CONKEY against BOND

CONKEY against BOND. Court of Appeals ; March, 1867. Bights of Principal.—Judgment against Agent. It is a fraud in law for one who is an agent to purchase for another, to fill the order with property of which he is owner, concealing the fact of his ownership ; and the principal on discovering the breach of confidence, is entitled to rescind. The facts that the agent acted without compensation, and without intent to defraud, and made no false representations, are immaterial. It appearing, on appeal, in an action to rescind such a sale, that the agent without his principals’ knowledge, sold as owner, what he bought as agent, a judgment dismissing the complaint will be set aside, and judgment absolute, for the plaintiff (the principal), ordered. Appeal from an order of the Supreme Court. This action was brought to rescind a sale of stock in the Oswego Starch Company, made by the defendant to the plaintiff, in February, 1857, and to recover $1,500, the price paid therefor, and certain payments made by the plaintiff as a stockholder. The complaint alleged in substance, that the defendant undertook to purchase stock in the company, as the plaintiff’s agent, and that he fraudulently transferred stock of his ow^ to the plaintiff, at a price greatly exceeding its value, under the pretence that it was the stock of other parties, which he had purchased for the plaintiff, as his agent; that he concealed this fact from the plaintiff, and upon its discovery by the latter, shortly before the commencement of the action, refused to rescind the sale. The complaint further alleged that the defendant made false representations to the plaintiff as to the value of the stock and the financial condition of the company, to induce him to make the purchase; and charged that the sale was fraudulent in fact and in law. The judge before whom the cause was tried found that no representations were made by the defendant which he knew to be false, and was of opinion that the other facts, established by the pleadings and proofs, did not entitle the plaintiff to relief. These facts were substantially as follows : In January, 1857, the defendant was the owner of a number of shares of the Oswego River Starch Company, and was the agent of the company in the city of New York for disposing of its manufactures. In an interview at that date between the parties, in Nexy York, after a favorable account by the defendant of the business of the concern (of which the plaintiff had previously no knowledge), the plaintiff expressed the desire to purchase some one or two thousand dollars worth of the stock, if any was to be obtained in the market, at a price not exceeding $150 per share. The' defendant thereupon undertook to buy some, if it could be procured, and, if successful, to apprise the plaintiff, who resided in the county of Chenango. Accordingly, on January 31,1857, he addressed a letter to the plaintiff, reiterating his opinion of the value of the investment, stating that he knew where he could obtain the shares at $150 per share, and asking defendant if he would like it. He stated further, that he did not wish to advise the plaintiff, but if he should conclude to take the stock he would “get and send him a certificate” for that amount. The plaintiff answered this letter on the '5th of February, remarking that he liked the statement, and was willing to take that amount, and desiring the defendant to obtain the certificate, when he would at once put him in funds. This letter the defendant acknowledged on the 19th by a brief note, saying that he would write and get the certificate as soon as possible; and on the 25th of February he wrote again, enclosing the plaintiff the scrip for ten shares of the stock, and adding, in a postscript: “If we meet with no mishap, I think our stock will pay well; I could sell quick at $150, if I had any to dispose of.” The plaintiff remitted the $1,500, and’that closed the transaction. The defendant did not, in fact, purchase any stock from the company, or from any outside party, but caused ten shares of his own stock to be transferred to the plaintiff. He did not communicate this fact to the plaintiff at any time during the negotiation, or subsequently; and it was not discovered until the following June. At the time of the transfer the company was in an embarrassed condition, and the stock was of little intrinsic value, though these facts were unknown to the defendant, and he supposed the representations to be true which he had made in this respect to the plaintiff. The affairs of the company were soon after wound up, and its effects passed into the hands of a receiver. The complaint was dismissed, but the judgment was reversed and a new trial ordered by the general term in the Fifth District* The case, as decided in the Supreme Court, is reported in 34 Barbour, 276. William F. Allen, for appellant. Lewis Kingsley and Benjamin F. Rexford, for respondent [MAJORITY — Parker, J.] Parker, J. The fact that the defendant volunteered his agency, did not absolve him from the duty of fidelity in the relation of trust and confidence which he sought and assumed. The plaintiff was induced to purchase, at an extravagant premium, stock of the value of which he was ignorant, on the mistaken representations of the defendant, who professed to have none which he was willing to sell. This assurance very naturally disarmed the vigilance of the respondent; and he availed himself of the defendant’s offer, by authorizing him to buy at the price he named. The defendant did not buy, but sent him a certificate for the amount required, concealing the fact that he had not acted under the authority given, and that the stock transferred was his own. There is no view of the facts in which the transaction can be upheld. The defendant stood in a relation to his principal which disabled him from concluding a contract with himself, without the knowledge or assent of the party he assumed to represent. He undertook to act at once, as seller and as purchaser. He bought as agent and sold as owner. The ex-parte bargain, thus concluded, proved advantageous to him and very unfortunate for his principal. It was the right of the latter to rescind it, on discovery of the breacn. of confidence. It is not material to inquire whether the defendant had any actual fraudulent purpose. The making of a purchase from himself, without authority from the plaintiff, was a constructive fraud, in view of the fiduciary relation which existed between the parties. In such" a case, the law delivers the agent from temptation, by a prcesumptio juris et de jure, which good intentions are unavailing to repel. It is unnecessary to state our views more fully on this question, as it is fully and ably discussed in the opinion delivered by Judge Bacon, in the court below; and his conclusions are abundantly fortified by authority. (Gillett v. Peppercorne, 3 Beav., 78; Story Ag., § 214 Michoud v. Girod, 4 How. U. S., 555; Davoue v. Fanning, 2 John. Ch., 268-270; Moore v. Moore, 5 N. Y. [1 Seld.], 262; N. Y. Central Ins. Co. v. National Protection Ins. Co., 14 N. Y. [4 Kern.], 91; Gardner v. Ogden, 22 Id., 347.) The objection that this theory is inconsistent with that stated in the complaint is not sustained by the record. The essential facts are alleged, and the appropriate relief is demanded. The fact that the complaint alleged other matters which the plaintiff failed to. establish impairs neither his right nor his remedy. Titile per inutile non vitiatur. The order of the Supreme Court should be affirmed, with judgment absolute for the respondent. All the judges concurred. Judgment accordingly