Opinion ID: 1248085
Heading Depth: 1
Heading Rank: 15

Heading: defense of due diligence

Text: Having concluded that the testimony of the Defendant Hullander purporting to show Plaintiffs' knowledge of the untruths and omissions was insufficient to that purpose and, in any case, was inadmissible, I proceed to the question of whether, in the language of the statute, the Defendants sustained the burden of proof that (they) did not know, and in the exercise of reasonable care could not have known of, the untruth or omission ... The showing of untruths and omissions referred to above, clearly shifted the burden to Defendants to show that they did not know and, in the exercise of reasonable care, could not have known of the untruths or omissions. Considering the record as a whole, I conclude that Defendants have manifestly failed to carry this burden of proof. Although not schooled in accounting, the Defendant Paul Hullander had general charge of the dealership, and the bookkeepers worked under his supervision. His testimony purporting to show that he told Plaintiffs of the untruths and omissions, while not admissible on the issue of Plaintiff's knowledge, strongly indicates that Mr. Hullander had knowledge of the untruth of matters warranted in the agreement. Moreover, under fundamental principles of South Carolina law, a master is liable for and is charged with knowledge of the acts and conduct of his servants operating within the scope of their employment. See cases collected at West South Carolina Digest, Master and Servant , Sections 303-305 and Principal and Agent , Sections 177 et seq. See also, 3 Am. Jur. (2d) Agency , Sections 273 et seq. In addition to the above finding that the knowledge of the servants was imputable to Mr. Hullander, I further find that Defendants have filed to sustain the burden of showing that they could not, in the exercise of reasonable care, have known of at least certain of the untruths or omissions that were contained in the representations and warranties made by the Defendants in the written agreement of August 18, 1974.