Court Opinion

ID: 3959383
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:20:02.485723+00
Date Added: 2024-06-11T13:53:07.949758
License: Public Domain

I do not regard this as a sound decision. I therefore enter my dissent.
It is evident that Walker's interest in the transaction was adverse to that of the bank, his principal, to which he owed scrupulous fidelity and open dealing. The effect of the transaction was to divert a security — the deposits — which the bank had for the debts of the millinery company, for the private advantage of Walker and Goldstein. This is obvious, since the agreement would not have been proposed but for the benefit of Walker and Goldstein which, at the expense of the bank, would ensue from it. One acting for his own private interest and so as to obtain an advantage of his principal, can not pretend to act for his principal; and for the sake of honesty the law, in such a transaction, refuses to regard him as the representative of his principal. For the same reason it refuses to permit others who know the facts and who join with the pretended agent in the transaction for their own advantage at the expense of the principal, to treat him as an agent of the principal. They can not in their own interest collude with the so-called agent for the betrayal of the principal's interest, and then say, — with the fruits of the conspiracy, obtained from the principal, in their hands or applied to their uses — that the unfaithful action of the agent was the action of the principal.
It was to the interest of Walker not to communicate the transaction to the bank. It was to his advantage to remain silent, as it appears he did. Goldstein must have known this. It was equally to his interest that Walker should remain silent. He was helping Walker to obtain the bank's money for his own benefit in a character of transaction which *Page 573 
he was bound to know the disinterested officials of the bank would repudiate if they knew of it. He was an active participant in the transaction, a direct beneficiary of it. He knew that it was necessarily prejudicial to the bank for its security for other debts to be diverted for the protection of his and Walker's liability upon this debt. He profited by the transaction at the expense of the bank. He can advance no claim of innocence. He is, therefore, in no position to say that Walker's knowledge was the bank's knowledge.
It does not appear from the certificate what the interest of Goldstein and Walker in the millinery company was, but it may be assumed that it was not philanthropic. It little matters what their interest was. They obtained the bank's money, and are responsible for its return.
That Walker alone acted in the pretended interest of the bank does not affect the question. Nor does it alter the result. Walker did not have the exclusive management of the bank. It does not appear that the bank did not have other officers and a board of directors as required by law, and which it will be presumed, therefore, it did have, — disinterested officers and directors. It is not believable that the disinterested representatives of the bank would have approved the transaction had they known the facts. That no real representative of the bank acted with Walker could not and did not qualify him as its representative. His self-interest, under the facts pleaded, disqualified him absolutely. Goldstein's knowledge of Walker's self-interest, his equal participation in the transaction and his equal appropriation of its benefits with that knowledge, all place him in the attitude of active collusion with Walker for the sacrifice of the bank's interest, and as strongly deny him any right to say that Walker was its representative. He was a party to the wrong done the bank by the transaction, and should not be allowed to derive any advantage from it. Certainly, under such circumstances he will not be permitted to rely upon a means of notice which he was bound to know did not lead to the bank itself through its disinterested officers or directors.
The rule which imputes to the principal the knowledge of his agent is for the benefit of innocent third parties. It is their innocence which furnishes the reason for the rule. There are instances where, to avoid wrong to innocent persons, the agent's self-interest in the transaction where be, alone, acts for the principal, is held not to vary the operation of the rule. Morris v. Georgia, etc., Co.; Bank v. Burns, and Brobston v. Penniman, cited from other jurisdictions as supporting this decision, are cases of that kind. In each of them, the persons in whose favor the rule was allowed to operate, were innocent of the agent's wrong to his principal and not the beneficiaries of it. A loss would have been visited upon persons not at fault had the principal not been held to the agent's knowledge. Such cases are maintainable under the maxim that where one of two innocent persons must suffer for the wrong of another, the loss will be visited upon him who makes possible the infliction of the wrong. They furnish no authority upon the question here. *Page 574 
As I have endeavored to emphasize the rule which charges the principal with the knowledge of the agent is for the protection of innocent third persons. It can not be availed of by those who use, or collude with, the agent in the perpetration of a fraud upon the principal.