Scott County Milling Co. v. Powers

Smith, C. J., delivered the opinion of the court. The only error committed by the court below, in so far as the result reached is concerned, was in holding certain payments made the Scott County Milling Company to be recoverable preferences under the bankrupt law. These payments cannot be recoverable as preferences unless, at the time they were made, the Scott County Milling Company had actual knowledge or constructive notice of the insolvency of the Harding-Coor Company, conceding that this company was then insolvent. Actual knowledge on the part of the milling company is not claimed by counsel for appellee, and any knowledge that its agent, Coor, may have had in this connection cannot be imputed to the milling company; for the reason that in all the dealings between it and the Harding-Coor Company the interests of Coor, because of the fact that he was a stockholder and the business manager of the Harding-Coor Company, were adverse to the milling company, he being engaged, in fact, in a scheme to defraud either it or the Harding-Coor Company, or both. “The rule that notice to an agent is notice to the principal, being based upon the presumption that the agent will transmit his knowledge to his principal, the [801] rule fails wlien the circumstances are such as to raise a clear presumption that the agent will not perform this duty, and accordingly, where the agent is engaged in a transaction in. which he is interested adversely to his principal, or is engaged in a scheme to defraud the latter, the principal will not be charged with knowledge of the agent acquired therein.” 31 Cyc. 1595. . Reversed, and bill dismissed.