C.) 86 Fed. 945:
“Any agreement or understanding between one principal and the agent of another, by which such agent is to receive a commission or reward if he will use his influence with his principal to induce a contract, or enter into a contract for his principal, is pernicious and corrupt, and cannot be enforced at law. This *1087principle is founded upon the plainest principle of reason and morality, and has been sanctioned by the courts in innumerable eases.”
The Supreme Court of the United States said in the cause of McMullen v. Hoffman, 174 U. S. 656, 19 Sup. Ct. 845, 43 L. Ed. 1124:
“Upon the point as to the ability of the plaintiff to make out his cause of action without referring to the illegal contract, it may be stated that the plaintiff for such purpose cannot refer to one portion only of the contract upon which he proposes to found his right of action, but that the whole of the contract must come in, although the portion upon which he founds his cause of action may be legal. Booth v. Hodgson, 6 T. R. 405, 408; Thompson v. Thompson, 7 Ves. Jr. 470; Embrey v. Jemison, 131 U. S. 336, 348 [9 Sup. Ct. 776] 33 L. Ed. 172, 177.”
And Justice Peekham in that cause, adopting the language of Lord Kenyon, in the cause of Booth v. Hodgson, supra, where the , latter justice was remarking upon an argument made before him, said:
“They say to the court: ‘Suffer us to garble the case, but suppress such parts of the transaction as we please, and to impose that mutilated state of it on the court as the true and genuine transaction, and then we can disclose such a case as will enable our clients to recover in a court of law.’ Such is the substance of this day’s argument. It is a maxim in law that a plaintiff must show that he stands on a fair ground when he calls on a court of justice to administer relief to him.”
Of course the principles are plain and fundamental; and we also think they are plainly and fundamentally applicable here.
The motion is overruled.