Opinion
December 4, 1958 —
January 2, 1959.
APPEAL from a judgment of the circuit court for Sawyer county: CLARENCE E. RINEHARD, Circuit Judge. Affirmed.
For the appellant there was a brief and oral argument by V. P. Davis of Hayward.
For the respondent there was a brief by Douglas, Omernik Bitney of Spooner, and oral argument by E. E. Omernik.
Action to recover damages for fraud. For several years last past the defendant has been a real-estate broker at Francesville, Indiana. For some time he has owned real estate in the vicinity of Hayward, Wisconsin, and has made many trips to that area. On these trips he became acquainted with Guy Stearns, a real-estate broker employed by the Thorp Finance Corporation.
One Julius Hendel owned a large farm near Spooner, Wisconsin. The farm contained over 1,300 acres of land, several buildings, and on or about January 1, 1957, there was a large amount of personal property thereon. The McNary Farm Management Company of Minneapolis managed the farm for Mr. Hendel. In late 1956 Thorp received a brochure from McNary advertising the Hendel farm for sale. The price, including livestock, was around $80,000. Stearns sent the defendant one of these brochures.
Plaintiff resided on a farm in Indiana near the home of the defendant. In January, 1957, plaintiff let the defendant know he was interested in the purchase of a farm and the defendant exhibited to him the brochure describing the Hendel farm. Plaintiff was interested and late in January he and the defendant met Stearns at Ladysmith and the three drove to the Hendel farm. Plaintiff made an offer to purchase the farm and personal property for $55,000 and an offer to purchase was submitted to McNary. The offer was refused, but McNary sent a new offer to sell the farm for $55,000 but without 40 acres of the land and the personal property.
Stearns wrote to the defendant of the new conditions. Stearns and the defendant informed the plaintiff that the price of $55,000 was net; that they would receive no commission from the seller, and that plaintiff would have to pay a commission. He agreed to do so if a satisfactory deal could be arranged, and Stearns and the defendant made a trip to Minneapolis to see if they could purchase the farm and certain personal property for the plaintiff.
On February 22, 1957, plaintiff and defendant drove to Spooner where they met Stearns. Terms were discussed and a final offer was signed by plaintiff, which was forwarded with plaintiff's check to McNary. At the same time plaintiff gave to each, the defendant and Stearns, a note for $1,000 payable on or before May 15, 1958, as their commission. On March 16, 1957, the defendant told plaintiff he was in need of money and would discount the note 10 per cent if it could be paid at that time. Plaintiff accepted the offer and paid defendant $900 in settlement of the note.
On March 18, 1957, Hendel sent to Thorp Finance Corporation a check for $1,833.34. This check contained the following notation:
"In full of all commission due Thorp Finance Corp. and Ben Moncel in connection with sale of Baker ranch by Julius Hendel to John W. Degner. This check is issued subject to complete and satisfactory closing of the sale."
Thorp Finance Corporation deducted the sum of $150 paid to a tenant on the farm to vacate the premises in advance of the termination of his lease and divided the balance, retaining half thereof and sending Moncel a check for $841.72. In September, 1957, the plaintiff learned through a representative of McNary that Hendel had paid a commission on the sale of the farm to Thorp and Moncel. He obtained a photostatic copy of the check and the same is an exhibit in the case. The defendant never informed the plaintiff that he had received this commission from Hendel. Plaintiff demanded that defendant return the commission paid by him, and upon refusal commenced this action.
The action was tried to the court and a jury. The jury found that plaintiff was induced to pay the commission to the defendant by means of false representation. That was the only question submitted to the jury, and no other question was requested. Judgment was entered on June 10, 1958, in favor of the plaintiff and against the defendant in the sum of $900, together with costs and disbursements. The defendant appealed.
The defendant contends that neither he nor Stearns made any false statements of fact to the plaintiff to induce him to execute the two notes for commission. Both Moncel and Stearns testified that they had no binding agreement with Hendel or McNary by which they could enforce the payment of a commission from the seller.
Upon the trial Stearns testified that McNary had said, "We'll take care of you." That was in response to a question as to whether he had any agreement, either oral or in writing, for a commission for selling the farm. Although the date is not given it must be inferred that it was at the time he mailed out the brochures or at the time he and the defendant were in Minneapolis. Since Stearns and Moncel were acting together, the knowledge of one is imputed to the other. When they went to Minneapolis and at the time of the final agreement for the purchase of the farm Stearns and Moncel were acting as agents for the plaintiff, pursuant to an agreement with him that he would pay them a commission. As such agents they were acting in a fiduciary capacity and as such were required to make a full disclosure of all information material to the transaction. Concealment of information material to the transaction where such a fiduciary relationship exists constitutes a species of fraud. When plaintiff was told by his agents that the price was net and that they would receive no commission from the seller they withheld information to which he was entitled, namely, that there was an oral agreement to pay them a commission.
The defendant further contends that there was no intent to defraud on the part of Moncel. Here we have a situation where the agents of the buyer inform their principal that they will not get any money from the seller, although the agents had an undisclosed purpose to collect a further commission from the seller. After the purchase had been completed Stearns talked with Hendel on the telephone. He was informed by Hendel that the transaction was satisfactory and everyone was happy. Stearns then asked Hendel if the deal was worth anything to him. Within a short time the check above referred to was sent to Thorp. Under the circumstances intent may be inferred. Polley v. Boehck Equipment Co. 273 Wis. 432, 78 N.W.2d 737; 23 Am. Jur., Fraud and Deceit, p. 907, sec. 119.
Finally the defendant contends that there was no reliance by the plaintiff on the statements made by Stearns and the defendant. The situation here presented is different from the ordinary fraud case where two persons are dealing at arm's length. Here the defendant was an agent of the plaintiff. Under the circumstances an agent who makes a profit in connection with the transactions conducted by him on behalf of the principal is under a duty to give such profit to the principal. Restatement, 2 Agency 2d, p. 203, sec. 388. Among Wisconsin cases citing this rule are Pederson v. Johnson, 169 Wis. 320, 172 N.W. 723; Caveney v. Caveney, 234 Wis. 637, 291 N.W. 818; Old Settlers Club v. Haun, 245 Wis. 213, 13 N.W.2d 913. When the defendant received a commission from both the seller and the buyer without the knowledge and consent of the buyer, it was the duty of the defendant to account to the plaintiff. The defendant was entitled to retain but one commission.
By the Court. — Judgment affirmed.