Hustad v. Drives

Rosenberry, J. It was the contention of the defendant throughout the trial that the plaintiff himself was the procuring cause of the sale; and second, that the plaintiff was [89] estopped by the conduct of his sub-agent, Kittleson, from claiming any commission. In passing upon the motion for a new trial the trial court said: “The rights of the parties were fixed by the contract. Under that contract Mr. Hustad was entitled to' commission if a sale was effected through the efforts of any one but Mr. Drives himself. Under this state of facts Mr. Kittle-son was under no obligation to advise Mr. Drives that he must pajr a commission if a sale was made through his efforts. That obligation was fixed by the terms of the contract.” As pointed out by the trial court, there was no evidence in this case indicating that Mr. Kittleson had made any representation or statement whatever to the .defendant in relation to the matter of commission. Is it true, however, that Mr. Kittleson, who unknown to the defendant was in fact acting as agent of the defendant, was not bound to disclose that fact to the defendant under the circumstances of this case? Mr. Kittleson came to defendant’s farm with Mr. Fridstrom. The defendant may well have supposed that he was there in the interest of the purchaser. Mr. Kittle-son’s suggestion that because of the condition of the farm he should reduce the purchase price $1,000, and, in the evgnt that he did, a deal might be made, was certainly such a suggestion as the defendant would have expected from a person there in the interest of the intending purchaser. It is an established principle in the law of agency that the agent must acquaint his principal with every material fact relating to the business or the property intrusted to- him. His failure or neglect tO' disclose material facts which come to his knowledge or lie in his memory makes him liable in damages to his principal where the principal sustains damages because of such failure to disclose. 2 Corp. Jur. p. 714, § 369, and cases cited. This is but a corollary of the general rule that the relation of an agent to his principal is that of a fiduciary, and that as such it is the duty of the agent, in all dealings concerning or affecting the subject matter of his [90] agency, to act with the utmost good faith and loyalty toward his principal. While it is true, as the trial court pointed out, that under the contract the plaintiff was entitled to a commission if a sale was effected through the efforts of any one but the defendant, and the jury has found that Mr. Kittleson, the sub-agent of the plaintiff, was the procuring cause of the sale, nevertheless where, as here, the principal having reserved the right to make a sale, it was the duty of the sub-agent to disclose to his principal the true situation, and where the sub-agent has by concealment led his principal into a position where he rightfully supposes himself to be the procuring cause of the sale and the principal for that reason reduces the purchase price, the agent is thereby guilty of a breach of duty and forfeits his right to compensation. The jury found that the defendant was led to reduce the price of the farm by reason of the fact that Mr. Kittleson concealed his true relation to the transaction. This he did in violation of his duty as agent. Where an agent is guilty of concealment or nondisclosure of material facts relating to the subject matter of the agency, he forfeits his right to compensation. 2 Corp. Jur. p. 760, § 428, and cases cited; Pratt v. Patterson’s Ex’rs, 112 Pa. St. 475, 3 Atl. 858. By the Court, — Judgment of the circuit court reversed, with directions to enter judgment for the defendant upon the verdict.