Sun Bldg. & Loan Ass'n of Newark v. Rashkes

• Decision Date: 14 February 1936
• Citation: 183 A. 274
• Parties: SUN BUILDING & LOAN ASS'N OF NEWARK v. RASHKES.
• Court: New Jersey Court of Chancery

183 A. 274

SUN BUILDING & LOAN ASS'N OF NEWARK
v.
RASHKES.

Court of Chancery of New Jersey.

Feb. 14, 1936.

183 A. 275

Syllabus by the Court.

1. An attorney cannot act on behalf of two opposing parties; and even though he may act for two parties in matters which are uncontested, his conduct is open to the most careful scrutiny, and he is obliged to exhibit the most perfect good faith. He cannot prejudice one client for the benefit of another.

2. Equity exercises jurisdiction in matters of account in compelling a broker, agent, or attorney to account for a secret profit made by him on the purchase of real estate for his principal.

3. Equity will not permit the statute of limitations to give aid and comfort to a transgressor by barring relief to a victimized client, who has exercised due diligence.

4. It is a well-settled rule in equity that in cases of fraud the time limited within which the action must be brought will not commence to run until the discovery of the fraud, or until the complainant was in a situation where, by the exercise of reasonable diligence, he would have discovered the fraud.

5. The courts do not stop to inquire whether the agent or attorney has obtained an advantage, or whether his conduct was fraudulent or not; but, if the fact is established that he has attempted to assume two distinct and opposite characters in the transactions, they will not speculate concerning the merits of the transactions, but will without hesitation pronounce it void as against public policy.

Suit by the Sun Building' & Loan Association, of Newark, in liquidation, by William H. Kelly, State Commissioner of Banking and Insurance, against Meyer Rashkes. On final hearing.

Decree for complainant.

Lindabury, Depue & Faulks and Simon L. Fisch, all of Newark, for complainant.

Benjamin M. Weinberg, of Newark, for defendant.

EGAN, Vice Chancellor.

The complainant, on or about December 8, 1925, appointed a committee to seek for it the acquisition of land and premises to be used by it as a headquarters for the transaction of its business. On December 15, 1925, the committee unanimously reported in favor of purchasing the premises No. 165 South Orange avenue, in the city of Newark, for a permanent home. These premises were then owned by Markus Brown and Minnie Brown, his wife. The daughter of the owners, Anna Brown, some time in the fall of 1925, caused to be inserted in the Newark Evening News (a newspaper), a notice, or advertisement, offering this same property for sale. The advertisement was inserted in the newspaper between November, 1925, and January, 1926. In response to the advertisement, the defendant, who was then counsel to the complainant, visited Anna Brown at her office, and was then and there told by her that her parents would sell the property for the sum of $15,000. Rashkes offered a lesser sum, whereupon Miss Brown put Rashkes in communication with her parents. There was a conference between him and them, in consequence of which he agreed to purchase the property for the sum of $14,200. A contract to sell and purchase for that sum was executed by the owners and Rashkes, who represented himself as the purchaser. As a deposit on the contract, Rashkes paid the sum of $1,000. It does not appear that Rashkes ever acquainted the complainant, or its committee, of his negotiations with the Browns. The association voted to pay $18,000 for the property, but its minutes do not indicate from whom it was to make the purchase. The minutes do show that on January 19, 1926, Rashkes reported "that contract has been drawn for purchase of building. A deposit of $2,000.00 being given in closing of title on March 10. Price $18,000.00."

183 A. 276

On December 21, 1925, the officers of the association signed a check for $2,000 payable to the order of George Franklin. The check bears this notation: "Deposit on building No. 165 South Orange Avenue." And it is indorsed "George Franklin, Genevieve Franklin, for deposit White Garage Company." It was deposited on December 24, 1925, in the Federal Trust Company of Newark, in the account of the White Garage Company. The defendant was an officer of the White Garage Company; and he was the only officer of that company who was authorized to sign checks on its account in the Federal Trust Company. On the same day, December 24, 1925, when the White Garage Company deposited the check for $2,000 to its account, a similar amount was withdrawn from that account. It does not appear just how the Franklins were interested in the property. Of course, we may surmise; the defendant could probably tell, but he has not chosen to do so.

When the title to the property was conveyed to the complainant on March 9, 1926, the grantors were represented by Adolf Altman, a lawyer located in the city of Newark. Altman, then, also represented the Wallace Building & Loan Association who held a mortgage on the property. He submitted at the hearing a closing statement of the transfer of title as follows:

"March 9, 1926.

"Statement in re sale of premises 165 So. Orange Avenue for Markus Brown and Minnie Brown, his wife, to Sun Building & Loan Association

Purchase Price		$14,200.00	Deposit	$1,000.00
Insurance	$7,000.00	22.35	Wallace Building & Loan Association
Insurance	1,500.00	3.75
				5,290.92
		$14,226.10	Taxes 1926	54.34
		6,350.26	Water	5.00
		$ 7,875.84"		$6,350.26

On the lastmentioned date the Browns conveyed the title, not to Rashkes, but to Louis Strijesky. Strijesky, in turn, on the same day, conveyed the premises to the complainant. The conveying deeds were recorded consecutively in the office of the register of the county of Essex on the following day. Strijesky, after the institution of this suit, and before the hearing, departed this life. His testimony was taken by deposition at his bedside in a sanitarium. He was an attorney of this state, and had served part of his law clerkship in the defendant's office. He was acquainted with the defendant since the year 1920. On different occasions, he had signed papers at the request, and for the benefit, of the defendant. In the transaction incident to the conveyance of the complainant's property, he acted gratuitously and as a declared "dummy" in behalf of Rashkes. He had no interest whatever in the purchase of the premises No. 165 South Orange Avenue, Newark; he had never asked Rashkes to purchase it for him, nor did he constitute Rashkes his attorney or agent for the purchase of it; he paid no money on account of the consideration of purchase, nor did he receive any consideration for the part he played in connection with the sale to, or conveyance from, him. He had never seen the building on the premises in question until after it was purchased and was occupied by the complainant. Strijesky, throughout his testimony, manifested his want of interest in the transaction. He indicated that he was just an intermediary, or conduit, for the passing of the title from the Browns to the complainant and that he became so at the request of Rashkes. At the passing, or transfer, of title from the Browns to Strijesky, and thence to the complainant, the defendant appeared and acted as the counsel for the complainant and, evidently, for Strijesky.

Rashkes submitted an account of the title passing, or closing transaction, to the complainant as follows: "Meyer Rashkes, Counsellor at Law, Union Building, 9-15 Clinton St., Newark, N. J.

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