Brown v. Draeger

212 N.W. 869, 51 S.D. 190, 1927 S.D. LEXIS 180
CourtSouth Dakota Supreme Court
DecidedApril 1, 1927
DocketFile No. 6337
StatusPublished
Cited by3 cases

This text of 212 N.W. 869 (Brown v. Draeger) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown v. Draeger, 212 N.W. 869, 51 S.D. 190, 1927 S.D. LEXIS 180 (S.D. 1927).

Opinion

SHERWOOD, J.

For an understanding of this case, it is necessary to give a synopsis of the pleadings.

The complaint alleges, in substance: That respondent, plaintiff below, resided at Mobridge, ioo miles from Aberdeen, and was not familiar with the value of lots in the latter city. That Draeger Land Company was a partnership composed of C. A. Draeger, Floyd Yeager, and J. W. Daniels. That in April, 1920, respondent was engaged in running a hotel in M'obrid’ge and was desirous of purchasing a tract of vacant ground in Aberdeen on which to erect and operate a hotel. Respondent called on appellant company in Aberdeen to ascertain if they had any property listed with them suitable for hotel purposes. While they were showing respondent different tracts they had for sale in the city, they passed certain vacant lots on South Main street which Draeger pointed out to respondent as lots belonging to one A. L. Ward, which lots were not then listed with defendant company, but might be for sale, stating to respondent they did not know what price Ward would want for the lots. That respondent suggested to appellant Draeger that they both go together and see the owner and ascertain at what price the property could be bought. That Draeger, for the fraudulent purpose of dissuading plaintiff from making inquiry of the owner as to the price of the lots, stated to' respondent that Ward was interested in the operation of two of the leading hotels in Aberdeen and would probably think respondent desired to purchase said property for a hotel and probably would not sell the lots to respondent or would ask an excessive price therefor; and further stated he was well acquainted with Ward and would be able to buy the lots for respondent at a less price than respondent could buy them from Ward. That thereupon respondent employed [192]*192said Draeger as his agent to. ascertain, for him, the lowest price at which such lots could be purchased, which Draeger undertook and agreed to do. That pursuant to that employment Draeger called on Ward, and Ward offered to sell the lots for $11,000 and allow ¡Draeger a commission of 5 per cent for selling same. That after obtaining this price Draeger stated to respondent that Ward asked $15,000 for said lots, and that was the lowest price at which they could be bought, and that said lots were well worth that amount. That relying on the statements of Draeger that $15,000 was the lowest price for which said- lots could be bought, he consented to purchase the lots from Ward at that price. That thereupon D'raeger proceeded to draw a contract of sale of said lots between Draeger Land 'Company and respondent for $15,000; $1,000 payable on the execution of the contract, $4,000 on or before May 20, 1920; upon which payment Draeger Land Company agreed to give respondent a deed and take back a first mortgage for $10,000 on the property, $5,000 due November 20, 1920, and $5,000, May 20, 1921, interest at 7 per cent. That upon presentation of this contract to respondent for his signature he inquired of Drager why said contract was made with D'raeger Land Company and not direct with Ward, the owner of the land. That Draeger then stated to respondent if the contract were made between respondent and Ward, Ward would probably refuse to sign the same, because he would know or suspect respondent was buying the property for the purpose of erecting a hotel thereon. That in order to arrange for the purchase it was necessary that the contract be made through Draeger Land Company instead of direct with the owner. That respondent paid Draeger Land Company $15,000 for said lots. That in all of said transactions he relied upon the honesty and integrity of defendants, particularly C. A. Draeger, in arranging for and carrying out the purchase of said lots from Ward, as agent of plaintiff, and at the lowest price for which said lots couldi be bought from Ward.

The complaint prays judgment against defendant for $4,000 and interest thereon at 7 per cent from May 20, 1920. The answer admits the copartnership and business of defendants and denies all other allegations of the complaint. The jury returned a verdict for plaintiff for $5,528.49, and defendants have appealed.

There are four assignments of error. The first relates to the exclusion of evidence. The second, to the instructions of the [193]*193court. ■ The third, to- the insufficiency of the evidence to sustain the verdict, And the fourth, to alleged misconduct of the jury.

Under the first assignment appellant sought to prove the value of the property bought by respondent, and by a suitable question and offer of proof presents that issue. It seems to be appellant’s contention that this is an action for fraud and deceit in inducing respondent to enter into the contract for the purchase of these lots, that respondent was limited in his procedure to rescinding his contract and demanding the return of the money paid or to retain the property and sue for damages, and that he would be limited in his recovery to the damages set forth in sections 1984 and 2001, R. C. 1919. In this we think appellant is in error. This is not an ordinary action for damages for fraud and deceit. It is an action 'brought by a principal to recover from his agent the profit obtained by such agent through deceiving his principal as to the sum paid by him for property bought for the principal; in other words, in purchasing at a less price than that which he charged his principal. In this case it is alleged that appellant obtained $15,000 from his principal for the purchase of certain lots, 'but only paid out $11,000 of that sum for the lots, falsely representing to his principal that the lowest price for which the lots could be obtained was $15,000, and this action is brought to recover of the agent the $4,000 profit so obtained by him, with interest thereon at 7 per'cent from the date the money was received. It is not an action' for breach of -contract, but rather for a breach of trust. The rule governing this class of actions is thus stated in 2 C. J. p. 697, § 3-56:

“As a general rule it is a breach of good faith and loyalty to his principal for an agent, while the agency exists, so to deal with the subject-matter thereof * * * as to make a profit out of it himself in excess of his lawful compensation; and if he does so he may be held as a trustee and may -be compelled to account to his principal for all profits * * * acquired by him in such dealings, whether in performance or violation of his duties.”

“ * * * The application of this rule is not affected by the fact that there is a usage or custom to the contrary or that the agent is a gratuitous one.

“So an agency may be compelled to account for profits made by * * * purchasing at a less price than that which he charges [194]*194against the principal for the property unless the principal had full knowledge of such facts and consented thereto.” 2 -'C. J. p. 698, § 357-

The actual value of the property was therefore immaterial, and the objection to the question, and offer of evidence, were both properly sustained.

Under assignment No. 2, appellant asserts error in giving the following instruction to the jury:

“The court further instructs .the jury that if you find from a preponderance of. the evidence in this case that the plaintiff employed the defendants as his agent to negotiate with A. L,.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Elfert v. Witt
38 N.W.2d 445 (South Dakota Supreme Court, 1949)
Brown County v. Zerr
295 N.W. 289 (South Dakota Supreme Court, 1940)
Saunders v. Farmers' & Merchants' National Bank
248 N.W. 250 (South Dakota Supreme Court, 1933)

Cite This Page — Counsel Stack

Bluebook (online)
212 N.W. 869, 51 S.D. 190, 1927 S.D. LEXIS 180, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-draeger-sd-1927.