A broker cannot, at the same time and in the same transaction, be acting for both parties (Sec. 48-50), except:
(1) Where both parties know that the broker is so acting. (Sec. 52.) Or
(2) Where the broker is vested with no discretion. (Sec. 53-57.)
The rule applies to an exchange as well as to a sale of property. (Sec. 51.)
It is the broker's duty to act solely for and in the interest of his employer. This is implied in the contract. The employer is entitled to the disinterested efforts and judgment of the broker, and if the broker procures a purchaser for whom he is also acting as agent, without disclosing the fact to his employer, he is precluded from recovering any compensation.1
The principal is entitled to the exercise in his behalf of all the skill, industry and ability and the intensest fidelity of his agent. The agent is under the implied obligation of using the utmost good faith, candor and zeal in obtaining for his employer the best price for his property.2
¹ Harten v. Loffler, 31 App. D. C. 368, 369 (1908), (citing Raisin v. Clark, 41 Md. 158, 161; 20 Am. Rep. 66; Farnsworth v. Hemmer. 1 Allen 494. 495; 79 Am. Dec. 756; Rice v. Wood, 113 Mass. 133, 135; 18 Am. Rep. 459: Marsh v. Buctaan, 46 N. J. Eq. 595, 597; 22 Atl. 128; Bell v. McConnell. 37 Ohio St. 396. 399; 41 Am. Rep. 528; Carpenter v. Hogan, 40 Ohio St. 203; Bollman v. Loomis, 41 Conn. 581 ; Murray v. Beard, 102 N. Y. 505. 508; 7 N. E. 553; Wilkinson v. MeCullough. 196 pa. 205. 208; 79 Am. St. Rep. 702; 46 Atl. 357; Warrick v. Smith, 137 111. 504; 27 N. E. 709; Hafner v. Herron, 165 111. 242, 247; 46 N. E. 211).
A unique opinion is the one of Powell, J. in Gann v. Zettler, 60 S. E. 283 (Ga. 1908), where he writes: "It is recorded of Him 'who spake as never man spoke' that, 'seeing the multitudes, he went up into a mountain, and when he was set his disciples came unto him; and he opened his mouth and taught them, saying: * * * "No man can serve two masters; for either he will hate the one and love the other, or else he will hold to the one and despise the other." ' So, also, is our law. Civ. Code, 1895, Sec. 3010, 3011, 3014, 3018. Whoso, having undertaken the service of his master, counsels with another and agrees also to serve him in those same things wherewith he has been trusted, cannot claim the reward promised by his master unless he makes it plain that he has not acted privily, but that his master was consenting thereto."
"It is implied in every contract of agency that the agent shall use his best efforts to promote the interests of his principal, and it is ordinarily inconsistent with the proper discharge by a broker of his duty to one employer that he shall at the same time and in the same matter be acting for another. The interests of the seller and purchaser of property in the negotiation for its sale are adverse. It is the interest of the seller to get the highest price and of the purchaser to buy at the lowest. So when a broker to sell is at the same time the broker to buy, the fact of the double agency, if unknown to the principals, is a breach of his implied contract with each, and operates, or is likely to operate, as a fraud upon both.3 The law, therefore, to prevent fraud, and upon the most obvious reasons of justice and policy, will not in such a case enforce the contract for compensation, and this, irrespective of the consideration whether the sale made was or was not advantageous to the party from whom the compensation is claimed." 4
² Roome v. Robinson, 99 App. Div. 143 (N. T. 1904).