Pikes Peak Co. v. Pfuntner

Grant, J. (after stating the facts). The principles of law controlling this case are too well settled, both by authority and reason, to require much discussion. One occupying a confidential and fiduciary relation to another is held to the utmost fairness and honesty in dealing with the party to whom he stands in that relation. Torrey v. Cement Co., ante, 348 (122 N. W. 614). While it is true the tenant, in the absence of express agreement, has no enforceable right to renewal of the lease, yet it is natural that, other things being equal, the landlord would lease to his present tenant, and that the tenant would prefer to renew the lease. This expectancy is recognized by the law as a valuable asset belonging to the tenant. The law does not permit an agent, officer, or trusted employe to take it from the tenant to whom he owes the duty to protect and advance his interests. Robinson v. Jewett, 116 N. Y. 40 (22 N. E. 224), and the many cases cited; Grumley v. Webb, 44 Mo. 444 (100 Am. Dec. 304); Keech v. Sanford, 1 White & T. Lead. Cas. 62, note; Davis v. Hamlin, 108 Ill. 39 (48 Am. Rep. 541). This is because of the wholesome rule that— “Whenever one person is placed in such relation to another, by the act or consent of that other, or the act of a third person, or of the law, that he becomes interested for him or interested with him in any subject of property or business, he is prohibited from acquiring rights in that subject antagonistic to the person with whose interests he [416] has become associated. Keech v. Sanford, supra. Except with the full knowledge and consent of his principal, an agent authorized to buy for his principal cannot buy of himself. An agent authorized to sell cannot sell to himself. An agent authorized to buy or sell for his principal cannot buy or sell for himself; nor can an agent take advantage of the knowledge acquired of his principal’s business to make profit for himself at his principal’s expense. The same rule applies to leases and other similar transactions.” Mechem’s Outlines of Agency, § 148. The same principle runs through the following cases in this court: People v. Township Board of Overyssel, 11 Mich. 222; Kimball v. Ranney, 122 Mich. 160 (80 N. W. 992, 46 L. R. A. 403, 80 Am. St. Rep. 548). It is no defense for defendant Pfuntner that the company for which he was acting was involved in financial difficulties and was adjudicated a bankrupt. ■ This expectancy belonged, not only to the tenant, but to those to whom the lease might be assigned. The original lessee and his assignees have continued to pay the rent, and the complainant, as we infer from the record, has rebuilt the structure at considerable expense. Pfuntner did not obtain this lease with the knowledge or consent of the party for which he was the agent, manager, and a director. It follows that he holds the lease in trust for complainant. The decree is affirmed, with costs. Blair, C. J., and Montgomery, MoAlvay, and Brooke, JJ., concurred.