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S Development Company v. Pima Capital Management Co.8/30/2001
on imputed knowledge was reversible error. "A jury verdict will not be overturned because of the jury instructions that were given unless there is substantial doubt as to whether or not the jury was properly guided in its deliberations." Catchings v. City of Glendale, 154 Ariz. 420, 424, 743 P.2d 400, 404 (App. 1987).
The appellants' argument is not well taken. A review of our common law, the Restatement (Second) of Torts, and the Restatement (Second) of Agency indicates that knowledge imputed from an agent to its principal can satisfy the requirements for nondisclosure under § 551 of the Restatement (Second) of Torts. As a general proposition, "knowledge acquired by an agent in the course of employment is imputed to the principal. . . . is premised on the presumption that the agent will perform his obligation to give his principal all knowledge relevant to the principal's protection and interest." Manley v. Ticor Title Ins. Co. of Cal., 168 Ariz. 568, 572, 816 P.2d 225, 229 (1991).
The appellants argue that the term "know" within the meaning of § 551 of the Restatement (Second) of Torts somehow requires actual knowledge. The appellants incorrectly premise their argument on the notion that a negligent nondisclosure claim has a "deceit component," and, therefore, that the state of mind of an agent cannot be imputed to the principal. We disagree. See Restatement (Second) of Agency § 257 cmt. b (1958) ("A principal, although personally innocent, is liable in an action of deceit under the rule stated in this Section [Misrepresentations; in General] if the agent's conduct constitutes deceit." (emphasis added)); id. § 261 cmt. a ("The principal is subject to liability [for his agent's fraud] under the rule stated in this Section although he is entirely innocent . . . ."); id. § 272 cmt. c ("In determining tort liability, the knowledge which the actor has or should have is usually of great importance. This is particularly true in cases of negligence and in tort which, like deceit . . ., are based upon the fact that the defendant has acted improperly in view of the knowledge which he has." (emphasis added)); id. illus. 6 ("P employs A to manage rental property. A learns that a stairway used in common by a number of tenants is dangerously weak. P's liability for harm to a tenant, hurt by the fall of the stairway, results from A's knowledge." (emphasis added)).
The cases that the appellants cite for the proposition that the appellants were required to have actual knowledge of the defective plumbing, rather than constructive knowledge through their agents, do not support their position. In Frazier v. Southwest Savings & Loan Ass'n, 134 Ariz. 12, 653 P.2d 362 (App. 1982), this Court did not have an imputed knowledge issue, or even an agency issue, before it. Rather, this Court held that the buyer's lender could not be held liable for nondisclosure because the evidence did not support a finding either that the lender was an agent of the seller or that the lender had knowledge of the seller's misrepresentations. Id. at 18-19, 653 P.2d at 368-69.
The next two cases that the appellants cite, Aranki v. RKP Investments, Inc., 194 Ariz. 206, 979 P.2d 534 (App. 1999), and National Housing Industries v. E.L. Jones Development Co., 118 Ariz. 374, 576 P.2d 1374 (App. 1978), are also distinguishable. In both of those cases, the plaintiffs attempted to impute the knowledge of a principal to an agent. See Aranki, 194 Ariz. at 208-09, 8-10, 979 P.2d at 536-37; Nat'l Housing Indus., 118 Ariz. at 379, 576 P.2d at 1379. By contrast, the facts of this case do not demonstrate that the appellees are attempting to impute knowledge of a principal to an agent.
The appellant
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