Jacks v. Manning

McCLENDON, C. J. This case arose out of the following facts, which are without substantial dispute: Jacks, the appellant, owned a residence situated on McKinney avenue, in Dallas, which he had listed for sale with Hull & Co., real estate brokers. Mrs. Manning, the ap-pellee, owned the east one-half of lot 7 in Glendale Acres, an addition to the city of Dallas, which she also had listed for sale with Hull & Co. On April 29, 1921, Steger, a representative of Hull & Co., told Jacks of Mrs. Manning’s property, representing it to be a half of block 7 in Glendale Acres, and stated that a trade could be made for his McKinney avenue property by putting in the half block in Glendale Acres for $1,250. Jacks went with Steger and inspected block 7 in Glendale Acres, and' Steger told him he would get half of the block in the trade. The un-contradicted evidence is that the entire block was unimproved, was covered with Johnson grass, and was practically uniform in value, and that the half block was worth approximately $1,250. Steger and Jacks returned to the office of Hull & Co., where the latter prepared a written contract whereby Mrs. Manning was to purchase the McKinney avenue property for a total consideration oj: $6,250, part of which was cash, part represented by the assumption of lien notes, and the balance as follows: “And a warranty deed to one-half block of land in Glendale Acreage, valued at $1,250, being three (8) lots.” The contract contained in the record appears to be signed as follows: “[Signed] C. A. Jacks, Seller, by W. E. Hull & Co., Agents. [Signed] Mrs. Mary L. Manning, Purchaser, by C. M. Reid. I agree to pay W. P. Hull & Co. $250 for commission. [Signed] C. A. Jacks.” Both Jacks iind Steger testified that Jacks signed the contract in person, and Hull & Co. signed it for Mrs. Manning. Mts. Manning testified that the contract was “signed for me by Hull & Co., or a member of that firm.” This is the only explanation of the signature of Reid. It is undisputed that the contract was drawn by Hull & Co. as the representative of both parties. It provided that each party was to furnish the purchaser a title policy to the property conveyed. The details of closing the trade and obtaining the title policies were left with Hull & Co. Jacks and wife signed and acknowledged a general warranty deed prepared by Hull & Co. conveying to Mrs. Manning the McKinney avenue property. Hull & Co. informed Jacks that there was some trouble about the title to the Glendale Acres which needed straightening out, and that the deed from Mrs. Manning would be a little delayed on that account, but would be forthcoming, and suggested that he deliver to them for Mrs. Manning the deed to the McKinney avenue property; and they would later get the deed and title policy to the Glendale Acres property. This he did, and the transaction was closed so far as he was concerned, he receiving all the other consideration for the McKinney avenue property. After waiting several weeks Jacks called at the office of the Title Guaranty Company, inquiring whether his deed and policy were ready, and was told that the company could not make the policy to the property named in the written contract, because it called for a half block, whereas Mrs. Manning owned only a half lot, and that the deed left with the company only covered a half lot. He was then shown the deed, which conveyed the west half of lot 1, block 7, Glendale Acres. He inquired of the company what to do about it, and was advised to get a lawyer, but replied: “No; let me have that deed which they left for me, and I will take it up with the Hull & Company office and call their attention to it and ask them to straighten it out and make it all right.” He then took the deed to Hull & Co’s, office, and was there told: “That is all you are going to get.” After this conversation he placed the matter in the hands of his attorneys. About this time or very shortly afterwards, Mrs. Manning instituted suit in trespass to try title to recover the McKinney avenue property, sued out a writ of sequestration, and dispossessed - Jacks under the writ; since which time she has held possession. Jacks’ attorneys advised him that he had the right either to rescind the sale and recover back the McKinney avenue property, or confirm the sale and recover the value of the three-fourths of the half block to which he was entitled under the contract, but which was not covered by Mrs. Manning’s deed; and in view of the fact that Mrs. Manning had already gone into possession of the McKinney avenue property, and had paid the cash consideration and probably interest on the lien indebtedness, it would be better or simpler for him to file a cross-action for the value of three-fourths of the half block in Glendale [590] Acres, as it would be necessary for bim, if be should rescind tbe sale, to place Mrs. Manning in statu quo. Tbis course was followed, and upon tbe trial, wbicb was to a jury, Jacks confessed judgment upon Mrs. Manning’s suit for title to tbe McKinney avenue property, and upon ber claim for $300 rentals during tbe period (four months) between tbe date of Jacks’ deed and tbe execution of tbe sequestration writ; and the case went to trial upon tbe cross-action of Jacks. Special issues were submitted to tbe jury wbicb resulted in tbe following findings: (1) That Mrs. Manning in ber deed conveyed to Jacks “tbe land she bad contracted to convey to bim”; (2) that tbe reasonable cash value of tbe land wbicb she contracted to convey to bim was $300; and (3) that tbe reasonable cash value of tbe land she actually conveyed to bim was $300.” Upon these findings tbe trial court rendered judgment decreeing tbe McKinney avenue property to Mrs. Manning, and, tbe east half of lot 1, block 7, Glendale Acres, to Jacks, awarded Mrs. Manning a •personal judgment against Jacks for $300 rentals, and denied recovery to Jacks on his cross-action. Tbe only question presented by the appeal is whether tbe evidence supports tbe judgment denying to Jacks recovery on bis cross-action. Appellee has not briefed the questions in the case, and the only theory wbicb suggests itself to us upon wbicb tbe court below submitted the above issues to tbe jury and declined to render judgment for Jacks on bis cross-action is that there was a mutual mistake in describing tbe Glendale Acreage property as a half block, and that Jacks got all tbe property be in fact bargained for. Tbe contract expressly calls for a half block in Glendale Acres, but it does not give the number of the block. As to tbe amount of property Jacks was to receive, the contract is clear and unambiguous. It is uneontradicted that Jacks was shown block 7 in Glendale Acreage, and that he was told by Steger tbát he was to get a half of that block. In so far as Jacks personally was concerned, there was therefore no mistake. Mrs. Manning testified that she bad nothing to do with the negotiations leading up to tbe trade; that this was all done by ber agents, Hull & Co., who signed tbe contract for her, but that she did not authorize them to sell any property she did not own, and she only owned tbe one-half lot conveyed in ber deed. Tbe contract was drawn by Hull & Co., who bad already through Steger represented to Jacks that be was to get tbe half of block 7, and the inclusion of a half block in the contract was tbe act of Hull & Co., and resulted, we assume, from a mistake on their part. The theory of mutual mistake can be applied only by imputing to Jack's tbe knowledge of Hull & Co. as his agents, under tbe doctrine that tbe knowledge of tbe agent acquired in the course of tbe agency is tbe knowledge of tbe principal. Tbe following is quoted from 2 C. J. 872: “Notice to an agent, who, with their knowledge and consent, represents both parties to a transaction, is notice to either of them to whom it would be notice if the agent represented him alone, and if each would be charged the notice to the agent is notice to both. Thus where a principal knows that his agent is also acting as agent for the party adversely interested in the transaction, and yet consents to let him act as his agent, the principal is estopped from denying notice and knowledge which the agent has during the negotiation.” An examination of tbe authorities, however, will show that tbis general statement of tbe rule is subject to a variety of qualifications and exceptions. A well-considered case by the Circuit Court of Appeals for tbe Seventh Circuit is Bank v. Munger, 95 F. 87, wherein it is shown that tbe rule has different application in different classes of cases. Where the question arises between one of tbe principals and a third party, it would seem that tbe rule above announced is generally followed; but where tbe controversy is between the two principals with reference to tbe transaction in wbicb tbe common agent acted, manifestly tbe rule would operate unjustly if arbitrarily applied in every case. An examination of tbe cases will show that tbe court took into consideration tbe relation of each party to tbe agent and determined tbe controversy, in most cases at least, from tbe viewpoint of tbe duties resting upon tbe agent to bis principals respectively, rather than by applying tbe general rule indiscriminately. It is manifest that where tbe controversy is between tbe two principals, tbe rule if arbitrarily applied might operate as a two-edged sword, for if all tbe knowledge wbicb tbe agent acquires during the course of tbe transaction is imputed to both principals, then neither principal could under any circumstances recover for tbe fraud or mistake of tbe agent, and under tbis application of tbe rule tbe parties would be bound as their agent bad sought to bind them without reference to any fraud or mistake. Thus Mrs. Manning would be charged with knowledge that Steger bad mistakenly represented to Jacks that she owned half of block 7 wbicb was to go into tbe trade, and therefore she would be bound by tbe contract wbicb her agents made with Jacks for a half block of ground, and could not set up mutual mistake as a defense to relieve her from tbe obligation which tbe contract imposed. In Ward v. Jenson, 87 Or. 314, 170 P. 538, tbe Supreme Court of Oregon cited the above quotation from Corpus Juris, and made tbe following bolding: “A real estate broker assisted tbe plaintiff in negotiating the exchange of properties. The defendant requested the court to instruct the [591] jury that notice to the broker was notice to the plaintiff. The court refused to give the requested instruction. The plaintiff claims that the court was warranted in refusing the instruction upon the theory that the broker was also the agent of the defendant. If there was an entire lack of evidence to show that the broker had knowledge of the things complained of, it was proper to refuse the requested instruction; but the fact that a double agency existed, if it did exist, would not of itself under all circumstances warrant a refusal to instruct the jury that notice to the broker is notice to one of the principals.” We very seriously question the soundness of this holding. In that ease the plaintiff sought to recover for fraudulent statements made to plaintiff direct by defendant as an inducement to the sale. The agent’s knowledge of the falsity of such statements could only be imputed to the plaintiff upon the theory that it was the duty of the common agent to inform the plaintiff thereof; which duty, if he had performed it, would have brought to plaintiff actual knowledge of the attempted fraud, and thereby defeated recovery. We do not think, however, that the law imposes upon a common agent the duty of, advising one of his principals that the other principal is by false statements made direct to the first principal attempting to commit a fraud on him. Where one of the principals in his direct dealings with the other principal makes false and fraudulent statements, the latter’s right to rely thereon should not be affected by the undisclosed knowledge of the common agent. In the more recent Kentucky case of Bank v. Surety Co., 195 Ky. 504, 243 S. W. 13, the general rule above announced was applied as follows: The cashier of the plaintiff bank was also agent for the defendant surety company in soliciting and delivering policies of burglary insurance. The bank’s board of directors instructed the cashier to obtain a policy with a certain coverage. There was correspondence between the cashier and the general agent of the surety company, and finally the policy in suit was written and was delivered by the cashier to the board of directors, with the statement that it provided for the desired coverage. There was a loss, and the bank sought to hold the surety company on the basis of the coverage which the bank had instructed its cashier to procure. The court held that the cashier was agent for both parties, and the bank was bound by his acts in accepting the policy. We read from the opinion: “It seems clear that Kemper was both the agent of the bank and the insurance company for the purpose of obtaining the $25,000 policy of burglary insurance. It follows therefore, that his acts were the acts of the bank as well as of the insurance company. He had authority to accept from the insurance company the character of policy which he delivered to the board of directors, and which they accepted and approved.” Thus in that case the parties were held bound by the acts of the common agent to the terms of the contract as written. By this application of the principle to the present case, both parties are bound to the contract as made with Jacks and as written. Another, and as we think the correct, view is that Hull & Oo. were not the common agents generally of the two principals, but that they acted in different capacities for each. Jacks had listed his property with them for sale and Mrs. Manning had listed hers. They were the agents of Mrs. Manning in the sale of her property, and any statements or representations with reference thereto made to Jacks by them were in furtherance of their authority to sell her property and she should' be held bound thereby. In addition to these considerations, we think Mrs. Manning was bound by the terms of the written contract and the representations of Steger in pointing out the property Jacks was to get from Mrs. Manning, for the further reason that she ratified the contract and accepted its benefits with knowledge of its contents. We quote from her testimony upon which there is no dispute:, “I had nothing to do with reference to the negotiations or trade until some time after it had been closed up by the contract óf sale, and then after 1 learned about the contract and the sale I received my deed and have done what I stated under the contract.” Under this testimony, Mrs. Manning is clearly estopped from claiming the advantage of a mistake made by her agents in negotiating the sale with Jacks. The latter was certainly not at fault in any way. He made the trade in good faith and was to get a full half of block 7. The contract called for that quantity of land. He and his wife signed the deed to their homestead and delivered it to the common agent for Mrs. Manning, on the faith of the representations of Steger and the express terms of the written contract. Mrs. Manning accepted this deed with knowledge of the contract and forcibly took possession of the McKinney avenue property. It would be inequitable and unjust to entertain her claim that she did not in fact intend to convey the full amount of property called for in the contract, and thereby defeat Jacks’ right of recovery on the contract as made in so far as he was concerned and as actually written. The jury found that one-fourth of the half block covered by Mrs. Manning’s deed was worth $300. This finding, in connection with the undisputed fact that the entire block was of practically uniform value, fixed the value of the half block at $1,200. Jacks is therefore entitled to récover $900, less the $300 admitted rentals, and he is also enti592 tied to a lien on the McKinney avenue property to secure the payment of this balance. The trial court’s judgment decreeing to Mrs. Manning the McKinney avenue property and to Jacks the east half of lot 1 in block 7, Glendale Acres, is affirmed. In all other respects the trial court’s judgment is reversed and judgment is here rendered in favor of Jacks against Mrs. Manning for the sum of $600, with interest thereon at the rate of 6 per cent, per annum from the 21st day of July, 1921, and all costs both of the trial court and on appeal, which said recovery is hereby decreed to be secured by a lien upon the McKinney avenue property described in the trial court’s judgment, which lien is hereby foreclosed and may be enforced by order of sale and execution as required by law. Affirmed in part, and in part reversed and rendered.