Robertson v. Chapman
152 U.S. 673 (1894)

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U.S. Supreme Court

Robertson v. Chapman, 152 U.S. 673 (1894)

Robertson v. Chapman

No. 255

Argued March 9, 12, 1894

Decided April 2, 1894

152 U.S. 673




The evidence does not bring this case within the operation of the following principles of law, laid down by the Court in its opinion, namely

(1) That an agent is precluded from taking advantage of his principal, or from dealing with the property committed to his care in any other capacity than as an agent, who is bound to subordinate his own interests to those of his principal.

(2) That an agent cannot directly or indirectly become the purchaser of property of his principal, entrusted to him to sell, and cannot maintain a title thus acquired as against his principal, for, in so purchasing, his duty and his interest would come in conflict.

(3) That if an agent to sell effects a sale to himself, under the cover of the name of another person, he becomes, in respect to the property, a trustee for the principal, and, at the election of the latter, seasonably made, will be compelled to surrender it, or, if he has disposed of it to a bona fide purchaser, to account not only for its real value, but for any profit realized by him on such resale, and this will be done upon the demand of the principal, although it may not appear that the property, at the time the agent fraudulently acquired it, was worth more than he paid for it.

(4) That the law will not, in such case, impose upon the principal the burden of proving that he was in fact injured, and will only inquire whether the agent has been unfaithful in the discharge of his duty, for while the agency continues, he must act, in the matter of such agency, solely with reference to the interests of his principal, and the law will not permit him, without the knowledge or assent of his principal, to occupy a position in which he will be tempted not to do the best he may for the principal.

MR. JUSTICE HARLAN, after stating the facts in the foregoing language, delivered the opinion of the Court.

Page 152 U. S. 674

This appeal brings up for review a decree dismissing a bill brought by the appellant for the purpose, among others, of obtaining a decree setting aside, and canceling of record, certain deeds and mortgages alleged to have been made in fraud of his rights.

The principal question in the case is whether the real estate covered by those deeds and mortgages was acquired by the appellee Polk in violation of his duty to the appellant.

Ella v. Davis, a citizen of Maryland, died in 1881, leaving a will by which Augustine C. Dalrymple was appointed a trustee, with power to sell and convey such estate of the testatrix as did not yield an income, and could not be leased to advantage.

Dalrymple renounced the trusteeship, and on the 3d of June, 1881, by an order of the proper court of Maryland, William A. Stewart was appointed in his place as trustee. Stewart, subsequently, on the 6th day of April, 1885, resigned that position, and the present appellant was substituted in his place.

The testatrix at her death, was the owner of numerous lots in Plattsmouth, Cass County, Nebraska. In the fall of 1885, the appellant, Robertson, visited that city for the purpose of effecting a sale of them if, upon investigation, it was deemed best to do so. He employed the appellees Samuel M. Chapman and Milton D. Polk, partners in the practice of the law as Chapman & Polk, to attend to the probating of the will in Cass County, and to obtain a judgment of the proper court construing the will and authorizing a sale of the lots. While in Plattsmouth, after conferring with real estate agents and others, to whom he was introduced by Chapman, and who were familiar with the value of property in that city, he fully determined to sell these lots. The only question, he testified, "was to find a purchaser at $4,000."

After returning to Baltimore, the place of his residence, Robertson received a letter from Chapman, dated October 22, 1885, in which the latter said:

"We have been canvassing the sale of the realty belonging to the Davis estate, and $4,000 is the best offer we can get -- $1,000 down, and the balance

Page 152 U. S. 675

when a deed is made and confirmed by court. I have prepared petition to sell, and will take first order next week. If a sale of this property is consummated, it should be done before winter sets in, as you cannot then, in all probability, get a fair offer before matters open up next spring. Looking this property over, I am, as you well know, very firmly convinced that you should sell it now, as a long, hard winter will, in the condition it now is, unquestionably reduce it in value."

Under date of November 14, 1885, Polk, in the name of his firm, wrote to Robertson:

"A man here, by the name of O'Donohoe, says he will give $4,000 for that property -- $1,000 cash, balance in three equal annual payments at 7 percent, secured by mortgage on that, together with mortgage on other property, so that the security will be ample. Not long ago, he offered $4,000 cash, but times are dull here now, and he says the time-payment offer is the best he will do. If the above is satisfactory to you, you can advise us and we will arrange the matter to close up the trade with him as soon as possible, as money matters are getting close here, with no flattering prospect of better times soon. We are yours to command. The above is the best we have been able to do, thus far, but, if not satisfactory, let us hear from you at your convenience."

To this letter, Robertson replied, under date of November 17, 1885, as follows:

"Yours of the 14th is before me. I am decidedly of opinion that the property in your city should be sold, and that too at once. I think the offer a fair one, and you are authorized to accept the same. Please send me the mortgage and notes as soon as consummated."

On account of the absence from Plattsmouth of both Chapman and Polk, some delay occurred in the preparation of the deed, mortgage, and notes. But on the 12th of December, 1885, the papers were mailed to Robertson, Polk, in the name of his firm, writing:

"Enclosed please find bank deed, mortgage, and notes of O'Donohoe. He did not like giving his notes before he got his deed, but finally he signed everything up in proper shape. Now there are some taxes due and payable against the property, and I agreed with him that when

Page 152 U. S. 676

he paid the $1,000 (on the receipt of his deed), we would accept tax receipts for those taxes in lieu of the amount of taxes in currency. Court is in session, and we expected to have had a decree before this, but have not. No doubt will have by time deed reaches us. Money matters are very close here. . . . You can send us deed, and we will collect and remit to you, or, if you do not know us well enough to be satisfied, and do not care to inquire of any bank in this city, you can send deed to First National Bank, with full instructions."

To this letter was this postscript:

"O'Donohoe claimed he might want to pay off those notes next fall, and would not sign unless they were made so he could pay them if he chose to do so. I did not think it would make any difference with you."

Under date of December 17, 1885, Robertson returned the deed, notes, and mortgage to Chapman & Polk, with directions to record the mortgage, returning the original to him, and to deliver the deed when a decree for the sale of the property was passed. In this letter, Robertson said:

"Please see that a decree is passed by your court authorizing sale before you deliver deed. Under our arrangement, fee of $400 was to be charged, and divided between us."

Polk, in the name of his firm, replied, December 22, 1885:

"Yours of recent date at hand, with deed duly executed, and mortgage, which I forgot to seal in my hurry to get it off in the mail. I have sealed the same, and will place on record as soon as we get decree and O'Donohoe pays in the money."

On the 22d of January, 1886, Polk enclosed to Robertson a draft for $449.15, as the balance in cash due on the first payment for the property bought by O'Donohoe. In that letter, Polk said:

"I reserved our fee of $200 out of the $1,000, together with the taxes. . . . I will send complete statement in a day or two, with duplicate tax receipts, together with what money is in bank here, belonging to you."

Under date of January 26, 1886, he enclosed a statement to Robertson indicating that he had received the cash payment of $1,000 and accounting for it as follows: "Paid fee, $200; paid taxes, $319.50; remitted, $449.15." This left a balance of $31.35. In a postscript to this last letter, Polk said:

"Now, shall I

Page 152 U. S. 677

remit you the balance due, or shall I apply it on taxes? The balance on taxes will have to stand until note is due, and be deducted from that, I suppose. I think, from the way things have been running, that a sale at $3,000 would have been profitable for the estate."

On the 28th day of January, 1886, the mortgage given by O'Donohoe and wife to the appellant as trustee to secure the notes executed by O'Donohoe was filed in the proper office for record.

On the 3d of April, 1886, Polk wrote to Robertson: "If you would like the money on the note which falls due first, send it to Citizens' Bank at Plattsmouth, for payment at an early date.

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