Philadelphia Rapid Transit Co., Mackowski v. (Pa.) 168 Philadelphia & R. R. Co., Dutrey v. (Pa.).. Picanardi v. Emerson Hotel Co. (Md.).... 483 Pizzini v. Pizzini (N. J. Ch.). 620 528 813 Salmon Falls Mfg. Co., Spilene v. (N. H.) 808 93 579 Samaha. State v. (N. J.). 254 43 Samuel Stores, Inc., v. Abrams (Conn.)... 541 Santurri, Carpenter v. (R. I.). 652 170 Sappington v. Fairfax (Md.). 575 8 167 Sarson v. Maccia (N. J. Ch.) Sault, Mason v. (Vt.). 109 267 Schaff. Appeal of (Pa.). 614 398 Schaper v. Cleveland & E. R. Co. (Pa.).. 407 Schilling v. Osten (Del. Super.).. 741 Schmelz v. Udetsky (R. I.).. 584 THE ATLANTIC REPORTER VOLUME 108 (90 N. J. Eq. 396) H. J. JAEGER CO. v. HANNAN. (No. 40-289.) LEWIS, V. C. The bill was filed by the complainant, a body corporate, against the defendant, to compel him to account for and pay over to the complainant the difference (Court of Chancery of New Jersey. Aug. 1, between what he paid for a certain piece of 1. BROKERS 1919.) 34-REAL ESTATE AGENT MUST ACCOUNT TO PRINCIPAL FOR SECRET PROFITS. Where a real estate agent was engaged by a corporation to procure for it a parcel of land on which it desired to erect a factory, and a fiduciary relation existed between the corporation and the agent, the agent cannot make any secret profit out of the transaction, and if he does so he must account therefor to his principal, the corporation. 2. BROKERS 8(1)-BURDEN OF PROVING FIDUCIARY RELATION ON PRINCIPAL. Where a corporation sued a real estate agent which it had engaged to procure for a factory site, on the ground that despite the fiduciary relation he made a secret profit, the burden of establishing the fiduciary relation is on the corporation. 3. BROKERS 8(3) EVIDENCE OF EXISTENCE OF FIDUCIARY RELATION. In a suit by a corporation to recover from a real estate agent whom it had engaged to purchase for it a factory site, evidence held sufficient to establish that the agent occupied toward the corporation a fiduciary relation, so that he was not warranted in making a secret profit. 4. BROKERS 38(2)—EQUITY HAS JURISDICTION OF SUIT FOR BREACH OF TRUST BY AGENT. Equity has jurisdiction of a suit by a corporation against a real estate agent who was engaged to purchase a factory site for the corporation, and, notwithstanding the fiduciary relation, made a secret profit; the jurisdiction of equity not being affected by reason of the right of action at law on the quasi contract. Bill by the H. J. Jaeger Company against John M. Hannan. Decree for complainant. Weller & Lichtenstein, of Hoboken, for complainant. land in Weehawken, N. J., and the amount paid to him for it by the complainant. The defendant, John M. Hannan, was a real estate agent. Mr. H. J. Jaeger was the president of the H. J. Jaeger Lamp Company, the complainant. The Lamp Company desired to purchase a tract of land upon which to erect a factory. By appropriate resolutions the president was authorized to negotiate for the purchase of the tract in question. He claims that he arranged with Hannan to treat with the owner of the land and obtain it for him, Hannan to receive his commission on the sale from the owner. Hannan, in turn, arranged with Louis Menscheler to negotiate with the owner, and told him to collect the brokerage for himself. Hannan then informed Jaeger that the property could not be purchased for the sum of $2,000, which was the price fixed by Jaeger, and finally the purchase price was inflated to $3,600, which is the consideration finally passing between Jaeger and Hannan. As the price advanced, however, during the negotiations, Jaeger (who had also agreed to pay Hannan the same commission which the owner was to pay) withdrew this part of the commission, and said that Hannan would have to receive his entire compensation from the owner. During all these negotiations Hannan represented to Jaeger that he was unable to get the property for the various figures mentioned, ranging from $2,000 to the final figure of $3,600. The Monor Real Estate & Trust Company was the owner of the land. It agreed to sell the land, as a result of these negotiataken in the name of Charles E. Gorrell, a tions, for $2,250. The agreement was first mere dummy. The agreement was drawn by George Frankenstein, a member of the bar of this J. Emil Walscheid, of Town of Union, for state, acting for Hannan. He testified that defendant. later on he learned that Gorrell was married, For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes and that there would be difficulty in obtain (89 N. J. Eq. 602) ing his wife's signature to a deed, and so RICKEY v. MOON CLAY & KAOLIN CO. the contract with the Manor Real Estate & et al. Trust Company for the sale of this land (Court of Errors and Appeals of New Jersey. Oct. 11, 1918.) 4(4)-CONSTRUCTION OF AGREEMENT FOR REIMBURSEMENT OF PRO- was assigned to Charles A. Rubens, to whom Where plaintiff had obtained certain valuable contract rights, and a three-party agreebe divided equally, and the first $8,000 was to ment was entered into, whereby profits were to be used partly in paying off debts owing by plaintiff, such sum to "be regarded as expenses and first deducted out of said profits," the debts of the plaintiff should be deducted from the profits before division, and not from the share going to plaintiff, although the transaction as but profits were made out of the joint advenoriginally contemplated was not carried through, Complainant, claiming to be the real party in interest, and for whom H. J. Jaeger, its president, simply acted as its agent in this transaction, now seeks an accounting from Hannan to the extent that Hannan received 2. MONEY LENT 7(1)-PRESUMPTION THAT unjust profits in this transaction. ture. MONEY GIVEN IS IN PAYMENT OF DEBT AND one person to another is given in payment of an obligation and not as a loan. [1] It is clear that if a fiduciary relationship is shown to have existed between com- by plainant and defendant, the defendant cannot take any profit in this transaction, at the expense of the party whose interests he was bound to protect, unless full disclosure was made and assented to by the complainant. Loudenslager v. Woodbury Heights Land Co., 58 N. J. Eq. 556, 43 Atl. 671. [2] It seems equally clear that the burden of establishing the fiduciary relationship is upon the complainant. [3] I think there is ample evidence in this case, direct and positive, with strong corroborating facts and atmosphere to establish the fact that Hannan, through his relations with Jaeger, was acting as the agent for the complainant, and that while so acting in negotiating the purchase of the land in question, maneuvered and manipulated a sale from the owner, to a dummy, and then resold to his principal at a profit. The exact amount of this profit is not disclosed by the proofs, but when ascertained by a proper accounting the defendant should be decreed to pay that amount to the complainant. If it is necessary to bring in Herman J. Jaeger as a party complainant in order to make the record technically correct for the granting of the relief stated, an order will be made on application to make such an amendment. [4] The only doubt in my mind is whether complainant has not an adequate remedy by law, either for damages or an action in quasi contract against Hannan to recover the amount of Hannan's profit. Dickinson v. Updike (Err. & App.) 49 Atl. 712. But I am satisfied, after consideration, that the relief here sought is of a clear equitable nature, and that a decree in accordance herewith should be made. I will so advise. 4(1)-ON DIVISION OF PROFITS INTEREST ON LOAN TO PROMOTER Where plaintiff obtained valuable contracts Appeal from Court of Chancery. Bill by Walter H. Rickey against the Moon From Clay & Kaolin Company and others. a decree for complainant, the defendants appeal. Affirmed. The following is the opinion of Vice Chancellor Backes: In 1913 the complainant, Rickey, obtained from the defendant Moon what has been termed an option agreement, whereby Moon agreed to sell to Rickey his clay lands in Hamilton township, at any time within two years, for $6,000 per acre for the best clay lands, and $1,000 per acre for the balance. In February of the folfurther term of two years, or "until the deal lowing year Moon extended the option for a now pending is closed." The deal was Rickey's negotiations with the Pennsylvania Railroad for a strip of land for its new freight line across New Jersey, between Philadelphia and New York. Rickey then interested the defendant Muschert, and persuaded him to secure a loan of $3,000 from his friend Watson upon a promise to pay Muschert one-tenth part of the profits on the option agreement. Rickey assigned the option to Watson as collateral security, and reduced to writing the 10 per cent. agreement with Muschert. He then got from |