Blank v. Aronson

• Decision Date: 19 April 1911
• Docket Number: 3,350.
• Citation: 187 F. 241
• Parties: BLANK v. ARONSON.
• Court: U.S. Court of Appeals — Eighth Circuit

187 F. 241

BLANK v. ARONSON.

No. 3,350.

United States Court of Appeals, Eighth Circuit.

April 19, 1911

Edward Engerud and Lee Combs (Holt & Frame, on the brief), for appellant.

Arthus W. Fowler (W. S. Stambaugh and W. H. Oppenheimer, on the brief), for appellee.

Before SANBORN and ADAMS, Circuit Judges, and WILLIAM H. MUNGER District Judge.

ADAMS Circuit Judge.

Aronson employed Blank to find a purchaser for a tract of land owned by him in Barnes county, N. D. Blank entered upon the task and produced Elmer W. Fish as a proposed purchaser at the price, which he represented to be all he could get, of $14 per acre. On December 3, 1906, a contract of sale was made between Aronson and Fish for that price, by the terms of which Fish agreed to pay $2,300 in cash, $2,000 more on or before November 1, 1907, when the deed was to be made, and to give his notes, secured by mortgage on the premises, for the balance, which was to mature from time to time thereafter. On November 1, 1907, Blank appeared to be the assignee of Fish's right to purchase, and upon representations to that effect the deed was made to him by Aronson.

The object of this suit, instituted by Aronson in the court below, was to annul that deed on the ground that Blank, while acting ostensibly as his agent and confidential adviser, had a personal interest in the purchase and concealed the same from him. The trial court found for the complainant, and entered a decree ordering a reconveyance of the property to complainant, on condition that he return to defendant the consideration received by him and certain sums paid by defendant for taxes and interest on prior mortgages. From this decree, defendant appealed.

If the charge found in the bill is sustained by the proof, the sale ought to be annulled. There is no principle of law, equity or morals more universally recognized than this: That an agent must be faithful to his principal in the discharge of the duty which he undertakes. He cannot purchase for himself that which his duty requires him to sell for his principal. 'Emptor emit quam minimo potest, venditor vendit quam maximo potest. ' His own interest is a constantly acting force inducing him to unfaithfulness in the discharge of the duty undertaken by him. As said by the Supreme Court of the United States in Michoud v. Girod, 4 How. 503, 554, 11 L.Ed. 1076;

'The general rule stands upon our great moral obligation to refrain from placing ourselves in relations which ordinarily excite a conflict between self-interest and integrity. * * * It therefore prohibits a party from purchasing on his own account that which his duty or trust requires him to sell on account of another.'

These salutary principles have been repeatedly laid down and enforced by this court. See Walker v. Pike County Land Co., 71 C.C.A. 593, 139 F. 609; Mastin v. Noble, 85 C.C.A. 98, 157 F. 506, 509; Files v. Rankin, 82 C.C.A. 491, 153 F. 537; Babcock v. De Mott, 88 C.C.A. 64, 160 F. 882; Cunningham v. Pettigrew, 94 C.C.A. 457, 169 F. 335.

The evidence, consisting of oral testimony, letters, and other written documents, was heard in open court by the learned trial judge. He had all the witnesses before him, and observed their demeanor in the trying ordeals of examination and cross-examination, and after hearing arguments of counsel thereon made the following concise findings of fact:

'That on or about the 15th day of August, 1906, the complainant and defendant entered into an oral agreement whereby the defendant, for a valuable consideration, agreed to act as the agent of the complainant in procuring a purchaser for the above-described land, and in assisting and acting as agent of complainant in closing up and completing the sale of the same with the purchaser so to be obtained.

'That in the course of such agency and employment, and on or about the 3d day of December, 1906, the defendant presented to complainant one Elmer W. Fish as a purchaser for said land, at the agreed price of $14 per acre, and then and there falsely and fraudulently stated and represented to complainant, and led complainant to believe and understand, that said real estate was being purchased solely for and by said Elmer W. Fish, and for his exclusive use and benefit; whereas, in truth and in fact, the defendant had secretly agreed with said Fish that he, said defendant, should have an equal undivided one-half interest in said property, and the contract to be entered into by said Fish with complainant for the purchase thereof. That said Fish was fully aware of said fraudulent scheme, and participated therein with the defendant. That relying upon the aforesaid statements and representations of the defendant that said Fish was purchasing said property for himself alone, and believing the same to be true, complainant entered into a written contract on said 3d day of December, 1906, with said Elmer W. Fish, whereby said Fish agreed to buy, and this defendant agreed to sell to him, the real estate above described, and the whole thereof, at the agreed price of $14 per acre, all as alleged and set forth in the complaint herein.

'That on or about the 20th day of December, 1906, said Fish died intestate, and that thereafter, and on or about the 25th day of July, 1907, the defendant procured from the heirs of said Fish a quitclaim deed, whereby they jointly and severally did grant, bargain, sell, release, and quitclaim to him, his heirs and assigns, forever, all their right, title, and interest in and to the real estate above described. That said quitclaim deed upon its face did not show the exact interest which said grantors as heirs at law of said Fish had in the real estate above described.

'That on or about the 22d day of October, 1907, the defendant falsely and fraudulently stated and represented to complainant that he had acquired from the heirs at law and next of kin of said Elmer W. Fish, deceased, all their right, title, and interest in and to said contract of purchase, and the lands covered thereby, and falsely and fraudulently stated and represented that the interest which said deceased had in said contract of purchase, and the lands covered thereby, and which defendant acquired from the heirs at law and next of kin of said deceased, as aforesaid, was the entire and exclusive interest in and to said contract of sale and in and to the lands covered thereby, and falsely and fraudulently represented that he, said defendant, was by reason of the purchase by him from said heirs at law and next of kin of said deceased, as aforesaid, the owner of the entire and exclusive interest in said contract of sale, and the lands covered thereby, and entitled to a conveyance from the complainant of all of said real estate, pursuant to the terms of said contract. That relying upon said statements and said representations so made by the defendant, and believing them to be true, and without any knowledge to the contrary, or that the defendant had from the beginning been jointly interested in the purchase of said lands with said Fish, the complainant on the 29th day of October, 1907, made, executed, and delivered to defendant a certain special warranty deed, whereby he did, in consideration of the sum of $14,258, grant, bargain, sell, and convey to said defendant all of said real estate.

'That as a part of said consideration of $14,258, named in said special warranty deed, defendant and his wife made, executed, and delivered to complainant their three promissory notes, bearing date October 29, 1907, and due as follows: One note for $2.000, due on or before November 1, 1908; one note for $1,000, due on or before November 1, 1909; and one note for $2,000, due on or before November 1, 1910, all of which said notes were secured by mortgage upon all of said real estate above described.

'That complainant did not discover the fraud of defendant and of said Elmer W. Fish until after the execution of said deed for said land, and that upon discovering the same he promptly demanded a rescission of said transaction, and a reconveyance of said property to him, and offered to restore to the defendant all payments made upon the purchase price of said land, and everything of value received by complainant under said contract, all of which was refused by the defendant.

'That the defendant has been in the possession of said land since the execution of said contract, and in the enjoyment of the rents, issues, and profits of the same. That...