Opinion
For Opinion on Hearing, see 68 Cal. Rptr. 589, 441 P.24 101.
Bear, Ruby & Grant, Lynwood, and Nossaman, Thompson, Waters & Moss, William L. Scott, Alvin S. Kaufer, Los Angeles, for appellant.
Turpit, Thompson & Miller by G. Scott Miller, Whittier, for respondent.
ROTH, Presiding Justice.
On December 14, 1959, Union Bank as Guardian for James Emery Porter, with the consent of his wife Lucille, mailed a brochure to 500 licensed real estate brokers in which Bank offered to sell the community real property of the Porters for $150,000 cash and asked for submission of bids.
The brochure listed the terms of sale and stated that a five per cent commission would be paid to the broker who produced a successful buyer. Appellant Robert R. Strehlow, a licensed real estate broker, received one of the brochures. He conferred with two associates and thereafter ostensibly on behalf of himself and his associates, was authorized to submit a bid in the name of San Antonio Development Co., Inc. (Company). Appellant and his wife owned 100% of the stock of Company.
On January 4, 1960, a letter from Company was received by Bank. It recited in pertinent part:
'We hereby offer to purchase the Porter Property under the proposal submitted to our Broker, R. R. Strehlow * * *.
'We will pay $153,750 * * * $15,375.00 cash herewith * * * balance * * * when sale is confirmed.
'SAN ANTONIO DEVELOPMENT CO., INC.
'By R. R. Strehlow, President.' (Emphasis added.)
There were no negotiations of any kind required by Bank's letter or indicated in that of the Company and none were required after the bid was deposited and accepted by Bank.
The bid of Company was the highest received, and on January 13, 1960, Bank filed its return of sale of real property to Company and petition for confirmation for the sum of $153,750. The superior court confirmed on February 11, 1960 and directed Following the death of James on March 30, 1960, respondent was appointed executrix of the Estate of James.
On July 18, 1960 Lucille (Lily) Porter, the surviving spouse of James, died and Pollyanna Phillips White (one of the defendants in this action) was appointed executrix of her estate on December 22, 1960. On January 26, 1961, on petition of respondent for an order authorizing and directing sale of the Porter property to Company, a hearing was had and an order was made directing the sale to Company for $153,750 and further directing that a real estate broker's commission be paid to appellant Robert R. Strehlow, in the sum of $7,687.50 '* * * for his services as agent in effecting the sale'. On March 31, 1961, the sale was consummated. Appellant was paid a real estate broker's commission of $7,687.50.
On September 12, 1961, after the consummation of the probate sale referred to in the preceding paragraph, respondent, as executrix of James' estate, pursuant to authorization of the probate court, brought this action for a return of the commission allowed and paid to appellant.
Respondent asserts that the commission was wrongfully paid by reason of the fraud of appellant and should be returned.
Her action proceeds on two theories: (1) that appellant, although pretending to act as a broker, was in fact a principal; and (2) that appellant, if he was in reality a broker, did not make a full and fair disclosure of his interests in the purchase of the property.
There is no contention that the price paid for the Porter property was unfair or unreasonable. There is no contention and no evidence that a larger price could have been received.
The trial court found:
'It is true that at said time [i. e., the time the original bid was submitted] defendant Robert R. Strehlow disclosed to one Storms, an employee of defendant Union Bank, that he, Strehlow, was the President of San Antonio Development Co., and that the commission which he, Strehlow, was claiming would be thrown back into the deal.
'* * *.
'It is true that an employee of the defendant Union Bank and the attorneys for the plaintiff acquired knowledge that defendant Strehlow was an officer of San Antonio Development Co. prior to the completion of the sale on March 31, 1961.'
The evidence shows that Bank did have actual as well as the written notice contained in the original letter from Company signed by appellant which refers to appellant as 'our Broker,' of the fact that appellant, a broker, was acting for Company and not for Bank and was claiming a commission. Mr. Allan Storms, who was handling the Porter property for Bank, testified that in the latter part of December or the first part of January 1960, prior to the receipt of the written bid of Company, appellant said to him:
'He was explaining to me a little bit about what his plans were for the property. He was, if my recollection serves me, a developer who looked for property of this type, and if he found something he would interest other persons in putting money into the corporation for the purpose of development. One of his means of getting an interest in the corporation, * * * was the throwing of his sales commission into the deal.
'Mr. Storms, did you ascertain at any time prior to the time you left the bank [February, 1960] that Mr. Strehlow was financially interested in San Antonio Development Company? A Yes, sir.' Bank admitted in the pretrial statement '* * * prior to the first confirmation of sale by the court and during the time it acted as guardian, one of its employees in its property management department was advised that Defendant Strehlow the broker had a financial interest in Defendant San Antonio Development Co.'
The record also shows that after the respective deaths of Mr. and Mrs. Porter, Mr. Thompson, an attorney for respondent, did long prior to the probate sale, know the complete background of how the property was placed on the market for bids by Bank and did have sufficient facts in his possession to put him on notice that appellant was interested in the purchase of the Porter property and was collecting a broker's commission. He testified:
'A I believe the first time I was aware of it was when I received the photostatic copy of the original bid.
'* * *.
'Q As a matter of fact it was approximately July of 1960, wasn't it? A Well, I believe it was approximately April of 1960. It was transmitted to me by Union Bank on April 26. I assume I received it a day or two thereafter.
'Q All right. Now, would you tell us approximately when you learned that a man by the name of Strehlow also purported to act as broker in connection with the sale of real property to San Antonio Development Company? A I learned that a man by the name of Strehlow was claiming a broker's commission in this when I received a copy of the return of sale and petition for confirmation of the guardianship proceeding.
'* * *.
'Q So that it is fair to say that at least by July of 1960 you personally knew that a man by the name of Strehlow was president of San Antonio Development Company and that a man by the name of Strehlow also purported to act as broker in the transaction for the sale of the property to San Antonio Development Company? A Yes. I knew that when I received this bid, the photostatic copy of the bid.
'* * *.
'Q Didn't your client ever tell you that she thought the terms of the sale were fair? A I think we were satisfied with the purchase price. We had no better offers.'
The trial court found '[t]hat defendant Robert R. Strehlow was not acting as a broker or real estate agent at any time during the negotiation and sale of the property hereinabove described, but was in fact a principal in the transaction, and as such, was not entitled to receive a commission as a real estate broker from plaintiff.'
On the undisputed facts, it would appear that the designation of appellant as a broker is immaterial since it clearly appears that appellant was in fact a finder or a middle man. Whether a person is a finder is a question of fact. (McConnell v. Cowan, 44 Cal.2d 805, 812, 285 P.2d 261; Clark v. Allen, 125 Cal. 276, 57 P. 985.)
California recognizes and accepts the difference between a 'broker' and a 'finder' or a 'middleman'. (Shaffer v. Beinhorn, 190 Cal. 569, 213 P. 960; Crofoot v. Spivack, 113 Cal.App.2d 146, 248 P.2d 45; McKenna v. Edwards, 19 Cal.App.2d 327, 65 P.2d 810.) At bench, appellant's only function was to submit a bid. He did and it was accepted. In Shaffer, supra, the court said 190 Cal. at page 573, 213 P. at page 962:
'In order to come within the definition of real estate broker or real estate salesman, a party must 'sell or offer to sell, buy or offer to buy, or negotiate the purchase or sale or exchange of real estate. * * *' By the terms of their contract as pleaded the plaintiffs were only required 'to find' or 'to introduce' to defendant a person 'interested' in purchasing and who subsequently did purchase, in order to recover the sum agreed by defendant to be paid to them. By the terms of the contract, as set forth in the complaint, the 'negotiation' of In Clark, the court says 125 Cal. at page 278, 57 P. at page 985:
'As a general principle, this contention is sound, but there are circumstances where a party may act for two persons and charge compensation from both for his services. If the duty of the broker is simply to bring together two men who desire to exchange their lands, and the broker's entire duty is performed when he has brought the two men together, then we see nothing against good morals and a sound public policy in allowing compensation to the broker from each of the parties. In such a case, the broker is in no sense representing conflicting interests. He has nothing whatever to do with the trade. Under the contract his advice and assistance to either party is not called for. Upon the state of facts here assumed, the broker may be termed a middleman and not an agent in the strict sense of the term.'
In Evans v. Riverside International Raceway, 237 Cal.App.2d 666, 675-676, 47 Cal.Rptr. 187, 193, this court stated, quoting from a New York case [numerous citations omitted]:
"A person is not a broker * * * where he merely brings a buyer and a seller together so that they may make their own contract without aid from him, but any participation, however slight, in the negotiations will bring him within the definition.'
"The same distinction between a finder (who finds, interests, introduces and brings the parties together for the deal which they themselves negotiate and consummate) (emphasis omitted) and a broker (whose duty is to bring the parties to an agreement on his employer's terms) has been noted in all the decisions dealing with the subject [citation omitted]. A more precise designation for a finder would appear to be an 'intermediary' or a 'middleman.'
"The services performed by finders may vary from case to case. But their distinction from the status of a broker * * * lies in their bringing the parties together with no involvement on their part in negotiating the price or any of the other terms of the transaction. * * *" (Emphasis in original.)
A finder is entitled to a commission from the seller, as per an agreement either oral or written. (Porter v. Cirod, Inc., 242 Cal.App.2d 761, 766, 51 Cal.Rptr. 784; Palmer v. Wahler, 133 Cal.App.2d 705, 711, 285 P.2d 8.)
It is conceded that respondent correctly states the law when it urges it is established that a real estate broker acting for a selling principal who pretends to have a purchaser, but who in reality purchases property for himself, and does not disclose that he is in fact the principal, is not entitled to commission and cannon enforce a contract for the same. (9 Cal.Jur.2d 205; Salisbury v. Yawger, 184 Cal. 783, 793, 195 P. 682; Bate v. Marsteller, 175 Cal.App.2d 573, 583, 346 P.2d 903.) Even if it were assumed that appellant was Bank's broker, the facts at bench show that such disclosure was made.
Appellant's second point is predicated on evidence given by Mr. Thompson that he never actually knew that appellant and Broker were the same person. He testified he assumed they might be relatives. This evidence raises the narrow question as to whether, if the relationship between appellant and Bank and the subsequent relationship between appellant and respondent is a fiduciary one, is respondent justified in ignoring facts sufficient to put a reasonably prudent man on notice and rely upon appellant's duty voluntarily and affirmatively to make a complete and full disclosure.
When a general relationship of principal and agent exists, and the agent has all facts material to a sale in his possession and consciousness during negotiations and at the time of the consummation of a transaction and does not disclose them Rodes v. Shannon,
It is clear from the record, however, that even if appellant was acting as Bank's and respondent's broker, his agency was a highly restricted one. Appellant's duties were limited to securing a bid, which might or might not be accepted and nothing more. In a situation such as this, an illustration emphatically apposite, is found in Restatement of Agency, Second, page 214:
'P, wishing to sell his house, publicly offers a commission of 5 per cent. to any person who will introduce P to a person who subsequently purchases P's house at a price satisfactory to P. A, a broker, comes to P's office with T and, without disclosing that T has employed A to find a house for him, urges P to sell at the price offered by T. P sells to T. A is entitled to the commission.'
At bench, an important difference between the facts and the above illustration is that appellant did not urge the owner to sell at a price offered by a prospective purchaser but had his purchaser merely bid on the Porter property known by all to be on the open market.
Bank proceeded with full knowledge to consummate a sale which was approved in the guardianship estate. Respondent's attorney had all the facts as to how the property was marketed prior to the consummation of the probate sale. The order of the probate court makes clear that the sale was subject to a broker's commission. There is nothing in the order which suggests that any extrinsic fraud was practiced or that the probate court would not have made the order if it had all the facts herein outlined before it.
The judgment is reversed and the trial court is directed to enter judgment for defendant and appellant.
HERNDON, Associate Justice (concurring).
I concur in the foregoing opinion and in the judgment of reversal.
In my opinion the record demonstrates that this is not a case 'where a principal on one side of the transaction has collected a commission from his adversary for purportedly acting as the latter's agent.'
The truth is that appellant Strehlow was never employed as the vendor's agent (as that term is defined in Civil Code, §§ 2295-2356) to sell the land here involved. No contention was made in the trial court by any party to the action that appellant acted as 'agent' for either the Union Bank as guardian of the estate of James E. Porter or for the personal representative of the estate of said James E. Porter, deceased. No such issue or contention was presented by the joint pre-trial statement nor was any evidence introduced tending to prove the existence of any such agency. On the contrary, the evidence proved, and the trial court expressly found, that no such agency existed.
However, even if we were to assume, contrary to fact, that appellant Strehlow was acting in a fiduciary capacity and therefore was legally required to disclose his personal interest, the record demonstrates that at the very outset appellant did make a full disclosure. As a matter of fact, the original written bid submitted by San Antonio Development Company was signed by R. R. Strehlow as its president and contained the following lanuage: 'We hereby offer to purchase the Porter, Property under the proposal submitted to our Broker, R. R. Strehlow * * *'
Respondent's complaint alleges that the officers, agents and employees of the Union Bank accepted said bid 'with full knowledge' that appellant was acting in the capacity of a licensed real estate broker and in the capacity of an officer, director '1. Defendant Union Bank fully performed its duties as guardian of the estate of James E. Porter in connection with the sale of said real property by accepting and returning for confirmation the bid to purchase said real property submitted by Defendant San Antonio Development Co. Said bid was the highest bid received for purchase of said real property and produced the highest net return to the estate.
'2. Defendant Union Bank did not have on duty to disclose to plaintiff or to the heirs or devisees of the last will of James Emery Porter, deceased, the information which was conveyed to one of its employees that Defendant Strehlow the broker had a financial interest in Defendant San Antonio Development Co.'
The undisputed evidence establishes the fact that many months prior to the time when she stipulated to the entry of the order finally confirming this sale, respondent Batson and her attorney, Wayne E. Thompson, not only were put upon inquiry concerning appellant's identity, his relationship to the transaction and to the corporation which had submitted the highest bid, but that they had actual knowledge of all relevant and material facts.
Attorney Thompson himself admitted in the course of his rather equivocal testimony that some six months before he appeared in the probate court seeking an order authorizing the consummation of this sale, he had undertaken an investigation for the purpose of ascertaining appellant's identity, his status as a broker and his relationship to the corporate bidder. His investigation included various inquiries addressed to the Union Bank, to appellant's attorney and to the office of the Real Estate Commissioner.
On July 13, 1960, six months before he appeared in the probate court seeking confirmation of the sale, Attorney Thompson wrote letters of inquiry to the Union Bank concerning the relationship between Robert R. Strehlow, the broker, and Strehlow, the president of the company. One of these letters to the Union Bank reads as follows:
'In regard to the sale of the Porter property to the San Antonio Development Co., Inc., please advise us whether or not a listing was given to Mr. Robert R. Strehlow, or to any other brokers, prior to the acceptance of the San Antonio offer.
'If such listings were given, we would appreciate being advised of the names and addresses of the brokers, and we would particularly like to receive a copy of the listing, if any, given to Mr. Robert R. Strehlow.
'In addition, we note in examining the bid for purchase of real estate and escrow instructions dated January 6, 1960, which your department so kindly provided us, that a Mr. A. R. or A. A. Strehlow signed the escrow instructions as President of San Antonio Development Co., Inc. Please advise us what relationship if any, exists between Mr. Robert R. Strehlow the real estate broker, and the President of the corporation, or his relationship, if any, to the corporation itself.'
Prior to the time when they stipulated to the order authorizing and directing the consummation of this sale, both respondent Batson and Attorney Thompson had met with appellant and his associates and had discussed the transaction at length. On the occasion of one of these meetings attended by Thompson and by appellant and his associates, a dispute developed over the payment of accrued taxes. Appellant and
It is understandable that respondent and Thompson were insistent that the sale be consummated, not only because the sales price agreed upon was the highest available, but also because the making of this sale had served as the basis upon which they were successful in defeating the claim of decedent's widow to a homestead interest in the property.
Attorney Thompson testified that his doubts concerning appellant's true status were not completely resolved until after the confirmation of the sale in 1961 when, according to his testimony, he determined the exact corporate structure of the San Antonio Development Company either by visiting the offices of the Corporation Commissioner located in the Times-Mirror Building or by receiving such information from that office over the telephone. However, the manager of the Los Angeles office of the State Division of Corporations testified that said office had been removed from the Times-Mirror Building and the practice of giving information in response to telephone inquiries had been discontinued in December 1960.
On January 26, 1961, after all these inquiries, meetings and discussions, Attorney Thompson, as attorney for respondent Batson, joined with the attorneys representing appellant, appellant's associates and the Union Bank in a stipulation for the completion of this sale of said real property.
After several continuances, respondent's petition for a decree authorizing the consummation of this sale, the conveyance of the property to San Antonio Development Company, and the payment 'to Robert R. Strehlow, a licensed real estate broker, a commission of $7,687.50 for his services as agent in effecting the sale' came on for hearing in the probate court. Attorney Wayne E. Thompson then and there appeared as attorney for respondent, the petitioner. It is an undisputed fact that appellant Strehlow was present in court on that day and that Mr. Thompson knew it. It also appears that appellant had been present in court on the earlier dates set for the hearing of this petition. Despite his asserted doubts about the true relationship of appellant to this transaction as a real estate broker and as president of the corporate bidder, despite all his prior investigations and his meetings with appellant and his associates, and despite the fact that appellant was then and there in court, Attorney Thompson sought and obtained the order or the probate court confirming the sale and directing payment of appellant's commission without making any disclosure to the probate court of any doubt as to the propriety or the legality of the order which he was then and there asking the court to make.
In short, as I view this record, if anyone is deserving of censure for failing to make a full disclosure to the probate court, that censure should be directed against respondent and the attorney who appeared for her both in the probate proceedings and in this action. It seems to me that if, as he testified, Attorney Thompson still entertained bona fide doubt concerning the legality of the terms of the sale or the propriety of the broker's commission which he, as attorney for respondent executrix, was then and there asking the probate court to confirm and authorize, he owed a duty as an officer of that court to disclose that doubt and to disclose any and all relevant and material facts within his knowledge giving rise to such doubt. If, as he testified, his doubt about Mr. Strehlow's identity or his relationship to the transaction still existed, why did he fail to call him to the witness stand and inquire?
There was no evidence whatsoever tending to indicate that appellant ever sought to conceal his identity from any party and such evidence as was received on this issue conclusively established that he gratuitously told anyone who would listen the exact nature of his role in the sale and what were his future plans for the property.
Respondent's own evidence demonstrates that at the very moment when she petitioned the trial court to approve the sale and to authorize the payment of appellant's commission from the proceeds thereof, she and her attorney deliberately withheld from the court the very information which she now urges should permit her to recover the amount of said commission. To approve such conduct would be to sanction a fraud upon appellant as well as upon the integrity and processes of the probate court.
In view of critical statements made in the dissenting opinion, my sense of justice impels me to say that I find absolutely nothing in this record to justify any suggestion that either appellant or the Union Bank was guilty of the slightest deviation from the requirements of honest and ethical dealings in this case.
In the absence of extrinsic fraud (which could not possibly be established in this case in the light of the true legal relationship existing between the parties and in view of the facts known to respondent and her counsel when she petitioned for confirmation of the sale), the order confirming the sale is not subject to collateral attack in this action. That appealable order is res judicata as to appellant's legal right to receive and retain the commission which the probate court ordered paid to him.
The only substantial issues that I see remaining for litigation in this case are those tendered by appellant's cross-complaint.
FLEMING, Associate Justice (dissenting).
In essence, this is a case where a principal on one side of a transaction has collected a commission from his adversary for purportedly acting as the latter's agent.
The rules derived from cases involving dual agents or finders, reflected in Restatement, Second, Agency, § 391, have little application to the present situation, for in those cases the dual agent or finder was presumed to be indifferent to the terms of the transaction and to have no control over their negotiation. That rule was summarized in McConnell v. Cowan, 44 Cal.2d 805, 811, 285 P.2d 261, 265, where the court said: 'The word 'middleman' is a short term for There was throughout an irreconcilable conflict of interest between Strehlow, the vendor's agent, who theoretically should have been interested in negotiating a sale at the highest possible price, and Strehlow, the sole owner of the purchaser, who in fact was interested in purchasing the property at its lowest possible price. By acting as a principal Strehlow relinquished his freedom to act as agent for the vendor under the general offer of agency tendered by the Bank, and accordingly he had no right to collect a commission. This exact situation was covered in Stineman v. Gottschalk, 34 Cal.App. 357, 358-359, 167 P. 550, in which the court declared: '* * * where one employed as an agent to sell property or secure a tenant therefor buys the property himself or leases the same, he, upon grounds of public policy, due to the fact that as such purchaser or lessee his position is inconsistent with his duty as agent, cannot claim a commission for such service.'
Partial disclosure, or full disclosure to some but not all interested persons, does not sanctify this fundamental conflict of interest. While the extent of the disclosure of Strehlow's status as a principal to agents of the vendor is a subject for conflicting inferences, 1 it is undisputed that there was neither disclosure to Mrs. Alva Batson, the executrix and actual vendor of the property at the time the deal was consummated, nor disclosure to the probate court, which had the final authority to approve the sale and award a commission to Strehlow for his services as agent of the vendor. I fail to understand why full disclosure to the probate court should not have been required, unless we are to treat the probate court as some kind of automatic rubber stamp used to provide a cachet of respectability for dealings which involve other people's prop But, it is argued, it was immaterial to the vendor whether the sale was reported to the executrix and probate court as one for $154,000 with an $8000 commission payable to an agent, or as a sale to a principal for a flat price of $146,000. The price was satisfactory to the vendor, and in either event the net amount to the estate was the same. Therefore, the estate was not hurt by payment of a sales commission to the adverse principal, and it has no cause to complain.
This argument ignores at least four realities of the business world: (1) Where there is a deal between principals in which no sales commission is payable, both parties know the deal is more valuable than if the cost of bringing the principals together has to be paid for. When that situation arises, the parties customarily renegotiate the price so that each will profit to some extent from the absence of a middleman. (2) The gross sales price is the basis on which all fees, expenses, and commissions connected with the sale are calculated. An inflated sales price inflates these charges proportionately. In the present case, for example, the guardianship file reflects a fee of 2 1/2 per cent of the inflated gross sales price sought by the Bank for its services as agent of the vendor in consummating the sale. (3) A fictitiously inflated price may scare off rival bidders, who might otherwise be tempted to top the net price at its confirmation sale in the probate court. (Prob.Code, § 785.) (4) Finally, there is an implied representation to the vendor that he has had an agent who has given him a run for his money because the agent's interests are parallel to his own, a representation which is illusory and false when the purported agent is in fact the opposing principal. The fictitious sense of security resulting from this illusion does not arise on a net bid submitted by a disclosed principal. (Bate v. Marsteller, 175 Cal.App.2d 573, 581-582, 346 P.2d 903; Fisher v. Losey 78 Cal.App.2d 121, 124, 177 P.2d 334.)
Identical problems of conflicting interests have been considered in the securities field, where, as here, the same arguments have been advanced to justify the conduct of principals (dealers) who purport to act as agents (brokers) in dealing with their customers. Practices involving less than full disclosure have been condemned. (Charles Hughes & Co. v. S.E.C., 2 Cir., 139 F.2d 434; Hughes v. S.E.C., 85 U.S.App.D.C. 56, 174 F.2d 969; 71 Yale Law J. 736, 738.)
The underlying principle is the ancient one that no man can serve two masters. We have in this case a principal masquerading as a fiduciary, a sleeper wearing the colors and collecting the pay of the team on the opposite side of the line of scrimmage from his own. The combination of fealty to one side and pay from the other has been outlawed under all civilized legal systems since the concept of fiduciary developed in Roman times. This is neither the time nor the place to dilute the full force of that salutary principle, the dangers of whose abandonment were epitomized by Mr. Justice Fox in Estate of De Hart, 196 Cal.App.2d 452, 456, 16 Cal.Rptr. 603, 605: 'To hold otherwise would be to open the door to all sorts of chicanery and double dealing and would be contrary to sound public policy and the fiduciary obligation which a real estate broker owes his principal.'
I would affirm.
'Q. Inviting your attention, sir, to January 26, 1961, the day the stipulation was worked out outside of Department 4, were you there at that time? A. Yes, I was. Q. Did you hear a conversation between Henry Bear (attorney for appellant and his associates] and Mr. Thompson? A. Well, there was a heated conversation, discussion there, with reference to taxes. I didn't get the full gist of it, but Mr. Thompson evidently wanted us to pay some taxes which we didn't agree to pay. Q. And was there a threat by Mr. Bear on your behalf to walk away from the sale? A. Providing we got our money back, yes, our deposit. Q. What if anything did Mr. Thompson say when that threat was made? A. Well, he did say that he would have a hard time finding people with that much cash, and if we walked away from the sale why, he would sue us, and he wouldn't return the $15,000 or he wouldn't authorize the court to refund it. Q. Were you acquainted with Mrs. Batson, the plaintiff in this case, before January 26, 1961? A. Yes. Q. How did you happen to know her? A. Well, she worked at the Sanders Plumbing Company and she lived in Lynwood and she called me in the hall one day at one of the hearings. I don't remember the date. Q. Could you pin down the year for the Court? A. Well, that was in 1960, after we appeared in court two or three times. So I would say it would be in the middle of 1960 sometime, May or June. Q. Who was present during the conversation besides yourself and Mrs. Batson? A. Just she and I. Q. What did Mrs. Batson say to you and what did you say to her? A. Well, she asked me if I was interested in the transaction with Strehlow, and I said yes, but I didn't know why we are involved in a deal like this with all this time being spent here, and this property is no bargain to get involved with.' (Emphasis added.)
As against these formal representations of agency, the only disclosure suggesting that Strehlow was acting as a principal was the statement of Strehlow to Storms, an employee of the Bank, that Strehlow was an officer of San Antonio and would throw his commission into the deal. Storms did not disclose this information to anyone, least of all to plaintiff executrix or to the probate court.