Farnsworth v. Hazelett, 35646.

• Decision Date: 24 June 1924
• Docket Number: No. 35646.,35646.
• Citation: 197 Iowa 1367,199 N.W. 410
• Parties: FARNSWORTH v. HAZELETT.
• Court: Iowa Supreme Court

197 Iowa 1367

199 N.W. 410

FARNSWORTH

v.HAZELETT.

No. 35646.

Supreme Court of Iowa.

June 24, 1924.

Appeal from District Court, Muscatine County; A. P. Barker, Judge.

Action at law aided by attachment to recover money loaned by the plaintiff. Defendant admitted the debt, but denied it was due and filed a counterclaim for damages caused by an alleged false, wrongful, and malicious attachment. The jury returned a verdict in favor of the defendant, with a special finding that the attachment issued was maliciously sued out by the plaintiff, and awarded exemplary damages in the sum of $100. Judgment was entered by the court against the plaintiff, but within the time fixed by the court a motion for new trial and arrest judgment was filed, which motion was sustained. From this ruling defendant appeals. Affirmed.Thompson & Thompson and G. Allbee, all of Muscatine, for appellant.

Hanley & Hanley, of Muscatine, and Cook & Balluff, of Davenport, for appellee.

DE GRAFF, J.

The specific problem in this case, reduced to its simplest terms, is to determine whether the plaintiff is bound by the knowledge which came to her attorney under the circumstances disclosed by the record. In general terms, the question is, When and under what circumstances is a principal obligated by the knowledge which is acquired by such agent?

The trial court sustained plaintiff's motion for a new trial on the ground that there was error in admitting certain testimony regarding the knowledge acquired and possessed by plaintiff's attorney, Jesse Fishburn, and in instructing the jury that such knowledge was by law imputed to the plaintiff. Defendant complains of this ruling, and contends that the evidence was properly admitted and that the instruction correctly states the law applicable to the evidence.

The instruction in question reads as follows:

“There is evidence in the case as to steps taken by Mr. Jesse Fishburn, an attorney, in connection with the collection of plaintiff's claim against defendant. If you find from the evidence that Mr. Fishburn was plaintiff's attorney and attempted to collect this demand from defendant, any information acquired by him in relation to defendant's property, his disposition of it, or intention in regard to it, while he was acting as her attorney, would bind her, whether he communicated it to her or not.”

The facts relating to this phase of the case disclose that plaintiff employed Jesse Fishburn as her attorney to collect a debt admittedly owing her by the defendant, and upon which this action is predicated. His services were engaged some time in October or November, 1920, and on November 9th he wrote the defendant requesting that he call at the attorney's office to settle the claim and that upon refusal so to do suit would be instituted. Upon receipt of this letter, defendant, Hazelett, went to the office of the attorney and there discussed the financial situation existing between plaintiff and defendant, with the view of effecting an amicable settlement. Subsequent visits and negotiations for settlement were had until a few days prior to the commencement of this suit. On or about the 20th day of November, 1920, plaintiff's attorney went to the office of the American Savings Bank and there discussed with its vice president, J. L. Giesler, the Farnsworth claim against the defendant, and the matter of obtaining a loan of $1,200 with which to pay the plaintiff. Mr. Giesler had a conversation with the defendant, Hazelett, and it was understood that the bank would do what it could to effect a settlement. In a later conversation, in which plaintiff's attorney, the defendant, Hazelett, and Giesler took part, it was agreed that the bank would loan defendant the sum of $1,200, which would enable defendant to settle plaintiff's claim. After the consultation defendant went home and consulted his parents, and thereafter defendant told plaintiff's attorney that he would pay the $1,200 with interest. Shortly after these negotiations between plaintiff's attorney and the defendant, Attorney Fishburn became ill and was confined to his home. About this time plaintiff was informed of the disappearance of certain of defendant's property, and that a note which she had indorsed had been transferred by the defendant. It was then that plaintiff attempted to consult with her attorney, and was advised by one of his household that he was ill and unable to see her or to do anything about the matter. This happened on Saturday, and she forthwith consulted another attorney, and on the following Monday this action aided by attachment was instituted by plaintiff.

On this state of facts the trial court admitted evidence over plaintiff's objection as to information acquired by Fishburn in the course of the negotiations conducted by him, and it was upon this evidence that the instruction as quoted is based. It is not claimed that Fishburn actually did communicate to his client any of the facts elicited during the negotiations. The proposition involves the doctrine of imputed notice or knowledge, and it is to this principle we now give attention.

[1][2][3][4] The relation of attorney and client is predicated on the doctrine of agency or representation. A person is legally obligated either (1) because he has consented to be, or (2) because the law, by reason of public policy, thinks it best that he should be. In the employment of an agent and the creation of obligations thereunder, it must be borne in mind that the principal must take account, not only of his own will, but also of the will of the agent, and, within certain limitations, not only his own knowledge, but the knowledge of the agent. Historically speaking, the doctrine of representation or agency is bottomed on the fiction of identity, the unity of principal and agent. The general notion is expressed in the maxim, “Qui facit per alium facit per se.” No one questions the legal identity of principal and agent, since equity and good conscience require that one who acts through an agent and avails himself of the benefits of his agent's participation should be charged with his agent's knowledge as well as his acts. In the last analysis, it is a rule of public policy. As stated by Justice Holmes:

“Every important principle which is developed by litigation is in fact and at bottom the result of more or less definitely understood views of public policy, most generally, to be sure, under our principles and traditions, the unconscious result of instinctive preferences and inarticulate convictions, but none the less traceable to views of public policy.” Holmes, The Common Law, p. 35.

The general rule that knowledge of the attorney is chargeable to the client cannot be questioned. This rule is sometimes spoken of as a conclusive presumption of law, but this is a mere matter of terminology. A conclusive presumption is a substantive rule of law, and when the basic facts are before a court the rule, like any other legal principle, finds application. In the evolution of such a rule, we find that in its origin it was based on presumption; for example, that a child under seven years cannot commit a felony; that a right by prescription presumes a lost grant. Referring to the instant rule, it is said in note, 4 A. L. R. 1593:

“The presumption that the agent has communicated the facts known to him is as conclusive as the presumption that the principal remembers facts brought home to him personally. It cannot be rebutted by showing that the agent did not in fact impart such information, at least, the client is chargeable in the same manner as if personal notice had been communicated to him. In other words, it is one of those anomalies of the law known as a conclusive presumption. More accurately speaking, it is not a presumption at all; it is a rule of law which charges a client with the knowledge possessed by his attorney. This is sometimes called constructive notice; other courts * * * prefer to characterize it as imputed notice.”

The viewpoint of Dean Wigmore finds expression in these words:

“In strictness, there cannot be such a thing as a ‘conclusive presumption.’ Whenever from one fact another is conclusively presumed, in the sense that the opponent is absolutely precluded from showing by any evidence that the second fact does not exist, the rule really provides that, where the first fact is shown to exist, the second fact's existence is wholly immaterial for the purpose of the proponent's case; and to provide this is to make a rule of substantive law, and not a rule apportioning the burden of persuading as to certain propositions or varying the duty of coming forward with evidence. The term has no place in the principles of evidence (although the history of a ‘conclusive presumption’ often includes a genuine presumption as its earlier stage), and should be discarded.”

To the same effect it is said:

“It may well be urged that all of these so-called conclusive presumptions may be more properly described as substantive rules of law than as conclusive presumptions of law.” 1 Jones' Evidence, p. 23.

The rule is not technical or arbitrary, but is applied when the conditions upon which it is predicated are shown to exist. The so-called exceptions to the general rule call for the consideration of facts and circumstances other and different from what must be established in order to invoke the general rule, but it is not correct to say that the rule or its so-called exceptions are mere rebuttable presumptions. These exceptions are also based upon “more or less definitely understood views of public policy.” Fictions and presumptions against the actual facts should be indulged only when some substantial advancement of the ends of justice are to be attained. If the natural or necessary consequence of a rule is productive of...