Sec. 264. Notice To Agent As Notice To Principal

The principal is chargeable with all the knowledge the agent possesses in the transaction of the business he has in charge.18 Or as another case puts it, a principal is chargeable with notice of all such facts as come to his agent's knowledge, whilst acting within the scope of his agency.19

13 Nat. Life Ins. Co. v. Allen, 116 Mass. 400 (1874), (citing Huntington v. Knox, 7 Cush. 371, 374; Exchange Bk. v. Rice, 107 Mass. 37. 43).

14Davis v. Lynch, 31 Misc. 724 (N. Y. 1900).

15City Trust. Safe Dep. & Surety Co. v. American Brewg. Co., 70 App. Div. 511 (N. Y. 1902) ; aff'd, 174 N. Y. 486 (1903) ; Mississippi Valley Const. Co. v. Abeles, 112 S. W. 894 (Ark. 1908).

16Wasserman v. Bacon, 80 App. Div. 505 (N. Y. 1903).

17See Sec. 46 supra.

When the members of a partnership are appointed agents, they are joint agents. Notice to one of two or more joint agents is notice to all.20

"In an action between vendor and vendee, knowledge possessed by either the principal or the agent is, respectively, imputable to each other."21 The rule rests upon the duty of the agent to disclose to the principal all the-material facts coming to his knowledge with reference to the subject of his agency and upon the presumption that he has discharged that duty. "An agent owes a duty to his principal to disclose to him any information which he may have which may be relevant to that agency. The law conclusively presumes that the agent makes such disclosure, unless the agent has some private purpose to accomplish, the accomplishment of which would be imperiled thereby."22

Sec. 265. When Notice To Agent Is Not Notice To Principal

The presumption as to disclosure does not always arise, for there are several exceptions.23 When the agent has no legal right to disclose a fact to his principal, or he is engaged in a scheme to defraud his principal, the presumption does not prevail.24

18 Adams v. Mills, 60 N. Y. 539 (1875).

19 Kauffman v. Robey, 60 Tex. 310 (1883), (citing Jones v. Banford. 21 Iowa 217; Fulton Bk. v. Canal Co., 4 Paige 127; Ewell's Evans on Agency, 164; Le Neve v. Le Neve, 2 Lead. Cases in Eq.. pt. 1. 167, 168).

20 Whlttenbrock v. Parker, 102 Cal. 100 (1894), (citing Wade on Law of Notice, Sec. 681; Fulton Bk. v. N. Y., etc.. Canal Co., 4 Paige (N. Y.) 127; North River Bk. v. Ayman, 3 Hill (N. Y.) 262; Bank of U. S. v. Davis, 2 Hill 451; Natl. Security Bk. v. Cushman. 121 Mass. 490).

21 Mayer v. Dean, 115 N. Y. 560 (1889).

22 Crooks v. People's Natl. Bk., 72 App. Div. 335 (N. Y. 1902). See also Sec. 248 supra.

23 Henry v. Allen, 151 N. Y. 1 (1896).

24 Id. ; Kauffman v. Robey. 60 Tex. 311 (1883), (citing Winchester v. Susquehanna R. Co., 4 Md. 231; La Farge Ins. Co. v. Bell, 22 Barb. (N. Y.) 54; McCormlck v. Wheeler. 36 111. 114).

In Pine Mountain Iron Co. v. Bailey, 94 Fed. Rep. 258 (1899), the court said: " The rule that notice to the agent is notice to the principal has an exception as well established as the rule itself. It is that when the agent acts for himself, in his own interest, and adversely to his principal * * * neither notice to nor the knowledge of the agent can be lawfully imputed to the principal.25 The reason of the general rule is that it is the duty of the agent to communicate to his principal the facts relative to any transaction in which he acts on his behalf, and that the law presumes that he has discharged his duty. But when the nominal agent commences to act in his own interest, and adversely to his principal, the presumption no longer obtains that he will communicate to him facts which might prevent the consummation of the negotiation which he is conducting on his own behalf, and the counter presumption that he will conceal them arises. As the reason for the rule no longer exists, the rule ceases to apply, and the exception prevails."

In Benedict v. Arnoux, 154 N. Y. 728 (1897), it was claimed that the knowledge of the agent was imputable to the principal. The court said: "This is true to a limited extent; so long as the agent acts within the scope of his employment in good faith, for the interest of his principal he is presumed to have disclosed to his principal all the facts that come to his knowledge as agent; but just as soon as the agent forms the purpose of dealing with his principal's property for his own benefit and advantage, or for the benefit and advantage of other persons who are opposed in interest, he ceases, in fact, to be an agent acting in good faith for the interest of his principal and his action thereafter based upon such purpose is deemed to be in fraud of the rights of his principal, and the presumption that he has disclosed all the facts that have come to his knowledge no longer prevails." The court then quotes from Henry v. Allen, 151 N. Y. 1 (1896). But "a principal who knows that his agent is also acting as agent for the party adversely interested in a transaction with him, and yet consents that he may act as his agent, is estopped from denying the notice and knowledge which the agent has during the negotiation." 26

25 Citing American Surety Co. v. Pauly, 170 U. S. 133, 156; 18 Sup. Ct. 552; Frenkel v. Hudson. 82 Ala. 158; 2 So. 758; Waite v. City of Santa Cruz. 89 Fed. 619, 630; Barnes v. Gas Light Co.. 27 N. J. Eq. 33. 37: Winchester v. B. B. Co., 4 Md. 231, 241 ; Davis Improved Wrought Iron Wagon Wheel Co. v. Davis Wrought Iron Wagon Co., 20 Fed. 699, 702; Thomson-Houston Electric Co. v. Capital Elec. Co., 56 Fed. 849, 853; Commercial Bank v. Cunningham, 24 Pick. 270, 276; Mechem on Agency, Sec. 723.