Warren v. Hayes

The payment of the notes indorsed by Jennings did not discharge the mortgage as a matter of law (Quimby v. Williams, 67 N.H. 489, 492, 493); so when he assigned the mortgage to Mrs. Dixon, the legal title to the property vested in her to secure the payment of her loan to Hayes. Since she was an innocent purchaser for value to the extent of that loan, her equitable right to the property was, to that extent, superior to the plaintiffs'. Lewis v. Dudley, 70 N.H. 594. Since this is so, the conveyance from Hayes did not invalidate her lien on the property, unless she is held to know that Hayes' title to it was procured by fraud, or unless she is in some way estopped to deny that J. B. Dixon was acting for her when he procured that conveyance.

If she is to be held to have known of the defect in Hayes' title, it must be because of the rule which imputes the knowledge of an agent to his principal; for it is found that she neither knew nor ought to have known of it. That rule does not charge the principal with his agent's knowledge of facts affecting the subject-matter of the business in which the latter is employed, unless the agent in fact acts for the principal in what he does in the matter in respect to which it is sought to charge the principal with his knowledge. Henry v. Allen, 151 N.Y. 1, 10. In other words, the principal is not charged with his agent's knowledge regarding particular transaction unless the latter's acts in respect to it were within the scope of his employment. To illustrate: If a person employs an agent to buy property, and the latter, instead of buying, sells to the principal property procured from a stranger by fraud, the agent's knowledge of that fraud will not be imputed to the principal (Allen v. Railroad, 150 Mass. 200, 206); but if the agent buys property for the principal, the latter will be charged with the agent's knowledge of any defects in the grantor's title. Hovey v. Blanchard,13 N.H. 145, 149. The test, therefore, to determine whether an agent's knowledge is to be imputed to his principal is to inquire whether or not the agent was acting for the principal when he did that in respect to which it is sought to charge the principal with his knowledge. Clark v. Marshall,62 N.H. 498, 500; Brookhouse v. Company, 73 N.H. 368, 374; Gunster v. Company, 181 Pa. St. 327, — 59 Am. St. Rep. 650, 658, note; Akers v. Rowan,36 S.C. 87, — 10 L.R.A. 705, 706, note.

It has been, found that J. B. Dixon was not acting for Mrs. Dixon when he procured the conveyance from Hayes, so she is not charged with his knowledge of the defect in Hayes' title. Consequently, she can hold the property as she would if that conveyance had not been made, unless she is estopped to deny that J. B. Dixon was her agent when he procured it. Although the plaintiffs cannot maintain this action by merely showing that J. B. Dixon was in Mrs. Dixon's employ when the conveyance was made, she cannot set up that conveyance to defeat the plaintiffs' right to redeem the property from her. The reason is, not that she is charged with J. B. Dixon's knowledge, but because a person cannot claim the benefit of so much of his agent's unauthorized act as is beneficial to him and repudiate the remainder. If he accepts any benefit from it after he knows and appreciates what his agent has done, he will be estopped to deny that the agent was acting for him. In other words, such conduct constitutes a ratification of the agent's act. In this case it is not found that Mrs. Dixon claims to stand any better because of the conveyance than she would if it had not been made, so it cannot be said as a matter of law that she is estopped to deny that J. B. Dixon was her agent.

Exception overruled.

All concurred.