This section is from the book "American Law Of Real Estate Agency", by William Slee Walker. Also available from Amazon: American law of real estate agency.
Where a land-owner sued his brokers, who had effected a sale, to recover a portion of the purchase money which had been retained by them, on the ground that the contract was not binding on him, because he had been fraudulently induced to enter into it by the act of the defendants in not correctly reading the contract to him, and also on the ground that the contract had been nullified by the alteration thereof by defendants, an instruction that, if plaintiff signed the original contract, and defendants, in reading it to him had fraudulently deceived him, then the contract was not binding, was not erroneous, on the theory that the action was not one for the cancellation of a contract. Harrison v. Lakeman, 189 Mo. 581, 88 S. W. 53. Compare Law v. Grant, 37 Wis. 548.
Where a broker employed to sell at the highest obtainable price makes an arrangement with the prospective purchaser to pay him a commission, this fraud deprives him of the right to recover from the vendor. Tasse v. Kindt, 125 Wis. 631, 104 N. W. 703; Raner's Law & Coll. Co. v. Bradbury, 3 Cal. App. 256, 84 P. 1007; Newell-Murdoch Realty Co. v. Wichham, 190 P. 359, - Cal. Sup. - .
If a broker employed to purchase property overstates to his principal the price at which it may be bought, and appropriates the difference, the principal may recover the excess wrongfully obtained. Healey v. Martin, 68 N. Y. S. 413, 33 Misc. 236; Warren v. Burt, 58 Fed. 101, 7 C. C. A. 105.
As a general rule, where one is employed by the owner of property to sell it, he can not sell it to himself alone, or in company with others, without the consent of the owner; but in the present case there was evidence to show that the owner consented to the making of such a sale, provided that he should receive a certain amount, without liability on his part for commissions. Mitchell v. Gifford (Ga. Sup. '10), 67 S. E. 197 (Syllabus).
Plaintiff employed defendant as its agent to buy a mine for not to exceed $150,000. Defendant actually bought it for $90,000, concealed the fact from plaintiff, and fraudulently caused it to be conveyed to a confederate, and by representing that he had bought it for $150,000 induced plaintiff to execute a contract with the confederate, agreeing to buy the mine at that price, $20,000 to be paid in cash, $90,000 in one year and $40,000 in eighteen months. Plaintiff paid the cash payment, and after obtaining a reduction of the remainder to $110,000, paid that sum also, thus by reason of deceit and fraud paid $40,000 more than the actual price for which defendant purchased for his account; held, that these facts alleged and found sufficiently made out a case of damages for deceit and fraud, and entitled plaintiff to a judgment of recovery for $40,000. Gt. Western Gold Co. v. Chambers, 101 P. 6, 155 Cal. 364; Mabry v. Randolph, 94 P. 403, 7 Cal. App. 424.
Where a real estate broker received an offer of exchange which would be advantageous to his principal, and fraudulently misrepresents such offer and prevents an exchange, and the principal's tenant easily consents to the transfer of lease to the property to be taken in exchange, and that the tenant's agreement is not in writing and voidable, is no defense to the principal's action against the broker for damages from the fraud. Maul v. Cole, 144 N. W. 247, 94 Neb. 714.
Where a real estate broker fraudulently induced his principal to trade property on a valuation of $4,000, and sold it for $5,750, in an action by the principal against the broker for the difference, the latter could not recoup the amount of expenses incurred in making the sale nor the portion of the profits paid the one who was associated with him in the fraud. Van Raalte v. Epstein, 99 S. W. 1077, 202 Mo. 173; Stewart v. Preston, 137 P. 993, 77 Wash. 559.
One who makes a fraudulent sale of his principal's property as agent, under a power of attorney, which entitled him to a share of the profits, and who has a secret interest in the purchase, on the cancellation of the deed and direction of an accounting, by the purchaser for the proceeds or portions resold by them, can not take anything under the provisions of the power of attorney. Snow v. Hazelwood, 179 P. 182, 102 C. C. A. 448, decree amend. and re. den., 181 F. 966, 104 C. C. A. 430.
In a suit to cancel a conveyance taken by brokers fraudulently in their own name, on an exchange of land in behalf of their principal, the brokers have no claim to compensation on the conveyance being set aside for the fraud. Dean v. Roberts, 62 S. 44, 182 Ala. 221.
Where a broker employed to use his best endeavors to sell property at a sum not less than $20,000 for commission, sought to induce a corporation to take the property at about $50,000, $11,000 of which should go to him and the balance of the excess over 20,000 to stockholders, he was guilty of misconduct depriving him of his right to a commission. Sankey v. Cramer, 131 P. 288, 24 Colo. App. 16; Schlerfenbano v. Rundbaken, 71 A. 899, 81 Conn. 623.
A real estate broker, on being compelled to account for profits received from an unfair purchase for himself of the subject of agency, is not entitled to allowance for collecting rents while he wrongfully withheld the property. Stemon v. Gavin, 99 N. E. 663, 255 I11. 480.
Where a broker authorized to sell property for $1,600, to receive $75 for a commission, sells for $1,700, but reported a sale for $1,600 to the broker's wife, giving her maiden name, and the principal repudiated the sale, the broker was not entitled to commissions. Boll v. Martin, 187 I11. App. 266.
Where a real estate broker fraudulently misrepresents the financial ability of a purchaser, and the principal, on discovering that the purchaser is unable to fully carry out the contract, rescinds in proper manner, the broker is entitled to at least a portion of his commission. Meyer v. Keating Land & Mtge. Co., 148 N. W. 452, 126 Minn. 409.
Contract between plaintiff and defendant looking to the pur-chase of real estate at price fixed, by defendant's principal; held, given in fraud of the owner so as to invalidate the contract. Tay-lor v. Nelson, 147 P. 1189, 26 Cal. App. 681.
A sale of real estate can not be sustained when one who acted as the ostensible agent for the vendor was in reality the secret agent of the purchaser, unless principal, after full knowledge, confirmed the acts of the agent. 'Evans v. Brown, 125 P. 469, 33 Okl. 323.
In an action for fraud in procuring contract for exchange of defendant's real estate for plaintiff's stock of goods, that defendant, real estate brokers, deceived plaintiff, their liability could not be minified because they were acting as his agents in the transaction. McCann v. Clark, 163 N. W. 222, - Iowa Sup. - .
Where defendant corporation, acting as brokers for plaintiff, sell at $1,200, itself purchasing at the price, less commission to it of $1,100, and resells for $2,000, having had that in view, all without disclosing the purchase for itself to plaintiffs of price received, it was liable for profits. Clark v. Rogers Foundry & Mfg. Co., 199 S. W. 576, - Mo. App. - .
Though defendant, broker, with whom plaintiff listed property for sale or trade, procured plaintiff's signature to earnest money contract under which the purchaser agreed, in case of default, to forfeit such earnest money to defendant; held, that defendant was liable to plaintiff for amount of earnest money forfeited by purchaser, the insertion of the clause "for defendant's own benefit," being unauthorized, and plaintiff's signature procured by fraud. Pederson v. Johnson, 172 N. W. 723, - Wis. Sup. - .
That defendant broker had agreed to pay to another a part of the commission which he was to receive in no way affected his liability to his principal for earnest money forfeited by the buyer, and to which principal was entitled. Id.
 
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