Bierce v. Red Bluff Hotel Co.

By the Court, Rhodes, J.: It was a material issue in this case, whether the plaintiffs took the note and mortgage in suit, with notice that they were made on a settlement between Byers, the plaintiffs’ assignor, and the Red Bluff Hotel Company, in respect to a certain contract theretofore entered into between them, and that such contract had been assigned, or pledged, by Byers to Doll & Simpson before such settlement, and was held by them when the settlement was made. The finding upon that issue was as follows : “ It was stipulated, in open Court, by the attorneys of the Red Bluff Hotel Company and Gr. W. Hoag, that they would waive the defense that the note was not due ; and further, that the same was transferred to them (Bierce & Powell) without any knowledge or notice, on their part, of the transactions out of which the debt grew, or of the fact that Byers had pledged the five thousand dollar contract to Doll & Simpson. Plaintiffs are therefore bona fide holders for a valuable consideration.” The defendants, in their motion for a new trial, assigned, as one of the grounds, that the evidence was insufficient to justify the finding, and under it specified that there was no evidence of such stipulation. The statement having been settled, the motion was called up for hearing, and denied; and in the order denying the motion, the following statement and decision was made: “ Upon hearing of the motion, the attention was called to an error in the findings drawn by the. attorney, the findings as filed making it appear that there was a' stipulation in Court between the parties, agreeing that the note in action was transferred by Byers to the plaintiffs without notice of any of the equities existing between Byers and the hotel company, or Hoag, or Doll & Simpson. The Court ruled that such finding was an error, when stated as a stipulation, but would be correct when stated as a finding of the Court from the evidence, and that this correction would be made in ruling upon the motion for a new trial, and is now so corrected, and to this ruling of the Court defendants then and there excepted.” [164] The defendants make the point that the Court had no authority to amend the finding, and that the question as to granting a new trial must be passed upon as it would be had the amendment not been made. But it is unnecessary to express any opinion upon the question as to the power of the Court to make the amendment, for conceding it to have been erroneous, the statement shows that it was not productive of any injury to the defendants. In the statement the defendants specify not only that there was no evidence of the alleged stipulation, but also state as one of the specifications of the insufficiency of the evidence to justify the finding that: “The Court finds that plaintiffs are bona fide holders of said note for a valuable consideration without notice, whereas the evidence of L. W. Elliott and J. Combs (uncontradicted) fully shows that at the time of the transaction, out of which the note grew, and at the time the note and mortgage were executed, he was the authorized and acting attorney and counsel of the said plaintiffs, and took part in said transactions on behalf of plaintiffs, as such attorney and counsel.” This we understand to be substantially a specification of the insufficiency of the evidence to justify the finding that the plaintiffs took the assignment without notice, and as no objection is made by the other side, we shall treat the matter as if such fact was actually or presumptively found. The statement, as prepared and settled, contains evidence applicable to this point alone, and the usual presumption will be indulged in that it contains ,all the evidence necessary to explain the point specified. This brings up for consideration the question whether the evidence was sufficient to support the finding, on the point of notice to the plaintiffs^ It appears that L. W. Elliott was the attorney for the present plaintiffs and brought suit for them against Byers, their assignor ; that process of garnishment was served on the hotel company; that the suit was compromised, and in accordance therewith the note and mortgage in suit were transferred by Byers to the plaintiffs ; that the compromise was made on the part of the plaintiffs by one of them in person; that their [165] attorney was subsequently informed of the compromise, and was sent by them to the bank of Doll & Simpson to receive the note and mortgage, which were executed while he was at the bank; that the attorney heard Doll & Simpson claim that they held the contract between the hotel company and Byers; that he saw the contract and knew that the note and mortgage were executed in part satisfaction of that contract, and that the plaintiffs had no actual notice of the assignment of the contract, until after they had received the assignment of the note and mortgage. Notice to an agent, notice to his principal. The principle is elementary, that notice to an agent of facts arising from or connected with the subject matter of the agency, is constructive notice to the principal, where the notice comes to the agent while he is concerned for the principal and in the course of the very transaction; and many authorities hold that the rule extends to cases where the notice was imparted to the agent so near before the transacaction that he must be presumed to recollect it. (See Le Neve v. Le Neve, 1 Ves. 64; 2 Lead. Cas. in Eq. Pt. 1, p. 106; Story on Agency, Sec. 140; Astor v. Wells, 4 Wheat. 466; Fuller v. Bennett, 2 Hare, 402; Sheldon v. Cox, 2 Eden, 224; Jackson v. Sharp, 9 Johns. 162; Reed's Appeal, 34 Penn. 207; Bracken v. Miller, 4 Watt & Serg. 102; Jackson v. Winslow, 9 Cow. 13; Jackson v. Leek, 19 Wend. 339; Willard’s Eq. 249; Bank U. S. v. Davis, 2 Hill, 461; Mech. Bank v. Seton, 1 Pet. 309.) It is not doubted by the learned counsel for the plaintiffs, that if Elliott, their attorney, had effected the compromise of the suit with Byers, the plaintiffs would have become bound by the notice brought home to him, while acting as their attorney in that suit; but he contends that Elliott was simply their attorney at law, that his authority extended only to. the management of the action, and that he did not, and did not claim to compromise the action. We need not pause to inquire whether he was not in fact their agent to some extent [166] in the matter of the. compromise, he having been sent by them to the bank of Doll & Simpson to carry into effect the terms agreed upon between the parties to that action, by receiving the note and mortgage—which was there executed under his supervision—and by releasing the garnishment; for we are clear that the plaintiffs, before entering into the compromise, had constructive notice of the facts, which were brought to the knowledge of their attorney while prosecuting the action. Before the compromise was agreed upon, Elliott saw the contract, which showed on its face that the five thousand dollars therein mentioned was to be paid by the hotel company to Byers, in full of his demands for the construction of the buildings, and was then informed by Doll & Simpson of their claim to the contract. The plaintiffs were attempting to secure the payment of their demand against Byers, out of the money due him from the hotel company, and it was important to them to ascertain all the facts bearing upon the state and condition of the contract and account between the hotel company and Byers, or going to show any claim on the same prior in time or law to their own. It was therefore the duty of their attorney to communicate to them whatever information he acquired on that subject, while acting in that capacity, and he will be presumed to have discharged his duty in that respect. Indeed, the rule that notice to the agent is constructive notice to the principal, is based on the presumption that the agent has ‘ communicated to the principal the facts connected with the subject matter of his agency, which came to his notice. These facts did not have a mere casual connection with the legal proceedings then on foot and in charge of their attorney, but they had a direct and important bearing upon the proceedings; and the agent having notice of them, his principals will be conclusively presumed to have had notice also. Where others than the principal and agent are concerned, the presumption that the agent has discharged his duty to his principal in communicating facts of which he has notice, is as conclusive as the presumption that the principal remembers the facts brought home to him personally. [167] If counsel could maintain the position that the compromise was a transaction distinct from the action—of which some doubt may be entertained—the constructive notice imparted to the plaintiffs in the progress of the action before the compromise was entered into, attends them in all the transactions directly growing out of or connected with the action. Judgment reversed and cause remanded for a new trial.