Neuman v. Friedman

• Decision Date: 04 April 1911
• Citation: 136 S.W. 251,156 Mo. App. 142
• Parties: NEUMAN v. FRIEDMAN et al.
• Court: Missouri Court of Appeals

136 S.W. 251

156 Mo. App. 142

NEUMAN v. FRIEDMAN et al.

St. Louis Court of Appeals. Missouri.

April 4, 1911.

1. BROKERS (§ 102)—AGENT FOR BOTH PARTIES —VALIDITY OF CONTRACT.

A contract for exchange of real estate negotiated by an agent in the employ of both parties thereto is unenforceable and void as to a party thereto who was not informed of the double agency, and it is immaterial that there was neither intentional fraud nor injury done.

2. EXCHANGE OF PROPERTY (§ 5)—RESCISSION —RESTORATION OF STATUS.

Where the same agent represented both parties without the knowledge of one of them, in effecting an exchange of real estate that party was entitled to a rescission upon offering to do equity by tendering to the other party a deed to the property conveyed to her, and offering to account for the rents, by offsetting the reasonable rental of the one property against the other.

3. EXCHANGE OF PROPERTY (§ 8)—FRAUD— EVIDENCE.

An exchange of real estate held, on the evidence, to have been procured by fraud.

4. EXCHANGE OF PROPERTY (§ 8)—CONSTRUCTION OF CONTRACT—EVIDENCE.

In an action to rescind an exchange of real estate, evidence held to show that defendant agreed to reduce an incumbrance on the land offered by him, so as to equalize the agreed value of the two properties.

5. BROKERS (§ 102)—AGENCY FOR BOTH PARTIES —ESTOPPEL.

A party to a contract for the exchange of real estate is estopped by the act of his agent, though such agent, without the knowledge of the other party to the contract, represented both parties in the transaction.

6. BROKERS (§ 102)—AGENT FOR BOTH PARTIES —KNOWLEDGE OF AGENCY—DILIGENCE.

In determining whether a party to an exchange of real estate brought about by one who acted as agent for both parties is precluded from avoiding the contract on the ground that she did not know of the double agency, her habits of life, her age, and her knowledge of the English language should be considered.

7. CONTRACTS (§ 94)—RESCISSION—DILIGENCE.

The principle, proscribing the want of diligence from being invoked against one who has properly relied and acted upon positive false representations knowingly made by another with a purpose to induce action, obtains as well with respect to proceedings for rescission as in others.

8. EXCHANGE OF PROPERTY (§ 8)—RESCISSION —RETENTION OF CAUSE FOR ALTERNATIVE RELIEF.

Where, in an action to rescind an exchange of real estate, the evidence showed that defendant had failed to comply with a condition in the contract of exchange to reduce an incumbrance on the land conveyed by him equity having rightfully obtained jurisdiction, it will under the general prayer of the petition for equitable relief, retain the cause for the purpose of compelling defendant to comply with such condition, though rescission has been denied on the ground that plaintiff is unable to place defendant in statu quo.

9. BROKERS (§§ 32, 102)—AGENT FOR BOTH PARTIES—LIABILITY OF AGENT.

Where an agent, without the knowledge of his principal, acted for the other party to a contract for the exchange of land, and the principal brought an action to rescind the contract, but was denied rescission because she was unable to put defendant in statu quo, and the court found that she was entitled to receive from defendant a sum of money which defendant had agreed to pay on a mortgage on the land conveyed by him, but had wrongfully refused to pay the same, judgment for such sum would be rendered as alternative relief, not only against defendant, but against the agent, who was also a party to the action.

Appeal from St. Louis Circuit Court; William M. Kinsey, Judge.

Suit by Margaret Neuman against Minnie Friedman and others. From a judgment dismissing the bill, plaintiff appeals. Reversed and remanded, with direction.

John Lally, for appellant. Andrew Johnson, for respondents.

NORTONI, J.

This is a suit in equity. After hearing the proof, the court dismissed the bill without prejudice, and plaintiff prosecutes an appeal from that judgment.

The suit proceeds for a rescission of a contract of sale of certain real property, and prays a cancellation of a deed passed by plaintiff to defendants, Friedmans, and the reinvestment of title in her, together with a prayer for general relief. It prays a recovery, too, against defendant Graham on the ground of fraud. It appears plaintiff, who is an old German lady, unlearned in the English language, owned a residence on Cook avenue, in the city of St. Louis, which she desired to dispose of at $3,750. The property was incumbered, however, by a mortgage to the extent of $900. About April 1, 1909, she employed D. W. Graham, a real estate agent, to dispose of the property for her and agreed to pay him $250 commission for so doing. Graham formerly officed with defendant B. Friedman, who is the husband of his codefendant, Minnie Friedman. It appears by admissions in the pleadings that the two Friedmans, though husband and wife, were partners, and as such owned some flats on Wells avenue, in the city of St. Louis which they desired to sell or exchange. Graham entered into negotiations with B. Friedman, acting for himself and his codefendant, touching an exchange of plaintiff's property for that of defendants, whereupon defendants agreed to pay Graham a commission of 1¼ per cent. on the agreed value of their property, if he effected an exchange for them. Graham did not communicate the fact of his double agency to plaintiff, but proceeded forthwith to persuade her an exchange of property should be made. B. Friedman admits that he employed Graham at the same time to effect an exchange of the Wells avenue property, and agreed to pay him therefor a commission of 1¼ per cent. on the agreed valuation of $6,500, and, indeed, he admits, too, that he subsequently paid Graham such commission. It is conceded throughout the case that plaintiff was wholly ignorant as to the matter of Graham's employment by defendants until some months after the exchange of property was consummated and the deeds thereto recorded. According to the evidence of both plaintiff and Graham, he advised her to exchange her property at a valuation of $3,750 for that of defendants at a valuation of $6,500, the mortgage on each to be deducted therefrom, which arrangement resulted in a balance of $600 in favor of plaintiff. This $600 was not to be paid to plaintiff in cash, but instead, under the agreement, it was to be paid or credited on the $4,250 mortgage against the Wells avenue property owned by defendants so as to reduce that incumbrance to $3,650. Defendant B. Friedman denies this, and says the agreement was to exchange their property, subject to $4,250 incumbrance, for that of plaintiff, subject to $900 incumbrance, equity for equity even, but the circumstances that he valued the Wells avenue flats at $6,500 and paid a commission to Graham accordingly are persuasive to the effect that the agreement was as related by both plaintiff and Graham. It appears after an exchange of property was agreed upon between plaintiff and defendants, negotiated entirely through Graham, the parties executed a writing whereby they stipulated for an exchange of deeds within 10 days thereafter without any mention whatever of a balance of $600 being available to plaintiff. But it appears as to this that defendant B. Friedman wrote this agreement and Graham conveyed it to plaintiff for her signature, which she affixed on his assurance that it was all right, without reading. As before stated, plaintiff is an old German lady, and scarcely able to speak the English language. Whether she could read it or not does not appear, but there is a strong inference that she could not. At any rate, plaintiff signed this contract which Friedman had drawn up at his instance through Graham without reading it, on the assurance of Graham, who at the time was without plaintiff's knowledge in the employ of defendants. On May 7, 1909, the deeds were exchanged between the parties through the agent, Graham. Plaintiff executed a general warranty deed conveying her property on Cook...