Hafner v. Herron

• Decision Date: 09 November 1896
• Citation: 46 N.E. 211,165 Ill. 242
• Parties: HAFNER v. HERRON.
• Court: Illinois Supreme Court

165 Ill. 242

46 N.E. 211

HAFNER

v.HERRON.¹

Supreme Court of Illinois.

Nov. 9, 1896.

Appeal from appellate court, First district.

Assumpsit by J. B. Herron, for use of Charles E. Schmidlap, against William Hafner. A judgment for plaintiff was affirmed by the appellate court (60 Ill. App. 592), and defendant appeals. Affirmed.

E. S. Cummings, for appellant.

W. R. Everett, for appellee.

This is an action of asumpsit brought by the appellee, Herron, against the appellant, Hafner, to recover certain commissions alleged to be due from the appellant to the appellee for a sale of certain shares of stock by the appellee for the appellant. The declaration alleges that the appellant owned 251 shares of stock in a corporation known as the Hartt Manufacturing Company, and made an agreement with appellee that, if appellee would negotiate and sell said shares of stock, appellant would pay him 5 per cent. on the first $10,000 of the purchase money, and 2 1/2 per cent. on the balance; that appellee accepted the conditions of the agreement, and sold the stock. The plea was the general issue. The case was tried before a jury, and resulted in verdict and judgment in favor of appellee. Upon appeal to the appellate court the judgment has been affirmed, and the present appeal is from such judgment of affirmance.

The material facts are as follows: The Hartt Manufacturing Company was engaged in manufacturing soda fountains under a patent owned or obtained by appellee. Appellee had been selling these soda fountains on commission, and had been connected with the appellant in business for more than four years. Appellant owned a controlling interest in the company. Appellee's wife owned some stock, and one Herman Huff and one Herman Will were also stockholders therein. There was some dissatisfaction among the stockholders with the policy of the appellant. Appellee proposed to sell his wife's stock to appellant, but appellant refused to buy, and said that he would sell out his own stock, and authorized appellee to get a man to buy him out. Early in July, 1894, appellee brought to appellant a man by the name of Stein, who, after examining the books and stock, offered $45,000 for appellant's interest; but appellant refused to take this sum, and the purchase was not made by Stein. Afterwards appellee wrote to one Charles W. Tufts, of Boston, proposing to him to buy appellant's interest. About the 1st of September, Tufts came to Chicago, and had an interview with Herron and Will and Huff. At that interview it was arranged that Huff should go to appellant, and make the purchase. Huff testified that at that conversation, between him and Tufts and Herron, as to the purchase of the stock, it was said that, if Hafner should know that Tufts was buying the stock, he would not sell out so leniently, and by making Hafner believe that he (Huff) wanted the stock for his friends, or by letting him think so, that the deal would be sooner consummated. On September 4, 1894, Huff went to appellant, and submitted a written proposition or contract, which appellant signed, and in which it was stated that appellant received of Huff $2,000 on account of the purchase price of $45,000 for said 251 shares of stock, and in full of the amount due on open account, as shown on the books, and that the balance of $43,000 was to be paid to Hafner on September 8, 1894; and therein appellant agreed to transfer his stock to whomsoever Huff might direct; and it was also therein provided that, if the $43,000 should not be paid on or before that date, the $2,000 should be forfeited to appellant, and the agreement terminated, and that the business was to be taken by Huff, or his assignee of the stock, as shown by the statement therein mentioned, and that, if the assets and liabilities should not be found as reported by such statement, then the $2,000 should be returned to Huff, etc. When this paper was signed by appellant, he did not know that Tufts proposed to buy the stock, or that any negotiations were pending with Tufts; nor had he at that time been informed that Herron had anything to do with the purchase proposed to him by Huff. Afterwards, on or about September 8th, Herron brought Tufts to appellant, and introduced him to appellant, and Tufts said that, if appellant would go with him, he would pay the balance of the money. Tufts did pay said money to appellant, and the sale of the stock to Tufts was thus consummated for the sum of $45,000.

MAGRUDER, C. J. (after stating the facts).

It is claimed by appellant that, after the failure of the proposed sale of the stock to Stein, he revoked his authority previously given to the appellee to sell the stock as his agent, and that thereafter appellee had no authority to act as his agent in that regard. On the contrary, it is claimed by appellee that after the failure of the negotiations with Stein, as well as before, he was still instructed by appellant to procure a purchaser for the stock, and was told that if he did so, he would be paid the commission mentioned in the declaration. The main issue of fact upon the trial in the court below was whether or not appellee was authorized to act as the agent of the appellant in negotiating the sale which was finally consummated. The parties to the suit contradicted each other upon the question of fact as to whether appellee was agent or not. The instructions on both sides, as given to the jury by the trial court, submitted the question of the existence of such agency.

The appellant now raises a new question not relied upon in the trial court. The new contention is that appellee was guilty of a want of good faith towards appellant in his negotiations with Tufts for the sale of the stock, and that, on account of such want of good faith, he is not entitled to claim any commissions. There is evidence in the record which would have justified the submission of the question of good faith to the jury under proper instructions. The fact that the appellee employed Huff to aid him in the consummation of the sale was not of itself evidence of a want of good faith. One broker may assist another in making a sale. Carter v. Webster, 79 Ill. 435. Nor is it always necessary that the purchaser should be actually introduced to the owner by the broker, provided it appears affirmatively that the purchaser was induced to apply to the owner through the instrumentality of the broker, or through means employed by the broker. It is sufficient if the sale is effected through the efforts of the broker, or through information derived from him. Sussdorf v. Schmidt, 55 N. Y. 319;Stewart v. Mather, 32 Wis. 344; Lincoln v. McClatchie, 36 Conn. 136. It is also true that, where the seller consummates a sale of property upon different terms than those proposed to his agent, the latter will not be thereby deprived of his right to his commission. Stewart v. Mather, supra. But it is well settled that if an agent or broker is employed to transact a particular piece of business, and in the transaction is guilty of bad faith to his principal, he thereby forfeits his commissions. Whart. Ag, § 336. It is said by Story, in his work on Agency, that ‘the agent is entitled to his commission only upon a due and faithful performance of all the duties of his agency in regard to his principal.’ Story, Ag. § 331. There is a want of good faith on the part of the agent towards his principal when he acts adversely to his principal's interest, or where, representing the seller, he conceals from him an arrangement intended for the advantage of the buyer. Story, Ag. § 334; Pratt v. Patterson's Ex'rs, 112 Pa. St. 475, 3 Atl. 858;Prescott v. White, 18 Ill. App. 322. In the application of this rule it makes no difference whether the result of the agent's conduct is injurious to the principal or not. In such case the misconduct of the agent affects the contract from considerations of public policy, rather than of injury to the principal. ‘It matters not that there was no fraud meant and no injury done. The rule is not intended to be remedial of actual wrong, but preventive of the possibility of it.’ Young v. Hughes, 32 N. J. Eq. 372. In the present case, if, by a preconcerted arrangement between appellee and Huff and Tufts, the fact that Tufts was to be the purchaser was concealed from appellant, with a view of inducing him to sell the stock to Tufts at a less price than he otherwise...