Supreme Court of Canada.
Hutchinson v. Fleming, (1908) 40 S.C.R. 134
Date: 1908-03-23
Dudley D. Hutchinson (Defendant) Appellant;
and
Amos C. Fleming (Plaintiff) Respondent.
1908: March 9, 10, 23.
Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, and Duff JJ.
ON APPEAL FROM THE SUPREME COURT OF BRITISH COLUMBIA.
Principal and agent—Secret profit—Trust—Clandestine transactions by broker—Sham purchaser—Commission—Quantum meruit.
H., a broker, undertook to obtain two lots for F., as an investment of funds supplied by F. for that purpose, at prices quoted and on the understanding that any commission or brokerage chargeable was to be got out of the vendors. H. purchased one of the lots at a price lower than that quoted receiving, however, the full amount quoted from F., and, by representing a sham purchase of the other lot, got an advance from F. in order to secure it.
Held, affirming the judgment appealed from, that H. was the agent of F. and could not make any secret profits out of the transactions, nor was he entitled to any allowance by way of commission or brokerage in respect of either of the lots so purchased.
APPEAL from the judgment of the Supreme Court of British Columbia affirming the judgment by Morrison J., at the trial, which maintained the plaintiff's action with costs.
The plaintiff applied to the defendant, who was a real estate broker at Vancouver, B.C., for information respecting investments in city property and, in consequence of what took place between them, instructed the defendant to purchase a lot he had listed for sale at $220 per acre, and another at a price quoted. The
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defendant purchased the first mentioned lot at $180 per acre, received the full price quoted from the plaintiff and paid the vendor, at the lower rate, out of the money he received from the plaintiff. In respect to the second lot, the defendant falsely represented to the plaintiff that another party had bought it and that, in order to secure it, he would have to pay a considerable advance on the price first quoted. The plaintiff paid the increased price thus asked for the second lot and defendant purchased it from the vendor at the price originally stated, retaining the difference himself. It had been agreed that the defendant should not charge any commission or brokerage to the plaintiff.
The defendant then invested the profits he had made on these transactions in the purchase of four other city lots and the plaintiff, on discovery of the deceit and artifices which had been practised in connection with his business, brought the action for a declaration that the defendant was his agent and became trustee for him of the four other lots purchased by the defendant with the secret profits he had thus made, or, in the alternative, to recover the amount of the difference between what he had been obliged to pay for the two lots and the prices actually paid to the vendors for them by the defendant.
The trial judge held, affirmed by the judgment appealed from, that the defendant stood towards the plaintiff in the fiduciary relation of an agent and was bound to procure the lots for him on the most favourable terms and that he could not make any secret profit out of the transactions. The defendant urged, on the present appeal, that, according to the evidence, no such agency had been created, that the defendant had dealt in the matter simply as a broker undertak-
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ing to procure the lots for an investor, and that he could get them for any price the vendors were willing to accept and sell them to the plaintiff or any other person at any advance in price which he might be able to obtain. He claimed, alternatively, that he was, in any event, entitled to receive remuneration in the form of a commission or allowance in consideration of the services he had rendered in negotiating the purchases.
W. S. Deacon for the appellant.
D. Greenfield Macdonell for the respondent.
THE CHIEF JUSTICE and DAVIES J. concurred in the opinion stated by Duff J.
IDINGTON J.—It seems to me that there is enough stated in the evidence if that of the appellant is entirely discarded to support the respondent's claim either on the ground of his agency or of deceit.
Having read the evidence I am satisfied the learned trial judge was right in discarding appellant's evidence.
The pleadings may not exactly stand as I would draw them, but enough is stated to cover either ground I have suggested and, indeed, both grounds upon which I have suggested the action on the evidence might be maintained.
The acceptance of respondent's agency in each transaction in question is followed in each case by a fraudulent use of it to the respondent's detriment in reporting as to the business he undertook in each instance for the respondent, that which has been proven
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to have been false and thereby extracting from the respondent's bank account sums he, the appellant, had no right to.
The only doubt I have had in considering the case is whether or not appellant's responsibility was not to each of the vendors, but I have concluded since reading the evidence that we have nothing to do with the possible result arising from his relations with these other parties which were somewhat indefinite and in any case must rest on other facts and relations than the respondent relies upon.
The appeal should be dismissed with costs.
DUFF J.—I think this appeal should be dismissed. In the transaction relating to lot 739 the defendant appears in fact to have made the purchase after he had accepted employment as the plaintiff's agent for the purchase of that property. Under his arrangement with the plaintiff the defendant was unquestionably entitled to bargain with the vendors for and to receive from them a commission on any sale effected through his agency; and, had he in this case made such a bargain, it may be assumed that the price demanded by the vendors would have been correspondingly increased. Instead, however, of taking this straightforward course, the defendant—as the learned judge appears with quite sufficient warrant from the evidence to have found—resorted to the subterfuge of a clandestine purchase in the name of another in order to procure a profit out of the plaintiff; a profit ostensibly paid to the sham purchaser, but really passing into the defendant's own pocket. By this tortuous course, the defendant made himself as the plaintiff's agent accountable for the whole of the excess of the
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purchase money paid by the plaintiff over that actually received by the vendors; and clearly, I think, without the right to make any deduction as for commission—for under the terms of his agency he was to look for his commission to the vendor.
With respect to the other transaction, the evidence, I think, supports the finding that the relation of principal and agent had already been established between the plaintiff and the defendant when the defendant procured from Alvensleben the option to purchase; and that it was in fact procured by him in his character of agent for the plaintiff. The plaintiff was, therefore, entitled to the benefit of that option, and here again the defendant was, under the arrangement referred to, bound to look to the vendor for his commission.
If in the result the defendant is not entitled out of the moneys in his hands as trustee for the plaintiff to retain any sum as for commission on the transactions he negotiated, that is only the just consequence of his attempt to traffic for his own profit upon a fiduciary relation.
Appeal dismissed with costs.
Solicitor for the appellant: E. J. Deacon.
Solicitor for the respondent: J. N. Ellis.
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