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CHAPTER X.

DECEIT.

SECTION 54. DEFINITION. Deceit is the inducing a man to act to his damage by willfully or recklessly causing him to believe in a falsehood.

Deceit is a species of fraud. These two terms are sometimes used as if they were interchangeable, but fraud is the broader term.

SECTION 55. REQUISITES IN AN ACTION OF DECEIT.

There are five necessary requisites in an action for deceit. A failure to prove any one of the following five elements will be fatal to the plaintiff's cause in an action of this character:

(1) There must be a misrepresentation of material fact:

(2) The defendant (in the action for deceit) must have known the statements made to be false:

(3) The plaintiff (in the action for deceit) must not have known the statements made to be false, but must have believed them to be true:

Fraud is a term of very wide

application and has been so carelessly used by writers and judges as to render the exact meaning of the term very indefinite. Fraud is divided into actual fraud and constructive fraud. Actions of deceit would generally fall under the former division. Some definitions of fraud which have been given are as follows: “Actual or positive fraud consists in deception, intentionally practiced to induce another to part with

property or to surrender some legal right, and which accomplishes the end designed.” Judd vs. Weber, 55 Conn., 267, 277; 4th Atl., 40. "It may be safely averred, that ail deceitful practices in depriving

endeavoring to deprive another of his known right by means of some artful device or plan contrary to the plain rules of common honesty, is fraud.” Mitchell vs. Kintzer, 5 Pa. St., 216, 219; 87 Am. Dec., 408.

or

(4) The defendant must have made the statement with the intention of having it acted upon: and

(5) The plaintiff must have actually acted upon the statement made by the defendant, and as a result been damaged thereby.

SECTION 56. THE MISREPRESENTATION.

There must always be a misrepresentation of material fact as the first element in an action for deceit. This misrepresentation, however, need not always consist of express words. There may be a misrepresentation either by (a) express words, (b) actions, or (c) concealment.

(a) Misrepresentation by express words. This is the clearest type of misrepresentation. Where misrepresentations are thus made, with the intention of having them acted upon, it is very evident that there is a basis for an action of deceit.?

The misrepresentations may have been as to any matter having a natural bearing on the transaction, but they must not be merely expressions of opinion. For example, where defendant, a corporation, by its president, wrote to the owner of certain land to be used in the sale of mortgage bonds, stating, inter alia, that "we have in our possession the original documents printed in the advertisements of your bonds secured by mortgage to this company as trustee upon the tract in this city. We indorse the estimates of value contained therein, made by,” certain persons, names, “all of whom are known as men of integrity and sound judgment touching local estimate value.

“We are of the opinion that it is adequate security for the • Stevens vs. Lee, 2 C. L. R., 251;

vs. Weave, 79 Iowa, 687; 44 Gerhard vs. Bates, 1. C. L. R.,

N. W., 915; Dickinson vs. 868; 2 E. & B., 476; Hubbard

Atkins, 100 tl. App., 401.

amount of your proposed loan.” It was held that such statements purport to be mere opinions, and, though false, actions for deceit will not lie in favor of persons to whom they were made for the purpose of inducing them to invest in bonds secured by the mortgage therein referred to.

Such letter, however, also stated: “That we consider the title good in you will appear from the fact that we have engaged to issue our policies of title insurance to the several holders of your mortgage bonds to the aggregate amount of $150,000, fully protecting such holders against loss or damage arising from any defect in said title or prior incumbrance thereon." It was held that such representation purports to be a statement of fact, which was intended to produce the belief among purchasers of bonds, to whom it was shown, that the title was perfect, and, if false, renders defendant liable to, such purchasers as bought relying thereon.

In actions for deceit by purchaser of such bonds on account of such representation it appeared that there was a prior mortgage of $30,000 on the land; that it had been arranged by the owner that defendant should reserve in its hands bonds to the amount of $40,000 as a protection against such mortgage; and that defendant's president probably regarded policies of title insurance to be issued by it as a perfect protection to the bondholders. It was held, that the representation was false, since a bond secured by a second mortgage with a policy of title insurance is not the same as a bond secured by a first mortgage.*

3

In a recent New York case it was held that an

4 Id.

• Nash vs. Minnesota Title Ins.,

etc., Co., 159 Mass., 437; 34 N. E., 625.

action for deceit would lie against one who induced the plaintiff to marry a woman by representing that she was virtuous, when she was at the time pregnant by the defendant.

Some cases have held that the action of deceit will not lie for a false claim by the vendor that the title is in him, when the purchaser has taken possession of the premises under a conveyance with express covenants. The weight of opinion, however, is the other way even on this point, and all cases agree that such action will lie for collateral misrepresentation affecting the title.

A person is liable, in an action of this character, who makes a false and fraudulent representation of fact as to the credit or standing of another, by which a third person is damaged. Thus it was held by the Supreme Court of Georgia that: "An action on the case for a false representation, lies against one who gives a letter of recommendation of character and credit to an individual, on the strength of which he gets credit, it being shown that the representations were false, and that the defendant knew them to be false.''

The illustrations already given will serve to show the various kinds of misrepresentations which be the basis for an action for deceit. A complete enumeration of all the possible forms of deceit would be an impossibility.

(b) Misrepresentations may also arise from the acts or conduct of the party. This is clearly set out in the decision in Leonard vs. Springer.10 "Counsel • Kujek vs. Goldman, 150 N. J., 8 Barnard vs. Duncan, 38 Mo., 170; 176; 44 N. E., 773.

90 Am. Dec., 426; Andrus vs. Peabody vs. Phelps, 9 Cal. 213.

St. Louis Smelting, etc., Cox, ? Haight vs. Hayt, 19 N. Y.,

464;

130 V. S., 643. Atwood vs. Chapman, 68 Me., • Young vs. Hall, 4 Ga., 95. 38; 28 Am. Rep., 5.

10 197 III., 532; 64 N. E., 209.

further contends there is no allegation that the defendant ever knew the plaintiff or ever made any representations of any sort to her. It is true, the representations were not by means of conversations between the parties, but the rule is as stated in the Law of Frauds, by Bigelow (p. 467), that a representation is anything short of a warranty, 'proceding from the action or conduct of the party charged, which is sufficient to create upon the mind a distinct impression of fact, conducive of action. The most usual and obvious example is an oral, written or printed statement. But statement is by no means necessary. Any conduct capable of being turned into a statement of fact is a representation. There is no distinction between misrepresentations effected by words and misrepresentations effected by other acts. It is sufficient that there were acts such as to mislead a reasonably cautious or prudent man in regard to the existence of a fact forming a basis of or contributing an inducement to some change of position by him. In this case, the recitals in the deeds and trust deed, stating a consideration which inferred that the property was of great value whereas the interest of the defendant therein was of no value whatever; the memorandum on the notes that they were secured, 'by a trust deed to Chicago Title and Trust Company, trustee, of even date herewith, on seven-story and basement building, No. 188 East Monroe Street, City of Chicago,' implying that the trust deed conveyed the fee simple title; the recital in the trust company's certificate that these notes were a part of a series of notes amounting to $75,000, 'secured by trust deed, and likewise the statement that 'in consideration of the interest being paid in full the time is extended to May 1, 1899,' signed by Miller, are in law representa

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