Craig v. Parsons

• Decision Date: 11 December 1916
• Docket Number: No. 1887.,1887.
• Citation: 161 P. 1117,22 N.M. 293
• Parties: CRAIG ET AL.v.PARSONS ET AL.
• Court: New Mexico Supreme Court

22 N.M. 293

161 P. 1117

CRAIG ET AL.

v.PARSONS ET AL.

No. 1887.

Supreme Court of New Mexico.

Dec. 11, 1916.

Syllabus by the Court.

A contract, providing that one party agrees to sell land of another party for a certain sum, for which first party shall receive a certain stipulated commission, held to create the relation of principal and agent between the parties.

The expression “to sell,” used in contract of brokerage, defined.

Where an agent sells land of his principal at a price in excess of the price stipulated and agreed upon between the principal and the agent, and fraudulently appropriates the difference to himself, or permits others to appropriate it, he becomes liable to the principal for such difference, together with the value of the commission received by him.

Where a person, with full knowledge of the facts, aids and abets a broker in the commission of an act of fraud upon the principal, he is liable to the latter for loss sustained thereby.

Appeal from District Court, Chaves County; Richardson, Judge.

Action by Harry V. Craig and another against Ralph M. Parsons and another. From a judgment for plaintiffs, defendants appeal. Affirmed on condition.

Where a person, with full knowledge of the facts, aids and abets a broker in the commission of an act of fraud upon the principal, he is liable to the latter for loss sustained thereby.

Geo. S. Downer, of Albuquerque, and Reid & Hervey and Ed. S. Gibbany, all of Roswell, for appellants.

R. C. Reid, of Roswell, for appellees.

HANNA, J.

This is an appeal from the district court of Chaves county by Ralph M. Parsons and M. M. Baumgartner from a judgment against them in the sum of $3,600. The complaint in this case, in substance, alleged that the appellees, prior to April 6, 1912, were the owners of a certain tract of land in Chaves county, and on the date last mentioned entered into a contract in writing with Parsons, whereby the latter agreed to sell said premises for $6,100, for which he was to receive from the owners of the land a certain model Ford automobile; that a sale of said premises was made by parsons to C. L. Herrman for $9,000; that appellants concealed from appellees that they had received $9,000 for said land and fraudulently appropriated the difference between the contract price of said land and the price actually received therefor to their own uses, and that the commission specified in said contract was paid by the owners to Parsons in ignorance of the fraud of the appellants. The time of the discovery of the alleged fraud was also alleged. The separate answer of the appellants denied the fraud alleged in the complaint, and alleged that the appellant Parsons sold the said lands to Baumgartner for $6,100, for which sum Parsons accounted to the owners, and that Baumgartner thereupon sold the said land to Herrman for $9,000. Under those facts it was contended that Parsons had fulfilled his contractual obligations, and that Baumgartner owed no duty whatever in the premises to the appellees. The contract of April 6, 1912, is in the following words:

“Parsons agrees to sell the place for $6,100 and to close the deal within 30 days from April 6 (unless time is extended by Craig): $4,000 of the purchase price to be paid in cash and the balance, $2,000 in one year at 10%; $100 having been already paid, the receipt of which is hereby acknowledged. $500 of the $4,000 has been deposited in the First National Bank of Roswell and if the deal is not consummated, by fault of present owners, then in that event, it is to be divided equally between Craig and Parsons. If the provisions of the above contract are carried out Parsons is to receive a new model T 4-door Ford car as his commission for effecting the sale. It is further understood that Parsons' customer may have the right, instead of making a note for the deferred payment of $2,000, to pay the same in cash.”

[1][2] 1, 2. One of the contentions made by the appellants is that this contract does not create Parsons the agent of the owners of the said land, but simply authorizes him to make a sale of the property. Upon that theory it is claimed that the evidence shows that Parsons sold the land to Baumgartner for the contract price, and even though he (Parsons) assisted in making the sale to Herrman for $9,000, he cannot be held liable to the appellees, because he owed them no duty in the premises. The contract hereinabove referred to clearly provides for the agency of Parsons in the matter of the sale for the owners of the property, unless the meaning to be ascribed to the words “to sell” changes the evident intention of the parties as elsewhere expressed in the instrument. Parsons, by the terms of the instrument, was to receive his specified commission from the owners for effecting a sale of the property to his “customer.” The evident intention of the parties that Parsons was to act as the agent of the owners in effecting a sale of the property is not changed because of the use in the contract of the words “to sell.” In Keim v. Lindley (N. J. Ch.) 30 Atl. 1063, 1073, a leading case, the court, speaking with reference to the meaning to be given to the words “to sell” and the like, said:

“It seems to me to amount to no more than this: That the mere employment of an ordinary real estate broker to effect a sale of a parcel of land, even though the price and terms be prescribed, does not amount to giving present authority to such broker to conclude a binding contract for the same. Moreover, such authority is not usually to be inferred from the use by the principal and broker in that connection of the terms ‘for sale’ or ‘to sell,’ and the like. Those words, in that connection, usually mean no more than to negotiate a sale by finding a purchaser upon satisfactory terms.”

See, also, 4 R. C. L. “Brokers,” § 14; Bacon v. Davis, 9 Cal. App. 83, 98 Pac. 71; Duffy v. Hobson, 40 Cal. 240, 6 Am. Rep. 617; Gault Lumber Co. v. Pyles, 19 Okl. 445, 92 Pac. 175, 176; Stemler v. Bass, 153 Cal. 791, 96 Pac. 809, 811, and note, 17 L. R. A. (N. S.) p. 211, where many cases are collected.

While the terms employed in such contracts control in the construction to be given them by the courts, cases of some similarity, holding that the relation of principal and agent was created by the act of the parties, are Chezum v. Kreighbaum, 4 Wash. 680, 30 Pac. 1098, 32 Pac. 109; and Tate v. Aitken, 5 Cal. App. 505, 90 Pac. 836, 839.

[3] 3. Holding, as we do, that at all times material hereto Parsons was the agent of the appellees, the question next presented is whether Parsons is liable under the facts disclosed by the evidence and the findings of the court. The appellants insist that their version of the transaction is the correct one, but there is substantial evidence to sustain the conclusions of the trial court, and therefore we must assume that those conclusions are correct. The trial court found that the record failed to disclose that Parsons appropriated to himself any of the excess of the purchase price. It also held that the sale of the premises was made to Herrman and not to Baumgartner. This finding is contained in the trial court's memorandum opinion, and conflicts with the judgment of the court, which found that all the allegations of the complaint were sustained by the evidence. The evident conclusion of the court, however, was that while Parsons did not appropriate to himself any of the excess purchase price, he was liable to the principal by virtue of his conduct in selling the property to Herrman for $9,000 and concealing from appellees the real price paid therefor. In Duncan v. Holder, 15 N. M. 323, 107 Pac. 685, the territorial Supreme Court said:

“The value in such cases [cases where principal sues agent for money had and received] is quite immaterial, for the reason that the agent is not employed with regard to the value of the property, but by the terms of his employment he is charged with the duty of selling it at a price fixed by his principal, irrespective of its value, and the law places upon the agent his duty to account to his principal for any advantage which he may secure in the line of his employment; that is, even if the property is placed in the agent's hands to sell at a certain price, and he receives a greater price, he is bound to account for it.”

Appellants' argument that appellees had no cause for complaint, because they received for their land all that they asked for it, is clearly without merit under the foregoing authority. Where the doctrine in the foregoing cases is applied, the courts hold that the principal may recover from the agent, not only the difference in the price paid to the principal for the land and the price obtained by the agent and concealed from the principal, but also the value of the commission paid by the...