Becker v. Spalinger

Doerfler, J. The question involved in this case is whether a fraud was perpetrated by the defendant Jacob Spalinger at the time the exchange of properties in question was made. Bassuener was a lawyer and the manager of-the Sheboygan Mortgage & Trust Company. The plaintiffs sought his advice as to the advisability of purchasing the farm in the vicinity of Antigo. His services were secured [449] and paid for, and he thereby became and was constituted the agent of the plaintiffs. While on the trip to Antigo, Bassuener, while acting as the agent for the plaintiffs, called attention to and recommended the purchase of the eighty-acre farm in question. Pursuant to arrangements previously made, on the day following the return of the parties from their Antigo trip Bassuener called upon them with his automobile and took them to the farm and was present while such farm was inspected. The plaintiffs at all times had good reason to believe that Bassuener was acting as their agent in this matter. While at the farm Bassuener hurried along the inspection and confined the same to a period of about half an hour, claiming that he was very busily engaged in important work which required his attention. The parties met on the following day at Bassuener’s office and the exchange papers were drafted and executed. It does not appear in the evidence that anything whatsoever was said regarding an abstract of title to the Sheboygan property. Bassuener, as a real-estate agent and an attorney, was presumed to know the usual practice in transactions of that kind with respect to examination and delivery of an abstract of title. The matter of outstanding and unpaid special assessments on the Sheboygan property was discussed, but neither the defendant Jacob Spalinger nor his agent, Bassuener, ever suggested the ascertaining of the exact amount of these outstanding and unpaid assessments, notwithstanding the fact that the information was available at the office of the city treasurer in the city of Sheboygan. Notwithstanding the fact that Bassuener led the plaintiffs to believe that he was acting in their behalf and in their interests as their agent, Bassuener during all these transactions had been hired for a compensation to act as the agent [450] for the defendant Jacob Spalinger, and at no time did the defendant Jacob Spalinger, or Bassuener, notify the plaintiffs that he, Bassuener, was acting as the agent of the defendant Jacob Spalinger in the sale of this farm. The conduct of Bassuener during the time the farm was inspected, in itself constitutes a rather insignificant incident, but becomes significant in connection with all the other facts and circumstances in the case. It becomes important when we consider his failure and the failure of Jacob Spalinger to require an abstract of the property, or with respect to the precise amount of the outstanding special assessments. These facts, together with the relationship that existed between Jacob Spalinger and Bassuener, and which relationship at no time was divulged to the plaintiffs, constitute fraud, which in itself is amply sufficient to warrant the judgment of the lower court. “It is the established law that the acceptance by an agent of a secret commission of compensation from the opposite party, where the agent is to exercise, on behalf of his principal, skill and judgment, vitiates the contract, and the principal who has thus been imposed upon may rescind the contract, even though the other party paid the commission or compensation in good faith.” Mechem, Agency (2d ed.) § 2138. Cited with approval in Weinhagen v. Hayes, ante, p. 233, 178 N. W. 780, 183 N. W. 162. Absolute fidelity and loyalty to the interests of his principal is the first duty and the highest obligation of an agent. Having been hired as plaintiffs’ agent, it was the duty of Bassuener to advise them with respect to the transaction in question. It was further his duty to bring home to the plaintiffs knowledge of his engagement as an agent for compensation on the part of the defendant Jacob Spalinger. Having failed to do this, he was guilty of disloyalty towards the plaintiffs, and this formed a sufficient basis for the rescission of the entire transaction. At the time the negotiations transpired in the city of She451 boygan for the exchange of these properties, the testimony shows that the defendant Jacob Spalinger stated that his farm was worth $7,000 and that he had been offered $7,000 for the farm. . We find that the latter statement was made, under the clear, preponderance of the credible evidence in the case, and that statement in itself, if false, constitutes a fraud warranting rescission. In 20 Cyc. 59, it is said: “Statements by a vendor that a third person has offered him a certain sum for the property is a statement of a material fact affecting the value and may form the basis for an action of deceit.” Whether the mere statement made by the defendant Jacob Spalinger, and as found by the court, namely, that his farm was worth $7,000, was a statement of fact or a statement of opinion, it is not necessary for us to decide. However, considering the inexperience of the plaintiffs with respect to farming and the value of farm lands, and the simplicity of their minds as shown by the short investigation made of the entire transaction, and the credulity of these plaintiffs, and particularly in connection with all the other facts and circumstances of the case, we are strongly inclined to hold that such a statement must be considered as a statement of fact rather than a statement of opinion. It is said in the case of Miranovitz v. Gee, 163 Wis. 246, 157 N. W. 790: “A study of the cases suggests the thought that, in the absence of an express intent to defraud, the determination of whether or not certain representations are statements of fact or of opinion depends upon whether or not the person to whom the representations are made may, under all the facts and circumstances of the case,, including such person’s capacity or want of capacity, rely upon them.” The bargain itself was grossly inequitable. Under it the plaintiffs parted with their equity in their property, amounting to $1,250, and agreed to pay the additional sum of [452] $5,000, for a farm which was incumbered to the extent of $500 in excess of its value. A court of equity, therefore, in view of all the facts and circumstances of this case, will lend its aid in giving relief to the injured party. By the Court. — Judgment affirmed.