Sterling v. Smith

Pleading — Avoidance of New Mattes in Answer—Evidence —Fraud not Pleaded. —Under section 462 of the Code of Civil Procedure, which provides that “ the statement of new matter im the answer, in avoidance or constituting a defense or counterclaim, must on the trial be deemed controverted by the opposite party,” a plaintiff is entitled to introduce on the trial any evidence which countervails or overcomes such new matter, and may introduce evidence of fraud, though no fraud is pleaded in the complaint.

Principal and Agent—Investment of Principal’s Monet—Undisclosed Interest of Agent—Constructive Fraud — Rights of Principal. —Where an agent invests money belonging to his principal for the purchase of an interest in a syndicate, of which the agent is a member, and in which he holds an interest, and which is indebted in a large amount, . and, to induce the investment, leads the principal to believe that he is not a member of the syndicate, or interested therein, and represents that the principal will not have any calls to pay upon becoming a member thereof, the law imputes fraud on the part of the agent, and the principal may avoid the transaction and recover from the agent the amount so invested.

Id.—Fraudulent Intent of Agent Immaterial.—In an action by the principal, in such a case, to recover the amount so expended by the agent, it is not necessary for the principal to prove or for the court to find expressly that the acts done by the agent were done with a fraudulent and wrongful intent.

Id.—Trustee — Union of Personal and Representative Characters. — Equity regards and treats the relation of principal and agent in the same general manner and with nearly the same strictness as that of trustee and beneficiary. The underlying thought is, that an agent should not unite his personal and representative characters in the same transaction; and equity will not permit him to be exposed to the temptation or brought into a situation where his own personal interests conflict with those of his principal.

Id. —Option of Principal— Right to Avoid Sale to Agent. —In dealings by an agent without the intervention of his principal, if the agent, ' for the purpose of selling property of the principal, purchases it himself, or for the purpose of buying property for the principal, buys it from himself, either directly or indirectly, the sale or purchase is voidable; it will always be set aside at the option of the principal; the amount of consideration, the absence of undue advantage, and other similar features being wholly immaterial. Nothing will defeat the principal’s right of remedy, except his own confirmation after full knowledge of all the facts.

Id. —Ratification —Findings. —Where there is no evidence tending to prove any ratification of the sale by the principal after full knowledge of the facts, the judgment avoiding the sale will not be reversed for want of a finding upon the question of ratification.