general manager so as to make the rules as to notice to a general manager applicable. Thus, his knowledge of bankruptcy proceedings as affecting property of a debtor of the bank will bind the bank.19 So if the cashier has any information sufficient to put him upon inquiry, the bank is bound to make the inquiry.20 And service of notice on the cashier of a bank is service on the bank where he has entire charge of the business-the president being such in name only.21 But the rule that notice not acquired in the course of his agency, but in the course of another agency, is not imputable to the corporation, is applied to bank cashiers as well as to other agents.22 Notice to or knowledge of the cashier in regard to defects in or defenses to negotiable paper discounted by the bank is ordinarily imputed to the bank,23 unless the cashier is adversely interested as where he owns the paper discounted or is interested in it as a member of a firm or a stockholder in another corporation.24 His knowledge is imputable to the bank even when he is acting in fraud of a third person; 25 and knowledge of the cashier of a bank as to its insolvency, although caused by his prior defalcations, is the knowledge of the bank, so far as the rights of an innocent depositor in the bank are concerned.26 On the other hand, where the purpose of the cashier is to defraud the bank, his knowledge is not imputable to it.27 Conversely, want of knowledge of the cashier as to a matter solely Mechem, Agency (2nd Ed.), § 1844, citing Merchants' & Planters' Bank v. Penland, 101 Tenn. 445, 47 S. W. 693. 19 Perry Naval Stores Co. v. Caswell, 63 Fla. 552, 57 So. 660. 20 Groff v. Stitzer, 75 N. J. Eq. 452, 72 Atl. 970. 21 Skillern v. Baker, 82 Ark. 86, 118 Am. St. Rep. 52, 12 Ann. Cas. 243, 100 S. W. 764. 22 First Nat. Bank of Elk City v. Dikeman, 96 Kan. 765, 153 Pac. 559; criticising Willard v. Denise, 50 N. J. Eq. 482, 35 Am. St. Rep. 788, 26 Atl. 29. 23 See §§ 2215-2220, supra. 24 See §§ 2243-2253. 25 Fishkill Sav. Institution v. National Bank of Fishkill, 80 N. Y. 162, 36 Am. Rep. 595. See, generally, § 2253, infra. 26 Pennington v. Third Nat. Bank cf Columbus, Georgia, 114 Va. 674, 45 L. R. A. (N. S.) 781, 77 S. E. 455, where contention, that the fact that the insolvency of the bank was due to the defalcation of the cashier repelled the presumption that he imparted the knowledge to the corporation, was not sustained. "This bank was hopelessly insolvent when the deposit was made, made so apparently by the operations of a firm of which the president of the bank was a member. The knowledge of the president was the knowledge of the bank." St. Louis & S. F. R. Co. v. Johnston, 133 U. S. 566, 576, 33 L. Ed. 683. 27 Hadden v. Dooley, 92 Fed. 274. See, generally, § 2250, infra. [§ 2238 within his authority is prima facie sufficient to show want of knowledge by the bank.28 In particular cases, notice has been imputed to a bank from knowledge of an assistant cashier,29 teller 30 or bookkeeper.31 § 2237. Traveling salesman. Whether notice to or knowledge of a traveling salesman is to be imputed to the corporation for which he travels depends largely, of course, upon the extent of his powers and duties and the nature of the notice or knowledge.32 Notice of a change in the membership of a firm, given to a traveling salesman employed merely to take orders for goods but with no powers or duties as to giving credit, is not imputable to the corporation.33 § 2238. Members or stockholders. Since the stockholders of a corporation, individually, are not its agents, and have no authority to bind it, the rule is well settled that notice to individual corporators or stockholders, or knowledge of facts possessed by them, is not notice to the corporation, where there are other stockholders, and where the persons having the knowledge are not also officers of the corporation.S4 Of course, if they are also officers, and the knowledge relates to matters in which they act for or represent the corporation, it is different. 28 Drovers' Nat. Bank v. Potvin, 116 Mich. 474, 74 N. W. 724, applying rule to discount of note. 29 Clark Sparks & Sons Mule & Horse Co. v. Americus Nat. Bank, 230 Fed. 738. The knowledge of the assistant cashier of a bank who handled a draft, that said bank to which it was sent for collection was insolvent, when he made the collection, is imputable to the bank itself. Clark Sparks & Sons Mule & Horse Co. v. Americus Nat. Bank, 230 Fed. 738. 30 Zeis v. Potter, 105 Fed. 671; Lowndes v. City Nat. Bank of South Norwalk, 82 Conn. 8, 22 L. R. A. (N. S.) 408, 72 Atl. 150. 31 Lowndes v. City Nat. Bank of South Norwalk, 82 Conn. 8, 22 L. R. A. (N. S.) 408, 72 Atl. 150. 32 See Columbus Sewer Pipe Co. v. Ganser, 58 Mich. 385, 55 Am. Rep. 697, 25 N. W. 377, where knowledge as to settlement on bond given by customer was held imputable to the corporation. 33 Neal v. M. E. Smith & Co., 116 Fed. 20. 34 United States. Racine Seeder Co. v. Joliet Wire-Check Power Co., 27 Fed. 367; The Admiral, 18 Law Rep. 91, Fed. Cas. No. 84. Colorado. Franklin Min. Co. V. O'Brien, 22 Colo, 129, 55 Am. St. Rep. 118, 43 Pac. 1016; Murphy v. Gumaer, 12 Colo. App. 472, 55 Pac. 951. Illinois. Burt V. Batavia Paper Mfg. Co., 86 Ill. 66. Massachusetts. Housatonic Bank v. Martin, 1 Metc. 294. Minnesota. Mercantile Nat. Bank of Cleveland v. Parsons, 54 Minn. 56, 40 Am. St. Rep. 299, 55 N. W. 825. Pennsylvania. Wilson v. McCullough, 23 Pa. St. 440, 62 Am. Dec. 347; Bank of Pittsburgh v. Whitehead, 10 Watts 397, 36 Am. Dec. 186; Union Canal Co. v. Loyd, 4 Watts & S. 393. In such a case, the rules stated in the preceding sections apply.35 And a corporation may be chargeable with notice of facts known to all the stockholders, or to a stockholder owning all the stock.36 But it is not enough that some of the corporators, but not all, have notice.37 The rule as to information possessed by promoters as being imputable to the corporation has already been stated,38 and it has been noted that their knowledge is not ordinarily imputed to the corporation unless they and the corporation are practically identical.39 35 Hoffman Steam Coal Co. v. Cumberland Coal & Iron Co., 16 Md. 456, 77 Am. Dec. 311; Cumberland Coal & Iron Co. v. Sherman, 30 Barb. (N. Y.) 553. General rules as to effect of information acquired prior to creation of agency, see § 2224, supra. Knowledge of a promoter, who be comes also director and manager, will be imputed to the corporation. California Consol. Min. Co. v. Manley, 10 Idaho 786, 81 Pac. 50. See also § 161. A corporation will be deemed charged with the secret knowledge of one of its organizers, who becomes its president, that he held certain personal property, transferred to the corporation, merely as a factor. Wyeth v. Renz-Bowles Co., 23 Ky. L. Rep. 2337, 66 S. W: 825. See also, as to the general principle involved, Elberton v. Pearle Cotton Mills, 123 Ga. 1, 50 S. E. 977. 36 Simmons Creek Coal Co. v. Doran, 142 U. S. 417, 35 L. Ed. 1063; In re V. & M. Lumber Co., Inc., 182 Fed. 236. 231, Knowledge of all the stockholders, especially where they are also the officers, of a company, is imputable to the company. Elberton v. Pearle Cotton Mills, 123 Ga. 1, 50 S. E. 977. That the minutes fail to contain a formal resolution authorizing a certain illegal course of action on the part of the corporation is immaterial where the facts are such that all the directors and stockholders must have known thereof and participated there in American Handle Co. v. Standard Handle Co. (Tenn. Ch. App.), 59 S. W. 709. Where all the stock of a corporation, not legally dissolved, was acquired by a single individual, and he continued the business for his individual benefit, but in the corporate rame, and the trustees, without resigning, ceased to act, it was held that a notice in reference to a contract of the corporation was properly served on the owner of the stock and his agents. Orr Water Ditch Co. v. Reno Water Co., 19 Nev. 60, 6 Pac. 72. See also National Conduit Mfg. Co. v. Connecticut Pipe Mfg. Co., 73 Fed. 491; Anderson v. Kinley, 90 Iowa 554, 58 N. W. 909; Hoffman Steam Coal Co. v. Cumberland Coal & Iron Co., 16 Md. 456, 77 Am. Dec. 311; Cumberland Coal & Iron Co. v. Sherman, 30 Barb. (N. Y.) 553. 37 Seeger Refrigerator Co. v. American Car & Foundry Co., 171 Fed. 416. But see Lea v. Iron-Belt Mercantile Co., 147 Ala. 421, 8 L. R. A. (N. S.) 279, 119 Am. St. Rep. 93, 42 So. 415, where knowledge of one who owned practically all the stock of the corporation was imputed to it. 38 See § 161, vol. 1. 39 Knowledge of a promoter is not imputed to the corporation thereafter formed through his efforts. Kiefhaber Lumber Co. v. Newport Lumber Co., 15 Cal. App. 37, 113 Pac. 691. But see Zeigler v. Valley Coal Co., 150 Mich. 82, 13 Ann. Cas. 90, 113 N. W. 775, 13 Det. L. N. 603. 41 [§ 2239 § 2239. Application of rules to knowledge of particular facts-In general. These general rules apply, of course, in a great variety of cases-in fact, in any case in which the question whether a corporation had notice of a particular fact is material. Thus, they apply when it is sought to charge a corporation with an officer's knowledge that a particular transaction was in fraud of third persons, 40 where it is sought to charge a corporation with an officer's knowledge of the insolvency or bankruptcy of a person from whom it has received a payment or a conveyance of property, or to charge the corporation with knowledge of bankruptcy proceedings, so far as the effect of failure to prove claims against the bankrupt under the federal act is concerned, or to charge the corporation with knowledge of its own insolvency, or to charge it with an officer's knowledge that a loan was made by it in furtherance of an illegal purpose, when it is sought to charge a co:poration with notice of an unregistered transfer or pledge of its stock, because of an officer's knowledge thereof, for the purpose of defeating its claim of a lien on the stock for a debt of the person appearing on the books as owner, or for the purpose of holding it liable for recognizing a subsequent transfer by him, or for dividends, etc.,45 where the knowledge of an officer of a bank as to the 43 Notice to one who afterwards organized a corporation of which he became the principal officer and stockholder is imputed to the corporation. Montana Elec. Co. v. Northern Valley Min. Co., 51 Mont. 266, 153 Pac. 1017. Where incorporators of a new corporation who "subscribed for eighty per cent. if not for all of the stock of the new corporation," and "became at once its officers and managers, knew certain things and acted in the incorporation under the influence of that knowledge to effect certain purposes for the unfair advantage of the corporation when formed," the corporation is affected with that knowledge. Equity in such a case will ignore to some extent the corporate entity by attributing to the corporation any disability in suing that the promoters would be under. Great Western Live Stock Commission Co. v. Great Western Commission Co., 187 Ill. App. 196, 209. 40 Brobston v. Penniman, 97 Ga. 527, 25 S. E. 350. See also § 2253, infra. Where the president of a corporation obtained money in the name of the corporation for his individual benefit from a bank of which he was vice president and general manager, with the knowledge and connivance of the other officers of the bank, it was held that the bank could not hold the other corporation liable. Trapp v. Fidelity Nat. Bank, 101 Ky. 485, 43 S. W. 470, 41 S. W. 577. 41 Arthur v. Harrington, 211 Fed. 215; Getman v. Second Nat. Bank of Oswego, 23 Hun (N. Y.) 498. 42 Perry Naval Stores Co. v. Caswell, 63 Fla. 552, 57 So. 660. 43 Orme v. Baker, 74 Ohio St. 337, 113 Am. St. Rep. 968, 78 N. E. 439. 44 Singleton v. Bank of Monticello, 113 Ga. 527, 38 S. E. 947. 45 Guarantee Co. of North America v. East Rome Town Co., 96 Ga. 511, 51 Am. St. Rep. 150, 23 S. E. 503; residence of an indorser of paper which it holds for collection is sought to be imputed to the bank to defeat its excuse, on the ground of ignorance in the matter, for failure to give the indorser notice of nonpayment.46 So the rules have been applied to charge the corporation with notice of the pendency of an action,47 notice of dissolution of a partnership, notice of retirement of a member of a firm which is a debtor of the corporation,49 notice of encroachments on property of the corporation,50 and notice of transaction resulting in the compromise of a claim of the corporation.51 So, also, knowledge of the agent of a fire insurance company that a building insured is not occupied will be imputed to the company.5 52 These rules also apply where knowledge and acquiescence on the part of a corporation is relied upon as a ratification of an unauthorized contract or act by an officer, or as the basis of an estoppel to deny the officer's authority.5 53 § 2240. Application to defeat claim that purchase was without notice. The question arises oftener perhaps than in any other case, in connection with whether the corporation is chargeable with knowledge possessed by its officers or agents so as to prevent it from being a bona fide holder without notice of negotiable paper.54 So it arises Gemmell v. Davis, 75 Md. 546, 32 Am. 46 Goodloe v. Godley, 13 Smedes & M. (Miss.) 233, 51 Am. Dec. 159. 47 Continental Realty Co. v. Cardwell, 171 Ky. 644, 188 S. W. 777. 48 Robertson Lumber Co. v. Anderson, 96 Minn. 527, 105 N. W. 972. 49 Rodgers-Wade Furniture Co. v. Wynn, Tex. Civ. App. W. 340. 156 S. 50 Fresno St. R. Co. v. Southern Pac. R. Co., 135 Cal. 202, 67 Pac. 773. 51 Metzger v. Southern Bank, 98 Miss. 108, 54 So. 241. The corporation will be deemed affected with knowledge possessed by its executive officer of an unauthorized settlement of corporate claims. Petersen v. Elholm, 130 Wis. 1, 109 N. W. 76, 1034. 52 De Soto v. American Guaranty |