Sec. 50. Acting For Both Parties Constitutes A Fraud

Where a broker, ascertaining that a person desires to sell or exchange his property, calls upon him and is directed to see what he can do, and thereupon finds a purchaser or a party having property to exchange, and the fact is that he is also the agent of such other party, the broker can recover no commission from the owner, for if he acts under such employment it is his duty to act solely for and in the owner's interest.

This, although not expressed, is implied in the agreement. The owner is entitled to the disinterested efforts and judgment of his broker in the matter of the agency, and if the broker has procured a purchaser for whom he is also acting as agent without disclosing the fact to the owner, it constitutes such fraud as would preclude him from recovering any compensation.5

Sec. 51. The Rule Applies To Exchange Of Property

Even though the transaction is an exchange, the broker cannot recover commissions if he is intrusted with any discretion, and has an agreement to receive part of the commission from the other side, without the knowledge of both parties.6 But the rule does not apply-to an exchange of. property where the broker has no discretion but is simply to bring the parties together. In such case the broker is a mere middleman.7 Where the broker is a middleman in the transaction, he is not bound to inform his principal of his employment by the other side. In fact, in one case 8 it was said: "Indeed, it may be said that defendant might reasonably assume that, in an exchange of property, a broker receives commissions from both sides."9 Where the contract provides that each of the parties is to pay the broker a commission, it would appear from the contract that they knew he was acting for both sides, and therefore, as stated in the following section, they cannot refuse his compensation.10

³See Plotner v. Chillson. 95 Pae. 777 (Okl. 1908). referring to and quoting from Campbell v. Baxter, 41 Neb. 735; 60 N. W. 91, (citing Rice v. Wood, 113 Mass. 133; 18 Am. Rep. 459; Walker v. Osgood, 98 Mass. 348; 93 Am. Dec. 108; Bollman v. Loomis. 41 Conn. 581; Meyer v. Hanchett. 43 Wise. 240; Holeomb v. Weaver, 136 Mass. 205; Byrd v. Hughes. 84 111. 174; 25 Am. Rep. 442; Atlee v. Fink. 75 Mo. 100; 43 Am. Rep. 385; Scribner v. Collar. 40 Mich, 375; 29 Am. Rep. 541).

4 Duryee v. Lester, 73 N. Y. 442 (1878). (citing Everhart v. Searle, 71 Penn. St. 259; Farnsworth v. Hemmer, 1 Allen 494; 79 Am. Dec. 756).

5 Carman v. Beach, 63 N. Y. 97 (1875).

Sec. 52. Acting For Both Parties With Their Knowledge

"When a broker is employed by both the vendor and the purchaser, neither can refuse compensation if he had knowledge that the broker held the same relation to the other party." l1 The burden of proof is, however, on the broker to show that the employer knew of the double employment.12

Where, after knowledge of the broker's receipt of pay from the other party, the principal still promises to pay the broker his commission, and especially where the principal actually pays something on account, he ratifies the broker's act.13

6 Norman v. Reuther, 25 Misc. 161 (N. T. 1808); Hannan v. Prentls, 124 Mich. 417 (1900).

7 Clark v. Allen, 125 Cal. 278 (1899).

8 Marks v. O'Donnell, 66 Misc. 147 (N. Y. 1910).

9 See also Alvord v. Cook, 174 Mass. 120 (1899).

10 Willner v. Seale, 127 App. Div. 180 (N. Y. 1908).

¹¹ Jarvis v. Schaefer, 105 N. Y. 289 (1887); Tieck v. McKenna, 115 App. Div. 701 (N. Y. 1906); Lamb v. Baxter. 130 N. C. 67 (1902); Dennison v. Gault, 132 Mo. App. 301 (1908) ; Evans v. Rockett, 32 Pa. Super. Ct. 365 (1907) ; Welnhouse v. Cronin, 68 Conn. 254 (1896); M'Lure v. Luke, 154 Fed. Rep. 650 (1907), (citing Meyer v. Hanchett, 43 Wisc. 246; Scrlbner v. Collar, 40 Mich. 375; Leathers v. Canfield. 45 L. R. A. 33; 117 Mich. 277: Hobart v. Sherburne, 66 Minn. 171; Young v. Trainor, 42 N. E. 139; 158 111. 428; Hannan v. Prentis, 124 Mich. 417; 83 N. W. 102).

12 Hannan v. Prentls, 124 Mich. 417 (1900).

Where the buyer, who promised to pay the broker a commission, was told by the broker that the owner had placed the property with him and then attempts to escape payment of the promised commission, the jury may find that knowledge of the double employment existed.14 But in a Pennsylvania case it was held that an agreement to waive the rule of law that commissions cannot be recovered from both sides cannot be inferred from knowledge of the fact that such rule has been violated, or from silence, or failure to dissent at the time, or from all these combined.18