pipe running into it carrying in water and more sewage every day in a cellar under a house, would render that house unfit for a residence. To sell such a house without disclosing the situation, when the purchaser would have no means of knowing the facts, from the pit being covered up as it was, was to practise a fraud upon him.

"It is insisted that Weikel acted in good faith and without knowledge of the real condition of things; but the proof shows that he knew enough facts to put a reasonable man on notice, and when he sold an innocent purchaser the house, causing him a loss by reason of the concealment of the facts, the loss should fall on him, and not on the purchaser. We rest our judgment on the ground that the facts which he knew were sufficient to apprise a man of ordinary prudence of the truth, and to impose upon him the duty to inform the purchaser of the situation which he had concealed from him. Jordan v. Pickett, 78 Ala. 331; Cardwell v. McClelland, 3 Sneed, 150; Minor v. Sharon, 112 Mass. 477, 17 Am. Rep. 122.

"Judgment affirmed."

(Note: The above case might also be supported on the ground that the facts known to one (even though they hadn't been concealed by him) were not discoverable by the other.)

Question 70: Griffith having a stock of old dry goods and wishing to sell same to Strand for much more than it was worth, put layers of new goods in the various boxes over the old goods, and by various wilful devices succeeded in keeping Strand from examining the goods. Strand bought the goods at about 10 times their worth. Has he a case? (Strand v. Griffith, 97 Fed. 854.)

§ 72. (Contracts, Sec. 40.) Silence as fraud.

Case 71. Guaranty Co. v. Liebold, 207 Pa. 399.

Facts: The Guaranty & Trust Co. sued Liebold on a contract to purchase real estate from him. The land went up in value about 50% after the Trust Company secured an option on Liebold's land, because of the de

cision of the Standard Steel Car Co. to locate its plants in that neighborhood.

"One of the requests of the defendant was that the court find 'that at the time the option was secured a company known as the Standard Steel Car Company contemplated coming to Butler to establish a large manufacturing plant; that Mr. Reiber (president of plaintiff company) had knowledge of this matter, and while defendant had heard of the coming of some contemplated company, his knowledge was indistinct and indefinite, and the certainty of its coming was known to the plaintiff who withheld this knowledge from defendant. The answer was: Refused. The rumor that some company proposed establishing a manufacturing plant in or near Butler was known to both Mr. Reiber and the defendant, Mr. Liebold, at the time the option was taken, to wit, March 25, 1902, but the certainty of its coming was neither known to the plaintiff nor the defendant.'"

Point Involved: Whether mere silence by one party to a contract of material facts known to him and discoverable upon investigation by the other is fraud.

MR. JUSTICE BROWN:

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Suppose Reiber had known definitely that the plant was to be established in Butler, and Liebold had been ignorant of this, was it the duty of the former to disclose such information to the latter, and can it be that without such disclosure, his contract with Liebold is not enforceable in equity? In this commercial age options are daily procured by those in possession of information from which they expect to profit, simply because those from whom the options are sought are ignorant of it. When the prospective seller knows as much as the prospective buyer, options can rarely, if ever, be procured, and the rule that counsel for appellant would have us apply would practically abolish them. The prospective buyer seeks an option instead of at once entering into a contract for the purchase of land, because, no matter what information he may possess exclusively, he is unwilling to act upon it until it becomes a

certainty. In the meantime, on the contingency of its becoming so, he makes his contingent bargain to purchase. This is fair in law and in morals: Hershey v. Keembortz, 6 Pa. 128; Harris v. Tyson, 24 Pa. 347. If the appellee concealed anything it was his duty to disclose, or said anything to mislead or deceive the appellant, this rule, of course, would not apply; but they dealt at arm's length, as men always do under such circumstances, each trying to make what was supposed to be the best bargain for himself at the time. This was the right of each of the parties, and on this point the appellant cannot be heard to complain,

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Question 71: Is mere silence by one bargainor about facts that the other doesn't know about fraud? Why?

§ 73. (Contracts, Sec. 41.) Silence As Fraud-Facts Not Discoverable.

Case 72. Grigsby v. Stapleton, 94 Mo. 423.

Facts: Suit for the contract price of 100 head of cattle. Defense, that the seller knew and did not disclose to the buyer, who did not know, that the cattle had "Texas Fever," a latent disease not readily discoverable on inspection.

Point Involved: If a seller knows of a defect in the thing sold, and the defect is of a character not ascertainable by the buyer on reasonable inspection, is the seller's mere silence with respect to such defect a fraud on the buyer?

BLACK, J.: Caveat emptor is the general rule of the common law. If defects in the property sold are patent and might be discovered by the exercise of ordinary attention, and the buyer has an opportunity to inspect the property, the law does not require the vendor to point out defects. But there are cases where it becomes the duty of the seller to point out and disclose latent defects. When an article is sold for a particular purpose the suppression of a fact by the vendor, which fact makes the article unfit for the purpose

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for which it was sold, is a deceit; and, as a general rule à material latent defect must be disclosed when the article is offered for sale, or the sale will be avoided. 1 Whart. on Cont., sec. 248. The sale of animals which the seller knows, but the purchaser does not, have a contagious disease, should be regarded as a fraud when the fact of the disease is not disclosed, Cooley on Torts, 481. Kerr says: 'Defects, however, which are latent, or circumstances materially affecting the subject matter of a sale, of which the purchaser has no means, or at least has no equal means of knowledge, must, if known to the seller, be disclosed.' Kerr on Fraud and Mis. (Bump's ed.) 101.

"There is no claim in this case that the defendant knew these cattle were diseased. It seems to be conceded on all hands that Texas fever is a disease not easily detected, except by those having had experience with it. The cattle were sold to defendant at a sound price. If, therefore, plaintiff knew they had the Texas fever, or any other disease materially affecting their value upon the market, and did not disclose the same to the defendant, he was guilty of a fraudulent concealment of a latent defect. It is not necessary to this defense that there should be any warranty or representations as to the health or condition of the cattle. Indeed, so far as the case is concerned, if the cattle had been pronounced by some of the cattlemen to have the Texas fever, and after knowledge of that report came to plaintiff, some of them to his knowledge died from sickness, then he should have disclosed these facts to the defendant. They are circumstances materially affecting the value of the cattle for the purposes for which they were bought, or for any other purpose, and of which defendant, on all the evidence, had no equal means of knowledge.

"To withhold these circumstances was a deceit in the absence of proof that defendant possessed such information."

Question 72: What was the fact that was not disclosed by the contracting party in Case 72? Was the failure to disclose fraud? Why?

Case 73. The Clandeboye, 70 Fed. 631.

Facts: The facts are stated in the opinion.

Question: Whether if one of the contracting parties, having from his superior position, knowledge of facts that are practically inaccessible to the other, and which materially affect the contract, merely remains silent as to such facts (making no misstatements and doing nothing otherwise to conceal such facts, or otherwise misleading) he is by his mere suppression of the truth guilty of fraud.

SEYMOUR, DISTRICT JUDGE: "The material facts of the case are as follows: The Clandeboye, a large and valuable British steamer, had become disabled by breakage of machinery, and had arrived off the Little Bahama Islands. Her mate had been sent by a ship's boat for assistance, and had on the 15th of May, 1894, arrived at Savannah. In pursuance of telegraphic instructions cabled to him by the owners, he had engaged the services of the Morse of New York, then, however, lying at the port of Philadelphia, which had agreed to proceed forthwith to the Little Bahamas and tow the Clandeboye to Vera Cruz, her port of destination, for the sum of $5,000. Leo Lomm, the libellant, part owner and master of the tug Dauntless, lying at the time at its home port of Brunswick, Ga., having learned from the Savannah papers of the arrival at that port of the mate of the Clandeboye, and of the condition and location of that vessel, on the 17th of May telegraphed, through his agents, to Savannah, and received a reply stating that the tug Morse of New York had been chartered to go to the assistance of the Clandeboye. The distance from New York-and that from Philadelphia is about the same -to Stranger's Cay, where the Clandeboye was lying, is more than 1,000 miles. From Brunswick the distance is about one-third as great. Captain Lomm's boat was lying idle. He concluded that he could beat the Morse in a race to the Clandeboye, and that, the master of the latter not knowing of the employment of the Morse, he