McDonald v. Lord

26 How. Pr. 404, 2 Rob. 7

• Court: The Superior Court of New York City
• Decided: February 15, 1864
• Status: Published

Opinion

By the court, Monell, J.

If the defendants dismissed Boak from their service because of any disobedience of their lawful orders, I think there was sufficient conflict in the evidence on that subject to have required the case to have gone to the jury. Boak was directed not to sell any more goods to Beattys & Boak on credit, and it was in evidence, although contradicted by Boak, that after such direction he continued to make sales to that firm. This disputed evidence would have been proper to go to the jury, and it would have been error to have taken the question from them.

But there is another ground upon which it is proper to assume the learned justice put his decision.

The contract was an entire one, and the defendants j could not lawfully terminate it within the year, without justifiable cause.

The evidence shows, that Boak, at the time of and during all of his employment by the defendants, to the time of his discharge, as the manager of their carpet department, was interested as a partner in the carpet house of Beatty's & Boak, No. 8 Fourth avenue, and that he sold the goods of the defendants to the firm in which he was interested. The fact of this connection of their employee with the firm of Beattys & Boak did not come to the defendants’ knowledge until shortly before his discharge, and the only ground assigned for the discharge was such con- . nection and interest, and the sales by him of the defendants’ property substantially to himself.

It is a well settled principle of morals as well as of law, that the agent must faithfully serve his principal. However unquestioned may be the honesty of tfhe agent, or his impartiality between his own interests and those of his principal, he is bound to the exercise of all his skill, ability and industry in favor of his principal. As an agent to sell, it is his duty to get the highest fair price ; and this duty is wholly incompatible with his wish to buy. In every trust this principle .prevails. No agent or trustee can deal with the subject matter of his trust, except for the benefit of his principal. Executors and administrators are expressly forbidden by statute (2 R. S. 104, § 27) from purchasing the property of their testator or intestate; •and the rule in equity is, that any act by an agent in respect to the subject matter of the agency, injurious to the principal, may be avoided by the principal, and where an agent to sell becomes the purchaser, the court will presume that the transaction was injurious, and will not permit the agent to contradict the presumption. (Coles agt. Thecothick, 9 Ves. 234, 247.) The policy of this rule is obvious. The confidence reposed in the agent must not be abused. His position of trust must not be employed to his own advantage, or to the injury of his principal. In short, while in the employment of his principal, his principal’s interest must be his interest, and he may have no interest which, conflicting with those of his principal, can work injury to the latter.

Boak was the agent of the defendants to sell their property, and could not become the purchaser without violating the duty'which the trust imposed upon him. He did virtually become the purchaser of the goods he sold, and his interest in the purchase was incompatible with the defendants’ interests. It is not necessary to draw fine distinctions. There is no evidence in the case of positive unfairness or fraud on the part of Boak in making sales to Beattys & Co. There is no imputation upon his character, nor suspicion, that he made more favorable sales to the firm, in which he was interested, than, to others. It is enough that the law presumes such sales to be injurious to the principal, and the plaintiff is not permitted to rebut the presumption. (Dobson agt. Racey, 3 Sandf. Ch. R. 60 ; S. C. 8 N. Y. R. 216.)

Upon principles so obvious and just, the facts of this case, in my judgment, afforded the defendants a full and complete justification for rescinding their contract with Boak, and discharging him from their service.

The learned justice was, therefore, correct in dismissing the complaint.

I am of opinion the judgment -should be affirmed.