Shaver v. Coal Co. , 108 W. Va. 365 ( 1929 )

The Bible declares that a man cannot serve two masters impartially. That declaration is based on the frailty of human nature and has become axiomatic. In recognition of the truth whereof the law does not permit an agent to serve two principals having divergent interests, "without the intelligent consent of both parties." Ferguson v. Gouch, 94 Va. 1. This inhibition is subject to the "notable exception" pointed out in the majority opinion. The leading case recognizing the exception is perhaps that of Rupp v. Sampson, (Mass.) 16 Gray 398, 77 Am. Dec. 416. In that case, after admitting the general rule, the court said of the broker: "He was not an agent to buy or sell but only acted as a middleman to bring the parties together in order to enable them to make their own contracts. He stood entirely indifferent between them and held no such relation in consequence of his agency as to render his action adverse to the interests of either party." The Massachusetts court, however, has been very careful not to expand the exception. It has adhered strictly to the general rule as propounded in the earlier Massachusetts case of Farnsworth v.Hemmer, 1 Allen 494, 79 Am. Dec. 756, in which it was said: "The duty of an agent for a vendor is to sell the property at the highest price; of the agent of the purchaser to buy it for the lowest. * * * It is of the essence of his contract that he will use his best skill and judgment to promote the interest of his employer. This he cannot do where he acts for two persons whose interests are essentially adverse." See Walker v. Osgood,98 Mass. 348, 93 Am. Dec. 168, 170. While the exception is generally recognized, it has been accepted by the courts with some degree of caution. For example, the Supreme Court of Michigan said in Scribner v. Collar, 40 Mich. 375, 29 Am. Rep. 541, 543: "No doubt such cases may occur but their exceptional character should appear clearly before they should be exempted from the general principle." And in Bell v. McConnel, 37 Ohio State 396, 41 Am. Rep. 528, 531: "We admit that all such transactions should be regarded with suspicion." Cases strongly asserting the general rule that an agent cannot represent both seller and purchaser where he takes any part whatever in negotiations between the two, unless with their consent, are our own case ofMcDermott v. Gas Light Co., 88 W. Va. 692, 706-7; Rice v.Davis, 136 Pa. 439, 20 Am. St. Rep. 931; Jacobs v. Bayer,125 N.Y.S. 597.

Now the dissenting opinion assumes the position that if the plaintiff made no false representations to the defendant, if he did nothing (affirmatively) to deceive it, and if it knew the value and extent of his services to it, then the fact that he was also to receive compensation from the plaintiff is "wholly immaterial". But under the authorities cited herein and in the majority opinion, the tests formulated by the dissenting opinion do not fairly determine the right to compensation in cases of dual agency. Under those authorities the tests are not necessarily fraud by the agent or knowledge of his services by one of the parties, but either entire indifference by the agent or the knowledge of his dual representation by both parties. In this case the defendant had no information whatever that the plaintiff was serving Paisley during the negotiations leading up to the lease to him by defendant. The plaintiff makes no such claim. In fact he denies that he did represent Paisley prior to the execution of the lease. That denial, however, is inconsistent with the writing formally accepted by him from Paisley, immediately following the execution of the lease. That writing referred directly to the lease and promised payment by Paisley to plaintiff or his heirs of $750.00 quarterly for forty quarters ($30,000.00 in all) "for services rendered". Unless this writing is infected with a latent ambiguity (not yet detected), its qualification by parole is not admissible.

The dissenting opinion states that the plaintiff "acted only as a middleman to bring the parties together that they might make their own contracts". I respectfully submit that the following evidence of the plaintiff (see majority opinion) tends to the contrary:

(a) His statement in the letter to Paisley of December 6, 1920, "I am willing to go my limit when you really need and must have it."

(b) His statement in the letter to Paisley of September 15, 1922, relative to a tentative agreement as to the rate of interest Paisley's deferred payments to defendant were to bear. "We had considerable struggle then on that point, and doubt it advisable to try to change it."

(c) His conduct on November 15, 1922, in preparing a draft of letter for Paisley to send to the president of the defendant in regard to the lease.

(d) His testimony that his purpose in writing certain letters was "to bring their minds, the minds of these people together."

If plaintiff was ready to go his limit (in the ordinary sense of the phrase) for Paisley, it cannot be said he "stood indifferent" between Paisley and defendant. If plaintiff actually participated in the struggle (negotiations) between defendant and Paisley over the rate of interest Paisley was to pay (reduced by defendant at Paisley's insistence from six per cent to five per cent), then the plaintiff did not leave the parties "to negotiate and come to an agreement themselves without any aid from him." (See quotation of law in majority opinion.) The draft of letter furnished by plaintiff to Paisley for transmission to defendant's president seems now to have been of little importance. But is plaintiff's conduct in that regard consistent with strict neutrality? If he actually strove to bring together the minds of his two principals, then he did not "permit them to make their own bargain". If he went his limit for Paisley, if he actually entered into the negotiations as to the rate of interest, if he really strove to reconcile each party to the demands or concessions of the other, then he doffed the cloak of indifference which is the livery of a middleman.

Plaintiff's instruction No. 1 (for which see the majority opinion) is not mandatory in form, but is nevertheless binding in its effect. It told the jury that the plaintiff "was entitled to compensation for the services rendered" upon proof that he had been employed by defendant to find a purchaser for its property and had done so, thereby entirely ignoring as stated in the majority opinion the defense of dual agency. Suppose it be admitted for the sake of argument that if plaintiff's instruction No. 2 be read in connection with defendant's instruction No. 10, then the error in No. 2 is corrected and the two instructions (together) "accurately presented" (according to the dissenting opinion) the defense of dual agency. That admission, however, contains no specific whatever for the malady which afflicts No. 1. The lack of harmony in the instructions (No. 1 on the one hand and Nos. 2 and 10 on the other) still exists, as was ably demonstrated in the majority opinion.