The broker must act in good faith. (Sec. 141.) He may-forfeit his standing, -
(1) By accepting pay from or acting for the other party. (Sec. 142.)
(2) By himself becoming a principal in the transaction. (Sec. 143.)
(3) By not accepting the best terms he was able to secure. (Sec. 144.)
Circumstances may exist under which a refusal on the part of the agent to disclose information asked for, would not imply bad faith. (Sec. 145.)
"Like other agents, the broker is required to exercise the utmost good faith towards his principal; and if, in the course of his agency, he has committed a fraud on his principal, he is not entitled to his commissions." If the broker acts in bad faith, the principal may discharge him and complete the transaction himself without liability for commissions.2 "There is a want of good faith on the part of the agent towards his principal, when he acts adversely to his principal's interest, or where, representing the seller, he conceals from him an arrangement intended for the advantage of the buyer.3 In the application of this rule it makes no difference whether the result of the agent's conduct is injurious to the principal or not; in such case, the misconduct of the agent affects the contract from considerations of public policy rather than of injury to the principal. 'It matters not, that there was no fraud meant, and no injury done. The rule is not intended to be remedial of actual wrong, but preventive of the possibility of it.' Young v. Hughes, 32 N. J. Eq.372." 4
1 4 Am. & Eng. Encv. of Law (2nd Ed.), 971. quoted in Low v. Woodbury. 107 App. Div. 298 (N. Y. 1905), where Is also cited Martin v. Bliss. 57 Hun 157 (N. Y. 1890): Whaples v. Fahys, 87 App. Div. 518 (N. Y. 1903) : Murray v. Beard. 102 N. Y. 505 (1886). See also Hafner v. Herron, 165 111. 247 (1897); Jeffries v. Bobbins. 66 Kans. 437 (1903); Veasey v. Carson, 177 Mass. 117 (1900).
The broker is not required, in support of his cause of action, affirmatively to establish his good faith. That he did not act in good faith is matter of defense.5
A broker with discretion cannot recover commissions if he is acting for both parties, unless with their knowledge and consent.6 Some cases go to the length of holding that the broker may not accept part of the commission of the broker acting for the other party.7
Real estate brokers purchasing real estate as agents for an undisclosed principal cannot recover commissions
² Featherston v. Trone. 102 S. W. 198 (Ark. 1907).
* Citing Storv on Agency. Sec. 334; Pratt v. Patterson's Exrs., 112 Pa. St. 475; Prescott v. White, 18 111. App. 322.
4 Hafner v. Herron. 105 III. 247 (1897). of the vendors for effecting the sale.8 In Hess v. Gallagher, 64 Misc. 95, 96 (N.Y. 1909), it was said: "As agents for the defendant, the plaintiffs might not directly buy from or sell to the defendant and recover for services upon their own contract as his agents; because, as agents, they were and would be under legal obligation to respect the confidence reposed in them as such, and could not unite, Jekyll and Hyde like, in their same persons the character of principal, which would naturally tend to a violation of the confidence reposed in them as agents and by whose active instrumentality an acceptance of defendant's offer was effected, if at all; and, therefore, they would and did disentitle themselves to recover for services therein, because 'contracts which are opposed to open, upright and fair dealing are opposed to public policy. A contract by which one is placed under a direct inducement to violate the confidence reposed in him by another is of this character.' "
5 Poilatschek v. Goodwin. 17 Misc. 591 (N. Y. 1890) ; Colonial Tr. Co. v. Pacific Co., 158 Fed. 284 (1907); Cook v. Platt, 104 S. W. 1133; 126 Mo. App. 553 (1907).
6 See Sec. 47-68 supra for fuller discussion of broker acting for both parties.
7 See Plotner v. Cliillson, 95 Pac. 777 (1908), (citing McKlnley v. Williams. 74 Fed. 95; 20 C. C. A. 313).