Agent's Duties to Principal. Ana Barreto and Flavia Gugliuzzi asked Ruth Bennett, a real estate salesperson who worked for Smith Bell Real Estate, to list for sale their house in the Pleasant Valley area of Underhill, Vermont. Diana Carter, a California resident, visited the house as a potential buyer. Bennett worked under the supervision of David Crane, an officer of Smith Bell. Crane knew, but did not disclose to Bennett or Carter, that the house was subject to frequent and severe winds, that a window had blown in years earlier, and that other houses in the area had suffered wind damage. Crane knew of this because he lived in the Pleasant Valley area, had sold a number of nearby properties, and had been Underhill's zoning officer. Many valley residents, including Crane, had wind gauges on their homes to measure and compare wind speeds with their neighbors. Carter bought the house, and several months later, high winds blew in a number of windows and otherwise damaged the property. Carter filed a suit in a Vermont state court against Smith Bell and others, alleging fraud. She argued in part that Crane's knowledge of the winds was imputable to Smith Bell. Smith Bell responded that Crane's knowledge was obtained outside the scope of employment. What is the rule regarding how much of an agent's knowledge a principal is assumed to know? How should the court rule in this case? Why?
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