the fact as to whether or not the agent, if he did not act in regard to the particular matter, has communicated his knowledge to the principal. Judges have confused the two things. If they are not kept distinct, a person dealing through an agent is either in a better or a worse position than if he dealt in the matter himself. The failure to observe this very plain distinction between a fact acquired by the agent in the line of his duty as agent, and the effect of the agent's private knowledge, has caused some exceedingly unjust decisions, as will appear in the next section. It is to be noticed further that officers of a bank performing a continuous course of service for the bank are within this rule considered as being engaged in one transaction. If the knowledge of such an officer of a fact has been acquired during the course of his authorized dealings for the bank, his knowledge is treated as if it were a part of each particular transaction of the bank. 13 This rule certainly applies to all the general executive officers of the bank as well as to those agents whose duties require them to be engaged in a continuous line of service for the bank. It follows that the bank will not be heard to dispute its knowledge received in this way." But there are cases which have lost sight of this distinction and 12 Some cases put the case of knowledge received during the course of the agent's business for the bank upon this ground also. See Pierce v. Red Bluff Hotel Co., 31 Cal. 160, 166. But this is wrong. If it were a mere question of communication, the presumption would be open to dispute, or the communication would need to be proven. This conclusion is escaped by calling it a conclusive presumption. But the calling of it a conclusive presumption only amounts to saying that the identity exists. Why does it exist? is the question. The only answer we can make is that originally in the English law it does not exist. Pollock & Maitland, Hist. Eng. Law, 529 et seq. But it did exist in the Roman law, and the experience of the ages shas decided that the Roman law was correct. "Eadem est persona domini et procuratoris. Eadem, inquam, non rei veritate, sed fictione," quoted 7 Am. Law Rev. 63. 13 Holden v. New York & Erie Bank, 72 N. Y. 286; Craigie v. Hadley, 99 N. Y. 131; First Nat. Bank v. Peisert, 2 Penny. 277. 14 Strauss v. Tradesmen's Bank, 122 N. Y. 379; First Nat. Bank v. Peisert, 2 Penny. 277, and Winslow v. Harrimon Iron Co., 42 S. W. R. 698. cannot be considered as properly decided.15 If the bank has once acquired knowledge through an agent competent to receive it, who receives it officially, the notice is always binding upon it. Yet it has been held that if the particular officer with the knowledge did not know of the transaction, or was not present in the bank at the time, and did not act in the transaction, his knowledge received in the course of his duties will not be imputable to the bank.16 These cases cannot be sound, and are not in accordance with authority," for notice once given to the bank, or received by it, is thereafter not dependent upon the continuous presence of the officer through whom the notice was derived. It follows also, in regard to such notice, that it is perfectly immaterial that the officer through whom the notice came to the bank had an interest adverse to the bank in the particular transaction wherein notice was acquired.. He was identical with the bank, where he acquired the knowledge, and the question of communication is not involved, and the bank, by adopting the transaction, adopts his act. While, perhaps, no case holds this exact language, it is the necessary result of the principle and the decisions. 18 Turning now to the case where an officer has acquired knowledge in his own 15 See cases in note 16. 16 Memphis Nat. Bank v. Sneed, 97 Tenn. 120; Fulton Bank v. New York Canal Co., 4 Paige, 127. These cases can be considered correct only on the theory that the court held that the officer had not received the knowledge officially. 17 Bank of America v. McNeil, 10 Bush, 54; Central Nat. Bank v. Levin, 6 Mo. App. 543; First Nat. Bank v. Peisert, 2 Penny. 277; Strauss v. Tradesmen's Bank, 122 N. Y. 379. Holm v. Atlas Bank, 84 Fed. R. 119, correctly decides that the knowledge received by an officer not officially, and where he did not act for the bank, is not imputable to the bank. 18 Twenty-Sixth Ward Bank v. Stearns, 148 N. Y. 515; Nesbit v. Macon Bank, 12 Fed. R. 686; Holden v. New York & Erie Bank, 72. N. Y. 286; Stebbins v. Lardner, 2 S. D. 127. The analogy of a pri vate principal is the same. Stockdale v. Keyes, 79 Pa. 251. See Huffcutt on Agency, secs. 144, 145, and First Nat. Bank v. Allen, 100 Ala. 476. But Louisville Trust Co. v. Louisville R. R., 75 Fed. R. 433, overlooks this distinction and is wrong. private affairs, whether or not such knowledge will be imputed to the bank depends upon circumstances. His private knowledge will never be imputed to the bank unless he communicated it, or unless he acted in the particular transaction wherein it is sought to impute knowledge to the bank.19 If he did not act in the transaction, the fact of his communication of his knowledge must be proven as a fact.20 The burden of proof is on the person claiming the communication. It may be inferred from the fact that the agent had such private knowledge; 2 but that seems an extreme rule. If the officer having the knowledge acquired outside of his duties as agent acted in the particular transaction, the bank will not be bound unless it appears that such knowledge was present in the mind of the officer when he acted.23 This may be inferred from circumstances and his recent acquisition of the knowledge. It makes no difference, in case the officer acted, how he acquired his knowledge, whether in a transaction adverse to the interest of the bank or not,25 because the bank's knowledge does not depend upon the fact of communication, but on the fact of an officer acting as to a transaction with the knowledge upon it, which gives the bank notice.26 A limitation is put upon this rule by some courts to the effect that the agent with 19 If it is communicated, of course, the bank has knowledge. Bank of Pittsburgh v. Whitehead, 10 Watts, 397. The principle is laid down in Fairfield Sav. Bank v. Chase, 72 Me. 226; Atlantic State Bank v. Savery, 82 N. Y. 291. 20 See cases cited in note 8. 21 Constant v. University, 111 N. Y. 604. But some courts say there is a presumption of communication if the officer in the transaction wherein notice is sought to be imputed had no adverse interest or no duty or reason to conceal the knowledge. 24 22 Continental Nat. Bank v. McGeoch, 92 Wis. 286. Compare Custer v. Tompkins Co. Bank, 9 Barr, 27. 23 The Distilled Spirits, 11 Wall 356; Campbell v. First Nat. Bank, 22 Colo. 177. 24 Brothers v. Bank, 84 Wis. 381. But see note 9 to § 111, ante, as to a presumption. 25 Union Bank v. Wando Mfg. Co., 17 S. C. 339; Hughes v. Settle, 36 S. W. R. 577. The rule presupposes that the agent acquired his knowledge in his own private affairs. 26 Union Bank v. Campbell, 4 Humph. 392. the knowledge must alone have acted for the bank; but there is no reason for such a rule, and it is not sound.28 § 112. Agent with adverse interest.- We have already discussed the question of the bearing of the agent's adverse interest in another transaction wherein he acquired knowledge which is sought to be imputed to a bank in a transaction wherein he acted, where he had no interest. Such knowledge was seen to be a case of knowledge acquired either in his course of acting as agent, or as knowledge acquired about his private affairs. But where an agent is acting in a particular transaction wherein he has an interest adverse to the bank, two cases may arise. The person with whom the agent is transacting business may know of the agent's alverse interest or he may not. We have already seen what facts may show that the agent's interest is adverse, in a case where the agent's power to act is in question. In such a case the person having the knowledge of the agent's lack of power is a wrong-doer with the agent, and he can claim nothing against the bank unless the bank insists upon the transaction. But the question as to notice is a different The bank in the first instance may have a right to rescind or to refuse to be bound by the transaction, because the agent acted upon both sides; but this right it waives one. 27 Atlantic Cotton Mills v. Indian Orchard Mills, 147 Mass. 268. 28 Le Duc v. Moore, 111 N. C. 516. See notes 3, 8 and 9, § 106, supra. But perhaps these cases are better authorities upon the proposition that an agent may act in a particular transaction wherein he is interested, if the bank ratifies it, and his knowledge, however acquired, where he acts for the corporation, is imputable to the corporation, whether the person treating with the corporation had notice of his lack of knowledge or not. The case of Graham v. Orange Co. Nat. 2 Savannah Bank v. Hartridge, 75 Ga. 149; First Nat. Bank v. Gifford, 47 Iowa, 575. But it must be remembered that the fact of the agent's adverse intent does not make him a wrong-doer. The transaction must be one where he is using the bank for his own benefit. when it adopts the transaction and insists upon it. Having adopted its agent's act, it adopted it altogether. This matter must be kept plainly in view, or only confusion will result. It presupposes the agent's power to act; but the question is whether facts that the agent knows will be considered facts known to the bank, where the agent is acting upon a matter where he is bound not to disclose such facts, or is interested in concealing his knowledge, and the bank is enforcing such a transaction. It presupposes also that the third person who is acting with the agent is not a wrongdoer as to the bank. If the third person, who claims that the bank had notice of certain facts through its agent, had no notice of the agent's adverse interest, the fact of such interest is immaterial as to him.3 That rule applies both to the transaction in which the notice of the fact was acquired, and to the after transaction in which the notice or knowledge acquired in the former transaction is sought to be imputed to the bank. In the latter transaction it is plain that the same or different officers may be acting for the bank. But if the third person has notice of the agent's adverse interest in a former transaction in regard to which the agent was acting not for the bank, and the knowledge gained in such a transaction is such that needs to be communicated to the bank in order to bind it, that is to say, if it is knowledge acquired by the officer outside of his duties, there will be no presumption of a communication where the officer has an interest or a duty 5 in concealing the matter. But where the fact is not one that needs communication, but is imputed to the bank by reason of the fact that it is within the officer's This result follows from the power of the agent to act in regard to a matter within the scope of his authority. See United States Nat. Bank v. First Nat. Bank, 79 Fed. R. 296; Chemical Nat. Bank v. Armstrong, 76 Fed. R. 339. 4 American Surety Co. v. Pauly, 72 Fed. R. 470, 38 U. S. App. 254; Hummel v. Bank of Monroe, 75 Iowa, 689. But if the wrongful act was perpetrated for the benefit of the bank, the bank has notice. Merchants' Nat. Bank v. Tracy. 77 Hun, 443. Compare City of New York v. Tenth Nat. Bank, 111 N. Y. 446. 5 Constant v. University, 111 N. Y. 604. |