It is no answer to a complaint that brokers have acted for themselves in a transaction involving their principal, that their intention was honest and that the brokers did better for their principal by selling him their own property than they could have done by going into the open market. The rule is inflexible, and although its violation in the particular case cause no damage to the principal, he cannot be compelled to adopt the purchase.15 The fact that the agent volunteered his agency does not absolve him from the duty of fidelity. Neither is it material to inquire whether the agent had any actual fraudulent purpose. The making of a purchase from himself without authority from his principal is a constructive fraud in view of the fiduciary relation.16
"It is a well-settled principle of morals as well as of law that the agent must faithfully serve his principal. However unquestioned may be the honesty of the agent, or his impartiality between his own interests and those of his principal, he is bound to the exercise of all his skill, ability and industry in favor of his principal. As an agent to sell, it is his duty to get the highest fair price; and this duty is wholly incompatible with his wish to buy. In every trust this principle prevails. No agent or trustee can deal with the subject-matter of his trust, except for the benefit of his principal * * *. And the rule in equity is, that any act by an agent in respect to the subject-matter of the agency, injurious to the principal, may be avoided by the principal, and where an agent to sell becomes the purchaser, the court will presume that the transaction was injurious, and will not permit the agent to contradict the presumption.17 The policy of this rule is obvious. The confidence reposed in the agent must not be abused. His position of trust must not be employed to his own advantage, or to the injury of his principal. In short, while in the employment of his principal, his principal's interest must be his interest, and he may have no interest which, conflicting with those of his principal, can work injury to the latter."18
15Taussig v. Hart, 58 N. Y. 425 (1874); Hare v. De Young, 39 Misc. 368 (N. Y. 1902) ; Mullen v. Bower. 22 Ind. App. 302, 303 (1898), (citing Clendenon v. Pan-coast, 75 Pa. St. 213; Soule v. Deering, 87 Me. 365; 32 Atl. 998; Hammond v. Book-waiter. 12 Ind. App. 177; Everhart v. Searle, 71 Pa. St. 256; Pratt v. Patterson's Ex., 112 Pa. St. 475; 3 Atl. 858; Wadsworth v. Adams, 138 U. S. 380).
16 Conkey v. Bond, 36 N. Y. 427 (1867). See also Porter v. Woodruff, 36 N. J. Eq. 174.
Such a transaction is voidable at the election of the defrauded party, and if, with full knowledge of all the facts, he deliberately and freely ratifies the act of the agent, he thereby waives his right to repudiate it. Ratification between the original parties, however, implies a conscious and intended approval of the act done. It rests in the intention. That intention is generally one of fact to be deduced from all the circumstances.19