Francis H. (Francis Hermann) Bohlen.

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ever that non-disclosure mif^ht be a ground in a proper proceeding at a proper
time for setting aside an allotment or a purchase of shares, would in my opin-
ion form no ground for an action in the nature of an action for misrepresenta-
tion. There must, in my opinion, be some active misstatement of fact, or, al
all events, such a partial and fragmentary statement of fact, as that the with-
holding of that which is not stated makes that which is stated absolutely
fcrtse." Cairns, L. C, in Peck v. Gurncy, L. R. 6 H. L. Z77.
-^ " Accord: Burns v. Dockray. 156 Alass. 135 (1892), defendant asserted
that his title was good without disclosing the fact known to him that one of
She prior grantors was reputed to be insane. Newell v. RcDtdall. 32 Minn. 171
(1884), a merchant who in order to obtain credit stated that he had assets
to the amount of $3,000, without stating that against this he owed $2,100, was
guilty of active misrepresentation, not mere passive non-disclosure: Allen v.
Addiiigton. 7 Wend. 9 (X. Y. 1831), defendant in an effort to enable his
debtor to obtain credit, stated facts tending to show him to be worthv there-
of, suppressing facts to the contrary known by him: Boxd Exrs. v. Bro'vue,
6 Pa. 310 (1847): Kidney v. Stoddard. 7 Mete. 252 (Mass. 1843). defendant
in giving a letter of recommendation to his son. who desired to purchase goods
of the plaintiff, failed to state that the lad was under twenty-one years of



6/0 SMITH V. CHADWICK.

age; Lobdcll v. Baker, 1 i^Ietc. 193 (Mass. 1840), the defendant put in cir-
culation a note known by him to be endorsed by a minor, without disclosing
the fact of the endorser's minority. In Rheem v. Naugatuck Wheel Co., ii
Pa. 356 (.1859), it was held that a statement that the defendant had endorsed
for a person seeking credit from the plaintiff and would do so again without
disclosing that when he did endorse for $800, he required a conveyance of
half that person's property and a judgment of $1,000 as security, w^as action-
able only if he did not when he made the statement believe such person worthy
of credit, which was a matter for the jury; but see Lord Kenyon in Burton
V. Loyd, 3 Esp. 207 (1802), to the effect that when a character was asked of
any man in trade, to whom the party inquiring was about to give credit, all the
circumstances within the person's knowledge ought to be stated and the party
left to judge for himself, whether he would give credit or not.

But see Potts v. Chapiit, 133 Mass. 276 (1882), in which it was held that
statements that A had always paid his notes at maturity, were not fraudulent
though their maker knew that A's methods of business were highly irregular
and that his notes had been met by extensions.

It is fraud to take advantage of a misconstruction known to have been
put in one's statements; even if plain and unambiguous, Biisch v. IVit'cox, 82
Mich. 315 (1890), p. 33i. In Dcgman v. Mason County, 15 Ky. L. 876 (1894),
a president of a turnpike road, who had as such demanded and received pay-
ment from the county for building its road, based on what he knew to be an
erroneous estimate made by the County Commissioners of the work done,
was held personally liable therefor.

"One who has made a statement, true, or honestly believed to be so when
made, is bound to communicate any change of condition which falsifies it or,
upon discovery of its original falsity, is bound to correct it, unless the person
to whom it is made has already acted in reliance upon it or by lapse of time or
change of circumstances has no longer any right to so act" ; Lord Blackburn in
Brownlie v. Campbell, L. R. 5 A. C. 925 (1880), p. 950; Atlas Shoe Co. v.
Bechard. 102 Maine 197 (1906) ; but see Rcid, Murdoch & Co. v. Kempe, 74
Minn. 474 (1898), denying the existence of any duty on the part of a mer-
chant to communicate to a commercial agency any change in his financial con-
dition which falsified a rating, correct when originally given by it.

A false representation can be made as well by actions as bv words, People
V. Clark. 10 Mich. 310 (1862) ; Croylc v. Moses. 90 Pa. 250 (1879), a horse,
known by vendor to be a "crib biter," short hitched so as to prevent this fault
from exhibiting itself.



SMITH V. CHADWICK.

House of Lords. L. R. 9 App. Cas. 187.

Lord Blackburn. I may say, though it is not necessary for
the decision of the case, that I think, as a matter of law, the motive
of the person saying that which he knows not to be true to another
with the intention to lead him to act on the faith of the statement
is immaterial. The defendants might honestly believe that the shares
were a capital investment, and that they were doing the plaintiff a
kindness by tricking him into buying them. I do not say this is
proved, but if it were, if they did trick him into doing so, they arc
civilly responsible as for a deceit. And if with intent to lead the
plaintiff to act upon it, they put forth a statement which they know
may bear two meanings, one of which is false to their knowledge,
and thereby the plaintiff putting that meaning on it is misled, I do
not think they can escape by saying he ought to have put the other.
If they palter with him in a double sense, it may be that they lie



FOSTER V. CHARLES. 67I

like truth ; but I think they he, and it is a fraud. Indeed, as a ques-
tion of casuistry, I am inchned to think the fraud is aggravated
by a shabby attempt to get the benefit of a fraud, without incurring
the responsibihty. But I do not think there is any case made out
against the defendants of that sort.



SECTION 2. ^ ^f,



Defendant's Intent and Motive.



8^



■^^Ti



FOSTER V. CHARLES.
Court of Common- Pleas, 1830. 6 Bingh. 396; 7 Bingh. 105.

At the trial before Tindall, C. J., London sittings after Michael-
mas term, it appeared that in November or Deceml)er, 1824, the
defendant, a soap manufacturer, called in the plaintiffs, wholesale
tea dealers, with whom he was on terms of intimacy, and after
asking them if they did business in ]\Lanchester, said "he had a
young friend for whom he was anxious to procure a commission in
the tea trade at Manchester : a nice young man ^ wlio had an excellent
connection there, and would be a great acquisition to any person
who wanted to do business there : the defendant being on such terms
with the plaintiffs, he had oft'ered it to them before he proposed it
to Smith & Co., a respectable house in the same line of business;
that Smith & Co. would jump at the offer; that his friend was so
excellent a young man, that he would rather trust him without
security than most men with ; that this young man had been doing
business at Manchester for a London tea house, who could no longer
execute his extensive orders ; that he had an uncle at Manchester
a clergyman of the Scotch Church, who could afford him great
facilities in the way of business, and knew all the Scotch travellers
in the trade; that defendant would like him to sell soap for defend-
ant and his partner, but feared his other connections would not
allow him time."'

The plaintiffs said they had an objection to giving commissions,
but the very strong recommendation the defendant had given his
friend would induce them to think of it.

Accordingly, in the beofinning of 1825, the plaintiffs employed
James Jacque, the defendant's young friend, to do business for them
on commission at Manchester. But by the middle of 1S27, after
repeatedly sending incorrect statements of the amount of his receipts
on tlieir bclialf, he contrived to be a defaulter to them to the extent
of £900 and upwards, and to involve them in bad debts to a much
greater amount.

ITc then took the benefit of the insolvent debtors' act.

Instead of having been employed in the ^Manchester commission



6^2 FOSTER V. CHARLES.

tea trade in the year 1824, as the defendant had stated to the plain-
tiffs, it appeared that he had, at the recommendation of the defend-
ant, been taken into partnership without any capital by Mr. R. C.
Stewart, a warehouseman in London, in July, 1823 ; but great losses
having been incurred in that concern, aggravated by a robbery to
some amount, Mr. Stewart closed the concern and dissolved the
partnership in October, 1824.

Jacque was then indebted to Stewart in the sum of £800,
which he undertook by deed, dated November 13th, 1824, to pay by
instalments, in two, three, and four years ; but nothing was ever paid.

All this was known to the defendant, who had acted through-
out for Jacque, and had negotiated the terms of the dissolution of
partnership.

Letters were also put in, written by the defendant to Jacque,
after the exposure of the Manchester transactions, in which the de-
fendant exhorted Jacque to write various falsehoods to the plaintiffs
with a view to the exculpation of the defendant, and to conceal from
th.e plaintiffs his knowledge of some of the transactions at Man-
chester.

Tindal, C. J., told the jury to consider whether the representa-
tion complained of by the plaintiffs had ever been made, whether
it was false within the knowledge of the defendant ; for unless it
were false within his knowledge, the action did not lie. ■^

Upon a new trial, Tindal, C. J., told the jury that if the defend-
ant made representations concerning Jacque, the tendency of which
was to occasion loss to the plaintiffs, knowing such representations
to be false, and intending thereby to benefit himself, he was guilty
of fraud in the common acceptation of the term ; if he had made
such representations, knowing them to be false, without proposing
thereby any advantage to himself, but proposing, perhaps, to benefit
a third person, he was guilty of fraud in the legal acceptation of the
term, and responsible to the plaintiff's for any injury resulting from
si5ch representations.

"^ The jury, thereupon, found for the plaintiffs, damages i8oo ;
but added, "We consider there was no actual fraud on the part of
the defendant, and that he had no fraudulent intention, although
what he has done constituted a fraud in the legal acceptation of the
term.U

Jones, Serjt. Now corrtended that this amounted to a verdict
for the defendant ; and therefore moved that the verdict might be
entered for him, instead of the plaintiff? .*

Tindal, C. J. No sufficient ground has been laid to induce*
us to disturb the verdict which has been found for the plaintiff.*
The application arises on a misconception of what the jury have
found. They first deliver a verdict for the plaintiff with damages,
and then add, that in point of fact they consider the defendant had
no fraudulent intention, although he had been guilty of fraud in the
legal acceptation of the term.

Their attention had been drawn by me to two classes o-f motives



POLHILL t'. WALTER. 6~T^

possible on the part of the defendant ; first, a desire to benefit hinvj
self by making a statement which he knew to be false ; secondly, a \
desire to benefit some third person ; and I stated that, although there
might be no intention on his part to obtain an advantage for himself,
it would still be a fraud, for which he was responsible in law, if he
made representations productive of loss to another, knowing such
representations to be false.

I1ic jury in finding that he had no intention to defraud mean
only that he'was not actuated by the baser motive of obtaining an
advantage for himself, but that he was guilty of fraud in law by
stating that which he knew to be false, and which was the cause of
loss to the plaintiff.

The question, therefore, is, whether, if a party makes repre-
sentations which he knows to be false, and occasions injury thereby,
he is not liable' f ui I ' l nr con sequences of his falsehood?

It would be most dangerous to hold that he is not.

The confusion seems to have arisen from not distinguishing
what is fraud in law and the motives for actual fraud. It is fraud
in law if a party makes representations which he knows to be false,
and 'm]Vir y_ ensues, althoug-h the motive from which the representa -
tions procee ded may not have" been bad : '1 he person who makes such
representations is responsible tor the consequences ; and the verdict,
therefore, in this ca se ought not to be d isturbed.

Gaselee, J. When this verdict is taken in connection with the
direction of the Chief Justice, there is an end of all doubt as to the
meaning of the jury, and the finding is a perfect finding, \yhat the
jury meant by actual fraud was a sordid regard to self-jntfrpf^t;
but the legal fraud, which is sufficient to sustain the action, was
complete when the intention to mislead was followed by actual in-
4liry-.- (The concurring opinions of Park and Bosanquet, JJ., are
omitted.) Rule refused.

Accord: Leonard v. Springer, 197 111. 532 (1902) ; Hanson v. Kline, 136
Iowa 101 (1907) ; Bean v. Herrick. 12 Maine 262 (1835) : Fisher v. Mellen,
103 Mass. 503 (1870); IVeber v. Weber, 47 Mich. 569 (1882); Bttsterud v.
Farrington, 36 Minn. 320 (1887).



POLHILL V. WALTER.
Court of King's Bench, 1832. 3 Barneuvll & Adolphus 114

Lord Tenterdex, C. J., (p. 120).

In this case, in which the defendant obtained a verdict on the
trial before me at the sittings after Hilary term, a rule nisi was
obtained to enter a verdict for the plaintiff, and cause was shewn
during the last term. The declaration contained two counts: the
first stated, that a foreign bill of exchange was drawn on a person of
the name of Hancorne. and that the defendant falsely, fraudulently,
and deceit fullv did represent and pretend that he was duly author-



6/4 POLHILL Z'. WALTER.

ized to accept the bill by procuration, and on behalf of Hancorne,
and did falsely and fraudulently pretend to accept the same by the
procuration of Hancorne. It then proceeded to allege several en-
dorsements of the bill, and that the plaintiff, relying on the pretended
acceptance, and believing that the defendant had authority from
Hancorne to accept, received the bill from the last endorsee in dis-
charge of a debt ; that the bill was dishonoured, and that the plain-
tiff brought an unsuccessful action against Hancorne. The second
count contained a similar statement of the false representation by the
defendant, and that he accepted the bill in writing under pretense
of the procuration from Hancorne and then proceeded to describe
the endorsements to the plaintiff, and the dishonour of the bill, and
alleged, that thereupon it became and was the duty of the defendant
to pay the bill as the acceptor thereof, but that he had not done so.

On the trial it appeared, that when the bill was presented for
acceptance by a person named Armfield, who was one of the payees
of the bill, Hancorne was absent ; and that the defendant, who lived
in the same house with him, was induced to write on the bill an
acceptance as by the procuration of Hancorne, Armfield assuring
him that the bill was perfectly regular, and the defendant fully be-
lieving that the acceptance would be sanctioned, and the bill paid at
maturity, by the drawee. It was afterwards passed into the plain-
tiff's hands, and being dishonoured when due, an action was brought
against Hancorne ; the defendant was called as a witness on the trial
of that action, and he negativing any authority from Hancorne, the
plaintiff was nonsuited. I left to the jury the question of deceit
and fraud in the defendant, as a question of fact on the evidence,
and the jury having negatived all fraud, the defendant had a verdict,
liberty being reserved to the plaintiff to move to enter a verdict, if
the court should think the action maintainable notwithstanding that
finding.

On the argument, two points were made by the plaintiff's coun-
sel. It was contended, in the first place, that although the defendant
was not guilty of any fraud or deceit, he might be made liable as ac-
ceptor of the bill ; that the second count was applicable to that view
of the case; and that, after rejecting the allegations of fraud and
falsehood in that count, it contained a sufificient statement of a cause
of action against him, as acceptor. But we are clearly of opinion
that the defendant cannot be made responsible in that character.
It is enough to say that no one can be liable as acceptor but the
person to whom the bill was addressed, unless he be an acceptor for
honour, which the defendant was certainly not.

This distinguishes the present case from that of a pretended
agent, making a promissory note, (referred to in Mr. Roscoe's
Digest of the Law of Bills of Exchange, note 9. p. 47.) or purchas-
ing goods in the name of a supposed principal. And, indeed, it may
be well doubted if the defendant, by writing this acceptance, entered
into any contract or warranty at all, that he had authority to do so ;
and if he did, it would be an insuperable objection to an action as



POLHILL 4-. WALTER. 675

on a contract by this plaintiff, that at all events there was no con-
tract with, or warranty to, him.

It was in the next place contended that the allegation of false-
hood and fraud in the first count was supported by the evidence ;
and that, in order to maintain this species of action, it is not neces-
sary to prove that the false representation was made from a corrupt
motive of gain to the defendant, or a wicked motive of injury to
the plaintiff: it was said to be enough if a representation is made
which the party making it knows to be untrue, and which is intended
by him, or which, from the mode in which it is made, is calculated,
to induce another to act on the faith of it, in such a way that he
may incur damage, and that damage is actually incurred. A wilful
falsehood of such a nature was contended to be, in the legal sense
of the word, a fraud ; and for this position was cited the case of
Foster v. Charles, 6 Bing. 396, which was twice under the considera-
tion of the Court of Common Pleas, and to which may be added the
recent case of Corbet v. Brozvn, 8 Bing. 33. The principle of these
cases appears to us to be well founded, and to apply to the present.

It is true that there the representation was made immediately
to the plaintiff, and was intended by the defendant to induce the
plaintiff to do the act which caused him damage. Here the repre-
sentation is made to all to whom the bill may be offered in the course
of circulation, and is, in fact, intended to be made to all, and the
plaintiff is one of those ; and the defendant must be taken to have
intended, that all such persons should give credit to the acceptance,
and thereby act upon the faith of that representation, because that,
in the ordinary course of business, is its natural and necessary result.

If, then, the defendant, when he wrote the acceptance, and,
thereby, in substance, represented that he had authority from the
drawee to make it, knew that he had no such authority, (and upon
the evidence there can be no doubt that he did,) the representation
was untrue to his knowledge, and we think that an action will lie
against him by the plaintiff for the damage sustained in consequence.

If the defendant had had good reason to believe his representa-
tion to be true, as, for instance, if he had acted upon a power of
attorney which he supposed to be genuine, but which was, in fact,
a forgery, he would have incurred no liability, for he would have
made no statement which he knew to be false: a case very different
from the present, in which it is clear that he stated what he knew
to be untrue, though with no corrupt motive.

It is of the greatest importance in all transactions, that the
truth should be strictly adhered to. In the present case, the defend-
ant no dou.bt believed that the acceptance would be ratified, and
the bill paid when due. and if he had done no more than to make
a statement of that belief, according to the strict truth, by a mem-
orandum appended to the bill, he would have been blameless. But
then the bill would never have been circulated as an accepted bill,
and it was only in consquence of the false statement of the de-
fendant that he actually had authority to accept, that the bill gained



dj^ SAWYER V. PRICKETT.

its credit, and the plaintifif sustained a loss. For these reasons
we are of the opinion that the rule should be made absolute to enter
a verdict for the plaintiff.

Rule Absolute.^

'See, however, Tackey v. McBaiit, L. R. 1912, A. C. 186 (Privy Council),
where the defendant, secretary of a Sumatra Company, resident at Shanghai,
had sold stock thereof short. He received a cable that oil had been found in
large quantities. He then directed his broker to cover his short contract and
buy additional stock. The broker having covered the short contract but not
yet having bought additional stock, another broker came to the defendant and
plied him with questions which the defendant evaded, in order, as he said,
to avoid making public -confidential information. Finally driven into the cor-
ner, he told the broker that " the company had received no news, good, bad
on indifferent." This having been spread broadcast by the broker, the plain-
tiff sold his stock. It was held that an instruction was correct which left to
the jury as decisive the question whether he made the statement to induce
holders to sell their stock or because "he may have thought it necessary to
keep this matter close for the interests of the company."



I

- SECTION 3.

Promises and Statements of Intention.

ANONYMOUS.

Y. B. XI. Edzv. IV. 6.

Brian, J. If a man sells me seed and warrants to me that it
is good and it prove bad, or that it be seed of a certain country and
it be not so, I shall have an action of deceit, because I could not
know but he who sold it might well know it, but if he should warrant
to me that the seed should grow, such warranty is void for it is not
in him to warrant that bijtiLisJjT_God. Choke, J. If I sell a horse
and warrant that he shall carry thirty leagues in a day, if he cannot
do it, the warranty is void, because the warranty must be of a thing
existing at the time of the warranty, f or _one canno t warrant a thing
which will happen in the future.



SAWYER V. PRICKETT AND WIFE.
Supreme Court of the United States, 1875. 86 U. S. (18 Wallace) 1^.

Appeal from the Circuit Court for the Northern District of
Illinois.

Ephraim Sawyer filed a bill in the court below against Henry
Prick ett and wife, to foreclose a mortgage given by them, on the ist
of Septeinber, 1857, to the Fox River Valley Railroad Company,
to secure the payment of a note for $2,000 at ten years from its date,
and by the company assigned to him, the complainant. The answer



SAWYER V. PRICKETT, 677

set up as a defence, that at the date mentioned Prickett gave the note
as described to secure the payment of a subscription to the stock
of the railroad company mentioned, and that this subscription was
obtained by fraud and deceit ; and so that the note and the mortgage
were void.

The court below dismissed the bill for foreclosure, and the
complainant brought the case here.

Mr. Justice Hunt delivered the opinion of the court.

The law gives a different effect to a representation of existing
facts, from that given to a representation of facts to come into
existence. To make a false representation the subject of an indict-
ment, or of an action, two things are generally necessary, viz., that
it should be a statement likely to impose upon one exercising com-
mon prudence and caution, and that it should be the statement of
an existing fact. A promissory statement is not, ordinarily, the sub-
ject either of an indictment or of an action. The law also gives a
different effect to those promissory statements based upon general
knowledge, information, and judgment, and those representations
which, from knowledge peculiarly his own, a party may certainly
know, will prove to be true or false.^ It becomes necessary to
classify, to some extent, the representations alleged to have been
made in the present case.

(The alleged representations of existing facts are then set forth.
These in a later portion of the opinion are held to have been either
truthful or not proven to have been made, or if made, to have been
made by any one who was an agent of the company, or to have been
relied upon by the plaintiff.)

2nd. The promissory representations, as might be expected,
cover a larger space. Thus it is said to have been represented, that
the farms and lands of the contributors would be greatly enhanced
in value; that the wheat market of Milwaukee was a better market
than that of Chicago, and that they would be able to command five
cents more per bushel for/their wheat after the road should be built ;