It is the rule that whether the principal is bound by contracts

entered into by the agent depends upon the nature and extent

of the agency, so docs the effect upon the princijial of notice

to the agent depend upon the same conditions." ^

(2) It can never be reasonably inferred that an agent will

communicate his knowledge to his principal where it is clearly

against his own interest to do so.^ Accordingly a princij)al is

not bound by notice acquired by his agent in a transaction

where the agent is acting adversely to his principal,^ or has

colluded with third persons to defraud his principal.^ This is

analogous to the case where an agent commits a wilfid tort

for his own ])urposcs, and not as a means of performing the

business entrusted to liim.^

В§ 146. Application of rule to corporations.

The general rule that notice to an agent acting within the

scope of his authority and in regard to the subject-matter of

the agency, is notice to the ])rincipal, a])plics to corporations

as well as to individual jiriucipals.*^ Indeed, it is probably in

1 Trentor r. Potlien, 40 Minn. 2dS\ Pittman r. Sofley, 01 111. 155.

2 Cave r. Cave, 15 Cli. Div. G:!!); Barnes V. Trenton Gas Light Co., 27

N. J. Eq. 33; Innerarity v. Merchants' Nat. Bk., 139 Mass. 332.

8 Frenkel V. Hudson, 82 Ala. 158.

* Western Mortg. & Invest. Co. v. Ganzer, 63 Fed. Rep. 047 ; Hudson

r. Randolph, GO Fed. Rep. 210; Nat. L. Ins. Co. v. Minch, 53 N. Y. 144.

^ Allen r. South Boston R., 150 Mass. 200. Cf. Bank r. American

Dock & Trust Co., 143 N. Y. 559.

В® Story on Agency, В§ 140 a; Duncan v. Jaudou, 15 Wall. (U. S.) 105;

NOTICE TO AGENT. 191

reference to corporations that the rule is most frequently in-

Voked, for as is said in one case : " a corporation cannot see

or know anything except by the eyes or intelligence of its offi-

cers." ^ (Generally speaking, however, its application to both

Individuals and corporations is governed by the same limita-

tions, and it is therefore only necessary to note, in this sec-

tion, that subject to a few exceptions, notice to either a

stockholder 2 or a single director ^ of a coi'poration is not re-

garded as notice to the corporation. But if the director acts

as a member of the board in passing upon the matter concern-

Ing which he has notice, the corporation is charged with his

knowledge. " If the note is discounted by a bank, the mere

fact that one of the directors knew the fraud or illegality will

not prevent the bank from recovering ; but if the director who

has such knowledge acts for the bank, in discounting the note,

his act is the act of the bank, and the bank is aft'ectcd with

his knowledge."^ But if " the officer who has such knowledge

has also such connection with or interest in the subject-matter

of the transaction as to raise the presumption that he would

not communicate the fact in controversy, there is no imputa-

tion of notice to the corporation." ^

В§ 147. Notice of sub-agent.

Does notice to a sub-agent stand upon the same footing as

notice to an agent ? The question was fully discussed in the

leading case of Hoover v. }Vise^ and the decision reached by

a divided court was that if the agent has power to apj)oint a

Union Gold Min. Co. v. Rocky INIt. N. B., 2 Colo. 248; Smith i-. Water

Comin., 38 Conn. 208.

1 Factors, &c. Co. v. Maine Dry Dock, &c. Co., 31 La. An. 149.

2 Housatonic Bk. v. Martin, 1 Mete (Mass.) 294; Union Canal Co. v.

Loyd, 4 W. & S. (Penn.) 393.

3 Powles V. Page, 3 C. B. 16; Westfield Bank v. Cornen, 37 N. Y. 320;

Fairfield Sav. Bk. v. Cliase, 72 ^le. 22G ; Farrel Foundry Co. v. Dart, 26

Conn. 370.

4 Bank v. Cushman, 121 Mass. 490. See also U. S. Bank v. Davis, 2

Hill (N. Y.), 451 ; Union Bank v. Campbell, 4 Humph. (Tenn.) 394.

^ Hatch V. Ferguson, 66 Fed. Rep. 668 ; Innerarity v. Bank, 139 Mass.

332.

В« 91 U. S. 308.

192 PRINCIPAL AND THIRD PARTY,

sub-agent notice given to the sub-agent is notice to the j)rinci-

pal,but if the agent has not power to appoint a sub-agent then

notice to the sub-agent is not notice to the principah The

dissent in this case was, perhaps, rather on the ground that

the agent had authority to appoint the sub-agent than that the

rule of law enunciated by the majority was incorrect. The

case is a typical one. A principal employs an agent to make

a collection or to transact some other business which may re-

quire the assistance of an attorney at law. The agent em-

ploys an attorney, and the notice with which the principal is

sought to be charged is given to or acquired by the attorney.

Hoover v. Wise holds that this is not notice to the principal

since the attorney is the agent of the agent and not of the

principal. As Mr. Justice Miller points out in a dissenting

opinion, " the effect of the decision is, that a non-resident

creditor, by sending his claim to a lawyer through some indi-

rect agency, may secure all the advantages of priority and

preference which the attorney can obtain of the debtor, well

knowing his insolvency, without any resi)onsibility under the

Bankrupt Law." The view taken in this cRvSC by the majority

has not generally prevailed. It may be said to be the general

rule that, where the business confided to the agent reasonably

contemplates that the assistance of an attorney at law may be

required, the agent has authority to appoint an attorney, and

notice to the attorney will be notice to the principal.^ So if,

by custom, as in the case of insurance agencies, it is usual to

appoint sub-agents, notice to such a sub-agent will be notice

to the principal.^

1 Bates V. American Mortgage Co., 37 S. C. 88; Davis v. Waterman,

10 Vt. 520; Ryan v. Tudor, 31 Kans. 360.

2 Arff V. Star Fire Ins. Co., 125 N. Y. 57; Carpenter v. German Am.

Ins. Co., 135 N. Y. 298.

TORTS AND FKAUDS OF AGENT. 193

CHAPTER XIII.

TORTS, FRAUDS, AND MISREPRESENTATIONS OF AGENT.

1. ComHtuenf s Llahilittj for Torts of Representative.

В§ 148. Distiuction between servant's torts and agent's torts.

A representative may render his constituent liable in tort

for the breach of an antecedent obligation fixed by the law.^

Such breach gives rise to an action ex delicto for damages.

Torts are the chief subject-matter of the law of master and

servant. A servant is employed to perform mechanical or

operative acts for his master. While so engaged he may

negligently or wilfully injure third persons. In such case it