McDonald v. Lord — 25 N.Y. Super. Ct. 7

Majority

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John McDonald, plaintiff and appellant, vs. Samuel Lord et al. defendants and respondents.

Headnote

1. An agent, while in the employ of his principal, has no right to abuse the confidence reposed in him, to his oivn advantage, or to the injury of his principal. If employed to sell goods, he cannot himself become the purchaser.

2. A merchant who has employed a person as clerk and salesman, for a stated period, has a right to rescind the contract and discharge him, when such employer discovers that such clerk, being interested as partner in another firm engaged in the same business, persists in selling the goods of such employer to such firm, on credit, contrary to orders.

(Before Robertson, Oh. J., Moncrief and Monem, JJ.)

Heard January 14;

decided January 30, 1864.)

Appeal from a judgment. The plaintiff’s assignor, John 0. Boak, was employed by the defendants as manager of their carpet department, in their store in this city, at a salary of $1400 per year, from the 9th of January, 1860. On the 7th of July, 1860, Boak was discharged by the defendants from their service. Boak obtained other employment at a less salary, and the action was brought to recover the difference, for the unespired part of the year, between the salary agreed to be paid by the defendants, and that which Boak obtained elsewhere after his discharge. Boak testified that one of the defendants told him that he (Boak) had an interest in another carpet house in this city, and if such was the case, he could no longer continue with them. He further testified, “ X did not

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tell Mr. Lord that I was interested- in the firm of Beattys & Co.; I declined to tell Mr. Lord that I was ; he asked me the question, and I declined to anstoer ; I told him I considered it would make no difference to Lord & Taylor; that it was my business what investments I made with my funds; I became interested in the firm of Beattys & Co. on January 1, 1859; the firm of Beattys & Boak commenced on the 13th January, 1862, in the carpet business at No. 8 Fourth avenue; they kept a store therein 1860; the way I was interested there was, I had money there; I had money invested in the house; any definite amount I could not state that I was to receive for my interest; it was dependent upon the profits; I told Mr. Lord I considered it exclusively my business; I think Mr. Lord told me they could not have any one in' their establishment, who was interested in any other house; he told me, if I was so interested elsewhere, I could no longer remain with Lord & Taylor; I sold Beattys carpets; I never received any instructions from the cashier to sell nothing further to the Beattys in the month of May, 1860; I was told some time in the month- of May or June, 1860, to sell no more goods to Benjamin Beattys on credit; that .was the only instruction I ever received in the matter; I think Mr. Wilson showed me a letter written by John T. Lord in the Broadway house, instructing him to see that no more goods were sold to Benjamin Beattys on credit; Wilson had not> previous to that, directed me not to sell to Beattys; I had.not refused to obey his directions; this note was not, to my knowledge, sent from John T. Lord, in consequence of my refusal.

“ Q. And didn’t you, after getting this direction in May or June, continue to sell to Beattys ? Didn’t you direct the entry clerk to make entries to Beattys ?

“ A. I have stated I sold goods to Beattys after seeing that letter of Lord’s; it was after that that Lord came over and had this conversation, and asked me if I was so interested; Lord, when he discharged me, said he understood I was interested in the concern of Beattys; I told him that I did not hold myself.responsible for current reports; he wanted an ex

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plicit answer whether I was interested in it or not; I told him I considered it exclusively my own business what use I made of money or any moneys I might have; either before or after my using that expression, he said that I could not he interested elsewhere and remain with the concern of Lord & Taylor; I had no reply to make to that; I went with the house of Barnum, Sutton & Co. on the 16th July, 1860/’

He further testified that he did not spend any of his time at the store of Beattys & Boak; and that it did not in any way interfere with the discharge of his duties with the defendants; that he never purchased goods for Beattys & Boak; and that he sold the goods of the defendants to them as he sold to any one else. '

The defendants proved that the entry clerk was instructed by them not to enter sales to Beattys on credit; and that Boak was so informed; and that Boak told the entry clerk to enter any goods on time to a certain amount, and he would he responsible.

The justice dismissed the complaint, and from the judgment of dismissal the plaintiff appealed.

John Hewitt, for the appellant-.

W. R. Stafford, for the respondents.

By the Court,

If the defendants dismissed Boak from their service, because of any disobedience of their lawful orders, I think there was sufficient conflict in the evidence on that subject, to have required the case to go to the jury. Boak was directed not to sell any more goods to Beattys & Boak on credit; and it was in evidence, although contradicted by Boak, that after such direction he continued to make sales to that firm; such disputed evidence would have Been proper to have gone to the jury, and it would have been error to have taken the question from them.

But there is another ground upon which it is proper to assume that the learned justice put his decision. The contract

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Was an entire one; and the defendants could not without justifiable cause, lawfully terminate it within the year. The evidence shows that Boak, at the time of, and during all of his employment by the defendants, to the time of his discharge, as the manager of their carpet department, was interested as a partner in the carpet house of Beattys & Boak, Ho. 8 Fourth avenue; and that he sold the goods of the defendants to the firm in which he was interested. The fact of such connection of their employee with the firm of Beattys & Boak, did not come to the defendants’ knowledge, until shortly before his discharge; and the only ground assigned for the discharge, was such connection and interest, and the sales by him of the de-° fendants’ property, substantially to himself.

It is a well settled principle of morals as well as of law, that the agent must faithfully serve his principal. However unquestionable 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 such duty is wholly incompatible with his wish to buy. In every trust this principle prevails. Ho.agent or trustee can deal with the subject matter of his trust, except for the benefit of his principal. Executors and administrators are expressly forbidden by statute, (2 R. S. 104, § 27,) from purchasing the property of their testator or intestate; 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. (Coles v. Trecothick, 9 Ves. 234, 247.) 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 interests must be his interests;

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and he may have no interest, which, conflicting with those of his principal, can work injury to the latter,

Boak was the agent of the defendants to sell this property; and could not become the purchaser, without violating the duty which the trust imposed upon him. He did virtually become the purchaser of the goods he sold; and his interest in the purchase was incompatible with the defendants’ interests, It is not necessary to draw fine distinctions. There is no evidence in the case, of positive unfairness or fraud on the part of Boak, in making sales to Beattys & Co. There is no imputation upon his character, nor suspicion that he made more favorable sales to the firm in which he was interested than to others. It is enough that the law presumes such sales to be injurious to the principal; and the plaintiff is not permitted to rebut the presumption. (Dobson v. Racey, 3 Sandf. Ch. Rep. 60; S. C. 8 N. Y. Rep. 216 .)

Upon principles so obvious and just, the facts of this case, in my judgment, afforded the defendants a full and complete justification for recinding their contract with Boak, and discharging him from their service.

The learned justice was, therefore, correct in dismissing the complaint.

I am of opinion the judgment should he affirmed.