Case Name: Bank of Commerce v. Hoeber, Appellant
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 1885-10
Citations: 88 Mo. 37
Docket Number: 
Parties: Bank of Commerce v. Hoeber, Appellant.
Judges: All concur.
Reporter: Missouri Reports
Volume: 88
Pages: 37–44

Head Matter:
Bank of Commerce v. Hoeber, Appellant.
1. Composition Agreement: preference : knowledge of attorney, when imputable to PRINCIPAL. An attorney of a debtor, employed to effect a composition with the latter’s creditors, gave his per. sonal promise in writing, and afterwards paid to one of the creditors a sum in excess of the amount agreed on and accepted by the other creditors. Held (1) That the knowledge of the attorney in the matter of giving such preference was, in law, the knowledge of the principal, and (2) that the failure of the attorney to disclose to another creditor the fact of such preference was the concealment of a material fact and invalidated the composition.
•2. Practice : appeal from court of appeals. In a cause appealed from a court of appeals, the judgment, if right, will be affirmed, although said court may have assigned other than the correct reasons therefor,
Appeal from SI. Louis Coiort of Appeals.
Abbirmed.
Broadhead & Ilaeussler, D. II. McIntyre and Cecil V. Scott for appellant.
(1) The court below erred in assuming that the defendant was responsible for the unknown and unauthorized promise made by Dickson to Levy & Brother. Laurence t>. Clark, 36 N. Y. 128; Carroll v. Shields, 4 E. D. Smith, 466 ; Wyllie t>. Poller, 32 L. J. Oh. 782 Jones v. Smith, 12 L. J. Oh. 382 ; Nat. Ins. Co. v. Minch, 53 N. Y. 144 ; Barnes v. Trenton, etc., 27 N. J. Eq_. 33. (2) The principal will not be affected by notice to the agent of any facts outside of the scope of his agency. Roach V. Kerr, 18 Kans. 529 ; Adams Express Co. v. Trego, 35 Md. 47; Congar v. Ry. Co., 24 Wis. 157; Smith v. Water Commissioners, 38 Conn. 208; Wells x. Am. Exp. Co. 44 Wis. 342 ; Mound City Life Ins. Co. v. Twining, 19 Kans. 380; Tate v. Hopkins, 7 Mo. 420; Taylor v. Labaume, 14 Mo. 572 ; 1 Mo. 205. (3) The contract of release was valid from the Bank of Commerce to Hoeber, unless Hoeber, either by himself, or by his authorized agent, practiced a fraud upon the bank. Hoeber did not do it himself. Neither did he do it by his authorized agent, for the act of Dickson could not be called the act of Hoeber by another, unless that other was acting for him. The act of Dickson was not for him, but against him. It was entirely outside of his authority, express or implied, therefore, not binding. It never became binding on Hoeber, because not being binding on him at the time, it could only become so by ratification. This ratification never- was given. Therefore, it was no act of Hoeber, either by himself or by another. (4) Ratification can only occur where it is accompanied with a full knowledge of all the facts. 1 Pars. N. & B. 101; Story on Agency, secs. 243-324; Nixon v. Palmer, 8 N. Y, 398 ; Whitford V: Monroe, 17 Md. 135. (5) Fraud will not be presumed where all the. facts consist as 'well with honesty and fair dealing as they do with an intention to defraud. Picot n. Bates, 47 Mo. 392 ; Rumbolds n. Parr, 51 Mo. 592; Dallam n. Renshaw, 26 Mo. 533 ; Ames n. Gilmore, 59 Mo. 531; Kitchen v. Cape Girardeau, 59 Mo. 514 ; Henderson n. Henderson, 55 Mo. 533 ; Kerr on Fraud and Mistake, 384. The agent, and not the principal, is responsible to third party for positive malfeasance. Buis n. Cook, 60 Mo. 391. The act must be within the scope of the authority committed to the agent. Story on Agency, sec. 165.
j Albert Arnstein for respondent.
(1) The only consideration which supports a release of the debtor from the payment in full of his liabilities, is the bona fide engagement of the creditors, one contracting with the other, and each with all, to give up the same prorate of their respective demands. Sage n. Valentine, 22 Minn. 102; 1 Smith’s Lead. Cas. 443 ; Forsyth on Composition, 104-137; Story’s Eq. secs. 378-9 ; Kahn n. Gamberts, 9 Ind. 430; Breóle n. Cole, 4. Sandf. (S. C.) 79. (2) Where a signature to a composition agreement is obtained by means of a secret promise .of preference, the preference vitiates the consideration for the release by the other creditors and the composition is void. Bastían v. Dreyer, 7 Mo. App. 332 ; Hefler v. Calin, 73 111. 296; Sage n. Valentine, 22 Minn. 102; Reay n. Richardson, 2 C. M. & R. 422; Page n. Bent, 2 Met. 375 ; Frost n, Gage, 6 Allen, 50; Case n. Gerrish, 15 Pick. 50. (3) The composition having been made with a secret preference to James Levy & Brother is void, even though Hoeber was ignorant of the preference. Holland n. Palmer, 1 B. & P. 95 ; Robson n. Caize, 1 Doug. 228 ; Solinger n. Karle, 82 N. Y. 393, (4) The knowledge and acts of an agent acquired in a performance by him in the course of his agency affect the principal. Harney v. ATberry, 12 Cent. L. J. 39; Jeffrey n. Bigelow, 13 Wend. 518; Loch v. Stearns, 1 Met. 518; Levassee v. WasJiburne, 50 Wis. 200; Crane v. JEhmter, 28 N. Y. 389. (5) Dickson’s testimony was properly admitted. “Privileged communications” extend only to wliat passes between the attorney and his client. What the attorney does with a third person while acting as agent for his client is not within the rule. Graham v. O'Fallon, 4 Mo. 333 ; Crosby v. Berger, 11 Paige, 377 ; BumsuTl v. Terry, 51 Gra. 186 ; In re Beilis, 3 Ben. 386.

Opinion:
Rat, J,-
In the trial court the jury found a verdict for the plaintiff, and there was judgment accordingly; from which the defendant appealed to the St. Louis coui't of appeals, where the judgment of the circuit court was affirmed, and the defendant again appealed to this court. The case is reported in 11 Missouri Appeal Reports, 475. The facts of the case sufficiently appear in the opinion of that court. Upon examination of that opinion, the reasoning and conclusions of that court appear to be well sustained by the authorities cited. The briefs of counsel in this court furnish no sufficient reason for a reversal, and for that reason its judgment is affirmed.
All concur.