Hofflin v. Moss

CALDWELL, Circuit Judge, after stating the case as above, delivered the opinion of the court. The instrument or contract sued on is, in legal effect, a power of attorney. It establishes between the parlies thereto the relation of principal and agent. Allen is described as “proprietor” of the “Buffalo Newspaper Advertising Agency” and it is by this title he is addressed by the defendants, and “authorized and employed to make contracts” for them. He avers in his complaint that he “has been doing business uiyler the style and description of 'Buffalo Newspaper Advertising Agency/” and the answer alleges that he agreed to act as agent for the defendants in the premises, and the demurrer admits the truth of the averment. Assuming, as we must, that the averments of the answer, well pleaded, are true, the plaintiff, as agent for the defendants, for the consideration mentioned in his power of attorney, agreed that the only inducement or consideration offered or paid to the publishers of the newspapers in which he might procure the publication of the defendants’ advertisements should be the medicines of the defendants, sold to them at the reduced rates specified in the contract. The defendants had good reason to suppose that the proprietors of newspapers would not publish their advertisements for nothing, and that if they did publish them they would do so in consideration of getting the medicines at the reduced rates mentioned in the contracts. This reasonable belief, Allen assured them, was well founded, and that the necessary result of such contracts would be, not only to advertise their medicines, but to bring them into use in every locality where they were advertised, through the orders they would receive from the publishers of the papers publishing the advertisements. In view of the relation between Allen and the defendants, it was the duty of Allen, as their agent, to act in the utmost good faith towards his principals, and to do nothing to militate against their interests la this regard. It did not require any special agreement to impose this duty upon him. As the agent of the defendants, the law imposed it upon Mm. Accepting the averment of the answer as true, Allen [444] knew at the time he sought and procured the agency that no newspaper would publish the defendants’ advertisements for the consideration mentioned in his power of attorney; that he did not intend or expect to ask them to do so, and in fact made no effort to do so; that he then himself owned the space in the newspapers in which he intended to insert the defendants’ advertisements; that the advertisements were in fact' inserted by him only in the papers in which he owned the space at the date of the contract, or in space which he purchased and paid for after the contract was made; and that the clause in the contract which was the chief, if not the only, consideration and inducement that led the defendarts to enter into it, was inserted solely for the purpose of deceiving and misleading them.’ The moment that Allen accepted this agency for the defendants, the law bound him to the exercise of disinterested skill, diligence, and zeal in carrying out the agency. He was bound toi act in the utmost good faith towards the defendants, and to execute the agency in the mode he knew his principals expected and intended it should be carried out, and with an eye single to their interests. Instead of so acting, it turns out, he was contracting for and with himself, and that his interests in the matter of the agency were directly inimical to those of his principals. An agent thus acting cannot recover commissions or compensation for his services. Fordyce v. Peper, 16 Fed. 516, and note. The aspect of the case is not altered by the statement in‘the contract that “it is understood that we do not guaranty the presentation of the above-mentioned orders.” The undoubted purpose of this clause was to shield Allen from the fraud which lie then meditated, but it can have no such effect. While he did not guaranty the presentation of the orders for the medicines, he was under the highest obligation, imposed on him by law, to do nothing that would have a tendency to discourage their presentation, but, on the contrary, to do what he could to secure their presentation, by not paying or offering any consideration for the insertion of the advertisements other than the medicines at the reduced prices. He made their presentation impossible by himself buying and paying for the space occupied by the advertisements. And the clause in the contract “that no representation, understanding, or agreement not in this contract shall bind either party, unless in writing and signed by both parties, as this is the complete agreement of the parties hereto,” is of no avail to the plaintiff. This clause, to the extent that it is valid, expresses no more than the law would imply without it. False and fraudulent representations made by one party to a contract, by which the other party is induced to enter into the contract, render it voidable, at the election of the defrauded party, and a stipulation in such a contract to the effect that the false and fraudulent representations by which the one party induced the other to enter into it shall not affect its validity is itself of no validity. 2sTo one can be estopped by anything contained in an instrument, which instrument was itself obtained from him by fraud and deceit. The law will not give effect to a stipulation intended to grant immunity to iniquity and fraud. In the case of Bridger v. Goldsmith, 38 N. E. 458, the court of appeals [445] of Yew York, discussing a somewhat similar provision in a contract, say: “A mere device of the guilty party to a contract, intended to shield himself from the results of his own fraud practiced upon the other party, cannot well be elevated to the dignity and importance of an equitable estoppel. If the clause has any effect whatever, it must be as a promise or agreement on part of the plaintiff that, however grossly he may have been deceived and defrauded by the defendant, he would never allege it against the transaction, or complain of it, but would forever after hold his peace. It is difficult to conceive that such a clause could ever ha suggested by a party to a. contract, unless there was in his own mind at least a lingering doubt aá to the honesty and integrity of his conduct. * * * Public policy and morality are both ignored if such an agreement can be given effect in a court of justice. The maxim that fraud vitiates every transaction would no longer he the rule, but the exception. It could be applied then only in such canes as the guilty party neglected to protect himself from his fraud by means of such a stipulation. Such a principle would, in a short time, break down every barrier which the law has erected against fraudulent dealing.” See, to the same effect, Fashion Co. v. Skinner, 64 Hun, 293, 19 N. Y. Supp. 62. In the case of Allen v. Pierpont, 22 Fed. 582, upon a contract like the one here in suit, the court held the plaintiffs could not recover, upon the ground that they were agents, under the contract, and had not acted in good faith towards their principal; and their action was the same, in ail respects, as the action of the plaintiff in this case. The judgment of the circuit court is reversed, and the cause remanded, with directions to grant a new trial.