Godfrey v. Schneck

Bardeen, J. The theory upon which the defendants claim that they are entitled to relief is, that the scheme of Meyers to form a corporation, and his offer to divide profits with the promoters, was in effect a bribe to effect the sale of plaintiff’s land. Meyers being the plaintiff’s agent, the latter must be held responsible for his acts, and hence the transaction fails. No great amount of time or mental energy need be expended in the solution of this question. The trial court evidently proceeded upon the assumption that [571] Meyers was a special agent, and that his acts in assisting in the formation of the defendant corporation were outside of the scope of his employment, and therefore not binding upon plaintiff. If that assumption is correct, that ends the case, and the judgment must be affirmed. No fact is found in the evidence or findings that shows plaintiff had ■any actual knowledge of Meyers’s plans, or shared in any way in the profits. When the land was conveyed by him, he received the purchase price of $525 per acre, less the commission he had agreed to pay. He had no part in the transactions, other than to execute his deed. No fact or circumstance is shown sufficient to charge him personally with knowledge that the promoters were committing a fraud on the corporation. We therefore come back to the ■original proposition, of whether the acts of Meyers were within the scope of his employment as agent to sell the plaintiff’s land. There is no room to question the fact that Meyers was a special agent to sell. Hoyer v. Ludington, 100 Wis. 441. Such agency contemplated the securing of a purchaser for the land in the usual course of trade. Any fraud or misrepresentation made by the agent, in the scope of his agency, to effect the sale, would be binding on his principal. Law v. Grant, 37 Wis. 548. But can it be rightfully claimed that the mere authority to sell contemplated the organization of a corporation to purchase ? Plainly not. The moment Meyers conceived this scheme, and set about carrying it into operation, he departed entirely from the real or apparent scope of his employment. He was then engaged in business of his own, and for his own profit. The fact that it eventuated in a sale of the land is not controlling. The means adopted to effectuate the sale having no direct or necessary connection with his employment, the link is missing upon which his principal’s liability must be predicated. His acts were not done in the interests of his employer and for his profit, but were distinctly personal [572] and primarily to Ms own advantage. They are not, in legal contemplation, the acts of his principal, and hence the principal cannot be bound thereby. The effort to apply to this case the principles of law announced in Alger v. Anderson, 78 Fed. Rep. 729, must fail. The facts are in no way parallel. In that case defendant’s agent corrupted plaintiff’s agent by a direct bribe, in order to influence the sale. Both were acting within the scope of their agency, and the court properly condemned the transaction. Here the project of syndicating the land was perfectly legitimate and proper. It was not, however, one usually connected with the agency to sell, or necessary to its performance. And here lies the distinction. It was not unlawful to agree to convey the land to the corporation at an increased price. The fraud arose in the failure to apprise their fiduciaries of the true situation. It is not claimed that Meyers made any misrepresentations to the corporators. The height of his offending lies in the fact that he counseled and aided in the organization of the corporation upon the basis stated, and did not reveal to the corporators that he was dividing a profit with some of the promoters. He sustained no fiduciary relation to them, was not a stockholder, and was under no legal obligations to make revelation to them. The' fraud on the corporation arose from the fact that Whaley, Hinners, and Se/meols kept their intentions concealed. To hold that the plaintiff is responsible for "this concealment would be carrying the so-called “ promoter doctrine ” beyond the limit of good sense or good law. The conclusion of the trial court meets with our entire approval. By the Cowrt.— The judgment of the superior court of Milwaukee county is affirmed.