Court Opinion

ID: 6577120
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:35:17.515733+00
Date Added: 2024-06-11T15:57:08.454466
License: Public Domain

Storrs, C. J.
It is unnecessary to examine the point made by the defendant on the trial, that the bills of exchange offered in evidence by the plaintiffs, were variant from those described in the special counts of the declaration, because we are of the opinion that the plaintiffs were entitled to recover, on the facts claimed to have been proved, under the general count, which embraced a claim for money had and received. Whatever may have been the decisions on this point elsewhere, (and there is much confusion in the cases on the subject,) we consider it to be settled, in this state, by the case of The Eagle Bank v. Smith, 5 Conn., 71.
As it is conceded that if the bills in question in this - suit were drawn, accepted and delivered to John F. Greene for the purpose claimed by the defendant, and were fraudulently appropriated by said Greene to a different purpose, the plaintiffs, if they had notice of such misappropriation when they discounted them, were not entitled to recover, the remaining *449question on this motion is, whether the plaintiffs are chargeable with such notice. The defendant claimed to have proved, and it must therefore be taken to be true, that Greene was an acting director of the plaintiffs’ bank when these bills were discounted by the plaintiffs, and for a period previously, extending back to the time when the paper was received by the plaintiffs, out of which those bills originated. No evidence was offered to prove that Greene was present at the meeting of the directors of the bank, when any of the notes in question, or of those out of which they originated, were received or discounted by the plaintiffs; and it must therefore be taken that he was not present at any of those meetings, since, if it were otherwise, it was a fact for the defendant to show. Nor was there any evidence offered to prove that Greene ever communicated to any other director, or to any officer or agent of the bank, any knowledge of the purpose for which any of the said bills had been drawn or accepted, or delivered to him, or any notice that they were made or delivered to him for any specific purpose whatever ; and it must therefore be also assumed that he never made any such communication, as there is not any presumption that he would do so, unless it was while the directors or officers of the bank were officially engaged in its business, and he was not present when any business in relation to the bills in question was transacted by the plaintiffs.
Under these circumstances, we are clearly of the opinion that the knowledge of Greene, in regard to the object and appropriation of the bills in question, is not to be considered as the knowledge of, or as notice to, the plaintiffs. The general rule on this subject is that notice of a fact to an agent is notice to the principal, if the agent has knowledge of it while he is acting for the principal in the course of the transaction which is in question. And this rule is applicable equally to corporations and natural persons. Hence, knowledge of a material fact imparted by a director of a bank to the board of directors at a regular meeting of them, is obviously notice to the bank. It has also been decided in some cases, that notice to either of the directors, while engaged in *450the business of the bank, is notice to the bank. Whether, however, the knowledge of a director, who is present at a meeting of the board of directors, when paper is discounted on his application and for his benefit, is, under the rule which has been stated, to be imputed to the bank, is a question on which there is a diversity of opinion, but one which it is unnecessary here to determine. Whether such knowledge should be treated as notice to the bank in that case, would probably depend on the question whether the director should be deemed to have been acting as a director and in behalf of the bank, when the transaction took place. And it is upon that point only, that the difference of opinion which has been alluded to, arose. In all of the cases where the question was whéther the principal was to be affected by the knowledge of his agent, the latter possessed such knowledge while he was acting for the former. There is none in which it has been held, or indeed claimed, that such knowledge would have that effect while he was not so engaged, nor can we conceive any good reason for the adoption of such a principle. In The Bank of the U. States v. Davis, (2 Hill, 451,) where it was claimed that the director was not acting as such in behalf of the bank while he had the knowledge by which it was sought to be affected, Ch. J. Nelson, in giving the opinion of the court, admits that, if that was the fact, such knowledge would not operate as notice to the bank; and for this he gives a most sensible and satisfactory reason. He says; “ I agree that notice to a director, or knowledge derived by him, while not engaged officially in the business of the bank, can not and should not operate to the prejudice of the latter. This is clear from the ground and reason upon which the doctrine of notice to the principal through the agent rests. The principal is chargeable with this knowledge for the reason that the agent is substituted in his place, and represents him in the particular transaction ; and as this relation, strictly speaking, exists only while the agent is acting in the business thus delegated to him, it is proper to limit it to such occasions.” This, in our opinion, is a correct principle, and has been often recognized. See Angell & *451Ames on Corp., § 305, 306, 307. Story on Agency, § 140 and notes. North River Bank v. Aymar, 3 Hill, 262. Louisiana State Bank v. Senecal, 13 Louis., 525. H. & Lee Bank v. Martin, I Metc., 294. Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige, 127.
Although it is obvious, it should perhaps be remarked, that the question involved in this case, is only how far a corporation is affected by the knowledge of one of its directors, when he has no authority to act for it, excepting what is derived from the mere fact of his being such a director, and does not apply to one where some special authority is conferred on a director, other than what he would have by virtue of his being such, in which case his knowledge, while acting under such special authority, would affect his principal to the same extent as that of any other agent acting in the business in which he is employed. Here there was no claim of any such special agency.
On the ground, therefore, that Greene was not present at the meeting of the directors, when the bills here in question were discounted, and never communicated to any of the directors or officers of the bank any knowledge in regard to them, we are of the opinion that a new trial ought not to be granted, and so advise the superior court.
In this opinion the other judges, Hinman and Ellsworth, concurred.
New trial not advised.