Wright v. Calhoun

Wheeler, J. It appears^ indisputably that Rogers bid off the property for Calhoun, pursuant to a previous understanding between them. The latter employed the former to purchase for him ; and thus constituted him his agent in making the purchase. It is immaterial what their private understanding was, as to the disposition of the property between themselves ; the later employed the instrumentality and agency of the former in making the purchase of the portion now claimed by him ; and the doctrine of principal and agent applies in its full force to the relation between them, as respects the purchase. It further appears indisputably, and to that effect is the finding of the jury, that the agent acted, in making the purchase, in actual fraud of the known rights of the plaintiff; and that his conduct was such as clearly to avoid the sale, as to himself, on the ground of positive, manifest fraud. And although it were not proved that his principal, for whose benefit he made the purchase, had actual knowledge of his fraudulent acts and conduct, yet the relation of principal and agent affects him with notice of them, and with all their consequences. (Story on Agency, Sec. 140, 139, 452 ; Story on Con. Sec. 496 ; Henderson v. Railroad Company, 17 Tex. R. 560.) Nothing is better settled, than that the fraud of an authorized agent will invalidate a contract entered into by him, in behalf of his principal. It is a general doctrine of law , (says Judge Story,) that the principal “ is held liable to third persons in a civil suit, for the frauds, deceits, concealments, misrepresentations, torts, negligences, and other malfeasances or misfeasances, and omissions of duty of his agent, in the course of his employment, although the principal did not authorize, or justify, or participate in, or, indeed, know of such misconduct, or even if he for [421] bade the acts or disapproved of them. In all such cases the rule applies, respondeat superior(Story Agency, Sec. 452.) There can be no sounder doctrine of morals or of law, than that which forbids the principal to take a benefit from the faudulent act or contract of his agent, to the injury of ah innocent third pei’son. It would indeed be a monstrous doctrine, to hold that a principal may speculate upon and enjoy the fruits of the frauds of his authorized agent, and incur no responsibility to the injured parties. It would enable one man, by employing the instrumentality of an unprincipled agent, to cheat, defraud and swindle others out of their property, and turn them over to their recourse upon the worthless agent, while he, the principal, received and retained the fruits of the iniquitous bargains. Such a doctrine can have no sanction in morals or law. Nothing can be more perfectly clear than that the principal in this case, cannot avail himself of the fraudulent contract of his agent. The purchase being fraudulent on the part of the agent, Rogers, cannot enure to the benefit of the principal, Calhoun, whether b e was or was not particeps fraudis. That is a wholly immaterial inquiry. If, therefore, the jury found rightly, (as there can be no doubt that they did,) that the agent could take nothing by the purchase by reason of his fraud, their finding in favor of the principal was manifestly contrary to law. If the agent could take nothing by the purchase, neither could the principal; and if there were no error in the charge of the Court, the judgment must have been reversed on the ground that the verdict was contrary to the law and the evidence. But there is the same error in the charge of the Court, which holds that, although the sale might be-avoided as to Rogers by reason of the fraud, it need not be as to Calhoun, at whose instance, and for whose benefit he made the purchase. We are referred by counsel for the appellee to the case of Mowrey v. Walsh, (8 Cowen, 238,) where it is held that though one obtain goods by a fraudulent purchase, void as to [422] himself, yet if he afterwards sell them to a Iona fide purchaser without notice of the fraud, the property passes to the latter. That undoubtedly is a correct principle ; and it has been repeatedly affirmed by the decisions of this Court. (George v. Watson, supra, and cases cited.) But that is quite a different case from the present. There the relation of principal and agent did not apply as between the fraudulent purchaser and his vendee; and, of course, the rule of law applicable 'to that relation did not obtain. The cases are governed by wholly different principles. The bona fide purchaser is protected because he was a stranger to the fraudulent transaction. But he who emloys the instrumentality of another to make a contract for him, is himself a party to the contract, and is as much bound by the acts of his agent in making that contract, as if he had himself personally done them ; and that is this case. Calhoun employed the instrumentality of Rogers, who acted fraudulently in effecting the purchase ; and the maxim applies in full force, Qui facit per dlium, facit per se. If he would adopt the acts of his agent, he must take them altogether ; as well those which defeat as those which confer a benefit. If he would take the benefit of a contract, he must take it as a whole, with all its attendant circumstances. He cannot adopt just so much as confers an advantage, and reject the rest. The whole must be taken together as one and the same transaction. It is good as a whole, or not good at all. It cannot be adopted in part or rejected in part. If the whole cannot be supported, no part of it can be, but it must be rejected altogether. (Hough v. Richardson, 3 Story, R. 689.) The judgment is reversed and the cause remanded. Reversed and remanded.