thing misrepresented is before the buyer, and the most casual look will suffice to discover the falsehood, no artifice being used to divert his attention; or the statement may carry its own refutation upon its face, may be so absurd or monstrous that it is palpably false; still the general rule is, and, on principle, must be, that the question is primarily one of reliance by the buyer on the false statement of the seller. Whether it was wise for him to rely on it, whether he was prudent in so doing, whether he is not chargeable with negligence in a certain sense in not investigating these inquiries are, in general, immaterial, provided the buyer has in fact been deceived. 14 As a general rule to found a charge of fraud on the misrepresentations of the seller, even for relief by way of rescission, they must have resulted in damage or prejudice to the buyer. 15 The question as to whether a misrepresentation was material, whether relied on by the buyer as a ground for an action of deceit or for rescission, has been held a question of law for the determination of the court.16 627. Reliance of Buyer on Representations.-The buyer must have relied on the alleged fraudulent representations of the seller to entitle him to base a charge of fraud thereon,17 and therefore if the buyer has actual knowledge of the falsity of the representation he cannot do so.18 And ordinarily when the buyer undertakes to make full investigation of his own and the seller does nothing to prevent his investigation from being as full as he chooses to make it, the buyer cannot afterwards allege that the seller made misrepresentations.19 But the fact that he may have made investigation in respect to the representations of the seller will not preclude him from basing a charge of fraud thereon if in fact he relied on them and was deceived.20 Thus a 14. Fargo Gas, etc., Co. v. Fargo Gas, etc., Co., 4 N. D. 219, 59 N. W. 1066, 37 L.R.A. 593 and note. Note: 14 Ann. Cas. 261. 16. Greenleaf v. Gerald, 94 Me. 91, 46 Atl. 799, 80 A. S. R. 377, 50 L.R.A. 542. See FRAUD AND DECEIT, vol. 12, p. 447. 17. Meland v. Youngberg, 124 Minn. 446, 145 N. W. 167, Ann. Cas. 1915B 775 and note. 18. Connersville v. Wadleigh, 7 Blackf. (Ind.) 102, 41 Am. Dec. 214. 15. Southern Development Co. v. Silva, 125 U. S. 247, 8 S. Ct. 881, 31 U. S. (L. ed.) 678; Campbell v. Whittingham, 5 Marsh. (Ky.) 96, 20 Am. Dec. 241; Meland v. Youngberg, 124 Minn. 446, 145 N. W. 167, Ann. Cas. 1915B 775; Jakway v. Proudfit, 76 Neb. 62, 109 N. W. 388, 14 Ann. Cas. 258. (This case involved a suit to rescind a sale of corporate stock for fraudulent representations that certain stock had been paid for in cash, whereas a note had been given there- 20. Morrow v. Bonebrake, 84 Kan. for which the corporation had nego- 724, 115 Pac. 585, 34 L.R.A. (N.S.) tiated but was liable as indorser. The 1147; Meland v. Youngberg, 124 Minn. note was paid by the maker after the 446, 145 N. W. 167, Ann. Cas. 1915B sale and consequently the buyer suf- 775. fered no prejudice.) 19. Southern Development Co. v. Silva, 125 U. S. 247, 8 S. Ct. 881, 31 U. S. (L. ed.) 678; Meland v. Youngberg, 124 Minn. 446, 145 N. W. 167, Ann. Cas. 1915B 775. charge of fraud may be based on the representation of a diamond dealer that the diamond offered by him for sale is of a certain grade and quality, though the buyer examined the stone and could have ascertained the falsity of the representation by a more thorough and searching inquiry.1 3 628. Effect of Warranty.-It seems to be the general rule, where there is a sale with warranty, that if the warranty was made with knowledge of its falsity the buyer may either sue on the warranty or on the fraud, as the fraud is in no way diminished because the seller has at the same time bound himself by a warranty. And a fortiori a charge of fraud may be based on misrepresentations as to the quality of the goods sold which were not covered by the warranty. And it has been held, in case of the sale of a ship en voyage, that an express warranty that the ship is unencumbered does not prevent the concealment of the fact that the freight, to be earned on the voyage, had been encumbered from being an actionable fraud. The exaction, however, of a warranty covering the representations alleged to have been fraudulently made, on principle would seem to show that the buyer did not rely on the representations of the seller, and it has been held that where an express warranty covering the representations of the seller as regards the speed of a vessel is inserted in the contract at the exaction of the buyer, he is presumed to have relied thereon and not on the representations and therefore cannot found a charge of fraud on the falsity of such representations.5 629. Expressions of Opinion; Promissory Representations.-A representation on which a charge of fraud on the part of a seller may be based must be a representation of an existing fact, as distinguished the expression of an opinion or promissory representation." Thus in case of the sale of a business, a representation that the profits 1. Morrow v. Bonebrake, 84 Kan. So. 891, Ann. Cas. 1917E 1052. 724, 115 Pac. 585, 34 L.R.A. (N.S.) 1147. house Am. 5. Williams Transp. Line v. Darius Cole Trans. Co., 129 Mich. 209, 88 N. 2. Corry v. Sylvia, 192 Ala. 550, 68 W. 473, 56 L.R.A. 939. 128, 59 125 Pa. R. 874; 567, 29 6. Gordon v. Butler, 105 U. S. 553, 26 U. S. (L. ed.) 1166; Jenkins v. Long, 19 Ind. 28, 81 Am. Dec. 374; Holbrook v. Connor, 60 Me. 578, 11 Am. Rep. 212; Homer v. Perkins, 124 Mass. 431, 26 Am. Rep. 677; Bigelow v. Barnes, 121 Minn. 148, 140 N. W. 1032, 45 L.R.A. (N.S.) 203; Williamson v. Holt, 147 N. C. 515, 61 S. E. v. Cockran, 8 Gratt. (Va.) 442, 56 Am. 384, 17 L.R.A. (N.S.) 240; McCrillis Dec. 151; West v. Emery, 17 Vt. 583, v. Carlton, 37 Vt. 139, 86 Am. Dec. 44 Am. 3. Dec. 356. Connersville Black f. 700. V. Wadleigh, 7 Notes: 81 Am. Dec. 376; 15 Am. (Ind.) 102, 41 Am. Dec. 214. Rep. 383; 2 L.R.A. 743. 4. Corry v. Sylvia, 192 Ala. 550, 68 of the business had been and were a certain amount a year is a representation of a fact on which a charge of fraud may be based, but a representation that the profits of the business will be a certain amount is not the basis of a charge of fraud because it is the expression of an opinion merely. So where it appeared that the publisher of a certain series of law books to be published at stated periods, to induce the defendant to subscribe therefor, represented that the publication of the books would be continued so long as another publishing concern should continue to publish certain of its books, there was no bad faith on the part of the seller, nor was there any intention to deceive. the subscriber. And because the publication of the books was subsequently discontinued, it was held that the representation, though not performed, furnished no basis for a rescission of the contract as to books published and delivered to the defendant thereunder. A representation by the seller as to the value of the property offered for sale is generally regarded as a mere expression of opinion or dealer's talk and does not constitute a basis for a charge of fraud." 630. Representation as to Quantity. In a sale of personal property the circumstances may be such that a seller's representation as to quantity may be the basis of a charge of fraud. Thus it has been held that if the owner of carpets covering the floors of a house knowingly and falsely represents, as of his own knowledge, that they contain a certain number of yards of material, to an intending purchaser, who, in reliance on such representation, purchases the carpets, a charge of fraud may be based thereon, as under such circumstances the purchaser was not bound to measure the carpets for himself, or to avail himself of other opportunities of ascertaining the quantity.10 But it has been held that a misrepresentation as to the amount an order for a specified number of steel bars or other like commodity at a specified price per pound will come to is not a ground for avoiding the sale, where there is no trust relation between the parties, and the buyer is experienced in the business and can easily ascertain for himself what the amount ordered will weigh and therefore what it will cost.11 If by mutual mistake the quantity of chattels purchased is supposed to be greater than it really was, the buyer may ordinarily recover the excess paid by him or require the seller to make good the deficiency, but the buyer cannot recover damages resulting to him. 7. Jenkins v. Long, 19 Ind. 28, 81 Am. Dec. 374. 8. Bigelow v. Barnes, 121 Minn. 148, 140 N. W. 1032, 45 L.R.A. (N.S.) 203. 9. See infra, par. 633. 10. Lewis v. Jewell, 151 Mass. 345, 24 N. E. 52, 21 A. S. R. 454. In this case the court refused to extend to such a case the rule that in the sale of land a vendee to whom boundaries are pointed out has no right to rely on the vendor's statement of quantity, but if he deems the quantity material he should ascertain it for himself. 11. Dalhoff Constr. Co. v. Black, 157 Fed. 227, 85 C. C. A. 25, 17 L.R.A. (N.S.) 419 and note. from such deficiency, as where, while still subject to the mistake, he paid excessive duties on such chattels,12 631. Dealer's Talk Generally.-Representations falling under the general head of "dealer's talk," which is regarded as mere commendation, puffing or expression of opinion, cannot, as a general rule, be made the basis of a charge of fraud.18 As regards the common and well understood affirmations in respect to property, as between buyer and seller, made for the purpose of increasing the price, and effecting a sale or barter, the maxim caveat emptor applies. The party to whom they are made has no right to rely upon them, and although false and intended to deceive, the party who confides in them is not entitled to relief.14 This rule is based on the universal practice of the seller to recommend the article or thing offered for sale, and to employ more or less extravagant language in connection therewith.15 That a misrepresentation or suggestion of a falsehood with respect to a fact of this kind, whereby another is deceived, is a violation of good faith, and consequently a deviation from the rules of moral rectitude, must be admitted. It, however, does not necessarily follow that it is sufficient to induce a right of action. There are many instances in which a person may be guilty of a moral delinquency without incurring a legal responsibility, for legal obligations are necessarily more circumscribed in their nature than moral duties. 16 This is also the rule of the civil law as exemplified by the maxim "simplex commendatio non obligat." While it is difficult to harmonize the cases and lay down any definite test, as to what is permissible under the sanction of dealer's talk, the rule will not be extended to cover wilfully false representaas to facts going to the quality and character of the goods,18 and it has been said that the court of recent years has shown no disposition to extend the decisions in favor of a seller's representations beyond the limits to which it had gone.19 tions 12. Hargous (N. Y v. Ablon, 3 Denio 406, 45 Am. Dec. 481. 13. Burwash v. Ballou, 230 Ill. 34, 82 N. E. 355, 15 L.R.A.(N.S.) 409; Neidefer v. Chastain, 71 Ind. 363, 36 Am. Rep. 198; Homer v. Perkins, 124 Mass. 431, 26 Am. Rep. 677; Deming Darling, 148 Mass. 504, 20 N. E. 107, 2 L.R.A. 743; Lilienthal v. Suffolk Brewing Co., 154' Mass. 185, 28 N. E. 151, 26 A. S. R. 234, 12 L.R.A. 821; National Cash Register Co. v. Townsend, 137 N. C. 652, 50 S. E. 306, 70 L.R.A. 349; Williamson v. Holt, 147 N. C. (N.S.) 515, 61 S. E. 384, 17 L.R.A. 240; Handy v. Waldron, 18 R. I. 794; 103 Va. 719, 49 S. E. 988, 2 Ann. Cas. 997. Notes: 6 Am. Dec. 118; 15 Am. Rep. 382; 37 L.R.A. 605. 14. Homer v. Perkins, 124 Mass. 431, 26 Am. Rep. 677. 15. Handy v. Waldron, 18 R. I. 567, 29 Atl. 143, 49 A. S. R. 794. 16. Moore v. Turbeville, 2 Bibb (Ky.) 602, 5 Am. Dec. 642. 17. Handy v. Waldron, 18 R. I. 567, 29 Atl. 143, 49 A. S. R. 794. Note: 15 Am. Rep. 382. 18. Notes: 6 Am. Dec. 118; 15 Am. Rep. 384. 19. Boles v. Merrill, 173 Mass. 491, 567, 29 Atl. 143, 49 A. S. R. 53 N. E. 894, 73 A. S. R. 308. Worrell v. Kinnear Mfg. Co., 632. General Application of Rule as to Dealer's Talk.-Promissory representations looking to the future as to what the buyer can do with the property, how much he can make on it, etc., are considered as dealer's talk.20 It has been held that of this character is a statement by one attempting to sell a cash register that its use would save the expense of a bookkeeper, and one half of one clerk's time.1 It has also been held that statements by a person bidding for a contract to furnish articles to be manufactured to the effect that his bid for the work is as low as the work can be done for and that there is no profit in it at that price are mere expressions of opinion, or "dealer's talk," and do not, though shown to be untrue, constitute such false representations as will avoid the contract. So it is generally held that a charge of fraud cannot be based on a representation by the seller as to what he has been offered for the property by third persons, or what he paid for it. Such representations are so commonly made by those holding property for sale, in order to enhance its price, that any purchaser who confides in them is considered as too careless of his own interests to be entitled to relief, even if the statements are false and intended to deceive. On the other hand a false representation as to what the seller paid for the article has been held to be a representation as to a fact on which a charge of fraud may be based, as it is not simply the case of a false affirmation, concerning the value of the thing sold, where information on the subject is easily within the reach of the buyer, and where the law would regard it the folly of the latter to credit the assertion, but of a false representation of a material fact known to the seller, and by means of which the buyer is induced to part with his money. And the right of the buyer to rely on the seller's statement of the cost of the property is generally upheld when the price is expressly based on the cost of the property to the seller. In case of the sale of an article of machinery, a representation that it would do its intended work rapidly and effectually has 20. Williamson v. Kolt, 147 N. C. 515, 61 S. E. 384, 17 L.R.A. (N.S.) 240. 1. National Cash Register Co. v. Townsend, 137 N. C. 652, 50 S. E. 306, 70 L.R.A. 349. 2. Worrell v. Kinnear Mfg. Co., 103 Va. 719, 49 S. E. 988, 2 Ann. Cas. 997. 3. Holbrook v. Connor, 60 Me. 578, 11 Am. Rep. 212; Boles v. Merrill, 173 Mass. 491, 53 N. E. 894, 73 A. S. R. 308; Williams v. Hicks, 2 Vt. 36, 19 Am. Dec. 693. Notes: 15 Am. Rep. 384; 37 L.R.A. 606; 6 Eng. Rul. Cas. 501. 4. Holbrook v. Connor, 60 Me. 578, 11 Am. Rep. 212; Boles v. Merrill, 173 Mass. 491, 53 N. E. 894, 73 A. S. R. 308. Notes: 15 Am. Rep. 384; 37 L.R.A. 606; 6 Eng. Rul. Cas. 501. 5. Holbrook v. Connor, 60 Me. 578, 11 Am. Rep. 212. 6. Pendergast v. Reed, 29 Md. 398, 96 Am. Dec. 539. See also Fairchild v. McMahon, 139 N. Y. 290, 34 N. E. 779, 36 A. S. R. 701; Luebke v. Berlin Mach. Works, 88 Wis. 442, 60 N. W. 711, 43 A. S. R. 913. Note: 37 L.R.A. 606. |