Kallash v. Claar

• Decision Date: 06 February 1930
• Docket Number: 5223
• Citation: 284 P. 1032,48 Idaho 714
• Court: Idaho Supreme Court
• Parties: NORA O. KALLASH, Sometimes Known as NORA NAHA, Respondent, v. JOHN N. CLAAR and H. S. BEALS, Copartnership, Doing Business Under the Firm Name and Style of CLAAR-BEALS & COMPANY, J. E. MONTGOMERY, AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, and STANDARD ACCIDENT INSURANCE COMPANY, a Corporation, Appellants

284 P. 1032

48 Idaho 714

NORA O. KALLASH, Sometimes Known as NORA NAHA, Respondent, v. JOHN N. CLAAR and H. S. BEALS, Copartnership, Doing Business Under the Firm Name and Style of CLAAR-BEALS & COMPANY, J. E. MONTGOMERY, AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, and STANDARD ACCIDENT INSURANCE COMPANY, a Corporation, Appellants

No. 5223

Supreme Court of Idaho

February 6, 1930

REAL ESTATE BROKERS-LICENSE BOND-LIABILITY-PARTNERSHIP-IMPLIED AGENCY.

1. Where broker's real estate license, required by Laws 1921, chap. 184, was issued to copartnership July 25, 1925 fraudulent conduct of brokers, which commenced before issuance of license, was covered by bond requiring brokers' payment to any party divested of real estate because of fraud or fraudulent representations of all damages not exceeding $1,000 arising by reason of fraud or fraudulent representations of licensee, directly or indirectly, where representations began before bond was issued and did not end until after bond was in full force and effect.

2. Real estate broker could not escape liability under bond conditioned on licensees' conducting business without fraud or fraudulent representations otherwise to pay to party entitled thereto damages not exceeding $1,000, as required by Laws 1921, chap. 184, merely because broker, with another broker, took deed to owner's property, where evidence showed that it was while purporting to act for others, and by reason of being brought into transaction on such basis, that personal interest was acquired so that broker and firm of which he was copartner were within purview of sec. 4 defining real estate broker.

3. A partner is an agent of a firm in all matters within the scope of the partnership business, and may bind his partner or partners in transaction as entirely as himself.

4. Sureties who executed separate bonds conditioning that licensed real estate broker conduct business without fraud or fraudulent representations, as required by Laws 1921, chap 184, for different parties, separately liable for depriving owner of real estate by fraudulent misrepresentations, were liable to amount of bond given by each, though sec. 10 provides that total aggregate liability of any surety under bond of licensed real estate broker shall not exceed sum of $1,000.

APPEAL from the District Court of the Eleventh Judicial District for Twin Falls County. Hon. H. F. Ensign, Judge.

Action for damages. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent. Petition for rehearing denied.

Walters, Parry & Thoman and J. R. Keenan, for Appellant Claar.

The bond only covers the acts of a broker acting in the capacity of a real estate broker, and is not a contract of credit insurance. (Chap. 184, sec. 4, Sess. Laws 1921; Pike v. Psihogios, 68 Cal.App. 145, 228 P. 722; Schomig v. Keiser, 189 Cal. 596, 209 P. 550; Shaffer v. Beinhorn, 190 Cal. 569, 213 P. 960; Woods v. National Surety Co., 27 Ariz. 479, 233 P. 900.)

Beals was not engaged in this transaction in any common business with Claar, nor within the scope of the business of Claar-Beals & Co., so his acts are not chargeable to Claar.

Claar-Beals & Co. is a common-law trust and not a partnership and the acts of one trustee are not chargeable to the other trustee. (State v. Cosgrove, 36 Idaho 278, 210 P. 393; Schumann-Heink v. Folsom, 328 Ill. 321, 58 A. L. R. 485, 159 N.E. 250.)

Neither a partnership nor other partners are liable for the acts of one partner in furtherance of his own business not within the scope of the partnership business. (20 R. C. L. 893, 917; Taylor v. Thompson, 176 N.Y. 168, 68 N.E. 240; Wolfley v. Brown, 7 Ariz. 157, 62 P. 691; Brown v. First Nat. Bank, 35 Okla. 726, 130 P. 140; Gold Fork Lbr. Co. v. Sweany & Smith Co., 35 Idaho 226, 205 P. 554; Boise Payette Lbr. Co. v. Sarrett, 38 Idaho 278, 221 P. 130.)

E. M. Wolfe and A. H. Nielson, for Appellants Montgomery and American Surety Company.

The test of cosuretyship is that the sureties become liable to the same creditor on the same debt or obligation. Here the principals were apparently joint tort-feasors. (See Agren v. Staker, 46 Idaho 36, 267 P. 460.)

Bothwell & Chapman, for Respondent Kallash.

The fraud of Claar-Beals & Company, actually causing respondent to lose her property and placing her in a position from which she could not recover her property, and which fraudulent acts were committed after a real estate license had been given, and upon which a bond had become effective, made such bond and the bonding company subject to and liable for the fraudulent acts.

The connection of Beals or Claar in this transaction was in the capacity of a real estate broker and the bonding company is therefore liable under its bond. (1921 Sess. Laws, chap. 184, secs. 4, 12; Brodtmann v. Cooper, (La. App.) 120 So. 727.)

A real estate broker cannot sell property to himself, nor to an employee without fully disclosing all the facts and that he is buying as principal. (Firestone v. O'Brien, 97 Cal.App. 43, 274 P. 1006.)

A partner is an agent of the firm in all matters within the scope of the partnership business and may bind his partner or partners in such transactions as entirely as himself and especially is this true where the partner deals in the name of the firm and with matters ordinarily in the scope of its business. (Boise Payette Lbr. Co. v. Sarrett, 38 Idaho 278, 221 P. 130; Bates v. Price, 30 Idaho 521, 166 P. 261; First Nat. Bank v. Grignon, 7 Idaho 646, 65 P. 365; Gold Fork Lbr. Co. v. Sweany & Smith Co., 35 Idaho 226, 205 P. 554.)

BUDGE, J. Givens, C. J., and Lee and Varian, JJ., concur.

OPINION

BUDGE, J.

Respondent brought this action against appellants to recover damages for alleged fraud and fraudulent representations growing out of an exchange of real property, and recovered judgment after trial of the cause to the court and jury. The parties directly concerned in the transaction were respondent, as the owner of land in Jerome, M. L. Beath, holder of a contract of purchase of real estate in Twin Falls, Claar-Beals & Company, a real estate firm of Twin Falls, and J. E. Montgomery, a real estate broker of Twin Falls. Appellants Standard Accident Insurance Company and American Surety Company were sued as sureties on real estate brokers' bonds posted by Claar-Beals & Company and Montgomery, respectively.

On or about July 18, 1925, Montgomery began negotiations with respondent looking to the exchange of her property in Jerome for that held by Beath in Twin Falls. The different properties were viewed by respondent and Beath, in company with Montgomery, who advised respondent the Twin Falls property was of more value than her property in Jerome, that a trade would be to her advantage, and that there was an incumbrance against the Twin Falls property of $ 1100 which she should assume to clear the title. The evening of the same day, respondent went with Montgomery to the office of Claar-Beals & Company, whose office had been arranged to be kept open for that purpose, where an escrow agreement was drawn up by H. S. Beals and later signed by all the parties thereto, including Beath and wife and respondent and her husband. This agreement provided in material part that, whereas Beath had executed to respondent an assignment of his contract for the purchase of the Twin Falls property, "subject to an unpaid balance on a contract of purchase of $ 1100, . . . . which purchaser assumes," the consideration therefor being an exchange of such property for that owned by respondent in Jerome by delivery of a deed executed by respondent in favor of Beath, "and an abstract showing a merchantable title, free and clear of all incumbrance. Now, therefore, in consideration of the premises and the mutual promises of the respective parties herein contained, it is hereby agreed by and between said parties as follows: First. The deeds and contracts together with an executed copy of this agreement (which shall constitute the instructions to the escrow holder) shall be deposited in escrow with Claar-Beals & Co., of Twin Falls, Ida., until the abstracts have been continued and showing titles to be merchantable, and shall, except in case of default as hereinafter stated, remain there until the purchaser (respondent) shall have performed their obligations as above mentioned."

On July 20, 1925, while the escrow agreement was in force, and at which time it appears the statement with reference to the amount due on the...