The parties must agree about all of the terms of the proposed transaction. There must be a meeting of the minds. 'Where the owner has not expressed him self already, all the terms offered must be satis factory to him. A case is on record where the brok er's purchaser required a warranty deed and the owner refused to give one. In this case the form of deed had not been agreed upon. A similar case came to the writer's attention in which negotiations for the sale of property were practically completed, the price and amount of cash payment having been agreed upon, when the question was raised as to which side should pay the expense of procuring certain mort gages to be placed on the property. Both the pur chaser and the seller refused to pay these expenses and the deal fell thru. The minds of the parties never met, and the broker did not earn a commission.
8. Double employment.—The broker's duty to his principal is that of any employe to his employer— loyalty, faithfulness and honesty. He is an agent, and as such must do all in his power to serve his em ployer's best interests. He cannot represent both buyer and seller faithfully and therefore must not ac cept pay from both, unless each knew that the other was paying a commission. By accepting, or agreeing to accept pay from the opposite side in a transaction, he forfeits the right to receive a commission from his employer. It is a breach of his contract of agency, and a fraud on his principal. Of course, a double em ployment might be known and consented to by one or both of the principals, in which event it could not be offered by one to whom it was known as an excuse for refusing to pay the broker. The rule against double employment is in accordance with both legal and moral principles—"No man can serve two masters." It applies whenever the agent has been intrusted with the slightest discretion. Where the broker merely acts as a middleman to bring the principals together, the price and terms being arranged entirely between them, he can be the agent for both sides. In such cases the broker has no discretion whatever, and if em ployed by both principals he can receive commission from both.
9. Secret pro broker employed by an owner to sell property cannot become the purchaser unless the owner clearly and unmistakably assents to it. In the New York case of Clark against Bird, reported in 66 Appellate Division 284, a broker was intrusted with property to sell for the owner. He received offers, but advised that they be declined. Finally he told the owner that one Jones would purchase the property for $10,000 and advised acceptance of the of fer. A contract was drawn and signed between the
owner and Jones at $10,000 but at the closing of the title the deed was taken in the broker's name. The owner claimed that she was cheated as she supposed Jones to be the real purchaser. Her action to rescind the sale resulted in the deed being set aside. The court in this case, quoting from Story on Agency said, "An agent employed to sell cannot himself be come the purchaser; and an agent employed to buy cannot himself be the seller. So an agent employed to purchase cannot purchase for himself." A broker cannot get the owner to fix a net price for his prop erty and then effect a sale at a greater price and keep the difference. He would be liable to the owner for the secret profit so realized. In Bain vs. Brown, 56 N. Y., 285, a broker brought about a sale for an owner at $17,000. Before title closed he made a contract in his own name with another party for the same property at $26,000. He took an assignment of the first contract and then directed the owner to deed direct to the second purchaser, not disclosing to the owner the price under the second contract. The Court of Appeals held that the owner was entitled to the benefits of the advance upon the second sale.
The foregoing does not mean of course that one not acting as agent for the owner could not get a net price from the owner and then sell at a larger price and make the profit, nor does it mean that the terms of employment may not allow the broker to make as a commission all he can realize over and above a cer tain price. This must be expressly stated in the con tract of agency, however. The agent cannot take a secret profit.
10. Broker's authority.—The broker may not sign a contract of sale for an owner unless authorized to do so. The ordinary employment of the broker does not include his authority to execute a binding contract of sale in the owner's behalf. In the states of New York and New Jersey and some others, if authority to sign a contract has been given to the broker, such authority need not be in writing.
If a broker employs another broker to sell property the latter must look to the first broker for commission. No privity of contract exists between the second broker and the owner. The owner can expressly au thorize the broker to employ sub-agents and in such cases he would be directly liable to the sub-agents for their commission. The owner might also ratify the employment of the sub-agent and thus become liable to him for commissions.