Pursley v. Stahley , 122 Ga. 362 ( 1905 )

Lamar, J.

(After stating the facts.) The principal is bound by notice to his agent, for the same reason and to the same extent that he is bound by the act of his agent. In both cases it must be limited to matters within the scope of the agency. Notice as to such matters binds the principal, according to some authorities, on the theory that the agent and principal are to be regarded as one; according to others, on the the theory that the agent may and should act for his principal on such information ; and according to others, because there is a presumption that such notice will be communicated. See Morris v. Georgia Loan Co., 109 Ga. 24; Civil Code, §§ 3027, 3028. But when the agent departs from the scope of the agency, and begins to act for himself and not for the principal; when his private interest is allowed to outweigh his duty as a representative; when to communicate the information would prevent the accomplishment of his fraudulent scheme, he becomes an opposite party, not an agent. The reason for the rule then ceases. Where, therefore, the agent who is an intermediary is guilty of independent fraud for his own benefit,'the law does not impute to the principal notice of such fraud. Instead of being communicated it would be purposely and fraudulently concealed. Instead of the lender being bound by constructive notice, the borrower must be bound by her actual signature to the note for $500.

2. Both parties may be innocent. The defendant, however, put it in the power of a third person to do the wrong, and she must bear the loss. She was endeavoring to arrange to borrow money to pay her own debt. She allowed the creditor to prepare the paper. He represented the borrower as much so as he did the lender. Notice of the fraud could have been as logically imputed to one as to the other. In law he was the agent of neither, but drew the note for the excessive amount for his own personal advantage, and in the commission of an independent-fraud. Merchants Bank v. Demere, 92 Ga. 739; Gunster v. Scranton Co., 181 Penn. St. 327; Civil Code, §§ 3940, 3028. On the facts the case is clear. The defendant could read. There was no emergency. She signed a deed and twelve notes. Years afterwards she signed six additional notes relating to the same debt, and at a time when it was not alleged that the agent was present. The judgment must be

Affirmed.

All the Justices concur.