Payne v. Beard
Decision Date | 12 November 1917 |
Docket Number | 4735. |
Citation | 247 F. 247 |
Parties | PAYNE et ux. v. BEARD et al. |
Court | U.S. Court of Appeals — Eighth Circuit |
Rehearing Denied January 16, 1918.
George S. Ramsey, of Muskogee, Okl. (O. H. Hoss, of Nevada, Mo Edgar A. De Meules, of Tulsa, Okl., and Malcolm E. Rosser, of Muskogee, Okl., on the brief), for appellants.
William Hatch Davis, of Muskogee, Okl. (George W. Leopold, A. G Cochran, and Ezra Brainerd, Jr., all of Muskogee, Okl., on the brief), for appellees.
Before SANBORN and HOOK, Circuit Judges, and AMIDON, District Judge.
This is a suit by Horace L. and Mima Payne, husband and wife, against L.B. and R. B. Beard, to cancel two deeds through which L. B Beard claims title to 80 acres of land in Muskogee county, Okl. The plaintiffs lived at Nevada, Mo. The defendants were partners in the real estate business at Muskogee, Okl., and were plaintiffs' agents for the sale of the land at the net price of $2,200. They reported having made a sale to one Lambert, a brother-in-law of R. B. Beard, at the price fixed, but before the purchase money was paid, and before plaintiffs' deed to Lambert was delivered, L. B. Beard raised the money and took a deed from Lambert to himself, without plaintiffs' knowledge or consent.
The petition sufficiently presents two grounds of complaint: First, that defendants during their agency fraudulently suppressed information of recent oil developments and transactions in the near vicinity of the land, affecting substantially and favorably its market value; and, second, that irrespective of actual fraud L. B. Beard was at the time disqualified to buy without plaintiffs' knowledge and consent, because when he did so the sale to Lambert was not so far complete that he (Beard) was discharged from his duties and obligations as their agent. On final hearing the trial court held with defendants on both grounds, and the plaintiffs appealed.
The first ground of complaint may be passed without decision. Upon the second the trial court applied Robertson v. Chapman, 152 U.S. 673, 14 Sup.Ct. 741, 38 L.Ed. 592, and Hermann v. Hall, 133 C.C.A. 619, 217 F. 947. These cases recognize the rule that an agent to sell property cannot become the purchaser without the knowledge and consent of his principal, and that if he does so under the cover of the name of another person he may be compelled, at the election of the principal seasonably exercised, to surrender it, and that this is so regardless of injury to the principal or the agent's actual fraud by suppressing information in his possession or misrepresenting the condition or value of the property. In the two cases mentioned it was held that the facts did not fall within the general rule above stated. In Robertson v. Chapman it clearly appeared that, before the agent bought from the purchaser, the sale to the latter had been so far consummated that it was not in the power of either party, principal or purchaser, to rescind it, and that the 'agency for the sale of the property had, in every material sense, terminated. ' This and the fact that the subsequent sale to the agent was bona fide, and not the carrying out of a device or prearrangement during the agency, were the ruling features of that decision. And in Hermann v. Hall it appeared that the sale by the agent to a bona fide purchaser had been 'so far completed that it could have been enforced by either the vendor or the vendee,' and further that 'the agency of the defendant (the agent) thereupon, in all material respects, terminated. ' The reason of these cases is plain. But, on the other hand, if the sale by the agent has not been substantially consummated because of noncompliance with an essential legal requirement, or because of some matter of agreement between him and his customer, the agency and the disqualification of the agent still remain. The agent cannot catch the title while it is in the air. His right to purchase begins when he is as free to deal with his principal as the rest of the world, and there is no longer the temptation between duty and self-interest. Until that time arrives it is his duty faithfully to communicate to his principal every important development affecting the value of the property and the attitude of the prospective purchaser.
What are the controlling facts here? On May 16, 1915, the defendants, as plaintiffs' agents, offered the land to Lambert for $2,200, the net price fixed. Lambert said he would take it, and gave R. B. Beard his check for $200, on which was written deed, until the abstract of title was examined, the title approved, and the purchase price raised and paid. All this was concluded May 25th, and the deeds were delivered to L. B. Beard. R. B. Beard, who had possession of the $200 check, returned it to Lambert, who destroyed it. In reply to a letter from one of the plaintiffs, L. B. Beard wrote June 11th that he had bought the property; also that, if Lambert deed arrived at the bank in Muskogee, Lambert, the grantee, 'had become uncertain and doubtful in his mind as to the desirability of his purchasing such land, and requested of these defendants certain guaranties respecting the value thereof, which these defendants were unwilling to give, and that said Clarence Lambert desired and requested these defendants to take said property off his hands.'
The Oklahoma statute of frauds (section 941, R.L. 1910) provides that an agreement for the sale of real property shall be invalid unless some note or memorandum thereof be in writing and signed by the party to be charged, or his agent. It is clear that when L. B. Beard acted in his own behalf the transaction had not progressed to the point where its completion could have been enforced against Lambert. Aside from his check, not a particle of writing passed between him and the plaintiffs' agents, and even the giving of the check rested at the trial in parol. It cannot be seriously contended that the check was sufficient by itself to bind him. See Halsell v. Renfrow, 14 Okl. 674, 78 P. 118 2 Ann.Cas. 286; Id., 202 U.S. 287, 26 Sup.Ct. 610, 50 L.Ed. 1032, 6 Ann.Cas. 189. A binding obligation of a purchaser to buy is tested by determining what he could be compelled to do when in an adversary, defensive attitude. Until the agent has found and bound a purchaser, it is obvious that his agency has not, 'in every material sense, terminated.' If the purchaser is at liberty to rescind, as Lambert was, a most important part of the agent's service remains undone. To allow him to cast aside his agency for his personal interest at such a juncture, and to support his conduct by oral evidence of the purchaser's willingness to buy, would open the door to the very evils that the rule of disqualification was designed to...
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