it afford any ground for a rescission of the contract.1 Thus in case of the sale of a hay rick, where the seller was silent but used no artifice to induce the sale, and proper diligence would have enabled the buyer to determine the unsound condition of the hay, a charge of fraud cannot be based on the seller's failure merely to disclose its condition.o The civil law differs from the common law rule of caveat emptor and the rule there adopted is caveat venditor, and requires him to disclose every material fact within his knowledge and unknown to the purchaser which might have an influence in making the contract, as otherwise it was considered that the parties would not stand on an equal ground.

621. Nondisclosure of Latent Defects.-Undoubtedly according to both the early and modern cases, if the defects are latent no charge of fraud can be based on the seller's failure to disclose them if he had no knowledge thereof, and there is authority for the view that if there are latent defects in the subject matter of a sale of which the seller has knowledge and of which the buyer is unaware, the law does not require that he disclose such defects, under the penalty of being charged with fraud, if he is guilty of no artifices or evasions, but the general rule is that if the defect is latent and not subject to discovery on a reasonable examination, the seller, if he has knowledge thereof, is bound to disclose the same, and his failure to do so may be made the basis of a charge of fraud. Failure to make such disclosure is to be deemed, it seems, fraud in law without regard to the intention to deceive. Whether the charge of fraud is based on actual misrepresentaions or alleged fraudulent concealment, there must be fraud, and to decide

J.

4. Hyatt v. Boyle, 5 Gill & (Md.) 110, 25 Am. Dec. 276; Hadley v. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454; Puls v. Hornbeck, 24 Okla. 288, 103 Pac. 665, 138 A. S. R. 883, 29 L.R.A. (N.S.) 202 and note; Westmoreland v. Dixon, 4 Hayw. (Tenn.) 223, 9 Am. Dec. 763.

5. Frenzel v. Miller, 37 Ind. 1, 10 Am. Dec. 62; Court v. Snyder, 2 Ind. App. 440, 28 N. E. 718, 50 A. S. R. 247. See also Ward v. Hobbs, 4 App. Cas. 13, 48 L. J. Q. B. 281, 40 L. T. N. S. 73, 27 W. R. 114, 3 Eng. Rul. Cas. 124.

Note: L.R.A.1917C 620.

6. Corry v. Sylvia, 192 Ala. 550, 68 So. 891, Ann. Cas. 1917E 1052; Kitchen v. Long, 67 Fla. 72, 64 So. 429, L.R.A.1917C 617; Hughes v. Robertson, 1 T. B. Mon. (Ky.) 215, 15 Am. Dec. 104; French v. Vining, 102 Mass. 132, 3 Am. Rep. 440; Cecil v. Spurger, 32 Mo. 462, 82 Am. Dec. 140; Hoe v. Sanborn, 21 N. Y. 552, 78 Am. Dec. 163; Brown v. Gray, 51 N. C. 103, 72 Am. Dec. 563; Hadley v. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454; Puls v. Hornbeck, 24 Okla. 288, 103 Pac. 665, 138 A. S. R. 883, 29 L.R.A. (N.S.) 202 (cattle infected with fever ticks); McFarlane v. Moore, 1 Overt. (Tenn.) 174, 3 Am. Dec. 752 (health of a slave); Wintz v. Morrison, 17 Tex. 372, 67 Am. Dec. 658.

Notes: 6 Am. Dec. 118; 15 Am. Dec. 106; 44 Am. Dec. 289; 90 Am. Dec. 429.

whether there is fraud, knowledge of the fact misrepresented or not communicated is most important. In both, there must be an intention to deceive; but this intention may be imputed, and in some cases will be conclusively imputed, upon the principle that a party must be presumed to intend the necessary consequences of his own acts or conduct. If a seller omits to disclose a latent defect, which it was under the circumstances his duty to disclose, and by such omission receives, as purchase money, many times the real value of the article, he cannot say, in answer to the action of the purchaser for a deceit, that none was intended. Want of title seems to be regarded as in the nature of a latent defect and it has been held that one selling personal property, knowing he has no title, and concealing that fact from the purchaser, is liable for fraud; and it has been held, in case of a sale of a ship en voyage, that the failure of the seller to disclose that he had encumbered the freight to be earned on the voyage constituted an actionable fraud. The duty to make disclosure of latent defects is especially imposed where the buyer inquires of the seller whether there are any latent defects of which he has knowledge, and in such a case the seller must make a full and positive disclosure.10 If the property is sold with all its faults, or whether sound or unsound, the seller is not required. to disclose latent defects of which he has knowledge, provided he does nothing to mislead the buyer or conceal or prevent the discovery of such defects.11 There is no obligation whatsoever on the defendant in execution to disclose defects in the property exposed to sale by the sheriff, and failure to disclose the same will not render him liable to an action of deceit; the sheriff and not the execution debtor is regarded in such a case as the seller. 12 On the other hand the sheriff may incur a personal liability by reason of his fraudulent misrepresentations or concealment of defects either in the title or condition of the property exposed to sale.13

622. Misrepresentations Generally.-False and fraudulent misrepresentations by the seller as to the subject matter of the contract may constitute fraud for which the buyer may maintain an action for damages or rescind the sale, and as a general rule every wilful misrepresentation by the seller in respect to a fact affording a material induce

7. Hadley v. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454.

8. Corry v. Sylvia, 192 Ala. 550, 68 So. 891, Ann. Cas. 1917E 1052; Jarrett v. Goodnow, 39 W. Va. 602, 20 S. E. 575, 32 L.R.A. 321. As to the implied warranty of title, see supra, par. 454.

9. Corry v. Sylvia, 192 Ala. 550, 68 So. 891, Ann. Cas. 1917E 1052.

10. Baker V. Seahorn, 1 Swan

(Tenn.) 54, 55 Am. Dec. 724.

11. West v. Anderson, 9 Conn. 107, 21 Am. Dec. 737; Ward v. Hobbs, 4 App. Cas. 13, 48 L. J. Q. B. 281, 40 L. T. N. S. 73, 27 W. R. 114, 3 Eng. Rul. Cas. 124.

Note: 3 Eng. Rul. Cas. 137. 12. Hart v. Hampton, 7 T. B. Mon. (Ky.) 381, 18 Am. Dec. 186.

13. Bartholomew V. Warner, 32 Conn. 98, 85 Am. Dec. 251. See ExECUTIONS, vol. 10, p. 1300-1301.

ment to the sale and which operates to deceive the buyer may be made the basis of a charge of fraud.14 It is not essential to found a charge of fraud that a misrepresentation be directly made; if a false impression is made by words or acts in order to mislead and has such effect, it may be sufficient.15 Fraudulent representations may be as well by arts or artifices calculated to deceive as by positive assertions,16 and concealment, when a duty to disclose is imposed on the seller, may form the basis of a charge of fraud as in case of active misrepresentations.17 In case of the sale of a patent right it has been held that a charge of fraud may be based on false representations as to its value and usefulness.18 On the other hand the same rule has been applied to the sale of patent rights as to other personal property, and such representations have been held not to be the basis of a charge of fraud.19

623. Time of Making of Misrepresentations.-In order that a charge of fraud may be based on false representations by the seller it is not necessary that they be made at the exact time of the sale; it is sufficient if they were made in view of and to induce the buyer to make the purchase and in fact had such effect.20 Thus a charge of fraud has been sustained where the seller exhibited a mule to a proposed buyer,

As to fraud in the sale of mines generally, see MINES, vol. 18, p. 1181. 15. Stewart v. Wyoming Cattle Ranche Co., 128 U. S. 383, 9 S. Ct. 101, 32 U. S. (L. ed.) 439; Howard v. Gould, 28 Vt. 523, 67 Am. Dec. 728.

14. Whitworth v. Thomas, 83 Ala. of a mining lease that the ground has 308, 3 So. 781, 3 A. S. R. 725; West not been mined, and that it has been v. Anderson, 9 Conn. 107, 21 Am. prospected by digging shafts to the Dec. 737; Morehouse v. Northrop, 33 ore and then left, are not matters of Conn. 380, 89 Am. Dec. 211; Barrie opinion but statements of fact upon v. Miller, 104 Ga. 312, 30 S. E. 840, which a charge of fraud may be 69 A. S. R. 171; Frenzel v. Miller, 37 based. Ind. 1, 10 Am. Dec. 62; Dowagiac Mfg. Co. v. Gibson, 73 Ia. 525, 35 N. W. 603, 5 A. S. R. 697; Hanks v. McKee, 2 Litt. (Ky.) 227, 13 Am. Dec. 265 (misrepresentation in sale of a slave of the degree to which asthma, with which she was afflicted, had progressed); Ripley v. Case, 78 Mich. 126, 43 N. W. 1097, 18 A. S. R. 428; Kendrick v. Ryus, 225 Mo. 150, 123 S. W. 937, 135 A. S. R. 585; Stewart v. Stearns, 63 N. H. 99, 56 Am. Rep. 496; Mayer v. Dean, 115 N. Y. 556, 22 N. E. 261, 5 L.R.A. 540; Fargo Gas, etc., Co. v. Fargo Gas, etc., Co., 4 N. D. 219, 59 N. W. 1066, 37 L.R.A. 593; Wintz v. Morrison, 17 Tex. 372, 67 Am. Dec. 658. Notes: 6 Am. Dec. 118; 90 Am. Dec. 426; 37 L.R.A. 593.

In Kendrick v. Ryus, 225 Mo. 150, 123 S. W. 937, 135 A. S. R. 585, it is held that representations by the seller

16. Croyle v. Moses, 90 Pa. St. 250, 35 Am. Rep. 654.

17. Keen v. James, 39 N. J. Eq. 527, 51 Am. Rep. 29. As to the duty to disclose latent defects, see the next preceding paragraph.

18. Page v. Dickerson, 28 Wis. 694, 9 Am. Rep. 532.

19. Neidefer v. Chastain, 71 Ind. 363, 36 Am. Rep. 198. As to representations as to value generally, see infra, par. 633.

20. Harris v. Mullins, 32 Ga. 704, 79 Am. Dec. 320; Keen v. James, 39 N. J. Eq. 527, 51 Am. Rep. 29.

and at that time represented the animal sound, knowing the contrary, even though the seller afterwards said to the proposed buyer that “the animal will be sold in a short time at auction, and you will then have a chance to buy him," and about an hour subsequently the mule was offered for sale at auction, and the proposed buyer purchased it relying on the prior representations of the seller.1

624. Misrepresentations by or to Third Persons.-It is clear that mere fraud of a third person which induces the purchase of goods will not give the purchaser a right to rescind the contract, if the seller is not a party to the fraud; in such a case the contract must stand and the buyer must resort to his remedy against such third person. On the other hand the misrepresentations need not be made directly by the seller; it is sufficient in case they are made by a third person that it was at the instigation of the seller, and that it was so made may be proven by circumstantial evidence. So, though misrepresentations by the seller as to value cannot ordinarily be made the basis of a charge of fraud, misrepresentations by a third person are placed on a different basis. The distinction between the two cases is marked and obvious; in the one, the buyer is aware of his position; he is dealing with the owner of the property, whose aim is to secure a good price, and whose interest it is to put a high estimate upon his property, and whose great object is to induce the purchaser to make the purchase; while in the other, the man who makes the false assertions has, apparently, no object to gain; he stands in the situation of a disinterested person, in the light of a friend, who has no motive or intention to depart from the truth, and who thus throws the buyer off his guard, and exposes him to be misled by the deceitful representations. To entitle a purchaser to relief from false representations, it is not necessary that they should be made to him by the seller directly. If they are made to a third person with the intent that they shall reach the purchaser and be acted on by him in the manner occasioning injury, or, more broadly, if they are made with the intent of their influencing everyone to whom they may be communicated, or who may read or hear about them, one of the latter class of persons will be in the same position as one to whom the representations are communicated directly."

625. Artifices to Conceal Defects.-If a seller resorts to artifices to conceal defects a charge of fraud may be based thereon; and though

1. Harris v. Mullins, 32 Ga. 704, 79 Am. Dec. 320.

2. Compton v. Bunker Hill Bank, 9 Ill. 301, 3 Am. Rep. 147; Nash v. Minnesota Title Insurance, etc., Co., 163 Mass. 574, 40 N. E. 1039, 47 A. S. R. 489, 28 L.R.A. 753; Bank v. Looney, 99 Tenn. 278, 42 S. W. 149, 63 A. S. R. 830, 38 L.R.A. 837. Note: 85 A. S. R. 374.

3. Rees v. Jackson, 64 Pa. St. 486, 3 Am. Rep. 608.

4. See infra, par. 633.

5. Kenner v. Harding, 85 Ill. 264, 28 Am. Rep. 615.

6. Note: 85 A. S. R. 373.

7. Mamlock v. Fairbanks, 46 Wis. 415, 1 N. W. 167, 32 Am. Rep. 716. Note: 90 Am. Dec. 428, 429.

ordinarily there is no obligation on the part of the seller to disclose open or patent defects, at the same time the seller must not use any art, or practice any artifice, to conceal defects, or make any representations, or do any act, to throw the purchaser off his guard, or to divert his eye, or to obscure his observation, or to prevent his use of any present means of information. Misrepresentations made with the intent to deceive and divert the attention of the buyer by lulling any suspicions appearances might have excited may be made the basis of a charge of fraud,10 and where there are defects, latent or open, though ordinarily the seller is under no obligation to disclose the same if the sale is expressly made subject to defects,11 yet if by artifices or misrepresentations as to the actual condition of the subject matter he misleads the buyer, a charge of fraud may be based thereon.12

626. Materiality of Representation and Negligence of Buyer.-To constitute a misrepresentation a ground of fraud for avoiding the contract, or to entitle the buyer to his action, it must be in regard to a material fact, operating as an inducement to the purchase, and on which the buyer had a clear right to rely. Likewise the party complaining must have been actually deceived thereby; and, generally, such representation must not be mere matter of opinion, or in respect of facts equally open to the observation of both parties, and concerning which the party complaining, had he exercised ordinary prudence, could have attained correct knowledge. If a party blindly trusts, where he should not, and closes his eyes, where ordinary diligence requires him to see, he is willingly deceived, and the maxim applies, volenti non fit injuria.18 The unmistakable drift, however, of the decisions is towards the just doctrine that the wrongdoer cannot shield himself from liability by asking the law to condemn the credulity of his victim. The falsity of the statement may be apparent because the

8. See supra, par. 620.

9. Croyle v. Moses, 90 Pa. St. 250, 35 Am. Rep. 654; Mamlock v. Fairbanks, 46 Wis. 415, 1 N. W. 167, 32 Am. Dec. 716.

10. Wintz v. Morrison, 17 Tex. 372, 67 Am. Dec. 658.

11. See supra, par. 621.

12. West v. Anderson, 9 Conn. 107, 21 Am. Dec. 737; Harris v. Mullins, 32 Ga. 704, 79 Am. Dec. 320: George v. Johnson, 6 Humph. (Tenn.) 36, 44 Am. Dec. 288; Baker v. Seahorn, 1 Swan (Tenn.) 54, 55 Am. Dec. 724; Wood v. Hobbs, 4 App. Cas. 13, 48 L. J. Q. B. 281, 40 L. T. N. S. 73, 27. W. R. 114, 3 Eng. Rul. Cas. 124. 13. Slaughter v. Gerson, 13 Wall. R. C. L. Vol. XXIV.-22.

337

379, 20 U. S. (L. ed.) 627; Jenkens v. Long, 19 Ind. 28, 81 Am. Dec. 374; Frenzel v. Miller, 37 Ind. 1, 10 Am. Dec. 62; Neidefer v. Chastain, 71 Ind. 363, 36 Am. Rep. 198; Poland v. Brownell, 131 Mass. 138, 41 Am. Rep. 215; Younger v. Hoge, 211 Mo. 444, 111 S. W. 20, 18 L.R.A. (N.S.) 94; Page v. Parker, 43 N. H. 363, 80 Am. Dec. 172; Williams v. Hicks, 2 Vt. 36, 19 Am. Dec. 693; Mamlock v. Fairbanks, 46 Wis. 415, 1 N. W. 167, 32 Am. Rep. 716.

Notes: 81 Am. Dec. 376; 90 Am. Dec. 427; 32 A. S. R. 384; 2 L.R.A. 743; 37 L.R.A. 593 et seq.

See infra, par. 631. as to so called dealer's talk,