Francis H. (Francis Hermann) Bohlen.

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Foundry v. Dallas, U7 Ala. 513 (1900): Short v. Stevenson, 63 Pa. St. 95
(1870)."

But where the price paid by the vendor is made the criterion of the price
to be paid by the vendee, as where the goods are sold "at cost," a false state-
ment of the price paid by the vendor is actionable in deceit, or, is grounds for
deceit and is a defense to an action to enforce the contract, or, ground for viti-



752 MEDBURV Z\ WATSON.

by one of the more ancient decisions ; as where a vendor had falsely
affirmed as to the amount for which the estate rented, and had in-
duced a person to give a higher price for the estate in consequence
of such false affirmation respecting the rent, there an action was
held to lie, on the ground that it was a matter within his own knowl-
edge, and the tenant might not disclose the amount of rent paid by
him. El kins v. Tresham, i Lev. 102, i Sid. 146. And so fraudulent
misrepresentations of particulars in relation to the estate, which
the buyer has not equal means of knowing, and where he is induced
to forbear inquiries that he otherwise would have made, are not
to be viewed in the light of assertions gratis dicta; and therefore,
where damage ensues, the party guilty for the fraud will be liable
for the injury sustained.

I do not think it necessary to go over, in detail, the authorities
cited by the counsel for the defendant, they having often been the
subject of comment; but I presume that I am safe in affirming, that
the greater part, if not all, the cases cited, are those of false affirma-
tion by the vendor to the vendee, where the maxim caveat emptor
applies, and not those resting upon the false representations of a
third person with regard to the value of the property. And the dis-
tinction 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 inter-
est it is to put a high estimate upon his estate, 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 nor intention to depart
from the truth, and who thus throws the vendee off his guard, and
exposes him to be misled by the deceitful representations.

In the present case, we think the averments in the declaration
would not have supported an action, if the false representations had
been made by the vendor to the vendees. But the representations



ating the same; Mason v. Thornton, 74 Ark. 46 (1905), in which the defendant
having sold goods at cost, fraudulently altered the cost marks ; Welch v. Bur-
dick, 101 Iowa 70 (1897) ; Pendcrgast v. Rccd. 29 ^Id. 398 (1868) : Barnard v.
Col-xell, 39 Mich. 215 (1878) ; Elerick v. Reid, 54 Kans. 579 (1895) ; McFad-
den V. Robison, 35 Ind. 24 (1870) ; and this is so even in those jurisdictions
which follow Medhnry v. Watson, 6 Mete. 246 (Mass. 1843), Blacks v. Catlett,
3 Litt. 139 (Kv. 1823) ; Lord v. French, 6\ Maine 420 (1873) : Gassctt v. Glasier,
165 Mass. 473" (1896) ; in which Allen, J., says (p. 480) : "The distinction may
be rather nice between an agreement to sell at cost, where the cost is repre-
sented at a certain sum. and an agreement to sell at a certain sum, which sum
is represented to have been the cost. This distinction, however, exists, and it
would be more marked, if at the time of entering into the agreement of sale,
the vendor should not fix or know the exact cost, and the parties should leave
it to be ascertained afterwards."

In Way v. Ryther, 165 Mass. 226 (1896), the court intimates its reluctance
to extend the protection afforded to vendors indulging in "dealers' talk;" fur-
ther than the decided cases required, and in Race v. Weston, 86 111. 91 (1877),
it is held that while no action would lie for false statements made by the ven-
dor as to the cost of property sold by him, a contract induced by such state-
ments will not be specifically enforced.



BUSTERUU V. FARRIXGTON. 753

were made by a third person, apparently disinterested, and who
proposed to aid the plaintiffs in making the purchase, and to i)ro-
cure the estate for them at a price which he stated that he knew
that it cost, and which he affirmed it was worth. Such false affirma-
tions and representations, having been made by a third person, witli
the intent to defraud, we hold are actionable ; and though the dec-
laration might have contained a more full averment of the facts
expected to be proved, yet we are of opinion that sufficient was
stated to maintain the action and to let in the other proofs connected
with and growing directly out of the assertions set forth in the
declaration. -

For these reasons, the motions for a new trial, and in arrest of
judgment, are overruled, and there must be judgment on the ver-
dict.



BUSTERUD V. FARRIXGTON.
Supreme Court of Minnesota, 1887. 36 Minn. 320.

Berry, J. It is not necessary to the action that the person mak-
ing the representation should receive any benefit from the deceit,
or^hat he should collude with the party who is benefited. Pasley v.
Freeman, 3 Term. R. 51 ; Upton v. Vail, 6 John. 181, 5 Am. Dec.
210; Hubbard v. Driggs, 31 N. Y. 518; Hxibbellv. Meigs, 50 N. Y.
480; Medbury v. Watson, 6 ^letc. (Mass.) 246, 39 Am. Dec. 726.
"The gravamen of the charge is that plaintiff has been deceived, to
his hurt, not that the defendant has gained an advantage." Fisher
V. Mellen, 103 Mass. 503.

A vendor's false representation of the value of a thing which
he proposes to sell, is ordinarily not actionable, {Wilder v. De^ Con,
supra,) though it may be so under special circumstances. GriMn v.
Farrier, 32 Minn. 474, 21 N. W. 553. But this immunity is not ex-
tended to a person not a vendor. He is held responsible generally
for a false representation of value ; the excuse of _ interest, and of
the natural disposition of men to overestimate their own property,
not being allowed in this case. Grinnell, Law of Deceit, 41-45.
50-52, 64; Medbury v. Watson, supra. A false representation as to
the condition, quality, or other matters affecting the value of prop-
erty, of which the person to whom the representations are made is
contemplating a purchase, is a false representation as to material

-Accord: Manning v. Alhec. 11 Allen 520 (Mass. 1866) ; Busterud v. Far-
rington, 36 Minn. 320 (1887) ; Kenncr v. Harding. 85 111. 264 (1877), vendor,
who induced third person to corroborate his assertion that such person had
offered a certain price for the land sold to the plaintiff, who had never seen
it. held liable in deceit; and see Belcher v. Costello, 122 Mass. 189 (1877),
statements bv vendor of the price paid bv one other than the vendor. In Jude,
Snow & Co. v. Woodburn. 27 Vt. 415 (1855). it was there held that a state-
ment bv a defendant seeking credit that he was worthy of credit, was a mere
matter of opinion and not actionable. The decision can only be supported in
Iha distinction taken in the principal case, since similar statements in regard
to the credit of third persons are habitually held actionable.



7^4 BOURN V. DAVIS.

facts; that is to say, of facts material to the purchaser with refer-
ence to the question whether the purchase will be for his advantage.
Bigelow on Torts, 17; Litchfield v. Hutchinson, supra; McAleer v.
Horsey, supra; Grinnell, Law of Deceit, 38-40.



t



BOURN V. DAVIS.
(76 Maine Reports 223.)



Symonds, J. Case for deceit alleged to have been practised by
the defendants in effecting an exchange of real estate with the plain-
tiff.

One of the allegations of fraud relied upon at the trial was that
the defendants said the place in Belfast, which they exchanged with
the plaintiff for her farm in Fayette, was valued by the appraisers
upon the estate of Lydia A. Hollis, mother of the defendant, Grace
U. Davis, at one thousand dollars, when in fact the appraisal was
only two hundred and twenty-five dollars.

In this respect the jury were directed by the presiding judge
that if the defendants stated "as a matter of fact, that the appraisal
had been made by the official appraisers under their oaths in per-
forming their official duty under the laws of this state and that
statement was false (and there is no dispute, I believe, about the
fact that the appraisal was two hundred and twenty-five dollars in-
stead of one thousand dollars), and was known by them to be false
at the time, and was made for the purpose of deceiving the plaintiff
and as an inducement to her to make the exchange, and she did rely
upon it and was thereby induced to make the exchange, "it was a
fraudulent misrepresentation which would give the plaintiff a right
of action to recover the damages which she sustained thereby. The
ruling appears to have been a pro forma one, and, the verdict being
for the plaintiff, the question of its correctness is reserved upon
exceptions by the defendants.

It is the general rule -at least in Massachusetts and Maine that
an action of tort for deceit in the sale of property does not lie for
false and fraudulent representations by the vendor to the vendee
concerning its cost or value, or the prices which have been offered
or paid for it. Long v. Woodman, 58 Maine 52 ; Holbrook v. Con-
nor, 60 Maine 578; Martin v. Jordan, 60 Maine 531; Bishop v.
Small, 63 Maine 12. "When a vendor of real estate affirms to the
vendee that his estate is worth so much, that he gave so much for
it, that he has been offered so much for it, or has refused such a
sum for it, such assertions, though known by him to be false, and
though uttered with a view to deceive, are not actionable." Med-
biiry V. Watson, 6 Mete. 259; Gordon v. Parmelec, 2 Allen 212;
Hemrncr v. Cooper, 8 Allen 334; Mooney v. Miller, 102 Mass 220;
Cooper V. Lovering, 106 Mass. 78; Parker v. Moulton, 114 Mass.
99; Poland V. Brownell, 131 Mass. 138; Page v. Parker, 43 N. H.

368.

With this rule established, it is difficult to see how a distmction



BOURN V. DAVIS. 755

can be drawn so as to hold a false statement about an appraisal of
property actionable, when proof of similar misrepresentations in
regard to prices offered or actually paid for it would fail to support
the action.

It will be observed that in this case the false affirmations alleged
are by the vendor to the vendee, personally or by agent, not as in
Mcdbnry v. Watson, supra, by a third person who stands "in the
light of a friend who has no motive nor intention to depart from the
truth, and who thus throws the vendee off his guard and exposes
him to be misled by the deceitful misrepresentations." This is the
distinction drawn in that case, between misstatements of this class
by the vendor and the same by a person who assumes to be disinter-
ested, not between misrepresentations by the vendor on tiie one
hand as to what he himself had paid and on the other as to what had
been paid by third jjersons, as the dicta in Manning v. Albee, ii
Allen 522, and Belcher v. Costello, 122 Mass. 190, would seem to
imply. We can see no dift'erence in legal effect betw^een a misrepre-
sentation by the vendor in regard to the price which he paid, and
one by him in regard to the price paid by other persons. The case
of Medbury v. Watson draws no such,distinction and the other cases
cited only purport to follow that.

In this respect, then, the misrepresentations as to the appraisal
stand upon the same footing as that class of affirmations of cost and
value, which the authorities hold are not material. They were made
by vendor to vendee. The ruling so regards them. In another re-
spect they are even less dangerous to a vendee in the exercise of
common diligence ; the proceedings of appraisers upon estates be-
ing matters of public regord and therefore open to the inspection of
all persons interested. Notwithstanding the official character of
the action of the appraisers, it still expresses only the judgment of
individuals as to the values of property, and from the time of Har-
vey V. Young, Yelv. 21 a, it has been held as a general rule that mere
affirmations of value between vendor and vendee are not actionable,
though false ; "for it was but the defendant's bare assertion that
the term was worth so much, and it was the plaintiff's folly to give
credit to such assertion."

The extension of this rule to false statements about prices paid
or offered, seems to include in its application to fraudulent repre-
sentations, such as appear in this case, about an appraisal of prop-
erty.

In Buxton v. Lister, 3 Atk. 385, a decree for the specific per-
formance of an agreement to buy timber-trees was resisted on the
ground that the plaintiff' had secured the contract by representing
that two timber merchants had valued the trees at three thousand five
hundred pounds, when in fact their valuation was only two thou-
sand five hundred pounds. Lord Hardwicke held that this, if proved,
was good ground for refusing to decree specific performance, for
such a decree is in the discretion of the court and should be entered
only when the agreement is certain, fair and just in all its parts.
This case is cited in 2 Kent's Comm. 487, as illustrating the greater
strictness of the rule in this respect in equity than at law, and also



756 GRAFFENSTEIX Z'. EPSTEIN & CO,

as showing that in equity there is a distinction hetween enforcing
specifically and rescinding a contract. "It does not follow that a con-
tract of sale is void merely because equity will not decree a specific
performance."

Under the principle which the decisions in this state have estab-
lished, we think that proof of the fraudulent representation alleged
in regard to the appraisal of property was not sufficient to sustain
the action.

Exceptions sustained.^

Peters, C. J., Barrows, Danforth, Virgin and Libbey, JJ., con-
curred.



GRAFFENSTEIN v. EPSTEIN & CO.

Error from the Lyon District Court, Supreme Court of Kansas, 23 Kan.

Rep. 443 (1880).

Brewer, J. : Plaintiffs sued defendant for a breach of the fol-
lowing contract:

"Emporia, May 26, 1879.

"I have sold this day to E. Epstein & Co. my wool (1,100
fleeces), at 20 cents per pound, to be delivered at Emporia. Re-
ceived ten dollars on contract, Wm. Graffenstein."

One ground of defense was as follows :

"3d. For a third defense, defendant says that at the date, to
wit, May, 1879, the plaintiffs came to the premises of defendant, and
contracted to purchase some wool of defendant at the price of twenty
cents per pound, and at the time falsely and fraudulently represented
that said price was higher than the market-price, they well knowing
to the contrary — which representations defendant, not knowing the
market-price thereof at that time, relied on and agreed to let them
have it at that price ; but plaintiffs were wool-buyers at the time,
and had been long before, and the fact was that wool had at that
time largely advanced, and said sum was much less than market-
price, and plaintiffs well knew it at the time ; that as soon as defend-
ant discovered the fraud, he decline^ and refused to comply with
the said contract."

Ui)on the trial, defendant offered testimony in support of this
count in .the answer, but the court ruled that the testimony was in-
admissible, and this ruling is the error alleged. CounseJ for plain-
tiff in error fairly state the question thus presented to be, "Whether
a false and fraudulent representation as to the market-price of a
commodity made by a purchaser who knows, to a seller who does
not know the market-price, to induce a sale more advantageous to
the purchaser than he could otherwise get, and which representation



^ But see Coles v. Kennedy, 81 Iowa 360 (1890), where a statement that a
certain well-known man had subscribed for 5,000 shares of stock was held
actionable, when in fact the stock had been given him for the use of his name,
the only value of his subscription as an inducement to. the plaintiff to purchass'
stock was because it expressed the alleged subscriber's belief in its value.



GRAFFEXSTEIX V. EPSTEIN & CO. 757

is believed and relied on by tbe seller to his darnap:e, is such a fraud-
ulent representation as avoids his contract of sale?"

This question thus presented must be answered in the negative.
It will be noticed that, as stated, the question eliminates two ele-
ments which sometimes enter into afifect the force of the misrepre-
sentation, i. e., that some personal trust or confidential relation, and
that of peculiar means of knowledge. Sometimes there are such
relations between the parties, or their situations are such, that a
l)eculiar obligation rests on the one who knows to reveal his knowl-
edge. There may be some trust relation between the two, or a
recognized habit of dealing in dependence upon the party's state-
ments and representations. In such cases, there is a peculiar duty
resting upon the party to disclose the true facts. A confidential ad-
viser, an attornev, a factor, an agent, all hold such relations that
they are under special duty to tell the truth, the whole truth, and
nothing but the truth. So^ where from a long-continued course of
dealing the party making the representations knows that the other
has become accustomed to act upon his representations, he may not
presume upon such confidence to impose a falsehood. So, also,
where there are peculiar means of knowledge possessed by one and
not open to the other, as where a dealer in precious stones trades
with one inexperienced and ignorant of the values of such articles.
Acquaintance with such values, or the tests of quality, is not acquired
at once, or by the mere asking; it requires training and time. So
if a dealer know^s that a party is confined to his room by injury or
disease, and compelled to depend on the information brought to
him — and indeed, generally, where the parties cannot, by reason-
able care and diligence, place themselves upon equal terms, the law-
casts a higher obligation to reveal the truth.

None of these elements enter into this case. The article was
one of general commerce ; there was no special relation of trust or
confidence ; no peculiar training was prerequisite to a knowledge of
values; the market-price was a matter of public knowledge, and
could be ascertained by any one by reasonable effort and inquiry.
Under such circumstances, i'f the one party chooses to take the state-
ments of the other, and act upon them, rather than make any in-
quiry as to the market-price, he cannot thereafter repudiate his
contract on account of the falsity of the statements. "It must ap-
pear that the injured party not only did in fact rely upon the fraud-
ulent statement, but had a right to rely upon it in the full belief of
its truth, for otherwise it was his own fault or folly, and he cannot
ask of the law^ to relieve him from the consequences." (2 Parsons
on Conts., 3d ed., p. 270.)

Counsel argue in favor of the rule as they claim it, that it will
tend to promote honesty in business transactions, and encourage the
confidence which one man should have in another in the statements
he makes. It may be well doubted whether, as a matter of public
policy, such a rule would be wise ; whether it is not better that every
one should understand that it is his duty to make reasonable and
ordinary efifort to acquaint himself with all the facts necessary for
his guidance in making a contract before he makes it, and that if



758 RIPV V. CROXAX.

he fails to make such effort, he must abide by the contract. Atten-
tion to business and prudence in making contracts are of no smah
importance ; inquiry before is vastly better than inquiry after. A
disposition, after entering into a contract which proves unfavorable,
to search for some means of getting out of it, is unfortunate ; it
encourages misconstruction of statements, misrecollection of words,
and wilful falsehood. A party who finds on inquiry that he cannot
avoid his contract, except by proof of misrepresentations by the
other party, is under fully as strong temptation to impute such
misrepresentations, as a party seeking a contract is to make them.

But it is scarcely necessary to pursue this question of policy
further. We think the law is the other way, and any change in the
rule must be made by the Legislature.

We see no error in the ruling, and the judgment will be af-
firmed.^

All the justices concurring.

RIPY V. CRONAN.

Court of Appeals of Kentucky, January 27th, 1909, 131 Ky. Rep. 638 (1909).

The particular charges brought against the defendant are :
That he presented to the Louisville school board an option on the
property purchased by it, signed by Edmonia Shannon, by which
she agreed to dispose of the property to the Louisville school board
for the sum of $5,985 ; that during the negotiations for the sale, and
at the time the sale was efi^ected, Cronan had in his possession an
agreement executed by Mrs. Shannon to sell and dispose of said
property to the Louisville School Board for the sum of $3,100; that
the defendant falsely represented that $5,985 was the lowest sum
at which said property could be bought. In determining the ques-
tions whether these allegations, if true, show fraud on the part of
the defendant, we must take into consideration the fact that the prop-
erty involved in the transaction was real estate, and that it consisted
of two lots of ground located in the city of Louisville. The prop-
erty was there for the inspection of the members of the board. They
could have inspected it individually, collectively, or by means of a



^Accord: Foley v. Cowgill, 5 Blackf. 18 (Ind. 1838); Cronk v. Cole, 10
Ind. 485 (1858); contra Smith v. Countryman, 30 N. Y. 655 (1864) semble,
fraud alleged as a defense in an action on a contract.

Where, however, ihe property is not dealt in any open market, so as to
give both parties equal means of knowledge of the current price, statements
that stock has not been sold for less than a certain figure or that all the orig-
inal stockholders had paid par for their holdings, or that the price, offered or
asked, is the same as that paid by others, are actionable fraud or ground for
rescinding a contract induced therebv; Adams v. Collins, 196 Mass. 422
(1907); Maxted v. Fowler, 94 ]\Iich. 106 (1892); Hubbard v. International
Agency Co., 68 N. J. Eq. 434 (1904); Cnolidge v. Goddard, 77 Maine 578
(1885) ; Weaver v. Cone, 174 Pa. St. 104 (1896) ; Kilgore v. Bruce, 166 Mass.
136 (1896).

So a defendant is liable who deceives the plaintiflf as to the current price
by producing forged newspapers containing false quotations thereof. Man-
ning V. Albee, 11 Allen 520 (Mass. 1866).



RIPY Z'. CROXAX.



759



committee appointed for that i)urpose. They were all sui juris and
capable of determining-, not only the value of the property, but the
price they were willing- to pay for it. Xo obligation was placed upon
the school board to buy. They could buy or not, just as they pleased.
Although the defendant stated that $5,985 was the lowest sum for
which the property could be purchased, it was, after all, entirely
optional with the members of the board whether or notthey would
pay that sum. If the law were as contended for by ajjpellant, then
every vendee of property could escape the obligation of his contract
just so he afterwards established the fact that at the time of the sale
the vendor or the agent representing him was willing- to take less
than he represented that he would take for the property disposed of.
Tills would impose no duty on the purchaser. The validity of his
purch.ase would depend, not ui)on what he was willing to pay, but
upon the price at which the property might be purchased. There
is nothing in this record to show that Mrs, Shannon was a non-
resident of Louisville when the members of the school board ex-
amined the property in question. If they considered the price too
high, they might have inquired of the owner whether or not she
would accept less. In doing this, they would have exercised only
ordinary prudence. People who are capable of acting for them-
selves cannot decline to act, and then put the entire blame for a bad
trade upon a vendor or his agent. In every transaction some allow-
ance must be made for what is called "trade talk." The statement
that a certain sum is the least that a piece of property can be bought
for is a very common expression, and forms a part of nearly every
trade. A purchaser who relies upon such talk and purchases prop-
erty without using ordinary prudence to investigate the truth of the