Foster v. Zapf

Decision Date31 January 1931
Docket NumberNo. 3512.,3512.
Citation296 P. 800,35 N.M. 319
PartiesFOSTER et al.v.ZAPF et al.
CourtNew Mexico Supreme Court

OPINION TEXT STARTS HERE

Syllabus by the Court.

Broker's surreptitious purchase of principal's property is constructive fraud for which equity will avoid sale at principal's election; principal who traded properties through broker could set aside transaction, where property received in exchange was secretly owned by broker.

Surreptitious purchase by broker of principal's real estate is constructive fraud for which equity will avoid the sale at principal's election, regardless of actual fraud.

In principal's suit to cancel deed for duress, Supreme Court would consider complaint as amended to conform to evidence received without objection showing broker's interest as surreptitious purchaser.

In suit to cancel sale of real estate for duress employed to enforce executory contract tainted with fraud, the evidence received without objection disclosing that the seller's broker, a defendant, was the surreptitious purchaser, and the fact having been found and relief having been based thereon, and the trial court's attention not having been called to the variance, Supreme Court considers the complaint as amended to cover proofs.

Appeal from District Court, Bernalillo County; Helmick, Judge.

Suit by Artie Foster and others against Charles G. Zapf and others. Judgment for plaintiffs, and defendants appeal.

Affirmed, and cause remanded.

Surreptitious purchase by broker of principal's real estate is constructive fraud for which equity will avoid the sale at principal's election, regardless of actual fraud.

Downer & Keleher, of Albuquerque, for appellants.

George C. Taylor of Albuquerque, for appellees.

WATSON, J.

C. E. Foster, now deceased, and Artie Foster, his wife, entered into an executory contract with J. R. Bennett for exchange of their residence properties. Pursuant thereto the former conveyed their property to the latter. In this suit against Bennett and a number of other defendants, the widow and heirs of C. E. Foster seek a reconveyance of it. Such relief was granted, based, as the learned trial judge states in his opinion, upon the rule that a real estate broker cannot purchase his principal's property without disclosing his interest in the transaction; citing Rodman v. Manning, 53 Or. 336, 99 P. 657, 1135, 20 L. R. A. (N. S.) 1158.

[1] By the findings it appears that appellant Zapf was the owner and proprietor of a brokerage business under the name of Zapf-Van Company, and that appellants Atwater and Bennett were associated in the business as salesmen on a commission basis; that up to March 13, 1929, the record title of the property for which the Fosters traded was in Atwater, but with an outstanding unrecorded deed to Zapf; that on March 16, by deed dated March 1, the record title passed from Atwater to Bennett, but that Zapf was at all material times the actual and equitable owner of the property; that on said March 13 the Zapf-Van Company solicited and obtained a listing of the Foster property at a price of $8,000; that immediately thereafter Atwater called upon them as representing the Zapf-Van Company, and negotiated the executory contract in question, representing that Bennett was the owner of the property offered the Fosters in trade, and that it was worth $6,500; that the Fosters were unadvised as to values and inexperienced in real estate transactions and relied wholly upon Atwater's representations; that on the following day they learned by inquiry that the value of the property was much less and refused to perform the agreement to convey; that thereupon Atwater and Zapf, by threats of making the Fosters trouble and of causing C. E. Foster to lose his railroad job, induced them to make the deed; that the ownership of the property and Zapf's interest therein was at all times concealed from the Fosters.

At the outset, appellants concede the principle above stated as the basis of the relief granted. They contend, however, that it is not here applicable. They urge the rule that, if the principal obtains knowledge of the broker's interest in the transaction and elects, nevertheless, to perform, he may not thereafter rescind. In such case, it is urged, the parties have really dealt at arm's length; there has been a waiver of the constructive fraud and of the right to rescind because of it.

Have we here a case of waiver? At appellants' request, the court found that, when the Fosters made the deed now sought to be annulled, they had knowledge that Atwater was interested in the property and that he had listed it with various real estate brokers at a price of $5,250, and that with full knowledge of Atwater's...

To continue reading

Request your trial
2 cases
  • Rice v. (bair
    • United States
    • New Mexico Supreme Court
    • 27 Junio 1946
    ...P. 351; Craig et al. v. Parsons et al., 22 N.M. 293, 161 P. 1117; Duncan v. Holder et al., 15 N.M. 323, 107 P. 685; Foster et al. v. Zapf et al., 35 N.M. 319, 296 P. 800; McBride v. Campredon, 24 N.M. 323, 171 P. 140, L.R.A.1918D, 407; A.L.I. Restatement of Agency, Vol. 2, Sec. 387. However......
  • Iriart v. Johnson
    • United States
    • New Mexico Supreme Court
    • 6 Diciembre 1965
    ...the facts to his principal and securing his approval thereto. Mitchell v. Allison, 54 N.M. 56, 60, 213 P.2d 231. See, also, Foster v. Zapf, 35 N.M. 319, 296 P. 800; Canfield v. With, 35 N.M. 420, 299 P. 351. In addition to the duty to disclose his interest as a purchaser, a real estate brok......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT