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tions calculated to deceive and mislead any third person dealing with those notes. Especially is the statement by Miller misleading and deceptive. It amounted to a statement that the notes were originally given to him as a part, only, of the purchase price for the property; and that statement, taken with the recitals of consideration, $100,000, naturally leads to the inference that he received $25,000 of the purchase price in money and $75,000 in said notes. Accepting as true the allegations of the declaration, as we must on this general demurrer, the scheme was an artful one, calculated to lead an innocent third party to believe that the property was ample security for a much larger sum of money than that invested by the plaintiff. Moreover, if appellee concocted a scheme for placing fraudulent and worthless securities upon the market, he cannot be heard to say that parties induced to buy them shall suffer for their failure or neglect to discover his fraud. The rule is, that a party guilty of fraudulent conduct, whereby he induces another to act, will not be allowed to impute negligence to the latter as against his own deliberate fraud.”
Inducing plaintiff to cash defendant's check, when the latter had no money in the bank, constitutes a sufficient ground for an action of deceit; " signing as a witness a forged assignment of a stock certificate, knowing that it was to be used in obtaining
(c) In the absence of any duty to speak, mere silence even as to material facts, will not amount to misrepresentation. The vendee is not bound to comu Sieling vs. Clark, 41 N. Y. 13 Littlejohn vs. Drennon, 95 Ga., Suppl., 982.
743; 22 S. E., 657; Stewart vs. 12 New York City Second National
Wyoming Cattle Ranche Co., Bank vs. Curtie, 2 N. Y., App.
128; U.S., 383; 9 Sup. Ct., 101. Div., 508; 37 N. Y. Suppl., 1028.
municate to the vendor of goods the knowledge of extrinsic circumstances, which might influence the price of the commodity, and which is exclusively within the knowledge of the vendee, particularly where the means of intelligence are equally accessible to both parties."
A suppression of truth, however, with the intent to deceive may be equivalent to positive misrepresentation." This principle is carefully stated by the Supreme Court of the United States, in the case of Smith vs. Richards: “It is an ancient and well established principle, that whenever suppressio veri or suggestio falsi occur, and more especially both together, they afford a sufficient ground to set aside any release or conveyance.
This ancient principle, thus expressed with so much sententious brevity, is laid down in terms somewhat more comprehensive and having a direct bearing on the present case, by a modern text writer on equity.
"In 1 Maddock's Chancery, 208, it is thus stated: If indeed, a man upon a treaty for any contract, make a false representation, whether knowingly or not, by means of which he puts the party bargaining under a mistake upon the terms of bargain, it is a fraud and relievable in equity. The doctrine thus laid down is almost in the very words used by the Chancellor, in the case of Neville vs. Wilkingson (1 Brown's Chan. Cases, 546), with the exception of the words, whether knowingly or not; and the part of the proposition embraced by these words, is founded upon the case of Ainslie vs. Medicot (Vesey, 21) which fully sustains Mr. Maddock. In this latter case the following strong language is used, 'No doubt, by a representa* Lardlaw vs. Organ, 2 Wheaton,
174; 20 N. W., 220; Lunn vs.
Sherner, 93 N.C., 104. 1 Faulkner vs. Klamp, 16 Nebr., 10 13 Peters, 26.
tion a party may bind himself just as much as by an express covenant. If, knowingly, he represents what is not true, no doubt he is bound. If, without knowing that it is not true, he takes upon himself to make a representation to another, upon the faith of which that other acts, no doubt he is bound, though his mistake was perfectly innocent.'
"But the doctrine is laid down with more comprehensiveness and precision by a still more modern writer on equity, who gives us, in the form of distinct propositions, what he considers the result of the various cases on the subject, and marks, with particularity, the modifications which belong to it.
"In 1 Story's Equity, 201, 202, it is thus stated: 'Where the party intentionally or by design, misrepresents a material fact, or produces a false impression, in order to mislead another, or to entrap or cheat him or to obtain an undue advantage of him, in every such case there is a positive fraud, in the truest sense of the terms: there is an evil act, with an evil intentdolum malum, ad circumveniendum. And the misrepresentation may be as well by deeds or acts, as by words,-by artifices to mislead, as by positive asser
If the two parties to a contract have not the same knowledge, or the means of obtaining it, it is the duty of the person having the superior knowledge to make it known to the other. 17
SECTION 57. DEFENDANT'S KNOWLEDGE OF THE FAL
SITY OF THE REPRESENTATION.
There is no deceit, and therefore no ground of action, unless the defendant had knowledge of the falsity of his representations. If the defendant acted with reasonable care and good faith, in making his representations, he is not liable for misstatements which he may accidently have made.18
17 Lockbridge vs. Foster, 4 Scannon, 569.
In an action for deceit, however, the necessity for proving the knowledge of the falsity of the statement by the defendant, can be fulfilled by showing either:
(a) That the defendant actually knew the statement to be false;
(b) That he made the statement recklessly, without taking pains to ascertain whether it was true or false;
(c) That he made the statement positively, when in fact it was only a matter of opinion; or
(d) That the defendant stood in such a relation to the subject-matter that it was his duty to know the truth concerning the matter."
These various methods of satisfying the requirement for knowledge on the part of the defendant, are discussed in Smith vs. Richards,20 already quoted in this chapter: "Whether the party thus misrepresenting a fact, knew it to be false, or made the assertion without knowing whether it were true or false, is wholly immaterial, for the affirmation of what one does not know, or believe to be true, is equally, in morals and law, as unjustifiable as the affirmation of what is known to be positively false. And even if the party innocently misrepresents a fact by mistake, it is equally conclusive, for it operates as a surprise and imposition on the other party. Or as Lord Thurlow expresses it, in Neville vs. Wilkinson, 'it misleads the parties contracting, on the subject of the contract.
18 Toner vs. Menssdorffer, 123 Cal.,
462; 56 Pac., 39; Davidson vs. Jordan, 47 Cal., 351; Cornell vg. El Paso Gold Min., etc., Co., 78 Pac., 677; Holdon vs. Ayer, 110 m., 448; Riley vs. Bell,
120 Iowa, 618; 95 N. W., 170. 10 Bome decisions, however, have
hold that actual knowledge of
the falsity of the statement is absolutely essential. Warfield 18. Clark, 118 Iowa, 69; 91 N. W., 833; Boddy vs. Henry, 113 Iowa, 462; 85 N. W., 771; 53 L. R. A., 769; Watson Coal, etc., Co. vs. James, 72 Iowa,
184; 33 N. W., 622. 30 13 Peters, 26.
"The author of the treatise last cited thus states the modifications of the doctrine:
“The misrepresentation must be of something material, constituting an inducement, or motive to the act, or omission of the other, and by which he is actually misled to his injury.
"In the next place, the misrepresentation must not only be in something material, but it must be in something, in regard to which the one party places a known trust and confidence in the other. It must not be a mere matter of opinion, equally open to both parties for examination and inquiry; and which neither party is presumed to trust to the other, but to rely on his own judgment.
"The doctrine of these text writers is illustrated by the cases in the books, some of which present very strong applications of it; for it is held to extend not only to the parties to the contract, but also to others, who, from gross negligence, are guilty of misrepresentation. Thus, for example, in the case of Pearson vs. Morgan (2 Brown's Ch. Cases, 385), where A, being interested in an estate in fee, which was charged with £8,000 in favor of B, was applied to by C, who was about to lend money to B, to know whether the £8,000 was still a subsisting charge on the estate. A stated that it was, and C lent his money to B accordingly. It appeared, afterwards, that the charge had been satisfied, yet it was held that the money lent was a charge on the lands in the hands of A's heirs, because he either knew, or ought to have known the fact