Summary
applying an inquiry notice standard in determining whether an assignee of a judgment took the assignment with notice that the judgment was worth less than the amount covenanted in the assignment
Summary of this case from Citibank v. Brigade Capital Mgmt.Opinion
Argued February 10, 1879
Decided March 18, 1879
Wm. C. Ruger, for appellant. Geo. N. Kennedy, for respondent.
If the plaintiff had knowledge when she purchased the judgment that Gillett was discharged, it would deprive her of the remedy she seeks, and she cannot recover in this action. The referee made a general finding that she had no notice and was not chargeable with notice or knowledge that Gillett had been released. He also made a special finding that Bennett, the agent and husband of the plaintiff, who negotiated the purchase of the judgment, was informed by one Hall, in the winter of 1866, and previous to the purchase and assignment of the judgment, that Gillett had been discharged from his liabilities; that afterwards, and before the purchase and transfer of the judgment to the plaintiff, he caused an examination to be made at the clerk's office, under the letter D in the docket of judgments, and that the records did not show that the said Gillett had been released from the judgment in question. Full effect must be given to the latter finding, upon the principle that a general finding of a referee, like a verdict, is controlled by a special finding of fact. ( Phelps v. Vischer, 50 N.Y., 69, 72.) The evidence establishes that Bennett was well acquainted with Gillett; that the docket of judgments, under the letter G, showed that Gillett had been released, and that Bennett had stated to one Lewis that Gillett had been discharged from his debts. The plaintiff was not called to testify that neither she nor her husband had notice that Gillett was released.
The notice which will estop a party from claiming a breach of a covenant may be either actual or constructive. The one operates directly, while the other operates indirectly and by presumption. The rule is laid down in Williamson v. Brown, ( 15 N.Y., 354, 362), to be that "where a purchaser has knowledge of any fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered a bona fide purchaser." (See also Reed v. Gannon, 50 N.Y., 349, 350; Pendleton v. Gray, 2 Paige, 202; Hawley v. Cramer, 4 Cow., 717; Baker v. Bliss, 39 N.Y., 70; Brown v. Volkening, 64 id., 76.)
Assuming that there is no proof that the plaintiff had notice, it was sufficient that the agent who negotiated the purchase of the judgment was notified. The general rule is undisputed, that notice to the agent is notice to the principal; and upon general principles of policy it must be taken for granted that the principles knows whatever the agent knows, and that there is no difference between actual and constructive notice. ( Bank of U.S. v. Davis, 2 Hill, 451-461; The Distilled Spirits, 11 Wall., 356, 366, 367; Le Neve v. Le Neve, 2 Lead. Cas. in Eq., 21.) If the agent acquires knowledge of a fact, while engaged in the business of his principal, and fails to institute the proper inquiries, by reason of forgetfulness, it is negligence, and the doctrine of constructive notice applies. (See 15 N.Y., 362 [ supra]; 50 id., 350 [ supra]). He was bound to inquire in this case. As he knew prior to the purchase that Gillett had been discharged, the presumption that he retained such knowledge, and that he had it present to his mind, will depend upon the lapse of time. Here, the proposition to purchase was made on the fifteenth day of February, 1866, and the assignment bears date on the first day of March following. As the notice was received by him in the winter of 1866, it is scarcely to be presumed that he could have forgotten the fact when the purchase was made. It must be taken for granted that the principal knows whatever the agent knows, and hence, that the plaintiff had all the information which her husband and agent had, in regard to the value of the judgment and the responsibility of the parties, as well as the probability of the collection of the same, and she was bound by such knowledge. ( Dresser v. Norwood, 17 C.B. [N.S.], 466, and authorities cited in note at page 482; Hart v. Farmers and Mechanics' Bank, 33 Vt., 253.)
It is claimed by the counsel for the respondent that the covenant contained in the assignment, that the sum named therein was due, was absolute, and that the parol evidence, given to show notice, tends to contradict and vary a written instrument, and hence, cannot affect the plaintiff's claim. The principle is well settled, we think, that parol proof is competent to establish that, at the time of entering upon a contract, the party claiming a breach of warranty received information or had knowledge of the real facts, and hence, that a warranty does not extend to known defects. This rule has been frequently recognized in the reported cases. ( Schuyler v. Russ, 2 Cai., 201; Jennings v. Chenango Co. Mut. Ins. Co., 2 Den., 75; Bidwell v. N.W. Ins. Co., 24 N.Y., 302; Tallman v. Atlantic Ins. Co., 3 Keyes, 93; Van Schoick v. Niagara F. Ins. Co., 68 N.Y., 434.) In the last case cited, the policy of insurance, upon which the action was brought, contained a warranty that the building insured did not stand on leased land; but it appeared that this fact was known to the defendant's agent, to whom the application was made. It was held that the knowledge of the agent was the knowledge of the defendant, when it accepted the risk, and that the defendant was estopped from setting it up, and it was not a breach of the warranty. We are referred to a number of cases by the counsel for the respondent, to sustain a different rule; but an examination of them discloses that they relate mainly to covenants as to real estate, and the admission of evidence to contradict or vary the same, and we think they are not in point. Applying the principles discussed to the case considered, we are brought to the conclusion that the plaintiff was chargeable with notice that Gillett had been released, at the time of the purchase; and if the plaintiff's agent had been vigilant, and had desired to do so, he could have acquired absolute knowledge of the fact, by an examination of the records, under Gillett's name. That he failed to do this shows either that he did not consider it important, or that he was not vigilant. It follows that the referee erred, and the judgment must be reversed and a new trial granted, with costs to abide the event.
All concur, except RAPALLO, J., absent at argument.
Judgment reversed.