Don J. LEATHERS

27.

John CANFIELD, Piff. in Err.

(........Mich.........)

A real-estate broker cannot be regarded

as a middleman entitled to a commission from both sides, if he has contracted expressly to serve the buyer and throughout the ne

Mr. R. W. Butterfield, with Messrs. Hanchett & Hanchett, for plaintiff in

error:

arrange conditions favorable to the buyer.

(June 7, 1898.)

ERROR to the Circuit Court for Kent County to review a judgment in favor of plaintiff in an action brought to recover commissions alleged to have been earned by the sale of certain real estate. Reversed. The facts are stated in the opinion.

NOTE.-Fraud and secret dealings or interest of real-estate brokers as affecting their commissions.

I. General doctrine.

II. In order to decrease price.

III. In cases of conflicting interests. IV. Nondisclosure of true position.

V. Soliciting others.

VI. Conspiring with purchaser.

VII. Secret profit.

VIII. Negligence of broker.

IX. Agreement to divide commissions.

X. By purchase of property.

XI. Double commissions.

a

General rule.

b. Reasons for the rule.

c. Custom or usage.

d. Pooling arrangements.

XII. Exceptions to rule.
a. General.

b. Knowledge or consent.
c. Mere middleman.

XIII. As affecting purchaser.
XIV. Miscellaneous cases.
XV. Burden of proof.

The question of real-estate broker's commissions as affected by the negligence, fraud, or default of the principal and a defective title will be found in note to Brackenridge v. Claridge (Tex.) 43 L. R. A. 593.

The question of real-estate brokers as the procuring cause of the sale is discussed in note to Hoadley v. Savings Bank of Danbury (Conn.) 44 L. R. A. 321.

The note to Lunney v. Healey (Neb.) 44 L. R. A. 593, deals with the question of performance of his contract by the broker.

Mandlebaum, 8 Mich. 433; Farnsworth v. Hemmer, 1 Allen, 494, 79 Am. Dec. 756; Walker v. Osgood, 98 Mass. 348, 93 Am. Dec.

168; Rice V. Wood, 113 Mass. 133, 18 Am. Rep. 459; Holcomb v. Weaver, 136 Mass. 266; Campbell v. Baxter, 41 Neb. 729; Berlin v. Farwell (Cal.) 31 Pac. 527; Rice v. Davis, 136 Pa. 439; Weinhouse v. Cronin, 68 Conn. 250.

I. General doctrine.

The compensation to which the broker is entitled is the consideration for the engagement into which he enters, and such reward is the inducement to the service, and the faithful performance of it is generally the condition on which the reward becomes due. Price v. Keyes, 62 N. Y. 378, 384.

It is a condition precedent to the right of the agent to the compensation agreed to be paid him, that he shall faithfully perform the services he undertakes to render, and if he abuses the confidence reposed in him, and withholds from his principal facts which ought in good faith to be communicated to the latter, he will lose his right to any compensation under the agreement. Hall v. Gambrill, 92 Fed. Rep. 32, 37; Wadsworth v. Adams, 138 U. S. 380, 34 L. ed. 984.

A real-estate broker assumes the duty of finding a purchaser for the property and of bringing the party into communication with his principal, and to use his best efforts to forward the negotiations between them in the interest of his employer; and to this extent he becomes an agent, and a fiduciary relation is established which requires on the part of the agent, within the sphere of his employment, fidelity and good faith to his employer. Young v. Hughes, 32 N. J. Eq. 372, 383.

The policy of the law is to exact from an agent the strictest integrity in reference to the duty owing from him to his employer. Hammond v. Bookwalter, 12 Ind. App. 177.

The law exacts of the broker an honest and faithful performance of his duty. Schwartze v. Yearly, 31 Md. 270.

And it is the purpose of the court to see that

Flint & P. M. R. Co. v. Dewey, 14 Mich. 477; Rice v. Wood, 113 Mass. 133, 18 Am. Rep. 459; Everhart v. Searle, 71 Pa. 256; Fuller v. Dame, 18 Pick. 472; Bollman v. Loomis, 41 Conn. 581.

While the law permits the plaintiff to receive a commission from both buyer and seller where each knows his employment by the other, it is the duty of the agent in such case to fully disclose his employment and the extent thereof, what he is employed to do, in order that each party may know the capacity in which he acts, and the extent to which he is employed to act for each party as against the other, to entitle him to commission.

McDonald v. Maltz, 94 Mich. 172; Rice v. Davis, 136 Pa. 439; Frankel v. Wathen, 58 the agent by reason of the confidence reposed in him by his principal secures to himself no advantage from the contract. Collins v. McClurg, 1 Colo. App. 348.

A person standing in the place of and representing the vendor is bound to discard every feeling of friendshin, to know no self-interest, to act as he judged the interest of the vendor would induce the vendor to act if present in person instead of being present by an agent; and it is his duty to accept the larger offer for the benefit of his client. Haydock v. Stow, 40 N. Y. 363.

The rule that a real-estate broker is entitled to his commissions whenever he has procured a purchaser willing to comply with the conditions fixed by his principal depends, not only on the fact that he is to be regarded as the agent of the seller, but that as such agent he acts with the utmost good faith toward his principal. Pratt v. Patterson, 112 Pa. 475; Henderson v. Vincent, 84 Ala. 99; Collins v. McClurg, 1 Colo. App. 348.

The relation between the broker and his principal is one of a confidential nature requiring the utmost good faith on the part of the broker, and entitling the principal to the benefit of the broker's skill, knowledge, and advice. Butler v. Baker, 17 R. I. 582; Henderson v. Vincent, 84 Ala. 99; Mears v. Stone, 44 Ill. App. 444, 447; McGuire v. Carlson, 61 Ill. App. 295, 297; Merryman v. David, 31 Ill. 404; Page v. Voorhies, 40 N. Y. S. R. 696, 698; Gilder v. Davis, 137 N. Y. 504, 20 L. R. A. 398; Condit v. Blackwell, 22 N. J. Eq. 481, 487; Parkist v. Alexander, 1 Johns. Ch. 394; New York Cent. Ins. Co. v. National Protection Ins. Co. 14 N. Y. 91; Huguenin v. Baseley, 14 Ves. Jr. 273; Lowther v. Lowther, 13 Ves. Jr. 102; Smith v. Seattle, L. S. & E. R. Co. 72 Hun, 202; Bell v. McConnell, 37 Ohio St. 396. 41 Am. Rep. 528; Wadsworth v. Adams. 138 U. S. 380, 34 L. ed. 984; Collins v. McClurg, 1 Colo. App. 348.

An agent must not put himself during the continuance of his agency in a position which is adverse to that of his principal, for the reason that the principal bargains for the exercise of all the skill, ability, and industry of the agent, and he is entitled to demand the exercise of all this in his own favor. Cottom v. Holliday. 59 I. 176, 179; Kronenberger v. Fricke, 22 Ill. App. 550, 553; Reardon v. Washburn, 59 11. App. 161.

And the principal is entitled to expect his

There could be no recovery upon the theory that the plaintiff was acting simply as a middleman to bring the parties together. In such case, in order to recover, he must not be under employment by one of the parties. to negotiate in his interest and secure terms or price favorable to that party, and he must not so act.

Ranney v. Donovan, 78 Mich. 318; Montross v. Eddy, 94 Mich. 100; Rupp v. Sampson, 16 Gray, 398, 77 Am. Dec. 416; Knauss v. Gottfried Krueger Brewing Co. 142 N. Y. 70; Empire State Ins. Co. v. American Cent. Ins. Co. 138 N. Y. 446; Siegel v. Gould, 7 Lans. 177; Orton v. Scofield, 61 Wis. 382; Phinney v. Hall, 101 Mich. 451.

Messrs. McGarry & Nichols and Judkins & Perkins for defendant in error. active aid in the conduct of the negotiations. Young v. Hughes, 32 N. J. Eq. 372, 383.

It is the duty of the broker to act in matters touching the agency with sole regard to the interest of his principal, and in accepting the employment he undertakes to manage the interest confided to him, and is charged with the trust imposed in him to the best of his ability for the benefit of his principal. Price v. Keyes, 62 N. Y. 378, 384.

The obligation of the broker to his principal requires that if he does anything his efforts shall be directed towards making a sale upon the terms given. Watts v. Howard, 51 Ill. App. 243, 246.

A broker is held to the obligation of loyalty to his employer in the matter of his agency, and if he fails in that he may not recover for his services; but there must be bad faith on his part to produce such a result. Hinton v. Coleman, 76 Wis. 221.

An agent for sale cannot sacrifice the property of his principal for the sake of his commissions, but the desire of earning them is generally a motive to diligence and an incentive to exertion. Price v. Keyes, 62 N. Y. 378, 384.

And if the broker or agent is guilty of bad faith toward his principal in the transaction he forfeits his right to commissions. Hafner v. Herron, 165 Ill. 242, Affirming 60 Ill. App. 592.

And if the broker or agent employed to procure a purchaser acts in bad faith towards his employer the latter is not bound to carry out the contract. Finch v. Conrade. 154 Pa. 326.

If he abuses the confidence reposed in him by his principal he may be deprived of commission and compensation. Collins v. McClurg, 1 Colo. App. 348: Sea v. Carpenter, 16 Ohio, 412; Hall v. Gambrill, 92 Fed. Rep. 32, 37; Wadsworth v. Adams, 138 U. S. 380, 34 L. ed. 984.

The rule is the same if he is guilty of any fraud, concealment, or misrepresentation, or if he takes any advantage of his position to theinjury of his principal. Collins v. McClurg. 1 Colo. App. 348: Cox v. Haun, 127 Ind. 325, 327.

And if an agent does not perform his duty. or is guilty of gross negligence, or gross misconduct, or gross unskilfulness, he not only becomes liable to his principal for the damages the latter may have sustained, but he also forfeits his claim to commissions. Collins v. Mc