
    Frederick A. Ringler et al., Resp’ts, v. William M. Reynolds and Jessie Reynolds, App’lts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed May 13, 1892.)
    
    Fraud—Agency—Contracts for purchase of land.
    Plaintiffs employed defendant Reynolds to purchase certain land for them.- He represented that the and belonged to a distant relative of his-wife, and could not be bought for less than a specified sum, but subsequently procured a contract for it-in the name of his wife for a much less-sum, and procured plaintiffs to take a contract from her, concealing the fact that she was his wife. In an action to vacate the latter contract and for an assignment of the contract held by the wife, Held, that the burden. ■was upon her to show that she was a bona fide purchaser and not a mere shield for her husband’s deceit, and that in the absence of such proof, a judgment for plaintiffs was properly granted.
    Appeal from judgment in favor of plaintiffs entered after trial at special term.
    The facts appear fully in the opinion of the special term, as follows :
    Patterson, J.—The facts appearing by the proofs in this cause entitle the plaintiffs to the judgment they aslc for. Some technical criticism may be made of the complaint, and if the success of the plaintiffs depended upon the establishment of the allegations of the complaint that Mrs. Reynolds had knowledge of the imposition practiced by her husband upon the plaintiffs, it must be conceded that no adequate proof thereof appears upon the record. But the plaintiff’s right of recovery does not depend upon any conscious participation of Mrs. Reynolds in the alleged fraud, nor upon her accepting the fruits of it with knowledge that it was committed. All the averments of the complaint on that subject may be disregarded, and a cause of action of equitable cognizance remains, the facts alleged being substantially and in brief as follows, viz.: That the plaintiffs employed Mr. Reynolds to negotiate for them as their agent the purchase of the land mentioned in the complaint; that he accepted the agency and began the negotiations; that during their pendency'he represented to the plaintiffs that the property belonged to a distant relative of his wife, and could be bought for not less than $55,000; that these statements were false, and were fraudulently made to induce the plaintiffs to agree to give that sum for the land; that, on the plaintiffs agreeing to that price, Reynolds procured from the owners of the property a contract to sell the same to his wife for $49,000, which fact he concealed from the plaintiffs, and procured them to enter into a written contract to purchase from Mrs. Reynolds at $50,000, which contract they signed in ignorance of the fact that Mrs. Reynolds was the wife of their agent in the transaction, and was not the actual owner; that they paid $5,500 on account in a check to the order of Mrs. Reynolds, part of the proceeds of which was actually used by Reynolds to make the first payment on account of the contract through which Mrs. Reynolds was to acquire the title; and they ask that the contract between themselves and Mrs. Reynolds be canceled, and that she be compelled to assign to them the contract taken in her name as purchaser. All the facts thus generally stated have been proven in detail to my entire satisfaction. It is of no consequence that Mr. Reynolds was not a broker. He undertook to negotiate a purchase of the property for the plaintiffs, and it is evident that, some time during the progress of the negotiations with Mr. Embree, who represented the real owners of the land, he formed the scheme of making a profit out of the transaction by taking a contract in his wife’s name, inducing the plaintiffs to believe that the real owner was a distant relative of his wife, and then to procure the enhanced price from them. The several stages of the development of this scheme may almost be traced in the testimany. It is clear from what Mr. Embree says that Reynolds did not pretend to be acting for himself or for his wife until just before the contract with her was signed. He stated to Mr. Embree that his principals were out of town, and lived in Boston, and it was not until the matter was about being closed that he said, in substance, that the purchase was a good thing, and he would have the contract made in the name of his wife.
    The case is simply one of an agent employed to buy specific property for a principal taking for his own benefit the title in the name of a third party, also advancing nothing, holding such third party out as the real owner and seller, and then selling that same property to the principal at a greatly increased sum; the principal paying all that is to be paid to the real seller, and also the profit to the agent’s alter ego. It cannot be doubted that if the agent had taken the contract in his own name a court of equity would give the principal the benefit of it. Taylor v. Salmon, 4 Mylne & C., 138. If the third party is the mere cover for the agent, and it appears clearly that the interposed title or right of such third party is only colorable, and one taken to conceal the acts of the agent, the technical rules of rescission do not apply ; for in equity the real nature of the transaction will be regarded, the purchase will be considered as made for the principal, and, all the parties being before the court, substantial justice will be done. If Mrs. Reynolds were a bona fide purchaser of the land, and as between her and the original vendors there had been, not only a formal contract, but an actual authorized purchase and an honest transaction, a different question would arise, and the points argued by the learned counsel for the defendants would then require serious consideration. But such is not the case. Although Mrs. Reynolds has answered the complaint, there is not a syllable of reliable testimony to show that she ever authorized her husband to buy this property for her, or that she ever knew anything about it prior to her signing the agreement. She did not present herself as a witness on the trial, although she might have cleared up the whole matter, and it is not for her husband to constitute himself by his mere statement her agent in a transaction in which he was acting on his employment by others, and necessarily in 'such a way as would prevent his acting for her. Agency for his wife seemed to have occurred to him after he had planned the scheme of injuring the plaintiffs. His real principals were the plaintiffs. From all that appears, Mrs. Reynolds may have been innocent of any intent to do wrong to the plaintiffs; but she stands on the record as a mere technical vendee of the land, as the person used to cover her husband’s design, as one introduced as a third party through and by whom the additional price of the property might be extorted from the real purchaser. The burden of proof was thrown upon her to prove that she was in reality a purchaser from the owners, and not only a nominal buyer, and that the transaction was honest and fair, and that she actually had constituted her husband her agent to buy this land, and that she was not a mere shield for his deceit. She has not even attempted to do this. I think there can be no doubt of the power of the court to cancel the contract of the plaintiffs with Mrs. Reynolds under the circumstances, and to go further, and determine that they are entitled to an assignment of the contract made by their agent in her name with the others; for the plaintiffs, in effect, paid everything that was paid to the vendors. They are entitled to a decree, but, all things considered, with costs only as against Mr. Reynolds.
    
      A. R. Dyett, for app’lts; H. Daily, Jr., for resp’ts.
   Per Curiam.

The judgment should be affirmed, with costs, upon the opinion of Mr. Justice Patterson at special term.

Van Brunt, P. J., O’Brien and Barrett, JJ., concur.  