Connelly v. Special Road & Bridge Dist. No. 5

• Decision Date: 05 March 1930
• Citation: 126 So. 794,99 Fla. 456
• Parties: CONNELLY v. SPECIAL ROAD & BRIDGE DIST. No. 5 et al.
• Court: Florida Supreme Court

126 So. 794

99 Fla. 456

CONNELLY v. SPECIAL ROAD & BRIDGE DIST. No. 5 et al.

Florida Supreme Court

March 5, 1930

ELLIS and BUFORD, JJ., dissenting.

Commissioners' Decision.

Suit by P. F. Connelly, trading as the P. F. Connelly Paving Company against the Special Road & Bridge District No. 5, and others. From an adverse decree, complainant appeals.

Reversed and remanded, with directions.

Syllabus by the Court

SYLLABUS

Agent's efforts must be for principal's benefit, and he may not deal in agency business for own benefit. An agent may not deal in the business of his agency for his own benefit. His duty to his principal requires that his efforts shall be in the behalf and for the benefit of his principal. He cannot perform this duty if he is constantly attempting to use his agency for his own purposes.

Servant is chargeable for breach of duty, if, without master's knowledge and consent, he engages in transaction bringing his personal interest into conflict with obligations as fiduciary agent. The general rule is that a servant is chargeable as for a breach of duty, if, without the knowledge and consent of his master, he engages in a transaction which tends to bring his personal interest into conflict with his obligations as a fiduciary agent. This rule has been applied where the agent derives profits from transactions which operate directly to the prejudice of his master's business.

Agent who, without principal's knowledge and sanction, procures personal advantage from transaction not contemplated by employment contract breaches duty. A servant who, without his master's knowledge and sanction, procures from a transaction in which he is acting as his master's agent a personal advantage not provided for, nor contemplated by, the contract of hiring, is guilty of a breach of duty.

Employee cannot, without employer's consent, retain profits or earnings received in course of employer's business or in undertaking constituting breach of duty. An employee is bound to the exercise of the utmost good faith towards his employer, and cannot, without the latter's consent retain profits or earnings received in the course of the performance of the employer's business or in an undertaking which constitutes a breach of duty to the employer.

After expiration of term of service, servant may compete with former employer but cannot use for own advantage information or material acquired in employment. A servant, after his term of service has expired, is entitled to compete in business with his master on the same footing as a stranger, with the qualification that the servant is precluded from using for his own advantage, and to the detriment of his former master information or material acquired by him in the course of his employment.

Agent must communicate to principal facts relating to principal's business which in good faith ought to be made known to latter. It is the duty of an agent to communicate to his principal facts relating to the principal's business which ought, in good faith, to be made known to the latter.

Profits gained by agent in execution of agency belong to principal regardless of whether derived through performance or violation of duty. The well-settled and salutary principle that a person who undertakes to act for another shall not, in the same matter, act for himself, results also in the other rule that all profits made and advantage gained by the agent in the execution of the agency belong to the principal. And it matters not whether such profit or advantage be the result of the performance or of the violation of the duty of the agent, if it be the fruit of the agency.

Agent's duty to be faithful to principal does not cease when employment ends, and cannot be renounced at will by termination of relation. As a general rule, the duty of an agent to be faithful to his principal does not cease when the employment ends, and it cannot be renounced at will by the termination of the relation. It is as sacred and inviolable after as before the expiration of its term.

One who, with knowledge or sufficient means of knowledge of his rights, remains inactive for considerable time is estopped from asserting rights against another induced to act relying on his inactivity. A party who, with full knowledge or with sufficient notice or means of knowledge of his rights and all the material facts, remains inactive for a considerable time, so that another party is induced to suppose that a transaction in which he, such other party, is interested, is recognized, will be estopped from asserting any rights he may have had.

One invoking estoppel has burden of proof. The burden of proving estoppel rests upon the one invoking it.

Notice to or knowledge of agent is imputed to principal only where knowledge is possessed or notice received by agent within scope of authority. The rule that imputes to the principal the knowledge possessed or notice received by the agent applies only to cases where the knowledge is possessed or the notice received by the agent within the scope of his authority.

Appeal from Circuit Court, Hillsborough County; L. L. Parks, judge.

COUNSEL

Hampton & Bull, of Tampa, for appellant.

Charles F. Blake, of Tampa, for appellees.

OPINION

DAVIS C.

The appellant filed his bill in the circuit court of Hillsborough county, wherein it was alleged in substance that on the 4th day of February, 1927, special road and bridge district No. 5, by and through the chairman of the board of county commissioners entered into fourteen contracts for the construction of paved roads in said district; that, after the letting of said contracts, complainant had a series of negotiations during the months of April, May, and June, 1927, conducted in part through the defendant J. W. Cooper, who was a trusted employee of complainant, and engaged in transacting business as general superintendent and later as assistant superintendent; that complainant was then engaged in other work in the state of Arkansas, and left with and trusted to the said Cooper and to one Walter Warntjers, another employee, the matter of securing other contracts for work, and intrusted particularly to the said Cooper and the said Warntjers the matter of securing from Smith Bros. Construction Company a subcontract upon the said roads 'for double surface treatment and covering asphalt with slag and spotting slag' upon each of said roads; that Cooper, with the fraudulent design of benefiting himself, and in bad faith towards complainant, at a time when he was in the employ of complainant, in his name and for his own use and benefit fraudulently entered into subcontracts with said Smith Bros. Construction Company, for 'sweeping and covering the asphalt with slag, at and for the price of four cents per square yard;' that Smith Bros. Construction Company knew of Cooper's employment; that complainant did not learn of the existence of the Cooper contract until after said work was completed and complainant was in Florida inspecting other work; that approximately a certain stated amount had been paid to Cooper on said contract, and that was in a safety deposit box in Tampa in the name of Mrs. J. W. Cooper, wife of the said J. W. Cooper; that other sums had been advanced upon said contracts 'for monthly estimates,' the exact amounts being unknown to complainant, but that final payment had not been made to Cooper, and that any sum then due Cooper for work called for by his subcontract 'is the property of and belongs to' complainant. The bill contains a prayer for an accounting, and that all sums which may be due Cooper by reason for the subcontract be deemed to be the property of and paid to complainant, except the sum of $1,300 which Cooper was entitled to as salary during the period of performance of the contract, and for general relief. On the 25th day of January, the court made an order reciting that the defendants J. W. Cooper, Smith Brothers Construction Company, special road and bridge district No. 5, and the county commissioners had appeared before the court by counsel, the said Cooper being present in court and the complainant being represented by counsel, and that the parties having entered into an agreement before the court 'That when the said Special Road and Bridge District Number Five and the said County Commissioners have ascertained the amount due to Smith Brothers Construction Company for the work of sweeping and covering the asphalt with slag, as described in the bill of complaint in this cause, that the amount so found to be due shall be paid to the Citizens Bank & Trust Company, a corporation, of Tampa, Florida, to be held by said bank until final decree is secured in this cause,' and it was so ordered, and it was further ordered that the said defendants be and they and each of them were thereby restrained and enjoined from removing or withdrawing the said sum so ascertained until the further order of the court.

Smith Bros. Construction Company answered the bill, but, inasmuch as the bill of complaint was afterwards, on motion of complainant, dismissed without prejudice as to it, and the injunction theretofore granted was dissolved as to said Smith Bros. Construction Company, it is not necessary to recite the contents of such answer.

The defendants J. W. Cooper and his wife answered, admitting that no final payment had been made to Cooper, as subcontractor by Smith Bros. Construction Company, the general contractor denying certain allegations and demanding strict proof of still other material allegations of the bill that were neither admitted nor denied. These defendants, further answering, said that at the time of the making of the contract between J. W. Cooper and Smith Bros. Construction Company on the 10th of June, 1927, Cooper had...