Francis H. (Francis Hermann) Bohlen.

Cases on the law of torts (Volume 1) online

. (page 110 of 124)
Font size
QR-code for this ebook

Tial coTiFtTttteiTt« - &f-'tlTe''actioTrare firmly fixed and are tersely stated
in Arthur v. Griszi'old (55 N. Y. 400), as, "representation, falsity,
scienter, deception and injury." Pecuniary loss to the deceived party
is absolutely essential to the maintenance of the action. F raud^ and

_deceit alone do not warrant the recovery of damages. Deceit and
injury must concur. (Taylor v. Guest, 58 N. Y. 262; Etting-er v.
Weil, 184 N. Y. 179.) 1

In the action at bar the plaintiff was not defrauded by the
transactions between herself and McCormick unless, as a result
thereof, she lost something of value. In case that result was a gain
to her or purely negative, representing neither gain nor loss, clearly
there is no room for the application thereto of any rule of damages ;
the enforcement of any measure of damages, when loss and damage
are wholly lacking, is impossible and inconceivable. {Dung v.
Parker, 52 N. Y. 494; Hicks v. Deemer, 187 111. 164.)

The jury, in the case here, found that the deceit of the defend-
ant moved the plaintiff' to release unto the defendant, in considera-
tion of the surh of five hundred dollars, whatever right or cause of
action she had against it through the killing of her husband. Unless
the right of action had a value and a value greater than five hundred
dollars, the plaintiff w^as not defrauded. If what she parted with had
a value less than or only equal to the value of that wdiich she re-
ceived, she was not injured ; if greater, she was injured and in a sum
equal to its excess of value. The basic principle underlying all rules
for the measurement of damages in actions for fraud and deceit is
indemnity for the actual pecuniary loss sustained as the direct result
nf flip ^yrnTT^ (Krumm V. Beach, 96 N. Y. 398.)

The jury were bound, having found the fraud, to determine
whether the plaintiff was injured through the fraud, and, if injured,

the sum of her damages. In case the right of action had no value,

^Accord: Freeman v. McDamcl, 23 Ga. 354 (1857) ; Aldcn v. Wright. 47
Minn. 225 (1891) ; Kern v. Simpson, 126 Pa. St. 42 (1889) ; Nye v. Merriam,
35 Vt. 438 (1862). So the statute of limitations only begins to run from the
time when the injury is sustained. Brackett v. Perry, 201 Mass. 502 (1909)
The plaintiff is not entitled to nominal damages upon mere proof of fraud,
Atden v. Wright, 47 Minn. 225 (1891).

It is not necessary that the plaintiff's loss should be due to the non-exist-
ence of the fact falsely asserted, if he be led into action or abstention from


she had gained by the transaction and was not injured. It had no
vakie whatever if the true state of facts disclosed that it was an in-
vahd and nonexistinj; chiim or, in other words, that the defendant
was not neghgent, that the intestate was not free from contributory
neghgence. If, however, the true state of facts would have estab-
lished that the defendant was negligent and the intestate free from
contributory negligence, then the plaintitl had a valuable right of
action, the acquirement of which through the fraud may have in-
jured her. Until the jury found the real facts and that they created
a valid claim against the defendant, they had not a basis for estimat-
ing the damages the plaintili" had sustained. The action is not to
enforce or vacate the compromise but to recover the actual pecuniary
loss sustained by the plaintiff.

Vann, J. (dissenting.)- I dissent upon the ground that the
plaintiff was not bound to show that she had an absolute and certain
right of recovery in an action for negligence had one been brought,
for it was sufificient if she proved that she had a reasonable chance
to recover. A compromise does not necessarily involve the surren-
der of a certainty, but has valid support if it involves the surrender
of a reasonable probability. A reasonable chance to recover a sum
of money has a pecuniary value depending upon the strength of the
probability and the plaintiff lost that chance on account of the fraud
practiced upon her by the defendant through its dishonest agent.
She parted with value when she gave up her chance of convincing
a jury that the defendant was negligent, and that her intestate was
free from contributory negligence. The action for negligence, if
brought, might have involved a close question of fact, and she was
not obliged to convince the jury in this action that the jury in that
would necessarily have found in her favor. She might or might not
have succeeded in that action, but she lost her chance to make the
attempt when she executed the release in question relying upon the
false representations made in behalf of the defendant. The jury
could find, and, as we must presume, they did find that her chance of
recovery was worth as much more than the sum received on the
compromise as to warrant the verdict rendered in her favor for the

Judgment reversed.

action bv the defendant's fraud, he may recover for all the damages naturally
resulting therefrom, I-ottlcr v. Moseley, 185 Mass. 563 (1904) ; the defendant
fraudulently induced the plaintiff to retain stock which he had intended to
sell. The stock depreciated in value because of the embezzlement of a di-
rector of the company of a large part of its assets, the defendant was held
liable for the resulting loss to the plaintiff. "The defendant, if he fraudu-
lently induced tlie plaintiff to keep his stock, took the risk" of all clianges,
resulting from causes not altogether abnormal such as the acts, innocent or
criminal, of its officers, a fire destroying the company's property, or the bank-
ruptcy of a debtor owing the company a large sum. "The risk of a fall, from
whatsoever cause, is presumed to have been contemplated by the defendant,
when he falsely and fraudulcntlv induced the plaintiff to retain his stock."
Knowlton, C. J., p. 565-566.

^With whom Hiscock J. concurred.

784 AUSTIN' 7'. r.ARROWS.

Supreme Court of Errors of Connecticut, 1874. 41 Conn. 287.

Pardee, J. This in an action on the case for fraud ; the defend-
ants demurred to the declaration, and the Superior Court sustained
the demurrer.

The material allegations in the declaration are — that Barrows,
one of the defendants, was justly indebted to the plaintiffs; that he
had property liable to attachment sufficient to pay all his debts ; that
he conspired with the other defendants to cheat and defraud the
plaintiff's and his other creditors ; that with this fraudulent intent the
defendants agreed that Barrows should make a colorable and col-
lusive sale to another of the defendants of property worth more than
$10,000 for l6s_s than $6,000; that the defendants should by false
and fraudulent statements and representations as to the financial
condition of Barrows, induce the plaintiffs and his other creditors
to refrain from taking any legal measures to collect their claims and
to acquiesce in the fraudulent transfer of his property ; that the
plaintiffs relied on the truth of the statements and representations
of the defendants and were deceived thereby and neglected to take
any legal steps to enforce their claim against Barrows ; that the de-
fendants pursuant to this fraudulent agreement and conspiracy and
with this fraudulent intent secretly and fraudulently conveyed away
and converted to their own use all the property of Barrows, so that
the plaintiffs were wholly unable to collect by legal process or other-
wise any portion of their claim against Barrows ; that when the
fraudulent conspiracy was entered into by the defendants Barrows
was the owner and possessor of property sufficient to pay all his cred-
itors in full, and that the plaintiffs could and would have collected
by suit or otherwise their claim against him but for the conspiracy
and the fraudulent acts and representations done and made in pur-
suance of it ; and that the defendants so completely consummated
their fraud that the plaintiffs did not discover it until the property
had been scattered, secreted, and sold to innocent purchasers and the
proceeds spent, so that the same could not be found or secured by
attachment or otherwise, or by a trustee in insolvency or bankruptcy
had one been appointed.

Both principle and precedent compel us to say that these allega-
tions are unequal to the support of this action ; and while it is true
that the courts uphold the general principle that wherever there is
fraud or deceit by the one party, and injury to the other, there an
action will lie, that principle must be understood with such limita-
tions and qualifications as other principles of law, equally sound,
impose upon it. The law does not undertake to redress all moral
wrongs ; and there may be also legal torts bringing great damage to
individuals, but damage so remote, contingent or indefinite as to
furnish no good ground of action.

To maintain an action for the deceit and fraud of another, it is
indispensable tnat the plaintiff should show not only that he has
sustained damage and that the defendant has committed a tort, but
that the damage is the clear and necessary consequence of the tort


and can be clearly defined and ascertained. {Lamb v. Stone, 1 1 Pick.


So far as the declaration shows, at the time when the acts were
performed and the representations were made, of which the plaintiffs
complain, they had not obtained, or taken any steps to obtain, any
lien upon the debtor's property for the security of their debt by con-
tract or negotiation with him, nor had they acquired any claim upon,
or interest in, or right to, any part of it by operation of law. They
had taken no steps and formed no plan to procure a writ of attach-
ment whereby to obtain security thereon ; and no person had moved
in the matter of a division of the property among the creditors, by
either bankrupt or insolvent laws. They therefore lost no lien of any
kind in consequence of the acts and representations of the de-

The point of their complaint is that: — they now think that if no
representations had been made to them they would have obtained a
lien by attachment. They cannot make legal proof of this, and we
cannot say that such an intent would have ripened into action ; the
property might have been destroyed before they could place a lien
upon it ; the debtor might have sold it to innocent purchasers and
disposed of the proceeds in many lawful ways ; their attachment
might have been anticipated by others. The law does not undertake
to grasp or measure such uncertainty as the value of a mere possi-
bility that a creditor may endeavor, at some future time, to obtain
security from his debtor.

Again, what rule of damages shall the court apply to this action ?

In this form of a special action on the case the plaintiff's do not
seek the property fraudulently conveyed, or its proceeds, but a
judgment against! one or all of the defendants for the damage they
have suffered by reason of the fraudulent conveyance. If one cred-
itor may maintain this action, then may everyone ; each one is entitled
to compensation for the injuries suffered from the same cause, and
may recover it for himself. Shall the fraudulent purchaser pay all
the debts, or a sum as damages equal to all the debts of the fraudu-
lent debtor? The effort to do justice, in this way, might result in
great injustice, for the value of the property purchased may be whol-
ly unequal to the amount of those debts.

If the value of the property transferred be not sufficient for all.
how shall it be^divided among the contending creditors seeking pay-
ment of damages simultaneously but by dift'erent methods? Some,
perhaps, by actions for fraud ; some by trustee process ; some, by
attaching the property in the hands of the fraudulent vendee. Shall
the first in time take his whole debt? Or shall one kind of process
take precedence of another? Can the plaintiffs resort to more than
one of these remedies at the same time? x\nd would the judgment in
one be a bar to another?

As a rule, whenever in actions in form like the one before us
individual creditors have been permitted to pursue a debtor alone,
or in connection with those combining and conspiring with him, not
for the recovery of the specific property sold, or the proceeds thereof,
but for damages for fraudulently assigning, conveying away and


concealing his property for the purpose of placing it beyond the
reach of legal process, the action was authorized by statute and
did not proceed upon common law principles.^

There is no error in the judgment of the Superior Court.^


Van Vechten Veeder, Esq., History of Defamation, 3 Select Essays in
Anglo-American Legal History, pp. 449 to 451, 455 to 458; 3 Columbia Law
Review, pp. 549 to 551, 554 to 558, (1903) : Actions for defamation were
common in the seignorial courts in the thirteenth and fourteenth centuries.^
Many would doubtless resort to the duel, but for the mass of humble folk
these courts probably did substantial justice. The manorial rolls show the
operation of a jurisdiction sufficiently certain and severe to curb defamation
of the baser sort. In these local courts the smirched reputation would be
cleared before the very persons in whose presence it had been reviled. So that
even at a later day when the king's courts were well established, they do not
deal with defamation; for such wrongs the humbler subjects sought their
remedy in the more familiar, cheaper, and perhaps more trusted, local courts.
When, at length, late in the sixteenth century, actions for defamation becanae
common in the king's courts, the manorial courts were in their decay.

^Meanwhile the church punished defamation as a sin. Throughout Europe
in the middle ages a great government existed, independent of the separate
states; the temporal government was local, but there was a spiritual jurisdic-
tion which was universal. * * *

The demarcation of the real province of this ecclesiastical jurisdiction
was a difficult task. The church claimed and exercised jurisdiction, as of a

^ A part of the opinion is omitted discussing the cases of Cowles v. Day,
30 Conn. 410, Adler v. Fenton, 24 How. (U. S.) 407 (1860), Smith v. Blake,
1 Day 258, Lamh v. Stone, 11 Pick. 527 and Moody v. Barton, 27 Maine 427.

"" Accord: Bradley v. Fuller, 118 Mass. 239 (1875), action against treas-
urer of debtor corporation, Gralwm v. Peale, Peacock & Kerr, 173 Fed. 9
(C. C. A. 1909), action against one who by false representation induced
plaintiff not to press his claim, and in the meantime collected in full the claim.
of a trust company of which the defendant was president thereby exhausting
the creditor's assets.

Contra: Mott v. Dan forth, 6 Watts 304 (Pa. 1837), where plaintiff,
whose debt was not due, was allowed to recover from one conspiring with
debtor to conceal his assets. In Meredith v. Johns and Bcnning, 1 Hen. &
Munf. 585 (Va. 1807), while the debt was due, no judgment had been ob-
tained. See also, Smith v. Tonstal, Carthew 3, where a declaration was held
good which alleged that the defendant had fraudulently concealed a debtor's
assets whereby the plaintiff was prevented from collecting a judgment of ilOO
and a further debt of £100 then due.

'Select Pleas in Manorial Courts (Selden Soc. Pub.), 19, 36, 82, 95, 109,
116, 143, 170; The Court Baron (Selden Soc. Pub.). 48, 57, 61, 125. 133. 136.
Cf. Prof. Maitland in Green Bag. ii, 5, 6, particularly his instructive extract
from a hvpothetical case found in a book of precedents for pleadmgs m
manorial courts. The manorial rolls indicate that the defendant might allege
that his words were true. Select Pleas in Manorial Courts, 82. Thus early
slander is said to have been uttered of malice aforethought, and sometimes
the plaintiff alleges special damage. Pollock and Maitland, ii, 536.


spiritual nature, not alone over matters of ecclesiastical economy, but over
matrimonial and testamentary causes and pledges, and was with difficulty
prevented from appropriating the greater part of the province of contract.
But its broadest claim was the correction of the sinner for his soul's health.
Under this head, along with the whole province of sexual morality, usury,
and perjury came defamation. Contumelious words were among the various
matters wliich had been embraced in Roman law under the title "injuria."
Injuria, m its legal acceptance, meant insult; but it was more comprehensive
than the modern significance of the word. A person was insulted in many
ways by direct force, as by shouting after him in the street so as to cause a
crowd to follow him. Reproachful language wMiich lessened one's good fame
was also an injury; and this class of injuries grew in ecclesiastical law into
the distinct title "diffimation." The Church, then, being answerable for the
cleanliness of men's lives, stayed the tongue of the defamer at once pro
custodia morum of the community, and pro salute aniinoe of the delinquent.
The usual ecclesiastical penance for the offence was the acknowledgment of
the baselessness of the imputation, in the vestry room in the presence of the
clergyman and church wardens of the parish, and an apology to the person
defamed. * * *

The significance of the action De Scandalis Magnatum is, that it was di-
rected against political scandal, and that the law was administered in the
Star Chamber. This cognizance of defamation considered as a political and
criminal offence was repeatedly confirmed, and as to particular cases, ex-
tended by subsequent statutes. It was a familiar jurisdiction, and one which
constantly grew with exercise. Hence it is not surprising to find that by the
time of Elizabeth the Star Chamber had assumed jurisdiction of cases of
ordinary or non-political defamation, which it decided in the way of criminal
proceedings. There was, indeed, a measure of justification for this course.
The duel was still a common method of vindication among those who did not
come within the terms of the statutory remedy. Now the Star Chamber made
every effort in the interest of public peace, to suppress duelling. But it
might well feel that it was idle to prohibit this ancient remedy and offer no
substitute. Therefore it took cognizance of both political and non-political
defamation in the interests of public tranquillity.

Finally we come to the king's courts of common law, which, prior to the
reign of Elizabeth, practically gave no remedy for defamation.

For the statement that the pleas of defamation were not entertained in
the king's court we have express authority. The earliest mention of the
offence in this jurisdiction occurs in a picturesque dispute between two Irish
magnates, which had been removed in 1295 to Westminster, where the whole
process was annulled for errors, foremost among which was the fact that
the case had begun with a charge of defamation — "and it is not used in this
realm that pleas of defamation should be pleaded in the king's court." The
silence of the Year Books and of the Abridgments confirm this statement.
In the Year Books, from the first year of the reign of Edward III to the
last year of Henry VIII, a period of two hundred and twenty years, there
arc in all only ten cases of defamation; one in the time of Edward III, three
under Edward IV, one under Henry VII, and five under Henry VIII. The
oldest Abridgments, Statham's (1494) and Fitzherbert's (1563), do not men-
tion the "action sur le cas pur parolx" ; and Brooke's Abridgement (1573)
contains only two paragraphs under this head. This brings us to the reign
of Elizabeth, which marks a turning-point.


The king's courts, then, did not usually entertain such actions. But, as
already shown, this denial of a remedy in the king's courts was no denial of
a right. There were other courts where reputation was defended. Only as
the old local courts fell into decay did denial of a remedy at Westminster
come to be a denial of a right. This may serve to explain the few instances
in which, in early times and under exceptional circumstances, we do come
across the action in the king's courts. The fact that when the action does
first appear it is in the form of a special action on the case, is quite con-
clusive that there was no remedy at common law prior to the statute of
Westminster the Second. Prior to that time the right was probably ade-
quately protected by the seignorial courts. When, however, these local courts
had fallen into decay, the question of royal jurisdiction would become more
important. But by that time the task was not an easy one. The time had
passed when a new form of action could be created without statute, which
made it necessary to discharge the new function by means of an action on
the special case for words, under the statute 13, Edward I. * * *

The principal difficulty doubtless arose from the fact that the ecclesias-
tical courts, having from remote times corrected the slanderer for his soul's
health, had, owing to the decay of the local courts, come to be regarded as
having, in some measure, an exclusive right to deal with defamation. The
statute Circumspect^ agatis, passed in the same year as the statute of West-
minster the Second, is an indication of the demand, which had even then
become pronounced, that more definite bounds should be set to the ecclesias-
tical jurisdiction. But the Church strenuously resisted all such attempts. The
common-law courts resorted to prohibitions. The ecclesiastical courts, on
their side, wielded the powerful weapon of excommunication. The pro-
tracted struggle has ended in the complete victory of the secular jurisdiction
only in our own day. The law of defamation, in common with most of the
other subjects originally within the spiritual jurisdiction, still bears the scars
of this contest, and some of its doctrines can be explained in no other way.

However acquired, cases of defamation begin to appear in the king's
courts soon after the last Year Books. During the reigns of Elizabeth.
James I, and Charles I, the reports teem with such cases, and the bulk of
litigation in defamation at once assumed very large proportions.

It was during this period that the rules of actionability were formulated
which in aftertimes came to be applied exclusively to oral defamation. There
was as yet, of course, no distinction at common law between slander and libel.
The law thus evolved by no means covered all defamatory words; only cer-
tain specific imputations were actionable. The principle of selection was
founded partly upon the character of the imputation, partly upon the conse-
quences arising from it. The exceptions to unbridled license of speech
founded upon the nature or substance of the charge were : imputations of an
indictable offence or crime; imputations of having certain contagious dis-
orders, i. e., syphilis, leprosy, and the plague ; any imputation affecting a
man's reputation for skill and address in his business, office, trade, pro-
fession, or occupation, which tended to cause his position to be prejudicially
affected. The other exception, founded upon consequences, allowed an action
for any imputation which had in fact directly caused special damage.

How the law came to be thus circumscribed is not entirely clear. The
conditions under which the common-law jurisdiction was acquired — i. e., the
struggle with the ecclesiastical courts, and the necessity of exercising juris-


diction through the medium of an action on the special case for words,

probably lie at the root of the matter.

I. Slander.

History of Defamation by Van Vcchlcn Veeder Esq. "Select Essays in
Anglo-American Legal History," Vol. HI, pp. 460-461, note 3; 3 Columbia
Law Rev. 560 n. 1 (1903).

"A plausible explanation of the method by which the common-law courts
acquired jurisdiction in defamation, which would also explain the process
of selection of actionable words, was advanced by N. St. John Green in
the very interesting article to which reference has already been made. (Am.
Law Rev., vi, 593, 607 et seq.) It was an established principle of law from
the time of Bracton that the accessorium must come under the same juris-
diction as the principale; that is, jurisdiction over a thing drew with it juris-
diction over all things accessory. It was by means of this rule that the Court
of King's Bench, by the fiction that the defendant was in its custody, and the
court of Exchequer, by the fiction of indebtedness to the crown, were en-
abled to extend their respective jurisdictions over most of the matters orig-