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Haymes v. Rogers

Supreme Court of Arizona

June 12, 1950

HAYMES
v.
ROGERS

Reversed.

Marshall W. Haislip, of Phoenix, attorney for appellant.

Robert & Price, of Phoenix, attorneys for appellee.

De Concini, Justice. La Prade, C. J., and Stanford and Phelps, JJ., concur. Udall, Justice (dissenting).

OPINION

De Concini, Justice.

Page 340

[70 Ariz. 258] Kelley Rogers, hereinafter called appellee, brought an action against L. F. Haymes, hereinafter referred to as appellant, seeking to recover a real estate commission in the sum of $ 425. The case was tried before a jury which returned a verdict in favor of appellee. The said appellant owned a piece of realty which he had listed for sale with the appellee, real estate broker, for the sum of $ 9,500. The listing card which appellant signed provided that the commission to be paid appellee for selling the property was to be five (5%) per cent of the total selling price. Tom Kolouch was employed by the said appellee as a real estate salesman, and is hereafter referred to as "salesman".

On February 4, 1948, the said salesman contacted Mr. and Mrs. Louis Pour, prospective clients. He showed them various parcels of real estate, made an appointment with them for the following day in order to show them appellant's property. The salesman then drew a diagram of the said property in order to enable the Pours to locate and identify it the next day for their appointment. The Pours, however, proceeded to go to appellant's property [70 Ariz. 259] that very day and encountering the appellant, negotiated directly with him and purchased the property for the price of $ 8,500. The transcript of evidence (testimony) reveals that the appellant knew the Pours had been sent to him through the efforts of appellee's salesman but he did not know it until they verbally agreed on a sale and appellant had accepted a $ 50 deposit. Upon learning that fact he told the Pours that he would take care of the salesman.

Appellant makes several assignments of error and propositions of law. However we need only to consider whether the trial court was in error by refusing to grant a motion for an instructed verdict in favor of the defendant.

One of the propositions of law relied upon by the appellant is as follows: "The law requires that a real estate broker employed to sell land must act in entire good faith and in the interest of his employer, and if he induces the prospective buyer to believe that the property can be bought for less, he thereby fails to discharge that duty and forfeits all his rights to claim commission and compensation for his work."

There is no doubt that the above proposition of law is correct. A real estate agent owes the duty of utmost good faith and loyalty to his principal. The immediate problem here is whether the above proposition is applicable to the facts in this instance. The question is, is it a breach of a fiduciary duty and a betrayal of loyalty for a real estate broker to inform a prospective purchaser that a piece of realty may be purchased for less than the list price? We believe that such conduct is a breach of faith and contrary to the interests of his principal, and, therefore, is a violation of the fiduciary relationship existing between agent and principal which will preclude the agent from recovering a commission therefrom.

The facts here are clear and undisputed. The salesman informed the purchasers that he had an offer of $ 8,250 for the property from another purchaser which he was about to submit to appellant. He further told them he thought appellant would not take $ 8,250 but would probably sell for a price between $ 8,250 and $ 9,500 and that they in all probability could get it for $ 8,500. The agent was entirely without justification in informing the purchasers that the property might be bought for $ 8,500, since that placed the purchasers at a distinct advantage in bargaining with the principal as to the purchase price of the realty. As a general rule an agent knows through his contacts with his principal, how anxious he is to sell and whether or not the principal will accept less than the listed price. To inform a third person of that fact is a clear breach ...


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