by John Marshall Harlan

“ It is the rule that the knowledge of the agent is the knowledge of his principal, and notice to the agent of the existence of material facts is notice thereof to the principal, who is taken to know everything about a transaction which his agent in it knows. ”

“ But when those words are taken with the words in the same sentence, 'as soon as practicable after such act shall have come to the knowledge of the employer,' it may well be held that the surety company did not intend to require written notice of any act upon the part of the cashier that might involve loss, unless the bank had knowledge-not simply suspicion-of the existence of such facts as would justify a careful and prudent man in charging another with fraud or dishonesty. ”

“ The object of the bond in suit was to indemnify or insure the bank against loss arising from any act of fraud or dishonesty on the part of O'Brien in connection with his duties as cashier, or with the duties to which in the employer's service he might be subsequently appointed. That object should not be defeated by any narrow interpretation of its provisions, nor by adopting a construction favorable to the company if there be another construction equally admissible under the terms of the instrument executed for the protection of the bank. ”

“ After observing that knowledge by the surety of the existing deficiency in the cashier's accounts might have had an important influence on his conduct, the court said: 'One who becomes surety for another must ordinarily be presumed to do so upon the belief that the transaction between the principal parties is one occurring in the usual course of business of that description, subjecting him only to the ordinary risks attending it ”

“ Ordinarily, a corporation, like any other principal, is chargeable with the knowledge of any facts which are known to its agenst; but in this case all these transactions, if there were any transactions of a fraudulent and dishonest character on the part of the cashier, were transactions for the benefit of Collins, and he was a participator in the fraud, and under those circumstances the law does not infer that the agent or the officer will communicate the fact to his principal, the corporation ”

“ The grounds upon which the surety was held discharged were thus stated by the court: 'There is no principle of law better settled than that persons proposing to become sureties to a corporation for the good conduct and fidelity of an officer to whose custody its moneys, notes, bills, and other valuables are intrusted have the right to be treated with perfect good faith. If the directors are aware of secret facts materially affecting and increasing the obligation of the sureties, the latter are entitled to have these facts disclosed to them, a proper opportunity being presented.'
Veazie v. ”

“ Undoubtedly, the company did not agree to be liable for any fraudulent or dishonest act of the cashier not discovered until after six months from his retirement from the service of the bank. But is it true that, within the meaning of the bond, O'Brien retired from the service of the bank when it suspended business on November 12, 1891? We think not. The bank was in existence under its articles of association while the examiner, under the order of the comptroller of the currency, was engaged in the investigation of its affairs. ”

“ Williams was the case of a purchaser at an auction sale, seeking to be relieved from his purchase because of fraud practiced at the sale by the auctioneer, who was the general agent of the owners, and the benefits of which sale the owners received. After a reference to many authorities, the court placed the liability of the owners upon these grounds: 'What the vendor may not do in person, or may not employ others to do in his absence, that is, make by-bids to enhance the price,-his agent, the auctioneer, cannot rightfully do. ”

“ After acquiring it, it was his duty, not as soon as possible to transmit information of it to the defendant, but to do it with reasonable promptness. He was not bound the first day or the next, necessarily. to give notice, but he was to give notice within a reasonable time; and it is for you to say, upon a consideration of all the circumstances of the case, whether he did, within a reasonable time after acquiring such knowledge, send the letter of May 23d. It might be reasonable under one state of facts; it might be unreasonable under another. ”

“ But, if you come to the conclusion that the dicovery was not made until the middle or latter part of May, then, in view of the situation of the plaintiff, you may reasonably come to the conclusion that he exercised proper diligence in sending the notice.' We perceive no error in these instructions. They are entirely consistent with the terms of the contract. Much stress was laid, in argument, upon the words 'which may involve loss' in the above extract from the bond. ”

“ Fitzgerald, 4 H. L. Cas. *483, *507: 'It [a life policy] is, of course, prepared by the company, and if, therefore, there should be any ambiguity in it, must be taken, according to law, most strongly against the person who prepared it.' There is no sound reason why this rule should not be applied in the present case. ”

“ An itemized statement of the account can also be forwarded you if desired. With regard to G. N. O'Brien, no action has been brought against him, because he is execution proof. In reply to my demand for payment for the amounts embezzled by J. W. Collins during the term covered by these bonds, he replied as per copy of his letter herewith inclosed. In compliance with the request of the U.S. attorney I appeared before the grand jury, and testified as to the state of facts that existed implicating G. N. O'Brien in the defalcations with J. W. Collins. ”

“ And about April 1, 1892, one Bloodgood, and expert bookkeeper, in connection with another bookkeeper, entered upon a particular examination of such books, with a view of ascertaining the transactions of Collins while he was president. Collins died March 3, 1892. Towards the end of May these experts made certain discoveries involving the fidelity and integrity of O'Brien as cashier, of which Bloodgood gave notice to the receiver. The facts thus discovered related to the false credits which, as above stated, O'Brien, as cashier, had given to Collins on the books of the bank. ”

“ Minch, which was an action to recover back money paid on a policy fraudulentl obtained by a husband on the life of his wife, the fraud not having been discovered until after the money was paid, the court said: 'Again, if the husband, as the agent of the wife, procured the policy by fraud, she cannot retain the benefit of it, and be relieved from the consequences of the fraudulent means by which it was obtained. It is established that an innocent principal cannot take an advantage resulting from the fraud of an agent without rendering dering himself civilly liable to the injured party. ”