Densmore v. Searle , 39 N.Y.S. 948 ( 1896 )

Rumsey, J.:

If the defendant was employed as the agent of the other stockholders of the Densmore Typewriting Company to effect a sale' of their stock to Fowler, at the best price that could be obtained for it, there can be no,.doubt that the judgment is-correct and should be affirmed. The rule is thoroughly settled that an agent employed to sell, or in any other business, is not permitted to .make profits' for himself in the transaction, and., for all such profits he must account to his principal,.and, if lie has taken title to property in violation of his., trust, equity will treat him as a trustee for -his principal. (Pom. Eq. Juris. §§ 959j 1075,). This rule of law is- not disputed. :So the whole case turns upon. the question whether Searle was the -agent of the stockholders of this company to make this sale¡

It is not denied by Searle that before .the. sale was made, and while negotiations were pending, there was an arrangement of some sort between-Densniore and himself about the price that should be -charged for the stock.' Densmore says that the agreement was that they would stand together, and- neither should sell at any different price than was agreed upon by all, Searle says that the agreement was that they should not sell at a less price than $75,000 in cash and $75,000 in stock. In this lie is corroborated by Matthews, and to some extent by the letters Which Matthews wrote to Densmore when the arrangement was made that the- price should be $100,000 in common stock and $100,000 in-first preferred stock. But it is .not -very important what the -particular agreement was between the parties. It is sufficient that there was an agreement by which they Were to act together in the sale of .the stock. It is claimed by the plaintiffs that after the first option had been given, and while the negotiations were pending for the second option upon a different kind of stock, Searle was deputed to negotiate in behalf of all the stockholders, including the plaintiffs, for an increase of price: with Fowler. Delahanty’s evidence is precise on that point; but it is contradicted by Searle. It is claimed that the evidence of Fowler corroborates Searle, but we do not think so. Fowler says that Searle told him that he was insisting upon that bargain for himself. That, undoubtedly, is the fact, but it does not alter the relations between the stockholders and Searle as related by Delahanty, and it does not tend to prove at all that Searle did not in fact make the contract, which Delahanty says he did, to negotiate in behalf of all the stockholders for $100,000 more of the stock.

The defendant lays considerable stress upon the letter of Dr. Densmore, written as he was about departing on the steamer for Europe, in which he says that he had been advised of the promise of Mr. Fowler to pay to Searle some individual stock in addition to what he otherwise would have, and relieve himself of all obligations in that matter or from any blame about it. If this letter had been written after a full statement to Dr. Densmore of the circumstances under which that stock had been received by Searle, it would, undoubtedly, be of great importance ; but it is evident from all the testimony in the case that at that time Densmore did not know of Searle’s employment in behalf of all the stockholders, or of the circumstances under which the promise had been made by Fowler to give him the stock, and for that reason the letter is not of much importance.

Upon a careful consideration of the evidence, we are of tlie opinion that the finding of the trial court was correct, that Searle was deputized to represent the stockholders in making the contract for the new option with Fowler, and that while he was engaged- in making that contract he procured the 500 shares of common stock and the 500 shares of second-preferred stock in addition to the price which was stated in the agreement. In that view of the facts, the rule stated above clearly applies, and the conclusion which was reached by the learned judge at Special Term was sound, and the judgment entered upon it was correct and should be affirmed, with costs.

Van Brunt. P. J., Williams, Patterson and Ingraham, JJ., concurred.

Judgment affirmed, with costs.