George v. Bolen

• Decision Date: 16 June 1978
• Docket Number: No. 49216,49216
• Citation: 580 P.2d 1357,2 Kan.App.2d 385
• Parties: Richard W. GEORGE, Appellee, v. Dan BOLEN, J. Donald Williams, Charles Stover, d/b/a Bolen-Williams, Realtors, a partnership, Appellants, Robert W. Mermis and Charles Stover, d/b/a M & S Investments, a partnership, Defendants.
• Court: Kansas Court of Appeals

Page 1357

580 P.2d 1357

2 Kan.App.2d 385

Richard W. GEORGE, Appellee, v. Dan BOLEN, J. Donald Williams, Charles Stover, d/b/a

Bolen-Williams, Realtors, a partnership, Appellants,

Robert W. Mermis and Charles Stover, d/b/a M & S

Investments, a partnership, Defendants.

No. 49216.

Court of Appeals of Kansas.

June 16, 1978.

SYLLABUS BY THE COURT

1. The relation between customer and real estate broker is that of agency and the general rules of law applicable to principal and agent govern their rights and liabilities.

2. Agency can result only from contract, express or implied, and in determining whether a valid contract has been entered into, the rules which pertain to contracts generally are applicable.

3. The relationship of principal and agent is a fiduciary one and if a wrong arises because of the conduct of the agent the same remedy exists against the wrongdoer on behalf of the principal as would exist against a trustee on behalf of the Cestui que trust.

4. Except as affected by operation of law, for one party to effect termination of an agency relationship terminable at will, he must give notice of termination to the other party.

5. The burden of proving termination of an agency is upon the party asserting it.

6. Where the claim that a verdict is excessive is based on passion or prejudice of the jury and depends for support solely upon the size of the verdict, a remittitur will not be ordered on appeal unless the amount of the verdict, in the light of the evidence, shocks the conscience of the appellate court.

James P. Mize, of Clark, Mize & Linville, Chartered, Salina, for appellants.

Clarence L. King, Jr. and David S. Knudson, of King, Stokes, Knudson & Nitz, Chartered, Salina, for appellee.

Gerald L. Goodell, of Goodell, Cogswell, Stratton, Edmonds, Palmer & Wright, Topeka, for amicus curiae Kansas Ass'n of Realtors.

Before REES, P. J., and SWINEHART and MEYER, JJ.

REES, Judge:

This is an action for breach of fiduciary duty allegedly owed plaintiff by the appellants (hereafter "defendants"), who were real estate brokers engaged in business as partners. Judgment was entered upon jury verdict for $180,000 compensatory damages and $184,647 punitive damages. Defendants appeal. We affirm as to the compensatory damages and, subject to acceptance of remittitur, reverse for new trial as to punitive damages.

The case was tried on the theory that defendant Williams had undertaken to act as plaintiff's agent and that the fiduciary duty arising by reason of that agency relationship was breached to plaintiff's damage. Defendants argue that (1) neither defendant Williams nor the partnership was the agent of plaintiff because there was no contract with plaintiff and (2) the damages awarded are not supported by the evidence. These arguments permeate and are the theses underlying all of plaintiff's variously stated issues on appeal. Upon extended and thorough study and consideration of the record on appeal, the briefs and arguments of counsel, we conclude our determinations of these arguments are dispositive of all issues on appeal. However, we will discuss other incidental and related arguments made by defendants.

The case as tried is aptly described by the following portions of the trial court's Instruction No. 2:

"In this case the plaintiff claims that the defendant J. Donald Williams agreed to represent plaintiff as his agent in an effort to purchase certain land owned at that time by one Dwight Tolle; That the defendant Williams was acting as one of the partners of a real estate agency known as Bolen-Williams Realtors a partnership consisting of the defendants Williams, Dan Bolen and Charles Stover; That the defendants obtained a listing of the property for sale at the price of $178,000.00, an amount agreeable to the plaintiff; That the plaintiff was never notified of the listing of the property for sale and that the defendant Stover and one Robert W. Mermis, who were partners in an enterprise known as M & S Investments, purchased the property from the owner without notice to the plaintiff and in violation of the responsibilities and duties of the defendants, Stover, Bolen and Williams as partners in Bolen-Williams Realtors, to the plaintiff as his agents.

"The plaintiff further claims that the action of the defendants was malicious & intentional.

"The plaintiff claims that as a result of the acts of the defendants he sustained damages in the amount of $253,310.00 and that he is entitled to punitive damages of $1,000,000.00.

"The parties stipulate and agree that at the times material in this case the defendants Dan Bolen, J. Donald Williams and Charles Stover were partners in the Bolen-Williams real estate agency and that J. Donald Williams was acting as agent for Bolen-Williams Realty;

"That the legal description of the property involved is not in dispute and that prior to June 21, 1975 it was owned by Dwight Tolle;

"That J. Donald Williams did obtain a listing on the property on or about June 21, 1975 for a sale price of $178,000.00;

"That the property was purchased on or about June 23, 1975 by Robert W. Mermis and defendant Charles Stover d/b/a M & S Investments;

"That the plaintiff was not notified by any of the defendants that the listing of the property had been obtained until after June 23, 1975.

"The defendants deny the . . . allegations (not admitted by the foregoing stipulations) . . . and further state that the plaintiff failed to mitigate his alleged damages according to law."

It is appropriate in considering defendants' arguments concerning the existence of a contract between the parties to review prior case law relating to the nature and existence of fiduciary duty arising out of the principal and agent relationship and the necessity of an underlying contract.

Most recently it was held in Sanders v. Park Towne, Ltd., 2 Kan.App.2d 313, 578 P.2d 1131 (1978) (filed May 19, 1978), as follows:

"It is well settled that 'the relation existing between a principal and agent is a fiduciary one demanding conditions of trust and confidence.' Merchant v. Foreman, 182 Kan. 550, Syl. 2, 322 P.2d 740 (1958). See, also, Kline v. Orebaugh, 214 Kan. 207, 210, 519 P.2d 691 (1974) and Wolcott & Lincoln, Inc. v. Butler, 155 Kan. 105, Syl. 1, 122 P.2d 720 (1942). '(I)n all transactions concerning and affecting the subject matter of his agency, it is the duty of the agent to act with the utmost good faith and loyalty for the furtherance and advancement of the interests of his principal. . . .' Merchant v. Foreman, supra at 556, 322 P.2d at 745. The agent must give the principal the benefit of all his knowledge and skill and cannot withhold or conceal information from the principal. Ibid." (2 Kan.App.2d p. 317, 578 P.2d p. 1135.)

In Kline v. Orebaugh, 214 Kan. 207, 519 P.2d 691 (1974), it is said:

". . . The relation of principal and agent is a fiduciary one, and if a wrong arises because of the conduct of the agent the same remedy exists against the wrongdoer on behalf of the principal as would exist against a trustee on behalf of the Cestui que trust. (Wolcott & Lincoln, Inc. v. Butler, 155 Kan. 105, 122 P.2d 720.) . . . Where a trustee violates any duty which he owes to the beneficiary he is guilty of a breach of trust and he is liable to the beneficiary to redress that breach of trust." (pp. 210-211, 519 P.2d p. 695.)

Much of the case law dealing with the principal and agent relationship is reviewed in Merchant v. Foreman, 182 Kan. 550, 322 P.2d 740 (1958):

"As preliminary to discussing the first point, we refer to well-established rules applicable to its disposition: (1) the relation of principal and agent can only be terminated by the act or agreement of the parties to the agency or by operation of law, and an agency, when shown to have existed, will be presumed to have continued, in the absence of anything to show its termination, unless such a length of time has elapsed as destroys the presumption (2 Am.Jur., Agency, § 35, p. 36; 8 Am.Jur., Brokers, § 38, p. 1007; 2 C.J.S. Agency §§ 68, 70, 81, pp. 1148, 1151, 1170; 12 C.J.S. Brokers § 16, pp. 43, 44); (2) the relationship existing between a principal and agent is a fiduciary one demanding conditions of trust and confidence which require of the agent the same obligation of individual service and loyalty as is imposed upon a trustee in favor of his beneficiary (Gillies v. Linscott, 94 Kan. 217, 219, 146 P. 327; Wolcott & Lincoln, Inc. v. Butler, 155 Kan. 105, 122 P.2d 720, 141 A.L.R. 356; 2 Am.Jur., Agency, § 252, p. 203; 3 C.J.S. Agency § 139, pp. 10, 11), and that in all transactions concerning and affecting the subject matter of his agency, it is the duty of the agent to act with the utmost good faith and loyalty for the furtherance and advancement of the interests of his principal (Gillies v. Linscott, supra; Wolcott & Lincoln, Inc. v. Butler, supra; 2 Am.Jur., Agency, § 252, p. 203; 3 C.J.S. Agency § 138, pp. 6, 7); (3) where a fiduciary relationship is established between the parties the law views with suspicion and scrutinizes very closely all dealings between them in the subject matter of the agency to see that the agent has dealt with the utmost good faith and fairness, and that he has given the principal the benefit of all his knowledge and skill, and, if it appears that the agent has been guilty of any concealment or unfairness, or if he has taken any advantage of his confidential relation, the transaction will not be allowed to stand (3 C.J.S. Agency § 145, p. 26; 2 Am.Jur., Agency, §§ 252, 254, 260, pp. 203, 205, 209; 12 C.J.S. Brokers § 41, pp. 96, 98; 8 Am.Jur., Brokers, §§ 86, 88, pp. 1035, 1037), and (4) one who acts as an agent and also deals with his principal with respect to the subject matter cannot take advantage of his principal by withholding from him any information within his knowledge, including the value of the property, which might have a bearing upon the desirability of the principal to make the trade (8 Am.Jur....