Hoover, Assignee v. Wise Et Al

• Decision Date: 01 October 1875
• Citation: 23 L.Ed. 392,91 U.S. 308
• Parties: HOOVER, ASSIGNEE, v. WISE ET AL
• Court: U.S. Supreme Court

91 U.S. 308

23 L.Ed. 392

HOOVER, ASSIGNEE, v. WISE ET AL.

October Term, 1875

ERROR to the Supreme Court of the State of New York.

The facts are stated in the opinion of the court.

Submitted on printed arguments by Mr. J. H. B. Latrobe for the plaintiff in error, and Mr. W. W. Boyce, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

This action is brought by an assignee in bankruptcy to recover back a sum of money collected from the bankrupt after the occurrence of several acts of bankruptcy.

Under the practice of the State of New York the case was referred to a referee, upon whose report judgment was entered at the special term in favor of the plaintiff. From this judgment an appeal was taken by the defendants to the general term.

Upon the hearing at the general term this judgment was reversed, and a new trial was ordered.

When a judgment is reversed, and a new trial ordered, two modes of proceeding are open to the defeated party in the practice of the State of New York. He can accept the terms of the order, and take a new trial in the court below. If he supposes that he can make a better case upon the facts than in contained in the report of the referee, this will be his proceeding; if he can make no improvement in this respect, or if he is satisfied to risk his case upon the facts as found, he may take an appeal to the Court of Appeals from the order granting a new trial. To make this appeal effectual, his notice of appeal must contain 'a consent on the part of the appellant, that, if the order appealed from be affirmed, judgment absolute shall be rendered against him.' Code, sect. 11. The order for a new trial thus becomes a final judgment in the case.

The latter course was adopted in the present instance. The plaintiff appealed to the Court of Appeals, giving the stipulation required for that purpose. The Court of Appeals affirmed the judgment of the general term, and remitted the record to the Supreme Court, that the judgment might be there entered and enforced. From this judgment, entered upon that remittitur, the present writ of error is brought.

It appears from the record that an account or money demand was delivered by its owners to Archer & Co., a collecting agency in the city of New York, and received by them, with instructions to collect the debt, and with no other instructions; that this agency transmitted the claim to McLennan & Archbold, a firm of practising lawyers in Nebraska City. Several acts of bankruptcy had been committed by Oppenheimer when Mr. McLennan persuaded him to confess judgment for the debt thus sent to him. Proceedings in bankruptcy were instituted against Oppenheimer within four months after such confession, and were prosecuted to a decree of bankruptcy. At the time of receiving the confession McLennan was well aware of the insolvency of Oppenheimer, and that the confession was taken in violation of the provisions of the Bankrupt Act.

The money collected was remitted to the collection agents in New York from whom he received the claim, but never paid by them to Wise & Greenbaum, the creditors.

When the debt in question was delivered to the collection agency in New York, it was so delivered, as testified by one of its owners, 'for collection.' 'Archer & Co.,' he says, 'were collection agents in New York. I gave them no directions except to try their best to collect it. They told me they would send it out (to Nebraska). I gave no other instructions.' 'The business of Ledyard, Archer, & Co. (he says), was to take claims for collection in different parts of the country, and, if necessary, have them sued,'

Mr. Archer, of the collection firm, testifies that he received the claim for collection; that he told the defendants, if sent on at once, he thought it could be collected; that the account was verified by one of the defendants, and sent by the witness to Mr. McLennan, a lawyer, at Nebraska City; that he afterwards told the defendants the account had been put in judgment, and that he hoped to make the money, or the greater part of it. When he made this communication he had McLennan's letter in his hand, and communicated it to the defendants. He further testified that the money had been received by him from McLennan, but had never been paid over to Wise & Co.

The referee held that the knowledge of the condition of the bankrupt by the attorneys residing in Nebraska, who took the confession of judgment, was the knowledge of the creditors in New York. The Supreme Court and the Court of Appeals adjudged otherwise, holding them to be the agents of Archer & co., and not of Wise & Greenbaum, the creditors. It is upon this point of difference that the case in now presented for decision.

The general doctrine, that the knowledge of an agent is the knowledge of the principal, cannot be doubted. Bk. v. Davis, 2 Hill, 451; Ingalls v. Morgan, 10 N. Y. 178; Fulton Bk. v. N. Y. & S., 4 Paige, 127.

It must, however, be knowledge acquired in the transaction of the business of his principal, or knowledge acquired in a prior transaction then present to his mind, and which could properly be communicated to his principal. The Distilled Spirits, 11 Wall. 356; Weeser v. Morgan, 10 N. Y. 178.

Neither can it doubted, that, where an agent has power to employ a sub-agent, the acts of sub-agent, or notice given to him in the transaction of the business, have the same effect as if done or received by the principal. Story on Ag., sects. 452, 454; Storrs v. City of Utica, 17 N. Y. 104; Boyd v. Vandenberg, 1 Barb. Ch. 273; Rourke v. Story, 4 E. D. Smith, 54; Lincoln v. Battle, 6 Wend. 475.

It is no answer to this liability to say that the act done by the agent was of a fraudulent character, and that the principal did not authorize the commission of a fraud. For a fraud committed by a partner or an agent the principal is not liable criminally; but he is liable in a civil suit if the fraud be committed in the transaction of the very business in which the agent was appointed to act. Story on Ag., sects. 452-54; Griswold v. Haven, 25 N. Y. 600, 602; 3 Ch. Com. L. 209; N. R. Bk. v. Aymar, 3 Hill, 262; Davis v. Bemis, 40 N. Y. 453, n.; Attorney-General v. Sidden, 1 Cromp. & Jer. 219.

Upon these general principles we find no difficulty. But the real question still remains: Was McLennan of Nebraska the agent and attorney of Wise & Company, the owners of the debt? or were Archer & Co., the collection agents, his principals? and was it to them only, and not to Wise & Co., that he stood in the relation of agent and attorney?

The evidence was uncontradicted in every particular. It became, therefore, as stated in the opinion of the Court of Appeals, a question of law, whether the evidence sustained the findings of the referee.

The rule of law is undoubted, that for the acts of a sub-agent the principal is liable, but that for the acts of the agent of an intermediate independent employer he is not liable. It is difficult to lay down a precise rule which will define the distinctions arising in such cases. The application of the rule is full of embarrassment. For a collection of the cases and illustrations of the doctrine, reference may be had to Story on Agency, sect. 454 and following.

Without attempting to harmonize or to classify the conflicting authorities, we think the case before us falls within a particular range of decisions, in which the preponderance is undoubted.

Among these are the following:——

In Reeves v. The State Bank of Ohio, 8 Ohio Stat. 465, the case was this: Reeves & Co. deposited for collection, in the Commercial Bank of Toledo, their draft for $500 on Buckingham & Co. of New York. The draft was forwarded to the American Exchange Bank in New York; and on the 21st of November, 1854, it was paid, and the amount credited to the Commercial Bank. On the 27th of the same month the Commercial Bank became insolvent, and its assets passed into the possession of the State Bank. Reeves & Co. sued the State Bank as the representative of the Commercial Bank, alleging that the latter bank was their agent, and that the money collected in New York for the latter bank on their draft belonged to them. In an elaborate and exhaustive opinion, in which all the cases, English and American, were reviewed, the Supreme Court of Ohio held, among other things, 1. That the Commercial Bank was responsible to Reeves & Co. for the conduct of the New York bank, and was liable to them for the amount of the draft immediately on its collection in New York. 2. That the New York bank was the agent of the Commercial Bank, and not the sub-agent of Reeves & Co. The action was sustained.

In Mackay v. Ramsay, 9 Clark & Fin. 818; 'M. employed R. & Co., bankers in Edinburgh, to obtain for him payment of a bill drawn on a person resident at Calcutta. R. & Co. accepted the employment, and wrote promising to credit M. with the money when received. R. & Co. transmitted the bill, in the usual course of business, to C. & Co. of London; and by them it was forwarded to India, where it was duly paid. R. & Co. wrote to M., announcing the fact of its payment, but never actually credited him in their books with the amount. The house in India having failed, it was held that R. & Co. were agents of M. to obtain payment of the bill; that, payment having been actually made, they became ipso facto liable to him for the amount received; and that he could not be called upon to sustain any loss from the conduct of the sub-agents, as between whom and himself no privity existed.' 'To solve the question,' says Lord Cottenham, 'it is not necessary to go deeper than to refer to the maxim, Qui facit per alium, facit per se. R. & Co. agreed, for a consideration, to apply for payment of the bill: they necessarily employed agents for this purpose, who received the amount. Their receipt was in law a...