Curotto v. Hammack

• Court: Missouri Supreme Court
• Writing for the Court: LEEDY
• Citation: Curotto v. Hammack, 362 Mo. 457, 241 S.W.2d 897, 26 A.L.R.2d 1302 (Mo. 1951)
• Decision Date: 10 September 1951
• Docket Number: No. 41893,No. 2,41893,2
• Parties: , 26 A.L.R.2d 1302 CUROTTO v. HAMMACK et al

Page 897

241 S.W.2d 897

362 Mo. 457, 26 A.L.R.2d 1302

CUROTTO v. HAMMACK et al.

No. 41893.

Supreme Court of Missouri, Division No. 2.

Sept. 10, 1951.

John E. Cramer, Jr., St. Louis, for appellant, Bakewell, Bakewell & Cramer, St. Louis, of counsel.

John A. Nolan, Clayton, for John T. Hammack, respondent.

Kerth & Schreiber, Dalton W. Schreiber, Clayton, for defendant-respondent Frank C. Freesmeier, guardian and curator of Elizabeth Freesmeier.

LEEDY, Presiding Judge.

This is a suit in equity brought by Alma M. Curotto, who was the owner of certain real estate in St. Louis County, to set aside a deed to that property executed by her on September 12, 1945, to Elizabeth Freesmeir (also known as E. Freesmeir), and for an accounting of the rents and profits subsequently accruing, and for general relief. The defendants are John T. Hammack (son-in-law of the grantee), Frank C. Freesmeier, guardian and curator of (his mother) Elizabeth, the grantee (who was adjudged incompetent subsequent to the date of the deed and prior to the institution of this suit), and Dimmitt-Rickhoff-Bayer Real Estate Company, Inc. The decree, upon a general finding of the issues in favor of all the defendants, dismissed plaintiff's petition, and she appealed. The parties will be referred to as they were styled in the trial court. The defendant real estate company has filed no brief. The other defendants have filed separate, although substantially identical, briefs.

Plaintiff's claim of right to cancellation of the instrument and other relief is based not upon fraud in fact, but wholly upon certain facts as constituting fraud in law. In the view we take of the case, it turns upon the effect of facts which are not in dispute, and hence an extended statement, as in the ordinary review of equity cases, de novo on the record below, is deemed unnecessary.

The property is income-producing, located at 1019-23 Big Bend Boulevard, Richmond Heights, improved with a store building and offices. Hammack, an agent in the employ of, and sales manager for, the defendant real estate company, solicited and obtained from the plaintiff (a widow) a written contract appointing the company as her exclusive agent for 30 days to sell the property for the price of $26,000, she agreeing to pay a commission of 5% in consideration of their services. Plaintiff's dealings with the company were through Hammack, whom she had known for several years. On the last day of the life of the listing contract, July 12, 1945, Hammack presented to the plaintiff at her home a contract providing for the sale of the property at the price of $26,000, signed by 'E. Freesmeier.' Disregarding the very sharp conflict between the versions of plaintiff and Hammack as to what was said by them, respectively, concerning the identity of E. Freesmeier before signing the contract, and treating that matter solely from the standpoint of Hammack's own testimony, it appears that, in response to her inquiry, he told her no more than that E. Freesmeier was a 'client' of the office of Dimmitt-Rickhoff-Bayer Real Estate Company, Inc. Plaintiff was not told that E. Freesmeier was his mother-in-law. The proposed purchaser was, in fact, Hammack's aged, widowed mother-in-law, who was then, and ever since 1927 had been, living in his home and that of his wife as a member of their household. Not only that, but Hammack was largely (if not exclusively) entrusted with the management and control of her property and financial affairs. He had negotiated a very considerable number of real estate transactions throughout the years, using her in some as a straw party (compensating her for that service), and in others acting directly for her, as her agent.

To carry out the contract, it was necessary that the purchaser refinance the property. For such purpose two loans were negotiated (upon an appraised value of $30,000), one for $18,000 from Roosevelt Federal Savings & Loan Association, and one for $1,500 from one Brown, an individual. Both were arranged by Hammack. The notes were signed by Elizabeth Freesmeier and Hammack, and secured by deeds of trust signed only by Elizabeth Freesmeier. The explanation of his becoming a co-maker of the two notes (which was supported by substantial evidence) was that it was a requirement of the lenders because of the advanced age of the real borrower, Mrs. Freesmeier, and the uncertainty of her income.

For our purposes, we will treat the proof as failing to sustain plaintiff's allegations that her property was acquired by Hammack for himself or jointly for himself and his mother-in-law, but, on the contrary, it will be deemed that in the negotiations culminating in the sale he acted on behalf of his mother-in-law, and that the title was, accordingly, taken in her name.

All of the parties concede the universal rule to be that a broker employed to sell property cannot, without the principal's full knowledge and consent, become the purchaser. This rule has been held to extend to employees, partners, and near relatives. 12 C.J.S., Brokers, Sec. 42, page 103. See, also, 2 Am.Jur., Agency, Sec. 257, and Rodman v. Manning, 53 Or. 336, 99 P. 657, 1135, 20 L.R.A.,N.S., 1158, 1159 et seq. It is upon the rule as thus extended that plaintiff relies, her whole claim being founded upon the failure of Hammack, as her own agent, to disclose to her the fact that the prospective purchaser produced by him was his own mother-in-law, and for whom he was acting. In the separate briefs of Hammack and his mother-in-law's guardian the position is taken that he was under no duty to disclose the fact of that relationship. Such is the pivotal issue. True, no case has been cited where the relationship considered happens to have been the precise one here involved.

Anent the general proposition above stated, Judge Lamm, in Meek v. Hurst, 223 Mo. 688, 698, 122 S.W. 1022, 1024, 135 Am. St. Rep. 531, said this: 'The doctrine of the law that forbids an agent to buy from or sell to himself is not necessarily based on the idea that such deal in dirt is (to speak colloquially) a 'dirty' deal; that is to say, resulted in an injury to or a fraud upon him. But it is rather based on the idea of closing the door to the temptation to commit fraud. It tends to keep the agent's eye single and clear to the rights and welfare of his principal. To allow one acting in the fiduciary relation of agent to buy from or sell to himself is a solecism in the realm of law; for the moral stamina of the average man is inadequate to preserving a fine glow of fidelity to his trust and confidential relation in such transaction, and the interdiction is enforced with a strong hand in courts of justice.'

In McNeill v. Dobson-Bainbridge Realty Co., 184 Tenn. 99, 195 S.W.2d 626, the broker was a corporation, as here. Its principal, the seller, Mrs. McNeil, dealt with one of the corporation's agents, Morgan, who took a conveyance to himself 'as trustee' without disclosing that it was his own mother for whom he was acting. It was held that ...