Fairfield Sav. Bank v. Chase

• Decision Date: 13 May 1881
• Citation: 72 Me. 226
• Parties: FAIRFIELD SAVINGS BANK v. ISAAC CHASE.
• Court: Maine Supreme Court

72 Me. 226

FAIRFIELD SAVINGS BANK v. ISAAC CHASE.

Supreme Judicial Court of Maine.

May 13, 1881

ON EXCEPTIONS.

Writ of entry to recover possession of a certain parcel of land described in a mortgage from John W. Chase to the plaintiff corporation, dated the tenth day of March, 1876, and duly recorded on that day. The defendant seasonably disclaimed as to one undivided half of the demanded premises, but claimed title to the other undivided half. The plea was the general issue as to the undivided half claimed by the defendant. The defendant based his claim to one undivided half upon a deed from John W. Chase to him, dated the eighth day of March 1876, but not recorded till the twenty-eighth day of March 1876.

The attorney who wrote and took the acknowledgment of both the deed and the mortgage, was at that time a trustee of the plaintiff corporation. It was not claimed at the trial that any other officer of the bank had any knowledge of the existence of the deed to the defendant, at the time of the execution or recording of said mortgage.

The court, for the purpose of settling a question of fact, ruled pro forma, that if the attorney, at the time of the execution of the mortgage, had knowledge that the deed had been executed and delivered by John W. Chase to the defendant, this would be sufficient notice to the plaintiff corporation to overcome the legal effect of the fact that the mortgage was recorded before the deed, and that, if the jury should find that the attorney had such knowledge, they should return a verdict for the defendant. The jury, under this instruction, returned a verdict for the defendant.

To the foregoing instructions the plaintiff excepted.

Brown and Howard, for the plaintiffs, cited: 2 Daniels on Neg. Insts. 49; Louisiana State Bank v. Ellory, 16 Mart. 87; Cross v. Smith, 1 M. & Sel. 545; stat. 1877, c. 218 § § 2, 4; Commercial Bank v. Cunningham, 24 Pick. 270; 22 Pick. 24; 14 Mass. 180; 1 Met. 294; 7 Gray 465.

Walton and Walton for the defendant, claimed that Brown was acting for the bank in drawing the mortgage from John W. Chase, and that his knowledge of the prior deed was a sufficient notice to the bank, and cited: Jones v. Bramford, 21 Iowa 217; Musgrove v. Brouser, 5 Oreg. 313; 3 Wash. R. P. 3d ed. 283; The Distilled Spirits, 11 Wall. 356; Hovey v. Blanchard, 13 N.H. 145; May v. LeClaire, 11 Wall. 217; 1 Pars. Contr. 5th ed. 77; Reed v. Ashburnham R. R. Co. 120 Mass. 47.

PETERS J.

A notice to a bank director or trustee, or knowledge obtained by him, while not engaged either officially or as an agent or attorney in the business of the bank, is inoperative as a notice to the bank. If otherwise, corporations would incur the same liability for the unofficial acts of directors that partnerships do for the acts of partners; and corporate business would be subjected oftentimes to extraordinary confusion and hazards. Carry the proposition, that notice to a director is notice to the bank, to its logical sequence, and a corporation might be made responsible for all the frauds and all the negligences, pertaining to its business, of any and all its directors not officially employed. Any one director would have as much power as all the directors.

A single trustee or director has no power to act for the institution that creates his office, except in conjunction with others. It is the board of directors only that can act. If the board of directors or trustees makes a director or any person its officer or agent to act for it, then such officer or agent has the same power to act, within the authority delegated to him, that the board itself has. His authority is in such case the authority of the board. Notice to such officer or agent or attorney, who is at the time acting for the corporation in the matter in question, and within the range of his authority or supervision, is notice to the corporation. Abbott's Trial Ev. 45, and cases in note; Fulton Bank v. Canal Co. 4 Paige 127; La Farge Fire Ins. Co. v. Bell, 22 Barb. 54; National Bank v. Norton, 1 Hill (N. Y.), 578; Bank of U. S. v. Davis, 2 Hill (N. Y.), 454; North River Bank v. Aymar, 3 Hill (N. Y.), 263; Ins. Co. v. Ins. Co. 10 Md. 517; Bank v. Payne, 25 Conn. 444; Farrell Foundry v. Dart, 26 Conn. 376; Smith v. South Royalton Bank, 32 Vt. 341; Washington Bank v. Lewis, 22 Pick. 24; Commercial Bank v. Cunningham, 24 Pick. 270; Housatonic Bank v. Martin, 1 Met. 308; 1 Pars. Con. *77; Story Agen. § 140; South. Law Rev. N. S. vol. 6, p. 45; Hoover v. Wise, 91 U.S. 308.

Another question arises in the case before us. It appears that Brown's knowledge of a previous conveyance was acquired anterior to his employment by the bank, if employed by the bank at all, and not during or in the course of his employment on their account. The question is, whether a principal is bound by knowledge or notice which his agent had previous to his employment in the service of the principal.

Upon this question the authorities disagree. The negative of the question has been uniformly maintained in Pennsylvania and some other of the states. In the late case of Houseman v. The Building Association, 81 Penn. St. 256, it was said, that " notice to an agent twenty-four hours before the relation commenced is no more notice than twenty-four hours after it has ceased would be." But we think, all things considered, the safer and better rule to be that the knowledge of an agent, obtained prior to his employment as agent, will be an implied or imputed notice to the principal, under certain limitations and conditions, which are these: The knowledge must be present to the mind of the agent when acting for the principal, so fully in his mind that it could not have been at the time forgotten by him; the knowledge or notice must be of a matter so material to the transaction as to make it the agent's duty to communicate the fact to his principal; and the agent must himself have no personal interest in the matter which would lead him to conceal his knowledge from his principal, but must be at liberty to communicate it. Additional modification might be required in some cases.

These elements appearing, it seems just to say that a previous notice to an agent is present notice to the principal. The presumption, that an agent will do what it is his right and duty to do, having no personal motive or interest to do the contrary, is so...