(101 Wash. 356, 172 Pac. 340.) that Denny, when he received the deed and bill of sale, knew of De Beaumont's insolvency, and took the same for the purpose of assisting De Beaumont in defrauding his creditors; that for the purpose of securing Mrs. De Beaumont's signature to the deed and bill of sale Denny paid to her the sum of $950, which thereby became community property of the De Beaumonts; that demand has been made by the trustee for the possession of the land and the delivery of the personal property, upon Denny, who has refused to deliver the same, and upon Mrs. De Beaumont for the $950, which she also has refused to pay to the trustee. Touching the mortgage from Denny to Morrison the court specifically found: "(23) That on the 12th day of May, 1914, said T. U. Denny made, executed, and delivered to F. G. Morrison a chattel mortgage to secure the payment of $1,500 secured upon the personal property above mentioned and described including said crop of grain. "(24) That at the time said mortgage was made said F. G. Morrison was unable to leave his home on account of physical injury, and said Charles H. Baldwin drew up said mortgage and looked after the interests of said Morrison in taking said mortgage. "(25) That at said time said Charles H. Baldwin was the attorney of the said H. C. De Beaumont and knew of his insolvent condition. "(26) That said chattel mortgage given to said F. G. Morrison by said T. U. Denny as aforesaid was in consideration of the sum of $1,500 paid by the said Morrison to the said Denny. "(27) That said F. G. Morrison took said chattel mortgage, without knowledge of the insolvent condition of said H. C. De Beaumont, and without knowledge of the fraudulent transactions which had taken place between said H. C. De Beaumont and said T. U. Denny, and was to the extent of his mortgage an in nocent purchaser of said personal property covered by his said mort gage. '(28) That the sum secured by said mortgage was, prior to the trial of this action, repaid to the said F. G. Morrison by the said T. U. Denny, and that said mortgage has been satisfied and released. "(29) That said F. G. Morrison has never received or converted to his use any property belonging to the estate of said H. C. De Beaumont, bankrupt, as aforesaid. "(30) That the value of the personal property transferred by said H. C. De Beaumont to T. U. Denny as aforesaid was $2,000, and that the landlord's interest in the crops grown on the lands sold by said De Beaumont to said Denny was of the value of $950; that the said T. U. Denny should be credited in his accounting with the sum of $600 paid by him to the Holland Bank to release the mortgage on the mules described in said bill of sale, and with the sum of $150 paid as interest on the real mortgage held by said Holland Bank, leaving a balance of $2,200 to be accounted for by the said T. U. Denny to the said trustee." Upon these findings and appropriate conclusions of law the court decreed that plaintiff have judgment against Denny and Mrs. De Beaumont, jointly, for the sum of $950 and interest from May 18, 1913, aggregating $1,160.58; that plaintiff recover from Denny the further sum of $1,250, with interest from May 18, 1913, aggregating $1,517.08; and that plaintiff recover his costs against the De Beaumonts and Denny. The court further ordered that the action be dismissed as to the defendant Morrison, and that he recover his costs. From this order of dismissal as to Morrison, plaintiff appeals. We have examined the evidence as set out in the abstracts of record with frequent recourse to the statement of facts. We are satisfied that it supports the findings by a fair preponderance in every particular save one. The finding numbered 23 is in error in that it states that the original chattel mortgage from Denny to Morrison for $1,500 covered a crop on the land. As a matter of fact the mortgage on the crop was executed on October 20, 1914, for an additional sum of $285, but we find this fact immaterial inasmuch as this money was loaned for the purpose and was used for the purpose of putting in the crop, and was repaid from the crop, so that in any Fraudulent conveyancemortgage to secure advance to make crop. view of the case that transaction, both by reason of its date and purpose, was wholly devoid of any fraudulent design or injurious results to De Beaumont's creditors. It was wholly independent of the main transaction, and requires no further notice. The findings being sustained in other respects by ample evidence, we shall treat as established the facts that the transfers from De Beaumont to Denny were made in fraud of De Beaumont's creditors; that Denny was an active participant in the covinous purpose, but that Morrison had no actual knowledge thereof, or of De Beaumont's insolvency. Evidenceburden of proof-fraud. It is elementary that the burden of proving fraud is upon the party who asserts it. There was no evidence whatever that Morrison actually knew of De Beaumont's insolvency, or of his purpose in making the transfers to Denny. In fact the evidence does not show that he was advised, when he made the loan of $1,500, that Denny was purchasing the chattels from De Beaumont. Were it not for the fact that the court found, on ample evidence, that the attorney who represented all parties in this transaction knew of De Beaumont's insolvent condition at the time, and was preparing papers for his voluntary bankruptcy, the discussion would end here. But that fact makes it necessary to consider the question of law as to whether, in the light of all the evidence, the knowl edge of the attorney must be imputed to Morrison so as to make him, in law, a participant in the covin of De Beaumont and Denny. As to what notice or knowledge of an agent or an attorney will impute notice to the principal or client, we are committed to the rule stated by Machem as sustained by reason and authority, as follows: "The law imputes to the principal, and charges him with, all notice or knowledge relating to the subject-matter of the agency which the agent acquires or obtains while acting as such agent and within the scope of his authority, or, according to the weight of authority, which he may previously have acquired, and which he then had in mind, or which he had ac quired so recently as to reasonably warrant the assumption that he still retained it: Provided, however, that such notice or knowledge will not be imputed: (1) Where it is such as it is the agent's duty not to disclose; (2) where the agent's relations to the subject-matter are so adverse as to practically destroy the relation of agency; and (3) where the person claiming the benefit of the notice, or those whom he represents, colluded with the agent to cheat or defraud the principal." 2 Mechem, Agency, 2d ed. § 1813, p. 1397. See also Gaskill v. Northern Assur. Co. 73 Wash. 668, 132 Pac. 643. Though this rule is a wholesome one and well sustained by authority, "the courts show a plain determination not to extend it, but to keep it confined within narrow and necessary limits." 2 Pom. Eq. Jur. 2d ed. § 672, p. 1169. An agent or attorney can no more bind his principal by his knowledge than by his acts in matters outside the scope of his authority or employment. The knowledge of the Notice-to agent, to be notice agents-binding to the principal, on principal. must be that of an agent who has authority to deal for the principal in reference to the specific matter which the knowledge affects. As said by an eminent jurist, in a well (101 Wash. 356, 172 Pac. 340.) reasoned and leading case on this subject: "The rule which imputes to the principal the knowledge possessed by the agent applies only to cases where the knowledge is possessed by an agent within the scope of whose authority the subject-matter lies; in other words, the knowledge or notice must come to an agent who has authority to deal in reference to those matters which the knowledge or notice affects. The facts of which the agent had notice must be within the scope of the agency, so that it becomes his duty to act upon them or communicate them to his principal. As it is the rule that whether the principal is bound by contracts entered into by the agent depends upon the nature and extent of the agency, so does the effect upon the principal of notice to the agent depend upon the same conditions. Hence, in order to determine whether the knowledge of the agent should be imputed to the principal, it becomes of primary importance to ascertain the exact scope and extent of the agency," Trentor v. Pothen, 46 Minn. 298, 300, 301, 24 Am. St. Rep. 225, 49 N. W. 129. 99 See also Atchison, T. & S. F. R. Co. v. Benton, 42 Kan. 698, 22 Pac. 698; Larzelere v. Starkweather, 38 Mich. 96. The evidence before us makes it plain that the agency of Baldwin for Morrison was extremely limited in its subject-matter. So far as the So far as the record shows, it extended no further than to advise Morrison of the existence and physical value of the chattels on which he was lending his money. Before he talked with Baldwin he had practically agreed to lend the money to Denny, whom he had known for some years. He had been injured in an accident, and was confined to his home when Baldwin came to him with the chattel mortgage, and because of his injury he then told Baldwin, who had in prior years been attorney for him in other matters, in substance, that he would take his estimate of the property and make the loan. While he 4 A L.R.-99 admitted that Baldwin was his agent to that extent, it is clear that throughout the whole transaction Baldwin was really the attorney and agent for De Beaumont and Denny, and was serving them in his visit to Morrison. Denny's title to the chattels or his right to mortgage the same was a matter concerning which there is no evidence whatever that Morrison ever sought or received advice from Baldwin. That matter was wholly outside the scope of Baldwin's agency for Morrison, so far as any such agency was established by the evidence. The fact that Baldwin drew the chattel mortgage we regard as immaterial. He received no fee from Morrison for doing so, nor in fact for any other services in the premises. He received his compensation for all of his services from Denny or De Beaumont. In any event he was a mere scrivener in drawing the chattel mortgage. We are clearly of the opinion that in view of the special and limited nature of Baldwin's agency for Morrison, Baldwin's knowledge of the insolvency and fraudulent purpose Attorneyof De Beaumont, knowledgeand of Denny's participation in that purpose, cannot be imputed to Morrison. notice to client. But there is another reason potent in equity why Morrison cannot be affected with notice of Baldwin's knowledge of the covinous nature of the transaction as between De Beaumont and Denny, whatever may have been the scope of Baldwin's agency for Morrison. Baldwin was agent and attorney for both Denny and De Beaumont on the one hand, and for Morrison on the other. If Morrison told the truth, Baldwin never advised him that De Beaumont was insolvent and was about to go into voluntary bankruptcy, or that the transfers of his property to Denny were such as to be in fraud of De Beaumont's creditors, or that such was the purpose of De Beaumont and Denny. Obviously this knowledge was withheld from Morrison with the consent, or at least with the connivance, of both De Beaumont and Denny. True, nobody so testified in terms, but the facts clearly raise that inference. The very fact that Morrison did not actually know of the fraudulent purpose of De Beaumont and Denny, who were acting under the advice and direction of Baldwin, and who, as Baldwin knew, had to have the money from Morrison in order to carry out that purpose by securing Mrs. De Beaumont's co-operation, makes the inference that Denny and De Beaumont knew that the knowledge would be withheld by Baldwin from Morrison almost a certainty. At any rate, that was an inference which the trial court had the right to draw from the undisputed facts. In such a case, the concealment constitutes a fraud upon the party kept in ignorance; the agent himself being such an instrument in that fraud as, in the language of Mechem above quoted, "to practically destroy the relation of agency." Mechem, after pointing out that the rule of imputed notice rests in the assumption that the agent will report to the principal everything touching the subject-matter material to the principal's protection and interest, says: "This presumption, however, it is said, will not prevail where it is certainly to be expected that the agent will not perform his duty, as where the agent, though nominally acting Notice-knowledge of attorney -interest in concealment. as such, is in reality acting in his own or another's interest, and adversely to that of his principal." 2 Mechem, Agency, 2d ed. § 1815, p. 1399. See also 2 Pom. Eq. Jur. 3d ed. § 674. From whatever angle this transaction may be viewed in the light of the evidence, we are satisfied that Morrison had no actual knowledge of the fraudulent purpose of De Beaumont and Denny, and that notice cannot be imputed to him from his limited employment of their at torney, Baldwin, in this transaction. The judgment is affirmed. Webster, Fullerton, Main, and Parker, JJ., concur. Petition for rehearing denied. NOTE. In many instances, courts have refused to apply the general rule that a client is chargeable with the knowledge of his attorney, because of the limited scope of the employment. The decision in the reported case (FLOR ENCE V. DE BEAUMONT, ante, 1565) is an illustration of such a refusal. The entire subject of imputation of knowledge of an attorney to his client is discussed in the note, post, 1592. See subd. III. c thereof for the cases relating to limited employment. Imputing knowledge when attorney is acting in his own interest, or in fraud of his client, is discussed in subd. VI. ALVIN F. PYEATT, Guardian, et al., Plffs. in Err., V. JENNIE C. ESTUS et al. Oklahoma Supreme Court - June 6, 1916. (— Okla. 179 Pac. 42.) Notice knowledge of attorney. 1. All of the conveyances involved were executed in the office of the attorney for the defendants Prudential Insurance Company of America Headnotes 1-10 by LINN, C. (Okla., 179 Pac. 42.) and the Deming Investment Company, and such attorney investigated and passed upon the title to said lands involved, and in making such investigation secured sufficient information as to the fact that the full purchase price of said lands was not paid in cash, that if reasonable diligence had been used, he would have obtained knowledge of all facts. Held, that said loan companies were not innocent bona fide encumbrancers without notice. [See note on this question beginning on page 1592.] 8. The facts show that the lands involved belonging to the minor plaintiffs were ordered sold for cash in hand; that they were purchased at the guardian's sale by M. for himself and associates V. and H. for the sum of $26,000 to be paid cash; that before the conveyances were made said purchasers sold said land to the defendant E. for an agreed consideration of $48,620, $15,000 of which amount was to be paid in cash, obtained by negotiating a loan on the lands in question, the balance to be paid in Oklahoma City property and second mortgage lien notes; that the $15,000 cash secured on the lands was turned over to Allen Cash, as guardian, and the conveyance was made to Allen Cash individually to certain Oklahoma City property, valued at approximately $28,000. The facts further show that the said purchasers colluded with the guardian for the purpose of securing title to the minors' lands in the manner stated. Held, that such facts rendered the conveyances to said land void. [See 12 R. C. L. 1142.] Notice examination of title. - 9. The defendant E., the purchaser of said lands, intrusted the examination and approving of the title to the attorney for the loan companies, who performed said services without additional charge to her. Held, under the laws, the relation of attorney and client existed between such attorney and purchaser, and such purchaser was bound by such notice and knowl |