The agent shall not make a personal profit from his principal's property; for all such he is bound to account.
(Orig. Code 1863, § 2165; Code 1868, § 2161; Code 1873, § 2187; Code 1882, § 2187; Civil Code 1895, § 3011; Civil Code 1910, § 3583; Code 1933, § 4-205.)
Law reviews.- For article surveying important general legal principles of municipal and county government purchasing and contracting in Georgia, see 16 Mercer L. Rev. 371 (1965).
JUDICIAL DECISIONS
Principles set forth in this section are generally applicable when the agent is acting or should be acting as such for the agent's principal in dealing with third persons. Smith v. Pennington, 192 Ga. 478, 15 S.E.2d 727 (1941).
Public agents are included under this section. Mayor of Macon v. Huff, 60 Ga. 221 (1878).
Trustees can never be allowed to derive a personal advantage from the use of the trustee's principal's property. Rogers v. Dickey, 117 Ga. 819, 45 S.E. 71 (1903).
Duty of agent.
- Arthur v. Georgia Cotton Co., 22 Ga. App. 431, 96 S.E. 232 (1918); Franco v. Stein Steel & Supply Co., 227 Ga. 92, 179 S.E.2d 88 (1970), cert. denied, 402 U.S. 973, 91 S. Ct. 1661, 29 L. Ed. 2d 137 (1971).
Loyalty to the principal is the primary obligation of the agent. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950).
Relationship of principal and agent is confidential and fiduciary and demands of the agent loyalty and good faith to the principal. Kellett v. Boynton, 87 Ga. App. 692, 75 S.E.2d 292 (1953).
Agent cannot have any interest or do any act adverse to the interest of the agent's principal or which is incompatible with the application of the agent's skill and diligence to the promotion of that interest. Franco v. Stein Steel & Supply Co., 227 Ga. 92, 179 S.E.2d 88 (1970), cert. denied, 402 U.S. 973, 91 S. Ct. 1661, 29 L. Ed. 2d 137 (1971).
Agent must not put oneself in relations which are antagonistic to that of the agent's principal; the agent's duty and interest must not be allowed to conflict; the agent can not deal in the business within the scope of the agent's agency for the agent's own benefit. Arthur v. Georgia Cotton Co., 22 Ga. App. 431, 96 S.E. 232 (1918).
Agent cannot engage in the business of the agent's principal for the agent's personal benefit and profit within the scope of the agency. Franco v. Stein Steel & Supply Co., 227 Ga. 92, 179 S.E.2d 88 (1970), cert. denied, 402 U.S. 973, 91 S. Ct. 1661, 29 L. Ed. 2d 137 (1971).
Relation of principal and agent is a fiduciary one, and the agent may not make a profit for the agent out of the relationship, or out of knowledge obtained from the relationship, to the injury of the principal. Larkins v. Boyd, 205 Ga. 69, 52 S.E.2d 307 (1949).
If the fiduciary relationship of principal and agent existed between the petitioner and the defendant, the defendant could not make advantage or profit for the defendant out of the relationship to the injury of the defendant's principal. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).
Scope of agent's power.
- There was no merit to a homeowner's argument that a restrictive covenant barring "For Sale" signs in a subdivision did not apply to the homeowner's real estate agent; under O.C.G.A. §§ 10-6-20 and10-6-25, an agent could do no more than a principal. Godley Park Homeowners Ass'n v. Bowen, 286 Ga. App. 21, 649 S.E.2d 308 (2007).
Gift or purchase from principal closely scrutinized.
- It is for the common security of mankind that gifts procured by agents, and purchases made by the agents, from the agent's principals, should be scrutinized with a close and vigilant suspicion. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).
Breach of faith requirement is fraud in itself.
- Relationship of principal and agent, being confidential and fiduciary in character, demands of the agent the utmost loyalty and good faith to the agent's principal, and any breach of this good faith whereby the principal suffers any disadvantage and the agent reaps any benefit is a fraud of such nature as to preclude the agent from taking or retaining the benefit, and also from claiming the agent's commissions. Peevy v. Wilkes, 48 Ga. App. 114, 172 S.E. 108 (1933); Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).
Principal need not show actual or moral fraud.
- Under former Civil Code 1910, §§ 3582, 3583 and 4628, an agent to buy and resell property for the agent's principals cannot lawfully make a secret profit from the transaction; nor is it necessary to the application of this rule that the principal must show actual or moral fraud. Ausley v. Cummings, 145 Ga. 750, 89 S.E. 1071 (1916).
Contract obtained by violation is void.
- Contract, no matter how solemnly expressed, obtained by an agent from the agent's principal through a violation of the loyalty and good faith imposed by the confidential relation, is void and is not enforceable in law or in equity. Peevy v. Wilkes, 48 Ga. App. 114, 172 S.E. 108 (1933).
Agent is trustee as to any advantage obtained.
- Relation of principal and agent is a fiduciary one, and the latter cannot make advantage and profit for oneself out of the relationship, or out of knowledge thus obtained, to the injury of one's principal; and the agency being established, the agent will be held to be a trustee as to any profits, advantages, rights, or privileges under any contract made and obtained within the scope and by reason of such agency. Peevy v. Wilkes, 48 Ga. App. 114, 172 S.E. 108 (1933).
Relation of principal and agent is a fiduciary one, and if the agent obtains any advantage or profit out of the relationship to the injury of the principal, one becomes a trustee. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950).
Good faith no defense.
- It is no defense for an agent and the agent's associate to show that the agent acted in good faith in selling to the agent in association with another and that the transaction was in fact for the best interest of the principal; the law does not inquire in such a case whether there is any fraud, but gives the principal the absolute right to repudiate the transaction because it will not allow an agent to take a position which is so inconsistent with the agent's duty to the agent's principal. Reeves v. Callaway, 140 Ga. 101, 78 S.E. 717 (1913); Smith v. Harvey-Given Co., 182 Ga. 410, 185 S.E. 793 (1936), later appeal, 183 Ga. 783, 190 S.E. 19 (1937).
Principal may rely on agent's representations.
- Because of their fiduciary relationship, a principal is justified in relying upon the representations of the principal's agent and in failing to read and know the contents of the various deeds signed by the principal. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).
Numerous decisions to the effect that a party who can read, must read, and that fraud which will relieve a party who can read must be such as prevents one from reading, apply to situations where the parties are dealing with each other at arms length and have no application to a situation where the confidential and fiduciary relation of principal and agent is involved. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).
Power of attorney.
- When the clear and unambiguous purpose of the power of attorney is to serve and benefit only the grantor of the power, there is no authorization for the agent to use such powers on the agent's own behalf, i.e., to secure a personal loan for the agent. First Nat'l Bank v. Cooper, 252 Ga. 215, 312 S.E.2d 607 (1984).
Duty terminates upon termination of agency.
- Principles of agency will not sustain grant of an injunction prohibiting competition after agency relationship is terminated. Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982).
Agent taking over principal's position with company deemed disloyal.
- Agent can do nothing more disloyal to the agent's principal than contacting the agent's principal's employer and taking over the latter's position with the company. Koch v. Cochran, 251 Ga. 559, 307 S.E.2d 918 (1983).
Breach of duty of loyalty by employee.
- Trial court's finding that a former employee breached the duty of loyalty to a former employer was supported by some evidence because competition against the employer by the employer's employees was specifically prohibited by the terms of the employee manual, the employee agreed to abide by the employee manual, and the employee engaged in a rival business while employed by the employer. Sitton v. Print Direction, Inc., 312 Ga. App. 365, 718 S.E.2d 532 (2011).
Cited in Allen v. Southern Ins. Sec. Corp., 54 Ga. App. 316, 187 S.E. 714 (1936); Thomas v. State, 87 Ga. App. 765, 75 S.E.2d 193 (1953); Smith v. Blackshear, 125 Ga. App. 775, 189 S.E.2d 99 (1972); Vinson v. E.W. Buschman Co., 172 Ga. App. 306, 323 S.E.2d 204 (1984); Doxie v. Ford Motor Credit Co., 603 F. Supp. 624 (S.D. Ga. 1984); Jennette v. National Community Dev. Servs., Inc., 239 Ga. App. 221, 520 S.E.2d 231 (1999); Seals v. Hygrade Distrib. & Delivery Sys., Inc., 249 Ga. App. 574, 549 S.E.2d 412 (2001).
OPINIONS OF THE ATTORNEY GENERALReal estate broker may not retain the amount received above the net listing, in excess of the broker's usual commission, unless the broker's contract with the seller so provides, and may not conceal from the seller the amount received from the purchaser. 1945-47 Op. Att'y Gen. p. 510.
RESEARCH REFERENCES
Am. Jur. 2d.
- 3 Am. Jur. 2d, Agency, §§ 222, 225.
C.J.S.- 2A C.J.S., Agency, §§ 318, 319.
ALR.
- Right of agent to offset his own claim against collection made for principal, 2 A.L.R. 132.
Right to recover against employee or his bond for money or property, the fruits of an employment involving a violation of law, 2 A.L.R. 906.
Validity of contract by agent for compensation from third person for negotiating loan or sale with principal, 14 A.L.R. 464.
Duty of principal to discover and notify third persons of wrongful disposal of property by agent not assuming to act for principal, 35 A.L.R. 325.
Duty and liability of former employee to former employer in respect of transactions or matters pending and uncompleted at termination of employment, 100 A.L.R. 684.
Salesman's power to pledge employer's or principal's personal property, 49 A.L.R.2d 1271.
Liability of vendor's real-estate broker or agent to purchaser or prospect for misrepresenting or concealing offer or acceptance, 55 A.L.R.2d 342.