Case v. McConnell & Forrester

THE COURT.

On rehearing complaint is made that the trial court in its findings and this court in its opinion on appeal failed to give complete consideration to the provisions

[690]

of Civil Code, section 2318, relating to constructive notice of the restriction upon the authority of an agent. It is urged that appellants, who were the beneficiaries of the trust, are entitled to the safeguard of the provisions in the trust agreement which limited liability to be incurred by their agents Forrester and McConnell to the trust assets.

The commissions here sued on and for which judgment was recovered amounted to $8,399.22 plus interest for sales to parties named Morris and Jervis. By their answer to plaintiff’s amended complaint, appellants admitted receiving at least $10,000 from Morris on account of these sales and there is evidence that certain other substantial sums were received from Jervis. It further appears that these beneficiaries acquiesced in an arrangement by which the security of certain of the trust property was materially impaired by permitting the purchaser to subject it to a first trust deed payable to an outsider and taking back a second trust deed for the balance of the purchase price.

Under the views we have heretofore expressed and the cases we have cited, we are not persuaded that the appellants would have benefited by a finding or more explicit expression by us on the question of constructive notice. Such beneficiaries, who are principals in this case, cannot receive the fruits of the labor of sub-agents hired on their behalf which exceed the amount they have agreed to pay these sub-agents, divert these collections (as the trial court found they had done) toward payment of other obligations, impair the

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of the trust by permitting it to be subjected, without any sufficient consideration, to an encumbrance superior to their own and then, on the theory of constructive notice, deprive their sub-agents of their pay for their work. All of this happened while the real estate market was strong and we have no doubt of the entire good intentions of the beneficiaries. Like so many ventures this one would in all likelihood have resulted in profits to all had the market not turned. These facts, however they may absolve the parties from personal blame, cannot affect their legal liabilities.