Pascal v. Cotton

[598]

SHOEMAKER, J.

Plaintiffs appeal from a judgment for defendants in an action to recover secret profits allegedly realized by defendants in two real estate transactions.

The facts are as follows: In 1954, the plaintiffs, Walter Pascal and his wife Gladys, were the owners of two pieces of real estate in San Francisco, one located on Chestnut Street, which stood in both names, the other located on Dolores Street, which stood in the wife’s name alone. Prior to April 1954, plaintiffs employed the defendant Frank Cotton, a licensed real estate broker, to sell these properties. Plaintiffs told Cotton that they wanted $37,500 for the Chestnut Street property net to them. On April 6, 1954, Cotton, and his associate Jackson and his wife, bought the Chestnut Street property, which purchase was not disclosed to the Pascals. Later, in December of 1954, Cotton arranged a sale of the Dolores Street property to a Verna M. Palmer, also known as Cora Jotz, which property, on January 3, 1955, she deeded to defendants in exchange for certain other property owned by them, a fact also not disclosed to the plaintiffs.

In May of 1958, plaintiffs were contacted by their present attorney, who told them that Cotton had actually purchased their properties on his own behalf, and had subsequently sold them at a profit. Plaintiffs then employed him to represent them in this action to recover the secret profits allegedly realized by defendants Cotton and Jackson.

After a trial without jury, the court found that plaintiffs had not been influenced by defendant Cotton in determining the selling prices of the real properties owned by them, but had arrived at their own independent judgment on this matter ; that defendants Cotton and Jackson had at no time made any false, willful, or fraudulent representations to the plaintiffs; and that there had been no breach of any fiduciary duty on the part of said defendants. Judgment was for defendants.

Appellants’ arguments for reversal are directed solely to the sufficiency of the evidence to sustain the judgment in favor of respondents. They assert that the relationship of a broker to his principal is a fiduciary one which imposes upon the broker the duty to act with the highest good faith toward his principal, and that as such he may not deal in his own behalf unless he makes a full and complete disclosure of his adverse interest. They strongly urge that the evidence in this case indicates that no disclosure was made,- hence the law requires that Cotton and the Jacksons, who acted in concert with him,