Benson v. Watkins

• Court: Missouri Supreme Court
• Writing for the Court: White, J.
• Citation: Benson v. Watkins, 285 S.W. 407, 313 Mo. 426 (Mo. 1926)
• Decision Date: 20 March 1926
• Parties: MAX BENSON, Appellant, v. JOHN A. WATKINS, HENRY ANTHONY, and ELIZABETH AMES, Intervener. MAX BENSON v. JOHN A. WATKINS, HENRY ANTHONY, and ELIZABETH AMES, Intervener; JOHN A. WATKINS, Appellant

285 S.W. 407

313 Mo. 426

MAX BENSON, Appellant, v. JOHN A. WATKINS, HENRY ANTHONY, and ELIZABETH AMES, Intervener.

MAX BENSON v. JOHN A. WATKINS, HENRY ANTHONY, and ELIZABETH AMES, Intervener;

JOHN A. WATKINS, Appellant

Supreme Court of Missouri

March 20, 1926

Rehearing Granted, Reported at 313 Mo. 426 at 436.

Appeal from St. Louis City Circuit Court; Hon. Moses Hartmann, Judge.

Reversed and remanded (with directions).

Banister Leonard, Sibley & McRoberts for Max Benson.

(1) The court properly found that defendant Watkins was guilty of fraud in purchasing the real estate himself without making full disclosure to Benson of all the facts, and in taking title in Anthony for himself upon payment to Benson of less than he could have sold the real estate for at the time and less than the intervener was ready to pay for same. Watkins was guilty of a constructive fraud against plaintiff which entitled plaintiff to have the conveyance of the real estate to Anthony set aside and the title thereto revested in plaintiff. 21 R. C. L. p. 829, sec. 13; 31 Cyc. 1437; Connor v. Black, 119 Mo. 134; Tyler v Sanborn, 128 Ill. 136; Meek v. Hurst, 223 Mo. 688; Laundy v. Gardner, 238 S.W. 788; Grumly v. Webb, 44 Mo. 444; Evans v. Evans, 196 Mo. 1; Witte v. Storm, 236 Mo. 476; Smith v. Tyler, 57 Mo.App. 672; Euneau v. Rieger, 105 Mo. 675; Montgomery v. Hundley, 205 Mo. 138; Kregan v. Blake, 239 S.W. 495; O'Day v. Annex Realty Co., 236 S.W. 22; Van Raalte v. Epstein, 202 Mo. 173. (2) The trial court committed error in allowing Watkins a commission for selling the real estate. Watkins in his telegram of April 13, 1922, to Benson agreed to charge no commission on the $ 4,000 sale. Plaintiff contends he has made no valid sale to intervener, but even if he has he does not claim he acted for plaintiff in negotiating that sale. It is very clear that he did not. He was recreant to his trust, and in such case the agent can claim no commission. Witte v. Storm, 236 Mo. 493; Van Raalte v. Epstein, 202 Mo. 196; Paul v. Machine Co., 87 Mo.App. 654; O'Day v. Annex Realty Co., 236 S.W. 25; Stone v. Farnham, 22 R. I. 227; Pollard v. Lathrop, 12 Col. 171. (3) The court erred in decreeing that Watkins convey to intervener the real estate here in question, for the reason that under the evidence in the case it appears that the intervener is not an innocent purchaser, hence, whatever rights, if any, she acquired, are subject to plaintiff's equities: (a) Because the so-called sales contract expressly provides that it must be approved by the owner of the real estate, and that if the title to said real estate shall be found defective the earnest money shall be refunded and this was sufficient to put intervener on inquiry, and require her to investigate the title, and that would have disclosed that the record title was in Benson. (b) Intervener, at best, could have but an equitable interest, because it cannot be claimed she acquired the legal title to the real estate, and as against Benson's equitable right she cannot be an innocent purchaser unless she did acquire the legal title to the real estate. 39 Cyc. 1688; Maning v. Ins. Co., 123 Mo.App. 456. (c) Because the intervener had paid a small part only of the purchase money, and to constitute her a bona-fide purchaser as against the right of Benson to have the conveyance to Anthony set aside and the title revested in Benson, she must have paid all the purchase money before she acquired notice of Benson's equitable right. 39 Cyc. 1700; Digby v. Jones, 67 Mo. 104; Paul v. Fulton, 25 Mo. 156; Arnhalt v. Hartwig, 73 Mo. 485; Bank v. McElvain, 219 S.W. 75; Edwards v. Railway Co., 82 Mo.App. 96; Wetmore v. Woods, 62 Mo.App. 266; Bishop v. Schneider, 46 Mo. 472; Greenlee v. Marquis, 49 Mo.App. 290; Halsa v. Halsa, 8 Mo. 303; Matthews v. O'Donnell, 233 S.W. 451.

Marion C. Early and Ivon Lodge for John A. Watkins.

(1) The authorities cited by plaintiff to support his contention that an agent cannot purchase from his principal without disclosing his identity are not applicable to this case, because there was no misrepresentation or concealment practiced by defendant, and the plaintiff knew, or should have known, that the defendant was the purchaser. Texas Brokerage Co. v. Barclay & Son, 109 S.W. 1001. (2) The defendant owed the plaintiff no duty to notify him of Blackwelder's alleged offer unless the same was a cash offer, because defendant was not authorized to sell otherwise than for cash. 9 C. J. 526. (3) The defendant having rendered the plaintiff a valuable service, is entitled to a reasonable compensation, even if the court should find that defendant was guilty of fraud in purchasing the property from plaintiff. Clark v. Foundry Co., 199 S.W. 578; Chilton v. Halstead, 149 Mo.App. 144; Mabry v. Randolph, 7 Cal.App. 421.

Leahy, Saunders & Walther for intervener.

(1) The contract having been signed by defendant John A. Watkins, admittedly the real purchaser from plaintiff, is valid and binding as between intervener and Watkins, and no further approval by either plaintiff or Anthony was necessary. 2 Paige on Contracts, secs. 1176, 1177; McMickle v. Wabash Railroad, 209 S.W. 611; Yoder v. White, 75 Mo.App. 155. (2) Intervener having purchased the property in question without any knowledge or notice of the claim or equities of plaintiff, it is immaterial whether Watkins or Anthony held the bare legal title at the time of the execution of the contract. The defendant Anthony knew Watkins was the real purchaser of the property from plaintiff and the title was taken in Anthony's name by defendant Watkins. (3) Where one or two innocent persons must suffer for a wrongful act of another, he must suffer who places the party doing the wrongful act in a position to do it. Baade v. Cramer, 278 Mo. 551; Neuhoff v. O'Reilly, 93 Mo. 164; 1 Story's Eq. Juris. (14 Ed.) sec. 514. (4) Even though Watkins was guilty of constructive fraud, intervener, having purchased without notice of any claim or equities of plaintiff, has an equity superior to that of plaintiff, for the maxim that of two equities the prior in time will prevail applies only where the equities are identical or precisely equal. 2 Pomeroy Eq. Juris., sec. 782. (5) If Watkins was guilty of constructive fraud upon plaintiff, yet to do full justice the legal title should be vested in intervener, an innocent party in the transaction, and the benefits which Watkins would reap should be paid to plaintiff. Bradshaw v. Yates, 67 Mo. 221; Steckman v. Harber, 55 Mo.App. 71; Long v. Abstract Co., 252 Mo. 158; Cravens v. Moore, 61 Mo. 178; Woodward v. Mastin, 106 Mo. 234.

OPINION

White, J.

The plaintiff, Max Benson, filed his petition in the Circuit Court of the City of St. Louis, alleging that he was the owner of a certain tract of land in that city, that his residence was in San Francisco, California, and that the defendant Watkins was a resident of the city of St. Louis and the plaintiff's agent or the manager of his real estate; that he collected rents on the land described; that he was requested by plaintiff to find a purchaser, and, falsely representing to plaintiff that the property could not be sold for more than $ 4,000, induced plaintiff to sell and convey it for that sum to one Henry Anthony, who was made a party defendant; that Watkins was at the time offered a much larger sum for the property and Anthony took the title merely for the defendant Watkins, and he had no beneficial interest in it; that Watkins paid the plaintiff the sum of $ 1937.98, the balance of the purchase price after deducting the amount of a mortgage and interest and expenses. Plaintiff prayed the court to adjudge that he might pay the sum received by him as aforesaid, and that the conveyance to Anthony be cancelled and for naught held.

Watkins filed, for answer, a general denial.

One Elizabeth Ames, by leave of court, filed an intervening petition. She alleged that on May 5, 1922, while Watkins was the legal owner of the property, she entered into a contract to purchase it from him for the sum of $ 5700. Of this sum she was to pay $ 3700 in cash and assume the $ 2,000 mortgage on the property. There was a benefit assessment on the property at the time amounting to $ 520, which was to be satisfied as a part of the cash payment. The intervener alleged that she had no knowledge or information about the matters alleged in the plaintiff's petition regarding Watkins' actions and therefore denied those allegations. She prayed the court as intervener to vest title in her on payment of the balance of the purchase money due. She had payed $ 300 earnest money at the time of entering into the contract.

On June 7, 1923, the court rendered judgment for plaintiff against Watkins, finding that Watkins, to whom Anthony had conveyed the property, at the time he purchased the property in the name of Anthony, did not disclose to his principal that he himself was the real purchaser. The court further found that the intervener, Elizabeth Ames, was an innocent purchaser for value, and adjudged that Watkins convey the property to her, that she pay into court the balance of the purchase money, that Watkins and Anthony pay into court the $ 300 earnest money, and that Watkins be repaid the $ 1937.98 which he had paid to plaintiff, and that he be further paid the sum of $ 201 as commission for making the sale of the real estate, and that the benefit assessment of $ 520 be paid, and the balance of the purchase money be paid to the plaintiff. From that judgment the plaintiff and Watkins appealed. Both appeals were heard together.

The evidence shows the following.

April 13, 1922, Watkins sent to Benson, then in California, the following telegram:

"Max Benson.

"1251 1/2 Eddy Street, San Francisco, Cal.

"Offer four

...