Francis H. (Francis Hermann) Bohlen.

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say whether, upon the evidence, the defendant made the representa-
tions with a fraudulent purpose to deceive, or whether he made
them in good faith and in the honest belief that they were true.
There will be a certificate accordingly.^



/



NASH V. MINNESOTA TITLE IXS. & TRUST CO.
* Supreme Judicial Court of Mass., 1895. 163 Mass. 574.

Knowlton, J. : —

These cases have once before been considered by this court
(see 159 Mass. 437) and the principal question then raised was
whether there was any evidence of fraud on the part of the de-
fendant. It was held that the defendant's statement in regard
to the title, taken in connection with the context of the letter and
the circumstances under which it was written, purported to be
a representation that the defendant h ad examined the title tq_ the_
mort gaged reaLjgstate, ami-bad found it to be. peri.ect_„The prop-
erty was subject to a prior mortgage of thirty thousand dollars,
as the defendant's officers well knew. At the last trial the defendant
offered to show that the words were not used in the sense in which
they were understood by this court, and that its officers acted hon-
estly, and that there was no intention on their part to state anything
falsely. The evidence was rejected, and the ruling was, in substance,
that in view of the admitted facts that_the defendant^officer knew
of the existence of the prior mort g ^age, a nd that this letter was to I5e
used to induce pers ons to buy t he mortL^ao[e bondis^ the representa-
tion was, as a matter"o f law , fraudulent.

Of course one will be presumed to have intended his language
to be understood according to its usual meaning, and in ordinary
cases, in the absence of a reasonable explanation of his mistake,
his testimony that he meant something different from what he had
said will have but little, if any weight. Hut inasmuch as the ques-
tion involved is what was his state of mind, and his actual incent as
distinguished from his apparent intent, he is entitled to explain his
language as best he can, if it is susceptible of explanation, and to
testify what was in his mind in reference to the subject to which



"Accord: Cabot v. Christie, 42 Vt. 121 (1869) ; Bullitt v. Farrar, 42 Minn.
8 (1889); Kimber v. Young. 137 Fed. 744 (1905), and cases cited therein;
Tucker v. White, 125 Mass. 344 (1878) : Connell v. El Paso Co.. Z3 Colo. 30
(1904) ; and see Kountzc v. Kennedy, 147 N. Y. 124 (1895). pp. 133-134. It is
not necessary that the defendant should in so many words, state that he is
speaking of his personal knowledge, Bullitt v. Farrar, 42 Minn. 8, and Cabot
V. Christie, 43 Vt. 121 (1860). Whether a representation is to be taken as an
assertion of personal knowledge or as a strong expression of opinion or be-
lief depends on the nature of the subject-matter and the relation of the maker
to it, whether the subject is one susceptible of exact knowledge and whether
it lies within the personal knowledge of the maker.



7l6 NASH V. MINNESOTA TITLE INS. & TRUST CO.

the alleged fraud relates. In this respect his expressions, whether
spoken or written, are not dealt with in the same way as when the
question is what contract has heen made between two persons who
are mutually relying upon the language used in their agreement.
Hazard v. Loring, lo Cush. 267. Thacher v. Phinncy^ 7 Allen,
146. Broivn v. Massachusetts Title Ins. Co., 151 Mass. 127. Snoiv
V. Paine, 114 Mass. 520, 526. Edwards v. Currier, 43 Maine 474.
Korris v. Morrill, 40 N. H. 395, 401. Gifford v. Thomas, 62 Vt. 34,
35. Seymour v. Wilson, 4 Kernan, 567. Thurston v. Cornell,^ ;^S
N. Y. 281. Pliclps V. George's Creek & Cumberland Railroad, 60
Md. 563. Berkey v. Judd, 22 Minn. 287. v,»

In the present case we need not determine whether the excluded
evidence on this subject was very important. It is obvious that,
if the defendant's officers knew that their statement in regard to the
title was false in the sense in which they generally supposed it would
be understood, it is immaterial whether or not they had a purpose
to do injury or cause loss to anybody who might relx- Upon it . It
is enough to furnish the foundation for a liability, if they used lan-
guage in regard to the title which they intended should be under-
stood as a representation that the title was perfect \\d]ienjhe;^[_kne^
it jY?*^ Tipt pecfprt. Forbes v. Hozve, 102 Mass. 427, A ash v. Min-
nesota Title Ins. & Trust Co., 159 Mass. 437. Commonzvealth v.
Coe, 115 Mass. 481. Spaulding v. Knight, 116 ]\Iass. 148. But a
majority of the court are of opinion that it was competent for them
to testify what their understanding was in regard to the meaning of
the representation, and that the presiding justice gave too broad an
interpretation to our former decision in the case.

Holmes, J. (dissenting). I am unable to agree with the de-
cision reached by a majority of the court on the first point discussed
by them. I will not in this place go into any extended discussion of
general principles. If I were making the law, I should not hold a
man answerable for representations made in the common affairs
of life without bad faith in some sense, if no consideration was
given for them, although it would be hard to reconcile even that
proposition with some of our cases. But the proposition, even if
accepted, seems to me not to apply to this case. The proper meaning
of the words used by the defendant has been settled by this court
already. 159 Mass. 437. The representation was not made in
casual talk, but in a business matter, for the very purpose of induc-
ting others to lay out their money on the faith of it. When a man
/makes such a representation, he knows that others will understand
_ rThis A vor^ according to their usual and proper meaning, and not by
^Ihe^accident of what he happens to have in his head, and it seems to
J me one of the first principles of social intercourse that he is bound
^ at his peril to know what that meaning is. In this respect it seems
to me that there is no difference between the law of fraud and that
of other torts, or of contract or estoppel. If the language of fiction
be preferred, a man is conclusively presumed in all parts of law to
contemplate the natural consequences of his act, as well as in the
conduct of others as in mechanical results. I can see no difference



IIADCOCK v. OSMER.



/ V



in principle between an invitation by words and an invitation by
other acts, such as openinj^ the gates of a railroad crossing {Broiv
y. Boston & Albany Railroad, 157 IMass. 399), or an intentional ges-
ture, having as its manifest consequence, according to common ex-
perience, a start and a fall on the part of the person toward whom
it is directed, in either of which cases I suppose no one would say
that a defendant could get off by proving that he did not anticipate
the natural interpretation of the sign. Of course, if the words
used are technical, or have a peculiar meaning in the place where
they are used, this can be shown; if by the context, or the subject-
matter, or the circumstances, the customary meaning of the words
is modified, this can be shown by proof of the circumstances, the
subject-matter, and the context ; but when none of these things ap-
pears, a defendant cannot be heard to say that for some undisclosed
reason he had in his mind, and intended to express by the words,
something different from what the words appear to mean, and were
understood by the plaintiff to mean, and are interpreted by the court
to mean, whether the action be in tort or contract.^

HADCOCK V. OSMER.

Court of Appeals, New York, 1897. 153 N. Y. 604.

Vanx, J. (p. 606). Prior to the fifteenth of September, 1888.
Deloss Brown, as principal, and Joseph Brown, as surety, were in-
debted to the defendant on a past-due note for over $300 and pay-
ment thereof had repeatedly been demanded. After trying in vain
to borrow money to pay the note, Deloss told the defendant that he
did not know -w'here they could get it, and asked if he must have it.
The defendant said yes, and, upon being further asked by Deloss



^ "A man may make a statement which he intended to mean one thing
only, but which negligently and stupidly he sends out in such shape as to bear
another meaning and the plaintiff may act upon that meaning. On that I need
only say that the defendant, in such a case, would have great difficulty in
establishing that it was only honest blundering; but if he did, as for instance,
by showing that his manuscript sent to the printer, contained the word 'not',
which b}- some printer's error was omitted in the printed prospectus, or that
10,000 was by printer's error printed 100,000, which escaped notice in revising
the proofs, I should sav it was not a fraud, though perhaps cross negligence,"
Lord Blackburn in Sm'itli v. Chadwkk, L. R. 9 A. C. 187 (1884), p. 201.

Bowen, L. J., in Anqus v. Clifford, 2 Ch. D. 449 (1891), p. 472; "A man
ought to have a belief that what he is saying is true; but a man may believe
what he is saying — the expression which he uses — to be true, because he is
honestly using the words in a sense of his own, which, however inappropriate,
however stupid, however grossly careless, if you will, is the special sense in
which he means to use the words, without any consciousness being present to
his mind that they would convey to other reasonable persons a different sense
from that in which he is using them — a man may believe a statement in that
sense of his, and yet the use of the language may he wholly improper, that is
to say, in respect of want of caution in the use of it. It does not follow; be-
cause a man uses language that he is conscious of the way in which it will be
understood by those who read it. Unless he is conscious that it will be un-



71 8 HADCOCK V. OSMER.

Avhere the money could be had, recommended him to call on one
Benjamin Hadcock. He did so and was told by Benjamin that he
could not lend the money, but that his brother Emmanuel, who was
stopping with him, could let him have it. Deloss reported to the
defendant that he thought he could get the money of "the Had-
cocks," and that they would let him have it "some time in October."
\\'hen the time came around, the Messrs. Brown started to see if
they could get the money of Emmanuel Hadcock, but first went to
the defendant and asked him to go along. He said that he could
not, when Deloss declared there was no use of their going alone,
and thereupon the defendant wrote and delivered to the Browns a
paper, of which the following is a copy: "Mr. Hadcock: The
Browns are good for what money you let them have." (Signed.)
"L. Osmer." The Hadcocks did not know the Browns, but, as they
knew the defendant, on the strength of this paper Emmanuel Had-
cock lent them $400, taking their note therefor, and on the same day
they used the most of the money to pay their debt to the defendant.
Both of the Browns were insolvent at this time, and while the de-
fendant may have believed they were good, he did not know whether
they were good or not and did not try to find out. Upon the trial
of this action, which was brought to recover damages for false -rep-
resentations by means of said paper, there was but slight dispute as
to the representations, their falsity or the injury resulting there-
from, butthe^defendant insisted that as hedid not know that his
represe ntations were fa lse, there could be no recuvtiry against him.
Through his counsel, he asked the trial court to charge the jury
"that there can be no recovery in an action of deceit unless it ap-
pears that the defendant made the representations, knowing them
to be false, with intent to deceive and that the plaintiff suffered
^^jiamages in consequence thereof." The court refused to so charge,
exce^ with the modification "that if he made the statement that
they were good, as a fact, not as an opinion, without knowing
whether it was true or not, then it was false in the sense that he
made a statement of fact as though he knew it to be true, which he
did not know to be true. That, together with what I have already
said in my charge in regard to it, will enable the jury to understand
what I mean." Exception was taken to the refusal to charge as re-
quested and to charge as made. In the body of the charge, the
court after instructing the jury as to the difference between the
assertion of a fact and the expression of an opinion, told them in



derstood in a different manner from that in which he is honestly though blun-
deringly using it, he is not fraudulent, he is not dishonest. An honest blun-
der in the use of language is not dishonest. What is honest is not dishonest."
In Slater Trust Company v. Gardiner, 183 Fed. 268 (Circ. Ct. Southern
Dist. N. Y. 1910), it was held that the president of a company was not liable
for false statements in a mortgage, which he signed, honestly believing on the
advice of his New York counsel that the company's counsel in St. Louis, one
of the most experienced attorneys of that place, had described in such words,
as under the laws of Missouri, most accurately covered them, the legal rights
of the company under the facts which he, the defendant, had correctly la'd
before such St. Louis counsel.



HADCOCK V. OSMER. 719

substance that if the defendant made the representation, either
knowing it to be untrue, or, without knowing wlietlier it was untrue
or not, stating it as an existing fact, intending that it should be
taken and acted upon as such, they might infer an intent to defraud ;
"because," as the court continued, "a man has no right to state a
thing as a fact, which misle^^ ds the other party to his damage, unless 1
he knows whether it i s true or__untrue ; and if he states it, knowing 1
and understanding th at he does not know wheth er it is true or not, i
he just as much misleads the otHerjnan as though he stated it with I
the knowledge that it w^as untrue.

An action to recover damages for deceit cannot be maintained
wMthout proof of fraud as well as injury. Actionable deceit cannot
be practiced without an actual intention to deceive, resulting in
actual deception and consequent loss. But while there must be a
furtive intent, it may exist when one asserts a thing to be true which
he does not know to be true, as it is a fraud _to affirm positive knowd-
edge of that which one does n aLpQsit4A:e5__kiiQ w . \\ here^a party
represents a material fact to be true to his personal knowdedge, as
distinguished from belief or opinion, when he does not know
whether it is true or not and it is actually untrue, he is guilty of
falsehood, even if he believes it to be true, and if the statement
is thus made with the intention that it shall be acted upon by an-
other, wdio does so act upon it to his injury, the result is actionable
fraud. {Koiintze v. Kennedy, 147 N. Y. 124, 130; Rothschild v.
Maek, 115 N. Y. i, 7 ; Marsh v. Falkcr, 40 N. Y. 562, 573 ; Bennett
V. Jiidson, 21 N. Y. 238 ; Addison on Torts, 1007 ; i Bigelow on
Fraud 514.) Such seems to be the case now before us, as the facts
are presumed to have been found by the jury. The plaintiff's tes-
tator did not ask for information in regard to the solvency of those
who wished to borrow money of him, but the defendant volunteered
to give it. He was interested in the result of the loan, for the bulk
of the proceeds was for his benefit. On being told that the loan
would not be made without his presence, he armed the proposed
borrowers with a written statement over his own signature, con-
taining a positive assertion of a material fact, with the intention that
it should be acted upon and should induce the loan of the money.
Yet he did not know the assertion, thus positively made for such
an important purpose, to be true, and he did not investigate or seek
to discover wdiether it was true or not, although he had dealt some
with the I'rowns and had some information as to their circum- •
stances. He intended, as the jury has found upon sufficient evi-
dence, that the leader should understand him as communicating his
actual knowdcdge and not as expressing his opinion, judgment or
belief. Knowing that he did not know^ what he said he did, and
what he intended to cause another to believe he did, he took the
responsibility of its truth, and honesty of belief in the supposed
fact, under such circumstances, cannot relieve him from the impu-
tation of falsehood and fraud. As was said by Judge Peckham. in
Rothschild ?'. Mack {supra): "He either knew or he did not know
of the financial condition of the makers of the note. If he did know



i"^*



720 HADCOCK Z'. OSMER.

it, then he knew that the note, as to both makers and indorsers, was
without vakie. If he did not know its condition, he yet assumed
to have actual knowledge of the truth of his statement. * * *
He certainly meant to convey the impression of actual knowledge
of the truth of the representations he made as to the value of the
note, and he either knew such representations were false or else
he was conscious that he had no actual knowledge while assuming
to have it and intending to convey such impression. If damage
ensue this makes an actionable fraudulent representation." The
language of Chief Judge Andrews, in Kountse v. Kennedy {supra),
is equally applicable : "One who falsely asserts a material fact, sus-
ceptible of accurate knowledge, to be true of his own knowledge,
and thereby induces another to act upon the fact represented to his
prejudice, commits a fraud which will sustain an action for deceit.
This is not an exception to, but an application of the principle that
actual fraud must be shown to sustain such an action. The purpose
of the party asserting his personal knowledge is to induce belief in
the fact represented, and if he has no knowledge, and the fact is
one upon which special knowledge can be predicated, the inference
of fraudulent intent in the absence of explanation naturally re-
sults." The rule is the same in other states and in England. Thus,
in Chatham Furnace Co. v. Moffatt (147 Mass. 403) the court said:
"The charge of fraudulent intent, in an action for deceit, may be
maintained by proof of a statement made, as of the party's own
knowledge, which is false, provided the thing stated is not merely
matter of opinion, estimate or judgment, but is susceptible of actual
knowledge, and in such case it is not necessary to make any further
proof of an actual intent to deceive. The fraud consists in stating
that the party knows the thing to exist, when he does not know it
to exist, and if he does not know it to exist he must ordinarily be
deemed to know that he does not. Forgetfulness of its existence
after a former knowledge, or a mere belief of its existence, will not
warrant or excuse a statement of actual knowledge." (See also,
Bullitt V. Farrar, 42 Minn. 8; Hexter v. Bast, 125 Pa. St. 52; Wells
V. McGeoch, 71 Wis. 196; Swayne v. Waldo, 73 Iowa 749; Craig v.
Ward, I Abb. Ct. App. Dec. 454; Evans v. Edmonds, 13 C. B. 777.)

Judgment affirmed.^

The liability for breach of warranty appears to have existed be-
fore the separation of tort and contract. The action in the King's
Court was trespass on the case upon the warranty, see Fitzherbert



^Accord: Cooper v. Schlesinger, 111 U. S. 148 (1883) ; Riley v. Bell, 120
Iowa 618 (1903) ; John. Gund Brewing Co. v. Peterson, 130 Iowa 301 (1906) :
Bullitt V. Farrar, 42 Minn. 8 (1889) ; Cahill v. Applegarth, 98 Md. 493 (1904) ;
People's Central Bank v. Central Trust Co., 179 Mo. 648 (1904); semble:
Hexter v. Bast, 125 Pa. St. 52 (1889), p. 72; Shackett v. Bickford, 74 N. H. 57
(1906). Many cases often cited as following Chatham Furnace Co. v. Mof-
fatt, ante., are either expressly decided on the same grounds as the prin-
cipal case or are cases in which the facts are similar to it, see Hamlin v. Abcll,
120 Mo. 188 (1894) ; and John. Gund Co. v. Peterson, 130 Iowa 301 (1906).



GEORGE W. IIUTTERFIELD V. ANDREW J. ]:ARliER. 72I

de Naturae Brevium (1643) 213 c' Until the middle of the eight-
eenth century the practice was to declare in deceit upon the war-
ranty, {zvarrantizando vcndedit),'dnd\\h\W the warranty was alleged
to be false and fraudulent, the averment of fraud like that in the
early actions of assumpsit, itself a form of action on the case for
deceit, was sufficiently established by proof that the goods were not
in fact as warranted and that thus the purchaser was deceived in
that his just expectations were disappointed. The practice of de-
claring in assumpsit is said by Lord Mansfield in Stuart v. IVilkins,
I Douglas 18 (1778), to be then of twenty years standing and was
probably introduced in order to allow the joinder of the money
counts, see Ashurst, J., in the above case and Lord EUenborough in
Williamson v. Allison, 2 East 449 (1802), p. 451. In the action of
deceit for false warranty it was not necessary to aver a scienter or
to prove it if averred, Williamson v. Allison, 2 East 449 (1802).
The plaintifif in such an action might recover by proof of the war-
ranty and its breach or by proof of a material misrepresentation
false to the vendor's knowledge, Vail v. Strong, 10 Vt. 457 (1838) ;
Place V. Merrill, 14 R. L 578 (1884) ; but see Mahnrin v. Harding,
28 N. H. 128 (1853), where it was held that if the warranty and its
breach is not expressly averred as the deceit sued upon, but repre-
sentations though amounting to a warranty are averred merely as
ilnducing the sale, the scienter must be proved ; and see Erie City
Iron Works \\ Barber, 102 Pa. St. 156 (1883), accord, where a fur-
ther distinction is taken between express and implied warranties.

In Pierce v. Carey, 37 Wis. 232 ( 1875), it is held that if the ac-
tion is in deceit upon a warranty, the scienter must be proved,
though leave will be granted to amend the complaint by striking
out the averments of fraud so turning the action into one ex con-
tractu.

In Caldbeck v. Simanton, 82 Vt. 69 (1909), it was held that
where no scienter is alleged the action though in form on tort, is in
substance ex contractu, so that the plaintiff could not proceed by
arrest on a capias.

SECTION 5.

Plaintiff's Right to Rely on the Defendant's Statements,
(a) Statements made to persons other than plaintiff.

GEORGE W. BUTTERFIELD v. ANDREW J. BARBER

Supreme Court of Rhode Island, 1897. 20 R. I. 99.

Case for deceitful representations by a debtor to his creditor,
the plaintiff having subsequently purchased the claim from the



Mn two cases in the Fair Court of St. Ives in 1317 and 1324. Select
Pleas of the Law Merchant, (Selden Society), p. 102. 105, the defendant is
attached to answer in plea of covenant, for breach of, in the one case an "as-
surance" and in tlie other of a pledge in a sale bound by giving God's penny
that the goods sold corresponded to a sample shown. The defendant denied
•'tort and force" and the question of the existence and breach of the covenant
was tried by an inquest.



^22 WELLS V. COOK.

latter in the form of a promissory note. Heard on defendant's
petition for a new trial.

Per CURLA.M. Assuming that the representations testified to by
the plaintiff were made by the defendant, the testimony shows that
they were made for the purpose of being communicated to Murphy
to procure an extension of time for the payment of his claim against
the defendant. At the time they were made the defendant had no
expectation that the note, which was subsequently made, was to be
taken by the plaintiff', who, in the meantime, had purchased the claim
from Murphy. We do not think that in these circumstances the
plaintiff' had the right to rely on the representations, if they were
made, because they were not made with the intention of inducing
his action, and consequently that he has no ground to maintain an
action for deceit.

Case remitted to the Common Pleas Division, with directions to
enter judgment for the defendant for costs.

Patrick H. Mulholland, for plaintiff.

George A. Littlefield, for defendant.



s'



WELLS V. COOK.
Supreme Court of Ohio, 1865. 16 Ohio State Reports 677.



Error to the Common Pleas of Union County. Reserved in the
District Court.

On the 26th of February, 1863, the plaintiff, Orlando Wells,
filed his petition, against the defendant Cook, as follows^ :

The defendant on or about the first day of November, sold to
the plaintiff, as the agent of his brother, Osmond Wells, a herd of
sheep, the defendant well knowing at the time of the purchase that
the said sheep were to be turned in with a large flock of sheep,
owned at that time by the said Osmond Wells, which flock at the
time were sound and healthy and free from any disease. The de-