''Accord: Tatton v. Wade, 18 C. B. 371 (1856) ; Scholfield Co. v. Schol-
field, 71 Conn. 1 (1898) : Dashiel v. Harshman, 113 Iowa 283 (1901) ; Marshall
V. Gilman, 52 Minn. 88 (1892) ; Kirkendall, Jones & Co. v. Hartsock, 58 Mo.
App. 234 (1894) ; Morgan v. Skiddy, 62 N. Y. 319 (1875) ; Wilson v. Tal-
heimer, 20 Pa. C. C. R. 203 (1897) : Handy v. Waldron, 19 R. I. 618 (1896) ;
Lebby v. Ahrens, 26 S. Car. 275 (1886) ; Shatv v. Gilbert, 111 Wis. 165 (1901).
So the plaintiff may recover though in part influenced by other non-actionable
statements of defendant, Tatton v. Wade, 18 C. B. 371 (1856), plaintiff in-
duced to extend credit to a third party in part by defendant's verbal and in
part by his written assurances of such party's solvency; Dashiel v. Harshman,
113 Iowa 283 (1901) ; Shaw v. Gilbert, 111 Wis. 165; but see Proctor v. Mc-
Coid, 60 Iowa 153 (1882), where it was held that a plaintiff did not rely upon
a warranty and representations that a horse he bought was sound because he
testified that when he asked for the warranty he was afraid the horse had
Where the defendant's fraud though intended to deceive the plaintiff has
elseif (getClientWidth() > 430)
no influence upon his action, there can be no recovery, Horsfall v. Thomas,
HUMPHREY V. MERRIAM. 775
HUMPHREY V. MERRIAM.
Supreme Court of Minnesota, 32 Minn. 197.
Mitchell, J. This was an action for damages for deceit in the
sale of stock of the Florence Mining Company. The deceit con-
sisted, as alleged by the plaintiff, in the false and fraudulent state-
ments of one Carver, defendant's agent, who made the sale, as to the
value, condition, and productiveness of the company's mine, and as
to the amount of its indebtedness. Assuming that the alleged repre-
sentations w^ere made, and that they were untrue, (of which facts
there was competent evidence,) and that they were material, (which
some of them undoubtedly were,) it was incumbent on plaintiff in
such an action also to prove ( i ) that they were fraudulently made ;
and (2) that he believed them, and relied on them in making the
We also think that the evidence utterly fails to show that the
plaintiff believed these representations, and relied on them in making
the purchase. It is true that in his examination in chief he states
generally that he relied on them ; but his cross-examination con-
clusively shows that he did not rely on them as true when he made
his purchase. He makes the following among other statements: 'T
wouldn't let him (Carver) touch the money, wouldn't take his word
that he was agent for the man. I considered that what he said was
wind. I saw a good many men to see how far Carver's representa-
1 H. & C 90 (1862), defendant patched up a flaw in a gun, intending thereby
to conceal it from a purchaser, who, however, bought without inspection.
It is error to instruct the jury that the plaintitT"s behef in the false state-
ments must be the "predominance" motive, Matthews v. Bliss, 22 Pick. 48
(Mass. 1839), or that the plaintiff cannot recover if he did not rely "so much"
upon the false statement as upon individual investigation and judgment.
Marshall v. Chapman, supra.
While the plaintiff can only recover if he has in fact relied and acted
upon the defendant's false statements, he need not expressly allege or give
direct evidence to prove that he so relied upon them if they are material,
Hicks V. Stevens, 121 111. 186 (1887), "when a party ignorant of the real facts
and having no ready means of information, makes a purchase or enters into
a transaction, as to the subject-matter of which misrepresentations have been
made which are material, the law will presume, as a matter of fact, that he
relied on them," Shope, J., p. 194; Redgrave v. Hurd, L. R. 20 Ch. Div. 1
(1881), per Jesscl. M. R. p. 21; but see Runge v. Brown, 23 Nebr. 817 (1888).
As to the effect of lapse of time between the making of the statement
and the plaintift''s action as depriving the latter of the right to rely upon it;
compare Bradley v. Seaboard National Bank. 167 N. Y. 427 (1901)'; plaintiff
held entitled to give credit to defendant on faith of false statements to a
financial agencv made two vears earlier: and Cox Shoe Co. v. Adams, 105
Iowa 402 (1898), with Lesem v. Miller, 10 Kans. App. 579 (1901), where the
plaintiff was held not entitled to sell goods on the credit of a letter of recom-
mendation five months old.
It is immaterial whether the plaintiff is induced to take positive action,
as making a contract or purchasing property, or is induced to refrain from
action, as where he is induced not to rescind an existing contract, Bozcen v.
Carter, 124 Mass. 426 (1878), or to retain stock of a corporation which he
had intended to sell, Bottler v. Moseley, 179 Mass. 295 (1901).
776 HAGEE V. GROSSMAN.'
tions were corroborated. I was anxious to see how I could protect
myself and take the stock. I didn't intend to take Carver's word that
he was Merriam's agent. I wanted to see that I was dealing with a
responsible man. These representations of Carver's were as the
wind, unless they were certified to by the character of an honest man.
I didn't mean that he should get any money, and I meant that >\Ir.
jMerriam should get my money, and should he have right to say that
these things were true." Again when asked if he would believe any-
thing Carver said, he answered, "No." When he went to see JMer-
riam he says he made him the speech which had been taught him by
his attorneys on a former occasion : "I have bought of you, through
your agent, Mr. Carver, some Florence." When asked his object
in making this speech, he replied, "To see whether he would say
Carver was or was not his agent." The evidence also shows that,
so far from believing the statements of Carver, he interviewed
numerous other parties, stockholders and others, to ascertain what
they knew about the mine, and what value they placed upon the
stock, and that so far as he made the purchase upon a belief in the
existence of facts, he acted upon what information he got from these
parties, and not upon what Carver told him.
The evidence clearly shows the plaintiff's position to be just
this : He knew that mines were proverbially uncertain, and might
prove very profitable or a failure. He found that others had faith
in this mine, and therefore he had ; but he wished something more
certain, and wanted a warranty from a responsible man, so that he
could keep his stock and get his dividends from the mine if it turned
out well, or get his money back from the defendant if it did not.
Whatever may have been plaintiff's belief as to the condition or
value, present or prospective, of the mine, that belief was not based
upon the statements of Carver. His only reliance upon Carver's
statements consisted, not in his belief of their truth, but because he
thought, if false, Merriam would be responsible for them. He made
his purchase, not because of any belief in their truthfulness, but
because he thought Merriam would be liable as a warrantor to make
them good if they proved untrue. On such a state of facts, as the
court below well remarked, if plaintiff made out anything, it was
a cause of action on a warranty and not for deceit.
On either or both of these grounds the action was properly
^^^ HAGEE AND ANOTHER v. GROSSMAN.
Supreme Court of Indiana, 31 Indiana Reports 233 (1869).
Appeal from the Miami Circuit Court.
Suit by the appellants against the appellee. The complaint
alleges, that the plaintiffs were engaged in the business of baking
bread for sale to the public, which was well known to the defendant ;
and that the defendant, fraudulently and craftily, intending to cheat
IIAGEK V. GROSSMAN. yjy
and defraud the plaintiffs, brought to their bakery twelve hundred
pounds of flour, in sacks, which he fraudulently and falsely repre-
sented to the plaintiffs to be good, sound, merchantable tlour, when,
in fact, said flour was musty, worthless, and wholly unfit to be used
in said business, which the defendant well knew ; that the plaintiffs
at the time paid the defendant seventy-five dollars for said flour,
being $6.25 per hundred, relying on said representations of the de-
fendant, and believing the same to be true ; that after they had paid
for the flour, they discovered it was worthless for the purpose for
which it was purchased, and thereupon they offered to return it
to the defendant, who refused to receive it or to repay said sum or
any part thereof ; whereby the plaintiff's were damaged, &c.
The defendant answered in two paragraphs : first, the general
denial; second, that before the sale of the flour to the plaintiffs the
defendant took it to their place of business, in sacks, and left it
there for several days for them to inspect and try it ; that after the
plaintiff's had done so and knew the quality of the flour, he sold it to
them at $6.25 per hundred, the price agreed upon between the par-l
ties, which was less than the market price at that time and place foji
good, merchantable flour.
Reply, the general denial. Trial by jury ; verdict for the defend-
ant, on which judgment was rendered, a motion for a new trial hav-
ing been overruled.
Ray, J. — The appellants urge a reversal of this case upon the
evidence. The only question before the jury was whether the appel-
lants relied upon fa lse representations of the quality of the flour nr
purclias ed it upon their own j udgment. The flour was left with them
-ifor examination tor ten or twelve ctays, and they used one sack from
among the lot ; and although there is evidence that the flour from the
sack used made good bread, and that from the other sacks did not,
when used at a subsequent time, make bread fit for sale, still the
jury might fairly find from the evidence in the case, that the flour
was all of one quality when sold, being but one lot of flour, from
the same lot of wheat, and ground at the same time, the sacks being
filled from the mill.
This instruction was also given to the jury: "If the jury find
that the flour in question was left in the possession of the plaintiffs,
for the purpose of being tested by their baker as the agent of the
plaintiffs, as to its quality for the purpose for which they wanted it,
and the defendant was not guilty of making any false or fraudulent
representations or acts at the time, which the plaintiff's relied on as
true, by which they were prevented from making such test, and after
such test under such circumstances, the plaintiffs, relying upon the
judgment of their baker as to the quality of the flour, purchased of
the defendant, they cannot recover, although it be true that the de-
fendant had previously made false representations as to the quality \
of the flour."
If by no act or word of the defendant the baker was prevented
from testing the flour, and if the plaintiffs relied upon that test in
7/8 ELY V. STANXARD.
making their purchase, they could not have rested upon the state-
ments of the defendant, and he could not be liable for deceit.^
ELY V. STANNARD.
Superior Court of Hartford County. 46 Conn. Rep. 124 (1878).
Carpenter, J. : — In July, 1873, the plaintiff was indebted to the
defendant in the sum of $1,200, by note payable with interest in 18
months to the order of the defendant. In April, 1874, the plain-
tiff without the knowledge of the defendant, executed a mortgage of
his land to the defendant to secure the note, being desirous of ex-
changing such land subject to the mortgage for an equity of redemp-
tion in certain other lands owned by one Lester S. Hills. The plain-
tiff then made an exchange of equities with Hills, treating the
mortgage as valid, and taking it into account in the settlement. It
was expressly agreed that neither party should personally assume
any liability upon the mortgage so conveyed. The defendant sold the
note before maturity to a bona fide holder for value. While the note
was outstanding in the hands of a third party, the plaintiff requested
the defendant to transfer the mortgage to him or to some third per-
son and for his benefit to secure the payment of the note. This he
refused to do. Afterwards, and while the note was still outstanding
in the hands of a third person. Hills induced the defendant to release
the mortgage to one White, to whom he had contracted to sell the
property free of the mortgage, for doing this Hills paid the de-
fendant $200. The result of this transaction was to take from the
plaintiff the amount of the note and place $200 of it in the hands of
the defendant, and the balance in the hands of Hills.
^Accord: Southern Development Co. v. Silfa, 125 U. S. 247 (1888);
Grauel v. Wolfe, 185 Pa. 83 (1898) ; Poland v. Brownell, 131 Mass. 138 (1881) ;
Allison V. Ward, 63 Mich. 128 (1886); Walker v. Casgrain, 101 Mich. 604
(1894) ; Warren v. Ritchie, 128 Mo. 311 (1895) ; Wimer v. Smith, 22 Ore. 469
(1892) ; all cases where fraud was alleged as a defense to the enforcement
of a contract, or as a ground for its rescission. See also, Wilson v. Talheimcr,
20 Pa. C. C. 203 (1897), semble ; and Zilkey. Woodley, 36 Wash. 84 (1904) ;
"any representations made before the parties viewed the land are not perti-
nent. The vendee had no longer the right to rely upon them and they there-
after proceeded in the light of their own knowledge from actual view of the
premises and its surroundings;" per Hadley, J., p. 89. But the fact that he
made inquiries elsewhere is not a bar to recovery if he placed substantial re-
liance upon the defendant's false statements, Lewis v. Crandall, 7 Mo .App.
564 (1879) : and see Marshall v. Gilman, 52 Minn. 88 (1892). So he may
recover if because of his reliance on the trustworthiness of the defendant's
statements he makes a less accurate and exhaustive examination and so fails
to discover the truth, Dyer v. Har grave, 10 Vesey 506 (1805).
ELY V. STANNARD. 779
The defendant further claims that the plaintiff cannot recover
the amount of the note for the reason that the note had not been
paid when suit was commenced. This claim assumes that the
plaintiff sustained no injury until the actual payment of the note;
that until that time it was fraud w^ithout damage. * * * It
does not come with very good grace from the defendant to insist,
notwithstanding that the fraud is complete, and has yielded its fruit
as to himself, that it is not complete as to the plaintiff, he not yet
having paid the note, although payment by the wrongful act of the
defendant is inevitable.
If the plaintiff is not yet damnified no one is. White certainly
is not, for he received just what he purchased and paid for. The
holder of the note is not, for the plaintiff, a responsible man, is his
debtor. The defendant's claim therefore involves this absurdity,
that although he has committed a fraud and received the fruits of it,
yet no one is injured. This cannot be. Either the maker or the
holder of the note is defrauded. It is certain that one of them
must suft'er, and as the maker is solvent there is no uncertainty as to
which it will be. For all practical purposes therefore the plaintiff
suft'ered damage from the moment the fraud was consummated.
This must be so. The plaintiff's liability was not contingent but
absolute. If it had been contingent, if there had been any legal un-
certainty about his being called upon to pay it — for instance, if the
security had been outstanding so that the holder of the note could
have resorted to that for payment — and the wrong had been of such
a character as to leave the liability contingent, the case would have
presented a dift'erent question. In that event the holder might have
collected the note from the security and the maker would have
suffered no damage. But unfortunately the wrong destroyed the
security, and converted a contingent liability into an absolute one.
After the defendant sold the note he might at any time, while hold-
ing the security, have been compelled to transfer it to the purchaser.
When the mortgage w^as released and the property conveyed to
White unencumbered, he purchasing in good faith and paying there-
for its full value, it was no longer possible for the holder to look to
the security. He could only resort to the maker, and for all practical
purposes it was certain that he would do so."
"We do not intend to infringe the rule that a mere liability
to loss is not ordinarily sufficient to maintain an action ; but we think
the rule does not apply when such liability is coupled with a legal
obligation from which there is no escape. We think this position is
sustained by the authorities. In an old case, Waterer, Hobart, 266,
Lord Hobart, C. J., says : — 'There must be not only a thing done
amiss, but also a damage either already fallen, or else inevitable.'
'There would be neither Avisdom nor justice in compelling the de-
fendant to pay the plaintiff money as compensation for a loss which
he has not incurred, and may never sustain. These remarks of
course do not apply where a liability has attached that may fairly
be regarded as inevitable, and sure to be responded to by the party
charged.' Sedgwick on Damages, 229. Again, on the same page,
the author says : — 'A mere probability of future loss is an insufficient
/So ENFIELD V. COLBURN.
basis of a claim for legal relief. But the case may be different where
the plaintiff is fixed with a legal liability to lose, which, consummated,
the defendant will be bound to make good.'
Our conclusion then is that the plaintiff had a complete right of
action when this suit was commenced ; and, inasmuch as the note was
paid before trial, he is entitled to recover the full amount of the
The Superior -Court is advised to render judgment accord-
In this opinion the other judges concurred.
ENFIELD V. COLBURN.
Supreme Court of Nezv Hampshire, 1884. 63 N. H. 218.
Carpenter, J. A mere naked lie — a falsehood — though told
with intent to deceive, upon which nobody acts, and by which nobody
Js_d££:eived, is not actionable. The declaration alleges, in substance,
that the defendant falsely and fraudulently represented that he had
a valid claim against the plaintiffs for damages, that the plaintiffs
relied upon the representations, and that they investigated them at
large e xpense and fo und them to be false. One or the other of the
lasFtwo allegations Ts~untruthful as the representations are claimed
to be: both cannot be true. If the plaintiffs relied upon the repre-
^gntations, they did not investigate them : if they investigated them
•lliey did not rely upon them. It is a perversion of language to say
that they did both. The averments are incurably repugnant, and
^neither of them can be rejected as surplusage.
If the inquiry had resulted in favor of, instead of against, the
validity of the defendant's claim, and if, relying upon the result of
the examination and not upon the representations, the plaintiffs had
paid the demand, they could maintain no action, however unfounded
the claim and however false and fraudulent the defendant's repre-
sentations might be. He only who has trusted in and acted upon a
^ In Luetcke v. Roberts, 130 Wis. 97 (1906), an action to cancel three prom-
issory notes because procured by fraud, it appearing that the notes, having
been transferred to bona fide purchaser for value, could not be cancelled,
judgment was rendered for the face value of the notes with interest, though
none of them had been paid either at the time of the beginning of the action
or of the trial and one at least was not payable till after tiie date of the trial;
see the same rule applied in action for breach of contract to return a note
to the maker, Lyle v. McCormick Harvester Co., 108 Wis. 81 (1900).
In Freeman v. Venncr, 120 Mass. 424 (1876), it was held that no action
could be maintained by one who had been fraudulently induced to become an
unrestricted endorser of a promissory note secured by a mortgage which was
transferred by the defendant to a bona fide holder for value, unless at the
time the action was brought he had been called upon to make payments on
account of his endorsement. In that case the makers of the note had become
bankrupt before the beginning of the action, and, after the beginning of the
action but before trial, the real estate mortgaged to secure the note had
been sold and applied to the payment of interest and to the part payment of
the principal, and an action had been begun against the plaintiff to recover
the balance, which action was pending at the time of the trial, but see
Trayne v. Doardman, 2^7 Mass. 581 (1910).
URTZ Z'. NEW YORK CENTRAL & 11. R. R. CO. 781
falsehood to liis injury can maintain an action. It is upon this prin-
cTpTc~that no action hes for false representations of facts which are
ec|ual ly open to tiie observation and knowledge of both parties.
Tt this declaration can be sustained, a plaintiff who makes and
institutes a suit upon a false and fraudulent claim, and is beaten,
must not only satisfy the judgment against him for costs, but is also
liable to an action on the case; and, generally, one may recover the
cost of detecting and defeating any fraud which may be attempted
upon him. There is no precedent for such an action. It is always
at a party's option to act upon the faith of statements made to him,
or upon his own judgment of the facts after making full inquiry.
If, where he does the latter and makes a mistake, another is not
answerable for his blunder whatever pains he may have taken to lead
him into it, still less should he be punished if by reason of the injury
21 mi stake is committed. It is the damages which result from acting
upon false representations as if they were true, and not the expense y^
of detecting their falsity, which a plaintiff is entitled to recover, ^^i^i - '
URTZ z'. NEW YORK CENTRAL & H. R. R. CO.
Court of Appeals, State of New York, 1911. 202 N. Y. 171.
Appeal from a judgment of the Appellate Division of the Su-
preme Court in the fourth judicial department, entered October 13th,
1910, affirming a judgment in favor of plaintiff' entered upon a
The action was to recover damages sustained by the plaintiff'
through the false representations made to her by'tlie~def^ndant. The
plaintiff's husband was killed at a crossing of the defendant's rail-
road by an engine of the defendant. One ]\IcCormick, a division
claim agent of the defendant, was empowered to investigate the facts
and was later authorized to effect a settlement with the plaintiff of
her claim for damages for the death of her husband, at a sum not
greater than $2,500. By certain representations alleged to be false
and fraudulent, 2\IcCormick induced plaintiff to settle her claim for
^ooand to execute a release of the (Icfcndant's liability.
the trial the plaintiff introduced evidence in proof of the
false and fraudulent nature of the statements of McCormick and her
reliance thereon, and the defendant introduced opposing evidence.
The trial judge in his charge instructed the jury in substance that
if they found that the statements made by AlcCormick were mis-
representations of facts and were fraudulently made and were rcliedl
upon by the plaintiff, then she was entitled to recover as damages]
"the amount the plaintill could reasonably obtain on a settlement'
where nothing but the true facts were given or relied upon ; deduct
from that the amount paid, and the residtie would be the recovery.
In other words, how much could the plaintiff" reasonably have de-
manded and received from the defendant by way of settlement if
782 URTZ f. NEW YORK CENTRAL & H. R. R. CO.
these false representations had not been made?''/ The defendant's
counsel requested the judge to charge that the^aintiff, in order to
maintain the action, must show, in the first instance, that she had a
valid and existing claim against the defendant originally, and the
judge responded, "I refuse to charge in that language. She must
show that there was a claim which was disputed and contested ; that
she was alleging a claim based upon facts sufficient that she could
reasonably apprehend that she had a just claim and that the defend-
ant could also feel that she had a just claim." Proper exceptions
thereto were taken. The verdict of the jury in favor of plaintiff
was unanimously affirmed.
Collins, J. In an action for the recovery of damages caused
by the fraud of the defendant, the plaintiff must allege and prove
that he has been injured by the fraud which he charges. The essen-