Lothian v. Wood

California Supreme Court Jul 1, 1880 No. No. 6,533Published

Before: McKee

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Holding. The court held that a corporation is not chargeable with an agent's knowledge unless acquired while acting in the scope of official business, and that the plaintiffs were entitled to a lien on the tenant's interest in the land despite the owner's non-liability.

Issues

Whether a corporation is chargeable with a director's knowledge of construction acquired outside the scope of official duties.
Whether swings and seats constitute structures subject to a mechanic's lien under the Code of Civil Procedure.
Whether the plaintiffs were entitled to a judgment of foreclosure against the tenant after his default.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“If the agent acquires his knowledge casually, or privately, or by rumor, and he does not inform the corporation or its agents of it, the corporation is not chargeable with it.”

“neither swings nor seats are buildings or structures, within the intent and meaning of §§ 1183 and 1192 of the Code of Civil Procedure”

Synopsis

Mechanic’s Lien—Notice—Coepobation.—Knowledge of a fact, concerning the business or affairs of a corporation, acquired by a director or other agent—unless acquired in tlie management and condnet of its business— does not constitute notice to the corporation. So held, in an action against a corporation and its tenant to foreclose a mechanic’s lien, for materials furnished in the construction of a building by the tenant on the leased X>remises—and alleged to have been furnished Avith the knowledge of the corporation—where it appeared that a director of the corporation, on ono occasion, was present during the construction of the building.

Id.—Building— Stbuctdbe—Definition.— Held further — the property upon which a lien was claimed being “a danoing-hall, swings, and seats” — that, at least, neither the swings nor seats were buildings or structures, (within the intent and meaning of §§ 1183 and 1192 of the Code of Civil Procedure) for Avkieh the corporation would be chargeable even with notice.

Id.—Vendob’s Lien—Judgment by Default.—The tenant defendant having suffered default, the Court adjudged that the plaintiff was entitled to a vendor’s Hen for the materials furnished, and that he should have the right to enter upon the premises and to remove and sell the same. Held, that the decision and judgment were outside the issues, and against law, and judgment directed to be entered in favor of the plaintiff for a lien upon such interest as the said defendant had in the land at the date of the accruing of the lien.

McKee, J. Defendant Wood being a tenant of his codefendant—the Southern District Agricultural Society—and in possession of the fair grounds and park of the society, which were located on the N. W. £ of section 7, township 2 south, range 12 west, S. B. M., in Los Angeles County, caused to be constructed thereon a dancing-hall, swings, and seats, and the lumber and materials which he used in their construction he procured from the plaintiffs. On the 22nd of May, 1878, the lumber and materials were all furnished. Wood failed to pay for them; and on the 20th of June, 1878, plaintiffs filed a mechanic’s lien on •the land and improvements, or “ such interest as the defendant Wood had in them on the 1st day of April, 1868.” To foreclose this lien, plaintiffs brought the action in hand against Wood and the society, in which they sought to make the society chargeable with the lien, upon the ground that it knew of the construction of the “ buildings,” and did not give notice, according to § 1192 of the Code of Civil Procedure, that it would not be responsible for their construction.

On the trial of the case the Court found, in substance, that the society was the owner of the land; that Wood was in possession of it as a lessee and tenant of the society: that he caused to be constructed upon the land the dance-house, swings, and scats, for his own use and convenience; that he owed the plaintiffs a balance of $384.50 for the lumber and materials which were furnished and used in their construction, and that the owner of the land had no knowledge or notice of their construction. This last finding of fact is complained of as erroneous, on the ground that it is against the uncontradicted evidence in the case.

The record discloses that there was no conflict of evidence upon the subject, and that the whole evidence amounted to this, viz.: that on one occasion one of the directors of the society was present on the land while Wood was erecting the buildings. [162]The precise time when the director was present does not appear. It may have been when Wood was constructing the swings or the seats, and it is doubtful whether he would be bound to take notice of anything more than what was being done while he was present. But, however that may be, there is no evidence tending to show that he was acting as the special agent of the so ciety when he saw the construction of any or all of the improvements upon the land of the society, or that he had any management or control of its business other than as a director. Nor does it appear that he communicated any knowledge which he may have obtained from his visit to the land, to the society or any of its agents. The director was, it is true, an agent of the society. As such, the knowledge of a fact which concerns the business or affairs of the society, acquired while engaged in the discharge of official duties, or of a matter which had been specially intrusted to him, would be considered, in law, the knowledge of the society ; for a corporation can have knowledge only from its agents or records. But unless it was acquired by an agent in the management and conduct of its business, notice of it is not attributable to the corporation. If the agent acquires his knowledge casually, or privately, or by rumor, and he does not inform the corporation or its agents of it, the corporation is not chargeable with it. “ I agree,” says Chief Justice Nelson, in The Bank of U. S. v. Davis, 2 Hill, 451, “ that notice to a director, or knowledge derived by him while not engaged officially in the business of the bank, cannot and should not operate to the prejudice of the latter. This is clear from the ground and reason upon which the doctrine of notice to the principal through the agent rests. The principal is chargeable with this knowledge for the reason that the agent is substituted in his place, and represents him in the particular transaction; and as this relation, strictly speaking, exists only while the agent is acting in the business, thus delegated to him, it is proper to limit it to such occasions.” (See, also, Fulton Bank v. N. Y. & Sharon Canal Co. 4th Paige, 127.)

Lothian v. Wood

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