As a general rule, where one is employed by an owner of property to sell it as his agent, he is not authorized to sell it to himself alone, or together with others, without the consent of the owner."1
A person cannot be both broker and purchaser.As soon_as-he becomes a purchaser or principal, his agency ceases, and his legal authority to act as a broker, ipso facto, becomes inconsistent and invalid. He cannot "legally act in such dual relations, however great his agility to turn a somersault."2
"The doctrine of the law that forbids an agent to buy from or sell to himself is not necessarily based on the idea that such deal in dirt is (to speak colloquially) a 'dirty' deal; that is to say, resulted in an injury to or a fraud upon him. But it is rather based on the idea of closing the door to the temptation to commit fraud. It tends to keep the agent's eye single and clear to the rights and welfare of his principal. To allow one acting in the fiduciary relation of agent to buy from or sell to himself is a solecism in the realm of law, for the moral stamina of the average man is inadequate to preserving a fine glow of fidelity to his trust and confidential relation in such transaction, and the interdiction is enforced with a strong hand in courts of justice."3
Where a real estate broker having a contract entitling him to half of a $500 commission to be received by the broker of a vendor of lands, organized a corporation to purchase the lands and falsely represented to the incorporators that the lands could be purchased for $10,000 subject to a mortgage of $4,500, when in fact the purchase price was $9,000 and he only paid $4,500 in cash on the lands, which was the amount contributed by his fellow-incorporators, and had stock issued to himself for the difference between the real and the represented price, the transaction comes within the rule prohibiting a broker from making any secret profit out of his principal.4
1 Syllabus by the court in Mitchell v. Gifford, 133 Ga. 823; 67 S. E. 197 (1910).
2McLaughlin v. Campbell. (N. T. Ct of E. & A.) 74 Atl. 530 (1909).
3Meek v. Hurst. 223 Mo. 688; 122 S. W. 1022 (1909): citing Montgomery v. Hundlev, 205 Mo., loc. cit. 148; 103 S. W. 527; 11 L. R. A. (N. S.) 122 et seq.; Moore v. Mandelbaum, 8 Mich. 434; Grumley v. Webb. 44 Mo. 444; 100 Am. Dec. 304; Evans v. Evans, 196 Mo., loc. cit. 23; 93 S. W. 969.
Where a person solicits another to appoint him his agent, there is an implied representation that the former is legally qualified to. be such agent, and if the agent has a personal interest in the trans-action not disclosed to his principal, he cannot be said to be legally qualified to act as such agent.5
"The principle that a person occupying a position of agent to purchase may not sell his own property to his principal is so elementary that it need only be stated. It must be quite as elementary and true that if one by misrepresentation or suppression of facts when he ought to speak induces another ignorantly to make a contract appointing the first his agent to buy and conferring upon him discretionary power to purchase his own property, the contract is voidable and even if executed may be rescinded and the money recovered back on restoration of what has been received."6
Add to footnote 22 (p 66) :
Sonnesyn v. Hawbaker, 148 N. W. (Minn.) 476 (1914).
While an agent employed to sell property may nut sell to himself, it has been suggested that where the agent is authorized to sell the property at a minimum price to the principal, the agent to be entitled to whatever is obtained for the property above that price, the agent may properly purchase the property himself.7 It is urged that in such case the minimum price fixed belongs to the principal. All above the minimum price belongs to the agent, and therefore the agent's diligence in securing the best price obtainable would be no benefit to the principal beyond the minimum price. Whether the property sells for $100 or $1,000 in excess of the minimum price, the result is the same to the principal. It might also be added that if the agent prefers to take his chances and accept his pay by taking the property and personally turning over to the principal the minimum price, the choice is with the agent. Such a situation, however, must not be confused with cases where the owner fixes a minimum selling price, without any agreement that the agent shall have as compensation all in excess of the minimum price.8
4Travis v. Travis, 140 App. Div. 191; 124 N. Y. Suppl. 1021 (1910). 5 Heckscher v. Edenborn, 203 N. Y. 210; 96 N. E. 441 (1911). 6 Heckscher v. Edenborn, 203 N. Y. 210 at p. 222; 96 N. E. 441 (1911). 7See Hutton v. Sherrard, 150 N. W. (Mich.) 135.
When an agent secretly becomes a purchaser for himself from his principal, the vendor, his purchase is void at the election of the vendor, on discovery of the facts, and if the buyer joins the agent in the scheme, knowing the agent's relations to the transaction, the buyer's purchase is equally voidable.9
8 See Sec. 215-217.
9 Waterbury v. Barry, 145 App. Div. 773, 782; 130 N. Y. Suppl. 517 (1911).