Lynch v. Fallon

• Decision Date: 19 February 1876
• Citation: 11 R.I. 311
• Parties: CHARLES W. LYNCH v. JOHN FALLON.
• Court: Rhode Island Supreme Court

11 R.I. 311

CHARLES W. LYNCH v. JOHN FALLON.

Supreme Court of Rhode Island.

February 19, 1876

While an exchange of realty was negotiating between A. and B., L a broker already in the employ of A., acted for B. without so far as appeared, the knowledge of A.: -

Held, that L. could not recover for his services to B., notwithstanding an express agreement on the part of B made before the exchange to pay commissions to L., and notwithstanding a promise made by B. after the exchange to pay a fixed sum to L.

A broker acting at once for both vendor and purchaser assumes a double agency disapproved of by law, and which, if exercised without the full knowledge and free consent of both parties, is not to be tolerated.

ASSUMPSIT heard by the court, jury trial being waived.

Henry B. Whitman, for plaintiff.

B. N. & S. S. Lapham, for defendant.

DURFEE C. J.

This is an action of assumpsit to recover $2,500 for commissions for the plaintiff's services as a broker in negotiating an exchange of real estate. The two estates exchanged were a hotel estate, belonging to the defendant, situated in Worcester, and valued by the defendant at $125,000, on one side, and a tract of land belonging to the West Elmwood Land Company, situated in Providence, on the other side. There was, subject to mortgages, an even exchange. The plaintiff claims that the defendant made him an express promise to pay him the regular commissions before the exchange, and after the exchange promised to pay him $2,500. The defendant denies this. We think the promise is proved. The defendant contends that, if proved, it is not binding upon him, the plaintiff having been previously employed by the West Elmwood Land Company to sell their land, and being in their employ throughout the transaction. We think this is proved. The plaintiff has in fact presented a bill to the company or its representatives for services in effecting the exchange.

The general rule is, that though a person may be entitled to pay from both parties to a sale or exchange where he acts merely as a middleman to bring them together; Rupp v. Sampson et al. 16 Gray, 398; Siegel v. Gould, 7 Lans. 177; he cannot be allowed to serve as an agent or broker for both, because in such case there is a necessary conflict between his interest and duty, and he is exposed to a temptation to sacrifice the interests of one or both of his principals to secure his double commissions. As agent for the vendor, his duty is to sell at the highest price; as agent for the vendee, his duty is to buy for the lowest; and even if the parties bargain for themselves, they are entitled to the benefit of the skill, knowledge, and advice of the agent, and, at the same time, to communicate with him without the slightest fear of betrayal, so that it is hardly possible for him to be true to the one without being false to the other. The claim to charge commissions to both parties is so unreasonable that it cannot be justified by any custom or usage. Farnsworth v. Hemmer, 1 Allen, 494; Walker v. Osgood, 98 Mass. 348; Pugsley v. Murray, 4 E. D. Smith, 245; Everhart v. Searle, 71 Pa. St. 256; Raisin v. Clark, 41 Md. 158; Schwartze v. Yearly, 31 Md. 270; Morison v. Thompson, L. R. 9 Q. B. 480.

It is intimated in Pugsley v. Murray, 4 E. D. Smith, 245 that the rule only applies where the broker conceals the double employment; but other cases rest the invalidity of the contract upon broad grounds of public...