Hancock v. Berger

• Decision Date: 09 January 1967
• Docket Number: No. 7990,7990
• Citation: 1967 NMSC 7,77 N.M. 321,422 P.2d 359
• Parties: Juanita HANCOCK, also known as Margaret Juanita Hancock, Third- Party Plaintiff-Appellee, v. Gene BERGER, Third-Party Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 359

422 P.2d 359

77 N.M. 321

Juanita HANCOCK, also known as Margaret Juanita Hancock Third- Party Plaintiff-Appellee, v. Gene BERGER, Third-Party Defendant-Appellant.

No. 7990.

Supreme Court of New Mexico.

Jan. 9, 1967.

Norton & Ingraham, Lovington, for appellant

Dan B. Buzzard, Clovis, for appellee.

OPINION

COMPTON, Justice.

The executrix of the estate of E. C. McReynolds, deceased, a Texas real estate broker, brought this action to foreclose a judgment lien in the amount of $8,000.00 obtained by the deceased in the United States District Court for the District of New Mexico against Juanita Hancock, a Clovis real estate broker, and her saleswoman, Gene Berger, jointly and severally. The foreclosure action named only the defendant Juanita Hancock, who in turn filed a third-party complaint against her codefendant Gene Berger, alleging that Hancock's liability was based solely on agency and that she was entitled to be indemnified by the third-party defendant Berger for any liability imposed upon her by reason of such agency relationship.

In addition to the main prayer for indemnity, Hancock sought to recover from Berger a portion of the commission received by Berger upon the sale of the land later mentioned herein. Berger counterclaimed, asking an accounting of Hancock for commissions due Berger from other sales. No appeal was taken from the judgment foreclosing McReynolds' judgment lien against Hancock. Minus certain setoffs, Hancock was granted indemnity against Berger, and awarded a share of the commission on the underlying land transaction. Judgment was entered accordingly and the cross-defendant appeals.

The major issue to be decided is whether Hancock was vicariously liable only. This answer depends upon the findings in the federal court action, made a part of the record. Summarizing the federal court found that there was an agreement between McReynolds and Hancock that they would attempt to find property which McReynolds' client would buy or otherwise acquire by trade. It was agreed that any compensation or commission realized as the result of the consummation of such transactions would be equally divided between Hancock and McReynolds. Berger located a rancher or ranchers who wanted to sell and Hancock referred the entire matter to Berger. Berger thereafter consummated a deal with McReynolds' client and as a result of which the sellers owed a commission of $16,000.00. Instead of receiving a cash commission, however, Berger took a note payable to herself in the amount of $16,000.00, claiming it was for the payment of an option which she held on the sellers' lands; that the note for $16,000.00 was in fact a real estate commission and not received as payment for an option interest, and that she did not have a valid option on the land.

Federal court finding 9 is the subject of much discussion in this appeal and is set out verbatim:

'That defendant Berger failed at any time to advise the plaintiff that she had received a note for $16,000. She told him that she had a note but did not reveal the amount of it. That the defendant Berger had no authority from the defendant Hancock nor from the plaintiff to take a note in payment of the commission. That she, in fact, converted the entire commission and note to her own use knowing the right of the plaintiff to receive 1/2 of the commission. That there was a fiduciary relationship between the plaintiff and defendants and the defendants had a duty to advise plaintiff of all material facts. That the defendants failed to do so and the defendant Berger consented to take the commission in note form and then converted it to her own use.'

Appellant Berger argues that the last sentence of finding 9 shows that Hancock was liable of her own fault and not just vicariously liable as the principal of Berger. Hancock's fault, appellant argues, was her failure to inform McReynolds of her employee's claimed option interest in the land. We disagree, it is not contended that Hancock was jointly at fault in any so-called conversion of the note, nor that Hancock was aware that the compensation was to be other than a five percent commission. While Hancock may have had a duty to inform McReynolds of her employee's claimed interest, Iriart v. Johnson, 75 N.M. 745, 411 P.2d 226, it is clear that her failure to inform McReynolds of the option interest was not the basis for imposing liability upon Hancock. Hancock's liability was based solely upon her principal-agency relationship with Berger.

The trial court in the present action found from the federal court findings and 'independent evidence' that 'Hancock was not a party to any effort on the part of Gene Berger to deprive McReynolds of his one-half of said commission, and that all of her actions in connection with said transaction were based upon statements and representations made to her by Berger, which she believed to be true, and that she was in no manner directly liable to McReynolds for any of her actions in said transaction except by reason of the fact she was the principal and Gene Berger was her agent.' This finding has ample support in the record.

When a principal or employer is held liable solely under the doctrine of respondeat superior he is entitled to indemnification from the agent or employee. Lommori v. Milner Hotels, 63 N.M. 342, 319 P.2d 949; Krametbauer v. McDonald, 44 N.M. 473, 104 P.2d 900; and Collier v. Union Indemnity Co., 38 N.M. 271, 31 P.2d 697. See, also, Thomas v. Malco Refineries, 214 F.2d 884 (10th Cir. 1954).

Appellant's second point relied on for reversal is that it was legally impossible for Berger to have 'converted' the note. The view we take of the case makes it unnecessary for us to decide whether the note was converted or if the conclusions are binding. Kaye v. Cooper Grocery Company, 63 N.M. 36, 312 P.2d 798. The real basis of Hancock's liability was that the contractual requirement to pay McReynolds one-half of the compensation received was not met. Even if we eliminate all reference to Berger's 'conversion,' the findings sufficiently show that payment to McReynolds was wrongfully withheld, for which judgment was rendered. That Berger took the $16,000.00 note in her own name without authority of Hancock is not disputed. The judgment being supported on other grounds, the conclusion of conversion by Berger, if error, was harmless error for which we will not disturb the judgment. Board of County Com'rs of Dona Ana County...