II. Of the Modern Action on the Case grounded on Fraudulent Misrepresentations by Persons not Parties to the Contract,

9 Geo. IV. c. 14, s. 6.

WHERE a person, with a design to deceive and defraud another, makes a false representation of a matter inquired of him, in consequence of which the person to whom the representation is made enters into a contract, and thereby sustains an injury, an action on the case, in the nature of deceit, will lie at the suit of the party injured, against the party making the fraudulent misrepresentation, although a stranger to the contract, from the entering into which the plaintiff was damnified (13). This was for the first time decided in the case of Pasley and another v. Freeman, H. T. 1789, 3 T. R. 51, which came before the court on a motion in arrest of judgment on the third count of the declaration. That count

stated, "that the defendant, intending to deceive and defraud the plaintiffs, did wrongfully and deceitfully encourage and persuade them to sell and deliver certain goods to one Falch, upon credit, and for that purpose did falsely, deceitfully, and fraudulently assert, that Falch was a person safely to be trusted, &c., whereas, in truth, Falch was not a person safely to be trusted, and the defendant well knew the same, &c." The question was, whether, admitting all the facts as stated to be true, the action could be maintained. Lord Kenyon, C. J., Ashhurst and Buller, Js., were of opinion, that it might be maintained; Grose, J., was of opinion, that it was not maintainable.

The principle of this case was extended much further by the Court of Exchequer in the case of Langridge and Levy (0), which was an action for falsely and fraudulently warranting a gun to have been made by Nock, and selling it as such to the plaintiff's father for the use of himself and sons, one of whom, the plaintiff, confiding in the warranty, used the gun, which burst and injured him; Parke, B., in delivering the judgment of the court, said, "As there is fraud, and damage the result of that fraud, not from an act remote and consequential, but one contemplated by the defendant at the time as one of its results, the party guilty of the fraud is respon(0) 2 M. & W. 519, confirmed on Error, 4 M. & W. 337.

(13) The old cases were confined to fraudulent assertions by one of the contracting parties, (as was justly observed by Grose, J., in his elaborate argument in Pasley v. Freeman, 3 T. R. 53,) and proceeded upon the breach of a promise, either express or implied, that the fact misrepresented was true, and in these respects they differ from Pasley v. Freeman, and subsequent cases decided on the authority of that case. See Lord Eldon's remarks on this case in 6 Vesey, 182, and in 3 Ves. & Beames,

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sible to the party injured" (14). So where the defendant, being about to sell a public house, falsely represented to B., who had agreed to purchase it, that the receipts were 180l. a month, B., having to the knowledge of the defendant communicated this statement to the plaintiff, who became the purchaser instead of B.; it was holden (p), that an action was maintainable for the deceit by the party eventually injured.

It seems, that no representation is necessary; it is enough if a party allow another to enter into a contract under a delusion as to material facts which he might have removed (g).

In cases of this kind it is not necessary that the defendant should have derived any advantage from the deceit (r); or that he should have colluded with the person who did derive the advantage; but there must be fraud (15) in the defendant, in order to support the action (s); for in a case where there was not any fraud or deceit in the party making the representation, although he had incau

(p) Pilmore v. Hood,, 5 Bingh. N. C. 97.

(q) See Hill v. Gray, 1 Stark. N. P. C. 434, cited by Coltman, J., in Pilmore v. Hood, 5 Bingh. N. C. 109.

(r) Pasley v. Freeman, 3 T. R. 51; and per Kenyon, C. J., in Eyre v. Dunsford, 1 East, 328,9.

(s) Tapp v. Lee, 3 Bos. & Pul. 367, recognized by Park, J., 7 Bingh. 107.

(14) See 4 M. & W. 337, where the Court of Exchequer Chamber recognized this dictum of Parke, B., as the ground of their decision. In Winterbottom v. Wright, 10 M. & W. 114, Lord Abinger, C. B., said, in reference to the case of Levy v. Langridge,—we ought not to attempt to extend the principle of that decision; the gun was bought for the use of the son, the plaintiff in that action, who could not make the bargain himself, but was really and substantially the party contracting: and Alderson, B. added, the principle of that case was simply this, that the father having bought the gun for the very purpose of being used by the plaintiff, the defendant made representations by which he was induced to use it. There a distinct fraud was committed on the plaintiff; the falsehood of the representation was also alleged to have been within the knowledge of the defendant who made it, and he was properly held liable for the consequences. (15) " "By fraud, I understand an intention to deceive; whether it be from any expectation of advantage to the party himself, or from ill-will towards the other, is immaterial." Per Le Blanc, J., in Haycraft v. Creasy, 2 East's R. 108. "Fraud may consist as well in the suppression of what is true, as in the representation of what is false." Per Chambre, J., 3 Bos. & Pul. 371. "Fraud and falsehood must concur to sustain this action;" Per Gibbs, C. J., Ashlin v. White, Holt's N. P. C. 387. But as respects fraud, fraud in law is sufficient. "It is fraud in law, if a party makes representations which he knows to be false, although the motive from which the representations proceeded may not have been bad." Tindal, C. J., 7 Bingh. 107. See also Foster v. Charles, 6 Bingh. 396; 7 Bingh. 105. See Shrewsbury v. Blount, 2 M. & Gr. 475; 2 Scott's N. R. 588; Pontifex v. Bignold, 3 M. & Gr. 63; 3 Scott's N. R. 390.

tiously asserted that to be within his own knowledge (t), which in strictness he could not be said to have known, but had reasonable and propable cause only to believe; it was holden by Grose, Lawrence, and Le Blanc, Js., that the action was not maintainable. But Kenyon, C. J., was of a different opinion. The defendant, having had a credit lodged with him by a foreign house (u), in favour of one T. to a certain amount, upon an express stipulation, that there should be previously lodged in the defendant's hands goods to treble the amount, and having been applied to, by the plaintiffs, for information respecting the responsibility of T., answered, that he (defendant) did not know any thing of T., except what he had learned from his correspondent, but that he had a credit lodged with him to a certain amount by a respectable house, which he held at the disposal of T., (omitting to mention the stipulation on which the foreign house had given T. credit,) and that, upon a view of all the circumstances which had come to the defendant's knowledge, the plaintiffs might execute T.'s order with safety, (viz. an order for the sale and delivery of goods upon credit) : It was holden, that on the part of the defendant, there was a material suppression of the truth, and evidence sufficient for the jury to find fraud, which was the gist of this action; although at the time when the defendant made the representation, he added, that he gave the advice without prejudice to himself. It is not necessary for the plaintiff to show that the false statement of the defendant was accompanied with an intention to injure the plaintiff (x). Plaintiff being about to furnish defendant's son with goods on credit, inquired of the defendant, by letter, whether his son had, as he asserted, 3001. of his own property; the defendant answered that he had; the fact being, that defendant had lent his son 3007. on his promissory note, payable with interest on demand, and had received interest on the note. The son having afterwards become insolvent; it was holden (y), that this was a misrepresentation for which the defendant was liable in damages; for the statement being false within the defendant's knowledge, fraud might be inferred. The making a representation, which a party knows to be untrue, and which is calculated, from the mode in which it is made, to induce another to act on the faith of it so that he may incur damage, is a fraud in law. Hence, where a bill was presented for acceptance at the office of the drawee, when he was absent, and A., who lived in the same house with the drawee, being assured by one of the payees that the bill was perfectly regular, was induced to write on the bill an acceptance as by the procuration of the drawee, believing that the acceptance would be sanctioned, and the bill paid by the drawee. But the bill was dishonoured when due. The indorsee, having sued the drawee, was nonsuited on the above facts;

(t) Haycraft v. Creasy, 2 East, 92. (u) Eyre and another v. Dunsford, B. R. H. 41 Geo. III., 1 East, 318.

(x) Foster v. Charles, 7 Bingh. 105. (y) Corbett v. Brown, 8 Bingh. 33.

the indorsee then brought an action against A. for falsely, fraudulently, and deceitfully representing that he was authorized to accept by procuration; and although the jury negatived fraud in fact, yet it was holden (z), that A. was liable, for there was a fraud in law. In the foregoing case, there was a direct assertion of that which the defendant knew to be untrue; but in order to constitute fraud for which this action will lie, it is not necessary to show that the defendants knew the fact they stated to be untrue; it is enough that the fact is untrue if they communicated that fact for a deceitful purpose (a). But where the party making the representation does not know it to be untrue, and there is no fraud in fact, the action cannot (b) be maintained.

By stat. 9 Geo. IV. c. 14, s. 6, "No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given, concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person (16), to the intent or purpose that such other person may obtain credit, money, or goods upon (c), unless such representation or assurance be made in writing, signed by the party to be charged therewith."

This provision was framed to prevent an evasion of the Statute of Frauds, 29 Car. II. c. 3, s. 4, which had prevailed since the decision in Pasley v. Freeman, ante, p. 657. Parties who were thereby prevented from suing as upon "a special promise to answer for the debt, default, or miscarriage of another, because there was not any guarantee in writing, brought actions on the misrepresentation." But this provision is not confined to cases under the Statute of Frauds, which is not mentioned in the act till afterwards (d).

In Lyde v. Barnard, 1 M. & W. 101, the foregoing section of the 9 Geo. IV, c. 14 was very fully discussed. It was an action on the case for falsely representing that the life interest of Lord E. Thynne in certain trust funds was charged with only three annuities, whereby the plaintiff was induced to advance to the said Lord E. Thynne, 9997., for the purchase of an annuity secured by

(z) Polhill v. Walter, 3 B. & Ad. 114. (a) Per Parke, B., delivering the judgment of the court in Taylor v. Ashton, 11 M. & W. 415; recognizing the cases of Pasley v. Freeman; and Haycraft v. Creasy.

(b) Freeman v. Baker, 5 B. & Ad. 797;

see Moens v. Heyworth, 10 M. & W. 147; Wilson v. Fuller, 3 Q. B. 68, 1009; 2 G. & D. 460; ante, p. 66, n.

(c) Sic.

(d) Per Tindal, C. J., in Devaux v. Steinkeller, 6 Bingh. N. C. 88.

(16) A representation made by the defendant alone, who was in partnership with two other persons, that the firm was trustworthy, is a representation as to the credit of others within the meaning of the statute, and must be in writing, to make it binding. Devaux v. Steinkeller, 6 Bingh. N. C. 84.

his covenant, bond, warrant of attorney, and an assignment of his life interest in the said fund; whereas the defendant well knew that the said interest was charged, not only with three annuities, but also with a mortgage for 20,000l. The representation having been made by parol, Lord Abinger, C. B., at the trial, nonsuited the plaintiff, on the ground that the case was within the statute. On motion for a new trial, the court was equally divided; Lord Abinger and Gurney, B., conceiving the case to be within the statute, relying on the word "ability" therein; Parke, B., and Alderson, B., considered the case not within the statute: the case was never decided; but it appears from subsequent cases that the construction contended for by the learned Chief Baron would be that adopted by the courts. See Haslock v. Fergusson, 7 A. & E. 86; Swann v. Phillips, 8 A. & E. 457.

In ordinary cases, the person who gives a representation of the credit of a third person is not liable beyond the value of the goods furnished on the facts of the representation (e): but circumstances may exist which will render him liable to losses arising from subsequent dealings (ƒ).

(e) De Graves v. Smith, 2 Campb. 533. (f) Hutchinson v. Bell, I Taunt. 558.