Court Opinion

ID: 9536116
Source: CourtListenerOpinion
Date Created: 2023-08-07 06:55:07.703682+00
Date Added: 2024-06-11T13:33:27.583935
License: Public Domain

Hill, J.
(dissenting) — I have no disagreement with the majority opinion insofar as it affirms the judgment of the trial court quieting title to the Mottman tract in Evergreen Park, Inc. The plaintiffs failed to establish any basis for imposing a constructive trust on that property. I do disagree with the denial of any recovery against the defendant, Warren Vadman.
I would hold that there was an agency, and a fiduciary relationship between the plaintiffs and Vadman. While it is my view that the evidence preponderates that the plaintiffs were told by Vadman that they had until 5 p.m. on September 1, 1966 to produce the $60,000 and that they had the right to proceed on that assumption, I concede that there is evidence to support the trial court’s finding that the plaintiffs bad only until the end of August, and that Vadman had reserved for himself the extra day of September 1, 1966.
My dissent is therefore predicated on the proposition that the evidence establishes that there was a limited agency terminating at the end of August 1966, and that until that time Moss and Robbins had the exclusive right as between Vadman and themselves to acquire for $60,000 a year’s option to buy the Mottman tract for $1,160,000.
It seems clear to me that the defendant Vadman, who had acted as the agent of the plaintiffs in procuring that right, violated his fiduciary relationship with them when on August 29 he disclosed to the defendant Richard Swanson, representing the Swanson-Whisler group, that if that group could not make a deal with the plaintiffs during August, they could deal with him on September 1. This in effect *406ended any chance the plaintiffs had of acquiring financing through the Swanson-Whisler-group and made Vadman liable for whatever he received in consequence of his subsequent dealing with the Swanson-Whisler group.
Having stated my position in brief, I shall proceed to a consideration of the evidence, circumstances and authorities which support my position.
Vadman, in addition to his accounting services for the plaintiffs, was their advisor on the feasibility of contemplated real estate transactions. He first broached the subject of the Mottman tract to them by mentioning that it could probably be purchased for $1,000,000. In March 1966, Moss indicated that the partnership might be interested in acquiring an option to purchase the tract at that price. Pursuant to Vadman’s suggestion, Moss drew up a letter authorizing Vadman to offer $5,000 for a 1-year option to purchase the property for $1,000,000. (The plaintiffs also agreed to pay Vadman a finder’s fee of 2 per cent of the purchase price. This finder’s fee was subject to two conditions, i.e., that he acquire the option for them; and that they sell or exercise the option within the year.)
Vadman was asked to present this offer to the Mottmans because he was intimately acquainted with the members of the family in consequence of his position as their accountant, and because the plaintiffs did not want the Mottmans to know from whom the offer was coming.8 Clearly at this point Vadman was an agent making an offer for undisclosed principals.
It is significant that in the interim between November-December 1965 and March 1966 Vadman never approached the Mottmans for an option on his own behalf and apparently had no desire to secure the option for himself. When he presented the proposition to the Mottmans, they understood that he was representing someone other than himself. His explanation for not disclosing their identity was expressed in these words: “the Mottmans are the type of *407people . . . that if they knew the financial standing of the offerer they would flatly refuse it.” The italicized word shows that Vadman recognized this to be an offer by the plaintiffs. He testified further, “I conversed with Mr. Fritz Mottman in private [before the stockholder meeting] and told him of the receipt of this offer, that I would like to present it to the family.” Later, the following exchange took place on direct examination of Vadman. “Q. Now, at that meeting, did you submit to the whole family this proposition contained in Exhibit 1 [the letter of authority from the plaintiffs9]? A. Yes, I did.” As noted by the majority, this offer was rejected, but on the basis that the Mottmans wanted to investigate further what the price should be and on what terms an option might be given.
The Mottmans met again on August 8, 1966. On the basis of the investigation that had been made, it was decided that the price should be about $1,000 an acre, and so the sale price was fixed at $1,160,000. It was decided also that the price for an option for 1 year should be $60,000.
The length of time for which this offer was to remain open became a subject for discussion. The Mottmans suggested 2 days, then 10 days, and Vadman, knowing the difficulty the plaintiffs might have in raising $60,000, was asking for a month. The Mottmans finally extended the time to the end of August, a matter of some 23 days. Vadman then left the meeting and contacted Moss by telephone to see if he and Robbins would be interested in the option on those terms. Vadman testified that he made clear to Moss that they would have no longer than the end of August and that Moss told him that they wanted the chance to take up this option on those terms. This testimony establishes that Vadman had secured for his principals the right to acquire an option on the Mottmans’ property if they could raise $60,000 during the month of August 1967.10 *408Then Vadman, without realizing it, placed himself in a position whereby it became possible for a conflict of interest to develop between his principals and himself.
Upon returning to the meeting after his phone conversation with Moss, he advised the Mottmans that the terms suggested were acceptable to “my people.” Then, being conscious of the very real possibility that his “people” might not be able to raise $60,000 by the end of August, and feeling that he knew sources from which it could be raised, Vadman said to the Mottmans: “Give me an extra day if these people don’t come up with it and I will get it myself.” His testimony was that the Mottmans agree to give him the extra day, that is, to 5 p.m., September l.11
All of these circumstances up to and through his meeting with the Mottmans on August 8 indicate to me that Vadman considered himself, and that he was in fact, an agent for the plaintiffs. Even the request for an extra day beyond the time which had been granted to his “people,” was a recognition that at least to the end of August he had reserved for them the exclusive right to acquire the option. The request for an extra day for himself when granted created a potential, although not a necessary, conflict of interest.
He had, for an agreed consideration, secured for his “people” a valuable option conditioned on their being able to raise $60,000 before the end of August. Consequently, he had an obligation, if not to help his “people” raise that $60,000, at least to do nothing which would hinder them, and thereby make his extra day a reality. That obligation was violated on August 29, under the following circumstances.
Among those from whom the plaintiffs were attempting to secure financial assistance in acquiring the option was the Swanson-Whisler group. Richard Swanson inquired of *409Vadman as to the interest of Moss and Robbins, explaining that his group could not reach any agreement with them. Further inquiry was made as to whether the SwansonWhisler group could go directly to the Mottmans and not deal with the plaintiffs. I quote Vadman’s own version of his answer:
I said, “No, you have to go through Moss and Robbins if you want it,” and when he told me they just couldn’t deal with them, I then disclosed to him that I actually held the option, not Moss and Robbins, that I actually held the option, that I had the last day of the option, which expired on September 1st at five o’clock, and that I was at that point in my own mind about ready to go out and start contacting the people I had for backup in case they did not come through with the money.
He wanted to know if they could take my place on the 1st, or put the money up that I would be looking for on the 1st. I said, “Yes, you could, but if you really want the option you better go through Moss and Robbins, because they have until the 31st, and I can’t work with you until the 1st of September, and if they come up with the money they are going to get the option. If you want the property you better work through Moss and Robbins.” He indicated that they would sooner take the chance and deal with me on the 1st and lose the option than to deal with Moss and Robbins on it. They then reported back to me a day and a half later, or a day later, that they would cover me for sixty thousand dollars on the 1st of September if Moss and Robbins had not given me the money before that day.
To Vadman’s credit, as his testimony indicates, he made an effort to induce the Swanson-Whisler group to work with the plaintiffs; but he also told them the one thing they needed to know to take off any pressure to deal with the plaintiffs, i.e., that if they (the Swanson-Whisler group) did not deal with the plaintiffs, they could deal with Vadman on September 1. Vadman’s insistence throughout that he could not dispose of the option until September 1 speaks eloquently of his own recognition of a fiduciary relationship with the plaintiffs until the end of August.
Again, in justice to Vadman, it should be pointed out that *410he extended the time for plaintiffs to come up with the $60,000 to 10 a.m. on September 1. The extra time was to no avail. Richard Yeager, with whom the plaintiffs had been negotiating, did produce the $60,000, but not until after 11:30 a.m. on September 1.
It is contended and could well be that Vadman’s statement to Richard Swanson actually had no bearing on who ultimately acquired the Mottman tract because the members of the Swanson-Whisler group testified that they would not have reached an agreement with the plaintiffs. However, it is clear that Vadman’s disclosure that he had the option and that he could deal with them on September 1 ended any chance of such an agreement.
It is generally recognized that an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency. Cant-well v. Nunn, 45 Wash. 536, 88 P. 1023 (1907); also see Restatement (Second) of Agency § 387 (1958); 3 Am. Jur. 2d Agency § 199 (1962). This is a fiduciary duty which demands the utmost good faith. Moon v. Phipps, 67 Wn.2d 948, 411 P.2d 157 (1966); Mele v. Cerenzie, 40 Wn.2d 123, 241 P.2d 669 (1952); Westerbeck v. Cannon, 5 Wn.2d 106, 104 P.2d 918 (1940). Implicit in this fiduciary duty is the obligation of an agent not to aid competitors of his principal concerning the subject matter of his agency. Restatement (Second) of Agency § 393 (1958); 3 Am. Jur. 2d Agency § 222 (1962).
Vadman, by his actions, did aid competitors of his principals. Because of his breach of such duty, Vadman should “disgorge” any profits he made by the transaction. Nicolai v. Desilets, 185 Wash. 435, 55 P.2d 604 (1936); also see Restatement (Second) of Agency § 403 (1958); 3 Am. Jur. 2d Agency § 223 (1962).
It is contended that even if there is an agency, it is unenforceable because it is in violation of the statute of frauds. RCW 19.36.010(5). Reliance is placed on Carkonen v. Alberts, 196 Wash. 575, 83 P.2d 899, 135 A.L.R. 209 (1938).
*411The agreement which RCW 19.36.010(5) declares void unless in writing is one authorizing an agent or broker to sell or purchase real estate for compensation or commission, but it does not say that the actual authority to sell or purchase must be in writing. Mele v. Cerenzie, supra; Pedersen v. Jones, 35 Wn.2d 180, 211 P.2d 705 (1949); Stewart v. Preston, 77 Wash. 559, 137 P. 993 (1914). That section of our statute of frauds is aimed at fabricated claims for real estate commissions, and purports only to invalidate an oral agreement for such payment. The statute does not abrogate fiduciary duties, a result which would provide unfaithful fiduciaries a shield under which they could violate their trust. I am satisfied that the statute of frauds has no application in this case.12
For reasons of public policy the law does not permit an agent to assume any relationship antagonistic to his duty to his principal. The underlying purpose of this rule is to avoid temptation and to keep the agent singularly concerned with the rights and welfare of his principal. 3 Am. Jur. 2d Agency § 220 (1962). Consequently, if an agent receives anything as a result of his violation of a duty of loyalty to the principal, he is subject to a liability to deliver it or its value to the principal. Restatement (Second) of Agency § 403 (1958). I have referred to the law of agency because of my belief that an agency was established which did not terminate until the end of August. However, whether or not there was an agency, Vadman recognized the exclusive right of the plaintiffs to acquire the option during the month of August. The whole transaction is “instinct with an obligation”13 not to interfere with that right. *412Vadman’s disclosure to the Swanson-Whisler group was such an interference, and in my book constituted a breach of a fiduciary relationship, regardless of the legal label that may be placed upon it.
Consequently, I would direct the entry of a money judgment in favor of the plaintiffs against the defendant Vadman in the sum of $25,000, the amount received by him from the Swanson-Whisler group as a result of his transfer of the option to that group.14
Rosellini, Neill, and McGovern, JJ., concur with Hill, J.
March 5,1970. Petition for rehearing denied.

 This was based on. their fear that the Mottmans would not deal with them because of their limited financial resources.

 See note 3 in majority opinion for exact wording.

 It should be noted that the plaintiffs contend that the time limit given them was 5 p.m. on September 1. There is evidence supporting *408this contention, but for the purpose oí this dissent I am accepting the facts as found by the trial court; i.e., that Moss and Robbins had until the end of August (extended to 10 a.m. on September 1 by Vadman) in which to get the $60,000 to Vadman.

 See note 6 in the majority opinion.

 I have given no consideration to an additional reason suggested for holding the statute of frauds inapplicable, i.e., that the option here in question did not constitute “real estate” within the purview of RCW 19.36.010(5), the issue not having been discussed or briefed by counsel. There was nothing more substantial in this case than a promise to give an option until after 2 p.m. on September 1, 1966.

 Scott, J., in McCall Co. v. Wright, 133 App. Div. 62, 68, 117 N.Y.S. 775 (1909), quoted by Cardoza, J. in Moran v. Standard Oil Co., 211 N.Y. 187, 198, 105 N.E. 217 (1914) and in Wood v. Duff-Gordon, 222 N.Y. 88, 91, 118 N.E. 214 (1917).

 Although the prayer of the plaintiffs’ complaint was for $23,000, the actual finder’s fee paid was $25,000, and recovery of that amount is authorized by CR 54 (c).