Bradley v. Davidson

47 App. D.C. 266, 1918 U.S. App. LEXIS 2407

• Court: Court of Appeals for the D.C. Circuit
• Decided: February 4, 1918
• Docket: No. 3048
• Status: Published

Opinions

Mr. Justice Robb

delivered tlie opinion of tlie Court:

The first question logically to be considered is what effect is to be given the answer of the defendants Davidson & Davidson. Answer under oath having been waived, and the hearing not having been upon bill and answer, the answer is not evidence. Baker v. Cummings, 4 App. D. C. 230, 263; Forrest v. Wardman, 40 App. D. C. 520, 529. See also Conley v. Nailor, 118 U. S. 127, 134, 30 L. ed. 112, 114, 6 Sup. Ct. Rep. 1001; Dravo v. Fabel, 132 U. S. 487, 489, 33 L. ed. 421, 422, 10 Sup. Ct. Rep. 170.

It is insisted, however, that inasmuch as answers to the interrogatories were required to be under oath, they are evidence. In so far as these answers are directly responsive to the interrogatories, the contention is sound, hut it is clear to us that a party, by interjecting statements not called for by the interrogatories, may not thereby render such statements evidence and avoid the danger of becoming a witness. Thus in Dravo v. Fabel, the court, speaking of the answers to the bill, said that they, “being directly responsive to the bill,” were evidence, since answers under oatb bad not been waived. In tlie present case the Davidsons were asked what commission the firm directly or indirectly received on account of the exchange of the properties in question. This question admitted of a categorical answer. Nevertheless, there was interjected into the answer a statement that the $400 paid by Simpson & Sullivan was received “with the full knowledge and consent of Henry Bradley.” To hold that this statement, which was not directly responsive to the question, is evidence, would he to countenance a mischievous practice and make possible in many cases the avoidance of sec. 1064 of the Code [31 Stat. at L. 1357, cliap. 854], to tlie effect that, where one of the original parties to a transaction or contract has died, lire other party shall not be allowed to testify “as to any transaction with or declaration or admission of tin; said deceased.” In the case before us Mr. Bradley is dead. All the written evidence of the transaction, instead of showing knowledge on his part of the payment by Simpson & Sullivan, who represented the owner of the apartment house, of $400 commission to the Davidsons, who were the agents of Mr. Bradley, tends to show the contrary. AYe are clearly of opinion that this statement is not evidence, and therefore may eliminate it from consideration.

Inasmuch as a discussion of the facts which were before the court when the motion of the defendants that the bill be dismissed was granted will be determinative not only of the question whether the ruling’ was right, but also of the question whether the plaintiff was guilty of ladies, and the related question whether she had a complete and adequate remedy at law, we now will consider that evidence. That the Davidsons occupied a confidential relationship towards their uncle clearly appears. That he relied, and had a right to rely, upon their representations and advice generally in making real estate investments in the District is equally certain. They made all their uncle’s investments, had authority to-take his notes out of bank and substitute now ones for them, and generally, according' to the express admission by one of the members of the firm, he accepted the firm’s judgment. These facts are very material, and must be kept in mind in the consideration of the evidence concerning the particular transaction here under review. Mr. Bradley owned this dwelling house free of encumbrance, and, under the evidence, we must assume it to have been worth about $12,000. 1 le received a letter from one of the Davidsons in which the statement was made that the firm had been offered “a very attractive apartment house * * * renting at $6,000 per annum,” and that “we would like you to see it, as wo think you would get from $1,000 to $1,500 a year net out of the property.” A few days thereafter the same nephew wrote his uncle that if he (the nephew) owned ■the Columbia Hoad bouse, and was offered the exchange, lie would accept it. Indorsed on this letter was the following:

Notes (trust notes)

House

$47,000

This shows that the Davidsons were representing to Mr. Bradley that he would be paying $ (-7,000 for the apartment house, and inferentially, of course, representing that it was of that value. If is true that Mr. Bradley came to Washington and inspected the apartment house, but he inspected it with one of the David-sons, whom he had a right to assume was representing him and no one else in the transaction. The exchange was effected and Mr. Bradley' deeded away his unencumbered house, the value of which thus had been fixed by the Davidsons at $12,000, and received therefor an apartment house which, under the evidence, we must find was encumbered for about all it ivas worth. Mr. Bradley was injured within a very little time after this exchange was made, and his death resulted soon thereafter. His will was admitted to probate, but, as appears from the testimony of John C. Davidson, there was a contest over the will, which had not been settled in 1918.

When the trust notes came due in the spring of 1912 Mr. Bradley’s will ivas in litigation, hut a representative of Mrs. Bradley interviewed the Davidsons with reference to a renewal of those notes, and, as averred in the bill and admitted in the answer, the property was sold at public and ion for the amount of the indebtedness thereon. When asked by the court as to the relevancy of this evidence, counsel for plaintiff stated: “'This is when we discovered the fact the property was not ivliat it was represented to be.” It further developed that the income from the apartment house was less than it was represented to he at the time of the exchange, but it ivas not until the answer of these defendants was filed that plaintiff could have felt sure that thei-r representations as to the value of the apartment house and the advisability of the exchange were not made in good faith; for it was not until then, under the evidence before us, that it was definitely known that they represented the owner of the apartment house as well as "Mr. Bradley. The statement rendered "Mr. Bradley makes no mention of any commission other than the commission of 1]/> per cent upon the value of the property which they exchanged for him. The. statement rendered the Davidsons by Simpson & Sullivan, which came to light while Sullivan was on the witness stand, credits the Davidsons with the $400 commission, which was paid the David-sons by Simpson & Sullivan, as representatives of the owner of the apartment house. "When asked how this amount was arrived at, Mr. Sullivan said he did not know.

It thus appears from the evidence that was before the court when this bill was dismissed, that agents sustaining a confidential relationship to their principal, who was paying.them for and entitled to their services and advice, grossly betrayed their trust by secretly representing the other party. Said this court in Mannix v. Hildreth, 2 App. D. C. 259: “Any attempt to occupy the relation of agent to two persons whose interests conflict, whether with or wdthout notice to them, is to be condemned as contrary to good morals and the principles of equity.” In Rawlings v. Collins, 36 App. D. C. 72, 77, this court, speaking through Mr. Justice Van Orsdel, said that “the principal will be protected against any concealed, undisclosed action on the part of the agent, whereby the agent or anyone whom he secretly represents may secure an unfair advantage or occupy a position where a possible fraud might be perpetrated. * * * This is especially true where the agent and the purchaser are either the same person or acting in collusion.” Again, in Fox v. Patterson, 43 App. D. C. 484, 493, this court said: “Instead, therefore, of Mr. Fox being in a position to act solely in the interest of Mrs. Fatter son, he had secretly assumed a position antagonistic to her. Stick, conduct cannot be too strongly condemned, and where it has occurred the principal may repudiate the entire transaction and enforce reparation for losses sustained.” In that case Fox was the agent and u^as compelled to make good the damages resulting from his lack of good faith. In Forrest v. Wardman, 40 App. D. C. 520, which was a bill to sot aside certain conveyances on the ground of fraud, it appeared, as hei*e, that one party secretly had paid a commission to the agent of the other party. This court said: “The question is -whether Ward man [the party secretly paying the commission] is to he held, and, if so, in what, amount. The facts which have been recited in this opinion make it unnecessary to enter into any discussion of the law upon the first part of that question. It would he a disgrace to the law if it were necessary to cite any authorities to show that a defendant, who has been found to have secretly purchased the services of the complainant’s agent in effecting an exchange of properties between the complainant and the defendant, is legally and equitably responsible and liable to make good to the complainant whateverloss the complainant has legally or equitably sustained. That is what the defendant Wardman has done. If the properties transferred to him were still in his power to restore, there can be no doubt tbat a court of equity would have power and right to order the reconveyance.”

These adjudications settle beyond poradventure the right of the plaintiff to have the transaction under consideration set aside and the Columbia Iioad property restored to her if that now' may he done, and, if that is not possible, to fasten upon the apartment house owner a role thus far assigned to the straw man O’Neil, liability in damages for losses sustained.

Nor do we think there is any doubt, under the evidence before us, as to the liability of the Davidsons for the damages resulting from their breach of faith. In the Fox Case the agent was compelled to respond in damages because, as here, he secretly had assumed a position antagonistic to his principal, and injury had resulted therefrom. That case involved an exchange of properties, and it appeared that Fox secretly had acquired an interest in the property wdiich wTas to be taken in the exchange by bis principal, but the basis of our ruling was bis breach of trust which, as here, resulted in a total loss to his principal. The legal result is the same, -whatever may be the fruit of the agent’s double dealing. Tlie degree of his success or the particular means employed to effect his ulterior purpose cannot change the character of that purpose or afford the wrongdoer escape from liability for the result of his duplicity. Under the evidence before us it must be assumed that the Davidsons, when they advised flic making of this exchange by their uncle, whose agents they were, knew that he would be exchanging a $12,000 house for air equity of little, if any, value. In other words, they knew that their bad faith and breach of trust inevitably would result in a loss to their principal. Clearly, therefore, they should be held responsible for that loss. And this is no now doctrine. In Hunsaker v. Sturgis, 29 Cal. 142, it was ruled that even where a person voluntarily becomes an unpaid agent of another to negotiate a sale of stock of a corporation, and then receives a certain sum from the purchaser as a reward for acting in his behalf and procuring a sale for less than the purchaser was willing to pay, the agent becomes liable to the owner for the loss he sustained by this breach of confidence. Tn that case it further was held that, even admitting that the defendant was not an agent eo nomine, the fact that a special confidence was reposed in the defendant which he knowingly be-i rayed to the damage of those by whom he was trusted, and for a mercenary reason, was “even more than enough to hold the defendant.” See also Morrison v. Ogdensburgh & L. C. R. Co. 52 Barb. 173, 182; Dazey v. Roleau, 111 Ill. App. 367; Wiruth v. Lashmett, 82 Neb. 375, 117 N. W. 887.

The suggestion, in the answer of the Davidsons, that it is a custom in this District “in cases of exchange óf properties to divide the commission between the two brokers,” may be summarily put out of view, for the reason that no custom will be permitted to override a positive and salutary rule of public policy.

It requires no citation of authorities to demonstrate that this peculiarly is a case for a court of equity, where all the facts may be brought to light, and, if the evidence warrants, the transaction may be set aside or those responsible for the wrong-may be required to respond in damages. To us it is perfectly clear that an action at law would not have afforded this plaintiff adequate relief. “The jurisdiction in equity attaches unless the legal remedy, both in respect to the final relief and the mode of obtaining it, is. as efficient as the remedy which equity woidd confer under the same circumstances.” Kilbourn v. Sunderland, 130 U. S. 505, 514, 32 L. ed. 1005, 1008, 9 Sup. Ct. Rep. 594.

Nor do we find any greater merit in the defendant s’ contention that plaintiff was guilty of laches. It is a familiar rule that the period of delay or neglect necessary to constitute laches varies with the peculiar circumstances of each case, and, unlike Hie Statute of Limitations, is not subject to an arbitrary rule. “It is an equitable defense, controlled by equitable considerations, and the lapse of'time must be so great, and the relations of the defendant to the rights such, that it would he inequitable to permit the plaintiff to now assert them.” Halstead v. Grinnan, 152 U. S. 412, 417, 38 L. ed. 495, 497, 14 Sup. Ct. Rep. 641. In George v. Ford, 36 App. D. C. 315, 333, this court, speaking through Air. Chief Justice Shepard, said: “So great is its abhorrence of fraud and the violation of fiduciary obligations, that a court of equity will look with some indulgence upon mere delay, from which no material injury has resulted.” See also Lewis v. Denison, 2 App. D. C. 387, 391; Baker v. Cummings, 4 App. D. C. 230, 273; and Ackerman v. McIntire, 7 App. D. C. 443.

In the present case it is averred in the hill, as previously set forth, that some time after the foreclosure of the trusts upon the apartment Al'rs. Bradley “became suspicious of the, character of said exchange and consulted her attorney in regard to the matter, and that, after an investigation of the same, plaintiff says that, upon information and belief, she recently discovered and therefore avers and charge's upon information and belief” the facts upon which she asks for a decree. Under rub' 30 of the equity rules of the Supreme Court of the United States, which of course are controlling in this jurisdiction, “averments other than of value or amount of damage, if not denied, shall he deemed confessed.” It, therefore, was incumbent upon tb(' defendants to make answer to the above averments of plaintiff's bill, and this they did not do. In other words, if the defendants were aware of any previous knowledge by Airs. Bradley concerning the' acceptance of double commissions by the Davidsons, it was their duty to say so in their answer. The Davidsons did not hesitate to mahe such an averment as to Mr. Bradley, whose lips were sealed, and their failure to include Mrs. Bradley certainly may not be attributed to oversight. It is clear that we must accept this averment as an admitted fact. The Davidsons and the owner of the apartment house, through Simpson & Sullivan, perpetrated a fraud upon Mr. Bradley and concealed the real evidence of that fraud. See Faust v. Hosford, 119 Iowa, 97, 100, 93 N. W. 58; Jackson v. Pleasanton, 95 Va. 654, 29 S. E. 680. Their concealment, therefore, amounted to a continuation of the original fraud. They made known the facts when, and when only, they w'ere compelled to do so; and a court of equity would be forgetful of its true province should it rule that, in these circumstances, the plaintiff was guilty of laches. The defendants appear “in an atmosphere so contaminated with secrecy and opportunity for unfair dealing, and so foreign to the proprieties of agency, that it shocks the refinements of equity.” Rawlings v. Collins, 36 App. D. C. 72, 78.

It is insisted next that, having called John C. Davidson as a witness, plaintiff was bound by his testimony, .and should not have been permitted to cross-examine him. In Dumas v. Clayton, 32 App. D. C. 566, 574, this court said: “In cases like this, it is generally necessary to call and examine the parties to the alleged fraud, and because of their adverse interest they may be treated as witnesses on cross-examination. The object of the right of such cross-examination is to draw out of an unwilling witness all'such circumstances as may tend to establish the perpetration of the fraud. * * * If a witness makes a direct statement, and then discloses circumstances inconsistent therewith, it is for the jury or court to determine what is to be believed.” In other words, while by calling Mr. Davidson as a witness plaintiff waived the right to impeach him in the ordinary manner permitted in cases of witnesses called by the opposing party, it was proper to elicit from the witness by cross-examination all germane facts and. circumstances, to the end that the real situation might be made to appear.

It was error for the court not to compel the testimony of the witness Bust and the other rñembers of the so-called Beal Estate Brokers Association Appraisement Committee. They were regularly subpoenaed, not for the purpose of compelling them to go out and make an appraisal of this property, but to appear on the witness stand and testify as to facts within tlieir knowledge. Apart from statute it may be laid down as a general rule that an expert witness may be compelled to testify as to matters of a professional opinion, or matters of which he has gained a special knowledge by reason of his professional training or experience, without any compensation other than the fee of an ordinary -witness. The question is very fully considered in Dixon v. People, 168 Ill. 179, 39 L.R.A. 116, 48 N. E. 108, and it there was held that a physician subpoenaed and interrogated as an expert witness cannot refuse to testify upon the ground that no compensation greater than allowed to ordinary witnesses has been promised or paid him. And in Stevens v. Worcester, 196 Mass. 45, 56, 81 N. E. 907, it was ruled tlint, a witness qualified as an expert as to a certain subject may be required to express an opinion regarding that, subject, if he has one, but cannot be required to perform labor in order to qualify him so to do. In that case, as here, the witness had formed an opinion which he had committed to writing. See also 40 Cyc. 2187.

One other question requires notice. Defendants suggest (hat the suit should have been brought by Mrs. Bradley as executrix. Since she was sole devisee and legatee under her husband’s will, and, according to evidence introduced by defendants, the value of the personal estate wTas more (han $50,000, it could make no difference to defendants whether the suit veas brought in plaintiff's individual or representative capacity. But we think the question is determined by the decision in Webb v. Janney, 9 App. D. C. 41, where it was ruled that a suit in equity to rescind a conveyance of land for fraud must he brought in the name of the heirs at law or devisees of the injured party.

Decree reversed, with costs, and cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.