Stapp v. Godfrey

139 N.W. 893, 158 Iowa 376

• Court: Supreme Court of Iowa
• Decided: February 11, 1913
• Status: Published

Opinion

Deemer, J.

The issues as made by the pleadings were: First. Did plaintiffs and defendant enter into an agreement whereby defendant was to allow plaintiffs a commission for the sale of his real estate? Second. Admitting that plaintiffs received a commission from the purchaser Kaufman, did defendant know of that fact before the sale was consummated ? Third. If plaintiffs are entitled to recover, what is the measure of their recovery?

The verdict was general, and, as there was a conflict in the testimony upon each of the propositions involved, the ease must be affirmed, unless it appears that errors were committed upon the trial which call for a reversal of the judgment entered upon the verdict. The errors argued relate to the instructions given by the trial court, and to its failure to give instructions relating to certain issues, although no requests were made by plaintiffs with reference thereto.' As complaint is made of most of the instructions, we have set out the ones which are complained of, with others which tend to modify or explain them.

In the instruction stating the issues, the court quoted this part of the reply filed by plaintiffs: “The plaintiff admits that it 'received a commission from the said Kaufman, and says, further, that plaintiff was acting as a mere middleman in consummating the trade, or exchange of property, and that defendant expected to pay a commission as alleged in plaintiff’s petition, and that plaintiff expected to receive such commission, and that defendant knew that plaintiff expected to receive a commission from both parties, and that plaintiff was acting with the full knowledge and consent of both the said Kaufman and defendant.” And this was followed by the main body of the charge, reading in this wise:

Under the issues thus presented, the burden of proof is upon the plaintiff to establish the material allegiations of his petition by a preponderance of the evidence before he can recover, and it being admitted by the plaintiff that it received a commission from the other party to said trade, to wit, E. C. Kaufman, the burden is upon plaintiff to show in like manner — that is, by a preponderance of the evidence— that, before the contract between Kaufman and Godfrey was signed'up, plaintiff or a member of the firm disclosed to the defendant Godfrey the fact that plaintiff firm was to receive a commission from Kaufman in the trade. The material allegations of plaintiff’s petition are that there was a contract between plaintiff and defendant, and that the terms thereof were substantially as set out and claimed by the plaintiff, and that there was a performance thereof on plaintiff’s part by bringing Kaufman and defendant together for negotiation for exchange of their properties, and that there is something due plaintiff from defendant by reason thereof. If you find these several matters so established by the evidence, and that the plaintiff firm, or a member thereof, disclosed to the defendant, before the signing of the contract between Kaufman and Godfrey, that Kaufman had listed his property with the plaintiff firm, and that plaintiff was to receive a commission from sa,id Kaufman, as herein explained, then your verdict should be for plaintiff. If you fail to so find, then your verdict should be for defendant. . . . The defendant alleges in his answer that the plaintiff was to receive, and did receive, a commission in this same trade from Kaufman, and it is admitted by plaintiff that such is the fact. This being so, the plaintiff cannot recover herein, even though you find the contract between the plaintiff- and defendant as claimed by plaintiff, unless the plaintiff firm or a member thereof disclosed to defendant that fact prior to the final consummation and signing of the contract between Kaufman and Godfrey. If you find from the evidence, and by a preponderance thereof, that plaintiff firm, or a member thereof, did so disclose such fact to defendant, and that the contract was as claimed by plaintiff — that is, that plaintiff was to bring Godfrey and Kaufman together for negotiations as to the exchange of the property — and that the agreement between plaintiff and defendant was that defendant should pay $1 per acre for such services, then your verdict should be for plaintiff. But, if you fail to so find, your verdict should be for the defendant. If you find plaintiff entitled to recover, the measure of his damages or recovery will be $320, with interest at 6 per cent, from May 21, 1911, and, if you so find, you should compute the interest and return your verdict in one lump sum.

1. Agency : commission contract : pleading: recovery. The last instruction was given on the theory that plaintiffs are entitled to recover either $320, with interest, or nothing; and in this there was no error, for plaintiffs in their petition alleged an express contract to pajr A ° *- them $1 per acre for finding a purchaser of defendant’s three hundred and twenty acres of land and there could be no recovery on quantum meruit.

2. Same middleman : right to commissions. The chief complaint made of the instructions quoted is that the court did not define a middleman or instruct as to the law of the case in the event the jury found plaintiffs were what counsel call “middlemen.” As we understand it, a middleman is one who acts , „ . ,. ,. , . , . as agent of both parties, and who sustains no such confidential relations to either as that he is bound to look after his interests. He is the agent of both, and merely brings the parties together in order that they may negotiate; he being under no duty of negotiating for either. Synnott v. Shaughnessy, 2 Hash. (Idaho) 122, (7 Pac. 82). Strictly speaking, a middleman is one who simply undertakes to bring the parties together, and does not involve the duty of negotiating for either. He may contract for and receive a commission from both, for such an agreement is implied from the nature of the agency. Stewart v. Mather, 32 Wis. 344; Hedden v. Shepherd, 29 N. J. Law, 344; Rupp v. Sampson, 16 Gray (Mass.) 398, (77 Am. Dee. 416). If the agent is understanding^ employed as a mere middleman to bring the parties together, he may receive a commission from both with or without the other’s consent, provided it is simply his duty to bring the parties together. It is true that this thought is not specifically covered by the instructions given, and the reason for it doubtless was that no instruction to that effect was asked.

3. same : instruction. Plaintiffs in their petition allege that they entered into an oral agreement with defendant: “Whereby it was agreed by and between the plaintiff and defendant that said plain-was to use e®orts Procuring a party who would trade a stock of goods for said three hundred and twenty (320) acres of land; and, in consideration of said service, the said defendant agreed to pay to said plaintiff the sum of one dollar ($1.00) per acre.” These allegations do not show that plaintiffs were employed as mere middlemen, and the only reference thereto is found in plaintiffs’ reply to meet the defense interposed by defendant to the effect that plaintiffs received a commission from the buyer without their knowledge and consent. The allegations of this reply were as follows: “That at the time of making the contract of employment, as alleged in plaintiff’s petition, defendant was informed that said stock was listed with plaintiff, and was informed that plaintiff expected to obtain a commission if exchange was made. . . . He admits that he received a commission from the said E. C. Kaufman. For further reply plaintiff states that it was acting as a mere middleman in consummating the said trade or exchange of property, and that defendant expected to pay a commission as alleged in plaintiff’s petition, and the plaintiffs expected to receive said commission, and that the defendant knew that plaintiff expected to receive a commission from both parties, and that plaintiff so acted with the full knowledge and consent of both the said E. C. Kaufman and the defendant herein.” The reply was called forth in response to defendant’s answer alleging that plaintiffs were not defendant’s agents, and that they received a commission from Kaufman. In so far as the reply departed from the allegations of the petition, it cannot be considered; but, if the allegations thereof be received, they proceed on the theory that defendant knew plaintiffs were to receive a commission from Kaufman^ and not upon the ground that plaintiffs were mere middlemen. For this reason, the court did not err in the instructions given or in failing to instruct in the absence of specific request upon the theory that plaintiffs were mere middlemen.

4. same right to commissions : instructions. It is familiar doctrine that a real estate broker cannot act as agent for both buyer and seller, and receive a commission from each, without the consent of both. But this consent may sometimes be inferred from the nature of the ■ agency. If one be employed as a mere middleman without the power or duty of negotiating for either, the law will imply notice to the principal that the middleman may receive and collect a commission from each. But if an agent is employed to find a purchaser, or is to make a sale, he cannot recover a commission from both, without the consent of each; for, as has been well said, ‘‘a man cannot serve two masters. ’’ In either event, however, consent either express or implied, is necessary.

The case was tried on the theory that plaintiffs had to show actual knowledge on the. part of defendant that plaintiffs were to receive a commission from Kaufman, and the instructions were based upon this notion, and of this plaintiffs are in no position to complain, for they asked no instructions whatever. As notice express or implied is necessary in either case, the trial court ivas not required, in the absence of specific request, to charge on the theory of implied notice.

5. same : middleman. Moreover, the testimony shows that plaintiffs actually participated in the negotiations leading up to the final exchange, and were at that time, so far as defendant knew, acting for him. They were, therefore, not mid-dlemen. In Casady v. Carraher, 119 Iowa, 500, we said: “The plaintiff undertakes to excuse his conduct on tbe ground tbat he was merely a middleman, engaged to bring the paiffies together, and, as such, was not bound to disclose his relations with one to the other. See Rupp v. Sampson, 16 Gray (Mass.) 398, (77 Am. Dec. 416); Orton v. Scofield, 61 Wis. 382 (21 N. W. 261). But, in order to occupy that position, he should have limited his exertions to such service. If, in addition thereto, the middleman assists either in effecting a trade,' he becomes to that extent a partisan agent, and the obligation immediately devolves upon him to, disclose his agency to the other. Strawbridge v. Swan, 43 Neb. 781, (62 N. W. 199) ; Copeland v. Insurance Co., 6 Pick. (Mass.) 203; note to Leathers v. Canfield, 117 Mich. 277, (75 N. W. 612, 45 L. R. A. 51). No definite value was put on their property by either defendant or Coombs in listing with plaintiff, and he was not authorized by either to negotiate the trade. But his compensation, as he claims, was dependent on an exchange, and he admits having exerted himself to the utmost to bring about the deal; advising each, apart from the other, that the trade was a desirable one to make. Under these circumstances, he was more than a middleman, for he attempted to aid each in effecting the exchange for which he was instrumental in bringing them together. Loyalty to either principal required him to disclose his relations to the other. The agent cannot serve two principals without the intelligent consent of both, and, if he undertakes to do so, compensation cannot be recovered for services rendered. Wilson v. Webster, 88 Iowa, 514; Lindt v. Brewing Co., 113 Iowa, 200; Bell v. McConnell, 37 Ohio St. 396, (41 Am. Rep. 528); Leathers v. Canfield, 117 Mich. 277, (75 N. W. 612, 45 L. R. A. 33), and valuable note; Rice v. Wood, 113 Mass. 133, (18 Am. Rep. 459). Even with such consent, the utmost good faith toward each principal is exacted, and, unless each may be honestly served, the agency should be promptly terminated. Morey v. Laird, 108 Iowa, 670. Fidelity in the agent is what is aimed at, and as a means of securing it the law will not permit the agent to place himself in a situation in which he may be tempted by his own private interest to disregard that of his principal. ‘This doctrine,’ in the words of another, ‘has its foundation not so much in the commission of actual fraud as in that profound knowledge of the human heart which dictated that hallowed petition, ‘Lead us not into temptation, but deliver us from evil,’ and that caused the announcement of the infallible truth that ‘a man cannot serve two masters.' Mechem, Agency, section 455. As both parties knew plaintiff had not seen the properties exchanged, and as no fact appears to have been misrepresented by him, nothing was in the way of acting for both, save the concealment of his relation to the defendant from Coombs. Up to the time the agreement was dictated, then, plaintiff was guilty of duplicity which would defeat recovery.” See, also, Scribner v. Collar, 40 Mich. 375, (29 Am. Rep. 541).

6. Same : pleadings : burden of proof. Under the admissions made in the pleadings, the burden was properly placed upon plaintiffs to show that defendant knew when he made his promise to pay a commission, if he made one, that plaintiffs were expecting a commission from Kaufman. Nothing to the contrary is announced in Redmond v. Henke, 137 Iowa, 228. In that case there was an issue as to whether or not plaintiff received a commission from the purchaser; while here plaintiffs in their reply admitted that fact, but sought a verdict by pleading knowledge on the part of defendant that they were to have a commission from the purchaser. As they were required, in the face of their admission, to plead the fact of knowledge, the burden was upon them to prove it. Lindt v. Brewing Co., 113 Iowa, 200; Wilson v. Webster, 88 Iowa, 514.

No error appears, and the judgment must be, and it is A lfirmed.

Preston, J., taking no part.