Kahn v. Gordon

CHRISTIAN, J. Defendant, a realtor and mortgage broker, appeals from a judgment awarding his clients damages in the amount of $2,905 arising out of a fraudulent misappropriation committed by a salesman employed by appellant while that salesman was acting within the scope of ostensible authority. Appellant asserts that the evidence and findings of fact do not support the judgment; we hold to the contrary.

The Pacts

In the fall of 1958 respondents, desiring to make investments, were referred by a mutual acquaintance to Mr. Anderson, a salesman employed in appellant’s real estate office, Gordon Realty Company. At that office respondents met Anderson who introduced them to appellant. Appellant explained that deeds of trust were good investments. Respondents, who were husband and wife and both dance choreographers, had little knowledge of investments in general or deeds of trust in particular; their ignorance was readily apparent to appellant, but he assured them “that Mr. Anderson could take full responsibility and care of [their] account, whatever further dealings [they] had with the office. ’ ’

Shortly thereafter Anderson contacted respondents with a specific investment opportunity and at the real estate office they handed Anderson a check for $3,150, payable to appellant, and took a receipt on appellant’s letterhead. A similar transaction took place later in 1958. Both investments were eventually fully liquidated with interest.

On March 10, 1959, Anderson visited respondents at their dance studio proposing a new and specially desirable investment that would be lost if they did not give him the money “right away that day.” Respondents gave Anderson their cheek in the amount of $1,250, payable to Anderson, and took his receipt made out then and there, on a plain piece of paper, as follows: “March 10, 1959 Received of Stanley Kahn $1,250.00 for assignment of Deed of Trust in amount of $2,500.00 payable $27.50 per month including 6% interest. Balance of $1,050.00 to be paid when money from Sharp Park is received. Charles S. Anderson.” It did not occur to respondents that this was irregular; they trusted Anderson on the basis of their previous dealings with him. They understood that the receipt was on blank paper instead of on appellant’s [724]letterhead because Anderson did not bring any stationery with him when he visited the studio.

One week later Anderson brought to the studio a title company cheek in the amount of $1,655 liquidating one of the earlier investments. As anticipated in the receipt set forth above, Mr. Kahn endorsed this check to Anderson. Respondents believed they had thus invested $2,300 through the Gordon Realty Company, and that the balance of $605 represented by the title company check would be returned to them. Anderson later brought in a cheek for $600 which Mrs. Kahn endorsed over to him for reinvestment.