Jensen v. Bowen

• Decision Date: 28 July 1917
• Citation: 37 N.D. 352,164 N.W. 4
• Parties: JENSEN v. BOWEN.
• Court: North Dakota Supreme Court

37 N.D. 352

164 N.W. 4

JENSEN

v.BOWEN.

Supreme Court of North Dakota.

July 9, 1917.

On Petition for Rehearing July 28, 1917.

Syllabus by the Court.

Where an agent is employed to sell land for another and to carry on negotiations in relation thereto, he cannot, without the consent of both parties, contract for or collect commissions from both parties. This rule is a rule of public policy.

A broker, who is employed as a mere middleman to bring two parties together to make their own bargains, may recover an agreed compensation from either or both, though neither may know that compensation is expected from the other. If, however, during the negotiations, he is intrusted with doing the actual bargaining, he must make his dual contract for commissions known to both parties.

A broker is simply a middleman, within the meaning of the exception, when he has no duty to perform but to bring the parties together, leaving them to negotiate and to come to an agreement themselves, without any aid from him. If he takes, or contracts to take, any part in the negotiations, however, he cannot be regarded as a mere middleman, no matter how slight a part it may be. Nor does it make any difference that the price was fixed by his first employer.

When a contract for double commissions is proved, the burden of proof is upon the broker to show that he was merely a middleman, and this not merely at the inception, but throughout the whole transaction.

On Petition for Rehearing.

An erroneous ruling upon a motion for a directed verdict on a counterclaim is an error of law, and is reviewable on appeal from the judgment, and it is not necessary to such review that a motion for a new trial should have been made, or that on such motion or on appeal the particulars in which the evidence was insufficient to support such counterclaim should be specified.

Appeal from District Court, Golden Valley County; W. C. Crawford, Judge.

Action by H. C. Jensen against M. K. Bowen. From a judgment for defendant, plaintiff appeals. Reversed.

This is an action to recover $800, alleged to be the purchase price of grain sold to the defendant, M. K. Bowen. The defendant admits the purchase, but claims that the amount agreed to be paid was only $600. He then alleges, as a counterclaim, that on or about the 15th day of July plaintiff and defendant entered into an agreement whereby the plaintiff agreed to pay to the defendant the sum of $800, on condition that the defendant should bring the plaintiff and one B. S. Davis, who was the owner of certain lands, together, so that the plaintiff and the defendant might make a deal for the sale by the said Davis and the purchase by the said plaintiff of said tract of land upon terms acceptable to the said Davis and the plaintiff; that the defendant did bring said Davis and said plaintiff together, and that the said parties then and there, on or about the 5th day of September, A. D., 1912, made a deal whereby the said Davis sold and transferred said real estate to the said plaintiff; that the defendant has given plaintiff credit in the sum of $600 for the purchase of the grain upon said brokerage of $800; and that there is now due to him the sum of $200, being the difference between the two amounts. A verdict was rendered for the defendant for the sum of $1, and from the judgment entered thereon the plaintiff appeals.

Thomas H. Pugh and Otto Thress, both of Dickinson, for appellant. M. H. Jefferson, of Sparta, Wis., and T. F. Murtha and J. W. Sturgeon, both of Dickinson, for respondent.

BRUCE, C. J. (after stating the facts as above).

It is urged that the defendant, Bowen, was acting for Davis in the sale of the land, that Davis had promised him a commission for selling the same, and that, since the proof shows that the plaintiff, Jensen, had also agreed to pay him a commission, and this fact was not known to Davis, no recovery can be had.

[1] There can be no doubt of the correctness of this contention, provided that the proof does not also show that the defendant was merely a broker or middleman. The rule is one of public policy. “The rule is intended to be, not only remedial of actual wrong, but preventive of the possibility of it. * * * There can be no recovery from the party kept in ignorance, for as against him the broker has been guilty of a breach of faith and contract, inasmuch as it is a physical impossibility for him to render to more than one side, at one and the same time, his entire skill, judgment, and discretion, as is bargained for by each employer, in the absence of an express stipulation to the contrary. Nor can there be any recovery from the party who alone consented to the broker's acting in behalf of both, for he and the broker are equally guilty of the wrong committed against the other employer, and the law will not enforce an executory contract entered into in fraud of the rights of the latter.” 4 R. C. L. 329; Rice v. Davis, 136 Pa. 439, 20 Atl. 513, 20 Am. St. Rep. 931;Scribner v. Collar, 40 Mich. 375, 29 Am. Rep. 541;Bell v. McConnell, 37 Ohio St. 396, 41 Am. Rep. 528.

[2] There is, however, an exception to this rule, and that is that “a broker employed as a mere middleman, or in other words one engaged not to negotiate a sale or purchase, but simply to bring two parties together and permit them to make their own bargain, may recover an agreed compensation from either or both, though neither may know that compensation is expected from the other.” Montross v. Eddy, 94 Mich. 100, 53 N. W. 916, 34 Am. St. Rep. 323;Leathers v. Canfield, 117 Mich. 277, 75 N. W. 612, 45 L. R. A. 33, and note; 4 R. C. L. 330.

[3][4] “A broker is simply a middleman, within the meaning of this exception, when he has no duty to perform but to bring the parties together, leaving them to negotiate and to come to an agreement themselves, without any aid from him. If he takes, or contracts to take, any part in the negotiations, however, he cannot be regarded as a mere middleman, no matter how slight a part it may be.” Montross v. Eddy, 94 Mich. 100, 53 N. W. 916, 34 Am. St. Rep. 323;Barry v. Schmidt, 57 Wis. 172, 15 N. W. 24, 46 Am. Rep. 35;Scribner v. Collar, 40 Mich. 375, 29 Am. Rep. 541;Leathers v. Canfield, 117 Mich. 277, 75 N. W. 612, 45 L. R. A. 33, and note; 4 R. C. L. 330.

In the case at bar there seems to be no proof that the defendant, Bowen, was actually employed to take any part in the negotiations. The question is: Did he take such a part? If he did, under the authorities cited, he can recover no commissions, for the question is one of public policy, as well as of implied contract. Anderson v. Bank, 5 N. D. 80, 64 N. W. 114;Clendenning v. Hawk, 10 N. D. 90, 86 N. W. 114.

Nor does it make any difference that the price was fixed by his first employer. See Webb v. Paxton, 36 Minn. 532, 32 N. W. 749. Unless, indeed, he was a mere middleman, each party who employed him was entitled to the exercise of his discretion, skill, and judgment, and the mere fact that the price was fixed by one would not absolve him from the use of such skill and discretion in regard to the interest of the other. But was he employed to act and to negotiate, or did he negotiate, for both parties? The question being one of burden of proof, when the double agency was shown, did he overcome the presumption of bad faith occasioned thereby by proof that he was merely a middleman, and this not merely at the inception, but throughout the whole transaction? We believe he did not, and we believe that it was incumbent upon him to do so.

The defendant testifies that he was employed by Mr. Davis to sell the land under the following letter of employment:

“I want to sell, as I bought more here lately. I am going to advertise mine for sale. Will sell it cheap, too, as I want to get rid of it, and get the money in here, if possible. If you know any one who has $10,000 in cash and will assume $900 due Fisher on Oscar's 160, I will make it an object to you. Will throw in my share of the crop on the place besides.”

He also testifies that he showed this letter to the plaintiff, Jensen, and that Jensen “told me that if I would get him and Mr. Davis together that he would give me a dollar an acre.” He then testifies:

“I got Mr. Jensen and Davis together, and Jensen bought the land. The deal was closed up about the 1st of September, 1912. Q. Now, Mr. Bowen, you were employed by Mr. Davis to sell this land for him, were you not? A. Well, I don't think I was really employed by him. I don't know whether you would call it employed or not; it might be. Q. This letter was dated July 12, 1912? Mr. Bowen, you say that shortly after that, along about the 1st of August, you saw Mr. Jensen, and asked him if he wanted to buy this property? A. I think it was around that time. It was some time after I got this letter. I showed him that latter, and told him what I could sell it to him for. He told me that, if I would get him and Mr. Davis together, he would give me a dollar an acre. Q. What else did he say? A. Well, he didn't want to come through on the proposition that Mr. Davis submitted there, and he told me his proposition. Q. Now, Mr. Bowen, I will ask you whether or not Mr. Davis ever paid you any commission for making this sale? A. Yes, sir; he did. I owed Mr. Davis a note of $260. He gave me that note back and gave me $210. Q. Now, Mr. Bowen, did you ever inform Mr. Davis that you had been employed by Mr. Jensen to buy this land from him? A. I don't know whether Bruce ever knew it. I never told him. He knew the whole deal at the time he paid me the commission. He knew this along in December, 1912. Q. And that is when he learned it? A. I think that he knew about it before. He learned of it along in December. Q. That is when he became aware of that fact, when you signed this receipt just shortly before this? A. He knew what our agreement was, and what we had settled on according to his letter on the 5th day of September. Q. You never told him that you were...