67

Belief or knowledge that the statement is false (3, a) renders the misrepresentation inexcusable, so, also, does the lack of any definite belief either way (3, b); he who makes a misstatement which he does not believe to be true is guilty of fraud." One, however, who makes a false representation under bona fide belief that it is true, is excused from liability, at least where his belief is so convincing that he can honestly regard it as virtually amounting to knowledge. In some jurisdictions the rule prevails that bona fide belief in the truth of a statement without reasonable ground for such belief is not an excuse, that the defendant will be liable in such cases of negligent belief.68 That doctrine, however, is now rejected in England and is not generally followed in this country.69

A belief in the truth of a statement may exist, yet accompanied by a consciousness that it is only belief and not what can fairly be called knowledge, that it is not a convincing belief. The effect of such a belief is, perhaps, not wholly settled. But the better view is that one who under such circumstances makes an unqualified assertion that a fact exists or expressly states it as a matter within his knowledge, is guilty of actionable fraud.70

66 Derry v. Peek, 14 App. Cas. 337 (Eng.), LEADING ILLUSTRATIVE CASES; Cowley v. Smyth, 46 N. J. L. 380, LEADING ILLUSTRATIVE CASES; Kountze v. Kennedy, 147 N. Y. 124; Union Pacific Ry. Co. v. Barnes, 64 Fed. 80. 67 Kountze v. Kennedy, 147 N. Y. 124.

68 Peek v. Derry, 37 Ch. Div. 541 (Eng.); Smith v. Chadwick, 20 Ch. Div. 27, 44 (Eng.).

69 Derry v. Peek, 14 App. Cas. 337 (Eng.); Kountze v. Kennedy, 147 N. Y. 124.

70 Darling v. Stuart, 63 Vt. 570; Cabot v. Christie, 42 Vt. 121; Union Pacific Ry. Co. v. Barnes, 64 Fed. 80.

It is frequently laid down as a rule by the authorities that, if the defendant states a fact as of his own knowledge, when he does not know but merely believes it to be true, he is liable." Generally, this seems to be merely another way of saying that one who states as a positive fact that of which he has not a convincing belief, acts in bad faith and is liable upon that ground. In some cases, however, the underlying notion appears to be that the defendant is liable because he acted negligently.

The unqualified assertion of a fact, alone or coupled with express words indicating knowledge, is to be understood as predicating belief of a greater or less degree of conviction according as the fact asserted is more or less susceptible of exact knowledge; it may indicate what may fairly be called certain knowledge, it may indicate mere belief of less but of varying degrees of persuasiveness; but whatever strength of belief or conviction it implies, that must the defendant have if he would be free from liability.72 Express words of knowledge are not necessary, within this principle, to make the representation convey the impression of positive knowledge,73 nor will the presence of such words always give the representation that character.74 How, as a whole, it is reasonably to be understood, is the test.

71 Cummings v. Cass, 52 N. J. L. 77; Cowley v. Smyth, 46 N. J. L. 380, LEADING ILLUSTRATIVE CASES; Litchfield v. Hutchinson, 117 Mass. 195; Cabot v. Christie, 42 Vt. 121.

72 Cowley v. Smyth, 46 N. J. L. 380; Cummings v. Cass, 52 N. J. L. 77; Cabot v. Christie, 42 Vt. 121.

73 Cummings v. Cass, 52 N. J. L. 77; Cabot v. Christie, 42 Vt. 121. 74 Haycraft v. Creasy, 2 East 92 (Eng.), LEADING ILLUSTRATIVE CASES; Cowley v. Smyth, 46 N. J. L. 380..

CHAPTER III.

THE EFFECT UPON THE PLAINTIFF.

19. Relying upon the representation.-To create liability, the defendant's wrongful conduct must harm the plaintiff by influencing his acts to his damage. 75 It is necessary that the representation should come to the knowledge of the plaintiff, be believed by him to be true, and relied upon as an inducement influencing his conduct. If the misrepresentation has created in the plaintiff a belief in its truth, that the fact stated actually exists, and if, influenced by such belief, the plaintiff has done something or refrained from doing something,76 with consequent injury to himself or his legitimate interests, the defendant's wrongful conduct has caused harm to the plaintiff and the defendant is liable.

The representation need not be the sole inducement; it is sufficient if it was one of several that operated together to influence the plaintiff's conduct." But if it did not operate at all as a cause of the harmful action or inaction, there is obviously no liability. Where the plaintiff chooses to investigate independently, not trusting to the defendant's representation,

75 Smith v. Chadwick, 9 App. Cas. 187 (Eng.); Fottler v. Moseley, 179 Mass. 295; Nye v. Merriam, 35 Vt. 438.

76 Fottler v. Moseley, 179 Mass. 295.

77 Arnison v. Smith, 41 Ch. Div. 348 (Eng.); Peek v. Derry, 37 Ch. Div. 541 (Eng.); Edgington v. Fitzmaurice, L. R., 29 Ch. Div. 459 (Eng.); Holton v. State, 109 Ga. 127; Matthews. v. Bliss, 22 Pick. 48 (Mass.).

and then acts upon the conclusion reached as a result of such investigation, the defendant is not liable, for his representation has not caused the harm to the plaintiff.78 The representation may be believed by the plaintiff and yet may not influence his conduct, or it may fail to have any influence upon his actions because it did not come to his knowledge or was not understood by him. In neither case is the defendant legally responsible for the consequences of the plaintiff's acts.79 And should the plaintiff's conduct be influenced by the misrepresentation and yet be harmless in its result, there is no liability.80

The damage to the plaintiff is always the result of his own acts or omissions induced by the misrepresentation. It may consist in injury to his person, or to his property, or in any other kind of harm for which the law gives remedy. Ordinarily, the plaintiff is induced by the deceit to enter into some contract or bargain whereby he is the loser, or which in some more indirect way causes harm to him, but the harm may arise independent of any contract.81

20. Negligence of the plaintiff in relying upon the representation.-Does the contributory negligence rule apply to cases of deceit, so as to bar the

78 Attwood v. Small, 6 Cl. & Fin. 232 (Eng.); Slaughter's Adm'r v. Gerson, 13 Wall. 379 (U. S.), LEADING ILLUSTRATIVE CASES; Enfield v. Colburn, 63 N. H. 218.

79 Smith v. Chadwick, 20 Ch. Div. 27, 44, 9 App. Cas. 187 (Eng.); Fottler v. Moseley, 179 Mass. 295; Nye v. Merriam, 35 Vt. 438.

80 Alden v. Wright, 47 Minn. 225; Nye v. Merriam, 35 Vt. 438.

81 The damage may consist in refraining from action, from doing something which otherwise would have been done. Fottler v. Moseley, 179 Mass. 295 (plaintiff induced to refrain from making a sale of stock).

plaintiff's right of action upon the ground that he ought not to have relied upon the representation of the defendant, that a reasonably prudent man would not have done so? It has been said that some kinds of representations are of such a character that one would not be justified in relying upon them, and sometimes it has been held that where the means of knowledge (sources of information) are at hand or readily to be reached, the plaintiff ought not to rely implicitly upon the representation of the defendant.82 But, notwithstanding such statements, it can be regarded as settled law in most jurisdictions, that the plaintiff's negligence in relying upon the representation and not doubting its truth or investigating for himself, is not a defense. He who makes a false representation for the purpose of influencing the conduct of another, cannot justly complain if the latter takes him at his word and relies upon it.83

Some actual or apparent exceptions to this rule are, however, generally admitted. Where the plaintiff understands the representation in a sense not intended by the defendant, or relies upon a representation not actually intended for him, he cannot properly rely upon it in a sense other than that in which it reasonably appears to have been intended, nor can he rely on it at all unless it was, or reasonably appears to have

82 Long v. Warren, 68 N. Y. 426; Gordon v. Parmelee, 2 Allen 212 (Mass.); Schwabacker v. Riddle, 99 Ill. 343; Slaughter's Adm'r v. Gerson 13 Wall. 379 (U. S.), LEADING ILLUSTRATIVE CASES.

83 Redgrave v. Hurd, 20 Ch. Div. 1 (Eng.); Watson v. Atwood, 25 Conn. 313; Fargo Gas & Coke Co. v. Fargo Gas & Electric Co., 4 N. Dak. 219; Sutton v. Morgan, 158 Pa. St. 204.