Johnson v. Mitchell

• Decision Date: 07 October 1921
• Citation: 233 S.W. 884,192 Ky. 444
• Parties: JOHNSON v. MITCHELL ET AL.
• Court: Kentucky Court of Appeals

233 S.W. 884

192 Ky. 444

JOHNSON v. MITCHELL ET AL.

Court of Appeals of Kentucky.

October 7, 1921

Appeal from Circuit Court, Pulaski County.

Action by R. O. Mitchell and others against R. L. Johnson. Judgment for plaintiffs, and defendant appeals. Affirmed.

Kennedy & Hays, of Somerset, for appellant.

E. T Wesley, of Somerset, for appellees.

THOMAS J.

The appellees and plaintiffs below, R. O. Mitchell and others owned a farm containing about 100 acres, located near the city of Somerset, in Pulaski county. The appellant and defendant below, R. L. Johnson, was a real estate broker, and bought and sold land for others. Some time in the autumn of 1917 plaintiffs listed their farm with defendant for sale which was done by oral contract, and there was no limitation of time within which he might sell it. On November 21, 1917, and while the land was yet in his hands for sale, he agreed to purchase it from plaintiffs for the sum of $7,500, and three days thereafter they executed to him a deed. Within less than a year plaintiffs filed this action against defendant, seeking to recover judgment against him for the sum of $1,050, upon the ground that at the time he purchased the land from them he, while he was acting as their agent, had been offered for it the sum of $8,500, which offer was made by Mrs. Alta C. Johnson, who was not related to defendant, and that shortly after he received his deed from plaintiffs he sold the land to her for the sum of $9,000; that he was to receive 5 per cent. commission for making the sale, which amounted to $450, leaving a net sum realized of $8,550, the difference between which sum and that paid plaintiffs by defendant for the farm was $1,050, the amount sought to be recovered.

It was alleged that defendant had practiced a fraud upon plaintiffs by taking advantage of the information he received because of the confidential relation of principal and agent, and had concealed from them the fact that he had been offered $8,500 for the land, or that he had a prospective purchaser for it in the person of Mrs. Johnson, or any one else. It was further alleged that under the agreement between plaintiffs and defendant they were to receive for the farm no less than $8,000 net, he to receive his agreed commission, provided it did not reduce the net sum below $8,000. The answer admitted the agency, but denied some of its alleged terms, and denied the alleged fraud, or that he had received any offer for the land before he purchased it.

The action was brought in equity, and was tried by the court as such, there being no motion made to transfer it to the ordinary docket. Upon submission the court rendered judgment in favor of plaintiffs for the sum of $708, to reverse which defendant prosecutes this appeal.

That the relation of principal and agent is one of extreme confidence, and requires of the latter the exercise of the utmost good faith, is a doctrine universally admitted and enforced, and it applies with all of its vigor to a broker who has in his possession or control property of his principal for sale. 9 Corpus Juris, 536; 4 R. C. L. 276, 277; Sutton & Cummins v. Kiel Cheese & Butter Co., 155 Ky. 465, 159 S.W. 950; Spotswood & Son v. Estes, 165 Ky. 743, 178 S.W. 1082. Within this rule, as will be seen from the authorities referred to, the broker may not deal with the subject-matter of the agency for his own advantage without fully disclosing to his principal all of the facts within his knowledge, and if he does so without such disclosure and realizes a profit to himself...