COPY 1 CORNELL LAW LIBRARY Cornell University Law Library The Moak Collection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 ,^ IN HEnORY OF JUDGE DOUGLASS BOARDMAN FIRST DEAN OF THE aCHOOt. By his Wife and Daughter ^ A. M. BOARDMAN and ELLEN D. WILLIAMS Cornell University Library KF 450.F7B59 '■^ A treatise on the law of fraud on Its cl 3 1924 018 882 609 CJorn^U Ham i^rljuol Sibtary Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018882609 A TREATISE on THE LAW OF FRAUD. A TREATISE ON THE LAW OF FRAUD ON ITS CIVIL SIDE BY 1 MELVILLE M. BIGELOW v Ph.D. Harvard BOSTON LITTLE, BROWN, AND COMPANY 1888 Copyright, 11/88, Bt Melville M. Bioelow. Uhiveesitt Pkessi John Wilson and Son, Cambeidge. TO AN ENGLISH JUDGE, \ ' \ ' SOMETIME GUEsi OFTHeNneW YOKE BAE, AND OF COtTNTET, TOWN, AKD COMMONWEALTH, WHO, WHEEE OTHEES MIGHT HAVE GAINED APPLAUSE, YET TOUCHED THE FINEE SENSE, AND DEEW NEAE TO A PEOPLE IN WHOM, WHEN COUNSEL WAS DAEKENED, HE HAD LOST NOT FAITH : TO JOHN DUKE, LORD COLERIDGE. PEEFACE. The Introduction renders unnecessary any other ex- tended prefatory remarks; for I assume, or rather trust, that the Introduction will be read. Indeed I cannot too strongly urge those who would use this book most effectively to read with care the Introduc- tion, and also the opening chapter on the Definition of Fraud. The reason will be obvious, upon the reading. The second volume, which will treat of fraud under the statutes, is well in hand, and will be completed as soon as a due regard for the work may permit. The present volume is however entirely independent of the second, and makes a book complete in itself. The authorities are cited down to about six months ago, with a few important ones (such as Blackburn v. Vigors, 12 App. Cas. 531, reversing the judgment of the Court of Appeal, 17 Q. B. D. 553) down to the latest moment. One word more : This is not a second edition of a work on Fraud published for me in 1877, though it was at one time thought of making it such. That was professedly incomplete ; it was indeed only a first Tl PEBFACE. attempt to explore part of a field which had scarcely been entered — I must of course except Kerr's notable survey — by writers since the time of Hovenden. The present work is entirely new, rewritten from the first page to the last, though the materials of the former have been used as far as they went to serve a larger purpose, to wit, that of a treatise covering the whole field of fraud, on its civil side. Melville M. Bigblow. Boston, January 1, 1888. INTRODUCTION: THEOEY OF THE LAW OF FEAUD. This book is a treatise upon the theory and admin- istration of a considerable body of law which may be described as stretching from Negligence on the one side across to Crime on the other, to wit, the Law of Fraud on its Civil Side ; and this Introduction is intended to set out in brief the theory of the subject as worked out in detail ia the body of the text. The book opens with an attempt to establish an ade- quate and a useful definition of the term ' fraud ' itself, against warnings founded, as the author thinks, in unnecessary fears. The definition given is the key- note to the construction of the book, and to much of the particular examination of the law within it, and by such as may wish to make the most of the work should be carefully observed ; though, to allay any ap- prehensions that may arise in the minds of those who will have, if such a thing can be thought, no definition of fraud, it should be said that the work is written throughout upon the lines of authority, and not upon preconceived views of the author. Whoever will, may therefore dispense with the definition for any purpose other than that of a guide to the contents of the book. VIU INTEODtrCTION. The definition finds that fraud is divided into two great branches, deception and circumvention, which may appear separately, or together. Deception is treated as fraud touching motives, and implies some transaction between the wrong-doer and the party wronged either directly or through an agency ; circum- vention is treated as fraud not touching motives, and implies the absence of any transaction between such parties. Deception follows, in the main, the lines of the judge-made or juristic law of fraud ; circumvention, in the main, the lines of the statutory law. If this were all, we should have to do only with sub- stantive law ; but like most other subjects, the law of fraud has also an adjective side, to use a convenient term for those secondary rights which the law provides for the enforcement of the primary ones. Adjective law must be dealt with ; and this might possibly be done upon the same lines, of deception and circumven- tion. That however would prove to be very unsatis- factory if found practicable, because there is too much in common for separation; and separation would re- quire endless repetition. The adjective law has therefore been kept together ; and it has been placed at the beginning of the book. Theoretically this might give ground for criticism ; for it might well be argued that primary rights ought to be treated first, as being first both in fact and in im- portance. To this the author has only to say that con- siderations of convenience in the matter of adjusting equally, as far as possible, the size of two volumes, had something to do with the place given to the subject ; INTRODUCTION. IX and besides experience shows that the end of a book is not the best place to put such subjects, if the object is to call special attention to them. The adjective law of fraud makes a considerable body of itself; few branches of the law have had so full a development upon that side. This is sufficient to indicate its impor- tance, and to require that it should not be shelved. The book then, after the chapter on the Definition of Fraud, begins with a consideration of the adjective law ; and this is presented in the order in which ques- tions pertaining to it naturally arise in the hands- of the practising lawyer. First comes the subject of Stat- utes of Limitation and the equitable doctrine of Lapse of Time.-' This is followed by a chapter on Jurisdic- tion ; ^ and then follow in order chapters on Remedies and their Consistency,^ Actions for Damages and Cross Actions,* Rescission,^ — in which there is a particular consideration of ' rescission in pais,' ' judicial rescission,' and ' rescission by plea,' — Injunction, Vacating Judg- ments, and New Trials,^ — these in one chapter, — Joinder of Parties,^ Pleading,^ Burden of Proof,* and Evidence." That completes the adjective law ; and there is noth- ing to be said of the theory of that part of the subject. The substantive law begins with a consideration of cer- tain general principles, first in relation to the question who is to be understood by ' the party defrauded,' ^^ secondly, who by ' the party defrauding,' ^ in chapters 1 p. 23. 2 p. 41. a p. 63. * p. 68. 6 p. 73. « p. 84. ' p. 108. 8 p. 114. » p. 123. w p. 137. " p. 197. " p. 215. X INTEODUCTION. thus entitled. In the first of these questions the fol- lowing subjects are considered ; The Person Intended/ Consent and the rule of Particeps Criminis/ Personal Nature of Eraud,^ and Suits by Personal Representa- tives.* The chapter on The Party Defrauding treats inter alia of questions of disability,^ of agency,® part- nership,^ conspiracy,* and fraud committed by third persons." It is proper to call special attention to the important questions treated under agency.-"* This brings the inquiry down to the subject of Con- structive Fraud; a great subject which it was thought best to dispose of before considering fraud proper, for much the' sanle reason that ' governed in regard to the adjective law. In the chapter on Definition no attempt was made to define anything but real fraud ; but it was indi- cated that constructive fraud, which as such covers Wrongs mOre or less of the nature, but always falling short of, real fraud, fell into two parts, first a class of cases relating to Fiduciary and Confidential Relations,^* and secondly, a group of cases which, later, in the proper place, was considered under the head of 'Con- duct Subsequent.'^ The author lays stress upon this division of con- structive fraud. In it we have in the first place a fa- miliar class of Cases needing only to be mentioned here, in which the burden of proof, after the relation of the parties is shown, rests upon the defendant even when 1 p. 197. ^ p. 200. 8 p. 209. 4 p. 212. 6 p. 216. « p. 225. ' p. 240. « p. 246. 8 p. 252. 10 See pp. 225 et seq. » p. 261. " p. 384. INTEODUOTION. XI Ms case consists only of denial of the plaintiff's allega- tions, a marked exception of course to general prin- ciples. Of the other division, or group of cases, given under the head of ' Conduct Subsequent,' something more should be said. Here the burden of proof, as in ordinary cases, rests on the plaintiff upon denial ; and the 'fraud' differs from true fraud in that the wrong consists, not in any evil purpose at the outset, w^hen the right affected was conferred, but in turning the original act and right to a wrongful end. It is a case then of subsequent misconduct. It is believed that the existence of such a group of cases has not before been pointed out ; and it may be that the author is laying too much stress upon it. He is however persuaded, upon much consideration of the subject, that more will be found in it than has in this book been stated. That is, the author believes that other subjects than those which he has placed under the head of 'Conduct Subsequent' will naturally take their place there, in the further development of the law; for the principle itself appears to be adequate for the disposal of all those cases not arising under fidu- ciary or confidential relations, which, not being cases of ' true fraud, may yet deserve to be treated, in certain important particulars, as if they- were such. Of course it is not true that subsequent misconduct in regard to a right acquired is necessarily to be con- sidered, by construction, a fraud. Indeed, as has just been intimated, it is not clear as yet what cases this branch of constructive fraud embraces ; those however which are referred to in the chapter defining the term XU IKTEODTJCTION. 'fraud,' and are afterwards set out in the chapter on Conduct Subsequent, seem plainly to belong to it. These are Notice in its various forms,-^ Volunteers and Purchasers without Value,^ Innocent Misrepresenta- tion,^ Fraud on Powers,* Perversion of the Statute of Frauds in the case of verbal contracts for the sale of land,^ and Surprise.® Many of the specific cases falling under these heads are indeed cases of true fraud ; but that is an accident. It is not necessary that there should be fraud in the proper sense to create the right of action ; the presence of fraud only makes a stronger case.^ The same remark may be made of many cases falling under the first division of Constructive Fraud.^ Now in none of the cases mentioned is there any wrong at the outset, when the right was acquired. Take two of the cases for illustration : I acquire prop- erty with notice that my vendor or donor bought it from another by means of fraud. My becoming pos- sessed of the property is no wrong to any one, assuming that there had been no rescission of the first sale ; for until rescission my vendor had the title, and he has only transferred that to me. I have had nothing to do with the fraud committed by him, and may indeed have known nothing of it. But, after taking the property subject to the rights of the defrauded party, it would be wrong for me to deny his right to it, should he claim it before any change of position by me. The wrong on my part therefore must be found in my subsequent unfair conduct. Again suppose a power of appoint- 1 p. 385. 2 p. 403. 8 p. 410. * p. 438. « p. 444. 6 p. 461. ' See e. g. p. 412. « gee e. g. pp. 301, 331. INTEODUCTION. XIU ment under a will is conferred upon A. A's accept- ance is, or may be, proper enough ; and assuming that the acceptance was honest (if dishonest, it would be a case of true fraud), any appointment by him rep- robated by law can only make a case of subsequent misconduct. We are now brought to fraud proper; and this, according to the definition in the first chapter of the text, ' consists in endeavor to alter rights, by deception touching motives, or by circumvention, not touching motives.' ^ Here is wrongdoing at the very outset, not the turning of some previously granted right to a wrongful purpose. This is the thread of theory which runs throughout the rest of the present volume, and will run through the second; the remainder of the present volume being devoted to the subject of Decep- tion,^ the whole of the second, to Circumvention. It remains to present a division of the subject along this line, which shall be exhaustive. The first of the two subjects will alone be dealt with here. Deception, which, it will be seen from the definition as well as from what is now to be said, includes but should not be confounded with the action for deceit, is here divided into two parts ; first, deception effected by misrepresentation, secondly, deception not effected by misrepresentation. Misrepresentation is then first considered ; ^ and this has required the detailed examination of all the ele- * See p. 5. The word ' alter,' it ought perhaps to be said, is used to mean not only to ' change,' but in any way to ' impair.' « p. 465. » p. 465. XIV INTRODUCTION. ments that may enter into any case of the kind that may demand the action of the courts. There are five chapters devoted to this inquiry; of which only the first and the third call for mention here. The first chapr. ter ^ endeavors to ascertain what is meant by a repre- sentation, and then considers, in succession, the topics Opinion and Prediction,^ in detail ; Promise, with intent not to perform ; ® Representations of Law ; * Represen- tations of Value,^ in detail ; Materiality ; "^ Ealsity.^, The third chapter on Misrepresentation* treats im the main. of the effect of means of knowledge as an answer to a charge of misrepresentation. In this chap- ter the author has made an attempt to show the cause and nature of the confusion into which many of our courts have fallen, and how the way has been cleared of most of the difficulties that beset the subject. The text endeavors to show that the root of all difiiculty lies in applying, consciously or unconsciously, the rule of caveat emptor to a case of misrepresentation. The fact merely is, that here as elsewhere Fraud, in the garb of Truth, meets and artfully disarms Prudence. Passiag on from the chapters relating -to misrepre- sentation as such, it is plain that the next thing to consider is how the several principles there developed apply to general cases which stand before the law upon some special footing. Here are enceuntered questions of the effect of misrepresentation in a treaty for and followed by Marriage,^ and then of misrepresentation made, not to the plaintiff, but to a third person to the 1 p. 465. 2 p. 473. s p. 483. * p. 487. » p. 490. e p. 497. ' lb. 8 p. 521. 9 p. 549. INTRODUCTION. XV damage of the plaintiff. These latter questions bring before the reader the law of Slander of Title,-' Trade Marks,^ and Business Signs.^ The attention of the reader is called particularly to the consideration of the relation of the law of these subjects to the elements of liability for misrepresentation. This completes that branch of deception ; for it will be seen that it covers mis- representation inter partes and inter alios. Nothing else remains. We are now brought to the second part of deception, to wit, deception effected otherwise than by misrepre- sentation; and that must be deception by act or by omission. The first embraces Collusion in various forms ; * the second is the case of silence, and is here treated under the head of 'Silence: Duty to speak.' ^ One of the obscure topics of the general subject, this latter has received somewhat of the attention which that fact, added to its importance, demands. It is believed that, in regard to this duty to speak, a principle capa- ble of being grasped and stated runs, however faintly, through all the variety of cases upon the subject. Three other subjects falling under the head of decep- tion remain. One of these is the effect of the Sunday laws ^ upon fraud by deception. In regard to the next one, it should be noticed that heretofore the fraud which has been encountered has, except incidentally, been such as to render the transaction following void- able only. But there is another kind of deception, having very marked characteristics, in which the trans- » p. 557. 2 p. 559. « p. 568. * p. 574. 6 p. 590. 8 p. 615. XVI INTEODTJCTION. action is void ; as where dealings come to the form of a contract, and the facts show that the fraud was such as to prevent any union of minds. Unlike the case of a contract voidable for fraud, no title or right is created by the transaction. This subject is considered under the head of ' Void Transactions.' ^ The subject alone remaining to make complete, or rather exhaustive, the inquiry, is the Consequences of Deception.^ Kemedial consequences had already been considered, and consequences only of the substantive law fall under the designation. The Measure of Dam- ages ^ is here considered, and this is followed by several minor topics. It should be said indeed in regard to the whole chapter that it is a chapter of possibilities, looking forward to the course of the law's development hereafter, quite as much as one of present realities. It is as yet like an unbuilt city, located on faith, and but partly laid out, in the highways of commerce. 1 p. 617. « p. 625. « lb. TABLE OF CONTENTS. Page Introduction vii Cases Cited xxiii Definition of Fraud 3 Adjective Law of Fraud 21 Chaptek I. Statutes of Limitation and Lapse of Time . . 23 § 1. Statutes of Limitation 23 § 2. Lapse of Time 37 II. Jurisdiction 41 III. Remedies and their Consistenct 63 IV. Actions for Damages, and Cross-Actions ... 68 V. Rescission 73 § 1. Characteristic Remedj' for Fraud 73 § 2. How Rescission is effected 75 VI. Injunctions, Vacating Judgments, and New Trials 84 § 1. Injunctions 84 § 2. Vacating and Impeaching Judgments and Awards 86 § 3. New Trials 100 VII. Joinder of Parties 108 VIII. Pleading 114 § 1. Allegation of Fraud 114 §2. Denial of Fraud 120 § 3. Demurrer 122 6 XVIU TABLE OF CONTENTS. Chaptek Page IX. Burden of Proof 123 X. Evidence 137 §1. Courts of Law and Courts of Equity . . . 137 § 2. Law and Fact 139 § 3. Preponderating Evidence 142 § 4. Circumstantial Evidence 146 § 5. Evidence of Other Frauds 160 § 6. Evidence of Conspirators and Joint Tres- passers 166 § 7. Declarations of Defendant or his Predecessor 169 § 8. Parol Evidence 174 § 9. Variance: Allegata et Probata 179 § 10. Privileged Communications 186 § 11. Fraud on Testators 187 § 12. Credibility of Witness 192 §13. Criminating One's Self: Discovery .... 192 Parties Concerned . . . ' 195 Chaptek I. The Party Defrauded . 197 § 1. Subject of the Chapter 197 § 2. The Person Intended 197 § 3. Consent : Particeps Criminis 200 § 4. Personal Nature of Fraud 209 § 5. Suits by Personal Representatives .... 212 §6. Assignee or Grantee of Right of Action . . 214 II. The Partt Defrauding 216 §1. Officers of State 216 § 2. Infants 216 §3. Married Women 219 § 4. Lunatics 223 § 5. Employers : Agency 225 § 6. Partners 240 § 7. Corporations 246 § 8. Conspirators and the Like 246 § 9. Cotrustees 248 § 10. Coesecutors or Administrators 248 TABLE OF CONTENTS. XIX Cbafteb Page § 11. Codistributees 252 § 12. Fraud of Third Persona 252 COKSTEUCTITE FeAUD 259 Chapter I. FiDUCIAKT, CONFIDEMTIAL, AND KlNDEED ReLATIOKS . 261 I. Fiduciary Relations 261 § 1. The General Principle 261 § 2. Attorney and Client 265 § 3. Principal and Agent 295 § 4. Partners and Joint Purchasers 310 § 5. Trustee and Cestui que trust 315 § 6. Guardian and Ward . '. 336 § 7. Executors or Administrators and Claimants of the Estate 341 § 8. Mortgagor and Mortgagee 347 II. Confidential Halations 351 § 1. Introductory 351 § 2. Engagement to Marry 351 § 3. Spiritual Advisers and Spiritualists .... 352 § 4. Husband and Wife 353 § 5. Parent and Child 354 § 6. Physician and Patient 360 § 7. Draftsman of Will taking Benefit .... 361 § 8. Confidential Advisers : Blood Eelatives . . 365 III. Eindred Melations 367 § 1. Illegal Marriages or Relations 367 § 2. Cotenants : Tenants for Life 368 § 3. Expectant Heirs 369 § 4. Sailors 373 § 5. Aged Persons 373 §6. Illiterate, Weak-minded, and Drunken Persons 374 n. Conduct Subsequent 384 § 1. Introductory 384 § 2. Notice : Its Relation to Fraud 385 § 3. Constructive Notice : Duty to Inquire . . . 386 § 4. Notice by Lis Pendens 396 XX TABLE OF CONTENTS. Chapter Page § 5. Notice by Registration 398 §6. Volunteers: Purchase without Value . . . 403 § 7. Innocent Misrepresentation : General Doc- trine 410 § 8. Innocent Misrepresentation : Rescission . . 411 a. The Rule of Equity- : Tendencj- at Law. 411 b. Tender 419 c. Consequences of Rescission 431 d. Compensation instead of Rescission . . 433 e. Waiver : Subsequent Events .... 434 § 9. Fraud on Powers 438 §10. Perversionof Statute of Frauds: Specific Per- formance : Resulting Trusts 444 § 11. Surprise 461 Deception 463 Chapter iNTRODUCTOEr 465 I. MiSREPKESENTATION 465 §1. Elements of the Wrong 465 § 2. What Constitutes a Representation .... 466 § 3. Opinion and Prediction 473 § 4. Promise 483 § 5. Representations of Law 487 §6. Representations of Value 490 § 7. Materiality 497 § 8. Falsity 497 II. Misrepresentation: Knowledge of Falsity . . 509 III. Misrepresentation : Ignorance op Falsity by Party Wronged 521 IV. Misrepresentation : Intention to Induce Action . 535 V. Misrepresentation : Acting on the Representation 540 VI. Misrepresentation: Marriage 549 VII. Misrepresentation to Stranger to the Action . 555 § 1. The General Rule of Law 555 TABLE OF CONTENTS. XXI Chapter Page § 2. Slander of Title 557 § 3. Trade Marks 559 § 4. Business Signs 568 § 5. Wnis 571 Vin. Deception by Act: Collusion 574 §1. Introductory: Confusion of Goods .... 574 § 2. Collusion with One in Fiduciary or Confiden- tial Relation to Plaintiff 576 § 3. Collusion in Public Sales 580 § 4. Collusive Conveyances : Registration . . . 586 § 5. Collusion against Creditors 587 § 6. Collusion against Wife 588 § 7. Collusive Litigation 589 IX^ Silence : Duty to Speak 590 X. Sdndat Laws 615 XL Void Transactions (as distinguished from Voidable) 617 § 1. Misrepresentation 617 § 2. Act not Misrepresentation 623 XII. Consequences op Deception 625 §1. Measure of Damages 625 § 2. Discharge in Bankruptcy 635 § 3. Collateral Deception 636 § 4. Rights of Innocent Parties inter sese . . . 638 Index 643 CASES CITED. A. Page Page Aldoborough v. Trye 371 Abbey v. Dewey 143 Aldrich v. Earle 170, 171 Abbot V. Allen 527, 543 V. Smith 257 V. Treat 138 , 488, 489 V. Warren 161, 162 Abbott V. Abbott 484 Alexander v. Beresford 547 V. Allen 415, 416 V. Church 542 Abbotts V. Barry 433 V. Dennis 496 Abell V. Howe 240 V. Dunn 101 Abingdon v. Butler 451, 619 V. Swackhamer 619, 622 Ableman v. Both 95 V. Tarns 456 Abouloffu. Oppenhelmer 95 Alger V. Thompson 101 Acer V. Hotchkiss 437 Allaire v. Whitney 530 V. Wescott 386 Allen, in re 399 Ackley v. Dygert 218 Allen's Appeal 468, 469, 549, 550, 552, Adair v. Adair 188 272, 362 590, 593 (/. Cumin 99 Allen V. Aldrich 254 Adams v. Adams 443 V. Anthony 390 t!. Bowman 630 U.Hart 412, 496 V. Davidson 170 V. Hartfield 247, 484 V. Frye 255 V. Hodge 476 V. Ryerson 382 V. Martin 681 V. Thornton 143, 146 «. Maury 486 Addie v. Western Bank 246 0. McClellan 92 Adler v. Tenton 69 V. McPherson 43,44 iEtna Ins. Co. y. Church 309 V. Morris 396, 397 V. Johnson 144 V. Bundle 476 V. Olmstead 234 V. Truesdell 476, 547, 548 V. Eeed 487, 510, 613 V. Wheeler 123, 142, 183 Ager V. Duncan 203, 204 Allerton v. Allerton 78, 81, 83, 227, 426 Agra Bank v. Barry 399 Alley V. Deschamps 444 Ahrend v. Odiorne 448 Allin V. Millison 68, 493 Ainslie v. Medlycott 482 Allis V. Billings 124 Akerly v. Vilas 543 Almond v. Wilson 110 Albany Inst, for Savings v . Burdick Alston V. Bicbardson 81 522, 524, 525, 529 Alsworth V, Cordtz 461 Alden v. Marsh 157 Alwood V. Mansfield 274, 281 V. Fryal 527 Ambrose Mining Co., in re 327, 330 XXIV CASES CITED. American Expr. Co. o. Willsir 491 Atlantic Bank v. Merchants* ] Bank 239 American Ins. Co. v. McWhorter 526 Atlantic Delaine Co. v. James 115 V. Oakley 59 Attorney General v. Brooke 331 American Wine Co. v. Scholei 583 V. Christ's Hospital 35 Ames V. Starterant 126 V. Hoses 331 Amoskeag Manuf. Co. v. Spear 567 V. Norwich 115 Anderson v. Anderson 95 V. Smith 389 t>. Costello 79, 121, 420 Atwood V. Dearborn 432 V. George 106 V. Sanford 527 V. Hill 492 V. Wright 251 V. Hubble 614 Attwood V. Small 540 V. Maltby 246 Aubrey v. Popkin 292 V. McPike 490 Audenreid's Appeal 352, 360 Andrews v. Jones 605 Aultman v. Olson 74, 377, 526 i>. Montgomery 95 Austin V. Barrows 69, 542 V. Ohio & M. R. Co. 532 Auten V. Gruner 74 t). Thayer 619 Ayer v. Tilden 626 Angler v. Brewster 175, 525 Aylesford v. Morris 372 Angle ». Northwestern Ins. Co 619 Ayre's Case 229 Annett v. Terry 91,92 Anonymous 486 B. Anthony v. Valentine 46 Arbenz, in re 567 Babb V. Clemson 172 Arbuckle v. Biederman 529 Babcock «. Booth 212 Archer v. Hudson 354 V. Lawson 403, 618 Argall tJ. Jacobs 120 V. Libbey 538 Arkwright v. Newbold 142, 412, 416, Backentoss v. Speicher 6 485, 48S 501 ,504, 508, 509 Bacon v. Bronson 45 Armstead w. Hundley 431, 434 V. Markley 525 Arnaz v. Escandon 253 Badger v. Badger 24, 38 118, 119 Arnold v. Banks 536 V. Nichols 468 V. Hardwick 439 Bagshaw v. Seymour 545, 546 ». Eichmond Iron Works 124 Bailey v. Bidwell 132, 134 V. Woodhams 220, 222, 223 V. Glover 26,29 Amot V. Biscoe 216, 885 V. Bichardson 390 Arrison v. Hamstead 256 ». Eider 114 Arthur v, Griswold 233, 234 V. Eobinsons 346 Ash V. Putnam 485 u. Smock 527, 534 Ashcraft ». De Armond 124 Bain v. Brown 325 Ashton V. Thompson 263, 339, 354, 356, Bainbrigge v. Brown 354 357, 359 Bainter ». Fults 247 Ashurst's Appeal 327 Baird v. New York 434, 438 Ashwell's Case 622 Baker v. Batt 272, 362 Atcheson v. Mallon 581 V. Bradle 355 Atkhis V. Knight 206 V. Davis 289 t7. Withers 262, 351, 353 t. Gavitt 192 Atkinson v. Allen 86,91 u. Jordan 604, 605 Atlantic Bank v. Harris 27, 28, 30, v. Loader 609 239, 631 V. Monk 373, 376 CASES CITED. XXV Baker v. Seaborn 474, 633 V. Sheehan 94 V. Simmons 103 V. Springfield Ry. Co. 315, 317, 334 V. Vining 176, 467 V. Wliiting 33 Baldwin v. Fagan 46, 133 V. Parker 126 Bales V. Weddle 592, 593 Ball V. Carley 101 V. Shell 403 Ballamy v. Sabine 211 Ballard v. Burgett 619 V. Franklin Ins. Co. 256 Balloa V. Lucas 627 Baltimore R. Co. u. Pally 254 V. Resley 255 Bame i'. Drew 582 Bandon ». Becher 91, 92, 93, 589 Banister, in re 471 Bank of Bellows Falls v. Rutland R. Co. 48 Bank of Commonwealth v. Hopkins 93 Bank of North America v. Cran- dall 6.35 Bank of Orleans v. Torrey 296 Bank of Republic v. Carrington 405 Bank of United States v. Davis 239 Bank of IJtica v. Bender 387 Bank of Woodlan o. Hiatt 30, 524 Banner, ex parte 92 V. Berridge 349 Bannister v. Alderman 185 V. Petty 254 Barber v. Houston 28 Barker v. Cleveland 71 V. Harrison 296 Barnard v. Campbell 406 V. Coffin 473, 616 V. Colwell 492 V. Crosby 497 V. Eaton 114 V. Hunter 270 Barnardiston v. Lingood 428 Barnes v. Boston R. Co. 446 V. Brown 200 V. Hardeman 132 V. Quigley 70, 179, 181 Barnesley v. Powell 43 Barnet v. Dougherty V. Nichols Barnett v. Spencer Barney v. Little V. McCarty Barnbart v. Greenshields Barrie v. Earle Barron v. Jackson Barrow v. Alexander Barry v. Bennett 45.S 36 208 400 400 390, 391 422 105 591 315 V. Butlin 272, 363, 364, 383 V. Croskey 545 V. Whitney 291 Bartholomew v. Bentley 117 V. McKinstry 153, 154 Bartle v. Coleman 201 Bartlett v. Blaine 640 . Belcher 359, 860 V. Costello 141, 481, 493, 494 Belden v. Bavies 53 Belford v. Crane 198 Belknap v. National Bank 255 V. Reinhart 519 V. Sealey 471 Bell's Case 229 Bell V. Ellis 484, 485, 486 V. Johnson 199 V. Twilight 391, 392 Bellage v. Southee 361 Bellair v. Wool 247, 425, 429 Bellairs v. Tucker 480, 495, 498 Bellamy ». Sabine 420 Bellew V. Ruasell 269 Belshaw v. Moses 64 Bemis v. Call 220 Benedict v. Cowden 256 V. Ocean Ins. Co. 236 Bennet v. Vade 380 Bennett, ex parte 319, 331 Bennett v. Judson 613 Bent V. Priest 265, 266, 285, 317, 318, 325 Bentley v. Craven 813, 318 Benzein v. Lenoir 199, 888 Berdoe v. Dawson 354 Berman v. Woods 434, 629 Bernard's Case 229 Berneoker v. Miller 106 Berrien v. McLean 266 Berryman v. Graham 72 Bersch v. State 101 Berson v. Jones 167 Bethell v. BetheU 117, 477, 489, 513 Bibb i;. Smith 266 Bicknell v. Field 95 Bidault V. Wales 485, 486, 487 Biederman v. O'Connor 63,. 73, 176, 619 Bigelow V. Comegys 203 Biggs V. Perkins 633 Bigler v. Thickinger 479 Billinghurst v. Vickers 272 Billings V. Russell 150 Billiter v. Young 437 Birdsey v. Butterfield 472, 475 Birdsong v. Birdsong 882 Birley v. Birley 442 Biscoe V. Perkins 333 Bish V. Cannon 115 V. Stout 580 Bishop V. Schneider 400 V. Small 492 Bishop of Winchester ». Paine 396 Bissell V. Taylor 640 Bivins v. Jarnigan 867 Bixler v. Kunkle 324 Black V. Bayless 170 V. Blazo 686 V. Walton 412 Blackburn v. Vigors 236, 596 Blacklock v. Dobie 208 Blackwell v. Cummings 147 Blaeser v. Milwaukee Ins. Co. 144 Blagrave v. Routh 294 Blair u. Bromley 25 V. Laflin 491 V. Owles 409 Blake v. Albion Assur. Soc. 161 CASES CITED. XXTU Blake v. Buffalo R. Co. 326 Bowen v. Hall 7,556 V. Morrell 430 V. Mandeville 65 V. Ward 93 Bower v. Metz 434 V. Watson 471 Bowes V. East London Waterworks V. White 161 320, 324 Blakeraore v. Shelby 415 Bowker v. Delong 509 Blakeslee v. Starring 65.5 Bowman v. Parker 627, 629 Blakesley v. Johnson 90 Box V. Stanford 122 Blanchard v. Detroit B. Co. 447 Boyce v. Grundy 45 V.Ely 409 Boyd V. Barclay 208 i;. Stevens 134, 405 u. Boyd 248, 363 V. Ware 396 V. Brotherson 257 V. Young 129 V. Brown 161 Blanchet v. Foster 609 V. De La Montagnie 202,207,853 Blaney v. Hanks 76, 421 V. McLane 176, 453 Blanton v. Taylor 221 Boj-lan V. Meeker 188 Bliss V. Matteson 331 Boynton v. Housler 307 Blodgett V. Hildreth 459 Bracken v. Miller 289 Blood V. Hayman 323 Brackenbury v. Brackenbury 200 Blossom V. Barret 554 Brackenridge v. Holland 575 Blount V. Bobesou 265 Bradbury v. Barding 467 Bloye, in re 282,283 V. Haines 496, 530 Bloye's Trust 296 Bradish v. Bliss 144 Blunt V. Morris 638, 639 Bradlee v. Warren Sav. Bank 425 Boaz V. Tate 247 Bradley v. Bosley 59 Bodurtha v. Phelon 71 ... Fuller 69 ,70, 367, 542 Boehlert v. McBride 323, 343 (J. Luce 49 495, 496 Bond V. Ramsey 251 V. Obear 403 Boney v. HoUingsworth 366 < . Poole 405, 498 Bonner v. Herrick 416 V. Rea 626 Bonney v. Ridgard 35, 578 Bradley Fertilizer Co. v. Fuller 160 Boomer v. French 26,27 Bradner v. Strang 635 Boon V. Barnes 405 Bradshaw v. Yates 354, 357 Boone v. Cliiles 33, 410 Bragg V. Paulk 410 Booth V. Jarrett 570 Braliam v. Beachim 565, 566, 570 V. Powers 165, 257 Bramble v. Kingsbury 598 V. Storrs 253, 604 Branham v. Record 540 V. Warrington 25 Breed v. Conley 400 Boothe V. Creswicke 286 V. Pratt 362 Borden i: Fitch 95 Breedlove v. Bundy 247 Borland v. Walrath 253 Brennan v. Bolton 446 Boston R. Corp. u. Dana 1.56 Brent v. Grace 340 Bostwick I'. Powers 400 Brereton v. Hutchinson 33 Bos well V. Coaks 593 Breslin v. Brown 581 Bothul V. Martyn 132 Bresnehan v. Price 107 Botstord V. Burr 453, 456, 457 Brewer v. Boston Theatre 57, 112 V. Wilson 510 0. Brown 505 Boulnois V. Peake 571 Brewster v. Brewster 79, 81, 436 Bourn v. Davis 492 Bridge v. Batchelder 82, 419 xxvm CASES CITED. Bridge v. Eggleston 170 Bridgman v. Green 382, 609 Briggs V. Ewart 619 V. Humphrey 125 V. Morris 177, 460 V. Wlthey 233 Brigham v. Winchester 433, 434 Brinkley v. Piatt 167 Brinsraead b. Harrison 109, 230 Bristol V. Braidwood 469 V. Wilsmore 6, 486 Bristol Savings Bank v. Keavy 132 Bristow V. Warde 443 British Am. Tel. Co. v. Albion Bank 579 British Banking Co. o. Charnwood Ry. Co. 226, 227, 228 British Box Co., in re 327, 329 Brittlebank v. Goodwin 33 Broaddus v. Eroaddus 90 Brock i". Barnes 270 Brockwell's Case 229 Broderick's Will 43 Brogden v. Walker 382 Brokaw v. New Jersey Ry. Co. 246 Bromley v. Smith 371 Bronson v. Graham 103 V. La Crosse B. Co. 110 Brooke v. Berry 296 V. Lord Mostyn 593 Brooks V. Hamilton 510 V. Martin 206, 495 Brophy v. Lawler 434 Brotherline v. Swires 583 Brothers v. Brothers 318, 320 V. Herrill 460 Brower v. Goodyear 76, 146, 485 Brown v. Bonner 227 •,. Broach 635 V. Bulkley 265 V. Carson 460 V. Carter 543 V. Castles 493, 528, 542 V. Cowell 319 V. Dunham 217 V. Dwelley 461 V. Edgington 117 II. Frost 59 V. Gray 691 Brown v. Hartford Fire Ins. Co. 82, 421 V. Hunt 144, 174, 176, 513, 540 V. Kennedy 289 V. Leach 523, 529 V. Lynch 454 «. McCune 217, 218 V. Molineaux 204 V. Montgomery 591, 612 V. Mutual Ins. Co. 438 V. Rice 489 V. Texas Hedge Co. 132 V. Volkening 392 V. Waters 434 Browne v. McClintock 35 Brownlie v. Campbell 510, 513, 514 Browning v. Bancroft 436 Bruce v. Ruler 611 Bruff V. Mali 546 Brnnsden v. Humphrey 64 Brush V. Sweet 214 Bryan v. Suggs 529 Bryant v. Taylor 224 V. Ware 575 Buclianan v. Codd 475 V. Matlock 44 Buck V. McCaughtry 525 V. Swasey 457 V. Warren 457 Buckeridge v. Glass 404 Buckley v. Artcher 485 V. Gross 575 Buckmaster v. Harrof 447 Buckner v. Calcote 28 Bufe V. Turner 595 Buffalow V. Buffalow 289, 381 Buffington v. Harvey 110 Bukey v. Judd 160 Bulkley v. Morgan 437, 438 V. Wilford 287 BuUis V. Noble 514 Bumpus V. Platner 415 Bunyard v. McElroy 189 Burchard v, Fairhaven 398 Burchell v. Marsh 99 Burck V. Smith 146 Burdick v. Michael 16 V. Seymour 628 Burgess v. Burgess 567 V. Seligman 476 OASES CITED. XXIX Burhop V. Roosevelt 111 Cambridge Bank v. Delano 386 Burley v. liussell 217, 218 Campan v. Van Dyke 39 Burnes v. Fennell 242 Campbell v. Dearborn 176, 448 Bumham v. Carr 161 V. Franklin SO V. Noyes 123, 142, 180, 181 V. Merchants' Ins. Co 234 Burns v. Lane 487, 489, 490 V. New England Life Ins Co. V. McCabe 167 125 594, 622 Burr V. Borden 349 V. Skinner 203, 205 V. Wilson 144, 495, 530 V. Whittingham 527 Burrill v. Stevens 485, 486, 487 Canal Co. o. Clark 566, 567, 568, Burson v. Huntington 618,619,623,624 570, 571 Burt V. Bowles 476, 487 V. Gordon 51, 108, 109 Burtis V. Burtis 550 Candee v. Lord 92 Burton b. Spiers 580 Cane v. Allen 269, 276, 296 V. Wookey 314 Cannam v. Farney 218 Bury V. Oppenheim 354 Cannon v. Jackson 143, 174, 176 Busey v. Hardin 281 Canoy v. Troutman 54 Bush V. Bender 429 Cape Breton Co., in re 325 Buswell V. Davis 366 Cardwell v. Cheatham 442 Butler V. Butler 605 Carey v. Brown 200 V. Hildreth 65, 68, 435, 437 Cargill V. Bower 227 228 233, 234 V. Lawson 26 Carleton v. Dorset 606 V. Stevens 392 Carley v. Wilkins 509 Butts V. Woods 331 Carmichael v. Vandebur 532 Bwlch-y-Plwm Mining Co. v Carnahan v. Wood 170, 171 Baynes 79, 120 121, 420 Carney v. Carney 170, 171 Byers v. Suget 281 Carpenter v. American Ins. Co. 229 V. Wackman 176 V. Carpenter 220 Byington v. Moore 354 V. Danforth 331 Byram v. McGuire 635 V. Lee 230 Byrd v. Hall 486 Carr v. London Ry. Co. V. Moore 536 628 c. u. Passaic Land Co. Carrier v. Sears 447 124 Cabot V. Christie 544 Carrington v. Goddin 50 Cadaval v. Collins 71,72 Carroll v. Potter 214 Cadman v. Horner 451, 507 Carter v. Carter 117 Cadogan v. Kennett 443 V. Grimshaw 198 Cadwallader v. West 381 0. Harden 487 ,545,546 Cagney v. Cuson 30, 528 V. Palmer 275, 289 Cain V. Dickinson 68, 485 V. Williams 388, 473 Caldwell v. Boyd 317 Cartier v. Carlisle 565 V. Bridal 521 Carver v. Carver 588 V. Henry 30, 513, 524 Carvill v. Jacks 174, 198 544, 545 Caledonian Ey. Co. v. Helrasburgh 208 Cary v. Gruman 628 Calhoun v. Burton 27 V. Hotailing 161 Calkins v. State 608 Casborne v. Barsham 271 Callahan v. Griswold 91 Case V. Boughton 509 CallJs V. Waddy 27 V. Carroll 293 XXX CASES CITED. Case V. Codding 457 Chicago Ry. Co. v. Lewis 73, 78 V. Sean 581 Cbickering v. Lovejoy 367 V. Gerrish 205, 206 Childers v. Childers 459 Casey v. Casey 296, 346 Childs V. Dobbins 175 Castle V. BuUard 161, 246 Chipman v. Tucker 623 Castxique v. Behrens 95 Cholmondeley v. Clinton 347 Caswell V. Coare 432 Chouteau v. Allen 349 Catlett V. Dougherty 98 Choynski v. Cohen 568, 570 Cavender v. Eoberson 66, 69 Christmas v. Bussell 95, 96, 122 Cawley v. People 417, 601, 602 Christy v. Sullivan 396 Cazeux v. Mali 545 Chrysler «. Canaday 475, 493, 496 Cecil V. Spurger 591 Church V. Kidd 454 Cecil Bank v. Snirely 457 V. Muir 203 Central Bridge Corp. v. Butler 129 Central Ey. Co. v. Kisch 30, 246, 501, 504, 523 Chadwick v. Turner 399 Chalmers v. Harding 479 Chambers v. Chambers 90 V. Cook 100 V. Goldwin 145 v. Wood 364 Champion v. Kigby 277, 291 V. Wenham 100 V. "White 53 Champlin v. Height 442 V. Laytin 240 Chandler v. Simmons 421 Chapman v. Chapman 449 V. MuU 849 V. Eose 618, 624 Charitable Corp. v. Sutton 326 Charleson v. Campbell 570 Charlton v. Coombes 186, 187 Chase v. Garvin 50 V. Horton 170 Chatauqua Bank v. White 114 Chatham v. Bradford 400 «;. Pointer 582, 583 Cheever v. Union Life Ins. Co. 234, 595 Cheney v. Gleason 48, 264, 299 Cherry v. Colonial Bank 518 Cheshire v. Booe 254 Chesterfield v. Janssen 8, 9, 137, 203, 370, 372, 373, 380 Chicago & A. E. Co. v. Shea 600 V. Thompson 600 Chicago Building Soc. a. Haas 90 Churchill v. Cummings 628 Citizens' Bank v. First Nat. Bank 476, 484 V. Richmond 266, 256 V. Smith 74, 526 City Bank v. Burns 486 Civil Service Assoc, v. Dean 562, 571 Claflin V. Commonwealth Ins. Co. 535, 538 Claggett V. Crall 527 Clanricade v. Henning 294 Clapp «. Brumagham 393 V. Leatherbee 132 V. Tirrell 207 Clark, in re 609 ■/. Baker 423 V. Chamberlain 132 V. Edgar 500, 508, 527, 629 V. Field 550 v. Fisher 362 V. Malpas 375 o. Pease 132, 133, 134 i^. Eicker 388 V. Tennant 418 Clarke v. Dixon 120, 420, 546 V. Sawyer 368, 400 V. Tipping 296 V. Watson 254 Clarkson v. Hanway 380 Clary v. Clary 48 Clay V. Cottrell 243 V. Williams 173, 202, 347 Clayton v. Tucker 213 Cleavinger v. Eeimar 292, 343 Cleland v. Fish 360, 365 CASES CITED. XXXI Clement ». Clement 177, 460 Clements ti. Nicholson 60, 127, 184 Clermont v. Tasburgh 507 Cleveland E. Co. v. Pattison 304 Clews V. Traer 214 Clifford V. Brooke 199 Clifton V. Murray 365 Clinan v. Cooke 447 Clive V. Carew 223 Clough V. London Ey. Co. 66, 80, 81, 83, 420, 436, 437, 622 a. Seay 257 Clute V. Small 257 Clyce V. Anderson 145 Coaks V. Boswell 318, 591 Coats V. Holbrook 563, 565 Cochrane v. Halsey 590 Cockcroft V. Sutclifie 440 Cocke V. Bromley 62 V. Minor 395 Cockey v. Milne 402 Cockrill V. Hall 36 Cockshott V. Bennett 205 Coddington v, Goddard 591 Coffeen v. Brunton 565 Coffin V. Coffin 362 V. Gephart 101, 103 Cogel V. Kinsley 591 Coggs V. Barnard 310 Cole V. Cassiday 509, 512, 513 V. Goodwin 600 V. McGlathry 30 V. Scott 409 Coleman v. Barklew 392 V. Mellersh 286 Coles V. Treeothick 317, 819 Coleson v. Smith 430 Collar V. Ford 295 CoUard v. Hare 35 Collen u. Wright 516,518 Collins V. Denison 535, 537 V. Evans 520 V. Jackson 179, 478, 509, 528 V. Sullivan 307, 453 V. Townsend 420, 438 Colquitt V. Thomas 386, 888 Combs V. Little 448, 449 Comins v. Coe 160, 163 Commercial Ins. Co. v. McLoon 46 Commonwealth v. Mechanics Ins. Co. 474, 475 Commonwealth v. Wood 494 Compton V. Bunker Hill Bank 200, 253 Comstock V. Comstock 296, 359 u. Hadlyme Society 188 Conant v. Jackson 146 Concord Bank v. Gregg 210 Condict V. Brown 175 Condit V. Blackwell 270, 296, 297 Confer v. McNeal 160 Congress Spring Co. v. High Kock Spring Co. 568 Connell u. Keed 560 Conner v. Fitzgerald 446 V. Henderson 426 Connihan v. Thompson 387 Connolly v. Branstler 220 Connoly v. Hammond 27 Conover v. Beudine 153 V. Van Mater 409 Conroe v. Birdsall 218 Constantein v. Blache 204 Conyers v. Ennis 485 Cook V. Berlin Woollen Mill Co. 326 V. Freson 150 V. Gilman 425 V. Gudger 460 V. Mason 153 V. Moore 155, 157 V. Perry 160 Cooke V. Lamotte 268, 270 V. Nathan 488, 489 Coolidge V. Brigham 425 V. Goddard 493 V. Melvin 177 Coon V. Atwell 493 Cooper, ex parte 212 Cooper, in re 619 V. Cooper 440, 441 V. Landon 70, 114, 181 V. Lovering 492 V. Schlesinger 628 Corbett v. Brown 604 Corbin v. Sullivan 402 Corby v. Weddle 618 Cordwell v. Mackrill 335 Corley v. Stafford 264, 276, 276, 277 Cornell v. Nebeker 256 xxxu CASES CITED. Corwin v. Suydam 243 Cory V. Gretchen 218 Coster V. Merest 104 Costigan v. Hastier 295 Cottle V. Cottle 102 Cotton V. Gregory 619 Coulson V. Allison 367, 368 Cowan V. Barrett 281, 295 Cowdry v. Day 286 Cower V. Cornell 266 Cowles V. Day 69 V. Townsend 489 Cowley V. Dobbins 509, 513 V. Smyth 11, 189, 180, 412, 537 CowpertUwaite v. First Nat. Bank 307, 453, 454 Cox V. Highley 510 u. Sullivan 294 Cozzins V. Whittaker 174 Crafts V. Belden 435 V. Union Ins. Co. 105 Cragie v. Hadley 246, 485, 509, 512, 51 5 Craig's Appeal 157 Craig V. Ward 227 Cramer v. Crumbangh 272 Cranson v. Goss 616 Crater v. Binninger 625, 626 Crawford v. Wick 446 Crawshay w. Thompson 562, 563, 566 Crayton w. Hunger 251 Crehore v. Crehore 469, 531, 550, 551 Creveling v. Tritts 818, 322 Cribbins v. Markwood 371 Crispell v. Dubois 272, 362, 364 Crogin v. Tarr 160 Crompe v, Barrow 443 Crop V. Norton 457 Crosby v. Buchanan 17 Crosland v. Hall 493 Cross V. Andrews 224 V. Herr 79 V. Peters 485 Crossley, in re' 35 V. Parker 292 Crouch V. London Ry, Co. 599 Crowe V. BuUard 298 Crown V. Carriger 529 Croyle v. Moses 467 Cruess v. Fessler 496 Crump V. George's Creek E. Co. 510 Cruttwell V. Lye 476 CuUen V. Thompson 230 Cumberland Coal Co. v. Parish 326 V. Sherman 322, 331 Cummings v. Bird 213 V. Cummings 169 Cummins v. Hurlbutt 142 Cundy v. Lindsay 403, 619, 621 Cunningham v. Blake 447 V. Pell 110 Curran v. Arkansas 110 Curry v. Commonwealth Ins. Co. 622 V. Keyser 114 Curtin v. Patton 218 Curtis V. Lyman 400 V. Moore 169 V. Mundy 392 Cushing V. Rice 423 V. Wyman 425 Cuthbertson's Appeal 362 Cutting V. Tower 213 Cutts V. Salmon 277 Cuyler v. McCartney 170, 171, 172 D. Daggett V. Rankin 221 Dalbiae v. Dalbiac 203, 332, 482 Dalby v. PuUum 415 Dale V. Roosevelt 53 V. Smithson 565 Dalton V. Dalton 359 Dambmann v. Schulting 547, 548, 590 Danby v. Coutts 388 Danforth v. Cushing 540 Daniel v. Hill 368 Daniels v, Davison 390 V. Dayton 482, 498, 501, 503 Darley Colliery Co. v. Mitchell 64 Darling v. March 244 Darlington Banking Co., ex parte 184, 243, 244 Darnell v. Rowland 114, 378 Daubeny v. Cockburn 443 David V. Park 30, 44, 480, 524, 528, 529 Davidson v. Lanier 198 V. Vorse 198, 545, 546 Davies v. Otty 459 CASES CITED. XXXIU Davis V. Abraham 289 V. Betz 73, 75, 475, 488, 509 V. Calvert 191 ti. Christian 394, 397 V. Cotten 35 V. Council 172, 192 V. DaveriU 105 V. Davis 188, 213 V. Dean 378 V. Fearis 53 V. Hamlin 334, 835 V. Hedges 71 V. Henderson 394 V. Marlborough 370 V. Rogers 362, 384 V. Smith 293, 294 V. Snider 73 V. Spooner 175 V. Spurling 249 V. Stone 675 u. Stuard 438 V. Talcott 71 V. "Wetherell 307 Dawes v. Harness 73, 79, 120, 121, 420 Dawkins v. Gault 150 Dawson v. Burrus 525 V. Graham 471, 477, 493, 508 Day V. Brownrigg 567, 570 V. Day 359, 365 V. Holmes 299 V. Lown 199, 412, 415 Dayton v. Fargo 214 c.. Mebick 420 V. Moore 167, 168 Deacon v. Shreve 103 Deakers v. Temple 172 Dean v. Negley 867, 368 V. Yates 408 De Armond v. Adams 91, 92 Deem v. Phillips 359 Deep River Mining Co. v. Fox 310 Deere v. Guest 56 Deiz V. Lamb 568, 570 Delancey v. McKeen 220 Dellard v. Crocker 409 De Manneville v. Crompton 482, 608 Demeritt v. Lyford 87 Deraorest v. Eastman 431 Den d. Smith v. Greenlee 580, 581, 5(82 Denny v. Dana 153, 154 Densmore v. Cowan 218 Dent V. Bennett 265, 361 Denton v. Great Northern Ky. Co. 227 Deposit Life Assur. Co. v. Ays- cough 120, 420 De Roo I). Foster 218 De Rose v. Fay 277, 280 Des Farges v. Pugh 485 Despond v. Walbridge 460 De Valengin v. Duffy 209 Devinney v. Norris 274, 281, 289 Devoe v. Brandt 407 DevoU V. Brownell 192 Dickey v. Lyon 386, 391, 392 Dickinson v. Barber 224 V. Lee 521, 522 V. Seaver 214 Dickson v. Hitt 94 ' Diconson v. Talbot 369 Diggs V. Kirby 527 Dillaway v. Butler 239 Dilling u. Murray 86 Dillon V. McAllister 574 Dimmock v. Hallett 685 Dingle v. Hare 628 Distilled Spirits 240 Doane v. Lockwood 76, 420 Dob V. Halsey 243 Dobson V. Pearce 90, 95 V. Raoey 296, 850 Dodd V. Clark 11 t. Cook 48, 49 Dodge V. Bank 621 V. Essex Ins. Co. 24 u. Meech 362 0. Pope 523, 527 Dodgson's Case 229 Doe V. Manning 132 Doe d. Pearson ?>. Ries 176 Doe d. Potts V. Dowdall 401 Doe d. Richards v. Lewis 605 Doe d. Roberts v. Roberts 200 Doe d. Stewart v. Johnson 247 Doggett V. Lane 361 Doherty v. Bell 434 Dole «. Wooldredge 493, 494 Donaldson v. Farwell 6, 486 Donegal's Case 382 xxxiv CASES CITED. Donelson v. Weakley 176 Dunlap I). Richards 304 Donnelly, in re 554 Dunn V. Chambers 866 Donovan v. Donovan 467 469 550 V. Oldham 513 Dooley v. Woloott 392 ». Record 270 Doorman v. Jenkins 310 V. White 412, 415, 509, 510 Dormer v. Fortescue 324 Dunnage v. White 366 Dorr V. Fisher 121 Dunne v. Doran 33 a. Munsel 53 Dunphy v. Ryan 448 Dortio J7. Dugas 514 528 Durell V. Haley 485 Doss V. Davis 106 Durfee v. Eviland 101 Doswell V. Buchanan 409 Durgin v. Somers 303 304, 305 Dougherty's Est. 91 Durling v. Loveland 362 Doughty V. Doughty 38,87 Duringer v. Moschino 88,90 Douglas V. McFadin 611 Dumell V. Corfield 364, 383 Douthitt V. Applegate 484 Durr V. Jackson 116 Dow V. Sanborn 485 Durst V. Burton 227 Dowden v. Wilson 152 179 Dwinal v. Smith 48 Downer v. Smith 431 Dyer v. Homer 206 Downes v. Grayebrook 319 349 V. Tilton 483 Downey v. Murphey 362 Dyott V. Anderton 294 Downing v. Blair 253 Dyster, ex parte 298 Doyle V. Hort 5,17 V. Knapp 416 E. V. Teas 400 Draper v. Wood 255 ,257 Eaglesfield v. Londonderry 487, 489, 490 Dresser v. Norwood 240 Earl V. Matheney 98,94 Drew V. Beall 627 Eastabrook v. Scott 205, 482 V. Power 145 Easter v. Allen 130, 132, 134 Drinan v. Nichols 248 East India Co. v. Henchman 302 Drummond v. Couse 144 East India Mining Co. v. Keighly 302 V. St. Albans 324 Eastman v. Premo 160 Drury v. Drury 218 Eaton V. Lyon 445 Duchess of Kingston's Case 91 (.-. Winnie 477 Dudley v. McLelner 150 Eberts v. Eberts 337, 340 V. Soranton 179 ,185 Eckert v. Williams 256, 257 Duffany v. Ferguson 473 ,474 Eckrote v. Myers 292 Duffield V. Robeson 862 ,364 Edelsten v. Edelsten 565 Dulaney v. Rogers 150, 513 ,538 ,545 Edgell V. Sigerson 89, 116 Dunbar v. Boston R. Co. 621 Edick V. Crim 509 Duncan's Appeal 605 Edington v. Nixon 175 Duncan v. Judson 394 Edmunds v. Dennington 606 V. McCuUough 434 V. Merchants' Transp. Co. 408, 619, Duncane, ex parte 349 ! 621 Dundas v. Dutens 450 Edson V. Cummings 86 Dundonald v. Masterman 245 ■ V. Edson 85 89, 90, 92, 94 Dung V. Parker 542 Edwards v. Browne 370 , 371, 489 Dunks V. Fuller 484 V, Marcy 544 Dunlap V. Cody 88 V. McLeay 416, 527, 543 V. Giidden 87 ;;. Meyrick 270, 274, 276,277, 278 CASES CITED. XXXV Edwards v. Owen 149 Evans v. Bacon 38 V. Warner 166 V. Bicknell 45 V. Warren 160 V. Carrington 468, 549, 552 ,554 Egerton v. Logan 262, 266 591 ,593 Ekins V. Tresham 493 V. Dravo 206 Eldridge v. Smith 325 V. Edmonds 8 Eli V. Gridley 390 V. Ellis 270 Elkhart Lodge v. Crary 580 V. Foreman 257 Elliot V. Branch Bank 213 V. Gale 425 Elliott V. Blair 415 V. Llewellyn 461 ,462 ». Elliott 339 V. Montgomery 434 II. Stoddard 126 Everhart v. Searle 304 Ellis V. BuzzeU 144 Everts v. Agnes 619 V. Davis 43 Evertson v. Miles 609 V. Mathews 374, 378 Ewing V. Johnston 663 Ellison V. Mobile & 0. E. Co. 532 Elwood V. Gardner 179, 181 F. Ely V. Hanf ord 303 « V. Stewart 530, 531 Fagan v. Newsom 522 V. Wilcox 402 Fairbanks v. Blackington 206 Elzey V. Elzey 550 Fairchild v. McArthur 214 Emerson v. McNamara 425 Fall^ner v. O'Brien 268 V. Udall 86, 97, 98 Emma Mining Co. v. Grant 302, 310, 325 Emmerson v. Herriford 251 Emmons v. Moore 199, 274, 365 V. Westfield Bank 155 Empire Natl. Bank v. Shotwell 621 Enfield v. Colburn 521 Engel V. Scheuerman 95 England v. Cm'ling 814 Engstrom v. Sherburne 87, 95 Enos V. Hunter 176 Eo[uitable Foundry Co. v. Hersee 66, 437 Erie Iron Works v. Barber 225, 246, 477, 510, 513 Erlanger v. New Sombrero Phosr phate Co. 310, 325 Ernest v. Croysdill 33, 35 Erwin v. Down 594 Esron v. Nicholas 219 Estabrook v. Messersmith 51 u. Swett 425 Estell V. Myers 412, 421, 477, 496, 513 514, 627 Estes V. Reynolds 422, 438 Enbanks v. Dobbs 212 European Ry. Co. v. Poor 326, 331 Fall River Bank v. Sturtevant 243 Faribault v. Sater 479, 510 Faris v. Lewis 625 Farley v, Lincoln 425 V. Lovell 51, 108, 109, 111, 242 Farmer v. Farmer 296, 363 Farmers' Bank v. Downey 325, 326 Farmers' Ins. Co. v. German Ins. Co. 586 Farnam v. Brooks 24, 27, 28, 80, 33, 38 115, 116, 296, 317, 318, 324, 523 Farnsworth v. Hemmer 303 Farrington v. Barr 459 Faucett v. Currier 584 Faulkner v. Elamp 427 Faure v. Martin 116 Faust V. Haas 680 Faville v. Shehan 146 Fawcett v. Fawcett 318 V. Gee 204 V. Whitehouse 313 Fay V. Fay, 204, 205, 206 V. Smith 255, 257 Fayette Bank v. Steffes 74, 526, 527 Featherstonaugh v. Fenwiok 334 Featherstone v. Cooper 294 Fellows V. Wyman 51 XXXVl CASES CITED. Feret w. Hill 47, 76, 636, 637 Ford V Chambers 143 Ferguson v. Coleman 47 V. Foster 560, 566 Ferlat v. Gojon 550 V. Harrington 286 Field w. Evans 355 V. Hennessy 353 V. Flanders 86 V. Williams 170, 171 V. Holzman 108, 588 Fore V. McKenzie 529 V. Seabury 210 Foreman v. Hunt 281 V. Stearns 4a2 Forniquet v. Forstall 61, 110, 212, 213, Fields V. Rouse 522 429 Findley v. Stewart ' 26,27 Foss V. Foss 469 531 549, 550 Firbank v. Humphreys 516 First Mass. Tump. Corp. v. Field 24, 26 First Nat. Bank v. GifEord 326 V. Yocum 414 Fish V. Cleland 360, 487, 488 1). Lane 92 Fishbaok v. Miller 529, 544, 547 Fishbeck v. Plienix Ins. Co. ' 81 Fisher's Appeal 296 Fisher v. Beckwith 619, 624 V. Budlong 492, 690 V. Mellen 513, 514 V. True 169 V. Von Behren 74, 526 Fisk V. Hicks 627, 628 V. Miller 86 Fitch V. Jones 132 Fitts 0. Hall 217 Fitzgerald v. Fitzgerald 73, 253, 525, 526 Fitzherbert v. Mather 238 Fitzroy v. Richmond 441 Fitzsimmons v. Chapman 633 V. Joslin 227, 229 Flagg V. Mann 391 Flanders v. Davis 101 Fleischman v. Stern 495 Fleming v. Culbert 27 Fletcher v. Hubbard 96 Flood V. Clemence 148 Florey v. Florey 572 Flower v. Floyd 95 Foard v. MoComb 513 Fogg V. Griffin 151, 246 . Bennet 382 Moxon V. Payne 179, 264, 277, 316 Mudge V. Wilmot 635 Mulford V. Bowen 343 V. Miuch 321 1 CASES CITED. Mulhallen v. Marum 296 Mullen V. Old Colony E. ' 377 Muller V. Eno 627 V. St. Louis Hospital Assoc. 125 MuUett W.Mason 626, 63i MuUoy V. Paul 36 Mulvaney v. Dillon 834 Mundy v. Foster 191 Munson v. Atwood 144 ». Hallowell 27 Murdock v. Hughes 35 Murphy v. O'Shea 296, 297 V. Smith 90 Murray v. Ballou 396 V. Beard 801, 303 V. Lylburn 397 Mussina a. Goldthwaite 116 Mutual Ins. Co. i>. Armstrong 160, 161 Mutual Life Ins. Co. v. Dake 400 Mycock V. Beatson 629 Mylnes v. Manwood 180 Nantes v. Corrock 382 Napier v. Elam 402, 416 Nash V. Lull 44 Nathan v. Giles 407 National Bank v. Cushman 239 National Exchange Bank v. Drew 227, 545, 637 National Ins. Co. v. Minch 289 Neal V. Stone 580 Neally v. Ambrose 192 V. Greenough 175 Nealon v. Henry 438 Neblett v. Macfarland 420, 430, 438 Neel V. Potter 189 Negley v. Lindsay 434 Neidefer v. Chastain 115, 479 Nellis V. Clarke 207 Nelson v. Stocker 218 V. Wood 412 V. Worrall 176, 177 Nelthorpe v. Pennyman 282, 283 Nesbit V. Lockman 266, 268, 269 Nesbitt V. Berridge 289 V. Tredennick 835, 350 Nesham v. Shelby 447 Nesmith v. Clinton Ins. Co. 103 Neville v. Wilkinson 203, 482 New Brunswick lly. Co. v. Cony- beare 114 Newbury i'. James 308 Newell V. Newell 484 V. Randall 504 Newhall v. Jones 341 V. Pierce 497 Newhouse v. Godwin 362 New Jersey Ins. Co. o. Baker 234 Newkirk v. State 101 Newman v. Alford 668 V. Payne 266 V. Sylvester 519 Newnham v. Stevenson 66, 437 Newton v. Carson 36 New York Cent. R. Co. v. FralofE 599 New York Ins. Co. v. Tooker 132 New York R. Co. v. Schuyler 546 Nexsen v. Nexsen 272 Nichols V. Baker 162 V. Holmes 64 V. Michael 424 v. Moody 519 V. Patten 205 V. Penner 485, 486 Nicholson v. Halsey 76, 421 V. Jacobs 394 Nixon's Appeal 453, 456 Noble V. Adams 486, 487 V. Googins 470, 471 V. Northern Illinois 205 Noel V. Horton 636 Nolte V. Reichelm 491 Noonan v. Lee 114, 116 Norris v. Le Neve 336 e/. Norris 207 u. Wait 218 North Bait. Assoc, v. Caldwell 318, 320 Northcott V. Casper 265 Norton v. Huxley 481 V. Rilly 382 Nott V. Morgan 566, 571 Nottingham Brick Co. v. Butler 604, 691 Nowlan v. Cain 467, 479, 522 Nowlin V. Snow 529 Noyes v. Blodgett 625, 626, 627 CASES CITED. li Noyes r>. Horr 400 Orr V. Johnston 606 V. Loeb 92 Ort V. Fovf ler 74 V. Lorlng 518 Osborn v. Moss 207 V. New Haven R. Co 61, 52, 109, Osborne v. Graham 343 241, 242 V. Williams 202, 354 Nudd V. Hamblin 27, 28, 29, 30 Osbrey v. Bury 333 Nugent V. Gifford 250, 578 Oswald V. McGehee 524, 532, 633 Nunn V. Fabian 446, 447 Oswego Starch Factory a, Len- Nye V. Merriam 635 drum 77 431, 432, 485 Otis V. Hadley 155 0. Otterson v. Middleton 86', 91, 92 Over V. Hetherington 631 Oakes i: Turquand 229 Overshiner v. Wisshart 200 Oakey v. Dalton 660 Overton ii. Bannister 219 Oakie v. Ritchie 476, 484 V. Tracy 307, 458 Oberlander v. Spiess 233 Owen V. Foulkes 282, 283 Obert V. Obert 88, 323, 343 V. Homau 601, 603 O'Brien v. Hilburn 220 Owing's Case 380 V. Lewis 266, 267 Oxwith V. Plummer 391 Ocean Ins. Co. v. Fields 92 Oclisenbein v. Papelier 90,95 P. Ochsenkelil v. Jeffers 178 O'Dell V. Bumbam 31 Pacific R. Co. V. Ketchum 266 O'Donnell v. Segar 146 Packard v. Pratt 114, 185 Oelrichs v. Spain 45 Packer v. Lockman 180 Ogden V. Greenleaf 672 Page V. Bent 475, 496 V. Larrabee 318, 320 ./. Parker 180, 231, 247, 492, Ogilvie V. Jeaffreson 387, 393 630, 628 V. Knox Ins. Co. 487 V. Stubbs 284 O'Hara, in re 190 Pain V. Coombs 446 Ohio Coal Co. v. Davenport 170 Paine v. Meller 370 Oliver, ex parte 200, 201 V. Upton 471 V. Chapman 635 V. Van Note 103 V. Court 319 Palmer v. Harris 660 V. Oliver 452 V. Locke 439 v. Pratt 410 V. Neave 482 Olmsted v. Miller 542, 557 V. Wheeler 443 Olson V, Orton 524 Panama Tel. Co. v. India Rubber Olvey V. Jackson 495 Tel Co. 232, 298, 411, 417 O'Neill'. Glover " 172 Parbury's Case 229 V. Murray 189 Parfitt V. Lawless 271 Oppenheimer v. United States Ex- | Parham v. Randolph 30, 416, 524, press Co. 600 627, 543 Optical Co. V Jackson 175 Parke v. Leewright 446 Oregonian Ry. Co. v. Oregon Ry. | Parker v. Brooke 335 Co. 514 V. Huntington 166, 231 Orgill's Case 330 1/. Marquis 66, 69, 540 Ormonde v. Hutchinson 267 o. McKenna 326 Ormsby v. Dearborn 686 f. Moulton 632 Ill CASES CITED. Parker v. Niekerson 317, 318 Peel V. January 89 V. Ramsbottom 246 Peffley ». Noland 477 Parkhurst v. Sumner 91,92 Peigne v. Sutcliffe 217 Parkman v. Welch 120 PeirsoU v. Elliott 46 Parks V. Burbank 503, 508 Pelhara v. Moreland 90 Parlin v. Small 144, 174, 176 Pemberton v. Staples 116 Parmelee v. Cameron 373 Pendarvis v. Gray 416 Parnilee v. Adolph 438 Penn. Ins. Co. v. Crane 139, 140, Parnell v. Tyler 290 497, 498 Parrish v. Thurston 76, 591 Pennell v. Deffell 408 Parrott v. Parrott 146 People V. Bank of North America 613 Parsons v. Phelan 307 V. Holbrook 175 V. Topliff 129 People's Bank v. Bog art 485, 690, Partridge v. Messer 206 591, 612 V. Menck 565 People's Bank Appeal 594 V. Usborne 30, 31, 39 Percival v. Harger 540 Paske V. OUatt 272 Perkins v. Anderson 620, 621 Pasley v. Preeman 8, 466, 481, 636, V. Bailey 420 537 , 640, 541 V. Knight 102 Patch V. Ward 86, 87, 92, 94 V. Partridge 493 Patee v. Pelton 621 V. Scott 379 Pater v. Baker 558, 659 Perley v. Balch 79 121, 420 Patman v. Harland 388, 473 Perry v. Hale 233 512, 629 Paton V. Coit 132 , 133, 134 V. McHenry 457 Patterson v. Eirkland 592 V. Meadowcroft 91, 589 V. Patterson 191 V. Wade 27 V. Wright 476 Peter v. Beverley 249 Pattison v. Albany Bldg. Assoc. 530 V. Wright 488 Patton V. Allison 188, 362 Petrie v. Eastern Counties Ey . Co. 208 u. Campbell 486 Pettee v. Coggeshall 155 V. Taylor 114 Pettigrew v. Chellis 180 Paul V. Fulton 409 Pettljohn V. Williams 249 Payne v. Avery 288 Pettinard v. Prescott 324 V. Hook 112, 113 Petty V. Petty 605, 611 ,,. O'Shea 86,87 Pfiffner v. Krapfel 88 Peabody v. Flint 110, 325 Phelan v. Clark 26 V. Norfolk 308 Phelps V. Wait 546 Peacock v. Evans 280, 370 U.White 80,412,508,514,515, Peake v. Highfield 75 623, 524 Pearce v. Olney 95 Philbrook v. Delano- 459 Pearsall v. Chapin 76 Philips V. Green 53 Pearson v. Benson 278 Philipson v. Egremont 91,92 V. Howe 180, 511 Phillips V. Hull 580 Peck V. Bullard 27 0. Jones 513 Peckham v. Barker 446 V. Potter 64 Pedrick v. Porter 476 Phillipeburg Bank v. Fulmer 105 Peek V. Gurney 198, 251, 467, 504, Phippen v. Stickney 581, 682 507 ,545 , 546, 591 Phoenix Ins. Co. v. Moog 78 Peel V. Bryson 527, 635 Piokard v. McCormick 477, 496 CASES CITED. liii Pickard v. Sears 16, 219, 233, 698 Post V. Martin 262, 268, 272 Pickering v. Pickering 114, 116 V. Mason 265, 272, 274, 362 V. Vowles 334 V. Shirley 120 Pickett V. Baum 409 Poston V. Balch 865 c/. Pickett 583 Potter V. Monmouth Fire- Ins. Piddock V. Brown 184 Co. 82 Pierce v. Brassfleld 179 Potts V. Chapin 504, 505 V. HofEman 160, 162 Pow V, Davis 518 V. Pierce 365 Powell V. Bradlee 485 V. Tierscli 412, 414 V. Cobb 381 V. Wood 68, 82, 168, 169, 241, V. Conant 619 420, 486 V. Thompson 392 Pike V. Pay 475, 498 Powers V. Benedict 66 Pince V. Beattie 291 V. Mayo 473,497 Pinckard v. Woods 345, 394 V. Russell 183 Piplier V. Lodge 33 Pratt V. Langdon 140 Pitclier V. Rigby 286 V. Philbrook 435, 437 V. Smith 421 V. Pond 47,77 Pitt I'. Jackson 443 V. Weyman 33 Pittman v. Gatty 391 Prees v. Coke 348 Place V. Minster 166, 167 Prentiss v. Russ 175 Planclie v. Colburn 418 Presby v. Parker 227, 412 Planter's Bank v. Hornberger 291 Prescott V. Hawkins 409 Piatt V. Snipes 865 .,. Wright 590 Playford v. United Kingdom Tel. Pressly v. Kemp 874 Co. 519 Prevost V. Gratz 33,35 Plenderleath v. Eraser 266 Prewit V. Wilson 605 Pluuimer o. Farmers' Bank 495 Price V. Dewhurst 89,95 V. Kappler 450 B. Evans 334 Plymouth v. Kussell Mills 38 V. Furman 421 Poillon V. Martin 270 286, 290 V. Hewett 218 Poindexter v. Waddy 106 V. Junkin 167 Poland V. Brownell 530, 531 V. Keyes 519 PolhiU V. Walter 9, 139 150, 180 i>. Martin 402 Pollock V. Sullivan 554 V. Price 213, 251, 554 Pomeroy v. Benton 313, 314 Price's Candle Co., in re 567 Pomroy v. Parmlee 6 Prideaux ;;. Bunnett 478 V. Stevens 892 V. Lonsdale 347, 609 Pool V. Chase 253 Priest V. White 540 Poole's Case 325 Prince v. Shepard 108 Portengton v. Eglington 382 Printup V. Alexander 26,28 Porter v. Fletcher 524 Pritchard v. Ovey 370 V. McElhiney 508 Proctor V. Robinson 291 V, Peckham 288 u. Spratley 413, 414 15, 510 V. WoodrufE 297, 299 315, 318 Proudfoot V. Montefiore 238 Portland v. Topham 442 Provis V. Reed 188 Portsmouth v. Portsmouth 550, 553 Pryce v. Security Ins. Co 144 Post, in re 270 Pryor v. Pryor 442 V. Marsh 200, 201 Purcell V. Macnamara 289 liT CASES CITED. Putnam v. Commonwealth Ins. Co. 235 Putney v. Hardy 502 Q- Quarles v. Lacy Quimby v. Blaokey Quin V. Allen Quinton v. Frith E. Race V. Weston 175, Kadde v. Norman Railroad Co. v. Anderson V. National Bank Haley v. Williams Ramsbottom v. Parker Ramsdell v. Edgarton Ramshire v, Bolton Rand v. Webber 75, 412, Randall v. Hazelton V. Howard V. Irvington V. Russell Randell v. Trimen Ranger i'. Great Western Ry. Rankin v. Blackwell V. ClarkebiU V. Patton V. Porter Rapp V. Latham Ratcliffe v, Barnard Ratterce v. Conley Rawlings v. Bean Rawlins v. Wickham SO, 221 26,29 38 339 Ray V. Mackin liea V. Missouri Read v. Hatch V. Howe Redfield v. Buck t;. Dysart Redgrave v. Hurd 11, 30, 416, 509, 523, 524, Redington v. Roberts Redlich v. Doll 447, 492 566, 568 517 405 514 370 205, 206 45 422, 423 542 203, 204 321 335, 336 518 Co. 227, 246, 255 165 161 865 310 241 399 252, 253 545 412, 416, 523, 629 580 148, 161 213 842 198 130, 133 140, 412, 525, 547 485 255 Reed v. Minell 27, 28 V. Peterson 325, 339, 375, 386 V. Tioga Manuf. Co. 527 Reel V. Reel 188 Reese River Mining Co. v. Smith 412, 416, 509, 513 Reid V. Plippin 493 V. Stanley 275, 308 Relf V. Rapp 600 Remington v. Higgins 221 Respublica v. Henrica 550 Ressequie v. Byers 71 Reubens v. Joel 47 Revell V. Hussey 370 Revett V. Harvey 337, 839 Rex V. Burdett 105 V. Gray 105 V. Joliffe 105 V. Wylie 165 Reynell v. Sprye 3, 11 30,110,202, 203, 412, 497, 608, 523, 624 Reynolds v. French 483 V. Reynolds 549, 550, 552 Rhoda V. Annis 493, 522 Rhodes v. Bate 264, 268, 270, 276, 296 V. Cook 356 Ribon V. Railroad Co. 110 Rice's Appeal 826 Rice V. Barrett 520 V. Boyer 217 V. Burt 29 V. Coolidge 87 V. Cunningham 177, 178 V. Wood 306 Richards v. Todd 629 Richardson v. Maine Ins. Co. 234 V. Mounoe 171, 173 V. Noble 492 V. Richardson 188 V. Silvester 198, 467, 545 V. Welch 252 V, Williamson > 518 Richart v. Castator 207 Richmond v. Heapy 51, 242 Ricker v. Ham 132 Ricketts v. Montgomery 322 Riddell v. Johnson 272, 273 Rider v. Kelso 264 Riggan v. Green 124 OASES CITED. Iv Righter v. Roller 528 Riley v. Riley 116 Ringgold V. Stone 345 Ringo V. Burns 308 Risch V. Von LilUenthal 491 Ritchie v. Holbrooke 102 Roach V. Trood 439, 440, 441, 442 Robarts v. Tucker 255 Robbins v. Bates 323 Roberts v. Baker 356 V. McGrath 623 V. Medbury 172 u. Moseley 334 V. Trawick 189 V. Wood 623 Robertson v. Cole 550, 552, 553 V. Coleman 621 V. Norris 349 Robeson v. French 615 Robins v. Hope 365, 366 Robinson v. Aldridge 244 V. Glass 525 V. Hook 33 V. Hutchinson 188 V. Proctor 288 V. Reed 256, 257 V. Smith 110, 326, 331 V. Wall 585 V. Wheelwright 223 Roche V. Farnsworth 248 Rockafellow v. Newcomb 352 Rockford Ins. Co. u. Nelson 234 Rodgers v. Nowill 563, 564, 566 Rodlifi V. Dallinger ' 619 Rodman v. Thalheimer 485 Rogers v. Blackwell 124 V. Batchelor 244 V. Gwinn 90, 95 V. Hall 133, 167 V. Higgins 378, 540 )>. Lockett 308 V. Palmer 8 V. Place 525 V. Simmons 448, 449, 453, 459 Rohrback v. Germania Ins. Co. 235 Rohrsohneider <^. Knickerbocker Life Ins. Co. 435 Rolfe V. Gregory 11, 18, 33, 34, 35, 39, 579 Roller V. Blair 117, 513, 527, 530 Roman v. Mali 202 Root V. Bancroft 252 V. French 431 Roper t;. Sangamon Lodge 417, 602 Rose V. Hurley 480 V. Mynatt 266 Roseman v. Canovan 532, 533 Rosenberg's Appeal 323 Rosenthal v. Freeburger 446 V. Walker 31 Ross V. Mather 179, 181 V. Wood 86, 87, 88, 92 Rothschild v. Brockman 296 Rouse V. Southard 30, 31 Rowland v. Sullivan 382 Rowley v. Bigelow 159, 160, 403, 485 (,-. Rowley 439 Rudd V. Jones 99 Ruddell V. Dilman 74, 526 RuS V. Jarrett 142, 517 Ruffner v. Ridley 434 Ruggles V. Genl. Ins. Co. 238 Runkle v. Gates 188 Rupp V. Sampson 594 Rush V. Rush 86 Rushworth's Case 335 Russell V. Austwick 313 V. Jackson 458 V. Ranson 386 V. Russell 378 u. Southard 348 Rutherford v. RufE 382 V, Williams 540 Ryan v. Ashton 266, 289, 291 V. Dox 447, 448, 449, 454 V. Leavenworth Ry. Co. 326, 328, 329 Ryder v. Hathaway 575 S. Saco Bank v. Sanborn 387 Sadler, ex parte 204 Safford v. Grout 140, 496, 544, 545 Sailor V. Hertzog 391,392 St. Aubyn v. Smart 245 St. George v. Wake 606 St. John V. Hendrickson 69, 436 Ivi CASES CITED. St. John V. St. John 203 St. Leger's Appeal 266 St. Louis Ry. Co. v. Rice 509 Salem Rubber Co. u. Adams 522, 523, 529 Salisbury v. Howe 179, 180, 181, 186, 511 Salmon v. Cutts 295 o. Richardson 152, 168, 170 Sample v. Barnes 86 Samuel v. Cheney 621 V. Marshall 882 Sanborn v. Benedict 592 V. Osgood 79, 121, 420 Sanderson v. Glass 266, 428 V. Walker 318 Sandford v. Norris 454 Sands v. Codwise 61, 429 V. Hughes 393 Sankey v. Alexander, 30, 239, 497, 523, 524 V. McElevey 28 Sargent v. Roberts 107 Satterthwaite v. Mutual Ins. Assoc. 236 Saufley v. Jackson 358 Saunders v. Hatterman 522 Savage v. Jackson 469 V. Murphy 198 V. Stevens 513, 522, 624, 529 Savery v. King 36, 270, 294, 420 V. Sypher 270 Savings Bank v. Albee 535, 545, 602 Sawyer v. Coasters' Ins. Co. 623 V. Prickett 476 Say V. Barnes 339 Sayre v. Townsends 457 Scheible v. Slagle 510 Schell V. Stein 400 Scheuber v. Ballow 131 Schiffer v. Dietz 435, 438 Schmidt v. New York Fire Ins. Co. 143, 144 Schnee v. Schnee 78 Schoelkopf v. Leonard 492 Schofield V. Blind 144 Scholefield v. Templer 210, 229 School Directors v. Boomhour 414 Scliucliardt v. Allen 117 Sehultz's Appeal 190 Schuize V. Great Eastern Ry. Co. 628, 633 Schuylkill «. Copley 524, 525 Schwabacker v. Riddle 609, 529, 530 Schwartz v. Saunders 220 Schweitzer v. Tracy 404, 407, 484 Sohwenk w. Naylor 523, 524, 525, 527, 629, 530 Scofield Co. V. State 239 Scott V. Eagle Eire Ins. Co. Ill V. Gamble 343 V. Scott 482 V. Sebright 553 u. Shepherd 199 V. Slrafeldt 550, 552 V. Tyler 578 V. Umbarger 841, 342, 408 Seaman v. Fonnereau 597 Sears v. Shaper 366 Seavey v. Potter 434, 635 Seddon v. Connell 385 Seeby v. Price 378 Segrave v. Kirwan 272 Seixo V. Provizende 562 Selden v. Myers 375, 377 Seligman v. Kalkman 484 Sellar v. Clelland 513, 529 Selma R Co. v. Anderson 531 Selsey v. Rhoades 296 Senhouse v. Earle 335 Serrao v. Noel 64 Sessions v. Johnson 109, 230 Seton V. Lafone 516, 518 V. Slade 445 Seving v. Gale 514 Sewall V. Baxter 176 Sexton V, Sexton 313 Seymour V. Wilson 142 Shaack v. Robbins 580 Shackle v. Baker 476 Shaeffer v. Sleade 488 Shailer v. Bumstead 188 Shande's Case 101 Sharp V. Caldwell 212 V. Ponce 79, 139, 141, 497, 524 Sharpe v. Foy 220, 221, 223, 239 V. San Paulo Ry. Co. 114, 116 Sharpley v. Soutli Ry. Co. 434, 438 CASES CITED. Ivii Shartel's Appeal 324 Shaw V. Spencer 894 Shay V. Norton 460 Shearer v. Shearer 122 Shedden's Case 89 Sheen v. Bumpstead 149 Shelton v. EUis 412 Sheppards v. Turpin 34 Sherrod v. Langdon 626 Sherwood u. Sutton 26, 627 Shipman v. Furniss 271, 354, 367, 368 Shook V. Singer Manuf. Co. 414 Shores v. Doherty 133, 134 Short V. Woodward 140 Shrewsbury v. No. StafEordshire Ry. Co. 208 Shropshire v. Brown 447 V. Kennedy 476 Shufelt V. Pease 403 Shumway v. Stillman 95 Sibley v. BuUis 580 .,. Hulbert 511, 516, 630 V. LefiSngwell 392 Sidensparker v. Sidensparker 91, 92 Sidny v. Ranger 282, 283 Sieveking v. Litzler 479 Sim V. Pyle 74 Simar v. Canaday 475, 496 Simmons v. Vulcan Oil Co. 325 Simras v. Richardson 409 Simpler v. Lord 359 Simpson v. Howden 208 V. Moore 495 Sims V. Eiland 509, 513 „. FerriU 488 V. Price 626 Singer Manuf. Co. v. Loog 565 V. Wilson 563, 564, 565, 568 Skelton v. Flanagan 439 Skinner v. Flint 132, 134, 158, 162 Slater v. Maxwell 120 Slaughter v. Gerson 522 V. Haling 426 Sleep V. Heymann 524 Slim V. Croucher 514 Sloan V. Kane 550 Small V. Attwood 49 V. Boudinot 114, 116 V. Jones 581 Small V. Small 364 Smallcombe's Case 88, 39 Smalley v. Hale 146, 147 Smith V. Abbott 87 V. Bank of Mobile 410 0. Beatty 377 «. Blake 69 u. Braine 134 V. Brittenham 420 V. Brotherline 288, 293 i,. Camelford 442 V. Cash Ins. Co. 234 V. Chadwick 412, 413, 495, 497 499, 547 V. Countryman 590 V. Davis 339, 340 V. Dudley 513 V. Everett 629 V. Fenner 188 V. Gibbs 476 V. Graves 102 0. Grim 212, 213 V. Harrison 137 V. Holyoke 427 V. Hubbs 206, 207 V. Hughes 691 0. Jackson 391, 392 ... Kay 497, 547 ,.. Keen 89 V. Knickerbocker Ins. Co. 495 V. Land Corp. 140, 416, 472, 497, 603, 524, 547 V. London Ry. Co. 634 V. Mace 266 V. Mclver 58 V. Munroe 495 V. Nelson 87, 92 V. Newton 492 V. Osborn 406, 504 V. Richards 412 V. Rowley 200 V. Sims 94 V. Smith 6, 46, 485, 486, 610 V. Spooner 558 V. Sweeney 296 u. Thompson 281, 283, 287 V. Townsend 303 V. Wheatcroft 619 V. Wright 454 mil CASES CITED. Snedaker v. Moore 450 Starin v. Kelly 132 133 , 134, 142 Snell V. Mitchell 451 Stark V. Chetwood 558 V. Moses 161 Starkweather v. Benjamin 30, 225, Snodgrass v. Andrews 212 523,532 Snow V. Nowlin 631 Starr v. Bennett 525 Snyder v. Sponable 230 V. Strong 405, 406 Society of Knowledge v. Abbott 330 V. Torrey 431 Sofer V. Stevens 416 I'. Vanderheyden 266 Somers v. Richards 185 Starry v. Korab 476 Somes V. Brewer 253 State V. HoUoway 488 Sooy V. State 216 (-. Holmes 86,87 Soper V. Peck 74 526 527 a. Little 89 Sorrell v. Carpenter 396 V. Prather 476 So. Carolina R. Co. u. Moore 99 V. Smith 107 Southern Ins. Co. u. Wilkinson 146 ,148 V. Young 93 Southworth v. Smith 427 Statham v. Ferguson 341 Spalding v. Hedges 524 StaufEer v. Young 146 Spargur v. Hall 359 373 Steadham v. Sims 824, 340 Spaulding v. Knight 544 545 Stebbins v. Eddy 475 Spedding v. Nevill 518 I'. Peck 616 Speer v. Bidwell 97,98 Steed V. Baker 114 Spence v. Dnnlap 130, 183 Steele v. Kinkle 143 V. Union Ins. Co. 575 Steinman v. Magnus 204 Speneeley v. De Willott 104 Stephen v. Beall 323 Spencer's Appeal 317 Stephenson v. Hawkins 170 Spencer v. Carr 630 V. Little 575 V. Handley 211 Sternburg v. Bowman 204, 205, 206 V. Vigneaux 87 Stevens v. Austin 412, 425 Spering's Appeal 331 V. Brennan 405, 406 Spindler v. Atkinson 403 V. Head 527, 543 Spinger v. Kleinforge 584 Stevenson v. Newnham 437 Spira V. Hornthall 132 133 134 Stewart v. Burlington E. Co. 103 Spofford V. Weston 401 V. Duffy 306 Sprague v. Duel 377 V. Emerson 485, 487, 635 Sprangler v. Chapman 509 V. Fenner 148 Springer v. Crowell 510 V. Iglehart 212 Springfield v. Drake 527 543 V, Levy 245 Spurgeon v. Collier 348 V. Mather 304 Squier v. Plunkett 633 V. Nelson 404 Squire v. Horder 459 V. Reed 402 Staats V. Bergen 318 V. Severance 583 Stalker v. McDonald 134 V. Stearns 479, 524, 529, 530 Stall V. Hart 471 V. Stewart 366 Stanfield v. Stiltz 146 V. Thomas 125, 126 Stanley v. Irwin 149 Stiles V. White 231, 247 627, 628 V. McGauran 30 523, 524 525 Stillman ;;. HoUenbeck 213 V. Stanley 223 Stilphen v. Houdlette 70 Stansfield v. Habergham 333 Stilwell V. Corwin 14 Staples V. Smith 160 163 Stine V. Sherk 176 CASES CITED. lix Stockton V. Ford 266, 281, 284 Stockwell V. Blaney 170 V. Silloway 160, 164 Stokeman v. Dawson 219 Stokes V. Clarke 335 Stone V. City Bank 229 V. Covell 149 V. Denny 611, 513 V. Dickinson 230 V. Lewman 90 V. Stone 35 V. Wood 354, 866 Stoolfoos i". Jenkins 218 Storrs V. Scougale 377 Stoughton V. Lynch 314 Stout V. Smith 274, 375 Stovall V. Northern Bank 122 Stover V. Wood 496 Strady v. State 167 Strafford v. Welch 46, 75 Strang v. Bradner 635 Strange v. Brennan 291 Strathmore v. Bowes 604, 606, 606 Stribley v. Imperial Ins. Co. 238 Strimpfler v. Roberts 33, 35 Strode v. Blackburne 393 Strong V. Downing 47 V. Hines 146 V. Jackson 638, 639 V. Lord 420 V. Strong 65 Stryker v. Vanderbilt 63 Stuart V. Blum 66, 205 Stubbs V. Johnson 141, 142 Studley v. Hall 105 Studwell V. Shatter 218 Sturge V. Starr 404 Sturgis V. Morse 35 Sturtevant v. Jaques 394 Sugden v. Crossland 817 Sullivan v. Davis 598 Summers v. Howland 160 Suydam v. Moore 546 Swamscott Machine Co. v. Perry 47 Swan V. No. British Co. 255 V. Scott 206 V. Tappan 658, 559 Sweat V. Rogers 167 Sweet V. Morrison 18, 241, 313, 385 Sweets V. Plunket 150 Sweetser v. Bates 152, 155, 170, 171 Swift V. Jewsbury 227 V. Tyson 405 V. Winterbotham 198, 227, 645, 546 Swimm v. Bush 532 Swinfer v. Chelmsford 116, 118 Swink V. Snodgrass 213 Swire v. Francis 227 Swoiiord v. Garmon 581 Sykes v. Bonner 71 V. Sykes 560, 663, 665, 567, 571 Tabor v. Peters 174, 476, 479, 490, 496, 609 528, 532 Talcott V. Henderson 485 Tally V. Smith 380 Tapp V. Lee 504, 536 Tate V. Williamson 289 Taylor v. Blakelock 405 406, 409 V. Boardman 288 u. Bowers 206 u. Brown 336 u. Carpenter 565 V. Davis 619 V. Guest 540 V. Johnston 365 V. King 60,63 V. Knox 296 V. Leith 610 V. Lohman 601 V. Luther 460 V. Plumer 84 V. Pugh 607, 608 V. Robinson 24,26 151, 170 V. Rochford 373 V. Stibbert 390 V. Taylor 357, 858, 460 u. Toung 265, 266, 274 Teague v. Irwin 141 Teakle v. Bailey 296 Tee V. Ferris 458, 459 Temple v. Hooker 867 Thacher v. Churchill 626, 630 Thayer v. Turner 77, 426 Thorn V. Bigland 536 Thomas v. Barton 438 Ix CASES CITED. Thomas v. Brownsville E. Co. 325, 327, Townshend v. Stangroom 462 328, 329 V. Townshend 35 V. Chapman 103 Tozier v. Crafts 425 V. Coultas 419, 438 Traeey v. Sackett 379 V. Kennedy 392 Tracy v. Gunn 630 V. McCormick 460 V. Herrick 99 Thompson's Appeal 91,92 Traill «. Baring 608 Thompson v. Harrison 230, 482 Trambly v. Ricard 377 V. Heywood 248, 349 Trevelyan v. Charter 296 V. Lee 403 Trexlor v. Miller 43 V. Mallet 103 Tribe v. Tribe 383 V. Moore 206 Trice v. Cockran 118 V. National Bank of Redemp- Tripp V. County Com. 105 tion 49 Trompert v. Trompert 554 V. Phoenix Ins. Co. 487 Trotter v. Smith 274 ,281 V. Rose 485 Truman v. Love 48 V. Shannon 146 Tryon v. Whitmarsh 511 V. Sheplar 628 Tuck V, Downing 521 V. Simpson 219 Tucke V. Bucholz 264, 338, 340, 356, V. Updegraff 188 357 ■c. White 452 Tucker v. Finch 184 Thorn V. Thorn 336 359; 360 v. Moreland 217 Thorne v. Prentiss 517 525, 530 V. White 513 ,615 Thornton v. WilUs 343 Tuckwell V. Lambert 210 ,630 Thorpe v. Bleavans 184 40.3, 404 Tune V. Rector 416 Thouvenin v. Rodriques 89 Turner, in re 441 Thurston v. Blanchard 424, 425 V. Atwood 635 Thurtell v. Beaumont 144 V. Collins 354 Tibeau v. Tibeau 447 Turnipseed v. Hudson 476 Tiernan v. Thurman 387 Tuttle V. Brown 627 Tifft V. Munson 401 Tweddell v. Tweddell 865 Tippecanoe Co. v. Reynolds 330, 331 Twin Lick Co. v. Marbury 325 Tisdale v. Bailey 607 Twining v. Morrice 462 Tobey v. McAIister 495 Twyne'S Case 184 380 Tobias v. Harland 558, 559 Tyler v. Anderson 471 Tobin V. Allen 542 Tyrrell v. Bank of London 265, 266, Todd V. Grove 365 284, 285, 289 303 Tompkins v. Nichols 143 Tyson v. Booth 160 V. Tompkins 362 Tomson v. Judge 266 268, 269 U. Tong V. Marvin 117 Toole V. Darden 403 Udell V. Atherton 227 Tooms V. Conset 348 Ungley v. Ungley 446 Tophain v. Portland 440, 444 Union Bank v. Hunt 30 524 Torrance v. Bolton 412, 416 Union Pac. R. Co. v. Credit Mo- Tousley v. Tousley 407 bilier 325, 327 328 Towne v. Wiley 217 Union Sav. Inst. v. Wilmot 495 Townsend v. Bogart 245 United Soc. v. Underwood 109 V. Cowles 487, 489 United States v. Atherton 118 CASES CITED. Ixi United States v. Flint 88, 89 V. Mertz 174 V. State Nat. Bank 34, 216 V. Throckmorton 86, 87 Unity Joint Stock Assoc, v. King 219 Uppington v. Bullen 280 Upshaw V. Debow 523, 527 Upton V. Trebilcock 438, 487 Urquhart v. Macpherson 420 Uzzle V. Wood 461 Vale I'. Butler Valentine v. Stewart Van Brunt v. Singley Vance v. Burbank V. Erie Ky. Co. 17. Schroyer Van Cleef v. Fleet Van Cortlandt v. Underbill Vanderveere t». Mason Van Duzer, in re Vandyke v. Walters Vane v. Dungannon i;. Vane Van Epps v. Harrison Van Keuren v. Central Ry. Co. 152 284 74 86 246 420, 424 431 99 91,92 567 431 440 31 492 393 Van Meter v. Jones 359, 365 Van Orman v. Merrill 390 Van Pell v. Veghte 249 Vanscoyoc v. Kimler 231 Varner v. Carson 375 Vasquez v. Richardson ' 323, 843 Vattier v. Hinde 409, 410 Vaughan v. Vanderstegen 220, 223 Vaughn v. Dotson 105 Vauxhall Bridge Co. v. Spencer 208 Veale v. Warner 96 Veasey v. Doton 491, 495 Veazie v. Williams 430, 584 Venable v. Levick 243 Vernol v. Vernol 434 Vernon v. Bethell 348 V. Keys . 492 V. Kirk 865 Verplanck v. Van Buren 68, 71, 86, 87, 88, 92, 94 Verplank v. Mercantile Ins. Co. 331 Viele V. Judson 16, 598 Villa V. Rodriguez 348, 349 Vogel V. Demarest 420 Vogle V. Ripper 257 Voorhees v. Bonesteel 114 V. Seymour 92 Vorley v. Cooke 408 Vreeland v. New Jersey Stone Co. 246 Vrooman v. Phelps 53 w. Wade V. Pettibone 281, 284, 293, 294 V, Withington 255 Wadsworth v. Williams 170 Wagner v. Freschl 241, 244 Wailes v. Cooper 410 Wainwright's Appeal 367, 368 Wakeraan v. Dalley 233, 511 V. Hazleton 348 Walker v. Coleman 353, 385 V. Cronin 556 V. Gilbert 122 V. Hill 448 V. Hunter 105 V. Locke 459 V. McCoy 380 V. Mobile & 0. R. Co 491 V. Osgood 303 V. Smith 266, 268, 269, 270, 272 V. Soule 28 V. Swasey 423 V. Symonds • 339 0. Walker 33, 105 Wallace v. Brown 446, 447, 448 V. Carpenter 303 o. Harris 187 V. KelsaU 61 V. McVey 378 V. Wallace 355 V. Wren 627 Waller v. Armistead 339 Wallingford v. Mutual Soc. 114 Wallwyn ti. Lee 393 Walmesley v. Booth 266, 291 Walsh V. Hall 523 V. Lilley 66,68 V. Morse 496 513 V. Sisson 436 1X11 CASES CITED. Walsham v. Stainton 68, 247 Webster v. Diamond 87 Walter v. Klock 453 456 V. Lamed 518 Wannell v. Kera 534 Wedderburn v. Wedderburn 339 Wanzer v. Bright 89 Weed V. Page 73 V. De Baun 71 Weeden v. Hawes 61, 429 Ward V. Ayre 675 Weeks v. Burton 482, 495 V. Berkshire Life Ins. Co. 220 V. Hobbs 468, 591 V. Southfleld 86, 87, 90, 92, 94 Warde v. Dixon 440 Ware v. Egmont 473 Warner v. Jacob 349 V. Whittaker 409 Warren v. Branch 601, 604 I). Carey 47 0. Cole 67 u. Swett 386 Wartembergw. Spiegel 378 Washington Ins. Co. v. Wilson 144 Waterman v. Vose 255 .V. Whitney 188, 189 Waters' Patent Heater Co. v. Smith 152 Water "Valley Manuf . Co. v. Sea- man 640 Watkins v. Corsall 304 V. Peck 388 Watson V. Atwood 628 V, Austin ' 521 V. Crandall 198, 545 V. Erb 448, 453, 456 V. Phelps 410 0. Planters' Bank 525 0. Walker 101 Watt V. Grove 296 ... Scofield 386, 387 Watterson v. Watterson 272 Way V. Cutting 29 «. Howe 635 Wear v. Skinner 24, 26, 29 Weaver v. Carpenter 39, 619 u. Leiman S3, 35 V. Rogers 242 V. Ward 224 Webb V. Corbin 74, 625, 526 V. Odell 435 V. Rorke 348 Weber v. Weber 109, 225, 523 Webster v. Bailey 30, 523, 532 V. Downing 147 Weidler v. Farmers' Bank 231 Weir V. Barnett 227 V. Bell 9, 227, 228 u. Davenport 214 Welch V. Priest 409 Welcker v. Price 130, 131, 132, 183 Wellborn v. Tiller 124 Welles V. Fish 26 V. Middleton 267 Wellesley v. Morrington 440, 442 Wellington v. Small 69, 602 Wells V. Child 80 V. Cook 210 V. Girling 204, 205 V. Polk 402 V. Prince 481 V. Sutton 490 V. Waterhouse 540 Welsh, in re 352, 383 Welshbillig v. Dienhart 116 Welz V. Rhodius 476 Wentz V. Morrison 626 Wessell V. Rathjohn 351, 358 West V. Anderson 432 V. Moore 217 V. Waddill 318, 342, 343, 344 V. Wright 116, 213, 513, 523 Western Bank v. Addie 225, 227, 228, 229, 415, 420, 512 .Western Ind. R. Co. v. Franklin Bank 246 Westervelt v. Demarest 489 Wethee v. Brooks 213, 554 Weyh V. Boylan 495 Whale V. Booth 578 Whalley v. Small 400 Wharton v. May 184 Whatton v. Toone 344 Wheelden v. Lowell 76 Wheeler v. Reynolds 447, 448, 449 V. Rice 244 V. Sage 314 CASES CITED. Ixiii Wheeler v. Single 212 V. Willard 281 Wheelock v. Freeman 256 Wheelwright v. Jackson 204 Whipple V. Barton 266, 268 Whitaker v. Bond 581 V. Brown 243 V. Garnett 176 V. Merrill 72 Whitbread v. Jordan 399 Whitcomb v. Whitoomb 87 White V. Ashton 476 u. Carpenter 456, 457 V. Concord R. Co. 628 V. Crow 89, 95, 96 V. Graves 222, 253 V. Hunter 200 V. Huss 256 V. Madison 518 0. Merritt 71 c. Moss 343 V. Patten 401 V. St. Barbe 443 V. Sawyer V. Small V. Smith V. Whaley 227, 231, 233, 245 380, 382 365 288 Whitebread v. Kennedy 266 Whited V. Germania Ins. Co. 235 Whiting V. Hill 521 V. Snyder 526, 527 Whitlock V. McCluskey 87, 90 Whitmore v. South Boston Iron Co. 627 Whitney v. Allaire 66, 68, 75, 76, 530 V. Blanchard 541 V. Clarendon 64 V. Snyder 618, 624 Whittemore v. Cowell 11, 49, 111 Whittier v. Frye 256 V. Varney 161 Whittingham u.Burgoyne 203 Wliittington v. Wright 219 Whitwell V. Vincent 436, 437 Whyte V. Ahrens 119 Wicker v. Hoppock 582 Wickersham v. Lee 27 Wickham v. Grant 414 Wicks V. Smith 438 Wier V. Still 550, 551 Wiest 0. Garman 377 V. Riggs 492 Wiggin V. Boston & A. R. Co. 600 V. Day 160, 485 Wight V. Slielby R. Co. 531 Wightman v. Western Ins. Co. 144 Wilbur V. Bowdltch Ins. Co. 622 V. Flood 421 Wilcox V. Iowa Wesleyan Univ. 137 Wilde V. Gibson 180, 239, 510 Wilder v. Cowles 129 V. De Cou 496, 534 Wildrick v. Swain 374 Wiley V. Howard 47 Wilkin «. Wilkin 53 Wilkinson v. Clauson 471 ■u. Searcy 495 V. Stafford 334 Willan V. Willan 462 AVillard v. Rice 575 Willcox «. Henderson 467, 513 Williams v. Baker 253 V. Beazley 592, 593 V. Bradley 584 V. Briscoe 447 V. Carle 6C© V. Hill 127, 542, 557 V. Ketchum 425- V. McCormack 252 V. Piggott 286 V. Bobbins 170, 173 V Spurr 590, 592 V. Stoll 74, 526 t;. Williams 206, 354, 357, 387, 549 Williamson v. Allison 117 ^. New Jersey B. Co. 438 V. Williamson 184 Willink V. Vanderveer 315 Willins V. Farley 172 Willis V. Foster 385 u. Valletta 239, 386, 387 Wilson's Appeal 362 Wilson, ex parte 211 V. Conway Fire Ins. Co. 234 V. Fisher 438 ^. Fuller 493 V, Greenwood 334 Ixiv CASES CITED. Wilson V. Hart 387 Woodworth v. Paige 886, 388 V. Howser 132, 133 Wooley V. Campbell 575 V. Ivy 27 Woollam V. Heam 450 V. Moore 248 Woollen V. Ulrich 74, 526 V. Moran 272 V. Whitacre 526 V. Silkmaj 128 Wooton V. Hinkle 580 V. Williams 243 Worcester v. Eaton 207 V. Y. & M. R. Co. 254 Worley v. Moore 477 , 489, 612 Wilt V. Welsh 217 Wormald v. Maitland 399 Winborne v. Lassiter 160 Wormley v. Moffet 54 Winchell v. Carey 615, 616 V. Wormley 442 Winchester v. Charter 160, 171 Worrall v. Gheen 256 V. Chester 151 Worsley v. Scarborough 398 Winchester Manufacturing Co. o. Worthen v. Ratcliffe 216 Creary 170 Worthy v. Caddell 407 Windett v. Hurlburt 47, 53, 73, 619 Wortman v. Skinner 343 Wingate v. Harrison 317 Wotherspoon v. Currie 562, 568 Winn V. Barnett 212 Wray v. Steele 457 Winston v. Browning 470 Wren v. Kirton 298, 299 Winter v. Bandel 482, 544 V. Weild 558 Wise V. Fuller 492, 493, 521 Wrench v. Murray 364 11. Harden 286 Wright V. Arnold 220 V. Fuller 3 u. Goff 441 Wiseley v. Findlay 52 V. Hardy 144 Withrow V. Biggerstaff 160 V. Howe 362 Witte I). Lockwood 70 V. Leonard 218, 220 Wolcott V. Heath 592 V. Proud 268, 382 V. Wolcott 43 V. Snow 219 Wolfe V. Pugh 167, 247, 529 V. Vanderplank 366 Wolford V. Herrington 307, 452, 453, V. Walker 342 343, 397 454, 458 V. Wood 391 Wood V. Downs 266, 267 0. Wright 447 t>. Garland 424 Wrigley v. Swainson 605 V. Goodrich 53,55 Wyche v. Macklin 58,54 V. Rabe 354 Wyman v. Rae 176 0. Robbins 631 Wyse V. Lambert 289 V. Steele 255 V. Vance 217 Y. Woodbury v. Robbins 185 Woodhouse v. Meredith 296, 319 Yeamans v. James 265, 266 Woodley v. Hassell 171, 173 Yeates v. Prior 435, 500 Woodman v. Davis 455 V. Reed 224 Woodruff V. Berry 580 Yeoman v. Lasley 315 V. Saul 414 Yerkes v. Wilson 159 Woods V. Hall 584 York Bldgs. Co. v. Mackenzie 296 V. Kirk ■200, 202 York & M. By. v. Hudson 318, 326, V. North 415 331 Woodward o. Lazar 570 Yost V. Mallicote 471 V. Thacher 627 Young ti. Bank of Orleans 343 CASES CITED. Ixv Young V. Bradley o. Edward 1-. Filley V. Hughes a. Hopkins V. MacBae V. Young 404 142, 143 627 298, 305 627 559 175 Zabriskie v. Smith 198, 214, 215, 545 Zell's Appeal 613 Zellerbach v. AUenberg . 88 Zerbe v. Miller 1*7 Zimmerman v. Rote 266 DEFINITION OF FRAUD. DEFINITION OF FRAUD. It may be thought, and not without ground, to be both rash and dangerous to offer a definition of the term ' fraud.' Fraud is manifested in such endless variety of form and phase, in such manifold and ever-changing disguises and colors, that a definition might at first indeed appear hopeless. Judges have declined to attempt one, sometimes ou the ground of its hopelessness,! sometimes of supposed danger.^ Perhaps a more potent reason may not infrequently have been want of time for sufficient examination of the term, in the midst of questions pressing for immediate answer; certain it is that definitions have been given. Writers on the Eoman law did not hesitate to offer them ; ^ the dictionaries do not pass over the term in silence ; not all the judges * and text-writers ^ of our own law have been above making the attempt. It will not be necessary to quote all the definitions, or 1 Reynell v. Sprye, 1 De G. M. & G. to define strictly the species or evidence 660, 691, Lord Cranworth ; Marsh i>. of it, the jurisdiction would be cramped Cook, 32 N. J. Eq. 262, 266 ; Wise o. and perpetually eluded hy new schemes, Fuller, 29 N. J. Eq. 257, 262 ; Hanger which the fertility of man's invention V. Evins, 38 Ark. 334. would contrive.' 1 Story, Equity, § 186, 2 Mortlock V. BuUer, 10 Ves. 292, note ; Parkes, Hist, of Chancery, 601, 306 ; Lawley v. Hooper, 3 Atk. 278, 508. 279. Lord Hardwicke in a letter to ' Infra, p. i ; Dig. 4, 3, 1, 2 ; ih. Lord Kames, as quoted hy Mr. Justice 2, 14, 7, 9. Story, once said : 'As to relief against * Chesterfield v. Janssen, 2 Ves. 125, frauds, no invariable rules can be estab- 155 ; Le Neve v. Le Neve, 3 Atk. 646, lished. Fraud is infinite ; and were a 654 ; s. c. 1 Ves. 64. court of equity once to lay down rules ^ Jeremy, Equity, Bk. 3, pt. 2, p. how far they would go, and no further, 358 ; 1 Story, Equity, § 187. in extending their relief against it, or 4 DEFINITION OP FRAUD. descriptions, for some are more properly descriptive ; enough that they indicate that it is not useless or dangerous to en- deavor to state in something like exact language the meaning of the term in question. Indeed it is clear that some definite meaning must be observed, in the mind at least, in order to any consistent adjudication touching the subject ; and if this is so, there is no reason why that meaning should not be stated in terms. Definition is not rule, but the means of lay- ing down a rule ; a great variety of rules may often be de- duced from or applied to a single definition. To lay down a hard and fast rule of law, limiting all frauds by it, would be dangerous in the extreme ; but to start witli some clear and exact idea of fraud is absolutely necessary to the declaration of any required rule, not to dwell upon the need of a basis for classification of the parts of the subject. Justified thus in proceeding to definition, we may, by way of a first step, say on good authority that the characteristic factor in fraud civiliter, the subject of this work, is either deception, touching motives, or it is circumvention, not touch- ing motives ; and each, it should be well observed, involves guilt.i 1. In the first form of the factor the plaintiff and defendant were concerned together in some transaction; in the second they were not. 2. In either form the factor may affect general or particular rights, i. e. rights in rem^ or rights in personam.^ 3. In defining fraud the question of its success may be disregarded ; for though as a rule the courts refuse to take cognizance of fraud which comes to nothing, 1 Ulpian tells us that Servius defined 3, 1, 2. (The .same passage tells us why fraud, 'dolus nialus,' to be, 'machinatio- 'malus' is added to 'dolus'). Decep- nem quandam alterius dedpicndi causa, tion or circumvention, it will be seen, cum aliud simulatur et aliud agitur." is the characteristic factor ; and the two But Labeo, he says, considered this de- together are broad enough to cover the fective, and thus defined the term : whole ground. ' Dolum malum esse oranem callidita- 2 Eights that avail against all men, tem, fallaciam, machinationem ad cir- as rights of property. eumiieniendum, fallendum, decipiendum 3 Eights that avail against certain alteram adhibitara.' And Ulpian adds, determinate men, as rights of contract. ' Labeonis definitio vera est.' Dig. 4, DEFINITION OF FBAUD. 5 still it is plain that everything which goes to constitute it is present as much in fraud which is abortive as in fraud which is successful.! Accordingly, understanding deception and circumvention as above limited, fraud may be said to consist, on the one hand, (1) in one man's endeavoring by deception to alter another man's general rights, or (2) in one man's endeavoring by cir- cumvention to alter the general rights of another ; — or on the other hand, (3) in one man's endeavoring by deception to alter another man's particular rights, or (4) in one man's endeavoring by circumvention to alter the particular rights of another. And this may be compressed into the following : Fraud consists in endeavor to alter rights, by deception touch- ing motives, or by circumvention not touching motives.^ The four classes may be put in the concrete thus : — 1. The owner of a horse seeks to sell it to me on the rep- resentation that it was foaled by 'Flora Temple,' when he knows, or ought to know, that the representation is false, or when he knows nothing about its truth or falsity. He is endeavoring by deception (practised on ray motives) to alter one of my general rights, the right to my money.^ A man to whom I am about to sell property on credit intends not to pay me for it. His conduct is of the same nature ; for I have 1 Evidence of unsuccessful fraud may, true, is so far guilty of no wrong, tliough where the connection is close enough, be his knowledge be incorrect ; but his evidence of fraud in a scheme carried situation towards the facts may have out. See Lynde v. McGregor, 13 Allen, been such that he ought to have known 172, 179. the truth. In that case he has not ' The qualifying words in regard to merely asserted knowledge for belief, — motives are necessary to make deception which might not be enough to make and circumvention exclusive of each him guilty of fraud, — he has asserted other. ' Touching motives ' however for knowledge what he must have known appears to be within the primary mean- he ought not even to have believed, ing of deception. See Lewis & Short, He has therefore endeavored by decep- Latin Lex,, 'capere,' 1, b, c. tion to alter my rights. The case of " One of the cases put, where the one who makes a. representation know- party "ought to know,' may need ex- ing nothing about its truth or falsity planation. He who makes to me a posi- needs no explanation, tive statement, which he believes to be 6 DEFINITION OF FEAUD. a right to suppose that his promise to pay means what it purports.^ 2. Again if I am arrested on Sunday on a trumped-up charge of crime, and held until Monday, all for the purpose of arresting me on Monday on civil process, the officer, or the person who procured him to act, or both, have sought by cir- cumvention (not practised on my motives) to alter one of my general rights, my right to liberty. If on pretence of search- ing for stolen goods, but in reality to find goods to attach, an officer should wrongfully open a trunk, his conduct would fall within the same category .^ 3. The maker of a promissory note payable to me, signed by him and by another as surety, seeks to induce me to sub- stitute for it a new written agreement, signed apparently by the same surety, upon a false representation of the genuine- ness of the surety's . signature. He is endeavoring by decep- tion to alter one of my particular rights, the right to the benefit, unimpaired, of the obligation he was (and still is, together with the surety^) under to me. The obligor in a bond payable to me seeks to induce me to cancel it upon a representation by him that it has been paid, knowing the con- trary ; this is a fraud of the same nature. 4. Once more if in the case of a sale on credit the buyer, though intending at the time to pay me, should afterwards change his mind, and put his property out of his hands to prevent me from obtaining payment, his conduct would be that of one endeavoring by circumvention to alter a particular right of mine, the right to payment for the property sold. 1 Some of the courts, against the 631, and cases cited ; Bristol a. Wils- weight of authority, refuse to take cog- more, 1 Bam. & C. 513. But it is use- nizance of such cases, where the conduct less to ai'gue that such a case is only of the purchaser stops short of any act one of dishonesty and not of fraud, as of deception aside from the promise, was done in Smith v. Smith, supra. Smith V. Smith, 21 Penn. St. 367 ; Estoppel in pais will be refeixed to Bai;kentoss v. Speicher, 31 Penn. St. later, p. 16. 32i. Contra, Kline v. Baker, 99 Mass. ^ Pomroy v. Parralee, 9 Iowa, 140. 253 ; Donaldson v. Farwell, 93 U. S. ' Kincaid v. Yates, 63 Mo. 45. DEFINITION OF FRAUD. 7 And any one joining him in his wrongful purpose would be guilty of conduct of the same kind.^ If one collude with my partner to obtain a false credit against me, in a covert trans- action within the proper aim of the partnership, his conduct too is fraudulent in the same way ; such one is endeavoring to circumvent me in my rights under the partnership.^ 5. The last example indicates that two or more of the four classes may be united in one transaction. I put money into my broker's hands to be invested in stocks in my name ; he wrongfully buys them in his own name, and then transfers them to a confederate in a common plot to cheat me. The former is guilty of fraud by deception practised upon my mo- tive for giving to him the money, — the deception being upon a right in personam ; ^ the latter is guilty of fraud by circum- vention not touching my motives so far as he is concerned,^ — the circumvention being upon a right in rem. Fraud in the sense of the definition is fraud in the only legitimate sense of the term, in its civil aspect at least ; and all forms of real fraud are, it is apprehended, covered by the definition. There are several terms of the law however that deserve an explanation. One of these is ' fraud upon the law.' Of this it is to be said, that the term does not designate any independent kind of offence not embraced within the defini- tion ; it is a term of convenience merely, by which a striking aspect of certain frauds is designated. Every fraud must be committed against a being capable of rights ; the frauds ' upon the law ' are, like the rest, frauds upon an individual, upon a corporation, or upon the sovereign; generally in evasion of 1 My right towards the confederate might doubtless be considered mali- would be in rem. The case of inter- cious. fering with a contract, which has caused ^ This is true though the broker did great discussion, may be noticed in con- not intend any fraud when he took the nection with the case of the partner, money, but conceived it afterwards ; for Such interfering mast, it seems, be ma- the fraud is then practised on my mo- licious. Bowen v. Hall, 6 Q. E. D. tive for leaving my money with him. 333, C. A. See Lumley v. Gye, 2 * That is, I have not been dealing El. & B. 216. But if fraudulent, it with him at all. 8 DEFINITION OF FEAUD. some statute, such as the bankrupt act, where the offence is nothing but fraud on creditors,^ or the liquor law, where the offence is a fraud on the sovereign. And much the same may be said of the old term ' deceptio curiae ; ' indeed in the old law that commonly meant simple deceit.^ Now it often means circumvention. The term ' legal ' fraud, as used since the beginning of the present century, is an anomaly. Lord Kenyon appears to have been the author of it in the sense in which it is com- monly used.^ That sense may best be shown by his own words in the case just cited. ' The defendant, he says, ' affirmed that to be true, within his own knowledge, which he did not know to be true. This is fraudulent ; not perhaps in the sense which affixes the stain of moral turpitude on the mind of the party, but falling within the notion of legal fraud. . . . The fraud consists, not in the defendant's saying that he believed the matter to be true . . . but in asserting posi- tively his knowledge of what he did not know.' * In more recent times judges generally have agreed to call such a case fraud, without any disturbing adjective, and rightly ; though Lord Kenyon's associates, to whom the whole subject was still new,^ were not even willing to give it the name of legal fraud. But the truth is, as Lord Kenyon virtually said, and as others have pointed out, such a case is falsehood told scienter; for the person who makes such a statement declares by plain implication that he is possessed of knowledge of facts sufficient to justify it; and that, by the very terms of the case, he knows to be false. This for many 1 See c. g. Eogers v. Palmer, 102 * See also Evans v. Edmouds, 13 U. S. 263. C. B. 777, 786, Maule, J. ; Hart v. 2 See Bigelow's L. C. Torts, 17. Swaine, 7 Ch. D. 42, 46, Fry, J;; Jo- 3 Haycraft v. Creasy, 2 East, 92, liffe v. Baker, 11 Q. B. D. 255, 259, 103 (1801). Sometimes the term 'legal 0. A. fraud ' is used without any color what- 6 Pasley t>. Freeman, 3 T. R. 51, the ever in the adjective, as in Furnas -o. first case, had been decided only a few Friday, 102 Ind. 129. It then means years hefore (1789). simply fraud as matter of law. DEFINITION OF FRAUD. 9 years has been held enough.^ The fraud is in the means, not in the ' endeavor.' ' Legal ' fraud in this sense is then simply fraud, and falls within the definition.^ The term has nearly gone out of use, and should be dropped ; ^ so far as there is occasion anywhere for a term of the kind, the established one, 'constructive' fraud, when properly used, is sufficient. ' Constructive ' fraud is a term which has been variously and loosely used. In Mr. Justice Story's well-known pages it often loses all color, and becomes on the one hand merely a convenient nomen collectivum for a variety of contracts ob- noxious to public policy, or on the other only a synonym for actual fraud. The term there includes marriage brokage contracts,* contracts and conditions in restraint of marriage,* contracts in restraint of trade,^ wager contracts,^ contracts for the buying of public ofiSce,^ and usurious contracts ; ® next cases arising under fiduciary relations, and then cases of fraud on creditors and purchasers under the statutes of Elizabeth,^<* and other cases of actual fraud." In a word the term is made to include all ' acts or contracts ' having a ' tendency to deceive or mislead other persons, or to violate private or public con- fidence, or to impair or to injure the public interests.' ^^ It is obvious that many of these cases have little connection with ^ See upon the whole suhjeot the honest enough, in a case like that before opinion of Williams, J. in Joliffe d. Lord Kenyon. Baker, supra. 8 gee Weir v. Bell, 3 Ex. D. 238, 2 It was long ago held that if other 243, Bramwell, L. J. conditions wore present, there need be ^1 Equity, § 260. See Chesterfield no intention to harm the plaintiff. Pol- v. Janssen, 2 Ves. 125, 155, where Lord hill 0. Walter, 3 Barn. & Ad. 114 ; Hardwicke, from whom Mr. Justice Foster v. Charles, 6 Bing. 396 ; s. c. Story takes these cases, speaks of them 7 Bing. 105. Hence the words iu our simply as frauds. ' Constructive fraud ' definition 'endeavor to alter rights,' was a very vague terra before Lord not 'to infringe' or 'injure' rights. Of Eldon's time. course there is an infringement of rights, ^lh.%27i. ' lb. § 301. but not necessarily from endeavor to in- ' lb. § 292. i' lb. § 349. fringe or injure. The endeavor may be ' lb. § 294. ii lb. § 384. 8 lb. § 295. " lb. § 258. 10 DEFINITION OP PEATTD. fraud. They are only cases of the possibility, or at most of the probability, of the commission of that wrong; and they are frowned upon by the law upon the principle of the Statute of Frauds, i. e. the prevention of fraud,^ as far as that offence is concerned. Such cases may be passed by ; while on the other hand cases of actual fraud should not be put under this head at all, if confusion would be avoided. Constructive fraud, properly speaking, always falls short of fraud. The more usual place for the term ' constructive ' fraud is in the law of fiduciary and confidential relations. Here there is only legal suspicion or assumption of fraud, where no fraud may have been. The term does not fall within the definition, though it must have its place in a work on Fraud. A typical example will serve a sufficient purpose here. A trustee, be- cause of his peculiar position, is not permitted to buy the trust property from the cestui que trust without putting the latter ' at arm's length,' i. e. without giving him full infor- mation of all the facts that should influence him, and his rights in regard to them ; the cestui que trust may have the sale annulled for mere want of such act on the part of the trustee. There need be rio fraud at all in the transaction; the sale may have been perfectly pure ; still the transaction raises a case of ' constructive ' fraud. The truth appears to be, that the case until explained, though often called one of 'presumptive' as well as of 'constructive' fraud, is one of suspicion only; and the law arbitrarily declares that if the suspicion is not removed by the production, on the part of the trustee, of evidence of perfect fairness, which is deemed to include full knowledge by the cestui que trust, it will be con- sidered that the sale was unfair to the vendor, and so, by a wide construction, fraudulent.^ This example will stand for 1 The invalidity of contracts of in- 2 The disability of a trustee to buy fants and of others under disability at his own sale is still stronger; it is might on the same ground be based on positive. See the chapter on Fiduciary fraud ; indeed the category might be and Confidential Relations, enlarged indefinitely. DEFINITION OF FRAUD. 11 all transactions of the kind between parties to fiduciary and confidential relations. The term ' constructive ' fraud is also applicable to the case of a person who asserts a right or title acquired with notice, act- ual or implied, of its invalidity or incompleteness.^ Such a case may perhaps be deemed, by the aid of the doctrine of privity, to fall within the definition ; but if not, it does not matter, for the case is not one of fraud, but of fraud by construction. Between these two there may sometimes be difference enough. The definition does not profess, and is not intended, to cover constructive fraud. "We have then here, where notice binds the right, a class of cases not of real fraud surely, but of what is treated in many respects, and rightly in principle,^ as if it were such. And there is another class, like this one, of quasi fraud, which might be embraced within the same designation of constructive fraud. Thus : — Suppose that through a false but an innocent representa- tion an obligation is apparently created; that obligation is not indeed created by fraud, but if after the truth is learned by the party who made it he should insist upon performance, his conduct would be almost as bad as if he had at first in- tended to deceive. Hence equity at least, if not a court of law, treats him, in his purpose to enforce performance, as if he had committed fraud.^ So of certain cases falling within 1 Upon the same principle that a De G. M. & G. 660, 708, 709 ; Eed- purchaser with notice of fraud by his grave v. Hurd, 20 Ch. D. 1, 12, C. A. ; vendor is a constructive trustee. Rolfe 1 Story, Equity, p. 210, note, 13th ed. V. Gregory, 4 De G. J. & S. 576 ; Dodd But an action for damages could not be v. Clark, 11 Gray, 495 ; Whittemore v. maintained for the misrepresentation. Cowell, 7 Allen, 446. Joliffe v. Baker, 11 Q. B. D. 255 ; 1 2 If the party iixed with notice were Story, Equity, pp. 209-211, note, 13th really innocent whea he acquired his sup- ed. The case is not deceit. lb. Jes- posed right, he has his redress against sel, M. E. in Redgrave v. Hurd, supra, the common author of the fraud. says that the case of the text may be 3 See Cowley v. Sm3rth, 46 N. J. explained both in the way we have 381, where the case is called one of con- stated, and also in the following : 'A atructive fraud ; Reynell v. Sprye, 1 man is not to be allowed to get a bene- 12 DEPINITION OK PEAUD. the statute of 13th Elizabeth. E. g. if a person really in- Bolvent, but not aware of the fact, should make a voluntary conveyance, the transaction, if impeached by creditors, would be treated by the courts, notwithstanding the grantor's real innocence of intentional wrong, as if it had been tainted by a fraudulent purpose, — so far as might be necessary. Another term is ' fraud upon powers.' The donee of a power ought to exercise the same only in conformity with its terms, not e. g. for his own benefit, except in so far as a just interpretation of the power may permit. If, con- trary to duty, he should exercise the right for his own benefit, it would be said that he had committed a ' fraud upon the power.' But there might be no fraud, — generally there would be none, — properly speaking, in the act ; it would have been quite as accurate from the beginning to say that the donee has abused the power. But such offences may properly be considered as falling under the head of constructive fraud. A like remark may be made of many cases of breaches of trust. Fraud is often predicated of them in a loose sense. When therefore such cases are treated under the head of fraud, as must often be necessary, the nature of the misconduct should be considered, so as to distinguish the case, if necessary, from cases of true fraud, and so to avoid confusion. Again it is sometimes said that to allow a party to do a certain thing which he desires to do would ' work ' or ' operate ' a fraud upon the opposite party. This is commonly said, it is apprehended, at least where it has any real significance, broadly of cases of agreement, or matters of duty, in which but for the treatment of the proposed conduct as a fraud there would be no redress or no sufficient redress. And such cases fit from a statement which he now ad- did not know it to be false ; he ought mits to be false. He is not to be al- to have found that out before he made lowed to say, for the purpose of civil it.' jurisdiction, that when he made it he DEFINITION OF FRAUD. 13 will be found in fact to fall but little short of fraud in the ordinary sense. The party about to take the unjust advantage may not have intended in the outset to violate the confidence expressed in the extra-legal way ; but what matters that, if he afterwards entertain the pui-pose ? The case will clearly be one of constructive fraud, like others already mentioned. A typical example is seen in the equitable doctrine of part per- formance, as applied to verbal contracts for the purchase of land,^ but for which a wrong might be perpetrated under the very guise of law. Before quitting these various terms we may refer to another nominally different, but in some of its aspects just falling short of fraud. That term is ' surprise.' The term appears to have been taken from the civil and canon laws ; it is a very old head of equity, and has been used (1) in the sense of being taken unawares,^ (2) of meeting an emergency Tinder sudden and confused impressions, and thus acting without due delib- eration,^ and in other senses.* The situation may not be due to fraud, but to take advantage of it may be considered con- structive fraud. 1. According to the definition fraud can only be perpetrated upon rights, i. e. upon legal ^ rights. There may indeed be fraud in morals, where no right under the municipal law may exi^t ; but with this, though it may not differ in its qualities from fraud under the law, we are not concerned. The fraud we are dealing with is the fraud that, when perpetrated, may be matter for the courts to remedy ; it must concern legal rights (or the equivalent), in the technical sense of the term. 1 See the section on Perversion of the * ' If a witness in testifying went Statute of Frauds. beyond the articles, the adverse party f The sense, it may be, in which the could have so much of his testimony famous ' surprise ' occurred in the fulfil- suppressed as being a surprise to him.' ment of the dark words, Langdell, Equity PI., § 19, referring to * . . . Fear not, till Bimam wood the canon law. Docome toDunsinane.' 5 As distinguished from merely moral 5 See 1 Story, Equity, § 120, note. rights. 14 DEFINITION OF FRAUD. A single illustration will suffice. By representations which he knows to be false, A induces B to alter his will, already executed in favor of C, and to leave nothing to C. Discover- ing the facts after B's death, C sues A for fraud. The action cannot be maintained, A having infringed no legal right of C.i Whether it be proper to characterize the act of a person in going from his own state or country to another, in which divorces are easy, to obtain a divorce and then to return, as a fraud upon the sovereign, or in common language as a ' fraud upon the law ; ' whether to go to Gretna Green to get married is a fraud ; whether the act of a person in removing from one place to another at a certain time of the year, or resorting to other means, to evade payment of taxes, is a fraud ; ^ these and the like questions relating to fraud upon the sovereign will turn upon the further question, whether the act is an infringement of the law, which, in the case of the sovereign, is the equivalent of ' legal right ' in other cases.^ These are cases of circumvention indeed, but not necessarily cases of fraud. 2. The fraud, as we have seen, is such without reference to any actual infringement of rights, i. e. without reference to its success ; but if it has not been carried out at all, it will be an affair only of the conscience of the man who conceived it. The courts will take cognizance of it, generally speaking, only upon the footing of its success, complete or partial ; that is, in the language of the law, upon the footing of damage. But it should be noticed that fraud may be practised without any view to the infringement of any right, and without 1 Hutching i>. Hutchins, 7 Hill, 104 ; law against the sovereign, is not quite s. c. Bigelow's L. C. Torts, 207. the same thing as saying there must he ^ See Stilwell v. Corwin, 55 Ind. damage, except in a vague if not con- 433. fusing sense, — in a sense which makes ' It will be seen that to say that there every common-law right of action in- must he a 'right' to be infringed, in- volve damage. That sense however haa eluding in that tenn infringement of some authority for its support. DEFINITION OP FEAUD. 15 damage; indeed with benefit to the person made the object of it, as in certain famiUar cases of concealed rights. Thus if the real owner of a chattel which I am about to buy from another represent, by word or conduct, that the latter owns it, and I thereupon buy, the owner has been guilty of fraud in that he has enticed (or what is the same thing in effect, suffered) me to buy through a false impression, for which he is in part responsible, in regard to the ownership ; and it is only confusing to say, as is sometimes said, that to allow him to recover the property would be to permit him to perpetrate a fraud upon me. He has perpetrated the fraud already ; and being the party guilty of wrong-doing he cannot be permitted to undo it to his own advantage and to my detriment. In other words he will be estopped to deny the truth of his representation. 3. It will be seen that while fraud practised by deception must be secret, fraud practised by circumvention may be open. Many cases, especially cases falling under the desig- nation of ' fraud upon the law,' attest this ; some have already been given. It would therefore be erroneous to suppose that the term fraud necessarily implied secrecy, true though it is that it is almost always practised in secret. 4. In ordinary cases fraud is essentially active in nature, a feature which appears in the definition, in the word ' en- deavor.' Apart from contract, or from some special duty enjoined by law, I have no right to require information from another. If a party with whom I am dealing does nothing falsely to affect the motives by which my conduct is to be regulated, I cannot complain ; he may keep all his informa- tion to himself if he will, for surely what a man has locked up in his breast is his own.^ But if he releases the informa- . tion, it is no longer his ; if he will impart information for my guidance, I have a I'ight to the truth, so far as the party can 1 The contract of marine insurance affords an exception resting upon special and sufficient grounds. 16 DEFINITION OF FRAUD. reasonably give it. The information will be a thing of value or of harm to me according as it is true or false ; and I have the same right to it in its purity, as a thing of value, that I have to any tangible thing I may acquire. One may howevei* ' endeavor ' by passive conduct to deceive another, and thus also be guilty of fraud. ' Some special duty ' may be enjoined by law, requiring a party to speak, as where two persons are negotiating in the presence and with the knowledge of another for the purchase of property belong- ing in reality to the latter, but not to the knowledge of the buyer.i No duty indeed to speak is created by the mere fact that one man may be aware that some one else, he knows not who, may act to his own prejudice if the true state of things is not, disclosed. A man may become aware of the fact that his name has been forged to a negotiable instrument, and so know that it is possible that some one may be led to purciiase the paper upon the belief that it is genuine, yet he is not bound, it seems, to take steps to protect persons of whose very existence he may be ignorant.^ If however the party, in the case ojE an undisclosed title or right like that above-mentioned, is present at the time of the transaction in question, he must speak, if speaking would probably prevent the action about to be taken ; ^ if absent, his silence, to be attended with any legal consequences, must at least be of a nature to have an obvious tendency to cause the result.* Cases like this, where there is a duty to speak, may properly be deemed to fall within' the meaning of ' deception ' in the definition ; for they are cases of misleading silence.^ 1 Pickard v. Sears, 6 Ad. & E. 469. a party must disclose facts to another 2 Vielei;. Judson, 82N. Y. 32, Fincli, with whom he is dealing, as will more J. McKenzie v. British Linen Co. 6 fully appear in a later chapter. App. Cas. 82, is not opposed to this. * Bigelow, Estoppel, 575, 576, 4th ' The proposition, it will be seen, is ed. carefully limited to the case of concealed ^ Burdick v. Michael, 82 Mich. 246 ; rights of third persons. There may be Bigelow, Estoppel, 564, 4th ed. An some other oases of which it will be illustration in which there were both true ; but it cannot be laid down that deception of one set of persons and cir- DEFINITION OP FRAUD. 17 The definition finally points, on its face, to either of two broad divisions of the subject : — One of these is fraud touching rights in rem and fraud touching rights in personam. Whether such a division could be strictly carried out however, without doing violence to an established order, may be doubted ; so to carry it out would require the separation e. g. of parts of the subject of mis- representation, for that wrong, as we have seen, may be committed against eitber class of rights. The division may be followed in a general way however ; but its chief purpose here has been to make the general terms of the definition somewhat concrete, and to add point to a set of illustrations drawn from all quarters of the subject. The other division has more significance for purposes of classification of the parts of the law of fraud ; that division is fraud effected by ' deception touching motives,' and fraud by ' circumvention not touching motives,' as at first explained. Now it so happens that this division conforms in the main to the one above suggested ; most frauds upon rights in rem are effected by deception touching motives ; most frauds upon rights in personam are effected by circumvention not touching motives. But this is only ' in the main.' It is more to the purpose that ' deception ' and ' circumven- tion ' involve different remedies. In the case of deception the person defrauded was a party to the transaction in which the cumvention of another by fraudulent edge of tte facts, and during all the silence may he found in Crosby v. Bu- time he permitted his adversaries to as- chanan, 23 Wall. 420. One to whom sume and represent his title.' 'When land had been conveyed, being bound therefore he came into court and as- to make a reconveyance to the children serted his absoli;te title as against the of the grantor, ' slept upon his rights ignorant heirs of the deceased contract- for a quarter of a century ; he waited ing parties, and wilfully concealed his for evei-y actor in the premises except contract for a reconveyance, and the re- himself to die ; in all the litigation af- ceipt which belonged to it, he came fecting his interests he never appeared with unclean hands and must suffer the so long as there was one alive who could consequences.' Waite, 0. J. speak against him from actual knowl- 18 DEFINITION OP FRAUD. fraud was committed ; in the case of circumvention he was not. In the former the remedy lies in a simple action for damages, or in the rescission of or defence to a contract, or the like relief ; in the latter, when unmixed in any way with deception, the remedy is entirely different. There has been no transaction, whether direct, or indirect througli an agent, between the party defrauded and the wrongdoer, in the case supposed ; and the remedy to be sought lies in undoing a transaction inter alios, except in cases standing upon special grounds.^ There is however another case. We have seen that two or more of the four cases given in illustration of the definition may be combined in one transaction ; that is, there may be both deception and circumvention in the affair in question. In such a case the remedy will, ordinarily at least, be that pertaining to deception, according to the phase in which the. particular case is presented. The most obvious examples are where a written contract, such as a promissory note, has been executed in fraud, by an agent in the name of his prin- cipal, to a participant in 'the wrong, or where an agent or a trustee has fraudulently put the funds of his principal or cestui que trust into the hands of a confederate ; in the first of these cases the injured party will sue for rescission, or defend if sued ; in the second he will bring suit in the nature of an action for conversion.^ In either case the remedy is that pertaining to deception. ^ As where a partner or part-owner, doing associate has authority to do the having authority under the articles of act, and the injured party may akeady agreement, openly and without any de- have received his share of the profits ception, but against the efforts of his and property of the business, so that associate, discharges a debt with a fraud- the loss to him could not be measured ulent pni-pose towards the associate, in by the amount of the debt discharged, favor of a debtor joining in the circum- lb. Perhaps the same would be true of vention. Here the remedy is held to a transfer by a pai'tner, of the partner- be in damages, not in undoing the trans- ship assets, in fraud of his associate, action. Sweet v. Momson, 103 N. Y. 2 jjolfe v. Gregory, i De G. J. & S. 235. But that is because the wrong- 576. DEFINITION OF FRAUD. 19 It only remains to add that this division into deception on the one hand, including cases in which there is circumvention with it as just pointed out, and circumvention simpliciter, i. e. without deception, on the other, — a division founded in the nature of the subject and supported by laws of procedure, — conforms also to a more obvious, if less philosophical, division, to wit, frauds established by judge-made law, or, as the sub- ject may be termed, Juristic Fraud, and frauds established by legislative law, or Statutory Fraud ; deception corresponding to the former, circumvention to the latter. Juristic Fraud will also cover, without serious strain, the whole subject of the adjective law, or procedure in the broad sense. This then completes the general division of fraud, with classification of its parts; Juristic Fraud, embracing (1) the adjective law, and (2) all forms of deception ; Statutory Fraud, embracing all forms of circumvention simpliciter. ADJECTIVE LAW OF FRAUD. § 1.] STATUTES OF LIMITATION, AND LAPSE OP TIME. 23 CHAPTER I. STATUTES OF LIMITATION, AND LAPSE OP TIME. § 1. Statutes op Limitation. The Statute of Limitations of James the first,^ parent of all the like statutes in this country, provides in effect that the common personal actions ex delicto and ex contractu ' shall be commenced and sued within ' a certain time ' after the cause of such actions or suit, and not after ' ; ^ into which American statutes have introduced, for greater certainty, the word ' accrues,' making the latter part quoted read ' after the cause of action accrues, and not afterwards.' ^ When does a cause of action for fraud ' accrue ' within this provision, i. e. excluding all qualifying or excepting clauses of the American statutes, — for there are none to the purpose in the parent act ? The profession in this country has become so accustomed to say that the cause of action for fraud arises only upon discovery of the wrong or upon knowledge of facts pointing to it, that it is not improbable that the question stated would be answered in that way by most American law- yers. But the statute, it will be seen, is in terms straight- laced ; and English courts of law have given it its natural interpretation. The result is that the cause of action accrues, and the statute begins to run, from the time when the fraud was committed, not from the time when it was or should have been discovered. More than that, it was settled law in Eng- land, under the system of courts of law and courts of equity, 1 21 Jac. 1, c. 16 (1623). ' See e. g. Mass. Pub. Sts. c. 191, 2 lb. § 3. § 1. 24 ADJECTIVE LAW OF FRAUD. [CHAP. I. that in legal actions, to a plea of the statute, a reply that the cause of action was fraudulently concealed by the defendant would not save a suit brought after the tim^ limited ; ^ and the same rule has been laid down in this country .^ It is not quite clear upon authority wliether the same rule prevailed in England in equity in a case within the statute ; though in principle it should be so. And the reason is, that the statute does not except a case which might happen to be brought in equity ; and that equity professes, as it ought to profess, to act in obedience to the statute in cases where it would govern at law.^ Equity might, as we shall see, vir- tually establish a limitation to equity suits, if no statute applied ; further than this to go, and to fix an exception to statute where the statute makes none, would be to legislate, nay more, to override legislation. And the weight of English authority appears until recently to have been in accordance with this reasoning ; * but a late decision of the Court of Appeal,* by two judges against one, has apparently turned the scale of authority. The case re- ferred to was a legal action, an action for damages for fraud ; but a reply of concealment of the cause of action was there allowed.^ The court however did not profess to overrule, on 1 Hunter v. Gibbons, 1 Hurl. & N. 65,71. Special reasons were given in the 459 ; Imperial Gasliglit Co. v. London first case cited for this rule in Massa- GasHght Co., 10 Ex. 39 ; Gihbs v. Guild, chusetts ; but the principle is true 9 Q. B. D. 59, 63, C. A. everywhere. See Badger v. Badger, 2 2 Franklin's Case, 8 Gill, 331 ; Tay- Wall. 87, 94. It will be seen that the lor V. Bobinson, 69 Ala. 269. See also learned judge in Dodge v. Essex Ins. Wear v. Skinner, 46 Md. 257. Contra Co., supra, was clearly wrong in saying First Mass. Turnp. Corp. u. Field, 3 that ' in England courts of equity do not Mass. 201, infra, p. 26, note. hold themselves barred [sic ; bound ?] ' Lockey v. Lockey, Free. Ch. 518 ; by the provisions of the Statute of Limi- Knox V. Gye, L. R. 5 H. L. 656, 674, tations.' Lord Westbury. ' The statute therefore * See the cases last cited, operates with us ex vigore suo, in equity ^ Gibbs v. Guild, 9 Q. B. D. 59, af- as well as at law, and not by the discre- firming 8 Q. B. D. 296. tion or courtesy of the courts.' Parker, ^ Under the Judicature Act all the C. J. in Famam v. Brooks, 9 Pick. 212, courts of England have equity powers. 243 ; Dodge v. Essex lus. Co., 12 Gray, 36 & 37 Vict. c. 66 (1873). § 1.] STATUTES OF LIMITATION, AND LAPSE OP TIME. 26 the contrary the judges admitted the authority of, the cases at law; but the reply was held good. Lord Coleridge in an opinion of great ability taking the ground that though a party may have a right by law, as e. g. under the Statute of Limitar tions, it may be unjust in a particular case (like the present) to permit him to exercise it.^ This case then seems to estab- lish the rule, on authority, that in equity a reply of fraudulent concealment of the cause of action, though in a legal case, is good. Whether it means that before the Judicature Act (1873) an injunction might have been granted for such reason against a defendant's pleading the statute in. a suit at law does not appear, though that would seem to follow. How- ever it is extremely doubtful whether that could have been done. In the cases at law ^ the reply was of course in the nature of an equitable pleading (allowed by statute), but that made no diilerence, as was admitted in the recent case under consideration.^ And the opinion of most of the judges in one of the cases at law,* afterwards fortified by the opinion of Lord Westbury^ in the House of Lords based upon that of Lord Macclesfield,^ was that the same rule would prevail in the Court of Chancery ; where that court had appeared to take another view, it was pointed out that the case was really an equity case on the merits.'^ The conclusion perhaps is that the Court of Appeal has gone somewhat beyond the previous authorities, and in the 1 Lord Coleridge, at p. 65, 9 Q. tiff had sufRcient confidence in this ad- B. D. vice to try it. a Hunter v. Gibbons, 1 Hurl. & N. ' Knox n. Gye, L. R. 5 H. L. 656, 459 ; Imperial Gaslight Co. v. London 674. Gaslight Co., 10 Ex. 39. « Lockey v. Lockey, Prec. Ch. 518. 8 Brett, L. J. in Gibbs v. Guild, 9 ' Where a court of equity assumes a con- Q. B. D. 59, 69. current jurisdiction with courts of law, * Hunter v. Gibbons, supra. But no account will be given after the legal Pollock, C. B. said : ' The plaintiff must limit of six years if the statute be go into equity and obtain redress, which pleaded.' Knox v. Gye, supra, that court ought to give him if his con- ' Blair u. Bromley, 5 Hai'e, 542 ; tentiou here is well found.' There is Booth v. Warrington, 4 Bro. P. C. 163 nothing however to show that the plain- (Toml. ed. ). 26 ADJECTIVE LAW OP FEAUD. [chap. I. interest of substantial justice done by way of interpretation wliat the legislature ought to have done long before, a thing for which more than one precedent might be found. Indeed it would be necessary to examine the decisions and statutes of forty independent jurisdictions in the United States to see how often what was done by the English Court of Appeal had already been done and surpassed in the United States.^ What the precise rule in regard to the case of fraudulent concealment, or of mere concealment (if that is anywhere enough 2), of the cause of action may be must turn upon the particular statute, where the case is governed by statute. The Massachusetts act, which has been widely adopted, provides that 'if a person liable to any of the actions mentioned in 1 See e. g. Wear v. Skinner, 46 Md. 257 ; Phelan u. Clark, 19 Conn. 421, a majority decision in equity. The same rule had been estaWished in Massachu- setts, even at law, long before any stat- ute gave authority for it. First Mass. Tump. Corp. v. Field, 3 Mass. 201 (1807), Parsons, C. J. That early case will probably be found to have been the leader of a considerable train of doubt- ful decisions. Homer v. Fish, 1 Pick. 435 ; Welles v. Fish, 3 Pick. 74, and cases cited in Perkins's ed. ; Sherwood V. Sutton, 5 Mason, 143. See post, p. 32. But it is significant that, not- withstanding the fact that Chief Justice Parsons, in Welles v. Fish (1825), pro- nounced it well settled that a plaintiff could at law reply fraudulent conceal- ment, the legislature a few years after- wards considered it expedient to enact the statute quoted in the text, pp. 26, 27. and so place the rule beyond question. Rev. Sts. 0. 120, § 12 (1836). A cor- rect decision upon this subject was lately rendered in Alabama. Taylor v. Robin- son, 69 Ala. 269. 2 See c. g. Quimby v. Blackey, 63 N. H. 77 ; Bailey v. Glover, 21 Wall. 342 ; infra, p. 28. See also Printup V. Alexander, 69 Ga. 553 ; Findley v. Stewart, 46 Iowa, 655 ; Boomer v. French, 40 Iowa, 601 ; Harman v. Looker, 73 Mo. €22. The last case in- volved the construction of the following language : ' If any person by abscond- ing, or concealing himself, or by any other improper act, prevent the com- mencement of an action, such action may be commenced within the time herein limited, after the commencement of such action shall have ceased to be so prevented.' Rev. Sts. Mo. § 3244. The court held that it made no differ- ence under this statute how ' openly the debtor may have resided in any new home he may have acquired, or how long he may have continued so to re- side.' Nor was it material whether the debtor was a, resident of Missouri and had ' sought a new home in some other or distant locality where he lives openly as to his new neighbors, or whether he was a non-resident who has found a home in Missouri, where he thus lives unconcealed as to other citizens of that vicinity.' See also Butler i. Lawson, 72 Mo. 227, and other cases cited. § l.J STATUTES OF LIMITATION, AND LAPSE OF TIME. 27 this chapter ^ fraudulently conceals the cause of such action from the knowledge of the person entitled to bring the same, the action may be commenced at any time within six years after the person so entitled discovers that he has such cause of action.' 2 Under such a statute it is not enough, even in a case where fraud is the cause of action, to show mere non-discovery of the fraud, for non constat that the plaintiff may not have been put upon inquiry which would have led readily to dis- covery ; * in such a case as that it is not likely that the bar of the statute would be opened anywhere. There must at least have been a concealment of the fraud,* or of facts the knowl- edge of which would in the case of a diligent man lead to discovery;^ no law requires the wrong-doer to disclose his fraud, or to give aid in finding it out. This however should be qualified in regard to one class of cases. It is unneces- sary that concealment of a fraud should appear in order to prevent the statute from running until discovery if there be a relation of trust and confidence between the parties, such e. g. as exists between principal and agent ; ® it would then be the duty of the party complained of to make disclo- sure.^ Nor will the fact that the plaintiff had the means of 1 All the ordinary personal actions. Wheeler, 34 Tex. 356 ; Munson y. Hal- 2 Piih. Sts. c. 197, § 14. lowell, 26 Tex. 477 ; Callis v. "Waddy, » Farnara v. Brooks, 9 Pick. 212 ; 2 Munf. 511 ; Reed v. Minell, 30 Ala. Nudd V. Hamblin, 8 Allen, 130; At- 61. See Meader v. Norton, 11 Wall, lantic Bank v. Harris, 118 Mass. 153 ; 443. Findley v. Stewart, 46 Iowa, 665 ; * Wickersham v. Lee, 83 Penn. St. Boomer v. Fi'eneh, 40 Iowa, 601. 416 ; Atlantic Bank v. Harris, 118 * See Manufacturers' Bank v. Perry, Mass. 147. Investing the principal's 144 Mass. 313, a good example. See money instead of remitting it as di- further infra, p. 28. rected is not a fraudulent concealment. s Farnam v. Brooks, 9 Pick. 212, Fleming v. Culbert, 46 Penn. St. 498. 245 ; Peck v. Bullard, 2 Humph. 41 ; See a further case of principal and Boone v. French, 40 Iowa, 601 ; Hum- agent, with actual fraud, in Perry v. phreys v. Mattoon, 43 Iowa, 546 ; Find- Wade, 31 Kans. 428. ley V. Stewart, 46 Iowa, 655 ; Calhoun ' Atlantic Bank v. Harris, 118 Mass. II. Burton, 64 Tex. 510 ; Connoly v. 147 ; Wicker.sham v. Lee, 83 Penn. St. Hammond, 68 Tex. 11 ; Hudson v. 416 ; Wilson v. Ivy, 32 Miss. 233 ; 28 ADJECTIVE LAW OF PBAtTD. [CHAP. I. knowledge in this (if in any) case bC; material.^ Such, it is obvious, may be a legal case under the statute, andi hence not within the special rules of equity ; and the case first cited is an example, the action being in , contract for money had and received. Suppose however that the fraud by which the plaintiff's cause of action is concealed is no other than that which con- stitutes the cause of action itself, and that there is thus, but not otherwise, a concealment of fraud of which the plaintiff had neither knowledge nor notice, so that he was not put upon inquiry ; is this enough to open the bar of the statute ? Again the answer must be, that will depend largely upon the language of the particular act. In the case of a statute such as that above quoted it has been held that such is not ' fraudu- lent concealment ' ; something, such as affirmative misrepre- sentation, being necessary beyond the mere creation of the cause of action to remove the bar of the statute,^ to which view indeed countenance appears to be given by the use of the word 'fraudulent.' Thus in a recent case^ the plaintiff sued at law for damages on account of fraudulent misrepresenta- tions of the quality of land. The defendants pleaded the statute, and the plaintiff replied that the cause of action relied upon was the fraud and fraudulent misrepresentation of the defendants, and the injury thereby caused to the plaintiff ; and the plaintiff alleged that ' he did not and could not by reasonable diligence have discovered said fraud, or that the representation was untrue and fraudulent, until within six years before action.' To this there was a demurrer, and the demurrer was sustained. The court said that to hold the Buokner v. Calcote, 28 Miss. 432. See = Sankey v. McElevey, 104 Penn. St. Nudd V. Hamblin, 8 Allen, 130. 265 ; Manufacturers' Bank v. Perry, 144 1 Atlantic Bank v. Harris^ 118 Mass. Mass. 313 ; Walker v. Soule, 138 Mass. 147,153. The case of Farnamj;. Brooks, 570; Famam v. Brooks, 9 Pick. 212, 9 Pick. 212, 244, went too far in saying 245 ; Eeed v. Minell, 30 Ala. 61 ; Barber that having. means of knowledge was v. Houston, 14 L. E. Ir. 273. Sec also fatal ; means of knowledge is nothing Printup v. Alexander, 69 Ga. 553. in the face of fraud. See infra, p, 30. " Barber v. Houston, supra. § 1.] STATUTES OF LIMITATION, AND LAPSE OF TIME. 29 reply good would be to hold as matter of law that every fraud- ulent representation involves a continuous fraudulent and intentional concealment of the fraud until the injured party might or ought to have discovered it. It seems difficult to answer this reasoning ; for though the commission of a fraud consisting in deception implies conceal- ment, and perhaps fraudulent concealment (though that is another thing), still it is not certain, as matter of law, that the concealment has been continuous until the statute has run, merely from the fact of the cause of action. However, a contrary rule prevails in several states.^ But it should be noticed in any event that it is the cause of action that must be concealed ; it does not satisfy the excep- tion in the statute to show the concealment of some collateral matter.2 ' What is the cause of action in the present case ? ' said a learned judge.^ ' Clearly it is the defendant's breach of the promise to pay the debt which the plaintiff alleges that the defendant owes him. . . . And this cause of action the de- fendant has never concealed. But he now sets up a discharge, under the insolvent law, from his liability to pay damages for this breach of promise. In answer to this defence the plaintiff alleges that the defendant committed a fraud in obtaining his discharge, and concealed that fraud till within six years next before this action was brought. And we are asked to decide that the concealment by the defendant of matter which the plaintiff must prove, in order to rebut and control the defend- ant's defence, is a concealment of the plaintiff's cause of action. This we cannot do.' It has been held that the fraudulent concealment of a cause of action will not arrest the operation of the statute when the 1 Wear v. Skinner, 46 Md. 257 ; language of the statute should always be Quimby v. Blackey, 63 N. H. 77 ; Way noticed. See Wear v. Skinner, supra. V. Cutting, 20 N. H. 187 ; Longworth ^ Rjce v. Burt, 4 Gush. 208 ; Battle V. Hunt, 11 Ohio St. 194. See Bailey v. Crawford, 68 Mo. 280 ; Humphreys V. Glover, 21 Wall. 342 ; Nudd v. v. Mattoon, 43 Iowa, 556. Hamblin, 8 Allen, 130, 132. But the ^ Metcalf, J. in Rice v. Burt, supra. 30 ADJECTIVE LAW OP FKAUD. [CHAP. I. plaintiff had the means of learning the facts.^ But the most of the cases cited appear to have followed the leading of the first one implicitly ; and that case was decided at a time when there was still much confusion in cases of fraud in regard to ' means of knowledge.' It is now firmly held everywhere that the mere fact that one has the means of knowledge, as e. g. in the registry, of the facts in regard to a fraudulent representa- tion will not prevent one from maintaining an action for deceit ; it matters not that the plaintiff was negligent if the defendant's misrepresentation, being material, was fraudulent.^ The misrepresentation put the plaintiff off his guard ; and he might safely act upon it without inquiry. There is no sound distinction between such a case and the means of knowledge of a fraudulent concealment of a cause of action, where any active measures sufficient to mislead are employed.^ Cases therefore which hold that falsehood cannot consti- tute 'fraudulent concealment,' in the presence of means of knowledge, stand, if at all, only upon authority.* Falsehood 1 Farnam v. Brooks, 9 Pick. 212, Keller v. Equitable Ins. Co., 28 Ind. 244 (referred to in Niidd v. Hamblin, 8 170 ; Matlock v. Todd, 19 Ind. 130 ; AUen, 130, 131, Wells v. Child, 12 Al- Parham v. Randolph, 4 How. (Miss.) leu, 333, 335, and Atlantic Bank v. 435 ; Kiefer v. Rogers, 19 Minn. 32 ; Harris, 118 Mass. 147, 153) ; Cole v. Caldwell «. Henry, 76 Mo. 254; Union McGlathry, 9 Greenl. 131 ; McKown Bank v. Hunt, ib. 439 ; Holland v. An- V. Whitmore, 31 Maine, 448 ; Bouse derson, 38 Mo. 65 ; McCIellan v. Scott, V. Southard, 39 Maine, 404 ; Hudson v. 24 "Wis. 81, 87 ; Bank of Woodlan v. Wheeler, 34 Tex. 356. Hiatt, 58 Cal. 234. See Marston v. 2 Central %. Co. v. Kisch, L. E, 2 Simpson, ,54 Cal. 189. But see Cagney H. L. 99, 120 ; Eawlins v. Wickham, „. Cuson, 77 Ind. 494, and comp. with 1 De G. & J. 304 ; E-edgrave v. Hurd, that case the other Indiana cases supra, 20 Ch. D. 1, 13, Jessel, M. R. ; Sankey and Campbell o. Franklin, 65 Ind. 591. V. Alexander, Ir. E. 9 Eq. 259, 316 ; See also Messer v. Smyth, 59 N. H. 41, Eeynell v. Sprye, 1 De G. M. & G. and Leavitt v. Fletcher, 60 N. H. 182, 668, 709; Stanley v. McGauran, 11 the language of which may be doubted. L. R. Ir. 314 ; Phelps ... White, 7 L. s No distinction was suggested in R. Ir, 160; David i-. Park, 103 Mass. the well considered case of Sankey v. 501 ; Mead v. Bunn, 32 N. Y. 275, Alexander, Ir. E. 9 Eq. 259, 316, where 280 ; Starkweather v. Benjamin, 32 Partridge v. Usborne, 5 Kuss. 195, 232, Mich. 305 ; Webster v. Bailey, 31 Mich, a case of lapse of time, was approved. 36 ; Jones v. Hathaway, 77 Ind. 14 ; * Cole v. McGlathry, 9 Greenl. 131 ; § l.J STATUTES OP LIMITATION, AND LAPSE OF TIME. 31 in itself is not indeed fraud, but falsehood with a view to deception, and resulting in deception, as in the cases under criticism, is typical fraud ,^ successfully carried out. The true rule upon the subject, unless statute has otherwise fixed its terms, is that, in the face of misleading word or act in regard to the existence of the cause of action, the plaintiff will not be defeated either because of means of knowledge generally, or of knowledge of facts which would lead a diligent man to inquire, and, on inquiring, lead him to a knowledge of the cause of action. That is consistent with the rule that the cause of action accrues from the time when discovery of it was made, or might have been made by the exercise of rea- sonable diligence.^ Indeed it is laid down in a case of high authority, relating to lapse of time in equity, that where one party to a contract makes a positive representation, it is not laches in the other not to proceed immediately to verify that representation ; laches cannot be imputed until he has reason to doubt its truth.* And if the defendant has misled him since the cause of action arose, surely laches cannot be imputed. Thus far of the Statute of Limitations in regard to the com- mon personal actions. Suits pertaining to the title to or in- terest in lands fall within other statutes. The English statute * provides that ' in every case of a concealed fraud the right of any person to bring a suit in equity for the recovery of any land or rent of which he or any person through whom he claims may have been deprived by such fraud, shall be deemed to have first accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered,' with certain unimportant qualifications. In a recent case,^ to give a single illustration of the effect McKown V. "Whitmore, 31 Maine, 448 ; 185 ; O'Dell v. Burnham, 61 "Wis. 652 ; Kouse V. Southard, 39 Maine, 404. Alston v. Richardson, 51 Tex. 1. 1 See the definition of fraud ante, ^ Partridge v. Usborne, 5 Euss. 195, p. 5. 232, Lord Lyndhurst. 2 Rosenthal v. Walker, 111 U. S. < 3 & 4 Wm. 4, c. 27, § 26. 6 Vane v. Vane, L. B. 8 Ch. 383. 32 ADJECTIVE LAW OF FRAUD. [CHAP. I. of this statute, it appeared that the illegitimacy of the plaintiff's elder brother (the first son) had been concealed from the plaintiff until after the period of limitations under the same statute. Upon the filing of a bill praying for a declaration that the plaintiff was entitled as heir to his father's estates, which had for many years been in the possession of his elder brother and the latter's heirs, it was held that the concealment mentioned had prevented the running of the statute. It is apprehended that there can be no substantial difference between the courts of England and those of America in re- gard to cases under statutes such as this, and that all that has been said concerning the statute in regard to personal actions will be applicable to the like questions arising in regard to statutes limiting the time of suing for land or interests therein. Indeed there can be no doubt that equity can provide that fraudulent concealment, or even concealment, of a cause of action purely equitable, shall open the bar of any limitation of equity's own creation, i. e. where no statute applies. It is considered as incompatible with the duties of a trustee of an express trust, such as is cognizable in equity only, to set up any claim to the trust property adverse to the rights of the cestui que trust. The possession of the one is the possession of the other, and there is therefore no adverse title.^ Acts in such cases which, if they had been done by a stranger, would be treated as adverse, are not so treated in the case of an ex- press trustee, since it is his duty to abstain from them. But it is at the election of the cestui quetrust (not of the trustee) to treat such acts as adverse ; and the lapse of the period of the Statute of Limitations will not bar his remedy .^ The existence of this rule of law has caused it to be stated sometimes that the Statute of Limitations does not apply to cases of trust ; which is too broad a proposition. In respect J Lewin, Trusts, 863, 8th ed. « Kane v. Bloodgood, 7 Johns. Ch. 110. § l.J STATUTES OP LIMITATION, AND LAPSE OF TIME. 33 of trusts that are strictly such, and recognized and enforcgd in courts of equity alone, such as the express trusts above re- ferred to, which are created by the parties for particular pur- poses, the above stated rule is in general true.^ It is perfectly clear however that in cases of constructive trusts and trusts over which both courts of law and courts of equity have juris- diction, and the bar of the statute would prevail at law, it will equally prevail in equity .^ And even in cases of express trusts if an open, public, adverse claim is set up by the trus- tee against his cestui que trust, and the trust itself is denied longer to exist, the bar of the statute will begin to apply .^ Hence where an administrator or trustee becomes purchaser at a fraudulent sale by him of property belonging to the intes- tate or cestui que trust, and afterwards with the knowledge of the parties interested openly and notoriously asserts title in himself, a bill in equity for relief against him will not lie after the lapse of the period which is a bar by the Statute of Limitations.* But where fraud has been committed in the rendering of accounts, equity will open and examine the ac- counts after any length of time, even though the person who committed the fraud is dead.^ It is important in this connection to notice a distinction in regard to the term ' trustee ' as applied to a person who fraud- i Farnam o. Brooks, 9 Pick. 212, " lb. ; Keeton v. Keeton, 20 Mo. 243 ; McLaurin v. Fairly, 6 Jones, Eq. 530. 375 ; McClane v. Shepperd, 21 N. J. 8 Eobinson v. Hook, 4 Mason, 151 ; Eq. 76 ; Strimpfler v. Roberts, 18 Penn. Kane r. Bloodgood, 7 Johns. Ch. 110. St. 283, 300 ; Prevost v. Gratz, 6 Wheat. « Keeton v. Keeton, 20 Mo. 530 ; 481 ; Weaver v. Leitnan, 52 Md. 708 ; Kane v. Bloodgood, 7 Johns. Ch. 110 ; Ernest v. Croysdill, 2 De G. F. & J. Boone v. Chiles, 10 Peters, 223 ; Rob- 175 ; Eolfe v. Gregory, 4 De G. J. & _S. inson v. Hook, 4 Mason, 161 ; Baker v. 576 ; Brittlebank v. Goodwin, L. R. 5 Whiting, 3 Sum. 486 ; Pipher v. Lodge, Eq. 545 (denying Dunne v. Doran, 13 4 Serg. & R. 315 ; Walker v. Walker, Ir. Eq. 545, and Brereton v. Hutchin- 16 Serg. & E. 384. son, 2 Ir. Ch. 648, s. c. 3 Ir. Ch. 361, ' Pratt v. Weyman, 1 McCord's Ch. in regard to the right of executors to 156 ; Maddox, Ch. 102. plead the statute, in the case of acts of the testator). 34 ADJECTIVE LAW OF FRAUD. [CHAP. I. ulently receives or possesses himself of trust property, or per- haps generally to a person who obtains a title to property by fraud. Relief is granted against the wrong-doer in such cases on the ground of fraud, Lord Westbury tells us,^ and not of constructive trust. The wrong-doer is indeed called a trustee in equity; but the term is used to denote the nature and extent of the remedy against him. It means that he may be treated as if he were an express trustee who had committed a fraudulent breach of trust. Now as the remedy is given on the ground of fraud, the right of the injured party, is not affected by lapse of time, or generally speaking by anything done or omitted while he remains, without fault of his own, in ignorance of the fraud.^ The case cited is a striking illustration. Suit was begun, by cestuis que trust against two defendants for abstraction of trust property by one of them and fraudulent receipt and appropriation of the same by the other ; more than twenty years having elapsed since the commission of the offence, the statute^ was set up as a bar to the demand. The facts however had not come to the knowledge of the plaintiffs until some four years before suit. Lord Westbury held that the- case could not be treated as a stale demand, on the ground above mentioned.* The effect of this important decision is, it will be seen, to relieve courts in many cases from the neces- sity of determining whether the trust in question was an express or only a constructive trust; if in any case there has been a fraudulent breach of trust, the statute will not 1 Rolfe V. Gregory, 4 De G. J. & S. que trust should go into equity to fol- 576. low it, when it has been perverted and ^ lb. aliened by the trustee. ' The cestui que ' 3 & 4 Wm. 4, 0. 27, § 40, barring trust can follow it at law as far as it suits for legacies inter alia after twenty can be traced.' United States v. State years from the accrual of the cause of National Bank, 96 U. S. 30, Swayne, J. action. citing May v. Le Claire, 11 Wall. 217 ; Taylor u. Plumer, 3 Maule & S. 562. ♦ It is not necessary, merely because See also Sheppards v. Turpin, 3 Gratt. the fund is a trust fund, that the cestui 373. § 1.] STATUTES OP LIMITATION, AND LAPSE OF TIME. 3-5 run while the cestui que trust, without fault, remains in ignorance.^ It should be noticed further that it may not be enough under any of these statutes that the cause of action might have been known by diligence, or even that it was in fact known. It must have been capable of being sued upon ; for there may have been an impediment of law to the action, such e. g. as bankruptcy. In such a case the cause of action does not accrue until the removal of the impediment.'"' But this ^ Attorney-Gen. u. Christ's Hospital, 3 Mylne & K. 344 ; Sturgis v. Morse, 3 De G. & J. 1 ; Prevost v. Gratz, 6 Wheat. 481 ; McLaurin v. Fairly, 6 Jones, E(j. 375. The earlier cases, or some of them, appear to have been the other way, permitting a plea of the stat- ute if the trust were to be regarded as merely constructive, notwithstanding the fraud. Townshend v. Tovvnshend, 1 Bro. C. C. 550, 554 ; Bonney v. Eid- gard, 1 Cox, 145 ; CoUard v. Hare, 2 Russ. & M. 675, 683 ; Lewin, Trusts, 863, 8th ed. Still it was held that where an express trustee commits a fraudulent breach of trust in the sale or mortgage of the trust property, and another knowing the trust, and collud- ing with the trustee, gets possession of the property the statute will not run against the cestui que trust while in (permissible) ignorance of the fraud. Ernest ». Croysdill, 2 De G. F. & J. 175 ; McLaurin v. Fairly, 6 Jones, Eq. 375. And that was the case before Lord Westbury. But it would perhaps be said that the colluding party in such a case became an express trastee ; Lewin, 876, 897 ; a position difficult however to maintain." The American cases are not clear. The case of Howells v. How- ells, 15 Wis. 55, supports the earlier English view ; so perhaps does McCIane V. Shepperd, 21 N. J. Eq. 76. Possi- bly one or two other cases may. See Strimpfler v. Roberts, 18 Penn. St. 300. But these cases were decided without the benefit of Lord Westbury's great authority and lucid distinction. Pre- vost V. Gratz, 6 Wheat. 481, appears to support the later doctrine. So does Mc- Laurin V. Fairly, 6 Jones, Eq. 375. Most of our cases merely reaffirm the well-settled doctrine that a constructive trust will be barred by lapse of time or by the Statute of Limitations. See the cases above cited ; also Murdock v, Hughes, 7 Sniedes & M. 219 ; Davis v. Gotten, 2 Jones, Eq. 430 ; Weaver v. Leiman, 52 Md. 708 ; Manion v. Tits- worth, 18 B. Mon. 582. But that is not the same as saying that fraud will not prevent the bar, unless there is clear statute to that effect ; for not every breach of trust is fraudulent. The sub- ject of Eolfe V. Gregory (Lord West- bury's decision) appears not to have been before the English courts since, though it was referred to in Stone o. Stone, L. E. 5 Oh. 74, 78, a different kind of case, and has been cited by counsel several times, as in Browne v, McClintock, L. E. 6 H. L. 456, 459. It may be hoped that Eolfe v. Gregory will not escape the attention of our courts when the question arises again. 2 In re Crossley, 35 Ch. D. 266, C. A. 86 ADJECTIVE LAW OP FRAUD. [CHAP. I. point has been attended with difficulty in some cases, as in the case of conveyances in fraud of creditors. In such a case does the statute begin to run from the time when the grantee took possession, or from the time when the creditor is in a condition to subject the land to his claim? This subject has been much discussed in Tennessee, and until the year 1852 was a vexed question in that state. Prom that time on it appears to have been settled law that the statute begins to run from the time when the creditor, by obtain- ing judgment against, the debtor and having a return of nulla bona, to his execution, is in a position to proceed in chancery against the property ; on the ground that until then he has no right of action in regard to the fraudulent conveyance.^ Again under any of the statutes if the plaintiff, though aware of his cause of action, was induced by the fraud or misconduct of the defendant to delay suit until after the statute has run, he can in this country show the fact as a sufficient reason for opening the bar of the statute.^ In a case in Michigan ^ the de- fendant having bought the plaintiff's land at tax sale, the latter shortly before the time for redemption expired offered to pay the defendant the amount of his bid, witli twenty-five per cent interest thereon, for an assignment of the certificate of sale. The defendant accordingly promised that he would send to the plaintiff an assignment of the certificate within two or three days. The plaintiff, relying upon this promise, per- mitted the time for redemption to expire, and then the de- fendant refused, upon tender of the proper amount, to accept the same. The court held the refusal fraudulent, and com- 1 MuUoy V. Paul, 2 Tenn. Ch. 160 ; California an action can be maintained .Tones v. Reed, 1 Humph. 335 ; Marr v. for the fraud whereby the maker of a Eucker, lb. 347. note gets possession of it from the payee 2 Laing v. McKee, 13 Mich. 124 ; and keeps it until the statute has run. Bamet v. Nichols, 56 Miss. 622 ; Savery Cockrill v. Hall, 65 Cal. 326. V. King, 5 H. L. Oas. 627, 666. See » Laing v. McKee, 13 Mich. 124. Newton V. Carson, 80 Ky. 309. In § 2.] STATUTES OF LIMITATION, AND LAPSE OF TIME. 37 pelled the defendant, who meantime had obtained a deed, to execute a conveyance to the plaintiff. If no facts are involved but the simple one of the length of time which has elapsed since the cause of action accrued, the question of reasonable time, within a statute in regard to the discovery of the cause, is one of law. But where disputed facts, involving questions of excuse, of the time of discovering the fraud, or the liice, are to be passed upon, the question is one of mixed law and fact, to be submitted in a jury case under proper instructions.^ § 2. Lapse op Time. The term ' lapse of time,' as now used, is a technical term of courts of equity, invented by such courts as a counterpart to the term ' statute of limitations.' The term is indeed some- times used in an untechnical sense, with regard to time under the statute,^ but here we refer to it in its peculiar sense. And heretofore we have been speaking generally of the fraudulent concealment of a cause of action, whatever that cause, whether ex delicto or ex contractu ; now however we come to a class of cases in which no distinction arises, so far as the doctrine of lapse of time is concerned, between fraudulent concealment of the cause of action as commonly understood and fraud alone as the cause of action.^ In either case the doctrine applies. That is, where no statute governs, equity, which created the doctrine of lapse of time, may control its applica- tion ; it may declare and does declare that that doctrine shall not apply to fraud, so long as the injured party remains igno- rant thereof without fault of his own. But this is true only of 1 Gatling v. Newell, 9 Ind. 572; v. "Wallis, 14 Maine, 57; Mauahan v. Kelsey v. Boss, 6 Blaekf. 536 ; Hoi- Noyes, 52 K H. 232. brook V. Burt, 22 Pick. 546 ; Kingsley " g^e ante, p. 34. s Ante, pp. 28, 29. 38 ADJECTIVE LAW OF FRAUD. [CHAP. I. actual, not of constructive fraud.^ Within what time a claim for relief against constructive fraud will be barred depends upon the special circumstances of the case. The claim for relief in equity may be and often is denied within the period fixed by the Statute of Limitations for ordinary cases.2 But where the facts of the case are clearly estab- lished, and the controversy is not embarrassed by claims of third persons or conflicting interests, mere delay to sue is not fatal .^ Speaking now of actual fraud as a cause of action, it has already been remarked that in cases of concurrent jurisdic- tion with courts of law courts of equity consider themselves bound by the Statutes of Limitation which govern courts of law, and this in obedience to the statutes rather than by analogy to them. In certain other cases in which the stat- ute does not govern them they act upon the analogy of the like limitation at law. Thus in a recent case the legal limit of one year for filing a bill of review was adopted in equity by analogy as the period within which a bill to vacate a de- cree for fraud should be brought ; * and the same limit was in another case held applicable to a petition for a new trial on account of the discovery of new evidence.^ But the de- fence founded on lapse of time and the staleness of the claim, arises where there are no acts of limitation to govern or to furnish analogy. In such cases equity, acting upon the principle of discouraging antiquated demands, refuses to interfere where there have been great laches in prosecuting the claim, or long acquiescence in the assertion of adverse rights.® 1 raraam u. Brooks, 9 Pick. 212 ; 5 Plymouth v. Russell Mills, 7 Al- Smallcombe's Case, L. K. 3 Eq. 769 ; , len, 438, 445. s. c. L. R. 3 H. L. 249. e Badger v. Badger, 2 Wall. 87, 94 ; 2 Obert V. Obert, 1 Beasl. 423 ; Plymouth v. Russell Mills, 7 Allen, Doughty V. Doughty, 3 Halst. Ch. 649 ; 438 ; Evans v. Bacon, 99 Mass. 213 ; Michoud V. Girod, 4 How. 503. Quin v. Allen, 47 Mich. 74. Cases of 2 Obert V. Obert, supra. rescission have therefore as such nothing * Evans v. Bacon, 99 Mass. 213. to do with this doctrine of lapse of time. § 2.] STATUTES OP LIMITATION, AND LAPSE OF TIME. 39 The books afford many illustrations of this rule of law. The failure of a cestui que trust to take steps to set aside a conveyance made by him to the trustee of his trust estate for three years and eight months is prima facie unrea- sonable, where the trustee has not been guilty of any posi- tive act of fraud or concealment.^ So too a delay to sue for fraud for six years and a half after knowledge, the prin- cipal parties to the fraud having died meantime, is unreason- able.2 And in an English case a bill to set aside a purchase made by a trustee for himself and his children was dis- missed after a lapse of eighteen years, upon the length of time only.^ Again where an infant was fraudulently induced to execute a deed of land to another, believing that she was merely exe- cuting an instrument authorizing the person named therein to sell the land, and failed to make inquiry concerning the exercise of the power for thirteen years after attaining major- ity, when she was first informed of the fraud, she was held barred by her negligence from the privilege of asserting a claim to the premises.* There was no evidence of a fraud- ulent concealment of her claim. So long however as the plaintiff remains, without fault of his own, under the influence of actual fraud on the part of the defendant, the rule of lapse of time will not apply. There can be no laches by delay in such a case ; and where there are no laches, there can be no bar,^ except by statute. But it will be found to be true, as was declared in a recent case by Lord Selborne,® that the doctrine of laches in courts of equity is no arbitrary or technical doctrine. When it would be practically 1 Jones V. Smith, 33 Miss. 215. 232 ; Smallcomte's Case, L. E. 3 Eq. 2 Campau v. Van Dyke, 15 Mich. 769, Eomilly, M. E.; s. o. L. E. 3 H. L. 371. 249 ; Eolfe v. Gregory, 4 De G. J. & S. » Gregory v. Gregory, Coop. Cas. in 576, ante, p. 34. Ch. 201. * Lindsay Petroleum Co. v, Hurd, 4 Weaver v. Carpenter, 42 Iowa, 343. L. E. 5 P. C. 221. ^ Partridge v. Usborne, 5 Russ. 195, 40 ADJECTIVE LAW OF FEAXTD. [CHAP. I. unjust to give a remedy either because the party has done that which might fairly be regarded as equivalent to a waiver of it, or when, though not having strictly waived the remedy, he has yet put the other party in a situation in which it would not be reasonable to assert the remedy .against him, — in either of these cases lapse of time and delay are very material.^ 1 Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 221, Lord Selbome. CHAP, n.] JTJEISDICTION, 41 CHAPTER II. JURISDICTION. At a time within the memory of living lawyers the legisla- ture had begun to lay a heavy hand upon the jurisdiction of the courts of common law, equity, and probate ; towards which courts the term ' jurisdiction,' as applied to fraud, has its chief significance. In some of the states, as in Massachu- setts, it was found necessary to create, and to nourish with unremitting care,^ a court of equity, and then at length to begin to remove, here and there, the barriers separating it from the domain of the law courts, and so to permit an easy escape from the one jurisdiction to the other.^ In other states, as in New York, where courts of law and courts of equity had long existed side by side, in hereditary independence, it was considered desirable to melt the two into one, the net result of which appears to have been a decided gain in favor of equity ; and more recently the same has come to pass in England. Indeed it appears to be true that in New York, and in the states which have followed its example and pattern, and in England, all the courts have become substan- tially courts of equity .2 Another considerable legislative change has come about in 1 By the legislature ; equity, as a Sts. c. 167, § 431. See further. Acts of growing jurisdiction, met with scant fa- 1887, o. 383. vor from the judiciary, oddly enough. ' But separate jurisdictions of law See 1 Story, Equity, pp. 26, 27, note, and equity still exist in the greater part 13th ed. of this country. For the history of 2 By the statutory permission, when English legislation, briefly and concisely needful, to turn a declaration at law into stated, see Maitland's Justice and Po- a bill in equity, and vice versa, at any lice, ch. i. stage of the proceedings. Mass. Pub. 42 ADJECTIVE LAW OF FKAUD. [CHAP. 11. England. As late as the year 1857 a difference existed there, explainable on grounds of history, between the effect of the probate of a will of personalty and the probate of a will of realty. The Ecclesiastical Court, to which down to that time the probate of wills had been committed, entertained exclusive jurisdiction of wills of personalty, so far as the question of the validity of a testament was concerned, which would in- clude, generally speaking, questions of fraud upon the tes- tator ; while in regard to the validity of wills of realty that court had no determining power. This belonged entirely to the common law courts ; the probate of a will devising real estate was not even evidence of the execution of the will, so far as such estate was concerned. This was all changed in 1857. The Court of Probate (and Matrimonial Causes) was then created, by which the same effect was given to the act of probate in regard to realty as it had before in regard to personalty.^ In the year 1875, by the Judicature Act, this court too was fused into the one High Court of Justice. The state of the law upon this subject of probate is very much mixed in the United States. The old distinction, de- rived from the Ecclesiastical Court of England, between the effect of the probate of personalty and of realty has from the first obtained, and it is believed still obtains^ in many states of the Union ; while in many other states the distinction, so far as it ever obtained, was long ago removed by legislation.^ But whether the distinction in question prevails in a given state or not, the Court of Probate, called by this or by what- ever name, has no jurisdiction over rights of property under the will, except in so far as the decision in probate upon the validity of the will is concerned. The question of fraud upon the testator is a question solely or not for the Probate Court, 1 20 & 21 Viet. c. 77, §§ 61, 62. Am. ed., printed as a chapter in 4th * See upon the whole subject Per- Am. ed. kins's note to 1 Jannan, Wills, 31, 5th CHAP. II,] JUEISDICTION. 43 to be determined in accordance with the existence or not of the distinction above mentioned ; but questions of fraud be- tween the beneficiaries, indeed all questions of fraud arising after the probate, are for the courts of law or of equity, or for the single court of general jurisdiction where law and equity have been fused. The jurisdiction of the Court of Probate begins and ends with the probate of the will ; questions of fraud upon the testator, or in the execution of the will, must be raised during the pendency of probate proceedings. After probate then no other court can declare that the will was obtained or executed by fraud. Equity has no power to set aside, or indeed to restrain, the probate of a will.^ On the other hand if fraud be proved, it will not assist the party prac- tising it, but will leave him to take such advantage of it other- . wise as he can.^ But further, equity may, according to the real intention of the testator, declare a trust upon a will, though it be not contained in the will itself, in at least three cases : first, in the case of a notorious fraud upon a legatee, as if the draftsman of the will should insert his own name in- stead of thAt of the legatee ; secondly, where the words imply a trust for the relatives, as in the case of a specific devise to the executors without a disposition of the residue ; thirdly, in the case of a legatee promising the testator to stand as a trus- tee for another.^ Indeed Lord Hardwicke has said that while fraud in making or obtaining a will must be inquired into and determined by the Ecclesiastical Court, fraud in procuring a will to be estab- lished in that court, fraud not upon the testator, but upon the person disinherited thereby, might be the subject of inquiry in equity.* And the same distinction has been recognized by 1 Broderick's "Will, 21 Wan. 503 ; ^ Fonblanque, Equity, Bk. 1, u. 2, Ellis V. Davis, 109 U. S, 485, 494 ; § 3, note u. Wolcott V. Wolcott, 140 Mass. 194 ; » Marriot v. Harriot, Gilb. 203, 209 ; Trexlor v. Miller, 6 Ired. Ec[. 248 ; Al- Allen v. McPherson, 5 Beav. 469 ; s. c. len V. McPherson, 1 H. L. Cas. 191 ; 1 Phill. 133 ; 1 H. L. Cas. 191. Meluish v. Milton, 3 Ch. D. 27. * Bamesley v. Powell, 1 Vea. 284. 4J: ADJECTIVE LAW OF FRAUD. [CHAP. II. other judges.^ So where the fraud does not go to the validity of the whole will, but only to that of some particular clause, or where the fraud consists in unduly obtaining the consent of the next of kin to the probate, courts of equity will interpose to declare the executor a trustee for the next of kin.^ And it has been held that a will which has been fraudulently de- stroyed or suppressed may be set up in equity.^ Beyond cases of this kind, over which the Court of Probate itself could afford no suitable relief, the jurisdiction of that court is in proper cases exclusive, and its decision beyond review. It will be seen that it is no paradox to say that while a par- ticular court may have exclusive jurisdiction of certain ques- tions touching fraud, after that jurisdiction has been exercised other courts may have jurisdiction of rights growing out of the decision of that court ; indeed in a collateral way invading its exclusive domain. The rule is not at all peculiar to the judg- ments or decrees of the Court of Probate, but is general. Thus an action for deceit in the sale of a patent is maintainable in a state court, though the case may involve, collaterally, the construction and validity of the letters patent,* the validity of which, directly considered, i. e. with reference to the jurisdic- tion to set the same aside, is exclusively within the cognizance of the United States courts. The boundary line of the jurisdiction of courts of equity in respect of fraud, generally, has been a subject of much per- plexity. Courts of law have unquestioned jurisdiction of ac- tions for damages, whether ex delicto or ex contractu ; have courts of equity also jurisdiction? Fraud, it is laid down, is an original head of equity ; and hence it has been declared 1 Meadows v. Duchess of Kingston^ * David v. Park, 103 Mass. 501. Amb. 762 ; Kennell v. Abbott, 4 Ves. Another example, in regard to bank- 802. See Allen v. McPherson, ut supra, ruptcy, may be seen in Hanson v. Her- 2 1 Story, Eijuity, § 440. rick, 100 Mass. 323. See also Nash u. 8 Buchanan v. Matlock, 8 Humph. Lull, 102 Mass. 60. 390. CHAP. II.] JUKISDICTION. 45 that equity has jurisdiction of false representations.^ Indeed in that general form of statement the proposition would be admitted everywhere. But has equity jurisdiction of false representations simpliciter, either for damages, or for restrain- ing an action at law upon a contract obtained by such act, or for cancelling or setting aside a writing so obtained ? Some judges appear to have been willing to answer the first, and therefore (it would seem) a fortiori the second and third, of these questions in the affirmative.^ The more general and probably the better answer however to the first question is in the negative.^ A more serious difficulty arises in regard to the second and third questions, which may be treated as one for the present purpose ; and there is considerable diversity of judicial opinion upon the subject. Thus in Massachusetts it is virtually declared that there is a 'plain, adequate, and complete ' remedy at law in such cases, in the defence of fraud, and that that is all that can be required. But.it is also said fur- ther by the same court that the remedy at law, to exclude the courts of equity, ought to be ' as practical and efficient ' as the remedy in equity ; * and it may well be contended that defence is not as efficient as cancellation or injunction. But the courts which declare that the remedy at law ought to be ' as practical and efficient ' as in equity, to cut off equity jurisdiction, are not agreed in the application of the rule. The Supreme Court of the United States, the very court which has most frequently stated the rule, has itself refused to order the cancellation of a policy of insurance obtained by fraudulent representations ; ^ while the Supreme Court of Massachusetts, which has generally taken a more limited view of the extent 1 Evans v. Bicknell, 6 Ves. 182 ; ° See the note just cited. Bacon c.Bronson, 7 Johns. Oh. 194, 201; * Holden v. Hoyt, 134 Mass. 181, Hill V. Lane, L. R. 11 Eq. 215, 220 ; 185 ; Oelriohs v. Spain, 15 Wall. 211, Rarashire v. Bolton, L. R. 8 Eq. 294. 228 ; Boyoe v. Grundy, 3 Peters, 210, 2 See Hill v. Lane, and Eamshire v. 215 ; note to Story, supra. Bolton, supra ; also 1 Story, Equity, ' Insurance Co. v. Bailey, 13 WalL p. 30, note, 13th ed. 616. 46 ADJECTIVE LAW OP FKATTD. [CHAP. II. of its jurisdiction in equity, has done the contrary.^ The latter appears to be tlie better course, and not only in such cases, but in all others of the kind where the invalidity of the instrument is not apparent on its face, and where further there is danger that the evidence to support the defence to it at law may bo lost by the delay of the opposite party to sue upon it,2 as in a striking case referred to in a preceding chapter,^ or where for any reason the instrument may be put to a wrongful use.* Thus in a case just cited ^ it appeared that a partner had fraudulently given the firm note to A. The firm is dissolved and a receiver appointed. After matu- rity of the note the injured partner brings suit in equity against A, who still holds the note, to have the same given up for can- cellation, and succeeds. The rule of jurisdiction ought to apply to the case of con- veyances made or obtained through fraud ; but here too the decisions of the courts are out of harmony. Indeed the same court is sometimes apparently out of harmony with itself. Thus in Massachusetts, where the case just stated was decided, and where an insurance policy has been cancelled for fraud,* it has been held that if the aggrieved party to a conveyance of land, obtained by the grantee through fraudulent represen- tations or other fraud, is in a position to maintain an action at 1 Commercial Ins. Co. v. McLoon, 601 ; Peirsoll v. Elliott, 6 Peters, 95 ; 14 Allen, 351, approved in Fuller v. Hamilton v. Cummings, 1 Johns. Ch. Percival, 126 Mass. 381. See also 517. The case may therefore be com- Smith V. Smith, 30 N. J. Eq. 564 ; pared to a hill to perpetuate testimony, Strafford v. AVelch, 59 N. H. 46 ; Hus- which it much resembles. See Lang- ton V. Eoosa, 43 Ind. 517 ; Huston v. dell. Equity PI., p. 217, 2d ed. Schindler, 46 Ind. 38 ; Hardy v. Brier, 8 ^^te, pp. 16, 17, note. 91 Ind. 91. All these cases but the * Glastenbury v. McDonald, 44 Vt. first were cases of promissory notes, 450 ; Bank of Bellows Falls o. Rutland ordered to be cancelled for fraud or E. Co., 28 Vt. 470 ; Baldwin v. Fagan, forgery. 83 Ind. 447. 2 Anthony v. Valentine, 130 Mass. ^ Fuller v. Perciyal. 119 ; Fuller v. Percival, 126 Mass. 381 ; " Commercial Ins. Co. v. McLoon, Commercial Ins. Co. v. McLoon, 14 Al- supra, len, 351 ; Martin v. Graves, 5 Allen, CHAP. II.] JTJEISDICTION, 47 law to recover possession,^ he cannot have relief in equity from the deed. The deed would not there be considered a cloud upon the party's title, though it might still be on record.''' On the other hand it is held in Indiana that where the vendor of real estate fraudulently represents that he has a perfect title thereto, the purchaser can enjoin the collection of the purchase-money until the title shall be made good.* Indeed the true rule is, that equity alone has jurisdiction, apart from statute, to ' set aside ' * a conveyance of land ob- tained by fraud upon the grantor, or made by fraud on his part ; on the ground that the legal title to the land has passed notwithstanding the fraud, and that that title can no more be reconveyed by parol rescission than it could have been con- veyed by parol.^ It is only by statute that property of a gran- tee can be taken at law as the property of the grantor. In the absence of statute an attaching creditor of the grantor must, before proceeding even in equity against the estate, have obtained judgment at law (if his claim is not equitable) and return of execution nulla bona.® It is of course clear that when there is no plain or adequate remedy at law equity will everywhere entertain jurisdiction. A few illustrations may be given. In a case in Tennessee it was held that in ejectment the grantor of a deed, regularly executed and recorded, cannot set up fraud in the procure- ment of the instrument ; his remedy is to be found in equity .'' 1 The process there is by (statutory) * More properly, to require a recon- writ of entry. But how can there be veyance ; even if a deed of land could an action at law when the defendant be ordered up to be cancelled, the can- has the legal title, as here ? It can only cellation would not restore the title to be by statute. the grantor. The term is only one of 2 Swamscott Machine Co. v. Perry, convenience. 119 Mass. 123 ; Bassett v. Brown, 100 » Feret v. Hill, 15 C. B. 207 ; Win- Mass. 355 ; Pratt v. Pond, 5 Allen, 59. dett v. Hurlburt, 115 111. 403 ; Israel v. 8 Hinkle v. Margerum, 60 Ind. 240. Jackson, 93 Ind. 543. See "Warren v. Carey, 5 Ind. 319 ; Wiley " Reubens v. Joel, 13 N. Y. 488. V. Howard, 15 Ind. 169 j Strong v. ' Ferguson v, Coleman, 5 Heisk. 378. Downing, 34 Ind. 300. 48 ADJECTIVE LAW OF FRAUD. [CHAP. II. And it is elsewhere laid down that a deed of gift executed and acknowledged by one having legal capacity to convey cannot be avoided at law by proof that it was obtained by undue influence; the remedy being in equity.^ Again equity has jurisdiction of a bill alleging a conspiracy between several defendants to defraud the plaintiff of his land, and setting out the acts done in pursuance of the objects of the conspiracy.^ So also equity has jurisdiction, even in Massachusetts, of a bill to set aside a deed obtained by the grantee's fraud, when the estate of the grantee is postponed until the death of a person still living.^ Jurisdiction in equity is also created by a case in which the defrauding grantee has sold the land by a valid title and re- ceived back a security for the purchase-price, such as a mort- gage, or in which the grantee has mortgaged the land, though for value, and without notice ;* though of course the remedy in such cases will not extend beyond the defrauding grantee. In a case in Massachusetts ^ the plaintiff filed a bill to com- pel the defendants to transfer to him a mortgage, to which the defendants demurred. The bill charged that a deed had been procured from the plaintiff, conveying land to defendant K, by means of false and fraudulent representations of defendant L, a broker employed by the plaintiff to sell the land ; that K was a party to the fraud ; that the land was afterwards conveyed to a third person for value and without notice ; and that that person had given back to K a mortgage, now held by him to secure payment of the purchase-money. The bill prayed that the defendant K might be restrained from trans- ferring the mortgage to any one but the plaintiff, and that to him the court would order an assignment of it, and damages.® The demurrer was held bad. The court declared that it was 1 Truman v. Love, 14 Ohio St. 144 ; * Cheney v. Gleason, 117 Mass. 557 ; Clary v. Clary, 2 Ired. 85. Dodd v. Cook, 11 Gray, 495. 2 Dwinal v. Smith, 25 Maine, 379. ' Cheney v. Gleason, supra. » Martin v. Grave.s, 5 Allen, 601. ' Dodd v. Cook, 11 Gray, 495. CHAP. II.] JURISDICTION. 49 clear that no action at law could furnish adequate relief ; the plaintiff sought to obtain possession of the mortgage as part of the avails of the fraud. The land itself was beyond his reach ; but it was established doctrine that where a legal estate had been acquired by fraud, tlie taker was in equity a trustee of the party defrauded, and the defrauded party might recover from him the estate, or its avails if capable of identifi- cation.^ Hence the plaintiff ought to have a transfer of the mortgage, as an equitable title in himself.^ Again where a defrauding grantee conveys the estate to an- other by an invalid title, the remedy of the original defrauded owner, to recover the estate, is in equity. Thus an insolvent debtor conveyed land in fraud of his creditors to one who afterwards mortgaged it to a third person by an invalid instru- ment ; and it was held that the assignee of the insolvent could recover the land in equity. The title of the grantee, it was said, was distinct from that of the mortgagee ; and a recov- ery against the former at law would leave the title of the latter undetermined. The validity of the two titles depended in part on different facts and the application of different principles.^ ^ In a case cited in the note * a bill alleged that judgment had been rendered in another state against the present plaintiff . and two others jointly, upon their liability there as directors of an insolvent bank. After the judgment the parties entered into an agreement to share the burden equally ; in fraud of this agreement two of the parties made an arrangement by which the judgment was taken up and transferred to E, who with others signed or indorsed the notes given in payment therefor. These parties in collusion with the two joint debtors now sought, in the name of the original creditor, to enforce 1 Small V. Attwood, Younge, 507 ; sufiicient to justify a bill in Massachu- Dodd V. Cook, 11 Gray, 495 ; Whitte- setts, as elsewhere, to set aside a con- more V. Cowell, 7 Allen, 446 ; Bradley veyance for fraud. ■0. Luce, 99 111. 234; Henley v. Kioe, » Hubbellr. Currier, 10 Allen, 333. 40 Mich. 73. * Thompson v. National Bank of Ee- '^ It is difficult to see why this is not demption, 106 Mass. 128. 50 ADJECTIVE LAW OF FEAUD. [CHAP. II. the judgment against the plaintiff alone, for the full amount, by levying on property and suit upon the judgment. The court held on demurrer that this clearly made a case for juris- diction. The arrangement with the creditor could not be pleaded at law as a payment of the debt ; the rights of other parties than the defendants prevented. Again the assignment to E was valid, and it could be impeached only to the extent necessary to make good the contributory arrangement made ; and that could be adjusted only in equity. In equity too securities which had been given by the two joint debtors to the other defendants could be reached and applied in aid of the plaintiff. A person who has executed a conveyance to a trustee cannot at law impeach for fraud in the purchaser a deed reg- ularly executed by the trustee of the trust property. He should go into equity.^ So also conveyances in fraud of the marital rights of the husband are good at law. The remedy therefor is in equity .2 The same is true of illusory appoint- ments under powers ; the appointment is good at law, and can be assailed only in chancery.^ So the obligation (which exists in certain cases) of a purchaser to see to the application of the purchase-money is enforceable only in chancery.* The remedy for fraud upon a partner in the settlement of partnership ac- counts is also by bill in equity. Assumpsit for example can- not be maintained.^ But this rule does not apply to the case of money obtained by such copartner from his fellow for the partnership, when the formation of the partnership and the obtaining the money were a fraud by the former upon the latter, practised for the sake of obtaining money for individual 1 Taylor v. King, 6 Mvinf. 358. sale and conveyance, has pursued the 2 Logan V. Simmons, 1 Dev. & B. 13. terms of the power is entitled to protec- 8 Carrington v. Goddin, 13 Gratt. tion as much as if the trustee had been 687. invested with the legal title. lb. Such ' lb. A bona fide purchaser without questions cannot be adjusted at law. notice from one clothed with a mere ^ Holyoke o. Mayo, 50 Maine, 385 ; power of sale, but who, in making the Chase v. Garvin, 19 Maine, 211. CHAP. 11. J JURISDICTION. 61 purposes. In such a case the defrauded party may recover his money at law.^ Such too is the nature of the legal rights of partners that it is considered that they must not only join in actions at law, but a right of action must be established in all, or no recovery can be had. It is a general principle that all must be entitled to judgment or none ; and, in cases where one partner is precluded on the ground of fraud, the fraud operates not only against him, but also, by reason of the necessary joinder of parties, against the innocent partners. Were it otherwise, the judgment obtained would be the joint property of all the plain- tiffs, and would go to the benefit of the guilty with the inno- cent ; and the law will not suffer a guilty party to come into court and reap the products of his own fraud by joining an innocent copartner with him.^ If the innocent partner have any remedy, it is by suit in equity, where the objection of. join- ing his guilty copartner can be obviated.* Thus, in the case first cited, it appeared that one of the plaintiffs in trover, Estabrook, had entered into partnership with the other plain- tiff, Bromley, purchasing a share of the goods held by the latter, and the goods were afterwards seized on attachment as the property of a third person. It further appeared that the goods were sold to Bromley by the attachment debtor, and that such sale was fraudulent towards the attachment creditor. The court accordingly held that the partners could not recover, though Estabrook had purchased his interest without notice of the fraud. In a recent case * three persons brought an action for the conversion of a quantity of glass. The plaintiffs had been 1 Hale V. Wilson, 112 Mass. iii. 9 Bam. & C. 532 ; Wallace o. Kelsall, '■' Estabrook v. Messersmith, 18 Wis. 7 Mees. & W. 264, 273 ; Kilby v. Wil- 545; Canal Co. li. Gordon, 6 Wall. 561 ; son, Ryan & M. 178; Eichmoud v. Farley v. Lovell, 103 Mass. 387 ; Homer Heapy, 1 Stark. 202. V. Wood, 11 Cush. 62 ; Noyes v. New ' Estabrook v. Messersmith, supra. Haven R. Co., 30 Conn. 1 ; Fellows v. * Farley v. Lovell, 103 Mass. 387. Wyman, 33 N. H. 358 ; Jones v. Yates, 52 ADJECTIVE LAW OP FEATJD. [CHAP. II, partners. One of them without the knowledge of the others had delivered the glass, which was partnership property, to the defendant in payment of a private debt, the defendant be- ing aware of the facts. It was held that the plaintiffs had gone into the wrong court ; they could only recover in the present action by showing the fraudulent acts of one of their number, — that is, one of them would have to allege and prove his own bad faith as the ground of action. This difficulty would not arise in equity.^ Nor can joint contractors sever the contract, so as to give one of them his share of the contract untainted by fraud on the part of the other, by which the whole contract was obtained.^ It is held that a bill in equity is maintainable against a de- fendant who, claiming title under a deed alleged to be fraudu- lent, has taken possession of, and converted to his own use, sundry articles of personal property ; the plaintiff praying the court to set aside the fraudulent deed, and to compel the de- fendant to render a just account of the property so wrongfully taken, and pay the value thereof to the plaintiff. This is not a mere action of trover.^ In a suit brought in equity for partition by a purchaser of the interests of devisees it is not regular to impeach for fraud or mistake the conveyance made to him. An application to a court of equity for partition does not seem to be an application to the sound discretion of the court, to be granted or refused according to the circumstances of the case, as in cases of spe- cific performance and other cases. It is a remedy substituted for the difficult and perplexed remedy by writ of partition. The only indispensable requisite to entitle the plaintiff to relief is that he shall show a clear legal title. If his title be disputed or doubtful, the decree for partition will be suspended until he establishes his title at law by ejectment or other remedy.* 1 Homer v. Wood, 11 Cush. 62; '^ Goode i). Hawkins, 2 Dev. Eq. 393. Noyes o. New Haven E. Co., 30 » Cocke v. Bromley, 6 Munf. 184. Conn. 1. • Wiseley v. Findlay, 3 Eand. 361 ; CHAP. II.] JURISDICTION. 53 At common law it has often been held incompetent to a defendant sued at law on a specialty to plead that the instru- ment was obtained by false representations ; it is a case, it is said, for equity alone.^ It is clearly otherwise of the execu'- tion of the instrument, as where the bond is misread to the obligor, or where his signature is obtained to an instrument which he' did not intend to sign. In such cases fraud may be alleged at law.^ The ground of this distinction seems to be, that to admit evidence of fraud not relating to the execution of the deed would be to allow the obligor to disprove the pre- sumption of consideration ; which presumption in the case of a specialty is an absolute one, not to be rebutted. This ground of distinction however is not well taken. In the first place it would be equally true in equity that to per- mit the allegation might be to permit a question of the con- sideration ; and this does not appear to be a case for any different rule in equity from that at law. But in the next place, and as a matter of greater weight, the better view, brought out by more recent investigation into the history of contract, is not that a consideration is conclusively presumed in the case of a specialty, but that no consideration is or ever was required to support such contract.^ The result is that to allow evidence at law of fraudulent representations is not in conflict with any rule in regard to consideration, whatever other rule it may affect. Some courts indeed admit the plea of fraud in the ' consideration,' as well as in the execution Wilkin V. Wilkin, 1 Johns. Oh. Ill; Cowan, 506; Champion o. White, lb. Philips V. Green, 3 Johns. Ch. 302. 609 ; Dale v. Roosevelt, 9 Cowen, 307 ; i George v. Tate, 102 U. S. 564 ; Belden v. Davies, 2 Hall, 433 ; Stryker Irving V. Humphrey, 1 Hopk. 284 ; d. Vanderbilt, 1 Dutch. 482 ; Holley v. Davis V. Fearis, 52 Ind. 128 ; and cases Younge, 27 Ala. 203 ; Wood v. Good- cited in the next note. rich, 9 Yerg. 266. 2 Windett v. Hurlburt, 115 III. 403,; = 3 Law Quarterly Review, 166 et Biederman v. O'Connor, 117 111. 493 ; seq. (The History of Contract, by John Taylor v. King, 6 Munf. 358 ; Wyche W. Salmond) ; Holmes, Common Law, «. Macklin, 2 Rand. 426 ; Dorr y. Mun- p. 134, 261, 263 ; Glanvill, lib. 10, Bel, 13 Johns. 430 ; Vroonian v. Phelps, cc. 10, 17. 2. Johns. 177; Franchot v. Leach, 5 54 ADJECTIVE LAW OF FKAtTD. [CHAP. II. of the instrument ; in other courts it is allowed by statute.^ And in any case, if the plaintiff traverse the plea, he waivea the estoppel, and the evidence of fraud becomes admissible.^ Even fraud in the execution of a deed may not be available at law, as e. g. when the rights of an innocent party therein would be impaired.^ Thus, in the case cited, a party proposed to convey a tract of land in trust, and his brother undertook to have the deed drawn, and thereupon, without the knowl- edge of the grantor, inserted a conveyance also of another tract of land in trust for himself. Upon presenting the deed for execution, in reply to a question from the grantor, the brother said it was ' all right,' whereupon it was executed without reading. It was held, in an action of trespass quare clausum fregit, that the deed was binding. The remedy of the grantor was to be sought in equity. The fraud indeed was thought not to have been perpetrated in the factum of the grant. But that may be doubted ; the result must have been different had the tracts been conveyed by separate deeds.* Concerning what is deemed fraud in the factum or execution of a deed, as distinguished from fraud relating to the consider- ation, the authorities afford various examples. One instance of fraud in the factum is where the grantor of a conveyance intends to execute a certain deed, and another deed is sur- reptitiously substituted in its place.^ Another is afforded by » Hazard v. Irwin, 18 Pick. 95, no inquiry into tlie consideration of a Shaw, C. J., denying certain early New deed could be made at law. York cases ; Phillips v. Potter, 7 li. I. ' "Wormley v. Moffet, 6 Munf. 120 ; 289 ; Hoitt v. Holcoinb, 23 N. H. 535, Wyche v. Macklin, 2 Rand. 426. 652. See 3 Phillips, Evidence, 1448, » McArthur o. Johnson, Phill. (N. note 969, Cowen's ed. In Hoitt u. Hoi- Car.) 317. comb, supra, the court hold that fraud * See Kennedy v. Green, 3 Mylne & not relating to the execution of a spe- K. 699 ; George v. Tate, 102 U. S. 564 cialty is not necessarOy fraud relating to Foster v. Mackinnon, L. K. 4 C. P. 704 the consideration ; and it was considered ' Canoy v. Troutman, 7 Ired. 155 that the cases which refuse to admit Gant v. . Hunsucker, 12 Ired. 254 evidence not relating to the execution Nichols v. Holmes, 1 Jones, 360 ; Mc have fallen into confusion in overlooking Arthur v. Johnson, Ehill. (N. Car. this distinction. It was conceded that 317. CHAP. II.] JUEISDICTION. 55 the case of a deed executed by a blind or illiterate person, when, upon request to read the deed, it has been falsely read to him.^ The principle upon which such cases as these proceed is that the party was fraudulently caused to execute a differ- ent instrument from that one which he intended. It could not therefore be properly called his deed. But where the party knowingly executes the very instrument which he in- tended, but is induced to do so by some fraud in the treaty, the fraud, according to the current of authority, cannot be set up at law. Of this species of fraud is that practised upon a man who can read the instrument which he executes and delivers, but refuses to do so. 'If the party,' says the Touch- stone, ' that is to seal the deed can read himself, and doth not, or, being an illiterate or a blind man, doth not require to hear the deed read, or the contents thereof declared ; in these cases, albeit the deed be contrary to his mind, yet it is good and unavoidable at law ; but equity may correct mis- takes, frauds, Ac.'^ Nothing therefore, according to this view, which would be discoverable upon the reading of the instrument can make the deed invalid at law, unless the duty of reading devolve upon the opposite party, and that duty is abused.^ If in an action at law upon a sealed instrument there be fraud (not relating to the consideration) on the part of the plaintiff, the court will hear evidence in resistance of the ac- tion. But a court of law will not allow evidence on the part of the plaintiff of fraud in the defendant ; as for example in the date of the deed. He should go into equity for relief.* And in a suit in equity for the correction of an alleged mis- take in a bond the defendant can allege that the bond was obtained by fraud, though no attempt is made to enforce it 1 2 Black. Cora. 304 ; Manser's Case, " Shep. Touch. 561. 2 Coke, 8 ; McArtliur v. Johnson, Phill. ^ McArthur v. Johnson, supra. (N. Car.) 317. ♦ Wood v. Goodrich, 9 Yerg. 266. 56 ADJECTIVE LAW OF FRAUD. [CHAP. II. in such suit. It is not necessary for the defendant to wait until he is sued at law upon the bond, even in those states in which such fact would be available at law.^ A few more special cases may be stated. There is no equity to restrain the overseers of a railroad made over the plaintiff's land from using the road after its comple- tion, or from interrupting the plaintiff's workmen in at- tempting to remove it and to restore the land to its original state, though the possession of the land for the purpose of constructing the railroad may have been obtained from a tenant of the plaintiff by means of fraud.'^ The question in such a case relates merely to the right of way ; and, if the railroad company have not acquired the right, they are trespassers, and liable accordingly. The remedy is not by injunction.^ An action cannot be maintained at law by stockholders of a corporation, in behalf of themselves and other stockholders, against the directors, for the benefit of the corporation, to recover profits supposed to have been gained, to its prejudice and damages, for losses suffered by it through the misconduct of the directors. And ordinarily the same rule will apply in equity. It is only from the necessity of the case, and to pre- vent a failure of justice, that suits in equity for such purpose are allowed. To justify a bill in equity, it must be shown that suitable redress is not attainable through the action of the corporation. To this extent all the authorities agree. There is some diversity however as to what will satisfy the requirement. Whether there must be an effort to move the corporate body to the redress of its own injuries, and to that end an attempt to procure a meeting and vote of the stock- holders, or whether an application to the present board of ofiicers by whom the corporate affairs are managed, and a refusal by them to aUow proceedings in its name and behalf, ' Hogencamp v. Ackerman, 2 Stockt. ^ Deere v. Guest, 1 Mylne & C. 516. 267. « lb. CHAP. II.] JURISDICTION. 57 would be sufficient, does not seem to have been determined by any clear concurrence of decision. The question may depend somewhat upon the nature of the corporate organization, and the extent of powers confided to its officers for the time being. Where the stockholders retain no control of the corporate business except by means of an annual election of officers, those officers, during their term of service, represent the corporation for all purposes ; and a refusal by them to take proper action for the protection of its interests, or to allow the use of the corporate name for that purpose, ought to be sufficient to justify a proceeding in behalf of the individual stockholders, making the corporation a party defendant. A formal application and refusal need not be alleged, if enough appear to show that such an appli- cation would be unavailing. Where the directors themselves are the parties charged with the wrong, or by whose fraud or collusion the wrong has been accomplished, and the suit is to be brought against them, they are by the very nature of the case incapacitated for the service of representing the corpora- tion in any action for the restoration of its rights, whether by suit or by proceedings in pais. If the corporate action is under the control of such parties, it is sufficient reason to warrant proceedings by suit in the name and behalf of the individual stockholders.^ In accordance with these principles, laid down in the case cited, it was there held that a bill for the purpose above in- dicated, which did not allege that any effort had been made to set the corporation in motion for the purpose of securing its own redress, or that any application had been made to the directors to take action in the matter, could not be main- tained, if the bill did not clearly show that such effort or application would be unavailing. It does not follow that because there may be a remedy at law there may not also be a remedy in equity. The whole > Mr. Justice Wells, in Brewer v. Boston Theatre, 104 Mass. 378. 68 ADJECTIVE LAW OF FRAUD. [CHAP. n. subject of fraud indeed is a matter of the concurrent juris- diction, for fraud was from the earliest times a head of equitj'^, and it is only within comparatively recent times that courts of law have succeeded in establishing their jurisdiction. In doing so they have not supplanted courts of equity ; ^ and wherever there is a jurisdiction at law and in equity, the jurisdiction is concurrent, though a law court may not be able in a particular case to afford an adequate remedy .^ A party may then have a remedy in equity in a case within the concurrent jurisdiction of that court, though he might find anotlier very good remedy at law ; almost the only exception being tlie case of a mere suit for damages already mentioned. A single example will now suffice, for others have already been given. Thus Lord Justice Turner has said, in the case of a bill in equity by a principal against his agent : ' It is not denied . . . that there would be a remedy at law against J. S. and his estate in respect of this breach of duty, but . . . there is at least concurrent jurisdiction in equity in case of fraud by an agent upon his principal, and certainly I am not. prepared to agree to the doctrine that where two agents concur in a fraud, and one of them only derives a benefit from the fraud, the other is not liable in equity for the benefit so derived.' ^ Notwithstanding the fact however that courts of equity generally have concurrent jurisdiction over fraud with courts of law, a determination at l^w of a question of fraud will con- clude a re-examination of the same matter in equity, except where the complaining party was under some disability which prevented him from bringing his case fully and fairly before the court of law.* Indeed though courts of equity and courts of law have a concurrent jurisdiction in cases of fraud, still if a suit be first brought in a court of law, in which, upon the issues, 1 1 Story, Equity, p. 30, note, 13th ed. » Walsham v. Stainton, 1 De G. J. & 2 See 1 Fonblaniiue, Equity, ch. 1, S. 678. § 3, note f. i Smith v. Mqlver, 9 Wheat. 532. CHAP, n.] JtTEISDICTION. 69 the question of fraud should be tried and determined, the party injured by the fraud must make his defence there ; and if he neglect to do so, equity has no jurisdiction to relieve him.i But this rule is probably to be understood of cases in which the defrauded party was bound to show the fraud in the action at law. It can hardly be true of cases in which such party is entitled to bring a cross suit.^ Equity will entertain a bill to set aside an order of court obtained for a fraudulent purpose, and a sale made thereunder, notwithstanding the fact that the plaintiff might have accom- plished the same object by mere motion in the court which granted the order, if it be not clear that the rights of the par- ties could be so well protected and disposed of under a motion. But where a full, adequate, and perfect remedy is attainable by motion, as in respect of orders fraudulently obtained for foreclosure sales, an independent proceeding is not allowed.^ Further in any case of fraud if the injured party is entitled to go into equity for relief^ in regard to any matter arising out of the contract or transaction in which he has been de- frauded, he may there obtain full relief without resorting to a court of law. Equity having entertained jurisdiction as to part of the case will entertain jurisdiction as to the whole, and give final relief to the injured party .^ Again an important distinction between jurisdiction at com- mon law® and in equity may be noticed in the case of the rights of a purchaser whose title has been overturned because 1 Haden v. Garden, 7 Leigh, 157. * As distinguished from discovery. ^ See Bigelow, Estoppel, 107, 138, As to that see 1 Story, Equity, p. 78, 175, 4th ed. note, 13th ed. » Hackley v. Draper, 60 N. Y. 88, 5 Bradley w. Bosley, 1 Barb. Ch. 125. overruling a dictum in Libhy v. Eose- See 1 Story, Equity, p. 30, note, 13th ed. krans, 55 Barb. 202, 219 ; Brown o. " What is here, and elsewhere, said Frost, 10 Paige, 243 ; American Ins. about jurisdiction at law must be under- Co. V. Oakley, 9 Paige, 259 ; McCotter stood of the common law ; special statu- V. Jay, 30 N. Y. 80 ; Gould v. Morti- tory modifications cannot be considered mer, 26 How. Pr. 167. in a work like the present. 60 ADJECTIVE LAW OF FRAUD. [CHAP. II. of fraud upon the creditors of the vendor, to which he is shown to have been privy. If the fraud be established in a suit at law, no relief can be given the purchaser ; he must lose the property regardless of the amount, or of the application, of the money which he has paid or laid out. Indeed no relief will be given to him in equity afterwards.^ But if the pro- ceeding against him is in equity, a more flexible and tolerant jurisdiction may be exercised. In the case just cited Mr. Justice Swayne, for the court, declares in regard to a pur- chase alleged to be in fraud of creditors, that while equity will scan with severest scrutiny the transaction, it will at the same time, look at all the facts, and, giving to each its due weight, deal with the subject according to its own rules of right and justice. ' In some instances it visits the buyer with the same consequences which would have followed in an action at law. In others it allows a security to stand for the amount advanced upon it. In others it compels the buyer to account for the difference between the under price which he paid and the value of the property. In others, although he may have paid the full value, and the property may have passed beyond the reach of the process of the court,^ it regards him as a trustee, and charges him accordingly. Where he has honestly applied the property to the liabilities of the seller, it may hold him excused from further responsibility.' "* The purchaser's rights in such cases will, it seems, often turn upon the nature, and perhaps upon the extent, of the fraud to which he has been found a party. If instead of being merely in privity with the vendor, as by mere notice of the intent of the latter (and that would not be enough in some states to overturn his title*), he should have actively partici- pated in the scheme of fraud, his claims would be looked upon ' Clements v. Nicholson, 6 Wall. ^ Swayne, J. in Clements v. Nichol- 299, Swayne, J. son, supra. 2 See e. g. Guerrant v. Fowler, 1 Hen. * Hill v. Ahem, 135 Mass. 168. & Munf. 5, a case of rescission. CHAP. II.J ' JURISDICTION. 61 with scant fayor in equity, even if not wholly disallowed.^ In- deed a similar doctrine has been applied to cases of rescission by a vendor of laud against a defrauding purchaser ; ^ the deed e. g. need not stand, it is held, as a security for the repayment of the money paid by the purchaser,^ a doctrine however not free from objection.* Rescission inter partes is a different thing from the proceeding of a creditor to set aside a con- veyance. Finally it is often said that equity supplements the law; it supplies its deficiencies, and mitigates its rigor. It would be more accurate to say that equity supplements that branch of the law which is administered in the common-law courts ; for that is but part and equity is the other part of the un- written law, and being part equity cannot supplement the whole. It only makes out what is wanting from the other part. This is a matter that deserves emphasis ; for it shows that equity is in no way superior in authority to that which it supplements. Each is a part of the same common law. It follows that equity can exert no authority over the courts of law. The books constantly speak of equity's ' setting aside ' judgments at law. Like the term ' void,' the expression is only conventional ; it is convenient, and must therefore be used. But it has well been pointed out^ that in reality equity 1 Sands ». Codwise, 4 Johns. 536, in an incorrect use of language. Ifajudg- error ; Weeden v. Hawes, 10 Conn. 50 ; ment had been obtained by fraud, he Forniquet v. Forstall, 34 Miss. 87. would enjoin the judgment creditor 2 McCaskey v. Graff, 23 Penn. St. from enforcing it ; if an award or an ac- 321 ; Gilbert v. Hoffman, 2 Watts, count stated was infected with fraud, he 66. w-ould not permit it to be used against ' McCaskey v. Graff, supra. the defrauded party . . . ; if a convey- * Further see chapter on Eesoission, ance of property was obtained by fraud, § 5, Tender. he would compel a reconveyance of it ; ^ ' It is often said to have been one of if a written instrument purporting to the functions of the chancellor to set constitute a contract was infected with aside, for fraud or other sufficient cause, fraud, he would in a proper case require judgments, awards, accounts stated, it to be delivered up and cancelled ; but conveyances, and contracts ; but this is he never did nor could set anything 62 ADJECTIVE LAW OP FEAUb. [CHAP. II. never does and never can set aside a judgment rendered by another court ; all that it does is to restrain the successful party from taking advantage of his judgment. And this is not because equity is superior in authority, but merely because it is supplementing that part of the common law which the machinery of the law court is not equal to. Hence, and on this ground only, it is truly said that equity will not abrogate a right at law, though in a proper case it may prevent the un- just assertion of such right.^ But statute is supreme ; it is only when the statute is silent a,nd so permissive, that the one court can supplement the other, — and a law court may and does often supplement a court of equity. When the statute however speaks, in general terms, and says that such and such a thing may be done, and nothing else, a court of equity is bound as much as a court of law, a fact sometimes overlooked, especially in cases of fraud ; and the occasional overlooking of that fact furnishes the reason for emphasizing a principle of great importance. aside by his decree." Langdell, Equity i Gibbs v. Guild, 9 Q. B. D. 59, 65, PI., p. 37, note, 2d ed.' Lord Coleridge, in C. A. CHAP. III.] REMEDIES AND THBIB CONSISTENCY. 63 CHAPTER III. REMEDIES AND THEIR CONSISTENCY. The law has provided one, sometimes more than one, of the following remedies for fraud, applicable according to circum- stances to be stated in their place ; An action for damages, or a cross-action ; rescission of contract oral or written ; in- junction against a suit or the use of an instrument, including cancellation of the writing ; proceedings to vacate judgments obtained by fraud, new trials, and proceedings to vacate or in consequence of vacating fraudulent alienations of property by debtors. So far as they are not inconsistent with each other two or more of these remedies may, if appropriate, be carried on in one suit or in separate contemporaneous suits. If then in a particular case it is found necessary to join or to consolidate ^ two consistent demands growing out of the same cause, it will be by reason of the exigencies of rules of practice, or because of the unnecessary hardship upon the opposite party to com- pel him to defend two suits, and not because of any rule of law which prevents the double recovery. This may be illustrated and its generality somewhat defihed by one or two cases of rescission. In many states a con- veyance of real property can be effectually rescinded only in equity ; but equity would in this case, no doubt, as in other 1 As to consolidation of actions see motion, compel a consolidation of them ; Gould, Pleading, ch. 4, § 103, where it that is to say, may order all the decla- is said : ' Where one brings several suits rations in the several actions to be upon several distinct demands which inserted, as so many counts, in one might all have been joined in one action, declaration.' This however is discre- the court may, upon the defendant's tionary. lb. 64 ADJECTIVE LAW OF FEAITD. [CHAP. III. cases, permit a recovery of all damages sustained by the plaintiff, including those for the fraud. Whether an action for such damages could be maintained after the recovery in equity is doubtful, unless they were of such a nature, or so well concealed, by the defendant, as not there to be ascertain- able.^ In other states however the conveyance could be an- nulled by the rescission so effectually as to permit of an action at law, such as a writ of entry ,2 to recover possession ; but in a (statutory) writ of entry damages beyond mesne profits and detriment to the estate could not, it seems, be recovered. The plaintiff would therefore be compelled to sue for damages in a separate action. On the other hand a simple sale of personalty, obtained by the buyer through fraud, could be effectually rescinded in pais, so as to justify an action at law for the conversion of the property on the refusal of the buyer to return it ; and in this action the plaintiff could and ordinarily would, as in equity, make his claim for any damages sustained/ by reason of the fraud, apart from injury to the property and loss of possession. Again a bill in equity for rescission (which, it may be remarked, is a different thing from an action based upon a rescission made ^) may also call, in an appropriate case, for an injunction against the assignment or other transfer of the written instrument under consideration. So too in a proceed- ing in equity to vacate a judgment obtained by fraud there may in a proper case be an injunction to prevent the enforce- 1 Upon this point comp. Belshaw v. fraudulently concealed by the defend- Moses, 49 Ala. 283. But see Serrao v. ant, so that the plaintiff could not by Noel, 15 Q. B. D. 549 (C. A.) ; Whitney diligence discover them in the first suit, V. Clarendon, 18 Vt. 252 ; Hodsoll v. another will be permitted. None of the Strallebrasse, 11 Ad. & E. 301 ; Darley cases cited are opposed to this. Krause Colliery Co. v. Mitchell, 11 App. Cas. r. Tliompson, 30 Minn. 64, permits re- 127 (overruling jjamb v. Walker, 3 Q. scission after judgment ou the contract, B. D. 389) ; Brunsden v. Humphrey, 14 where the fraud was not then known. Q. B. D. 141, 152. Still it is appre- ^ Bassett 17. Brown, 100 Mass. 355. bended that where the damages were ' Post, chapter on Rescission. CHAP. III.] EEMEDIES AND THEIR CONSISTENCY. 65 ment of the judgment pending the proceeding. These pro- ceedings, instead of being inconsistent with, are supplements of each other. If however two proposed proceedings are inconsistent, the law will allow but one of them.^ If the two are pending at the same time, the law will require the plaintiff at the in- stance of the defendant, to elect between the two ; and the election, if made with knowledge of the facts, will be con- clusive.^ If one of the two inconsistent remedies has been prosecuted to judgment before the other is instituted, then too there will be deemed to liave been an election of reme- dies, unless the second proceeding is based (in part) upon the ground of some invalidity, such as fraud by the opposite party in keeping the plaintiff's witnesses away from court, or of some equity that has arisen since the judgment was rendered. We have mentioned some of the remedies which are con- sistent with each other ; what remedies are inconsistent ? The following may be stated : An action for damages for the fraud by which the defendant has induced the plaintiff to enter into a contract the fruits of which the plaintiff retains, and an action based upon rescission ; the former would treat the contract as binding, while the latter would repudiate it as invalid.^ On the other hand if a proceeding is instituted for the purpose of effecting a rescission of the contract, no action for damages involving the existence of the contract can be maintained, — nothing is permitted in the way of an action for damages except an action by which the contract is repu- diated.* So if a contract of sale of goods has been rescinded 1 Jewett V. Petit, 4 Mich. 508. MoUer v. Tuska, 87 N. Y. 166 ; Mal- 2 ' Quod semel placuit in electionibns, lory v. Leach, 35 Vt. 156 ; Heastings v. amplius displicere non potest.' Co. McGee, 66 Penn. St. 384, 387 ; Butler Litt. 146 a ; Moller v. Tuska, 87 N. Y. v. Hildreth, 5 Met. 49. 166. * In regard to the question whether ^ Strong V. Strong, 102 N. Y. 69 ; the mere bringing of suit is an election, Bowen v. Mandeville, 95 N. Y. 237 ; so as to preclude the plaintiff from 5 66 ADJECTIVE LAW OP FRAUD. [CHAP. III. by the vendor for fraud, he cannot afterwards sue for the price of them as agreed upon, or for their value as goods sold ; ^ though of course their value could be recovered in an action for their conversion upon refusal of the purchaser to return them, or the value of any part converted could be recovered.^ It is often said that for a person, induced to enter into a contract by the fraud of the other party thereto, to sue for damages is to affirm the contract; and that of course is inconsistent with repudiating it. This in fact is commonly true ; for when the party defrauded sues for damages he ordi- narily sues for the fraud by which he was induced to enter into a contract the fruits of which he still retains. He has e. g. bought a horse under fraudulent representations made by the vendor, and, keeping the horse, he sues for damages, to recover what the horse would have been worth had the representations been true." bringing another action inconsistent with the iirst, there appears to he a coniliet of authority. That an election has been made if the facts were known, see Butler v. Hildreth, 5 Met. 49 ; and see Equitable Foundry Co. v. Hersee, 103 N. Y. 25. But see Newn- ham V. Stevenson, 10 C. B. 713, the language of which however is restrained by Clough K. London By. Co., L. B. 7 Ex. 26 (Ex. Ch.). And .see Krause v. Thompsou, 30 Minn. 64 ; post, p. 437, section on Rescission. 1 Powers V. Benedict, 88 N. Y. 605 ; Jewett V. Petit, 4 Mich. 508 ; Walsh v. Lillcy, 49 Mich. 423 ; Mallory v. Leach, 35 Vt. 156. 2 lb. 'A wrong-doer carries away one hundred bags of grain ; the owner recovers fifty by legal process from one who received it without con.sideration, and whose title is no better than that of the trespasser ; does he thereby lose his right to recover the value of the remainder ? Surely not. Nor is he bound to restore the fifty in order that the latter action can be maintained. Kinney v. Kiernan, 49 N. Y. 164. [See Moody V. Brown, 58 N. H. 45 ; Martin V. Boberts, 5 Cush. 126.] So the sub- sequent effort of these plaintiffs to ob- tain in bankruptcy compensation for the unfound portion of their goods is no obstacle to a recovery against a third person for so much of the fruits of the fraud as is found in his hands. Kinney V. Kiei-nan, supra.' Danforth, J. in Powers ii. Benedict, supra. See also Stuart V. Blum, 28 Penn. St. 225. ' The defrauded party • may keep what he has received, and sue to re- cover damages for the fraud.' Earl, J. in Gould v. Cayuga Bank, 86 N. Y. 75 i "Whitney v. Allaire, 4 Denio, 564 ; s. o, 1 Comst. 305 ; Mallory v. Leach, 35 Vt. 158; Parker v. Marquis, 64 Mo. 38 ; Cavender v. Roberson, 33 Kans. 626. CHAP. III.] REMEDIES AND THEIR CONSISTENCY. 67 But this is not necessarily the effect of a suit for damages. The party wronged may still find himself far from whole after a complete and consummated rescission of the contract ; he may have been induced to incur expense, or to put himself to detriment, in making necessary preparations for the carrying out of the contract. If this is true, — if and in so far as such expense or detriment was the natural and reasonable consequence of the fraud, — it would be strange to say that a suit for such damage would be an affirmance of the con- tract, and therefore inconsistent with any rescission of it; it simply would not be true. For such cases the law must permit, and does permit, an action for damages, with rescis- sion (assuming that to be possible), if the defrauded party prefer.^ 1 Lenox v. Fuller, 39 Mich. 268 ; WaiTen v. Cole, 15 Mich. 265. 68 ADJECTIVE LAW OF PBAUD. [CHAP. IV. CHAPTER IV. ACTIONS FOR DAMAGES, AND CROSS-ACTIONS. It is to be borne in mind that the general subject under consideration in these earlier chapters is the ' adjective ' law, which assumes the existence of a right of redress or relief in some way, and only prescribes what is necessary for enforcing the right. The present chapter will therefore treat, not of the facts necessary to create a right of action,^ but of the question, when the remedy in damages is the appropriate remedy ; and the same remark, mutatis mutandis, will apply to all the chapters relating to the remedy for fraud. After what has been said in the preceding chapter there re- mains little to be said upon the subject of this one. The ac- tion for damages scarcely extends beyond the case of redress of misrepresentations. It may be used for some other cases, as e. g. for the concealment by a plaintiff of a defence of fraud,^ and perhaps for the fraudulent procurement in some other way than by misrepresentation, of the abandonment of an attach- ment ; but such cases are infrequent, and it will generally be found that the law has provided some better mode of redress. The action may often be brought regardless of the question whether, in a case of sale to the defendant, there has been a rescission of the transaction ; for the plaintiff may elect to affirm the contract and sue for the damages sustained by him in being drawn into it,^ and though he has rescinded the 1 See the chapters on Deception. 35 Vt. 156 ; Alliu v. MilKson, 72 111. 2 Verplanck v. Van Buren, 76 N. Y. 201 ; Cain v. Dickinson, 60 N. H. 371 ; 247 ; chapter 6, § 2. Jewett v. Petit, 4 Mich. 508 ; Walsh v. 3 Whitney v. Allaire, 4 Denio, 554 ; Lillcy, 49 Mich. 423 ; Pierce v. Wood, 8. 0. 1 Comst. 305 ; Gould v. Cayuga 23 N. H. 519 (there is some doubt Bank, 86 N. Y. 75 ; Mallory v. Leach, whether the right form of action was CHAP. IV.] ACTIONS FOR DAMAGES, AND CKOSS-ACTIONS. 69 contract and recovered his property, he may not thereby be made good the loss inflicted upon him by the other party .^ A creditor cannot, according to the weight of authority, maintain an action at common law against his debtor, or against persons conspiring with him, for fraudulently dispos- ing of his property in order to avoid the payment of his debts.^ The debtor in such a case has indeed committed a fraud upon others, to their damage ; but the law has provided a more suitable mode of procedure to meet such cases. If such an action were to be allowed, the result would generally be to prevent the possibility of a ratable division of the debtor's property among his creditors ; for it often happens that the estate of the debtor is insufficient to meet all the claims of the creditors, and if an action for damages , were to be allowed, the plaintiff would be entitled to recover the amount of his debt. This would be more than he would be entitled to under a distribution of the effects in bankruptcy. It is true a debtor may prefer one creditor over another in many cases, or one creditor may by diligence secure an advantage over other creditors ; but the proceedings in such cases must be accord- ing to established methods, of which an action for damages is not one. This principle will not be affected by the circumstance that the debtor has made false and fraudulent representations to his creditors of his financial condition, by which they were deceived, and led to refrain from making attachments upon his property until it was too late.^ The same objection to the brought in this case. See Jewett v. Bhike, 1 Day, 258 ; Adler v. Fenton, Petit, supra) ; Parker v. Marquis, 64 24 How. 407 ; Lamh v. Stone, 11 Pick Mo. 38 ; Caveuder v. Eoberson, 3 Kaua. 627 ; Wellington v. Small, 3 Gush 626 ; Grabenheimer v. Blum, 63 Tex. 145 ; Bradley v. Fuller, 118 Mass. 239 369. The case of St. John v. Hendrick- Moody v. Burton, 27 Maine, 427. Con- son, 81 Ind. 350, was wrongly decided, tra Mott v. Danforth, 6 Watts, 304 See especially Parker v. Marquis, supra. Kelsey i). Murphy, 26 Penn. St. 78. 1 See ante, p. 67. ^ Austin v. Barrows, 41 Conn. 287 2 Austin V. BaiTows, 4] Conn. 287 ; Moody v. Burton, 27 Maine, 427. Cowles V. Day, 30 Conn. 410 ; Smith v. 70 ADJECTIVE LAW OF FKAUD. [CHAP. IV. action ■will arise which exists in the case above stated. A further and perhaps a better reason, especially applicable to those conspiring with the debtor, is that the loss of an attach- ment which had not been undertaken in the least was not a reasonably certain effect of the fraud. But if the plaintiffs had actually levied an attachment upon the defendant's prop- erty, and were prevented from retaining their lien by the de- fendant's fraudulent representations, the case ■would have been different, and the action held maintainable.^ One to whom a warranty is made may, instead of suing upon the ■warranty in contract, sue in deceit upon the repre- sentations made ; but in such a case it will be necessary, it seems, to allege and prove that the representations -were made fraudulently .2 At all events if the plaintiff allege that the de- fendant made false and fraudulent representations, making such an allegation the foundation of his suit, he ■will not, apart from statute, be permitted to show a warranty ,3 unless that was made in fraud ; for it is a well-recognized rule of law that a party must stand upon the case which he has made.* Independent cross rights of action generally, like the case of mutual debts, have been the subject of statutory provision in some states.^ Whether a (dependent) cross right of action for fraud in a particular matter can be employed after judg- ment for the opposite party upon the demand out of which the cross right grew, though clear in principle is not clear on au- thority except in cases in which the supposed cross right was set up and adjudicated ; in such a case there could of course be no further use of the right in any way, at least in the ab- sence of fraud in regard to the adjudication upon it. 1 Bradley v. Fuller, 118 Mass. 239. * See chapter on Evidence, section 2 Mahurin v. Harding, 28 N. H. 'Variance : Allegata et Probata.' 128 ; I,arey v. Taliatferro, 57 Ga. 443. 5 See e. g. ■Witte v. Lockwood, 39 " Mahnrin D. Harding, supra ; Cooper Ohio St. 141 ; Lombard v. Cowham, 34 V. Landon, 102 Mass. 58. See Graves v. Wis. 486 ; Stilphen v. Houdlette, 60 ■Waite, 59 N. Y. 156 ; Barnes v. Quig- Maine, 447 (cross divorces), ley, lb. 265. CHAP. IV.J ACTIONS FOR DAMAGES, AND CROSS-ACTIONS. 71 The doubt is in regard to cases in which no use* was made of the cross right in the former action. There is reason to believe however that a cross right of action for fraud in the transaction upon which the opposite party has obtained judg- ment may in such" a case still be available.^ It has been held by a large preponderance of authority that, notwithstanding an action has been sustained upon a contract e. g. of services, to which the defence of negligence or breach of warranty might have been raised, which defence however was not made, a cross action can be maintained for the negligence or breach of warranty ; the two proceedings are quite consistent with each other .2 If this is accepted, there appeal's to be no serious reason why a cross action for fraud should not be permitted under the same circumstances.^ Indeed, the case of fraud is often much stronger; for while the negligence or breach of warranty will generally be known, though the extent of loss may not be known, at the time of the suit by the opposite party, fraud is often concealed so effectively as not to be dis- coverable for a long period of time. In such a case, not barred by limitation, there would clearly be a right to call for redress.^ 1 Hall V. Clavk, 21 Mo. 415. judgment be rendered in eaeli of any 2 Bodurtha D. Phelon, 13 Gray, 413; two actions, taken sep.arately, the two Basooni v. Manning, 52 N. H. 132 ; judgments will te perfectly harmoni- Sykes v. Bonner, Cin. Sup. Ct. Kep. ous and consistent, and if they are 464 ; Eessequie v. Byers, 62 Wis. 650 ; both satisfied or performed, perfect legal Goble V. Dillon, 86 Ind. 327 ; Barker justice will be done.' Langdell, Equity V. Cleveland, 19 Mich. 230 ; Mondel v. PI., p. 174, 2d ed. Steel, 8 Mees. & W. 858 ; Davis v. * Verplanck v. Van Buren, 76 N. Y. Hedges, L. R. 6 Q. B. 687 ; Houstonn 247. A defendant, ignorant of facts V. Sligo, 29 Ch. D. 448. Contra in which entitle him to file a cross bill New York. Gates v. Preston, 41 N. Y. until the depositions of the plaintiff's 113 ; White i). Merritt, 7 N. Y. 352 ; witnesses reveal such facts, cannot, if Davis V. Talcott, 12 N. Y. 184. See he now file his cross bill without un- Bigelow, Estoppel, 164-176, 4th ed. necessary delay, be deprived of the ben- ' See Hall v. Clark, 21 Mo. 415, di- efit of such facts at the plaintiff's rectly to that effect ; Wanzer v. De Baun, instance, when he was wilfully kept in 1 E. D. Smith, 261 ; Michigan v. Phce- ignorance of them by a person acting in nix Bank, 33 N. Y. 9, 25 ; Cadaval v. concert with the plaintiff, who had been Collins, 4 Ad. & E. 858. 'If a proper recommended by the plaintiff to the 72 ADJECTIVE LAW OF FRAUD. [CHAP. IV. And accordingly it is laid down upon thorough consideration by the court which refuses a cross action for negligence or breach of warranty, that money received by one party from another by means of a judgment or other judicial proceeding effected by fraud, falsehood, and imposition of the successful party, may be recovered by the defrauded party, where the money so secured was paid over before the fraud was discov- ered.i So also if an attachment of property is obtained by fraud, and the property after judgment bought by the creditor on execution, the debtor can maintain an action of deceit against the creditor, though not of trover;^ That however is a somewhat different case. It is clear that before judgment has been obtained upon the demand out of which the cross right grew, an action may be maintained, otherwise the right would not be a cross right at all, but only a defence ; and this though suit lias been begun by the opposite party. Thus a defendant in equity, against whom the plaintiff, having the legal title to a piece of land, has prayed relief founded upon a sale of the land to him by the defendant, may file a cross bill against the plaintiff for a re- conveyance of the estate on the ground that the plaintiff was guilty of fraud in the purchase ; and if the defendant succeeds, the plaintiff's bill will be dismissed.^ Tlie only difference be- tween such a case and a cross suit at law would be that, apart from statute, judgment at law might be rendered for each party.* defendant as a trastworthy person in the ^ Whitaker v. Merrill, 28 Barb. transaction, but whose fraudulent con- 526. duct is the ground of the cross-bill. 3 Langdell, Equity PI., p. 180, 2d Berryman v. Graham, 6 C. E. Green, ed. The defendant could not plead the 370. fraud to the bill ; the contract must 1 Michigan v. Phcenix Bank, 33 N. Y. have been rescinded for that purpose, 9. To the same effect Cadaval v. Col- and rescission would require a reconvey- lins, 4 Ad. & E. 858. As to actions for ance. lb. See post, p. 76. fraud practised in obtaining judgments * See ante, p. 71, note 3. see chapter 6. §!•] KESCISSION. 73 CHAPTER V. RESCISSION. § 1. Characteristic Remedy for Fraud. Fraud iu contract, when it does not go to the very exist- ence of any agreement upon the subject of the transaction,^ — and in its most familiar aspect it does not, — is consistent with the existence of the contract, though no contract or no such contract might have been made had the party wronged known the truth. The contract then is not void, though be- cause of the fraud 2 the injured party may in certain cases ter- minate it and require a restoration of the status quo. In technical language the contract is said to be ' voidable, not void,' 2 an expression however that must be understood only 1 See e. g. George v. Tate, 102 U. S. 564 ; Foster v. Mackinnon, L. E. 4 G. P. 704 ; Kennedy v. Green, 3 Mylne & K. 699, 718 ; and cases cited in note 3, infra. 2 Fraud after the contract was made is no ground for rescinding the contract. Fulton V. Lofts, 63 N. C. 393. 3 Dawes v. Harness, L. R. 10 C. P. 166 ; Gould v. Cayuga Bank, 86 N. Y. 75 ; Davis v. Betz, 66 Ala. 206 '; Hewitt V. Clark, 91 111. 605 ; Weed v. Page, 7 Wis. 503. A few early eases and dicta to the contrary were long ago overruled. McArthur v. Johnson, Phill. (N. Car.) 317, is an important case in regard to the question of fraud in the 'factum.' If there was fraud in the factum, there was no contract ; secus if there was not, and the contract is of course good until it is avoided. In McArthur v. John- son, A proposed to convey a tract of land in trust, and his hrother undertook to have the deed drawn, and without the knowledge of the vendor inserted another tract also, in trust for himself, saying in reply to a question of the vendor that it was ' all right,' whereupon it was executed without reading. It was held that the conveyance of the tract to the brother was good at law ; the fraud was deemed not in the factum. McKerall V. Cheek, 2 Hawks, 343, was overruled. But the result must have been different had the conveyance to the brother been by a, separate deed. See Kennedy v. Green, 3 Mylne & K. 699, 718 ; George V. Tate, 102 U. S. 564 ; Davis v. Snider, 70 Ala. 315 ; Biederman v. O'Connor, 117 111. 493 ; Windett v. Hurlburt, 115 111. 403 ; Chicago Ey. Co. v. Lewis, 109 111. 120 ; Fitzgerald v. Fitzgerald, 100 74 ADJECTIVE LAW OF FBAUD. [chap. V. as a very convenient short and free rendering of the law, for it is obviously impossible to make what has been done really void; and the distinction may sometimes be impor- tant.i Hence we have said that the party injured may ' termi- nate' the contract and ' require a restoration.' Something must then be done by the party defrauded before the contract can cease to be binding; when that something has been done, and the engagement has been terminated, the contract is said to have been ' rescinded,' and the process by which such result is effected is called ' rescis- sion.' And this is the peculiar and characteristic remedy, though not the only remedy as we have seen, for fraud in contract. It is peculiar in that it seeks, not reparation, like an action for damages, but restoration ; so that it is specific performance reversed, the literal undoing, as far as may be, 111. 385 (where the evidence did not sustain the charge of fraud) ; Auten v. Gruner, 90 111. 300 ; Vanbrunt v. Sing- ley, 85 111. 281 ; Sim v. Pyle, 84 111. 271 ; Goodwin v. AVhite, 59 Md. 503 ; Hobbs V. Solis, 37 Mich. 357 ; Soper v. Peck, 51 Mich. 563 ; Fayette Bank v. Steffes, 54 Iowa, 214 ; Aultman v. 01- Bon, 34 Minn. 450 ; Mackey v. Peter- son, 29 Minn. 298 ; Frohreich r. Gam- mon, 28 Minn. 476 ; Citizens Bank v. Smith, 55 liT. H. 593 (negligence) ; Kastner u. Pibilinski, 96 Ind. 229 ; Mitchell u. Tomlinson, 91 Ind. 167 ; Williams v. Stoll, 79 Ind. 80 (negli- gence) ; Webb v. Corbiu, 78 Ind. 403 ; Riiddell V. Dilman, 73 Ind. 518 (negli- gence) ; Fisher v. Von Behren, 70 Ind. 19 (negligence)' ; Ort v. Fowler, 31 Kans. 478 (negligence) ; McNeil v. Jor- dan, 28 Kans. 7 (negligence). The cases of Woollen v. Ulrich, 64 Ind. 120, and Kimble v. Christie, 55 Ind. 140, may be doubted. See Foster v. Mackinnon, L. E. 4 C. P. 704. (For convenience of reference the author has here made a tolerably complete collection of cases of the kind). The facts may of course be shown by parol ; there would be no other way to show them ordinarily. Davis V. Snider, supra. The rules of rescission do not apply where there is absolutely no contract at all in law, as in the foregoing cases. Aultman v. Ol- son, 34 Minn. 450. 1 When it is said that a contract is 'void,' it is not meant that everything done under it is without validity and so can be undone. An innocent holder of a void written contract may have done a variety of things under the contract which must stand, and for which he may be able to obtain no redress at law or in equity against any one on discov- ering that the contract relied upon is no contract. In truth all that is meant when it is said that a contract is ' void,' is that the fact may always be shown at law ; whereas if it is only ' voidable,' the fact, as we shall see, may soinetimea be shown there. § 2.] EBSCISSION. 75 of the contract.^ It is not the same thing as cancellation even when a written instrument is concerned ; for cancella- tion is a remedy not only against the written evidence of contracts, but against instruments which are not contracts at all, or are contracts only in point of form, as in the case of a forged promissory note.^ § 2. How Rescission is Effected. There are three classes of cases in which rescission may be effected, each having a mode of its own. These classes, nameless in the books, may be severally termed ' rescission in pais,' ' judicial rescission,' and ' rescission by plea (or answer).' ' Rescission in pais,' as the term implies, is effected by act out of court. It is the remedy for fraud in contracts of sale and the like. A sale has been made, and something of value has thereby been received by the defrauded party, whether vendor or purchaser it matters not; and this must, before suit,^ be tendered back to the wrong-doer, in the name of rescission,* i. e. with demand of return of what the wrong- doer has received.^ The object of .the tender is to effect 1 The rescission must then be entire ; Ind. 517. An instrument may of course there cannot be a partial rescission, be cancelled for fraud as well as for for- Jewett V. Petit, 4 Mich. ."iOS ; Davis v. gery ; but if the instrument to be dealt Betz, 66 Ala. 206 ; Rand v. Webber, 64 with is actually a contract, the proceed- Maine, 191; infra, p. 76. Though of ing is properly termed rescission, though course one may retain what one has re- cancellation may be added. ceived on the contract and sue for dam- ' Gould v. Cayuga Bank, 86 N. Y. ages for the fraud ; the latter proceed- 75 ; Herman v. Haffenegger, 54 Cal. ing is not disaffirmance of the contract. 161. Infra, p. 83. lb. ; Whitney v. Allaire, 4 Denio, 554 ; * Of course neither that word nor B. c. 1 Comst. 305 ; ante, p. 68. any of its cognates need be used, so long 2 Peake v. Highfield, 1 Euss. 559; as the purpose is clearly manifested; Johnston v. Benton, L. E. 9 Eq. 181 ; indeed the use of the word woxild do Lee •£>. Angas, L. R. 7 Ch. 79, note ; no good unless the necessary conditions Strafford v. Welch, 59 N. H. 46 ; Hardy went with it. V. Brier, 91 Ind. 91 ; Huston v. Schin- ^ if the defrauded party received dler, 46 Ind. 38 ; Huston v. Roosa, 43 nothing from the wrong-doer, he need 76 ADJECTIVE LAW OF FEAUD. [CHAP. V. restoration of the status quo ; and in this class of cases it ia a condition precedent to rescission. Such act will be sufficient for the rescission of any mere sale or purchase of personalty, and in some states of realty. The defrauded vendor of personalty, or the defrauded pur- chaser of personalty or realty who has transferred chattels in full or part payment, having properly performed the neces- sary act, may now take his property wherever he can find it ; he may even enter the wrong-doer's premises, if not forbid- den, and take it.^ This proceeds upon the ground that the rescission, which became complete with the tender and de- mand, divested the merely voidable title of the wrong-doer, revesting it in the party wronged, and revested the wrong- doer with the valid title, if any, conveyed by him.^ Thus of a case of personalty sought by either party, in con- sequence of the rescission. If however the property sought is realty, the case will be different, according to the general view of the common law. The guilty party acquires indeed only a voidable title, as in the case of personalty ; but the title of real estate can be conveyed only by deed, and it follows that it can be divested only by deed. Tender and demand will not then restore the legal title to the e. g. defrauded vendor.^ He would have no right to enter; he could not then expel the purchaser ; * and he could not maintain an action . of ejectment, for that requires a legal title.^ The vendor (or not make demand for the property, but acquired it ; hence the vendor need not may sue at once. Moody v. Brown, 58 go into equity to get back his own N. H. 45 ; infra, p. 77. goods. The case is the ordinary one for 1 Wheelden v. Lowell, 50 Maine, trover, if there be a refusal to restore. 499. 3 Feret v. Hill, 15 C. B. 207 ;. Pear- 2 Whitney v. Allaire, 4 Denio, 554 ; sail v. Chapin, 44 Penn. St. 9 ; Nich- s. c. 1 Conist. 305 ; Doane v. Lock- olson v. Halsey, 1 Johns. Ch. 417 ; ■wood, 115 111. 490 ; Brower o. Good- Mitchell v. Moore, 24 Iowa, 394 ; Bla- year, 88 Ind. 572 ; Parrish v. Thurston, ney v. Hanks, 14 Iowa, 400. 87 Ind. 437. That is, to take the case * Feret v. Hill, supra. of a defrauded vendor, the purchaser, * lb. Nor on the other hand can after the rescission, no longer has the ejectment by the wrong-doing grantee legal or any title, — the vendor has re- be resisted, since he has the legal title, §2.] RESCISSION. 77 the purchaser, as the case may be) must file a bill for rescis- sion and reconveyance.^ A different conception of the law has however obtained in some states, as in Massachusetts ; tender and demand of reconveyance being there sufficient to permit an action at law (not for rescission, but) for re- covery of the land.^ ' Judicial rescission ' may be of two kinds ; one a substitute for ' rescission in pais ' where the latter would be equally effectual as rescission, the other where it is necessary to resort to the courts, not for the purpose of recovering the property merely but to obtain rescission itself. The former case occurs where the defrauded party in a sale or the like has received nothing of value from the wrong-doer, and in- stead of making demand out of court for his property by way of rescission, proceeds at once to sue for it, as by trover or replevin ; which he may do.^ notwithstanding the fraud. See Lom- bard V. Cowham, 34 Wis. 486. In the case cited land of an intestate had been sold and conveyed by an administrator without authority of law to one Acker- son, under whom the defendant claimed. The title still remaining in the heir, the plaintiff obtained a conveyance from him for a nominal consideration, by fraudu- lently representing that he was procur- ing it for the benefit of Ackerson. In ejectment against the grantee of Acker- son it was held that the legal title had passed to the plaintiff, and that the de- fendant had only an equitable interest in the land ; and this fraud could not be set up in bar of the action under a mere general denial. It was decided however that under the practice in Wis- consin it could be set up by way of counterclaim as a gi-ound of equitable relief, the issue thus made up to be de- termined by the court. ^ See note 2, infra. 2 Bassett v. Brown, 100 Mass. 355 ; Pratt V. Pond, 5 Allen, 59 ; ante, p. 67. But that view cannot be supported in principle. It must rest on the ground either that no title passed to the pur- chaser or that a title can be divested by parol. Neither is true. As to the sec- ond alternative, not even a destruction of the deed by the purchaser could re- vest a title in the vendor, though it might work an estoppel upon the pur- chaser in favor of a second grantee, if it was for the purpose of enabling the gi'antee to convey to another. Law- rence V. Stratton, 6 Cush. 163 ; Howard V. Massengale, 13 Lea, 577 ; Bigelow, Estoppel, 641, note, 4th ed. Indeed it should seem insufficient even to set aside a deed in' chancery ; a reconvey- ance ought to be ordered. ' Moody B. Brown, 58 N. H. 45 ; Thayer v. Turner, 8 Met. 550, 552 ; Hall V. Gilmore, 40 Maine, 578 ; Os- wego Starch Factory v. Lendrum, 57 Iowa, 573. 78 ADJECTIVE LAW OF FEAUD. [CHAP. V. The other kind of judicial rescission rests upon the ground of the insufficiency of acts in pais by one party to defeat the right or title of the other, or, where such acts might be suffi- cient for that purpose, their insufficiency to restore the status quo. More than that, it rests upon the insufficiency of any remedy at law, whether by action or defence, and therefore upon the need of a resort to the Court of Chancery. It is the remedy for fraud in transfers of real estate, according to the general common-law doctrine, for specialties, according to some authorities,! and for fraud in contracts generally where tender and demand are insufficient or inappropriate for the end sought, or where there is nothing to tender because noth- ing has been received, and yet where a defence alleging the fraud might not afford sufficient relief. Tender may be neces- sary to judicial rescission,^ as to rescission in pais, but it will always be insufficient. The bill to be filed is a bill therefore for rescission, not consequent upon rescission.^ The third kind of rescission is ' rescission by plea (or an- swer).' But the question may be raised, at the outset, can there be a rescission by plea? and if by plea, why not by re- ply ? To put the first question in another form, by way of answer, what is the effect of a valid plea of fraud to an action upon a contract ? Is it a defence merely, or is it rescission ? * A defence it is surely, in a certain sense, but not in the same sense that payment for example is a defence. A contract remains a contract until it comes to an end ; in the form of 1 George v. Tate, 102 U. S. 564 ; fraudulent overestimate of loss. On Irving 0. Humphrey, 1 Hopk. 284. the other hand where the fraud goes to Biit see ante, p. 53. the very execution and existence of the 2 See however Sohnee v. Schnee, 100 supposed contract, the plea is good as Ind. 477 ; Gould v. Cayuga Bank, 86 a simple plea of such fact ; there is N. Y. 75 ; Allerton u. AUerton, 50 nothing to rescind in such a case, and N. Y. 670 ; infra, p. 81. no offer need be made. See e. g. Chi- s See farther post, pp. 419 et seq. cago R. Co. v. Lewis, 109 111. 120 (fraud- * Fraud may not always he a defence ulently inducing one to sign a release even when no question of rescission, as a receipt), and other cases cited in such as tender, may arise. See e. g. note 3, ante, p. 73. Phcenix Ins. Co. v. Moog, 78 Ala. 284, § 2. J KESCISSION, 79 a truism, it is binding throughout its life. It is binding then until it is rescinded, unless it is terminated in some other way. This is true in the nature of things of every contract ; it will not do to say that that doctrine is applicable only to questions of the transfer of property, for that would be to say of the same undertaking, under the same conditions, it is and it is not a contract. Payment of a contract of hiring for example ends the contract; but fraud would not prevent it from coming into existence, and of course could not termi- nate it. It is not then the allegation of fraud that puts an end to the contract ; that is only making known to others what already existed without annulling the contract, and what may have been known already to the parties. It is the allegation of the fraud in repudiation of the contract that constitutes the defence; that is, it is the i-escission of the contract which constitutes the defence to the action ; the fraud is only the ground of the rescission. A plea of fraud is then, or rather it may be, a rescission of the contract, and not merely a defence to the action. There may not be categoric authority for this ; ' but there are de- cisions^ which go beyond it, to be considered presently. In- deed there is a whole class of cases of undoubted authority which sustain it. According to these latter cases it is no de- fence to a suit for the price of property sold that the sale was effected through the vendor's fraud ;^ and why ? Because the contract is binding until rescinded ; and the plea of fraud fails to constitute a rescission only because the purchaser has not 1 See Cross v. Herr, 96 Ind. 96 ; Harness, L. R. 10 C. P. 166 ; Anderson Mitchell V. Tomlinson, 91 Ind. 167. v. Costello, 5 Ir. K. C. L. 544 ; Gent 2 Harris i;. Equitable Ins. Co., 64 v. Ensor, 41 Md. 24 ; Sanborn v. Os- N. Y. 96. See Brewster v. Brewster, good, 16 N. H. 112 ; Heaton v. Knowl- 9 Vroom, 119, a replication, which how- ton, 53 Ind. 357. But the fraud could ever was considered as not amounting be given in evidence in reduction of the to an attempt to rescind, but only to amount demanded. Gent v. Ensor, and adjust, according to the truth. Sanborn v. Osgood, supra ; Perley c. 3 Bwlch-y-Plwra Mining Co. v. Balch, 23 Pick. 283 ; Sharp v. Ponce, Baynes, L. E. 2 Ex. 324 ; Dawes v. 76 Maine, 360 ; s. c. 74 Maine, 470. 80 ADJECTIVE LAW OP FEATJD. [CHAP. V. performed the necessary condition to it in that case, — he has not tendered back the property received by him.^ If still it be insisted that after suit it is too late for rescis- sion, since ex concessis there was a binding contract when the plaintiff sued, so that the plaintiff had a cause of action unless the fraud is treated as an ordinary defence, — the answer is that it is the plaintiff's own fault that a rescission after suit may defeat him. He has brought the defendant into court against the defendant's will, knowing necessarily the answer that will be made to his demand ; and the defendant may not have been under any duty before to rescind. Hence it could not be said that the defendant had necessarily misled him in not rescinding, and so induced the plaintiff' to believe that the right to rescind had been waived and to change his position by bringing suit; though it would probably be true that if the defendant had so conducted himself, he would be barred not merely of his right to rescind, but what that involves, of his right to plead the fraud;^ All this however assumes that the defendant had received nothing from the plaintiff, so that there was nothing for him to offer to return. But suppose that he has received from the plaintiff money or property ; may the defendant with his plea of fraud make tender or offer, now for the first time ? To put a specific case, the plaintiff sues upon a policy of insur- ance, upon which he has paid premiums to the defendant. The defendant pleads that the plaintiff obtained the policy by 1 So probably in equity. ' If a bill notwithstanding the fraud ; and while alleges that the plaintiff is owner of a the title remains in the plaintiff, he certain piece of land, and prays relief cannot be deprived of the rights inci- founded upon such ownership ; and the dent to his legal ownership.' Langdell, fact is that the plaintiff acquired his Equity PI. p. 180, 2d ed. Suppose how- title by means of a deed of conveyance ever that the title to the land is in the from the defendant, which he obtained defendant ; coiild he not then in his by fraud, the defendant cannot set up plea or answer of fraud make a tender the fraud in - plea or answer, for it is of reconveyance, assuming that he had no defence to the suit. The fraud ren- not waived the right to rescind ? dered the deed voidable, not void ; the ^ Clough v. London Ey. Co., L. E. 7 deed transferred the title to the plaintiff Ex. 26 (Ex. Ch. ). § 2.] KESCISSION. 81 misrepresentation ; must he also plead tender to the plaintiff of the premiums before suit, assuming that the plaintiff on re- scission would be entitled to a return of the money ? An an- swer to such a question has been given in the negative, on the ground that, upon offer by the defendant of judgment for the premiums, the matter could be adjusted by the court, and the plaintiff awarded his dues.^ This however is going to the limits of the law, for the defendant probably knew that the plaintiff was going to press his demand, and there may have been reasonable hope of recovery ; and the plaintiff may have been misled by the defendant's not giving the reason for re- fusing to pay .2 Still the defendant may have considered itself entitled to the premiums, and for this reason awaited suit. The ground above suggested, that the rights of the parties could be adjusted in the judgment, has been referred to in other cases,^ and virtually acted upon as a general ground. But is it such ? If it is, — and here we are brought to the question of rescission by reply, — it must apply as well in favor of the plaintiff as of the defendant. Thus the plaintiff' sues the de- fendant upon a promissory note. Tlic defendant pleads a contract by the plaintiff to pay the note ; and the plaintiff now replies that that contract was obtained by the defend- ant through fraud. Assuming that the plaintiff received e. g. money from the defendant on the contract, the question is whether the replication, without showing or making tender, is good. The New Jersey courts would answer, it seems, in the ^affirmative, on the ground that the matter could be ad- justed by a reduction from the amount due on the face of the note.* But the courts of Massachusetts and of New York 1 Harris v. Equitable Life Ins. Co., * Gould v. Cayuga Bank, 86 N. Y. 64 N. Y. 96. See Fishbeck v. Phenix 75 ; AUerton ». Allerton, 50 N. Y. 670 ; Ins. Co., 64 Cal. 422. Quaere whether Brew.ster ». Brewster, 9 Vroom, 119. this could be done under common-law * Brewster v. Brewster, 9 Vroom, practice? 119. It would not however consider 2 See Clough v. London By. Co., L. the replication as amounting to an at- E. 7 Ex. 26. tempt to rescind, properly speaking ; 6 82 ADJECTIVE LAW OF FRAUD. [CHAP. V. ■would answer the question in the negative,, unless there is a distinction between the foregoing case and the following ;! An action is brought upon a policy of insurance ; the under- writer's defence is that the claim has been compromised with the plaintiff ; the plaintiff offers to show that the compromise was obtained by the defendant through fraud, without offering (other) evidence of rescission, or tender of the sum received on the compromise. The evidence is refused ; there should have been a rescission with tender before suit.^ Here too was a case in which the judgment might have adjusted the differences between the parties, by simple reduc- tion of the claim ; and at first it may seem perverse and un- reasonable in a court to refuse. In reality however the court should firmly refuse ; and the reason becomes evident upon reflection. The plaintiff has come into court with a demand upon which he knows, in contemplation of law at least (but whether so or not is no matter), he has no cause of action. The compromise is a binding contract until rescinded ; it is binding then when he brings his suit.^ He may indeed re- scind the contract after the suit is undertaken, but not for the but the distinction, as applied to a re- if (because of fraud) he must first re- plication, is too fine, though more satis- turn what was already safe in his hands, factory in regard to a plea. See Lord and it would be senseless to require him V. Bropkfield, 8 Vroom, 552. to do so ; whereas if a, new contract 1 It is clear however that a vendor, stand in his way, he must clearly get in suing on the contract of purchase for rid of it before he can sue. To do that the price, may repudiate a fraudulent he must rescind, with restoration of any- insufficient payment, and recover the thing of value. balance due to him ; in such a case he ^ Brown v. Hartford Fire Ins. Co., need not tender back what he has re- 117 Mass. 479 ; Potter v. Monmouth ceived, since his action is not for or in Fire Ins. Co., 53 Maine, 440. To the consequence of a rescission. Kepudiat- same effect, with an elaborate judgment, ing the payment is no rescission of any- Gould u. Cayuga Bank, 86 N. Y. 75. tiling. Martin i). Roberts, 5 Cush. 126 ; There indeed the plaintiff, after the close Bridge v. Batchelder, 9 Allen, 394 ; of the evidence on the trial, and after Pierce v. Wood, 23 N. H. 519, 534; the objection of want of tender, paid the Moody V. Brown, 58 N. H. 45. Sub- sum received into court, with interest ; stituting a new contract for the old one but this was held insufficient, is a different thing. A person might ^ See Gould v. Cayuga Bank, 86 well hesitate about suing for a balance N. Y. 75, 82. § 2.] EEScrssiON. 83 purposes of that suit ; his situation is not that of a defendant who has been forced into court. To permit the plaintiff to gain a right of action in the particular case by act after suit would be destructive of the fundamental principle upon which suits are brought.^ Whether in an equitable action for rescis- sion the plaintiff could not in his complaint offer to restore is another question ; there the objection would be very technical, and not favored,^ for an equity suit is begun by the bill, and not, as a suit at law, by writ. The rescission is thus contem- poraneous with the action. The result is (1) that there can be no such thing in princi- ple as rescission by reply, (2) that this involves no conflict with the rule that a defendant may rescind by plea, and (3) that the fact that the differences between the parties may on proper offer be adjusted by the judgment furnishes no general ground upon which to excuse want of rescission before suit. A further result is that whether a defendant can avail himself of the fact that the judgment may be adjusted to the situation, where that is true, will depend upon the question whether he has by delay after knowledge of the facts, or in any other way, waived his right to rescind, or has in fact misled the plaintiff into suing as if the contract had been affirmed.^ Where however it is doubtful whether he may not be entitled to keep what he has received, it would seem that no inference based on failure to make tender can be drawn against his right to rescind by plea.* 1 Herman v. Haffenegger, 54 Cal. ty any reconstruction of the courts. 161. Gould V. Cayuga Bank, supra. 2 lb. ; Allerton v. Allerton, 50 N. Y. 3 ciough v. London By. Co., L, E. 670. The distinction between an action 7 Ex. 26. for rescission and an action consequent ' The substantive law of rescission upon rescission is not to be abrogated will be considered later, in its appropri- ate place. 84 ADJECTIVE LAW OF FRAUD. [OHAP. VI. CHAPTER VI. INJUNCTIONS, VACATING JUDGMENTS, AND NEAV TRIALS. § 1. Injunctions. We have already seen under what circumstances the law will enjoin proceedings upon a written contract obtained by fraud, and order it to be delivered up for cancellation; we have seen that by the current of authority the law will au- thorize the injunction and cancellation where the invalidity of the instrument is not apparent upon its face, and where further there is danger that the evidence to support the de- fence of fraud may be lost by delay of the opposite party to sue upon it, or where for any reason the instrument may be wrongfully used.^ We have also seen that courts of equity in some states have refused to entertain jurisdiction over fraud in conveyances of land in which, as in the foregoing, there is a plain remedy at law ; ^ for these and other cases of the kind the reader is referred to the chapter on Jurisdiction. The law furnishes one of several remedies for fraud suc- cessfully committed in the course of a trial ; among them a bill in equity to enjoin enforcement of the judgment. This remedy is commonly given after the expiration of the term during which the fraudulent judgment was rendered. Gen- erally speaking, it is given to supply the defect in legal procedure arising from the fact that, apart from statutory provision to the contrary, the power of a law court over its judgVnents ceases with the term in which they were ren- dered. It sometimes happens to a party to discover, after I Ante, p. 46. = Ante, pp. iH, 47. § l.J INJUNCTIONS, VACATING JUDGMENTS, NEW TEIAL8. 85 the expiration of the term, that a judgment pronounced against him was obtained by the fraudulent conduct of the success- ful party ; and to provide for such cases, the injured party has the right to file a bill in equity, praying for the proper relief.! The remedy by bill in equity is also proper during the term in which the judgment of the law court was rendered, when the circumstances disclosed are such as to indicate that com- plete relief cannot be obtained by means of a new trial. But inasmuch as this relief is supplementary, it is a general rule of law that it will be granted only when the complainant has been guilty of no negligence in respect of his rights at the trial in question.^ If the fraud were of such a nature as (in case of knowledge of it) to require presentation to the court, the party cannot safely forego the opportunity of pleading it, or of moving the court for a new trial by reason of it. For example if the action were upon a promissory note, and the defendant should discover in the course of the trial that his signature thereto was forged, it would be his duty to bring the fact at once to the notice of the court ; failing which, he would be bound, if judgment was rendered against him, to pay the sum decided to be due. He could not afterwards file a bill in equity for relief. And the same would be equally true in case, without actual knowledge of the fraud, he were put upon such inquiry as, diligently prosecuted, would be apt to lead to a discoverj"^ of the wrong done him. If however the fraud were not discoverable before the judgment was ren- dered, or afterwards within the time allowed by law for mo- tions for a new trial, he could apply to equity for the redress desired. ^ See for example Edson v. Edson, against a, judgment at law obtained by 108 Mass. .590, where a decree of divorce fraud in a case where the party seeking of a previous term was set aside for relief has an adequate remedy by appli- fraud. cation to the court in which the fraud 2 Equity will not grant an injunc- was perpetrated. Lyme v. Allen, 51' tion or a new trial by way of relief N. H. 243. 86 ADJECTIVE LAW OF FRAUD. [CHAP. VI. But the criterion of the right to call upon the court of equity for relief does not, it seems, depend in all cases upon the complaining party's knowledge or upon notice of the fraud before judgment. We have elsewhere suggested that there may exist frauds in connection with claims prosecuted against a party which, not being necessarily connected with the val- idity of the claim, he may prefer to avail himself of in a pro- ceeding instituted by himself instead of by his adversary; and in cases of this kind the law might well allow the party his own election in the matter, and not impute to him laches for not doing that which it may not have been for his just interest to do.^ § 2. Vacating and Impeaching Judgments and Awards. It is well-established law that a judgment may be set aside or impeached collaterally during the term, or afterwards, for fraud.2 But this does not mean that a question involving a fraud put in issue in the case may be reopened (except on mo- tion for a new trial, or on appeal or writ of error or the like) after the rendition of the judgment, so as to retry the matter of fraud ; nothing of the kind is allowed.^ Thus a judgment cannot be set aside (except as above indicated), or impeached collaterally, upon the mere ground that false evidence, such as a forged document, was given on the trial ; * nor can an > Ante. p. 71. 78 ; Pajme v. O'Shea, 84 Mo. 129 ; 2 It raattei-s not that the judgment Mechanics' Bank v. Barnet Mauuf. Co., has been acted upon, as by suing upon 33 N. J. Eq. 486 ; Patch v. Ward, L. E. it in another state. Edson v. Cum- 3 Ch. 203, 207. mings, 52 Mich. 62. See Eush r. Rush, ^ Vance v. Burbank, supra; United 46 Iowa, 648. States v. Throckmorton, 98 U. S. 61 ; » Vance v. Burbank, Ml U. S. 514 ; Ward v. Southfield, supra ; Verplanck Sample v. Barnes, 14 How. 70 ; State v. v. Van Buren, supra ; Patch v. Ward, Holmes, 69 Ind. 577 ; Emerson v. Udall, supra ; Galena E. Co. v. Eunor, 116 111. 13 Vt. 477 ; Atkinsons v. Allen, 12 Vt. 55 ; Hartman ». Ogborn, 54 Penn. St. 619 ; Ward u. Southfield, 102 N. Y. 120 ; Fisk v. Miller, 20 Tex. 579. See 287 ; Verplanck v. Van Buren, 76 N. Y. Field v. Flanders, 40 111. 470 ; Dilling 247, 257 ; Boss v. Wood, 70 N. Y. 8 ; ii. Murray, 6 Ind. 324. Otterson v. Middleton, 102 Penn. St. § 2.] INJUNCTIONS, VACATING JUDGMENTS,, NEW TKIALS. 87 action be maintained for damages sustained by the enforce- ment of a judgment obtained through false and perjured evi- dence.i Nor while a judgment remains in force, could the de- fendant, against whom it was rendered, maintain an action for conspiracy and fraud against the plaintiff, or against his agent, or attorney, where the question of fraud was tried in the former suit.^ It has however been held that one of sev- eral defendants against whom a judgment now sued upon has been rendered may show that the judgment was obtained by fraud and conspiracy between the plaintiff and the other de- fendants ; ^ but there is strong authority the other way.* The fraud for which a judgment may be set aside or impeached collaterally must be actual,^ and consist (1) in ' meditated and intentional contrivance to keep the parties and court in ignorance of the real facts of the case, and ob- taining the judgment by such contrivance,' * or (2) in facts relating to the manner of obtaining jurisdiction of the cause, to the mode of conducting the trial, or to some concoction of 1 Demeritt v. Lyford, 27 N. H. 541 ; * Engstrom v. Sherburne, 137 Mass. Hillsborough v. Nichols, 46 N. H. 379 ; 152. See State v. Holmes, 69 Ind. 577. Dunlap V. Glidden, 31 Maine, 435 ; " Ward v. Southfield, 102 N. Y. Smith V. Abbott, 40 Maine, 442 ; 287 ; Vei-planck v. Van Buren, 76 Engstrom v. Sherburne, 137 Mass. 152 ; N. Y. 247, 257 ; Hunt v. Hunt, 72 Greene d. Greene, 2 Gray, 361. See N. Y. 217, 227 ; Boss •/. Wood, 70 Verplanck v. Van Buren, 76 N. Y. 247. N. Y. 8, 10 ; Smith v. Nelson, 62 N. Y. But see Spencer v. Vigneaux, 20 Gal. 286, 288 ; Patch i;. Ward, L. E. 3 Ch. 442. And see Rice v. Coolidge, 121 203 ; United States v. Throckmorton, Mass. 393, as to strangers to the suit. 98 U. S. 61. No action can be maintained against a * Patch i) . Ward, L. R. 3 Ch. 203, witness for giving such evidence. Ver- 207, quoted and followed in Verplanck planok V. Van Buren, supra ; Rice v. v. Van Buren, 76 N. Y. 247, 257 ; Coolidge, 121 Mass. 393, 395 ; McLaugh- Ward v. Southfield, 102 N. Y. 287. lin V. Cowley, 127 Mass. 316. In Kress See Mechanics' Bank v. Barnet Manuf. V. State, 65 Ind. 106, it is held that a Co., 33 N. J. Eq. 486 ; Doughty o. justice of the peace is not liable to an ac- Doughty, 27 N. J. Eq. 315 ; Grover v. tion for damages for fraudulently giving Wyckoff, ib. 75 ; Whitlock v. McClus- judgment for a smaller sum than was due. key, 91 111. 582; Whitcomb u. Whit- 2 Smith V. Abbott, 40 Maine, 442 ; comb, 46 Iowa, 437 ; Payne v. O'Shea, Demeritt v. Lyford, 27 N. H. 541. 84 Mo. 129 ; Webster v. Diamond, 38 3 Spencer v. Vigneaux, 20 Cal. 442. Ark. 532. 88 ADJECTIVE LAW OF FRAUD. [CHAP. VI. the judgment, or (3) in facts not actually or necessarily in issue at the former trial. ^ This last kind of fraud has already been considered, as furnishing ground for a cross action.^ If the fraud in question be of the first or second kind, the injured party must have been ignorant of it, and that without fault on his part, in order to justify the court in setting the judg- ment aside, or in permitting an action on account of the fraud by which it was obtained.^ In regard to the manner of obtaining jurisdiction of an action, it has even been held that if a judgment be obtained in a cause, jurisdiction of which was acquired by the fraud of the prevailing party, the fact may be collaterally shown.* Thus if a person residing in one jurisdiction be induced under false pretences or representations to go into another for the real purpose of getting service of process upon him, the juris- diction and the judgment rendered thereunder will be deemed to have been fraudulently obtained ; and such fact will, it is said, be a sufficient ground for proceedings not only to set aside the judgment, but, if it were rendered in another state or country, for denying its validity in a collateral action brought to enforce it.^ But this has been denied ; the remedy 1 ' The fraiids for which courts of tion of the court, collusion between the equity will interfere to set aside or stay parties, or other circumstances which the enforcement of a judgment of a would establish that what seemed a de- court, having jurisdiction of the subject- cree was in faet no decree ; that it was matter and the parties, must consist of fabula, non judicium.' Hoffman, J., in extrinsic collateral acts not involved in s. c. the consideration of the merits. They 2 Ante, p. 71. See Verplanck v. mu.st be acts by which the successful Van Buren, 76 N. Y. 247. party Jias prevented his adversary from = Verplanck v. Van Buren, supra; presenting the merits of his case, or Ross v. Wood, 70 N. Y. 8 ; Zellerbach by which the jurisdiction of the court v. Allenberg, 67 Cal. 290. has been imposed upon.' Field, J. in * Dunlap v. Corly, 31 Iowa, 260. United States v. Flint, U. S. Circ. " Dunlap v. Cody, 31 Iowa, 260 ; Court, Cal. Sept. 1876. 'It is true Duringer v. Moschino, 93 Ind. 495. that a decree may be avoided, by show- So of the effect of fraudulently obtain- ing that It was obtained by fraud. But ing service of a cross petition. Phffner this must be fraud in its concoction [2 v. Krapfel, 28 Iowa, 27. Story, Equity, § 1575], such as eorrup- § 2.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 89 being considered proper only for equity or for an equitable plea.^ In the case of a foreign proceeding, no mode of vacat- ing the judgment woUld exist ; but an injunction against pro- ceeding to enforce it,^ or an equitable plea of the fraud in obtaining the jurisdiction in a suit to enforce the judgment, would be allowed, or an action could be maintained for the fraud by which jurisdiction was acquired.^ Again if through the instrumentality of one party to an action, the witnesses of his adversary be forcibly and illegally detained, or bribed to disobey its subpoena, or if the testimony of his adversary be secreted or purloined,* or if the citation to him be given under such circumstances as to defeat its purpose, a fraud is committed for which relief will be granted in equitj'', if it produce injury to the innocent party ,^ So if the litigation be collusive, if the parties be fictitious, if real parties affected be falsely stated to be before the court, the judgment may be set aside, or its enforcement restrained.® Fraud may also be shown in equity for the purpose of vacating a judgment, if not also for impeaching it at law or in equity in a collateral action,^ where the wrong consists in 1 Peel fl. January, 35 Ark. 331, But it is considered in some of the where the authorities are reviewed. states that, if .such fraud do not appear 2 See Price v. Dewhurst, 8 Sim. 279. upon tlie face of the record, it cannot ' Wanzer v. Bright, 52 111. 35. See be shown in a collateral action. The however Luekenhach v. Anderson, 47 remedy is by suit to vacate tlie judg- Penn. St. 123, and White v. Crow, 113 ment. lb. ; Kelley v. Mize, 3 Sneed, U. S. 183, where it is held that the jus- 59; Edson v. Edson, 108 Mass. 590. tice of the claim thus sued upon must Contra, Jackson v. Summerville, 13 also be denied. Penn. St. 359 ; Edgell v. Sigerson, 20 * Shedden's Case, 1 Macq. 535. Mo. 494 ; Hall v. Hamlin, 2 Watts, 6 United States v. Flint, U. S. Circ. 354 ; State v. Little, 1 N. H. 257 ; Court, Cal. Sept., 1876, Field, J. Smiths. Keen, 26 Maine, 411 ; Thouve- 6 lb. nin v. Eodriques, 24 Tex. 468 ; Hart- ' Of cour-se if evidence of fraud, man v. Ogborn, 54 Penn. St. 120. In going to the very existence of the judg- principle it can make no diii'erence ment, appear upon its face, the judgment whether the facts making the judg- raay be impeached for such fact in a col- ment void appear upon the face of the lateral suit at law as well as in equity, record or not ; that is only a matter of Mason v. Messenger, 17 Iowa, 261, 274. evidence. 90 ADJECTIVE LAW OF FRAUD. [CHAP. VI. deceit practised upon the court in which the former suit was tried/ the injured party being absent, and having no notice of the acts resorted to.^ For example obtaining judgment in violation of an agreement between the parties, and without the knowledge of the opposite party, is ground for relief in equity .3 And this is true, though the agreement was made on the Sabbath.* In regard to fraud in the concoction of a judgment, if a party's own counsel should prove false to him, and by collu- sion with counsel for the other side, or perhaps by materially violating his instructions, to the knowledge of the oppo- site party, has then consented to the judgment in question, these facts would afford ground for vacating the judgment.^ And. if the judgment were rendered in a foreign court, such facts would doubtless be admissible in defence to an action upon the judgment. So too where a trustee in violation of duty to his cestui que trust, or a guardian in violation of his duty to his ward, or several of the parties to a cause in viola- tion of the rights of their fellows on the same side, should have a collusive judgment entered; in all of these and the like cases, the facts would constitute a ground for vacating the judgment, and, at least in the case of a foreign judgment, of collaterally impeaching the same.^ Cases of this kind are more common where the fraud is » Ward V. Southfield, 102 N. Y. man, 47 N. H. 507 ; Eogers v. Gwinn, 287. 21 Iowa, 58 ; Dobson v. Pearce, 12 2 Edson V. Edaon, 108 Mass. 690, N.Y. 165. qualifying Greene v. Greene, 2 Gray, ^ Duringer ■/. Mosohino, 93 Ind. 361. See also Laphara v. Campbellr, 61 495 ; Henteg v. Sweet, 27 Kans. 172 ; Cal. 296 ; Ochsenbein v. Papelier, L. R. Murphy v. Smith, 86 Mo. 333. 8 Ch. 695 (case of a foreign judgment) ; * Blakesley v. Johnson, 13 Wis. 630. Johnson v. Muversaw, 30 Ind. 436 ; * Chicago Building Soc. v. Haas, Stone V. Lewman, 28 Ind. 97 ; Jarmin 111 111. 176. See Whitlock v. Mc- 0. Saunders, 64 N. Car. 367 ; Chambers Cluskey, 91 111. 582. V. Chambers, 28 Conn. 552 ; Holland v. ^ See Bigelow, Estoppel, 208-212, Trotter, 22 Gratt. 136 ; Broaddus v. 4th ed. ; Ochsenbein v. Papelierj L. R. Broaddus, 3 Dana, 636 ; Pelham v. 8 Ch. 695. Moreland, 6 Eng. 442 ; Hibbard v. East- § 2.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 91 sought to be practised upon a third person. It is often laid down in general terms that third persons are not bound by judgments, not being parties to them, and may impeach them for fraud.^ Ld. Chief Justice de Grey long since laid it down that in civil suits all strangers might falsify for covin either fines or real or feigned recoveries, and even a recovery by a just title, if collusion were practised to prevent a fair defence ; and this whether the covin were apparent upon the record, aa in not assigning or not demanding the view, or by suffering judgment by confession or default, or extrinsic, as in not pleading a release, collateral security, or other matter of ad- vantage.^ This doctrine in regard to strangers whose right or title is directly affected by the judgment has been uniformly followed.^ But this rule needs some explanation. Third persons are bound by judgments inter alios, and, it is apprehended, cannot allege that they were obtained by fraud or collusion, except in so far as they have at the time of the judgment a legal right to insist upon its fairness. The fact that they have no present right of this kind, or a present right that is only remotely and indirectly affected by the judgment, will not enable them to attack it for the fraud. But third persona who have a present interest either in the amount of the judg- ment, or in the property concerned, are permitted to complain that the judgment was concocted in fraud of their rights. For example judgment creditors, and perhaps subsequent pur- 1 Otterson v. Middleton, 102 Penn, ^ Duchess of Kingston's Case, Bige- St. 78 ; Hoffman v. Coster, 2 Whart. low, Estoppel, 207, 4th ed, 453 ; De Annond v. Adams, 25 Ind. ' Perry «. Meadowcroft, 10 Beav. 455 ; Callahan v. Griswold, 9 Mo. 775 ; 122 ; Meadowcroft v. Hugueniu, 4 Vanderveere v. Mason, 4 Zab. 818 ; Moore, P. C. 386 ; Bandon v. Becher, Humphries v. Bartec, 10 Smedes & M. 3 Clark & F. 479 ; Gaines v. Keif, 12 282 ; Aunett v. Terry, 35 N. Y. 256 ; How. 472 ; Hall .>. Hamlin, 2 Watts, Great Falls Co. v. Worster, 45 N. H. 354 ; Dougherty's Estate, 9 Watts & S. 110 ; Atkinson v. Allen, 12 Vt. 619 ; 189 ; Thompson's Appeal, 57 Penn. St. Parkhurst o. Sumner, 23 Vt. 538; 175; Bigelow, Estoppel, 207,211,4th Sidensparker v. Sidensparker, 52 Maine, ed. 481 ; Philipson v. Egreraont, 6 Q. B. 687. 92 ADJECTIVE LAW OF FBAUD. [CHAP. VI. chasers, may attack a judgment where it is a fraud upon them,^ as where there has been collusion between debtor and creditor ; but they cannot object to it merely because it is a fraud upon the debtor or vendor.^ They can attack the judgment for collusion, but not for matter of defence, original or subsequent.^ That is a matter of defence personal to the defendant.* Under the like circumstances a surety can allege that a judgment against the principal debtor, now sought to be enforced against him (the surety), was obtained by collu- sion between the principal debtor and his creditor, in fraud of the surety.^ Concealment of facts which, had they been known, would have prevented a judgment, affords ground for relief ; ^ and that too even after the term in which the judgment was ren- dered.^ Mere suspicion of fraud however in obtaining a judg- ment is not sufficient ground for annulling a judgment, if the facts were known during the trial, or might have been known by the exercise of reasonable diligence.* 1 Hoffman v. Coster, 2 Whart. 453 ; Great Falls Co. v. "Worster, 45 N. H. Ottevsou V. Middleton, 102 Penn. St. 110 ; Pavkhurst v. Sumner, 23 Vt. 538. 78 ; Harbrough v. Hahn, 52 Ind. 243 ; See further as to the right of third per- Ex parte Banner, 17 Ch. D. 480. In sons to allege fraud in obtaining the this last case Cotton, L. J. said that it judgment, De Armond v. Adams, 25 was 'well established that in bankruptcy Ind. 455 ; Vanderveere v. Mason, 4 Zab. the trustee, as representing the credi- 818 ; Humphries v. Bartec, 10 Smedes tors, is entitled to go behind a judgment & M. 282 ; Philipson v. Egremont, 6 under circumstances in which the person Q, B. 587 ; Bandon v. Becher, 3 Clark against whom it was obtained would not £ F. 479. be allowed to do so, or to dispute his « Verplanck v. Van Buren, 76 K. Y. liability for the amount of the judg- 247 ; Ross v. Wood, 70 N. Y. 8 ; Fish ment.' v. Lane, 2 Hayw. 342 ; Noycs u. Loeb, 2 Thompson's Appeal, 57 Penn. St. 24 La. An. 48 ; Ocean Ins. Co. v. Fields, 175 ; Hogg V. Link, 90 Ind. 346, a 2 Story, 59 ; Patch v. Ward, L. R. 3 Ch. subsequent purchaser. 203. 8 Lewis V. Rogers, 16 Penn. St. 18. ' Edson v. Edson, 108 Mass. 590 ; * Sidensparker v. Sidensparker, 52 Allen v. McClellan, 12 Penn. St. 328 ; Maine, 481 ; Candee u. Lord, 2 Comst. Jennison v. Haire, 29 Mich. 207. 269 ; Voorhees v. Seymour, 26 Barb. ^ "Ward v. Southfield, 102 N. Y. 569, 585. 287 ; Smith v. Nelson, 62 N. Y. 286 ; ' Anuett V. Terry, 35 N. Y. 256 ; Lapham v. Campbell, 61 CA. 296. § 2.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 93 The distinction between fraud as a ground of impeaching a judgment and fraud not such ground lies in the consideration whether the fraud were such as to render the judgment void (that is, liable to be treated by the injured party as a nullity^), or such as to render it merely erroneous. The existence of fraud of the first kind, whether it consist in the preliminary steps necessary to obtaining jurisdiction of the cause, or in the subsequent proceedings down to the rendition of the judg- ment, is good ground for relief in equity, and no doubt may be pleaded in an action upon the judgment at law. Fraud of the second kind is not available in equity or at law, except by motion for a new trial or in arrest of judgment, or by writ of error or by appeal.^ This however assumes the existence of a (domestic) judg- ment rendered upon a trial of the cause to the end. If the case went to judgment without trial, as by agreement or upon a compromise,^ or on default,* it seems that it will not be exempt eitlier from collateral impeachment or from being set aside, upon the facts supposed to have been decided by it. And a like remark may be made in regard to determinations in probate in respect of the settlement of accounts of execu- tors, administrators, and guardians, and the distribution of the property ; such settlements may probably be opened for fraud in the statement of the accounts or in other material evidence furnished by the accounting party.^ 1 A judgment is a judicial determi- ^ Eaij v. Matheney, 60 Ind. 202. nation of a cause agitated between real * Jenkins v. Robertson, L. R. 1 H. parties, upon which a real interest has L. Sc. 117 ; Haldeman v. United States, been settled. In order to make a judg- 91 U. S. 584 (agi'eed judgment) ; States, ment there must be a real interest, a Young, 32 Kans. 292 (entry of satisfac- real argument (if there be any argument tion obtained by false representations), at all), a real prosecution of the suit, a But see Bank of Commonwealth v. Hop- real defence (if any), and a real decision, kins, 2 Dana, 395 (agreed judgment). The absence of any of these makes the See Bigelow, Estoppel, 68-70, 4th ed. judgment a nullity as to innocent par- * See Bigelow, Estoppel, 71-74, 4th ties, as was laid down in the House of ed. Lords in Bandon v. Beeher, 3 Clark & ' See Blake v. "Ward, 137 Mass. F. 479. 04 ; Bigelow, Estoppel, 221, note, 94 ADJECTIVE LAW OF FRAUD. [CHAP, VI. The line which separates the remedy by setting aside a judgment from that of impeaching it collaterally, i. e. impeach- ing it -without setting it aside, appears to be fading out. It is clear that there is no distinction between the two remedies, and there never was any, where the judgment in question is void upon its face, as for want of jurisdiction ; and the same rule should prevail in principle though evidence is required to show that the judgment is void.^ But it seems that either proceeding may sometimes be proper though the judgment be not deemed absolutely void, as where it was rendered in a case of ' meditated and intentional contrivance to keep the parties and court in ignorance of the real facts,' the fraud be- ing in this way effectively concealed from notice at the trial.^ This appears to be an innovation upon what was formerly un- derstood to be the law, to wit, that in cases in which the judg- ment was not void, the remedy, if any remained, was by a direct proceeding to vacate it.^ Where the court has jurisdic- tion, a judgment obtained by fraud is not ordinarily, it is clear, entirely void ; an officer executing it will not be liable, if not fixed with notice.* Judgments of courts of foreign powers, whether in rem or in personam, may be impeached for fraud ; that is, it may be shown that the judgment was obtained by fraud or collusion. It is not clear whether this means that the injured party may show that the judgment was obtained by the production of false testimony ; there have been decisions of great authority upon both sides of the question.^ It is apprehended however 4th ed. ; Morrow v. Allison, 39 Ala. Ward, L. R. 3 Ch. 203, 207 (setting 70; Hanf u. Whittington, 42 Ark. 491; aside judgment). See also Ward v. Dickson v. Hitt, 98 111. 300. See also Southfield, 102 N. Y. 287. Smith V. Sims, 77 Mo. 269, under stat- ' See e. g. Edson v. Edson, 108 ute. Mass. 590, 597 ; Earl v. Matheney, 60 1 Ante, p. 89, note. Ind. 202. 2 Verplanck v. Van Buren, 76 N. Y. * Baker v. Sheehan, 29 Minn. 235. 247, 257 (action for damages) ; Patch'!). ^ Against allowing such evidence. § 2.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 95 that the better view is that such evidence should not be re- ceived. It would seem that the plea of fraud must be directed to the mode of obtaining the jurisdiction, or to the concoction of the judgment. And even in regard to the plea of fraud in obtaining the jurisdiction, it is held necessary to show further that the claim itself is invalid.^ The rule in this country concerning the right to impeach for fraud, in the sense just indicated, a judgment rendered in a sister state has never been fully settled. Some of the courts have asserted that the right exists,^ while others have denied its existence.^ The conflict in these cases may be partly re- conciled in the fact that several of the cases which assert the right of impeachment for fraud were proceedings in equity ; and most of the authorities admit that the plea of fraud is good in equity.* Thus it has been held in several cases that equity will enjoin proceedings upon a judgment rendered in a sister state, if it was obtained by fraud.^ The question has never been fullj"^ determined by the Supreme Court of the United States ; and to this court alone can we look for a settlement of the same, since it involves the construction of the constitutional provision and act of Flower v. Lloyd, 10 Ch. D. 327, 333, Shnmway u. Stillman, 4 Cowen, 292 ; C. A. ; Castriquec. Behrens, 2 El. & E. Pearce v. Olney, 20 Conn. 544 ; Engel 709. See Engstrom v. Sherburne, 137 v. Scheuennan, 40 Ga. 206 ; Rogei-s v. Mass. 163. Contra, Abouloff V. Oppen- Gwinn, 21 Iowa, RS. See Dobson v. heimer, 10 Q. B. D. 295, C. A. ; Hunt Pearce, 12 N. Y. 156. ii. Hunt, 72 N. Y. 217, 227, dictum. ' Anderson v. Anderson, 8 Ohio, See Ochsenbein v. Papelier, L. R. 8 Ch. 108 ; Bicknell v. Field, 8 Paige, 440 ; 695 ; Price v. Dewhurst, 8 Sim. 279, Christmas f. Russell, 5 "Wall. 290 ; 302 ; Bigelow, Estoppel, 246, 247, Hood v. Hood, II Allen, 196 ; s. c. 110 4th ed. Mass. 463. See Bigelow, Estoppel, 1 Luckenbacka Anderson, 47 Penn. 293-299, 4th ed. St. 123 ; White v. Crow, 110 U. S. * Contra, Bicknell v. Field, supra. 183 ; Hair v. Lowe, 19 Ala. 224 ; Pearce ^ Pearce v. Olney, 20 Conn. 544 ; V. Olney, 20 Conn. 544 ; Ableman v. Engel v. Scheuerman, 40 Ga. 206 ; Koth, 12 Wis. 81, 90. Rogers v. Gwinn, 21 Iowa, 58. See 2 Holt V. Alloway, 2 Blackf. 108 ; Dobson v. Pearce, 12 N. Y. 156. Cou- Borden v. Fitch, 15 Johns. 121 ; An- tra, Bicknell v. Field, supra. drews v. Montgomery, 19 Johns. 162 ; 96 ADJECTIVE LAW OF FRAUD. [CHAP. VI. Congress concerning the effect of judgments of the sister states.^ As a question of equity, the subject has not appeared in that court. In its legal aspect the court has decided that fraud is not a valid ground for impeaching a judgment ren- dered in a sister state ; ^ and this is probably a final decision of the question, so far as it goes. It may be doubted how- ever if this case goes any further than to decide that fraud cannot be alleged at law where the facts show that the judg- ment is erroneous only. It would be to put the judgments of the courts of a sister state above those of the domestic courts to hold that the allegation of fraud is inadmissible where the facts pleaded show that the judgment was actually void. We apprehend that the Supreme Court of the United States would not refuse to allow the allegation of fraud in either of the following cases : first, where the jurisdiction of the court was obtained by fraud, and the claim sued upon is shown to be palpably without foundation ; ^ secondly, where the judg- ment itself or some material step leading to it was concocted in fraud ; and perhaps thirdly, wliere the allegation is not attended with any impeachment of the judgment, as where the injured party, accepting the judgment as binding, sues for damages for the fraud by which the opposite party obtained the claim passed into judgment.* An award not made a rule of court cannot be set aside for fraud in a court of law. The only remedy is by bill in equity. This is true, however gross the misconduct or even corruption of a party or of the arbitrator.^ The reason of this is that in such cases there is nothing upon which a court of law can fix its jurisdiction for such purpose.^ It is equally true that, after an award under a rule of court 1 See Bigelow, Estoppel, 297, 4th ed. ^ Fletchers. Hubbard, 43 N. H. 58 ; 2 Christmas «. Eussell, 5 "Wall. 290. Veale v. Warner, 1 Wms. Saund. 327 c; s Lnckcnbaek v. Anderson, 47 Penn. Greenhill v. Church, 3 Eep. in Ch. 49 ; St. 123 ; White v. Crow, 110 V. S. 183. Eussell, Awards, 60 (4th ed.). * Ante, p. 71. ° Eussell, ut supra. § 2.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 97 has been entered as the judgment of the court, it cannot be set aside at common law for fraud except under a practice applicable to judgments generally. The fraud should have been alleged before the award became the judgment of the court, or before the close of the term. At that time the court would have vacated the award on motion of the injured party, or upon plea of the facts in opposition to a motion by the opposite party to have the award entered as the judgment of the court.i Afterwards the remedy is by bill in equity.^ It follows that in cases of awards of this kind (entered as judgments under a rule of court), if an action be brought upon the arbitration bond for non-performance of the award, or in an action upon the award itself, the defendant cannot, in the absence of statute, plead fraud on the part of the plain- tiff or of the arbitrator in defence to the action.^ For, the award having become a judgment of court, to allow such a plea would be to allow the party to impeach a judgment in a collateral action ; at least, if the plea were a plea in bar of the right of action, and not in the nature of a cross-claim to damages by reason of the fraud. It is doubtful whether the same rule would apply to awards neither made under a rule of court nor entered as judgments thereof. The award in such a case is but an ordinary contract,* simple or special accord- ing to its form ; and it should seem that, when sued upon, it should be subject to the same kinds of defence as may be made in other cases of contract. And so it has been decided, even in a case in which the submission was upon agreement that there should be no appeal.* It would seem on principle that, whether the award has become a judgment of court or not, an action may be brought by the injured party for the fraud whereby the claim upon which the award was based was obtained, provided no issue 1 Morse, Awards, 611. * Russell, Awards, 50 (4th ed.). 2 See Emerson t>. Udall, 13 Vt. 477. ' Speer v. Bidwell, 44 Penn. St. 23. ' Morse, Awards, 542, citing many See Bigelow, Estoppel, 65-67, 4th ed. cases. 7 98 ADJECTIVE LAW OP FRAUD. [QHAP. VI. concerning such fraud were raised in the arbitration ; since such a proceeding does not impeach the award. In such a case the party adopts the award, but seeks damages for the original fraud of the plaintiff in the award. The case is pre- cisely like the common one of a party drawn into a contract by fraud accepting the bargain, and then sumg for the fraud.' Whether such a cross action can be maintained for perjured evidence introduced by the opposite party does not appear to have been decided. If the award was made under a rule of court and has passed into a considered judgment, it is at least doubtful if such an action could be maintained. The authori- ties concerning ordinary judgments are opposed to such ac- tions.2 Nor is it clear that equity will set aside an award of this kind on such grounds, if the award has become a judg- ment of court ; ^ though, before the award has been adopted by the court, equity would doubtless entertain a bill to set it aside for perjury of the opposite party's witnesses. And a fortiori would this be true of an award out of court. This in- deed would seem to be the preferable mode of proceeding for such a case, instead of bringing a cross action. A common law or statutory award, subject to the foregoing qualifications, is assailable for corruption or misbehavior of the arbitrators, as e. g. in receiving a material statement from one of the parties in the absence of tlie other, designed to in- fluence the decision,* or in receiving evidence or opinions from persons not witnesses ; ^ and tliis without proof that the arbi- trator was actually influenced thereby,^ and though the parties may have agreed that there should be no appeal.'^ And the same would doubtless be true in respect of fraud in the oppo- site party alone ; for it cannot be presumed that the agree- ment against exceptions or appeal was intended to cover any fraudulent practice that might be resorted to. Such an agree- 1 Ante, p. 71. ' Moshier v. Shear, 102 111. 169. ■■i Ante, r- 87. e lb. 3 Emerson v. Udall, 13 Vt. 477. ' Speer v. Bidwell, 44 Penn. St. 23. * Catlett V. Dougherty, 114 111. 568. § 2.J INJUNCTIONSi VACATING JUDGMENTS, NEW TBIALS. 99 ment merely bars the parties from setting up mistakes of law or of fact by the arbitrators.^ In regard to what constitutes evidence of fraud or corrup- tion in an arbitrator no universal rule can be laid down ; each case must be judged by its own facts. However it is held that whatever would be misconduct on the part of a juror will as a general rule be the same in an arbitrator.^ On the other hand the fact that the damages assessed, are much larger than a court would probably give, and that they are divided very disproportionably and to appearance arbitrarily between two defendants, will not constitute evidence of fraud or improper conduct in the arbitrator ; at least, not so decisively alone as to be ground for setting aside the award.^ But if the amount of damages assessed be grossly extravagant, it seems that the award may be treated as fraudulent.* Strong evidence is required to impeach a result on which the arbitrators heard the parties and exercised their judgment, if there was no actual concealment of facts. Something more is necessary than a mere showing by an accountant that the statement of account presented to the arbitrators by the opposite party was for example in a form not according to the rules of book-keeping, when it is apparent that tlie statement as made out could not have misled, if compared with other papers in the case, to which it must be presumed that all the parties looked for information.^ Where an award is procured by a plaintiff through false and fraudulent pretences and testimony, equity will restrain col- lection of it, where the complainant could not make a success- ful defence in a court of law; and the fact that the award 1 lb. ; McCahan D. Eeamey, 33 Penn. < Van Cortlandt v. Underhill, 17 St. 535. Johns. 405 ; Eudd v. Jones, 4 Dana, 2 Moshier v. Shear, 102 111. 169. 229 ; Tracy v. Herrick, 25 N. H. 381 ; 8 Burehell v. Marsh, 17 How. 344. In re Hall, 2 Man. & G. 847 ; Adair v. A veiy excessive award may he consid- Cumin, 48 Mich. 375, award of parti- ered erroneous however. South Car?- tion hy commissioners. lina B. Co. v. Moore, 28 Ga. 398. ' Beam v. Macomher, 33 Mich. 127. 100 ADJECTIVE LAW OF FRAUD. [CHAP. VI. was confirmed by the Circuit and Supreme Courts will not prevent equity from enjoining the collection of the judgment.^ The whole award however need not be disturbed where the fraud complained of can be discriminated and settled by itself.2 In some cases, if not in all, arbitrators may open and retry a judgment or decree upon the matter submitted to them, if they find that it was obtained by artifice, trick, or other fraud- ulent practice. Thus it has been held that if the plaintiff in a suit in equity has been induced by fraud to settle the same, and his bill has thereupon been dismissed without an entry that it was without prejudice, and if then, without applying to the court for a correction of the decree, an agree- ment is made to submit to arbitration ' all claims, whether in law or in equity, existing between the parties,' the arbitrators may receive evidence that the settlement was obtained by fraud, and proceed to retry the subject-matter of the equity suit.3 § 3. New Trials. It is a general rule of law that trick, artifice, or fraud *of any other kind, in the course of a trial, and especially attempts to tamper with the jury, or to influence them except in open proper argument before the court, will vitiate the verdict, if rendered in favor of the party guilty of such mis- conduct, and afford ground for a new trial.* Under this head five classes of cases have been mentioned, to wit : 1. Where papers have been surreptitiously handed to the jury ; 2. Where a party has improperly approached a juror upon the subject of the trial ; 3. Where there has been a neglect to correct improper attempts to influence the jury ; ^ 4. Where 1 Chambers v. Cook, 42 Ala. 171. * 1 Graham & W. New Trials, 45 ; 2 Champion «. "Wenhara, Ambl. 245 ; 2 Archb. Pr. 225. Baam v. Macomber, 33 Mich. 127. * A ground of course for refusings ' Mickles r. Thayer, 14 Allen, 114. new trial. Post, p. 104. § 3.] INJUNCTIOljrS, VACATING JUDGMENTS, NEW TRIALS. 101 indirect measures are employed to influence or prejudice the jury ; 5. Where an attempt is made to mislead the court and the jury. Under the first head Lord Coke has said that if, after the evidence has been given and the jury have departed from the bar, the plaintiff or any one acting for him deliver any letter from the plaintiff to the jury concerning the matter in issue, or any evidence or any scroll touching the matter in issue which was not given in evidence, the verdict, unless found for the defendant, will be vitiated.^ So too if papers written upon and underscored so as to attract special attention be passed to the jury, without the knowledge of the opposite party, he will, if defeated, be entitled to another trial.^ But though the paper surreptitiously handed to the jury contain nothing material to the issue, it may be questioned, notwitlistanding the language of Lord Coke, whether a verdict for the party guilty of the intended fraud should not be set aside. It has been decided that if the jury carry out with them a deposition, part of which has been ruled out as inad- missible, the verdict will be permitted to stand, if the evidence be altogether irrelevant and immaterial, and the deposition were taken out by mistake.^ And the court says that, if the deposition had been delivered to the jury by the plaintiff's counsel without the consent of the other side, the verdict would be set aside, though it should fully appear that the rejected part had not been read to the jury. Such an act would be in contempt of the court, and, in effect, a tampering with the jury ; and such an act, it is apprehended, need not be successful to be rebuked. It is clear that, if the act 1 Coke, Litt. 227 ; Shande's Case, 1 Dunn, 5 Ind. 122 ; Eersch -v. State, 13 Sid. 235 ; Alger v. Thompson, 1 Allen, Ind. 434 ; Newkirk v. State, 27 Ind. 1 ; 453 ; Killeu v. Sistnink, 7 Ga. 2S3 ; Coffin v. Gephart, 18 Iowa, 256. But Flanders v. Davis, 19 N. H. 139 ; see Maynard b. Fellows, 43 N. H. 255. lK)nsdale v. Brown, 4 Wash. C. C. 149 ; " Watson v. Walker, 23 N. H. 471. Durfee v. Eviland, 8 Barb. 46 ; Ball v. ' Lonsdale v. Brown, 4 Wash. C. C. Carley, 3 Ind. 577. See Alexander v. 149. 102 ADJECTIVE LAW OF FEAUD. [CHAP. VI. amount to tampering with the jury, the verdict (if for the party committing such act) will be set aside, though the jury were not influenced thereby.^ Under the second head, where a party or any one on his behalf directly approaches a juror upon the subject of the trial, there are numerous cases ; and the rule is well settled that for such misconduct a new trial will be granted, unless the verdict has been given for the opposite side.^ Thus, in the case first cited, it appeared by an affidavit of one of the jurors that a difficulty in the plaintiff's account having been mentioned after the jury had received the charge of the court and retired to consider of their verdict, the foreman of the jury declared that the plaintiff had satisfied him with regard to that difficulty in a conversation which he had had with him out of court, and after the jury had been sworn. A new trial was granted the defendant. And it is worthy of obser- vation that while it is a disputed question whether affidavits of a juror should be received to prove the misconduct of the jury alone, as in deciding a case by the drawing of lots, affi- davits have always been received to prove outside improper influences with the jury.^ It should be observed also that, though in fact such conduct is generally fraudulent, it is not necessary that it should be so. Even if a juror should make honest inquiry of one of the parties to the suit, after retiring, concerning the facts, the effect would be the same as if there had been a fraudulent tampering with him. If after the jury have retired, a witness at the trial be sent for by them, and admitted into their room without the knowl- edge of the court or parties, a new trial will be granted.* And the same rule prevails where the jury, without the knowledge of the parties, take with them and use in the con- 1 Knight V. Freeport, 13 Mass. 218. » Ritchie v. Holbrooke, supra. 2 Ritchie v. Holbrooke, 7 Serg. & R. ♦ Luttrell a. Maysyille E. Co., 18 458 ; Cottle v. Cottle, 6 Greenl. 140 ; B. Mon. 291 ; Smith v. Graves, 1 Brev. Knight V. Freeport, 13 Mass. 218 ; Per- 16. kins V. Knight, 2 N. H. 74. § 3.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 103 suiting room a material deposition which was not offered in evidence.^ And in general a new trial will be granted when the jury receive new evidence after leaving the bar.2 The acts of third persons may afford ground for a new trial. Such persons have no more right to interfere with the delib- erations of the jui-y than have the parties themselves.^ Thus where a friend of one of the parties induced several jurors to go with him upon the locus of the cause of action, without the knowledge of the party opposed to his friend, where he made certain explanations to them, the court granted a new trial to the opposite party.* So where the plaintiff's son-in- law said to one of the jurors during the trial that the cause was of great importance to him, that he should have to pay the costs if the case should go against the plaintiff, and that the defence was a spiteful thing, a new trial was granted.* So too it is held that, upon a motion to set aside a verdict on account of remarks which were made to the jury by the officer in charge of them, it is sufficient to show that there is reason to suspect that the remarks were made, and, if made, that they were calculated to influence the verdict, without proving that such influence was in fact exerted." And in general, though a verdict will seldom be set aside merely because the jury have been approached if it clearly appear that no injus- tice has been done and the interference did not affect the re- sult, still if it appear that they have been approached in such a manner as might have influenced their verdict, the verdict should be set aside without reference to the source or the motive of the interference." 1 Coffin V. Gephart, 18 Iowa, 256 ; " Thomas v. ChapmaTi, 45 Barb. 98. Stewartw.BurlingtonR. Co., llIon-a,62. But see Baker i'. Simmons, 29 Barb. 2 Bronson ». Graham, 2 Yeates, 166; 198, where it was held that the fact Thompson v. Mallet, 2 Bay, 94 ; Paine that the officer in charge of the jury V, Van Note, 1 South. 146. urged them to give a verdict for the * Deacon v. Shreve, 2 Zab. 176 ; plaintiff, which they did, was not of it- Knight V. Freeport, 13 Mass. 218. self ground for a new trial. * Deacon v. Shreve, supra. ' Nesmith v. Clinton Ins. Co., 8 s Knight V. Freeport, 13 Mass. 218. Abb. Pr. 141. 104 ADJECTIVE LAW OF FRAUD. [CHAP. VI. The third head is simply the case of counter-misconduct. It is the duty of a party who knows of misconduct towards the jury on the opposite side to make the fact known to the court, if it be in his power to do so. The court is interested in such matters as well as the party against whom the fraud is practised ; and a new trial will not be granted upon the success of the fraud, not only because of the acquiescence of the complaining party ,^ but (it would seem) because he has failed in the performance of a duty to the court. And if the case be one of mutual attempts at fraud upon the adminis- tration of justice, the proper course for the court would be tp allow the verdict to stand, and to punish both of the parties. Under the fourth head are classed cases in which the jury are not directly approached, but either means are put in their way which, if observed by them, might prejudice them against the opposite party, or some artifice is employed to prevent the opposite party from producing all of his evidence. This latter case might very properly constitute a distinct head, since the success of such artifice does not operate to prejudice the jury, but solely to defeat the rights of the other pai-ty. As an illustration of the putting of improper means of decision in the way of the jury may be mentioned the case of a party distributing about the court and halls, at and before the trial, a statement of his case,^ or handbills reflecting upon the char- acter of the opposite party .^ In these cases it appears to be immaterial wlietlier such means fell into the hands or came under the observation of the jury or not.* As an illustration of the employment of artifice to prevent the other side intro- ducing evidence may be mentioned the case of an arrest and imprisonment of a witness, and detention of him until after the trial, done for the purpose of preventing him from giving 1 Herbert v. Shaw, 11 Mod. 118. ^ Coster v. Merest, 3 Brod. & B. 2 Spenceley v. De "Willott, 7 East, 272 ; s. c. 7 Moore, 87. 1 08. * Coster v. Merest, supra. § 3.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 105 testimony.^ So too an interference by one party to defeat the service of a subpoena on behalf of the other, by inducing the witness to avoid testifying, and the giving to a witness a reward for testifying in a particular way, will ordinarily be ground for a new trial.^' A party may be guilty of misconduct by granting a favor to a juryman. Thus if after the jury has been impanelled, one of them in the progress of the trial should be entertained by either of the parties, a verdict rendered in favor of such party will be set aside.^ But a mere indiscretion, not attended with a fraudulent design, and not resulting in injury to the opposite party, will not be ground for a new trial. In one case the defendant, during a recess of the court, invited a juror to take a glass of soda with him, and also to dine with him, whicli the juror did, the defendant paying the charges.* Nothing was said to the juror about the suit. The two were neighbors, and in the habit of doing mutual favors, and, not- withstanding this, the juror was in favor of a verdict for the plaintiff ; but, by consent of the parties, the agreement of a majority of the jurors was taken as the verdict of the jury, and thus a verdict was rendered for the defendant. It was held that there was no ground for a new trial.^ In regard to the next head, — attempts to mislead the court and jurj', — an example is given of a plaintiff who had sold goods to the defendant on credit, taking as security the note of a third person which had been the property of the defendant. This security, by the negligence of the plaintiff, became worth- 1 Davis V. Daverill, 11 Mod. 141. v. Hall, 22 Maine, 198 ; Phillipsburg As to acts of the kind by strangers, see Bank v. Fulmer, 31 N. J. 52. Grovenor v. Fenwick, 7 Mod. 156 ; * The only ciTect of such evidence Rex V. Burdett, 2 Salk. 645 : Rex o, seems to be to indicate, in some degree, Gray, 7 Burr. 510 ; Eex v. JoUiffe, 4 an intent to prevail upon the mind of T. R. 285. the juror in respect of the verdict. 2 Barron v. Jackson, 40 N. H. 365. '^ Vaughn v. Dotson, 2 Swan, 348. See Crafts v. Union Ins. Co., 36 N. H. '44. See also Hilton v. Southwick, 17 Maine, 3 Walky V. Walker, 11 Ga. 203 ; 303 ; Handley v. Call, 30 Maine, 9 j Walker o. Hunter, 17 Ga. 364 ; Studley Tripp v. County Com., 2 Allen, 556. 106 ADJECTIVE LAW OF FEAUD. [CHAP. VI. less ; and the plaintiff having subsequently sued the defendant, declaring against him for goods sold and as indorser of the said security, the only question in the case was, who should bear the loss of the note. The defendant, in this aspect of the case, relying upon production of the' note by the plaintiff, had not given him notice to produce it. The plaintiff now saw his advantage. To produce the note would be fatal, under the evidence already produced of his own negligence. If he did not produce it, the defendant could not give evidence of its contents, since he had not notified the plaintiff to exhibit it. The plaintiff therefore resorted to the sharp practice of taking a verdict upon the sale and delivery of the goods. But the court set aside the verdict, and granted a new trial, on the ground that the plaintiff had taken a verdict for the price of goods for which he had received satisfaction, the evidence of which was in his own possession, and had been purposely suppressed by him.^ Where it appears that, through the fraud and combination of the attorneys to a cause, a sham defence to the action has been interposed, and the court has been so deceived that no judgment has been obtained, and without any action of the court the case has been suffered to disappear from the docket, the injured party will be entitled to have the cause redocketed, and a trial instituted on the pleadings as they remain in the files of the court.^ So if a party has been prevented from making a good defence at law by the promises or assurances of the party or attorney on the other side, equity will relieve him.' So also if the court be so imposed upon as to suffer a false entry of appearance by a defendant to be made, the judge upon a proper case will, so far as possible, deprive the plain- tiff of any advantage which he may have derived from his fraud.* 1 Anderson v. George, 1 Burr. 352. 136 ; Poindexter v. Waddy, 6 Munf. 2 Doss V. Davis, 60 Mo. 300. 418. » ' Holland v. Trotter, 22 Gratt. « Bemecker v. Miller, 44 Mo. 102. § 3.] INJUNCTIONS, VACATING JUDGMENTS, NEW TRIALS. 107 Nothing indeed is better settled than that, whei'e by fraud a party has gained an unfair advantage in proceedings in a court of justice which must operate to make the court an instru- ment of injustice, as where a default is taken after other ar- rangements have been made between counsel for the disposi- tion of the cause, equity will interfere and restrain such party from reaping the fruits of the advantage gained.^ There may be such misconduct on the part of the judge as will warrant a new trial. Clear proof of any corruption in favor of one of the parties will of course afford good ground to the opposite party, if defeated, for another trial. And the same will be true of far less serious offences. If for example the judge should write a letter to the jury, after the adjournment of the court, relating to the cause committed to them, a new trial would be granted.^ So too if, without the consent of the parties, the judge should visit the jury in their consulting room.^ But if such a visit should be made on request of the jury, with the knowledge of either party, his consent will be implied.* So too if after retiring the jury are allowed by the judge, at their own request, but without the knowledge of the parties, to have a copy of the statutes for examination, the verdict cannot stand.^ 1 Bresnehan v. Price, 57 Mo. 422. * Hancock v. Salmon, 8 Barb. 564. 2 Sargent v. Eoberts, 1 Pick. 337. ' Merrill v. Nary, 10 Allen, 416. » Hoberg v. State, 3 Minn. 262. See State v. Smith, 6 E. I. 33. 108 ADJECTIVE LAW OF FRAUD. [CHAP. VII. CHAPTER VII. JOINDER OF PARTIES. Wheee an action lies in favor of two or more jointly, the general rule at law, though not in equity,' is that the action must be brought by all together. This is the rule in cases of contract,^ and it applies to torts committed against joint con- tractors or partners.^ The same reason is applicable to both cases ; the interest is joint, ' and the defendant ought not to be subjected to two suits for one and the same entire cause.' But this could not be necessary, though it may be permissible,^ where the joint contracting parties defrauded have separate or several interests. Thus if A by one and the same deed and covenant leases Blackacre to B and Whiteacre to C, by fraud- ulent representations, B and C, the joint covenantees, may each maintain his action against the lessor ; ° and of course the death of either cannot affect the right of action of the other,® whether the right of action in the other survives or not.^ And if the fraud were perpetrated upon but one of the covenantees, in such a case, he would not, it seems, be required to join his associate.^ Apart from statute^ several persons having dis- tinct and individual rights of action for fraud against the same 1 Canal Co. v. Gordon, 6 Wall. ' See chapter 'The Party Defrauded,' 661. as to survivorship. 2 Gould, Pleading, 186, 5th ed. « See Canal Co. d. Gordon, 6 Wall. » Farley v. Lovell, 103 Mass. 387 ; 561, infra, p. 109 ; and comp. Prince v. Homer v. Wood, 11 Cush. 62 ; Canal Shepard, 9 Pick. 176, that an assign- Co. V, Gordon, supra. See Larsen v. ment may be fraudulent as to one of Groeschel, 98 Ind. 160. two assignees and valid as to the other. * Larsen v. Groeschel, 98 Ind. 160. ' Field v. Holzman, 93 Ind. 205. 6 Gould, p. 187. See the converse, infra. « lb. 188. CHAP. VII.] JOINDEK OF PARTIES. 109 person cannot join in a common suit against him ; otherwise if the fraud was accomplished in a joint transaction.^ Where a release is fraudulently obtained from one of two joint contractors, the releasing party, though he might repudi- ate the release in a suitable case and then join his associate in the action, is not a necessary party to a hill filed by his co- contractor against the opposite party to the contract.^ But where the releasing contractor, e. g. a partner, has joined with the opposite party in fraud upon the associate contractor, the releasing contractor cannot be made a party to a suit against the person released, since he has consented to the fraud ; ^ the injured party therefore sues in equity, where joinder would not be necessary.* In regard to defendants the rule at law is that all persons concerned in fraud, whether by preconcert or conspiracy or not, may be joined.^ On the other hand, according to the law of this country, it is not necessary to join parties at law at all, though they were in fact guilty of preconcert or conspiracy ; a joint tort may here be treated as a several wrong.® The rule is different in England ; '' and it may be that a different rule would be held here of fraud committed by joint tenants, joint contractors, or partners.^ It is clear that two persons cannot be sued in one action for distinct frauds committed by them severally against the same person ; several distinct torts cannot be treated as joint.^ On the other hand if two are joined in an action for fraud, and it turns out that but one is guilty, the suit against the other 1 Levering i). Scherell, 78 Mo. 167. Luce «. Dexter, 135 Mass. 23 ; Morgan 2 Canal Co. v. Gordon, e Wall. v. Chester, i Conn. 387 ; Gilbreath v. 561. Jones, 66 Ala. 129 ; United Soc. v. Un- ^ Noyes v. New Haven R. Co., 30 der.wood, 11 Bush, 265. See Weber v. Conn. 1 ; Farley v. Lovell, 103 Mass- Weber, 47 Mich. 569. 387 J Homer v. Wood, 11 Cush. 62. ' Brinsmead v. Harrison, L. R. 6 * lb. C. P. 584. 6 Gould, pp. 190, 194. 8 comp. Gould, p. 195. ' lb. ; Lovejoy v. Murray, 3 Wall. ' lb. 1 ; Sessions ». Johnson, 95 U. S. 347 ; 110 ADJECTIVE LAW OF FRAUD. [CHAP. VII. may be dismissed and judgment rendered against the guilty party.' The rule in equity in regard to parties defendants is that all whose interests would be materially affected by the decree sought to be obtained, such as purchasers under different deeds, must be before tlie court.^ Hence where a minority of stockholders and bondholders of a railroad company seek to set aside as fraudulent a sale and foreclosure of mortgage made through the co-operation of the other stockholders and bond- holders, the bill must make not only the purchaser a party, but also the consenting stockholders and bondholders.^ But stock- holders of a corporation, who have been allowed to put in answers in the name of a corporation, cannot be regarded as answering for the corporation itself. In a special case how- ever where there is an allegation that the directors fraudu- lently refused to attend to the interests of the corporation, a court of equity will in its discretion allow a stockholder to be- come a party defendant for the purpose of protecting from unfounded claims against the company his own interests and the interests of such other stockholders as choose to join him in the defence.* In an action against directors of a mutual insurance company for refusing to pay a loss, when they had funds wherewith to do so, but which they have fraudulently applied to other purposes, the insurance company should be made a party.^ 1 Eeynell v. Sprj-e, 1 De G. M. & G. bankrupt Buffington v. Harvey, 95 660, 684, 685. The result only affects U. S. 99. costs. lb. 3 Ribon v. Railroad Go., 16 Wall. 2 ' In Virginia it is common practice 446. for a judgment creditor to unite in one * Bronsou v. La Crosse R. Co., 2 bill any number of purchasers claiming Wall. 283. different parcels of land by separate .jind ^ Lyman v. Bonney, 101 Mass. 562. distinct alienations.' Almond v. Wil- That relief in equity will be granted in son, 75 Va. 613, Staples, J. So else- such cases, see Peabody v. Flint, 6 Al- •where. Forniijuet v. Forstall, 34 Miss, len, 52 ; Robinson v. Smith, 3 Paige, 87. An assignee in bankruptcy, suing 222 ; Cunningham v. Pell, 5 Paige; 607 ; to set aside a deed of the bankrupt made Hodges v. New England Screw Co., 1 in fraud of creditors, need not join the E. I. 340 ; Curran v. Arkansas, 15 How. CHAP. VII.] JOINDER OF PARTIES. Ill In an action in equity by innocent partners against their late associate who has fraudulently sold firm property to him- self and others, the latter are or are not necessary parties ac- cording as they are innocent of the fraud or not.^ This was held in a case of the kind, in which a retiring partner having made the sale at an undervaluation, a bill was filed to settle the affairs of the old firm, and incidentally to set aside the sale so far as the price had been fixed by agreement, and to charge the defendant partner with the fair value of the property.^ Several other illustrations of the rule of joinder of parties in equity may be given : A note and mortgage executed to a railroad company, which were procured by fraudulent repre- sentations, having been transferred to a city, to secure it against liability on its bonds issued in aid of the road, the claim that the bonds are invalid for want of authority in the city to issue them will not be determined, and the city required to deliver up the note and mortgage to the maker, unless the holders of the bonds are not only made parties to the suit for such pur- pose, but so subjected to the jurisdiction of the court that it may compel a surrender of the bonds.^ Where too judgments are impeached and sought to be set aside in equity for fraud, the plaintiffs in such judgments are indispensable parties to the bill, and no decree can be ren- dered in favor of the complainant without making them par- ties.* It is not enough that the defendant admits liimself to be the owner of the judgment, since such an admission may be collusive.^ On a bill in equity by heirs to set aside a deed procured from the ancestor by fraud, a sale of the estate being desired to pay the charges equitably due the grantee for advances, it 304 ; Scott 0. Eagle Fire Ins. Co., 7 ^ Farley v. Lovell, supra. Paige, 198. » Burhop v. Koosevelt, 20 Wis. 338. 1 Farley v. Lovell, 103 Mass. 387. * May v. Barnard, 20 Ala. 201. See Whittemore u. Cowell, 7 Allen, * Marshall v. Beverley, 5 Wheat. 446. 313. 112 ADJECTIVE LAW OF FRAUD. [CHAP. VII. is necessary that all of the heh-s should be made parties, before such a sale can be ordered.^ A bill which seeks to set aside a fraudulent receipt obtained by an administrator from a distributee of a decedent's estate, and to recover the amount coming to that distributee, is not a suit in which all other persons interested in the estate can be heard, unless they are made parties, or make themselves parties to the suit in some appropriate way.^ The sureties of an administrator on his official bond may be joined with him in an equity proceeding for an erroneous and fraudulent administration of the estate by him, if on finding a balance against the administrator those sureties would be liable.^ The rule for ordinary cases of fraud on creditors by a debtor who has made an, assignment, voluntary or involuntary, in bankruptcy or not, or by a corporation or the like in the hands of a receiver, is that the assignee or the receiver should sue, not individual creditors ; but the case may be different where the assignee, upon sufficient notice or request, neglects or re- fuses to proceed,* or where the evidence is such as to show that neither notice nor request would avail, as where collusion of the assignee with the debtor has been sliown.^ So too in ordinary cases it is for the representative of an intestate debtor, who has made a conveyance in fraud of his creditors, to take the necessary legal steps to recover the property or its avails for the creditors, and not for creditors individually or otherwise than by the intestate's representative to sue. But the case will be different here also if the representative un- reasonably neglect or refuse to proceed, or if he is shown to have been in collusion with the debtor in the f raud.^ In either of these two cases the recusant or colluding party should be joined with the debtor.'' 1 Harding v. Handy, 11 Wheat. 103. ^ Comp. Brewer v. Boston Theatre, 2 Hook V. Payne, 14 Wall. 252. 104 Mass. 378 ; ante, p. 57. 8 Payne v. Hook, 7 Wall. 425. « Bate v. Graham, 11 N. Y. 237. * Monitor Furnace Co. o. Peters, 40 ' See ib. ; Monitor Furnace Co. i>. Ohio St. 675. Peters, supra. CHAP. VII.] JOINDEE OP PARTIES. 113 The rule of equity that all persons materially interested in the subject-matter of a suit should be made parties to it, like all general rules, will yield whenever it is necessary that it should yield, in order to accomplish the ends of justice. It will yield, if the court is able to proceed to a decree and do justice to the parties before it without injury to absent per- sons, equally interested in the litigation, who cannot con- veniently be made parties to the suit. And this exception prevails as well in the case of a bill founded on fraud as in other cases.^ Where a bill to set aside a conveyance as fraudulent is re- manded or dismissed, because the complainant has not added necessary parties, costs are allowed a co-defendant, the per- son charged with having received the fraudulent conveyance.^ ^ Payne v. Hook, 7 "Wall. 425, 431. = Gaylords v. Kelshaw, 1 Wall. 81. 114 ADJECTIVE LAW OF FRAUD. [CHAP. VIH. CHAPTER YIII. PLEADING. § 1. Allegation op Feaud. Relief in equity or at law, on the ground of fraud, will not be granted, unless the fraud be made a distinct allegation in the bill or declaration, so that it may be put in issue in the pleadings.^ In bills in equity facts from which the allegation of fraud is derived are part of the case, and must therefore be alleged.2 For example it is held that a party seeking, on the ground of iraud, to open an account that has been allowed and settled in the Probate Court, must point out the particu- ' Patton V. Taylor, 7 How. 132"; Voorliees v. Bonesteel, 16 Wall. 16 ; Noonan v. Lee, 2 Black, 499 ; Bailey v. Eider, 10 N. Y. 363 ; Chatauqua Bank V. White, 5 N. Y. 236 ; Baruard v. Eaton, 2 Gush. 294 ; Wallingford v. Mu- tual Soc, 5 App. Gas. 685 ; New Bruns- wick Ky. Go. V. Gonybeare, 9 H. L. Oas. 711, Lord Westbury ; Sharpe v. San Paulo Ry. Co., 8 Ch. D. 597, C. A. ; McCalmon v, Eankin, 8 Hare, 1, 15 ; Marshall v. Sladden, 7 Hare, 428, 444 ; Pickering v. Pickering, 4 Mylne & C. 289 ; Curry v. Keyser, 30 Ind. 214 ; Darnell o. Rowland, lb. 342 ; Steed v. Baker, 13 Gratt. 380 ; Knibb v. Dixon, 1 Band. 249 ; Marr's Appeal, 78 Penn. St. 66 ; Hendrix v. Nunn, 46 Tex. 141 ; Small V. Boudinot, 1 Stoekt. 381. It is enough however to prove the sub- stance of the fraud. Packard v. Pratt, 115 Mass. 405. But a breach of war- ranty cannot be proved under an alle- gation of false representations in deceit. Cooper v. Landon, 102 Mass. 58. See ante, p. 70. ^ ' It is most essential to the admin- istration of justice in a court of equity that the nature of the case, where it is constituted of fraud, should be most ac- curately and fully stated in the biU of the plaintiff. It is impossible to give relief merely on the general charge that something has been done by a party or has been obtained from a party under the influence of fraud. It must be shown in what the fraud consists, and how it has been effected. And if the fraud is alleged to consist in certain representations which were untrue, and other facts were relied on for the pur- pose of showing that they were untrue, those facts must undoubtedly constitute a part of the case made by the plaintiff.' Lord Westbury in New Brunswick Ry. Co. V. Gonybeare, supra. § 1.] PLEADING. 115 lars in which the account is fraudulent, so as to apprise the opposite party what he intends to prove ; and he must lay such evidence before the court as will make out a clear prima facie case.^ But if the defendant goes to trial without object- ing, and the plaintiff prove facts sufficient to constitute fraud, he will be entitled to a decree.^ In accordance with this rule a party who seeks to charge another with the consequences of a fraudulent breach of trust is bound so to state his case upon the bill that the circum- stances alleged must, if proved, necessarily and at all events, constitute a fraudulent breach of trust. His case must not be left to bare inference. Where therefore an information was filed, alleging that certain payments, charged to be illegal and improper, were about to be made by a municipal corporation out of corporate funds, and praying that the corporation might be restrained from making them, but the payments were of such a kind that under certain circum- stances (the existence of which was not negatived by the infor- mation) they might be justifiable, a demurrer was sustained.^ In like manner a declaration in deceit must show not only what the fraud was, and that the plaintiff has been injured,* but also the connection of the fraud with the alleged damage, so that it may appear to the court whether the fraud and the damage sustain to each other the relation of cause and effect, or at least whether the one might have resulted directly from the other .^ Hence a general charge that a party acted ' f raud- ^ Hyer v. Morehouse, Spencer, 125. ' Attomey-Gen. i). Norwich, 2 Mylne See Atlantic Belaine Co. v. Jamea, 94 & K. 406. IT. S. 207. But see infra, p. 119, as to * Bish v. Cannon, 94 Ind. 263. A particulars in interrogations and bills of bare general allegation that an article discovery. bought is 'worthless' appears to be in- 2 Farnam v. Brooks, 9 Pick. 212, sufficient. Neidefer u. Christian, 71 decides much more than that. There Ind. 363. But see Hess o. Young, 59 was no direct averment of fraud there, Ind. 379. and yet the evidence having shown ^ Bayard v. Holmes, 5 Vroom, 296. fraud, it was held that the plaintiff was entitled to relief. 116 ADJECTIVE LAW OF FRAUD. [CHAP. VIII. ulently,' or ' made fraudulent representations,' is not good, unless accompanied with a statement of facts to sustain it ; ^ and this whether by the plaintiff or by the defendant.^ So too a party seeking relief from the payment of purchase-money on the ground of fraud must allege the fraud distinctly in his bill.^ And particular acts of fraud should be alleged.* Thus that the plaintiff has understood that a sale was conducted fraudulently, that the defendants and others specified were the wrong-doers, and that they suppressed certain facts which ought to have been made known, are not a sufficient statement of the facts constituting the alleged fraud. It should appear in what respect the sale was fraudulently conducted, or what facts were suppressed to the detriment of the plaintiff.^ But if the facts alleged clearly show fraud, actual or constructive, it will not be material that there is no direct averment of fraud.^ And in an action for a false and fraudulent mis- 1 Sharpe v. San Paulo Ry. Co., 8 Ch. D. 597, 0. A. ; Mey v. Riley, 34 Wis. 372 ; Welshbillig v. Dienhart, 65 Ind. 94 ; Hess v. Young, 59 Ind. 379 ; Durr V. Jackson, 59 Ala. 203 (affidavit of at- tachment must charge actual fraud and evil intent to hinder and delay cred- itors) ; Mcllroy v. Buckner, 35 Ark. 555 ; Mock v. Pleasants, 34 Ark. 63 ; Estate of Kidder, 66 Cal. 487 ; West v. Wright, 98 Ind. 335. See McComas v. Haas, 93 Ind. 276. 2 Mills ». Collins, 67 Iowa, 164. ' Ifoonan v. Lee, 2 Black, 499. * Marr's Appeal, 78 Penn. St. 66 ; Lewis V. Neugel, 38 Penn. St. 222; Mills V. Collins, 67 Iowa, 164. 6 Small V. Boudinot, 1 Stockt. 381. It is held in Missouri, under the new practice, to he unnecessary to set out the facts constituting fraud. A general plea of fraud is good. Edgell v. Siger- son, 20 Mo. 494. Indeed that practice was considered proper in that state under the common-law system of plead- ing. Montgomery v. Tipton, 1 Mo. 318 ; Pemhertou v. Staples, 6 Mo. 59 ; Hill -0. Montague, 2 Maule & S. 377. * The effect of the decision in Edgell t>. Sigerson therefore is that the new prac- tice does not require greater particular- ity than the old, not that it is satisfied with less. Under the Code of New York it is held necessary to set out the facts. Faure v. Martin, 7 N. Y. 210. » Fai-nam v. Brooks, 9 Pick. 212 ; Mussina v. Goldthwaite, 34 Tex. 125 ; McCalmon v. Rankin, 8 Hare, 1, 15 ; Marshall v. Sladden, 7 Hare, 428, 444 : Pickering v. Pickering, 4 Mylne & C. 289. If a declaration disclose a. state of facts upon which an action may he maintained, independently of the exist- ence of fraud, the plaintiff is not bound to prove fraud, though his declaration allege it ; he may recover on the liabil- ity which the facts disclose, though the allegation of fraud be in fact disproved. Swinfen v. Chelmsford, 5 Hurl. & N. 890. § 1.] PLEADING. 117 representation it is sufficient to allege the substance of the representation. It is not necessary to set it out by a literal recital ; the amount required in a criminal case is not neces- sary .^ Nor can the objection that the facts constituting an alleged fraud are not stated in the declaration or bill be first raised in a court of error.^ Though it is usual in actions for fraud to charge expressly a fraudulent intent, where the fraud is alleged to consist in intention, and the quo animo is the gist of the inquiry, still there is no rule requiring a fraudulent intent to be averred where the intent is a legal conclusion drawn from the facts alleged, and where the existence of those facts, and not the fraudulent intent, is the gist of the inquiry and the founda- tion of the rights asserted in the action.^ It has been said however that, in cases of actual fraud, the fraudulent intent should be charged in express terms, and not left to inference from the facts stated.* But if the facts which constitute fraud are set forth witli an averment of the injurious result, the case is certainly sufficient on the pleadings ; and a detail of the circumstances which tend to establish a dishonest in- tent in the conduct of the other party may be properly left fof production in taking the evidence.^ So too it may not be necessary in an action for deceit to allege in terms the scien- ter, where the allegations made clearly imply it or show an equivalent ; ® still it is unsafe to omit it. In an action for a false warranty, whether the action be in assumpsit or in tort, a scienter need not be averred, and, if averred, need not be proved.'^ But it has been said that if, in 1 Montague v. Adams, 15 Vt. 237. Bethell v. Bethel), 92 Ind. 318 ; Frenzel 2 Mason v. Daly, 117 Mass. 403. w. Miller, 87 Ind. 1. A fraudulent pur- ' Carter v. Carter, 5 Tex. 98. pose will be an equivalent of the sci- • Bartholomew v. Bentley, 15 Ohio, enter. Roller v. Blair, supra. 659. 1 Mahurin i: Harding, 28 K H. 6 Tong V. Marvin, 15 Mich. 60 ; 128 ; Schuchardt v. Allen, 1 "Wall. 359 McMahan v. Rice, 16 Tex. 335. Williamson v. Allison, 2 East, 446 » See Furnas v. Friday, 102 Ind. Gresham v. Postau, 2 Car. & P. 540 129 ; Keller v. Blair, 96 Ind. 203 ; Brown v. Edgington, 2 Man. & G. 279 118 ADJECTIVE LAW OP FKAUD. [CHAP. VIII. a suit to recover damages for a fraudulent representation of soundness of a horse, the plaintiff allege that the disease con- stituting the unsoundness is e. g. the glanders, he must prove the allegation ; for though it was unnecessary to make it, it is not immaterial when made.^ A bill to set aside, or rather to prevent one from having the benefit of,^ a judgment on the ground that it was obtained by the opposite party's fraud, should be very specific in its allegations, since a judgment is a record of the highest author- ity. The plaintiff should accordingly, unless he can show some sufficient excuse for not doing so, set out as distinctly as possible the parties to the fraud, i. e. the names of all who were concerned in it, and the way in which the court was imposed upon.^ Courts of equity, acting on the principle of discouraging antiquated demands, refuse, as we have seen, to interfere to establish a stale trust, except first, where the trust is clearly proved ; and secondly, where the facts have been fraudulently and successfully concealed by the trustee from the knowledge of the cestui que trust.* And in such cases for relief the cestui que trust should set forth in his bill specifically what were the impediments to an earlier prosecution of his claipi, how he came to be so long ignorant of his rights, and the means used by the respondent fraudulently to keep him in ignorance, and how and when he first came to a knowledge of his rights.^ Otherwise the court may refuse to consider his case, without inquiring whether there is a demurrer or Holman v. Dord, 12 Bart. 336 j House i Lindsay v. Davis, 30 Mo. 406. V. Fort, i Blackf. 293 ; Trice v. Cock- But compare Swinfen n. Chelmsford, 5 rail, 8 Gratt. 449 ; Laseter v. Ward, 11 Hurl. & N. 890, ante, p. 116. Ired. 443. Contra if the suit is for false 2 ggg Langdell, Equity PI., p. 37, and fraudulent representations. Mahu- note, 2d ed. rin V. Harding, supra. See ante, p. 70. " IJnited States v. Atherton, 102 It is material therefore what is the U. S. 372. foundation of the suit, and what is only * Ante, p. 32. alleged in support thereof. ' Badger v. Badger, 2 Wall. 87. § 1.] PLEADING. 119 formal plea of the Statute of Limitations contained in the answer.^ It seems that under the English practice, in the case of filing interrogatories or a bill of discovery based on allega- tions of fraud particulars of the fraud need not be alleged.^ In one of the cases cited ^ it appeared that the plaintiffs had employed the defendant as their agent, to purchase goods, and were now suing for an account upon an allegation that the defendant had bought goods at prices above the market, and had secretly received from the vendors allowances or commis- sions. The charges were stated in general terms, no particu- lars being mentioned. Upon denial of the charges by the defendant the plaintiffs applied for a production of docu- ments, which was granted by tlie vice-chancellor; and the Court of Appeal being divided, the decision of the vice-chan- cellor stood. And that decision was afterwards confirmed by the other case cited, though not without dissent. It is some- thing surely in favor of the view of the majority that the party making the charges may be unable to state particulars, and that, even if he can, he is exposing his case to dangers by doing so. If charges of fraud in a bill in equity be made upon in- formation and belief, they should be charged as true, so that, if taken as confessed, a decree may be rendered, granting relief.* "Where a plaintiff's action is so conceived that the matter of fraud, upon which he relies, may arise as a replication, he is not compelled, even under the Code system of New York, to allege it in his declaration by way of anticipating the de- fence likely to be made. Thus a creditor brings an action for the price of goods against his debtor who has been dis- 1 Badger v. Badger, 2 Wall. 87. ' Whyte ». Ahrens. 2 Leitch 1-. Abbott, 31 Ch. D. 374, * Memphis E. Co. v. Neighbors, 51 C. A., Fry, L. J. dub. ; Whyte v. Ah- Miss. 412. rens, 26 Ch. D. 717, C. A., Fry, J. diss. 120 ADJECTIVE LAW OF FRAUD. [CHAP. VIII. charged in bankruptcy. Now the creditor need not allege that the debt has been created or released by fraud, so as to obviate the effect of the discharge ; if the defendant plead the discharge, the plaintiff may then avail himself of the fraud at the trial, with or without a replication, according to the local practice.^ § 2. Denial op Fraud. Just as a general allegation in a bill or declaration is in- sufficient to justify relief, so a general denial of proper allega- tions of fraud in a bill is not sufficient. Every sufficient allegation of fraud should be answered.^ And where an act charged upon a defendant is peculiarly within his own knowl- edge, as where it relates to the manner in which he had bid off property at auction, the general rule of equity pleading is that he must answer the charge positively, and not merely accord- ing to his remembrance or belief.^ But if such an improper answer be not excepted to, and a replication be made, the objection to its sufficiency is waived.* Nor can the plaintiff treat the charges of his bill as proved ; if he does not reply and so waive the defects, he should except to the answer for ■want of particularity.® A plea in bar to a suit upon a note that it was given for land sold by the plaintiff under false representations is bad, unless it aver a reconveyance of the property or tender thereof, or something equivalent.^ And a plea of defence, that a con- tract sought to be enforced against the defendant was ob- tained by the plaintiff's fraud, should aver that the defendant has repudiated the contract by tendering to the plaintiff the benefit received under it.'' The maxim ' ex dolo malo non 1 Argall V. Jacobs, 87 N. Y. 110. » Parkman v. Welch, 19 Pick. 231. 2 Gray v. Regan, 23 Miss. 304 ; 6 Post v. Shirley, 5 Blackf. 430. Parkman v. Welch, 19 Pick. 231. ' Dawes v. Harness, L. R. 10 C. P. 8 Slater v. MaxweU, 6 Wall. 268, 166 ; Deposit Life Assur. Co. v. Ays- 274. cough, 6 El. & B. 761 ; Clarke v. Dixon, * Ih. ; Story, Equity PI., § 877. EL, B. & E. 148 ; Bvrlch-y-Plwm § 2.] PLEADING. 121 oritur actio' was at one time thought to lay down the gen- eral rule that a contract could not be the subject of an action, if it could be impeached for fraud or illegality ; but the later cases have qualified the rule to the extent of holding that fraud merely gives a right to rescind the con- tract.^ In an action against a shareholder for calls the plea, after stating that the defendant had been induced by fraud to become a shareholder, went on to aver that he had repudiated the shares, and that he had received no benefit from them. This was considered as sufficient with- in the above stated rule.^ Of course if a party can have derived no benefit from the contract, it is not necessary for him, when sued on the engagement, to aver a previous repu- diation.^ Whether a plea of fraud to an action upon a sealed contract should set out the facts constituting the supposed fraud, as is necessary in the case of a declaration or a bill in equity, is not clear. In some states no such defence can be made at law ; * in equity the defendant would doubtless be required to allege the facts fully. In New Hampshire, where the defence of fraud may be made at law, which is the better rule, it has been held unnecessary in a court of law to set out the facts constituting the fraud.^ MiniBg Co. ■». Baynes, L. B. 2 Ex. 324 ; amount of the recovery. Sanborn v. Anderson v. Costello, 5 Iiish Rep. C. L. Osgood, 16 N. H. 112 ; Perley v. Balch, 644 ; Sanborn v. Osgood, 16 N. H. 112. 23 Pick. 283 ; Dorr v. Fisher, 1 Cosh. 'The true doctrine is that fraud merely 271, 275. renders the contract voidable, that is to i Dawes v. Harness, and Anderson say, gives an option to the party de- v. Costello, supra. frauded to disaffirm the contract, but " Bwlch-y-Plwm Mining Co. t». until he disaffirms, it remains good. . . . Baynes, supra. 'The plea,' saidBram- The forms of pleading allow fraud to be well, B., 'alleges all these facts, fraud, pleaded generally, but the plea must be prompt repudiation, and restitution as taken to include an allegation that the far as possible. ' defendant disaffirmed the contract, oth- ' Anderson v. Costello, supra. erwi.se it would be n bad plea.' Brett, * Ante, p. 5 . J. in Dawes v. Harness, supra. But ' Hoitt t>. Holcomb, 23 N. H. the fraud may be shown to reduce the 535. 122 ADJECTIVE LAW OP PBATJD. [CHAP. VIII, § 3. Demueeee. If a bill contain an allegation of fraud, it is a general rule, as we have seen, that such allegation must be answered, and a general demurrer will not be allowed.^ When however fraud is charged in a bill, it need not be answered if the bill, admitting the fraud, presents no ground for relief.^ Thus a bill to enforce a parol sale of land, charging the defendant with fraudulently refusing to reduce the agreement to writing, though it was part of the contract that it should be reduced to writing, is demurrable without an answer to the charge of fraud.8 A demurrer cannot be good as to a part which it covers, and bad as to the I'est. It must stand or fall as a whole.* Hence where the plaintiff's bill charged a combination to cheat and defraud the plaintiff, and the defendant filed a general demurrer to the whole bill, it was held that the de- murrer should be overruled, since that part of the bill charg- ing a combination to cheat and defraud the plaintiff required an answer.^ So too a demurrer to a plea of fraud in obtain- ing a judgment sued upon should be special, not general.^ 1 Stovall V. Northern Bank, 5 Smedes ^ Box v. Stanford, supra. & M. 17 ; ante, p. 114. * Shearer o. Shearer, 50 Miss. 113 ; 2 Box V. Stanford, 13 Smedes & M. Story, Equity PI., § 443. 93 ; Walker v. Gilbert, 7 Smedes & M. ' Shearer v. Shearer, supra. 456 ; Morton v. Grenada Academy, 8 6 Christmas v. Russell, 5 Wall. 290. Smedes & M. 773. CHAP. IX.] BUKDBN OP PKOOP. 123 CHAPTER IX. BURDEN OF PROOF. The burden of proof in regard to an allegation of fraud, coining either from the plaintiff or from the defendant, rests upon the party who makes it. If the plaintiff's case, originally or on replication, is that the defendant has defrauded him in a particular transaction, or that the defendant is in privity with one who has defrauded him, the burden of proof is upon the plaintiff ; he must prove the fraud, which means that he must show it by clear and satisfactory evidence, such as will pre- ponderate over presumption ^ or evidence on the other side.^ If on the other hand the defence to a suit is that the plaintiff defrauded the defendant in the supposed cause of action, or that the plaintiff is privy to one who defrauded him, the burden of proof is upon the defendant; he must prove the fraud, which means the same thing as when the burden rests upon the plaintiff.^ It will be useful to present a few illustrations of the rule stated, both on the side of the plaintiff and on that of the de- fendant ; and first concerning an allegation by the plaintiff. It may be stated at the outset that it matters not whether the controversy is over the title to personal property* or 1 E. g. the presumption of honesty, of evidence required. See post, pp. 128- Hatch V, Bayley, 12 Cush. 27 ; infra, 130, where they are considered. p. 138, note. " The latter proposition is of course ^ Lynn v. Baltimore E. Co., 60 Md. only a particular example of the rule iOi ; Mead i). Conroe, 113 Penn. St. that a defence (or a reply) of confession , 220 ; Burnham v. Noyes, 125 Mass. 85 ; and avoidance shifts the burden of proof Allen V. Wheeler, i Gray, 123. Some upon him who alleges the new matter, of the cases are open to criticism in the The defence or reply is affirmative. language used in regard to the amount ^ Sse e. g. Burnham v. Noyes, 125 124 ADJECTIVE LAW OP FEAUD. [CHAP. IX. realty,^ or over a matter not concerning property at all. An illustration relating to real property may be seen in an Ala- bama case.^ That was a bill in equity to rescind a contract for the sale of land on account of alleged false and fraudulent representations concerning the defendant's title. The defend- ant, to put the case shortly, admitted the contract, and as- serted his ability and willingness to make good the title in question, and indeed that a complete title had actually vested under the contract. The court held that the answer of ability to convey was irresponsive, and that it was for the defendant ' to support the assertion by proof.' • That language certainly was careless ; if the answer was irresponsive, it would be of no use to support it even by ' proof.' Still the allegation was affirmative, and would have required proof had it been respon- sive. The falsity of the representations appears to have been established ; and it was not said that the defendant must ' prove ' their truth. This rule of the burden of proof holds true even though the defendant claim by a deed obtained from an insane gran- tor, which the plaintiff alleges was obtained by fraud.^ The case cited was a petition for partition ; the defendant claiming the land alone by virtue of certain deeds which the plaintiff alleged had been obtained by fraud and undue influence while the grantor was insane ; and the issue was upon the sanity of the grantor. The court held that the plaintiff had the burden of proof, and the clear inference from the language used is that the plaintiff would have the burden in regard to fraud even after showing the grantor's insanity. The deed of an insane person, it was declared, was not void but voidable,* Mass. 85 ; Lewy v. Fischl, 65 Tex. * Carrier v. Sears, 4 Allen,, 336 ; 311. Allis ■». Billings, 6 Met. 415 ; Arnold v. 1 See e. g. Maloney v. Roiirke, 100 Richmond Iron Works, i Gray, 434 ; Mass. 190 ; Wellborn v. Tiller, 10 Ala. Ashcraft v. De Arniond, 44 Iowa, 229 ; 305. Kiggan v. Green, 80 N. C. 236. But 2 Wellborn v. Tiller, 10 Ala. 305. see Rogers v. Blackwell, 49 Mich. 192. ' Howe V. IJo-f/e, 99 Mass. 88. CHAP. IX.j BURDEN OF PROOF. 125 and it followed that a person who claimed title under a deed was not bound to give evidence of his grantor's sanity. The conveyance was binding, even if the grantor was insane, until it was properly avoided. The rule of evidence in regard to propounding wills rested upon different principles.^ Let us now take the case of an allegation by the defendant. In one such case^ the plaintiff sued in contract for rent re- served in a lease ; the defendant answered that the lease was obtained by false and fraudulent representations made by the plaintiff. The judge at the trial instructed the jury that if they believed that such representations had been made, or if on the whole testimony they could not say whether the lease had been executed and delivered under such circumstances as to make it a valid contract (as that had been explained), the verdict should be for the defendant. The Supreme Court un- derstood this as implying that the burden was upon the plain- tiff to prove that no such representations had been made, and not upon the defendant to prove the contrary ; and the instruc- tion was held erroneous.^ Again in an action of contract for the price of goods the de- fence was fraudulent misrepresentations by the plaintiff. The same rule was declared; it was for the defendant to sustain his defence. The defence admitted the sale and set up a dis- tinct matter in avoidance ; clearly it was no part of the plain- tiff's case to disprove that.* So in an action upon a policy of insurance of any kind a defence of false representations imposes the burden of proof in regard to them upon the defendant.* 1 That is, he who propounds a will 73 Mo. 242, which appears to be wrong must show the testator's sanity. But on this point. an allegation that the will was obtained ^ Beatty v. Fishel, 100 Mass. 448. by fraud or undue influence would put ' Citing Stewart r. Thomas, 15 Gray, the burden of proof upon the party 171 ; Baldwin v. Parker, 99 Mass. 79. making the allegation, since it would * Briggs v. Humphrey, 5 Allen, 314. not be denial of the issue of will or no ^ Campbell v. New England Life wUl, but an affirmative objection. But Ins. Co., 98 Mass. 381. see MuUer v. St. Louis Hospital Assoc, 126 ADJECTIVE LAW OP FBAUD. [CHAP. IX. Another case of the kind occurs where in answer to a claim for property by the plaintiff the defendant alleges that the plaintiff's title was effected by a purchase made in fraud of the vendor's creditors on whose rights the defendant stands. Here too it is the duty of the judge to tell the jury that it is for the defendant to establish his allegation, and not for the plaintiff to show that the sale to him was not made with in- tent to defraud his vendor's creditors.^ Thus in one of the cases cited ^ the plaintiff brought an action for the conversion of property ; to which the defence was that the property was not the plaintiff's but belonged to one Ewing. The plaintiff gave evidence of a sale of the property by Ewing to himself, and the defendant, that the sale was in fraud of Ewing's creditors. The judge instructed the jury that the burden of proof was upon the plaintiff, and that he must satisfy them upon the whole evidence that the property and the right to the possession of it were in him as against the creditors of Ewing at the time of the alleged conversion ; and he refused to instruct them that fraud being set up by the defendant, upon that point the burden was upon him. The instruction given was held wrong, and that refused, right. Chief Justice Shaw said that the production of the plaintiff's bill of sale was prima facie evidence of title, and the burden thereupon changed, because unless the defendant proved the sale void against creditors, he could not hold the property. And where in such cases the defendant rests his right upon a levy of execution and sale to him of the land in question, it is for him also to show that the "debt alleged to have been due to him was the debt for which he obtained the execution.^ The case is of course still stronger where the defendant is allowed to meet the plaintiff's case, such as that of a pre- sumption of fraud, by a counter claim or sei>off ; the burden of proof will be upon the party making such claim just as it 1 Elliott V. Stoddard, 98 Mass. 145 ; ^ Stewart v. Thomas, supra. Stewart v. Thomas, 15 Gray, 171. ' Ames v. Sturtevant, 2 Allen, 583. CHAP. IX.] BURDEN OF PEOOP. 127 would be if he wei'e suing upon it. Thus where, under the laws of Alabama, a garnishee produced notes signed by the judgment debtor, bearing date before the judgment, but did not prove their existence before such judgment, it was held proper for the jury to say whether there was fraud between the garnishee and the debtor.^ It makes no difference that evidence in support of the defendant's case may come from the plaintiff's witnesses, as e. g. on cross-examination.2 Thus in the case cited, a writ of entry, the demandant claimed the land under a deed, and the tenants under a title afterwards acquired by them as credi- tors of the grantor ; and it was held that the fact that the same evidence which proved the execution and delivery of the demandant's deed tended also to prove that the grantor was then in failing circumstances was not material, — the burden was still upon tne tenants to impeach the deed successfully for want or inadequacy of consideration, and to show that it was made with intent to defraud the grantor's creditors. It does not affect the correctness of the proposition that he who affirms fraud must prove it, that it has sometimes been said, in cases of the denial (as distinguished from avoidance) of fraud prima facie made out, that the defend- ant must ' prove,' ' establish,' or ' make out ' his own good faith or honesty in the matter in question. Such expres- sions, fit terms of the burden of proof, are generally care- less;^ if not careless, — if they are to be understood as meaning that the defendant is bound to do more than to come to the support of his denial and meet the case made by the plaintiff's evidence, — they are wrong in principle and wanting in the support of the best authorities. To rule 1 Williams v. Hill, 19 How. 246. ' As e. g. in Clements v, Nicholson, 2 Foster v. Hall, 12 Pick. 89, Shaw, 6 Wall. 299 ; ante, p. 124, note. C.J. 128 ADJECTIVE I/AW OF FKAUD. [CHAP. IX. that upon an issue raised by a negative defence, i. e. by denial, the defendant must overcome the plaintiff's case by prepon- derating evidence, would be fatal to all sound conceptions of argumentation and of actually accepted modes of procedure. The defendant need only show the plaintiff's evidence to be untrue or meet that evidence with evidence of equal weight, so long as he merely denies ; when he has so met it, the plaintiff has not proved his allegation ; and the same will be true, mutatis mutandis, when the denial of alleged fraud comes from the plaintiff. It would be idle to insist upon so plain a proposition if it were not occasionally overlooked. Cases sometimes arise in which there is apparently so strong an indication of fraud, and so strong a call for protection against it, that courts, for- getful for the time of the rule of burden of proof, may be led to use too strong language towards the supposed wrong-doer ; and again cases arise in which the line separating denial from aflSrmative defence (confession and avoidance) may be dim, and mistake result. It will not be difficult to find an example. In a recent case 1 a feigned issue had been joined to determine the validity of a judgment confessed by the husband of the defendant to a trustee for her benefit; the plaintiffs being creditors of the husband. The case was then this: the defendant had the legal title (or right), and the plaintiffs, having consequently only the equitable right if any, were attacking that right as obtained by a fraud in which the defendant participated ; that . is, the plaintiffs affirm and the defendant denies. The plain- tiffs now make a prima facie case (seen in the passage to be quoted), and then ask for the following direction to the jury: ' When a judgment is taken in the name of a trustee for the wife against the husband, it is necessary for the wife, in a contest with creditors of the husband, as in this case, to establish that the judgment was taken bona fide to secure a 1 Wason V. SUkman, 97 Penn. St. 509. CHAP. IX.] BURDEN OP PROOF. 129 debt of the wife from the husband from moneys of the sepa^ rate estate of the wife. In the absence of such froof the judgment must be regarded as fraudulent and void as against such creditors.' The lower court refused the request, and the Supreme Court held that it should have been granted. Now if this had been all, it might be said that the use of the words above italicized was merely careless, and did not signify that anything of the nature of burden of proof was cast upon the defendant, whose case it must be remembered was only a denial of the fraud ; but that was not all. The Supreme Court declared in terms that 'the affirmative was upou the defendant,' and accordingly that ' it was for her to show that the judgment executed to the trustee for her use by her husband represented the proceeds of her separate estate.' This appears to be in the teeth of the rule of burden of proof ; but the court say that it is ' under the circum- stances of the case ' that the defendant has ' the affirmative,' which appears to mean, not of the issue, but of the allegation of separate property. And herein is the explanation, in part, of the case. Under the law of Pennsylvania ' the husband,' the court says, ' is presumed to be the owner of the property.' There is then a presumption to be assailed, aside from meet- ing the evidence of fraud in an ordinary case. Even in re- gard to that, the wife could only be said, in careless language, to have the affirmative. The truth appears to be still that the plaintiff has the real affirmative, the burden of showing facts sufficient to raise the presumption. He relies upon that to overcome the defendant's legal title. In principle then the defendant lias only to meet the presumption and suspend it ; he need not disprove it.^ However it appears to be the 1 See Parsons v. Topliff, 119 Mass. of fraud; but the burden of proof would 245, 248, 249. ' If the plaintiff proved not be changed. Blanchard n. Young, that the transfer to the defendant was 11 Cush. 341 ; Central Bridge Corp. v. not made in the usual and ordinary Butler, 2 Gray, 130 ; Wilder v. Cowles, course of business of the bankrupts, 100 Mass. 487.' Morton, J. in Parsons this fact would be prima facie evidence v. Topliff, supra. 9 130 ADJECTIVE LAW OF FEAUD. [CHAP. IX. policy of the law in Pennsylvania, and perhaps elsewhere, in such cases, to require 'proof of the fact of separate estate, ' not only because of the ease with which the husband's credi- tors might otherwise be defrauded, but because ordinarily it is impossible for her to have a possession separate and dis- tinct from her husband.' ^ There is another case of common occurrence which deserves attention ; it is purchase for value. Nothing is more common, in the case of one who, in answer to proof of fraud against his vendor, alleges that he is a bona fide purchaser for value, than the statement that the purchaser must ' prove,' ' establish,' or ' make out ' the facta constituting his defence ; and these terms are often used with express purpose to denote that the burden of proof rests upon him.^ Thus where the defendants claimed to be purchasers, bona fide and for value, from J and C, who had obtained the property from the plaintiff by fraudj the court said that if the defendants undertook to set up a better title than that of their vendors, it was incumbent upon them to ' make out the facts' necessary ; ' the burden was upon them at least to show that they were bona fide purchasers for value.' ^ A scrutiny however of the situation in such a case will show that the defence of purchase for value is not new matter in avoidance. The defendant, being a purchaser from one hav- ing the legal title (for his vendor had a legal, though a voida- ble title), has himself acquired that title. The plaintiff can then only have an equitable title; and to prevail he must overcome the former, and this whether he sues at law or in equity.* In other words he must show that the purchaser's 1 Comp. also Gamber v. Gamber, 6 Allen, 8 Allen, 7 ; Morgan o. Morse, Harris, 363 ; Keeney v. Good, 9 Harris, 13 Gray, 150 ; Eedfield v. Dysart, 62 349. In that view the case may be com- Penn. St. 62 ; Spence v. Dunlap, 6 Lea, pared to a sale of trast property by a- 457 ; Welcker v. Price, 2 Lea, 666 ; cestui que trust to his trustee, upon im- Lane v. Starkey, 15 Neb. 285, 289. peachment thereof by the former. 3 HaskinsD. Warren, 115 Mass. 514. 2 Haskins v. Warren, 115 Mass. 514 * See Langdell, Equity PI. p. 212, ('unless the defendants prove that they 2d ed. purchaised in good faith ') ; Easter v. CHAP. IX.] BUKDEN OF PEOOP. 131 title is bad; this he undertakes to do by showing that the vendor's title was obtained from him (the plaintiff) by the vendor's fraud. And this is sufficient ; but how does it be- come so ? The answer is, that in law it shows presumptive notice to the defendant; the defendant is presumed, prima facie, to be privy to his grantor's fraud.^ This presumption the defendant must now meet, but just as he would meet any otlier fact alleged and testified to, or presumptively shown, by the plaintiff. The defence is still negative, i. e. denial ; hence the burden of proof is still upon the plaintiff. This however supposes that the defendant has the legal title ; if on the other hand the defendant has only an equita- ble title, so that the plaintiff's case is e. g. actually or virtually equitable ejectment, the defence will be affirmative, i. e. the allegation of purchase for value will be new matter in avoid- ance instead of denial. In that event the burden of proof will of course be upon the defendant;^ but such cases are infrequent. But it may still be thought necessary to inquire whether the plaintiff himself has really sustained the burden of proof, so as to require the defendant to come to the support of his de- fence, by merely showing fraud. It may be asked if the plain- tiff ought not to go further and, though he has made a case of fraud in the grantor, offer some definite evidence of notice, or what for the present purpose ^ is the same thing, that the conveyance to the defendant was voluntary.* The answer of 1 See infra, p. 133. Of course if the chase of exempt property with notice grantor'.s act is not fraudulent or other- that creditors are about to levy upon it. wise invalid, purchase for value as such ^ See Langdell, Equity PI., pp. 224, has nothing to do with the case. If the 225, and note, 2d ed. vendor's conduct was lawful, it matters ' That a, conveyance is voluntary is not that the purchaser may know of not for all purposes the same thing as some ulterior purpose and participate in notice of an equity, it ; that is nothing to creditors. And * Of course the case may be such that purchase for value is nothing to that ; to show the fraud of the grantor the the sale is good anyhow. See e. g. creditor has to show that the convey- Scheuber v. Ballow, 64 Tex. 166, pur- ance was voluntary. See e. g. Welcker 132 ADJECTIVE LAW OF FRAUD. [CHAP. IX. the authorities, though not without here and there a discords ant note,i is that evidence of the fraud is enough, and this whether the case be one of fraud on creditors, or fraud on a vendor ; ^ such is the better answer in those states in which, in cases of fraud upon creditors, notice to the purchaser is sufficient to defeat his title. Where however, as in Massachu- setts, notice or even knowledge will not defeat the title of a purchaser for value, but participation in the fraud is necessary to that result,^ it may well be required of the creditor to go further than to prove fraud in the vendor ; he ought to prove participation by the purchaser, or that his purchase was witli- out consideration.* The same question has frequently arisen in the law of bills and notes in reference to the rights of a plaintiff. It is set- tled law there that, in an action by an indorsee against e. g. the maker of a note, if the defendant show that the note was obtained from him by fraud on the part of the payee, that is enough to require the plaintiff to show purchase for value in good faith, either by himself or by some previous holder ; ^ the V. Piice, 2 Lea, 666. But that is an- See Hill v. Exeter, 2 Taunt. 69 ; Doe other thing ; the case supposed in the u. Manning, 9 East, 59 ; Bothul v. Mar- text is where the fraud is shown with- tyn, 1 Bos. & P. N. R. 332 ; Huron v. out showing that the conveyance was Wilsmore, 8 T. R. 528. voluntary. * Clark v. Chamberlain, 13 Allen, 1 New York Ins. Co. v. Tooker, 35 257, 260, 261. 'Where the purpose of N. J. Eq. 408 (fraud ou creditors) ; the grantor is shown to have been actu- Barnes v. Hardeman, 15 Tex. 366. ally fraudulent as to creditors, it is suf- 2 Starin v. Kelly, 88 N. Y. 418 ficient to prove that the grantee takes (fraud on creditors) ; AVilson v. Howser, without consideration, without proving 12 Penn. St. 109 (fraud on creditors) ; otherwise his participation in the fraud- Easter V. Allen, 8 Allen, 7 ; Skinner v. nlent intent. Harden v. Babcock, 2 Flint, 105 Mass. 528 ; Haskins v. War- Met. 99, 104.' Hoar, J. in Clark v. ren, 115 Mass. 514; Miller v. Fraley, Chamberlain, supra. 'The same rule 21 Ark. 22 ; Brown's. Texas Hedge Co., is applicable to the fraudulent procure- 6.4 Tex. 396 ; Spira v. Hornthall, 77 ment of a conveyance to a third person Ala. 137. under the statute." lb. 3 Hill V. Ahem, 135 Mass. 158 ; 6 Bailey v. Bidwell, 13 Mees. & W. Bristol Savings Bank v. Keavy, 128 73 ; Fitch v. Jones, 32 Eng. L. & Eq. Mass. 298 ; Clapp v. Leatherbee, 18 134 ; Paton v. Coit, 5 Mich. 505 ; Clark Pick. 131; Eicker W.Ham, 14 Mass. 137. v. Pease, 41 N. H. 414; Mitchell v. CHAP. IX.] BUKDEN OP PROOF. 133 ground commonly taken being that proof of the fraud begets a probability that the paper was handed over by the payee to the plaintiff as one in privity with the wrong.^ This may be thought somewhat arbitrary, but it is established law ; and it is doubtless the ground upon which to rest the general case of purchase for value, as well when alleged by a defendant as when relied upon by a plaintiff. It is important however to observe that the notice thus shown is indefinite. In terms it does not point to either of the facts looking to the destruction of the defendant's title, knowledge of the fraud, or purchase without value ; in fact, or rather in law, it probably applies to either of them. The re- •sult, in principle, is that the defendant, whose title is thus overturned, ought to put it upon both its legs again ; that is, he ought to meet the notice in both its aspects, — he ought in principle, though there are cases contra, to furnish evidence of purchase both in good faith and for value.^ Whereas in cases not of fraud (or of duress or illegality 3) if knowledge, or perhaps definite notice of the plaintiff's equity, or purchase without value, were alone alleged, the defendant would have to meet only the particular case.* This position based on principle, holds good enough in the law of bills and notes at least; there the purchaser must Tomlinson, 91 Ind. 167 ; Baldvpin o. meet, without actually overcoming, the Fagan, 83 Ind. 447 ; Johnson v. Mc- presumption of notice. That is, if the Murry, 72 Mo. 278. scales are now left in equilibrio, the 1 See the cases just cited. plaintiff cannot recover. But the lan- ^ But see Starin v. Kelly, 88 N. Y. guage of the courts is sometimes faulty 418, infra ; Shores v. Doherty, 65 Wis. on this point also. 153 ; Spira v. Homthall, 77 Ala. 137,. ' See Clark v. Pease, 41 N. H. 414 ; Of course it is not meant (unless the de- Paton v. Goit, 5 Mich. 629 ; Johnson v. fence, in accordance with what is said McMurry, 72 Mo. 275. supra, p. 131, is really affirmative) that * See Langdell, Equity PI., p. 225, he ought to establish those facts in the note, 2d ed. sense in which the plaintiff has to prove The evidence to he given of value fraud, that is, by preponderating evi- must be outside of the grant. Eedfield dence. That would be to impose the Co. v. Dysart, 62 Penn. St. 62 ; Wilson burden of proof upon him. It is enough v. Howser, 12 Penn. St. 109 ; Rogers v. for him to offer evidence sufficient to Hall, 4 Watts, 359. 134 ADJECTIVE LAW OP FEAtTD. [CHAP. IX. show purchase for value in good faith,^ and the question next arises whether the requirement of purchase in good faith requires him to show purchase without notice. He must then give evidence of a negative ; that however would not necessarily be inconsistent with law or a hardship upon the party, for the facts are within his own knowledge, and proba- bly not within his opponent's. Still there is much doubt whether it can be necessary, even in the law of bills and notes, for him to show more than that he paid value under circumstances, testified to, which indicate a purchase made in good faith ; this begets so strong a probability in his favor that it may now be for the other party to prove that the pur- chase was with notice of the fraud.^ But under the statutes concerning fraudulent conveyances as interpreted in New York and in other states, this appears to be different; it is enough there to satisfy the law, for the party to show pur- chase for valuable consideration. It is then for his opponent to come, with proof, to the support of liis case again.^ 1 Clark ». Pease, Paton v. Coit, and a fraudulent intent on the part of the Johnson v. McMurry, supra ; 2 Green- vendee, or that he had notice of the leaf. Evidence, § 172 ; Smith «. Braine, vendor's fraudulent intent.' Earl, J. 16 Q. B. 201, 244 ; Bailey v. Bidwell, in Starin v. Kelly. See also Shores v. 13 Mees. & W. 73. Doherty, 65 "Wis. 153 ; James v. Van 2 Johnson v. McMurry, 72 Mo. 278. Duyn, 45 Wis. 512 ; Spira v. Horn- See Paton V. Coit, 5 Mich. 505 ; Has- thall, 77 Ala. 137. In Massachusetts kins V. Warren, 115 Mass. 514, 539 ; it is not enough that a purchaser for Skinner v. Flint, 105 Mass. 528 ; Easter valuable consideration had notice of the V. Allen, 8 Allen, 7. The head note in vendor's fraudulent intent ; he must the last case goes too far. have participated therein. Supra p. 3 Starin V. Kelly, 88 N. Y. 418. 132. ' Under the statute a creditor assailing It should also he home in mind that a transfer of property as fraudulent may the statutes concerning fraudulent con- succeed by simply showing a fraudulent veyances make the exception in favor of intent on the part of the vendor or such purchasers, not for value, hut for valna- intent on the part of the vendee. If hie consideration ; the significance of however the vendee shows that he paid which may he seen hy comparing such 1 valuable consideration for the prop- a case as Blanchard v. Stevens, 3 Gush, erty, . . . then proof of the fraudulent 162, 168, 169, with Bay v. Coddington, intent of the vendor only is not sufii- 5 Johns. Ch. 54, 20 Johns. 637, or with cient ; then there must he proof also of Stalker v, McDonald, 6 Hill, 93. Under CHAP. IX.J BTJKDEN OP PROOF. 135 Thus far of the ordinary case of allegations of fraud. There is however one case in which the burden of proof in regard to mere denial appears to be upon the defendant 5 that is the case of an impeachment, by the dependant party (e. g. a cestui que trust) to a fiduciary relation, of a sale, gift, or the like by him to the party holding the superior position (e. g. a trustee). The burden of proving the facts constituting the relation, and of proving the transaction itself, is doubtless upon the complaining party ; but if these be proved or ad- mitted, a suspicion or a presumption, it is not clear which, of fraud or at least of misconduct, arises against the defend- ant, which he must actually and fully overcome. It will not be enough, it seems, in support of his denial, to make it doubtful whether he did wrong, as would be the case if the burden were upon the other party; he must wholly disprove the suspicion or presumption, and make out the bona fides of his conduct, the sufficiency of information possessed by or given to the plaintiff, and the propriety of the transaction.^ What constitutes a fiduciary relation, with the various phases of it will be treated elsewhere ; but it may be here observed that there appears to be nothing in the relation of a mortgagee to his mortgagor to affect the question of the burden of proof in the case of a release of the equity of re- demption by the one to the other in consideration of the amount of the debt. In a case in the House of Lords ^ the assignee in bankruptcy of a mortgagor had so released such an equity to the mortgagee, which the mortgagor afterwards, having now succeeded to the right of the assignee, sought to set aside as obtained by fraudulent representations. The judge in the lower court had treated the burden of proof as resting upon the mortgagee ; but this was considered erro- the statutes the purchaser must prove ' See the chapter on Fiduciary and value in the old and suhstantial sense Confidential Relations. of the word rather than in the new and " Melbourne Banking Corp. v. vague sense generally entertained in the Brougham, 7 App. Cas. 307. law of hills and notes. 136 ADJECTIVE LAW OF FEAUD. [CHAP. IX. neous. Lord Selborne now said that if the judge intended to affirm the general proposition that whenever a release by a mortgagor to the mortgagee of an equity of redemption, in consideration merely of the amount of the debt, was im- peached, the burden of justifying rested upon the mortgagee, that doctrine was opposed to a decision of Lord Cottenham.^ The Statute of Limitations is an affirmative defence to all personal actions ; and fraud, whether relating to personal estate or to realty, or not to property at all, gives rise to an action of that kind. Hence the burden of proof in regard to the statute will be upon the defendant. So too when fraud has been proved against the opposite party to a cause, and he seeks to turn aside the effect of the fact by alleging laches in his adversary, it is for him (the party guilty of fraud) to show when the other acquired knowledge of the truth and that he knowingly forebore to assert his right.^ J Knight V. Majoribanks, 2 Macn. & ' Lindsay Petroleum Co. v. Hurd, G. 10. L. R. 5 P. C. 221. § 1.] EVIDENCE. 137 CHAPTER X. EVIDENCE. § 1. Courts op Law and Courts op Equity. It is often said that fraud may be presumed in equity, but must be proved at law ; and this proposition, first announced, it seems, by Lord Hardwicke,^ has sometimes been misinter- preted to mean that equity will grant relief upon the ground of fraud as established by presumptive evidence, which evi- dence courts of law would not always deem sufficient to jus- tify a verdict.^ The proposition would be more clear and perhaps strictly accurate if, instead of the latter clause, it should be stated, ' which (i. e. the presumptive evidence of equity) could not generally be received at law.' The mean- ing of the proposition, it is apprehended, is not that a different value can be attached to the same admitted evidence at law from that given to it in equity, but that certain kinds of evi- dence are inadmissible at law, owing to the nature of the procedure of law courts, which would be admissible in equity; and certain cases of presumptive evidence furnish an example of the rule.^ The reason of the apparent diversity lies mainly ' Chesterfield v. Janssen, 2 Ves. 125, was 'a third kind of fraud, which may 155. be presumed from the circumstances and 2 King V. Moon, 42 Mo. 551 ; Jack- condition of the parties contracting, son V. King, i Cowen, 207. See 1 Stoiy, And this goes further than the rule of Equity, § 190; Wilcox u. Iowa Wes- law, which is that it must he proved leyan Univ., 32 Iowa, 367, dictum ; and not presumed ; but it is wisely es- Smith V. Harrison, 2 Heisk. 230, 240 ; tablished in this court to prevent taking Fullagar v. Clark, 18 Ves. 481, 483. surreptitious advantage of the weakness * This is clearly what Lord Hard- or necessity of another.' Chesterfield v. wicke meant when he started the fa- Janssen, supra. miliar proposition. He said that there 138 ADJECTIVE LAW OF FRAUD. [CHAP. X. in the fact that courts of equity have jurisdiction of a large class of cases, in which a decree for fraud may be rendered upon presumption, over which cases the law courts have no or but a lame jurisdiction. Thus if a client has been induced to make a gift to his attorney, or if a trustee has made a purchase of the trust property, the client or the cestui que trust impeaching the same must usually go into equity to obtain adequate relief ; and upon the filing of the bill, showing the relation of the parties and the gift or purchase, the court treats the transac- tion as suspicious on the part of the attorney or trustee ; and the suspicion, unless overcome, will justify a decree sustaining the bill. Now the injured party could not accomplish this at law, not because of a different rule there in the matter of evi- dence, but because the law court could not undertake to grant the relief. And this is true of the whole class of cases aris- ing between persons standing in confidential relations to each other. But if a law court has obtained jurisdiction of such a cause in any way, as where a trustee sues his cestui que trust upon a promissory note, there is little doubt that, upon the defendant's bringing to the attention of the court, by an equi- table plea, the situation of the parties, he will thereby make out, at all events, a suspicion of fraud ; and that, if not re- moved, would probably defeat the action. Indeed in general where these courts have concurrent jurisdiction, the rules of evidence in them are the same, whether in cases of actual or of constructive fraud.^ Fraud must in such cases be proved as well in equity as at law.^ 1 A chancellor cannot find fraud as the legal presumption of innocence, and a fact on less evidence, or evidence dif- beget a belief of the truth of the allega- ferent from that which would he re- tion of fraud. Marksbury v. Taylor, 10 quired to authorize a. jury to find the Bush, 519. 'Any other rule,' said the same fact. The true rule in all courts court, in this ease, ' would be calculated is to require such legal evidence as will to create invidious distinctions between overcome in the mind of the tribunal the difierent courts of the country, and 2 Abbot V. Treat, 78 Maine, 121. § 2.] EVIDENCE. 139 § 2. Law and Fact. Fraud in law differs from fraud in fact in that, when certain indicia are established, its presence is determined by the court as matter of law, regardless of the existence of any evil in- tent on the part of the person engaged in it ; whereas fraud in fact depends upon the fraudulent intent of the party, and the facts establishing such intent are for the jury.^ Thus when the fact is established that the defendant has made a false representation to the plaintiff, with knowledge of its falsity, the court draws the conclusion -as matter of law that the representation was made with a wrongful intent, whenever proof of such an intent is part of the case to be made ; and the question of intent will not be given to the jury, or if the jury have found upon it, their finding will not be regarded.^ Again, concerning the elements which go to make up a case of fraud, it is for the court and not for the jury to determine whether e. g. an inducement held out by one party to another, which the latter professes to have acted upon, is material or not.2 On the other hand it does not follow as matter of law from the circumstance that the inducement was material, and that the person to whom it was made acted in accordance with it, that he acted upon it ; it may be that he acted upon would make the rights of parties depend- est of the party charging it to avoid Ing upon questions of fraud or no fraud issues out of chancery to he tried by to turn upon the accident which brought juries, to the embarrassment of the them into the particular forum, and not courts and the prejudice of the due upon uniform and known rules of law. administration of justice.' Almost every alleged fraud in the innu- ^ Milne v. Henry, 40 Penn. St. 352. merable transactions of men may in some ^ Cowley u, Smyth, 46 N.J. 381; way be made cognizable in a court of Hine v. Campion, 7 Ch. D. 344 (C. A.) ; equity ; and, as the party alleging the Foster v. Charles, 6 Bing. 396 ; s. c. fraud selects his own forum in all cases 7 Bing. 105 ; Polhill v. Walter, 3 Barn, of concurrent jurisdiction, nearly all & Ad. 114. questions of fraud would soon come into ^ Penn Ins. Co.'^'y. Crane, 134 Mass. courts of equity for decision. Under 56. But see Sharp v. Ponce, 74 Maine, such a rule, it would become the inter- 470, a case which may be doubted. 140 ADJECTIVE LAW OF FEATJD. [CHAP. X. other inducements for which the defendant was in no way responsible, and such fact may be shown.^ Generally speaking it is also for the court to interpret language of a perfectly plain nature, unaffected by external facts such as the particular circumstances in which it was used ; when so modified, it is for the jury to declare its meaning. But when, as we have just said, the language is plain and not subject to modification aliunde, the case is for the court ; and this is true in principle whether the language be written or oral. There is no question of the truth of this proposition when applied to written language ; and there ought to be none in re- gard to oral statement, for no sound distinction can be drawn between the two cases. Indeed it has been distinctly laid down that the construction of an oral as well as of a written contract is for the court ; the court must declare its legal effect upon the duties and liabilities of the parties.^ Thus it is declared in the case first cited that where facts have been concealed from or misrepresented to an underwriter by the assured, it is always determined by the court, upon consider- ing the contract of insurance, what is the character of facts concealed or misrepresented which will invalidate the policy, and for the jury only to ascertain whether, within the defini- tion so declared, there has been a material concealment or misrepresentation .^ But this principle, so cogent in itself, and so clearly ex- pressed, has not always been consistently followed. No little confusion has arisen in regard to matters of ' opinion,' or as they are sometimes termed, of ' belief,' * in representations ; 1 Smith V. Land Corp., 28 Ch. D. 7, * ' Statements of facts susceptible of 16, Bowen, L. J. criticising a contrary knowledge as distinguished from mat- dictum of Jessel, M. R. in Redgrave v. ters of mere opinion or belief.' Safford Kurd, 20 Ch. D. 1, 21. v. Grout, 120 Mass. 20, 25, Colt, J. It * Penn Ins. Co. v. Crane, 134 Mass. is a wrong though common joinder of 56; Short v. Woodward, 13 Gray, 86 ; terms; 'belief applies to fact as well Pratt V. Langdon, 12 Allen, 544 ; Globe as to opinion. The word is misleading. Works V. Wright, 106 Mass, 207. The same may be said of ' estimate' and 8 Devens, J. 'judgment' lb., and in other cases. § 2.] EVIDENCE. 141 the general proposition of law, to which however there are important qualifications and exceptions, being that the state- ment of a mere matter of opinion cannot be made the ground of an action, or of a defence to a contract, since opinion is not of a nature to carry conviction to a prudent man to the ex- tent of causing him to act upon it except at his own risk. With the proposition itself we are not now concerned — it will be considered in its place ; but when courts fall into the habit^ as some appear to have done,^ of leaving to a jury the question whether a plain statement, unaffected by external facts, is a statement of opinion or a statement of fact, they delegate a power which they ought, it seems, to exercise. The case is one of the construction, or the meaning, of plain language ; and that is properly for the court. What language means at one time it means at another, under the same conditions, and should not be left to contradictory findings, upon perhaps metaphysical distinctions. When indeed the statement of the supposed opinion rests upon facts which may make it fraudulent, it may be said in a loose sense that the question whether the statement is one of fact or not is to be left to the jury. So it was said in a re- cent case.2 But that is misleading ; the question for the jury is whether the facts at the foundation of the ' opinion ' are such as to make the statement fraudulent. It is only in this way that the ' opinion ' may be found by the jury to be a state- ment of fact ; in truth it is not then a statement of fact, it is only fraudulent opinion treated as on the footing of ordinary misrepresentation. If it were not for the fact supposed to be behind the opinion, it would not be proper at all to ask the jury whether the statement was not in reality one of fact. Probably this is the real meaning of some of the cases in which questions of the kind are left to the jury ; there are 1 Stnbbs V. Johnson, 127 Mass. 219 ; Costello, 122 Mass. 189 ; Sharp v. Morse v. Shaw, 124 Mass. 59 ; Homer Ponce, 74 Maine, 470. V. Perkins, 124 Mass. 431 ; Belcher v. ^ Teague v. Irwin, 127 Mass. 217. 142 ADJECTIVE LAW OF FBAUD. [chap. X. others however in which the position is taken that the jury may find that a statement, apparently in itself alone, such e. g. as one of the solvency of parties to a promissory note, ' was in- tended to be a representation of a fact ' or ' the expression of an opinion merely.' ^ That cannot be sound ; what the party intended must be found in his words, if there be no modifying facts.2 § 3. Pbepondbbating Evidence. The party who alleges fraud must make good his allegation, as we have stated, ' by clear and satisfactory evidence, such as will preponderate over presumption or evidence on the other side.' 3 The law does not, generally speaking, require more. Parties engaged in fraudulent schemes resort to the use of legal forms, as far as possible, to cover their purposes ; and it would be expecting too much to look for undisputed evidence 1 Homer v. Perkins, 124 Mass. 431. See also StulilDS o. Johnson, 127 Mass. 219. If in this case ' good as gold ' had been written on the note, would the court have left the question to the jury ? Comp.- the case of certifying a check or accepting a bill of exchange. 2 Arkwright u. Newbold, 17 Ch. D. 301, 322 ; 1 Stoiy, Equity, 209, note, 13th ed. On the issue of fraudulent in- tent on the part of a grantor he may be asked (except in answer to a conclusive presumption of fraud) whether he had a fraudulent intent in the transaction. Seymour v. Wilson, 14 N. Y. 567 ; Bedell v. Chase, 34 If. Y. 386 ; Starin V. Kelly, 88 N. Y. 418. But that is a different thing ; it involves the mean- ing of a doubtful act, not of plain lan- guage, to which, it must be understood, the text refers. * Ante, p. 123 ; Lynn v. Baltimore R. Co., 60 Md. 404 ; Cummins v. Hurl- butt, 92 Penn. St. 165 ; Mead v. Conroe, 113 Penn. St. 220 ; Bumham v. Noyes, 125 Mass. 85; Allen ®. Wheeler, 4 Gray, 123. The language of Cummins V. Hurlbutt, in declaring that the evi- dence must be 'indisputable' and that of McShane v. Hazlehurst, 50 Md. 107, that there must be ' clear and conclusive proof, ' is incautious and too strong, even when applied to the contradiction of written evidence. See Young ■». Ed- ward, 72 Penn. St. 287 ; Lynn v. Balti- more R. Co., 60 Md. 404. The language of Ruff V. Jan'ett, 94 111. 475, in object- ing to the word 'satisfactory' of the required evidence, goes too far the other way. The evidence need not be ' con- clusive ' or leave no doubt ; but it ought to be so clear and satisfactory as to pre- ponderate. See Lynn v. Baltimore E. Co., supra. Of course =■■ party cannot make his own evidence, however clear. Thus an affidavit of fraud under attachment laws cannot be read in evidence upon the question of fraud ; it is preliminary only. Lewy v. Pischl, 65 Tex. 311. § 3.] EVIDENCE. 143 of fraud. The law at any rate does not require it. This is es- pecially true upon motions for new trials based on the ground that the evidence does not support the verdict of fraud ; ^ but it is equally true upon exceptions to instructions to the jury. A jury should then be instructed that they ought to find fraud upon mere preponderance of evidence. It is not neces- sary for the evidence to show beyond doubt that a party is guilty of fraud.2 It is settled law that, upon the trial of a civil action in which the claim or defence is based on alleged fraud, the issue may be determined in accordance with the preponderance or weight of evidence, except in cases of re- sulting trusts arising on verbal agreements to buy for an- other.^ In other cases of fraud nothing more is required than that the evidence should be sufficient to satisfy the mind of a common man, although the evidence does not amount to absolute certainty.* Evidence of fraud indeed is not re- quired to be more direct and positive than that of facts and circumstances tending to the conclusion that it has been committed.® Hence an instruction to the jury that the fraud in question could not be found by them except upon clear and undoubted proof of it, is erroneous. If the party al- leging the fraud produce such evidence as the jury could reasonably and safely rest their consciences upon, it is suffi- cient.® But it should be clear ; and this is especially so where there is strong prima facie evidence against it, as where the attempt is to prove that a deed absolute on its face is only a mortgage,^ or where the terms of any written instrument 1 Gill V. Crost)y, 63 111. 190. 3 Ala. 352, and Tompkins o. Nichols, ^ Cases supra, note 3 ; also Ford v. 53 Ala. 197) ; Jewett v. Bowman, 29 Chambers, 19 Cal. 143 ; Young v. Ed- N. J. Eq. 174 ; Rea v. Missouri, 17 wards, 72 Penn. St. 257; Abbey v. Wall. 532. Dewey, 25 Penn. St. 413 ; Lee v. Pearce, ^ See post. Resulting Trusts. 68 N. Car. 76 ; Gordon v. Parmelee, 15 * Young u.^dwards, 72 Penn. St. Gray, 413 ; Schmidt v. New York Fire 257. Ins. Co., 1 Gray, 629 ; Jones v. Greaves, ^ Pea v. Missouri, 17 Wall. 632. 26 Ohio St. 2 ; Adams v. Thornton^ 78 « Abbey v. Dewey, 25 Penn. St. 413. Ala. 489 (overruling Steele v. Kinkle, ' Cannon «.' Jackson, 40 Ark. 417. 144 ADJECTIVE LAW OP FRAUD. [CHAP. X. are impeached.^ In such cases the facts should be 'clearly and abundantly established.' ^ It follows however from the rule requiring preponderating evidence, or rather it is only another way of stating that rule to say, that where the parties stand upon an equal footing, that is, where no relation of confidence or the like exists, circumstances attending a transaction which are consistent equally with a fraudulent intent or with an honest purpose will not be treated as fraudulent.^ That a party does not re- member signing a contract bearing his name is not evidence that the signature is fraudulent.* And of course mere sus- picion of fraud is not proof .^ There is some conflict of ai^thority upon the degree of evi- dence required to prove the commission of a fraud which is indictable. Under an indictment the evidence must be more than simply preponderating; there must be such evi- dence as shall leave no reasonable doubt of the commission of the act, in order to justify conviction. In some cases it has been held that the same degree of proof is required in a civil action upon the issue of the commission of the act.® In most cases however it is held to be sufficient if the evidence be preponderating.^ And this is the better opinion. It has 1 Parlin v. Small, 68 Maine, 290 ; Schmidt v. New York Ins. Co., 1 Gray, Brown v. Hunt, 72 Maine, 415. 529 ; Blaeser v. Milwaukee Ins. Co., 37 'lb. Wis. 31, explaining and modifying Pryce 3 Funkhauser «. Lay, 78 Mo. 458 ; v. Security Ins. Co., 29 Wis. 270 ; Jordan v. Osgood, 109 Mass. 457 ; Washington Ins. Co. v. Wilson, 7 Wis. Drummond v. Couse, 39 Iowa, 442; 169; Wright v. Hardy, 22 Wis. 348; Lyman v. Cessford, 15 Iowa, 229 ; Scho- Ellis v. Buzzell, 60 Maine, 209 ; Mina, field V. Blind, 33 Iowa, 175 ; Hamilton Ins. Co. v. Johnson, 11 Bush, 587 ; V. liishop, 22 Iowa, 306. Wightman v. Western Ins. Co., 8 Bob. * Jack D. Brown, 60 Iowa, 271. (La.) 44-2; Hoffman v. Western Ins. ^ Jewett V. Bowman, 29 N. J. Eq. Co., 1 La. An. 216. See also Burr v. 174. Wilson, 22 Minn. 206 ; Bradish v. 8 McConnel v. Delaware Ins. Co., Bliss, 35 Vt. 326 ; Gordon v. Parmelee, 18 111. 228 ; Thurtell v. Beaumont, 8 15 Gray, 416 ; Freeman v. Freeman, 31 Moore, 612 ; s. c. 1 Bing. 339. Wis. 235, explained in Blaeser v. Mil- ' Jones V. Greaves, 26 Ohio St. 2 ; waukee Ins. Co., supra. Muuson V. Atwood, 30 Conn. 102 ; § 3.] EVIDENCE. 145 well been said that, where civil rights are to be ascertained, a less degree of probability may be safely adopted as a ground of judgment than in criminal cases which affect life and liberty.^ It is a general rule in matters of account that where there has been a settlement, and the account has either been signed or a security executed on the footing of it, equity will not open it, unless the evidence produced (and that evidence founded upon charges in the plaintiff's bill) show the transaction to be so iniquitous that it ought not to be brought forward at all to affect the party sought to be bound.^ Settled accounts may be opened also when fraud is reasonably to be inferred from the mode of taking the accounts, though no facts of positive fraud be distinctly proved. Thus it would be dangerous if accounts settled between two stewards, without vouchers pro- duced, should be deemed conclusive against their principals.^ And the absence of the vouchers would be sufficiently sugges- tive of fraud to require the parties seeking to sustain the ac- counts to prove their accuracy. But while it is not necessary, in order to sustain an allega- tion of fraud, that the evidence should be so decisive as to leave no doubt, unless it be in the case of an attempt to over- turn a writing, the rule requiring clear and satisfactory evi- dence appears to mean more than is meant by satisfactory evidence of other facts not involving turpitude. There is, it seems, in the case of a charge of fraud a presumption of hon- esty to overcome, and stronger evidence will accordingly be required than would be necessary in a case in which no pre- sumption to be met existed.* The case first cited was replevin 1 2 Russell, Crimes, 727 (7th Am. opened for any improper act or conceal- ed. ). ment which operates to the prejudice of 2 Drew V. Power, 1 Schoales & L. the parties directly interested in the 192 ; Chambers v. Goldwin, 9 Ves. 266. estate. See Clyce v. Anderson, 49 Mo. 37, ' Beaumont ■». Boultbee, 7 Ves. 617. holding that the final settlements of * Hatch v. Bayley, 12 Cush. 27. executors or administrators may be See also Long t». West, 31 Kans. 298 ; 10 146 ADJECTIVE LAW OF PKAtJD. [CHAP. X. of flour against an officer, who had attached the same as the property of a third person. The plaintiff claimed un- der a previous sale by that person, which sale the defendant alleged to have been fraudulent. The court instructed the jury that there was a presumption that the plaintiff had acted honestly, and that the evidence on the part of the defendant must be sufficient not only to establish an innocent act but also to overcome this presumption of honesty ; and the in- struction was upheld. § 4. Circumstantial Evidence.^ It seldom happens that fraud can be proved by direct evi- dence ; if it could not be shown by circumstantial evidence, justice must often fail. Hence the law may be satisfied with- out direct and positive evidence.^ And it is said that no rigid rule can be applied to determine the admissibility of cir- cumstances, so diversified are the conditions, relations, and conduct under which they arise. ' Hence,' — and this rather than the admissibility of circumstantial evidence is the strik- ing fact peculiar to the subject, — ' it has grown into a maxim that great latitude is to be allowed in the trial of questions of fraud.' '^ And this maxim has itself in the case cited received a very liberal interpretation. Morris V. Talcott, 96 K Y. 100 ; Segar, 25 Mich. 367 ; Southern Ins. Co. Adams v. Thornton, 78 Ala. 489. Con- v. Wilkinson, 53 Ga. 535. tra, Faville v. Shehan, 68 Iowa, 241. « gtauffer v. Young, 39 Penn. St. 1 See Allegata et Probata, infra, 455. ' The meaning of which maxim I § 9. take to be that every circumstance in 2 Conant v. Jackson, 16 Vt. 335 ; the condition and relation of the parties, Stanfield v. Stiltz, 93 Ind. 249 ; Brower and every act and declaration of the V. Goodyear, 88 Ind. 572 ; Massey v. party charged with the fraud, shall be Young, 73 Mo. 260 ; Smalley v. Hale, competent evidence, if in the opinion of 37 Mo. 102 ; Burck v. Smith, 15 Tex. the judicial mind it bears such a rela- 219 ; Thompson v. Shannon, 9 Tex. tion to the transaction under investiga- 536 ; Graham w. Roder, 5 Tex. 141 ; Par- tion as in its nature is calculated to rott V. Parrott, 1 Heisk. 681; Strong persuade the liberal men in the jury-box V. Hines, 35 Miss. 201; O'Donnell u. to the belief that the allegation of fraud § 4.J EVIDENCE. 147 In the investigation of a question of fraud then courts should be exceptionally liberal in the receipt of evidence tending to disclose the true nature of the transaction.^ Very slight cir- cumstances, apparently trivial in themselves, when joined with other facts, may afford irrefragable proof of fraud.^ Upon a question of fraud indeed the evidence should embrace all the facts and circumstances which go to make up the transaction, disclose its true character, and explain the acts and intentions of the parties ; ^ enough if the evidence fall within a broad interpretation of the rule of relevancy. Such is a statement of the principle of evidence in its ap- plication to fraud. How the principle is itself interpreted can only be seen by taking a wide selection of examples. To this, attention will now be drawn ; but first it may be remarked that the principle applies, it seems, to evidence in denial as well as to evidence in support of fraud, and a few illustrations of the fact may be given. Thus where fraud is charged against an agent, and made to depend upon his management of a sale of lands of his principal, in an action by the latter for fraud in selling the property at a price less than it was worth it is evident that the question whether the defendant was guilty of fraud may be determined more or less by his knowledge or ignorance of the condition of the title, and by what that condition was. Hence in a recent case * of the kind it was held that the agent was entitled to introduce in defence evidence of the condition of the title and its marketable value. So also, as tending to disprove allegations of fraud in the exe- cution of a mortgage, on the part of a mortgagee, he may show that the mortgagor executed the instrument of his own accord and without solicitation from the mortgagee.^ Again evidence is or is not well founded.' lb., Wood- ^ Hopkins v. Sievert, 58 Mo. 201. ward, J. See also Zerbe v. Miller, 16 ^ Smallej- v. Hale, 37 Mo. 102. Penn. St. 488 ; Garrigues v. Hams, 17 * Weeks v. Downing, 30 Mich. 4. Penn. St. 344. ^ Blackwell v. Cummings, 68 N. C. J Garrigues •». Harris, 17 Penn. St. 121. 344 ; Zerbe v. Miller, 16 Penn. St. 488. 148 ADJECTIVE LAW OF FRAUD. [CHAP. X. of a party's good faith in the purchase of land may be shown by the fact that he proceeded to make improvements upon the estate ; for it is said that people do not often improve estates if they doubt their title.^ So in a late case ^ a jury was held entitled to consider by whom an insurance was obtained, whether at the instance of the assured or of the underwriter's agent, as possibly throwing light upon a question of fraud in effecting the contract. Questions of rebutting evidence otten arise in cases of the retention of possession of property under a secret trust, after sale or other disposal of it. The plaintiff in one case ^ brought an action of tort against an officer for entering a cigar shop and converting by attachment the goods therein ; which goods, it was alleged, had been sold to the plaintiff by the late owner. The sale was proved, and the defendant proved retention of possession by the vendor and showed a prima facie case of fraud in the sale. In reply the plaintiff offered to prove that before the final carrying out of the terms of sale the vendor offered to sell to another party, and that that party applied to the plaintiff for his consent, and also that after the attachment stock was purchased for the shop by the plaintiff in his own name ; but the evidence was held in- admissible. Another case, less characteristic perhaps, may be stated.* An action was brought by the assignees of N in insolvency, to recover the value of stock and fixtures in a factory sold by N to the defendant by a fraudulent and collusive sale, as was alleged. To show that the sale was proper the defendant was held entitled to introduce evidence that before the sale, N had openly and publicly expressed a desire and purpose to dispose of the same property, and had for that purpose offered it in 1 Stewart v. Fenner, 81 Penn. St. ' Flood v. Clemence, 106 Mass. 177. 299. ^ Southern Ins. Co. v. Wilkinson, * Heywood v. Reed, 4 Gray, 574. 53 Ga. 535. § 4.J EVIDENCE. 149 the market. It was declared that his declarations and offers to that effect had some tendency to show that the subsequent sale was made in the regular course of legitimate business, and hence was not fraudulent. Again in a suit for fraud in misrepresenting the character and value of a note and mortgage received in exchange for personal property, it is admissible to prove the value of the chattels, both to show the extent of the fraud, and as part of the res gestse, to throw light on the probabilities of the whole transaction.^ In an action for falsely and fraudulently repre- senting a tradesman to be trustworthy, evidence of his fellow- tradesmen concerning his reputation for trustworthiness is admissible, as tending to show that the statements were made in good faith .2 If it be sought to charge a person with fraud and deceit in representing another as worthy of credit, he may, for the purpose of .repelling the imputation of fraud, prove what he had said he thought such person worth prior to the time of making the statement complained of.^ And similar evidence may be given against him to establish his fraud.* In a contest for fraudulent misrepresentations, in that the defendant had represented that the maker of certain notes, taken by the plaintiff from the defendant in payment for goods, was solvent, when in fact he was at that time insolvent, evidence is admissible on the part of the defendant that the maker was solvent at the maturity of the notes, for the pur- pose of showing that the plaintiff, by the exercise of proper diligence, would not have suffered loss, and also as tending to show that the representations were true at the time when they were made.^ Again it is some evidence of honest intention, that an insolvent who has made a mortgage of his property made it to secure a debt actually due ; but such evidence of 1 Stone V. Covell, 29 Mieh. 3.59. ' McCracken v. West, 17 Ohio, 16. ^ Sheen v. Bumpstead, 2 Hurl. & C. * Edwards v. Owen, 15 Ohio, 600. 193. * Stanley v. Irwin, 31 Iowa, 418. 160 ADJECTIVE LAW OF FBAUD. [CHAP. X. course does not as matter of law disprove a fraudulent intent.^ The fact that the party alleged to have been defrauded never complained of the fraud, after knowledge of the facts, in con- versations with the supposed wrong-doer may be shown for what it is worth.^ Evidence of good character is said in some cases to be admissible,^ in others inadmissible in answer to evidence of fraud.* And when fraud as matter of law is shown, the guilty party cannot be asked whether lie intended to defraud.^ It is obvious that in most of the foregoing cases the evi- dence in denial of the alleged fraud has not gone far in the direction of excluding the commission of the offence, not perhaps as far as evidence in most other civil cases should go to make it properly relevant ; still it really goes that way, and that, when fairly appreciable, appears to be enough. Turning now to the illustration of the rule in its appli- cation to the support of the allegation of fraud, a variety of cases is at hand. Some of the more striking may be presented. In one case® the plaintiff brought replevin for cotton sold to J & C through their fraud, who went into bankruptcy shortly afterwards. It was held proper to prove the state of their bank account, and a mode of overdrawing by them for a week or more before their purchase of the cotton, as tending to show that they were aware of their condition at the time of the sale.'^ So too the amount of their liabilities at the time of their failure was held competent; it had some tendency to show their pecuniary condition four days before, when the sale was made. So a creditor has been permitted to show that a conveyance made by his debtor was fraudulent, by evidence that on the same day the grantor 1 Billings V. Russell, 101 N. Y. 226. « Dulaney v. Rogers, 64 Mo. 201 ; 2 Cook V. Fuson, 66 Ind. 521. Polhill v. Walter, 3 Bart. & Ad. 114 ; ' Dawkins v. Gault, 5 Rich. 151 ; ante, p. 12, note 1. Sweets <;. Plunket, 1 Strob. 372 ; 1 6 Haskins v. Warren, 115 Mass. 615. Greenl. Ev. §§ 54, 55. ' Citing Jordan v. Osgodd, 109 Mass. * Dudley '-v. MoLelner, 65 Mo. 241. 459. § 4.J EVIDENCE. 151 mortgaged all his real estate to his daughter and all of his personalty not exempt from execution to his nephew.^ The same rule is illustrated hy a recent writ of entry .^ The suit was brought by an assignee in insolvency, to re- cover land which he alleged that the bankrupt had conveyed to the tenants with notice, in fraud of creditors. To prove the fraud the demandant offered to show that the bankrup"t had recently before the conveyance in question been creating ficti- tious evidences of debt in favor of his sons, by giving to them notes falsely purporting to represent money loaned by them to him ; and the evidence was held competent. The plaintiff in another case,^ suing as assignee in insol- vency of an insurance company upon premium notes, was met by the defence of false and fraudulent representations con- cerning the condition of the company and the payment and investment of its capital stock, as the inducement to the con- tract. To show that the capital stock had never been paid in and invested according to law the defendant offered inter alia the deposition of the secretary of the company, who tes- tified that the first instalment of the capital stock was paid to him as secretary in May, 1853, the larger part being paid by L. M., president and treasurer of the company, and that the same was immediately paid by him to L. M. as treasurer ; that the second instalment was paid and disposed of in the same way in September, 1853 ; and that the whole capital was paid in before the spring of 1854. He also testified that the company kept deposits in tliree banks only, and that he had no knowledge what became of the money paid in for capital except that in the fall of 1853 L. M. produced certificates of shares in various banks and other corporations in his name as president, in which he said he had invested the money. The defendant also produced the ledger of the company to 1 Taylor v. Robinson, 2 Allen, 562. 2 Winchester v. Chester, 97 Mass. 140 ; s. 0. 12 Allen, 611. 8 Fogg V. Griffin, -2 Allen, 1. 352 ADJECTIVE LAW OF FRAUD. [CHAP. X. show that no part of the instalments of the capital had been charged to L. M. therein ; he also offered evidence that no part of the instalments was deposited in the banks referred to, and further that the investments by the president were colorable. All this evidence, which had been received under objection", was now held competent. ' It tended to prove that the notes in suit had been obtained ... by false and fraud- ulent representations concerning the solvency of the corpora- tion, its ability to meet its liabilities, the amount of its capital stock and the mode of its investment.' ^ Another illustration may be seen in a case from the same state.2 The plaintiff sued for the price of a patent feed water heater, represented to be capable of preventing transmission of oil to boilers, when attached according to the printed direc- tions to certain boiler works. The defence was that the rep- resentations were false and fraudulent. In order to prove this the defendants had been permitted to show that other heaters made and sold by the plaintiffs, and identical in con- struction with the one in question, necessarily transmitted oil to the boilers in injurious quantities ; and this was not due at all to any defect or negligence in the setting or operating of the heaters, and was not merely accidental or occasional. The court held the evidence proper, declaring that there was no occasion for the defendants to go through the ceremony of putting the particular heater to the test of actual experi- ment.3 But the evidence of witnesses who had only seen a model of machinery, such as a brake, and other pieces worked on the same principle, is inadmissible to prove the particular article worthless.* Evidence of one's general financial repute furnishes another illustration of circumstantial evidence. In a recent case ^ the 1 See a, similar case in Salmon v. lied upon by the plaintilT, was distin- Richardson, 30 Conn. 360. guished as involving a question of ■^ Waters' Patent Heater Co. v. warranty only, not of deceit. Smith, 120 Mass. 444. 4 Dowden v. Wilson, 108 111. 257. 5 Vale V. Butler, 111 Mass. 65, re- ' Sweetser v. Bates, 117 '. § 4.J EVIDENCE. 153 plaintiff, a creditor, claimed to recover land conveyed, as he alleged, to the defendant in fraud of creditors, the defendant being privy thereto ; and he offered evidence of the general repute of all the parties to the alleged fraudulent transaction, in regard to their credit and pecuniary responsibility. The evidence was received, and the court now held properly. The general repute of the grantors, it was said, was a fact which with other circumstances (indeed it seems without other circumstances i) would have a tendency to show that the defendant must have understood their motives in making the conveyance and might have participated in their unlawful purpose ; ^ and proof of the defendant's want of credit would tend to prove that the conveyance, made on credit, could not have been made in good faith in reliance upon the tenant's ability to pay.^ Such evidence is admissible also for the purpose of showing that a conveyance made by the alleged insolvent debtor in payment of or security for a pre-existing debt was invalid (under insolvent laws), by showing that the taker had reason- able ground to believe the debtor to be insolvent at the time;* and conversely evidence that the debtor was then in good repute is admissible to show that the preferred creditor had not reasonable ground to believe the debtor to be insolvent.^ In both cases the evidence is competent on the one ground that a man's belief in regard to things of which he has not personal knowledge is reasonably supposed to be affected by the opinions of others who may be supposed to have information.^ An illustration of the first proposition is 1 Bartlett v. Decreet, 4 Gray, 111 ; v. Munson, 10 Allen, 491. See also Lee V. Kilburn, 3 Gray, 594. Bartlett u. Decreet, 4 Gray, 111 ; 2 Notice of the fraudulent pui-pose of Conover «. Berdine, 59 Mo. 125. a grantor, in a case of fraud upon cred- * Lee v. Kilburn, 3 Gray, 594 ; itors, is not enough in Massachusetts ; Bartholomew v. McKinstry, 6 Allen, there must have been participation in the 567; Denny v. Dana, 2 Gush. 160. fraud. Hill v. Ahem, 135 Mass. 158. ^ Bartlett v. Decreet, 4 Gray, 111 ; 8 Citing Cook u. Mason, 5 Allen, 212; Heywood v. Eeed, ib. 574. Lee V. Kilburn, 3 Gray, 594 ; Metcalf « Bartlett v. Decreet, Metoalf, J. 154 ADJECTIVE LAW OP FEAUD. [CHAP. X. afforded by one of the cases cited.^ A bill in equity was brought by an assignee in insolvency to procure an assign- ment to the plaintiff of a mortgage made by the insolvent to the defendant, on the ground that it was an unlawful preference. Evidence had been received to prove that the insolvent, at and before the time of the mortgage, had the reputation of managing his business badly and of neglecting to attend to it, on the issue that the defendant had reasonable cause to believe that his debtor was insolvent at that time ; and this evidence was now held competent. This was upon the authority of an important case,^ a case of trover to recover machinery, drugs, and dye-stuffs mort- gaged to the plaintiff. The defendant claimed as assignee in insolvency of the mortgagors, alleging that the mortgage was in fraud of creditors as a preference, in that the plaintiff had reasonable cause to believe that the debtors were then insol- vent. The debtors had been manufacturers of printed goods, amongst others of mousselines de laine ; and the plaintiff was a merchant dealing in dye-stuffs, and trading with the debtors. One of the questions asked a witness was, whether before the time of the mortgage it was a fact known in the community that the printing of mousselines de laine was a ruinous busi- ness to those engaged in it ; the question was objected to but received, and the court now decided that it was competent. It was said that evidence that the business was unprofitable and losing, and that the fact was generally known, would have a tendency to prove that the debtors became insolvent,^ and that the plaintiff had the means of knowing the fact. The subject is illustrated also by a decision under the poor- debtor law of Massachusetts.* The defendant in an action for goods purchased sought to take the poor-debtor's oath, to 1 Bartholomew v. McKinstry, 6 Al- business, the amount done, and the ex- len, 567. tent of their resources. » Denny v. Dana, 2 Gush. 160. * Horton ■«. Weimar, 124 Mass. 92, ' This doubtless would depend upon referred to further infra, pp. 163, 164. the time they had been engaged in the § 4.J EVIDENCE. 155 which the plaintiff objected that the goods had been obtained by fraud. Among other facts the plaintiffs produced the de- fendant's schedules of his creditors and assets filed by him in bankruptcy proceedings shortly before, and the testimony of his assignee that there were no assets. This, aided by evi- dence of certain other purchases before obtained on credit from third persons, was held admissible as tending to show that the defendant had lately purchased large quantities of goods, which were not accounted for in the schedules; the facts tended to show a fraudulent purpose in the purchases from the plaintiffs and others.^ In another case ^ the plaintiff, or rather demandant, brought a writ of entry and claimed title under execution upon an equity of redemption, alleging that the property had been con- veyed in fraud of creditors. In support of this allegation he had been allowed to introduce evidence that the debtor had made a mortgage of personalty some months after the con- veyance in question, covering all his property ; and this evidence was now held admissible, not indeed as an act or declaration of the debtor to impeach the title of his grantee,^ the defendant or tenant, but as a means of measuring his property, and thus as having a tendency to show his condi- tion in regard to solvency at the time of the conveyance in question.* An action for the conversion of skins was brought in a Massachusetts case,^ the skins having been attached as the property of H. An instrument in evidence created between the plaintiff and H the relation of principal and agent in the manufacture of goods out of the skins, the plaintiff agreeing to furnish the stock and H agreeing to make the goods and take his compensation out of the proceeds remaining after 1 As to schedules in bankruptcy see 100. See also Pettee v. Coggeshall, 5 also Cook V. Moore, 11 Cush. 218. Gray, 51. 2 Sweetser v. Bates, 117 Mass. 466. ' Emmons v. Westfield Bank, 97 ' See infra, § 7. Mass. 230. * Citing Otis v. Hadley, 112 Mass. 156 ADJECTIVE LAW OF FBAUD. [CHAP. X. reimbursing the plaintiff according to the contract. The defendant, a creditor of H, claimed that this was a mere cover, and that the property belonged to H. At the trial H was a witness, and testified thdt the skins belonged to the plaintiff ; and it was now held proper to ask him on cross- examination whether he had not paid the expense of other people's lawsuits ■ out of the property. This would have a tendency to show that he had acted as if he was owner of the skins. For the same reason he might be interrogated con- cerning the style and expense in which he was living while supported out of the proceeds of sales ; so he might be asked if on a certain occasion when he was trying to borrow money on mortgage, he had not produced from his pocket several thousand dollars which he had declared to be his own. It was a suspicious circumstance that he kept on his person so much money, especially in connection with other like facts. The acquisition of property not to be accounted for appar- ently on theories of honesty affords, as the last case suggests, a good illustration of our rule. In one case^ the plaintiffs sued their agent for money had and received ; their case being that money had been abstracted fraudulently from them by some one in their employ, and the defendant was the guilty party. They offered evidence tending to show that the de- fendant, at the time of entering the plaintiffs' service, was in- solvent, and had since received only a limited salary and some small extra compensation ; and that after the time of his alleged misconduct and before suit he had become owner of a large property, far exceeding in amount his entire salary and receipts while in the employment of the plaintiffs. The evi- dence was held competent, not however upon the ground that it showed possession of stolen property, but upon the broader principle that it was a fact relevant to the point in issue. One way of showing fraud by a liberal application of the 1 Boston B. Corp. v. Dana, 1 Gray, 83. § 4.] EVIDENCE. 157 rule of circumstantial evidence is to show a previously ex- pressed purpose to do the thing which has been done, or to do something similar. A case^ in illustration may be given. The plaintiff brought debt upon a judgment, and the defend- ant pleaded a discharge in bankruptcy. To avoid the effect of the discharge the plaintiff offered to show that before the pas- sage of the then recent bankrupt law the defendant had ex- pressed an intent to defraud the plaintiff out of his debt by concealing and conveying away fraudulently his property, and that the defendant had about that time so convoyed it. The evidence was held competent. Evidence of acts not in issue, it was declared, was admissible, provided they tended to estab- lish the intent of the party in doing the acts in question. The reason was that the only mode of showing a present intent was often to be found in proof of a like intent previously en- tertained. ' The existence in the mind of a deliberate design to do a certain act, when once proved, may properly lead to the inference tliat the intent once harbored continued and was carried into effect by acts long subsequent to the origin of the motive by which they were prompted.' On similar grounds evidence of acts done before any rights of the parties charging fraud had supervened, and tending to illustrate the conduct of the parties and to show their relations, is admissible.^ In some cases the relevancy of circumstantial evidence has been carried to the verge of the law. In one case ^ the plain- tiff sued for the conversion of a stock of tailor's goods, claim- ing them as mortgagee, while the defendant claimed them as assignee in insolvency of the mortgagor on the ground that the mortgage was a fraud on creditors. It was held proper to show that the mortgagor was a man of intemperate habits and accustomed to neglect his business, as tending to prove the existence of a cause of which insolvency would be the nat- ural effect.* 1 Cook V. Moore, 11 Cush. 213. ' Alden v. Marsh, 97 Mass. 160. 2 Craig's Appeal, 77 Penn. St. 448. * But see Bartlett v. Decreet, 4 Gray, 158 ADJECTIVE LAW OF FRAUD. [CHAP. X. Allegations that a purchaser of goods bought them with in- tent not to pay for them can seldom be proved by direct evi- dence ; indeed circumstantial evidence, with at least the same liberality permitted in other cases of fraud, must be received. In one case ^ the plaintiff had brought replevin of liquors sold, and afterwards levied upon by the defendant, an officer, as property of the purchaser. It was alleged that the purchaser had bought with intent not to pay and under false representa- tions. To prove the fraudulent intent the plaintiff offered evidence to show that upon the arrival of the goods at the place of business of the purchaser in the West they were at once shipped to Philadelphia, without being taken to the pur- chaser's store, at a time when they could not have been bought in the West and sold in Philadelphia at a profit; the evidence was held admissible. The ground apparently was that the purchaser could not have intended to pay the price and at once ship the goods for sale to a distant place at a lower trade price. Another case of the kind may be stated.^ The plaintiffs brought replevin of goods sold, alleging that the buyer, a tradesman, intended not to pay for them. To show the in- tention the plaintiffs, against objection, offered to prove that shortly after the purchase one of them went to the buyer's shop and found it locked and empty ; the evidence was re- ceived, and, it was now held, properly. The evidence had some tendency to show that the buyer's conduct in the pur- chase had been fraudulent. Again in trover for goods sold by tlie plaintiff to one under whom the defendant claimed it was held proper to give the evidence of persons who had sold goods to the same purchaser about the same time, that the pur- chaser was then insolvent and knew the fact, and that he had 111, where evidence of knowledge of the ^ Kline v. Baker, 106 Mass. 61 ; debtor, as distinguished from knowl- s. c. 99 Mass. 253. edge of his business was held inad- ^ Skinner v. Flint, 105 Mass. 528. missible. § 4.] EVIDENCE. 159 no reasonable expectation of being able to pay them ; tbis had a tendency to show that he did not intend to pay for the plain- tiff's goods.^ A recent case in New York ^ furnishes a good illustration of the uses of circumstantial evidence in support of an alle- gation of fraud upon a testator by a beneficiary under the will. The evidence was that the beneficiary had had an opportunity to practise deception and had 'employed some of the means usually resorted to for such purposes,' and that a result was produced in the party's favor contrary to the known wishes and fixed purpose of the testator. No satisfactory explana- tion of the facts was given ; and the court considered that a case of fraud had been made out. On a question however of the fraudulent destruction of a will, at the time of the exe- cution, by an attendant upon the testatrix, evidence that the testatrix was then very ill in bed, in a semi-comatose state, that the attendant handed the will to her, and immediately after- wards saw it in the fire and made no attempt to save it, is held not enough to show such fraudulent destruction of the will.^ The fact of puffing and by-bidding in other sales at auction on the same occasion as that of one complained of as fraudu- lent affords another illustration. In a recent case "• it appeared that various pieces of land belonging to the same persons had been offered for sale by auction at the same time and place. Evidence was admitted that several of the lots were run up by puffers and struck off to them colorably, for the purpose of showing that similar bidding occurred upon another lot struck off to a real purchaser. This case brings us to a large class of cases containing a special illustration of the rule under consideration, to wit, the admissibility of evidence of the commission of other frauds by the party now charged with fraud. 1 Rowley v. Bigelow, 12 Pick. 306. ' Estate of Kidder, 66 Cal. 487. 2 McLaughlin v. MoDevitt, 63 N. Y. * Yerkes v. Wilson, 81* Penn. St. 9. 213. 160 ADJECTIVE LAW OF FEAUD. [CHAP. X. § 5. Evidence op Other Feauds. One fraud committed by a party cannot in itself be deemed to taint with fraud other similar transactions of his, which have resulted in damage to those with whom he has dcalt.^ But where unlawful acts of the same general character are con- tinuous in their operation, and appear to be parts of a general scheme or plan, participation in them at an earlier stage is the usual evidence that one who was afterwards present was a participator then.^ Hence evidence of other similar trans- actions about the same time with other persons, if so con- nected as to show a general purpose of fraud, or that the party was conducting his business in an unusual manner, indicating an expectation of failure, is admissible to sus- tain a charge of fraud.^ And such fraud may be proved by third persons or by the cross-examination of the party him- self.* The admissibility of such evidence is placed on the ground that where transactions of a similar character, par- ticipated in by the same parties, are closely connected in 1 Comins v. Coe, 117 Mass. 45. See Aleer v. Horsey, 35 Md. 439 ; Staples Jordan v. Osgood, 109 Mass. 457, infra, v. Smith, 48 Maine, 470 ; Crogin v. p. 163. Tavr, 32 Maine, 55 ; Hawes v. Dingley, ^ Tj'son V. Booth, 100 Mass. 258. 17 Maine, 341 ; Knight v. Heath, 23 ' Jordan v. Osgood; 109 Mass. 457 Haskins v. Warren, 115 Mass. 514 Winchester v. Charter, 97 Mass. 140 N. H. 410 ; Hovey »._Grant, 52 N. H. 569 ; Bradley Fertilizer Co. v. Fuller, 58 Vt. 315 ; Eastman v. Premo, 49 Vt. s. c. 12 Allen, 611; Wiggin w. Day, 9 355; Fierce v. Hoffman, 24 Vt. 525. Gray, 97 ; Rowley v. Bigelow, 1*2 Pick. Judgment of conviction of other frauds, 307 ; Confer o. McNeal, 74 Penn. St. as e. g. in piaking fraudulent convey- 112; McKinley «. McGregor, 3 Whart. ances, is conclusive, in a subsequent 397 ; Summers v. Howland, 2 Baxt. case between the same parties, that such 407 ; Mutual Ins. Co. v. Armstrong, frauds had been committed. Stockwell 117 U. S. 591 ; Montgomery Ey. Co. 51. r. Silloway, 113 Mass. 384. Further Matthews, 78 Ala. 357 ; Loeb v. Flash, see Cook v. Perry, 43 Mich. 623, evi- 65 Ala. 526 ; Bukey v. Judd, 22 Minn, dence of like fraud received to identify 287 ; Withrow v. Biggerstaff, 87 N. C. and make certain the facts. 176 ; Winborae v. Lassiter, 89 N. C. 1 ; « McAleer v. Horsey, 35 Md. 439. Edwards v. WaiTen, 35 Conn. 517 ; Me- § 5.J EVIDENCE. 161 time, the inference is reasonable that they proceed from the same motive.^ The rule of the English courts in regard to other frauds is substantially the same. Thus it has lately been held, in an action against a company to recover money obtained by them from the plaintiff through the fraud of their agent, committed with their knowledge and for their benefit, that evidence of similar frauds committed on other persons by the same agent, in the same way, with knowledge and for the benefit of the defendants, was competent.^ The following general illustrations from our own courts may be given : Upon a question of the fraudulent character of a deed obtained by an administrator from one of the heirs, evidence of fraud in relation to property obtained by him from another heir of the same estate is admissible.^ So in order to prove fraud in a conveyance, evidence that the debtor and grantor, about the same time, made other conveyances of a collusive character is proper.* Where again there were cir- cumstances creating suspicion that a note had been fraudu- lently altered, the alteration of other notes made and indorsed by the same parties, to take up one for which the note in question has been given, is admissible as tending to strengthen the suspicion.^ So where a writing is impeached as forged or fraudulent, evidence tending to prove another writing upon the same subject-matter, and upon the same paper, to be forged or fraudulent, is admissible ; and this though the latter 1 Mutual Ins. Co. v. Armstrong, 117 ^ Blake v. Albion Assur. Soc, 4 C. U. S. 591, Field, J. ; Lincoln v. Claffin, P. D. 94. 7 Wall. 132, 138 ; Castle v. Bullard, 23 « Lovell v. Brigg?, 2 N. H. 218. How. 172 ; Gary v. Hotailing, 1 Hill, * Whittier v. Varney, 10 N. H. 291 ; 317. See Hall v. Naylor, 18 N. Y. 588 ; Blake v. White; 13 N. H. 267 ; Bum- Rea V. Missouri, 17 Wall. 532. But ham v. Carr, 11 Wend. 83 j Howe v. evidence of fraud by one part owner of Reed, 3 Fairf. 515 ; Aldrich v. Warren, a vessel, in the sale thereof, is no evi- 4 Shep. 565 ; Hawes u. Dingley, 5 dence of fraud in a sale by another part Shep. 341 ; Foster v. Hall, 12 Pick. 89. owner, of his share, to the same pur- ^ Eankin v. Clarkebill, 2 Johns. Cas. chaser, at the same time. Boyd v. 198 ; Snell v. Moses, 1 Johns. 99. Brown, 17 Pick. 453. 11 162 ADJECTIVE LAW OP FEAUD. [CHAP. X. writing be not offered in evidence.^ So also to show that an instrument was not designed for a particular purpose, to which it was, as alleged, fraudulently turned, other like instruments, with the use made of them, about the same time, have been held admissible.^ And so testimony to prove that false certi- ficates of the value of an article sold were exhibited by the seller to others than the purchaser for the purpose of effecting a sale, being evidence of a general design to deceive any one who could thus be drawn in to make the purchase, is admissi- ble to prove fraud in the present sale.^ On the question of a person's pretended and fraudulent purchase of property, evidence of his obtaining or attempting to obtain other property under color of a purchase, without paying for it, so connected in time and circumstances as to afford evidence of a general scheme of fraud, is admissible.* On the issue whether a sale of goods was induced by fraud of the buyer evidence is admissible of a previous purchase by him of like goods from the same party, the terms of which were referred to and adopted in the sale in question." So too in trespass for property which the defendant claimed was fraudulently purchased by the plaintiff, testimony of other fraudulent dealings between the parties about the same time of the one in question is admissible.® Kepresentations made by a vendor of land upon a former sale of an adjoining parcel of land to the same person, which representations extended to the lands now in question and were repeated at the second sale, are competent evidence in a suit for fraud in the second sale. And the fact that the second sale was not in contem- plation when the first was made, and that the vendor was not then in a position to make it, is immaterial.'^ 1 Knight V. Heath, 23 N. H. 410. Jacobs v. Shorey, 48 N. H. 100 ; Lee v. s Nichols V. Baker, 75 Maine, 334, Lamprey, 43 N. H. 15. two judges dissenting. 6 Skinner v. Flint, 105 Mass. 528. ' Aldrich v. Warren, 16 Maine, 6 Pierce v. Hoffman, 24 Vt. 625. 465. ' Kost V. Bender, 25 Mich. 616. 4 Hovey V. Grant, 52 N. H. 569 ; § 5.J EVIDENCE. 163 The transaction to Ije proved for the purpose of showing the fraud which is tlie subject of controversy must, as has been intimated, be shown by some evidence, direct or circumstantial, to be so connected with it as to make it apparent that the de- fendant had a common purpose in both frauds.-' The recent case referred to is an apt illustration. The plaintiffs brought replevin for goods sold to the defendant under alleged false and fraudulent representations by the latter of his pecuniary condition, and with intent not to pay for them. Evidence had been received that about the time of the purchase in question the defendant had made the same representations to other persons, which were false and fraudulent; and the question now was whether this evidence should have been received either to show that the representations made to the plaintiffs were false and fraudulent in regard to his pecuniary condition, or that he bought the goods intending not to pay for them. The court was clear that the evidence was not proper for the first purpose, and upon consideration of the authorities held it inadmissible for the second. In regard to the first it was said that the fact that the defendant had committed a similar but distinct crime or fraud could not prove that he had com- mitted the particular crime or fraud charged ; such fact was equally consistent with the affirmative or negative of the ques- tion to be decided. In regard to the question of intent not to pay it was said that the mere fact that an insolvent trader made misrepresentations of his pecuniary condition did not justify the inference that he had formed a general scheme to cheat ; and there was nothing to show any connection between the transactions. In a still more recent case in Massachusetts ^ the defend- ant, who had been sued for the price of goods, and had been arrested on mesne process, made application to take the poor 1 Jordan v. Osgood, 109 Mass. 457 ; ^ Horton v. Weimar, 124 Mass. Comins ». Coe, 117 Mass. 45; Staples 92. V. Smith, 48 Maine, 470. 164 ADJECTIVE LAW OP FRAUD. [CHAP. X. debtor's oath. The plaintiffs filed charges of fraud, which if true would bar him from taking the same ; and they had been allowed to give evidence of several purchases of goods from other persons not far from the time of his purchase from the plaintiffs, to which the defendant excepted. The evidence was held proper. The court said that if the other purchases were all made before the purchase from the plain- tiffs, which appeared to be the case, evidence of them was competent to show the amount of the defendant's indebted- ness at the time of the purchase in question ; if any were made afterwards, the transactions might be proved so far as they were parts of a general scheme of fraud with which the present transaction was connected,^ of which indeed there was evidence. The evidence of other transactions which the law receives is evidence of similar transactions ; and that appears to mean fraudulent or perhaps criminal transactions. Thus in a case of an alleged purchase of goods with intent not to pay for them it was held that evidence of other purchases of goods not paid for, made by the same buyer, about the same time with the one in question, was inadmissible if unaccompanied by evidence that such other purchases were fraudulently made.2 This rule^ in regard to evidence of other frauds does not require that such frauds must have been actually or even partly consummated. A person may join another in a fraud- ulent conveyance of property in which he (the former) mis- takenly supposes he has an interest ; but the fact that he has no interest in law in the property will not be sufficient to ex- clude evidence of the transaction as tending to show fraud in another transfer of property actually his, if the transaction offered in evidence is otherwise competent. A husband, with intent to defraud his creditors, joined in mortgages to the 1 Citing Jordan v. Osgood, 109 Mass. 457 ; Stockwell v. Silloway, 113 Mass. 384. 2 Kline v. Baker, 106 Mass. 61. § 5.] EVIDENCE. 165 defendant of his wife's separate property, in which the hus- band supposed he had an interest; the defendant participa- ting in the fraud. About the same time he executed other mortgages now in suit to the defendant ; he was insolvent all the time, and there was evidence that the defendant knew the fact. In an action by the assignees of the insolvent to recover the value of the latter mortgaged property it was held that evidence of the first named transaction was admissible to show fraud in the execution of the other mortgages.^ It is laid down in New York that if it be sought, in an action for fraud, to corroborate the evidence of the fraud complained of, by proof of a contemporaneous fraud, the evidence of the latter wrong must be such as to warrant the submission of the case to the jury, were the action founded thereon.^ And it has recently been held in the same state, in an action on a note alleged to have been fraudulently altered, that evidence that another note,, made at the same time, by the same person, of the same tenor and date of the one in question, for the same consideration, but payable at a differ- ent time, was owned by the plaintiff, and was by him altered in the same particular, after it came into his hands, without the consent or ratification of the maker, is inadmissible.^ It was conceded in the case referred to that, on an issue of the forgery of a note, it is proper, for the purpose of showing a fraudulent intent, to give evidence of the possession and uttering of other like forged notes;* but a majority thought the rule inapplicable to the above stated case,- — a position not easily understood. It is held in Connecticut that the cases in which evidence of other similar fraudulent transactions is admissible to prove a particular fraud are only those of a conspiracy to commit fraud. The object of such evidence is considered to be to 1 Lynde ». McGregor, 13 Allen, 172. * Rex v. AVylie, 4 Bos. & P. 92 ; 2 Meyev v. Cullen, 54 N. Y. 392. Eankin v. Blackwell, 2 Johns. Cas. 8 Booth V. Powers, 56 N. Y. 22. 198. 166 ADJECTIVE LAW OF FRAUD. [CHAP. X. show first, the fact of a conspiracy of the defendant with others to commit frauds similar to the particular fraud in question; and secondly, as an inference, that the fraud in question was part of the same conspiracy. Hence evidence of other distinct and independent acts of fraud cannot be received to prove a disposition to commit fraud, and thus to render the commission of the particular fraud in suit probable.^ § 6. Evidence op Conspieatoes and Joint Teespassees. The essence of a conspiracy, so far as it justifies a civil action for damages, is a concert or combination to defraud or to cause other injury to person or property, which actually results in damage to the person or property of the party in- jured or defrauded.2 Now in cases of conspiracy to defraud, embracing a number of similar cases in which there is one common design and one object to be accomplished, the pro- ceedings of the conspirators are to be regarded in contempla- tion of law as one continuous act. In such cases each part has therefore an important relation to the whole, and may throw light upon the entire transaction.^ Thus where sundry notes of like character were obtained from different persons by a series of fraudulent acts, the whole being done under a conspiracy to defraud all who could be imposed upon, it was held that, for the purpose of proving the fraud in regard to one of the notes, evidence was admissible of the fraudulent practices in procuring the otliers.* Further the law treats the case among the conspirators as a virtual agency, of a limited nature, arising ex maleficio ; 1 Edwards v. "Warner, 35 Conn. 517 ; ' Knotwell v. Blanchard, 41 Conn. Gardner v. Pre.ston, 2 Day, 205. 614 ; Hoxie v. Home Ins. Co., 32 Conn. 2 Place V. Minster, 65 K. Y. 89 ; 21 ; Edwards v. Warner, 35 Conn. Hutchins v. Hutchins, 7 Hill, 104 ; 517. Kimball v. Harman, 34 Md. 407 ; Parker * Knotwell ». Blanchard, supra. X.. Huntington, 2 Gray, 124. § 6.] EVIDENCE. 167 and hence, upon the charge of a combination to defraud, the declarations of each of the parties to such combination, relat- ing thereto, are evidence against the others, though made in the absence of the latter; provided the parties were at the time of the declarations engaged in the furtherance of the common design.^ If made after the consummation of the en- terprise, the declarations would be admissible only against those who made them or authorized them to be made.^ But the party must, generally speaking, first prove a fraudulent combination to deceive and defraud him. In the absence of conspiracy or combination the acts or declarations of any of the alleged joint tort-feasors are inadmissible against the others.^ Slight evidence however of collusion or concert* is suffi- cient to let in the declarations of one of the parties as evi- dence against all, though not made in the presence of the others ; ^ but there must be some evidence of the combination. Such may be infeiTed for example from the relation and con- duct of the parties, and the circumstances surrounding them.^ Thus where a coal merchant replenished his yard with coal purchased on credit, and immediately transferred the property 1 Lincoln v. Claflin, 7 Wall. 132 ; * The conspiracy need not he estab- Jenne v. Joslyn, 41 Vt. 478 ; Harrison lished by direct evidence ; circumstan- V. Wisdom, 7 Heisk. 99 ; Sweat v. tial evidence may be received. Dayton Rogers, 6 Heisk. 117 ; Strady o. State, u. Moore, 47 Mich. 193. Evidence that 5 Cold. 300 ; Burns v. McCabe, 72 at an auction sale there were three bid- Penn. St. 309 ; McCabe v. Burns, 66 ders, and that they did not bid against Penn. St. 356 ; Wolfe v. Pugh, 101 each other is not enough to establish a Ind. 293 ; Loeb v. Flash, 65 Ala. 526. fraudulent combination among them. Perhaps if the declarations of one are Berson v. Jones, 59 Iowa, 166. made soon after the transactions, they ' Rogers v. Hall, 4 Watts, 359 ; are admissible against his fellows. See Price v. Junkin, ib. 85. McCaskey v. Graff, 23 Penn. St. 321 ; ^ McDowel v. Bissell, 37 Penn. St. Helser v. MoGrath, 58 Penn. St. 458. 164. Evidence of the declarations of - Ib. one of several conspirators may be given 8 Brinkley v. Piatt, 40 Md. 529 ; before proof of the conspiracy, if con- Kimball v. Harman, 34 Md. 407 ; Hel- ditional upon proving the conspiracy ser V. McGrath, 58 Penn. St. 458 ; afterwards. Place v. Minster, 65 N. Y. Wolfe V. Pugh, 101 Ind. 293. 89. 168 ADJECTIVE LAW OP FRAUD. [CHAP. X. to his broker at a greatly inadequate price and absconded, this was considered sufficient evidence of collusion between the parties to make the acts and declarations of one evidence against the other.^ Evidence that parties holding under a deed sought to be cancelled for fraud knew that the agent who made the deed intended to defraud his principal, is admissible to prove connivance and confederation on their part.2 So evidence that a defendant proposed to participate with others in a series of frauds of the same character as the one in suit will justify the finding that such defendant is one of the conspirators.^ So also subsequent acts of the alleged conspirators may be evidence against such parties to show conspiracy.* In a suit by a creditor of a firm in which the partnership relation of one of the defendants is denied, it is not compe- tent for him to prove a combination of two of the admitted partners to suborn witnesses against himself, unless there be evidence that the other was engaged in the combination.^ On the other hand the declarations of one of two partners, joint defendants, made after a dissolution of the firm, are evidence against both in regard to any contract made before dissolution, whether the other partner be present or not.® The principle indeed extends so far as to embrace evidence of the declara- tions of one partner to bind the firm for frauds committed by him in the course of the partnership business, even when the other partner had not the slightest connection with or knowl- edge of the fraud.^ It has been expressly adjudged that 1 Kelsey v. Murphy, 26 Penn. St. is sufficient to authorize a verdict against 78. them all for the damages sustained 2 Gihsou V. Fifer, 21 Tex. 783. though there be no proof that they all 3 Dayton v. Moore, 47 Mich. 193. participated in the profits of the fraud. * Salmon v. Richardson, 30 Conn. Jernegau v. Wainer, 12 Tex. 189. 360. 6 Pierce v. Wood, 23 N. H. 519 j 6 Batdorff v. Bank of Beading, 61 Mann v. Locke, 11 N. H. 246. Penn. St. 179. But evidence that two ' Pierce v. Wood, supra j Story, or more persons conspired to commit a Part. § 108. fraud upon another, and did commit it, § 7.] EVIDENCE. 169 where A and B, partners in trade, made a compromise of their debts, and transferred their property to pay a certain per cent thereon upon being discharged from paying the balance, and at tlie same time agreed that any fraudulent representation or concealment of property should revive the claim for the balance, and during the negotiation one of the partners, without the knowledge of the other, made state- ments relative to some of the property conveyed, tending to show fraud, evidence of such statements was admissible in an action against both partners for the balance.^ § 7. Declarations op Defendant or his Predecessor.^ When in the course of an action it is necessary to inquire into the nature of a particular act, and the intention of the person who did it, proof of what was said by such person at the time of doing the act is admissible for the purpose of showing its true character.^ The declarations of the vendor of property made before the sale, and tending to prove fraud on his part, are admissible in evidence in favor of the pur- chaser.* Conversations and negotiations, prior and leading to a contract, are evidence also to prove fraud ; but there should be clear evidence that the transaction continued to the time of entering into the contract.^ It is however held that in an action to recover the amount of money received by the defendant upon a contract obtained through his misrepresen- tations, the repetition of the false statements made after the date of the contract is competent evidence of the defendant's bad faith from the beginning.^ Acts or declarations of a vendor, in disparagement of his 1 Pierce ii. Wood, 23 N. H. 519. < Fisher v. True, 38 Maine, 534 ; 2 As to declarations of testators, see Howe v. Reed, 3 Fairf. 515. post, pp. 188-190. 6 McGinty v. McGinty, 63 Penn. St. 3 Curtis V. Moore, 20 Md. 93 ; Kalb 38. V. Whitely, 3 Gill & J. 188 ; McDowell ' Cuinmings v. Cummings, 5 Watts V. Goldsmith, 6 Md. 329. & S. 553. 170 ADJECTIVE LAW OP FRAUD. [chap. X. vendee's title, are not admissible in evidence, generally speak- ing, except against the vendor himself ^ and his privies in right,^ if made after and unconnected with the conveyance ; ^ otherwise if they were before, at the time of, or in connection with the conveyance,* unless the purchase was for value and without notice.^ Two or three illustrations may be given. In an action by mortgagees of chattels for seizure, of the same on execution against the mortgagor, the defendant offered to prove that about a month after the mortgage to the plaintiffs the mortgagor, while in possession, but without tlie knowledge or privity of the plaintiffs, executed other mortgages, upon the same property to others, which were fraudulent towards his creditors. The evidence was not admitted ; and the re- fusal was now sustained. The rule contended for by the de- fendants would, the court well declared, place it in the power 1 'Wadsworth v. Williams, 100 Mass. 126 ; Adams v. Davidson, 10 N. Y. 309. See Salmon v. Kichardson, 30 Conn. 360. ' Hence they are not admissible against a personal representative or an as- signee (see Cuyleri). McCartney, 40 N.Y. 221, infra) suing on behalf of creditors, for the party is not in that ease a privy in right of the vendor ; seous if the suit or claim is on behalf of the vendor's estate as property of his heirs and dis- tributees, including in the latter term devisees and legatees. 3 Chase v. Horton, 143 Mass. 118 ; Stockwell li. Blarney, 129 Mass. 312 ; Lincoln v. Wilbur, 125 Mass. 249 ; Sweetser v. Bates, 117 Mass. 126 ; Hol- brook V. Holbrook, 113 Mass. 74 ; Tay- lor V. Robinson, 2 Allen, S62 ; Wil- liams V. Robbins, 15 Gray, 590 ; Gates V. Mowry, lb. 564 ; Aldrich v. Earle, 13 Gray, 578 ; Bridge i>. Eggleston, 14 Mass. 245, 249 (leading case) ; Cuyler v. McCartney, 40 N. Y. 221 ; Ford v. Wil- liams, 13 N. Y. 577 ; Hartman v. Diller, 62 Penn. St. 37 ; Ohio Coal Co. o. Davenport, 37 Ohio St. 194 ; MeSween u. McCown, 23 S. C. 342 ; Carney v. Carney, 7 Baxt. 284 ; Carnahan v. Wood, 2 Swan, 502 ; Hiuson v. Walker, 65 Tex. 103 ; Winchester Manuf. Co. v. Creary, 116, U. S. 161 ; Stepheson v. Hawkins, 67 Cal. 106. * Taylor v. Robinson, 2 Allen, 562 ; Horn V. Brooks, 61 Penn. St. 407 ; Black V. Bayless, 86 K. C. 527 ; Hin- son V. Walker, 65 Tex. 103 ; McKinnoh ■u. Reliance Lumber Co., 63 Tex. 30. Of course after it appears that the purchase was a purchase for value with- out notice, evidence of acts or admis- sions by the vendor before sale, as well as after, would be inadmissible against the purchaser. MoElfatrick «. Hicks, 21 Penn. St. 402 ; Moses v. Dunham, 71 Ala. 173. But to determine the prior question of fraud on the part of the vendor, and so to raise a presump- tion against the purchaser, the evidence would be proper. That is the meaning of the text. s McElfatrick i>. Hicks, 21 Penn. St. 402. § 7.] EVIDENCE. 171 of a debtor, after having given a security in good faith for an honest debt, to create evidence by his own act in destruction of it, witliout fault of the creditor.^ Upon the same principle it is laid down that after the exe- cution and delivery of an assignment for the benefit of credi- tors, and the entry of the trustees upon the performance of the trust, by taking possession of the assigned property, the assignor cannot by his acts or admissions out of court invali- date the assignment or furnish evidence of his own or the trustees' fraudulent conduct in making or receiving it, for the purpose of defeating the claim of the trustees to hold and administer the property according to the trust.''^ The rule is not different, according to the weight of author- ity, though the vendor of realty was in possession at the time of the subsequent acts or declarations,^ except perhaps in the case of a judicial sale.* Nor is it material whether the ques- tion is raised by subsequent or by existing creditors, where it is a fraud upon creditors,^ or whether the conveyance was made to a stranger in blood, to a child of the vendor, or to the vendor's wife.^ Indeed it matters not that the person doing the acts or making the declarations had never been owner of the property, but had caused the conveyance to be made directly from the late to the present owner.^ Thus, in the case cited, which was a writ of entry, the defendant's hus- band had bought land, which he had had the grantor convey directly to the defendant. The plaintiff's case was that the conveyance had been made in fraud of creditors ; and decla- rations of the husband,, after the conveyance, were offered 1 Ford V. Williams, 13 N. Y. 577. * Woodley v. Hassell, 94 N. C. 157 ; 2 Cuylerr. McCartney, 40 N.Y. 221. infra, p.'l73. s Ford V. Williams, 13 N. Y. 677 ; * Winchester v. Charter, 97 Mass. Sweetser v. Bates, 117 Mass. 466. Con- 140. tra, Richardson v. Mounce, 19 S. C. 477 « Aldrich v. Earle, 13 Gray, 578. (judicial sale ; see infra, p. 173) ; Car- ' Holbrook v. Holbrook, 113 Mass. ney v. Carney, 7 Baxt. 284 ; Camahan 74. V. Wood, 2 Swan, 500, 503. 172 ADJECTIVE LAW OF FRAUD. [CHAP. X. in evidence to show the fraud. The plaintiff claimed that the rule in regard to declarations of a grantor did not apply to such a case ; but the court held the contrary. The rule in question applies also to cases of loan as well as of sale.^ But while a vendor of realty may not, while in possession, after conveyance disparage the title made, the case of a vendor of personalty in the same situation is held to be different. The title to a chattel may pass without any written grant ; delivery is enough, and the possession of the chattel is of it- self, if uncontrolled by evidence, sufficient to prove title in him who has the possession. Hence it is laid down that ' if the seller retain possession, his acts and declarations accom- panying that possession and giving character to it, are often competent.' ^ The rule too excluding evidence of the subsequent acts or declarations of a grantor of realty has some important quali- fications. It does not hold where it appears that grantor and grantee were colluding or conspiring to defraud others.^ Thus in a case cited * successive conveyances in close connec- tion had been made by the grantor to the same grantee, de- fendant in the action ; and to show that one of these was fraudulent the later ones, which were fraudulent, were offered in evidence and held admissible. The question, the court said, was reduced to this, whether evidence of a later fraudulent act could be evidence of a prior fraudulent intent ; and the court thought it could be, where as in the present case the several acts were to be considered merely as parts of one 1 Hinson v. Walker, 65 Tex. 103. i>. McCartney, 40 N. Y. 221 ; Hartman 2 Roberts v. Medbury, 132 Mass. v. Diller, 62 Penn. St. 37 ; Deakers «. 100, Lord, J. citing Babb v. Clemson, Temple, ,41 Penn. St. 234. The con- 10 Serg. & E. 419 ; Willins v. Farley, versations of those who are charged as 3 Car. & P. 395 ; Helfrich u. Stern, 17 the perpetrators of the fraud are admis- Penn. St. 143. sible if the conversations accompany and * Jones V. Simpson, 116 U. S. 609 ; explain the fraudulent acts. Davis v. Lynde v. McGregor, 13 Allen, 172 ; Council, 92 N. C. 725. O'NeU 11. Glover, 5 Gray, 144 ; Cuyler * Lynde v. McGregor, supra. § 7.] EVIDENCE. 173 transaction.^ The case would have been different if the im- peached transaction had been distinct and separate from the rest.^ It has also been held that the acts and declarations of a judgment debtor remaining in possession of land, after it has been sold on execution and a sheriff's deed executed, are admissible to show an agreement between himself and the purchaser at the sale to defraud his creditors.^ But the soundness of any distinction between judicial and private sales on this point may be doubted ; though true it is that there is a distinction between the two in regard to the effect of subsequent possession upon the question of fraud in the sale. A judicial sale however is not affected by the vendor's remaining in possession ; * hence a fortiori his acts or decla- rations after conveyance in such a case should not prejudice the purchaser. Evidence that a vendor of property made statements to a third person, subsequently to the sale, at variance with his representations to the purchaser made at the time of the sale, is admissible, as tending to show that he knew such represen- tations to be false when he made them.® On the other hand evidence of the declarations of a grantor of a deed alleged by him to have been procured by fraud and never delivered, may be received to rebut evidence tending to sustain the charge.® So proof of subsequent declarations and acts of the donor in a deed of gift, though inadmissible taken singly, may be received under total absence of testimony applying to the time of the contract, in connection with corroborating circumstances, to show that the nature of the writing was misunderstood or misrepresented at the time of the signature.'^ The declara- 1 Williams ». Kobbins, 15 Gray, 590. * Mead u Conroe, 113 Perni. St. 2 lb. 220. 8 Woodley r. Hassell, 94 N. Car. ' Jones v. Hopkins, 32 Iowa, 503. 157 ; Hilliard v. Phillips, 81 N. Car. « Little v. Gibson, 39 N. H. 505. 99 ; Richardson v. Mounce, 19 S. C. ' Clay v. Williams, 2 Munf. 108. 477. 174 ADJECTIVE LAW OF FRAUD. [CHAP. X. . tions of a party charged with fraud, when they are not part of the res gestae but explanatory only of some concomitant act, are inadmissible against him.^ Statements of the present grantee, made before he acquired title, may be evidence to show how he acquired the same. The plaintiff brought an action for the conversion of a horse ; the defendant, an oificer, justifying under a writ in favor of C. B. against the plaintiff's vendor. The defendant, to prove the sale fraudulent, offered the evidence of C. B. to show that the plaintiff had said, before the sale, that he, C. B., should never recover any property of the vendor if the plaintiff could help it by any means in his power ; and the evidence was held competent. One of the most obvious means of hindering C. B. from getting such property was by having it conveyed to the plaintiff.^ § 8. Parol Evidence. Parol evidence, when very clear ,3 is admissible to contradict the terms of a written contract, in cases where the contract was obtained by fraud.* Thus if the vendor of property should verbally agree with the purchaser to remit in the purchase price a sum due by the purchaser to a relative of the vendor, and thereby induce a purchase, the vendor could not afterwards insist upon payment for the full price of the property as stated in the written contract of sale, on the ground that parol evi- dence could not be received to vary the terms of the writing.^ So where an agreement is to the effect that ' for no consid- eration' the obligor undertakes certain things, the obligee 1 United States v. Mertz, 2 Watts, Cozzins v. Whittaker, 3 Stewt. & P. 406. 322 ; Meiley v. Butler, 26 Ohio St. 535 ; ^ Foster v. Thompson, 5 Gray, 453. Tabor v. Peters, 74 Ala. 90 ; Carvill v. ' Parlin v. Small, 68 Maine, 290 ; Jacks, 43 Ark. 439 ; Hines v. Driver, Brown v. Hunt, 72 Maine, 415 ; Cannon 72 Ind. 125. V. Jackson, 40 Ark. 417. * Meiley v. Butler, 26 Ohio St. 535. * Hare v. Shearwood, 1 Ves. Jr. 241 ; § 8.] EvroENCE. 175 may prove a consideration by parol, where the terms of the obligation, in connection with the evidence, show a deliberate design on the part of the obligor to defraud and overreach the obligee ; and this too though the obligee observed the words in question at the time the agreement was drawn, and signed the contract after objection.^ Though there be a written contract between the parties, this, at least if the contract be not under seal, does not pre- clude parol proof of fraudulent representations made at the same time as an inducement to making it ; ^ and this whether the representations relate technically to the execution of the contract, so that non est factum could be pleaded at law,^ or not.* And where there is nothing in a written contract of a peculiar character, requiring its production as the best evidence of the matter in issue, parol evidence of fraud in the transac- tion may be given, without producing the writing upon notice to do so.^ So too notice to the opposite party to produce an original paper which he has obtained by fraud is unnecessary for the sake of laying ground for introducing secondary evi- dence of its contents.*' In an action for deceit, in giving a false credit in the sale of- goods, the plaintiff may prove the ■■ Young V. Young, 19 Tex. 504. is more authority for such a rule at law 2 Prentiss v. Russ, 16 Maine, 30 ; if the contract he under seal. George Kimball v. ^Etnalns. Co., 9 Allen, 540 ; v. Tate, 102 U. S. 564 ; Irving v. Hum- Eace V. Weston, 86 111. 91 ; Match v. phrey, 1 Hopk. 284. But even this is Hunt, 38 Mich. 1 ; Childs v. Dobbins, misconceived. See ante, pp. 53, 78. 61 Iowa, 109 ; Optical Co. v. Jackson, But of course a defendant cannot plead 63 Miss. 21 ; Goodwin v. Home, 60 fraud as a defence and repudiation of a N. H. 485. contract and at the same time retain the * As in Biederman v. O'Connor, 117 fruits of it. That would be to rescind 111. 493, and Foster v. Mackinnon, L. E. without restoration. See ante, pp. 79, 4 C. P. 704. 80. * As in Race v. "Weston, 86 111. 91, ^ Condict v. Brown, 21 Tex. 421. and most other cases. It is an entire ' Neally v. Greenough, 25 N. H. mistake to say, with one or two late 325 ; Davis v. Spooner, 3 Pick. 284 cases, that the fraud must relate to the Doe d. Pearson u. Eies, 7 Bing. 724 execution of the contract. Mitchell v. Edington v. Nixon, 2 Bing. N. 0. 324 Universal Life Ins. Co., 54 Ga. 289 ; People v. Holbrook, 13 Johns. 90. Angier v. Brewster, 69 Ga. 362. There 176 ADJECTIVE LAW OP FRAUD. [CHAP. X. sale and delivery of the goods, and the indebtedness of the purchaser, without producing the notes given by him for the payment of the goods. If the defendant would show that the credit given upon the notes had not expired, he should give notice to produce them.^ Nor does the rule which excludes parol evidence to vary or add to the terms of a written contract apply to the case of a fraudulent 2 promise by the vendor of land to do some further act for the improvement of the premises after the sale. If the act agreed to be done be a material part of the inducement to purchase, the failure to perform it will afford the purchaser ground for rescission of the contract.^ A deed absolute may be shown in equity to have been intended as a mortgage.* Still to set aside a solemn instru- ment between parties, and convert it into an obligation of different import on the ground of fraud, the evidence must relate to what occurred at the execution of the instrument, and should be clear and precise.^ And where a deed is attacked as fraudulent, there should be other evidence of consideration than the recitals in it.® A resulting trust in lands may be proved by parol, as by the admissions or dec- larations of the purchaser ; '^ but the evidence should be clear and unequivocal, and not merely preponderating. There should be no room for reasonable doubt concerning the facts.^ Where there has been a long lapse of time, and the parties 1 Wyman v. Rae, 11 Gill & J. 416. « Whitaker v. Gamett, 3 Bush, 2 Unless the promise were fraudulent, 402. it would appear to be necessary to show ' Lloyd v. Carter, 17 Penn. St. 216 ; that the undertaking was a condition. Byers v. Wacknaan, 16 Ohio St. 440 ; 8 Donelson v. Weakley, 3 Yerg. 178. Nelson v. Worrall, 20 Iowa, 470. * McDonough e. O'Niel, 113 Mass. 8 Johnson v. Quarles, 46 Mo. 423 ; 92 ; Campbell v. Dearborn, 109 Mass. Baker ». Vining, 30 Maine, 120 ; Malin 130. V. Malin, 1 Wend. 625 ; Sewall v. Bax- 6 Stine V. Sherk, 1 Watts & S. 195 ; ter, 2 Md. Ch. 447 ; Hollida v. Shoop, Cannon v. Jackson, 40 Ark. 417 ; Par- 4 Md. 465 ; Boyd v. McLane, 1 Johns, lin V. Small, 68 Maine, 290 ; Brown v. Ch, 582 ; Enos v. Hunter, 9 111. 211. Hunt, 72 Maine, 415. § 8. J EVIDENCE. 177 have died since the transaction in question, the case should be looked upon with suspicion, and the trust allowed only upon the most satisfactory evidence.^ If a corporation file a bill, alleging that certain acts were done by committees thereof, whereby a resulting trust in cer- tain land, conveyed to a third party, arose in favor of the cor- poration, it cannot prove the authority of the committees to act therefor, by parol evidence. Their power to act can be shown only by the corporation records.^ Where a bill seeks to convert a purchaser of property at auction into a trustee for the plaintiff, upon the ground that the purchase was made with the money of the plaintiff, and as his agent, the legal title having been made to the purchaser, mere parol proof that the purchaser admitted the trust will not, it is held in North Carolina, be sufficient to entitle the plaintiff to relief. There must be corroborating evidence of facts and circumstances dehors the deed inconsistent with an absolute purchase for the defendant.^ And where the facts and circumstances relied upon as corroborating the evidence of the purchaser's declarations are unsatisfactory, and sus- ceptible of various and contradictory conclusions, some of which are consistent with the defendant's claim, they will be deemed insufficient to establish the trust.* Another case in which parol evidence is admissible to affect the terms of a writing on grounds of fraud arises where the object of the evidence is to establish a secret trust in favor of the vendor of property, and thus to show that the sale was made in fraud of creditors or of subsequent purchasers.^ An illustration may be given from Massachusetts.® The case cited was a writ of entry to recover land alleged to have been conveyed to the tenants in fraud of the creditors of the grantor. 1 Nelson v. Worrall, 20 Iowa, 470. * Clement v. Clement, supra. 2 Meth. Chapel Coip. v. Herriok, 25 ^ Eice v. Cunningham^ 116 Mass. Maine, 354. 466 ; Lukiiis v. Aird, 6 Wall. 78 ; 8 Clement v. Clement, 1 Jones, Eq. Coolidge v. Melvin, 42 N. H. 510. 184 ; Briggs v. Morris, Ih. 193. •■ Rice v. Cunningham, supra. 12 178 ADJECTIVE LAW OF FEAUD. [CHAP. X. The plaintiff had obtained judgment against the grantor, levied upon the land, and bought it at sheriff's sale. The debtor's deed was not recorded for ten months, and the debtor re- mained in possession, exercising acts of ownership. Besides all this there was evidence of an oral promise by the defend- ant to support his grantor ; but the judge instructed the jury- that a mere personal promise of this kind would not create what is known as a secret trust ; the promise must attach it- self in some way to the land and carry an obligation to hold, manage, or dispose of the land for the purpose named.i This instruction was held confusing and improper. It was declared that a secret trust, created for the purpose of defeating or delaying creditors, was always provable by parol, and when so proved rendered inoperative the transaction to which it was annexed.^ If there was in fact any such trust, it was a mat- ter of no consequence how it was created or expressed. ' If a debtor in failing circumstances makes a conveyance of his property purporting on its face to be absolute and without reservation, and at the same time there is a concealed agree- ment between the parties to it, inconsistent with its terms, intended to secure a benefit or advantage to the grantor at the expense of those whom he owes, a trust thus secretly created is a fraud upon creditors because it places the right of possession beyond their reach.' '^ The Statute of Frauds cannot be set up as a defence to an action for fraud, whereby a vendor deceived an ignorant pur- chaser into the belief that he was buying Blackacre, when in fact Whiteacre was conveyed. In all such cases the buyer may disregard the written instrument of conveyance, and sue directly for the fraud.* 1 In some states agreements for sup- 2 Citing Hills v. Eliot, 12 Mass. 26, port though secret are treated as making 31. a valuable consideration, rather than as ' Rice v. Cunningham, supra, Ames, amounting to a secret and unlawful J. trust. * Ochsenkehl v. Jeffers, 32 Mich. 482. § 9.] EVIDENCE. 179 § 9. Variance. Allegata et Probata. Parties must stand upon the case made by their pleadings ; they cannot depart from them to new ground, or add new ground to them, when they come to taking evidence.^ Ac- cordingly where no allegation of misrepresentation is made by a party, he cannot show misrepresentation at the trial.^ So in general where a case is based on fraud, the fraud must be proved, and no relief can be given on any different ground.* But the obtaining property for example, or any benefit, through the undue and unconscientious abuse of influence by a person in whom trust and confidence are placed, is treated as fraud of the gravest character ; and if such frauds are alleged and proved, the allegation that they were parts of a scheme early conceived and deliberately carried out, whether it be made out or not, is of no consequence in such a suit. ' If a man robs his fellow-traveller, and is indicted for so doing, the allegation that he became the companion of his victim with a preconceived design to rob him is wholly immaterial.' * In accordance with the above-stated rule of law, it is gen- erally held that an allegation of actual fraud is not sustained by proof of mistake ; ^ nor would an allegation of fraud be 1 Jewett V. Bowman, 29 N. J. Eq. or where fraud is alleged only as a con- 274 ; Dowden v. Wilson, 108 111. 257. sequence of acts stated, which are suf- See Jackson v. Collins, 39 Mich. 557 ; ficient even as showing nothing hut Collins V, Jackson, 54 Mich. 186. mistake to justify relief, it seems clear 2 lb. that evidence of the facts may be shown ; 3 Salisbury v. Howe, 87 N. Y. 128. for the case is not one of real fraud. On * Moxou V. Payne, L. E. 8 Ch. 881, the other hand if the case is founded James, L. J. on actual fraud, that must be proved. * Mercier v. Lewis, 39 Cal. 532 ; And the fraud alleged must be proved ; Salisbury o. Howe, supra ; McMichael other fraud will not answer. Jackson V. Kilmer, 76 N. Y. 36 ; Barnes v. v. Collins, 39 Mich. 557 ; Collins v. Quigley, 69 N. Y. 265 ; Dudley v. Jackson, 54 Mich. 186. See also Jones Scranton, 57 N. Y. 424 ; Ross v. v. Kemp, 49 Mich. 9. See Pierce v. Mather, 51 N. Y. 108 ; Elwood u. Brassfield, 9 Ala. 573. But see Mont- Gardner, 45 N. Y. 349. Where how- gomery v. Shookey, 37 Iowa, 107. ever only a constructive fraud is alleged, 180 ADJECTIVE LAW OP FRAUD. [CHAP. X. sustained by evidence of a conversion.' So where the gist of an action is a false and fraudulent representation made by the defendant in the course of negotiations, as an inducement to a contract, the plaintiff will have to prove that the defend- ant knew the representation to be false when he made it, or the equivalent.^ And this is not established by showing that, though the defendant believed it to be true when he made it, yet after the negotiations were concluded, and had been merged in a written contract without warranty, he ascer- tained it to be false, and neglected to communicate his knowl- edge to the plaintiff.^ Nor is a declaration, which alleges that the representations made were well known by the de- fendant to be untrue, supported by proof that the defendant had reasonable cause to believe that they were untrue.* But proof that a false representation was made to the plaintiff scienter is proof of a fraudulent intention in an action for deceit, and probably in any other action ; evidence that no fraud was intended will not be heard, after such proof.® In an action by a seller to recover damages sustained by means of a sale induced by the fraud of the purchaser's agent, evidence that the purchaser afterwards sold the property for less than the price at which the seller sold it, and less than the market value, is admissible as tending to show knowledge, on the purchaser's part, of the fraud, and participation in it.^ And evidence of designed partial statements which deceive, and concealment of facts, such as to make those declared 1 Burnham v. Noyes, 125 Mass. * Pearson v. Howe, 1 Allen, 207 ; 85. See also Frost v. Gage, 50 Allen, Salisbury v. Howe, 87 N. Y. 128. 60. 6 Cowley v. Smyth, 46 N. J. 381 ; ^ Litchfield t». Hutchinson, 117 Mass. Hine v. Campion, 7 Ch. D. 344 (C. A.) ; 195, proof of statement made as of the Wilde v. Gibson, 1 H. L. Caa. 605, 633 ; party's own knowledge equivalent, the Foster v. Charles, 6 Bing. 396 ; s. c. 7 statementbeingfalse, to proof of scienter. Bing. 105 ; Polhill v. Walter, 3 Barn. Infra, p. 185. & Ad. 114 ; Mylnes v. Manwood, 15 C. » Pettigrew v. Chellis, 41 N. H. 95 ; B. 778. Page V. Parker, 40 N. H. 47 ; s. c. 43 « Packer v. Lockman, 115 Mass. 72. N. H. 363. See Circumstantial Evidence, supra. § 9.] EVIDENCE. 181 partial and misleading, is admissible under a charge of fraud- ulent misrepresentations.^ An allegation of fraudulent representations in an action of deceit is not supported by evidence of mere breach of war- ranty, though the plaintiff might have maintained an action in the latter form.^ This is true under the Code of New York, at least so far as the damages claimed are distinct from the damages arising by reason of the breach ; ^ and at common law it is apprehended that it is true in all cases. And in general if the form of action be ex delicto, evidence of a right of action in contract cannot be received.* Nor is it enough in support of a plea of fraud to show that the transaction was in contravention of some statute, such as the statute against usury. It must be shown that some con- cealment or other fraud was practised with respect to the particular transaction.^ Indeed an allegation of actual fraud is not supported by evidence of acts or conduct short of presumptive fraud, even though the same be illegal. This deserves illustration, though it appears to be only a special phase of the general rule that a party must rest upon the case which he makes. Indeed it could hardly be contended that anything (as e. g. mistake^ or slight circumstances of suspicion '') short of fraud of some accepted kind would be enough for the purpose; the only contention would be that proof of some wrongful conduct, or something like fraud, would beget a probability that the fraud alleged had been committed, so as to require the opposite party to meet the case. That however is not true. In a recent case ^ the plaintiff 1 Kenyon v. Woodruff, 33 Mich. 310. Barnes v. Quigley, 59 N. Y. 265 ; Ross 2 Cooper V. Landon, 102 Mass. 58 ; v. Mather, 51 N. Y. 108 ; Elwood -d, Mahurin v. Harding, 28 N. H. 128. Gardner, 45 N. Y. 349. Reason to he- ' Graves v. Waite, 59 N. Y. 156. lieve one's own representation false may * Barnes v. Quigley, lb. 265. he shown with other facts as tetiding to * Green v. Gosden, 3 Man. & G. 446. prove fraud. Salisbury v. Howe, supra. « Salisbury v. Howe, 87 N. Y. 128 ; ' Mead v. Conroe, 113 Penn. 220. McMichael v. Kilmer, 76 N. Y. 36 ; ^ Burnham v. Koyes, 125 Mass. 85. 182 ADJECTIVE LAW OS' FKAUD. [CHAP. X. brought an action for the conversion of a check, against the drawer, who answered a discharge in bankruptcy. The decla- ration alleged that the defendant had obtained possession of the check from the plaintiff by the fraudulent representation that he wished to examine it, which representation he had made with intent to cheat and defraud the plaintiff, and that having thus obtained possession of the instrument, he kept and converted it to his own use. The court held that the burden rested upon the plaintiff to establish fraud, and that it was wrong in the judge at the trial to instruct the jury that if the defendant did any acts in relation to suppressing and retaining the check, which were unlawful, no presumption thereafter existed that he was innocent of wrongful intention in getting possession of the check, and that, in that case, the burden was upon the defendant to prove the honesty of his conduct, and that he believed that he had a right to the check. In other words it was not enough for the plaintiff to prove a conversion or other wrongful act short of fraud. The same principle appears in those cases in which a de- fendant, on grounds of public policy, is permitted to set up his own participation in fraud.^ The plaintiff in a Massachu- setts case brought an action of contract against an assignee in insolvency to recover a dividend upon his debt, the plain- tiff being one of the creditors of the insolvent. The defence was a secret agreement between the parties, unknown to other creditors, whereby the plaintiff was not to claim any proceeds of the estate if the defendant would sign a release and pro cure others to do so, which the defendant had done. The court held that it was for the defendant to prove all these facts. Mere proof that an agreement was entered into to pay the plaintiff the whole amount of his debt would not show that it was fraudulent or raise any presumption that it was secret.^ Indeed it has been declared, on behalf of a defendant alleg- 1 Chap. 1, § 3, post. '■' Frost v. Gage, 6 Allen, 50. § 9.] EVIDENCE. 183 ing fraud in a sale to the plaintiff, that the allegation is not sustained by evidence of (prima facie) badges of fraud.^ The proposition, so broadly stated, may be doubted, unless there is ground for a distinction between the situation of the plain- tiff and that of the defendant in regard to allegations of fraud ; wliich can hardly be true in principle and is not suggested by the authorities. The case criticised was replevin of property attached by the defendant, a constable, upon a writ against J. U. It appeared that U., being insolvent, had conveyed and delivered the property in question to the plaintiff one of his creditors, who immediately gave back possession to U. Sales of the property were now made by the latter, who accounted therefor to the plaintiff ; finally the plaintiff gave U. certain of the property. The judge at the trial instructed the jury that. ' if the defendant relied upon fraud to invalidate ' the alleged sale, ' it was incumbent on the defendant to prove such fraud.' He was then requested to instruct the jury that the transactions stated ' were badges of fraud, or indications that at best the transaction was for security, and not an absolute sale,' and that in either case they should find for the defendant. But the instruction given was that ' all the facts relied on by the defendant . . . unless satisfactorily explained, were evidence of fraud,' and that if the transac- tion was only a mortgage or security, it was void towards the defendant. The Supreme Court held that the defendant had no ground for exception ; saying inter alia that ' the burden was upon him to prove fraud, and his counsel cannot main- tain the position which they take, that this burden was shifted by proof of badges of fraud.' This proposition in regard to badges of fraud is true enough; such will not shift the burden of proof. ^ But the 1 Allen V. Wheeler, 4 Gray, 123, a presumption changing the burden of 127, Metcalf, J. citing Powers v. Eus- proof. See e. g. Welcker v. Price, 2 sell, 13 Pick. 69 ; which in no way sus- Lea, 666 ; Spence v. Dunlap, 6 Lea, tains the proposition. 457. The burden of proof remains ^ It is a common mistake to speak of where it was notwithstanding the pre- 184 ADJECTIVE LAW OP FKAUD. [CHAP. X. proper question should liave been, will they not sustain the burden? It is not clear that the instructions given were wrong, for the evidence perhaps fell short of showing any badge of fraud ; and it may be true too that some badges of fraud might be too slight to raise a prima facie case of fraud. i If the Supreme Court meant more than that, as its language may mean, the ruling is open to criticism. It is clear that some badges of fraud are sufficient to sus- tain an allegation of that offence, even where such badges are not conclusive. Thus it has been declared at law and repeated in equity that the unexplained fact that a partnership security has been received from one of the partners in discharge of a separate claim against himself is ' a badge of fraud or of such negligence as amounts to fraud,' making it incumbent upon the party taking the security to remove the effect ; ^ and many more examples could be given. But what is enough to con- stitute a badge of fraud in one case may not be enough in an- other. Thus for a vendor in the case of a private sale to remain in possession and management of the property after the sale is a badge of fraud (and in some states conclusive evidence), while the contrary is true if the sale be judicial.^ Indeed strong doubt against a purchaser in a private sale alleged to be in fraud of creditors may be enough to require the purchaser to come to the defence of his case.* sumption, and even if the presumption or a deed with special warranty is prima (alleged hut not proved) be a conclusive facie evidence that the grantee knew of one, unless it is answered by affirmative some defect in the title, allegation, i. e. allegation in avoidance. ^ Leverson i/. Lane, 13 C. B. N. S. 1 See e. g. Thorpe v. Bleavans, 73 278, 282 ; Ex parte Darlington Bank- N. C. 241, conveyance to a relative ; ing Co., 4 De G. J. & S. 581. Williamson v. Williamson, 11 Lea, 355, ^ Mead v. Conroe, 113 Penn. St. 220. conveyance from father to son, in a con- * Clements v. Nicholson, 6 Wall, test with creditors. But conveyance to 299, Swayne, J. citing Piddock v. a relative is only a auspicious circum- Brown, 3 P. Wms. 289 ; Wharton v. stance. See Twyne's Case, 3 Coke, 80 ; May, 5 Ves. 49. But it was a slip in Tucker v. Finch, 66 Wis. 17. It is held the learned judge to say that this turned in Williamson v. Williamson, supra, the burden of proof ; it was only meant that to accept a mere quit-claim deed, that the purchaser must now defend. § 9.] EVIDENCE. 185 III an action for fraud it is not necessary however for the plaintiff to prove all the allegations of his declaration, of the means used by the defendant in doing the act complained of, or the manner of carrying it out, provided sufficient is sliown to constitute a cause of action.^ Thus where it is alleged that a sale was brought about by the defendant's fraud, evidence that the 'transaction resulted in a lease is admissible.^ It is sufficient to prove the substance of the charge of fraud.^ An allegation again that a horse had the glanders at the time of sale, is sustained by evidence that at such time he had the seeds of that disease, which afterwards developed into the perfect disease.* Gross mistake however is not conclusive evidence of fraud.® The cliarge of fraud, as we have said, is not to be proved by evidence of mistake.® Again if the plain- tiff in an action for deceit prove that the misrepresentations were made by the defendant as of his own knowledge, with in- tent to induce the plaintiff to act upon them, he need not go further and show that the defendant knew that they were false. An allegation to that effect not being descriptive, tlie plaintiff may rely upon proof of such other allegations as, without that, would constitute the substantial cause of action.'^ If however pleadings be so framed as to rest a claim for relief solely on the ground of fraud, the plaintiff, failing to establish the fraud, cannot, it is declared, pick out from the allegations of the bill facts which might, if not put forward as proofs of fraud, have yet warranted the plaintiff in asking for 1 Somers v. Richards, 46 Vt. 170 ; the action. Mahurin v. Harding, 28 Packard «. Pratt, 115 Mass. 405. N. H. 128, 131 ; Hughes v. Funston, 2 Packard v. Pratt, 115 Mass. 405. 23 Iowa, 257. 3 Packard v. Pratt, 115 Mass. 405. * 'Woodbury v. Robbins, 10 Gush. Unnecessary allegations need not, as a 520. rule, be proved. Thus the common ^ Leighton v. Grant, 20 Minn. 345. averment of conspiracy in an action of 6 Ante, pp. 179, 181 ; Dudley v. deceit need not be proved. Haywood Scranton, 57 N. Y. 424. V. Draper, 3 Allen, 551. So of an alle- ' Bannister v. Alderman, 111 Mass. gation of a scienter in an action for 261 ; Litchfield v. Hutchinson, 117 breach of warranty in the sale of prop- Mass. 195; Morse v. Dearborn, 109 erty, though proof of it would not defeat Mass. 693. 186 ADJECTIVE LAW OP FEATJD. [CHAP. X. relief. The defendant is not bound to do more than to answer the case as it is put fbrward.^ Yet if relief is asked for in the alternative, either on the ground of fraud, or, failing that, then on some other equity, the plaintiff may fail upon the one but succeed upon the other alternative ; but this is because the defendant's attention has been called to both alternatives. ^ § 10. Peivileged Communications. In the absence of collusion between an attorney and his client in respect of matters of evidence affecting the interests of third persons, documents put into the hands of the attorney by his client, and oral communications made by the client in respect of his legal interests, are privileged ; and the attorney cannot be compelled to divulge them. But if the attorney conspire with his client in concocting a fraud, in respect of which relief is sought by the injured party, there is no such privilege. The courts, it has been aptly observed, will not permit it to be said that the contriving of a fraud forms part of the professional business of an attorney.^ In the case first cited a bill in equity sought relief in respect of alleged fraud ; and it was charged that the defendant Taylor, an annuitant, and his wife, and the defendant Jefferyes, a residuary legatee, with a view to his own interest, and also with a view to the interests of the other residuarj', legatees, took counsel together, and with their respective solicitors, in order to devise some means of defeating the title of the plaintiffs to the annuity. There was a strong charge introduced for the purpose of rais- ing the question of conspiracy and of obtaining discovery. But looking at the whole transaction as stated in the bill and answer, the court held that it was not a fraud, and therefore that the solicitor was not bound to set forth the contents of 1 Salislrary v. Howe, 87 N. Y. 128. ' By Lord Cranworth in Follett ». ^ Hiokaon v. Lombard, L. E. 1 H. L. Jefferyes, 1 Sim. N. s. 1. See Charltou 824. V. Coombes, i Gi£f. 372. § 11.] EVIDENCE. 187 the documents desired. Nor is it enough to break down the privilege, that fraud is made out against the client. There must be a specific charge connecting the attorney with the fraud.^ § 11. Fraud on Testators. When a will is contested on the ground of fraud or undue influence, a very broad range of inquiry is permitted, extend- ing into the whole chain of circumstances attending the pre- paration of the will ; and the transaction must be deemed to embrace all of the immediate preliminaries.^ Thus where a will disinheriting the testator's relatives in favor of his wife and her relatives was impeached for undue influence and want of capacity, it was considered competent to prove the wife's abuse of the husband's relatives, and a quarrel with him about a former will by which he had made provision for them.* Evidence that parties had lived together in adulter- ous intercourse is pertinent as one of several facts to prove the prevalence of undue influence ; but it is doubtful whether by itself it ought to be regarded as conclusive of such in- fluence, in relation to property transactions between them.* Influence properly gained however, though used for a selfish purpose and to obtain an unjust advantage, is not fatal to a party receiving a bounty, provided the gift is of the free act and will of the donor.^ On the trial of issues whether the execution of a will was procured by fraud or undue influence, and whether the will was executed by the testatrix in ignorance of its contents, after the introduction of evidence of a previous condition of 1 Chariton v. Coombes, supra. tinned so that the testator was laboring 2 Beaubien 1). Ciootte, 12 Mich. 459. under it when he made the will, (3) that It is held that an issue whether a will he was by that means induced to make was obtained by fraud should not be it. Longford v. Purdon, I L. R. Ir. 75. submitted to a jury unless there is rea- * lb. sonable evidence (1) that fraud was * Wallace v. Harris, 32 Mich. 380. practised, (2) that its influence con- -^ Howe v. Howe, 99 Mass. 88. 188 ADJECTIVE LAW OF TEAUD. [CHAP. X. her mind, having relation to the disposal of her property, evi- dence of her subsequent acts or declarations is admissible to prove the subsequent existence of that condition, if such acts or declarations are significant of a condition sufficiently per- manent in its nature, and they occurred so soon after the exe- cution of the will as to afford a reasonable inference that such •was then also the condition of her mind.^ But such evidence is inadmissible to prove the actual fact of fraud or undue influence in another.^ So too upon similar issues, in order to rebut any presumption that the will was freely executed which might arise from the fact ttiat the will remained unrevoked for a considerable time, evidence of the testator's subsequent acts or declarations indicating dissatisfaction with or ignorance of the contents of the instrument may be produced.^ The declarations of a testator before and at the time of making his will and afterwards, if so near as to be part of the res gestae, are admissible to show fraud or the absence of it * in obtaining a will. But it is generally otherwise of declara- tions at any distance of time after the will has been executed, especially if the will has been in the testator's possession.^ This is held true of declarations made by the testator only six or eight days after executing the will, where there is no evidence that the will was not in his possession at the time.^ 1 Shaileri). Bumstead, 99 Mass. 112; a legitimate bearing, they are not ad- Davis V. Davis, 123 Mass. 590. See missible. Davis v. Davis, supra. Jackson v. Kniffen, 2 Johns. 31 ; Wat- ^ i\,^ . Provis v. Eeed, 5 Bing. 435 ; erman v. Whitney, 1 Kern. 157 ; Com- Marston v. Koe, 8 Ad. & E. 14. stoeks). Hadlyme Society, 8 Conn. 254 ; ' Shailer v. Bumstead, supra. Robinson v. Hutchinson, 26 Vt. 47 ; * Patton v. Allison, 7 Humph. 320 ; Moritz V. Brough, 16 Serg. & E. 402 ; Adairc. Adair, 30 Ga. 102. See Thomp- McTaggart v. Thompson, 14 Penn. St. son v. Updegraff, 3 W. Va. 629. 149, 154 ; Boylan v. Meeker, 4 Dutch. ^ Smith t7. Fenner, 1 Gall. 170 ; Eich- 274. But see Reel v. Reel, 1 Hawks, ardson v. Richardson, 35 Vt. 238. 248 ; Howell v. Barden, 3 Dev. 442. « Runkle v. Gates, 11 Ind. 95. It If the statements or declarations were seems to be otherwise of subsequent not made so soon after the execution of declarations showing that the will was the will, or so connected with evidence obtained by coercion. Beaubien v. Ci- of the previous state of mind, as to have ootte, 12 Mich. 459. And in North § 11.] EVIDENCE, 189 On the other hand declarations of the testator made even at the distance of ten years prior to the execution of the will, and repeated five years after, have been held admissible to show a fixed purpose to make a will similar to the one in controversy, and to rebut any impression that it was procured fraudulently or by the undue influence of others.^ The rule therefore is not so strict as to require that proof of fraud should be confined to the time of the execution of the will. Still the party offering the evidence of declarations made at another time must show that they are so connected with the act done as to furnish some reasonable ground of inference that the act was influenced in whole or in part by them.^ Thus it was held in the case last cited that no reasonable in- ference adverse to the will in question could be drawn from the mere fact that six years or more before it was executed the testator said he would not make a will, although the exec- utor and his wife were 'harrying' him to do so. Disconnected from proof of intervening persuasion, the declaration of the testator was too remote from the act alleged to have been influenced. Mere parol declarations by a testator of his wishes concern- ing the disposition of his property, whether made contempo- raneously with the execution of the will, or at another time, cannot, in the absence of fraud, be admitted in evidence so as to affect the written will. The testator himself cannot create a valid parol trust in opposition to the terms of his written will ; but whenever the testator is induced by the devisee, Carolina it has been decided that subse- Hester, 4 Dev. 228. Subsequent decla- quent declarations of the testator are rations of the testator tending to show admissible to prove that the will was a deficiency of mental capacity and im- obtained by fraud, without evidence position are admissible. Waterman v. of the connection of the declarations Whitney, 11 N. Y. 157. with the execution of the instrument or ' Roberts v. Trawick, 17 Ala. 55, that the same was not in the possession See O'Neil v. Murray, i Bradf. 311 ; of the decedent. At least, the reports Neel v. Potter, iO Penn. St. 483. are silent upon these two points. How- ^ Bunyard v. MoElroy, 21 Ala. 314. ell V. Harden, 3 Dev. 442 ; Hester v. 190 ADJECTIVE LAW OF FRAUD. [CHAP. X. either by promises or otherwise, to omit from his will a devise which he would have made, had such inducement not been held out to him, there equity (not the testator) raises a trust, and converts the devisee into a trustee for the purpose of compelling him to carry out the intention of the testator, and thus preventing him from perpetrating a fraud by appropri- ating the property to his own use. But equity never raises such a trust except in cases where the devisee in some way, by words or silence, encourages or induces the testator to devise the property to him.^ To avoid a deed for undue influence it must be shown that the influence existed, and that it was exercised for an undue purpose. The former may be inferred from the relation of the parties to each other ; the latter must be determined from the nature and results of the transaction called in question. Both these points must concur to produce the effect of avoid- ance.2 When the question is of fraud and undue influence in procuring the making of a will, evidence is admissible of facts and declarations which tend to show a motive for the use of fraud and undue influence.^ So too the declarations of one who is at the same time executrix and legatee, made before and at the time of the execution of the will, are admissible to show that she exerted an undue influence over the mind of the testator.* Where a will is contested upon the ground of fraud or undue influence, it is permissible to inquire whether the provisions of the will are just and reasonable and consonant with the state of the testator's family relations ; and if they are, that is a circumstance conducing in some degree to establish the capacity of the testator, and the absence of fraud or undue influence in the execution of the will. On the other hand the 1 Schultz's Appeal, 80 Penn. St. 396, 2 Lead. Cas. in Equity, 1156 (4th Am. 402. Opinion of auditor, adopted by ed.), note to Huguenin v. Baseley. court. In re O'Hara, 95 N. Y. 403. » Lucas v. Parsons, 27 Ga. 693. 2 Millioau v. Millican, 24 Tex. 426 s < Jackson v. Jackson, 32 Ga. 325. § 11.] EVIDENCE. 191 ■fact that the will makes an unnatural and inequitable distri- bution of the property is a circumstance tending in the oppo- site direction, and is proper to be weighed by the jury in pronouncing upon the issue.^ Gross and unaccountable ine- qualities in the dispositions of a will require, it is said, satis- factory evidence that it was the free and deliberate choice of a rational, self-poised, and clearly disposing mind. If such evidence be wanting, the will may be set aside.^ Evidence showing from what source a testator derived his estate is ad- missible upon an issue in regard to the validity of a will impeached for undue influence on the part of certain of the testator's family, for the purpose of showing that they have a stronger moral claim to his bounty by reason of such evidence than others.^ As relevant to the question of imposition by a beneficiary of the testator to whom he was not related, evidence may be given that the decedent possessed a large fortune, that he had neither wife nor child, and that his relations with such beneficiary were of an intimate business and social character.* Like the rule in other cases, fraud in regard to obtaining a will need not be proved by direct and positive testimony. Any fact, however slight, bearing at all upon the point, and not wholly irrelevant, may be admitted, provided it be strong enough to satisfy the jury of the existence of the fraud.^ Old age alone however is not sufficient ground to support a charge of imposition.^ If a person be charged with procuring the destruction of a will, the party attempting to set it up may prove the declara- 1 Fountain «. Brown, 38 Ala. 72. Evidence of dispositions of property 2 Barrel v. Barrel, 1 Duv. 203. ty a testator in fraud of a valid agree- * Patterson v, Patterson, 6 Serg. & ment made upon consideration must be R. 55. clear and decisive. Mundy v. Foster, * Frew V. Clarke, 80 Penn. St. 31 Mich. 313. 170. 8 liCwis V. Pead, 1 Ves. Jr. 19. . « Davis V. Calvert, 5 Gill & J. 269. 192 ADJECTIVE LAW OP FRATTD. [CHAP. X. tions of such person as part of the res gestte, if they are con- temporaneous with and illustrate the act.^ § 12. Credibility op Witness. Clear and unequivocal evidence that a witness was guilty of fraud in connection with the facts about which he is testi- fying is a matter affecting, not his competency, unless the fraud was criminal,^ but his credibility ; and of this the jury may be instructed. But if the evidence does not clearly show that the witness was concerned in the fraud, or that the facts constitute actual fraud or the like serious offence, it would be error so to instruct the jury. Thus in a case of conflicting evidence the judge should not rule that evidence which merely tended to prove fraud on the part of the witness is competent to affect his credibility.^ But a witness who admits his participation in fraud is impeached.'' § 13. Criminating One's Self : Discovert. Though a defendant may refuse to criminate himself, that is, to furnish evidence by which a criminal prosecution could be sustained against him, he may still be compelled to make discovery of a non-criminal fraud, however great the moral turpitude of the facts." In the earliest of the cases just cited the defendant, under a scire facias charging him as trustee ■ of another, disclosed that a bill of sale of personalty had been made to him by that party ; whereupon he was asked certain questions with a view to show that that sale was fraudulent against creditors. He refused to answer ; but the court com- pelled him, declaring that the constitutional provision that 1 Batton V. Watson, 13 Ga. 63. * Davis v. Council, 92 N. C. 725. 2 Even then the statute may make ^ Foss v. Haynes, 31 Maine, 81 ; the evidence competent. See e. g. Mass. Neally v. Ambrose, 21 Pick. 185 ; De- Pab. Stats. Ch. 169, § 19. voll v. Brownell, 5 Pick. H8. 3 Baker v. Gavitt, 128 Mass. 93. § 13.] EVIDENCE. 193 no one should be compelled to give evidence against himself did not relate to questions of property. Indeed where a defendant in equity is charged with having procured a title to property by fraud, and with fraudulently setting up such title to defeat the plaintiff, equity will compel him to disclose not only the facts alleged as fraudulent, but all the circumstances attending, in order that the court may determine whether those circumstances established the charge of fraud.^ For example the defendant may be compelled to disclose whether he purchased with notice of the plaintiff's right, or whether he has paid the purchase-money. In order to obtain protection he must have purchased without notice and for value, and have paid the price.^ 1 HoweU V. Ashmore, 1 Stookt. 82. " lb. 13 PARTIES CONCERNED. PARTIES CONCERNED. CHAPTER I. THE PARTY DEFRAUDED. § 1. Subject of the Chapter. In a previous chapter i we had to consider the question whether a defrauded party must, on account of technical laws of procedure, join others witli him as nominal or real parties plaintiff, and whether he must join others than the real or chief wrong-doer as parties defendant ; in other words we had then to consider questions of adjective law. Now we have to consider whether, irrespective of the joinder of others, the plaintiff in the suit brought has a cause of action; in other words we have to consider a question of substantive law. § 2. The Person Intended. Must a person have been the intended victim of a fraud, in order to enable him to gain the ear of the courts ? The answer to this question must be special ; it will differ for different branches of the subject. One answer must be given for the law relating to deception, another for the law relating to circumvention.^ This is not the place for considering the several answers in detail ; for that, reference should be made to special subjects of the law to be considered later. It will be enough in the present place to say, in regard to the law of deception, that the courts will give appropriate 1 Joinder of Parties, ante, p. 108. ter on Definition of Fraud, for the mean- 2 The reader should consult the chap- ing and use of these two terms. 198 PARTIES CONCERNED. [CHAP. I. redress or relief for actionable misrepresentation to any one to whom the same was made or for whom it was intended, and only to such ; and this whether it was made to a single individual, or to several persons, or to a particular class of persons, or to the public, or again to A to be conveyed to B.^ In regard to the law of circumvention the main question is, whether a subsequent creditor, i. e. one who has become a creditor after a particular conveyance made by his debtor, can proceed against such conveyance as a fraud upon himself when no fraud was intended against him. Upon this question it will be enough here to say that, according to the law of most of the states, the debtor, in making the conveyance will not be deemed to have committed a fraud upon subsequent creditors in the absence of any intent to delay or defraud them ; ^ while according to the law of some of the states, and of England, it will be sufficient that the debtor intended by the conveyance to delay or defraud existing creditors ; the conveyance will then be deemed fraudulent also in regard to subsequent creditors.^ After these special answers to the first question proposed, and subject to them, it may, it seems, be laid down further, and in general, as applicable equally to deception and to cir- cumvention, that both he who was the intended object of a fraud, practised upon him to his hurt, and he who, though not actually and personally intended, has sustained damage from it in the natural course of things, as effect follows cause in contemplation of law, may, under ordinary conditions, call upon the courts for redress or protection. The question will 1 Richardson v. Silvester, L. R. 9 100, 105; Savage ■». Murphy, 34 N. Y. Q. B. 34 ; Swift v.Winterhotham, L, R. 508 ; Belford v. Crane, 1 C. E. Green, 8 Q. B. 244 ; Peek v. Gurney, L. R. 6 265 ; Harlan v. Maglanghlin, 90 Penn. H. L. 377; Zabriskie v. Smith, 13 St. 293; Miner v. Jackson, 101 111. N. Y. 322 ; Carvill v. Jacks, 43 Ark. 550 ; Davidson v. Lanier, 51 Ala. 318. 454 ; Watson v. Crandall, 78 Mo. 583 ; 3 Redfield v. Buck, 35 Conn. 328 ; Davidson v. Vorse, 52 Iowa, 384. McLane v. Johnson, 43 Vt. 48 ; Free- ' Laughton u. Harden, 68 Maine, man v. Pope, L. R. 5 Ch. 538. 208, 212 ; Carter ». Grimshaw, 49 N. H. §2.] THE PAETY DEFEAtTDED. 199 then become one simply of proximate cause, so far as cases not covered by statute are concerned. Thus where the fraud is intended to operate upon A, but instead, and in the natural course of things, from what may properly be regarded as pre- sumptive intention, operates upon B, B will be entitled to the aid of the court against the perpetrator.^ But if the fraud did not work harm to the plaintiff, he has no cause of action, whatever may have been the effect upon others.^ And if in the case of false representations it appear that the party seeking 1 Benzein v. Lenoir, 1 Dev. Eq. 225 ; Clifford V. Brooke, 13 Ves. 131. 'It is no defence either in the civil or criminal code that the blow was not designed to injure the person stricken, but another. Neither is it in this court.' Henderson, J. in Benzein v, Ijcnoir (1828), at p. 260. See also Emmons u. Moore, 85 111. 304. ' The defendant did not mean to defraud the plaintiff. But if evidence had been produced that he parted with the deeds for the purpose of defrauding any one. Lord Bacon's maxim would apply to such a case of fraud, intended against one person, taking effect upon another ; which principle prevails also in trespass and the criminal law, as in the case of a squib, by which, having passed through several hands, a person lost an eye. Scott u. Shepherd, 2 W. Black. 892. So a stone being thrown in a sti'eet where many people are pass- ing, which does not hit the person at whom it was thrown, but kills another against whom it was not directed.' Lord Erskine, in Clifford v. Brooke (1806), at p. 132. This, it will be seen, is a special application of the rule in the text, to cases of fraudulent conveyances, which, as we have said, is not generally ac- cepted in this conntiy. But that is a matter only of the construction of stat- ute, and not a dispute about the princi- ple itself of proximate cause. It may be doubted however whether Lord Ers- kine's proposition is widely true. Cer- tainly it is not to be inferred from the text, though it might be inferred from the language just quoted, that any one who may casually hear a statement may act upon it, and then upon its turning out to his hurt, maintain an action upon it by showing it to be false and fraudulent. Such a person could not properly consider himself presumed to have been intended ; and the case must be brought within the mle of deception previously stated, as the authorities there cited clearly declare. 2 Bell V. Johnson, 111 111. 374. 'It is u, familiar rule that only the person against whom the fraud is committed, or a person who is injured by it, can maintain a bill to have the fraudulent transaction impeached. If, as claimed by appellant, he acquired all of Groom's title to this land by his tax deed, then Croom had no title out of which he could he defrauded by Woodruff, John- son, or any one else. If on the con- trary appellant's tax deed was void, then he had no title out of which he could be defrauded by Woodruff or Johnson. If he had no title, it does not concern him whether Woodruff or Johnson has defrauded Croom or not.' Walker, J. in Bell v. Johnson. See also Day v. Lown, 51 Iowa, 364. 200 PARTIES CONCERNED. - [CHAP. I. relief knew the real state of facts, or stood in such a relation to them as to be bound, in contemplation of law, to know them, he could not prevail ; not on the ground indeed that he consented (he doubtless did not consent) to the wrong, within the maxim ' volenti non fit injuria,' but because he was not in law deceived, a subject which will be developed in a later chapter. This brings us to cases of consent. § 3. Consent : Paeticeps Criminis. As a general rule a party cannot set up his own fraud as a ground upon which to rest his action or defence ; ' nemo allegans turpitudinem suam audiendus est.' ^ Thus a person cannot avail himself of a lien the discharge of which has been fraudulently prevented by his own acts ; ^ nor can one have a negotiable note cancelled against a holder with notice, where such one has executed the note in fraud.^ A party to a fraud is barred by his misconduct from alleging that he has been injured thereby, not only towards the person with whom he may have contracted, but also towards third persons, or the state, upon whom the fraud may have been intended to oper- ate.* Thus where a creditor entered into a secret arrange- ment with his debtor, in fraud of a general composition deed which he and the other creditors had executed, but was out- witted in the matter by the debtor, it was held that the credi- tor must abide by the consequences of his conduct. The other creditors could not be made to suffer, in order to enable him ' to get even ' with the debtor. It was no ground, the court 1 White u. Hunter, 23 N. H, 128 ; ' Overshiner v. Wisshart, 59 Ind. Woods V. Kirk, 28 N. H. 324 ; Carey 135. V. Brown, 92 U S. 171; Barnes v. « Ex parte Oliver, 4 De G. & S. 359 ; Brown, 32 Mieh. 146; Compton o. Post d. Marsh, 16 Ch. D. 395 ; Greene «. Bunker Hill Bank, 96 111. 301 ; Jerome Bateman, L. R. 5 H. L. 591 ; Bracken- V. Bigelow, 66 111. 452 ; Smith v. bury v. Brackenbury, 2 Jac. & W. 391 ; Rowley, 66 Barb. 503 ; Overshiner v. Doe d. Roberts v. Roberts, 2 Bam. & Wisshart, 59 Ind. 185. Aid. 367. ^ Carey v. Brown, supra. § 3.J THE PAKTY DEFRAUDED. 201 held, for disturbing a fraudulent agreement between A and B to injure C, that A had outwitted B.' So too the courts will refuse to enforce an agreement to publish a book bearing a false title, likely to deceive the public.^ In accordance with the general rule no suit at law or in equity to compel a division of profits can be maintained against an alleged copartner in a scheme tainted with fraud against the government or individuals. Public morals, pub- lic justice, and the well-established principles of all judicial tribunals, alike forbid the interference of the courts in aid of such enterprises. The law leaves the parties to the transac- tion where it found them. If either has sustained a loss by the bad faith of the other, the result is but just. A judicial tribunal will not shift the loss from one party to another, or equalize the benefits or burdens which may have resulted from the unlawful scheme.^ So also where a fraud is con- trived against several, and is successful against one only, that one cannot call upon the others upon whom the fraud was intended to contribute towards his loss.* This rule of law that a person shall not take advantage of his own wrong is equally applicable whether such wrong be intentional or not. If intentional, it would be a gross fraud to allow him to profit by it ; if unintentional when committed, he makes it in effect intentional by afterwards attempting to derive a benefit from it, since in so doing he adopts it.^ It has accordingly been held that if an officer, whose duty it is in cases of default in tax-suits to draft a decree enforcing the lien of the tax, should insert in the decree, whether inten- tionally or by negligence, a clause that summons has been served, contrary to the fact, he cannot afterwards become a purchaser of the property at the tax-sale.® 1 Ex parte Oliver, supra. cent misrepresentation by a party, in- 2 Post D. Marsh, supra, Fry, J. ducing a contract which such party after- ' Bartle v. Coleman, 4 Peters, 184. wards seeks to maintain. Ante, p. 11. « Grubb V. Cottrell, 62 Penn. St. 23. « Martin v. Parsons, 50 Cal. 498 ; ^ Comp. the rule in regard to inno- s. c. 49 Cal. 94. 202 PARTIES CONCEENED. [CHAP. I. But a party who sets up a title or defence which is honest and legal will not be debarred from proving such defence by the circumstance that his evidence tends also to prove him guilty of a fraud in some other matter. Thus in an action upon a contract, the defendant may show that the plaintiff has already taken advantage of a fraud committed by the defendant to annul the agreement.^ So too if an obligee has obtained a confession of judgment by fraud participated in by the obligor (as where the object is to defeat creditors), and the obligee is entitled, independently of such transaction, to an account, the court will decree an account, and allow him what may justly be due to the extent of the judgment, but no further.^ So where a conveyance is made for a small sum, much less than the value of the property, but fraudulently recited to be for the full consideration, equity will not set aside the conveyance absolutely, but will let it stand as secu- rity for the money actually advanced.^ There are other exceptions to the rule that courts of justice will not interpose for the relief of a party who has been parti- ceps criminis in a fraudulent transaction. One of these excep- tions is where the party suing, though particeps criminis, is not in pari delicto with the adverse party. There may be different degrees of guilt between the parties to the fraudu- lent transaction ; and if one party act under circumstances of oppression, imposition, undue influence, or at great disadvan- tage as compared with the other party concerned, so as to make it evident that his guilt was subordinate to that of the defendant, equity will grant relief.* Again (though this may or may not be a case of fraud) 1 Woods V. Kirk, 28 N. H. 324. band in fraud of creditors, relievable 2 Clay V. Williams, 2 Munf. 105. at instance of wife unless the husband ' Lane v. Page, 1 Ambl. 233. show clearest evidence that it was freely * E«ynell v. Spiye, 1 De G. M. & G. and deliberately made) ; Eoman v. Mali, 660, 678, 679 ; Osborne v. Williams, 18 42 Md. 513, 532 ; Kitchen v. Greena- Ves. 379; Boyd ti. De la Montagnie, 73 baum, 61 Mo. 110; 1 Story, Equity, N. Y. 498 (conveyance by wife to bus- § 300. § 3.] THE PARTY DEFKAUDED. 203 where a transaction contravening public policy has taken place, relief may be given at the suit of one who is particeps criminis.i Relief in such cases, it is somewhat obscurely said, is given to the public through the party .^ Lord Hardwicke once observed : ' It was urged for the defendant that this is a bill brought by one of the parties to this corrupt contract against a representative of the other, who is a stranger to it ; and that, although an executor might have claim to relief for the sake of providing assets, yet the court will show no favor to either of the parties themselves. But the truth is that, in these cases of violations of public policy, it is indifferent who stands before the court, if the intention of the contract be evident ; because the court does not regard the state and condition of the parties so much as the nature of the contract and the public good.' ^ Upon this principle a bond to secure to one creditor the deficiency of a composition, without the knowledge of the other creditors, was in an English case ordered to be delivered up, though to one who was particeps criminis.* In another English case a creditor, having sup- pressed the fact of his debt, was not permitted to set it up even against the person at whose instance and in whose favor he made the suppression.^ Indeed it may be broadly laid down that a person can set up in defence to an action upon a contract, that the contract was made in fraud of creditors or others.'' Nor will the character 1 Hatch V. Hatch, 9 Ves. 292 ; St. <> Blacklock v. Dotie, 1 C. P. D. John V. St. John, 11 Ves. 535 ; Jackson 265 ; Begbie v. Phosphate Sewage Co., 0. Mitchell, 13 Ves. 587 ; Whittingham L. R. 10 Q. B. 491 ; s. c. 1 Q. B. D. w. Burgoyne, 3 Austr. 914; Eeynell v. 679; Ager v. Duncan, 50 Cal. 325; Sprye, 1 De G. M. & G. 660, 679. Heineman v. Newman, 55 Ga. 262 ; 2 1 Story, Equity, § 298. Campbell v. Skinner, 30 Mich. 32 ; 8 Gilbert v. Chudleigh, 9 Ves. 299, Church v. Muir, 4 Vroom, 318 ; Goudy note. See also Chesterfield v. Janssen, v. Gebhart, 1 Ohio St. 262 ; Bigelow v. 2 Ves. 125, 156. Comegys, 5 Ohio St. 256 ; Hamilton v. * Jackman v. Mitchell, 13 Ves. 581. Scull, 25 Mo. 165 ; King v. Hutchins, 6 Neville v. Wilkinson, 1 Brown, 28 N. H. 561 ; Randall v. Howard, 2 C. C. 543 ; Dalbiac v. Dalbiac, 16 Ves. Black, 585. A grantor in a, deed in 116, 125. fraud of creditors is a competent witness 204 PARTIES CONCEKNED. [CHAP. I. of such agreement be changed by showing that the claim of the third party whose rights were to be affected by it was also fraudulent.^ Hence one may show that a note made by him was executed to the payee and plaintiff in fraud of creditors or others.2 In the case therefore of a composition, if one of the credi- tors, before executing the deed, obtain from the debtor secu- rity for the residue of his demand, that security is void at law, because it is a fraud on the rest of the creditors.^ This doc- trine was established in equity before it was recognized by courts of law ; but it has long been maintained in both juris- dictions.* The principle is that in such cases each creditor must act openly. As the other creditors may have been induced to come into terms upon a belief that all were to be on the same footing, any private agreement for greater benefit to one is a fraud upon the rest, and hence invalid.'' But though a creditor may have obtained a preference in contemplation of an intended deed of composition, which preference would clearly be invalid against other creditors under the composition, still it is held that, if the composi- tion should go off, the securities given with such improper view may be retained against a commission of bankruptcy subsequently issued, and not contemplated at the time of the preference.^ It has been observed however that the case cited was not that of an action brought by the holder of the securi- ties given with the purpose above stated, but an action of in Virginia to prove the fraud. Brown 586 ; Constantein v. Blache, 1 Cox, V. Molineaux, 21 Gratt. 539. 287 ; Fawcett v. Gee, 3 Anstr. 910 ; 1 Randall v. Howard, 2 Black, 585. Middleton v. Onslow, 1 P. Wms. 768. 2 Fay V. Fay, 121 Mass. 561 ; Ham- 5 Leicester v. Rose, 4 East, 380 ; ilton V. Scull, 25 Mq. 165 ; Ayer v. Steinman v. Magnus, 11 East, 393 ; Duncan, 50 Cal. 325. Mawson v. Stock, 6 Ves. 300 ; Ex parte 3 Jackson «. Davison, 4 Bam. & Aid. Sadler, 15 Ves. 55; Lewis v. Jones, 4 695 ; Wells v. Girling, 1 Brod. & B. Barn. & C. 511. 452 ; Fay v. Fay, 121 Mass. 561 ; Stern- « Wheelwright ». Jackson, 5 Taunt, burg V. Bowman, 103 Mass. 325. 116. * lb. ; Jackman v. Mitchell, 13 Ves. § 3.] THE PARTY DEFRAUDED. 205 trover to recover possession of the instruments or their value ; to which instruments, being in possession, the defendant had tlie better right, upon the principle that, when the parties are in pari delicto, potior est conditio possidentis.* An undertaking between a debtor, or his assignee,^ and one of the creditors in effecting a composition of his debts, by which he agrees to a secret preference of such creditor, renders the whole composition invalid ; and the debtor him- self or the assignee can plead such secret agreement in an action upon the contract of composition.^ Besides the ground of public policy another reason may be given for this, namely that the guilty creditor must be a party plaintiff to the suit, the contract being joint ; and, as one of the joint parties is barred from suing, the others (where the common-law rule has not been changed by statute) must also be barred. A re- ceipt may also, in any action between the parties to it, be shown by the party giving it to be against the truth, and to have been given for a fraudulent purpose in which both parties participated.* And in general either party to a fraudulent scheme can set up the common fraud in an action by the other.* A distinction is taken in some courts (in regard to such defences) between secret agreements of preference entered 1 Note to Eastabrook v. Scott, 4 Ves. Howe v. Litchfield, 3 Allen, 443 ; Stem- 461, Am. ed., distinguishing Wells o. burg v. Bowman, 103 Mass. 325. Girling, 1 Brod. & B. 453, where it was * King v. Hutchins, 28 N. H. 561. decided that the holder of a note given Where an agent pays an employe of his to secure a preference in contemplation principal a part of the wages due him, of a composition could not recover and obtains from him by fraud a receipt thereon, though the composition did in full for his services, the employ^ can not take effect. recover from the principal the balance 2 Frost V. Gage, 6 Allen, 50. of the wages due, though the principal ' McFarland v. Garber, 10 Ind. 151 ; may have allowed the agent in settle- Case V. Gerrish, 15 Pick. 49 ; Stuart v. ment for the full amount of the em- Blum, 4 Barr, 225 ; Cockshott v. Ben- ploye's wages, as stated in the receipt, nett, 2 T. R. 763 ; Leicester v. Eose, 4 Noble v. The Northern Illinois, 23 East, 372 ; Knight v. Hunt, 5 Bing. Iowa, 109. 429. See Fay v. Fay, 121 Mass. 561 ; « Campbell v. Skinner, 30 Mich. 32. Eamsdell v. Edgarton, 8 Met. 227; 206 PARTIES CONCEKNED. [CHAP. I. into between a debtor and one of several creditors who have agreed, or are about to agree, to a composition with the debtor, and other agreements in fraud of creditors. The former are held void, and the debtor himself may set up the facts, on the ground, in part, that the facts indicate coercion.^ The latter, at least without coercion, are held binding between the parties, even though executory ; and the debtor is not allowed to set up the fraud in defence.^ According to this view of the law a mortgagor cannot resist a bill for foreclosure by evidence that the mortgage was executed with intent to defraud creditors.^ And the test whether a demand connected with an illegal transaction is capable of being enforced has often been said to be, whether the plaintiff requires the aid of the illegal transaction to eai- tablish his case. ' If the plaintiff cannot open his case with- out showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant ; ' * if on the contrary the plaintiff can establish his (prima facie) case without showing the illegality of the acts of the parties, he can recover.^ In an action upon a bond or a promissory note e. g. the plaintiff makes out a case by alleging the execution of and producing the instrument. The result is, he is entitled to recover, though the instrument was given in aid of a fraud upon a third person.® Whether the test referred to would be applicable where, as in Massa- 1 Case V. Gen-ish, 15 Pick. 49 ; Williams, 34 Penn. St. 312 ; Hendriok- Ramsdell v. Edgarton, 8 Met. 227 ; son v. Evans, 25 Penn. St. 441. See Lothrop V. King, 8 Oush. 382 ; Part- Brooks v. Martin, 2 "Wall. 70. ridge o. Messer, 14 Gray, 180 ; Stern- 8 Williams v. Williams, 34 Penn. burg V. Bowman, 103 Mass. 325 ; Fay St. 312. V. Fay, 121 Mass. 561 ; Atkins o. i Swan v. Scott, 11 Serg. & R. 164 ; Knight, 46 Ala. 539. Evans v. Dravo, 24 Penn. St. 62 ; Beg- 2 Dyer v. Homer, 22 Pick. 253 ; bie v. Phosphate Sewage Co. , L. R. 10 Fairbanks v. Blackington, 9 Pick. 93 ; Q. B. 491 ; s. c. 1 Q. B. D. 679. Knapp V. Lee, 3 Pick. 452 ; Harvey v. 6 Evans v. Dravo, supra. See Tay- Vamey, 98 Mass. 118 ; Thompson v. lor v. Bowers, 1 Q. B. D. 291, C. A., Moore, 36 Maine, 47 ; Nichols v. Pat- fraud not consummated ; Mallett v. ten, 18 Maine, 229 (overruling Smith Swain, 56 Cal. 171. V. Hubbs, 1 Fairf. 71) ; Williams ./. 6 ib. § 3.] THE PARTY DEFRAUDED. 207 chusetts, the contract is directly held binding between the parties, is not clear.^ There is however, according to other courts, a marked dis- tinction between executed and executory contracts of a fraud- ulent character, where both parties are guilty. The former cases are binding ; the latter may be avoided. From another point of view there is no distinction between them. The prin- ciple is the same in both cases ; to wit, that the courts will not lend their aid to the one party or to the other. The exe- cuted contract must therefore stand executed, because the courts will not interfere ; while the executory contract must fall for the same reason.^ Upon this principle, while a con- veyance of property made for the purpose of defrauding cre- ditors is binding between the parties,^ the buyer can avoid a security given for the purchase price by showing the fraud intended.* Among other exceptions to the general rule prohibiting one to allege one's own fraud it is held that a person sued upon a contract, whereby he agreed to procure an office in a corpora- tion for the plaintiff, may show that he (the defendant) was at the time a shareholder in the corporation, with the attend- ant duties to other members thereof. The purpose of the contract being to influence the defendant in the decision of a question affecting the private rights of his associates, by con- siderations foreign to those rights, the contract is a fraud upon them, and is invalid.^ So a contract whereby an agent agrees to play false to his principal is invalid, and the object 1 Suppose e. g. in Massachusetts that Norris v. Norris, 9 Dana, 317 ; Nellis the note or other security sued upon v. Clarke, 4 Hill, 424. disclosed the fraud. ' It is held to be otherwise when the 2 Harvin v. Weeks, 11 Rich. 601 ; conveyance is made by a wife to her Smith n. Hubbs, 1 Fairf 71 ; Jackson v. husband, unless he can show that it was Garnsey, 16 Johns. 189 ; Richart ■». freely and deliberately made.. Boyd v. Castator, 5 Binn. 109 ; Clapp v. Tirrell, De la Montagnie, 73 N. Y. 498. 20 Pick. 247 ; Osborn v. Moss, 7 Johns. * Harvin v. Weeks, 11 Rich. 601. 161; Worcester v. Eaton, 11 Mass. 375 ; ' Guernsey v. Cook, 120 Mass. 501. See Fuller v. Dame, 18 Pick. 472. 208 PARTIES CONCERNED. [CHAP. I. of the agreement may on principle be set up by either party in bar of an action by the other to enforce the same; at all events, if the agent sue, it hais been decided that the other party can avoid liability by showing the nature of the contract.^ Where the plaintiff and defendant are parties to a combina- tion to defraud the government of the United States, or of a state, and the defendant, in the execution of the fraudulent purpose, receives money from the government in the name of the plaintiff, and acting ostensibly as his agent, no action can be maintained by the plaintiff for the recovery of the money so received.^ Nor can a party urge that the fruits of an act done in violation of explicit law have been obtained by an- other through fraud. The courts will not interfere in such a case in behalf of the interests of either party .^ There are many other cases of a similar character, which may or may not be cases of fraud, according to the particular facts. Of such may be mentioned the case of a secret con- tract ' pending a bill in Pai-liament for the charter of a cor- poration for private purposes (as for example a railway),' the contract to be concealed from Parliament in order to stifle opposition and so to procure the passage of the bill under a false impression.* So of contracts to procure the passage of an act of the Legislature by any other fraudulent means.^ It has been frequently held that the device of insuring property as that of a neutral, when in fact it is that of a bel- ligerent, is not contrary to law. Contracts made with underr writers in relation to property thus covered have always been enforced in the courts of neutral powers, in cases w^here the 1 Barnett v. Spencer, 4 Blackf. 206. Spencer, 2 Madd. 356 ; s. c. , Jac. 54. 2 Boyd V. Barclay, 1 Ala. 34. See Petrie v. Eastern Counties Ey. Co., 3 Kitchen ». Greenabaum, 61 Mo. 1 Eailw. Cas. 462; Shrew.sburys. North 110. Staffordshire Ey. Co., L. R. 1 Eq. 593 ; * Story, Equity, § 293 a ; Howden Caledonian Ry. Co. v. Helnisburgh, 2 0. Simpson, 10 Ad. & E. 743 ; Simpson Macq^ 391. 17. Howden, 1 Keen, 683 ; s. c. 3 Mylne * Story, ut supra, note, 13th ed. & V. 97 ; Vauxhall Bridge Co. v. § 4.] THE PARTY DEFRAUDED. 209 true character of the property, and the means taken to protect it from capture have been fairly represented to the insurers. The same doctrine has always been held where false papers have been used to cover the property, provided the under- writer knew, or was bound to know, that such stratagems were commonly resorted to by the persons engaged in that trade. And it is considered that the same disguise may be continued after capture, in order to prevent the condemnation of the property, or to procure compensation for it when it has been lost by reason of the capture. Courts of the capturing nation would not enforce contracts of this description; but the courts of a neutral country will respect tliem.^ § 4. Peesonal Natueb of Fraud. Only the .party injured by the fraud can claim active re- lief. Thus if an attorney having a demand intrusted to him for collection fraudulently deceive his client in refer- ence to the responsibility of the debtor and the value of the demand, and thereby prevail upon the client to sell to him the demand for less than the amount due upon it, and the attorney subsequently collect the whole amount thereof, he will not be liable to refund to the debtor the amount received by him above the amount paid by him to the client. The fraud is upon the client; and the attorney is liable to him only .2 Nor can a purchaser of a ward's lands from the guar- dian allege that the sale was in fraud of the ward's rights.' So if a person make a conveyance to another which is after- wards rescinded, and a new conveyance of the same property be made to the plaintiff, the heirs of the first grantee cannot allege that the plaintiff obtained the deed from the common grantor by fraud.* Nor could the first grantee ; neither he 1 De Valengin v. Duffy, 14 Peters, ^ Marvin v. Schilling, 12 Mich. 356. 282. « Love v. Belk, 1 Ired. Eq. 163. 2 Marshall v. Joy, 17 Vt, 546. 14 210 PABTIES CONCEENED. [CHAP. I. nor his heirs having any interest in the property after the rescission. Upon the same principle if a grant or patent for land, or a legislative confirmation of titles to land, has been made by the sovereign authority, which alone has the right to make it, without any provision in the patent, or by the law, for in- quiring into its fairness between the grantor and grantee, or between third parties and the grantee, a third pa-rty cannot in ejectment raise the question of fraud as between the grantor and grantee.^ And a bill in equity to set aside letters-patent lies only between the sovereignty making the grant and the grantee.^ So an agent cannot sue for a false representation made to him in a transaction understood by the parties to be on behalf of the principal alone. So long as the representa- tion was not made with intent to affect the interests of the agent, the principal alone can sue.^ A principal however may maintain an action upon a false representation made to his agent in the purchase of property.^ And on the other hand it is held that even where a party could not maintain an action against a principal for the fraudulent representations of his special agent, he may avail himself of such representations by way of defence to an action upon the contract by the principal.^ It is laid down that a person, though innocent, cannot avail himself of an advantage obtained" by the fraud of another, un- less some consideration has been given by himself." Thus, in the case cited, a debtor and his surety persuaded the creditor to accept from the debtor the transfer of a mortgage, which the debtor knew to be imaginary, but which the surety, relying on the debtor's statement, believed to be a good security. Afterwards the creditor, at the request of the surety, who 1 Field v. Seabiuy, 19 How. 323. ^ Concord Bank v. Gregg, 14 N. H. ^ lb. 331. s "Wells V. Cook, 16 Ohio 8t. 67. « Soholefield v. Templer, 4 De G. & * Tuckwell V. Lambert, 5 Cush. 23. J. 429, per Lord Ch. Chelmsford. § 4.j THE PAETY DEFRAUDED. 211 suggested to him that he was secured by the mortgage, released the surety. Friends of the latter now lent him money, on the faith of the release, to enable him to com- pound with his creditors ; which the present creditor knew, at the time of giving the release, that they had refused to do, unless the release was obtained. Tlie fraud of the principal debtor having afterwards been discovered, it was held that the creditor was entitled to be restored to his rights against the surety, since the latter had parted with no value by reason of the transaction.^ If an arrangement however between two parties is on general principles fair between them, it is not invalid merely because it may have been concocted and brought about by a third party, with a fraudulent intent to benefit himself. In such a case, so far as regards the third party, the whole may be looked upon as one transaction, in order to judge of his motives and to put a construction upon his acts. But as regards the other two, who, though affected by one part of the transaction, may be total strangers to the other part, it is not only not necessary, but it would be unjust, to consider every part of the transaction affected by objections which in fact apply to particular poi'tions of it only.^ The case cited affords a good illustration of this principle. An agreement between a father, tenant for life, and an eldest son, tenant in tail, for certain considerations, to bar the entail and convey the estate to the son, was followed within a fortnight by a sale of the estate by the son to the solicitor who had acted for both parties in the agreement. In a suit after the death of the son without issue, by the next remainder-man in tail, who was also heii-at-law of the son, to set aside both transactions, and 1 The creditor, it will be observed, founded upon Ex parte Wilson, 11 Ves. had given the release at the instance 410. and request of the debtor. Had he 2 Ballamy v. Sabine, 2 Phill. Ch. acted of his own motion, the case might (Eng. ) 425. See Spencer v. Handley, have lieon dillerent; a distinction sug- 4 Man. & G. 414. gesteil by the Lord Chancellor, and 212 PAKTIES CONCERNED. [CHAP. I. to have the estates resettled to the former uses, the Court of Chancery was of opinion upon the evidence that both trans- actions were but parts of one scheme, contrived by the solici- tor for his own benefit. But being also of opinion that, on the principle of family arrangements, the agreement between the father and the son was not necessarily an unfair one in itself, tlie court set aside the second only, and, dismissing the bill in regard to the first, decreed the solicitor to convey the estate to the plaintiff. Where property is sold by auction in which creditors are interested as well as the owner, they have the same right that the owner has to object to fraudulent combinations among the bidders.^ But when the result of recovering property alleged to have been delivered to a creditor by way of fraudulent preference would not be for the benefit of the creditors at large, but only of an individual creditor who claims a security on it, the trustee ought not to take proceedings for the re- covery of the property himself ; nor will the individual credi- tor be allowed to take them in his name.^ § 5. Suits by Personal Representatives. A deed fraudulently obtained may be impeached by the representatives of the grantor;^ but not so of a deed fraud- ulently made by the decedent,* unless made in fraud of credi- tors ; if in fraud of the vendor's creditors, his administrator or even executor may, according to the general current of au- thority, set up the fraud and avoid the sale.® So an adminis- 1 Miltenbergeru. Momson,39Mo.71. Moody v. Fry, 3 Humph. 567 ; Forui- 2 Ex parte Cooper, I,. R. 10 Ch. quet v. Forstall, 34 Miss. 87 ; Snod- 510. grass v. Andrews, 30 Miss. 472 ; Winn 8 Stewart v. Iglehart, 7 Gill & J. v. Bamett, 31 Miss. 653.'; Kipp v. 132 ; Martin v. Bolton, 75 Ind. 295. Haniia, 2 Bland, 26 ; Eubanks v. Dobbs, * Merry v. Fremon, 44 Mo. 518 ; 4 Pike, 173. McLaughlin ti. McLaughlin, 16 Mo. ^ Babcock v. Booth, 2 Hill, 181 ; 242 ; George v. "Williamson, 26 Mo. Smith v. Grim, 26 Penn. St. 95 ; 190; Sharp 21. Caldwell, 7 Humph. 415; "Wheeler v. Single, 62 "Wis. 380 ; For- § 6.] THE PARTY DEFRAUDED. 213 trator de bonis non may have a sale set aside which was made by his predecessor's fraud.^ And where assets of the estate have been fraudulently disposed of by the administrator-in- chief without consideration, an administrator de bonis non, if they can be identified, may recover them in an action at law.''^ But if the administrator-in-chief fraudulently, or without au- thority, make a sale of his intestate's personal property, the parties in interest may treat it as an administration ; and if they so elect, the administrator de bonis non cannot recover the property.^ By the rules of the common law, actions for damages caused by fraud do not survive to the representative of the injured party.* Whether such actions will survive must therefore be a question of statute ; and the statutes vary. considerably. The statute of Maine e. g. is very broad ; by it trespass and tres- pass on the case survive, without qualification. Fraud is there- fore included.^ The contrary is true in Massachusetts, in New York, and in other states ; the rule of law being that no action can be maintained, by the injured party's personal representa- tive, for a fraudulent representation, such as that a particular person is worthy of credit.^ It matters not in Massaclmsetts that the misrepresentation caused the loss of a specific estate.'' niquet v. Forstall, 34 Miss. 87 ; Martin * Wethee v. Brooks, 65 Maine, 14, r. Bolton, 75 Ind. 295. See McKnight in which it was held that an action for V. Morgan, 2 Barb. 171. The heirs need fraud in a marriage survived. Secus in not be made parties. Smith v. Grim, New York. Price v. Price, 76 ^. Y. Bupra. 244. Under the Code of Georgia the heir * Read v. Hatch, 19 Pick. 47 ; Cut- cannot maintain an action against a ting v. Tower, 14 Gray, 183 ; Stillman person as executor de son tort, who ob- v. Hollenbeck, 4 Allen, 391 ; Cummings tained a conveyance from the ancestor v. Bird, 115 Mass. 346 ; Leggate v. by fraud, unless he claim as creditor of Moulton, ib. 552 ; Henshnw v. Miller, the estate. Davis i). Davis, 56 Ga. 37. 17 How. 212. See Price «. Price, supra. See Clayton v. Tucker, 20 Ga. 464. The personal representative is of 1 Forniquet v. For.stall, 34 Miss. 87. course individually liable for a false 2 Swink V. Snodgrass, 17 Ala. 653. representation by himself touching the 3 Elliott!, Branch Bank, 20 Ala. 345. decedent's estate. West v. Wright, 98 < 3 Black. 302 ; 1 Chitty, Pleading, Ind. 335. 68. ' Leggate v. Moulton, 115 Mass. 552. 214 PARTIES CONCERNED. [CHAP. I. In the case cited the original plaintiff had died pending suit, and the suit was now continued by his administrator. The declaration was for fraudulent misrepresentations made by the defendant to the plaintiff's intestate, by which she was induced to part with and lose her real estate. It was urged for the plaintiff that the action survived under a statute which pro- vided that actions for ' damage done to real or personal estate ' should survive. But the court refused to entertain this view. The statute, it was said, was intended to give a remedy wliicli should survive, only for injuries of a specific character to real or personal estate ; it was not intended to include actions for damages for frauds committed upon an intestate by which he might have been induced to part with his title at less than its worth, or otherwise to diminish the amount of his property'. § 6. Assignee or Grantee of Right of Action. A right of action for fraud cannot be conveyed at law or in equity ; equity will not enforce the demand of an assignee or a grantee of a right to sue for fraud, when the action is con- fined to that wrong.i The case first cited was an action for deceit by an assignee of a contract. The declaration set forth a bargain between H and the defendants, whereby H was to sell lumber to them and take in payment a note of one of the defendants. It averred that the defendants caused H to sell lumber fraudulently, they falsely representing that the note was good and the maker responsible, and that H confiding in the representation delivered the lumber and took the note in payment; the note being worthless. The declaration then averred the assignment of all claim for the price and value of ' Dayton v. Fargo, 46 Mich. 153 ; Mass. 100; Faivchild v. McArthur, 15 Dickinson v. Seaver, 44 Mich. 624 ; Gray, 526. Contra in Iowa. Clews v. Brush V. Sweet, 38 Mich. 574 ; Morris Traer, 67 Iowa, 459 ; Weir v. Daven- V. Morris, 5 Mich. 171; Carroll v. Pot- port, 11 Iowa, 49 ; Gray v. McAllister, ter, Walk. Ch. 355; Zabriskie v. Smith, 50 Iowa, 497. Further see the rule 3 Kern. 322; Foster v. Wightman, 123 post, p. 545, and note 3 thereto. § 6.] THE PARTY DEFRAUDED. 215 the lumber and of the cause of action growing out of the transaction, and that by reason of the premises the plaintiff was deprived of the use and value of the property, and that the defendants had falsely and fraudulently deceived H. It was held that no cause of action was disclosed in favor of the plaintiff. And a similar ruling was made in regard to a case in which deceit liad been practised upon a firm of several menibers, the action having been brought by members to whom an outgoing partner had transferred his interest.^ In like manner it is held that a grantee of a mortgagor cannot set up, in defence of a writ of entry to foreclose the mortgage, the fraud of the mortgagee upon the mortgagor, though the plaintiff, who was assignee of the mortgagee, took it with notice of the fraud.^ 1 Zabriskie v. Smith, 3 Kern. 322. ^ Fairohild v. McArthur and Foster V. Wightman, supra. 216 PARTIES CONCEENED. [CHAP. II. CHAPTER II. THE PARTY DEFRAUDING.i § 1. Oppicers op State. Redress for fraud will . always be granted against the wrong-doer himself, if satisfaction or a waiver of the wrong has not already been made, with perhaps the single excep- tion of fraud committed by the chief officers of state, in matters of government unmixed with matters of a merely personal nature. And even in such a case if the effect of the fraud be to draw an innocent party into an executory contract, the courts will allow him to give evidence of the fraud in bar of an action to enforce the contract. For such a purpose the state stands in no better position than an individual.^ And where money or property of an innocent person has actually gone into the treasury of the government, by means of a fraud committed by an agent of the government, or to which he was a party, such money or property must be given up to the person so wronged.^ § 2. Infants. Infancy is no protection for the commission of a pure tort ; and fraud in such a form may be redressed, as well against an infant as against a party sui juris.* But an infant is liable in 1 As a matter, not of procedure, but 8 United States v. State National of substantive law ; the question being Bank, 96 U. S. 30. But see McElroy whether the party is -■ wrong-doer, or v. Swart, 57 Mich. 500. whether the right of action still exists * Arnot v. Biscoe, 1 Ves. 95 ; Gilson against him (by survivorship). Comp. v. Spear, 38 Vt. 311 ; Worthen v. Eat- ante, p. 197. cliffe, 42 Ark. 330. a Sooy V. State, 9 Vroom, 324. § 2.] THE PARTY DEFBAUDING. 217 an action ex delicto for fraud only in cases in wliich the form of action does not suppose that a contract has existed the breach or failure of which is the real . ground of action.^ Hence an action of deceit cannot be maintained against an infant for fraudulent representations made in the sale e. g. of a horse, and this even though the plaintiff may have tendered back the horse, and demanded the purchase-money.^ Perhaps the case would be different where, instead of buying the horse, the infant obtained it in bailment by fraud, and then injured it ; ^ for an infant is liable for conversion. The cases cited in the note as opposed to this proposition cannot easily be sustained. It is universally conceded that infancy is a good defence to an action ex contractu, though the contract was procured by the infant's fraud ; but in the cases referred to it has been supposed that a different rule may prevail, if the infant be sued ex delicto for his fraud.* One answer to this however is that to allow an action of tort would in such a case be virtually to enforce the contract, by depriving the infant of the power to repudiate it; and the measure of damages would be the same whether the suit were in tort or in contract. Another answer is that, in cases in which the fraud is the foundation of a contract, there is no damage apart from the avoidance of the contract, and the in- fant has the legal right to avoid his promissory undertakings.^ 1 Eiee v. Boyer, 108 Ind. 472 ; Gil- " Gilson v. Spear, 38 Vt. 311 ; West son V. Spear, 38 Vt. 311 ; Liverpool Ad. v. Moore, 14 Vt. 447 ; Green v. Green- Assoc. V. Fairhurst, 9 Ex. 422 ; Bartlett bank, 2 Marsh. 485. Contra, "Wood o. V. Wells, 1 Best & S. 836 ; Bateman Vance, 1 Nott & McC. 197 ; Towne o. V. Kingston, 6 L. R. Ir. 328 ; Brown Wiley, 23 Vt. 361, dicta overruled in V. Dunham, 1 Root, 272 ; Geer v, Gilson v. Spear, supra; Fitts v. Hall, Hovy, ib. 179 ; Wilt«. Welsh, 6 Watts, 9 N. H. 441. See Burley v. Eussell, 9; Brown o. McCmie, 5 Sandf. 228; 10 N. H. 184. Homer v. Thwing, 3 I'ick. 492 ; Tucker ' Kice v. Boyer, 108 Ind. 472. V. Moreland, 10 Peters, 59 ; Ewell's * See Burley t. Russell, 10 N. H. L. C. Disabilities, 206. Contra, Wood 184, thus explaining Fitts v. Hall, 9 V. Vance, 1 Nott & McC. 197 ; Peigne N. H. 441. V. Sutcliflfe, 4 McCord, 387 ; Kilgore v. ^ Ewell's L. 0. Disabilities, 219, Jordan, 17 Tex. 341. 220. 218 PARTIES CONCERNED. [CHAP. II. It is a case of fraud without legal damage. Hence in prin- ciple as well as by the weight of authority it matters not that an infant has procured another to make a contract with him by false representations that he is of age or by any other fraudulent action ; whether sued in contract or in tort, he can plead his infancy in bar of the proceeding.^ And an infant can avoid his executed contracts as well as his executory en- gagements ; but he must give up what he still has in the way of property under the contract, and so put the other party, as far as may be, in statu quo.^ But for pure torts an infant is liable as well as an adult ; and hence, if his fraud be not the foundation of a contract between himself and the defrauded party, — if e. g. it is a consequence of a contract, — the courts will hold him answera- ble for his conduct. In such a case there is no contract, at least between the parties to the suit, for the infant to repudiate. He may therefore be proceeded against by an action ex delicto, or be barred by an estoppel if he attempt to repudiate his own conduct. There has however been some conflict concerning the ex- tent of this principle. It has indeed been maintained that the doctrine of estoppel in pais has no application to infants, even in cases of fraud.^ This is no doubt true of all cases in which 1 Johnson v. Pie, 1 Keb. 913 ; Grove & E. 403 ; Keen v. Coleman, 39 Penn. V. Nevill, ib. 778 ; Caunam v. Farney, St. 299 ; Studwell v. Shaftei-, 54 N. Y. 3 Ex. 698 ; Price v. Hewett, 8 Ex. 146 ; 249 ; Mathews v. Cowan, 59 111. 341 ; Liverpool Ad. Assoc, v. Fairhurst, 9 Densmore v. Cowan, ib. 347, note, and Ex. 422 ; Wright v. Leonard, 11 Com. the valuable note by Mr. Ewell in his B. N. s. 258 ; De Eoo v. Foster, 12 Leading Cases on Disabilities, pp. 206- Com. B. N. s. 272 ; Bartlett v. "Wells, 220. I Best & S. 836 ; Barley v. Eussell, 10 = gee Lemprifere v. Lange, 12 Ch. D. N. H. 184 ; Merriam v. Cunningham, 675 ; Hayes v. Parker, 41 N. J. Eij. II Cush. 40 ; Drury v. Drury, 2 Eden, 630 ; Walker v. Davis, 1 Gray, 506. 72 ; Beckett v. Cordley, 1 Brown, C. C. 3 Lowell v. Daniels, 2 Gray, 161, 353, 858 ; Nelson v. Stoeker, 4 De G. & 168 ; Brown v. McCune, 5 Sandf. 224 J. 458 ; Cory v. Gertchen, 2 Madd. 40. Ackley v. Dygert, 33 Barb. 176, 193 See further Conroe ■!). Birdsall, 1 Johns. Laokman v. Wood, 25 Cal. 147, 153 Cas. 127 ; Curtin v. Patton, 11 Serg. & Norris v. Wait, 2 Eich. 148. See Mc- E. 309 ; Stoolfoos v. Jenkins, 12 Serg. Coon v. Smith, 3 Hill, 147. § 3.] THE PARTY DEFRAUDING. 219 the fraud is tlie foundation of a contract between the litigating parties, as we have in substance said ; but it is contrary to many authorities, and, as we believe, to sound principle, when asserted of cases involving no contract between the parties. Thus it is held by many courts that an infant may preclude himself from setting up title to property by disclaiming, actively or by silence, any right to the same, and thereby inducing another to purchase it as the property of the as- sumed owner ; ^ though, in the case of real property, the es- toppel, according to many authorities, could be asserted only in equity .2 To allow the estoppel in such cases is not to deprive the infant of the right to repudiate his contracts, since he has made no contract with the purchaser. The pur- chaser has bought from another person ; and (unless such person were the infant's agent) the infant could maintain no action on the contract of sale, whether for breach of warranty or for failure to pay the purchase price. It is difficult there- fore to understand how he could repudiate the sale and recover the property.^ § 3. Married Women. What we have said above upon the question of the liability of infants upon contracts procured by their fraud, and of actions ex delicto and estoppels against infants in such cases and in cases of fraud unconnected with contract, is at com- mon law equally true of married women. Briefly then mar- 1 Sugden, Vendors, 743 (Uth Eng. 2 SeeEigelow, Estoppel, 682, 4th ed. ed.) ; Overton v. Bannister, 3 Hare, ^ Qf course this ^ificulty would be 503 ; Esron v. Nicholas, 1 De G. & S. removed if the vendor were to be treated 118; Hall v, Timmons, 2 Eioh. Eq. in law as the infant's agent; but it is 120 ; Whittington v. Wright, 9 Ga. 23 ; apprehended that this would be a ques- Irwin V. Merrill, Dud. 72 ; Thompson tion of fact, dependent upon the actual V. Simpson, 2 Jones & L. 110 ; Story, relation of the vendor to the infant. Equity, § 380. See Stokeman o. Daw- See Pickard i). Sears, 6 Ad. & E. 469, son, 1 De G. & S. 90 ; Wright v. Snow, where the nature of the facts in such a 2 De G. & S. 321 ; Unity Joint Stock case (between adults) was left to the Assoc. V. King, 3 De G. & J. 63 ; Bige- jury, low, Estoppel, 584-586, 4th ed. 220 PARTIES CONCEENED. [CHAP. n. ried women are not liable at common law on contracts which they have procured through fraudulent means, nor in actions ex delicto for false representations or other frauds by means of which they have procured such contracts. The same con- flict of authority exists in regard to the question whether the doctrine of estoppel in pais by fraudulent conduct applies to married women. In Massachusetts it has been declared that at common law the doctrine does not apply to them.^ By other courts the contrary has been laid down.^ And the lat- ter seems to us the more correct view, for reasons stated in the section relating to infants.^ But the enabling acts have in many states and in England done away with most of the distinctions of the common law concerning the civil liabilities incident to coverture ; and this whether by way of action or of estoppel. A married woman in Massachusetts, and doubt- less in many other states, may now e. g. bind herself by an estoppel by deed of warranty.* Notwithstanding the common-law incapacity of a married woman to incur a debt by her contract merely, it is well established that a married woman is capable of committing a fraud, and that she may be visited with the consequences of the commission of it.^ In an English case which has been cited as establishing this principle,^ it appeared that a married woman was entitled to an estate in fee-simple, expectant on the death of her mother. Her half-sister was about to be 1 Lowell V. Daniels, 2 Gray, 161, War. 134 ; Vaughan v. Vanderstegen, 168 ; Bemis v. Call, 10 Alien, 512, 517 ; 2 Drew. 363 ; Wright •«. Leonard, 11 Merriam v. Bos!on &c. R. Co., 117 C. B. N. s. 258 ; In re Lush, L. R. 4 Mass. 241, 244. So in Delancey v. Mo- Ch. 591 ; O'Brien v. Hilburn, 9 Tex. Keen, 1 "Wash. C. C. 354. Contra now, 297. Knight u. Thayer, 125 Mass. 25. See s Ante, § 2. See also Bigelow, Es- Bigelow, Estoppel, 579, 4th ed. toppel, 579-584, 4th ed. 2 Carpenter v. Carpenter, 10 C. E. « Knight v. Thayer, 125 Mass. 25. Green, 194 ; Schwartz v. Saunders, 46 6 Vaughan v. Vanderstegen, 2 Drew. 111. 18 ; Ward v. Berkshire Life Ins. 363, 379 ; Sharpe v. Foy, L. R. 4 Ch. 35. Co., 108 Ind. 301 ; Connolly v. Branstler, « Vaughan v. Vanderstegen, supra ; 3 Bush, 702 ; Wright v. Arnold, 14 B. Arnold ». Woodhams, L. E. 16 Eq. 29, Mon. 638 ; Jones v. Kearney, 1 Dru. & 33. § 3.] THE PARTY DEFEATJDING. 221 married. The married woman entitled to this remainder or reversion was anxious to promote that marriage ; and, in order to bring it about, induced her mother to represent her- self as owner in fee of the estate, though she was only tenant for life, the married woman entitled in remainder suppressing and concealing the fact of her own title. The marriage was accordingly effected by the mother conveying the estate, as if she were the owner in fee, to the intended husband. After- wards the married woman, who had thus induced her mother to execute this conveyance, became a widow ; and on a bill filed by the husband of the sister she was compelled by the court to convey the estate. A married woman's present estate may of course equally become bound by her participation in fraud ; as where a mort- gage is obtained upon property of the feme, upon the false representation made by her that she owned the absolute inter- est in the estate. Such a representation will give the mort- gagee precedence over a prior marriage settlement of the same estate, of which the mortgagee had no notice at the time ; and this too though there was a defect in the feme's execution of the mortgage, which was not remedied until after the mortgagee had received notice of the settlement.^ At common law inactive participation of a married woman in the fraud of her husband in the sale of his property in which she is interested will not generally impair her rights therein. Thus where a man-ied woman received a provision in lieu of dower under a transaction of the husband in fraud of his creditors, it was held that the provision would not be disturbed, the fact appearing that it was only equivalent to dower.'* And a fortiori where a husband in the transaction 1 Sharpe u. Foy, L. R. 4 CIi. 35. ton v. Fryberger, 38 Iowa, 185, 201 ; See also as to defective execution Eem- Gibb v. Rose, 40 Md. 387 ; these latter ington V. Higgina, 54 Cal. 620 ; Love v. being cases of statutory conveyances. Sierra Nev. Mining Co., 32 Cal. 639 ; ^ Blanton v. Taylor, 1 Gilmer, 209. Daggett V. Rankin, 31 Cal. 321. But See Quarles v. Lacy, 4 Munf. 251 ; see Martin v. Dwelly, 6 Wend. 9 ; Hea- Hudson v. Wheeler, 34 Tex. 356. 222 PAKTIES CONCEKNED. [CHAP. II. of his own business assumes to deal in his wife's name, and upon the credit of her estate, her knowledge of the fact will not operate to charge her with participation in fraud, nor lier estate with liability for the indebtedness. So long as she ab- stains from active co-operation with him, there is no presump- tion that he is acting as her agent or by her authority .^ A married woman may sometimes however be bound by her fraud, even where that was committed under a certain degree of coercion by the husband. Thus where a married woman wrote and signed a paper, dated before her marriage, purporting to give to her husband, in consideration of the intended marriage, her reversionary interest in a trust fund, it was held that a purchaser of the same (to whom a similar acknowledgment was made by her) acquired a good title, notwithstanding the fact that the paper was executed under threats of the husband.^ And the same rule prevails in gen- eral in favor of an innocent purchaser for value, where the coercion does not go to the extent of depriving the feme of her freedom of action.^ But there is no ground for equitable interference to apply the income of a married woman, which she is restrained from anticipating, to make good the consequences of her fraud, where the restraint on anticipation appears from the instru- ment in respect of wiiich relief is sought.* In the case cited a married woman had made an appointment to her husband of a reversionary interest, after having made a prior appoint- ment of such interest to her mother. By ti'usts executed be- fore her marriage aud before either of these appointments, she was under restraint of anticipation ; and these trusts were recited in the second appointment, but no mention was made of the appointment in favor of her mother. The second appointment was deposited by the husband with a creditor 1 Lawrence v. Finch, 2 C. E. Green, ' White v. Graves, 107 Mass. 325. 234. * Arnold v. Woodhams, L. R. 16 2 In re Lush's Trusts, L. R. i Ch. 591. Eq. 29. § 4.] THE PARTY DEFRAUDING. 223 as security for debt; and the creditor, on learning of the prior appointment, sought to hold the wife's separate estate for the fraud practised upon him ; but the court decided that he could not do so, on the ground that there had been no active misrepresentation on the part of the wife, and that the instrument disclosed the restraint on anticipation, and only attempted to deal with a reversionary interest, not being intended as a present security.^ It was admitted that a mar- ried woman could not set up her equity to a settlement or the like against an active fraud committed by her,^ a distinction afterwards however treated as inapplicable, in any case, to restraints upon anticipation.* § 4. Lunatics. Whether an action founded on fraud can be maintained against an insane person does not appear to have been deter- mined. It is very clear however that insanity does not de- stroy even if it impairs the faculty in man for cunning ; indeed it seems rather to sharpen it. Fraud may in fact be com- mitted by a person of unsound mind ; and if there can be no redress for it, it must be on the ground either that the insane party was, by reason of his insanity, wanting in the faculty of rational deliberation and judgment, or that the party deal- ing with him was aware of his unsoundness of mind. 1 See Jackson v. Hobhouse, 2 Meriv. whatever to deal with the fund, the 483 ; Clive v. Cavew, 1 John. & H. court . . . must go on to hold her 199, 206. Ivoferring to the decision of interest in the fund protected even Wood, V. C, in the last-named case, against her own fraudulent acts."' Malins, V. C. in Arnold v. Woodhams, See also Vanghan v. Vanderstegen, 2 supra, said : ' I think his decision ap- Drew. 363 ; Sharpe v. Foy, L. R. i Ch. plies entirely to the present case ; and I .SS ; In re Lush's Trusts, ib. 591 ; Rob- agree with the view he expressed, that inson v. Wheelwright, 6 De G., M. & " upon the whole it is the sounder course G. 535. to adhere to the view taken by Lord ^ In re Lush's Trusts, supra. Eldon in Jackson v. Hobhouse, namely, ' Stanley v. Stanley, 7 Ch. D. 589, that, having once sanctioned this species Malins, V. C. ' In no case and by no of protection to a married woman by device whatever can the restraint upon making it impossible for her in any way anticipation be evaded.' Ib. 224 PARTIES CONCERNED. [CHAP. II. The first of these grounds can hardly be accepted, for it is not true ; the very fact that the plaintiff is admitted to have been overreached shows this, not to make too much of the fact that madmen are liable for their trespasses.^ It is proba- bly on the ground of knowledge of their condition that they are exempt from liability for fraud, if they are exempt. It is possibly a disputed question whether an insane person can be liable for slander or libel ; in England an affirmative answer has been intimated,^ — in this country the negative has been held, though with qualifications which make knowledge of the mental condition the ground of decision.^ The true rule indeed in slander and libel appears to be as laid down in the first of the American cases cited, that ' where the derangement is great and notorious, so that the speaking [or writing] of the words could produce no effect,' insanity is a defence ; but if on the other hand the insanity is ' but slight, or not uniform [or continuous?], the slander might have its effect, and it would be for the jury to judge upon the evidence before them, and measure the damages accordingly.' It is obvious that this will apply with increased force to the case of a libel published where the lunatic is entirely unknown. The principle of all this is clear, that the lunatic, notwith- standing his insanity, intends his act ; and the intentional doing of an act which is in itself wrongful (that is, wrongful until sufficient excuse is shown) is always, when attended with damage, actionable. There is no reason why the prin- ciple should not be applicable to the frauds of the insane : and if this be true, the ground of exemption in a particular case, if there be exemption, will be knowledge, or perhaps notice, on the part of the plaintiff. A person who is sane enough to conceal his mental unsoundness, or whose conduct 1 Weaver v. Ward, Hob. 134 ; Cross * Dickinson v. Bai-ber, 9 Mass. 225 ; V. Andrews, Ore. Eliz. 622 ; Bacon's Yeates v. Keed, i Blackf. 463 ; Bryant Abr. Trespass, G. v. Taylor, 6 Humph. 199 ; Horner v. 2 Mordaunt u. Mordaunt, 39 L. J. Marsliall, 5 Munf. 466. Prob. & M. 59, Kelly, C. B. See Em- mens v. Pottle, 16 Q. B. D. 354, 366. § 5.] THE PARTY DEFEAUDING. 225 is not such as to disclose the fact of his unsoundness, may well be held accountable for any fraud committed by him upon innocent persons ; and this whether in cases of decep- tion, such as fraudulent representations, or of circumvention, as in making a conveyance in fraud of creditors. § 5. Employers : Agency. That a principal is liable for the fraud of his agent which he has himself authorized in fact, requires no citation of au- thority in its support, any more than would holding the brain liable for what it directs the hand to do. But is an innocent principal liable in damages for the frauds of his agent, in the course of the agency, i. e. within the scope of the agent's au- thority, when those frauds were neither in fact authorized by or known to the principal, nor subsequently ratified by him?^ This question, though it has generally been answered in the affirmative, especially in this country, has been the subject in recent times of great discussion and of some conflict of authority. The question, as we have said, has generally been answered in the affirmative in the United States.^ And the ground sometimes taken, that the principal is liable because he has held the agent out as having authority, and therefore, be- tween two innocent persons, he should suffer as having given occasion for the loss,^ — this ground might lead to the broad- est liability. But it is apprehended that even by those courts which accept it, it would still be held that if the agent, though doing an act within his powers as agent, were in fact acting 1 Of course the agent himself would Erie Iron Works v. Barber, 106 Penn. be liable. AVeber i>. Weber, 47 Mich. St. 125; Lee d. Sandy Hill, 40 N.Y. 442. 569 ; Starkweather v. Benjamin, 32 Contra, Herring v. Skaggs, 62 Ala. 180 ; Mich. 306 ; Kennedy v. McKay, 43 Kennedy v. McKay, 43 N. J. 288, point- N. J. 288; Western Bank v. Addie, ing out the distinction between an action L. B. 1 H. L. Sc. 146. for damages and an action for rescission. 2 1 Story, Equity, p. 214, 13th ed. ; s jb..; Locke v. Stearns, 1 Met. 560 ; Maple V. Eailroad Co. 40 Ohio St. 313 ; Hern v. Nichols, 1 Salk. 289. 15 226 liAETIES CONCERNED. [CHAP. II. for himself, or for himself and another, and not for his princi- pal, the principal would not be liable. So it has just been held by the Court of Appeal of England.^ In the case cited the secretary of a railway company, who in conjunction with a third person had fraudulently issued certificates for debenture stock in the company in excess of the amount authorized by law, falsely and fraudulently, and for the benefit of himself and the third person only, answered questions put to him as secretary by .the plaintiff's manager, in regard to the validity of this debenture stock. An action was brought against the railway company for damage sus- tained by reason of the fraud ; and the Court of Appeal, reversing the decision of the Queen's Bench Division, held that as the secretary had not acted 'for' his company, the company were not liable, though in fact the secretary had authority to answer such questions. His authority to answer such questions was an authority to answer them in the inter- est of his principal, not for himself.^ Again there has been strong inclination on the part of some of our courts, supported somewhat by English opinion, to hold 1 British Banking Co. v. Chamwood The rule has often been expressed in the Ry. Co., 18 Q. B. D. 714. terms, that to hind the principal the 2 'The secretary,' said Lord Esher, agent must he acting " for the benefit," 'was held out by the defendants as a of the principal. This in my opinion is person to answer such questions as those equivalent to saying that he must be put to him in the interest of the plain- acting " for" the principal, since if there tiffs, and if he had answered them falsely is authority to do the act it does not on behalf of the defendants, he being matter if the principal is benefited by it.' then authorized by them to give answers The other judges took the same view, for them, it may well be that they would Bowen, L. J. referring particularly to be liable. But although what the secre- the general rale as laid down by Willes, tary stated related to matters about J. in Barwick v. English Joint Stock which he was authorized to give an- Bank, L. R. 2 Ex. 259: 'The general swers, he did not make the statements rule,' said Willes, J. 'is that the master for the defendants but for himself. He is answerable for every such wrong of had a fiiend whom he desired to assist his servant or agent as is committed in and could assist by making the false the course of his service and for the statements, and as he made them in master's benefit, though no express his own interest or to assist his friend, command or privity of the master iie he was not acting for the defendants, proved.' §5.J THE PAKTY DEFRAUDING. 227 that the innocent principal should not be liable, even when the fraud was perpetrated for his benefit, further than to the ex- tent of benefit received by him (in the absence of course of full ratification) ; his liability thus being in the nature of lia- bility for the return to the injured party of money had and received to his (the plaintiff's) use and benefit,^ or for rescis- sion.2 The general current of authority however is set in the direction of holding that the principal in such a case is liable not only because he has received a benefit,^ but also to the extent of the damage caused by his agent.* Indeed the current of authority appears to be set in the way of discarding all distinction between fraud and other wrongs, 1 Krumm ». Beach, 99 N. Y. 398 ; Judsoii ■». Bennett, 21 N. Y. 238 ; Locke V. Stearns, 1 Met. 560 ; Barwick :;. English Joint Stock Bank, L. R. 2 Ex. 2,59, 266 ; Mackay v. Commercial Bank, L. R. 5 P. C. 394, 414. See also British Banking Co. v. Charnwood Ey. Co., 18 Q. B. D. 714, 719, Bowen, L. J. ; Pollock, Torts, 259 ; Bigelow's L. C. Torts, 24, 25. 2 Kennedy v. McKay, 43 N. J. 288, denying the liability in damages of the Innocent principal ; following the views of Bramwell and Martin, BB. in Udells. Atheiton, 7 H. & N. 172, and Western Bank v. Addie, L. E. 1 H. L. So. 146. See Cargill v. Bower, 10 Ch. D. 502. ^ Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259 (Ex. Ch.) ; Mackay v. Commercial Bank, L. R. 5 P. C. 394 ; Udell v. Atherton, 7 Hurl. & N. 172 ; National Exchange Co. v. Drew, 2 Macq. 103 ; Ranger v. Great Western Ry. Co., 5 H. L. Cas. 72; Fuller V. Wilson, 3 Q. B. 58 ; Swift v. Winterbotham, L. R. 8 Q. B. 244 ; s. o. sub noni. Swift v. Jewsbury, L. R. 9 Q. B. 301 (reversing L. E. 8 Q. B. 244) ; Swire v. Francis, 3 App. Cas. 106 ; Weir v. Bell, 3 Ex. D. 238 ; Weir V. Barnett, 3 Ex. D. 32 ; Houlds- worth V. Glasgow Bank, 5 App. Cas. 317 ; AUerton v. AUerton, 50 N. Y. 670 ; Creig v. Ward, 3 Keyes, 393 j Durst V. Burton, 47 N. Y. 167 ; Jeff- rey V. Bigelow, 13 Wend. 518 ; White V. Sawyer, 16 Gray, 586 ; Fitzsimmons V. Joslin, 21 Vt. 119 ; Presby v. Parker, 56 N. H. 409 ; Lee v. Pearce, 68 N. C. 76 ; Hopkins v. Snedaker, 71 111. 449 ; Brown v. Bonner, 8 Leigh, 1. 1 Jeffrey v. Bigelow, 13 Wend. 518 ; White (.. Sawyer, 16 Gray, 586. And that is evidently the effect of the rule in Barwick v. English Joint Stock Bank, supra, which with a qualification (no- ticed in the text suju'a) appears to be the accepted rule in England. Contra, Kennedy v. McKay, 43 N. J. 288. The question is pertinent whether this would be true of a corporation, where the act in question was ultra vires ; the question has been raised in recent cases but not answered. British Banking Co. v. Charnwood Ry. Co., 18 Q. B. D. 714, 719, Bowen, L. J. ; Western Bank v. Addie, L. E. 1 H. L. s. c. 146, 166, 167. But see Denton v. Great Northern Ey. Co., 5 El. & B. 860 ; Pollock, Torts, 259. 228 PARTIES CONCERNED. [chap. II. snch e. g. as trespass, in regard to the question of the liabilitj of a principal or employer for the acts of his agent or servant. With a single qualification to be mentioned it appears now to be nearly or quite settled law that the principal, however in- nocent, is liable, at law and in equity alike, for the frauds of his agent or servant, in the course of the employment, pro- vided they were committed in the interest of the principal, just as he would be for a trespass.^ The qualification re- ferred to arises from the single case of the buying into a com- pany by the purchase of shares from it. An action for dam- ages cannot be maintained against the company, at law or in equity, at least in the absence of evidence of fraud on the part of the company, though their agent was guilty of fraud in securing the purchase.^ The only remedy is rescission and. 1 British Banking Co. v. Charnwood Ey. Co. 18-Q. B. D. 71i (C. A.); Bar- wick V. English Joint Stock Bank, L. R. 2 Ex. 259 (Ex. Ch.). The rule above quoted (p. 226, note) from the second case has been repeatedly cited and fol- lowed in England, though there have been strong dicta opposed to it. West- em Bank v. Addie, L. R. 1 H. L. Sc. 145. See 1 Story, Equity, pp. 212-214, 13th ed. Indeed the broad rule of lia- bility appears not fully settled in the House of Lords. See Houldsworth a. Glasgow Bank, 5 App. Cas. 317, 339- 341, Lord Blackburn. The author cannot but think it unfortunate that a rule which makes one man liable for another man's torts should be so extended. See Cargill v. Bower, 10 Ch. D. 502, Fry, J. The usual ground for the doctrine of agency in recent authority is that the employer has put the agent or servant into his place to do ' that class of acts ' contained in the agency. Barwick v. English Joint Stock Bank, L. P.. 2 Ex. 259 ; British Banking Co. v. Charn- wood Ey. Co., 18 Q. B. D. 714, 718. ' I am answerable for the wrongs of my servant or agent, not because he is au- thorized by me or personally represents me, but because he is about my affairs, and I am bound to see that my affairs are conducted with due regard to the safety of others.' Pollock, Torts, 68. This certainly is more satisfactory than the pure^fiction formerly much in vogue, that the employer warranted the compe- tency and honesty of his agent. Bar- tonshill Coal Co. v. Eeid, 3 Macq. 266, 283 ; Weir v. Bell, 3 Ex. D. 238, 245. See 1 Story, Equity, 214, note, 13th ed. If the later ground also is not altogether satisfactory, it will then remain to say, what certainly is true, that the doctrine of agency, where there is in fact an ab- sence of authority, rests on grounds of the public good. It has been deemed best, on the whole, that the employer should be liable for acts and omissions in his interest, rather than leave the plaintiff to a redress against the proba- bly irresponsible agent. See Limpus v. London Omnibus Co., 1 Hurl. & C. 526 ; L. C. Torts, 35. 2 Western Bank v. Addie, L. B. 1 § 5.] THE PARTY DEFKAUDING. 229 in the language of Scotch law, ' restitutio in integrum ' ; and that indeed may have become impossible, as by reason of winding up the company in insolvency ,i or of the intervention of new rights. Such is the rule in England. In regard to new rights it should be observed that where, after the plaintiff's subscription, others have innocently joined the company, or new credits have been given to it in good faith, the presumption tliat this has been done, in part at least, on the faith of the plaintiff's membership will in ordi- nary cases be very strong. In such a case the plaintiff will be denied redress, wdiether he seek it by way of an action to rescind his contract of membership, or by way of damages retaining his membership ; ^ and this whether the principal be innocent of the agent's fraud or not. If however no new rights have intervened since or on the faith of the plaintiff's subscription, the case will be different, and he will be entitled to relief, at least in equity, though the principal knew nothing of the agent's fraud and did not in fact authorize it.^ This assumes that he bought his shares from the company, and not from a third person;* for in this latter case the company could not in any view of agency or of liability be considered as a wrong-doer. A principal is chargeable with the fraud of his agent only in so far as the latter is in fact his agent. If the agency be a limited or special grant of authority, the principal will not be liable for acts or concealments for which he might be liable if H. L. Sc. 145 ; Houldsworth v. Glas- See the present writer's note to 1 Story, gow Bank, 5 App. Cas. 317. Equity, pp. 211, 212, 13th ed. 1 Stone V. City Bank, 3 C. P. D. 282, » Parbury's Case, 3 De G. & S. 43 ; C. A. ; Oakes v. Turquand, L. E. 2 Bell's Case, 22 Beav. 35 ; Ayre's Case, H. L. 325. 25 Beav. 513; Scholefield v. Templer, 2 Western Bank v. Addie, supra; Johns. (Eng.) 155; Houldsworth v. Mixer's Case, 4 De G. & J. 575 (over- Glasgow Bank, 5 App. Cas. 317 ; Fitz- ruling Brockwell's Case, 4 Drew. 205) ; simnions v. Joslin, 21 Vt. 129 ; Car- Dodgson's Case, 3 De G. & S. 85 ; Ber- penter v. American Ins. Co., 1 Story, nard's Case, 5 De G. & S. 289 ; Oakes 57. V. Turquand, L. R. 2 H. L. 325, 348. « Bell's Case, 22 Beav. 35. 230 PARTIES CONCEENBD. [CHAP. II. the agency were general. For example in an action upon a policy of insurance, effected by the plaintiff on the life of his wife, the defendants averred that the plaintiff had con- cealed certain facts material to the risk, in regard to which the policy declared that, if anything stated by the plaintiff should not be true, the agreement should not be binding. The evidence in support of the plea went to show that the wife had been examined by the defendants, and that she did not disclose the facts in question, concerning which however she was not asked any specific question. It was held that the evidence did not support the plea. It had merely shown that the wife was the special agent of the husband for a particular purpose, to wit, answering such questions as the defendants should choose to ask her ; and these she had truly answered. But it was observed that, if the wife had been the plaintiff's general agent to effect the insurance for him, the case would be like that of any other agent going to effect a contract for his principal ; and her knowledge might then be considered the knowledge of the principal.^ An agent engaged with his principal in the commission of a fraud is equally liable with the principal.^ But it has been held that an action for deceit in the nature of a conspiracy cannot be maintained against a principal and his agent jointly for the unauthorized fraudulent acts and representations of the agent alone. Such action, it is said, can be maintained only where some representation, wilfully false, or some de- 1 Huckman u. Fernie, 3 Mees. & W. 164. This is probably on the groxmd 505. Notice to the husband is not no- held in England that the tort is joint, tice to the wife unless there is an actual and cannot be treated as several. Brins- agency. Snyder v. Sponable, 1 Hill, mead v. Harrison, L. E. 6 C. P. 584. 567 ; s. c. 7 Hill, 427. The contrary is held in this country. '^ CuUen V. Thompson, 4 Macq. 424 ; Lovejoy v. Murray, 3 Wall. 1 ; Sessions Carpenter v. Lee, 5 Yerg. 265. It v. Johnson, 95 U. S. 347 ; Luce ■». is said however that if a party injured Dexter, 135 Mass. 23 ; Stone v. Dick- by the fraud of others release the prin- inson, 5 Allen, 29 ; Morgan ». Chester, cipal in the wrong, he cannot proceed 4 Conri. 387 ; Gilbreath «. Jones, 66 against those who are secondarily liable. Ala. 129. Thompson v. Harrison, 2 Brown, C. C. § 5.] t'he party defeadding. 231 signed and positively fraudulent artifice, is directly proved or necessarily to be presumed, from the circumstances attending the transaction itself, to have been made or engaged in by the defendants jointly .^ If however a person procure another to make false representations, the effect is of course the same as if the former had made them himself.^ The sheriff in an execution sale is not the agent of the defendant in the execution, and a purchaser cannot hold the defendant liable for the sheriff's misrepresentations at the sale either as ground for an action of deceit or for the purpose of a proceeding to rescind the contract of sale.^ Nor is a sheriff, in selling the property of the defendant in the ex- ecution, the agent of the plaintiff; and the plaintiff is not bound therefore by the false representations made by the sheriff.* Deception in sales will sometimes in equity convert a party into an agent, and render him liable to make redress, where perhaps an action at law (as for deceit) could not be maintained against him. Thus, in a recent case,* the defendant, being aware that the plaintiff wished to obtain shares in a certain company, represented to the plaintiff that he (the defendant) could obtain a certain number of the shares at £3 per share. The plaintiff agreed to purchase, and authorized the defendant to buy at that price ; and the shares were thereupon transferred, and the money paid. The plaintiff afterwards discovered that the defendant himself 1 Page V. Parker, 40 N. H. 47. See maintained against the principal ; but it s. c. 43 N. H. 363. Sed quaere, for the would still hold against the agent. See allegation of oouspiraey is surplusage oases just cited. But that apparently and may be disregarded. lb. pp. 66, is not what the court meant, for it was 67 ; Stiles . Fox, 4 re Hereford Co., 2 Ch. D. 621, C. A. Ired. Eq. 61. See ante, p. 295, note 4. « jt)_ § 4. J riDUCIAEY AND CONFIDENTIAL EELATIONS. 311 no legal entity, may be regarded as principal. Nothing then, apart from special arrangement is peculiarly in the keeping of a particular member ; that is, nothing is in his keeping and control in the sense in which a principal's interests are in the keeping and control of his agent, or a client's interests in the keeping and control of his attorney, or a cestui que trust's in his trustee's. This assumes the ordinary and typical case of a partnership or joint venture. Partners are presumed to have equal access to and knowl- edge of the books and business of the firm ; and, in the ab- sence of any evidence contrary to this presumption, they stand upon an equal footing in inter-alienations of their re- spective interests.^ Hence in the case of such a sale it will not be permitted one of the parties to say that the value of his interest was misrepresented by the other. And it has even been held in such a case that the fact that the pur- chaser bought the vendor's interest through a third person, concealing the real nature of the purchase, was not necessarily a fraud.2 But where a partner intending to purchase the interest of 1 Geddes's Appeal, 80 Penn. St. 442. in a chain of evidence to establish a 2 lb. 'That such a, concealment,' fraud, where a fraud in fact had been it was said, ' was not a fraud per se, as committed. In this case, we have the is assumed in this assignment of error, fact in proof, that the relations between is easily demonstrated. Of what im- the plaintiff and his partners were not of portance was it to the plaintiff who the the most amicable kind. This circnm- purchaser was, provided he obtained his stance may have induced the latter to price or the value of his interest ? It is conceal their real purpose. It is said a very common thing in real estate, and that, if the plaintiff had known who the perhaps other transactions, for the pur- actual purchasers were, it would have chaser to conceal his name from the ven- put him upon his guard, and perhaps in- dor, and negotiate through or in the duced him to demand a higher price for name of another party. The reasons his interest. This, if true, raises no for this are obvious, and such course equity. The argument, to be worth any- of dealing has never been held to be thing, must go the extent of supposing fraudulent. It is true there might be a that the plaintiff would have used the case in which such concealment might information for the purpose of exacting be some evidence of fraud. But it would a greater price than his interest was only be so in its relation to other facts, worth. For if he got its value, how was as to which it formed a connecting link he injured ? It is possible the defend- 312 CONSTKUCTIVE FKAUD. [CHAP. I. his copartner, has had the special management of the business or the keeping of the accounts, the case is different, and there is now a close resemblance to the case of transactions between principal and agent; the intending purchaser must make a full disclosure of the extent and situation of the business, otherwise the purchase will be liable to be avoided by the copartner. Thus it appeared in an English case that a partner, who had superintended exclusively the accounts of the business, agreed to purchase his copartner's share there- in for a sum which he knew from accounts in his posses- sion was inadequate. The transaction was set aside on the ground that the purchaser had concealed the state of these accounts.! Dealings with others. So much in regard to dealings of the parties among themselves ; but there is another case which bears some resemblance to the one last mentioned, and that is the case of dealings in matters of the partnership by one member for his own special benefit. This is like the case of a partner having the exclusive management of the partner- ship business, in that the business is in the partner's hands exclusively ; and it goes beyond that case in that the business is unknown to his associates, and kept from them. It is clear then in principle that in any dealings with this partner in the way of purchasing his interest, or of settling the firm accounts, or other transaction touching his entire interest, his position is fiduciary in the same general sense as is that of an agent dealing with his principal. He must show that he has made the fullest disclosure, and that the transaction with his partners was in all respects fair and just. It is certainly the duty of partners towards each other to refrain from all concealment in the transaction of the partner- ants had this in view in withholding could, provided they did no wrong to the information from him. They had a the plaintiff.' right to buy upon as good terms as they i Maddeford v. Austwiok, 1 Sim. 89. § 4.J FIDUCIARY AND CONFIDENTIAL EELATIONS. 313 ship business. If a partner be guilty of any such concealment and derive a benefit therefrom, lie will be treated in equity as a trustee for the firm, and compelled to account to his co- partners.i This rule will prohibit sales to the firm by one partner in the name of a third person ; ^ indeed all apparently clandestine bargains by one partner for his own exclusive benefit, such as bargains made in contemplation of establish- ing a partnership with other persons.^ The burden is upon him to justify the transaction, otherwise he is a trustee. So each partner is bound to refrain (in the absence of consent by his copartners) from engaging in any other business or speculation which will deprive the partnership of a portion of the skill, industry, diligence, or capital which he is bound to employ therein. In other words a partner is not at liberty presumptively to deal on his own private account in any matter or business which is obviously at variance with his primary duty to the partnership.* The object of this rule is to withdraw from each partner the temptation to bestow more attention, and to exercise a sharper sagacity in respect of his own purchases and sales and negotiations than he does in respect of the concerns of the partnership, in the same or in a conflicting line of business.^ Hence if one partner secretly carry on another trade, or the same trade, for his own advantage, especially if actually rather than presumably to the injury of the partnership interests, or if the partner divert the capital or funds of the partnership to such secret or sinister purposes, he will be compelled to 1 story, Partnership, § 172; Russell facts within his knowledge. Beam v. V. Austwick, 1 Sim. 52 ; Maddeford v. Macomber, 33 Mich. 127. Austwick, ib. 89 ; Sexton u. Sexton, 9 ^ Bentley v. Craven, 18 Beav. 75 ; Gratt. 204 ; Hopkins d. Watt, 13 111. Getty v. Devlin, 54 ^N. Y. 403. 298 ; Pomeroy v. Benton, 77 Mo. 64. " Fawcett v. "Whitehouse, 1 Kuss. & See Sweet v. Morrison, 103 N. Y. 235. M. 132, 148 ; Hichens v. Congreve, 4 The principle applies to partners ar- Russ. 562 ; Story, § 174. bitrating in regard to the settlement * Pomeroy v. Benton, 77 Mo. 64. of partnership matters ; each partner ^ Story, § 177 ; 3 Kent, Com, 51. should lay before the arbitrators all the 314 CONSTBUCTIVE FRAUD. [CHAP. I. account in equity for all the profits made thereby.^ So if one partner should purchase articles on his own private account in some special trade and business in which the partnership was engaged, the purchase being to the injury of the partner- ship, he would be held to account in equity for his profits.^ In cases of this sort equity will even restrain the partner from carrying on any such trade or business without the consent of his copartners.^ But if it merely appear that the enterprise objected to offers only a temptation to betray the pax'tnership, no injunction will be granted.* It is however considered no fraud in one member of a part- nership, intrusted by the firm with business outside of the operations of the firm as such, to enter into an arrangement with a stranger by which the partner shall derive a special benefit from the outside transaction, not shared by the other partners, if they too have been guilty of fraud.^ Thus, in the case cited, a firm engaged in the general produce business held a mortgage on real estate, which real estate the firm were desirous of purchasing under the mortgage. The busi- ness of so acquiring this property was intrusted to one of the partners ; and he made an arrangement with a third person, without the knowledge of his partners, by which such third person should buy the property, giving him, the partner, an interest in it. The mortgage debt having been fully paid into the firm account, it was determined that the partner thus • managing the matter was not liable to account to the other members of the firm in respect of the benefit obtained by him in his private arrangement with the third person ; inasmuch as it appeared that the other partners had been guilty of 1 Story, § 178 ; Long v. Majestre, 1 Bosw. 115 ; Pomeroy u. Benton, 77 Johns. Ch. 305 ; Stougliton v. Lynch, Mo. 64. ib. 467, 470 ; Glassington o. Thwaites, " Burton v. Wookey, supra. 1 Sim. & S. 124, 133 ; Burton v. » Glassington -v. Thwaites, 1 Sim. & Wookey, 6 Madd. 367 ; Lock v. Ley- S. 133. nam, 4 Irish Ch, 188 ; England v. Curl- * Glassington v. Thwaites, supra, ing, 8 Bear. 129 ; Herrick v. Ames, 8 ^ Wheeler v. Sage, 1 Wall. 518. § 5.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 315 fraudulent conduct in relation to the property under mort- gage, having engaged in a scheme to depreciate its value and to deceive other creditors. The relation of joint purchasers is similar ; one will not be permitted to acquire a secret advantage, in the purchase, over his associates.^ If one party agree to unite with two others in the purchase of land, each to furnish one-third the pur- chase-money, and such party to conduct the negotiations and buy the land for the least possible price, he assumes a posi- tion of trust towards his .associates, and is bound to exer- cise the utmost good faith towards them, and permit them to share with him all the profits of the business, without reservation.^ So of joint owners of property, in the sale thereof.^ § 5. Trustee and Cestui que trust. Dealings inter sese. It is the duty of trustees in transac- tions with their cestuis que trust, such as gifts, sales, con- tracts, or the like, to see that the latter are properly advised in regard to their rights ; and the burden of proof rests upon the trustees to show such fact and the perfect fairness, open- ness, and reasonableness of the transaction.* The rule applies to trustees of every description who have, or may have, any control over or management of the trust estate ; ^ it applies to trustees e. g. of bondholders, who may have nothing to do with the estate until a default,^ but not, it seems, to mere instruments.'' The duty in regard to advice is one of serious importance. It may not be necessary that a third person should be called in ; but if the trustee himself assume the part of adviser, it 1 WillinkB.Vanderveer.l Bart. 599; * Jones v. Lloyd, 117 111. 597, and Yeoman v. Lasley, 40 Ohio St. 190, 339 ; oases passim in this section. Hodge V. Twitchell, 33 Minn. 389. ^ Porter v. Woodruff, 36 N. J. 174. 2 Kingi). "Wise, 43 Cal. 629 ; Barry « Baker v. Springfield Ey. Co., 86 0. Bennett, 45 Cal. 80. Mo. 75. 8 Willink V. Vanderveer, supra. ' See ib. ; and comp. ante, p. 310. 316 CONSTRUCTIVE FEATJD. [CHAP. I. must appear that he gave such advice as a disinterested per- son might well have given. And even if he call in a third person it must be shown that that person was really such, and not the agent of some interested party, or if he was, that the cestui que trust, knowing the fact, authorized him to act.^ The case cited well illustrates the principle. Two ladies enti- tled to a trust fund, which had been improperly lent by the trustees to J A (who stood towards the ladies in loco paren- tis), were induced by J A, soon after they came of age, to exe- cute releases to the trustees, taking from him a security for the money, which security was known to be worthless. No direct communication took place between the ladies and the trustees, nor did the trustees render any account to them; but the ladies were represented in the transaction by G, a solicitor, who was known to the trustees to have been for years the confidential adviser of J A, and the transaction was con- ducted by G and J A's solicitors. G was never in fact au- thorized by the ladies to act for them, but was nominated by J A. The ladies did not at the time consider him to be acting for them. The Court of Chancery decided that under these circumstances the trustees could not avail themselves of the releases. The determination of the question whether necessary in- formation was given to a cestui que trust to enable him or his advisers to form a proper judgment of the condition of the estate, and decide whether a release is valid, renders it necessary to examine the circumstances connected with it, such as the conduct and the acts of the parties before its exe- cution, though occurring during the minority of the cestui que trust. Thus where two releases were executed by the cestui que trust, one before and one twelve days after he had reached majority, and the necessary information was conveyed at the time of the first release, and a proper examination made 1 Lloyd 0. Attwood, 3 De G. & J. 614. See Moxon v. Payne, 8 Ch. D. 881, C. A. § 5.] FIDUCIAEY AND CONFIDENTIAL EBLATIONS. 317 by the advisers of the minor in regard to the condition of the trust fund, such facts were considered as the operating causes for the second release.^ A trustee may in a word treat with and buy from the cestui que trust, provided that there is a distinct and clear contract, ascertained to be such after a jealous and scrupulous exami- nation of all the circumstances; that the cestui que trust understood the matter and intended that the trustee should buy ; that the price was adequate ; and that no fraud or con- cealment was employed or advantage taken by the trustee in respect of information acquired by him in his fiduciary posi- tion.2 The purchase is not void but voidable, and hence it is good until lawfully impeached and set aside.^ The trustee may also advance or loan money to the cestui que trust taking an equivalent assignment of future income in payment, where the transaction is not open to the charge of wrong-doing on the part of the trustee* But he cannot make a profit for himself out of the trust,^ beyond what he is justly entitled to receive for his services ; he cannot speculate with the estate.^ A trustee on the other hand cannot, in the sale by him of the trust property, unless authorized by the court or by statute, unite in himself the opposite characters of buyer and seller.'^ 1 Forbes v. Forbes, 5 Gill, 29. * Caldwell v. Boyd, 109 Ind. 447. 2 Coles V. Trecothick, 9 Ves. 234, ' Wingate v. Harrison, 59 Ind. 520. 247 ; Farnam v. Brooks, 9 Pick. 21 2 ; He cannot even hold money which he Spencer's Appeal, 80 Penn. St. 317. has receired from a successor for retir- In the first case Lord Eldon said : ' I ing from the trust ; the money is to be admit it is a difficult case to make out treated as part of the trust estate. Sug- wherever it is contended that the excep- den v. Crossland, 3 Smale & G. 192 ; tion prevails.' He then explains Fox Gaskell v. Chambers, 26 Beav. 360 ; V. Mackreth, 2 Brown, C. C. 400, as Bent v. Priest, 86 Mo. 475. consistent with the exception. ^ Landis v. Saxton, 89 Mo. 375, * So of contracts made by trustees, that an executor cannot recover a bonus such as directors of a corporation, by for loan of funds of the estate ; Baker which they are to make a personal profit v. Springfield Ry. Co., 86 Mo. 75. out of the tnist. Gilmau v. Kelly, 77 ' Parker v. Nickerson, 112 Mass. 111. 426 ; Kitchen i>. St. Louis Ry. Co., 195 ; Bent v. Priest, 86 Mo. 475 ; Mc- 69 Mo. 224. Neil v. Gates, 41 Ark. 264. 318 CONSTRUCTIVE FRAUD. [CHAP. T. The disability is absolute, if objection is properly made.^ And, if he so buy, the cestui que trust, unless, upon the fullest knowledge of all the facts, he elect to confirm the act of the trustee, may repudiate the sale as of right, or he may charge the profits made by the trustee with an implied trust for his benefit.^ The case first cited was a bill in equity by receivers of a ferry company for an account in the matter of a sale of a steamboat. The defendants were directors of the ferry company, and had bought the steamboat in their private capacity, and then, while so owning it as directors, under a vote of the ferry company bought it from themselves for the company at a price much greater than they paid and greater than its value. Tlie principle just stated was applied. But it is not necessary to show that a trustee who has purchased the trust property has made any profit or obtained any ad- vantage thereby. Still it is said that the sale will be sup- ported, if found to be beneficial to the trust estate. This however was said of a purchase made under authority of court.^ But the rule that a trustee cannot act in the double capacity of seller and buyer of the trust property does not, as we have seen, necessarily apply to all dealings with the person for whom he holds it and towards whom he bears the relation of trustee. He may purchase the property of such person in private dealings as distinguished from public sales by the ^ See Brothers v. Brothers, 7 Ired. v. Craven, 18 Beav. 75 ; Kimher v. Eq. 150 ; West v. Waddill, 33 Ark. 675 ; Barter, L. R. 8 Ch. 56. Freeman u. Harwood, 49 Maine, 195 ; ' Fawcett v. Fawcett, 1 Bush, 511. Ogden V. Larrabee, 57 111. 389 ; North Even when the court authorizes, and the Baltimore Assoc, v. Caldwell, 25 Md. cestui que trust consents to a purchase 420 ; Staats v. Bergen, 2 C. E. Green, by the trustee, it is said that the sale 654 ; Poiter v. Woodruff, 36 N. J. Eq. will be looked upon with suspicion. lb. 174 ; Creveling v. Fritts, 34 N, J. Eq. 134. But see Coaks v. Boswell, 11 App. Cas. ■•' Parker v. Nickerson, 112 Mass. 232. 195 ; Bent v. Priest, 86 Mo. 475 ; When a trustee takes a benefit under Michoud V, Girod, 4 How. 503 ; Gillett his own abuse of the trust, a fraudulent a. Peppercome, 3 Boav. 78 ; York & M. purpose will be presumed. Harrison v, Ry. V. Hudson, 16 Beav. 485 ; Bentley Smith, 2 Heisk. 230. § 5.J PIDUCIAEY AND CONFIDENTIAL EELATIONS. 319 trustee ; and if the whole transaction, and the circumstances under which it took place, were fair and open, and no advan- tage was taken by him over the cestui que trust, whetlier by positive concealment, misrepresentation, or omitting to state any important fact, and no undue influence was exercised, and the cestui que trust understood what he was doing, the contract will not be set aside because of the fiduciary relation of the parties.^ A trustee may come to an agreement with his cestui que trust that, with reference to a proposed contract of purchase, they shall no longer stand in the present trust relation. And if the trustee prove that, through the medium of such an agreement, he had previously to the purchase clearly, dis- tinctly, and honestly removed himself from the position of trustee, his purchase may be sustained.'' But though the authorities concede that a man may put off the confidential character of trustee, it may frequently be difficult to deter- mine that he has done so effectually ; ^ and this fact will be investigated with jealousy. So though the connection may have been dissolved, still the trustee cannot use, against the interests of the cestui que trust, any information derived by him while in the trust relation, unless such information has been fully imparted to the cestui que trust.* But though a trustee may purchase from his cestui que trust, where the latter is fully informed, and is not pressed by any undue influence, still the trustee must purchase openly for himself. He cannot set up a nominal purchaser, and deal with his cestui que trust in the name of another person.''' When trustees depart from that rule of conduct which their duty prescribes, neither they nor those who claim under them 1 Brown v. Cowell, 116 Mass. 461 ; * Ex parte Lacey, 6 Ves. 626 ; Coles Farnam v. Brooks, 9 Pick. 212, 231 ; v. Trecothick, 9 Ves. 248 ; Oliver v. Perry, Trusts, § 195. Court, 8 Price, 161, 164. 2 Sanderson v. Walker, 13 Ves. 601 ; ^ Woodhouse v. Meredith, 1 Jac. & Downes v. Grazebrook, 3 Meriv. 208. W. 222. 8 Ex parte Bennett, 10 Ves. 394. 320 CONSTEUCTIVE FEAUD. [CHAP. I. with notice can sustain an interest derived from their breach of trust. Nor are the cestuis que trust called upon in such cases to prove actual injury, in order to enable them to set aside the transaction.^ But the cestuis que trust may, with full knowledge of the facts, when under no legal disability or undue influence, confirm such acts and debar themselves from future objection, though of course they cannot control the rights of others. If for instance the cestuis que trust be ten- ants for life, they cannot by their confirmation conclude the interests of those in remainder.^ It is an inflexible rule, as we have seen,^ that, when a trustee buys at his own sale, the cestui que trust may treat the sale as a nullity, though the trustee paid a fair price ; not because there is, but because there is likely to be, fraud,* a reason founded of course upon the peculiar relation of the parties. Thus it has been held that, where shares of stock, standing in the name of a trustee, were assessed by an act of the legislature and put up at auction for non-payment, and struck off to the trustee, the sale was invalid, and the trustee liable in trover for the value of the shares at the time of the sale and the dividends he had received thereon, with interest, less the amount of the assessments and expenses of sale.^ And this rule, invalidating purchases by trustees at their own sales, applies as well where the sale is made under a decree of court as where it is made by himself.® And a trustee is not only forbidden to purchase for himself, but he cannot buy as agent for another person.^ However if the trustee, in buying, acted without moral 1 1 Hovenden, Fraud, 484. ^ Freeman v. Harwood, 49 Maine, 2 lb, ; Bowes v. East London Water- 195. works, 3 Madd. 383. « Ogden v. Larratee, 57 111. 389. 8 Ante, p. 318. ' North Baltimore Assoc, v. Cald- * Brothers v. Brothers, 7 Ired. Eq. well, 25 Md. 420 | Lewin, Trusts, 377, 150. See Freeman v. Harwood, 49 note. Maine, 195. § 5.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 821 turpitude, equity may protect him so far as to give him a lien upon the property for any advances of a reasonable kind which he may have made.^ And if the trustee put improvements upon the trust property which he has pur- chased, he will be allowed therefor upon a resale ; provided the premises bring more than the sum agreed to be paid by the trustee.^ If a trustee purchase the trust property at his own sale, and claim to hold the same against the cestui que trust, on the ground of acquiescence, it devolves upon him to show notice to the cestui que trust, and distinct information to him before the alleged acquiescence began. The sale being prima facie fraudulent, the purchaser must be able to prove sufficient to overcome the presumption.^ Mere notice can- not be enough ; for it does not follow in logic or in any uniform or usual course of events that a cestui que trust, having notice of a purchase by his trustee, had sufficient information from the trustee to justify him in making the purchase. The transaction may however often be established by long acquiescence in the purchase, in the absence of actual fraud. If the cestui que trust, being under no disability, lie by for a considerable time, with full knowledge of the purchase by the trustee, or do not within a reasonable time after his dis- ability is removed seek to set aside the sale, or to treat the trustee as a purchaser for his benefit, it will be considered a case of acquiescence in the sale, and the trustee will not be disturbed.* Thus an attorney who sells bonds of his client at public sale, and buys them in himself at their full value at the time, cannot, after twelve years' acquiescence by the client, be called to account for them as a trustee.^ 1 M^ulford V. Minch, 3 Stookt. Ch. 16. * Mason v. Martin, 4 Md. 124. 2 Mason v. Martin, 4 Md. 124. 6 Marsh -v. Whitmore, 21 Wall. 8 Miles V. Wheeler, 43 111. 124 ; 178. Randall v. Irvington, 10 Ves. 427. 21 322 CONSTEUCTIVE FEAUD. [CHAP. I. To render the ratification of a purchase made by a trustee of trust property for himself effective and binding, the cestui que trust, being sui juris, must at the time of the ratification be fully aware of every material fact, and his act of ratifica- tion must be an independent, substantive act ; and he must not only be aware of the facts, but apprised of the law as to how these facts would be dealt with, if brought before a court of equity.! An application by the cestui que trust to be allowed to participate in the purchase, which is refused, is not such an acquiescence in the sale to the trustee as to make the sale valid.^ Again though equity will enforce the utmost good faith on the part of a trustee, and vigilantly watch any acquisition by him in his individual character of property which has been the subject of his trust, on the ground of a collusive purchase for himself through another,^ yet after he has sold the prop- erty to another in good faith, and without collusion, he may now purchase it, and acquire a good title.* A fortiori if the sale has been judicially confirmed after opposition by the cestui que trust, the fact that years afterwards he bought the property from the person to whom he sold it will not alone vitiate the transaction. The question in such a case becomes one of actual fraud. Where therefore on a bill charging fraud in a sale, the answer denies it in the fullest 1 Cumberland Coal Co. v. Sherman, be doing violence to probability to im- 20 Md. 134. ' The doctrine of a Court pute ignorance in such cases ; but it is of Chancery,' say the court, quoting only meant to say that where the legal from Lamniott v. Bovvley, 6 Har. & J. principle is confessedly doubtful, and 526," 'is not, as has been contended, one about which ignorance may well be that equity will not administer relief in supposed to exist, a person acting under cases of mistake of law, upon the prin- a misapprehension of the law in such a ciple that every man is bound to know case shall not forfeit his legal rights by the law. It is not intended to say that reason of such mistake.' the plea of ignorantia legis would in all 2 Ricketts v. Montgomery, 15 Md. 46. instances be available in civil cases (in ^ Gaston v. Dashiell, 55 Tex. 608. criminal it never can be), because some * Creveling v. Fritts, 34 N. J. Eq. legal propositions are so plain and famil- 134. iar even to ordinary minds that it would § 5.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 323 mannei", alleging a purchase bona fide and for full value, and that, when the trustee made the sale to the person from whom he has since bought it, the present purchase by himself was not thought of, equity will not pronounce the purchase fraudulent.! Tlie fact even that property was sold by a trustee for a sum less than half its value, and was shortly afterwards sold back to him by the purchaser for the same amount, is not of itself sufficient to fix on the trustee the charge of having com- mitted a fraud.2 To establish such a fact, there should be proof of an imderstanding between the trustee and the bidder at or prior to the sale.^ It is accordingly held that the fact that the registry of deeds shows a sale by the trustee and a reconveyance on the same day or shortly afterwards by the purchaser to the trustee personally is not notice to a subse- quent purchaser of any defect of title.* In regard to taking accounts between a trustee and his cestui que trust, the general rule is, that the trustee must, as in other transactions, make full disclosure of everything material. But where the subject matter of adjustment is an 1 Stephen v. Beall, 22 Wall. 329. if not actual fraud," citing Obert v. 2 See Gaston u. Dashiell, i55 Tex. Obert, 2 Stockt. Oh. 98 ; s. c. 1 Beaal. 508 ; Vasquez v. Richardson, 19 Mo. 96. 423 ; Rosenberg's Appeal, 2 Casey, 67. 3 Bnehlert v. McBride, 48 Mo. 505. "And as the defect is apparent on the * Gaston v. Dashiell, supra. The face of the record, a third person buying court in this important case, by Gould, subsequently will be affected with no- C.J. say: 'Appellee cites from 1 Lead- tiee and cannot hold the land. Kosen- ing Cases in Equity (part 1, p. 255) berg's Appeal. " ' where, in discussing the disability of a The learned judge now examines these trustee or executor to buy of himself, cases and concludes that they do not and stating that the attempt to do this support so broad a proposition ; there through another is an indirection indi- being some special ground for the par- eating collusion, the authors say : "Ac- ticular decision, such as inadequacy, as cordingly where a purchaser at such a in Obert r. Obert, supra. See also Rob- sale reconveys the property at once, or bins v. Bates, 4 Cush. 104 ; Blood v. within a brief period, to the executor or Hayman, 13 Met. 231 ; Jackson v. trustee, the yiresuniption is that he is Walsh, 14 Johns. 414 ; Lazarus v. Bry- used as a tool or cover, and the transac- son, 3 Binn. 54. tion will be set aside as a constructive 324 CONSTRUCTIVE FEATJD [CHAP. I. account running through many years and volumes of books, relating to transactions which may in a measure have passed out of memory, all that the law requires appears to be the giving of information to lead the party into inquiry, a willing- ness to answer all questions, and a submission of all mate- rials of information to the cestui que trust. If in such a case a compromise is made which turns out to be advantageous to the trustee, equity will not, especially after long lapse of time, disturb the same.^ But generally speaking a release obtained by trustees from the cestuis que trust for less tlian the amount due from them is invalid, especially if the beneficiaries reside in another State.^ So too releases from cestuis que trust to their trus- tees, without a settlement of the trust account, are looked upon with jealousy by the courts.^ If however there have been great laches on the part of the cestui que trust (supposing him to have been sui juris), and the trustee has not been guilty of positive fraud, the account will be taken only from the commencement of the suit. But where there have been no laches in seeking the account, or where the parties are not sui juris, or where the trustee is chargeable with fraud, the account will be carried back to the time when the fraudulent possession began.* Generally speaking where a trustee has an agent through whom the business of managing the estate and making up the accounts, with settlement and releases, is transacted, the trus- tee is alone accountable, and the cestui que trust cannot pro- ceed against the agent for losses sustained ; the agent will be accountable only to his employer. But if the agent, though without participation in the misconduct, secure any benefit from a breach of trust with notice, he will be responsible to 1 Farnam v. Brooks, 9 Pick. 212. * Miles v. Wheeler, 43 111. 123 ; See Steadham v. Sims, 68 Ga. 741, Bowes v. East London "Waterworks, 3 post, p. 340. Madd. 375 ; Drummond vi St. Albans, 5 2 Bixler v. Kunkle, 17 S. & R. 298. Ves. 432 ; Pettinard v. Prescott, 7 Vea. 8 Shartel's Appeal, 64 Penn. St. 25. 541 ; Dormer v. Fortescue, 8 Atk. 130. § 5.] riDUCIAEY AND CONFIDENTIAL RELATIONS. 325 the cestui que trust to the extent thereof ; and if he join in the breach his liability will, in principle, be co-ordinate with that of the trustee himself.^ In the first of the two cases he will be a constructive trustee ; in the second he will be a joint tort-feasor. Again if the agent become the virtual principal in the management of the trust, as where an estate belonging to minors is left in the hands of their mother as guardian by their father deceased, and a second husband now takes the same into his hands, though nominally acting as agent, such agent may be treated as a trustee and will be responsible accordingly ; and if guilty of misconduct, he will not be permitted to say that the whole business, reports, and settle- ments in probate, were in the name of the nominal trustee.^ Besides those who are trustees eo nomine, there are others who virtually occupy that position. Among such, promoters of a company may be mentioned ; ^ but particularly the officers and directors of a corporate body are trustees of the stock- holders.* Neither of these classes of persons can, without be- ing deemed guilty of constructive fraud, secure to themselves advantages not shared by the latter.^ Thus where a corpo- 1 See ante, p. 247. One to whom certain property has 2 Lehman v. Rothback, 111 111. 185, been conveyed by his debtor in trust a.n important case. See also Keed v. for others is not precluded from pur- Peterson, 91 111. 288. chasing or levying upon other property * Grover's Case, 1 Ch. D. 182, C. A. ; of the debtor, for his own personal bene- Erlauger v. Sombrero Phosphate Co., fit. Eldridge i: Smith, 34 Vt. 484. 3 App. Gas. 1218 ; Emma Mining Co. 5 Union Pacilic R. Co. v. Credit Mo- V. Grant, 17 Ch. D. 122. Secus if bilier, 135 Mass. 367 ; Lyman v. Bon- the promoters are to sell outright to the ney, 101 Mass. 562 ; Peabody v. Flint, company, and not to become members. 6 Allen, 52 ; Farmers' Bank v. Downey, Grover's Case, supra ; In re Cape Breton 63 Cal. 466 ; Bain v. Brown, 56 N. Y. Co., 29 Ch. D. 795, C. A. ; Ladywell 285 ; Jackson v. Ludeling, 20 Wall. Mining Co. v. Brooke.s, 35 Ch. D. 400 616 ; Simmons v. Vulcan Oil Co., 61 C. A. But the promoters might still be Penn. St. 202 ; Bice's Appeal, 79 agents of the company to be formed, and Penn. St. 168; Gardner v. BuUer, 30 BO stand in a fiduciary relation to them N. J. Eq. 702 ; Koehler v. Black River though they were not to become members. Iron Co., 2 Black, 715 ; Twin Lick Co. * They are not trustees of the credi- v. Marbury, 91 U. S. 587 ; Thomas v. tors of the company. Poole's Case, 9 Brownsville R. Co., 109 U. S. 522; Bent Ch. D. 322, 328, Jessel, M. R. in C.' A. -o. Priest, 86 Mo. 475 (a strong illustra- 326 CONSTRUCTIVE FRAUD. [CHAP. I. ration instructed its officers to effect a loan of money, and they, in violation of their duty, proceeded to secure personal claims of their own against the company, they were held guilty of a fraudulent breach of trust, and the transaction was declared void as against the stockholders.^ So where the president and directors of an insurance company misapplied the funds of the company by distributing them among them- selves and other stockholders, and then refused to pay the claim of a party assured, it was held that he could recover the amount due through a bill in equity against the president and directors personally .^ So again if a director propose a contract for the company from the execution of which he will derive a profit not shared by the company, such profit belongs to the company.^ The principle is the same in these cases as in those of ordinary trustees ; no one acting in any such capa- city is allowed to put himself into a position in which his interest and his duty will be in conflict.* Of the last proposition the case cited for it affords an tion) ; Cook ■». Berlin Woollen Mill Co., to themselves advantages which were 43 Wis. 433 ; First National Bank v. not common to all the stockholders, GifFord, 47 Iowa, 575 ; Imperial Credit they were guilty of an unauthorized act, Assoc. V. Coleman, L. R. 6 H. L. 189 ; and violated a plain principle of equity Parker v. McKenna, L. R. 10 Oh. 96 ; applicable to trustees. The directors Hay's Case, ib. 593 ; York Ry. Co. o. are the trustees or managing partners, Hudson, 19 Eng. L. & E. 361 ; Chari- and the stockholders are the cestuis que table Corp. v. Sutton, 2 Atk. 404 ; Rob- trust, and have a joint interest in all inson v. Smith, 3 Paige, 222 ; Blake v. the property and effects of the corpora- Buffalo R. Co., 56 N. Y. 485 ; Cumber- tion ; and no injury that the stockhold- land Coal Co. «. Parish, 42 Md. 598 ; ers may sustain by a fraudulent breach European Ey. Co. v. Poor, 59 Maine, of trust can, upon the general princi- 277 ; Hodges v. New England Screw pies of equity, be suffered to pass with- Co. 1 R. I. 321 ; Michigan R. Co. u. out a remedy.' Angell & Ames, Cor- Mellen, 44 Mich. 321 ; Jones (/. Mor- poratious, § 312. See Farmers' Bank rison, 31 Minn. 140 ; Ryan u. Leaven- v. Downey, 63 Cal. 466. worth Ry. Co., 21 Kans. 365 ; Oilman 3 Lyman v. Bonney, 101 Mass. 562. V. Kelly, 77 111. 426 ; Harts v. Brown, s Imperial Credit Assoc, v. Coleman, ib. 226. L. R. 6 H. L. 189. 1 Koehler v. Black River Iron Co., * Parker v. McKenna, L. E. 10 Ch. supra. 'In executing this mortgage,' 96, Lord Cairns, said the court, 'and thereby securing § 5.J FIDUCIARY AND CONFIDENTIAL RELATIONS. 327 instructive illustration. The defendants had been of the nnmber of directors in a joint stock bank. At that time resolutions were passed to increase the capital by the issu- ance of twenty thousand new £50 shares, to be offered to the old shareholders at ;a certain rate. Shares not so taken were to be disposed of by the directors at £30 premium. Tlie directors accordingly entered into an arrangement with S, by which he was to take at £30 premium all the unsold shares. In pursuance of this more than nine thousand shares were allotted to S, who paid only £5 per share, upon an arrangement that the certificates should be withheld, that the bank should have a lien upon them for the premiums, and that no transfer of them to any purchaser should be registered until the £30 per share on the shares transferred should be paid. S being unable to pay for so many applied to the defendants to relieve him ; and they severally took consider- able numbers at £30 per shai'e, afterwards disposing of such at a profit. It was held that they must account to the bank for that profit; though the case would have been different had S bought and paid for the shares and then sold them to the defendants. While however the officers of a corporation cannot make a personal profit out of the business of the company, still, as in other cases of fiduciary relations, transactions for the individual benefit of the directors are supported where the fiduciary relation has ceased before the particular transaction, or where it was entered into with the consent of the stock- holders,! or where by acquiescence they have precluded them- selves from objecting.2 So too where a contract, originally objectionable on account of the double character of a director in relation to it, is afterwards, with the assent of the board of directors, acting openly and fairly, assigned to others, the 1 In ve British Box Co., 17 Cli. D. 290 ; Thomas v. Brownsville R. Co., 467, C. A. ; In re Ambrose Mining Co., 109 U. S. 522. See Union Pacific R. 14 Ch. D. 390, C. A. Co. v. Credit Mobilier, 135 Mass. 367. 2 Ashhurst's Appeal, 60 Penn. St. 328 CONSTEUCTIVE FRAUD. [CHAP. I. objectionable feature is thereby removed, and the claim of the assignees is good.^ The case cited is a striking illustration. D was managing director of a railroad company, whose road was to be con- structed. He procured H, an irresponsible person, to offer to construct the road, and procured the board of directors to accept his offer for the company ; H agreeing to assign the contract if and as directed. D provided H with means to prosecute the work, and took the profits. It was intended to give all the stockholders of the railroad company opportu- nity to become interested with H in the contract, but before any change in this respect was made the defendant construc- tion company was established, embracing common directors in part with those in the railroad company ; and the opportu- nity was given to all the stockholders of the latter to join. H, according to orders, assigned his contract to the construc- tion company. The railroad was now completed by that company, and suit brought for payment. The present ac- tion was instituted to enjoin the first one on the ground of actual and of constructive fraud. The case failed in both respects. If the arrangement between D and H was indeed objectionable, it was declared that it was only voidable by the railroad company, and therefore remained good until set aside. But upon the assignment the reason for any repudiation of the contract had ceased, and the contract stood of its own force. It was not true to say that the con- tract became valid when ratified ; it was good until repu- diated, and the time for repudiation was now past. Nor would the fact that D and other directors had common in- terests in the two companies make a case of constructive fraud as matter of law ; ^ though that would clearly be a 1 Union Pacific R. Co. v. Credit ville R. Co., 109 U. S. 622 ; Gilman v. Mobilier, 135 Mass. 367. Kelly, 77 111. 426 ; Ryan „. Leaven- 2 Kitchen v. St. Louis Ry. Co., 69 worth Ry. Co., 21 Kans. 365; all rail- Mo. 224, to same effect. See also on road construction cases. the general subject Thomas v. Browns- § 5.J FIDUCIAEY AND CONFIDENTIAL EELATIONS. 329 suspicious circumstance, because temptation would then be strengthened by opportunity.^ Indeed where the peculiar benefit derived, or to be derived, by a director is received with the consent of the whole com- pany as it existed at the time, the transaction cannot after- wards be upset by the fact, not then contemplated, of the admission of new members at a later time, to whom the matter was not disclosed.^ The case cited is an interesting illustration. Certain persons formed a company for the pur- chase and working of a patent owned by some of them ; all but one of the company became directors, and that one was the solicitor. The directors, having made the purchase, now allotted shares, to some of their number without consideration. All consented and at a regular meeting of the company the allotting was ratified. At this time there was no intention of bringing others into the company, and no prospectus was issued. A year or so later however the company, being in need of more money than it had, admitted certain new stock- holders, who paid in full. The company was afterwards or- dered wound up, and the question arose whether those of the directors who had received shares without consideration should be ordered to pay for them ; the new stockholders alleging that the circumstance had not been disclosed to them. The Master of the Rolls decided the question in the negative ; and his judgment was affirmed on appeal. The ground of the decision was that there had been no intention at the time of allotting the shares of taking in new members ; the need of anything of the kind was not contemplated until long after- wards. Hence there was no fraud upon any one. The case would have been different had the allotment been made in view of adding to the membership others who actually did 3 join in ignorance of the facts ; in such a case the burden 1 See Thomas v. Brownsville E. Co., 2 In re British Box Co., 17 Ch. D. Kyan v. Leavenworth By. Co., and 467, C. A. Kitchen v. St. Louis Ey. Co. , supra. ' The mere fact that the scheme 330 CONSTKTJCTIVE FEAUD. [CHAP. I, would have been upon the allottees without consideration to satisfy the court, if they could, that the bounty was intended to be, and was in fact honestly received.^ The directors are trustees not only for present members but also for those who become members in the future, when the association looks or is such as to look to additions from time to time.^ Where then, broadly speaking, deception is practised in the gift of stock, the donee may be compelled to pay for the shares.^ A director of a company is not in the position of a trustee of his shares for the general body of shareholders, and under ordinary circumstances he may deal with them as freely as any other shareholder, provided he^ does not part with his qualification. But he is a trustee of his power of making calls for the general body of shareholders, and must not use it for his own benefit, without regard to their interests.* It has been held in Indiana that the relation existing between the president of a railroad corporation and a non- official stockholder is not such as to require a disclosure of facts in transactions in the corporation stock between such persons.^ In the case cited the president of a railroad company, who was also one of its directors, having knowledge by reason of his official position that the true value of the stock of the company was very largely in excess of its nomi- nal market value, purchased at much less than its real worth the stock of a non-official stockholder, who was ignorant of the company's financial condition, and of facts giving an extraordinary value to the stock, without disclosing to the seller the facts and circumstances within his knowledge as to its true value. It was held that in the absence of actual might have been intended to deceive ^ lb., Cotton, L. J. the public would not affect the case if ^ jjay's Case, L. E. 10 Ch. 593, none of the public were drawn into it. denying Orgill's Case, 21 L. T. N. 8. In re Ambrose Mining Co., 14 Ch. D. 221 ; Gilraan v. Kelly, 77 111. 426. 890, C. A. « Gilbert's Case, L. K. 5 Ch. 559. 1 lb. ; Society of Knowledge v. Ab- 5 Tippecanoe Co. v. Reynolds, 44 bott, 2 Beav. 559. ' Ind. 509. § 5.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 331 fraud the sale was valid. It was considered that such a case did not disclose a relation of trustee and cestui que trust. But the decision was not unanimous, and the subject is worthy of further consideration. The court was perhaps correct in holding that the president of the company was not, in strict- ness, a trustee towards the vendor ; i but it is quite another thing to say that no relation of confidence and trust existed between the parties. And that is all that is necessary to require disclosure.^ But this decision is not to be understood as in any way impugning the well-established doctrine, that the duties of corporate officers require them to forego all personal interests except in so far as their personal interests do not conflict with their duties to the corporation. The au- thorities upon this point were conceded to be correct.^ Next in regard to transactions between the trustee and others than the cestui que trust. Here the case will more often resolve itself into one of actual fraud, though it will still be found that that this only strengthens, and is not necessary to create, the right of action. Misconduct here is often called ' fraud,' and is enough.* Thus : — Leases of charity estates for an unreasonable term, with- out an adequate consideration, are invalid ; ^ a fortiori if they contain a covenant for perpetual renewal.® In all such cases ' fraud ' is inferred ; and the lessee is held to be a trustee. So if a corporation, acting as trustee of a charity, demise part 1 See Spering'3 Appeal, 71 Penn. St. Barb. 181 ; Hodges v. New England 11, 20 ; Bliss v. Matteson, 45 N. Y. Screw Co., 1 R. I. 312 ; European Ry. 22 ; Bedford E. Co. v. Bowser, 48 Co. v. Poor, 59 Maine, 277 ; York Ry. Peun. St. 29 ; Koehler o. Black River Co. i. Hudson, 19 Eug. L. & E. 361 ; Co., 2 Black, 715. Great Luxembourg Ry. Co. v. Maguay, 3 To the same effect as Tippecanoe 25 Beav. 586 ; Ex parte Bennett, 18 Co. V. Reynolds, supra, see Carpenter v. Beav. 339. Danforth, 52 Barb. 581. * Comp. ante, pp. 300, 301. 8 Robinson v. Smith, 3 Paige, 222 ; * Attorney-General v. Moses, 2 Madd. Verplankt'. Mercantile Ins. Co., 1 Edw. 308. Ch. 84 ; Cumberland Coal Co. v. Sher- ^ Attorney-General v. Brooke, 18 man, 30 Barb. 553 ; Butts v. Woods, 38 Ves. 326. 332 CONSTRUCTIVE FRAUD. [CHAP. I. of the charity estate to one of their own bodj at a lower annual rent tlian might have been obtained from another responsible tenant, it would be impossible, it is held, for the lessee to sup- port the lease, if he was aware of the circumstances ; and in such case the lease must fail for constructive fraud.^ Again if one accept the office of trustee of a marriage set- tlement by which property is intended to be secured for the separate use of the wife, with remainder to the survivor, but subject to a power of joint appointment reserved to them in the settlement, any private agreement between the husband and the trustee that the property should be held liable to make good the engagements of the husband with the trustee would be ' fraudulent ' against the other parties to the settle- ment. The trustee would be bound to carry the appointment into execution, without himself setting up or allowing any one else to set up anything to defeat it.^ And where a cred- itor of the husband, by suppressing the fact that he is a creditor, procures himself to be appointed one of the wife's trustees, with a view of obtaining payment out of the wife's separate property, equity will not permit him to reap the fruits of his conduct by reverting to his character, and setting up the debt which he had suppressed.^ If again the trustees of a marriage settlement, empowering them to advance to the husband money upon receiving a written consent of the wife, attested by witnesses, take upon themselves to advance the money without such consent, they cannot justify this breach of trust by alleging a subsequent approval of the wife. For the actual advance of the money to the husband, who perhaps may be unable to return it, would create an unfair pressure upon the judgment of the wife ; and thus to obtain her approval might be considered, by construction, a fraud.* It would in ordinary cases be a fraud in mere trustees 1 Ex parte Greenhouse, 1 Madd. 109. ' Dalbiac v. Dalbiac, 16 Ves. 124. 2 Morris v. Clarksou, 1 Jac. & W. 111. * Bateman v. Davies, 3 Madd. 99. § 5.] FIDUCIARY AND CONFIDENTIAL EBLATIONS. 333 appointed to preserve contingent remainders to concur in the destruction of the very interests the protection of which was the object of their appointment ; ^ but where they join in the destruction of contingent remainders without any fraudulent motive in fact, after the first tenant in tail has attained the age of twenty-one years, this may be in furtherance of such a fair and reasonable family arrangement as equity, even if it hesitated to direct the act, would not deem a culpable breach of trust.2 A fortiori where the trustee is not merely such, but is also tenant for life of the estate, he will not be deemed guilty of a breach of trust in joining with a remainder-man in tail to bar the entail ; for the policy of the law favors the free alienation of property.^ But where trustees join collusively with a remainder-man in putting the tenant for life of the trust estate out of posses- sion, and before the tenant is restored to his rights some of the occupiers of the land become insolvent, the trustees will be decreed to make good, not merely what the tenant for life would under the circumstances actually have received, had his possession been uninterrupted, but all he is entitled by his contracts of lease to receive.* If on the other hand trustees to preserve contingent remainders collude with the tenant for life, and permit him to commit waste in fraud of those in remainder, the trustees will be liable for such misconduct.^ Courts of equity again look with special jealousy upon the conduct of trustees where infants are the cestuis que trust. Where a person has the management of two estates, in one of which he is interested personally and in the other as trustee, he will not be allowed to refer an engagement into which he has entered to one account or the other, as he may think fit, after he has seen the probability of its turning out advan- 1 Mansell v. Manaell, 2 P. Wms. 680 ; ' Osbrey v. Bury, 1 Ball & B. 58. Biscoe V. Perkins, 1 Ve.s. & B. 491. * Kaye v. Powell, 1 Ves. Jr. 408. 2 Moody V. Walters, 16 Ves. 307, ^ Garth „. Cotton, 3 Atk. 763 ; 310, 311. Stansfield v. Habergham, 10 Ves. 278. 334 CONSTETJCTIVE PRATTD. [CHAP. I. tageously or otherwise. If he has once embarked the infant's property, though no part of such trust money has been laid out, the trustee cannot abandon the contract on the part of the infant and take it on his own behalf. For any profits made, he must account; whether he must answer for any loss or not will depend upon his authority so to employ the trust funds, and the diligence and honesty with which he has conducted the transaction.^ A trustee cannot either at private or judicial sale buy an outstanding title to any of the trust estates, superior or not to the trust title, and assert it against the cestui que trust ; ^ and this is true even of a trustee for bondholders, who has no duties with regard to the management of the trust property before default of payment.^ In the absence of full consent of the cestui que trust, founded upon perfect knowledge, the pro- hibition is absolute, though the act would probably be only voidable. A general rule also obtains in respect of trustees of every description, including agents and other employees, and of tenants for life, namely, that if, from being in possession, they improve an opportunity of renewing a leasehold interest, such renewal will be treated as a graft upon the old lease.* They must not obtain a reversionary interest for their own use only ; ^ but whatever advantages they obtain by such means 1 1 Hovenden, Fraud, 481 ; Wilkin- not applicable where there is no title son V. Stafford, 1 Ves. Jr. 42. whatever in the party oocupj'ing the 2 Roberts o. Moseley, 64 Mo. 507 ; subordinate position. Price v. Evans, McAUen v. Woodcock, 60 Mo. 174 ; 26 Mo. 30. Loss V. Sternberg, 50 Mo. 124 ; Baker ' Baker v. Springfield By. Co. supra. ■0. Springfield Ry. Co., 86 Mo. 75. * Mulvany v. Dillon, 1 Ball & B. Where the title to which » trust or 419 ; James v. Dean, 15 Ves. 240 ; mortgage attaches fails absolutely, the Gower v. Andrew, 59 Cal. 119 ; Davis trustee or mortgagee, in the absence of v. Hamlin, 108 111. 39. So of a lease fraud or unfair dealing or unfair advan- obtained by a partner for himself, tage arising out of the relation sustained Featherstonaugh v. Fenwick, 17 Ves. to the cestui que trust or mortgagor, 311 ; Wilson o. Greenwood, 1 Wils. may purchase and hold for his own ben- C. C. 236. efit an adverse title. The prohibition is ^ Pickering v. Vowles, 1 Brown, § 5.j FIDtrCIAEY AND CONFIDENTIAL KELATIONS. 335 they must hold in trust.^ And purchasers with notice of course stand in the same situation, if relief be sought against them without laches.^ Still where there has been no contrivance in fraud of those who were interested in the old lease, and where such old lease and all the trusts relating to it are absolutely determined, and there is neither any remnant of the old lease, nor any tenant right of renewal upon which a new lease can be considered a graft, then the party who was trustee is quoad hoc no longer in that situation. The fiduciary relation is terminated for want of an object ; the trust over this subject has expired ; and there is no ground for excluding the quondam trustee from becoming a purchaser of the property for his own bene- fit.^ The disability of employees of the lessees was however recently applied to a case' in which, the lease having expired, the plaintiff lessees refused to accede to the proposed contract of renewal, desiring a reduction of the rent. The defendants, one being the clerk and agent of the plaintiffs, and another a party having notice, waited until the plaintiffs had written that they could not afford to pay more than a certain sum ; when the lease was made to them, defendants, at a higher price. The proceeding was to compel a transfer of the lease and to enjoin the defendants from proceeding to recover the premises, which the plaintiffs had not vacated.* Where on the other hand a trustee, even during the existence of a trust over the leasehold interest, purchases the reversion in fee, though it may be objected that by this means he debars the cestui que trust of a fair chance of a renewal, yet this fact C. C. 198 i Randall v. Eussell, 3 Meriv. » Stokes v. Clarke, CoUes, P. C. 196. 193. 1 Gower v. Andrew, supra ; Davis v. * Gower v. Andrew, 69 Cal. 119. Hamlin, supra ; Nesbitt i>. Tredennick, Three judges dissented, on the ground 1 Ball & B. 46 ; Eushworth's Case, 2 that taking the lease under such circum- Freeni. 13. stances was not doing an act prejudicial ' Parker v. Brooke, 9 Ves. 587 ; and adverse to the interests of the Senhouse v. Karle, Amb. 288 ; Cordwell employer. V. Mackrill, 2 Eden, 347. 336 CONSTETJCTIVE FEAUD. [CHAP. I. alone is not of sufficient importance to convert the purchase of the inheritance into a mere graft upon the leasehold in- terest.^ Upon similar principles, though it would be highly improper for an attorney to avail himself of information which he obtained as trustee for tenants for life or years to procure from the right heir a conveyance of the reversion in fee for his own benefit, still, desirous as equity might be to consider him a trustee only, it would not be warranted in doing so in favor of tenants for life who took nothing in the inheritance.^ "Where a trustee in abuse of his trust has converted the trust property to his own use, the cestui que trust has the option to take the original or the substituted property. And if either has passed into the hands of a bona fide purchaser without notice, he may take its value in money. If the trust property come back into the hands of the trustee, that fact does not affect the rights of the cestui que trust. The prin- ciple is, that the wrong-doer shall derive no benefit from his own wrong. The entire profits belong to the cestui que trust ; and equity will so mould and apply the remedy as to give them to him.3 § 6. Guardian and Waed. Dealings inter sese. Property transactions, such as gifts, sales, and contracts, between guardian and ward, in the inter- est of the former, are prima facie invalid : but the guardian is entitled at common law ^ to show, if he can, for the burden of proof is upon him, that he dealt with the ward exactly as with a stranger, taking no advantage of his influence over 1 Randall v. Eassell, 3 Meriv. 197 ; for • moneys which he has expended. Hardnian v. Johnson, ib. 352. McKennan v. Pry, 6 Watts, 137. See 2 Norris v. Le Neve, 3 Atk. 38. Thorn v. Thorn, 51 Mich. 167. ' May V. Le Claire, 11 Wall. 217, * The case is in some states under 236. If there he actual fraud in the statute regulation, to a certain extent, trustee in the execution of the trust, See e. g. Taylor v. Brown, 55 Mich, the cestui que trust can recover of him 482. without an offer to reimburse the trustee § 6.] FIDUCIARY AKD CONFIDENTIAL BELATIONS. 337 him, or of his superior knowledge in relation to the subject- matter of the transaction, and that the ward's act was the result of his own volition and upon full deliberation * and legal advice. The transaction therefore is not void, but at most only voidable.^ The principle of law which protects wards in transactions with their guardians is general.^ It extends to the execution of a will by a ward in favor of his guardian ; and hence a tes- tament made by a ward in favor of his guardian will be held void, unless the legal presumption of undue influence is re- butted by proof.* The same principles apply to cases of ac- knowledgment of debts. Thus in an English case it appeared that the plaintiff had married while a minor, and had thereby placed himself in a position of great embarrassment. The defendant, an attorney, made to him considerable advances of money, but did not appear to have acted for him in any professional capacity. Two months after coming of age, the plaintiff signed an acknowledgment, stating, as the defendant alleged (but this was disputed), that he was indebted to the defendant above <£1,800. The court treated the case as one of guardian and ward, and held that he could not be permitted to conclude the plaintiff by an acknowledgment, signed by him within a short time after coming of age, and without the in- tervention of any friend or adviser.^ 1 Meek v. Perry, 36 Miss. 190. of the ward to his own use, the ward 2 See Hunter v. Lawrence, 11 Gratt. will be entitled to hold him to account 111, that an innocent purchaser for therefor at the highest price reached by value will acquire a good title not- the stock after the conversion. Lamb's withstanding fraud on the part of the Appeal, 58 Penn. St. 142. Cases of guardian. this kind show how anxious the courts * Where a guardian has been guilty are to protect the interests of the de- of actual fraud in buying land from pendent party to a trust, his ward, and has put improvements * Meek v. Perry, supra, upon it, the ward can recover the land ^ Revett v. Harvey, 1 Sim. & S. 502. without paying for the improvements. Of course a mere acknowledgment of Eberts v. Eberts, 55 Penn. St. 110. debt would not be conclusive in any Secus probably in the absence of actual case, unless under seal ; but in this fraud. If the guardian convert stock case the defendant alleged that the ■ 22 338 CONSTKXJCTIVE FRAUD. [CHAP. I. The jurisdiction of equity will be exercised to restrain an action at law upon a negotiable security obtained by a guardian from his ward while under the influence, though absolved from the connection, of the confidential relation. In an English case it appeared that a lady, two years and a half after she came of age, had at the request of her late guardian, with whom she was still living, indorsed a promissory note, made in his favor. The paper came into the defendant's hands for value, but with notice of the circumstances. Upon a bill filed by the young lady, the defendants were restrained from suing her at law upon her indorsement.^ When a man acts as guardian, or trustee in the nature of guardian, for an infant, the courts are extremely watchful to prevent such person taking any advantage, immediately upon the attaining majority by his ward or cestui que trust,^ and also at the time of settling accounts or delivering up the trust, because an undue advantage may then be easily taken.^ The occasion would give an opportunity, either by flattery or by force, to take such an advantage ; and therefore the rule of the courts is to treat the situation as one coming under the head of public utility, like the case of bonds ' obtained from young heirs, and rewards given an attorney pending a cause. Gifts under such circumstances are not in general permitted to stand, though perhaps in the particular case there may not have been any actual unfairness. Still such bounties by wards just come of age are not universally invalid. A ward in such a situation may bind himself by a gift to his guardian ; as where, being actually in possession of an estate, and fully instrument was signed after a regular ^ Tucke v. Buchholz, 43 Iowa, 415. settlement of accounts and delivery of ^ The guardian is bound to account vouchers, and there was no suggestion to the ward for all profits made with of mistake. the estate. Kepler v. Davis, 80 Penn. 1 Maitland v. Backhouse, 16 Sim. St. 153. 58. See Maitland v. Irving, 15 Sim. 437. § 6. J FIDUCIARY AND CONFIDENTIAL RELATIONS. 339 sui juris, he makes a gift by way of reward for care and trouble, with his eyes open.^ A person entering upon the estate of an infant, whether the infant had been in possession or not, will be fixed with a fiduciary relation to the infant: first, whenever he is the natural guardian of the infant ; secondly, when he is so con- nected by relationship or otherwise with the infant as to im- pose upon him a duty to protect, or at least not to prejudice, the infant's rights ; or, thirdly, where he takes possession with knowledge or express notice of the infant's rights.^ One who occupies such a position towards an infant comes, it should seem, within the general prohibition against treating by way of contract or purchase with reference to the infant's estate. And an agent in the management and settlement of the affairs of a .guardian may so far take to himself the duties of the office as to make him directly liable for mismanagement or misconduct to the ward.^ Deeds of release and acquittance as well as of gift, made by a ward to his guardian, or to a person who has borne the part of a guardian, shortly after the ward's arrival at majority, but before the delivery of the ward's estate and without a settlement of accounts, are considered invalid without proof of actual fraud.* The same is true of settlements in general made by the guardian with the ward out of court, shortly after the latter' s majority, if made without competent and in- dependent advice, such as that of friends, unless the guardian show that the transaction was entirely fair and just.^ But circumstances may be such as to excuse the guardian from 1 Hylton V. Hylton, 2 Ves. 548. ^ Wedderburn v. AVedderburn, 2 " Quinton v. Frith, L. R. 2 Irish Keen, 722 ; Walker v. Symonds, 3 Eq. 396. See also Revett v. Harvey, 1 Swanst, 69 ; Hylton v. Hylton, 2 Ves. Sim. & S. 502. 547 ; Hatch v. Hatch, 9 Ves. 292 ; ' Lehman v. Rothback, 111 111. Elliott v. Elliott, 5 Binn. 8 ; Say v. 185. See also Reed v. Peterson, 91 111. Barnes, 4 Serg. & R. 114 ; Ashton v. 288, an attorney taking management of Thompson, 32 Minn. 25 ; Harris v. the estate. Carstarphen, 69 N. C. 416 ; Smith v. * Waller v. Armistead, 2 Leigh, 11. Davis, 49 Md. 470. 340 CONSTEUCTIVE FRAUD. [CHAP. I. furnishing the ward with all details in regard to transactions, as when considerable time, filled with important and engrossing events, such as the existence of war, has elapsed; and this though the ward may have suffered prejudice.* Again if a guardian buy property from- his ward at a greatly inadequate price, shortly after the ward arrives at majority, the sale will be set aside at the suit of the ward.^ But undue influence will not be presumed to exist on the part of a guar- dian over his former ward in a settlement between them made more than three years after the ward has attained his majority.^ The settlements and allowances of a guardian however, when made in a Probate Court, in the matter of his guardian- ship, have the force, it has been held, of judgments, and can be set aside only upon proof by the ward that they were pro- cured by fraud.* And it is not a fraud, such as will avoid such a settlement, for the guardian e. g. to give his individual note for the maintenance of the ward, and then to obtain an allowance therefor in the settlement.^ In regard to dealings between the guardian and . third persons touching the ward's interests, in whatever way, the 1 Steadham i^. Sims, 68 Ga. 741. his ward precisely the whole state of ' In this case,' said the court, ' it was her affairs, mentioning all the money not pretended hy the defendant at the received for her, the amount due, with trial that the ward had received the full interest &c., was too exacting upon him, amount of principal and interest that and especially upon an estate that had would have heen due her upon a strict been brought down through the recent legal settlement; hut the issue was, war.' And judgment was reversed. See did she, in view of all the facts con- also Smith v. Davis, 49 Md. 470. nected with the management of her es- 2 Eberts v. Eberts, 55 Penn. St. tate, and with a full knowledge of its 110 ; Tucke v. Buehholz, 43 Iowa, conditions and amount, agree to settle on 415. the payment of the sums named in the ^ Eittredge v. Betton, 14 N. H. receipts, without mistake on her part, 401. or imposition or fraud on the part of * Brent v. Grace, SO Mo. 263; her guardian. To have held this trustee Mitchell v. Williams, 27 Mo. 399. then up to more than the letter of the ^ Brent v, Grace, supra, law, and required him to have shown § 7.] PIDTJCIAEY AND CONFIDENTIAL EELATIONS. 341 situation of the guardian is that of a strict trustee, and what has been said in relation to trustees is applicable here. § 7. Executors oe Administrators and Claimants of THE Estate. Dealings inter sese. Executors and administrators also come under the general designation of parties holding fiduciary re- lations to others, and the general principles already stated apply to them.^ In a recent case ^ a widow had yielded the right of administration upon her husband's estate to the hus- bands of children by a former marriage of the deceased. Be- tween the widow and these children and their husbands the most affectionate relations existed. The husbands had in their hands or within their control personal property of the deceased amounting to sixty thousand dollars or more, to one- third of which the widow was entitled absolutely by law. She had in fact great confidence in the men, as she evinced by renouncing her right to the administration of her husband's estate in their favor. Soon after the qualification of the ad- ministrators, a deed was executed between all the parties above-named, whereby they agreed to abide by the terms of a defective will made by the deceased in the disposition of his estate. The effect of this arrangement was the giving up, on the part of the widow, of some $25,000. Upon the evidence in the case it was considered that, in the situation of the par- ties, undue influence had been exerted on the widow, and that she was not sufficiently informed of the value of the estate or of her rights ; and therefore, though no actual fraud had been practised, the deed was set aside. 1 Humphreys v. Burleson, 72 Ala. to A's mother, does not sustain a fiduci- 1 ; Statham v. Ferguson, 25 Gratt. ary relation to a legatee of the mother 28; Scott 1). IJmbarger, 41 Cal. 410; whom the administrator advises concern- Michoud V. Girod, 4 How. 603 ; Landis ing the legatee's interest. Newhall v. V. Saxton, 89 Mo. 375. The adminis- Jones, 117 Mass. 252. trator of A, whose property goes by law ^ Statham v, Ferguson, 25 Gratt. 28. 342 CONSTKUCTIVE FEAUD. [CHAP. I. A purchase, again, by an administrator of one of the dis- tributees, shortly after the distributee became of age, of all his interest in his father's estate, the administrator having ren- dered no inventory of the estate or stated an account, and the purchase being made at a grossly inadequate price, will be considered fraudulent and voidable at the election of the distributee, if application is made for that purpose within a reasonable time afterwards, or within reasonable time after obtaining knowledge of the fraud.^ As we have elsewhere seen, in considering the duties of trustees, a person cannot legally purchase and acquire inde- feasibly, on his own account, that which his duty requires him to sell on account of another ; nor can he purchase, on account of another, that which he sells on his own account. He can- not as of right unite the opposite characters of buyer and seller. On the contrary the parties in interest may have the sale set aside as of right ; for duty and interest conflict, and that is enough.^ The disability is peremptory, if objection is properly made. And this rule applies to purchases by execu- tors at open sale, though they were empowered by the will to sell the estate of their testator for the benefit of heirs and leg- atees, of whom they themselves were part.* And an adminis- trator can no more buy the estate of the deceased through a third person acting on^ his behalf than he can do so di- rectly.* Thus where property sold at an administrator's sale is purchased by his attorney and his brother, and he (the administrator) afterwards negotiates sales of the same, deriving profits thereby, equity will set aside the original pur- chase, unless the property has since passed into the hands of innocent third persons.^ But the sale is only voidable, not 1 Johnson v. Jotnson, 5 Ala. 90. Gaughey v. Brown, 46 Ark. 25 ; West 2 West V. Waddill, 33 Ark. 575, an v. Waddill, 33 Ark. 575 ; Wright v. important case. Walker, 30 Ark. 44 ; Hall v. HaUett, s Michoud V. Girod, 4 How. 503. 1 Cox, 134. * Scott V. Umbarger, 41 Cal. 410 ; « Read v. Howe, 39 Iowa, 553. See Morgan v. Wattles, 69 Ind. 260 ; Mc- Hawley v. Cramer, 4 Cowen, 717 ; § 7.] FIDUCIAEY AND CONFIDENTIAL RELATIONS. 343 void ; 1 and this is probably true in all other cases of purchase by executors or administrators. The transaction is valid until properly impeached ; ^ and it matters not whether the property is personal or real.^ The rule which restrains executors and administrators, and persons in situations of trust generally, from buying the prop- erty under their charge, does not go so far as to prevent them from buying the property from one who has purchased the same for value and in good faith. Provided there be no con- nivance or collusion between such parties, the executor or trustee may treat for the purchase, and. acquire the title to the property immediately after it is sold from the estate in trust.* But the fact e. g. that a purchaser at an administra- tor's sale was a man of no pecuniary means, that on the same day on which the administrator conveyed the property to him he reconveyed it to the administrator, is sufficient evidence, in the absence of an adequate explanation, that the first purchase was made for the benefit of the administrator ; and the trans- action may be avoided by the parties in interest.^ On the other hand where the evidence clearly shows that a purchaser at administration sale bid off the property on his own accoimt, and not as agent of the administrator, a subse- Youiig V. Bank of Orleans, 9 Paige, are not bound to act jointly ; each has 649 ; Howell v. Baker, 4 Johns. Ch. his own election. lb. 118 ; Cleavinger v. Reimar, 3 Watts & » lb. S. 486 ; West v. Waddill, 33 Ark. 575 ; ' Wortman v. Skinner, 1 Beasl. 358 ; Wright V. Walker, 30 Ark. 44 ; Hall v. Ives v. Ashley, 97 Mass. 198 ; West v. Hallett, 1 Cox, 134. Waddill, 33 Ark. 575 ; Vasquez v. Rich- 1 Ives V. Ashley, 97 Mass. 198 ; Mc- ardson, 19 Mo. 96. The mere fact that Gaughey v. Brown, 46 Ark. 25 ; Jones the purchaser afterwards conveyed the V. Graham, 36 Ark. 383 ; White o. property to the administrator is no evi- Moss, 67 Ga. 89 ; Thornton u. Willis, dence of fraud. Vasquez v. Richardson, 65 Ga. 184. The sale may therefore supra ; Boehlert v. McBride, 48 Mo. become good by lapse of time. White 505. Gaston v. Dashiell, 55 Tex. 508, V, Moss, supra ; Jones v. Graham, supra, ante, p. 323. 2 lb. SeeLitchfieldD. Cudworth, 15 ^ obert t-. Obert, 2 Rtockt. 98. See Pick. 23. The purchase of real e-state Scott v. Gamble, 1 Stookt. 235 ; Mul- by the administrator may be avoided or ford v. Bowen, ib. 797 ; Michoud v. Har- confirmed by the heirs ; and the heirs ris, 4 How. 563; West v. Waddill, supra. 344 CONSTEUCTIVE ITEADD. [CHAP. I. quent sale by the purchaser to the administrator will not be invalidated by the fact that the purchaser was influenced to buy by the assurance of the administrator that he would take the property off his hands if desired by him. So long as such assurance appears to have been given — probably that fact should be shown by the administrator — to procure a pur- chaser and to prevent a sacrifice of the property, and the purchaser was to be at liberty to keep the property, the ar- rangement does not constitute an agency nor is it necessarily improper.! Indeed though the property was bought by an agent, e. g. an attorney, of the administrator, for himself (the agent), if the purchase appears to have been in all respects fair and just, it will not be set aside because of mere fluctua- tion of value, which has turned out to the advantage of the administrator,^ or because an appraisal, if honest and fair, was low.^ If an executor, ignorant of the rules of the Court of Chan- cery, openly purchase assets of his testator with the full approbation of the parties interested, he will not be held answerable, after a considerable lapse of time, for the profit he has made, provided he has purchased honestly. But if it appear that the purchase was made with a fraudulent in- tention, the rule will be enforced. The purchase will be set aside, and the executor required to account for the accumulations.* A purchase of bonds from an executor at a discount of eighteen per cent, with knowledge that the condition of the estate does not require the sale, is a fraud on the part of the purchaser, though he may not know that the bonds do not amount to more than the executor's interest (as one of the legatees) in the estate. And in such a case, where the executor has not paid to the other legatees their portion of the estate, such purchaser may be compelled to repay the 1 Ives V. Ashley, supra. 3 lb. 2 West V. Waddill, 33 Ark. 575. i Whatton v. Toone. 5 Madd. 54. § 7.] FIDUCIARY AND CONFIDENTIAL EBLATIONS. 345 money to them.^ So too if the sureties of the executor have been compelled to pay the amount to the legatees, they may recoYcr over from the purchaser.^ Settlements made out of court in administration are re- garded with the same jealousy, and are to be sustained only when truthfully and fairly made ; though when settlement is made in court, the burden of proof will of course be upon the party attacking the same. If an administrator charge himself in settlement with the appraised value of the estate, while the sale-bill returned by him shows that the amount for which the property sold exceeded its appraised value, or if he apply the money of the estate to the purchase of property in his own name and right, equity will open the settlement for fraud.^ And the same is true where such a party, in his trust capac- ity, collects notes due and drawing interest, without charging himself with such interest, though there be no evidence of posi- tive fraud.* And legatees may of course safely rely upon rep- resentations made by the administrator in regard to the estate.^ A party who voluntarily interferes with and manages an estate in behalf of heirs as their representative, and as such . ' Pinckard v. "Woods, 8 Gratt. 140. of course, he is jjersoually liable to ' It is the duty of an executor, ' said the creditors, legatees, and others injuriously court, ' not to sell, but to collect the affected by such improper diversion of debts due to the estate of his testator, the assets. And the purchaser himself, including those arising out of sales of so acquiring such debt at a profit, if he goods made by the executor in the course has reason to believe at the time that of his administration ; and, if he sells the same belongs to the estate, and is Bu?h debts at a price below their value, so disposed of by the executor for his he thereby commits a devastavit, unless individual uses, thereby concurs in such he makes it appear that such sale was fraudulent breach of trust by the ex- manifestly required by the interests of ecutor, and therefore incurs the like the estate. And this he can never do liability.' without showing in the first place that ^ lb. the proceeds thereof have been applied ^ Osborne u. Graham, 30 Ark. 66. to the purposes of the estate. The ap- * Ringgold v: Stone, 20 Ark. 526. propriation by the executor of the pro- 5 Humphreys v. Burleson, 72 Ala. 1, ceeds of such a sale to his own individual opening a settlement in the Court of uses presents the case of a fraudulent Probate on account of misrepresentation breach of trust on his part, for which, by the administrator. 346 CONSTEUCTIVE FEAUD. [CHAP. I. acquires information to which a stranger would not have access, stands in the situation of an administrator or executor duly appointed. And, in treating with the heirs for the pur- chase of the estate, he is bound to disclose every matter which it is important they should know, or the sale will be invalid, unless such disclosure is distinctly waived.^ It has been doubted whether a gift will be looked upon with such suspicion as to cast the burden of proving fairness upon the donee, where the situation of the donee was merely that of a person transacting the business of the donor as administratrix of the estate of the donor's husband, and of attending to her out-of-doors affairs generally. If however the situation were to be deemed that of an agency, subject to the severest scrutiny of the law, there was nothing in the evidence to cast the slightest suspicion upon the transaction ; and it was accordingly upheld.^ When an executor's purchase at his own sale is set aside, the executor will not be held to take the property at what it was worth upon the estimate of witnesses. The property will be put up for sale again ; but, if more cannot be obtained for it than the executor was to pay, his purchase will be confirmed.^ Of course an executor or administrator cannot speculate in the funds of the estate ; and a contract with him for a bonus for a loan of money of the estate cannot be en- forced.* He is entitled only to his proper compensation for 1 Casey v. Oasey, 14 111. 112. such case the performance of so reason- ^ MlUican v. Millican, 24 Tex. 426, able a service and duty on his part will 451. See Hunter v. Atkins, 3 Mylne & disqualify the son from receiving a gra- K. 113. In Millican v. Millicau the tuity from his mother, or from becoming court say : ' The agency which existed the object of her bounty equally with in this case was such as every widowed others who have not rendered such ser- inother, who is under the necessity of vices. Undue influence is not to be administering upon her deceased hus- inferred as the legal consequeuce of such band's estate, would be likely to intrust an agency.' to a son, if she have one competent ° Bailey v. Eobinsons, 1 Gratt. 4. to transact the business ; and it will * Laudis v. Saxton, 89 Mo. 375. scarcely be contended that in eveiy ^ lb. § 8.] FIDUCIAEy AND CONFIDENTIAL KELATIONS. 347 A court of equity will not assist in carrying into effect compositions of claims by executors or administrators, unless the party praying it will first disclose all the circumstances of the case, that the court may see that there has been no fraud, and that everything was fair.^ Settlements of adminis- tration in court have the force of judgments, at least so far as imposing the burden of proof upon him who impeaches them.2 Dealings of the executor or administrator with others stand upon the same footing, it seems, with the like deal- ings of trustees. § 8. Mortgagor and Mortgagee. Dealings inter sese. The relation of mortgagee to mort- gagor is fiduciary in certain particulars, or rather in a limited sense.^ The law upon the subject of the right to redeem mortgaged property, where the mortgagor has conveyed to the mortgagee the equity of redemption, makes a near ap- proach to the law governing the strict trust relation. It is characterized by a jealous and salutary policy. Principles are applied almost as stern as those which govern where a sale by a cestui que trust to his trustee is drawn in question. To give validity to such a sale by a mortgagor, it must be shown that the conduct of the mortgagee was in all things fair and frank, and that he paid for the property what it was worth. He must hold out no delusive hopes ; he must exer- cise no undue influence ; he must take no advantage of the 1 Clay V. Williams, 2 Munf. 105. 2 gee Bigelow, Estoppel, 221, 4th ed. Executors who advise a lady legatee to ' As to the nature of this relation make a particular settlement of her fund the masterly opinion of Sir Thomas should see that she has competent ad- Plumer in Cholmondeley v. Clinton, 2 vice or full information, so that she Jac. & W. 182-185, should he read, understands what she is doing. Pri- Most that has since been said on the deaux v. Lonsdale, 1 De G. J. & S. 433. subject is only an echo of that opinion. 348 CONSTKUCTIVE'FKAtJD. [CHAP. I. fears or poverty of the other party. Any indirection or ob- liquity of conduct is fatal to his title. Every doubt will be resolved against him. The fact that the mortgagor may have knowingly surrendered and never intended to reclaim is of no consequence. If there be vice in the transaction, the law, while it will secure to the mortgagee his debt with interest, will compel him to give back that which he has taken with unclean hands.^ In deciding upon transactions between mortgagor and mort- gagee equity will then jealously examine whether the latter has taken advantage of the necessities of the former. ' He who has the absolute control of a sale for his own benefit cannot be the purchaser unless there is fair competition of bidders or a lawful opportunity given for such competition.' ^ When the loan has been coupled with or followed by any other transaction beneficial to the lender, the inequality of the situations of the parties will be evidence that the dealing was produced by the influence derived from the mortgage. And on this ground it will be set aside as fraudulent.^ Thus sales of equities of redemption may be set aside whenever, by the influence which the incumbrance gives him, a mortgagee has purchased for less than others would have given,. and there has been any evidence of misconduct on his part in obtaining the purchase.* Indeed it is directly held in this country that when, upon such a sale, the mortgagor sues to regain possession and for account of rents and profits, the burden is upon the mortgagee to prove, by evidence beyond the deed, that the conveyance was fair and that he paid for 1 Villa V. Rodriguez, 12 Wall. 323, Michael v. McDermott, 5 Harris, 358 ; 339, per Swayne, J. ; Morris v. Nixon, Forbush v. Greene, 108 Penn. St. 503. 1 How. 118 ; Russell v. Southard, 12 s Webb v. Eorke, 2 Sehoales & L. How. 139 ; Wakeman v. Hazleton, 3 673 ; Spurgeon v. Colliei-, 1 liden, 59 ; Barb. Ch. 148; Holmes... Grant, 8 Vernon «. Bethell, 2 Eden, 113 ; Tooms Paige, 245 ; Prees v. Coke, L. E. 6 Ch. v. Conset, 3 Atk. 261 ; 2 Hovenden, 645 ; 4 Kent, Com. 143. Fraud, 180. '■* Strong, J. in Klopp v. Witmoyer, * Gubbins v. Creed, 2 Sehoales & L. 43 Penn. St. 219, quoting from Mc- 221. § 8.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 349 it what it was worth, in order to rebut a presumption of fraud.i On the other hand it is held in England, by the House of Lords, that a release to the mortgagee, of the equity of redemption, for the amount of the mortgage debt does not cast the burden of justifying it upon the mortgagee.''' Cer- tainly when mortgaged premises are to be sold under orders in bankruptcy against the mortgagor, the mortgagee may, by application to the court, obtain permission to become pur- chaser, if he prove to be the highest bidder at the sale.^ Again one who undertakes to execute a power of sale in a mortgage is bound to the observance of good faith and to a careful regard for the interests of his principal;* a sale under such a power will be set aside upon proof of the slightest fraud or unfair conduct.^ This however does not mean that countervailing evidence is not to be taken into account. The whole evidence must be fairly weighed. The sale will not be set aside upon slight evidence of unfairness, if met by prepon- derating evidence on the other side.® Neither the mortgagee nor an agent for him or for himself can, as of right, purchase when exercising the power of sale.^ And the same is true of a pledgee.^ If a mortgagee under a power of sale is indeed, to a certain extent, a trustee in law,^ his own interest may still absorb the whole estate. It is pledged to him for his protection; and 1 McLeod V. BuUard, 86 N. C. 210, the slightest proof (evidence ?) of fraud citing Villa v. Eodiiguez, 12 Wall. 323, or unfair conduct, lb. and Chaiiman v. Mull, 7 Ired. Eq. 292. « Burr v. Borden, 61 111. 389. 2 Melbourne Banking Corp. v. ' Martinson v. Clowes, 21 Ch. D. Brougham, 7 App. Gas. 307 ; Knight 857. u. Majoribanks, 2 Macn. & G. 10. ' Hayward v. National Bank, 96 IT. 8 Ex parte Duncane, Buck, 18 ; Ex S. 611 ; Chouteau v. Allen, 70 Mo. 290. parte Hammond, ib. 465. " Hood v. Adams, 124 Mass. 481, * Thompson v. Heywood, 129 Mass. 484 ; Eobertson v. Norris, 1 GifiF. 421, 401 ; Martinson v. Clowes, 21 Ch. D. 424 ; Downes v. Glazebrook, 3 Meriv. 857. 600. See however Warner v. Jacob, 20 6 Burr V. Borden, 61 III. 889 ; not Ch. D. 220, Kay, J. ; Banner v. Ber- however as was inaccurately stated in ridge, 18 Ch. D. 254, 269 (a mortgage Longwith v. Butler, 3 Gilm. 42, upon with a clear trust), Kay, J. 350 CONSTRUCTIVE FEAUD. [CHAP. I. his security might be greatly impaired or even sacrificed at such sale, if he were not permitted under any circumstances to become a purchaser. It has been accordingly held that where the mortgagor was privy to the sale, assented to it, and to the acquisition of title by the mortgagee, and con- curred in that result after it was reached, and there was no suspicion of fraudulent practice, the sale to the mortgagee would stand.' It has also been held that a mortgagee with a power of sale may purchase at his own sale through a third party, and that such sale is not subject to impeachment in the absence of proof of unfairness, attempt to stifle com- petition, or other fraudulent acts.^ So too it has been held in New York that a mortgagee, holding a power of attorney from the mortgagor, may sell and convey through a third party to himself, provided he act therein with the knowledge and concurrence of the mortgagor.^ A mortgagee selling under a power of attorney, and a mortgagee acting under a power of sale incorporated in the mortgage, stand upon the same footing. In the latter case the mortgage deed itself is treated, for this purpose, as a power of attorney.* Dealings with others. A single case may here be noticed. If the mortgagee of leasehold premises obtain a renewal, either by being in possession or by clandestine conduct towards the mortgagor, the renewal lease will be treated as a graft upon the old one ; and the mortgagee will not be allowed to retain it for his own benefit, but will hold it in trust.^ 1 Medsker v. Swaney, 45 Mo. 273. * Medsker v. Swaney, 45 Mo. 273, 2 Howards v. Davis, 6 Tex. 174. 277. » Dob.son V. Racy, 4 Seld. 216. See ' Nesbitt v. Tredennick, 1 Ball & B. Ives V. Ashley, 97 Mass. 198. 46. §§ 1, 2.] fiduciary and confidektlal relations. 351 ii. confidential relations. § 1. Introductory. We come now to a class of cases in which the relation in question is one of confidence in the legal sense of that term, and yet not properly fiduciary. The principles applicable to the two appear to be the same in nature, differing perhaps only in degree. Here and there the law may now require stronger evidence, or evidence of some additional fact, on the part of the plaintiff, beyond what would be necessary if the relation were fiduciary, before casting the burden of proof of fair and honorable conduct upon the defendant ; but that is about all. Thus it is laid down that the relation of parent and child belongs to a different class of relations from that of trustee and cestui que trust, attorney and client, principal and agent, and the like ; and the presumption (or suspicion) of objectionable conduct is not so strong.^ In these cases of confidential relations merely we have only to consider deal- ings of the parties to the relations inter sese. § 2. Engagement to Marry. Undue influence may easily be exercised under the inti- mate relation created by an engagement to marry. In the case e. g. of a marriage settlement of the intended wife's prop- erty, drawn up by the intended husband, it is the duty of the latter to explain the provisions of the deed in unmistakable terms, and to give due opportunity to the lady for delibera- tion ; failing which she may on the husband's death, if not before^ have the settlement annulled.^ Again if a woman 1 Wessell V. Eathjohn, ' 89 N. C. true that 'a man holds the superior 377, Merrimon, J. position, and the affianced is so much 2 Lovesy v. Smith, 15 Oh. D. 655. under his influence that the law looks But see Atkins v. Withers, 94 N. C with suspicion upon any contract made 681, where the court say that it is not between them, and will throw the bur- 352 CONSTEUCTIVE FBAUD. [CHAP. I. give a man land upon a promise of marriage, and he then refuse to marry her and continue to hold the land, this is a fraud for which the law will give the woman proper relief.^ So, on the other hand, if a man should, after much solicitation and hesitancy, convey land without adequate pecuniary con- sideration to a woman who had promised to marry him, and who had thereby gained great influence over him, her refusal to marry him would afford him ground for rescinding the conveyance.^ § 3. Spiritual Advisees and Spiritualists. The relation of spiritual adviser to members of a church or parish is a relation often of close confidence, though not fiduciary, and calls for scrutiny when a gift to minister or church is impeached by the giver.^ It is hardly necessary to say that there is no incapacity in the receiver to accept the gift, large or small.* Still the act does not rest on the foot- ing of a gift between persons in no relation other than that of mere friendship or kindred.^ Thus where a person's spiritual adviser procures a will to be drawn and superintends its execution, by which a church in which he is interested is benefited, ihere arises sufficient for a presumption of undue influence.^ den of showing its fairness upon him.' this case a widow who had made a volun- It was considered that the sense of honor tary settlement in favor of a clergyman and chivalry in man was such as to pre- in whom she placed great confidence, vent any presumption of wrong-doing in sought to set the same aside. Lord the relation. But the facts in cases like Eldon now said : ' The question is not Lovesy v. Smith show unfortunately whether she knew what she was doing, that there is danger. had done, or proposed to do, but how 1 3 Black. Com. 174. ' the intention was produced ; .whether 2 Eockafellow a. Newcomb, 57 111. all that care and providence was placed 186. around her, as to those who advised her, ' Huguenin v. Baseley, 14 Ves. 273. which from their situation and relatiou * Audenreid's Appeal, 89 Penn. St. with respect to her, they were bound to 114 ; Greenfield's Estate, 12 Harris, 232. exert on her behalf.' ^ Huguenin v. Baseley, supra. In ^ In re Welsh, 1 Redf. 238 ; Ford v. § 4.] FIDUCIARY AND CONMDENTIAIi RELATIONS. 353 It is also to be observed that one who prevails over another through spiritualistic means to obtain a gift of property may be compelled to restore or make good the property so obtained.^ In the case cited a widow of advanced years was induced by the defendant, acting as a spiritual medium, to adopt him as her son, to transfer to him a large amount of property, to make her will in his favor, and to settle upon him a large reversionary interest. She afterwards instituted a suit to set aside these gifts, and it was held that the relation exist- ing between the parties implied the exercise of dominion by the defendant over her mind; and the latter having failed to show that the gifts were the pure, voluntary, and well- understood acts of the plaintiff, she was entitled to judg- ment. The burden of proof rests upon the defendant in such cases, just as in those of attorney and client, guardian and ward, and the like.^ § 4, Husband and Wife. The relation of husband and wife certainly is not fiduciary ; but it has been laid down that there is a principle of equity in virtue of which the court will set aside instruments between persons occupying relations in which one of the parties may naturally exercise an influence over the conduct of the other. And under such a principle it is held that the husband occu- pies towards his wife the relation mentioned, so that gratu- itous transfers by the wife to him may be set aside accordingly, unless the husband show by the clearest evidence that the gift was freely and deliberately made.^ Indeed it was held in the same case that it made no difference that the gift was made in fraud of creditors ; for the husband could not avail himself Hennessy, 70 Mo. 580 ; Huguenin v. 498 ; Atkins v. Withers, 94 N. C. 581, Baseley, supra. dictum ; Farmer v. Farmer, 39 N. J. 1 Lyon V. Home, L. R. 6 Eq. 655. Eq. 211. See Hatch v. Hatch, 9 Ves. = Ih.; Leightoni). Orr, 44 Iowa, 679. 292, 298 ; Walker v. Coleman, 81 111. 3 Boyd V. de la Montagnie, 73 N. Y. 390. 23 354 CONSTKTTCTIVE FEATJD. [CHAP. I. of the plea of particeps criminis.^ Liberal gifts by the hus- band to the wife clearly furnish no evidence of undue influ- ence on the part of the wife.^ Still the husband may be so •weak-minded or feeble as to require the wife to justify the gift.3 And the wife may no doubt become the confidential agent, or the trustee, of her husband, so as to be subject to the ordinary duties and disabilities of the position.* § 5. Paeent and Child. In respect of bounties by children in favor of their parents, it is for the parent, father or mother,^ to show that no ad- vantage was taken of his or her influence or knowledge, and that the transaction was fair and conscionable.® And the same is true of one standing in affection and influence in loco parentis,'^ as e. g. an elder brother though he be not guardian,^ or a step-father who has acted as guardian.^ The Missouri case cited affords a striking illustration of the main proposition. In that case a daughter joined with her brother in a voluntary deed to her father giving to him a life estate in all her property. The father used no undue or im- proper influence of any kind to induce her to sign the deed ; he never even spoke to her on the subject until after the deed was prepared and she was about to sign it, her brother first 1 Citing Freelove v. Cole, 41 Barb. Kenipson v. Ashbee, L. R. 10 Ch. 15, 318, af d in 41 N. Y. 619 ; Osborne v. 21 ; Turner v. Collins, L. E. 7 Ch. Williams, 18 Ves. 379. See Byington 329 ; Miller v. Slmonds, 72 Mo. 669, V. Moore, 62 Iowa, 470. a strong case ; Wood v. Eabe, 96 N. Y. 2 Small V. Small, 4 Maine, 220 ; 414. Shipman v. Furniss, 69 Ala. 555, 564. ' Archer v. Hudson, 7 Beav. 551. 3 Haydock v. Haydock, 34 N. J. Eq. » See Williams v. Williams, 63 Md. 570. 371 ; Gillespie v. Holland, 40 Ark. 28; < See Stone v. Wood, 85 111. 603. Million i>. Taylor, 38 Ark. 428. The ^ Ashton V. Thompson, 32 Minn. 25. relation of brother and sister is not ' Miskey's Appeal, 107 Penn. St. however per se confidential. Million 611 ; Bainbrigge v. Brown, 18 Ch. D. v. Taylor, supra. See infra, pp. 365, 188 ; Berdoe ii. Dawson, 34 Beav. 603 ; 366. Bury V. Oppenheim, 26 Beav. 594 ; 9 Bradshaw v. Yates, 67 Mo. 221. § 6.J FIDTJCIAEY AND CONFIDENTIAL RELATIONS. 356 suggesting it, and she readily assenting. She was at the time of age, but she was also on the eve of marriage, and acted without time or opportunity for reflection, and without inde- pendent advice further than that of her brother. The deed was considered improvident and the transaction set aside. Lord Eldon has however said that the Court of Chancery will not look on such transactions in the light of reversionary bargains, but will regard them as family arrangements, with a reasonable degree of jealousy, and will not look into all the motives and feelings which might actuate the parties in enter- ing into such arrangements.^ This principle has been reas- serted in later cases. Lord St. Leonards, after quoting this language, has said that if it could be shown on the whole that the son understood what he was doing, and that the case was one of family arrangement, he would be most unwilling to look narrowly into the consideration.^ And both of these statements have been cited with approval in a recent case.^ This was the case of a bounty by a son, entitled in remain- der to real estate expectant on the lives of his mother and father, by whom he had been educated and maintained. A few days after he attained majority the son, in order to relieve his parents (who had mortgaged their life interest as a secu- rity for moneys borrowed and partly expended in improving the property) from keeping on foot certain life insurance poli- cies, executed a deed, charging the inheritance with the mort- gage debt. He subsequently filed a bill to have the deed set aside on the ground of fraud, which was disproved, and of undue influence ; but the bill was dismissed with costs. It was considered that the benefit conferred upon the inheri- tance would support the deed.* Whether it would have been 1 Tweddell v. Tweddell, 1 T. E. 1. 21 Beav. 259 ; Head v. Godlee, Johns. 2 Wallace v. Wallace, 2 Dru. &War. 636 ; Jenner v. Jenner, 2 De G., F. & 470. See also Rhodes v. Cook, 2 Sim. J. 359 ; Field v. Evans, 15 Sim. 375. & S. 489. * 'It was argued indeed,' said the 8 Baker o. Bradley, 2 Smale & G. court in Baker v. Bradley ' that a judi- 531, 559. See also Hartopp v. Hartojip, cious friend would have advised the 3J6 CONSTRUCTIVE FRAUD. [chap. supported in the absence of such a consideration does not appear. In cases also of gifts to a parent, or to one standing in loco parentis,^ by a child shortly after majority, the courts look with jealousy upon the transaction ; and the more especially when the parent has, during the minority of the child, been guardian of his property, and in receipt of the rents of a considerable estate.^ The burden of proof rests upon the parent to show (and he should show plainly) that the gift was made, not in consequence of representations on his part, but by the spontaneous act of the child, and that the child had full knowledge of the nature of the deed by which the gift was effected, and of his own position and rights in reference to the property .^ A gift to the parent however by a child just come of age jjlaintiff that it was useless to attempt to relieve his father by joining in the security, and that his tetter course was to preserve uniiicumhered his reversion- ary estate. But, to justify the pro- priety and wisdom of any such advice, it will be necessary to show some other scheme of life and of intermediate sub- sistence for the plaintiff during the life of the father and mother. But no such scheme has been shown. Upon a fair view of the whole transaction, there seems nothing unfair, nothing unreason- able in it as a family arrangement, even if the money expended by the father on the estate was not a sufficient con- sideration. That the plaintiff perfectly understood the transaction is proved by various circumstances. . . . Looking at this case with that reasonable degree of jealousy required in the investigation of all such transactions, it would seem that the previous expenditure by the father for the improvement of the es- tate, and the advantages which were likely to accrue to the plaintiff in point of position and futnre prospects in his profession [surveying] by his concurring to preserve the family establishment, are considerations enough to support the securities given in September, 1848, as a reasonable family arrangement. It has indeed been said on behalf of the plaintiff that this is the case of a father urged, by the, threat of a creditor, to exercise his parental influence to induce his son to do what was wholly to his detriment. But it is impossible, on a fair view of the facts, to consider that some advantage did not accrue to the son, and that the expenditure of the father on the estate was not a valuable consideration.' 1 See e. g. Tucke v. Buchholz, 43 Iowa, 415, step-father Roberts v. Ba- ker, 63 N. H. 332, brother. ^ Wright u. Vanderplank, 2 Kay & J. 1 ; s. c. 8 De G., M. & G. 133 ; Tucke !). Buchholz, 43 Iowa, 415 ; Ash- ton V. Thompson, 32 Minn. 25. See Lehman v. Rothback, 111 111. 185. ' Wright V. Vanderplank, supra. § 5.J FIDUCIARY AND CONFIDENTIAL RELATIONS. 357 is not per so voidable ; nor, it is held iu this country, is it prima facie voidable. The true interpretation of the cases on this subject is said to be to the effect that there must, in such a case, be some ingredient of undue influence exercised by the parent, operating upon tlie fears or hopes of the child ; thus showing reasonable ground to presume that the act was not perfectly free and voluntary on the part of the child.^ But the natural and just influence which a parent has over a child renders it peculiarly important for courts of justice to watch over and protect the interests of the latter. And therefore all contracts and conveyances whereby benefits are secured by children to their parents are objects of jealousy ; and if they be not entered into with scrupulous good faith, and are not reasonable under the circumstances, they will be set aside, unless third persons have acquired an interest under them.2 Hence where a deed of gift was made by a female child just of age, and living with her parents, to a trustee for the benefit of one of those parents, and was executed under the influence of misrepresentations by the parents, and contained false recitals, the instrument was ordered to be set aside and the property to be reconveyed to the grantor.^ And the general principle under consideration applies equally to settlements and compromises made between the child and parent, while the parental influence still exists, in regard to transactions between them in the interest of the parent.* The influence which a child may exert over a parent on the 1 Taylor v. Taylor, 8 How. 183, 201 ; ^ Williams v. Williams, 63 Md. 371 ; Jenkins v. Pye, 12 Peters, 241. The 1 Story, Equity, § 309. fact that the child is of age however ' Taylor v. Taylor, 8 How. 183. may he of no aid to the parent, as where "Where there has been long delay (but the child is weak-minded or suffering not too long for relief), and permanent from disease and excitement. WiUiams improvements have been made by the V. Williams, 63 Md. 71. Such a case parent on land given by the child, the calls for the gi-eatest care on the part of deed will not be set aside, if the value the parent, in regard to the interests of of the land as it was when given, with the child. lb. See also Tucke v. Buch- interest, shall be made good to the child, holz, 43 Iowa, 415. Bradshaw v. Yates, 67 Mo. 221. * Ashton V. Thompson, 32 Minn. 25. 358 CONSTEUCTIVE FRAUD. [CHAP. I. other hand by acts of filial duty and obedience can never be undue. That influence is proper which any person gains over another by acts of pure kindness and attention, and by correct conduct. In the case of a gift from a child to a parent, undue influence may be inferred from the relation itself, but never where the gift is from the parent to the child.i In the former case it may be inferred that the gift proceeded from the exercise of parental authority. It is natural that the known wishes of a parent should be strongly felt by a child accustomed from infancy to implicit confidence and obedience, even after the child has attained majority ; to the extent of affecting the child's freedom of will, especially if he continue to reside with the parent and to look to him or her for protection and support. But where the gift is from the parent to the child, there is no such inference. A parent does not yield obedience to the child further than affection or duty prompts ; and it is in accordance with the promptings of nature that parents should make gifts to their children.^ There is indeed nothing in the relation between a grantor and his son, or grandson, or son-in-law, to raise a presump- tion of fraud in the case of deed granting to such persons a bounty, though the instrument was executed without the aid of legal counsel but eight days before the grantor's death, and while he was confined to his bed by sickness.^ In the case however of a voluntary settlement by a parent in favor of a child the deed should contain a power of revocation ; in 1 Taylor v. Taylor, 8 How. 183 ; ing a benefit upon his son, or his grand- Wessell V. Rathjohn, 89 N. C. 377. son, or his son-in-law, even though only 2 Millican v. Millican, 24 Tex. a few days before his death. To provide 426, 446 ; Saufley v. Jackson, 16 Tex. for his children or grandchildren is, or 579 ; Leddel v. Starr, 5 C. E. Greene, may be, a necessary duty ; and where a 274. father discharges that duty, this court 8 Beanland v. Bradley, 2 Smale & G. will not presume fraud. If fraud is 339. ' There is no rule of this court,' alleged, it must be proved in the ordi- said Stuart, V. C, 'which prohibits a nary way.' man by a voluntary deed from bestow- § 5.] FIDUCIAKY AND CONFIDENTIAL RELATIONS. 359 the absence of such power the beneficiary has the burden of proving, if the transaction is impeached, that the settlor was properly advised, that he thoroughly understood the effect of omitting the power, and that he intended to execute it as a settlement.^ Notwithstanding the favor with which family settlements are regarded, they seem to stand upon no peculiar footing, when, effected under the influence of one in whom a special confidence, from his familiarity and connection with the estate, is placed.^ Thus it has been laid down that where a father devises an estate to a son and daughters, the son, knowing its value, and the daughters not knowing it, should be scrupu- lously careful to apprise them, when entering upon a treaty with them for a different settlement of the estate, of its value, of their rights, and of every circumstance necessary to enable them to treat upon terms of perfect equality with him. Any positive concealment or misrepresentation on his part, calcu- lated to put them at a disadvantage, will, it is clear, be suffi- cient ground for annulling the settlement.'' The principles applicable to gifts by children to their parents apply where the natural position of the parties has become reversed, and the child has become the guardian of his aged or infirm parent.* Thus it has been held that a son, the principal legatee of an infirm mother, who was generally under his influence, must produce the most satisfactory evi- dence of the good faith of his conduct.^ And where the son 1 HaU V. Hall, L. E. 14 Eq. 365 ; Barb. 453 ; Day v. Day, 84 N. 0. 408 ; Kleeman v. Peltzer, 17 Neb. 381. Belcher v. Belcher, 10 Yerg. 121 ; Mar- 2 Ashtou V. Thompson, 32 Minn. 25; tin v. Martin, 1 Helsk. 644 ; Glover v. Hewitt V. Crane, 2 Halst. Ch. 159. Hayden, 4 Cush. 580 ; Harrington v. » Hewitt 1). Crane, 2 Halst. Ch. 159; Grant, 54 Vt. 236 ; McKinney v. Hins- Van Meter v. Jones, 2 ' Green's Ch. ley, 74 Mo. 326 ; Deem v. Phillips, 5 520. W. Va. 168. * Highberger v. Stiffler, 21 Md. 352 ; ^ Simpler v. Lord, Jacox v. Jacox, Simpler v. Lord, 28 Ga. 52 ; Jacox v. Thorn v. Thorn, and Dalton v. Dalton, Jacox, 40 Mich. 473 ; Thorn v. Thorn, supra. See Spargur v. Hall, 62 Iowa, 51 Mich. 167 ; Dalton v. Dalton, 14 498 ; Kleeman v. Peltzer, 17 Neb. 381. Neb. 419 ; Comstock v. Comstock, 57 As to evidence to rebut the presumption 360 CONSTEUCTIVB FRAUD. [CHAP, I. has been guilty of serious misconduct, he will hare no equity to claim for outlays made by him upon the property obtained, on the annulling of the transaction.^ If no undue or improper means be used by a son to procure a voluntary deed from his father, the mere fact that the father regarded him with more favor than another child, and that the deeds were executed when the father was in some degree intoxicated, but not enough to be insensible of what he was doing, will not be suf&cient to set aside the gift.^ A son employed by his father to procure a deed making a certain disposition of his property thereby assumes a fiduciary relation towards his father. Hence where a son so employed procured a deed to himself and a brother, in exclusion of the other heirs, the father being at the time aged, infirm, and in a distressed state of mind, though capable of making a deed, and there being indications that the father had been im- posed upon, the sons were held to strict proof of the fairness of the transaction.^ There is no such relation of trust and confidence existing between a son-in-law and his mother-in-law, by force of the mere relationship, that in dealings between them the latter should be supposed to act upon the presumption that there would be no concealment of facts from her.* § 6. Physician and Patient. A close confidential, though not a fiduciary relation exists ordinarily between a patient and his regular medical adviser, close enough to bring the relation within the class of which •we are treating. There is indeed no rule of law which prevents gifts and bounties by the patient ; ^ but on the against the legatee, see Gloyer v. Hay- ' Martin v. Martin, 1 Heisk. 644. den, 4 Cush. 680. * Fish v. Cleland, 33 111. 238 ; Cle- 1 Thorn V. Thorn, supra. See Mc- land v. Fish, 43 111. 282. Kennan v. Pry, 6 Watts, 137. ^ Audenreid's Appeal, 89 Penn. St. 2 Belcher v. Belcher, 10 Yerg. 121. 114. § 7.] FIDUCIAKY AND CONI'IDENTIAL EELATIOKS. 361 principle of correcting abuse of confidence, equity will look with favor on the claim of a patient against his medical attendant in respect of relief from gifts made to him. Relief has been granted against the liability of the maker of a promissory note, taken by his medical attendant (who had rendered no account) from a poor patient on the occasion of an accession of fortune for an amount beyond what was due for his services on the most extravagant scale of charges.^ So too an agreement obtained by a physician or surgeon from a deceased patient will be set aside, if the court be satisfied that the patient never did agree to, or intend to direct, what ia the agreement he was represented as agreeing to and directing, and if his signature must have been obtained by fraud, or under such circumstances as to render it the duty of the court to protect the patient and his estate from prejudice. And the relief stands upon the general principle applicable to all the variety of relations in which dominion may be exercised by one person over another .2 The mere fact however that a vendor was afflicted with a chronic disease, and that the purchaser was his family physi- cian, will not be sufficient to raise a presumption of fraud in the sale against the purchaser.^ § 7. Draftsman op Will taking Benefit. Besides the foregoing cases there are others in which there arises, from the peculiar circumstances under which an instru- 1 Bellage v. Southee, 9 Hare, 534. intention imports knowledge, and liber- 'Why,' said the court, 'was the amount ality imports the absence of influence ; of the debt which was due from the and I see no evidence in this case either poor man to be altered, because his of knowledge or of the absence of influ- position in life was about to be changed? ence. And, where a gift is set up be- And why was the alteration to be made tween parties standing in a confidential ■ without any account being rendered or relation, the onus of establishing it by any explanation being offered ? It is proof rests upon the party who has re- said that he intended to be liberal, and ceived the gift' that this court would not prevent him 2 £)ent v. Bennett, i Mylne & C. 269. from being so ; and no doubt it would ^ Doggett v. Lane, 12 Mo. 215. not, if such were his intention. But 362 CONSTKUCTIVE FRAUD. [CHAP. I. ment, especially a will, is executed, at least a suspicion ^ of un- fairness or imposition, and that sufficiently strong as matter of law to require the party claiming the bounty to prove the perfect fairness of the transaction and the freedom of action of the giver. Such a, case occurs where a will is written or pro- cured to be written by a person benefited by its provisions, especially by one standing in the relation to the testator of attorney or counsel. Such a circumstance is sufficient to ex- cite close scrutiny, and to require strict proof of free volition, assent, and capacity ,2 and (it seems) that the testator was la- boring under no mistaken apprehension in regard to the value of his estate and the amount he was giving to the draftsman. There is however no necessary incompatibility between the positions of acting as a draftsman of a will and of receiving a benefit under its provisions. The only effect of occupying both positions is to require the party to show the facts above indicated.^ The presumption against the validity of the be- quest will however be still stronger if the disposition be differ- ent from the previously expressed intention of the testator.* It follows from the statement of this proposition (to wit, that the writing a will or the procuring it to be written by a 1 It is douttful whether there is any Shelford, Lunacy, 317-334; 1 Jarman, presumption of fraud. Post v. Mason, Wills, 42 (4th Am. ed.). But see 91 N. Y. 539. Wright v. Howe, 7 Jones, Eq. 412. 2 Wilson's Appeal, 99 Penn. St. 648; » Post v. Mason, 91 N. Y. 539; Cuthhertson's Appeal, 97 Penn. St. 163; Davis v. Rogers, 1 Houst. 44. Breed v. Pratt, 18 Pick. 115 ; Coffin v. * Lee v. Dill, 11 Abb. Pr. 214. A Coffin, 23 N. Y. 9 ; Post v. Mason, 91 will written for a testator in extremis N. Y. 539 ; Clark v. Fisher, 1 Paige, by one who takes under it is not ipso 171 ; Duffield v. Robeson, 2 Harr. (Del.) facto invalid. Downey v. Murphey, 1 384 ; Tompkins v. Tompkins, 1 Bailey, Dev. & B. 82. If the draftsman of a 92 ; Patton v. Allison, 7 Humph. 320 ; will be one of the nearest relatives of Crispell v. Dubois, 4 Barb. 393 ; Beall the testator, the fact that he is made V. Mann, 5 Ga. 456 ; Adair v. Adair, 30 executor will not in ordinary cases raise Ga. 102 ; Newhouse v. Godwin, 17 Barb, a presumption of fraud ; nor will the 236 ; Durling v. Loveland, 2 Curteis, case be different, if a small legacy and 225 ; Greville v. Tylee, 7 Moore, P. C. a contingent remainder be given him 320 ; Baker v. Batt, 2 Moore, P. C. and several other relations in the same 317 ; Dodge v. Meech, 1 Hagg. 612 ; degree. Coffin v. Coffin, 23 N. Y. 9. § 7.] FIDUCIARY AND CONFIDENTIAL KBLATIONS. 363 beneficiary under it raises a suspicion against his riglit to the bounty) that the rule is independent of any allegation in regard to the capacity and volition of the testator by the party contesting the testament. In fact however most of the cases upon this subject are cases in which there was asserted to be more or less weakness of mind in the tes- tator. But this cannot affect the correctness of the propo- sition. Parties do not generally contest the validity of a will without some allegation of the incapacity of the testator or of fraud practised upon him, and some attempt to sup- port the allegation by proof. If however it were insisted, even without such allegation, that a beneficiary who had written the will should make clear proof of the capacity and volition of the testator, the court, it is apprehended, would require it. On the other hand it is not conclusive against the validity of the bounty to the draftsman of the will that the testator was at the time of executing the testament a person of weak mind.^ Thus, in the case first cited, it appeared that the testator was a person of slender capacity, of retiring disposi- tion, indolent habits, addicted to drinking, singular in his appearance, frivolous, and even childish at times in his amuse- ments and occupations. However there was no evidence to show that he was insane, or that he lacked the capacity to make a will. Indeed it was not disputed on the one side that he was of testamentary capacity, or on the other that he was of weak mind. The court accordingly declared that, even admitting that the weakness went to the extent claimed by the party contesting the will, the only conse- quence was to add to the suspicion against the draftsman and beneficiary (a solicitor), who was to take no less than a fourth of the estate, the legatees taking the rest to the exclusion of the testator's family, and to call upon the court 1 Barry v. Butlin, 1 Curteis, 637 ; Harvey u. Anderson, 12 Ga. 69 ; Boyd V. Boyd, 3 Hill (S. Car.), 341. 364 CONSTEXJCTIVB FRAUD. [CHAP. I. to watch the proof of the will itself with increased jealousy and suspicion.^ Hence it is laid down that the increased strictness of scru- tiny and proof required in cases where the person by whom, or by whose procurement or direction, a will is drawn, receives a benefit from it, and in cases of doubtful capacity (and ' in- creased scrutiny' states the whole difference between such and other cases, since the party propounding a will must in all cases establish it, and some scrutiny is always necessary), is only such as to give full and entire satisfaction to the court or jury that the testator was not imposed upon, and that he knew what he was doing, and the dispositions he was making, when he executed the will.^ The doctrine, as declared by a distinguished judge,^ is that proof of the knowledge of the contents of the will may be given in any form ; that the degree of proof required depends upon the circumstances of each case ; that, in the case of per- fect capacity, knowledge of contents may be presumed, but when the capacity is weakened, and the benefit to the drawer of the will is large, the presumption is weaker and the sus- picion stronger. The proof in such case must be more strin- gent, and the court must be satisfied of the knowledge of the contents beyond the proof of execution by the testator. And then the nature of the instrument is to be considered, — its simplicity or complexity. In cases of suspicion therefore the proof is to be in proportion to the degree of suspicion ; and the greater the loss of capacity, the more stringent will the court be to require adequate proof of knowledge of the con- tents of the testament. It is not necessary in ordinary cases then, apart from stat- 1 See also Chambers w. Wood, 1 384, 385 ; Davis v. Eogers, 1 Houst. Jarman, "Wills, 45 (4th Am. ed.) ; 44; Barry i). Butlin, 1 Curteis, 637; Wrench v. Murray, 3 Curteis, 623 ; Durnell v. Corfield, 1 Robt. Ecc. 51, 63. Crispell v. Dubois, 4 Barb. 393 ; Hill ^ Dr. Lushington in Dumell v. Cor- V. Barge, 12 Ala. 687. field, 1 Robt. Ecc. 51, 63. 2 Duffield „. Robeson, 2 Harr. (Del.) § 8.] FIDTTCIARY AND CONFIDENTIAL EELATIONS. 365 ute, in order to establish the will, that the person claiming under it should prove that it was read over to the testator in the presence of the attesting or other witnesses.^ The law presumes in general that the will was read over by or to the testator. But if evidence be given that the testator was blind, or from any cause unable to read, or if a reasonable ground is laid for believing that it was not read to him, or that fraud or imposition of any kind was practised upon the testator, it is incumbent upon those who would support the will to meet such fact by evidence, and to satisfy the jury either that the will was read or that the contents were known to the testator.^ § 8. Confidential Advisees: Blood Relatives. One may finally have a confidential adviser, who is neither an attorney nor an agent or other employee, in general mat- ters of business or simply in a single transaction ; ^ and there is reason for considering the general rule in regard to persons in fiduciary or confidential relations to apply to transactions with such adviser.* But specific authority to illustrate the point is as yet scanty. An approach is found in decisions in regard to transactions between near relatives, such as brother and sister. Blood relationship short of parent and child creates alone no technical confidential relation,^ but one may very easily — more easily than without it — be superin- duced as matter of fact ;^ and then, it seems, the ordinary case 1 Hai-rison v. Eowan, 3 Wash. C. C. fii-st cousins ; Emmons v. Moore, 85 111. 580, 584. 304, brother-in-law ; Cleland v. Fish, 2 Day V. Day, 2 Green, Ch. 549. 43 111. 282. For other cases of blood See Gerrish v. Nason, 22 Maine, 438 ; relationship see Hewitt v. Crane, 2 Harding v. Harding, 18 Penn. St. 340 ; Halst. Ch. 159, 631 ; Van Meter v. Clifton V. Murray, 7 Ga. 564 ; Vernon Jonea, 2 Green's Ch. 520 ; Todd v. ■0. Kirk, 30 Penn. St. 218. Grove, 33 Md. 188 ; White v. Smith, 3 See e. g. Piatt u. Snipes, 43 Ark. 51 Ala. 405 ; Eankin v. Patton, 65 Mo. 21 ; Poston «. Balch, 69 Mo. 115. 378 ; Beanland v. Bradley, 2 Smale & 1 But see Hunter v. Atkins, Coop. G. 339 ; Taylor v. Johnston, 19 Ch. D. Cas. temp. Brough. 464. 603, 6 Pierce v. Pierce, 56 Mich, 629, « Lett v. Emmett, 37 N. J. Eq. 535, brothers ; Eobins v. Hope, 57 Cal. 493, brother and sister. 366 CONSTETJCTIVE FRAUD. [CHAP. I. arises, with its attendant duties in the person occupying the superior position, and the corresponding burden of proof. ^ The mere fact however that a party was once in a relation of confidence to another, and that he still continues to be a trusted friend, appears not to be enough ; a sale to such an one will be valid though the price was to his knowledge, and not to that of the vendor, inadequate, being of property of which he had formerly for many years had special charge as a servant.^ It need hardly be said that the fact that a party dealing with another has great confidence in him and may be easily influenced by him, does not raise the technical confi- dential relation.^ The following however seems to meet the point intended to be established. A person cannot take advantage of cir- cumstances arising from a project communicated to him by another, to secure a benefit from the action of the person making the communication, to the exclusion of such person ; especially if he advised the latter to take the course pursued.* Thus, in the case cited, a creditor having knowledge that part of the real estate of his debtor was mortgaged, apparently to its full value, was informed by another creditor that he pro- posed to effect an arrangement by which that mortgage should be removed, and one taken to himself. The former advised the latter to effect the arrangement ; and after the arrange- ment had been made and the first mortgage discharged, but before the new one was executed, levied an attachment upon the land to secure himself. It was held on a bill filed by the injured creditor that the attachment was fraudulent. A levy 1 The following cases of brother and ^ Hemingway v. Coleman, 49 Conn, sister will serve to illustrate the text : 390 ; Moore v. Stone, 40 Iowa, 259. Sears v. Shaper, 2 Seld. 258 ; Gillespie = lb. ; Robins v. Hope, 57 Cal. 493, v. Holland, 40 Ark. 28 ; Million v. a strong case between relatives. Taylor, 38 Ark. 428. See also Dunn * Buswell v. Davis, 10 N. H. 413. V. Chambers, 4 Barb. 376, 381 ; Stewart See Stone v. Wood, 85 III. 603, of a V. Stewart, 7 J. J. Marsh. 183 ; Boney J', volunteer under the party giving the Hollingsworth, 23 Ala. 690 ; Dunnage advice. V. "White, 1 Swanst. 138. § l.J FIDUCIARY AND CONFIDENTIAL EELATIONS. 367 under such circumstances, it was well observed, was not a fair exercise of superior diligence.^ If a party voluntarily undertake to aid another in obtaining possession of his property in the hands of third persons, he thereby assumes a relation of confidence towards the party whom he proposes to assist ; and if he take advantage of this relation, and by deception or improper influence induce him to part with his property without an adequate consideration, equity will afford redress.^ And it would seem on principle that the presumption of law would be against the volunteer and in favor of the other party, so as to cast the burden upon the former of establishing the fairness of the transaction. This point however was not considered by the court.^ iii. kindred relations. § 1. Illegal Marriages or Relations. It has recently been laid down that where one living in illicit sexual relation with another makes a large gift to the latter, especially if the giver excludes -natural objects of his bounty, the transaction will be looked upon with such suspi- cion in equity as to cast upon the beneficiary the burden of proving that the gift was the result of free volition, and was not induced by fraud or undue influence.* The same principle would doubtless apply to other transactions in favor of the party standing in the superior position, when not founded upon full value. 1 Beckett v. Cordley, 1 Brown, 0. C. * Shipman v. Furniss, 69 Ala. 5.55, 357 ; Temple v. Hooker, 6 Vt. 2i0 ; Jack- on authority of Leighton v. Orr, 44 son V. Burgott, 10 Johns. 461 ; Chick- Iowa, 679 ; Hanna v. Wilcox, 63 Iowa, ering v. Lovejoy, 13 Mass. 51. But 547; Dean v. Negley, 41 Penn. St. comp. Bradley v. Fuller, 118 Mass. 239. 312 ; AVainwright's Appeal, 89 Penn. " Harkness v. Fraser, 12 Fla. 336. St. 220 ; Bivins v. Jamigau, 3 Baxt. ' Further as to information volun- 282 ; Kessinger v. Kessinger, 37 Ind. teered see Kimber v. Barber, 8 Ch. D. 341 ; Coulson v. Allison, 2 De G., 56, C. A., stated ante, p. 263. J. & F. 521. 368 CONSTBTJCTIVE FRAUD. [CHAP. I. The existence of an unlawful relation between the testator and the object of his bounty at the time of the execution of the will is considered sufficient to raise a presumption of un- due influence against the beneficiary, where there are natural objects of his bounty who are thus pushed aside.^ But the bare proof of cohabitation between a testator and devisee or legatee appears to be insufficient to raise such a presumption of undue influence as to avoid the gift.^ The improvidence of the act, on the other hand, is a cogent fact looking towards fraud or undue influence.^ In England the marriage of a widower with the sister of his deceased wife is not lawful ; and a conveyance obtained without full consideration by a widower so marrying, without advice to the sister-in-law in regard to the character of the act and her legal status, is voidable at the suit of the latter. And the burden of proof is upon the widower to show that, at the time of entering into the transaction, the lady was fully, fairly, and truly informed.* This principle is probably applicable to such transactions in all cases of illegal marriage. § 2. CoTENANTS : Tenants for Life. Tenants in common of property, not jointly engaged in making purchases and sales, do not stand in a relation of trust or confidence towards each other with reference to the common property ; and they may deal with each other for the purchase of the entire ownership thereof, as if they were owners of separate property.^ Thus a tenant in common of a vessel, in contracting with his cotenaut for the purchase of his share at a certain price, is under no legal obligation to 1 Dean o. Negley, 41 Penn. St. 425 ; Jennings v. McConnel, 37 111. 312. 148 ; Daniel v. Hill, 52 Ala. 430 ; Ship- 2 Wainwright's Appeal, 89 Penn. St. man v. Fumiss, 69 Ala. 555. 220 ; Shipmau v. Fumiss, 69 Ala. 555. * Coulson v. Allison, 2 De G., J. & 3 Harvey v. Mount, 8 Beav. 439 ; F. 521. Clarke v. Sawyer, 3 Sandf, Ch. 351, « Matthews v. Bliss, 22 Pick. 48. § 3.] FIDtTCIAEY AND CONFIDENTIAL EELATIONS. 369 disclose that a third person had previously agreed with him to purchase the whole of the vessel at a higher rate.^ Again there is no fiduciary or confidential relation between a tenant for life and the remainderman ; and hence the pur- chase of an estate in remainder or reversion by a tenant for life, though it may be open to objection, is not to be impeached on general principles.^ But it is the duty of a tenant for life to keep down interest on mortgages upon the estate, and of course to refrain from deception upon such matters towards the remainderman. It seems that such tenant could not law- fully collude with a stranger, procure him to join in a con- templated fraud and purchase the mortgage, to go through the form of foreclosure, and then convey the property to the tenant, and so cut off the remainderman. It is clear at all events that if the tenant for life was executor of the late mortgagor and owner of the estate, he could not, by such practice, destroy the remainder; and this even though he had never qualified as executor, especially where he had taken possession and paid off the other debts of the estate, having sufiicient to pay off the mortgage also.^ But of course if there were no collusion or other fraud, the mortgage might be pur- chased and foreclosed by a stranger and the property then conveyed to the life tenant ; * or the same might be done by the mortgagee. § 3. Expectant Heies. Generally speaking, a contract cannot be avoided on the ground that advantage has been taken of distress, when the advantage, if any, depended upon subsequent contingencies, the result of which must have been equally uncertain to each 1 j^j_ mainderman facts in regard to the value 2 Lloyd 17. Johnes, 9 Ves. 37 ; Die- of the estate. Dicconson v. Talbot, conson v. Talbot, L. R. 6 Ch. 33. But supra. qusere whether the life tenant may not ' Morse v. Bassett, 132 Mass. 502. be bound to communicate to the re- * lb. 21 370 CONSTRUCTIVE FEATTD. [CHAP. I. party at the time of the contract.^ The case of an expectant heir, dealing for his expectancy during his father's life, is an exception. To that class of persons equity has extended a degree of protection approaching nearly to fixing an inca- pacity to bind themselves by any contract.'^ Lord Eldon has declared it to be clearly established that, -if a person has dealt with an heir apparent, for interests of which he is not in present possession, equity will extend to the heir, with reference to those so dealing with him, the benefit of the principle that it does not rest with him to show that the bargain was unreasonable and improvident, but on the other party to show that it was reasonable.^ And he held that where the dealing was substantially for the expectation of an heir, a colorable disguise, of the character of the bargain, such as including a small present possession, would not avail the purchaser.* Relief in these cases is given on grounds of inadequacy. In an English case it appeared that a reversionary interest, worth at least <£1,900, was bought for .£1,700. The rever- sioner was a man under twenty-three years of age, somewhat straitened in circumstances, and very desirous of obtaining money ; but there was no evidence of fraud. The sale was however set aside.^ It has accordingly been said by an eminent English judge that it is incumbent upon those who have dealt with an expectant heir relative to his reversionary interest to make good the bargain by showing that a full and adequate con- sideration was paid.^ And though some doubt has been 1 Eamsbottom v. Parker, 6 Madd. 6 ; 109 ; Fox v. "Wright, ib. 112 ; Gwynne Paine v. Meller, 6 Ves. 352 ; Pritcliard v. Heaton, 1 Brown, C. 0. 9. V. Orey, 1 Jac. & W. 403 ; Revell i;. ' Davis v. Marlborough, 2 Swanst. Hussey, 2 Ball & B. 287 ; Gowland v. 108, 139. De Faria, 17 Ves. 20, 25 ; 1 Hovenden, « Ib. p. 154. Fraud, 497. * Edwards v. Browne, 2 Coll. C. C. 2 Chestei-field v. Janssen, 2 Ves. 125, 100. 157. See Peacock v. Evans, 16 Ves. 6 sir William Grant, in Gowland v. 514 ; Marsack v. Reeves, 6 Madd. De Faria, 17 Ves. 20, 24. § 3.] PIDUCIAKT AND CONFIDENTIAL KELATIONS. 371 suggested in regard to the correctness of this principle,^ it appears to express the established rule of equity .^ But by this rule is meant, not the valuation which may be set upon the interest by actuaries on the tables of mortality, but the fair market value at the time of dealing.^ The rule itself has recently been changed by statute in England ; and it is now provided in that country that no purchase made bona fide, and without fraud or unfair dealing, of any reversionary interest in real or personal property, shall be opened or set aside merely on the ground of undervalue.* The common- law rule still prevails generally in America.^ The application of this rule is not prevented either by the fact that the transaction was a charge and not a sale, or that the expectant heir was a person of mature age, or that he perfectly understood the nature and extent of the transaction. Nor is it necessary for the heir to show that he was in pecu- niary distress at the time. That fact is assumed from the circumstance of his having dealt with another upon such a footing; and the assumption that the person advancing the money has possibly taken advantage of that distress is the reason why the courts throw upon him the burden of proving that the bargain was reasonable.^ AVhen however the trans- action is set aside for mere inadequacy, the proof failing to disclose actual fraud, the conveyance will be decreed to stand as a securit}' for the money paid, and interest. The suit in such case is considered as in the nature of a bill of 1 Sir Knight Bruce in the course of Lead. Cas. in Equity, 580 (3d Am. ed.). the argument in Edwards v. Browne, 2 It is however held in Virginia that where Coll. C. C. 100, 104; Sir John Leach there is no actual fraud, and no fiduciary in Hinksman v. Smith, 3 Russ. 433, relation between the purchaser of a re- 435. versionary interest and his vendor, mere 2 Aldoborough v. Trye, 7 Clark & F. inadequacy of consideration is not suffi- 436, and notes, Am. ed. cient to avoid a sale ; unless indeed it ^ lb. To this extent Gowland u. be so gi-eat as to shock the moral sense. De Faria was overruled. Mayo v. Carrington, 19 Gratt. 74 ; Crib- * 31 Vict. ch. 4. bins v. Markwood, 13 Gratt. 495. 6 1 Story, Equity, §§ 336 et seq. ; 1 « Bromley v. Smith, 26 Beav. 644. 372 CONSTRUCTIVE TEAXTD. [CHAP. I. redemption ; and the yendor is charged with the costs of the suit.i It is held in England that the doctrines of equity, in regard to the relief of expectant heirs from unconscionable bargains, have not been affected by the repeal of the usury laws, or by the alteration of the law in regard to sales of reversionary in- terests. The changes of the law in these particulars have not altered the onus probandi in those cases, which, according to Lord Hardwicke, raise a presumption of fraud ' from the circumstances or conditions of the parties contracting, — weakness on one side, usury on the other, or extortion, or advantage taken of that weakness.' ^ ' Fraud ' then in such cases does not mean deceit or circum- vention ; it means an unconscientious use of the power arising out of sucli circumstances and conditions. And when the relative position of the parties is such as prima facie to raise the presumption of such conduct, the transaction, it has lately been reaffirmed, cannot stand, unless the person claiming the benefit of it is able to repel the presumption by proving it to have been in point of fact fair, just, and reasonable.^ Where however an expectant heir, under pecuniary pres- sure, mortgages his reversionary estate to obtain an advance of money or credit for a purchase of goods, and the party in present possession of the property so mortgaged stands in loco parentis to such heir, and approves of the transaction, the heir cannot afterwards obtain a rescission of the mortgage.* The sale of a legacy which has become absolute and fixed, the amount and time of payment of which have become cer- tain, is not the sale of an expectancy or reversionary interest within the rule which protects young heirs or reversioners from the consequences of these ' catching bargains.' And this 1 Bawtree v. Watson, 3 Mylne & E. ' Aylesford v. Morris, supra. Lord 339. See 1 Story, Equity, § 344. Selbome. 2 Aylesford v. Morris, L. B. 8 Cli. * King v. Hamlet, 2 Mylne & K. 484, citing Chesterfield v. Janssen, a 456 ; afarmed, 3 Clark & F. 218. Ves. 125. , §§ 4, 5.] PIDtJCIAEY AND CONFIDENTIAL EBLATIONS. 373 is equally true, though the vendor of the legacy be shown to be a reckless, dissipated, and weak-minded man, provided no actual fraud or undue influence be practised upon him.^ § 4. Sailoes. The courts treat with great indulgence the rights and interests of common sailors in the mercantile and naval ser- vice, considering them as standing upon the same footing with young heirs and expectants.^ The contracts of seamen are watched with great jealousy, and will generally be set aside whenever any inequality appears in the bargain or any undue advantage has been taken.^ The burden of proof is probably upon the party obtaining such advantage. § 5. Aged Persons. Where a party of ordinary capacity and intelligence makes a purchase from an elderly and feeble or inexperienced per- son, it appears to be incumbent upon the buyer, if the sale is impeaclied by the seller, to show that he paid the value of the estate, or that the vendor had competent and independent advice; if he fail in that, the sale will be annulled.* In an English case a deed of gift was set aside where one of the donees had married the niece of the donor, it appear- ing that the donor had entire trust and confidence in the donees, that she was eighty-four years old, and nearly blind, and that she was dependent upon their kindness and assist- ance. It was considered that they stood in a relation to her which so much exposed her to their influence that they could not maintain the transaction without showing that the act 1 Parmeleei). Cameron, 41 N. Y. 392. ■• Baker v. Monk, 4 De G., J. & S. 2 How V. Weldon, 2 Ves. 516, 388. See Spargur v. Hall, 62 Iowa, 518 ; Taylor i). Eochford, 2 ib. 281. 498, conveyance obtained by daughter See Cheatei-field v. Janasen, ib. 125, from aged and infirm mother, without 137. adequate consideration set aside. See ' 1 Story, Equity, § 332. ante. Guardian and Ward. 374 CONSTEUCTIVE FEAUD. [CHAP. I. was the result of her own free will, and had been effected by the Intervention of some indifferent person.^ Indeed the rule of law is, that where a person enfeebled by disease or age is so placed as to be likely to be subjected to the influence of another, and makes a voluntary disposition of property in favor of that person, the courts will require proof of the fact that the donor understood the nature of the act, and that it was not done through the influence of the donee.^ Again in transactions between creditor and debtor if either is aged and dependent and treats the other with special con- fidence, that will impose upon the latter the duty of acting with scrupulous honor. It has accordingly been laid down that where a debtor, of experience and sagacity, attempts to discharge a mortgage, running from him to an aged and inexperienced woman, by his own unsecured paper promise, he must exercise the most scrupulous good faith ; and unless, upon an impeachment of the transaction by the creditor, he can show that the creditor fully comprehended the legal effect of the acquittance, it must be adjudged to be without legal force.^ Old age alone however is not a ground for presuming imposition or undue influence. It is merely a circumstance which may be taken into consideration in deciding upon the fairness of a transaction, where there is other evidence tending to show imposition.* § 6. Illiterate, Weak-minded, and Drunken Persons. Though evidence of mere undervalue, except where the undervalue is very gross, will not afford ground for inter- 1 Griffiths V. Robins, 3 Madd. 191. * Millican v. Millican, 2i Tex. 426, 2 Haydock v. Haydock, 34 N. J. Eq. 449 ; Lewis v. Pead, 1 Ves. Jr. 19, note ; 570 ; Huguenin v. Baseley, 14 Ves. 273. Pressly v. Kemp, 16 S. C. 334. See 8 Wildrick v. Swain, 34 N. J. Eq. also Ellis v. Mathews, 19 Tex. 390 ; 167, Van Fleet, V. C. post, p. 378. §6.J PIDUCIAKY AND CONFIDENTIAL EELATIONS. 375 fcrence with a completed purchase, still, where the seller is an illiterate person, unable to judge of the precautions to be taken in selling, or of the mode of sale, or of the mode of securing the price when not paid down, and acts without professional advice,^ these circumstances, added to inadequacy will afford such person ground in equity for relief.^ Thus, 1 111 Stout V. Smith, 98 N. Y. 25, one who in a purchase of land professed to be a lawyer acted in drafting the pa- pers for the vendors, ignorant persons, but able to read and write, but was held to have owed no duty of advice under the circumstances. And it was consid- ered that no inference of undue influ- ence could be drawn from the fact that the buyer was better qualified than the sellers ' to make bargains and to obtain advantages by reason of his capacity, shrewdness, and superior ability.' ' On the other hand see Eeed v. Petferson, 91 lU. 288. Both were cases of dealings by attorneys with colored people. 2 Clark V. Malpas, 4 De G., F. & J. 401 ; Selden u. Myers, 20 How. 506 ; Vamer v. Carson, 59 Tex. 303, where the transaction was between members of the same church . See also Eeed v. Peterson, 91 111. 288, as to inadequacy with other circumstances. ' The seller,' said Lord Justice Bruce, in Clark v. Malpas, ' was a man in humble life, im- perfectly educated, and unable of him- self to judge of the precautions to be taken in selling, or of the mode of sale, or of the mode of securing the price which was not at once paid down. He was helpless in the matter, without advice, without protection. Now in the trans- actions only one solicitor was employed, and, though the evidence may be con- flicting, I am perfectly satisfied, without meaning any reflections on Mr. Cooper, that if Mr. Cooper was not the solicitor of the purchaser alone in the matter, he was more the solicitor of the purchaser than of the seller. The bargain was not an ordinary one ; it was to sell these cottages, forming the whole of the sell- er's property, in consideration of a weekly annuity for his life, and a dwell- ing to be provided for him, and a sum of £100 to be paid after his death, with power to him to require £10 of it to be paid in his lifetime. The seller was made to convey absolutely at once, with- out taking any security for the annuity, for the dwelling-house, or for the £100. A title was not shown, perhaps a mar- ketable title could not be shown, nor any title without expense, but that did not justify making the seller enter into absolute covenants for title which on eviction would render him liable to re- pay the whole purchase money. For the annuity he had only the personal liabil- ity of the purchaser, probably a sub- stantial person, but who might die at any moment or fall into adverse circum- stances. He might sell the property, and then fail or die, and from what source was then the annuity to come ? The same observations apply to the £10 and the £100. So that not only was there completion at an undervalue, which alone might be nothing, but there was completion under circum- stances of gross imprudence, on terms on which the seller ought not to have been allowed to complete. It does not appear that Cooper called attention to any of these considerations. No coun- terpart or copy of the conveyance was kept for the seller : he was left helpless. If he had been bred to the law, if he 376 CONSTKTJCTIVE PBAUD. [CHAP. I. in a recent case,^ certain real estate had been sold by an elderly, uneducated woman in humble life to a person far above her in station. The agreement was made without the intervention of any one acting on her behalf ; and it appearing that the consideration paid was inadequate, the sale was set aside, though there was no evidence of fraud on the part of the purchaser. It was said that the purchaser and vendor were in such relative positions as that, according to estab- lished principles of equity, it lay on the former to show affirm- atively that the price given represented the true value of the estate.^ But slight circumstances, such perhaps as the refusal of the complainant to employ counsel, may suf&ce to overturn the presumption of fraud.^ It is laid down that proof that the grantor in a deed was a very ignorant and illiterate man, and could not read writing, and that the deed was not read to him, is not sufficient to avoid the instrument, unless he requested that it be read to him.* On the other hand it is held that one who deals with an illiterate person, unable to read or write, and takes from him a promissory note for the payment of money, and also a deed for property in trust to secure the payment, is bound to show, when he seeks to enforce his securities, that they or the material parts of them were read and fully explained to the had had the advantages of education, the last during the life of this old lady, who case might have stood differently. could know no more about what the 1 Baker v. Monk, 4 De G., J. & S. pecuniary value of that annuity was 388. than any person whom you might meet 2 'Here is a transaction,' said Tur- walking along the streets at the time, ner, L. J., 'between an old woman (and I think there was that distinction be- I will say no more than that), said to be tween the parties which rendered it a very shrewd old woman, but still an incumbent on the appellant to throw old woman dealing with a person far further protection around this lady be- superior to her in position, there being fore he made the bargain with her.' no advice given to her and no assistance ^ See Harrison v. Guest, 6 De G., M. rendered to her in the course of the & 6. 424. treaty for the purchase and agreement * Hallenbeck v. Dewitt, 2 Johns. 404. for the sale of the fee-simple of the See Jackson v. Croy, 12 Johns. 427. property for an annuity of 9s. a week, to § 6.] FIDUCIARY AND CONFIDENTIAL EELATIONS. 377 party before they ■were executed, and that he fully understood their meaning and effect.^ But if this be shown, evidence is not admissible to prove that the contract agreed upon was different from that which was reduced to writing. To make such evidence admissible, it must be proyed that the party was deceived and misled in regard to the contents of the written instrument.^ If a weak-minded person is, notwithstanding his weakness, compos mentis, he can make a valid sale of his property, so far as his own capacity is concerned.^ That is implied in being compos. And if he can make a valid sale of his property, he can make a valid gift of it ; for there is no authority of law for requiring greater strength of mind for the latter act than for the former. Mental capacity admitted for the exercise of one class of acts, ex contractu in character, and the capacity for all classes of such acts follows. But evidence that the injured party is a person of weak understanding puts him in a position moye favorable than the position of one of perfectly sound understanding, in that such a person is more easily deceived. If then it appear that the weak-minded person has parted with property at an inadequate price, it is natural to sup- pose that he has been cheated ; and the law. accordingly raises a presumption of fraud against the party who has obtained the advantage.* But this pi-esumption cannot be a conclusive one, since the injured party has the capacity to make a sale or a gift ; and there may be a good and substantial reason for the sale at the inadequate price, a reason perfectly consistent with 1 Selden o. Myers, 20 How. 606 ; out that he gives the consideration for Trambly v. Eicard, 130 Mass. 269. Of one thing and by fraud obtains an agree- course if the party has received any- ment that it was given for another tiling.' thing of value by virtue of the transao- Mullen v. Old Colony R., Soule, J. tion, he must return it before he can ^ Selden v. Myers, supra, be relieved from liability on the con- ' Smith v. Beatty, 2 Ired. Eq. 456 ; tract. Mullen v. Old Colony R., 127 Sprague v. Duel, Clarke, 90. Mass. 86. Secus if the supposed con- * "Wiest v. Garman, i Houst. 119, tract was no contract at all. Ante, 140 ; Moore v. Moore, 56 Cal. 89 ; p. 74, n. ; Aultman v. Olson, 34 Minn. Storrs u. Scougale, 48 Mich. 388. 450. Secus also ' where >- party holds 378 OONSTKUCTIVB FRAUD. [CHAP, I. the highest honor and good faith on the part of the purchaser. It is the purchaser's duty however to show that such a reason existed, and to remove completely the suspicion resting upon him. So of a gift/ except that, instead of receiving an inad- equate consideration, the grantor receives none at all. But the presumption can hardly be stronger in his favor than in the case of a sale ; at all events it cannot be conclusive. The fact may be that the recipient was a most worthy object of the grantor's bounty, and that he may not only not have used any improper means to obtain it, but he may not have used any means at all, and may not even have known that the grantor had any intention of making it until after the act was done. In such cases the gift should be allowed to stand. There would be no more propriety in setting aside such transactions than there would be if the party were perfectly sound of mind. Having the capacity, and his weakness not having been im- posed upon, he indeed stands in the situation of other men.^ It is however distinctly laid down that one who deals in property matters with an aged and feeble person is bound to prove the fairness of the transaction.^ Hence it is declared that though a contract made by a man of sound mind and fair understanding may not be set aside merely because it is a rash, improvident, or hard bargain, still, if the same con- tract be made with a person of weak understanding, there arises an inference that it was obtained by fraud or undue influence.* A fortiori is this true if the defendant occupied an actual confidential relation to the complainant.^ Equity will also set aside a contract for the sale of real 1 See Davis ■!). Dean, 66 Wis. 100. another; Darnell u. Rowland, 35 Ind. 2 See Russell v. Russell, 4 Dana, 40, 342 ; Wallace v. MoVey, 6 Ind. 300 ; 43, which implies that such transactions Rogers v. Higgins, 56 111. 244 ; Lind- may he binding ; Davis v. Dean, 66 sey v. Lindsey, 50 111. 79 ; Miller v. Wis. 100, to the same effect ; Harris v. Craig, 36 III. 109. Wamsley, 41 Iowa, 671 ; Galpin v. ^ Wartemberg v. Spiegel, 31 Mich. Wilson, 40 Iowa, 90, which implies that 400 ; supra, p. 374. a weak-minded person, if not imposed * Ellis v. Mathews, 19 Tex. 390. upon, may bind himself as surety for ' Seeby v. Price, 14 Mich, 541. § 6.J FIDUCIARY AND CONFIDENTIAL EELATIONS. 379 estate and a conveyance thereunder, where it appears that the capacity for business on the part of the grantor has been greatly weakened by trouble and distress of mind, and the price was grossly inadequate. In such a case the grantee will be liable e. g. for timber taken by him from the premises, and for the rental value thereof during possession. But the rental value may be diminished by circumstances arising after the sale and not under the control of the purchaser, such as the prevalence of a freshet which destroyed the fences of the land.i A confession of judgment on the other hand has been sup- ported, though made by a man of weak understanding, in the habit of making improvident bargains, and addicted to intoxi- cation, and embarrassed in circumstances, and though such confession was induced by the plaintiff's giving him time to pay the money. Such a case however assumes that no pressure was brought to bear, that no fraud was committed in obtaining the confession, and that the confession was deliberately made, whether by the defendant personally or by virtue of a power of attorney deliberately and voluntarily executed by him.^ It may then be laid down as very clear that the acts and contracts of weak-minded persons will be held invalid in equity, if the nature of the act or contract justify the conclu- sion either that the party through undue influence has not exercised a deliberate judgment, or that he has been imposed upon, circumvented, or overreached by cunning or artifice. And where inadequacy of consideration or undue influence is joined to imbecility or weakness of mind arising from old age, sickness, intemperance, or other cause, equity will set aside the transaction at the suit of the injured party .^ What is that degree of mental imbecility which may be taken into account as one of the elements necessary for relief is often a difficult matter to decide. No definite rule of law 1 Perkins v. Scott, 23 Iowa, 237. ' Tracey v. Sackett, 1 Ohio St. 54. 2 Ma.son v. 'Williaras, 3 Munf. 126. 380 CONSTRUCTIVE FEAXTD. , [CHAP. I. can be laid down. A set of examples has been given by the Court of Chancery of Maryland,^ of which the following may be mentioned : It has been laid down in general terms that it is fraudulent to obtain a deed by the exercise of undue in- fluence over a man whose mind had ceased to be a safe guide of his actions,^ or from a man who was of small understand- ing, and not able to manage the lands which had descended to him.3 A woman who could read and write, and had taught a child to read, was still held to be a person of weak under- standing.* So too it was in another case considered no proof of sanity that a person could repeat scraps of Latin and read classic authors, because what a person learns in youth leaves a very lasting impression ; and such a person may still be weak-minded.^ In another case a person is spoken of as being seventy-two years of age, and a weak man, easily im- posed upon.^ Again a grantor is said to be eighty-four years of age, blind, or nearly so, and altogether dependent upon the kindness and assistance of others.'^ From these examples it is suggested that by weakness of mind is meant a sort of mental imbecility approaching to the condition of one who is actually non compos mentis, and analogous to childishness and dotage.* 1 Owing's Case, 1 Bland, 370, 391. influence, he will he protected in a court 2 Harding v. Handy, 11 "Wheat. 125; of equity when an unfair advantage has Chesterfield v. Janssen, 2 Ves. 156. been taken of hia weakness. And it is ' Twyne's Case, 3 Coke, 83. immaterial from what cause such weak- * White V. Small, 2 Ch. Cas. 103. ness arose, whether from illness, heredi- 6 Bennet v. Vade, 2 Atk. 325. tary misfortune, the infirmity of old age, 8 Clarkson v. Hanway, 2 P. Wms. or from depressions resulting from sud- 204. den fear or overwhelming calamitj'. ' Griffith V. Eobins, 3 Madd. 191. Tally v. Smith, 1 Cold. 290, 298 ; 1 8 Owing's Case, 1 Bland, 370, 392 ; Story, Equity, § 234. And a degree Henderson v. McGregor, 30 Wis. 78 ; of weakness of intellect far below that Johnson v. Chadwell, 8 Humph. 145. which would justify a commission of Where a person, though not posi- lunacy, coupled with other circumstances tively non compos or insane, is yet of showing that advantage had been taken such great weakness of mind as to be of the weakness, will be sufficient to set unable to guard himself against impo- aside the conveyances of such a person. sition, or to resist importunity or undue Walker v. McCoj', 3 Head, 103. § 6.] FIDUCIAEY AND CONFIDENTIAL KELATIONS, 381 The circumstances which, taken in connection with this weakness of mind, constitute sufficient grounds to annul pecu- niary transactions are of course extremely various. The follow- ing examples may be mentioned : Where an ignorant old man was induced to execute a deed, surrendering to his children a large fund to which he was entitled, by being informed by them of the opinion of a lawyer whom they had employed, and in whom he had great confidence, that he had no right to the property, and also by the false representations of one of the children of what they had agreed to give him, and of the purpose for which the deed was to be used, it was held that equity would grant relief.^ So too an agreement with a weak old man, whereby he makes an assignment of his whole estate upon the consideration of the assignee's personal covenant to maintain him for life out of the profits of the estate, imports undue advantage ; and this without reference to any confidential relation between the parties, or to any state of anxiety or alarm on the part of the assignor.^ The fact that a deed has never been left for the grantor's perusal ; or that it has not been read by him ; or that it was prepared by the grantee and obtruded upon the grantor ; or that the gift was excessively large ; or that the other party had not the means to pay ; or that the grantee had acquired a com- manding influence over the grantor, and had exercised it in the transaction ; or that the consideration was greatly inade- quate ; ^ or that a relation of trust and confidence existed between the parties ; ^ or that the grantor had conveyed all of his property, leaving himself to be fed and clothed at the pleasure of the grantee, — in all these and similar cases, the weakness of mind of the party, though it does not render him non compos, will be sufficient, in connection with the other 1 Powell V. Cobb, 3 Jones, Eq. 483 ; Freeland v. Eldridge, 19 Mo. 456. 325. 2 Buffalow V. Buffalow, 2 Dev. & B. * Cadwallader v. "West, 48 Mo. 483 ; Eq. 241. Freeland v. Eldridge, 19 Mo. 325 ; ' Cadwallader v. West, 48 Mo. Morisso v. Philliber, 30 Mo. 1 45. 382 CONSTEUCTIVE FEAUD. [CHAP. I. facts, to establish a presumption of fraud, and entitle the party wronged to relief.^ Contracts made by persons under the influence of liquor, even when not completely intoxicated, are governed by the same principles which apply to other cases, where one party is in a position to expose him to the exercise of an improper influence by the other. If carried so far that the reasoning powers are destroyed, the contract is void ; but when it falls short of this, the contract will not be avoided, unless undue advantage (which however the law seems to presume) has been taken of the condition of the drunken party. Thus if a party while excited by liquor has been led into a hard and disadvantageous bargain, the contract will be set aside in equity. And the same is true of transactions with persons whose minds are enfeebled by habitual intoxication, though not intoxicated when the contract was made.^ Gifts also of property, made by a person in a state of mental imbecility owing to habitual intoxication, will often be treated as void upon the presumption of imposition. Thus a person in such a condition made a voluntary and irrevocable deed of gift of his whole estate to a cousin german, to the disherison of his half-sister, reserving however the use to the donor during his life. No reasonable motive was assigned for the act; and it was held that fraud and imposition might be inferred from the very nature of the transaction.^ What has been said thus far, though relating to transac- tions inter vivos, is equally applicable to questions of the 1 See Hervey v. Hervey, 1 Atk. 664; v. Pecks, 1 Munf. 518 ; Kutherford v. Mountain v. Bennet, 1 Cox, 353 ; Euff, i Dessaus. 350 ; Eowland v. Nantes v. Corrock, 9 Ves. 183 ; White Sullivan, lb. 518 ; Brogdeu v. Walker, V. Small, 2 Ch. Cas. 103 ; Portengton 2 Har. & J. 285 ; Gibson v. Jeyes, V. Eglington, 2 Vera. 189 ; Donegal's 6 Ves. 275. Case, 2 Ves. 408 ; Bridgraan v. Green, ' Birdsong v. Birdsong, 2 Head, 289. lb. 627 ; Norton v. Eilly, 2 Eden, 286 ; ' Samuel v. Marshall, 3 Leigh, 567; Wright u. Proud, 13 Ves. 136; Hugue- Adams v. Eyerson, 2 Halst. Ch. 328; nin V. Baseley, 14 Ves. 273 ; Harvey Hale v. Brown, 11 Ala. 87. § 6.] FIDUCIARY AND CONFIDENTIAL RELATIONS. 383 validity of wills obtained from testators in the like situations. Imposition upon weakness, though insufficient to constitute what would be fraud upon a person in health and strength of body and mind, would be ground for setting aside a will. In- deed in cases of weakness of mind at the time of executing a will strong evidence will be required at the outset, in the pro- bate of the instrument, that its contents were known to the testator, and that the execution was his spontaneous aqt.^ Still where the testator's capacity is clearly proved, he will be presumed to have been cognizant of its contents.^ The pre- sumption however will not be conclusive ; and suspicious cir- cumstances in regard to the origin or execution of the will must be wholly cleared up where there is evidence of weak- ened mental power.^ The will in case of weakness of that kind must result, it is held, from the decedent's own sugges- tion, free from any influence.* 1 Mitchell V. Thomas, 6 Moore, P. C. ^ Barry v. Butlin, 2 Moore, P. C. 137 ; Dumell v. Corfield, 8 Jur. 915 ; 480. Tribe v. Tribe, 13 Jur. 793 ; In re ^ In re Welsh, supra. Welsh, I Redf. 238. < lb. 384 CONSTEUCTIVE FEATTD. [CHAP. II. CHAPTER II. CONDUCT SUBSEQUENT. § 1. Inteodttctoet. The second division of constructive fraud differs from the first in that the burden of proof rests upon the plaintiff ; it differs from fraud proper both in its origin and in its effect. Fraud, in the proper sense of that term, consists in deception touching motives or in circumvention not touching motives, And we have seen that the characteristic feature of the law of fraud in the form of deception is that an action for damages may be maintained against the wrong-doer.^ The second di- vision of constructive fraud differs from fraud at these points ; there was no wrongful purpose at the outset, when the right affected was conferred, and the wrong when done is more limited in legal effect in that an action for damages is not a general and characteristic remedy. Indeed there are but few cases in which such an action for damages is maintainable for any of the wrongs now referred to. This second division of constructive fraud, embracing all cases in which the burden of proof rests upon the plaintiff, in- cludes, as heretofore intimated,^ the subjects of notice, inno- cent misrepresentation, fraud on powers, perversion of the Statute of Frauds in cases of verbal contracts concerning the purchase of land, and surprise. In this order these subjects will now be considered. In all of them that which constitutes the constructive fraud lies, as we have said, not in the origi- nal act, but in subsequent misconduct, i. e. in trying to turn the original act to a wrongful end. They may therefore be considered under the head of Conduct Subsequent. 1 Ante, pp. 18, 68. = See ante, pp. 11-13. § 2.] CONDUCT SUBSEQUENT. 385 § 2. Notice : Its Relation to Fraud. He who confederates with another, even if only as a pro- fessed agent,! ^q defraud me and succeeds is liable in dam- ages equally with his associate ; but he who merely takes a title under the wrong-doer, without participation in the wrong- doing, is not guilty of fraud however cognizant of the fraud of him under whom he claims. Though the fraud of the pre- decessor be deception, no action for distinctive damages can be maintained against the successor ; that is, no action for the fraud, such as could be maintained against the wrong-doer, can be supported against the taker from him. He must in- deed give up what he has received from the wrong-doer, or its avails if he has disposed of it ; but that is all. Thus a pur- chaser from an executor with notice of a breach of trust by the latter is bound only to give up what he has received ; he is not liable to the same extent as the executor.^ The taker's misconduct then, like that of the party making the innocent misrepresentation, falls short of fraud ; it is constructive fraud. The existence of a right of action for damages is not to be taken however as a general test of the presence of fraud, for circumvention may be fraud as truly as deception, as we have seen ; and in pure circumvention there is no right of action for damages according to the better view, except in cases of sale or the like by a part owner.^ The existence of a right to recover damages is (apart from the cases just mentioned) only a test of the presence of fraud in the form of deception, or of circumvention with deception. Now just as one who takes with notice, or as a volunteer, under a party who has been guilty of fraud by deception may be treated as guilty of 1 Reed v. Peterson, 91 111. 288 ; = 'Willis v. Foster, 65 Ga. 82. Arnot V. Biscoe, 1 Ves. Sr. 95 ; Seddon ^ Ante, p. 18, note ; Sweet v. Mor- V. Connell, 10 Sim. 86. See also Walker risen, 103 N. Y. 235. V. Coleman, 81 111. 390. 25 386 CONSTRUCTIVE FRAUD. [CHAP. II. constructive fraud, so also one who takes with notice, or as a volunteer, under a party guilty of fraud by circumvention (e. g. a debtor conveying property in fraud of creditors) may be treated as guilty of constructive fraud. In some states how- ever, as in Massachusetts, so pronounced is the view that a purchaser with notice of an intent by his vendor to defraud creditors is not to be treated as guilty of fraud merely because of the notice or knowledge, that he actually acquires a good title ;i if he did not participate in the wrongful intent, he is not guilty even of constructive fraud. But that is not the gen- erally accepted rule. § 3. Constructive Notice : Duty to Inquire, Certain cases falling under the head of actual notice, which, it should be observed, is not knowledge, have already been considered in treating of employers.^ Knowledge of an agent is, within certain limits, actual notice to his principal ; otlier cases of actual notice will be considered in subsequent sec- tions. Here we are to consider another class of cases, cases not of knowledge of the fraud by any one, except by the party who committed it, but cases of constructive notice of the fact. The general proposition of law concerning constructive notice is, that if facts are brought to the knowledge of a party which would put him, as a man of common sagacity, upon inquiry, he is bound to inquire ; and if he fail to do so, or to do so properly, whether fraudulently or only negligently, he will be chargeable with notice of what he might have learned upon reasonable examination.^ Where for example a party has had knowledge or notice that property in dispute 1 Hill V. Ahern, 135 Mass. 154. Scofield, ib. 261 ; Dickey u. Lyon, 19 2 Ante, pp. 236-240. Iowa, 544 ; Woodworth v. Paige, 5 Ohio « Warren v. Swett, 31 N. H. 332 ; St. 70 ; James v. Drake, 3 Sneed, 540 ; Cambridge Bank v. Delano, 48 N. Y. Colquitt v. Thomas, 8 Ga. 258 ; Martel 326 ; Acer v. Wescott, 46 N. Y. 384; v. Somers, 26 Tex. 551; Jones w. Smith, Willis ». Vallette, 4 Met. (Ky.) 186; 1 Hare, 43 ; Kennedy «. Green, 3 Mylne Kussell V. Eanson, 70 111. 167 ; Watt v. & K. 699, 718. § 3.] CONDUCT SUBSEQUENT. 387 was in fact charged, incumbered, or in some way affected with the claims of others, he is considered as having constructive notice of all facts and instruments to a knowledge of which he would have been led by an inquiry after the charge, incum- brance, or other fact affecting the property.^ Hence a person is chargeable with notice of an unrecorded lien, though he may have no knowledge of its existence, if he has notice of the contents of the instrument giving the lien.^ So where the defendants, who claimed as subsequent purchasers of a mortgage interest, were aware at the time of their purchase that the plaintiff had been a mortgagee of the same prop- erty, they were considered as fixed with notice of the par- ticulars of his security from which the title offered to them was derived, and of the evidences of fraud which there ap- peared.-^ So also it is held that if the purchaser of corn from a tenant know of the existence of the tenancy, and that his vendor, as tenant, has raised the corn on the demised prem- ises, this will be notice to him of any statutory lien the land- lord may have upon the premises for unpaid rent.* So too one who purchases land with notice that another has a con- tract for the purchase of it is bound to inquire into the nature of such contract, and takes subject to the same, if valid, though he may not have notice that it is in writing.^ If however reasonable inquiry has been made, the law is satisfied, and whatever the information, if it be such as to satisfy a reasonable mind, the doctrine of notice does not apply ; ^ that is, the party is not fixed with notice of anything beyond the apparently trustworthy facts developed by the 1 Willis ».Vallette, 4 Met. (Ky.) 186. « "Williams v. Williams, 17 Cli. D. 2 lb. ; Tiernan v. Tliurman, 14 B. 437, 442 ; Hoyt v. Shelden, 3 Bosw. Mon. 279. 267. See Wilson v. Hart, L. R. 1 Ch. 3 Ogilvie V. Jeaffreson, 2 Giff. 353 ; 463 ; Jones v. Smith, 1 Hare, 43 ; Kennedy v. Green, 3 Mylne & K. 699, s. c. Phill. 244. Comp. cases of send- 718. ing notice of dishonor of bill or note on * Watt V. Scotield, 76 111. 261. infonnatiou received. See e. g. Bank * Connihan ■». Thompson, 111 Mass. of Utica v. Bender, 21 Wend. 643 ; 270. Saco Bank v. Sanborn, 63 Maine, 340. 388 CONSTRUCTIVE FBAUD. [CHAP. II. actual inquiry. Indeed it seems that if a party can make it appear reasonably certain that inquiry would have led to nothing, he will be excused from inquiring altogether ; ^ but it will not be enough for him merely to say that inquiry would only have led to wrong information. Again if there be no fraudulent turning away from knowl- edge of the facts which the res gestae would suggest to a prudent mind ; if mere want of caution, as distinguished from fraudulent and wilful blindness, is all that can be imputed to a purchaser of property, the doctrine of notice will not apply to him.2 Hence a party cannot be charged with notice of an advertisement in a newspaper, in the absence of statutory provision, whether he is or is not a subscriber to the paper.^ Thus cautioning ' all persons ' against purchasing a bill of exchange, by advertisement in a newspaper circulating in the place of residence of a subsequent purchaser of the bill, is not notice to him of fraud tainting the bill ; to affect the pur- chaser the advertisement must have been read by or known to him.* There sliould be a duty to become informed, to constitute notice,^ Notice again must be definite and certain ; that is, the facts known must be clear facts, and point plainly to the particular fact not known. Mere rumor is not notice. To hear for example floating reports about an incumbrance upon land about to be bought does not affect the party with notice.^ But it is said to be otherwise of general reputation and belief.^ With regard to the question what constitutes notice 1 Carter v, Williams, L. R. 9 Eq. v. French, 15 Gray, 354. But see King 678 ; Patraan d. Harland, 17 Ch. D. v. Paterson K. Co., 5 Dutch. 82. 353, 356. * Kellogg v. French, supra. 2 ^Jones V. Smith, 1 Hare, 43 ; Jones ^ Hallmark's Case, 9 Ch. D. 329, V. Gordon, 2 App. Cas. 610 ; Danby v. C. A. Coutts, 29 Ch. D. 600 ; Woodworth v. « Maul v. Eider, 59 Penn. St. 167 ; Paige, 5 Ohio St. 70. Colquitt v. Thomas, 8 Ga. 258 ; James " Watkins v. Peck, 13 N. H. 360 ; v. Drake, 3 Sneed, 540. But see Ben- Clark V. Ricker, 14 K. H. 44 ; Lincoln zein v. Lanoir, 1 Dev. Eq. 225. V. Wright, 23 Penn. St. 76 ; Kellogg ' James v. Drake, supra. § 3.] CONDUCT SUBSEQUENT. 389 of fi'aud in a conveyance, while it is settled that vague and general assertions, resting on mere hearsay and made by strangers, may be disregarded, still a direct statement to a purchaser of the existence and nature of an adverse claim or title will operate as notice, whether it was made by or on be- half of the holder of the adverse title, or by a mere stranger.^ The general doctrine however is that notice cannot arise, unless it proceed from a person interested in the property, and in the course of a treaty for its purchase ; but this rule applies only to notice in its strict sense, as distinguished from knowledge or such information as is substantially equivalent to knowledge. If it be shown that the purchaser knew or was informed of the existence of fraud, it is immaterial whether his knowledge was obtained from parties in interest or from third persons. From whatever quai'ter it may proceed it will be sufficient if it be so definite as to enable the pur- chaser to ascertain whether it is authentic or not, and suffi- ciently clear and definite to put the purchaser on inquiry in regard to its truth, and enable him to conduct that inquiry to an ascertainment of the fact.^ The statements of third per- sons may be sufficient for this purpose; and as we have seen, the existence of a fact may acquire such a notoriety as to have the same effect.^ It is accordingly held that one who, prior to the issuing of a patent from the state to his grantor, knew that the state authorities claimed that the lands covered by it were reserved from sale, and knew of ineffectual attempts to purchase them from the state, has sufficient to put him upon inquiry to find out the truth, and to subject him to equities growing out of any mistake or fraud under which the patent may have been issued.* There are now two subjects in regard to which the doctrine of constructive notice has important and frequent application, 1 Martel v. Somers, 26 Tex. 551. * Attorney-Gen. v. Smith, 31 Midi. 2 lb. s lb. 359. 890 CONSTRUCTIVE FEAUD. [CHAP. II. to wit, possession, and breaches of trust. These we shall con- sider in turn ; first then of possession. If a man take a conveyance of land from one, while another is in the open and visible possession of the estate, he will be affected, generally speaking, with notice of everything in rela- tion to the title which could be known upon diligent inquiry. And if in such case the person in possession have an equitable title to the land, the taking of the conveyance will be deemed a fraud ; and nothing will pass to the grantee which can avail him against such equitable title.^ Hence actual possession by a tenant or by a cestui que trust is constructive notice to a purchaser that there is some claim, title, or possession of the property, inconsistent with full ownership by the vendor;'^ the purchaser, it is declared,^ is bound by all the equities which the tenant or cestui que trust could enforce against the vendor. And the equity of the party so in possession extends not only to interests connected with his tenancy,* but also to interests under collateral agreements;^ this probably in the absence of registration according to law. Possession is prima facie evidence of seisin in fee.^ * Notice however, or 6ven knowledge, of a tenancy is notj ac- cording to what appears to be the better view, notice of the nature of the title of the lessor ; a purchaser will be affected by the equities of the tenant only,^ including those of an agent or steward who may be in receipt of the rent.^ That is, actual possession, and that only, will constitute notice. And this 1 Hadduck «. Wilmarth, 5 N. H. explained in Bamhart v. Greenshields, 181 ; Hathaway ■». Noble, 56 N. H. supra. 508 ; Eli v. Gridley, 27 Iowa, 376 ; * Taylor v. Stibbert, 2 Ves. Jr. 437. Van Orman ■». Merrill, ib. 476, and ' Daniels v. Davison, 16 Ves. 249 ; cases cited in the following notes. Allen v. Anthony, 1 Meriv. 282 ; Bam- 2 Daniels v. Davison, 16 Ves. 249 ; hart v. Greenshields, supra. Johns V. Norris, 12 C. E. Green, 485 ; " Barnhart v. Greenshields and Jones McDavit V. Pierrepont, 8 C. E. Green, v. Smith, supra. ' 42 ; Kerr v. Day, 14 Penn. St. 112. f Bamhart v. Greenshields, 9 Moore, 8 Barnhart v. Greenshields, 9 Moore, P. C. 18, 34. P. C. 18, 32 ; Jones v. Smith, 1 Hare, ^ Knight v. Bowyer, 23 Beav. 609 ; 60 ; Bailey v. Richardson, 9 Hare, 734, s. c. 2 De G. & J. 421. § 3.] OONDtrCT SUBSEQUENT. 391 proposition applies to the situation of tenant and sub-tenant ; if the latter is alone in possession, a purcliaser will be fixed with notice of his rights, apart from questions arising under the law of registration, but the purchaser will not be held to notice of the upper tenant's estate.^ This view of notice, touching the lessor's estate, has, it is believed, the support of reason and of the better authorities.^ Notice fixed by the knowledge of a fact pertains in principle to matters in the regular train of that fact, and not to matters wholly distinct from it ; inquiry would not naturally lead to the discovery of such. The fact that A has leased and given possession to B would not lead to knowledge that A had also mortgaged the property to C ; unless by accident.^ However there are decisions to the effect that the fact of possession in another is notice of the nature of the title of the lessor or owner.* It is not enough to say that these decisions are not sound authority ; it is doubtful in certain cases whether possession by a tenant is notice even of the extent of the tenants title. K the title of the tenant is not on record, or if, being upon the registry, it is not entitled and not known to be there, his pos- session would doubtless be notice of the actual extent of his interest, so far as ascertainable by reasonable diligence. But if his title was recorded according to law, or if, not being en- titled to registration, it was known to be on record, the ques- tion becomes a serious one, whether one dealing with the estate must make further inquiry because of the tenant's 1 Oxwith V. Pluramer, 2 Vern. 636 ; v. Fahnestook, 1 Barr, 470 ; Wright v. s. c. Gilb. 13 ; Bamhart v. Greenshields, Wood, 23 Penn. St. 120, 130 ; Pittman supra. V. Gatty, 5 Gilm. 186. See Smith v. 2 Flagg V. Mann, 2 Sum. 486 ; Beat- Jackson, 76 111. 254. But in Wright v. tie V. Butler, 21 Mo. 313. Wood, ut supra, the court says that ' the ^ Bell V. Twilight, 18 N. H. 159. possession of an intruder cannot be held * Dickey «. Lyon, 19 Iowa, 544, ma- to be notice of the title of a stranger.' jority decision upon apparent authority Whether the Pennsylvania court in- of cases in Pennsylvania and Illinois, tend to go as far as that of Iowa is not Sailor v. Hertzog, 4 Whart. 259 ; Hood clear. 392 CONSTBUCTIVE FRAUD. [CHAP. II. possession. The true answer, in principle, however appears to be in the negative.^ The object of the registry laws is to apprise the world of facts that may be relied upon. It would materially impair the usefulness of those laws if possession should be considered to charge the public with notice regard- less of the registry, as e. g. of an unrecorded conveyance by the lessor to the lessee.^ This must clearly be true where the statute requires actual as distinguished from constructive notice of unrecorded equities to affect a purchaser ; ^ posses- sion would at most be only constructive notice.* The possession of land which in any case will afford notice of the party's rights must be as open, notorious, and exclu- sive as is required to constitute adverse possession under the limitation laws.^ If land upon which there are no buildings be used for pasture by the grantee and others, this is not such visible, notorious, and exclusive possession by the grantee as amounts to constructive notice of ownership. The possession for such purpose must be actual and distinct, and manifested by such acts of ownership as will naturally be observed and recognized by others.^ So where real estate is ostensibly as much in the possession of the husband as of the wife, there is no such actual possession by the wife as will import notice of an equitable interest possessed by her in the land to a purchaser at execution sale, under a judgment against the husband, in whom the legal title apparently was at the time of the rendition of the judgment.'' 1 See Bell v. Twilight, supra. Lyon, 19 Iowa, 5ii ; Smith v. Jackson, 2 lb. 76 111. 254. 8 Pomroy v. Steyena, 11 Met. 244 ; ^ Smith v. Jackson, 76 111. 254 ; Mara v. Pierce, 9 Gray, 306 ; Dooley v. Brown v. Volkening, 64 N. Y. 76. See Wolcott, 4 Allen, 406 ; Sibley v. Leff- McMechan o. Grlffing, 3 Pick. 150 ; ingwell, 8 Allen, 584 ; Beattie v. Butler, Kendall v. Lawrence, 22 Pick. 540. 21 Mo. 313. But actual notice of the <> Coleman w. Barklew, 3 Dutch. 357; equity does not mean knowledge of it. Holmes v. Stout, 3 Green, Ch. 492 ; s. c. Curtis V. Mundy, 3 Met. 405. 2 Stockt. 419 ; MoMechan v. Griffing, 3 4 Beattie v. Butler, 21 Mo. 313. See Pick. 149; Butler v. Stevens, 26 Maine, Sailor v. Hertzog, 4 Whart. 259 ; Hood 484 ; Powell v. Thompson, 9 Ala. 409. V. Fahnestock, 1 Barr. 470 ; Dickey v. ' Thomas v. Kennedy, 24 Iowa, 397. § 3.J CONDUCT SUBSKQUENT. 893 The rule of notice by possession does not apply in favor of a vendor remaining in possession after an absolute convey- ance, so as to require a purchaser from his grantee to inquire whether he has reserved any interest in the land conveyed. So far as the purchaser is concerned, the vendor's deed is conclusive. Having declared by his deed that he makes no reservation, he cannot afterwards set up any secret arrange- ment by which his grant is impaired.^ Nor has the doctrine of notice of defects in the title to land, arising out of the neglect of the purchaser to investigate, any application to cases of adverse possession and outstanding claim.^ Indeed it is not fraudulent to purchase and take possession of land with actual notice of an outstanding claim.^ The question in such a case is simply, who has the better title? The fact of fraud operates against the purchaser with notice only when the opposing claimant had an equity in the land superior to the right of the purchaser's vendor. This doctrine of possession does not always require the subsequent purchaser to have taken actual possession. It was indeed considered by Lord Rosslyn that the defence of a purchase for value without notice was a shield to protect the possession of property, and was not availaljle in any case except to protect the actual possession.* But Lord Eldon overruled that doctrine, and decided that possession by tlie purchaser was not necessary, provided he purchased from au apparent owner, who was actually in possession.^ And this doctrine has more recently been reaffirmed.^ Next concerning notice in connection with breaches of trust. A person who holds property as trustee for another has of course no right to apply it to his own personal uses, as 1 Van Keuren v. Central R. Co., 9 * Strode v. Blackburne, 3 Ves. 222. Vroom, 165. ' Wallwyn v. Lee, 9 Ves. 24. 2 Sands v. Hughes, 53 N. Y. 287 ; « OgUvie v. Jea£freson, 2 Giff. 353, Clapp V. Brumagham, 9 Cowen, 558. 379. 3 Sands v. Hughes, supra. 394 CONSTBUCTIVE FBATJD. [CHAP. U. e. g. to pledge it to secure a debt of his own growing out of a transaction independent of his trust.^ It is tlie duty of the trustee to use all reasonable diligence to preserve the trust property ; and no one can acquire an interest therein against the cestui que trust, who purchases the property with notice of the failure of the trustee to use proper diligence in preserv- ing it to the beneficiary .2 Hence if a certificate of stock expressed to be in the name of ' A, trustee,' be pledged' by A, the pledgee is, by the language of the certificate^ put on in- quiry in regard to the character and limitations of the trust,^ So too a note payable upon its face to a guardian or agent affords notice that the obligation belongs to the ward or prin- cipal, and a holder can acquire no rights adverse to those of the parties in whose interest the restriction is made.* To convict a purchaser however of fraudulent pai-ticipation in a breach of trust by an executor having authority to sell, the evidence of notice of the fraudulent intent on the part of the executor ought to be very strong. The purchaser has a right to presume, in the absence of direct and plain proof to the contrary, that the executor is exercising his power fairly and faithfully.^ In regard to what should put the purchaser upon inquiry it appears to be enough that he has knowledge that the title was in the testator. The fact e. g. that bonds in the hands of the executor are payable to the testator is sufficient to indicate that prima facie they belong to the testator's estate ; and the purchaser, buying at an inadequate price, acts at his peril.^ In a proceeding charging a purchaser from a trustee with 1 Shaw V. Spencer, 100 Mass. 382. 577 ; Kicholson v. Jacobs, ib. 666 ; The duties of the trustee may however Louisiana Bank v. Orleans Nav. Co., 3 be entirely regulated by the terms of the La. An. 294 ; Holmes v. Carman, 1 trust deed, will, or contract. Freem. Ch. 408 ; Miller v. Helm, 2 2 Joor V. 'Williams, 38 Miss. 546. Smedes & M. 687 ; Davis v. Henderson, ' Shaw V. Spencer, 100 Mass. 382 ; 25 Miss. 549 ; Livermore v. Johnson, 27 Sturtevant v. Jaques, 14 Allen, 523 ; Miss. 284. Duncan v. Judson, 15 Wall. 165. ^ Davis v. Christian, 15 Gratt. 11. * McMasters v. Dunbar, 2 La. An. ' Pinckard v. Woods, 8 Gratt. 140. § 3.] CONDUCT StTBSEQUENT. 395 notice that the sale was in fraud of the rights of the benefici- ary it is not enough for the protection of the purchaser that the trustee informed him that lie needed the money obtained to meet debts contracted for his cestui que trust, and that from all the information he had he was led to believe that the trustee wanted the funds for proper purposes. Nor in such a case is it enough for the trustee himself that the necessities of the beneficiary required a sale of the trust fund, and that he had properly applied the proceeds to his use. He should show how they were applied.^ Again where the property or the paper of a firm is taken in payment of the private debt of one of the partners, the law charges the creditor with notice of an abuse of trust, and imposes upon him the burden of repelling the presumption. The rule is founded upon the principle that the employment of the partnership funds by one of the partners for his pri- vate benefit is prima facie a fraud upon the partnership, and the creditor participating in the transaction is a party to the fraud.2 It will not take a case out of this principle that a negotiable note of the firm, made payable to a third person and by him indorsed, is found before maturity in the hands of one of the partners, and is by him indorsed to the plaintiff. The presumption in such case is that the note is accommodation paper, the property of the firm, and not of the individual member ; and if such note be transferred to a creditor for the private debt of the partner in whose possession it is, the cred- itor takes it charged with notice that it is firm property. The presumption however that the note belongs to the firm may be rebutted by the creditor, by showing that it has been regularly negotiated in due course, and has become the prop- erty of the individual partner.'^ 1 Cocke V. Minor, 25 Gratt. 246. 230 ; Halstead v. Shepard, 23 Ala. 538 ^ Mecutchen v. Kennady, 3 Dutch. See ante, pp. 312-315. " Mecutchen v. Kennady, supra. 396 CONSTKTJCTIVE FRAUD. [CHAP. II. If a person purchase an instrument with constructive notice that it is void, he can neither recover thereon against the maker, nor in the absence of fraud on the part of the vendor can he recover from the latter the purchase price paid.^ For example a person not making inquiry is chargeable with notice of all the facts appearing upon the face of a county warrant purchased by him ; and if it is invalid in law, he must suffer the loss of the purchase-money, unless the vendor was guilty of fraud or warranted the instrument good.^ § 4. Notice by Lis Pendens. We come now to some new classes of cases of actual notice (not of knowledge), cases i. e. in which notice is fixed upon one regardless of any suggestions to inquiry, as an absolute rule of law. The first of these is lis pendens. A person purchasing property pendente lite is treated as a purchaser with notice, and is subject to all the equities of the person under whom he claims, and is bound by the decree that may be made against the person from whom he derives title ;^ and this too, it is held, even though careful search of the records by the purchaser before buying failed to disclose any record of the pendency of the suit, in the absence of any fraudulent concealment of the fact by the vendor.* The ground of the doctrine of lis pendens is that, if a trans- fer of interest pending a suit were to be allowed to affect the proceedings, there would be no end to litigation ; for as soon as a new party was brought in, he might transfer to another, 1 Christy V. Sullivan, 50 Cal. 337. 574 ; Griswold v. Jackson, 2 Edw. Ch. See Lamert v. Heath, 15 Mees. & W. 466 ; Metcalfe v. Pulvertoft, 2 Ves. & 487 ; Lawes v. Purser, 6 EI. & B. 930. B. 205 ; Sorrell v. Cai-penter, 2 P. Wms. 2 Christy V. Sullivan, supra. 482 ; Moore v. McNamara, 2 Ball & B. s Allen V. Morris, 5 Vroom, 159 ; 187. Bishop of Winchester v. Paine, 11 Ves. * Blanchard i;. Ware, 43 Iowa, 530 ; 194 ; McPherson v. Housel, 2 Beasl. s. c. 37 Iowa, 305. The 2d headnote 301 ; Murray v. Ballou, 1 Johns. Ch. in 43 Iowa, 530, is wrong. § 4.] CONDUCT SUBSEQUENT. 397 and render it necessary to bring that other into court ; and thus the suit might be interminable. But the rule applies only to cases in which the purchaser derives title from one of the litigating parties. If he claim adversely to both, by title paramount, the proceedings will not bind him. The judgment or decree settles the rights of the parties to the suit only, and those claiming under or deriving title from them.^ The rule too has no application to a third person whose interest existed before the suit was begun, and who might have been made a party .^ Nor does the rule apply to purchasers at tax-sales. The authority of the State to make a tax-sale is paramount to the rights of the owner and of all others ; and, when made in accordance with law, the sale is conclusive against all persons.^ Again a purchaser who has notice of a pending suit can only be held chargeable with knowledge of facts of which the record in the cause, as it existed at the time of the purchase, would have informed him. If these facts inform him that the vendor is committing a fraud in making the sale, he becomes, by purchasing, a party constructively to the fraud, so far as his rights in the property are concerned (and no further).* But he cannot be charged with a knowledge of facts afterwards brought into the case.® The burden of proving such a case as this however would doubtless rest upon the party claiming the property. It seems pretty clear at all events that, if a party's claim to property in litigation arose before the litigation began, he must show the fact.^ Mere service of a subpoena is not a sufficient lis pendens, unless a bill or declaration is afterwards filed. But when 1 Allen V. Moms, supra. wrong in any .sucli sense as to make him 2 Murray v. Lylbnrn, 2 Johns. Ch. guilty of real fraud, like his vendor. 441. No action for damages could be main- ' Wiight V. Walker, 30 Ark. 44. tained against him. * The case in regard to the purchaser, 6 Davis v. Christian, 15 Gratt. 11. if he is innocent, is a case only of con- 6 Hall v. Jack, 32 Md. 253. structive fraud ; he is not a party to the 398 CONSTRUCTIVE FRAUD. [CHAP. II. the bill or declaration is filed, the doctrine of lis pendens relates to the service of the subpoena.^ And the question must concern the estate, and not merely money securities upon it.2 So if the suit fail for defect of process, there is no lis pendens. Thus where there is a defect in an attachment, the debtor can convey a good title to a purchaser for value with- out notice of the attachment proceedings.^ § 5. Notice by Rbgisteation. Another class of cases of actual notice arises under the registration of instruments according to the recording acts of this country. In virtue of these acts the recording, in the public registry, of certain instruments, such as conveyances of real estate, is notice per se, i. e. actual notice, of the ex- istence of the instrument and of its contents as spread upon the record. These acts have practically made registration compulsory and universal, by making compliance with their provisions the chief means of safety in the purchase of prop- erty covered by them. The English registration acts are more limited and much, less effective ; indeed they appear to be matter of mere con- venience and privilege, and to have been of small influence. The subject of sweeping changes is even now under consider- ation in Parliament. The doctrine of notice in relation to registered deeds has in England been divided into two classes of cases : First, cases in which tlie party charged has had actual notice that the property in dispute was in fact charged, incumbered, or in some way affected ; in such cases the courts have there- upon bound him with constructive notice of facts and instru- ments, to a knowledge of which he would have been led by an 1 Sagden, Vendors, 534, Perkins's ed. '■2 lb. ; Worsley v. Scarborough, 3 Atk. 392. » Burohard v. Fairhaven, 48 Vt 327. § 6.] CONDUCT SUBSEQUENT. 399 inquiry after the cliarge, incumbrance, or other circumstance affecting the property of which he had actual notice. Sec- ondly, cases in which the courts have been satisfied from the evidence before them that the party charged had designedly abstained from inquiry. The proposition of law upon which the first class of cases proceeds is, not that the party charged had notice of a fact or instrument which in truth related to the subject in dispute without his knowing that it had such a bearing, but that he must have had actual notice that it did relate to the subject in dispute. The proposition of law upon which the second class of cases proceeds is, not that the party charged had incau- tiously neglected to make inquiries, but that he had abstained from such inquiries for the purpose of avoiding knowledge ; a purpose which, if proved, would clearly show that he had a suspicion of the truth and a fraudulent determination not to learn it. In short if there be not actual notice that the prop- erty is in some way affected, and no fraudulent turning away from a knowledge of facts which the res gestae would suggest to a prudent mind, — if mere want of caution as distinguished from wilful blindness is all that can be imputed, — the doc- trine of constructive notice will not apply.^ In accordance with these principles it is held that, in order to affect the priority of a registered deed over an unregistered security by reason of fraud in the grantor, actual notice of the fraud must be fixed upon the grantee of such deed.^ According to our laws a purchaser^ is constructively af- fected by the registration of a deed required to be put on record with such knowledge as the index entries afford ; and, 1 Jones V. Smith, 1 Hare, 55 ; Rat- cising 'Wormald u. Maitland, 35 L. J. cliffe V. Barnard, L. R. 6 Ch. 654 ; Ch. 69, and In re Allen, L. E. 1 Eq. Chadwick v. Turner, L. R. 1 Ch. 319 ; 455. Whithread v. Jordan, 1 Younge & C. 32 ; ^ jt seems that the registry is not Agra Bank v. Barry, L. R. 6 Irish Eq. notice to all the world, hut only to 128, 144. those who are bound to make search. 2 Agra Bank o. Bany, supra, criti- Maul v. Rider, 59 Penn. St. 167. 400 CONSTKUCTIVE FEATJD. [CHAP. U. if they are such as necessarily to put a cautious and prudent man upon inquiry, such inquiry will be considered to have been made, and knowledge fixed accordingly.^ ' But this is not the extent of the rule concerning notice by registration, as held by some of our courts. The doctrine has been carried so far as to require a purchaser to take notice of that of which he can in fact have no knowledge from the books of registration, except by examining every recorded instrument therein. Thus it has been decided that the registration of a deed required to be recorded constitutes notice to subsequent purchasers, though the record of the instrument be not in- dexed.2 This however is upon the ground that under the statute in regard to registration the index is no part of the record ; it could not well be sustained on the ground of fraud. A man cannot be guilty of fraud of this kind, except by shut- ting his eyes to facts directly before him. The case turns simply upon a question of statutory interpretation ; and it is proper to remark that there is authority to the contrary of the cases above referred to.^ By the law of California a grantee of land must ascertain whether any of the preceding grantors of the property had made an earlier conveyance of the same, which, remaining unrecorded until after the registration of the second grant under which the present claimant holds, was then put upon record. If such were the facts, the present claimant, though a purchaser for value without actual notice, is considered to have constructive notice of such prior (and for a time) unre- corded grant.* It may well be doubted however, in the 1 Bostwick V. Powers, 12 Iowa, 456 ; ^ Barney v. McCarty, 15 Iowa, 510 ; Doyle V. Tea?, 4 Scam. 202. Miller v. Bradford, 12 Iowa, 14 ; Whal- 2 Mutual Life Ins. Co. v. Dake, 4 ley v. Small, 25 Iowa, 184 j Noyes v. Cent. L. J. 340 ; Curtis v. Lyman, 24 Horr, 13 Iowa, 570 ; Breed v. Conley, Vt. 338 ; Bishop v. Schneider, 46 Mo. 14 Iowa, 269. See Barney v. Little, 15 472. See also Schell v. Stein, 76 Penn. Iowa, 527 ; 4 Cent. L. J. 387, and cases St. 398 ; Chatham v. Bradford, 50 Ga. .cited. 327, and other cases cited in the Cen- * Clark v. Sawyer, 48 Cal. 133 ; tral Law Journal, nt supra. Mahoney v. Middleton, 41 Cal. 41. See § 5.] CONDTTCT SUBSEQUENT. 401 absence of a clear intent to this effect on the part of the legislature, whether this is not transcending the purpose of the registry acts.^ But authorities in support of that rule are not wanting.^ A mortgage duly recorded certainly ope- rates as notice until discharged ; and hence where a mort- gagor has regained possession by fraudulent practice, and has then conveyed to a purchaser for value, who has no knowledge of the mortgage, the mortgagee may foreclose against him.^ But this is a very different case. The prior registration of a conveyance obtained in fraud of a grantee registering later will be of no avail against the rights of the latter. Thus if after knowledge of a sale to an- other, a person should procure another conveyance to himself from the vendor, and have the deed recorded before the regis- tration of the deed to the first grantee, he would be compella- ble in equity to surrender his fraudulent claim to the latter.* It is however clear that the kind and degree of notice suffi- cient to stand as a substitute for an actual record of a deed must be such as to charge a party with fraud in taking the second conveyance. He must have definite information of the prior conveyance ; it is necessary for a party relying upon an unregistered deed against a subsequent purchaser or attach- ing creditor to prove that the latter had actual notice of the deed.^ A floating rumor or a vague suspicion is insufficient. The conflict of authority in regard to the effect of possession under an unrecorded deed, as notice to a subsequent pur- chaser from the grantor or lessor of the person in possession, has already been noticed.® also White u. Patten, 24 Pick. 324 ; Bigelow, Estoppel, 423, 4th ed. These Knight V. Thayer, 125 Mass. 25. cases are wrong. Rawle, Covenants, 1 See Kawle, Covenants, 404, 5th ed. ; 402 et seq., 5th ed. ; Bigelow, Estoppel, Bates V. Noroross, 14 Pick. 224 ; Bige- 424-437, 4th ed. low. Estoppel, 432, 4th ed. » Grimes v. Kimball, 8 Allen, 153 ; 2 Jarvis v. Aikens, 25 Vt. 635 ; Doe s. c. 3 Allen, 518. d. Potts V. Dowdall, 3 Houst. 369 ; * Mercter v. Hemrae, 50 Cal. 606. TifTt V. Munson, 57 N. Y. 97; Mc- ^ Spofford «. Weston, 29 lyiaine.UO. Casker v. McEvey, 9 E. I. 525. See 6 Ante, pp. 389-391. 26 402 CONSTEUCTIVE FEAUD. [CHAP. II. Though land be bid off at an administrator's sale for the administrator by a nominal purchaser, who after confirmation of the sale receives a conveyance from the administrator, and subsequently conveys to the latter, still subsequent purchasers for value are not, it is said, chargeable with notice of the fraud by the mere record of the conveyances between the administrator and nominal purchaser.^ The registration of a deed defectively acknowledged is not notice to a subsequent bona fide purchaser for value.^ And the registration of any deed is notice of such fraud only as appears on the face of the instrument; it is not notice of fraud perpetrated in its execution.^ And again the registra- tion of a deed is notice only to those who claim through or under the grantor.* The purchaser of land is not bound to take notice of a registered lien or incumbrance upon the estate, created by any person other than those parties through whom he is compelled to make title.^ The doctrine of notice to a purchaser by registration does not apply where there is a false representation that the ven- dor has an unincumbered title. In such a case the purchaser can, without an eviction,^ enjoin the collection of the price agreed upon, though the conveyance contain covenants of warranty.'' A purchaser for value without notice of a prior unregis- tered conveyance may make a valid conveyance to one who has such notice. The doctrine is explained on the ground that, but for the rule, the bona fide purchaser would not be able to enjoy the full benefit of his own unexceptionable title.8 1 AVells V. Polk, 36 Tex. 120. ^ Harper v. Bibb, 34 Miss. 472 ; 2 Cockey v. Milne, 16 Md. 200. Maul v. Eider, 59 Penn. St. 167. » Godbold V. Lambert, 8 Rich. Eq. ° See post, p. 416. 155 ; Hoffman v. Strohecker, 7 Watts, ' Napier v. Elam, 6 Yerg. 108. See 86. " post, p. 416. * Corbin v. Sullivan, 47 Ind. 356 ; ^ 1 Story, Equity, § 409 ; Price v. Ely V. Wilcox, 20 Wis. 523, 630 | Maul Martin, 46 Miss. 489 ; Stewart v. Eeed, V. Eider, 59 Penn. St. 167. 91 Penn. St. 287. §6.] CONDUCT SUBSEQUENT. 403 § 6. Volunteers: Purchase without value. Volunteers, or purchasers without value, are commonly classed with purchasers having notice ; but this is not strictly accurate. If a volunteer were to return the property to the late owner and then purchase it for value, he would not be affected by the fact that he had formerly acquired the prop- erty as a volunteer ; while the contrary would be true if he had acquired it with notice. It would be more correct then to say that while a person remains a volunteer, his title can rise no higher than that of his predecessor. On the other hand subject to such exceptions as have already been considered, fraud cannot be alleged against a bona fide purchaser for valuable consideration without no- tice ; a bona fide purchaser for value obtains a good title, notwithstanding the fact that his vendor's title may have been obtained by fraud.^ So strong is this rule that where ^ Thompson v. Lee, 3 Watts & S. 479 ; Ball V. Shell, 21 Wend. 222 ; Moody V. Blake, 117 Mass. 23 ; Hoff- man ii. Noble, 6 Met. 68 ; Eowley v. Bigelow, 12 Pick. 307 ; Spindler v. At- kinson, 3 Md. 409 ; Toole v. Darden, 6 Ired. Eq. 394 ; Thorpe v. Beavans, 73 N. Car. 241 ; Bradley v. Obear, 10 N. H. 477 ; Gage v. Gage, 29 N. H. 533 ; Shu- felt V. Pease, 16 Wis. 659 ; Hawkins v. Davis, 5 Baxt. 698 ; Babcock v. Lawson, 5 Q. B. D. 284, af g 4 Q. B. D. 394. But such vendor must have acquired a title in order to this result, unless the conduct of the real owner was fraudu- lent. A person buying goods without authority for another, who refuses to receive them, cannot himself acquire title to them by taking possession upon such refusal ; nor is the case different when the party falsely represents himself to be a member of a firm for whom the goods are without authority purchased. He cannot take possession and convey a title even to a bona iide purchaser for value. Moody v. Blake, 117 Mass. 23. Sb if a person sell goods to another, or has been led to believe that he has sold them to such person, and deliver them, as he supposes, to such person, and the person who has led him into that belief receive and carry off the goods and dispose of them to another, there has not been a sale to the person who has thus fraudulently represented himself to be a servant or agent of the supposed purchaser ; and he cannot con- fer a good title on any one else, the property never having vested in him. Hardman v. Booth, 1 Hurl. & C. 803 ; Lindsay v. Gundy, 2 Q. B. D. 96, C. A. (reversing 1 Q. B. D. 348) ; Gundy v. Lindsay, 3 App. Gas. 459 ; Edmunds v. Merchants' Transp. Co., 135 Mass. 283 ; post, chapter 'Void Transactions.' A purchaser at an execution sale can- 404 CONSTEUCTIVE FRAUD. [CHAP. H. a man already married went through the ceremony of mar- riage again with another person, and then joined with her as his wife in assigning her property to such a purchaser, the assignment was supported, though the woman had been deceived.^ So if a trustee be in actual possession of the trust estate, and convey it to an innocent purchaser for value, the remedy of the cestui que trust is against the trustee alone. The purchaser gets a good title.^ A person however receiv- ing money raised on trust property in fraud of the cestui que trust, is held to be liable for the amount to. the latter, though the money was obtained for value and without notice of the trust.^ Thus, in the case cited, the defendant had received money fraudulently raised on real property which had been settled on the plaintiff and her children ; and though the defendant was trustee of this marriage settlement, he had no notice or knowledge that the money referred to had been raised on the trust property. But the plaintiff, her husband having deceased, was held entitled to follow the fund into the defendant's hands, and recover the same for herself and (as next friend) for her children. And it was thought imma- terial that the defendant had been discharged in insolvency since the money was put into his hands.* A purchaser for value in general is one who, at the time of his purchase, advances a new consideration, surrenders some security, or does some other act which, if his purchase were not be held liable for any device of the ^ Sturge v. Stan-, 2 Mylne & K. 195. defendant in the execution of which he ^ Grove v. llobards, 36 Mo. 623. was ignorant. Thorpe v. Beavans, 73 The ownership of a trust fund is unaf- N". Car. 241. But the public policy in feoted by a change of the custodian, or favor of sustaining judicial sales does where it is taken by a volunteer or one not go so far as to protect a purchaser who has notice of the trust. Kepler v. who has himself been guilty of trick or Davis, 80 Penn, St. 153. artifice in obtaining the property at an ^ Buckeiidgei;.Glasse,Craig&P.126. undervalue. Stewart v. Nelson, 25 Mo. * The debt was not shown to have 309 ; Schweitzer v. Tracy, 76 111. 345 ; been in the defendant's schedule ; but Young V. Bradley, 68 111. 553 ; Michi- the court thought the result would have gan Cent. R. Co. v. Phillips, 60 III. been the same, even if it had been 190 ; Jennings v. Gage, 13 111. 610. proved to be there. § 6.] CONDUCT SUBSEQUENT. 406 set aside, would leave liim in a worse than his original situa- tion,i or, in the law of bills and notes (according to most of the authorities), which would leave him in a worse situation than he might have been but for the purchase.^ Thus a person who takes a negotiable bill of exchange in payment, absolute or conditional, of a pre-existing debt ; or as security for a debt simultaneously created with the giving of the bill or note, where such instrument is part of the inducement to the credit ; or, according to the strong tendency and weight of authority, where the bill or note is taken as security for a pre-existing debt, whether there be an agreement to extend the time of the original credit or an agreement not to extend the time, — in all of these cases, the holder of the paper is a holder for value ; and if he has no notice of fraud or other defence available in an action between the original parties, his right to recover is perfect.^ The discharge of a pre-existing debt in sales of property also is by most courts held to constitute a valuable consideration within the rule protecting a purchaser for value without no- tice.* But in New York (and possibly in some other states) 1 Boon u. Barnes, 23 Miss. 136. vens -u. Brennan, 79 N. Y. 254, and in Hence a purchaser of property who has Moore v. Ryder, 65 N. Y. 438. But the not paid anything for it, tliough he may law of hill.s and notes, as seen in Blanch- have agreed to pay full value, is not ard v. Stevens, supra, is peculiar, protected. Hicks v. Stone, 13 Minn. * Merchants' Ins. Co. v. Ahhott, 131 434. But the case would be otherwise, Mass. 397, 400 ; Railroad Co. v. Na- ■where he had given security for pay- tional Bank, 102 U. S. 14, 58, 59 ; ment. Starr v. Strong, 2 Sandf. Ch. Taylor v. Blakeloek, 32 Ch. D. 560, 139. C. A. 'By the common law of this 2 Blanchard v. Stevens, 3 Cush. 162 ; country the payment of an existing debt Bank of Republic v. Carrington, 5 R. I. is a payment for valuable consideration. 515. That was always the common law, be- 8 The cases at variance with the last fore the reign of Queen Elizabeth as well of these propositions are considered in as since. Commercial transactions are the note to Swift c. Tyson, Lead. Gas. based upon that very idea. It is one of on Bills and Notes, 186, 195. See fur- the elementary legal principles,' as it ther the late reaffirraance of the rule in seems to me, which belong to every civ- New York (requiring the actual parting ilized country ; and many of the com- with some value, or otherwise positively mercial instruments which the law changing the party's position), in Ste- recognizes have no other consideration 406 CONSTRUCTIVE FEATTD. [CHAP. II. it is firmly held that one to whom property, purchased through fraud, has been delivered by the. defrauding buyer, in payment of a preceding debt, or in performance of an executory con- tract of sale made prior to acquiring possession of the property in question, though a consideration was paid at the time of the contract, is not a purchaser for value, within the rule, and cannot hold the property against the party who originally owned and was defrauded of his possession of the property.^ But payment, even in New York, is not necessary to . make one a purchaser for value. The giving of securities is equally good.2 In accordance with the general doctrines of law one who has ■ innocently received from a husband, to secure the pur- chase price of goods then presently sold and delivered to him, and also to secure a prior indebtedness, a mortgage executed by the wife of the debtor upon her own property, which in regard to the prior indebtedness was a fraud upon the wife, cannot claim to have equities superior to hers, so long as the avoiding of the mortgage to the extent of such prior debt will not place him in any worse position than he originally occupied.** To make the claim of the mortgage superior to that of the wife, it must appear that, in relation to the prior debt, he has done something, or parted with something, in reliance upon the mortgage, which will make the effect of defeating the mortgage as a security to that extent operate to his injury.* It is further held that an execution creditor does not be- come a purchaser for value by buying goods at a sale thereof without making an advance upon them, when the goods were fraudulently purchased by the defendant in the execution. Such a proceeding gives the creditor no better title than a mere delivery from the fraudulent defendant. The creditor whatever than a pre-existing deht.' ^ Starr v. Strong, 2 Sandf. Ch. 139. Bowen, L. J. in Taylor v. Blakelock. ' Smith v. Osborn, 33 Mich. 410. 1 Barnard v. Campbell, 58 N. Y. 73; ' lb. ; Mo Williams v. Mason, 31 N. Stevens v. Brennan, 79 N. Y. 254. Y. 294. § 6.] CONDUCT SUBSEQUENT. 407 advances nothing, and loses nothing by the proceeding. That is, the creditor had no right, under the circumstances, to levy on the goods in question ; and • the mere sale had therefore conferred no title upon him.^ A mere attaching creditor is not regarded as a purchaser for value anywhere. He parts with nothing in exchange for the property, nor does he take it in satisfaction of any debt. The property is merely seized for the purpose of having it after- ward so appropriated. The attaching creditor, by his attach- ment, obtains but a lien. It is a well-settled rule, at least in equity, that the general assignees of a bankrupt take his estate subject to every equitable claim existing against it in favor of third persons ; and so it is with judgment creditors in regard to the lien of their judgment.^ But if the property attached be afterwards sold under the levy, and the creditor become purchaser, paying cash or giving a valid security for payment, he will be a purchaser for value, even under the New York rule. Further one who claims against a prior donee or creditor as a purchaser for value must prove a fair consideration, not necessarily equal to the full value of the property, but a price paid which does not cause surprise or warrant a suspicion of fraud or contrivance on the .part of the purchaser.^ But if the price paid be grossly below the value of the pro- perty, he will not be regarded as a purchaser for value against a creditor, though in fact his purchase was made without knowledge of any fraudulent intent on the part of the vendor.* , Indeed if. any interest pertg,ining to the res remain in the » Devoe v. Brandt, 53 N. Y. 462. ley, 5 Ohio St. 78 ; Nathan v. Giles, .5 This was quite clear for the further Taunt. 558. See McLaughlin v. Shep- reason that there was evidence that the herd, 32 Maine, 143. creditor had notice of his debtor's fraud. ' "Worthy v. Caddell, 76 N. Car. 82; 2 Sohweizer-w. Tracy, 76 111. 345, 351; FuUenwider v. Roberts, 4 Dev. & B. 278. Ex parte Howe, 1 Paige, 125 ; Gibson v. * lb. Warden, 14 Wall. 249 ; Tousley v. Tous- 408 CONSTEUCTIVB PRAT7D. [CHAP. II. intermediate fraudulent vendor of property, it seems that the original vendor can follow the property into the hands of a bona fide purchaser for value to the extent of such interest. That is, he can sue upon the rights of the purchaser's vendor, and recover to the extent of such rights.^ But in the absence of trust or agency, this right of the intermediate vendor must, it should seem, be in the nature of a lien upon the property ,2 and not a mere right of action for the breach of a contract; since the original defrauded owner would not be a party to the contract. If the fraud practised on the owner of the property be of such a character as to prevent the passing of a title to the supposed vendee, the latter of course can convey no title to a subsequent purchaser, though the purchase be made without notice and for value. Thus where under pretence that an instrument was a deed of covenant to procure title-deeds, a solicitor obtained from his client a mortgage of property to secure the payment of an alleged debt not shown to exist, the deed thus procured was held to be void, not merely against the solicitor, but also against an assignee for value from him without notice of the fraud.^ And it is held that if the fraud- ulent purchaser of goods does not obtain a delivery of them under the contract, but subsequently acquires possession of them through fraud and misrepresentation, he cannot convey a good title to them as against the owner, even to a bona fide purchaser for value.* Again one who buys property from another who acquired the title by fraud must, in order to protect himself in his purchase, have been ignorant of any of the facts constituting the fraud, not only at the time of his purchase, but also at the time of paying the purchase price.^ To constitute one a pur- 1 See Justh v. National Bank, 56 « Vorley v. Cooke, 1 Giff. 230. See N. Y. 478. also ante, pp. ISO, 157. 2 Justh V. National Bank, 56 N. Y. * Dean v. Yates, 22 Ohio St. 483, 484. See also Pennell v. Deffell, 388. 4 De G., M. & G. 372. ' Soott o. Umbarger, 41 Cal. 410 ; § 6.] CONDUCT SUBSEQUENT. 409 chaser without notice, he should have paid the purchase-money in whole or in part ^ before notice.^ Hence a person receiving notice after having contracted for the purchase of land, but before the delivery of the deed or adjustment of the consider- ation, is not a purchaser without notice.^ But notice to a purchaser after purchase completed does not affect him.* An assignee who takes in trust for others is not a purchaser for value in the technical sense, and some courts hold that an assignee purchasing even in his own right, as e. g. an assignee of a mortgage purchased for himself in ordinary course, is not to be treated as one having the rights of a purchaser for value. In that view of the law the assignee of the mortgage takes subject to equities, even though he purchased without notice.^ But a contrary and, it is believed, a sounder rule prevails in other courts.^ • In the absence of fraud a convey- ance by the party who appears ... to be the owner of the mortgage should be sufficient to protect a purchaser who has no actual or constructive notice of title in any other.' '^ Upon what solid ground can a distinction be maintained between the situation of one who purchases an unincumbered estate for a valuable consideration, without notice, from a vendor whose title was acquired by fraud, and that of one who so purchases a mortgage ? It signifies nothing that tlie latter, in strict- ness, is an assignee of the mortgage. To protect the assignee is no more to make mortgages negotiable than other property. Blanchara v. Ely, 12 Mich. 339 ; War- Donally, 3 Hen. & M. 316 ; Jewett v. ner v. Whittaker, 6 Mich. 133. Palmer, 7 Johns. Ch. 65 ; Simms v. 1 Hardin v. Harrington, 11 Bush, Richardson, 2 Litt. 274. 367. See Pickett y. Baum, 29 Barb. * Low v. Blinco, 10 Bush, 331. 505 ; 2 Story, Eriuity, § 1502. 6 Conover v. Van Mater, 3 C. E. 2 Paul V. Fulton, 25 Mo. 156 ; Vat- Green, 481. tier V. Hude, 7 Peters, 252 ; Doswell v. 6 ggg Welch v. Priest, 8 Allen, 165 ; Buchanan, 3 Leigh, 365 ; Dellard v. Hulsman v. Whitman, 109 Mass. 411, Crocker, 1 Speer, Eq. 20 ; Bash v. Bash, 413 ; Merchants' Ins, Co. v. Abbott, 3 Strobh. Eq. 131 ; Kyle v. Tait, 6 131 Mass. 398, 400 ; Taylor v. Blake- Gratt. 44 ; Cole v. Scott, 2 Wash. 141. lock, 32 Ch. D. 560, C. A. 8 Prescott V. Hawkins, 16 N. H. 122; v Welch v. Priest, sUpra, Hoar, J. Blair v. Owles, 1 Munf. 38 ; Hoover v. 410 CONSTRUCTIVE FEAITD. [CHAP. II. Again to be a purchaser of land without notice, it is held that the party must have acquired the legal title ; a purchaser of an equitable title is deemed not within the protection,^ though there is much to be said in favor of a different rule.^ Nor is one who holds title under a quit-claim deed regarded as a bona fide purchaser without notice.^ § T. Innocent Misrepresentation : General Doctrine. One who brings about a sale or a contract by misrepresen- tation commits no fraud, if his representation was, when made, innocent in the ordinary sense of being free from moral wrong, i. e. if it was honestly believed to be true under cir- cumstances permitting honest belief.* Hence no action for damages can be brought however grievously the party dealt with may have suffered. But when the fact that the represen- tation was false becomes known to the one who made it, he should then, as an honest man, be willing to pei-mit the trans- action to be undone if possible, or if not, to relinquish any claim to maintain his advantage upon offer of reciprocal relin- quishment of any benefit received by the injured party. To refuse to do this would make him guilty, not of fraud, but of constructive fraud ; the significance of which lies in the fact that the law would not permit him to maintain his advantage under the transaction as matter of right. If the wrong-doer sue upon a contract thus obtained, the defendant may defend by alleging (1) the misrepresentation and (2), if he received anything of value in the transaction, that he has offered to restore the same to the plaintiff ; or he may show the misrepresentation in reduction of the value of the 1 Wailes v. Cooper, 24 Miss. 208. 10 Peters, 177 ; Vattier v. . Hinde, 7 2 See an article by Professor Ames in Peters, 252 ; Bragg i'. Paulk, 42 Maine, 1 Harvard Law Rev. 1 (April, 1887). 502 ; Smith v. Bank of Mobile, 21 Ala. » Watson V. Phelps, 40 Iowa, 482 ; 125. May V. Le Clafra, 11 Wall. 217 i .Oliver * See ante, pp. 5, note 3, 11, and V. Pratt, 3 How. 333 ; Boon v. Chiles, note. § 8.] CONDUCT SUBSEQUENT. 411 contract, retaining what he has received.^ In either case the wrong-doer is deprived of any advantage, though not liable to any action for damages. If on the other hand the party who made the misrepresentation, having received some security for the payment to be made, such as a negotiable promissory note, which he might turn to the hurt of him who gave it, should not sue, the injured party may bring an action in equity to require him to deliver up the security.^ And the same would be true if the defendant had received and refused to return, upon proper demand, any piece of property, assum- ing that the plaintiff offered return of what he may have received.^ But that is all. Whatever then the course of the law in the particular case, the wrong-doer is treated as guilty of something less than fraud. Such is the general doctrine concerning innocent misrepre- sentation. We now call attention to the application of the doctrine to the special subject of rescission ; though it must be understood that contracts may be rescinded for other causes than misrepresentation. The case of transactions be- tween parties to fiduciary and confidential relations, already considered, affords a striking illustration ; and there are cases too of conduct subsequent, not consisting in misrepresentation, for which rescission may be granted.* It may also be remarked that the subject of misrepresentation as such is reserved for consideration in the following chapter relating to Deception. § 8. Innocent Misrepeesentation : Eescission.^ a. The Rule of Equity : Tendency at Law. The general rule of equity is that any contract, of however solemn character,^ may within certain limits be rescinded for 1 See the chapter on Eescission, ante; Eubher Tel. Co., L. R. 10 Ch. 515, post, pp. 73 et seq. ; infra, p. 420. pp. 417-419. ^ Ante, pp. 46, 84. ' As to procedure in rescission see ' Ante, pp. 76, 77 ; infra, ' Conse- ante, pp. 73 et seq. quences of Rescission,' p. 431 . ^ As to jurisdiction in rescission of * See e. g. Panama Tel. Co. v. India specialties see ante, pp. 53-56. 412 CONSTRUCTIVE FRAUD. [CHAP. II. constructive, and a fortiori for actual fraud ; or, to state the matter with reference to the title of this section, any contract may be rescinded for innocent misrepresentation, which was sufficient inducement thereto.^ The 'fraud' upon which a proceeding to effect rescission is based is found in the purpose, or it may be the actual attempt, to enforce the contract after knowledge of the falsity of the party's representations has been brought home to him.^ Knowledge at the time the representations were made, that they were false, only makes a stronger case ; it is not essential.^ We speak of the rule as a rule of equity ; in courts of com- mon law the rule stated has not prevailed. In such courts however suits cannot be brought for, i. e. to obtain, rescission ; they can only be brought there in consequence of a rescission al- ready made, for the purpose of securing the resulting rights, as by replevin,* trover,^ or by a suit to recover back money paid.^ Whether this may account to any extent for the difference, or whether the very difference in the constitution of courts of law and courts of equity may not furnish a still stronger reason,^ 1 Smith V. Chadwick, 9 App. Cas. Lown, 51 Iowa, 364 ; Presby v. Parker, 187 ; s. c. 20 Oh. D. 27 ; Arkwriglit v. 66 N. H. 409 ; Matthey Wj Wood, 12 Newbold, 17 Ch. D. 301, 320, C. A. ; Bush, 293 (executed contracts) ; Estell Redgrave v. Hurd, 20 Ch. D. 1, 0. A. ; v. Myers, 54 Miss. 174 ; Allen v. Hart, Torrance v. Bolton, L. E. 8 Ch. 118 ; 72 111. 104. Keese Silver Mining Co. v. Smith, L. R. ^ See ante, p. 11 ; Redgrave a. Hurd, 4 H. L. 64 ; Rawlins o. Wickham, 3 20 Ch. D. 1, 12, C. A. ; Reynell o. De G. & J. 304 ; Reynell v. Sprye, 1 Sprye, 1 De G., M. & G. 660, 708, 709. De G., M. & G. 660 ; Phelps v. White, ' See the cases cited supra, note 1. 5 L. R. Ir. 318 ; Smith v. Richards, 13 * Ante, pp. 76, 77. Peters, 26 ; Kennedy v. McKay, 43 ^ Stevens v. Austin, 1 Met. 557. N. J. 288 ; Cowley v. Smyth, 46 N. J. Rescission of a sale of personalty for 381 ; Lewis v. McLemore, 10 Yerg. misrepresentation by the purchaser re- 206 ; Lowe v. Trundle, 78 Va. 65 ; Lin- vests the title in the vendor ipso facto ; hart V. Foreman, 77 Va. 540 ; Nelson and the vendor, if he has nothing to re- V. Wood, 62 Ala. 175 ; Black v. Wal- turn, may thereupon sue in replevin or ton, 32 Ark. 321 ; Shelton v. Ellis, 70 trover without a prior demand. lb. Ga. 297 ; Dunn v. White, 63 Mo. 181 ; See also ante, p. 77. Baughman v. Gould, 45 Mich. 481 ; ^ See Hedden v. Griffin, 136 Mass. Pierce v. Tiersch, 40 Ohio St. 168 ; 229 ; Rand v. Webber, 64 Maine, 191. Loper V. Robinson, 54 Tex. 510 ; Day v. ' ' I have often thought that perhaps § 8.] CONDUCT SUBSEQUENT, 413 the difference has existed; and it has nowhere been more clearly shown than in language of Mr. Justice (now Lord) Blackburn in a case at law,i where it was necessary to lay down the common law rule. The action under consideration by the court was upon a contract, to which the defence set up was mis- representation, not shown to have been made with knowledge. Speaking of the right of rescission on the part of the defend- ant, with reference, it must be understood, to an action at law, the learned judge said that it would be enough, in a case of fraudulent representations, to show that the representations touched any part of that which induced the making of the contract sought to be rescinded ; ' but where there has been an innocent misrepresentation or misapprehension, it does not authorize a rescission unless it is such as to show that there is a complete difference in substance between what was sup- posed to be and what was taken, so as to constitute a failure of consideration.' ^ No such distinction has obtained in equity ; and it is probably now a thing of the past in England, since the fusion there of courts of law and courts of equity, with the general adoption of the rules of equity.^ the discrepancies between expressions of ^ ' For example, ' the learned judge equity and common law judges are great- proceeded to say, ' where a horse is ly owing to the fact that at common law hought under a belief that it is sound, questions of fact are for the jury, and it is if the purchaser was induced to buy by necessary for the j-udge to separate them a fraudulent representation as to the clearly from the questions of law ; where- horse's soundness, the contract may be asinequitythe judges have to determine rescinded. If it was induced by an both law and fact, and it is sometimes honest misrepresentation as to its sound- impossible to understand whether their ness, though it may be clear that both decisions were meant to be inferences vendor and purchaser thought that they of fact or of law.' Lord Blackburn, in weredealingaboutasoundhorseandwere Smith V. Chadwiclc, 9 App. Gas. 187. in error, yet the purchaser must pay the The very difficulty of accounting for wholeprice, unless there was a warranty.' the distinction shows that it was never See also Proctor v. Spratley, 78 Va. 254. founded in principle. Misconceptions ^ Whether the rule in equity would of the rule of caveat emptor (see chapter now be applied to a case over which the 3, of Deception, post) have no doubt Court of Chancery never could have had had something to do with the matter. jurisdiction, as in the example put in 1 Kennedy U.Panama Mail Co., I*. R. the last note, quaere ? The result would 2 Q. B. 580, 587. be to reduce the rule of caveat emp- 414 CONSTRUCTIVE PEAUD. [CHAP. II, There is a marked tendency in this country also towards the adoption generally of the rule in equity, in the general progress towards a single system of law. But there has been and still is some confusion upon the subject here, when the question arises in a case which under the old system would be a com- mon law action. It is clear that where the proceeding is one to obtain rescission, that is, where it is properly an equitable action, the broad rule prevails that innocent as well as fraud- ulent misrepresentation is a ground for rescission, without distinction ; and the current of authority, with indeed here and there an eddy or a counter-current, is on the whole strongly set in favor of the rule in equity in all cases, where equitable claims or defences may be set up, whether the ac- tion is for or in consequence of rescission, or though the right to rescind is set up by way of defence to an action upon the contract. The result is the same in all these cases ; the party who made the misrepresentation, however innocent he may have been at first, is no longer innocent in seeking to main- tain the contract after knowledge of the facts. In so doing he is guilty of constructive fraud.^ The distinction between re- scission (or defence, recoupment, or injunction) and an action for damages is clear and well settled, — to recover damages real fraud, the scienter at the outset, must be proved; but tor to cases of silence by the seller ground of action was actual fraud ; and — a result towards which the law is it might well be held that this could not clearly and, it seems, fortunately tend- be sustained by proof of innocent mis- ing. See chapter 3, of Deception. representation. Ante, p. 179. But see 1 The old common law rule may be Gregory v. Schoenell, supra, which this seen in the following among other cases remark does not reach, at law : King v. Eagle Mills, 10 Allen, The better rule of equity was affirmed 548 (defence) ; First National Bank v. in the following and other law cases: Yocum, 11 Neb. 328 ; Proctor v. Sprat- Kennedy v. McKay, 43 N. J. 288 ; ley, 78 Va. 254 (defence) ; Shook v. School Directors v. Boomhour, 83 111. Singer Manuf. Co., 61 Ind. 520 ; Greg- 17 (defence) ; Woodruff d. Saul,, 70 Ga. oryv. Schoenell, 55 Ind. 101 (replevin) ; 271; Baughman v. Gould, 45 Mich. Matthey v. Wood, 12 Bush, 293 (of 481 ; Pierce v. Tiersch, 40 Ohio St. 168 ; executed, but not of executory con- Loper v. Ptobinson, 54 Tex. 510 ; Wick- tracts). Even of some of these cases it ham v. Grant, 28 Kans. 517. Ante, should be observed that the defence or p. 412, note 1. § 8.] CONDUCT SUBSEQUENT. 415 the distinction as here stated, has been reduced to its lowest terms.^ A strong and typical illustration of the general rule under consideration, drawn from the sale of real property, may now be given. The purchaser of land, upon discovering that the vendor has made a material misrepresentation in the contract of sale, may at once give notice of his repudiation either directly or by some act clearly manifesting it, abandon the premises, and resort to the law, if necessary, to be restored to his rights. Besides, where the rescission is based upon want of title in the vendor, the fact that after such abandonment the vendor cured the defect in his right to convey as at- tempted, or that a third party, the real owner of the land, offered to make a good title upon the payment of the price which had been agreed upon, will not defeat the right of the purchaser to rescind.^ But it is held that the rule is otherwise, if there was no fraud on the part of the vendor. The tender of a good title is held to be a good answer to a bill for rescis- sion in such case.^ It matters not, it will be seen, that the contract has been executed. Executed or executory,* the contract of sale may be rescinded, according to the better authorities, for misrep- resentation ; it is not necessary that the party who made the misrepresentation should have known its falsity when he made it.^ Thus it is held that the fact that the vendor of 1 The distinction however has some- * Foster v. Gressett, 29 Ala. 393. times been overlooked, and the result But see Hart r. Hannibal R. Co., 65 Mo. has been confusion. See e. g. Proctor 509, properly holding that mere failure of V. Spratley, 78 Va. 254. It is well title is not enough, and citing Bumpus shown in Kennedy v. McKay, 43 N. J. u. Platner, 1 Johns. Ch. 213 ; Abbott 288, quoting Western Bank v. Addie, v. Allen, 2 Johns. Ch. 519 ; Goveneur v. L. E. 1 H. L. Sc. 145. Elmendorf, 5 Johns. Ch. 79 ; and other 2 Dal by u. PuUum, 1 Euss. & M. cases. It would clearly be otherwise if 296 ; Green v. Chandler, 25 Tex. 148 ; there was a plain misrepresentation of Woods V. North, 6 Humph. 309 ; fact in regard to the title. See Gunby Blakemore v. Shelby, 8 Humph. 430 ; v. Sluter, 44 Md. 237. Elliott V. Blair, 5 Cold. 185. ^ Glasscock v. Minor, 11 Mo. 655 ; * lb. ; Frost v. Brunson, 6 Yerg. 36. Dunn v. White, 63 Mo. 181 ; Day v. 416 CONSTETJCTIVE PEAUD. [CHAP. II. land represented that the property sold lay along a certain creek, the purchaser desiring the land, as the seller knew, for a stock ranch, when in fact the land did not lie along that - creek or any other, had no water upon it, and was worthless for the intended use of the purchaser, is sufficient ground for rescission ; it mattered not that the seller made the statement in ignorance of the real state of things, and had been unwill- ing to enter such description in the warranty clause of the deed.i Indeed a purchaser of land can, according to the current of authority, avail himself of the misrepresentation of the vendor in regard to the title though the conveyance be made without any covenants for title at all, and though the purchaser may not have been evicted. If he can show an outstanding para- mount title, and false representations by his vendor in relation to the same, he will be entitled to rescind the bargain.^ So too the purchaser of land may rescind for false representation in regard to the number and amount of liens thereon, where at all events these exceed the amount of purchase-money due from him, instead of applying such money to the payment of the liens.^ The cases upon this point are generally indeed cases of fraudulent misrepresentation ; but the principle, it is believed, should apply as well to misrepresentation which was innocent when made.* Lown, 51 Iowa, 364 ; Pendarvis v. Doyle v. Knapp, 3 Scam. 334 ; Tune v. Gray, 41 Tex. 326; Torrance «. Bolton, Rector, 21 Ark. 285; Parham i). Ean- L. E. 8 Ch. 118 ; Arkwright v. New- dolph, 6 How. (Miss.) 435 ; Gilpin v. bold, 17 Ch. D. 301, 320, C. A. ; Red- Smith, 11 Smedes & M. 109 ; Abbott grave v. Hurd, 20 Ch. D. 1, C. A. ; v. Allen, 2 Johns. Ch. 522 ; Napier v.. Reese Eiver Mining Co. v. Smith, L. R. Elam, 6 Yerg. 108 ; Edwards v. McLeay, i H. L. 64 ; Rawlins v. Wickham, 3 Coop. 308. De G. & J. 304 ; Smith v. Land Corp., ^ Bonner v. Herrick, 99 Penn. St. 28 Ch. D. 7, C. A. Secus, as we have 220. It would seem to be unneces- seen, if the action were for damages, sary to the right that the amount See post, chapter on 'Misrepresentation: of the liens exceed the sum due for Knowledge of Falsity.' the purchase-price. See Kennedy ■». 1 Pendarvis v. Gray, 41 Tex. 326. Panama Mail Co., L. E. 2 Q. B. 580, 2 Battle V. Rochester Bank, 5 Barb, ante, p. 41 3. 414 ; Sofer v. Stevens, 14 Maine, 133 ; * But see Key v. Jennings, 66 § 8.] CONDUCT SUBSEQUENT. 417 There are cases possibly in which the falsity of a supposed representation, if innocent, might not be sufficient ground for treating a contract as invalid even in equity. Thus where the obligee of a bond given by a bank has honestly selected the bank as solvent, and so far, but no further, has made a rep- resentation of the bank's solvency, a surety thus induced to sign the bond cannot at law escape liability on the bank's proving insolvent when the engagement was incurred.^ And as the very object of the suretyship was to guaranty the solvency of the bank, it would seem that the rule must be the same in equity ; nothing short of fraud perhaps being suffi- cient ground for exemption from liability.^ At all events there must have been a clear representation, something more than the supposed representation in the case first cited. When there has been such a representation, it would be dangerous to question the application of the general rule in equity. Some doubt however in regard to the general right of rescission in cases of constructive fraud has been created by obiter language used by a learned English judge in a recent case ; ^ though it may be important to observe that the case was not one of misrepresentation. It was declared by Lord Justice James that any surreptitious dealing between one principal to a contract and the agent of the other principal was a fraud in equity, entitling the last-named principal to have the contract rescinded, and to refuse altogether to pro- ceed with it ; and this, it is apprehended, is the true rule. But Lord Justice Mellish was not willing to go so far. Thq consequence of (such?) fraud, in his opinion, was that the court would see that the defrauded party obtained full redress for the fraud, as far as that could be given. If it could be Mo. 356 ; Clark v. Tennant, 5 Neb. 2 gee Cawley v. People, 95 111. 249. 549. 8 Mellish, L. J. in Panama Tel. Co. 1 Mathis V. Morgan, 72 Ga. 517. v. India Rubber Tel. Co., L. R. 10 Oh. See also Roper v. Sangamon Lodge, 91 515. 111. 518, a somewhat similar case. 27 418 CONSTBTJCTIVE FEAXJD. [CHAP. IT. obtained with the contract, it should be so given ; if not, it must be given vs^ithout the contract, and rescission must be allowed.^ It was his opinion however that the situation of the contract in question was one of the latter kind. The only- way in which the injured party could be suitably relieved was by rescission. The case was this : A telegraph works com- pany had agreed with a telegraph cable company to lay a cable, the same to be paid for by a sum payable when the cable was begun, and by twelve instalments payable on certificates by the cable company's engineer, named in the contract. Shortly afterwards the engineer, who was engaged to lay other cables for the works company, agreed with them to lay this cable also for a sum of money to be paid to him by in- stalments payable by the works company when they received the instalments from the cable company. It was held that, under the circumstances, the agreement between the engineer and the works company was a fraud, entitling the cable com- pany to have their contract rescinded, with a return of the money which they had paid under it.^ 1 The suggestion has not, so far as we quence of fraud is that the court will are aware, been followed. The distlnc- see that the party defrauded obtains, as tion would probably prove to he unfor- far as can be given, full redress for the tunate. fraud ; and I have thought it, therefore, ^ In the course of his opinion Mell- necessary on this part of the case to con- ish, L. J. said : ' I am not quite certain sider whether the plaintiffs could be re- that I go the full length to which the lieved from the consequences of this Lord Justice [James] has gone in think- fraud by anything short of the relief ing that, because a person has been a which the Vice-Chancellor has given to party to a fraudulent act of this kind, them. Now I do hot think it necessary after the contract was made, the mere to give a conclusive opinion whether at fact of his having been guilty of such law there would be a defence, on the fraudulent conduct, supposing that a ground that by the act of the defendants full remedy for the fraud could be other- the performance of the contract has been wise obtained, would entitle the other to rendered impossible. No doubt it is a Bay, "Because you acted fraudulently, clear principle of law that if by any act therefore I will have nothing more to of one of the parties the performance of a do with you, and I will not carry out contract is rendered impossible, then the my contract with you." I am not aware other side may, if they choose, rescind of any authority which has gone to that the contract ; and certainly, according extent. As far as I know, the conse- to the case of Planche v. Colbum, 8 §8.] CONDUCT StTBSEQUENT. 419 b. Tender. Inasmuch as the party to whom the misrepresentation was made may be entitled to rescind the contract, it would ob- viously be wrong to require him first to offer full performance on his part, where he has not already performed his under- taking ; and the law therefore does not require anything of the kind.i So too, on the other hand, if the suit by the in- jured party be in aihrmance and not in rescission of the contract, the plaintiff need not tender back the consideration which he may have received,^ as where a vendor, suing for Bing. 14, and other cases, it appears sufficient if the contract cannot be per- formed in some other manner not very different. Still there may be a question of law in a case of this kind as to how far the certificate of the engineer would be considered so much of the essence of the contract that the plaintiffs, having been deprived of that, would be entitled at law to rescind the contract. But, whether it is so or not, I am clearly of opinion that if by any fraudulent mis- conduct of the defendants in entering into an agreement with Sir Charles Bright [the engineer], which had the effect of making it impossible to keep him as a disinterested engineer, if by that act it is rendered impossible that the plaintiffs can have the full benefit of the contract, then it appears to me that there is sulBcient to entitle them to rescind the contract. Now the way in which the question arises in the present case is really this : The contract has been broken, and it seems to be clear on the facts that, independently of the question which is raised before us, it has been broken by the plaintiffs, and so long a time has elapsed that neither party is bound to the other to complete the contract. The only ques- tion then is whether the defendants ought to keep the £40,000 [paid them by the plaintiffs under the contract], and, besides that, ought to be allowed to sue at law for any damages they may have sustained, on the ground of the plaintiffs not having completed the con- tract. . . . It seems tome that it would be in the highest degi-ee inequitable to allow the defendants to keep the £40,000. The contract having been broken, and having come to an end, is it to be treated as having been broken by the default of the plaintiffs, or by the default of the defendants ? It appears to me clearly that the defendants have deprived the plaintiffs of the advice of their engineer, and having by improper conduct deprived them of his advice, the contract clearly must be treated as having been broken off through the de- fault of the defendants ; and, having been broken off through their default and misconduct, it follows that the plain- tiffs are entitled to have the £40,000 paid back, and that they are entitled to be protected from any action at law to recover damages on account of their having, as alleged, broken the contract.' 1 Thomas v. Coultas, 76 111. 493. 2 Bridge V. Batchelder, 9 Allen, 394; 420 CONSTEUCTIVE FKATJD. [chap. II. the price of property, has by misrepresentation been induced to accept insufficient payment.^ While all this is true, it is still a condition precedent to the right of rescinding a contract that the party against whom relief is sought shall be restored' substantially to the position he occupied before the transaction complained of ; ^ the right to rescind can be exercised only upon the terms of restoring the consideration received or, so far as that is at all permitted, its value.^ This is strikingly illustrated in the case of attempted defences to actions upon contracts of sale obtained from the purchaser by fraud. The injured party cannot allege the fraud in bar of the action without tendering back the property re- ceived ; * though he may show the fraud in recoupment of the amount the plaintiff would otherwise be entitled to recover.^ Martin v. Roberts, 5 Cash. 126 ; ante, pp. 68, 75, note. 1 lb. ; Pierce v. "Wood, 23 N. H. 519, 534 ; Moody v. Brown, 58 N. H. 45. 2 Neblett v. Maofarland, 92 U. S. 101 ; Perkins v. Bailey, 99 Mass. 61 ; Catling V. Newell, 9 Ind. 572 ; Johnson V. Jones, 13 Smedes & M. 580 ; Herman V. Haffenegger, 54 Cal. 161 ; Collins v. Townsend, 58 Cal. 608 ; Doane v. Lock- wood, 115 111. 490; Smith ■». Brittenham, 109 111. 540; Strong v. Lord, 107 lU. 25; Vogelw. Demarest, 97 Ind. 440; Vance n. Schroyer, 79 Ind. 380 ; Jeffers v. Forbes, 28Kans.l74; Bellamy i>. Sabine, 2Phill. 425 ; Savery v. King, 5 H. L. Cas. 627 ; Western Bank v. Addie, L. R. 1 H. L. Sc. 162 ; XJrqnhart v. Macpherson, 3 App. Cas. 831, P. C. * Clough K. London Ry. Co., L. R. 7 Ex. 26, Ex. Ch. ; Bwlch-y-plwm Mining Co. v. Baynes, L. R. 2 Ex. 324. It is very doubtful whether an offer to pay the money value of an article would in any case be good, ex- cept where the article is practically equivalent to money, as bonds current on the market, or the like negotiable instruments. Thus in the case of re- scission of a sale of merchandise, by the purchaser, either the original articles or their number, quantity, and value in kind should be tendered. Smith v. Brittenham, 109 111. 540. So probably of shares of stock ; tender of their sup- posed money value would probably be insufficient, for the ownership of the shares gives rights of membership in the company. Comp. the rule in regard to specific performance of a contract to sell shares. 2 Story, Equity, p. 37, note, 13th ed. * Sanborn v. Osgood, 16 N. H. 112 ; Gent V. Ensor, 41 Md. 24 ; Heaton v. Knowlton, 53 Ind. 357 ; Dawes v. Har- ness L. B. 10 0. P. 166; Bwlch-y- Plwm Mining Co. v. Baynes, L. R. 2 Ex. 324 ; Clarke v. Dixon, El. B. & E. 148 ; Deposit Life Assur. Co. ii. Ays- cough, 6 El. & B. 761 ; Anderson v. CosteUo, 5 Ir. E. C. L. 544. 5 lb. ; Huntingdon v. Stratton, 22 Pick. 510 ; Perley v. Balch, 23 Pick. 283 ; Dayton v. Mebick, 32 N. J. Eq. 570 1 Lilley v. Randall, 3 Col. 298 ; Baughman v. Gould, 45 Mich. 481 ; §8.] CONDUCT SUBSEQUENT. 421 Indeed not even a married woman at common law, with all the exemption that implies, can avoid a sale of property made by her without restoring the consideration given by the pur- chaser, if it still remain in integro.^ And the same rule appears to apply to infants who, at the time of demanding rescission, still have in their possession and control the con- sideration received for the sale.^ If however the considera- tion has been consumed or parted with, restoration cannot be insisted upon as a condition to the rescission.-^ But this is a matter personal to the infant (or married woman at common law) ; an adult would not be excused from tender even upon the ground that he was in partnership with an infant, that the infant made the contract, and that he received and con- sumed or parted with what was conveyed by the defendant.* In case real property has been conveyed to the injured party, it is not enough to tender baclc the conveyance, for that would not restore the title to the former owner; the grantee should tender a reconveyance.^ A mere offer, in the case of an exchange of lands, to ' trade back ' would therefore be insufficient.^ But it is held that tender of a deed of recon- veyance at the trial would be sufficient ; ^ and the deed ten- dered need clearly be no more than a quit-claim. Where a deed purporting to convey an estate is an absolute nullity, it would seem that no tender of reconveyance is necessary.^ It is not necessary in all cases that tender of the whole of that which has been received should be made in order to a Estell V. Myers, 54 Miss. 174. This ^ ^^tg^ pp_ yg^ 77. Nieholson v. right of recoupment is not affected by Halsey, 1 Johns. Ch. 417 ; Blaney v. lapse of time. Estell v. Myers, supra. Hanks, 14 Iowa, 400 ; Mitchell v. 1 Pitcher v. Smith, 2 Head, 208. Moore, 24 Iowa, 394 ; Jeifers v. Forbes, 2 Bartlett v. Cowles, 15 Gray, 445. 28 Kans. 174 ; Wilbur v. Flood, 16 See ante, p. 218. Mich. 40. 8 Bartlett v. Drake, 100 Mass. 174 ; ^ WUbur v. Flood, supra. Chandler v. Simmons, 97 Mass. 608; ' Kiefer v. Eogers, 19 Minn. 32; Gibson v. Soper, 6 Gray, 279 ; Price v. Martin v. Martin, 36 Ala. 560 ; Garnett Furman, 27 Vt. 268. v. Leverett, 32 Ala. 410. * Brown v. Hartford Ins. Co., 117 ' Bates v. Graves, 2 Ves., Jr., 287, Mass. 479. 295. 422 CONSTEUCTIVE FBAUD. [CHAP. II. rescission of the contract ; for it may not be necessary that there should be a complete rescission of the whole under- taking. If indeed the whole undertaking is to be rescinded, the injured party must return or offer to return everything of value which he has received. This will obviously be the case where the undertaking is to do an entire indivisible act, for if indivisible, it must in the nature of things be treated as a whole ; ^ it will also be obviously the case where, while the undertaking may be capable of division, that which has been received is one indivisible thing applying to the under- taking as a whole, and not to any part of it. Accordingly where a purchaser brings suit in equity for the rescission of an entire contract for the sale of land, and to have a mortgage and notes for the purchase money released and cancelled, a judgment which does not provide for an ab- solute rescission of the contract, but treats it as valid in part and invalid in the rest, cancelling the mortgage and notes but permitting the purchaser to hold the land, cannot be sus- tained. The rescission and tender should be complete.^ So where a person was fraudulently induced in a transaction to accept township and county bonds for county bonds only, it was held that he must tender back the county as well as the township bonds in order to a valid rescission.^ It has also been held, where a grantee was induced by mis- representation to believe that she was buying with the rest, in an entire contract, a certain tract of ten acres, that she could not maintain an action for money had and received to recover back that part of the consideration paid by her which 1 Band v. Webber, 64 Maine, 191 ; But this case apparently was not a ease Estes ■». Reynolds, 75 Mo. 563 ; Jarrett of rescission at all, though it was treated V. Morton, 44 Mo. 275 ; Hart v. Hand- as such by the court. As 'an action lin, 43 Mo. 171 ; Grant v. Law, 29 Wis. for damages for frand and deceit,' as the 99 ; Masson v. Bovet, 1 Denio, 69. See statement of facts has it, the decision Barrie v. Earle, 143 Mass. 1, book pub- was wrong. The plaintiff, if in fact he lished in parts, and so paid for. had not elected to rescind, had the right 2 Grant v. Law, 29 Wis. 99. to keep the county bonds and sue for " Estes V. Reynolds, 75 Mo. 563. damages. See ante, p. 68. § 8.] CONDUCT SUBSEQUENT. 423 was represented by the ten acre tract, on the ground that she sliould have resorted to equity, or have sued for deceit,^ or have rescinded the whole contract and tendered a reconvey- ance, instead of attempting, as she was doing by an action for money had and received, to rescind in part.^ What has now been said will suggest the conditions, in principle, upon which tender of part may be made. If that which each party has received, or if that which the injured party has received and that which the wrong-doer has under- taken to do, be divisible upon corresponding lines, ' so much for so much,' and the misrepresentation conform to a division so to be made, the injured party should be allowed to act accordingly, rescinding in respect of the objectionable part and tendering the corresponding part.^ Thus where a party agrees to sell and convey two distinct lots of land, each for a specified price, making a false representation of fact in regard to one of them, he may keep the other and rescind in respect of the one which was the subject of misrepresentation.* So a fortiori if a grantor, in fulfilling an agreement to convey a piece of land for a certain price, is induced by misrepresenta- tion, upon receipt of such price, to execute a deed conveying another piece also, not paid for, he may recover the second without paying or tendering back the consideration received or any part of it.^ The rule requiring tender is not dispensed with by evidence that the injured party disposed, in whole or in part, of what he had received before having become aware of the mis- representation.^ He will then be left to an action for dam- ages, or to a right to have the contract price reduced if the 1 Ante, p. 68. Bos. & P. 162. See CuaMng v. Eice, 2 Rand v. Webber, 64 Maine, 191. 46 Maine, 303. 8 Eand v. Webber, 64 Maine, 191 ; * Goodspeed v. Fuller, 46 Maine, Goodspeed v. Fuller, 46 Maine, 141 ; 141. See Eand v. Webber, supra. Miner v. Bradley, 22 Pick. 457 ; Clark * Bartlett v. Drake, 100 Mass. 174 ; V. Baker, 5 Met. 452 ; Morse v. Brack- Walker v. Swasey, 2 Allen, 312. ett, 98 Mass. 205 ; Bartlett v. Drake, « McCrillis u. Carlton, 37 Vt. 139 ; 100 Mass. 174 ; Johnson v. Johnson, 3 Gent v. Enaor, 41 Md. 24 ; ante, p. 420. 424 CONSTKUCTIVE FKAUD. [CHAP. II. price remains unpaid ; ^ and the former he cannot have if the misrepresentation was innocent. The right however to insist upon tender is not an arbitrary right ; on the contrary it will yield to circumstances which show that it would either be unjust or an idle ceremony to require it. Thus if a purchaser who has committed fraud upon the vendor, holds at the time of the rescission a sum of money belonging to the vendor as great as that due for the property, and has made payment for what he has bought, he cannot insist upon a tender of the sum so paid by him as a condition to the seller's right to rescind. He has his money already .2 So where A by misrepresentation obtains an as- signment from B of all his interest in a large estate, of which A was administrator, for a certain sum, e. g. |4,000, and B, before discovering the facts, spends all the money received by him, and dies, C, his administrator, may rescind the assign- ment. And if A has in his hands, of the estate which he administers, a larger amount than the $4,000 which would belong to B, C, in rescinding the assignment, need not tender back the |4,000, but may leave A to deduct the amount he paid to B for the assignment, from the money in his hands belonging to B ; and C may upon demand sue and recover the balance from A.^ A very common case of excuse of tender arises where that which has been received can have no value for' the wrong- doer. Thus where a vendor, induced to sell by misrepresen- tation on the part of the buyer, takes the latter's promissory note in payment, he may repudiate the transaction without first tendering the note.* At best the note is but a mere promise to pay now annulled. It is therefore of no value 1 McCrillis v. Carlton, 37 Vt. 139. 75 ; Nichols v. Michael, 23 K. Y. 264 ; 2 Montgomery v. Pickering, 116 Wood v. Garland, 58 N. H. 154 ; Mass. 227. Bassett v. Brown, 105 Mass. 551, 8 Judge of Probate v. Stone, 44 N. H. 558 ; Thurston v. Blanchard, 22 Pick. 593. 18. Contra, Vance v. Schroyer, 79 « Gould V. Cayuga Bank, 86 N. Y. Ind. 380. § 8.] CONDUCT SUBSEQUENT. 425 to the maker, and need only be surrendered to him at the trial.i Again if the owner of goods has been induced by misrep- resentation to sell them, and to accept the note of a third person, made by him directly to the seller of the property, the fact that the seller has passed the note to another for value will not defeat his right to rescind the sale unless the note was passed by him with knowledge of the'misrepresenta- tion so as to make the act an affirmance of the sale.^ The note, it will be seen, is not in such a case the property of the wrong-doer, and hence he could have no right to demand a surrender of it.^ So if A obtain goods from B by false pre- tences, and give for them an accepted draft upon C, an ac- commodation acceptor, B may rescind the contract and reclaim the property from a volunteer without returning the draft to A.* But tender of the paper of a third person, received as the property of the wrong-doer, should always be made before trial, unless it can be shown to be absolutely worthless.^ It is no excuse for a failure to offer to return a promissory note given by a third person in the course of a sale that the maker is insolvent ; the note cannot, for this reason alone, be treated as of no value.® Indeed it is not necessarily suffi- 1 lb. See also in regard to the sufBi- 45 ; Farley v. Lincoln, 51 N. H. 577, , ciensy of suirendet of notes at the trial, 580, 581 ; Bellair v. Wool, 35 Mich. Tozier v. Crafts, 123 Mass. 480 ; Brad- 440 (consideration from codefendant). lee V. Warren Sav. Bank, 127 Mass. 107 ; It is nothing to the defendant, if he did Home V. Walton, 117 111. 130. not own the property received by the 2 Manning o. Albee, 14 Allen, 7 ; plaintiff, whether it is ever retnmed or s. c. 11 Allen, 520. not. 8 It makes a clear case of excuse if * Frost v. Lowry, 15 Ohio, 200. the property in question does not belong ^ Estabrook v. Swett, 116 Mass. to the defendant, as where he is not the 303 ; Coolidge v. Brigham, 1 Met. 547 party to whom the sale was made, but Williams v. Ketchum, 21 Wis. 432 is a mere volunteer or subsequent pur- Emerson v. McNamara, 41 Maine, 565 chaser with notice. Manning ■». Albee, Gushing v. Wyman, 38 Maine, 589. 11 Allen, 520, 523 ; Stevens v. Austin, 8 Coolidge v. Brigham, 1 Met. 547, 1 Met. 557 ; Thayer v. Turner, 8 Met. 550 ; Cook v. Gilman, 34 N. H. 556 ; 550, 551 ; Thurston v. Blanchard, 22 Evans v. Gale, 21 N. H. 240. See how- Pick. 18 ; Moody v. Drown, 58 N. H. ever Estabrook v. Swett, 116 Mass. 303. 426 CONSTKITCTIVE FEAUD. [CHAP. II. cient to excuse a failure to make tender, that the thing held is of no intrinsic or market value. If it be capable of serving any purpose of benefit to the person from whom it was re- ceived, as where it may serve as a voucher for him in the settlement of accounts, tender- must be made.^ We have seen that the rule that he who seeks to rescind a contract must place the other party in statu quo is satisfied, in the case of a defendant pleading the fraud, if the judgment asked for will accomplish that result ; and in such a case no offer to return that which has been received is necessary .^ Thus if an insurance is obtained by misrepresentation and premiums are taken thereon, it is not necessary for the under- writer to tender back the amount of such premiums, as a con- dition to his right to set up the misrepresentation in defence of an action upon the policy. It will be sufficient for him to offer judgment for the amount of such premiums, if they can- not be retained.^ This is ' rescission by plea.' ^ Tender in a case of rescission between parties to the sale of a partner's interest in business stands upon a footing of its own. Three persons e. g. own saltworks in partnership. One of them by false representations induces another to buy out his interest. The latter, when he discovers the fraud, determines to disaffirm the contract. For this purpose it is sufficient if he give notice of his determination to his vendor, who may there- upon resume his former position in the firm. As the pur- chaser has a right still to participate in the business, because of the interest he had before he bought out his partner, and still has, he is not bound to give up the possession or tender back the property.^ 1 Bassett v. Brown, 105 Mass. 551 ; probatly does not apply to a plaintiff. Morse v. Brackett, 98 Mass. 205 ; s. c. Ante, pp. 81-83. But the injured 104 Mass. 494 ; Conner v. Henderson, party may sue for damages without • 15 Mass. 319. rescinding the contract at all. Ante, 2 Aate, pp. 81-83 ; Gould v. Cayuga p. 68. Bank, 86 N. Y. 75 ; Harris v. Equita- ^ Harris v. Equitahle Ins. Co., supra. ble Ins. Co., 64 K Y. 196 ; AUerton * Ante, p. 78. V. Allerton, 50 N. Y. 670. The rule « Slaughter ii. Huling, 4 Dana, 426. § 8.] CONDUCT SUBSEQUENT. 427 Again if the failure to make tender before the trial was due to the misconduct of the other party, he cannot object to tender made during the trial.^ Thus at the trial of an action for bodily injuries the defendant produced a receipt in full for the demand, signed by the plaintiff. The plaintiff testified that the receipt was obtained by fraud, that she did not know its contents till it was read in evidence, and that she supposed that the money was paid in satisfaction of another claim. During the argument she tendered back the sum paid by the defendant, and the court held that, if under the circumstances any tender was necessary, the tender was good.^ And this clearly indicates that it is unnecessary that the acts of the wrong-doer should have been done with a view to preventing tender.^ It is clear too that objection to want of tender can- not be made where the wrong-doer has put it out of the power of the injured party to make return.* It is laid down in Pennsylvania that a distinction exists between cases of actual and cases of constructive fraud in sales in regard to the right of the fraudulent purchaser to insist upon a return of the money laid out by him in the purchase.^ In cases of constructive fraud it is conceded that the purchase-money paid must be restored. Thus an attorney who, without his client's consent, buys a title in regard to which he has been consulted, may hold it, it was said, until he is reimbursed what he paid for it. And the same rule, it was considered, applies to all sales which are unobjectionable ex- cept for the fiduciary relation borne by the purchaser to the other claimant. It was also conceded that where a party goes into equity to be relieved against a hard bargain which has been obtained from him through his folly, his weakness, or his 1 Smith V. Holyoke, 112 Mass. 517 Southworth V. Smith, 7 Gush. 391 Hammon v. Pennock, 61 N. Y. 146 ' See also Masson v. Bovet, supra. 1 Faulkner v. Klamp, 16 Neb. 174. 5 McCaskey v. Graff, 23 Penn. St. Masson v. Bovet, 1 Denio, 69 ; Martin- 321 ; Jackson v. Summerville, 13 Penn. dale V. Harris, 26 Ohio St. 379. St. 359 ; Gilbert v. Hoffman, 2 Watts, 2 Smith V. Holyoke, supra. 66. 428 CONSTRUCTIVE FEAUD. [CHAP. II. necessities, but whicli he made with his eyes open, and with- out being influenced by any positive deception of the other party, relief will not be given until he who seeks it surrenders all the advantage he has derived from the agreement.^ And the following examples were given : One in remainder sold an estate which was to fall in upon the death of a tenant in tail, turned of fifty and not likely to marry, for a sum not greater than a single year's value. Lord Hardwicke declared it a catching bargain against a necessitous and improvident heir, and set it aside, but directed the plaintiff to pay back the sum he had received.^ So where £1,000 had been assigned to an attorney for fees by a weak and intemperate woman, there being no proof of deception, the attorney was allowed his just claim, and no more.^ A defendant in an execution, driven to the wall by the oppressive rigor of his creditorj and seeing his property about to be sold at an enormous sacrifice, consented to give a bond and mortgage for his own debt and that of his insolvent son besides. It was decreed that the bond and mortgage should stand for the amount of the exe- cution.* In another case the assignment of a sailor's share of prize money at a great undervalue was set aside upon paying the sum actually received by the assignor.* And again a deed was ordered to be cancelled on account of the grantor's mental imbecility ; but the master was directed to take an account between the parties, and allow certain advances made by the grantee.® In none of these cases, said the court of Pennsylvania, was there any actual fraud. But it was considered that a title procured by means of an actual fraud, or a plain and positive deception, was destitute of all validity, at law and in equity. And in such cases the court held that the defrauded party need not offer to return the consideration received as a 1 Qusere if such a case be strong ^ Saunderson v. Glass, ib. 296. enough to entitle a party to relief at all ? * McDonald v. ISTeilson, 2 Covven, 139. 2 Barnardiston v. Lingood, 2 Atk. ^ How v. Weldon, 2 Ves. 516. 133. « Harding v. Handy, 11 Wheat. 103. § 8.] CONDUCT SUBSEQUENT. 429 condition to relief ; or, in the case of a conveyance of real property, that the deed need not stand as a security for the repayment of the money paid by the fraudulent purchaser .^ It appears to be settled indeed that, where a sale is set aside for actual fraud upon creditors, the purchaser is not entitled to ask for repayment of the money paid by him.^ But that is a different case ; it is not a case of rescission at all.^ In a proper case of rescission, i. e. in a case between vendor and purchaser or the like, it may be questioned if the injured man can be said to come into court, especially into equity, with good grace while he holds in his hands the price of the fraud and refuses to return it. If he will honestly repudiate the fraud, he should do so in toto. He can tender the money into court, and then, if entitled to damages besides rescission, he can be awarded them out of such fund, and, if thisbe not sufficient, have execution for the balance. This does not imply that the wrong-doer is so far entitled to repay- ment as to be able to maintain an action for the recovery of the money, in case the contract should be rescinded out of court. He has indeed paid the money in his own wrong, and has now no right to it which he can enforce by bringing an action at law or in equity. But when the defrauded party comes into court seeking equity, he shoald be willing to do equity ; or, if that be not the proper way to put it, he should clear himself from all imputation of ratifying, in any degree, the fraud of which he complains. To keep the money paid 1 McCaskey v. Graff, 23 Penn. St. will not be permitted to stand as a valid 321. See also Basil o. Bender, 113 security for any purpose. If however Penn. St. 94. Comp. BeUair v. Wool, the mortgage be obtained under merely 35 Mich. 440. inequitable or suspicious circumstances, 2 Sands v. Codwise, 4 Johns. 536, in and not with a fraudulent intent, it may error ; Fomiquet v. Forstall, 34 Miss, be set aside in part, and be allowed to 87 ; Weeden u. Hawes, 10 Conn. 50. stand as a security for what is equitably In the latter case it was held that a due. mortgage deed executed with a fraudu- * In re Maddever, 27 Ch. D. 523, lent intent as to the grantor or creditors C. A., shows the difference strikingly is totally void as to him or them, and between such a case and rescission. 430 CONSTRUCTIVE FBATJD. [CHAP. II. after rescission might be allowing him far greater damages than he may have sustained ; and he may thus be quite will- ing to make a profit out of the fraud. That would be at once a ratification and a repudiation; no man can be entitled to both. It is no ground of objection to rescission that the property tendered by way of restoration of the status quo has fallen in value since the transaction .^ Nor, if the property is of a perishable nature, is the holder bound to keep it in a state of preservation until the rescission.^ Nor is a party who seeks to set aside a sale of shares of stock bound to pay calls upon them after filing a bill for rescission, to prevent a forfeiture ; ^ indeed he would not be bound to pay them before the suit for rescission, it seems, unless it was necessary to do so to pre- vent forfeiture.* Nor again is it an objection to the right of rescission that the Statute of Limitations has run upon securities to be returned.^ Indeed the fact that parties cannot be put precisely in statu quo in regard to the subject-matter of the transaction will not be a valid ground of objection to rescission. If it were, an executed contract could never be rescinded ; for the parties never could be placed thus either in regard to time or in regard to the use "of the property. Some period of time must elapse before rescission is possible ; and some use of the property will generally be necessary to a discovery of the wrong.^ All that can be required, in the case of an executed contract, is that the injured party should restore whatever of value he has received, and, as far as the nature of things will permit, undo what has been done. In the case of an execu- tory contract it will often be practicable, and therefore neces- sary, to restore the exact status, saving the matter of time.^ 1 Netlett t). Macfarland, 92 TJ. S. * Comp. Guckenheimer v. Angevine, 101 ; Veazie v. Williams, 8 How. 134, 81 N. Y. 394, payment of whiskey tax. 158 ; Blake v. Morrell, 21 Beav. 613. ^ Neblett v. Macfarland, supra. 2 lb. 8, Gatling v. Newell, 9 Ind. 5?2, 8 lb. 578. See also Coleson v. Smith, ib. 9 ; § 8.] CONDUCT SUBSEQUENT. 431 On the other hand an offer to return everything unreserv- edly which has been received will not necessarily constitute a rescission or a right thereto ; for the other party, though a wrong-doer, guilty it may be of actual fraud, has rights to be considered. He may have so changed his position with re- gard to the transaction that it would be wrong to require him to rescind ,^ though the courts will not be over tender of the rights of a designing wrong-doer.^ The property if it be personal should be returned in ordi- nary cases, it seems, to the premises of the party entitled to it, and there delivered,^ unless there is a waiver by him of his right ; but this rule may be varied by contract, or by the nature of the property. If e. g. the plaintiff agrees to deliver to the defendant at P an engine for the defendant's railroad at M, and the defendant takes the engine to M and tries it there, and finds that it does not answer the object for which it was bought and for which it was warranted, it is a sufficient rescission of the contract to give notice thereof to the plaintiff at P, without sending back and tendering the engine there.* c. Consequences of Rescission. Inasmuch as rescission of a sale of personalty revests the title in the vendor, or if chattels be transferred by each of the parties to the other, revests the respective titles in the former owners, it follows that after a valid rescission the ven- dor cannot sue for the price of the property,^ and property sold cannot, in the absence of fault on the part of the vendor, be levied upon as the purchaser's, but only as the vendor's;^ Masson v. Bovet, 1 Denio, 69 ; Downer ^ Demorest v. Eastman, 59 N. H. 65. V. Smith, 32 Vt. 1. « Van Cleef «. Fleet, 15 Johns. 147; 1 Arinstead v. Hundley, 7 Gratt. 62; Root v. French, 13 Wend. 570 ; Hawes infra, ' Compensation instead of Resois- v. Dingley, 17 Maine, 341 ; O.swego sion.' See also infra, pp. 436, 437. Starch Factory v. Lendrum, 57 Iowa, 2 Vandyke v. "Walters, 88 111. 144. 673. Hence the defrauded vendor can ' See Klein v. Rector, 57 Miss. 538. take the property from an attaching * Starr v. Torrey, 2 Zab. 190. creditor of the purchaser. See the last 432 CONSTEUCTIVE FKAUD. [CHAP. II. and on the other hand that the chattels received in payment, part or full, cannot now be taken as the property of the ven- dor, but only as the purchaser's or former owner's. But each party may lose his rights by directly misleading the creditors of the other, as by actually holding the other out as still being owner of the property, but not, it seems, by merely sleeping upon the rights acquired by rescission and not removing or separating the property, or taking legal steps to secure it if the other fail or refuse to give it up;^ and the creditor so misled may levy upon the property in accordance with the apparent ownership. To be a creditor however within such a rule the party must have become such by a credit, or the like, extended in reli- ance upon such supposed ownei'ship ; the mere fact that a right of action existed against the party thus holding the property in question would not bring him within the rule.^ Thus it could not be enough that the party holding the prop- erty had committed a tort upon the one making the levy ; the latter would not have been misled into extending a credit, and the title of the owner could therefore be asserted. It further follows from the rule in rescission that the per- sonalty revested in the former owner will thereafter be at his risk, provided that the one holding it no longer interferes with it more than may be necessary for its preservation or protec- tion. Any loss of or injury to the goods, without fault of the holder, must therefore be sustained by the former and now new owner, as also any expense necessary to the care or cus- tody of the property .8 For the same reason if the property in hand be sold by the holder after rescission the proceeds will case, aad Atwood v. Deartom, 1 Allen, " "West v. Anderson, 9 Conn. 107 ; 483. Caswell v. Coare, 1 Taunt. 566. Until 1 So held in Field v. Steams, 42 Vt. rescission tte party holding the prop- 106. See Gregory v. Schoenell, 55 Ind. erty under the contract of sale must of 101. course bear the expense. West v. An- 2 See Oswego Starch Factoiy v. derson, supra. Lendrum, 57 Iowa, 573. § 8. J CONDUCT SUBSEQUENT. 433 belong to the owner under the rescission, and may be recov- ered by the opposite party as money had and received to his use ; indeed the same will be true in favor of the party en- titled to rescind, though of course not in favor of the wrong- doer, in case of a sale before rescission of the goods received, upon making a valid demand of rescission.^ d. Compensation instead of Rescission. ' The right to rescind a sale ot property is lost if before its exercise the purchaser has sold the property to a bona fide purchaser for value. The injured party may still sue for damages if the misrepresentation was fraudulent ; but he Can have no right, in ordinary cases, to the avails of the sale by the wrong-doer. The reason of this is that the avails received by the wrong-doer in payment came by a title perfectly good and unimpeachable by the first vendor, because they came from a third person; and they came in payment for prop- erty which the wrong-doer, whose title had not as yet been divested, had a right to sell.^ ! Cases might arise however in which the situation would be different. Suppose the property in question to have been bought by a bona fide purchaser for value after notice to his vendor of rescission by the original owner, but before the re- scission had become completed ; as in the case of real estate, to rescind a conveyance of which would, according to the gen- eral rule,^ require more than notice. The second purchaser would indeed acquire a good title, and there could be no re- scission ; but it would be consistent with analogies of the law to treat the wrong-doer, at the instance of the party wronged, as a trustee for him to the extent of whatever may have been 1 Abbotts V. Barry, 2 Brod. & B. ceived not a proper form of action where 369. the property sold was land. 2 Comp. Brigham v. Winchester, 6 ' Secus in Massachusetts. See ante. Met. 460, holding money had and re- pp. 76, 77. J8 434 COKSTEUCTIVE FRAUD. [CHAP. II. received for the property.^ To a right to the avails equity might well remit the injured vendor upon his tendering back ■whatever of value he may have received ; and this too as ■well ■where the misrepresentation was innocent when made as ■where it ■was fraudulent. This ■would be compensation instead of rescission.^ e. Waiver: Subsequent ■Events. For the party to treat the contract as if still binding, after he has discovered that he ■was drawn into it by fraud, will ordinarily have the effect to waive the right to treat it as invalid.3 Thus if a party with full knowledge that he has been defrauded in the purchase of real estate proceed to execute the contract by the payment of any part of the pur- chase-money, he cannot afterwards sue for rescission.* Slight acts however will not be sufficient to bar a rescission. Thus the use of oxen by the purchaser for five days after ground for suspecting fraud on the part of the vendor has arisen will not bar the right to rescind the contract.^ So too though a party who seeks to rescind a contract for concealment of 1 Comp. Brigham v. "Wincliester, Ga. 100 ; Dunks v. Fuller, 32 Mich. supra. 242 ; Brown -u. ■Waters, 7 Neb. 424 ; 2 This expression has been used in Berman v. 'Woods, 38 Ark. 351. Of equity cases as a practical equivalent course the mere fact that the defrauded for the action in deceit for damages, party has dealt with the property as Armstead v. Hundley, 7 Gratt. 52. his own before discovering the fraud is But that is a different thing. So is de- nothing, if he has not thus prevented ficiency in sales of land. See Euffner himself from returning it. Brophy v, V. Ridley, 81 Ky. 165 ; Kreiter v. Bom- Lawler, 107 111. 284. berger, 82 Penn. St. 59. * KunckoUs v. Lea, 10 Humph. 577. a Grymes v. Sanders, 93 IT. S. 55 ; See Baird v. New York, 96 N. Y. 567. Sharpley v. Louth Ry. Co., 2 Ch. D. 663, But ratification requires no considera- C. A. ; Vernol v. Vemol, 63 N. Y. 45 ; tion. Lyon v. Phillips, 106 Penn. St. Himes v. Langley, 85 Ind. 77 ; Doherty 57 ; Negley v. Lindsay, 67 Penn. St. V. Bell, 55 Ind. 205 ; Bower v. Metz, 217, overruling Duncan v. McCuUough, 54 Iowa, 394 ; Evans v. Montgomery, 4 Serg. & R. 487, and Miller's Appeal, 60 Iowa, 325 ; Seavey v. Potter, 121 30 Penn. St. 478. Mass. 297; Montgomery v. Pickering, ^ Matteson ti. Holt, 25 Vt. 336. 116 Mass. 227 ; Hunt v. Hardwick, 68 § 8.] CDNbtrCT SUBSEQUENT. 435 material facts may have confirmed the contract after ac- quiring knowledge of part of the facts concealed, still if suffi- cient facts were unknown to him at the time to authorize a rescission, such confirmation cannot operate to prevent him from annulling the contract.^ In suits by purchasers for rescission of contracts of sale the fact that the purchaser has remained in possession of the property after tender to the vendor by way of rescission as well as before is a matter merely addressed to the court in adjusting the rights of the parties in relation to rents, im- provements, interest, or the like. It will not necessarily go to defeat the claim of rescission,^ though a presumption of waiver would arise if, upon refusal of the tender, the injured party should retain and make use of the property.^ The fact too that an assignee in insolvency of a seller of goods, in a suit against the buyer, joins counts in contract and in tort for the conversion of the property, under a prac- tice of joinder authorized by statute, is not a waiver of the plaintiff's right to rescind the sale as fraudulent, especially where it appears that all the counts were intended to disaffirm the sale, and the counts in contract are abandoned at the trial.* Nor is the bringing of an action of assumpsit to recover the value of goods bought from the vendor by the purchaser's fraudulent representations necessarily an affirm- 1 Pratt V. Philbrook, 41 Maine, 132. knowledge of the facts, has brought an See Rohrschneider v. Knickprhooker Life action for the price of goods sold, can- Ins. Co., 76 N. Y. 216. not discontinue it and then suethepur- 2 Yeates v. Prior, 6 Eng. (Ark. ) 68 ; chaser in trover for the value of the Schiffer v. Dietz, 83 N. Y. 300. goods on the ground that the sale was ' See McCuUoch v. Scott, 13 B. Mon. illegal and consequently a conversion of 172, which seems to hold the pre- the property. But the principle of that sumption of waiver in such a case case has no application to the present, conclusive. Nor is a mere demand of the price by * Crafts V. Bclden, 99 Mass. 535. the assignee an irrevocable affirmation ' A waiver is an intentional relinquish- of the sale.' lb. Foster, J. See also ment of a known right ; and the doc- Webb v. Odell, 49 N. Y. 583 ; Morri- trine of Butler v. Hildreth, 5 Met. 571, son v. Universal Ins. Co., L. E, 8 Ex. is simply that an assignee who, with 197, reversing ib. 40. 436 CONSTKTJCTIVE FEAUD. [CHAP. II. ance of the contract,' so as always to be inconsistent with an action e. g. of replevin under which part of the goods themselves are taken.^ In any event however the form of the remedy may be adjusted to suit the case of affirmance or disaffirmance.^ Again a party may waive a right to rescind a contract by claiming an abatement from the agreed consideration. Thus if a purchaser buying land discover, after receiving the title, that he has been defrauded, he is not compelled to rescind the agreement in order to interpose an objection to the pay- ment of the purchase price. He can claim an abatement of the sum agreed to be paid,* and can in this way waive his right to rescind the contract. The effect is to permit the contract to be amended so as to conform to fair dealing. The defrauded party to a contract has but one election to rescind the same. If he once determine his election, it is determined forever.^ Hence if it be shown that he has at any time after knowledge of the fraud, either by express words or by unequivocal acts, affirmed the contract, his election is irrevocable.^ Nor has the injured party power to keep the question of election open so long as he will. The 1 Whitwell V. Vincent, i Pick. 449; Hubbard, J. in Browhiug v. Bancroft, Jewett V. Petit, 4 Mich. 508 ; Walsh v. supra. Sisson, 49 Mich. 423 ; Grabenheimer v. ^ See Jewett v. Petit, 4 Mich. 508 ; Blum, 63 Tex. 369. But see Pierce v. Grabenheimer v. Blum, supra. Wood, 23 N. H. 519. * Lord v. Brookfield, 8 Vroom, 552 ; "^ Browning w. Bancroft, 8 Met. 278; Brewster v. Brewster, 9 Vroom, 119; Morford v. Peck, 46 Conn. 380. ' The Kelly v. Pember, 35 Vt. 183 ; Goodwin form of action here adopted is often the v. Eobinson, 30 Ark. 535. most convenient, where only damages ' Kinney v. Kieman, 49 N. Y. 164. can be recovered ; and the mere adoption * Comyns, Dig. Election, C. 2 ; of the form does not under the circum- Clough v. London Eailway Co., L. R. 7 stances change the nature of the plain- Ex. 26 (Ex. Ch.); Kennedy v. Thorp, tiffs' claim, nor affect their right to 51 N. Y. 174 ; ante, p. 65. But if a recover specifically the goods which the contract was entered into, mere treating party had not sold when his fraud was that as binding after notice of the fraud discovered. . . . The jury directly neg- will not bar a suit for damages for the ative such an election, or that the plain- fraud. St. John v. Hendrickson, 81 Ind. tiffs in any way affirmed the contract.' 350, loses sight of this distinction. § 8.j COKDTJCT SUBSEQUENT. 437 rule of law upon this point is this : So long as the defrauded person has made no election, he retains the right to determine it either way, provided that, in the interval while he is de- liberating, an innocent third party has not acquired an in- terest in the property, or that in consequence of his delay the position of the wrong-doer himself has not been substan- tially affected.! But the mere fact that a party to fraud has before the rescission issued a writ and commenced an action pertaining to the subject-matter of the fraud is not such a change of position as will preclude the defrauded party from exercising his election to rescind. Nor is a declaration of intention to rescind necessary prior to the answer to such action.^ Nor will the mere bringing of suit upon the contract prevent a later rescission of it, though presumptively such a suit will be an election to affirm it.^ Indeed it has been held that judgment for the price of goods in favor of a defrauded vendor will not prevent him from rescinding the contract tliereafter if he was ignorant of the fraud when he obtained his judgment.* Clearly the plaintiff may stop his suit upon the contract and rescind if he only then discovered the fraud ; in this the authorities are agreed. The right to rescind is to be determined by the state of 1 Clough V. London Ry. Co., L. E. 7 this did not mean that no statement Ex. 26 (Ex. Ch.). on the record, however explicit, could 2 Clough V. London Ey. Co., supra, amount to an election. modifying Newnham v. Stevenson, 10 » Whitwell v. Vincent, 4 Pick. 449 ; C. B. 713, 723, where it had been said ; Bulkley v. Morgan, 46 Conn. 393 ; 'The commencement of an action in Equitable Foundry Co. u. Hersee, 103 trover, which may be abandoned at any N. Y. 25 ; Clough v. London By. Co., time, and which assumes that the goods supra ; Newnham v. Stevenson, 10 C. B. came into the possession of the defend- 713. But see Butler i;. Hildreth, 5 ant lawfully, cannot without more be Met. 49 ; Acer v. Hotchkiss, 97 N. Y. taken to be an election on the part of 395, and Equitable Foundry Co. v. Her- the assignees to avoid the transfer.' see, supra, in regard to knowledge. See Stevenson v. Newnham, 13 C. B. < Krause v. Thompson, 30 Minn. 64, 285 ; Billiter v. Young, 6 E. & B. 1, citing Pratt v. Philbrook, 41 Maine, 33 ; Bulkley v. Morgan, 46 Conn. 393 ; 132 ; Clough v. London Ry. Co., supra; Butler V. Hildreth, 5 Met. 49. It was Lloyd v. Brewster, 4 Paige, 537. said in Clough v. London Ry. Co. that 438 CONSTKUCTIYB FEADD. [CHAP. H. things at the time the contract was entered into, and will not be affected by the turn of subsequent ey^nts, except in so far as such events may tend to show that there was no ground for a rescission. Thus where a party files a bill to rescind a contract for an exchange of lands, on the ground of a fraud- ulent concealment by the other party of the existence of judgment liens upon his land, the discharge of such liens after the filing of the bill will not affect the plaintiff's rights.^ The rescission as a matter of caution should be made promptly upon the discovery of the fraud ; ^ not however, as it should seem, upon the discovery of suspicion of the fraud, or upon being put upon notice, but in such cases from the time when by reasonable diligence the fraud would have been discovered. But delay will only be evidence of waiver,^ and it is perhaps suf&cient to say that rescission, if made at all, should be made within reasonable time after discoveiy of the fraud.* § 9. Fraud on Powers. A 'fraud upon a power,' which need be no more than a constructive fraud,^ may be committed either on the donor of the power or on the objects of it, or upon both. It is com- mitted on the former when a power to create a burden on the estate in settlement is used for a purpose not intended ; it is 1 Thomas v. Coultas, 76 111. 493^ St. 295; Parmlee «. Adolph, 28 Ohio St. Merritt v. Robinson, 35 Ark. 483. 10 ; Wicks v. Smith, 21 Kans. 412. 2 Sharpley v. Louth By. Co., 2 Ch. * Nebletl; v. Macfarland, 92 U. S. D. 663, C. A. ; Baird v. New York, 96 101 ; Collins v. Townsend, 58 Cal. 608; N. Y. 567 ; Gould v. Cayuga Bank, 86 Marston v. Simpson, 54 Cal. 189 ; Mer- N. Y. 75 ; Thomas v. Barton, 48 N. Y. rett v. Robinson, 35 Ark. 483 ; Bulkley 193 ; Upton v. Trebilcock, 91 U. S. 45 ; v. Morgan, 46 Conu. 393 ; Masson v. Bayard v. Holmes, 4 Vroom, 119 ; Kstes Bovet, 1 D^nio, 69 ; "Wilson v. Fisher, V. Reynolds, 75 Mo. 563. 5 Houst. 395 ; Hunt v. Blanton, 89 » Schiffer v. Dietz, 83 N. Y. 300 ; Ind. 38; Key v. Jennings, 66 Mo. 356; Bulkley v. Morgan, 46 Conn. 393 ; Brown v. Mutual Ins. Co., 32 N. J. Eq. ■Williamson v. New Jersey R. Co., 29 809 ; Nealon v. Henry, 131 Mass. 153 ; N. J. Eq. 311 ; Marston v. Simpson, Bassett v. Brown, 105 Mass. 551. 54 Cal. 189 ; Davis v. Stuard, 99 Penn. ^ ^jite, p. 12. § 9.] CONDUCT SUBSEQUENT. 439 committed on the latter when a power to control the devolu- tion of the estate is used to give a benefit to some one not an object of it.i But of course when all the objects on whom alone such fraud can be committed concur in or confirm the transaction, and no imposition or undue influence is used in the matter, the fraud is waived.^ As an illustration of fraud upon the donor the case may be given of the donee of the power appointing the fund to one of the subjects named in the power, upon an understanding that the appointee will lend the fund to the donee ; such appoint- ment is bad, though the fund was to be loaned on good security .3 In such a case the party entitled in default of appointment obtains the fund.* As an illustration of fraud upon the objects of the power the case may be stated of an appointment made with the object of giving an advantage to the appointor, directly or indirectly ; in this case he is a trustee of the power, and subject, to the obligations of a trustee.^ Still if the object of the appointment be to secure a benefit for all the objects of the power, the appointment is good, though the appointor may to some extent participate in such benefit.^ Thus, in the case cited, it was urged that certain appointments (made by a tenant for life acting under a power given by a marriage settlement), the object of which was to effect building leases, were for the benefit of the appointor, and therefore, not being authorized by the settlement, were invalid. But the Master of the Rolls considered that this principle should give way, where, as in this case, the benefits of the appointment extended to parties in interest. The building leases had indeed benefited the tenant for life ; but they had also bene- 1 Eowley v. Rowley, Kay, 258 ; Skel- 6 Palmer v. Locke, 15 Ch. D. 294, ton V. Flanagan, L. R. 1 Irish Eq. 362, C. A., Cotton, L. J. ; Roach v. Trood, 369. 3 Ch. D. 429, C. A. 2 Skelton v. Flanagan, supra. ° In re Huish's Charity, L. R. 10 Eq. 3 Arnold v. Haidwick, 7 Sim. 343. 5 ; Roach v. Trood, 3 Ch. D. 429, C. A. ; * lb. Beere v. Hoffmister, 23 Beav. 101. 440 CONSTEtrCTIVE FKAUD. [CHAP. II, fited the other interested parties in the improved value of the property, which they would lose if the appointment were declared void. To hold otherwise would be to strain a rule intended to benefit the objects of the power to a rigid exact- ness, which would inflict manifest injury upon them.^ It is not necessary however that an appointment under a power should be directed (contrary to the intent of the power) to the benefit of the appointor, in order to make it invalid as a fraud upon the objects of the power. Where the donee exercises a power of appointment in favor of one of several objects of the power with a view to the benefit of a stranger, the appointment is in ordinary cases, but not neces- sarily ,2 considered fraudulent ; ^ and this too though the ap- pointee be ignorant of the fraud, and though the motive of the donee be not morally wrong.* In the case cited a mar- ried woman having a power to appoint a fund (of which she was to receive the income during her life) among her children, appointed the whole fund at her death to her eldest daughter. The object of this was that the daughter should, out of the fund, benefit her father. The daughter was not informed of her mother's intention until after the mother's death; but the appointment was held invalid.^ 1 See McQueen D. Farqiihar, 11 Ves. been cited,' said the court, 'there has 467 ; Cockcroft v. Sutcliffe, 25 L. J. been a direct bargain between the donee Ch. 313 ; Topham v. Portland, 1 De of the power and the person in whose G., J. & S. 517 ; s. c. 11 H. L. Cas. favor it is exercised, under which the 32, L. E. 5 Ch. 40 ; Vane v. Dungan- donee of the power was himself to derive non, 2 Schoales & L. 118 ; Warde v. a benefit ; and certainly there has been Dixon, 28 L. J. Ch. 316 ; Cooper v. nothing of that kind in this case. In Cooper, L. R. 8 Eq. 312 ; s. o. L. R. 5 my opinion however it is not necessary Ch. 203 ; In re Marsden's Trust, 4 that the appointee should be privy to Drew. 594. the transaction, because the design to ^ See Roach v. Trood, 3 Ch. D. 429, defeat the purpose for which the power BaggaUay, L. J. was created will stand just the same, ' In re Kirwan, 25 Ch. D. 373. whether the appointee was aware of it * In re Marsden's Trust, 4 Drew, or not ; and the case of Wellesley v. 594. This shows that the fraud is con- Morrington, 2 Kay & J. 143, shows that structive. it is not necessary, in order to bring the ' ' In some of the cases which have case within the scope of the jurisdiction § 9.] CONDUCT SUBSEQUENT. 441 On the other hand it is laid down by Lord Justice Fry ^ that the mere conferring of a benefit upon a person not an object of the power will not avoid an exercise of such power, if made with approval of the real objects, or even if made with approval of the person who would take under an exercise in favor of the object of the power, as where an appointment was made to a married daughter, and she and her husband resettled it, giving benefits not only to their children but to a stranger to the family ,2 or where the appointment was made upon the usual terms of a marriage settlement upon the marriage of an infant daughter.^ In the case first cited * trustees of a power of appointment had acted in good faith, the only objection raised to their action being that they had imposed the requirement of reset- tling a portion of the property, by the appointees thereof, as a condition of the exercise of the power, thus conferring by possibility benefits upon persons who were not objects of the power. It was declared on authority of a decision rendered by Lord Hardwicke,^ and of a very recent case,^ that the exist- ence of an antecedent contract between the donee of the power and the appointee of a resettlement conferring benefits upon a stranger would not alone render the appointment in- valid. But it was declared that if such contract was the 'causa sine qua non' of the appointment, the case would be dif- in which this court acts, that the ap- self.' See Roach v. Trood, 3 Ch. D. pointee should be aware of the inten- 429, Baggallay, L. J. tions of the appointment, or of its being ^ In re Turner, 28 Ch. D. 205, C. A., actually made. Neither is it necessary from whose language the present and that the object should be the personal the next paragraph are in substance benefit of the donee of the power. If taken. the design of the donee in exercising the ^ Wright v. Goff, 22 Beav. 207. power is to confer a benefit, not upon * Fitzroy v. Richmond, 27 Beav. 190. himself actually, but upon some other < In re Turner, supra. person not being an object of the power, ^ Langston v. Blackmore, Amb. 288. that motiye just as much interferes with ^ Roach ij. Trood, 3 Ch. D. 429. and defeats the purpose for which the Cooper v. Cooper, L. R. 8 Eq. 322, was trust was created, as if it had been for also referred to. the personal benefit of the donee him- 442 CONSTBUCTIVE FEAITD. [CHAP. II. ferent ; ^ in the present case the evidence did not show that the antecedent contract furnished the reason for the appointment. If too a parent, having a power of appointment among his children, purchase the share of one child, it would be a fraud for him to attempt, by the exercise of his power, to entitle himself to more than the share which that child would have taken in default of appointment.^ It would be equally fraud- ulent if a father were to appoint to a child who was deceased, intestate and without issue, or who, though living, was an infant in a hopeless state of health.^ Such an appointment would in reality be an appointment to the father himself. So also the donee of the power must really give the property to the person to whom he professes to give it, and not withhold it, or a part of it (after professing to give the whole), subject to some future disposition.* Again if real estate be conveyed by a husband to a trusteej for the sole and separate use of the grantor's wife, with power to sell and convey, the proceeds of sale to be reinvested as the wife may direct, it is the duty of both the trustee, and the purchaser, in the event of a sale, to see that the fund is paid over to the former, and reinvested by him for the benefit of the wife. If, in violation of the terms of the trust, the purchaser contract with the husband, pay him the purchase- money, and then, though upon authority of the wife, receive a conveyance from the trustee, the transaction is a fraud upon the power, and upon the wife's application it will be set aside.^ But the case would be otherwise where the purchaser had no notice of the breach of trust.^ 1 Birley v. Birley, 25 Beav. 307 ; "Wrey, 21 Ch. D. 332, C. A., reversing Pryor v. Pryor, 2 De G., J. & S. 210. 19 Ch. D. 492. 2 Smith V. Camelford, 2 Ves. Jr. * Portland v. Topham, 11 H. L. Cas. 714. 32. See Roach v. Trood, 3 Ch. D. 429. " McQueen v. Parquhar, 11 Ves. 479 ; ^ Cardwell i;. Cheatham, 2 Head, 14. Hinchinbroke v. Seymour, 1 Brown C. See Wormley ■«. Wormley, 8 Wheat. 0. 395 ; Wellesley v. Moirington, 2 421 ; Champlin v. Height, 10 Paige, Kay & J. 143 ; Koaeh v. Trood, 3 Ch. 274 ; s. c. 7 HilJ, 245. D. 429, Baggallay, L. J. See Hentz v. "• Cardwell v. Cheatham, supra. § 9.] CONDUCT SUBSEQUENT. 443 Where the legal estate is outstanding in ti'ustees, a bill by a purchaser for valuable consideration and without notice, under a fraudulent appointment of property in settlement, will be dismissed as against the persons who, in default of a valid appointment, are entitled. The payment of a money consideration cannot make a stranger become the object of a power created in favor of children. He can only claim under a good appointment. An appointment, at first impeachable as voluntary, may indeed be sustained by a consideration ex post facto ; as for instance where the subject of appoint- ment is pui'chased for a valuable consideration from the appointee. But that is only where a valuable consideration was all that was wanting to make the appointment good ab initio.^ Where there has been fraud in the concoction of a bargain, payment of money cannot make an appointment in pursuance of such bargain fair, though the appointment may cease to be voluntary.^ But though, under circumstances similar to those above stated, the whole transaction is invalid, there is a distinct class of cases in which the execution of powers is void only in part ; as where a parent, having power to appoint amongst children only, appoints (without their consent 3) a part to grandchildren. This is a fraud only to the extent in which it deprives the true objects of the power of the benefit in- tended for them by' the party creating the power ; the execu- tion of which therefore is held void only for the excess.* And, in general, the rule, that where an appointment is made for a bad purpose, the bad purpose affects the whole instrument, does not apply to cases in which the evidence enables the court to distinguish what is attributable to 1 George v. Milbank, 9 Ves. 190. « Adams v. Adams, 2 Cowp. 651 2 Daubeny v. Cookbum, 1 Meriv. Pitt v. Jackson, 2 Brown, C. C. 51 626 ; Cadogan v. Kennett, Cowp. 4-34 ; Bristow v. Warde, 2 Ves. Jr. 350 2 Hovendeu, Fraud, 222. Palmer ■„. Wheeler, 2 Ball. & B. 28 ' White V. St. Barbe, 1 Ves. & B, Crompe v. Barrow, 4 Ves. 685. 399. 444 CONSTETJCTIVE FRAUD. [CHAP. II. an authorized from what is atti'ibutable to an unauthorized purpose.^ The same general principles which are applied to discre- tionary trusts in general are applicable to this particular species of discretionary trust. Unless it can be shown that the trustee haying the discretion exercises the trust corruptly or improperly, or in a manner which is for the purpose not of carrying into effect the trust, but of defeating the purpose of the trust, the courts will not control or interfere with the exercise of the discretion. Though there be a sus- picion that the trust has been exercised in a particular man- ner and from a motive which, if proved, would be held fatal, still, if there be nothing but suspicion (though this would be occasion for jealous investigation), and nothing amounting to a judicial inference or conviction from the facts, the courts will not act upon it. On the other hand if it can be proved to the satisfaction of the court that the power has been exer- cised either corruptly, or for a purpose which would defeat rather than carry into effect the object of the trust, the courts will not pennit such an exercise of the power to prevail.^ § 10. Perversion op Statute op Frauds : Specipic Per- PORMANCE ; Eesulting Trusts. The jurisdiction of courts of equity to compel performance of contracts was, in its origin, built upon the foundation of a legal right, the law giving the title,^ or rather a legal right to have the title completed ; * to which right however courts of law, which could only adjudge damages for non-perform- ance, had not the means of giving effect.* Courts of equity, having once established their jurisdiction to this extent, did not stop here, and confine themselves to cases of strictly legal 1 Topham v. Portland, 1 De G., J. & ' Halsey v. Grant, 13 Ves. 76. S. .517. * Alley v. Desohamps, lb. 228. ^ In re Marsden's Trust, 4 Drew. * Harnett v. Yielding, 2 Schoales & 594, 599. L. 553 ; 2 Hovenden, Fraud, 1. § 10.] COKDUCT SUBSEQUENT. 445 titles, but laid down another principle, now well settled, which operated to prevent the courts of law from being made the instruments of injustice. In accordance with this prin- ciple when a party attempts to take an unjust advantage of any accident, mistake, or fraud which renders a strict performance impossible, equity will interfere to restrain a harsh exaction, if the failure to conform to the requirements of the contract be not substantial.^ A more striking case however arises under part performance of a verbal purchase of lands. By the English Statute of Frauds, all parol agreements respecting any interest in, or to arise out of, real estate (ex- cept leases for terms not exceeding three years) are put upon the footing of mere estates at will.^ Courts of equity how- ever have long been in the habit of allowing the spirit of this statute to control its letter in certain cases. The earliest case upon this subject ^ was decided upon a principle recognized by courts of law, but which, according to their modes of pro- cedure, was not capable of application to the particular case. By the highest tribunal of England it was held to be against conscience to suffer a party, who had entered and expended his money on the faith of a parol agreement, to be treated as a trespasser, and for the other party, in fraud of his engage- ment, though that was verbal, to enjoy the advantage of the money laid out. This determination, though contrary to the letter of the statute, was founded on principles of natural justice, and has become established law.* Whatever amounts to part performance indeed takes the case out of the statute ; and possession taken under the agree- ment is the most obvious example. And it would seem that the length of time of such possession would be immaterial. 1 Halsey v. Grant, 13 Vea. 77 ; ^ 29 Car. 2, c. 3. Eaton V. Lyon, 3 Vea. 693 ; Seton o. ' Foxcroft v. Lyster, CoUes P. C. Slade, 7 Ves. 274 ; Lennon v. Napper, 108. 2 Sehoales fi; L. 684 ; 2 Hovenden, * 2 Hovonden, Fraud, 2, Fraud, 1. 446 CONSTRUCTIVE PRAtTD. [CHAP. II, If possession is taken under the agreement, in good faith, and not wrongfully, as in violation of it, it should be good, for however short time ; it is part performance.^ It has some- times been said that taking possession is to be treated as part performance on the ground that otherwise the party entering would be liable as a trespasser, and it is to prevent a fraud being perpetrated upon him in that way that the case is treated as it is.^ But that appears to be a misconception. If the party has entered under the agreement, he has entered with the license of the owner, and it matters not that that is not by deed ; an oral license to enter would protect one from being treated as a trespasser.^ The true ground of the rule in regard to taking possession is that it is part performance. It is still true however that if to repudiate the parol con- tract would work a fraud upon the buyer, equity will prptect him. Thus outlays for repairs or improvements made upon the land are not necessarily part performance, for the oral contract may not call for them. The possession before the outlays may or may not have been part performance, for it may or may not have been taken under the agreement. But in regard to the outlays it would work a fraud upon the purchaser to be turned out, and hence he will be protected whether possession was taken under the agreement or existed before ; * assuming of course that they were made in good faith, and not e. g. against the consent of the vendor ^ ' to 1 TJngley v. Uiigley, 4 Ch. D. 73, 76, 8 Bigelow, Torts, 175-178. Malins, V. C. But see Goetchius v. * As to prior possession, in the case Sanborn, 46 Mich. 330. And there are of a tenancy or otherwise, see Rosenthal other cases in which this view has es- v. Freebnrger, 26 Md. 75 ; Peckham v. caped attention apparently, and the posi- Barker, 8 R. I. 17 ; Barnes i). Boston tion been taken or suggested that there R. Co., 130 Mass. 388; Crawford v. ought to be no protection if no detri- Wick, 18 Ohio St. 190 ; Mahana v. ment would follow repudiation of the Blunt, 20 Iowa, 142 ; Conner v. Fitz- contract. See Wallace -o. Brown, 2 gerald, 11 L. R. Ir. 106 ; Brennan v. Stockt. 308 ; Glass v. Hulbert, 102 Bolton, 2 Dru. & War. 354 ; Pain v. Mass. 24. Coombs, 1 De G. & J. 34, 46 ; Nunn 2 Story, Equity, § 763, and cases v. Fabian, L. R. 1 Ch. 35. cited. ' Parke v. Leewright, 20 Mo. 85. § 10.] CONDUCT SUBSEQUENT. 447 improve him out of his estate.' ^ The result is that there are two cases which call for protection, one case resting upon the ground of part performance, the other of the prevention of fraud. With regard to the case of a tenant already in possession the fact of his continuing in possession under a verbal con- tract of purchase is of no avail ; but where a person not previously in possession makes an agreement with the owner of an estate, and enters into possession, such possession is part performance.^ On the other hand payment of money is not considered as part performance so as to entitle the party to a specific performance ; for the money may be repaid with interest, and the parties thus restored to their former situar tion,^ a result not so easily effected and sometimes impossible in the other case. In order to take the case of a verbal agreement to convey land out of the Statute of Frauds, on the ground of part performance, two things are necessary. The terms of the contract must be established by clear, definite, and unequiv- ocal evidence ; * and the acts relied upon must be exclusively referable to the contract.^ Where therefore a plaintiff, ask- ing for specific performance against an agent for alleged breach of trust, relied solely, to prove the agreement, upon 1 See Nunn v. Fatian, L. R. 1 Ch. Mich. 43 ; "Wright v. "Wright, ib. 380 35, 40, that outlays are not, properly McClintock v. Laing, 22 Mich. 212 speaking, part performance. Goodman v. Randall, 44 Conn. 321 2 Morphett v. Jones, 1 Swanst. 181 ; McCarnack v. Sage, 87 111. 484 ; Race Buckmaster v. Harrop, 13 "Ves. 474. ■». Weston, 86 111. 91 ; Carr v. Passaic 3 Clinan v. Cooke, 1 Schoales & L. Land Co., 7 C. E. Green, 85 ; Gelston 41 ; Frame v. Dawson, 14 "Ves. 388 ; v. Sigmund, 27 Md. 334 ; Shropshire v. Tibeau v. Tibeau, 19 Mo. 78. Such is Brown, 45 Ga. 175 ; Huff v. Shepard, the distinction often stated ; but it is 58 Mo. 242 ; Marshall v. Berridge, 19 based upon a misconception (see p. 446), Ch. D, 233; Nesham w. Selby, L. R. 7 and really stands more upon authority Ch. 406 ; Williams v. Briscoe, 22 Ch. than upon principle. Still it is settled. D. 441. * See Lj-nes v. Hayden, 119 Mass. 6 Wallace v. Brown, 2 Stockt. 308 ; 482 ; Cunningham v. Blake, 121 Mass. Wheeler v. Reynolds, 66 N. Y. 227 ; 333 ; Blanchard •«. Detroit R. Co., 31 Ryan v. Dox, 34 N. Y. 307. 448 CONSTKTJCTIVE FEATJD, [CHAP. II. the declaration of the defendant to a third person that he was purchasing for the plaintiff, and upon the immediate taking of possession by the defendant and part payment (by him) of the purchase-money, it was held that the plaintiff had not brought himself within the rule. No clear and definite contract was proved by the declaration of the defendant. The terms of the contract were left wholly uncertain. And in regard to the possession, the court considered that, as there was no evidence of the terms under whicli the defendant took possession, they could not hold that such possession was referable to the contract.^ If however a plaintiff in an execution levied upon land make an agreement with the defendant that he will buy the property at sheriff's sale and hold it for the defendant, and then take advantage of such agreement to buy in the property at a price lower than he otherwise could have done, as by inducing others not to bid,^ lie will be deemed to hold in trust for the defendant ; and the latter will be allowed to redeem.^ But equity will not enforce such an agreement, if in parol, except upon clear proof of fraud or mala fides ; for the mere non-performance of a parol agreement is not of itself such a fraud as will call for the exercise of the powers of equity.* Cases of this kind, by the weight of authority, do not fall within the doctrine which enables courts of equity to effectu- ate parol contracts concerning lands on any notion of part performance. There is no part performance, in the proper sense of that term ; the purchaser neither obtains nor holds 1 Wallace v. Brown, 2 Stookt. 308. * Wheeler v. Eeynolds, Levy v. 2 Ryan v. Dox, 34 N. Y. 307. See Brush, Walker v. Hill, and Merritt v. Levy V. Brush, 45 N. Y. 589, 596 ; Brown, supra ; Ahrend v. Odiome, 118 Wheeler v. Eeynolds, 66 N. Y. 227. Mass. 261 ; Campbell v. Dearborn, 109 8 Walker D. Hill, 6 C. E. Green, 191; Mass. 130, 140 ; Glass v. Hulbert, 102 Combs V. Little, 3 Green's Ch. 310 ; Mass. 24 ; Rogers v. Simmons, 55 111. Marlatt v. Warwick, 3 C. E. Green, 76; Kellum ■». Smith, 33 Penn. St. 158; 108 ; s. c. 4 C. E. Green, 443 ; Merritt Watson v. Erb, 33 Ohio St. 35 ; Dunphy V. Brown, ib. 286 ; s. o. 6 0. E. Green, ^. Ryan, 116 U. S. 491. 401 ; Wallace v. Brown, 2 Stockt. 308 ; ante, p. 307. § 10.] CONDUCT SUBSEQUENT. 449 possession of the premises by virtue of his agreement to take the property in trust. On the contrary, he enters upon the land by force of the title vested in him through the deed from the sheriff, by operation of law. With respect to his posses- sion, the defendant's contract with him is entirely nugatory, and such possession therefore cannot be in execution of it.^ And it was further remarked, in the case just cited, that to decree performance in such cases would be a disastrous prac- tice ; for such practice must embrace in principle every, case of an agreement to buy lands in behalf of a defendant in execution, however free from oppression or unfairness the transaction might be.^ But whenever an agreement of this nature (so held the New Jersey court) has been entered into, and the purchaser has made use of it or of any other contrivance, to obtain the property for an inadequate price or to the oppression of the debtor, the right to equitable relief is clear .^ The jurisdiction of the court is founded upon the doctrine that it is the prov- ince of a court of conscience to prevent the Statute of Frauds from being made productive of the very evils it was designed to suppress. Still so important is it deemed to maintain confidence in judicial sales, that the purchaser should be pro- tected against all pretences of a trust by parol, unless mala fides be proved by the clearest evidence.* The refusal to perform a contract then can seldom of itself amount to a fraud ;^ but the consequences of such refusal may sometimes make the refusal fraudulent, and may there- fore afford ground for the interference of equity. In an early case in Virginia,^ it appeared that an heir had promised his 1 Merritt v. Brown, ,6 C. E. Green, * Merritt v. Brown, Levy v. Brush, 401, 403 ; Wheeler v. Reynolds, 66 and Wheeler v. Reynolds, supra. N. y. 227. ^ Menitt v. Brown, supra ; Rogers v. 2 Explaining and limiting Combs v. Simmons, supra. Little and Marlatt v. Warwick, supra. « Chapman ■». Chapman, 4 Call, 430, 'Ryan v. Dox, 34 N. Y. 307; argued hy Randolph and Marshall, Wheeler v. Reynolds, 66 N. Y. 227. among other counsel. 29 450 CONSTRUCTIVE FRAUD. [CHAP. II. mother to convey property to his brother on condition that she would give him (the heir) half of her estate. She agreed to do so ; and the heir accordingly executed several conveyances to his brother, one of which however was defective. He agreed to make this good; but afterwards, discovering that his mother had conveyed part of her property to his brother, he refused to do so, and destroyed the defective deed. It was held that equity would not set up the deed against the heir, since the object of his refusal to convey was to prevent a fraud upon himself. Had he executed the gift, and the action of the mother had been considered fraudulent towards him, it would seem that he would have been entitled to relief, either against his mother or against his brother for rescission. So refusal after marriage to perform an antenuptial agreement to execute a settlement is a fraud against which equity will grant relief.^ An executory contract for the sale of land will not be specifically enforced where the tract is described as contain- ing a certain number of acres, when in fact it contains much less, even though the vendor offer to make up the deficiency by the conveyance of adjoining lands. The law will not compel a man to pay for land he .did not buy, or to ac- cept less than he contracted for.^ And though a defendant resisting a claim for specific performance may introduce parol evidence that by fraud the written agreement does not express the real terms of the contract undertaken, a plaintiff, for the purpose of obtaining a specific performance with a variation, cannot do so.^ Specific performance of an agreement is never compelled, unless the case is free from the imputation of all deception. The remedy is one of sound discretion.* The conduct of the person seeking it must be free from all blame ; misrepresen- 1 DundasB.Dutens.lVes. Jr. 196,199. " Woollam ». Heam, 7 Ves. 211. ^ Snedaker v. Moore, 2 Duval, 542. * Plummer v. Kappler, 11 C. E. Comp. ante, p. 415. Green, 481. § 10.] CONDUCT SUBSEQUENT. 451 tation, even as to a small part of the subject, will exclude him from relief in equity.^ Thus though a lease may have been executed with perfect good faith before any circumstances are known to the lessee which would make the transaction fraud- ulent on his part ; still if before delivery he discover any facts which give him an unfair advantage over the lessor, and are contradictory to the representations upon which the bargain was made, he cannot enforce delivery of the lease, or have a specific performance of the agreement.^ So where the con- tract sought to be enforced required the plaintiff to pay one-half of the expenditures upon a farm mortgaged for the support of the plaintiff's father, who was also the defend- ant's father-in-law, and the parties disagreed upon the question whether the support of the father was part of the expenditure to be charged ; where also by the contract one party could be compelled to sell, but the other could not be compelled to buy ; where the plaintiff delayed fourteen years before asking a conveyance, holding meanwhile the defendant's notes to the value of the farm, given as a security for the promise to convey, which notes he had till then declined to surrender; where, after the fourteen years, the defendant had sold the premises, supposing (as he claimed) that the contract was null by reason of non-performance by the plaintiff; where, further, aid was asked for relief from difficulties into which the plaintiff got himself in an attempt to defraud his creditors, — the court declined to interfere in favor of the plaintiff's claim for specific performance.^ A similar principle applies to another class of cases, to which attention has already been directed,* — resulting trusts in land. Such trusts are in terms excepted from the Statute of Frauds.^ The question then is, what the statute, intended 1 Cadman v. Homer, 18 Ves. 11. « Ante, pp. 306-308. 2 Abingdon v. Butler, 1 Ves. Jr. 208. ^ 29 Charles 2, c. 3, §§ 7, 8. ' All * Snell V. Mitchell, 65 Maine, 48. declarations or creations of trusts or 452 CONSTBTJCTIVE FBAUD. [CHAP. 11. as it is to prevent fraud, excludes under this designation ; for the principle of interpretation in regard to the statute is, that where there is fraud, constructive or actual, the want of a writing shall not be set up. ' The Statute of Frauds was not made to cover fraud.' ^ A trust of the kind is deemed to arise (1) where A furnishes B with money with which to buy land for A, (2) where A gives money or property to B upon B's promising to hold it in whole or in part for C, or (in England) for the grantor, (3) where A makes to B an absolute conveyance of land, which is in fact intended to secure the payment of a debt of the grantor to the grantee, and in other ways. B's refusal or failure to regard his undertaking is commonly spoken of as a ' fraud ; ' in real- ity the case is one of constructive fraud, since it is not neces- sary that there should have been any wrongful purpose on his part at the time of the undertaking.^ It may often indeed be true that B's intention was wrongful at the outset, so as to make a true case of deception ; but it is enough that the inten- tion subsequently became wrongful. Indeed the undertaking itself raises a trust in regard to the money or property put into B's hands in reliance upon it, and it would be sufficient to describe B's refusal or neglect to perform it as a breach of trust. Accordingly in England A's right to the benefit of a trust appears to rest, as we shall see, merely upon the rela- tionship involved in the employment. Taking now the first phase of the subject, it is laid down confidences of any lands, tenements, or struction of law, then and in every such hereditaments, shall be manifested and case such trust or confidence shall be of proved by some writing signed by the the like force and effect as the same party who ia by law enabled to declare would have been if this statute had not such trust, or by his last will in writing, been made.' § 8. or else they shall be utterly void and of i Lincoln o. Wright, 4 De G. & J. none effect.' § 7. ' Provided always, 16, 22, Turner, L. J. ; Haigh v. Kaye, that where any conveyance shall be L. K. 7 Ch. 469. made of any lands or tenements by ^ Wolford ». Herrington, 74 Penn. which a trust or confidence shall or may St. 311, 314 ; Oliver v. Oliver, 4 Rawle, arise or result by the implication or con- 144 ; Thompson v. White, 1 DaU. 447. § 10.] CONDUCT SUBSEQUENT. 453 that where one person furnishes another with money to be used in the purchase of land for the former, and a convey- ance is taken in the name of the latter, a trust results in favor of the party who advanced the money.^ So too where the plaintiff buys land with his own money and takes the deed in the name of the defendant, a trust results in favor of the plaintiff.^ And in either case parol evidence may be given to prove the facts ; and these, if established, take the case out of the operation of the statute.^ Money being paid by the plain- tiff, the trust arises ' by implication of law,' within the statute, and not from any agreement of the parties.* This rule indeed is generally considered, in this country, as resting upon the very ground that the person claiming the existence of the trust has paid his money for the land ; ® so that if it appears that he paid out nothing, he cannot claim the property. Any fraud however, actual or constructive, would doubtless suffice. But it is considered not to be enough to take a case out of the operation of the statute that the per- son who has bought the estate has merely broken his verbal promise, in refusing to carry out the understanding with the one who employed him to buy.® In Pennsylvania it is deemed enough that the person claiming the trust has been lulled into security, and induced to refrain from purchasing, by a promise made by the pur- 1 Bartlett v. Pickersgill, 1 Eden, 515; Nixon's Appeal, 63 Penn. St. 279, qnot- s. c. 1 Cox, 15, i East, 577, note ; Boyd ing the language of Botsford v. Burr ; V. McLean, 1 Johns. Oh. 582 ; Botsford Hays o. Hollis, 8 Gill, 357 ; Watson v. V. Burr, 2 Johns. Ch. 405 ; Hays v. Erb, 33 Ohio St. 35 ; Walter v. Klook, Hollis, 8 GUI, 357 ; Cowperthwaite v. 55 111. 362. First National Bank, 102 Penn. St. 397; « Jackman v. Eingland, 4 Watts & Watson V. Erb, 33 Ohio St. 35 ; Col- S. 149 ; Barnet v. Dougherty, 8 Casey, lins V. Sullivan, 135 Mass. 461 ; ante, 371 ; Kellam v. Smith, 9 Casey, 158 ; pp. 306-308. Wolford . Parker, 43 N. H. 363 ; Mc- See Smith ii. Newton, 59 Ga. 113 ; Eaee Fadden v. Robinson, 35 Ind. 24 ; More- v. Weston, 86 111. 91 ; Barnard v. Col- head V. Eades, 3 Bush, 121 ; Wise v. well, 39 Mich. 215, where price of prop- Fuller, 29 N. J. Eq. 257 ; Jackson o. erty was to be measured by previous Armstrong, 50 Mich. 65. cost, of which there was a misrepresen- 5 Medbury v. Watson, 6 Met. 246, tation. The excess now paid was held 260 ; Hemmer v. Cooper, 8 Allen, 334 ; recoverable. Further see Jackson v. Manning v. Albee, II Allen, 622 ; Collins, 39 Mich. 557. Mooney v. Miller, 102 Mass. 220 ; 6 Bourn v. Davis, 76 Maine, 223. Cooper V. Levering, 106 Mass. 79 ; ? Graffenstein v. Eppstein, 23 Kans. Bourn v. Davis, 76 Maine, 223 ; Rich- 443. ardson v. Noble, 77 Maine, 390 ; Long § 6.] MISEEPEESENTATION. 493 had large deposits of oil, and were of great value for manu- facturing oil, has in Maine been held to be a mere statement of opinion.^ But a false and fraudulent statement, by the vendor, of the amount of hay cut upon a farm the previous year has, in the latter state and in New Hampshire, been held good ground for an action of deceit.^ It would doubtless be otherwise of representations of the amount of hay or wood to he cut on a farm.^ Misrepresentations of cost, rental,* the selling price of bonds,^ the income from the royalty on a certain patent,® or from other business,'^ and the like made by a stranger to the title, may clearly be actionable.^ Indeed it is apprehended that the authorities which hold misrepresen- tations of such matters by the vendor actionable are well supported in principle.^ In a leading case just cited and often referred to,^" in which an action was brought for deceit in regard to the sale of a tannery, the following facts in substance appeared : The par- ties to the suit were at B, where the defendant resided, when 1 Holbrook v. Connor, snpra, two 272 ; CroslanJ v. Hall, 33 N. J. Eq. judges dissenting. See Dawson v. Gra- 111, and cases cited. ham, 48 Iowa, 378. ^ Manning v. Albee, 11 Allen, 520 ; 2 Martin v. Jordan, 60 Maine, 531 ; s. c. 14 Allen, 7. Messer v. Smyth, 59 N. H. 41 ; Coon v. 6 Crosland v. Hall, 33 N. J. Eq. Ill, Atwell, 46 N. H. 510. See Khoda •». an important case. Annis, 75 Maine, 17; Irving v. Thomas, ' lb., and cases cited ; Wise v. Ful- 18 Maine, 418. But see Mooney v. ler, 29 N. J. Eq. 257. Miller, 102 Mass. 217. So of the ex- 8 Medbuiy v. Watson, 6 Met. 246, tent of sales of a patented article. Al- 259 ; Belcher v. Costello, 122 Mass. 189; lin D. Millison, 72 111. 201. So of the Dole v. Wooldredge, 142 Mass. 161; number of subscribers to a newspaper. Kenner v. Harding, 86 111. 264. Harvey v. Smith, 17 Ind. 272. So of « See cases cited ante, p. 492, note the age of a horse. Eeid v. Flippin, 47 4, and comp. Coolidge •>. Goddard, 77 Ga. 273. Maine, 578, misrepresentation by vendor 8 Mooney v. Miller, 102 Mass. of what shareholders in a company had 217. paid for their shares held actionable, i Ekins D. Tresham, 1 Lev. 102 ; on the ground of misrepresentation of s. c. 1 Sid. 1 46 ; Wilson i). Fuller, 3 the amount of the company's assets. Q. B. 68 ; Brown v. Castles, 11 Cush. See also Perkins v. Partridge, 30 N. J. 348, 350 ; Medbury v. Watson, 6 Met. Eq. 82. 246, 260; Chrysler i;. Canaday, 90 N. Y. i" Medbury v. Watson, supra. 494 DECEPTION. [chap. I. the plaintiffs inquired in regard to a tannery. The defendant told them that W, who owned the tannery, was a shrewd man and knew the value of property ; that the defendant could purchase the tannery for what W paid for it; that if the plaintiffs would return home, the defendant would effect the purchase, and that they (the plaintiffs) had better not go near W ; that the defendant soon afterwards saw "W and told him what the plaintiffs wanted, and that he (W) had ' better keep dark and not tell how much he gave for the tannery,' and defendant 'would make $1,000 for him;' that the defend- ant thereby induced W to keep the matter secret, and effected the purchase of the tannery for the plaintiffs for |4,000, which sum the plaintiffs paid ; that in fact W paid but $3,000 for the property ; that a loss of more than $1,000 had been sustained by the plaintiffs ; and that the defendant knew that W gave only $3,000 for the tannery. It was held that the plaintiff was entitled to recover; the court taking the dis- tinction between misrepresentations made by a vendor and the same made by a stranger.^ It should be noticed that the representation was not of value strictly, but of cost ; a false representation of what property is worth would not be action- able, though made by a stranger to the title, it seems.^ It has been held that the rule in regard to representations of value applies to representations of pecuniary ability of third persons to pay promissory notes made by them.^ In one of tlie cases just cited * it appeared that the plaintiff had taken from the defendant certain notes of third persons ; the defendant, it was alleged, representing that ' the makers were 1 The case also decides that the fact the vendor but the plaintiffs' agent, that the purchasers sold the property See also Commonwealth o. Wood, 142 for what they paid for it was no defence Mass. 459. to the action. The case might have ^ See Commonwealth v. Wood, 142 heen decided, it seems, on grounds of Mass. 459. agenc}', — the existence of a confidential s Homer u. Perkins, 124 Mass. 431 ; relation between the parties to the suit. Belcher v. Costello, 122 Mass. 189. See Dole v. Wooldredge, 142 Mass. 161, * Belcher v. Costello, supra, where the defendant was considered not §6.j MISEEPKESENTATION. 495 in good pecuniary circumstances and able to pay ' the notes. The representation proved was that the makers were ' good.' It was held that this representation, taken by itself, was not a statement of fact but of opinion, and that a ruling at the trial that it was a representation of fact was wrong.^ But this is hard to understand ; the ruling at the trial was cer- tainly in conformity with the law in regard to general repre- sentations of solvency, and no distinction can be perceived between a representation that A is solvent, and a represen- tation that he is able to pay a note which he has made. If the note had been a check, and it had been fraudulently cer- tified 'good,' could the certifying party have said that the expression was only opinion ?2 The cases under considera- tion are opposed to the authorities generally, throughout the country.^ 1 See Morse v. Shaw, 124 Mass. 59 ; Homer v. Perkins, supra. 2 See Bigelow, Estoppel, pp. 516 et seq., 4th ed. 8 "Weeks v. Burton, 7 Vt. 67 ; Bates V. Le Clair, 49 Vt. 229 ; Alexander v. Dennis, 9 Port. (Ala.) 174 ; Brooks v. Martin, 4.3 Ala. 360 ; Wilkinson v. Searcy, 74 Ala. 243 ; Simpson v. Moore, 5 Lea, 372 ; Weyh v. Boylan, 85 N. Y. 394 ; Smith v. Munroe, 84 N. Y. 354, 359 ; Smith v. Knickerbocker Ins. Co. ib. 589 ; Fleischman v. Stern, 90 N. Y. 110 ; Union Sav. Inst. v. Wilmot, 94 N. Y. 221 ; Tobey v. McAlister, 9 "Wis. 463 ; Hoover v. Kilander, 83. Ind. 420 ; Plummer v. Farmers' Bank, 90 Ind. 386 ; Olvey v. Jackson, 106 Ind. 286 ; Hefner v. Dawson, 63 111. 403 ; Brad- ley V. Luce, 99 111. 234 ; McKown v. Furgason, 47 Iowa, 636 ; Marbourg v. McCormiok, 23 Kans. 38 ; "Walsh v. Morse, 80 Mo. 568. See also Burr v. "Willson, 22 Minn. 206. We have elsewhere commented upon the practice in some states of leaving to the jury the question whether a repre- sentation, in cases near the border, like the present, is a representation of fact or of opinion. Ante, pp. 140, 141. See also Messer v. Smyth, 59 N. H. 41. Representations of solvency have long had a fixed position ; they are, in con- templation of law, representations of fact, and the jury should not be per- mitted to find them representations of opinion. And this should be true in all cases in which the language is not affected by external facts ; the court should, it is believed, declare in such eases whether the language is that of fact or of opinion. This is well illuS' trated in "Veasey v. Doton, 3 Allen, 380, Metcalf, J., in Hickey v. Morrell, 102 N. Y. 454, in Fruin v. Crystal Ry, Co. 89 Mo. 397, and in Bellairs v. Tucker, 13 Q. B. D. 562, Deuman, J. ludeed the question whether a repre sentation is of fact or of opinion is never, as such, a proper question for the jury. If the language is of double import, as in Smith v. Chad wick, 9 App. Cas. 187, post, p. 499, or if it was affected by ex ternal facts, as in Bradley v. Poole, 98 496 DECEPTION. [chap. I. The rule however that representations of value will not be considered by the courts is not universal ; we have elsewhere seen that if a fiduciary or confidential relation exists between the parties, representations of value made by the party hold- ing the position of trust or confidence have the same effect as ordinary representations of fact.^ And these probably are not the only cases in which the law will take notice of such representations. If one of the parties to a sale assumes to have special knowledge of the value of the property, in regard to which the other, being known to be ignorant, trusts en- tirely to the good faith of the former, to the former's knowl- edge, it may be very proper to treat representations of value as standing upon the same ground as representations of fact.^ Of course if a statement of value be accompanied by a clear statement of fact calculated to induce action, the former may be disregarded, and the case considered as if only the latter were present.^ Mass. 169, it will be for the jury to find what was understood. And it may sometimes be left to the jury in such cases to say whether the man of average intelligence and prudence would act upon it. But that is as far as the mat- ter should go. The jury should not be permitted to fritter away lights by rais- ing metaphysical distinctions between fact and opinion ; the question should be the plain one, How would the rep- resentation be apt to affect the conduct of an average man in the situation, in the actual and usual intercourse of men? See Hickey v. Morrell, supra, Danforth, J. The courts have not been helped in this matter by the use of such words as 'belief,' 'estimate,' 'judgment' and the like as equivalent to ' opinion.' Page v. Bent, 2 Met. 371, 374; Satford v. Grout, 120 Mass. 20, 25, and other cases. Ante, p. 140. All facts are more or less matters of 'belief,' 'estimate,' or 'judgment,' in the practical sense of those words. 1 Ante, pp. 264, 299. 2 Stover V. Wood, 26 N. J. Eq. 417; Bradbury v. Haines, 60 N. H. 123 ; Estell V. Myers, 54 Miss. 174 ; Griffin V. Farrier, 32 Minn. 474, citing Wilder V. De Cou, 18 Minn. 421 ; Haggarth v. Wearing, L. R. 12 Eq. 320 ; Pickard v. McCormick, 11 Mich. 68 ; Simar v. Canaday, 53 N. Y. 298, 306 ; Chrysler V. Canaday, 90 N. Y. 272 ; Cruess v. Fessler, 39 Cal. 336 ; Kost v. Bender, 25 Mich. 515. But there was further evidence of fraud in Griffin v. Farrier. 3 Miller v. Barber, 66 N. Y. 558 ; Bradley o. Luce, 99 111. 234 ; Allen v. Hart, 72 III. 104 ; Tabor v. Peters, 74 Ala. 90 ; Jackson v. Collins, 39 Mich. 557 ; Griffin v. Farrier, supra ; Brad- bury V. Haines, supra. In Allen v. Hart there were false assertions as to the value of the teni- §§ 7, 8.] MISEEPRBSENTATION. 497 § 7. Materiality. In the next place the representation must have been material ; that is, it must not only have induced the action taken, it must have been adequate to induce it by offering a motive sufficient to influence the conduct of a man of average intelligence and prudence.^ Still a party who has effected his purpose through a misrepresentation cannot deny its materi- ality .^ Indeed the courts will not be astute to find that a particular one of several connected inducements was not alone adequate to the damage ; enough if it might have had a sub- stantial effect, with the rest.^ § 8. Falsity. The representation must have been false.* This is plain enough ; but it sometimes happens that it is difficult to de- termine whether a representation is true or false. In one aspect it may be true, in another it may be untrue.^ For the correct apprehension of such cases it is necessary in the first place to ascertain whether the question is one of law or one tory covered by a patent to be included the representation was acted upon is a in a purchase, based upon statements of question of fact. Smith v. Land Corp., fact within the knowledge of the vendor 28 Ch. D. 7, Bowen, L. J. ; Smith v. and not of the buyer ; it was held that Chadwick, 9 App. Cas. 187, Lord Black- the consideration paid by the buyer for bum. See ante, pp. 139, 140. the interest in the patent could be re- ^ Smith v. Kay, 7 H. L. Cas. 750. covered. ' Eeynell v. Spiye, 1 De G. M. & 1 Hall V. Johnson, 41 Mich. 286. If G. 660 ; Sankey v. Alexander, Ir. E. 9 the party was not of average intelli- Eq. 259 ; James v. Hodsden, 47 Vt. genoe, the case may be different. lb. 127; post, chapters. Matei-iality is a question of law ordi- * The defendant cannot say that be- narily. Penn. Ins. Co. v. Crane, 134 cause he was not bound to answer an Mass. 56 ; Barnard v. Crosby, 6 Allen, inquiry, he was not bound to answer 327 ; ante, p. 139. But see Sharp v. it truly. Kelly v. Eogers, 21 Minn. Ponce, 74 Maine, 470, and Newhall v. 146. Pierce, 115 Mass. 457, and qu. as to ^ gee e. g. Powers v. Mayo, 97 Mass. the decisions. Whether, being material, 180. 32 498 DECEPTION. [chap. I. of fact. That is a matter of the adjective law, and as such has already been considered.^ The rule, as we have said, appears to be that it is for the court to interpret language which is unaffected by extraneous facts i'^ it is for the jury to find its meaning if it is affected by facts aliunde.^ And this, generally speaking, is true whether the language is written or oral.* This rule however has not always been consistently applied. It will be seen that it does not matter that the meaning of the term itself is doubtful ; if still its meaning has not been ex- plained (as doubtless it might if evidence were offered ^) by extraneous evidence, the court should interpret it. Thus if the defendant has said to the plaintiff, 'A is solvent,' and the truth or falsity of the statement turns upon the meaning of the word ' solvent,' left unexplained in any way, it is in principle the duty of the court to instruct the jury what the word means, and not leave its meaning to them. If for instance it should appear that, though A had at the time property enough, if he could turn himself, to pay all his debts then due, he could not then pay the one in question, or if he could pay the one in question but not all his debts,^ it would be the duty of the court to instruct the jury that the representation was false.^ And yet there are cases, as we have seen, in which the significance of language unaffected by evidence has been left to the jury, as e. g. whether a particular state- ment was a statement of fact or of opinion.^ Such cases must create confusion. But whatever the true rule upon that point may be, the language should be taken in its ordinary ' Ante, pp. 140-142. as Johnston v. Ewing, 7 App. Cas. 219 ; 2 Bellairs u. Tucker, 13 Q. B. D. s. o. 13 Ch. D. 434. 562, Denman, J.; Fruin v. Central Ey, ^ pijj^g v. Fay, 101 Mass. 134. Co., 89 Mo. 397 ; ante, p. 495, note. « Daniels v. Dayton, 49 Mich. 137, 3 Pike V. Fay, 101 Mass. 134 ; Brad- infra, pp. 500, 501. ley V. Poole, 98 Mass. 169, 179. ' So of such a term as 'solid rock.' * Penn. Ins. Co. v. Crane, 134 Mass. Fruin v. Crystal Ey. Co., 89 Mo. 397. 56 ; ante, p. 140. And comp. such cases 3 Ante, p. 141. § 8.] MISREPEBSENTATION. 499 natural sense, as a person of average intelligence would understand it, unless some sufficient reason to the contrary appears. When the representation is of an ambiguous nature, i. e. naturally capable of more than one meaning,^ it is for the party complaining to show that in acting he interpreted the representation in the sense in which it was false.^ It appeared in the case cited, an action for deceit, that the prospectus of a company in process of formation to take over certain iron works contained this statement : ' The present value of the turnover or output of the entire works is a million pounds sterling per annum.' Now this statement might mean either that the works had actually turned out more than a million's worth of produce at present prices within one year or yearly, or only that the works were capa- ble of turning out so much ; in the former sense it was false, in the latter true. The plaintiff, who had been induced thereby to purchase shares in the company, testified that he had understood the statement in the sense ' which the words obviously conveyed,' and had not been asked and had not testified further on that point. It was held that he had not shown that he had acted upon the representation in the sense in which it was false.^ Again if a term of art has been used in the representation, which will be true or false according to the question whether it is to be interpreted in its general or in its technical sense, the court will probably say that, if the term was used between persons engaged in the vocation in which it has a technical sense, its truth or falsity must be determined, if there be no controlling evidence, by that sense ; on the other hand if 1 The word ' corn ' is not ambiguous statement was capable of but the one in this country ; it means Indian corn, meaning in which it was false, and that Kenick v. Van Dusen, 32 Minn. 317. the plaintiff had proved that he had 2 Smith V. Chadwick, 9 App. Cas. understood it in that sense, but that 187 ; s. c. 20 Ch. D. 27. there was not evidence enough that the 8 Lord Bramwell thought that the statement was fraudulent. 500 DBCEPTiosr. [chap. I. neither is engaged, or ever was engaged, in such vocation, or if the person to whom it was made never was engaged in it, the truth or falsity of the term would doubtless be governed by the general meaning attached to it, unless there were evidence that that was not the intention of the parties. An illustration of . Hamilton, 15 Minn. 26 ; Faribault v. Sater, 13 Minn. 223, 231; Botsford V. Wilson, 75 111. 132. The grounds should then be shown, so that it may appear whether the belief was justified. 2 Beach v. Bemis, 107 Mass. 498 ; Proctor V. Spratley, 78 Va. 254 ; Mer- win V. Arbuckle, 81 III. 501 ; Crump V. George's Creek R. Co., 60 Md. 536 ; Dunn 1). White, 63 Mo. 181 ; Humphrey V. Meniam, 32 Minn. 197. See Erie Iron Works V. Barber, 106 Penn. St. 125. Perhaps if a representation of fact were made by a layman, based upon a supposed state of the law which he might not unnaturally believe to be true, there would be no liability if there was no representation of real knowledge. Cox «. Highley, 100 Penn. St. 249. See Jordan v. Pickett, 78 Ala. 331 ; Scheiblei). Slagle, 89 Ind. 323, where the matter was in litigation, and was after- wards decided against the representation. 3 Legge V. Croker, 1 Ball & B. 506. « Wilde «. Gibson, 1 H. L. Cas. 620; Brownlie v. Campbell, 5 App. Cas. 925. CHAP, n.] KNOWLEDGE OP FALSITY. 511 had been made that a decision had been rendered against the existence of a right of way over a certain locus. It was made in good faith, and tlie party mailing it believed that there had been such a decision ; but when the matter was examined, it turned out that the decision did not exclude every sort of right of way but only a certain kind, and one other kind was afterwards established. It was held in equity that there was no ground for relief. It is not enough indeed, under the first phase of the scienter, if under any phase of it, for the plaintiff to show that the de- fendant (sued for damages) had no reasonable ground to believe his representation to be true,^ or that he had good reason to believe that his representation was false ; that is not equivalent to knowledge of falsity, and this though the defendant may, on his part, show under this phase of tlie subject — where, that is to say, he has not affirmed his knowl- edge — that he believed his representation to be true. Here the plaintiff must show knowledge of falsity .^ In the first of the cases cited the plaintiff contended that knowledge was in truth nothing more than good reason for belief, and hence that the absence of such reason was the absence of knowl- edge ; but the court refused to accept the view. And the same is held of a person who has been sued for a false repre- sentation that a note payable to him had not been paid ; ^ it seems that the payee is not bound to know of the facjfc of pay- ment unless he clearly affirm of his own knowledge. In accordance with tlie rule under consideration it is held that a director of a corporation, who issues or authorizes the issuance of a prospectus of the company knowing that it contains false and fraudulent representations calculated to 1 McKown V. Fui'gason, 47 Iowa, 636. evidence tending to show the fraudulent 2 Tryon o. Whitmarsh, 1 Met. 1 ; intention to be established. Salisbury- Pearson V. Howe, 1 Allen, 207 ; Stone v. Howe, supra ; Meyer v. Amidon, 4.5 V. Denny, 4 Met. 151 ; Salisbury v. N. Y. 169 ; Wakeman v. Dalley, 51 Howe, 87 N. Y. 128. But absence of N. Y. 27. ' reason to believe ' by the defendant is ' Sibley v. Hulbert, 15 Gray, 609. 512 DECEPTION. [chap, II. deceive, is personally liable for any damage thereby caused.^ But this rests, according to the authorities, upon his actual knowledge of the falsity of the representations, not upon any presumptive knowledge of the facts. The mere fact that a person, whether as director, trustee, or otherwise, allows or directly authorizes his name to be used in support of a corpo- ration or company, in prospectuses containing representations which prove to be false, will not make him liable in dam- ages ; knowledge of the real state of things must be estab- lished against him.^ Still it is clear in principle that if the defendant were shown to have made the statements personally to the plaintiff, as matters of his own knowledge, or to have repeated them to the plaintiff positively, it would not be ne- cessary to show that he knew them to be false ; it would be enough to show that he had no knowledge about the facts.* That would be a case under the second phase of the scienter. Perhaps too if the statements were made by one whose direct and constant duty it was to know the truth of the facts set forth in the prospectus, the case would be difficult ; * it would then fall under the third phase of the scienter. A statement made in terms upon the information of another is none the less actionable on that account if the party making it had no such information, or if he knew that the information was false. The defendant in a late case^ had had several conversations with the plaintiff in regard to the sale by the latter of a piece of laud, and had falsely represented that the plaintiff had only a life estate therein as he (defendant) 'had been informed.' The defendant made an offer for the prop- erty upon this basis which was finally accepted ; the plain- tiff thus parting with the land at much less than its value. The defendant had no such information as he professed, 1 Morgan v. Skiddy, 62 N. Y. 319 ; 3 Comp. Cole v. Cassiday, 138 Mass. Western Bank v. Addie, L. R. 1 H. L. 437, infra, p. 513. Sc. 146 ; ante, pp. 226 et seq. * See Cragie v. Hadley, 99 N. Y. ' Morgan v. Skiddy, supra. See 131, infra, p. 515. Perry v. Hale, 143 Mass. 540. ' Hogan v. Wixted, 138 Maiss, 270. CHAP. II.] KNOWLEDGE OF FALSITY. 513 or knew it to be false if he had, and a rescission was granted to the plaintiff. The first phase of the scienter needs no further comment. Of the second it is to be said that a positive statement im- plies knowledge, and if the pai'ty who makes it has no knowl- edge upon the subject, he has told scienter what is untrue ; he has affirmed his knowledge.^ In a recent case ^ the plain- tiff sued a director of a bank for damages for ' falsely and fraudulently ' representing to the plaintiff, ' of his own knowl- edge ' that the bank was sound. The judge instructed the jury in substance that the plaintiff could recover, the fact of the soundness of the bank being a fact within the defendant's means of knowledge,^ if the defendant stated that the bank was sound, having no knowledge of the fact; and that he would then be liable though he believed and had reason to believe his representations to be true. This instruction was upheld. A representation of one's own financial condition, made in positive terms, will furnish an illustration in point.* Thus the defendant in an action for damages had falsely represented that he was worth |6,000, thereby inducing the plaintiff to 1 Erie Iron Works v. Barber, 106 v. Cassiday, 1S8 Mass. 437 ; Cowley v. Penn. St. 125; s. c. 102 Penn. St. 166 ; Dobbins, 136 Mass. 401 ; Jewetti). Car- Mtns, Ins. Co. v. Eeed, 33 Ohio St. 283 ; ter, 132 Mass. 335 ; Savage v. Stevens, Willeox V. Henderson, 64 Ala. 535 ; 126 Mass. 207 ; Tucker v. White, 125 Herring v. Skaggs, 62 Ala. 180 ; Hanger Mass. 344 (that the proposition does not V. Evins, 38 Ark. 334 ; Sellar v. Clel- hold true of representations by public land, 2 Col. 532 ; Smith v. Dudley, 69 ofBcers, but see infra, p. 515) ; Litch- Ga. 78 ; West v. Wright, 98 Ind. 335 ; field v. Hutchinson, 117 Mass. 195 ; Roller V. Blair, 96 Ind. 203 ; Bethell v. Fisher v. Mellen, 103 Mass. 503 ; Mil- Bethell, 92 Ind. 318 ; Walsh v. Morse, liken v. Thorndike, ib. 382 ; Stone v. 80 Mo. 568 ; Caldwell v. Henry, 76 Mo. Denny, 4 Met. 151 ; Lobdell v. Baker, 254 ; Dulaney v. Eoger.s, 64 Mo. 201 ; 1 Met. 193 ; Brownlie v. Campbell, 5 Dunn v: Oldham, 63 Mo. 181 ; Sims v. App. Cas. 925 ; Reese River Mining Co. Eiland, 57 Miss. 607 ; Brown v. Hunt, o. Smith, L. R. 4 H. L. 64, Lord Cairns. 72 Maine, 415 ; Humphrey v. Merriam, 2 Cole v. Cassiday, 138 Mass. 437. 32 Minn. 197 ; Foard v. McComb, 12 * That is, it seems, capable of being Bush, 723 ; Estell v. Myers, 54 Miss, known upon examination. See Litch- 174 ; Phillips v. Jones, 12 Neb. 213 ; field v. Hutchinson, 117 Mass. 195. Indiana R. Co. v. Tyng, 63 N. Y. 653 ; * But see ante, p. 483. Bennett v. Judson, 21 N. Y. 138 ; Cole 514 DECEPTION. [chap. II. furnish goods to him on credit. The instruction to the jury- had been that the plaintiffs would have to prove that the de- fendant knew the representation to be false, or, what would be equally fraudulent, knew that he was affirming tlie exist- ence of a fact about which he was ignorant. This instruction was upheld by the Supreme Court ; the court declaring that if the representation was false, the jury would be authorized in finding that it was fraudulent.^ Eepresentations of the con- dition of land occupied and cultivated by the party making them would afford perhaps another illustration, at least for purposes of recoupment.^ Indeed where a person makes a statement in terms of his ' own knowledge ' or the equivalent, he cannot escape liability, it seems, if it turn out to be false, by saying that his state- ment was made upon trustworthy information. The plaintiff sued for deceit in the sale to him of stock, alleging that the defendant stated facts in regard to it of ' his own knowledge.' It appeared in evidence that the plaintiff during the negotia- tions asked the defendant ' if he knew these things were so,' and that the defendant said, ' Yes, and he should not tell the plaintiff so, if he did not know it.' The defendant was not permitted to show that he made the representations upon information of others.^ It follows also from the rule that a positive statement un- qualified implies knowledge, that it will be no excuse that the person making it had forgotten the facts ; and so it has been held in many cases.* If the person who made the representa- tion ' had spoken the simple truth, he would have said, " I do not recollect whether it is so or not," ' said Lord Selborne in 1 Morse v. Dearborn, 109 Mass. 593. * Brownlie v. Campbell, 5 App. Gas. See Seving t>. Gale, 28 Ind. 486. Such 925 ; Slim v. Croucher, 1 De G. F. & J. a representation was treated as mere 518 ; Phelps v. White, 5 L. R. Ir. opinion in Dortic v. Dugas, 55 Ga. 484. 318 ; Lock v. Burrowes, 10 Ves. 470 ; 2 Estell V. Myers, 54 Miss. 174, BuUis v. Noble, 36 Iowa, 518, 521 ; which goes farther, applying the rule to Ealey v. Williams, 73 Mo. 310 ; Ore- damages, gonian Ry. Co. v. Oregon Ry. Co., 10 8 Fisher v. Mellen, 103 Mass. 503. Sawy. 464, 469. CHAP. II.J KNOWLEDGE OF FALSITY. 515 the case first cited. A fortiori will this be true in a case of carelessness, instead of mere forgetfulness,i as where the managing officers of a bank long since on the point of failure should attempt to say that they were not aware of its con- dition, without showing that its condition was hidden from them or not capable of being known .^ It has been held that the rule under consideration does not apply to representations made by public officers in the dis- charge of duty.^ In the case cited, an action for deceit, it appeared that the defendant, a deputy sheriff, sold an estate to the plaintiff by auction, under an execution against S, that he (the defendant) stated, of his own knowledge, to those present at the sale that there was no incumbrance upon the estate ex- cept the right of dower in the wife of S, and that the plaintiff was thereby induced to purchase. The statement was false ; but it was held that the plaintiff was not entitled to recover ; the ground of distinction being that the representation was made by an officer of the public. The distinction drawn however is not satisfactory. It is said that the officer acts under a statutory power, and that he has no title to or interest in the property ; also that his state- ment that there were no incumbrances was not a statement of fact susceptible of personal knowledge. None of these positions can be sound. The fact that the officer acts under statutory powers does not imply that people may not believe statements made by him outside of his statutory authority, in his private capacity ; it certainly cannot be true that a person must have an interest in property, in order to make him re- sponsible for statements concerning the title ; and a statement by an agent for the sale of property, in regard to incum- brances, is a statement of fact as susceptible of knowledge by him as would be a statement by A, perhaps an entire stranger legally, of B's solvency. 1 Phelps i>. White, supra. ' Tucker v. White, 125 Mass. 344. 2 Cragie v. Hadley, 99 N. Y. 131. 516 DECEPTION. [chap. II. If however upon a fair interpretation of the facts it is consid- ered that the defendant lias not affirmed, directly or by clear implication, his knowledge, the case will of course stand, if it does not fall under the third phase of the scienter, upon the ordinary footing ; and if the representation was believed to be true, or rather if the plaintiff does not show that the defend- ant knew it to be false, there will be no liability in damages.i Thus where the defendants undertook to give to their em- ployer advice concerning the question whether a sale of land which neither had seen was ' a good sale ' at a fair price, it was held that if the advice given was honest there was no liability in damages, though the defendants did not know enough about the matter to give reasonable advice ; assuming that they made no misrepresentation of the kind and extent of their knowledge or of any other material fact.^ The third phase of the scienter embraces representations made within what is sometimes termed one's ' special means of knowledge.' Here there is a duty to know,^ and the party has asserted for knowledge what he must have known he ought not even to have believed.* Representations made under such circumstances are apt to carry great weight, greater probably than would be the case under the first or second phase of the scienter. It is, it should seem, for this reason, as much as on grounds of negligence,^ that it is enough to satisfy the rule in regard to the scienter that the plaintiff can show the situation of the defendant towards the facts. 1 Hartford Ins. Co. v. Matthews, 102 * Ante, p. 5, note 3. Mass. 221. That is perhaps the explaua- 6 See Seton d. Lafone, 18 Q. B. D. tion of such cases as Sibley v. Hulbert, 139, Denman, J., putting the case on 15 Gray, 509. the ground of negligence. A wharfinger ' Barnard v. Coffin, 138 Mass. 37. had falsely represented himself pos- ' In Hallmark's Case, 9 Ch. D. 329, sessed of goods. Comp. also .such cases Bramwell, L. J. says that knowledge as Jefts v. York, 10 Cush. 392, 395 ; of facts ought not to he implied, con- Collen ■». "Wright, 8 El. & B. 647 j trary to the truth, except ' where there Firhank v. Humphreys, 18 Q. B. D. is some duty on the part of the man to 54, C. A. Infra, p. 518. inform himself of the facts.' CHAP. U.J KNOWLEDGE OF FALSITY. 617 The cases falling within this phase of the subject may all perhaps be embraced within the language of a learned Irish judge. What a man must know, it was in substance declared, must have regard to his particular means of knowledge and to the nature of the representation ; and these must be sub- ject to the test of the knowledge which a man, paying that attention which every one owes to his neighbor in making a representation to be acted upon, would have acquired in the particular case by the use of such means.^ In this connection the doctrine of implied warranty may be noticed, partly to distinguish it, partly to show its resem- blance to the subject in hand. By way of distinguishing it, it should be observed that implied warranties are generally pure creations of the law, while representations, of whatever sort, are necessarily realities. Even where an implied war- ranty rests upon what in fact is a representation, as in the case of sales by sample, or in the case of supposed agency, the warranty is a fiction. The existence of the warranty, in a word, is presumptive,- while the existence of a representation in any form is a question of evidence in the ordinary sense, i. e. it must be shown as an ordinary fact. The presumption of the existence of the warranty is however only a presump- tion of fact, arising in the absence of evidence inconsistent with its existence. On the other hand implied warranties are like the repre- sentations last considered in that they arise in cases where the party bound has ' special means of knowledge ; ' hence it is considered to be his duty to know the facts. The general proposition of law is familiar enough, that one who warrants the existence of a fact thereby binds himself to answer in 1 Doyle V. Hort, i L. R. Ir. 661, to the scienter, laid down in Marsh v. 670, Ex. D., Pallas, C. B. See Ruff ». Falker, 40 N. Y. 562, 567, between Jarrett, 94 111. 475 ; Thorne v. Pren- matters of general knowledge and mat- tiss, 83 111. 99 ; Eailroad Co. i). Ander- ters the knowledge of which is uncom- son, 51 Miss. 829. See a peculiar and, nion and exceptional, it seems, unsound distinction in regard 518 DECEPTION. [chap. n. damages in case of its non-existence ; and the law therefore will not permit him to say, if the warranty turn out to be untrue, that he believed it to be true. This, where the war- ranty is implied, must in justice proceed upon the ground that the party ought to know the fact in question. A few cases of implied warranty of agency may be consid- ered in illustration. It is settled law that if a person, how- ever honestly, assume to act for another in respect of a matter over which he has no authority, he renders himself liable, not merely to his principal, where the act is a violation of the terms of the agency, but to the person whom he has thus deceived. This action is sometimes said to be based upon a breach of warranty of authority, and sometimes indeed upon deceit ; in either form of action, the injured party is entitled to recover against the supposed agent, to the extent of the damage sustained.^ It has indeed been decided, professedly upon this principle, that, in an action against a telegraph company for delivering a message never sent, and alleging that the defendants falsely represented that they were authorized to deliver such a mes- sage and thereby caused the plaintiff to suffer damage, it is not necessary to allege that it was false to the knowledge of the defendant. Such an action was considered as in the nature of a false warranty against one professing to act as 1 Seton V. Lafone, 18 Q. B. Div. Smith, 21 Conn. 627 ; McCurdy v. 139; Collen v. Wright, 8 El. & B. 647; Kogers, 21 Wis. 197, 202. See how- Bandell v. Trimen, 18 C. B. 786 ; ever Webster v. Lamed, 6 Met. 522. Cherry v. Colonial Bank, L. E. 3 P. C. It is held that the proper remedy is by 24 ; Pow V. Davis, I Best & S. 220 ; an action of deceit. Noyes v. Loring, Spedding v. Nevill, L. R. 4 C. P. 212 ; 55 Maine, 408. See Jones v. Wolcott, Godwin v. Francis, L. R. 5 C. P. 295 ; 2 Allen, 247 ; May v. Western Union Richardson v. Williamson, L. R. 6 Q. B. Tel. Co., 112 Mass. 90. Indeed an ao- 276 ; White v. Madison, 26 N. Y. 117, tion ex delicto for deceit can be main- 124 ; Jefts v. York, 10 Cush. 395 ; s. c. tained though an express warranty was 4 Cush. 371 ; Jones v. Wolcott, 2 Allen, made, if deceit can be proved. Indiana 247 (attorney) ; May ■». Western Union R. Co. v. Tyng, 63 N. Y. 653. See Tel. Co. , 112 Mass. 90 ; Bartlett v. ante, p. 70. Tucker, 104 Mass. 336 ; Johnson v. CHAP. II.] KNOWLEDGE OP FALSITY. 519 agent, and representing that he has an authority which he has not.^ While however a person professing to be an agent is, generally speaking, liable in deceit in case he does not possess the authority professed, still if he honestly and fully disclose all the facts touching the supposed authority under which he acts, he is not liable.^ So too if the party act as a public officer, and in that capacity act honestly in regard to his powers, he will not be personally liable.^ And if his authority to act be defined by public statute, all who contract with him will be presumed to know the extent of his authority, and no one can allege his ignorance as a ground for charging him with acting in excess of his authority, unless he knowingly mislead such person.* There is a difference too between an agent's situation towards his principal and towards third persons. A third person can hold the supposed agent liable as for a fraudulent representation of his authority, when the former could not. Mere proof for example that an agent has exceeded his authority, to the damage of his principal, will not render him liable to the principal in an action for fraud.^ In such a case as this it seems necessary to prove actual fraud in the agent. This doctrine of the liability of a party who falsely repre- sents the extent of his authority to act for another applies still more strongly to the case of a person professing to be a partner in a mercantile or other firm. Thus it has recently been held that one who, by representing himself to be a part- ner in a firm, induces another to give credit to the supposed 1 May V. Western Union Tel. Co., ^ Newman v. Sylvester, 42 Ind. 106. 112 Mass. 90. See Jefts v. York, 10 s lb.; Belknap «. Keinhart, 2 Wend. Cush. 392; Bartlettv. Tucker, 104 375 ; Hodgson ». Dexter, 1 Cranch, 345 ; Mass. 336. Contra, Playford v. United Nidiols v. Moody, 22 Barb. 611. Kingdom Tel. Co., L. E. 4 Q. B. 706. " Newman «. Sylvester, supra. The principle however is English, as ^ Price v. Keyes, 62 N. Y. 378. the oases cited in note 1 show. 520 DECEPTION. [chap. II. partnership, is liable to him as a partner, whether actually a partner or not.^ It matters not that the party who made the false representation believed that he was a partner ; it was his duty to know the law and the facts relating to the question. There is another situation deserving of mention in this connection. Where an action is brought against a party who is bound to indemnify the plaintiff for an act done by the defendant's authority upon a false representation made by him, as in the case of an action by a sheriff against an attorney who has required him to levy upon certain goods as the property of a judgment debtor when they were not his property ; or to take the body of such a person as being the one intended in a writ, when he was not the person intended, — in such cases, it is not necessary for the plaintiff to prove that the defendant knew that his statement was false.^ But the action in such cases is for indemnification, and not for deceit. The equitable doctrine of misrepresentation in regard to knowledge has been considered in a previous chapter.^ It will be enough here to say that, while for the purpose of an action for damages, the scienter in one of the senses above stated must be proved, — for purposes of cancellation, rescis- sion, defence (in equity or by equitable plea at law), recoup- ment, or injunction, it is not necessary, according to the better authorities, to prove any scienter. An innocent misrepresen- tation ceases to be innocent when the party who made it un- dertakes, after learning of its falsity, to maintain the advantage gained by means of it.* In a court of strict law the rule would probably be different and proof of the scienter required, as would be the case in an action for damages.^ 1 Rice V. Barrett, 116 Mass. 312. ' Ante, pp. 410 et seq. ^ Humpkries v. Pratt, 5 Bligh, N. s. * Ante, p. 414. 154 ; Collins v. Evans, 5 Q. B. 820. ^ ^te, p. 413. CHAP, ni.] IGNOEANOE BY PABTY WBONGBD. 521 CHAPTER III. MISREPRESENTATION: IGNORANCE OF FALSITY BY PARTY WRONGED. We have next to consider the rule that requires the party- complaining of misrepresentation to show that he was ignorant of the truth of the matter concerning which the representation was made, and that he believed that the representation was true. In general both of these situations must be true of him ; he must have been ignorant of the true state of facts, and must have given credit to the representation of them as made by the alleged wrong-doer. He must have been deceived ; one who has knowledge of the truth,^ or without knowledge thereof makes examination for himself,^ or acts upon inde- pendent information, and not in a belief of the truth of the particular representation, is in the one case not deceived at all,^ and in the other is not deceived by the person of whom complaint is made.* A single illustration will suffice. In an action for money had and received it appeared that the plaintiff had negotiated with the defendant's agent for the purchase of a piece of land. The agent said that the lot contained between forty and fifty 1 It has been held in Vermont not Hagee v. Grossman, 31 Ind. 223 ; Tuck to be incumbent upon a plaintiff suing v. Downing, 76 111. 71 ; Halls v. Thomp- for deceit in a sale to allege want of son, 1 Smedes & M. 443 ; Whiting v. knowledge in himself of that which Hill, 23 Mich. 399. ' If the plaintiffs made the sale fraudulent. Patee v. relied on the representations, they did Pelton, 48 Vt. 182. But there was not investigate them ; if they irvesti- held to be a warranty in that case. gated them, they did not rely on them.' " Dickinson v. Lee, 106 Mass. 557 ; Carpenter, J. in Enfield v. Colburn, Watson V. Austin, 63 Miss. 469. supra. 8 Enfield v. Colburn, 63 N. H. 218 ; * Caldwell v. Bridal, 48 Iowa, 15. Wise V. Fuller, 29 N. J. Eq. 257 ; 522 DECEPTION. [chap. III. thousand square feet. The parties rode around it, and the plaintiff agreed to take it at sixteen cents per foot. The lot in fact contained sixty-six thousand square feet, and the agent knew at the time of the sale that the lot contained more land than he had stated. It was held that the action could not be maintained, on the ground that the plaintiff had made such examination as he had seen fit, and that no deception had been practised upon him in making it.^ But as there are cases in which the alleged wrongdoer, though in fact ignorant of the falsity of his representation, and supposing the same to be true, is deemed in law to hare knowledge of the facts, and is liable for his conduct,, so there appear to be some few cases in which the party complaining of the alleged deceit, though actually ignorant of the true state of facts, and supposing the representation to be true, is considered by the law as fixed with knowledge, and therefore is barred from making complaint. These cases we are now to consider. All the cases upon this aspect of the subject fall, as before, under the designation of 'means of knowledge.' It has in- deed been laid down as a broad proposition of law that if the means of knowledge be at hand and equally available to both parties, and the subject of the transaction be open to the in- spection of both alike, the injured party must avail himself of such means, if he would be heard to say that he was deceived by the representations of the other party ,2 unless there was a warranty of the facts. And further it has been declared that if the quality of goods bought is open to the ob- servation of the buyer, and he has equal means with the 1 Dickinson ■». Lee, 106 Mass. 557. 3 Jones, 222 ; Fields v. Rouse, ib. 72 ; 2 Dictum in Slaughter v. Gersou, 13 Saunders v. Hatterman, 2 Ired. 32 ; Wall. 379. See to the same effect Sav- Pagan v. Newsom, 1 Dev. 20 ; Long v. age V. Stevens, 126 Mass. 207 ; Nowlan Warren, 68 N. Y. 426 (but as to this V. Cain, 3 Allen, 261 ; Salem Rubber case see Albany Inst, for Savings o. Co. V. Adams, 23 Pick. 256; Messer Burdick, 87 N. Y. 40) ; Rhoda i;. Annis, V. Smyth, 59 N. H. 41 ; Leavitt v. 75 Maine, 17. Fletcher, 60 N. H. 182 ; Lytle v. Bird, CHAP. III.] IGNORANCE BY PAETY WRONGED. 523 vendor of testing them, lie cannot (in the absence of a war- ranty) allege misrepresentation in an action for the price of them,i or bring an action for damages on such ground.^ But there is serious ground for doubting the correctness of this proposition in its broad form. It will be seen, upon reflection, that the situation of the person to whom the mis- representation was made is quite different in regard to means of knowledge from that of the person who made it. The latter may well be held to the duty to know the facts ; no one has prevented him from knowing them. The former has been put off his guard and misled by the very representation which has been made. Indeed a representation may as well mislead even where the means of knowledge are directly at hand as where they are not. The supposed rule in regard to means of knowledge came to be applied in this country before this distinction had been pointed out ; ^ we have seen one aspect of this mistake in cases of the concealment of a cause of action.* Kecent authority has however gone far towards setting the matter right in principle ; the proposition has now become very widely ac- cepted, at law as well as in equity, at least as general doctrine, that a man may act upon a positive representation of fact, notwithstanding the fact that the means of knowledge were specially open to him,^ or though he had legal notice, as e. g. 1 Brown v. Leach, 107 Mass. 364. Schwenk v. Naylor, 102 N. Y. 683 ; 2 lb. ; Salem Rubber Co. v. Adams, Mead v. Buun, 32 N. Y. 27.6, 280 ; 23 Pick. 256. Linington v. Strong, 107 111. 295 ; 8 Farnam v. Brooks, 9 Pick. 212, Griffcth i: Hanks, 46 Tex. 217 ; "We- 244 (1830). ber '»■ Weber, 47 Mich. 569 ; Stark- 4 Ante, p. 30. weather v. Benjamin, 32 Mich. 305 ; 6 Central By. Co. v. Kisch, L. R. 2 Webster v. Bailey, 31 Mich. 36 ; West H. L. 99, 120 ; Rawlins v. Wickham, v. "Wright, 98 lud. 335 ; Dodge v. Pope, 1 De G. & J. 304 ; Redgrave v. Hurd, 93 Ind. 480 ; Jones •<'. Hathaway, 77 20 Oh. D. ], 13, C. A. ; Reynell v. Ind. 14; Keller v. Equitable Ins. Co., Sprye, 1 De G., M. & G. 668, 709 ; San- 28 Ind. 170 ; Matlock v. Todd, 19 Ind. key D. Alexander, Ir. E. 9 Eq. 259, 316; 130 ; Upshaw v. Debow, 7 Bush, 442 ; Stanley v. McGauran, 11 L. R. Ir. 314 ; Walsh v. Hall, 66 N. C. 233 ; Hale Phelps V. White, 7 L. R. Ir. 160 ; v. Philbrick, 42 Iowa, 481 ; Oswald v. 524 DECEPTION. [chap. in. in the public registry, of the real state of things.^ It may be improbable that a man with the truth in reach should accept a representation made in regard to it, but the improbability can be no more than matter of fact. If the representation were of a character to induce action, and did induce it, that is enough. It matters not, it has well been declared, that a person misled may be said, in some loose sense, to have been negligent ^ (in reality negligence is beside the case where the misrepresentation was calculated to mislead, and did mis- lead ^) ; for it is not just that a man who has deceived another should be permitted to say to him, ' You ought not to have be- lieved or trusted me,' or ' You were yourself guilty of negli- gence.'* This indeed appears to be true even of cases in which the injured party had in fact made a partial examina- tion.^ Nor is the rule applicable merely to cases which in McGehee, 28 Miss. 340 ; Spalding v. Hedges, 2 Barr, 240 ; Schuylkill v. Cop- ley, 67 Penn. St. 386 ; McKee v. Eaton, 26 Kans. 227 ; Stewart v. Stearns, 63 N. H. 99 ; Parham v. Randolph, 4 How. (Miss.) 435 ; Olson v. Orton, 28 Minn. 36 ; Porter v. Fletcher, 25 Minn. •493 ; Eiefer v. Eogers, 19 Minn. 32 ; Caldwell v. Henry, 76 Mo. 254 ; Union Bank u. Hunt, ib. 439 ; Holland e. Anderson, 38 Mo. 55 ; Messer v. Smyth, 59 N. H. 41 ; Sleep v. Heymann, 57 "Wis. 495 ; McClellan v. Scott, 24 "Wis. 81, 87 ; Bank of "Woodlan v. Hiatt, 58 Cal. 234. See also ante, p. 30, note 2. ^ David V. Park, supra ; Parham v. Eandolph, supra. 2 Smith V. Land Corp., 28 Ch. D. 7, C. A. ; Redgrave v. Hurd, 20 Ch. D. 1, 13, Jessel, M. R. ; Reynell v. Sprye, 1 De G. M. & G. 660 ; Stanley v. Mc- Gauran, 11 L. R. Ir. 314 ; Phelps v. "White, 5 L. E. Ir. 318 ; Sankey v. Alexander, Ir. R. 9 Eq. 259 ; David v. Park, 103 Mass. 501 ; Albany Inst, for Savings v. Burdick, 87 N. Y. 40 ; Schwenk v. Naylor, 102 N. Y. 683. The same principle applies to Hickey V. Morrell, 102 N. Y. 454. 3 Jackson v. Collins, 39 Mich. 557, infra, p. 528. The only place for the consideration of negligence in regard to means of knowledge is in questions arising upon negotiable instruments. Foster v. Mackinnon, L. R. 4 C. P. 704, infra, p. 526. * Albany Inst, for Savings v. Bur- dick, supra ; Liningtou v. Strong, 107 111. 295 ; Gardner v. Trenary, 65 Iowa, 646 ; Hale v. Philbrick, 42 Iowa, 81 ; Porter v. Fletcher, 25 Minn. 493 ; Olson V. Orton, 28 Minn. 36 ; Jackson V. Collins, 39 Mich. 657 ; Redgrave v. Hurd, supra ; Smith v. Land Corp., supra, Bowen, L. J. The doctrine of contributory negligence has nothing to do with such a case. Albany Inst, for Savings v. Burdick, supra. But see Sav- age V. Stevens, 126 Mass. 207, and the observation near the end of Sharp v. Ponce, 74 Maine, 470, a case already crit- icised upon the submission to the jury of what the court should have decided. * Smith V. Land Corp., supra; Jack- CHAP. III.] IGNORANCE BY PARTY "WRONGED. 525 some respects stand upon special grounds, as e. g. suits for specific performance ; it applies to rescission equally, and in- deed is a general rule.^ The authorities furnish a wide range of illustration. Every man or woman, even though illiterate, is presumed to know the contents of a written instrument signed by him ; ^ but no presumption of knowledge will stand in the way of a charge of fraud made in regard to the contents of the writing. No doubt it would be imprudent, in a sense, not to read or to re- quire the reading of an instrument before signing or accept- ing it ; indeed the courts would turn a deaf ear to a man who sought to get rid of a contract solely on the ground that its terms were not what he supposed them to be. But the courts would not refuse to listen, on the contrary they would give re- lief, where a plaintiff charged fraud upon the defendant in reading the contract to him, or in stating its nature or terms ; * son V. Armstrong, 50 Mich. 65. But see Buck v. McCaughtiy, 5 T. B. Men. 221 ; Long v. Warren, 68 N. Y. 426, decided by a bare majority, and dis- credited in Albany Inst, for Savings v. Burdick, 87 1^. Y. 40. See also Schwenk V. Naylor, 102 N. Y. 683, and Thorn v. Prentiss, 83 111. 99, in support of the text. If the omission to prosecute the ex- amination fally was due to the opposite party's representations (or other acts), that omission cannot be charged against the injured party. In almost all cases, even of the most persuasive representa- tions, the other party will make some inquiry ; and it cannot be said that he must rely wholly upon the representa- tions or not at all. It is enough that they were calculated to induce him to rely upon them, and that he did rely upon them. Comp. cases of several in- ducements. James v. Hodsden, 47 Vt. 127, and other cases in chapter 5. 1 Kedgrave v, Hurd, supra. 2 Hunter v. Walters, L. E. 7 Ex. 75; Starr v. Bennett, 5 Hill, 303 ; Leslie v. Merrick, 99 Ind. 180 ; Hardy v. Brier, 91 Ind. 91 ; Eogers v. Place, 35 Ind. 577 ; Bacon v. Markley, 46 Ind. 116 ; Hawkins v. Hawkins, 50 Gal. 558 ; Thacher v. Churchill, 118 Mass. 108 (married women) ; Maine Ins. Co. v. Hodgkins, 66 Maine, 109 ; Miller v. Sawbridge, 29 Minn. 442 ; Watson v. Planters' Bank, 22 La. An. 14 ; Daw- son V. BuriTis, 73 Ala. Ill ; Goetter V. Pickett, 61 Ala. 387 ; Fitzgerald v. Fitzgerald, 100 111. 385 ; Merritt v. Bag- well, 70 Ga. 578 ; Angier v. Brewster, 69 Ga. 362. ' Foster v. Mackinnon, L. R. 4 C. P. 704, ante, p. 258 ; Stanley v. McGauran, II L. R. Ir. 314 ; Albany Inst, for Sav- ings V. Burdick, 87 N. Y. 40 ; Robinson V. Glass, 94 Ind. 211 ; Webbi). Corbins, 78 Ind. 403 ; Bacon v. Markley, 46 Ind. 116 ; Hawkins D. Hawkins, 60 Cal. 558; Schuylkill v. Copley, 67 Penn. St. 386 ; Linington v. Strong, 111 111. 152; 526 DECEPTION. [chap. III. and also in leaving out terms agreed upon,^ or in inserting terms not agreed upon.^ This would obviously be true of cases in which the complaining party could not read, or could read only with difficulty, or in which a printed document was con- cerned containing much fine print.^ But the rule is not con- fined to such cases ; on the contrary it is very general. There should however be real fraud in the opposite party to excuse the failure to know the contents of the instrument.* Indeed in the one case of a negotiable bill or nOte, which has passed into the hands of a purchaser for value without notice, it seems that ' negligence ' in signing may cut off the defence of misrepresentation of contents, even when such misrepresen- tation related to the nature of the instrument as distinguished from the facts stated in it, as e. g. where a bill of exchange is represented to be a guaranty .^ This rests however upon the ground of the negotiability of the instrument, and the posi- tion of the plaintiff.^ But a suggestion of inconsistency even in this case, in the matter of negligence, cannot fail to arise ; there is no reason surely for allowing a jury to say that the Martindale v. Harris, 26 Ohio St. 379 ; ing the note. So of Woollen v. Whit- Moore ». Brown, 49 Iowa, 130. But acre, 73 Ind. 198. The rule is correctly see American Ins. Co. v. McWhorter, stated in Webb ». Corbin, 78 Ind. 403, 78 Ind. 136 ; Woollen v. Whitacre, 73 and in Fisher v, Von Behren, 70 Ind. Ind. 198 ; Woollen v. Ulrich, 64 Ind. 19. See also Euddell v. Dillman, 73 120 ; Williams o. Stoll, 79 Ind. 80 ; Ind. 518. Of course where the misrep: infra ; and comp. with Webb v. Corbin, resentation relates to the facts stated supra. in the Negotiable paper, the case will be 1 Hitchins v. Pettingill, 58 N. H. 3. stronger against the .signer ; for the case 2 Aultman v. Olson, 34 Minn. 450; will then be one of degree instead of Miller v. Sawbridge, 29 Minn. 442. kind. But even in such a case the ' Keller v. Equitable Ins. Co., 28 plaintiff must have been a purcl^er for Ind. 170. See also Sims v. Price, 67 value without notice. Perhaps such a. 111. 88. plaintiff could then recover regardless * See Fitzgerald i). Fitzgerald, 100 of the question of negligence. 111. 385. ^ See Foster v. Mackinnon, supra ; " Fosters. Mackinnon, L. R. 4 C. P. Soper v. Peck, 51 Mich. 563 ; Fayette 704, ante, p. 258. The similar but Baukv. Steffes, 54Iowa, 214 ; Whiting stronger case of Williams v. Stoll, 79 i'. Snyder, 2 Lans. 477 ; Mackey o. Ind. 80, was wrongly decided, assuming Peterson, 29 Minn. 298 ; Citizens' Bank that there was no ' negligence ' in sign- v. Smith, 55 N. H. 593. CHAP. III.] IGNOKANCB BY PARTY -WEONGED. 527 injured party was negligent — and the question is treated as one of fact^ — simply because the instrument was negotiable, a fact which may have been concealed from him. If negli- gence is out of the case at all, it should be out of the case as well where an instrument not known to be negotiable is con- cerned as elsewhere. Public policy may require a different rule if the party knew the instrument to be negotiable.^ Again the purchaser of land is entitled to relief against the vendor for fraudulent misrepresentations in regard to title, even though the conveyance was by quit-claim only — so it has lately been held.^ This at all events is clear of a convey- ance with warranty, even though the existence of the true title was on record at the time of the purchase ; * and this too though there has been no eviction of the purchaser.^ In case of fraud it is not necessary for a purchaser of land to rely upon the covenants of his deed ; ^ and hence an eviction is held not to be necessary in order to the recovery of substantial dama- ges.'^ Again the buyer of a patent, after disturbance^ or other special damage, may maintain an action against the seller for false representations in regard to what was covered by the patent, or what was not covered by an earlier patent, though 1 Foster v. Mackinnon, supra ; Soper N. Y. 683 ; Peel v. Bryson, 72 Ga. 331, V. Peck, 51 Mich. 563 ; Fayette Bank that discharge in hankruptcy is no an- V. Steffes, 54 Iowa, 214. swer to such a case. ^ See Whiting v. Snyder, and Fay- ' Parham v. Randolph, supra. But ette Bank v. Steffes, supra. see Alden v. Pryal, 60 Cal. 215. Clearly ' Ballou V. Lucas, 59 Iowa, 22; At- damage must have been sustained, wood V. Sanford, 68 Maine, 38. ^ Parhanrw. Eandoli>h, supra ; Diggs ^ Parham v. Randolph, 6 How. v. Kirby, 40 Ark. 420 ; Edwards v. Mc- (Mtss.) 435; Kiefer i>. Rogers, 19 Leay, Coop. 308 ; s. c. 2 Swanst. 308. Minn. 32 ; Upshaw v. Debow, 7 Bush, '> Parham -o. Randolph, supra ; Gil- 442; Young r. Hopkins, 6 Marsh. 23; pin v. Smith, 11 Smedes & M. 109; Campbell v. Whittingham, 5 J. J. Abbot v. Allen, 2 Johns. Ch. 522 ; Marsh. 96 ; Roller v. Blair, 96 Ind. Edwards v. McLeay, Coop. 308 ; s. c. 203 ; Dodge v. Pope, 93 Ind. 480 ; 2 Swanst. 308 ; Coke Litt. 384, note ; Reed v. Tioga Manuf. Co., 66 Ind. 21 ; 2 Kent, Com. 470. Clark V. Edgar, 84 Mo. 106 ; Bailey v. « Springfield v. Drake, 58 N. H. 19; Smock, 61 Mo. 213 ; Holland v. Ander- Bass v. Putney, 38 N. H. 47 ; Bartlett son, 38 Mo. 55 ; Claggett v. Crall, 12 v. Holbrook, 1 Gray, 114 ; Stevens v. Kans. 393 ; Schwenk v. Naylor, 102 Head, 9 Vt. 174. 528 DECEPTION. [chap. III. he might have ascertained the truth by examining the records of the patent office.^ The result appears to be, not only in principle but by the weight of authority, that the party to whom the represen- tation is made is affected by means of knowledge, or by notice, only where the language or conduct was not of a kind to withdraw his attention from what otherwise he would be bound to know, i. e. only where the representation was not calculated to put him off his guard, as in cases of represen- tations of value or opinion.^ As for other cases, the doctrine is dead in England and in Ireland, if it ever had any life there; in the United States it cannot long survive. Surely in a case of misrepresentation it is not more important that the innocent should suffer for his innocence than that the wrongdoer should suffer for his wrongdoing. The law should bear upon guilt in such cases not less than in others.^ 1 David V. Park, 103 Mass. 501 ; Brown ii. Castles, 11 Gush. 348 ; Man- ning V. Albee, 11 Allen, 520 ; s. c. 14 Allen, 7 ; Watson v. Atwood, 25 Conn. 313. ^ See Montgomery Ry. Co. v. Mat- thews, 78 Ala. 357 ; Tabor v. Peters, 74 Ala. 90 ; Gaty v. Holcomb, 44 Ark. 216 ; Eighter v. Roller, 31 Ark. 170 (sed qu. of the application of the dis- tinction in this case) ; Dortic v. Dugas, 55 Ga. 484 ; Cagney v. Cusen, 77 Ind. 494. Perhaps misrepresentation to a public board, of its duties, which the board can and should know, may also be an exception. Churchill v. Cummings, 51 Mich. 446. ' ' One who is pradent on the par- ticular occasion as most prudent men would be, and is nevertheless cheated, can hardly be held negligent. The law encourages diligence and requires all persons to look after their own interests; but it does not hold out any induce- ment to rogues to practise any sort of fraud with impunity.' Jackson i). Col- lins, 39 Mich. 557, Campbell, C. J. See s. o. 54 Mich. 186, Collins v. Jack- son, where however the point is not so correctly stated. ' We are not inclined to encourage falsehood and dishonesty by protecting one who is guilty of such fraud, on the ground that his victim had faith in his word and for that reason did not pursue inquiries which would have disclosed the falsehood.' Hale v. Phil- brick, 42 Iowa, 81, Beck, J. The rule in private .sales, of caveat emptor, has nothing to do with the case ; that rule applies only in the absence of fraud. The truth is, the maxim of caveat emptor, in the light of the later and better authorities, has been overworked. The rule of law, ob- scured somewhat in the application of that maxim, is simply this, that both parties to a contract, whether of sale or not, must act the part of prudence ; nothing more is required. In the ab- CHAP. III.] IGNORANCE BY PARTY WRONGED. 529 In Massachusetts (and perhaps elsewhere ^) a distinction appears to have come into existence between (1) means of knowledge at hand and (2) actual notice, as e. g. by the public registry, or means of knowledge not at hand. In the first case it has been held that the injured party will be barred of redress as matter of law, notwithstanding the mis- representation ; 2 in the second he will be entitled to act upon the representation, and hence to relief if he has suffered from it.* But there is clear authority against any such distinc- Bence of any misleading word or act by the opposite party this rale requires each party to satisfy himself hefore the contract is made ; in the presence of a truly misleading word or act, i. e. such as might mislead a pi-udent man, pru- dence wUl be satisfied, if the rule means anything, by the acceptance of that word or act. What would be necessary in the absence of the misconduct cannot be required in its presence ; and this is as true' of cases of ' means of knowledge ' as of other cases. The rule of caveat emptor applies more strongly to judicial than to pri- vate sales. Fore v. McKenzie, 58 Ala. 115. 1 See Crown v. Carriger, 66 Ala. 590 ; Hanger v. Evins, 38 Ark. 334 ; Sellar v. Clelland, 2 Col. 532 ; Bxyan v. Suggs, 56 Ga. 679 ; Arbuckle v. Biederman, 94 Ind. 168 ; Merriam v. Pine City Lumber Co., 23 Minn. 314; Fishback V. Miller, 15 Nev. 428 ; Long v. War- ren, 68 N. Y. 426. But see Albany Inst, for Savings ii. Burdick, 87 N. Y. 40; Sehwenk v. Nay lor, 102 N. Y. 683 ; Clark I'. Edgar, 84 Mo. 106 ; Stewart v. Stearns, 63 N. H. 99. It would be agreed everywhere that if the property were in some distant place the representations, assuming that they were of facts, could be acted upon. Savage v. Stevens, 126 Mass. 207 ; Ladd V. Pigott, 114 111. 647 ; Brj'an v. Suggs, 56 Ga. 679 ; Wolfe v. Pugh, 101 Ind. 293 ; Nowlin v. Snow, 40 Mich. 699. 2 Salem Rubber Co. v. Adams, 23 Pick. 256 ; Brown v. Leach, 107 Mass. 364 ; Savage v. Stevens, 126 Mass. 207 (means of knowledge, but not at hand). 8 David V. Park, 501 ; McKee v. Eaton, 26 Kans. 227. In Hanger v. Evins, supra, the court says : ' Neither warranties nor false rep- resentations bind the maker, regarding things patent to any observer who might take the trouble to examine the article, and where the party claiming to be ag- grieved had the opportunity of seeing it. This is upon the ground that, with regard to such things, it is not to be presumed that the warranties or repre- sentations were intended upon either side to apply.' And the court shows that the presumption is only one of fact. This comes very nearly to a correct view of the situation ; the real questions are, (1) whether the representations were such, in themselves or under the cir- cumstances, as might reasonably have diverted one from inquiry, and that is generally a question of law, and (2) whether they did divert from inquiry and were acted upon, and that is a ques- tion of fact. See Schwabacker v. Rid- dle, 99 111. 343. It has been intimated that representations made by strangers in circulats should not be relied upon. Berman v. Woods, 38 Ark. 351. But 84 530 DECEPTION. [chap. ni. tion ; ^ indeed there has been no direct attempt to justify it, even if it is capable of being carried out.^ Confusion is in- evitable in attempting to apply to the person to -whom a representation was made the rule applied to the person who made it. It may be true that a party is bound to know presently a fact with which he has once been familiar, if no great time has since elapsed or if there be no other sufficient excuse for failure of memory ; ^ indeed what a man is shown to have this cannot properly be affirmed as mat- ter of law ; it is only a matter of fact, witli perhaps a probability that the rep- resentations were not relied upon. The injured party should be judged simply by the conduct of the diligent or careful man. Schwabacker v. Eiddle, supra ; Roller V. Blair, 96 Ind. 203. ' A fraud is something that would probably mis- lead or deceive an attentive man, or something to relax or divert his atten- tion.' Pattison c. Albany Building Assoc, 63 Ga. 373, Bleckley, J. In a case of an action for deceit in the sale of a stock of goods represented by the vendor to be ' clean and desirable,' and of ' good styles and sales,' the purchaser being unacquainted with goods of the kind, the court said : ' The evidence that the plaintiff's vigilance was dis- armed by the defendant's representa- tions was admissible under the declara- tion. It is a, necessary consequence of such representations to lull suspicion and prevent inquiry and examination.' Stewart v. Stearns, 63 W. H. 99. (See Burr V. Willson, 22 Minn. 206.) This, it will be seen in view of the nature of the representations, is a strong case against the supposed rule of means of knowledge. See Jackson v. Collins, 39 Mich. 557 ; Collins v. Jackson, 54 Mich. 186 ; ante, pp. 478, 479. But in Leav- itt V. Fletcher, 60 N. H. 182, the New Hampshire court speak of facts ' equally open to both parties ' as a bar to an ac- tion for deceit ; and language in Stewart V. Stearns, supra, bears the same way. See also Page v. Parker, 40 N. H. 7. But later, in Bradbury v. Haines, 60 N. H. 123, the rule is correctly stated. It is there laid down that an action for deceit by misrepresentations is maintainable ' where the purchaser did not have equal means of knowledge with ' the vendor, 'or, having such means, is induced to forego further inquiry.' In that case however the means of knowledge were not at hand. 1 Schwenk v. Naylor, 102 N. Y. 683, sale of land, with question of the loca- tion of the line. The plaintiff ' saw it before him, but was not bound then and there to examine the title, especially when the defendant professed to know all about it and the extent of the prop- erty.' The court cited Whitney v. Al- laire, 4 Denio, 554, 555 ; Allaire v, Whitney, 1 Hill, 485 ; Beardsley v. Duntley, 69 N. Y. 577. See also Thorne v, Prentiss, 83 111. 99, and cases supra of omitting to read writings. '^ To which class of cases .would the presumption of knowledge, by the maker, of the contents of an instru- ment belong ? Thacher v. Churchill, 118 Mass. 108, 109. 3 See Ely v. Stewart, 2 Md. 408 ; Poland p. Brownell, 131 Mass. 138 ; Spencer u Carr, 45 N. Y. 406. CHAP. III.] IGNORANCE BY PARTY WRONGED. 531 known at one time he would doubtless be presumed to have known afterwards, in the absence of sufficient explanation. Such is the rule at least in the case of • one who has made a positive representation, as we have seen.^ But that is not a case of means, even special means, of knowledge. In one of the cases just cited ^ it appeared that a manufacturing estab- lishment about to be sold by a trustee was represented by him to have a water power with fall of about fifteen feet. The fall in fact was considerably less ; but the purchaser had for many years been one of the owners of the property, and had united with the other owners in a deed conveying the prop- erty, and describing it as having about fifteen feet of water- fall. He had ample means of knowing the truth, and it was accordingly considered that he could not have relied upon the trustee's representation.^ In another case it was held that a divorce would not be granted a man from his wife on the ground that she falsely stated to him before the marriage that she was not pregnant, if he himself had already had sexual intercourse with her, though her pregnancy was by another man, and the child a bastard.* ■A different case too may perhaps be presented by the false representations of an agent of a corporation, where those rep- resentations are clearly beyond the powers of the corpora- tion. Thus a subscriber to the stock of a corporation, who resists payment or assessment on the ground that he was deceived by the false and fraudulent representations of the corporation's agent in giving his subscription, will not escape liability, it is said, if such representations relate to matters controlled by the charter of the company ; the same showing that the agent had no authority to make such representations.^ In other words the subscriber is bound to examine the com- 1 Ante, p. 514. * Crehore v. Crehore, 97 Mass. 330. 2 Ely V. Stewart, supra. See Foss v. Foss, 12 Allen, 26 ; ante, » Poland V. Brownell, 131 Mass. 138, pp. 468, 469. was a similar case. So was Over v. ' Selma R. Co. v. Anderson, 51 Miss. Hetherington, 66 Ind. 365. 829 ; Wight v. Shelby R. Co., 16 B. 532 DECEPTIOK. [chap. HI. pany's charter; he cannot safely rely upon the representations of its agents. But so far as this is sound doctrine, it rests upon special law relating to corporations ; such bodies feeing without capacity to do, or to authorize the doing of, acts not within their granted powers. To induce one however to forbear investigation, or to pre- vent effective examination, will, as follows from what has already been said of representations, excuse a failure to inquire;^ and this even in those cases in which, as where there is only a representation of value, the party was pre- sumptively bound to inquire.^ Indeed where one induces another to abstain from seeking information, mere conceal- ment of material facts may become fraudulent;* nor will relief be refused in such a case, merely because a sharp busi- ness man might not have been deceived.* Nor is the rule different where the vendor suggests examination to the pur- chaser, but in such a way as to indicate that such a step would be unnecessary. If for example the vendor suggest that the purchaser should go and look at the property, ' as their judgments might not agree, and if not satisfied the vendor would pay his expenses, but if satisfied the purchaser should himself pay them,' it is held that such a proposal asserts by implication the exercise by the vendor of an in- telligent judgment upon the subject, tends to dissuade from inquiry, and renders him liable, if the statements prove false, even though he believed them to be true.^ Again, though a purchaser may on close inspection detect a vice in the property sold, still if the vendor divert his at- Mon. 4 ; Andrews ■». Ohio & M. K. Co., ' See however Halls v. Thompson, 1 14 111. 169 ; Irrin v. Turnpike Co., 2 Smedes & M. 443. Penn. 466 ; Ellison v. Mobile & 0. K. ^ Swimm v. Bush, 23 Mich. 99 ; Co., 36 Miss. 572. Starkweather v. Benjamin, 32 Mich. 1 Parker v. Moulton, 114 Mass. 99 ; 305 ; Oswald v. McGehee, 28 Miss. Tabor v. Peters, 74 Ala. 90. 340 ; Eoseman v. Canovan, 43 Cal. 2 Carmichael v. Vandebur, 50 Iowa, 111. 651. 6 Webster v. Bailey, 31 Mich. 36. CHAP, m.] IGNOKANCB BY PAETT WRONGED. 533 tention, the sale may be avoided.^ So if a party make a false and fraudulent explanation of a visible defect in property to be sold by him, he is liable as well as if he had made a false and fraudulent statement concerning the latent condition of the property .2 And in general where a party put upon notice is by any means actually misled and induced not to prosecute investigation by the opposite party, he will be entitled to relief .2 The maxim ' caveat emptor ' does not apply when the vendor of property resorts to any artifice to put the pur- chaser off his guard.* Further, accepting and paying for goods upon delivery will not bar the purchaser from relief, though the goods were open to his inspection at the time, if such acceptance and payment were procured by fraudulent artifices on the part of the ven- dor. Thus whei-e the defendants, manufacturers and ven- dors of tobacco, had fraudulently used damaged tobacco in the manufacture, and had fraudulently used boxes of green lumber, and while the tobacco was being manufactured they exhibited to the plaintiff from time to time, in order to mislead him, specimens of tobacco as of the kind they were supplying him, when in fact they were making a different and inferior kind, it was held, notwithstanding acceptance and payment, the plaintiff was entitled to recover damages for the loss sustained.^ However if a party assert that he relied upon the state- ment of another, instead of using the means of information at his hands, the burden of proof is upon him to establish the statement. For, where persons can see for themselves if they choose to look, a presumption arises that they do look and 1 Oswald V, MoGehee, 28 Miss. 340 ; prudence was disarmed, that is enough. Baker v. Seahorn, 1 Swan, 54. It was Ante, p. 529, note, said in Baker v. Seahorn that if the ^ Gant v. Shelton, 3 B. Mon. 423. vendor of a horse merely suggest a doubt * Eoseman v. Canovan, 43 Cal. 111. as to the goodness of the animal's eyes, * Biggs ■». Perkins, 75 N. C. 397 ; knowing that thej' are defective, this is Baker v. Seahorn, 1 Swan, 54. a fraud. But see ante, p, 474. Still if ^ McAvoy v. Wright, 25 Ind. 22. 534 DECBPTIOK. [chap. III. ascertain the fact for themselves ; and this presumption must be overcome, if thej' would prevail. But, as we have seen, proof that a party is diverted from looking for himself, by the act or conduct of the opposite party, will rebut the presumption.^ Even though a party sell at the risk of the purchaser, he will not be permitted to practise fraud upon him. Thus it has been held that where a party, during a negotiation for the sale of propei'ty, stated that the other contracting party must take the property at his own risk, such statement would not exonerate the party from liability for a deceitful suppression of the truth or for the suggestion of a falsehood.^ Where the parties do not stand upon an equal footing, the objection to a plea or claim of false representations, that the party to whom they were made was 'negligent' in not making inquiry or examination, has still less force and would nowhere be allowed.^ This rests upon the just and salutary ground that the injured party in such a case is in the power, to a greater or less extent, of the wrongdoer, so as to be more easily imposed upon than if he were standing at arm's length, and acting upon an equal footing with him. 1 Wilder v. De Cou, 18 Minn. 470, ^ George v. Johnson, 6 Humph. 36. 480 ; Bailey v. Smock, 61 Mo. 213. 8 Wannell i;. Kern, 57 Mo. 478. CHAP. IV.] INTENTION TO INDUCE ACTION. 635 CHAPTER IV. MISREPRESENTATION: INTENTION TO INDUCE ACTION. In regard to the rule which requires the party complaining of deceit to prove that the opposite party intended his repre- sentation to be acted upon, it is to be observed that, while the rule is probably inflexible, its force appears chiefly in cases in which the deceit was practised with reference to a negotiation between the plaintiff and a third person, and not in cases of contract between the plaintiff and the defendant. In cases of contract between the parties to the suit, especially in contracts of sale, the intention to mislead obviously follows from the defendant's knowledge of the falsity of his represen- tation ; that makes a case of fraud, and no further evidence of intention is required.^ In cases of the other kind however, an example of which is found in false representations to the complaining party of the solvency of a third person, it is plain that the transaction with the third person, though shown to have been caused by the false representation in question, affords no evidence of an intention in the party complained of that the representation should be acted upon by the other. The defendant, notwith- standing his knowledge of the falsity of his representation, may not have been apprised of the fact that the plaintiff was about to act upon his representation. And this though it appeared that the defendant had not volunteered his state- 1 Collins V. Denison, 12 Met. 549. it was intended for the opposite party Claflin V. Commonwealth Ins. Co., 110 hefore he can complain of it. Savings U. S. 81. But even in cases of contract, Bank v. Alhee, 63 N. H. 152. See ante, if the representation was made to a third p. 12, note 1. person, it must he made to appear that 536 DECEPTION. [chap. IV. ments, but had made them only upon inquiry by the plaintiff ; for the plaintiff might have appeared to make the inquiry out of curiosity, or out of a mere general interest in the affairs of the third person. Proof of such facts would show that the defendant had not intended to injure the plaintiff. The representation would then be a mere idle falsehood. If the false representation amounted to defamation, the person who had been slandered in his character, profession, or occupation might indeed main- tain an action of slander against the party uttering the lan- guage ; or he might maintain an action of slander of title (so called), if false representations of the state of his property had been made to his actual damage ; but no right of action would arise in favor of any one addressed, and none of course in favor of any bystander, who might have acted upon the representation to his own injury. It follows that where a party complains of false representa- tions, whereby he was caused to suffer damage in a trans- action with some third person, it devolves upon him to show expressly that the alleged wrongdoer intended, or, what is the same thing, that he may reasonably be supposed under the circumstances to have intended,^ that the plaintiff should act upon the misrepresentation ; and that it is not enough to prove that the misrepresentation was made with knowledge of its falsity .2 The existence of such a class of cases as this has been recognized for a hundred years.^ And from the first case in which it is clearly enunciated,* it has been settled law that it is not necessary that the misrepresentation complained of 1 Freeman v. Cooke, 2 Ex. 654 ; Carr s. o. Bigelow's L. C. Torts, 1, and note, V. London Ry. Co., L. R. 10 C. P. 307 ; 36 ; Thorn v. Bigland, 8 Ex. 725, 731 ; Arnold v. Banks, 1 C. P. D. 578 ; Tapp v. Lee, 3 Bos. & P. 367 ; Foster Leather Manuf. Bank v. Morgan, 117 v. Charles, 6 Bing. 396 ; 7 Bing. 105. U. S. 96, 108 ; Hardy v. Chesapeake » it dates from Pasley v. Freeman, Bank, 61 Md. 562 ; Manufacturers' Bank 3 T. R. 51, A. B. 1789. V. Hazard, 30 N. Y. 226. < Pasley v. Freeman, supra. 2 Pasley v. Freeman, 3 T. R. 51 ; CHAP. IV.] INTENTION TO INDUCE ACTION. 637 should have been made with a corrupt motive of personal gain on the part of the person making the representation, in order to entitle the opposite party to relief.^ Where however the effect of the false representation was to bring the plaintiff into a business transaction with the party himself who made the representation, the case, as we have seen, is quite different. Proof of such a fact shows at once the intent of the defendant to induce the plaintiff to act upon the representation ; and it follows that express evidence of an intention, whether actual or apparent, is unnecessary. This is the meaning of most of the cases which hold it not incumbent upon the plaintiff in deceit (and it should be ob- served that the rule is the same of any party, plaintiff or defendant, who complains of deceit), after proof of the other elements of redress, to prove an intent to deceive. We pro- ceed to illustrate the subject from the authorities. Where for example evidence is given that a defendant, in the sale of a horse, knowingly made false representations to the plaintiff concerning the animal, and that the plaintiff has been induced thereby to buy the horse, the jury are bound to find that the defendant made the representations with intent to induce the plaintiff to buy the horse ; and the plaintiff cannot be required to give any further evidence of such intent of the defendant.^ Again if a party sell a horse as sound, knowing that he is not sound, the existence of an intent to defraud is proved ; and this is equally true where the vendor knew that the horse was sick at the time of the sale, though he did not know what was the matter with him. It is not necessary to give other evidence of intention.^ And in general where the facts themselves show that the wrong- doer intended the fraud, evidence of want of such intention, 1 Pasley v. Freeman, 3 T. R. 51 ; ^ Collins v. Denison, 12 Met. 5i9. Foster ■». Charles, 6 Bing. 396 ; s. c. 7 ' Johnson v. Wallower, 15 Minn. Bing. 105 ; Hine v. Campion, L. R. 7 474 ; s. c. 18 Minn. 288 ; Lindsay v. Ch. 344 ; Hubhell v. Meigs, 50 N. Y. Davis, 30 Mo. 406. 480 ; Cowley v. Smyth, 46 N. J. 381. 538 DECEPTION. [chap, IV. as a mere state of the mind, is inadmissible.^ The case would be otherwise no doubt if the external facts were themselves not clear. It follows from what has already been said that where inquiry has been made of the defendant, which has elicited the representation in question, it must appear that the pur- port of the inquiry, either in itself or under the circumstances in which it was made, was such as to indicate clearly the purpose of the plaintiff ; otherwise it cannot be clear that the defendant intended that the representation should be acted upon. An illustration, going however to the very verge of the rule, may be found in a recent New York case.^ A letter of inquiry from the plaintiffs to S. & Co. began by stating that the plaintiffs ' understood that S. & Co. had a lien ' upon the mills of A, and inquired whether S. & Co. would buy A's paper ; if not, was A solvent ? S. & Co. had a chattel mort- gage of $300,000 upon A's property, on record, and a mort- gage of his real estate. The answer of S. & Co., which was considered favorable, said nothing about the mortgages, be- cause, as the defendant testified, they were on record ; and there was no wrong intent in the fact. It will also be noticed that the plaintiffs knew of tlie existence of a * lien ' in favor of S. & Co. It was held that no cause of action for damages existed. The court said that the defendant might reasonably assume from such a letter as the one in question that it was no part of the purpose of the inquiry to obtain information in regard to the ' lien,' but that, having knowledge of the ex- istence of the same, they would resort to the record. The jury would not be warranted therefore in finding a fraudulent intent in the non-disclosure. Finally it is to be observed that it is not necessary, even in an action for damages, for the plaintiff to prove that the defendant intended to injure him ; the intention to be shown ^ Dulane.y v. Rogers, 64 Mo. 201. See Claflin v. Commonwealth Ins. Co., 110 U. S. 81. 2 Babcock v. Libbey, 82 N. Y. 144. CHAP. IV.] INTENTION TO INDUCE ACTION. 539 is an intention that the representation should be acted upon. The defendant may in fact have intended to benefit the plain- tiff, as where, in a transaction of importance to the plaintiff, a supposed agent has without authority assumed to act for another.^ 1 Ante, p. 518. 540 DECEPTION. [chap. V. CHAPTER V. MISREPRESENTATION: ACTING ON THE REPRE- SENTATION. It is fundamental that the representation should have been acted upon by the complaining party, and acted upon to his injury .1 Fraudulent conduct will not afford ground of action or defence unless connected with the particular transaction complained of, and shown to be the very ground upon which the party acted and upon which the transaction took place.^ And this is as true in equity as at law.^ Thus one cannot claim to have acquired rights against a corporation by virtue of recitals of facts in its records, of which one was ignorant when the supposed rights were acquired.* It is not enough that the misrepresentation has been acted upon ; it must have been acted upon to the injury of the one making complaint.^ It was long since laid down that fraud without damage afforded no ground of redress in a suit for 1 Pasley v. Freeman, 3 T. R. 51 ; * Holden u. Hoyt, 134 Mass. 181. Wells V. Waterhouse, 22 Maine, 131; The recitals in this case were fraudulent Branham v. Record, i2 Ind. 181 ; Eog- interpolations; but that could not alter ers V, Higgins, 57 111. 244 ; Lindsey the result. V. Lindsey, 34 Miss. 432 ; Taylor v. « Marsh v. Cook, 32 N. J. Eq. 262 ; Guest, 58 N. Y. 262 ; Howe Machine Bartlett v. Blaine, 83 111. 25 ; Parker Co. V. Brown, 78 Ind. 209. v. Marquis, 64 Mo. 38 ; Dauforth v. 2 Rutherford o. Williams, 42 Mo. Cushing, 77 Maine, 182 ; Brown v. 18 ; Priest v. White, 89 Mo. 609 ; Att- Hunt, 72 Maine, 415 ; Gee v. Moss, 68 wood V. Small, 6 Clark & F. 447. Iowa, 318 ; Hatcher v. Day, 53 Iowa, 3 Rogers v. Higgins, 57 111. 244. 671 ; Hale v. Philbrick, 47 Iowa, 217 ; If however there has been damage, it Percival v. Harger, 40 Iowa, 286. The is no answer that that will be made amount or the nature of the damage, if good by the expected ultimate success real, appears however to be immaterial of the transaction entered into. Water to the question of a right of action for Valley Manuf. Co. v. Seaman, 53 Miss, deceit. See Bissell v. Taylor, 41 Mich. 655. 702. CHAP, v.] ACTION ON THE EEPEESENTATION. 541 damages,^ and, it might be added, no ground of defence or of relief in equity, except by way of rescinding an executory contract. In accordance with this rule it has been held that an action to recover damages for inducing the payee of a negotiable note to indorse it in blank upon its transfer, by false and fraudulent representations, cannot be sustained before actual payment of the instrument by such indorser.^ Again where a defendant sued for damages for falsely repre- senting to the plaintiff that he was a constable, whereby the plaintiff was induced to give a writ to him to serve, which he never served, it was held that the plaintiff could not recover ; for if the defendant had served the writ, the act would have been a nullity, conferring no benefit upon the plaintiff.^ On the other hand it is held that a party, induced by fraud- ulent representations in a sale to him to give his note for the property, indorsed by another who pays it to a bona fide holder for value, is entitled to redress in damages ; the pay- ment by the indorser being treated as made on behalf of the plaintiff.* So one who has been induced to subscribe to the stock of an insolvent corporation, and to give his bond and mortgage to secure the payment of his subscription, has been damnified, though his subscription has not in fact been paid.^ To constitute damage^ a legal as distinguished from a moral right, complete or in process of creation, must have been in- fringed.^ To illustrate : A person who is prevented from effecting an attachment upon property by the fraudulent representations of the owner or his agent is considered to have suffered no legal damage thereby, though subsequently another creditor attach the whole property and sell it upon 1 Pasley v. Freeman, supra, BuUer, J. The distinction between the first case 2 Freeman v. Venner, 120 Mass. and Freeman v. Venner, supra, seems i2i. to be that in the latter nothing but a 3 Whitney v. Blanchard, 2 Gray, conditional liability had been incurred, 208. while in the former an actual present * Grant v. Mellen, 134 Mass. 335. estate had been conveyed. See Gross ^ Hubbard v. Briggs, 31 N. Y. 518. v. McKee, supra. See Gross d. McKee, 53 Miss. 536. » Ante, pp. 13, 14. 542 DECEPTION. [chap. V. execution to satisfy his o-wn debt.^ The person thus deceived, having acquired no right in the property, cannot lose any by reason of the deceit. The most that can be said, it has been observed, is that the party intended to attach the property, and that this intention has been frustrated.^ And it could not be certainly known that this intention would have been carried out.** Of course the case would be different where a party has been induced by false representations to abandon an attachment actually made.* And the same is true, it is held, where proceedings for obtaining a lien had already been be- gun, though they had not been perfected at the time of the misrepresentations.^ On the other hand it is laid down that no action can be maintained for fraudulently preventing one from obtaining an expected gratuity from a testator.^ Again where a per- son falsely represents that he has authority to lease a store to the plaintiff, and proceeds to grant to him a verbal lease for two years, no action will lie for the fraud, since the lease was void, and hence no legal damage had been sustained.^ But to cause loss of hospitality, or it seems of any gratuity one is actually receiving, would be to cause damage.^ The same would be true if one should cause the breaking off nego- tiations for a contract on the point of consummation.® In accordance with the rule requiring proof of damage it is in ordinary cases necessary, before the purchaser or licensee of a patent, or of an interest in a patent, can maintain an 1 Bradley v. Fuller, 118 Mass. 239 ; 561, distinguisliing cases in whicli no Lamb v. Stone, 11 Pick. 527 ; Welling- action had been taken. Austin v. Bar- ton V. Small, 3 Cush. 145 ; Randall v.. rows, il Conn. 287. See also Tobin Hazelton, 12 Allen, 412. But see v. Allen, 53 Miss. 563. Tobin V. Allen, 53 Miss. 563. " Hutchins v. Hutchins, 7 Hill, 104. 2 Lamb v. Stone and Bradley v. ' Dung v. Parker, 52 N. Y. 494. Fuller, supra. ^ See Olmsted u. Miller, 1 Wend. 8 Bradley v. Fuller, supra. 506 ; Williams v. Hill, 19 Wend. 305. * lb. ; Brown v. Castles, 11 Cush. ^ Malachy v. Soper, 3 Bing. N. C. 348. 371. ' Alexander v. Church, 53 Conn. CHAP, v.] ACTION ON THE BEPBBSENTATION. 543 action for damages against the seller or licensor for false rep- resentations in regard to the validity of the patent, to show some disturbance in the enjoyment thereof, amounting to an actual loss ; ^ though there may be cases of loss without such disturbance, as where the business has been seriously injured by reason of knowledge by others of the facts. On the other hand it is held that the purchaser of land can recover sub- stantial damages for fraudulent misrepresentations of title, though there has been no eviction.^ But clearly there must have been damage. Again damage may be sustained by causing a person to forego a right to terminate a duty owed by him, until too late. A recent case ^ will serve for illustration. The plaintiff in an action of deceit alleged that he had contracted with S to make for S certain goods and to deliver them on a credit of thirty days. Before the delivery S informed the plaintiff that he did not want the goods, and requested the plaintiff not to deliver them. The plaintiff, thinking that perhaps the refusal of S arose from inability to pay, inquired of the defendant concerning that person's pecuniary condition. The defendant replied (in writing) that he had no reason to doubt the re- sponsibility of S, and that S had always paid his rents and debts due to him promptly. This was alleged to be false and fraudulent, but the plaintiff, believing it to be true, delivered the goods to S on a credit of thirty days, to his own loss. It was held on demurrer that the declaration was good, notwith- standing the fact that it appeared that the plaintiff had been released from any duty to deliver the goods ; for he had been induced not to rescind his contract with S. We have seen that it is not necessary to prove that the 1 Springfield v. Drake, 58 N. H. 19; dolph, 6 How. (Miss.) 435 ; Akerly v. Bass V. Putney, 38 N. H. 47 ; Bartlett Vilas, 21 Wis. 109 ; Abbot v. Allen, V. Holbrook, 1 Gray, 114 ; Stevens v. 2 Johns. Ch. 522 ; 2 Kent, Com. 470. Head, 9 Vt. 174. See Rawle, Covenants, § 62, 5tli ed. ; 2 Edwards v. McLeay, Coop. 308 ; ib. § 176, note ; ib. § 322. s. c. 2 Swanst. 308 ; Parham v. Ran- ' Brown v. Carter, 124 Mass. 426. 544 DECEPTION. [CHA?. V. plaintiff relied solely upon the defendant's representations.^ It is sufficient if the representations were relied upon by the plaintiff as constituting one of the substantial inducements to his action.2 It is indeed sometimes said that the false representations must have been such that without them the transaction complained of would not have taken place. But, it has well been said, it is not possible for any man, in the aggregate of inducements which led to the transaction, to determine whether the result would have been attained with some of the inducements wanting. Nor should the guilty party be permitted to allege in excuse that the innocent party might have acted as he did, if less deceit had been practised upon him. If a man resort to unlawful means and accom- plish an unlawful purpose, the law will not stop, to measure such inducements.^ If for example a party, induced by the several false and fraudulent declarations of two persons, different in time and character, purchase worthless property, it would not do to say that because the trade might not have been made if only one falsehood had been uttered, and the purchase not wholly in- duced by either, the party injured is without redress. If a fraud be accomplished, and the unlawful acts of the defendant contributed thereto, he is answerable. The fraudulent acts of the defendant must indeed have worked an injury ; but if the wrong has been done, and the defendant has been a party to its commission, 'the court will not apportion the penalties of guilt among offenders, nor divide spoil among highwaymen.' * Hence if B conspire with A to defraud C, by inducing C 1 Ante, p. 497. Hale v. Philbrick, 47 Iowa, 217 ; Fish- 2 James v. Hodsden, 47 Vt. 127 ; 'back v. Miller, 15 Nev. 428 ; MoAleer Safford v. Grout, 120 Mass. 20 ; Spaul- v. Horsey, 35 Md. 439 ; "Winter v. ding V. Knight, 116 Mass. 148 ; Hart- Bandel, 30 Ark. 362. See Cabot v. ford Ins. Co. v. Matthews, 102 Mass. Christie, 42 Yt. 121. 221 ; Edwards v. Marcy, 2 Allen, 486 ; 3 James v. Hodsden, supra, Eed- Jordan v. Pickett, 78 Ala. 331 ; Carvill field, J. V. Jacks, 43 Ark. 454 ; s. o. lb. 439 ; * James v. Hodsden, supra. CHAP, v.] ACTION ON THE EEPEESENTATION. 545 to loan money to A upon the security of a forged note, the fact that C, in making the loan, relied also upon other se- curities, and upon verbal representations made by B of the ability of A to repay the loan, will not prevent his recovering from B, in an action for the conspiracy, if C relied upon the forged note as well.^ It is enough that the representations materially influenced the conduct of the plaintiff, though (being combined with other motives) they were not the sole or even predominant inducement to the party's action.^ Concerning the question who may act upon the representa- tion it may be answered broadly that only the person or persons intended may do so ; ^ but the representation may be intended for a particular individual alone, or for several, or for the pub- lic, or for any one of a particular class, or it may be made to A to be communicated to B.* Any one so intended by the party making the representation will be entitled to relief or redress against him by acting upon the misrepresentation to his damage.^ Thus where directors of a company put forth 1 Spaulding v. Knight, 116 Mass. * Richardson ®. Silvester, L. R. 9 148. It is no defence to such an action Q. B. 34 ; Davidson v. Vorse, 52 Iowa, that the person so obtaining the money 384. Intended to pay it at the time. lb. ' Richardson v. Silvester, L. K. 9 2 Safford v. Grout, 120 Mass. 20 ; Q. B. 34 ; Swift v. Winterbotham, Matthews v. Bliss, 22 Pick. 48. L. R. 8 Q. B. 244 ; Barry v. Croskey, 3 Hence a subsequent purchaser from 2 Johns. & H. 21 ; Bedford v. Bagshaw, one to whom a false representation has 4 Hurl. & N. 548 ; Bagshaw o. Sey- been made cannot as such purchaser mour, 29 L. J. Ex. 62, n. ; Gerhard avail himself of the representation ; and v. Bates, 2 El. & B. 476; Clarke v. this though such purchaser assume pay- Dickson, 6 C. B. N. s. 453 ; Gazeux v. ment of the original purchase price still Mali, 25 Barb. 583 ; National Exchange unpaid. Harding ^. Council Loan Co. , Co. v. Drew, 2 Macq. 103; Peek v. 84111. 251. Ante, p. 214. Nor can the Gurney, L. R. 6 H. L. 377 ; Zabriskie wife of the purchaser of property, e. g. a v. Smith, 13 N. Y. 322 ; Carvill v. horse, claim the benefit of a false repre- Jacks, 43 Ark. 454 ; Watson v. Cran- sentation made to her husband, and not dall, 78 Mo. 583 ; Dulaney v. Rogers, for her, in regard to it, though she is 64 Mo. 201 ; Davidson v. Vorse, 52 injured in the use of the same. Carter Iowa, 384 ; ante, pp. 197, 198. A man V. Harden, 78 Maine, 528. Further, may make false representations in an see Long v. West, 31 Kans. 298 ; Raw- official capacity to the public without a lings V. Bean, 80 Mo. 614 ; Savings view to causing any one to act upon Bank v. Albee, 63 N. H. 152. them, and yet, it seems, be liable to a 35 546 DECEPTION. [chap. V. a prospectus containing false representations for the purpose of selling shares of stock, the false representations are deemed to have been made to all who read the prospectus and become purchasers from the company in reliance upon the statements there made.^ But the purchaser of shares in the market, upon the faith of a prospectus which he has not received from those who are answerable for it, cannot by acting upon it so connect himself with them as to render them liable to him for the misrepresentation contained in it, as if it had been addressed to himself personally .^ Upon the same principle where a representation was made to the plaintiff's father with the view to being acted upon by the plaintiff, it was decided that by acting upon it the plaintiff had acquired a right of redress.* So also a party may make inquiry, where such is the custom, through his banker (instead of personally) concerning the standing of a third person ; and it is no objection to a claim for redress for a fraudulent answer given to the plaintiff's banker that the misrepresentation was not made to the plaintiff.* Statements made to a witness in the presence of the pur- person dealing with him upon the evi- with intent to defraud any and all pur- dent footing of the representations, chasers, the perpetrators well knowing Kean v. James, 39 N. J. Eq. 527, deal- that every person into whose hands the ings with the cashier of a national hank false certificates of stock should come evidently upon his reports to the comp- by fair purchase might be injured, troller of the currency. Comp. cases in New York E. Co. v. Schuyler, Si note 2, infra. But that goes to the N. Y. 30 ; Phelps u. Wait, 30 N. Y. verge of the law. 78 ; Suydam v. Moore, 8 Barb. 358 ; 1 See the cases just cited. Bruff v. Mali, 36 N. Y. 200. And the 2 Feekv. Gurney, L. E. 6 H. L. 377, action may be maintained jointly or overruling upon this point Bedford v. separately against the agent who com- Bagshaw and Bagshaw v. Seymour, mitted the fraud. Phelps u. Wait, supra. supra ; Suydam v. Moore, supra. It is held however in New York, '' Langridge v. Levy, 2 Mees. & W. that a corporation is liable for the fraud- 519 ; s. c. 4 Mees. & W. 337. See Car- ulent over-issue of stock, not only to the ter v. Harden, 78 Maine, 528 ; Davidson pereon to whom the over-issue is made, v. Vorse, 52 Iowa, 384. but also to any subsequent bona fide * Swift v. Winterbotham, L. E. 8 purchaser thereof. Such acts are done Q. B. 244. CHAP. V.J ACTION ON THE REPBESENTATION. 547 chaser of property in relation to the property are, it is held, of the same effect as if made to the purchaser.^ But a vendor of property sold at auction is not bound by representations made by him privately to some of the bidders, and not heard by the purchaser.^ Where a letter is written, marked ' confidential,' concern- ing the pecuniary standing of a party, it is for the jury to say whether it was intended for the exclusive perusal of the per- son addressed.^ It is also for the jury to say, on a thorough examination of letters of this kind, and the facts and circum- stances connected with them, whether they were calculated to inspire, and did inspire, a false confidence in the pecuniary responsibility of the party, to which the writer knew he was not entitled.* Again it is for the jury to say whether the rep- resentation was acted upon, even though it was clearly ade- quate to the action taken.* Ordinarily a representation must have been acted upon at the tinle substantially when it was made ; ® but this rule may be varied by the terms of the negotiation or of the representa- tion itself, or by the nature of the representation in connec- tion with the transaction in which it was made.^ The first two cases need no special comment ; an illustration will serve to show the meaning of the third case. The plaintiff bought a horse from the defendant which the latter represented (and 1 Alexander v. Beresford, 27 Miss, drawing such an inference as an infer- 747. enceoffact.' See Smith v. Cliadwick, 2 Lindsey i>. Liudsey, 34 Miss. 432. 9 App. Cas. 187, 196, denying a similar * lasigi V. Brown, 17 How. 183. remark of the learned Master of the < lb. Rolls in the court helow. 20 Oh. D. s Smith V. Land Corp., 28 Oh. D. 27, 44. See also Lowe v. Trundle, 78 7, Bowen, L. J. criticising a. remark of Va. 65 ; Holhrook v. Burt, 22 Pick. Jessel, M. E. in Redgrave ■». Hurd, 20 546 ; Fishback v. Miller, 15 Nev. 428. Ch. D. 1, 21, ' that if a material repre- » Fogg v. Pew, 10 Gray, 409 ; Lind- sentation calculated to induce a person sey v. Lindsey, 84 Miss. 432. See to enter into a contract is made to him, Smith v. Kay, 7 H. L. Cas. 450 ; Mor- it is an inference of law that he was ris v. Talcott, 96 N. Y. 100. induced by the representation to enter ' See Allen v. Truesdell, 135 Mass. into it,' 'though,' said Lord Justice 75; Morris i;. Talcott, 96 N". Y. 100 ; Bowen, ' there may be strong reason for Dambmann v. Sohulting, 75 N. Y. 61. 548 DECEPTION. [chap. V. warranted, as was alleged) to be ' not afraid of the cars.' In an action of deceit the plaintiff oiTered to show that some five weeks after the purchase she drove the horse seven or eight miles, and on her way home, while driving with due care on a highway near the track of a railroad, the horse took fright from a passing train and ran, and after running nearly a mile finally sheered into a private way and upset the carriage, and the plaintiff was hurt. The evidence was held proper. The court observed that it could not be said as matter of law that the lapse of time and the plaintiff's acquaintance with the habits and disposition of the horse acquired in the interval showed that she had not been induced to take the drive by the defendant's representations.^ Again it has been laid down that while representations made by a party with a view to procuring credit with another may be held to apply to and affect subsequent credits extended by the vendor to the vendee, yet such representations, in order to have that effect, must be made in the course of the dealing, and under circumstances from which it may be inferred that they were made with an intent to induce a continued credit.^ 1 Allen V. Truesdell, 135 Mass. 75. ^ Ruger, C. J. in Morris v. Talcott, Nor did the distance run show conclu- 96 N. Y. 100, and citing Dambmann v. sively that the fright or vice of the Schulting, 75 N. Y. 61. horse was not the cause of the injury. lb. CHAP. VI.] MARRIAGE. 649 CHAPTER VI. MISREPRESENTATION : MARRIAGE. We have now ascertained the general principles of law re- lating to misrepresentation as such ; it remains to consider their application to certain special subjects, in which, while some or all of the principles already set forth are necessary to redress or relief, these principles are more or less modified or restricted. And first in importance are questions con- cerning marriage. The contract of marriage, so far as it is a contract, is regarded by law, because of the momentous consequences attending any loose view of it, as specially sacred. It may indeed be set aside for cause, but it cannot be avoided on the ground of fraud except upon ' the most plenary and satisfac- tory proof of deceit and imposition touching matters which constitute the essentialia of the marriage relation.' ^ This in part indicates the line of demarcation between the general subject of misrepresentation and misrepresentation in the matter of a contract for marriage. It is not enough for the purpose of a divorce, or for setting aside a conveyance after separation,^ that a marriage was brought about by misrepre- sentation ; it is laid down that concealment or even an express misrepresentation of previous chastity affords no ground for avoiding marriage.^ That does not bring the case within what is meant by ' essentialia ' of this contract. 1 Foss V. Foss, 12 Allen, 26, 28, ^ -Evms v. Carrington, 2 De G., F. & Bigelow, C. J. quoting Beynolds v. Eey- J. 481. Bolds, 3 Allen, 605, 608 ; Allen's Ap- » Allen's Appeal, 99 Penn. St. 196 ; peal, 99 Penn St. 196. Wmiams v. Williams, 63 Wis. 58. See Evans v. Carrington, supra. 650 DECEPTION. [chap. VI. In some States, as in Pennsylvania, the statutes expressly mention fraud as a ground of divorce ; ^ in other States, as in Massachusetts, they do not.^ But though statute may not specify fraud as a ground, it prohahly does not exclude fraud touching ' essentialia.' ^ There is however a preliminary question in regard to the duty of the plaintiff in informing himself or herself of the facts. In the Pennsylvania case cited the defendant, pregnant at the time by another man, married the plaintiff, who had no notice of the fact. It was held that he was entitled to a divorce ; and this is in accord- ance with well settled law.* In a Massachusetts case ^ on the other hand it was held that where the woman falsely told the husband before their marriage that she was pregnant by him, when slie was pregnant by another man, of which fact the husband was ignorant, no divorce could be granted upon such facts. The ground of the decision was that it was necessary that the fraud should have been practised under such circum- stances as to lead to a reasonable inference that the plaintiff 1 Allen's Appeal, supra. Tex. 356 ; Wier v. Still, 31 Iowa, 107 ; " Formerly, from 1855, fraud was Keyes v. Keyes, 22 N. H. 553 ; Sloan specified as a ground for decree of di- v. Kane, 10 How. Pr. 66 ; Clark v. Torce or nullity in Massachusetts. Gen. Field, 13 Vt. 460 ; Respublica v. Henrica, Sts. c. 107, §4. It is not specified 3 Wheel. C. C. 505 ; Crehore «. Crehore, now, the old statute being simply omit- 97 Mass. 330 ; Donovan v. Donovan, 9 ted. Pub. Sts. c. 146, § 1. But it is Allen, 140 ; Harford v. Morris, 2 Hagg. hardly to be supposed that the mere Cons. 423 ; Portsmouth v. Portsmouth, omission of the former provision amounts 1 Hagg. Eccl. 355; Hull v. Hull, 15 to an exclusion of fraud as a ground of Jur. 710 ; Jolly ■». McGregor, 3 Wils. divorce ; the matter is probably left to & S. 85. In Delaware neither imbe- common law considerations, as virtually cility of mind nor intoxication at the it was under the statute. See Reynolds time of the marriage, though accompa- V. Reynolds, 3 Allen, 605. 'Mamage nied with fraud on the part of the friends by our law is i-egarded as a purely civil of the wife, will be sufficient to give the contract, which may well be avoided husband ground for divorce. Elzey v. and set aside on the ground of fraud.' Elzey, 1 Houst. 308. lb. p. 607. * Donovan v. Donovan, 9 Allen, ' Besides the cases already cited see 140; Reynolds v. Reynolds, 3 Allen, Scott «: Shufeldt, 5 Paige, 43 ; Ferlat 605. V. Gojon, Hopk. 478 ; Burtis v. Burtis, « Foss v. Foss, 12 Allen, 26. ib. 557, 568 ; Robertson v. Cole, 12 CHAP. VI.] MAEEIAGE. 651 was deceived, and that if it appeared that he had the means of ascertaining the falsity of the statements made to him, or that the nature of the transaction and tlie circumstances attending it were such as to put a reasonable person upon inquiry, the presumption of deceit arising from proof of the fraud would be repelled.^ The two cases stated are obviously distinguishable on the ground of notice; and though the principle applied in the Massachusetts case has been criticised in these pages as un- sound in the face of a plain misrepresentation of fact as an inducement to an ordinary contract,^ there is sufficient reason in public policy for applying it to cases of the kind now under consideration. Other exemplifications of its soundness here might easily be given. Thus if a stranger were to present himself to a woman of mature years and experience for mar- riage, representing himself to be a man of respectability and good standing in his own community, and propose marriage at once, and should finally, though after several refusals at short intervals on the ground of his being a stranger, be ac- cepted, the courts would be slow to grant the lady a decree of nullity, though it should turn out that she had been united to a ' jail bird ' of the worst character.^ Assuming however that nothing in the nature of negligence or fault can be imputed to the complaining party, the ques- tion remains what constitutes the essentials of the contract. Some intimation, negative and positive, has already been given upon this point. While there has been conflict of opinion among writers concerning misrepresentation or con- cealment of imchastity, the better view is that there is nothing in the contract of marriage which implies, as an essential feature, that incontinence, not resulting in pregnancy by another man, shall render the marriage invalid, even when there is positive misrepresentation justifying belief and reli- 1 To the same effect, Crehore v, Cre- ^ Ante, pp. 523 et seq. hore, 97 Mass. 330. 3 -wier v. Still, 31 Iowa, 307. 552 DECEPTION. [chap. VI. ance thereon.^ Misrepresentation of chastity stands upon the same footing with misrepresentation of personal qualities gen- erally, and of fortune, circumstances, and position in lifej and it is clear that nothing of this kind is an essential of the contract.^ On the other hand if the incontinence has been followed by pregnancy, the case, under the limitations above stated, will be different. Further than this it is difficult, and perhaps unsafe as yet, to formulate any general rule. What the courts have said on particular facts may be seen in such cases as these : In a case in New York it appeared that the parties were white persons, and that the defendant had previously charged the plaintiff with being the father of her bastard child. The plaintiff thereupon, believing the child to be his, had married the de- fendant to obtain his discharge from proceedings in bastardy. Subsequently he ascertained the fact that the child was a mulatto, and that the defendant knew the fact at the time she swore it to be his ; she having already been delivered and having seen the child. The plaintiff was granted a de- cree of nullity.-^ A like decree was granted in a case in Texas, where it appeared that the plaintiff was but eighteen years old ; that the parents had not given their consent to her marriage ; that the marriage license required by law had been procured by fraudulent representations and false swear- ing by the defendant ; and that the plaintiff immediately upon learning these facts repudiated the ceremony, and refused to cohabit with the defendant.* Indeed it matters not that the fraud, when sufficient in kind, was practised by third persons. In a case in New Hampshire it appeared that friends of the defendant, with whom she was living, had by artifice procured the plaintiff to marry her, knowing that she was insane, the plaintiff being 1 See Eeynolds u. Reynolds, 3 Allen, ^ Reynolds v. Reynolds, snpra. 605, 608 ; Allen's Appeal, 99 Penn. St. " Scott v. Shufeldt, 5 Paige, 43. 196 ; Evans v. Carrington, 2 De G., F. & * Robertson v. Cole, 12 Tex. 356. J. 481. CHAP. VI.] MAKEIAGE. 553 kept in ignorance of the fact. A separation was granted.^ The same was granted in England by reason of a forcible or fraudulent abduction of a ward of tender age by her guar- dian.2 So too where a marriage was effected under clandes- tine circumstances, from which 'fraud and circumvention' were inferred, between a person of weak and deranged mind and the daughter of his trustee and solicitor, who had great influence over him.^ And again a decree was granted to the plaintiff, where it appeared that the ceremony was procured at the instigation of the parents of the defendant, and tliat the plaintiff was but fourteen years of age at the time, and was under their custody and control.* A distinction has sometimes been suggested between cases of suits for nullity instituted before the marriage has been consummated by cohabitation, and the contrary ; ^ but in prin- ciple it cannot be material whether the suit is brought before or after cohabitation, provided cohabitation was terminated as soon as the fraud was discovered, except in case of preg- nancy following the cohabitation, or long lapse of time.^ The fact that the wrongdoer has succeeded in his immediate purpose, and has not made the situation permanent, should only aggravate his offence, and afford still stronger ground for obtaining a decree of separation. It matters not how fraudulent may be the motives prompt- ing the parties to marry, or what may be the consequences resulting from such marriage as affecting third persons ; if the marriage be in compliance with the forms of law, and by consent of the parties, they being capable of contracting marriage, no court has power, upon the application of a third 1 Keyes v. Keyes, 22 N. H. 553. § 166 ; Scott v. Sebright, 12 P. D. 21, 2 Harford «. Morris, 2 Hagg. Con. 423. undue influence and duress; 3 Law " Portsmouth v. Portsmouth, 1 Hagg. Quarterly Kev. 252. Ecc. 355. ' 8 Cohabitation after knowledge * Hull V. Hull, 15 Jur. 710 ; s. c. 5 would, of course, be evidence of assent Kng. Law & E. 589. to the fraud. See Eobertson v. Cole, * See Bishop, Marriage and Div.. 12 Tex. 356, 365. 554 DECEPTION. - [chap. VI. person, either to dissolve the bonds of matrimony or to re- lieve against any of the consequences which result from the marriage.^ In case the marriage in question was absolutely void, as where one of the parties was lawfully married at the, time, an action for damages for fraudulent misrepresentations, suc- cessfully made for the purpose of effecting the marriage, is maintainable ; ^ and all contracts effected under the same influence, so far as the rights of innocent third persons have not intervened, could no doubt be set aside in favor of the injured party .^ And where a devise or legacy has been given to one as husband or wife of the testator, who was not such, under downright deception in regard to the relation of the parties, the gift will be invalid ; though it would perhaps be otherwise if the gift was made from other motives than those furnished by the supposed marriage relation and indepen- dently of that,* as clearly it would if there was no fraud on the part of the devisee or legatee.^ 1 McKinney v. Clarke, 2 Swan, 321. ' See Evans v. Carrington, 2 De G., ' Withee V. Brooks, 65 Maine, 14 ; F. & J. 481, where the ground of action Price V. Price, 75 N. Y. 244 ; Blossom was insufficient. But qu. if it had been «. Barret, 37 N. Y. 434 ; Grim v. a case of concealed pregnancy ? Can, 31 Penn. St. 633 ; Pollock v. Sul- < Kennell v. Abbott, 4 Ves. 802. livan, 53 Vt. 507. The action would ' Jarman, Wills, 63, note, 5th ed.; survive in Maine, but not in New York. In re Donnelly, 68 Iowa, 126; Trom- Ib. ; ante, p. 213. Nor in Pennsylva- pert v. Trompert, 13 Bush, 327. nia. Grim v. Carr, supra. § l.J STRANGER TO THE ACTION. 555 CHAPTER VII. MISREPRESENTATION TO STRANGER TO THE ACTION. § 1. The General Rule op Law. In the next place it is necessary to consider the application of the principles of misrepresentation to cases in which the deception was practised upon a tliird person to the damage of the plaintiff. There are some special subjects of the kind which require individual examination ; but it may be laid down, before proceeding to them, as a general proposition of law, that any material misrepresentation made to a third person, to the damage of the plaintiff, gives to the plaintiff a right of action. To find specific authority for such a broad proposition would be difficult. But that is no more than is true of many another proposition which, because it is general, or because it is plain and fundamental, is assumed to exist. Perhaps how- ever a single case, which stands upon no special or peculiar footing, may be taken as authority for the proposition, so far as authority is needed. The defendant assigned to the plain- tiff for value a contract for the purchase of land entered into with a railroad company. Afterwards, by false representa- tions that he had not parted with his rights under the con- tract, he obtained a conveyance of the land from the railroad company. The plaintiff now filed a bill praying that this conveyance might be ' set aside,' or that the defendant might be compelled to convey to him ; and on demurrer the bill was sustained.^ There are two questions however that might arise con- J Blakeslee v. Starring, 34 Wis. 538. 556 DECEPTION, [chap. VII. cerning the correctness of the general proposition ; tlie first where the third person, if he had knowledge of the facts, was already bound to consummate the transaction interfered with ; the second where the third person was only on the point of consummating the transaction. It has been most earnestly contended, both at the bar and on the bench, that the plaintiff has no right of action for interfering with the performance of a contract, except in cases arising under the old Statute of Laborers,^ which ' only applied to persons whose only means of living was by the labor of their hands.' ^ But the question has recently been set at rest in England, and it is now held in that country that malicious and successful inter- ference with the performance of a contract is actionable.^ This is indeed a somewhat different thing from preventing the performance of a contract not known to exist ; but in re- gard to the matter of damage there is a point of coincidence, and that is the only matter of concern here. It has always been objected to such cases that the damage is caused by breach of the contract rather than by the defendant's miscon- duct ; so that only a right of action against the opposite party to the contract arises. But the answer to this is, that the result was in fact brought about by the defendant, and (for that might not be enough) that result was designed by him ; * nothing more than that can be required to make a case of damage caused by a defendant, either in point of reasoning or of public policy. The second question is whether a right of action can arise before any right had been consummated between the plaintiff and the other party to the negotiation. This in principle might perhaps be difficult to answer in the affirmative ; for 1 25 Edw. 3, St. 1. " Bowen v. Hall, 6 Q. B. D. 333, 2 Wightman, J. in Lumley v. Gye, C. A., Lord Coleridge, C. J. dissenting. 2 El. & B. 216 ; s. o. Bigelow's L. C. See Walker k. Cronin, 107 Mass. .556, Torts, 306, 323. See especially the dis- 565, 567. senting opinion of Coleridge, J. in the * Bowen v. Hall, 6 Q. B. D. 333, original report. 338, 339, Lord Esher. § 2.] STEANGBK TO THE ACTION. 657 how, it might be asked, can the interruption of that to whicli there is no right confer a right (of action) ? But this ques- tion has been set at rest by authority. It is settled that, by false representations, to cause negotiations for the sale of property to be broken off is actionable.^ And this, after all, appears to be consistent with principle, as clearly it is with sound policy ; for though the plaintiff has acquired no right against the other party to the negotiation, he had all along a right to have that negotiation carried on without interference. For an infringement of that right he sues, and may well sue. But this is anticipating one of the special subjects now to be considered. § 2. Slander op Title. The first of the special subjects towards which the applica- tion of the principles of misrepresentation is to be considered has been suggested by the last paragraph. Slander of title consists in one man's making a false statement of fact, to a third person, of another's (the plaintiff's) title to property ; and this gives a right of action partaking in part of an action for slander, and in part, but more, of an action for deceit. So far as the mere formal instrument is concerned, by which the injured party sets out to the court his supposed cause of action, the greater part of it in extent points to an action for slander (or libel) as nearly as difference of facts could permit ; the plaintiff's declaration, at all events accord- ing to the common law precedents, contains but small sugges- tion of an action for deceit, in its framework, down to the point of alleging damage. There the declaration leaves the beaten track of actions for defamation, and alleges, as in deceit, special damage.^ 1 Lowe V. Harewood, Sir W. Jones, stead v. Miller, 1 "Wend. 506"; "Williams 196 ; Malacliy v. Soper, 3 Bing. N. C. v. Hill, 19 "Wend. 305 ; Moore v. Mea- 371. Comp. also cases of cutting one gher, 1 Taunt. 39. oft" from gratuitous hospitality. Olm- 2 ggg e. g. Gott v. Palsifer, 122 Mass. 658 DECEPTION. [chap. VJl. It is in the right of action itself that the case more nearly resembles an action for deceit. The plaintiff's action is not for defamation, but for a false representation ; unlike a plain- tiff's case in a suit for defamation, a case in slander of title is not made until the statements made are shown to be false.' In regard to the scienter the case is somewhat different. The declaration in an action for slander of title does not allege any scienter in the manner of an action for deceit ; it alleges that the defendant, ' well knowing the premises, but maliciously intending to injure the plaintiff, published a cer- tain false, malicious, and unfounded ' statement ; which is the allegation of an action for defamation. However, the plaintiff is required, according to the current of authority, to prove malice, i. e. actual malice, in the first instance ; ^ and this he will often do by showing that the defendant made the false statement with knowledge of its falsity. Again intention that the statements should be acted upon 235 ; Swan v. Tappan, 5 Cush. 104 ; impoverish, and wholly ruin the plain- Tobias u. Harland, 4 Wend. 537 ; and tiff, to wit, on the 2d of January, 1836, especially Malachy v. Soper, 3 Bing. N. wrongfully and unjustly did publish, C. 371 ; s. c. Bigelow's L. C. Torts, 42. and cause and procure to be published. The declaration in this case, after re- a certain false, malicious, and unfounded citing the facts of a newspaper publica- libel in a certain public newspaper, of tion impeaching the plaintilFs title to and concerning the plaintiff and his said shares in a certain silver mine, proceeded shares, . . . that is to say.' And here thus : 'Yet the defendants, well know- follows the publication set out in the ing the premises, but greatly envj'ing formal way of an action for a libel, with the happy state and condition of the the usual innuendoes. The declaration plaintiff, and contriving and wickedly closed with an allegation of general dam- and maliciously intending to injure the age ; and in this particular was held bad. plaintiif in his said rights, and to cause See also Gott v. Pulsifer, 122 Mass. 235. it to be suspected and believed that the i The action survives in England, said shares of the plaintiff were of little Hatchard v. Mfege, 18 Q. B. D. 771. or no value, and that the plaintiff had 2 Kendall v. Stone, 5 N. Y. 14 ; no right to use or work the said mine as s. c. 2 Sandf. 284 ; McDauiel v, Baca, aforesaid, and to hinder and prevent the 2 Cal. 326 ; Stark v. Chetwood, 5 Kans. plaintiff from selling or disposing of his 141 ; Smith 'U. Spooner, 3 Taunt. 246 ; said shares, and from deriving or ac- Pater v. Baker, 3 C. B. 831 ; Wren v. quiring from the said mine any more Weild, L. E. 4 Q. B. 730 ; Gott v. Pul- profits, emoluments, or advantages what- sifer, 122 Mass. 235 ; Bigelow's L. C. ever, and also to vex, harass, oppress. Torts, 54-58. § 3.] STRANGER TO THE ACTION. 659 is no doubt part of the case to be proved by the plaintiff ; but that is made out in proving malice. On the other hand there is no specific allegation of ignorance of the facts by the person or persons to whom the statements were made, such as calls for proof ; though it is stated generally that ' by means of the premises ' ' divers persons had believed, and still did believe ' that the plaintiff had no title.^ But the plaintiff must show that the representation had the effect of causing actual dam- age to him, which implies at all events that the person who heard or read the statement paid sufficient attention to it to decline to go on with negotiations with the plaintiff for pur- chasing or otherwise dealing in respect of the property .^ The conclusion then is that a right of action for slander of title arises only when the defendant has made the false repre- sentation, with express malice, to the actual damage of the plaintiff. It matters not whether the title affected is of real or of personal property .^ Again an action of the same nature may be maintained where the ' slander ' touches the quality or condition of property, or its value as a subject for exhibition.* Thus to publish falsehood concerning a statue on exhibition for gain appears to be actionable if done with actual malice, to the damage of the exhibitor.^ So it has been held that to state falsely and maliciously of a newspaper that it is ' lowest in circulation ' is actionable upon proof of actual damage.^ § 3. Trade Maeks. A trade mark is a special mark for authenticating goods as the goods of the person making or preparing them for sale,^ 1 See Malaohy v. Soper, supra. v. MacEae, 3 Best & S. 264, Coekturn, 2 lb. ; Gott V. Pulsifer, 122 Mass. C. J. ; Heriot v. Stuart, 1 Esp. 437 ; 235. Ingram v. Lawson, 6 Bing. N. C. 212, 3 Pater v. Baker, 3 C. B. 831 ; Mai- Bosanqnet, J. achy V. Soper, 3 Bing. N. C. 371. ' Gott v. Pulsifer, supra, ' Cardiff 1 Gott V. Pulsifer, 122 Mass. 235 ; Giant ' case. Swan V. Tappan, 5 Gush. 105 ; Tobias ° Heriot v. Stuart, supra. V. Harland, i Wend. 637. See Young ' The definition may be taken to in- 560 DECEPTION. [chap. VII. just as a seal is a special instrument for authenticating a document as that of the author. And the wrongful use of a trade mark makes another special subject for the considera- tion of misrepresentation to third persons. Here indeed we have to consider two modes of proceeding, one an action for damages, the other a proceeding for injunction, to restrain the defendant from further use of his mark. Different rules of law, growing out of different requirements in regard to the trade mark, prevail in relation to the two proceedings. We shall first consider the action for damages ; though it should be said at the outset that, whether the action is for damages or for an injunction only, the plaintiff has no case if it appear that his own mark contains a misrepresentation calculated to deceive the public.^ The action for damages for infringement of a trade mark, it should be understood at the outset, does not suppose the existence in the plaintiff of any exclusive right to or priority of use of the mark in question, apart from the very instru- ment with which the mark is made and the particular labels which the plaintiff may have on hand; the instrument and the labels are of course property, and a contest with regard to them would require the plaintiff to show the better right. But in regard to the mark itself the case is different, and the plaintiff may be entitled to recover though, paradoxical as at first it appears, the defendant may have as good a right to the use of the mark as the plaintiff.^ olude the title of a book ; this, though R. 7 Ch. 611. Bat the mere unauthor- not copyrighted, is equally within the ized use of the word ' patent ' will not general law of trade marks. See e. g. necessarily be fatal in England. Sykes Metzler v. Wood, 8 Ch. D. 606, C. A. v. Sykes, 3 Barn. & C. 641 ; Ford v. So of a play. Isaacs v. Daly, 39 N. Y. Foster, supra ; Marshall v. Boss, L. E. Supr. 511. 8 Eq. 651. 1 Manhattan Co. v. "Wood, 108 U. S. = Sykes v. Sykes, 3 Barn. & C. 541 ; 218 ; Palmer v. Harris, 60 Penn. St. s. o. Bigelow's L. 0. Torts, 66 ; Metzler 156 ; Connell •!. Reed, 128 Mass. 477 ; v. "Wood, 8 Ch. D. 606, C. A., James, Leather Cloth Co. v. American Leather L. J. ; Marsh v. Billings, 7 Gush. 322 ; Cloth Co., 4 De G., J. & S. 137 ; a. c. s. c. L. C. Torts, 59. The action sur- 11 H. L. Cas. 623 ; Ford v. Foster, L. vives. Oakey v. Dalton, 36 Ch. D. 700. § 3.] STEANGEE TO THE ACTION. 661 The apparent paradox will disappear with a statement of the case first cited. The plaintiff Sykes was a maker of powder- flasks and shot belts, upon which he placed the words ' Sykes Patent.' In point of fact there was no patent upon the arti- cles, as had been decided in a previous action. But the pat- entee continued to use the words upon his goods to designate them as goods of his making.^ The defendant, whose name was also Sykes, made similar goods, and put upon them the same words, with a stamp closely resembling that used by the plaintiff. So far there was no right of action in dam- ages, for the defendant might have done this with no actual or virtual intent to affect the plaintiff's rights or inter- ests, indeed without any knowledge of the existence of the plaintiff's mark. But it was alleged in the declaration, and there was evidence held admissible to support the allegation, that the defendant had sold the goods thus marked ' as and for' the plaintiff's goods. This constituted deception, and gave the plaintiff, on proof of actual loss, a right to damages. This case shows clearly the nature of the wrong ; it consists in the defendant's fraudulently misrepresenting his own goods to be the goods of the plaintiff, to the plaintiff's injury ; and a little examination will suffice to show that the action is in substance an action for deceit. In the first place it is necessary for the plaintiff to show that the defendant has, in the use of his mark and the sale of the goods, made a material misrepresentation. That ap- pears in a broad way in his attempting to sell his own goods as goods of the plaintiff ; and so far as that is concerned, it would not be necessary for the defendant to use any mark at all. It would be a fraud for him to attempt in any way to palm off his goods as the plaintiff's. But it is in a special sense that a material misrepresentation must be shown ; in the sense, that is to say, that the defendant's mark bears a 1 Supra, p. 560, note 1. 36 562 DECEPTION. [chap. VH. near resemblance lo that of the plaintiff — so near as to be apt to deceive.^ It is not required that the resemblance should be so close as to deceive an expert ; enough that it is such as to be likely to deceive the ordinary buyer.^ In the last case cited it was said of a mark used on goods to be sold in Aden and India that although two tickets objected to could not lead any one to mistake one for the other, it might easily happen that both might be taken by natives unable to read or understand Eng- lish as equally symbolizing the plaintiff's goods.^ On the other hand resemblance in some small detail will not be apt to be enough ; though the question of sufficient resemblance is probably a question of fact. In the next place it is necessary to the maintenance of an action for damages to show that the defendant knew that he was making a false representation ; that is, the plaintiff must show that the defendant knew of the existence and use of the plaintiff's mark. This rule is more often assumed than directly enunciated, as in the case in regard to the mark ' Sykes Patent ; ' but it is very clearly assumed. Thus in one case of authority * Mr. Chief Justice Tindal speaks of an allegation in a declaration as insufficient which only states that the defendant deceitfully and fraudulently prepared the mark in question in imitation of that of the plaintiffs, but that a further allegation that the goods were prepared and sold falsely as goods prepared and sold by the plaintiff made the declaration good. And similar remarks may be found in many other cases.^ ^ McLean v. Fleming, 96 U. S. 45 ; Gorham Co. o. White, 14 "Wall. 511 ; Johnston v. Ewing, 7 App. Cas. 219, Manuf. Co. v. Lowell Mills, 129 Mass. af g 13 Ch. D. 434 ; Metzler v. Wood, 325 ; Seixo v. Provizende, L. K. 1 Ch. 8 Ch. J). 606, C. A. ; Wotherspoon v. 192 ; Metzler v. Wood, 8 Ch. D. 606 ; Currie, L. E. 5 H. L. 508. The fact Johnston v. Ewing, 7 App. Cas. 219. that one person has been deceived is not " Wotherspoon v. Currie, L. R. 5 conclusive of misrepresentation. Civil H. L. 508, was a similar case. Service Assoc, v. Dean, 13 Ch. D. 512. * Morison v. Salmon, 2 Man. & G. 385. 2 McLean v. Fleming, 96 TJ. S. 45 ; ' Crawshay v. Thompson, 4 Man. & § 3.] STBANGER TO THE ACTION. 563 In the third place the plaintiff must show that the pur- chasers, or some of them, were ignorant of the real facts, and believed the goods to be goods of the plaintiff's making or preparation ; he must show that some one was deceived.^ It matters not that the ' trade ' may have known the facts ; ^ it is enough that retail buyers were deceived. Thus in the case of the ' Sykes Patent ' evidence had been received that, though the dealers to whom the defendant sold his goods knew that the defendant made them, the defendant had sold them to such dealers to be resold to the public as goods of the plain- tiff's making, and that was held sufficient to support even a declaration which alleged that the defendant had sold the goods as and for goods of the plaintiff. On the other hand if the facts are fully made known to the retail buyer, the action cannot be maintained.^ In the fourth place it is for the plaintiff to show that the defendant intended, actually or virtually, to represent his goods to be the goods of the plaintiff. This appears from what has already been said, and in a great many cases. In- deed it is the point most frequently emphasized in suits for damages.* In the case first cited it appeared that the plain- tiff had complained to the defendants of their use of the mark in question, designating such use as a ' palpable fraud.' The defendants replied that they had used the mark for many years, and that they had a right to do so. The statement that they had used the mark for many years was not true ; G. 357, 379, 383 ; Rodgers v. Nowill, 5 219 ; Coats v. Holbrook, 2 Sandf. Ch. C. B. 109 ; Coits v. Holbrook, 2 Sandf. 586, 597. Ch. 586, 597 ; Marsh v. Billings, 7 ' Magee Furnace Co. u. Le Barron, Cush. 322. It is doubtless unneces- 127 Mass. 115 ; Singer Manuf. Co. ■<>. sary however to allege the scienter Wilson, 2 Ch. D. 434. specifically. * See especially Crawshay v. Thomp- 1 Sykes v. Sykes, 3 Barn. & C. 541 ; son, 4 Man. & G. 357 ; Rodgers v. Marsh v. Billings, 7 Cush. 322. Nowill, 5 C. B. 109 ; Morison u. Sal- 2 Sykes v. Sykes, 3 Barn. & C. 541 ; mon, 2 Man. & G. 385 ; Marsh v. Bil- Ewing V. Johnston, 13 Ch. D. 434 ; lings, 7 Cush. 322 ; Coats v. Holbrook, s. c. Johnston v. Ewing, 7 App. Cas. 2 Sandf. Ch. 586, 597. 664 DECEPTION. [chap. VII, but it was shown that the mark had been adopted by them in the execution of orders from foreign countries. The plaintiff now contended that the continued use of the mark after the notice gave to him a right of action in damages ; but the court held that evidence of intention to deceive was neces- sary, and that this was not shown.^ Finally it follows from what has been said that the plaintiff must show that some one has, according to the purpose of the defendant, acted upon the misrepresentation ; but whether the plaintiff, in order to recover damages, must show special dam- age, that is, actual loss, is not clear. Of course he must show actual loss in order to recover substantial damages ; but must he show that in order to recover nominal damages ? Upon the analogy afforded by the action for deceit, it would follow that he must. But it must be noticed that an action of the kind under consideration is peculiar. In the ordinary action for deceit, the plaintiff is suing for compensation for a well- defined loss ; but how can the plaintiff in a suit for infringing a right of the kind now in question know how much damage he has sustained ? Whether this is the reason or not, it is held unnecessary in the declaration for the plaintiff to allege spe- cial damage ; a general allegation of loss is sufi&cient.^ Still it is probable that the plaintiff should give evidence of some specific loss.^ 1 Coltman, J. said ; ' It appears to it may be added, if the defendant or me that an intention to deceive is » any one else, even in such a case, in- necessary ingredient in this case. The formed the retail purchasers of the facts, intention is for the jury ; and fraud there could be no recovery of damages, must be made out by proof of an in- Magee Furnace Co. v, Le Barron, 127 tention existing in the mind of the Mass. 115 ; Singer Manuf. Co. v. Wil- party, that the iron should pass as the son, 2 Cli. T>. 434. iron of the plaintiff. If there was such ^ Rodgers v. Nowill, 5 C. B. 109 ; a similarity as might impose on ordinary Marsh v. Billings, 7 Cush. 322. persons, and it was shown that the de- s Marsh v. Billings, supra. But the fendants were aware of the resemblance, jury wUl not, when this is done, he re- and that it was calculated to mislead, stricted in their award of damage to the plaintiff would have been entitled that. On the contrary they may draw to the verdict, for the intention to de- a reasonable inference, and award dara- ceive would have been manifest.' StUl, ages accordingly. lb. § 3.] STKANGEE TO THE ACTION. 565 It should further be observed that the question is not whether the retail dealer, to whom the goods have been sold under the misrepresentation, has been injured, but whether injury has been sustained by the plaintiff. It will often appear indeed that the defendant has been palming off upon the public an inferior article ; ^ but it may well be that he has made a good article, a better article even than the plaintiff's. Still he has no right to supplant the plaintiff, or to cut into his business, by fraud.^ Thus far of an action for damages. In a proceeding for an injunction simply, without a demand for damages,^ the plain- tiff rests his case upon an exclusive right ; he must therefore show title in himself, as e. g. by priority of use, or, if a regis- tration act exists, as in England, priority of registration.* But when he has shown that, he has shown enough to restrain the use of the imitation, assuming that the mark is capable of exclusive appropriation; it is not necessary that the defend- ant should have known of the existence and use of the plain- tiff's mark,^ or that the defendant intended to sell his goods as the goods of the plaintiff,^ or that any one has in fact been deceived to the plaintiff's damage." The plaintiff's case pro- ceeds upon the ground of his own exclusive right and of such resemblance to his own in the defendant's mark as to be likely to mislead the average buyer. But in order to exclude the defendant from the use of his mark, the plaintiff himself must, as we have said, have a good 1 See Sykes v. Sykes, 3 Barn. & C. 31 Beav. 292 ; Edelsten v. Edelsten, 1 541. De G., J. & S. 185 ; Dale v. Smithson, 2 Taylor v. Carpenter, 2 Sandf. Oh. 12 Abb. Pr. 237 ; Coffeen v. Brunton, 603 ; Partridge u. Menck, ib. 622 ; i McLean, 516 ; Kendall v. Davis, 2 CoafB V. Holbrook, ib. 586. R. I. 566. " If damages are asked for in equitj', ^ Edelsten v. Edelsten, supra, the case becomes virtually an action for * See Singer Machine Manufrs. v. deceit, requiring proof of fraud. See Wilson, 3 App. Gas. 376. Edelsten v. Edelsten, 1 De G., J. & S. ' Johnston v. Ewing, 7 App. Cas. 185. 219 ; s. c. 13 Ch. D. 434 ; Braham v. * Singer Manuf. Co. u. Loog, 18 Ch. Beachim, 7 Ch. D. 848. D. 395, 417, C. A. ; Cartier v. Carlisle, 566 DECEPTION. [chap. VII. title to his own ; and this implies, not only priority of use by him, or conformity to requirements of the registration law, if there be such a law, but also that his mark must in any case, not otherwise provided for by statute, be one capable in law of exclusive appropriation, unless indeed his prayer for an injunction is based upon the ground of fraud on the part of the defendant. An injunction is obtainable for fraud, though the plaintiff's mark is not such as to give an exclusive right to use it.i What is capable in law of exclusive appropriation as a trade- mark is often a question of difficulty ; even to state satisfac- torily a general rule is a difficult matter. Perhaps as much as can be said, in the absence of statute,^ is that the mark, as the Supreme Court of the United States has in a recent 1 Lee V. Haley, L. E. 6 Ch. 155 ; Kadde v. Norman, L. E. 14 Eq. 348 ; Eodgers k. Nowill, 6 Hare, 325 ; Nott V. Morgan, 2 Keen, 213 ; Metzler v. Wood, 8 Ch. D. 606, C. A. ; Brahani v. Beachim, 7 Ch. D. 848 ; Hudson v. Osborne, 39 L. J. Ch. 79 ; s. c. 21 L. T. N. s. 386 ; Canal Co. v. Clark, 13 "Wall. 311, 322. The sale of a husinesS carries with it, apart from agreement to the contrary, a right in the purchaser, to the exclusion of the vendor, to use the trade marks and business designa- tion of the house. Hudson v. Osborne, supra. ' It has been settled that there is no implied covenant of any kind in the sale by an individual himself of the good will of his business ; but it seems to be settled that a trader, whose business and the good will of whose business have been sold by himself, or by any person deriving title under him, has no right to represent himself as carrying on that identical business ; he has no right to use the trade marks which were the marks of that business, or by the use of the name, or of a title of the finn, to represent himself as being the continuer of that identical business which was sold.' lb., James, V. C. Continuing to use a mark resembling the plaintiff's after notice not to do so is strong evidence of fraud. Orr v. Johnston, 13 Ch. D. 434, C. A. See Crawshay v. Thompson, 4 Man. & G. 357, supra, pp. 563, 564. Mere length of time of adverse user will not of itself make a mark, which was originally a trade-mark, public prop- erty, where such user was originally fraudulent and is still calculated to de- ceive ; but it throws upon the trader claiming an exclusive right to the mark ■the burden of proving such original fraud and continuing misrepresentation, and the longer the user the stronger must be the evidence. In re Heaton, 27 Ch. D. 570 ; Ford v. Foster, L. E. 7 Ch. 628. 2 The English Patents, Designs, and Trade Mark Act, 1883, § 64, requires of trade marks that there be a ' dis- tinctive device, mark, brand, heading, label, ticket, or fancy word or words not in common use.' Under this act it was lately held that the name ' Price's § 3.] STRANGER TO THE ACTION. 667 case ^ declared, ' must either by itself, or by association, point distinctively to the origin or ownership of the article to which it is applied.' The right accordingly extends to the use of all marks, forms of figure, or symbols used for designating such origin or ownership. Negatively it is laid down in the same case that no right can arise to the use of any words, letters, figures, or symbols which bear no relation to the name or quality of that to which they may be affixed.^ This however is not a clear negative, it will be noticed, of the affirmative proposition, and the meaning of the court is therefore left in doubt. Does the rule, to take a class of cases, which would ap- pear to raise no intrinsic difficulty, exclude names generally, and in particular family and place names ? The negative part of the rule creates a doubt ; what does ' name ' mean in the expression ' name or quality ' ? In England it has been decided, not only that family names cannot be appro- priated,^ but that no one can appropriate to himself any general name, such a name e. g. as might be chosen for the designation of a piece of landed property consisting of a house or of land only.* In the United States,^ on the other hand, conflicting decisions have been rendered upon Patent Candle Company' in common 541. In Burgess «. Burgess, Lord Jus- letters, in the upper border of a label, tice Bruce said : ' The Queen's subjects with the words ' National Sperm ' in have a right, if they will, to manufac- ' the centre, were not a subject for regis- ture and sell pickles and sauces, and tration. In re Price's Candle Co., 27 not the less so that their fathers have Ch. D. 681. As to 'fancy words not done so before them. All the Queen's in common use' see In re Arbenz, 35 subjects have a right to sell them in Ch. J>. 248, C. A., word 'gem' ; In re their own name, and not the less Van Duzer, 34 Ch. D. 623, 0. A, so that they bear the same name as 'Melrose.' their fathers.' 3 De G., M. & G. at 1 Canal Co. v. Clark, 13 Wall. 311, p. 903. 323, Strong, J. for the court. « Day v. Brownrigg, 10 Ch. D. 294, 2 lb., quoting and adopting the Ian- C. A. guage of the court in Amoskeag Manuf. ^ ^g to statute see 21 U. S. Sts. at Co. V. Spear, 2 Sandf. 599. Large, 503 ; U. S. Eev. Sts. § 4939 ; 3 Burgess v. Burgess, 3 DeG., M. & Mass. Pub. Sts. ch. 76. G. 896 ; Sykes v. Sykes, 3 Barn. & C. 568 DECEPTION. [chap. VIT. questions of this kind ; though the weight of authority is with the English rule.^ The negative part of the rule should be omitted, or changed to conform to the aifirmative proposition. But whatever the true way of stating the rule in ordinary cases in regard to place and family names, it is held that where a name of the kind has been identified with an article first made by a person, especially if so as to become generally recognized as the designation of his property, his right to the same is good against others who afterwards attempt to use it in a way likely to deceive ;2 and this too though the use complained of be in advertisements, and not upon the articles sold.3 There may be some doubt however whether an in- junction should be granted against a person who had so begun to use the name in ignorance of the plaintiff's prior use of it;* still the public often has an interest in such matters, and the courts may well regard that as a determining factor, in proper cases. § 4. Business Signs, There is another class of rights, suggested by the cases last referred to, which, though differing in fact from trade-mark rights, rests substantially upon the same ground. The rights 1 Denying the right of appropria- nace Co. v. he Barron, 127 Mass. 115 ; tion : Canal Co. ■!>. Clark, 13 Wall. 311 ; Singer Machine Manufrs. u. "Wilson, Choynski v. Cohen, 39 Cal. 501 ; Gray 3 App. Cas. 376 ; Wotherspoon v. Cur- V. Koch, 2 Mich. N. P. 119. Contra : rie, L. R. 5 H. L. 508 ; Metzler v. Howard v. Henriques, 3 Sandf. 725. Wood, 8 Ch. D. 606 ; Eadde v. Nor- And see Deiz v. Lamb, 6 Eob. (N. Y.) man, L. R. 14 Ecj. 348. In Singer Ma- 537 ; McCardel v. Peck, 28 How. Pr. chine Manufrs. v. Wilson Lord Cairns 120. Infra, p. 571. said that the evidence had shown that This particular phase of the rule the word ' Singer ' had not come merely raises more commonly a question of to describe a sewing machine, without business signs, and will be referred to reference to the maker, like the words again in the next section. ' Brougham ' or ' Hansom.' 2 Newman v. Alford, 51 N. Y. 189 ; ^ Singer Machine Manufrs. v. Wil- Congress Spring Co. v. High Eock sou, supra. Spring Co., 45 N. Y. 291 ; Magee Fur- * Eadde v. Norman, supra, at p. 355. § 4.] STRANGER TO THE AOTIOK. 569 now referred to are rights growing out of the designation of one's business or vocation. There can indeed be no right of property in an ordinary business sign, apart from the physical substance containing it; though if the sign be some special and peculiar device, it may amount to a trade mark and give rise to corresponding rights and duties. But while an ordinary business sign, like a trade mark, can confer no monopoly upon any one, no one has a right to appropriate it, any more than a trade mark, with a view to the injury of another entitled to use it. This is well illus- trated in a case ^ which has already been cited several times. The proprietor of a hotel had formerly made a contract with B, afterwards terminated, by which B alone, a coach-driver, was given the right to represent the hotel at a certain railroad station; and B had accordingly put the name of the hotel upon his coaches and upon the hats of his men. B kept the names there after the contract with him had been terminated, and a similar contract made with M, who also put the name of the hotel upon his coaches and his men's hats. Now it was considered no wrong for B to keep using the name of the hotel as before, and to run his coaches from the station to the hotel, carrying such passengers as he could secure by open honest competition ; but it was also held that he could not represent to passengers that he had the right of patronage of the hotel which had been granted to M, and so secure busi- ness to the detriment of M. That was not competition but fraud. The ground of action therefore is false and fraudulent representation to the detriment of the plaintiff.^ The case 1 Marsh v. Billings, 7 Gush. 322 ; reason, and is all that is in fact required, s. u. L. C. Torts, 69. And under that the plaintiff would be 2 To recover in such a case it would entitled to such damages as the jury, not he necessary to allege special dam- upon the whole evidence, should be age. Marsh u. Billings, supra. See satisfied he had sustained. The damages ante, p. 564. An allegation of general would not be confined to the loss of such damage is all that could be required in passengers as the plaintiff could prove 570 DECEPTION. [chap. VII. differs from the right of action for infringing a trade naark only in the fact that there need be no resemblance in the signs used by the respective parties ; it is the false representation, orally made, or suggested by confusion of names, which de- ceives. The case indeed would be no different if the defend- ant used no business sign at all ; he would still have no right to represent that he, and not the plaintiff, was the person entitled to perform the service, or do the business, in question. Whether an injunction should be granted to restrain a per- son from using a mere business sign, upon the sole ground of prior use by the plaintiff, is more than doubtful, as follows from what has already been suggested;^ unless indeed the sign, being capable in law of exclusive appropriation, as by consisting of some peculiar device first made by the plaintiff, indicative of ownership, amounts in substance to a trade mark. In such a case as that, and in cases of fraud, an injunction had actually teen diverted from his coaches to those of the defendant ; hut such inferences in regard to loss of busi- ness by the plaintiff might be drawn as the jury thought warranted by the evi- dence adduced. lb. ^ Ante, p. 568. Against the right of injunction : Canal Co. v. Clark, 13 Wall. 31 1, ' Lackawanna Coal ' ; Choynski v. Cohen, 39 Cal. 601, ' Antiquarian Book- Store ' ; Gray v. Koch, 2 Mich. B". P. 119, ' Mammoth Wardrobe ' ; Booth u. Jarrett, 52 How. Pr. 169, 'Booth's Theatre,' the name having ceased to designate proprietorship ; Day v. Brown- rigg, 10 Ch. D. 294, C. A., ' Ashford Lodge ' ; Charleson ■». Campbell, i Ct. Sess. Cas. (Scotl.), 4th series, 149, ' Station Hotel.' But see the following cases in which an injunction was granted : Howard v. Henriques, 3 Sandf. 725, ' Irving Ho- tel ' ; Woodward v. Lazar, 21 Cal. 448, ' What Cheer House ' ; McCardel v. Peck, 28 How. Pr. 120, 'McCardel House ' ; Deiz ». Lamb, 6 Rob. {N. Y.) 537, 'Prescott House,' name used under a license, now revoked, and use continued. In Braham v. Beachim, 7 Ch. D. 846, it appeared that the plaintiffs owned and worked coal mines in R, Somerset County, and on the names of wagons and billheads used the words, ' R Col- lieries.' Afterwards the defendants be- came lessees of mines in Somerset but not in R, having before been in the coal business in E. Later they ac- quired a coal trade in Surrey County; and this they advertised in that county, calling themselves ' The R Colliery Pro- prietors and Factors.' It was held that the plaintiffs were entitled to an in- junction so long as the defendants had no coUieiy in R. The defendants had also offered to supply coal directly from the collieries ; such advertising they were also enjoined from continuing un- til they should become authorized to sell from the colliery in E. § 5.J STfiANGER TO THE ACTION. 671 would be granted,! assuming that the plaintiff had practised no deception upon the public. But where the right to an injunction depends upon a fraud- ulent purpose, such purpose must be clear. It is not enough e. g. that a trader using a name may know that another near by intends to use it.^ In the case cited a bootmaker, having a shop in London, running up to Bedford Street, with a front and entrance on the Strand, put up over his door the words ' Civil Service Boot Supply.' Another company, the Civil Service Supply Association, was at the time buildiug a large store at the other end of Bedford Street, not far off, in which the company, on finishing the store, opened a general shop ; afterwards opening a boot and shoe shop in Tavistock Street, in the same neighborliood. The company now sought to re- strain the bootmaker from using the sign, but there was con- sidered to be no evidence in these facts of any purpose on his part to deceive, and the case was dismissed ; and this too though in fact one of the customers of the company had mis- taken the bootmaker's shop for that of the association.^ § 5. Wills. Two terms in the law of wills are often so coupled together as to indicate that there is little or no distinction between them. These terms are ' fraud ' and ' undue influence,' for either of which, when practised upon a testator, the will may be avoided. Whether there is any difference in legal effect between the two, and ordinarily there is not, there 1 Canal Co. v. Clark, 13 "Wall. 311, Marsh v. Billings, 7 Cush. 322 ; Sykes 322 ; Nott v. Morgan, 2 Keen, 213, -t). Sykes, 8 Barn. & C. 541 ; Nott ' London Conveyance Co.' ; Boulnois v. v. Morgan, 2 Keen, 213. See supra, Peake, Week. N. 1868, p. 95, ' Carriage p. 570. Bazaar'; Metzler i;. Wood, 8 Ch. D. 606, 2 Civil Service Assoc, v. Dean, 13 C. A. (name of book) ; Isaacs •«. Daly, Ch. D. 512. 39 N. Y. Sup'r, 511. Mere use of the ^ It was considered that no rational sign would alone he no evidence of fraud, person would be deceived. 672 DECEPTION. [chap. VH. is a sufficient difference between them in fact ; fraud clearly is not undue influence, nor is undue influence fraud, in the proper sense of that term. Undue influence upon a testator consists in substituting virtually the will of the person exer- cising it for that of the testator ; fraud upon a testator con- sists in making that which is false appear to him to be true, and so affecting his will. Undue influence need not be at- tended at all with deception or circumvention ; fraud need not be attended with undue influence except in so far as the mis- representation or other fraudulent act amounts to influence, — there need be no pressure, such as is necessary to constitute undue influence. Clearing away any confusion that may exist between these two terms, there remains little to say in regard to fraud. Misrepresentation, the particular aspect of fraud under con- sideration, appears to be nothing different as a ground for impeaching a will from misrepresentation as a ground for impeaching a contract. Indeed mere questions of misrepre- sentation seldom if ever arise ; alleged deception is almost always attended with pressure and undue influence, and would generally be found insufficient without it. There are however a few observations to be made. Fraud will not have the effect necessarily of invalidating the whole will. If indeed the person who practised the wrong be the sole beneficiary under it, to the exclusion of other natural ob- jects of the testator's bounty, or if the fraud taint the whole will, though committed by but one of the beneficiaries, the whole will is invalid ; ^ but if one only of several legatees or devisees, or if all but one of them, procured the gifts to themselves by fraud not extending further, other gifts of the instrument would still be good.^ It may also be observed that a prohibition by the testator, in the will or out of it, against questioning the dispositions 1 Florey v. Ilorey, 24 Ala. 241. See Ogden v. Greenleaf, 143 Mass. 349 ; 1 Jarman, Wills, 36. 2 lb. § 5.] STRANGEE TO THE ACTION. 573 made, on pain of forfeiting the gift, will not prevent in- terested parties, whether beneficiaries or not, from contest- ing it for fraud practised upon the testator ; for it cannot be supposed that the testator meant to preclude inquiry into imposition practised upon himself.^ Indeed it has been held that a prohibition in the will against questioning the acts and decisions of the executors on pain of forfeiture will prevent a beneficiary from impeaching the executor's conduct for fraud.^ 1 Jarman, Wills, 35, note, Sth Am. ed. 2 Lee V. Colston, 5 T. B. Mon. 246. 574 DECEPTIOK. [chap. VHI. CHAPTER VIII. DECEPTION BY ACT: COLLUSION. § 1. Introductoet : Confusion op Goods. Deception by act was divided into cases of misrepresenta- tion, and cases not of misrepresentation. The first named has been considered ; it involved the consideration of transac- tions carried on entirely between the wrongdoer and the party wronged. The cases now to be considered must, to exhaust the subject, be cases in which there has been some transaction resulting in deception, in which the party deceived was not engaged. These are cases of deception effected by circumven- tion ; but the remedy to be applied will be that pertaining to deception, and hence the subject should be treated in the pres- ent place.i The subject referred to concerns at least two well marked classes of cases ; first, cases in which the fraud was carried out through a party standing in some fiduciary or confidential relation towards the party defrauded, i. e. one of the wrong- doers was an agent, a trustee, or the like, of the plaintiff, and the other a stranger ; secondly, cases in which the fraud was carried out by or through persons" holding no such relation towards their victim. And both cases, it will be seen, are cases of collusion.^ Besides these cases there are others, with occasional illus- trations in the books, where the only persons concerned are the defrauding and the defrauded party, and yet where there 1 See ante, p. 18 ; Dillon v. McAllis- ^ Collusion may also of course be part ter, 40 Ark. 189. of a scheme of pure circumvention. § 1.] DECEPTION BY ACT : COLLUSION. 675 is no misrepresentation in any proper sense. Such cases are hardly numerous enough for distinct treatment. Indeed it is not clear how to describe them as yet. One important exam- ple may be seen in cases of the confusion of goods ; and even these cases do not turn upon fraud. They ought however to be noticed. A person whose property another has fraudu- lently or wrongfully mingled with his own has the right to take possession of the whole mass, for the purpose of sepa- rating and securing or disposing of the part belonging to himself.^ According, it is said, to the Eoman law, to dwell somewhat upon special features of this example, this was the extent of the injured party's rights ; he was entitled to retain the whole, or the proceeds in case of sale, only upon making satisfaction for the value of the other's share. The English and the Amer- ican law goes further, and requires the wrong-doer to identify, if he can clearly, his own ; failing which the whole, without any account or liability, will go to the party defrauded.^ But it is held that in such a case the mingling must have been more than intentional ; it must have been fraudulent or in some other way wrongful.^ 1 Stephenson v. Little, 11 Mich. 433 ; Uuion Ins. Co., L. K. 3 C. P. 427, 437. Wooley V. Campbell, 8 Vroom, 163 ; The rule at first appears obscure, for Jewett u. Dringer, 30 N. J. Eq. 291 ; if the party who mingled the goods Ryder v. Hathaway, 21 Pick. 298 ; Da- cannot Identify his own, how can he vis V. Stone, 120 Mass. 228 ; Ward v. require an account in any case ? ' Few Ayre, Cro. Jac. 366 ; Buckley v. Gross, subjects m the law,' said Shaw, G. J. in 3 Best & S. 566. Eyder v. Hathaway, supra, ' are less '' Hart V. Ten Eyck, 2 Johns. Ch. familiar, or more obscure, than that 62 ; Jewett v. Dringer, 30 N. J. Eq. which relates to the confusion of prop- 291 ; 2 Kent 364. srty. If different parcels of chattels, 3 Stephenson v. Little, 10 Mich. 433, not capahle of being identified, owned 441 ; Eyder v. Hathaway, 21 Pick, by different persons, get mixed, how 298 ; "Willard v. Rice, 11 Met. 493 ; are they to be severed ? . . . Take for Beach v. Schmultz, 20 111. 185 ; Brack- example grain or liquor. Can each one enridge -o. Holland, 2 Blackf. 377 ; of the former owners take from the Moore v. Bowman, 47 N. H. 494, 502 ; common mass his proportion, or do they Haseltine v. Stockwell, 30 Maine, 237 ; become tenants in common of the whole ? Bryant v. "Ware, ih. 295 ; Spence v. If one takes the whole, what shall be 676 DECEPTION. [chap. vni. If the goods can be separated, no change of property takes place, even though (it seems) the act of mixing was fraudulent. This will be the case where such articles as household furni- ture are mixed ; so, as the last note shows, if the articles be- ing alike are of equal value. But if they are of different value or quality, and the original value cannot be distinguished, the injured party takes the whole; and this .whether there was fraud, or misconduct of some other kind. § 2. Collusion with One in Fiduciary or Confidential Relation to Plaintiff. Cases falling under this head might be dismissed with the statement that they turn, not upon fraud proper, but upon con- structive fraud. That is, it is not necessary to relief in a case the remedy ? Will trespass lie ? If they become tenants in common, clearly not. . . . The cases of intentional inter- mixture present questions of greater perplexity. ... If the property be wil- fully and unlawfully intermingled, it clearly cannot constitute a tenancy in common, because a person cannot be made a tenant iu common or co-paHner without his consent.' Then turning to the rule as stated in substance iu the text, supra, the learned Chief Justice addresses himself to what may be con- sidered an authoritative explanation of the difficulties. 'There may,' he says, 'be an intentional intermingling, and yet no WTong intended ; as where a man mixes two parcels together, sup- posing both to be his own, or that he was about to mingle his with his neighbor's, by agreement, and mistakes the parcel. In such cases, which may be deemed accidental intermixtures, it would be unreasonable and unjust that he should lose his own, or be obliged to take his neighbor's. If they were of equal value, as corn or wood of the same kind, the rale of justice would be obvious. Let each one take his own given quantity. But if they were of unequal value, the rule would be more difficult. And if the intermix- ture was such as to destroy the prop- erty, the whole loss should fall on him whose carelessness, orfolly, or misfortune caused the destruction of the whole. . . . The intentional and innocent intermix- ture of property of substantially the same quality and value does not change the ownership. And no one has a right to take the whole, but in so doing com- mits a trespass on the other owner.' And then he says of the case before the court that if the plaintiff, who was su- ing in trespass for carrying away wood, ' knew that the laud was not his, or if he doubted whether it was his or not, and mixed the wood, with an intent to mis- lead or deceive the defendant, and to prevent him from taking his own with- out danger of taking the plaintifTs, then he has by his own fraudulent act lost his property and can have no remedy.' § 2.] DECEPTION BY ACT : COLLUSION. 577 based upou deception accomplished by collusive conduct be- tween one standing in a fiduciary or confidential relation towards the plaintiff, and another person, to show that the parties intended to defraud the plaintiff ;i enough that there has been collusive misconduct. That is not all ; the case differs still further from a suit against a person standing in no fiduciary or confidential rela- tion towards the plaintiff. The trustee, agent, or employee would have to prove his own integrity and justify his seem- ingly improper conduct ; and this upon slighter evidence on the part of the plaintiff than would be required in other cases.^ A different rule in regard to the connection of the supposed (non-fiduciary) confederate with the transaction would of course obtain; ordinary rules would apply to that. The plaintiff would have to bring home to such party notice or equivalent evidence of his associate's misconduct; but that would be enough. The case would then become one of con- structive fraud only.^ We nse the term ' plaintiff ' here as elsewhere for the sake of brevity. It may as well be the defendant who is mak- ing complaint, whether by way of counter-claim or of defence ; and the case may not be one of notice at all, but of actual participation throughout or in part in the misconduct. The result will be the same ; there need be no real fraud in the transaction. To give an illustration of all this : If a person 1 Comp. ante, pp. 10, 263, 265. were in that relation. It certainly could 2 lb. not be maintained that the evidence * This may appear to conflict with which would fasten liability upon the the view heretofore set forth (ante, pp. trustee or agent would not, after evi- 384 etseq.), that in cases not of iiduciary dence of notice, fix liability upon the or confidential relations, constructive confederate, upon any ground that he fraud arises from conduct subsequent to stood at arm's length towards the plain- some rightful act or relation ; but there tiff ; hence he must be treated as if he is a fiduciary or confidential relation here, stood in the peculiar relation of his asso- andthe confederate connectshimself with ciate towards the plaintiff, not of course it, though ex maleficio, so as to make it for every purpose, but certainly for this proper to treat him, for the purpose of one. the redress now in question, as if he too oi 578 DECEPTION. [chap. VIII. is induced to become surety in a contract in which his princi- pal and the obligee, without the surety's knowledge, agree upon terms and conditions of a nature prejudicial to the surety's interests, the surety is entitled to a discharge ; and this is true though there was no fraudulent purpose, against the interests of the surety.^ Another illustration is found in the rule that in a case of mere constructive fraud between an executor or trustee selling and the buyer, the latter must see to the application of the purchase-money.^ But cases of this kind are generally, in fact, cases of true fraud, and so set down in the pleadings ; it would therefore be hardly satisfactory to relegate the subject wholly or chiefly to the domain of Constructive Fraud. Still it will not be neces- sary to do much more here than to gather up illustrations, from the preceding pages, of the working of a very plain rule of law, to wit, that collusive misconduct, resulting in de- ception, to the injury of a cestui que trust, or of an employer, affords ground for redress. The following are some of the cases already given : Where a written contract, such as a promissory note, has been exe- cuted in fraud, by an agent in the name of his principal, to a participant in the wrong ; and where an agent or a trustee has fraudulently put the funds of his principal or cestui que trust into the hands of a confederate ; ^ — in each of tliese cases the party defrauded has perfectly plain rights, the rights of one who has been deceived, not indeed by misrepresentation, but by an act which equally shows deception, for in each he has a right to suppose that the agent or trustee is doing his duty. In the first case the party wronged may have the contract rescinded, or may defend if sued upon the note;* in the 1 Denison v. Gibson, 24 Mich. 187. proof of actual fraud. Nugent v. Gif- - Jones u. Clark, 25 Gratt. 642 ; ford, 1 Atk. 463 ; Mead v. Orrery, 3 Bonney v. Eidgard, 1 Cox, 144 ; Scott Atk. 235 ; Whale v. Booth, i T. R. V. Tyler, Dick. 712 ; Hill v. Simpson, 625, note. 7 Ves. 152. The earlier cases required ° Ante, p. 18. * lb. § 2.] DECEPTION BY ACT : COLLUSION. 579 second he will bring an action to recover back the money or property given to the confederate.^ The only difficulty that has arisen relates to the operation of lapse of time or of the Statute of Limitations in cases like the second. The question whether time had barred the right of action was formerly supposed to turn upon the consideration whether the trust was express or constructive ; and this often resulted in subtle and perplexing refinements. These however have been swept away by Lord Westbury,^ who pointed out the fact that the case is one of fraud, so that the question whether the trust is express or constructive is immaterial.^ Many other examples of collusive wrongs by a party in a confidential relation towards the plaintiff might be collected from the earlier pages of this volume. Some will be found of trustees colluding against their cestuis que trust in litiga- tions,* some of attorneys betraying their clients,^ some of partners betraying their copartners,^ and finally the chapter on Fiduciary and Confidential Relations ^ will alone disclose many cases of the kind. Cases may also arise in which the wrongdoers themselves stand in a relation of trust or confidence towards each other, but at arm's length towards the plaintiff ; but such cases are not peculiar. And this brings us to collusion between parties all of whom stand at arm's length towards the plaintiff, such as cases of combinations in public sales, and the fraudulent registration of a junior conveyance. 1 lb. ; Eolfe v. Gregory, 4 De G. J. application of that money, whicli neither & S. 676. A nor D had authority from their mas- In British Am. Tel. Co. v. Albion ters to make, C must refund to B. ' Bank, L. R. 7 Ex. 119, Mr. Baron ^ Rolfe v. Gregory, supra. Bramwell puts the following case, in ' Ante, pp. 34, 35. illustration of the case before the court : * Ante, p. 90. 'If A, the clerk of B, without B's au- ' lb., also p. 106. thority, pays money into the bank of * Ante, pp. 18, note, 242-245, 312- C, having previously made an arrange- 314. ment with D, the clerk of C, for .some ' Ante, p. 261. 580 DECEPTION. [chap. VIII. § 3. Collusion in Public Sales. Public sales may be invalidated either for collusion among the bidders to obtain the property on sale at a price within certain limits,^ or for collusion between the vendor and oth- ers to advance the price. In the former case the vendor is the sufferer, and he alone can complain of the wrong; in the' latter the purchaser is the sufferer, and objection must come from him. A sale effected by such means is invalid, it has been held, even at law.^ Any public sale then will be set aside where the evidence shows collusion to enable the purchaser to obtain the property at a price below its value.^ Thus where it appeared that at a partition sale the bidders, for the purpose of obtaining the property at a sacrifice, agreed that one should become the purchaser and the others refrain from bidding in consider- ation of sharing the benefits of the purchase, the sale was annulled.* So where lands of a decedent are sold by an offi- cer of court, and part of the distributees combine and agree not to bid against each other, and they prevent competition 1 So of course for any fraud by the ' Den d. Smith v. Greenlee, 2 Dev. purchaser alone, and this whether before 126. But this case may well be doubted or at the time of the sale. Barton o. in declai-ing that no title is conveyed. Hunter, 101 Penn. St. 406 ; Phillips v. See Sibley v. BuUis, 40 Iowa, 429, that Hull, ib. 567 ; Faust v. Haas, 73 Penn. a good title can be conveyed by the St . 295. It is said that the difference buyer to a bona fide purchaser for value, between such a case and a case of col- following Shaack v. Bobbins, 36 Iowa, lusion between the sheriff and the pur- 201. chaser is that in the latter case the sale » Neali). Stone, 20 Mo. 294 ; Wooton would be void at law, while in the v. Hiukle, ib. 290 ; Lynch v. Keese, 97 former it would be voidable only in Ind. 360 ; 'Woodrufr v. Berry, 40 Ark. equity. Burton v. Spiers, 92 N. C. 261, that the same principle applies to 503; Hill v. Whitfield, 3 Jones, 120. combinations to stifle biddings in letting It is held that circumstances indicating out a contract, as e. g. for the public unfairness will, in connection with great printing. See also Ray v. Mackin, 100 inadequacy, raise a presumption of fraud 111. 246 ; Elkhart Lodge v. Crary, 98 in a judicial sale. Graffam v. Burgess, Ind. 238 ; Bish v. Stout, 77 Ind. 255. 117 U. S. 180. i Wooton v. Hinkle, supra. § 3.] DECEPTION BY ACT : COLLUSION. 681 at the sale by promising to divide the fruits of their purchase with others intending to bid, if they will not bid, and thus become purchasers of the land at a price far below its value, the case affords sufficient ground for a refusal by the court to confirm the sale.^ So also if a bidder at auction offer to one proposing to bid that, if he will desist, the former will divide the property with him, this is a fraud upon the vendor.^ So where parties agreed that if the defendant would not bid upon a note against the plaintiff at an auction sale thereof, the plaintiff would discharge a demand against the defendant, the agreement was considered unlawful, and the demand held enforceable.^ But it is combinations to affect the price of the particu- lar property bought that come within the prohibitive rule. Where then a purchaser bids off property at a public sale, the fact that a combination existed to prevent certain lands from being sold to other bidders, to wMch he was not a party, and of which he was ignorant, will not invalidate his purchase.* Indeed a combination of interests in respect of the prop- erty bought is not necessarily illegal. Parties may purchase jointly at public sales, if all be open and fair ; it is the end to be accomplished which determines whether a combination Is lawful or otherwise. If that be to depress the price of the property by artifice, the purchase will be void ; if it be to raise money for payment, or to divide the property for the accommodation of the purchasers, it will be valid.^ More broadly speaking, if the object of an agreement among bidders be fair, if there be no indirection or purpose to pre- 1 Swofford V. Garmon, 51 Miss. 348. lin ■;;. Brown, 24 Ohio St. 565 ; Phippen 2 Whitaker v. Bond, 63 N. 0. 290. v. Stickney, 3 Met. 388 ; Den d. Smith 8 Gardiner v. Morse, 25 Maine, 140. v. Greenlee, 2 Dev. 126 ; McMinn v. * Case V. Dean, 16 Mich. 12. Phipps, 3 Sneed, 196 ; James v. Ful- 5 Morrison v. Bank of Commerce, 81 crod, 5 Tex. 512. But see Atcheson v. Ind. 335 ; Allen v. Martin, 61 Miss. 78 ; Mallon, 43 N. Y. 147- Small V. Jones, 1 Watts & S. 128 ; Bres- 582 DECEPTION. [chap. YIJI. vent the competition of bidders, and sucli is not the necessary- effect of the arrangement, the agreement will be sustained.^ In the case cited there was an agreement that the defendants in error should procure judgments against certain parties, levy on their property, expose the same to sale, and that the plaintiff in error should bid the amount of the judgments for it. The agreement did not declare that the other party should not bid ; and it was sustained. In another case^ there was an agreement between two persons that one of them only should bid, and that, after buying the property, he should sell part of it to the other upon such terms as the witnesses to the agreement should decide to be just and reasonable. This agreement was up- held. It was agreed in another case^ that a party should bid a certain amount for a steamboat about to be sold under a mortgage, and transfer to the mortgagor an undivided in- terest of one-third, upon his paying a corresponding amount of the purchase-money. The contract was held valid. In still another case * an agreement was made between a senior and a junior mortgagee. The former agreed to bid the amount of his debt for a specific part of the mortgaged prop- erty; and this bargain was held a proper one. So also a simple agreement between two or more persons, each of whom wished to purchase a part only of certain land offered at a chancery sale, that they would purchase the whole jointly, and afterwards make division among themselves, does not constitute such a combination to stifle the biddings as will vitiate the sale.^ It is not necessary that the restraint upon competition should be effected by the bidders. If the auctioneer fraudu- lently prevent competition, the sale is equally invalid.*' Thus 1 Wicker v. Hoppock, 6 "Wall. 94. See Den d. Smith v. Greenlee, 2 Dev. ^ Phippin V. Stickney, 3 Met. 384. 126. 1 Bame v. Drew, 4 Denio, 290. « Jackson v. Crafts, 18 Johns. 110 ; * Garrett v. Moss, 20 111. 549. Chatham v. Pointer, 1 Bush, 423 ; Hin- 5 McMinn v. Phipps, 3 Sneed, 196. nen v. Newman, 35 Kans. 709. See § 3.] DECEPTION BY ACT : COLLUSION. 583 where an auctioneer, on seeing a party approach, who, as he knew, was likely to bid, knocked down the premises before such party could bid, the sale was set aside.^ So a combi- nation between a commissioner appointed by court to sell property, whereby the commissioner becomes a partner with others in the purchase of the property sold by him, is fraudu- lent; and the commissioner and his partners are liable for the profits realized by them from the transaction.^ So where A agreed with an auctioneer to bid in property for him, but in A's name, and A, having bid in the property, refused to turn it over to the auctioneer, it was held that the auctioneer could not recover it.^ But if the auctioneer give all buyers a fair chance to purchase, only refusing to assure the title to the property, his own purchase is not fraudulent, however inadequate the price.* Prom considerations of public policy courts are indeed strongly inclined to uphold judicial sales ; still these consid- erations will not induce them to sustain such sales, when they have been conducted in bad faith. Thus if a purchaser at execution sale falsely appeal to the benevolence of the bidders by giving out that he is buying for the benefit of the debtor or his family, this will be a circumstance which, with other slight evidence, may be sufficient to justify a court in setting aside the sale as fraudulent. And the same result will follow when the representations are made privately, and persons are thereby kept away who otherwise would have attended the sale for the purpose of bidding.^ A scheme was entered into by the widow and the admin- istrator of a decedent to procure a foreclosure sale of the Pickett V. Pickett, 31 Kans. 727 ; of public policy. See the doctrine of American "Wine Co. v. Scholer, 85 Mo. particeps criminis, ante, pp. 200-209. 496. * Brotherline v. Swires, 48 Penn. 1 Jackson v. Crafts, supra. St. 68. 2 Ciiatham v. Pointer, 1 Bush, 423. ^ Stewart v. Severance, 43 Mo. 322. ' Hinnen v. Newman, supra. A was See McNew v. Booth, 42 Mo. 189 ; Mo- allowed to set up the fraud, on grounds Neil v. Gates, 41 Ark. 264. 584 DECEPTION. [chap. VIII. intestate's lands, at which the administrator was to buy them in at an inadequate price by giving out at the sale that he was purchasing for the widow, thus dissuading others from bidding. Under these circumstances the administrator pur- chased the lands at sheriff's sale, and agreed to convey them to the widow for the price at which they were struck off to him. On his refusal to do so the widow and the intestate's only child filed a bill to redeem. It was held that the widow was barred by her participation in the fraud ; but in regard to the child the administrator was decreed a trustee for her.^ If however it appears that no one was influenced by tlie false representations of a bidder that he was bidding in the interest of the owner and his family, or that e. g. only the attorney for the execution plaintiff was so influenced, and it does not appear that he would have bid more than the amount of the debt, a sale for the amount of the debt will be valid.2 On the other hand the employment of a puffer at an auc- tion sale is a fraud upon the real bidders ; and equity will set aside the contract,^ or direct a bond, given by a bidder for property bought under such circumstances, to be delivered up.* But evidence that the plaintiff requested the defendant to bid on the property as an under-bidder, and told her that she would not be bound to take the property, but might take it if her husband desired, does not show any fraud practised upon third persons, or any illegal contract between the plain- tiff and the defendant.^ Nor is a purchaser of land entitled to relief because the price was run up by the apparent compe- tition of a person in reality insolvent and unable to comply with the terms of the sale, who bid upon the known special desire of the purchaser.^ Nor is it any objection to a sale 1 Johns V. Norris, 12 C. E. Green, Morehead v. Hunt, 1 Dev. Eq. S4 ; 485 ; s. c. 7 C. E. Green, 103. Spinger v. Kleinsorge, 83 Mo. 162. 2 Gilbert i>. Carter, 10 Ind. 16. * "Woods v. Hall, ib. 411. ' Veazie v. WUliams, 8 How. 134 ; ^ Faucett v. Currier, 115 Mass. 20. McDowell u. Simms, 6 Ired. Eq. 278 ; 6 Williams v. Bradley, 7 Heisk. 54. § 3.] DECEPTION BY ACT : COLLUSIOK. 685 of mortgaged property, that the mortgagee bid and ran up the price to a high figure, provided it appear that the auction- eer gave distinct notice at the sale that the parties were at liberty to bid.^ If property is advertised to be sold without reserve, such advertisement excludes any interference, direct or indirect, by the vendor, which can under any possible circumstances affect the right of the highest bidder, whatever be the amount of his bid, to be declared the purchaser. And any evasion of that duty on the part of the vendor will disentitle him to the aid of equity to enforce the sale.^ Thus where the vendor, previously to the sale of a life interest, advertised to be with- out reserve, entered into a private agreement with another person that the latter should bid a certain sum at the auction, and be the purchaser at that sum unless a higher sum were bid, a bill by the vendor for specific performance against another who had been declared the purchaser at the auction, though for a much higher price, was dismissed.^ A sale which is voidable because of collusion is voidable, if there has been no change of position, in favor of any party whose rights have been injuriously affected by the fraud. Thus the defendant in an execution, whose property is sold by the sheriff or other officer, may complain of fraud in the sale, and so may the plaintiff, according as the fraud affects the one or the other.^ If there has been some change of position, such as to make it impossible or unjust to set aside the sale, as where the property has been changed in form or the rights of an innocent third person have intervened, the defrauding purchaser may be held a trustee of the person defrauded, in respect of any proceeds of the property in his hands ; ^ or an 1 Dimmook v. Hallett, L. R. 2 ' lb. Ch. 21. ■* Hudson v. Morris, 55 Tex. 595. ^ Robinson ii. "Wall, 2 Phill. Oh. ^ lb. (Eng.) 372. 686 DECEPTION. [chap. VIII. action for damages could, it seems, be maintained against him if he was guilty of actual fraud. ^ It is laid down however that a trust will not be declared if the person who would have the benefit of it would in effect thereby receive the benefit of the fraud at the expense of some other person defrauded in the transaction who is equally entitled to protection ; and the following is put by way of illustration : Where the debtor's property, sold under execu- tion by means of fraud, is sacrificed and lost to the debtor, the plaintiff in the execution will not be permitted to allege the fraud for the purpose of appropriating to himself the fruits of the wrong, by holding the fraudulent purchaser as his trustee. To allow him to take the proceeds of the ill-gotten gains would be 'to sanction the wrong by simply discrimi- nating between the actor in the fraud [the purchaser] and a creditor seeking to appropriate its advantages.' The debtor must be protected ; and to set aside the sale, where that is practicable, will not harm the creditor.^ § 4. Collusive Conveyances : Registration. Another case of collusion by parties at arm's length to the plaintiff occurs where the plaintiff, having a genuine but un- recorded conveyance of, or incumbrance upon property of another, is induced by the debtor's or other person's deception to delay having the same recorded or perfected until some colluding junior grantee or incumbrancer has had his own deed put upon the record.^ Recording in such a case will be of no avail against the elder right. This follows from what has been said upon another page,* that if after knowledge of a sale to another, a person should procure a conveyance of the property to himself from the same vendor, and have the 1 Comp. ante, pp. 66, 68. Fanners' Ins. Co. v. German Ins. Co., 2 Hudson V. Morris, supra. 79 Ky. 598. 3 See ante, pp. 398-402. See also * Ante, p. 401. § 6.] DECEPTION BY ACT : COLLUSION. 587 deed recorded before the registration of the earlier deed, he would be compellable in equity to surrender his claim to the elder grantee.^ Another illustration may be given, drawn from the law relating to mechanics' lien. The plaintiff in a recent case ^ filed a bill in equity to have a mortgage upon buildings set aside, as obtained in fraud of the plaintiff's right to a me- chanics' lien upon the property, upon the ground that the plaintiff had been induced by the defendants to delay signing his contract with the owner until the latter had executed and put on record a mortgage thereon to one of the defendants (without consideration). The court declared that a mort- gagee who had by such means obtained an advantage could not retain it, and decreed in favor of the plaintiffs right of priority. In answer to an argument based upon the suggestion that the mortgage being without consideration was a fraud upon creditors, and therefore could not affect the plaintiff, the court said in substance that, while it was true that the mort- gage could not be set up against a purchaser under pro- ceedings to enforce the plaintiff's lien, such proceedings could not be begun until default of payment by the debtor ; mean- time the mortgage might be assigned for value to a pur- chaser without notice, to the defeat of the plaintiff's just demand. § 5. Collusion against Creditoes. Collusive acts to defeat creditors afford still another illus- tration of the subject under consideration. The general sub- ject of fraud upon creditors under the statutes is not now referred to ; that will be under consideration in the next ^ Mercier v. Hemme, 50 Cal. 606. '■' Hulsman v. "Whitman, 109 Mass. See Marshall v. Robert, 23 Minn. 49 ; 411. GUI V. Russell, ib. 362. 588 DECEPTION. [chap. VIII. volume as a branch of the law of circumyention. We now refer to cases of deception practised through collusion ; as where fictitious claims are asserted against a debtor who has induced his creditor, in pursuance of the common purpose, to let him have goods on credit. In a recent case ^ in Indiana the plaintiffs, in an action to enjoin a sale of goods under execution, averred a conspiracy between H, M, and others, in which it was arranged that H should buy goods of tlie plaintiffs on credit, which were after- wards to be levied upon on fictitious claims of M and the rest ; that this conspiracy was carried out, a large judgment entered accordingly against H, and levy of execution made upon the goods in H's hands ; and that the property was now about to be sold. The injunction was granted. § 6. Collusion against Wife. The fears of a wife are sometimes worked upon by design- ing persons to induce her, through false representations con- cerning her husband, to make over to them her property. To give a single illustration : In an Indiana case ^ it was alleged that the plaintiff was a married woman ; that the defendant, knowing that the plaintiff's husband was weak-minded, con- federated with him and a justice of the peace to induce her to execute a deed of property, the legal title to which was in her husband but the equitable title in her, as the defendant knew, under a false pretence of taking a mortgage to save the land to her, and to save her husband from arrest and imprison- ment; that the defendant had possession of the land, and claimed title under the deed ; and that her signature was a forgery. It was held that this stated a good cause for recon- veyance, and for damages for detention of the property. 1 Field V. Holzman, 93 Ind. 205. 2 Carver v. Carver, 97 Ind. 497. § 7.J DECEPTION BY ACT : COLLUSION. 589 § 7. Collusive Litigation. Collusive agreements, or other acts in the course of a litiga- tion, which are to be directly acted upon by the person in- tended to be deceived, whether a party or the court itself, also belong to this category. Cases of this sort may be gathered from the earlier pages of this volume ; such e. g. as cases of suits by fictitious parties,^ collusion of counsel, whether by some agreement in fraud of a client or of the judge,^ collusion between a creditor and principal debtor against a surety,^ collusion with an arbitrator,* or with a judge.^ A collusive judgment differs essentially from a judgment rendered upon deceptive evidence. In the latter case there has been a real contest upon a real issue ; in the former, where the collusion is between parties on opposite sides, there has been a sham issue and a sham contest.^ Divorce cases are a fruitful source of such practices. Here the deception is practised upon the court alone ; but because of the interest of the state in the proper conduct of such causes, the effect is the same as if it had been practised upon a party. Any judgment whatever obtained by collusion may be set aside. Indeed in divorce cases collusion is almost the only kind of fraud ever resorted to which will operate against the validity of the judgment, if the court has full jurisdiction of the cause and of the .parties.' 1 Ante, p. 89. ' See Meddowcroft v. Hugiienin, 4 " Ante, p. 90. Moore, P. C. 386 ; Perry o. Meddow- * Ante, p. 92. croft, 10 Beav. 122 ; Bigelow, Estoppel, * Ante, pp. 96, 98. 220, 4th ed. Collusion is not the only 5 Ante, p. 107. kind of fraud that might have such 8 See Bigelow, Estoppel, 211, 4th effect ; but other kinds are not so apt ed. ; Bandon v. Becher, 3 Clark & F. 479. to succeed. 590 DECEPTION. [chap. IX. CHAPTER IX. SILENCE: DUTY TO SPEAK. Hating now considered the subject of deception by act, on all sides, we are next brought to the subject of deception by omission ; in other words to the case of silence where there was a duty to speak.^ Now silence alone, it may be declared as a general rule, is not unlawful in transactions between men at arm's length, however great the advantage gained thereby ; a man's unpublished thought is surely his own.^ But it must be understood at the outset, that by silence we mean entire silence as distinguished from that sort which merely keeps back part of a truth told or suggested. This latter case is nothing else than misrepresentation, and has already been referred to.^ But speaking of pure silence, the general rule stated is very strong. It governs, even though the silence was med- itated, and with knowledge that the opposite party was laboring under mistake or ignorance.^ Thus neither the 1 The author refrains as far as possi- It may also be observed that prom- We from using the word ' concealment,' ises with intent not to perform belong not because it is not often an appropri- to the subject of misrepresentation, be- ate word, but because it is ambiguous, cause they virtually assert the fact of It is used both of pure and of partial present intent. See ante, pp. 484. silence, i. e. both of silence and of mis- * Laidlaw v. Organ, 2 Wheat. 178 ; representation. In the latter sense it Smith v. Countryman, 30 N. Y. 655, has already been considered in treating 670, 671 ; People's Bank v. Bogart, 81 of misrepresentation. N. Y. 101 ; Dambmann v. Schulting, 2 Ante, p. 15. 75 N. Y. 55 ; Kintzing v. McElrath, 5 ' Ante, p. 504. Any active conduct Barr, 467 ; Allen's Appeal, 99 Penn. tending to mislead turns the silence into St. 196 ; Hanson v. Edgerly, 29 N. H. false representation, with the usual con- 343 ; Fisher v. Budlong, 10 E. I. 525, sequences of that wrong. See Laidlaw 527 ; Hadley v. Clinton Importing Co., V. Organ, 2 Wheat. 178 ; Prescott v. 13 Ohio St. 502 ; Williams v. Spurr, 24 Wright, 4 Gray, 461 ; Hadley v. Clintou Mich. 335 ; Law v. Grant, 37 Wis. 548 ; Importing Co., 13 Ohio St. 502. Cochrane u. Halsey, 25 Minn. 52 ; Mitch- CHAP. IX.J SILENCE : DUTY TO SPEAK. 591 seller i nor the buyer of goods is bound to communicate intel- ligence of external circumstances, exclusively within his own knowledge, which might influence the market value of the commodity .2 It was accordingly held in the case first cited that the purchaser of a quantity of tobacco was not bound to communicate to the vendor news of peace, which would have materially affected the price of the commodity. So by the general law, mere silence on the part of the vendor of goods with respect to a latent defect therein of which the purchaser is ignorant, will not be ground for avoiding the sale. It is held however in Missouri and in one or two other states that if a person sell property having a latent defect of which he is aware, but which he fails to disclose to the pur- chaser, knowing that the latter is acting upon the supposition that no sucli defect exists, he is guilty of fraud ; and the fact is available against him in an action for the price of the prop- erty .^ So too it has been said in Mississippi that in cases of latent defect, where the sale is for a full price, the seller is bound to disclose such defect if known to him, especially when the disclosure might so far influence the purchaser as to ell V. McDougall, 62 111. 498 ; Cogel Talue. Comp. Brown v. Montgomery, V. Kinsley, 89 111. 598 (patent defects) ; 20 N. Y. 287. Frenzel v. Miller, 37 Ind. 1 ; Smith v. " Laidlawu. Organ, supra. See Cod- Hughes, L. R. 6 Q. B. 597 ; Evans v. dington v. Goddard, 16 Gray, 436. Carrington, 2 De G. F. & J. 481 ; Peek In the last case an agent of the pur- V. Gurney, L. R. 6 H. L. 377, Lord chaser said to the seller of copper, on Cairns ; Ward v. Hobbs, 4 App. Cas. inquiry, that he did not know of any 13 ; s. c. 3 Q. B. D, 150 ; Coaks v. advance in price of the article. That Boswell, 11 App. Cas. 232, Lord Sel- was true, but there had been an ad- borne. Further see Jordan v. Pickett, vance, and the principal knew the fact. 78 Ala. 331. But see Parrish v. Thur- Still the sale was held good. Comp. ston, 87 Ind. 437, and cases infra, note Nottingham Brick Co. v. Butler, 16 Q. 3. Parrish v. Thurston was a case of B. D. 778. C. A., ante, 604, note 1. mistake by a purchaser in regard to a * Cecil v. Spurger, 32 Mo. 462 ; Mc- party to a note, which mistake the seller Adams v. Gates, 24 Mo. 223 ; Barrow was aware of and did not correct. This v. Alexander, 27 Mo. 630 ; Lunn v. was held fraud. Sed qu. Shermer, 93 N. C. 164 ; Brown v. Gray, 1 People's Bank v. Bogart, 81 K. Y. 6 Jones, 103 ; Merritt v. Robinson, 35 101, sale of negotiable paper, with Ark. 483 (non-disclosure of mortgage knowledge of facts affecting its market of chattel). 692 DECEPTION. [chap. IX. induce him to decline the purcliase.^ This observation was however unnecessary to the decision of the case. The rule too by which a party to a sale of property is de- clared not to be bound to disclose circumstances within his knowledge which might affect the value of the property, ap- plies as well to sales of real estate as to sales of personalty. A person who knows that there is a mine in the land of another, of which the latter is ignorant, may nevertheless buy it, without disclosing the existence of the mine.^ On the other hand the vendor need not undeceive the purchaser who may be buying under an impression (not derived from the vendor) that the land contains minerals of great value. Thus though a vendor of land, effecting a sale at an extrava- gant price, knew that the estimate of the value of the land formed by the purchaser was based upon his belief in the ability of a certain person to detect mineral veins by walking over the surface of the land, and though the vendor himself fixed a high valuation upon the land by reason of such sup- posed condition of the soil, this alone was held insufficient to relieve the purchaser from payment of the agreed price. The contract price is binding in the absence of any false representations or acts of the vendor tending to cause or strengthen the false opinion upon which the purchaser has acted.^ Nor is it a fraud for a party to make a professed sale of property, as e. g. a lot of hogs, in prsesenti, to be thereafter delivered, without owning the subject of the contract, if he make no representation of having it.* It will be proper for him in such a case to purchase the property on the market, and the purchaser will be bound by his contract. But it will 1 Patterson v. Kirkland, 34 Miss. 8 Law v. Grant, supra. 423, 431. * Bales v. Weddle, 14 Ind. 349 ; 2 Hanis v. Tyson, 24 Penn. St. 347 ; Sanliom v. Benedict, 78 111. 309 ; Wol- Williams v. Spun-, 24 Mich. 335 ; Law cott v. Heath, ib. 433. V. Grant, 37 Wis. 548. Contra, Wil- liams V. Beazley, 3 J. J. Marsh. 577. CHAP. IX.J SILENCE : DUTY TO SPEAK. 593 be otherwise if, at the time of making the contract, he falsely represent that he has the property on hand.^ Again it is deemed not a fraud for a party to remain silent in regard to the correctness of an opinion expressed by a stranger to the contract at the time parties are contracting, though such opinion may influence the other party to the contract to his prejudice.^ Nor in any of these cases is the rule affected by the circumstance that the purchase may have been made un- der authority of court ; that will not require disclosure beyond the giving of information specifically called for by the court.^ Indeed the rule in question is not confined to cases of sale at all ; it is a general rule of contract. Thus it is applicable to the case of an attempt to set aside a marriage settlement by a man becoming engaged to a woman who failed to dis- close to him a lapse by her from virtue of which he was ignorant.* Again a debtor effecting a compromise with his creditor is not bound, unasked, to disclose his pecuniary con- dition ; ^ though if he intends not to pay that will be a fraud.^ It has also been held that an indorser of a negotiable note is 1 Bales V. Weddle, supra. subject under its consideration." As a ^ Williams v. Beazley, 3 J. J. Marsh, general and abstract proposition this 577. seems to me to be too broadly stated. " Boswell i). Coaks, 11 App. Cas. I do not think that because information 232, reversing upon this point 27 Ch. on some material point or points is of- D. 424. Lord Selbome now said : fered, or is given on request, by a pur- ' There are two passages in the judgment chaser from the court, it must therefore of the Court of Appeal on which I think be given on all others as to which it is it right to make some remark, as they neither offered nor requested, and con- seem to affect questions of principle, cerning which there is no implied repre- At pp. 453, 454 of 27 Ch. D. it is sentation, positive or negative, direct said that ' ' a person desirous of buying or indirect, in what is actually stated, property which is being sold under the The case of Brooke v. Lord Mostyn, 2 direction of the court must either ab- De J. & S. 373, referred to by the Court stain from laying any information before of Appeal, was unlike the present.' (The the court'in order to obtain its approval other passage referred to by his lordship [of the request for permission to buy], is not important here. ) or he must lay before it all the infer- * Evans v. Carrington, 2 De G., F. & J. mation he possesses, and which it is 481 ; Allen's Appeal, 99 Penn. St. 196. material that the court should have to ' Graham v. Meyer, 99 N. Y. 611. enable it to form » judgment on the * Ante, p. 485. 38 594 DECEPTION. [chap. IXt not bound to disclose the fact that the maker is incompetent to contract ; ^ but it should be noticed that indorsement war- rants the capacity of the prior parties to the instrument.^ So one who is only a middleman between seller and buyer, i. e. one whose duty is merely to bring the two together, as distin- guished from an agent to make a bargain, is not bound to dis- close the existence of any agency of his in favor of the oppo- site party to the sale.^ After dismissing cases falling under the general rule which declares silence to have no effect, and on the other hand cases of transactions between parties to confidential relations, in which silence is fatal,* we reach the really difficult pajt of the subject. The authorities clearly show that there are cases other than these, in which, regardless of inquiry, there is a duty to speak ; and silence here is a fraud. Do such cases stand upon any principle clear enough to be grasped and stated ? It will help to answer this question, to classify the cases. There is one class of cases in which the silence goes to the very essence of the transaction, preventing the existence of any contract, when the transaction takes the form of contract, for want of union of minds between the parties. If the silence of A in effecting insurance with B produce the reason- able impression upon B's mind that the risk to be insured is X, whereas the only subject for insurance is in fact Y, it is clear in principle and upon authority that there is no insur- ance ; none upon risk X, because that does not exist ; none upon Y, because there was no undertaking to insure Y.^ This however is not essentially a case of fraud at all ; but the sub- ject suggested is so often connected with deception as generally to have been treated as a branch of the law of fraud, by the 1 People's Bank Appeal, 93 Penn. * Ante, pp. 263, 264. St. 107. 6 Comp. Goddard v. Monitor Fire •■i Erwin v. Down, 15 K. Y. 575. Ins. Co., 108 Mass. 56 ; Campbell v. See Bigelow, Estoppel, 516, 4th ed. New England Life Ins. Co., 98 Mass. 3 Rupp V. Sampson, 16 Gray, 398 ; 381, 390, 396 ; Arnould, Marine Insur- ante, p. 304. ance, 494, 495. CHAP. IX.] SILENCE : DUTY TO SPEAK. 595 courts and by writers upon insurance, and it ought not to be passed by in this book. A special field for the application of the rule concerning silence of the kind now under consideration, or non-disclosure as it is generally called, is marine insurance ; but there are other branches of the law of insurance, and doubtless other subjects than insurance, in which the effect of silence is to prevent the union of minds. Thus if a policy of life insur- ance should not make it a cause of forfeiture for the assured to die at the hands of the law for crime committed by him, and a person under sentence of death should in any way pro- cure such a policy upon his life, answering truly all questions asked in the application, neither the insurer nor his agent knowing the real state of things, there would be no contract.^ So if a person knowing that a conflagration was raging or smouldering near his property were to apply for insurance to an underwriter's agent who was ignorant of the fact, and ob- tain a policy, it seems clear that there would be no contract.^ But it is by no means clear that the rule of union of minds can be applied to all cases of difference of risk ; and where that rule fails, there may be a true case of fraud. Tlie differ- ence of risk may in some cases be properly considered as dif- ference of degree rather than of kind. Policies of insurance commonly contain schedules of graded and classified risks, and a particular risk may be set down, or be treated, as hav- ing gradations ; in such a case it may be doubted whether misunderstanding by the underwriter, even though produced by fraud on the part of the assured, could be considered to have prevented any union of minds. However this may be, we may pass on to notice the well- settled rule of law that a marine policy is not binding if the assured or his agent fail to disclose any material fact, whether by design or not, and whether an inquiry is made such as 1 Cheever v. Union Ins. Co., 4 Am. ^ Bufe v. Turner, 6 Taunt. 338. L. Rec. 155 ; s. c. 5 Big. 458. 596 DECKPTION. [chap. IX. would elicit the fact or not.^ The duty devolves upon the applicant for such insurance to disclose to the underwriter everything he knows respecting the proposed adventure, and he cannot safely exercise his own judgment in regard to the materiality of any part of the information he may possess. If he should not disclose the whole, and what is kept back should appear to the court to be material, the policy will not be valid, though the concealment was without fraudulent in- tention, and arose merely from error of judgment.^ A material fact in this connection is one which, if commu- nicated to the opposite party, would induce him either to refrain altogether from the contract, or not to enter it on the same terras.^ The duty of disclosure too is not one merely binding upon the applicant ; it is mutual. The marine under- writer as well as the applicant is bound to disclose all circum- stances peculiarly within his knowledge in any degree affecting the risk ; and therefore, if at the time of subscribing the policy he know that the ship has arrived in safety at its des- tination, the contract is void as against the insured, and the premiums may be recovered back.* 1 See Hartford Ins. Co. v. Harmer, misrepresentation or concealment,' &o. 2 Ohio St. 452, where the whole law of And Lord Watson, still more specifical- concealment in insurance is considered, ly: ' Itis, in my opinion, a condition pre- lu the case of Blackburn v. Vigors, cedent of every contract of marine in- 12 App. Cas. 531, just at hand, in which suranoe ' — he does not say of insurance the House of Lords reversed the judg- — ' that the insured shall make full dis- ment of the Court of Appeal, and re- closure of all facts materially affecting Btored that of Day, J., 17 Q. B. D. 553, the risk, which are within his personal upon a, point of agency not important knowledge at the time when the con- here (ante, p. 236), the doctrine of con- tract is made. Where the insurance is cealraent and misrepresentation in ma- effected through the medium of an rine insurance is directly declared to agent, the ordinary rule applies, and rest upon the ground of breach of a non-disclosure of material facts, known condition precedent ; that is to say, no to the agent only, will affect his prin- contract at all arises in case of the cipal,' &c. concealment (non-disclosure) or mis- ^ Amould, Marine Insurance, 512 representation of a material fact. Lord (4th Eng. ed.). Halsbury, quoting as correct the Ian- ' Arnould, 509. guage of Lindley, L. J. ; ' It is a con- * lb. 511. dition of the contract that there is no CHAP. IX.] SILENCE : DUTY TO SPEAK. 597 It is the duty of the assured, as we have said, to communi- cate to the underwriter all the intelligence he has that may affect the mind of the underwriter in regard to either of the two following points : 1st, whether he will take the risk at all ; and, 2dly, at what premium he will take it. And this is a duty attaching at the time of effecting the insurance, and not in the least dependent upon subsequent events; for the effect of a concealment on the policy is determined not by its ultimate relation to the nature of the risk, but with refer- ence to its immediate influence upon the judgment of the underwriter. Hence though the intelligence concealed turn out to be wholly unfounded, or the loss to arise from a cause totally unconnected with the fact concealed, the policy is void.^ In the foregoing we have one class of cases relating to the effect of silence ; the silence there has or may have the effect to prevent any contract from coming into existence. Over against this must be set a certain, if somewhat indefinite, class of cases in which silence is deemed fraudulent, and yet, not being radical, permits the creation of a (voidable) contract. This class of cases was touched upon in the chapter on the Definition of Fraud ; ^ a duty to speak, which is the ground of liability ,3 arises wherever and only where silence can be con- sidered as having an active property, that of misleading. This 1 lb. ; Seaman v. Fonnereau, 2 it that it would work a denial of justice Strange, 1182 ; Lynch v. Hamilton, 3 to rest a case of the kind upon that Taunt. 37 ; s. c. 14 East, 494, in error, ground as matter of fact. In those 2 Ante, p. 16. cases however in which silence falls ' The duty to speak, and not any within the cognizance of the law, it ap- supposed creation of a representation, pears to be the counterpart of repre- direct or indirect, of fact, is the true sentation to this extent, that when ground ; though true it is that silence there is no warranty all the elements in the cases referred to is seldom abso- necessary in misrepresentation to create lute. There will almost always be some a case for the action of the law are prob- misleading act connected with it ; but ably necessary in silence, so difficult wiU it often be to fix upon 598 DECEPTION. [chap. IX. is a broad proposition, and it will be necessary to justify it by illustrations widely gathered ; it may also be thought indefi- nite, and it will be necessary to make its meaning clear by pointed examples. The first illustration, already referred to somewhat nar- rowly,^ is drawn from a familiar branch of the doctrine of estoppel in pais. The silence of A in the presence of B and C, who are negotiating in regard to a sale of property, let us say of a chattel, from B to C, estops A to set up a claim to the property from C, upon the consummation of the sale, as- suming that C was ignorant of the existence of any right to the property in A. The silence of A is deemed to be mis- leading; and his presence at and knowledge of the negotiation between B and C create a duty on his part to apprise C of his right or claim.^ Such a case, it is clear, is different from a case in which A may have become aware that some one, sometime, may pos- sibly act to his prejudice in making a purchase in which the purchaser may wrongly suppose that A has not (or has) an interest.^ Indeed it is laid down with good sense that knowl- edge by an owner of property (land in the particular case) that some one is about to buy it from a third person does not impose upon the owner the duty of seeking out the former and advising him of the facts.* In the estoppel case the parties are all together, and A's presence and silence may well be considered as having an active property of mislead- ing ; in the second A's absence and silence can have no such property. 1 Ante, p. 16. * Bramble v. Kingsbury, 89 Ark. 2 Pickard v. Sears, 6 Ad. & E. 469 ; 131. See also Sullivan v. Davis, 29 Bigelow, Estoppel, 544, 4th ed. Kans, 28, that a landowner is not es- * See Viele v. Judson, 82 N. Y. 32, topped by knowing that a lithographed Finch, J. putting the case of a forgery map, showing subdivisions of his land of A's name to negotiable paper, of into blocks, is in circulation, to deny which A learns. It is believed that the validity of such subdivisions, where McKenzie v. British Linen Co., 6 App. the map was unauthorized by him. See Cas. 82, is not contra. See infra, p. 613. Bigelow, Estoppel, 575, 576, 4th ed. OHAP. IX.] SILENCE : DUTY TO SPEAK. 599 An illustration of this principle of misleading silence may now be drawn from the law of carriers. Suppose a carrier to have given general notice that he will not be liable for loss of or injury to goods beyond a certain sum, unless the value of the goods is made known to him at the time of the shipper's delivering them. So important is it in such a case for the shipper to disclose the value of his goods that it has been held that, if such value exceed the amount specified, silence alone on the part of the shipper is a fraud in law, discharging the carrier from liability for loss of the same occasioned by his negligence ; and this too though no inquiry were made of the value of the goods, and no artifice employed by the shipper to deceive the carrier.^ The shipper's act in delivering the goods, followed by his silence in regard to their value, had still an active tendency to mislead the carrier. Where however no limit is placed upon the carrier's liabil- ity, the shipper is not bound to disclose the value of the goods, unless he is asked thereof by the •carrier.^ The latter at the same time has a right to make inquiry, and is entitled to a true answer ; otherwise he will not be liable for a loss caused by negligence.^ He would in any case be liable for losses caused intentionally. Thus it is held to be no excuse for the conversion by a carrier of the property of a consignee that the consignor fraudulently misstated the weight of the goods, and that the consignee knew that the bill of lading 1 Maguire v. Dinsmore, 62 N. Y. 35. venience when ti-avelling ; and in the 2 lb. See New York Cent. R. Co. absence of conduct upon the part of the V. Fraloff, 100 U. S. 2d. In this case passenger misleading the carrier as to the court, by Mr. Justice Harlan, said : the value of the baggage ; the court can- ' In the absence of legislation limiting not as matter of law declare . . . that the responsibility of carriers for the bag- the mere failure of the passenger un- gage of passengers ; in the absence of asked to disclose the value of his bag- reasonable regulations upon the subject gage is a fraud upon the carrier which by the carrier, of which the passenger defeats all right of recovery.' has knowledge ; in the absence of in- ^ i\,, . Crouch v. London Ry. Co., quiry of the passenger as to the value 14 Com. B. 255. See Batson v. Dono- of the articles carried, under the name van, 4 Barn. & AM. 21. of baggage, for his personal use and con- 600 DECEPTION. [chap. IX. stated the weight at less than it was, and did not notify tlie carrier thereof.^ A distinction further exists between the effect of those notices by carriers which seek to discharge them from duties which the law has annexed to their employment, and those which are designed simply to insure good faith and fair deal- ing on the part of the consignor. In the former case notice alone is not effectual; the consignor must assent in fact or by implication to the restriction. In the latter case notice alone, if brought to the knowledge of the shipper, will be sufficient.^ The principle under consideration is possibly further seen in another rule in regard to carriers, to wit, that, inde- pendently of express stipulation, a consignor of goods can- not recover for the loss of valuable goods by the carrier, where, in order to secure their carriage at a low rate, he fails to inform the carrier of their value.^ In a recent case * a shipper delivered to a carrier for transportation a bundle having the appearance of bedding only, when in fact it con- tained within the bedding valuable clothing, such as a silk dress, a brocha shawl, and furs, of the value of |200. This was not disclosed to the shipper, and the bundle was sent at a low freight. The goods having been lost, it was held that the carrier was liable for the value only of what was properly to be treated as bedding. But this particular example of the rule should rather be treated as a case of misrepresentation than of silence ; and perhaps the rule itself, upon which it is founded, looks to misrepresentation. This duty to speak may be considered again with reference to matters affecting sureties. It is laid down generally that 1 Wiggin V. Boston & A. R. Co., Watts & S. 21 ; Hollister v. Nowlen, 19 120 Mass. 201. "Wend. 23i ; Cole v. Goodwin, ib. 251 ; 2 Oppenheimer v. United States Exp. Chicago & A. R. Co. v. Thompson, 19 Co., 69 111. 62. 111. 578. 3 Ib. ; Chicago & A. R. Co. i/. * Chicago & A. R. Co. v. Shea, Shea, 66 111. 471. See Relf v. Eapp, 3 supra. CHAP. IX.] SILENCE : DUTY TO SBEAK. 601 where a person is induced to enter into a suretyship under cir- cumstances, connected with the transaction, which are pur- posely concealed by the creditor, the surety cannot be held liable ; ^ though the concealment must of course be a conceal- ment of facts which it was the duty of the person charged with it to reveal. If there was no duty incumbent upon him to reveal the particular circumstances, the surety cannot complain.2 Clearly it is not necessary that a creditor should disclose to a surety obligor every material circumstance of the situation.^ A surety is in general a friend of the principal debtor, acting at his request, and not at the request of the creditor ; and it may be assumed that in ordinary cases the surety obtains from the principal all the information he requires. At the same time, when the creditor describes to the proposed surety the transaction to be guaranteed, it is laid down in England that that description ordinarily amounts to a representation — at least it is evidence of a representation — that there is nothing in the transaction that might not naturally be ex- pected to take place between the parties to a transaction such as that described. And if a representation to this effect be made to the intended surety by one who knows that there is something not naturally to be expected to take place between the parties to the transaction, and that this is unknown to the person to whom he makes the representation, and that, if it were known to him, he would not enter into the contract of suretyship, this is evidence of such a fraudulent representa- tion as will discharge the surety.* Thus, in the case cited, a surety for the faithful conduct of another alleged that the creditor had concealed from him the fact that the subject of 1 A surety may also be caused to be- ^ Greenfield v. Edwards, 2 De G., lieve that his name has been removed J. & S. 582 ; Owen v. Homan, 4 H. L. from the obligation, and have just Cas. 997 ; Warren v. Branch, 15 W. ground to complain, as of a conceal- Va. 1 ; Cawley v. People, 95 111. 249. ment, that it has not. See Taylor v. ' See Cawley v. People, 95 111. 249. Lehman, 74 Ind. 418. * Lee v. Jones, 17 C. B. N. s. 482, 602 DKCEPTION. [chap. IX. the obligation was already heavily in debt to the obligee ; and this was held upon the foregoing principles a good defence to an action upon the obligation.^ But it is held in this country that even the fact that a rep- resentation, which turns out to be false, has been made by the obligee to the surety, will not have the effect to discharge the surety if the representation was honestly made. Thus it is held at law that one who became surety upon the bond of a bank, as state depositary of funds, cannot escape liability on the bond by showing that the Governor of the state selected the bank as solvent when in fact it was not solvent, and pub- lished it as one of the depositaries, and that the surety was thereby induced to sign the bond. Nor is it a defence that the surety signed the bond because of the selection by the Governor, acting as agent for the state, and under a law of the state requiring the selection of a solvent bank, ' by reason of which the state represented the bank as solvent and thereby made a false representation ' which induced the surety to sign. The state does not guaranty the solvency of the bank to sureties ; the sureties guaranty it to the state.^ In another case ^ sureties upon the bond of the treasurer of a secret society, being sued thereon, pleaded that the princi- pal debtor, being already a defaulter as treasurer, to the knowledge of the society, had been re-elected for the term covered by the present bond ; that the sureties were ignorant of this when they signed the bond; and that they were not members of the society, this last allegation being intended to indicate that they were not bound to know the facts. It was held that the plea did not state a good defence to the action ; the ground taken being that, though the society was a secret Blackburn, J., affirming s. c. 14 C. B. ^ Mathis v. Morgan, 72 Ga. 517. N. s. 386. See Savings Bank v. Albee, See also Savings Bank v. Albee, 63 N. 63 N. H. 152, distingnlshing Lee v. H. 152. Jones, supra. " Eoper v. Sangamon Lodge, 91 111. 1 See also Cawley v. People, 95 518. lU. 249. CHAP. IX.] SILENCE : DUTY TO SPEAK. 603 organization, the sources of information in its books of ac- count were open to the examination of the sureties, and they made no inquiries. Indeed it is doubtful in some of the states whether the cred- ' itor in a bond for faithful performance of duty is under any obligation to inform the surety that the principal debtor is already in default to him, at least where the bond is of a character to suggest the default. If in such a case the surety take no pains to inquire into the nature or circum- stances of his undertaking, he cannot complain that the facts were not disclosed to him, assuming that the creditor is not aware of any fraud being practised upon the surety in the transaction.^ Again the law bears strongly against the exemption of sureties upon the bonds of dependent persons, so far as such exemption is based upon non-disclosure. In a recent case^ the surety defendants to an action upon a guardian's bond alleged that B and C, by means of fraud, procured the re- moval of a former guardian of B, and the appointment of C, for the purpose of getting possession and control of the estate of B and spending it for their joint purposes. They now in- duced S and T to become sureties on C's bond, concealing their purpose just mentioned. B and C now, in pursuance of that purpose, succeed in gettipg the property into their hand and squander the same in living in adultery. It was held that these facts showed no defence to the action. It was the guar- dian's duty to take care of the funds, ' no matter what the wishes of his ward might be, and his sureties were bound to see that he did his duty.' In a case however before the House of Lords ^ Lord Cran- worth declared that if the dealings in which the principal had obtained the concurrence of the surety were such as fairly 1 Lee V. Wisner, 38 Mich. 82. 2 Judge of Probate v. Cook, 51 N. H. 450. 8 Owen II. Homan, i H. L. Gas. 997. 604 DECEPTION. [chap. IX. to lead a reasonable man to believe that fraud must have besn practised in order to obtain the concurrence, the creditor was bound to make inquiry and could not shelter himself under the suggestion that he was not called upon to ask and did not ask any questions upon the subject. If a person ab- stained from inquiry because he saw that the transaction in which he was engaged was tainted with fraud, his want of knowledge would not avail him. And this has been consid- ered, in the midst of many perplexing and conflicting cases, a sound conclusion for our own courts.^ It is clear that a creditor is not bound without inquiry to disclose to a surety that the principal debtor is indebted to him beyond the amount of the security signed by the surety. Thus where a creditor received from his debtor the latter's promissory note, payable to a third party who indorsed the same as surety, in part payment of his demand, and the debtor's individual claim for the balance, it was decided that the creditor was not bound to communicate the existence of the latter security,' unless inquiry was made.^ The matter of secret antenuptial conveyances furnishes, it seems, another illustration of the principle in regard to silence. At common law the husband assumes upon marriage his wife's debts, and in consideration thereof has certain rights over her property. The property, or its equivalent, which she has at the time of making engagement for marriage he has a right to suppose will remain her property until the marriage, apart from conveyances or gifts permitted by law or made with his consent ; ^ though indeed conveyances made by her even upon the eve of the marriage are presumptively lawful.* But the husband has the right to show that his wife's silence, taken in connection with the marriage, misled him. 1 Warren v. Branch, 15 W. Va. 21. » Baker v. Jordan, 73 ¥. C. 145. 2 Booth V. Storrs, 75 111. 438. See * Strathmore v. Bowes, 1 Yes. Jr. 22, also Lee v. Wisner, 38 Mich. 82. 38 ; s. c. 2 Cox, 28, 2 Bro. C. C. 345. CHAP. IX.] SILENCE : DUTY TO SPEAK. 605 It will be right at this place to set out further the rules of law applicable to such transactions, and to see just how the principle under consideration works in special cases. Voluntary antenuptial settlements made by an intended wife are at common law voidable by the husband after mar- riage, provided it appear (1) that intermarriage was in the contemplation of the parties at the time ; (2) that the woman executed the settlement in contemplation of the future mar- riage ; (3) that she concealed it from her intended husband. If these facts be proved, the cases have established the prin- ciple that such a settlement cannot stand against the marital right of the husband.^ The husband therefore cannot avoid the wife's settlement where, before the marriage, he had suf- ficiently early notice that it was intended to settle the wife's property, if nothing afterwards passed to justify a belief on the husband's part that, at the time of the marriage, no settle- ment had been made.^ Nor can he avoid a conveyance by the wife made for value and without notice.^ In applying the principle upon which conveyances made by the intended wife, pending a treaty for marriage, are avoided 1 Goddard v. Snow, 1 Russ. 485 ; Mon. 215. It makes no difference Strathmore v. Bowes, 2 Cox, 28 ; s. c. whether the conveyance is made before 2 Brown, C. C. 345 ; Baker v. Jordan, or after the marriage. In Green v. 73 N. C. 145 ; Williams f. Carle, 2 Green the deeds were executed before Stockt. 543 ; Duncan's Appeal, 43 but delivered after the marriage. Penn. St. 67 ; Jordan v. Black, Meigs, A secret settlement made by a woman 142. Whether this is the case under pending a treaty for marriage is not recent statutes is doubtful. Butler v. necessarily void in a court of law, Butler, 21 Kans. 525 ; Green v. Green, though liable to be set aside in equity ; 34 Kans. 740. But where the man-iage since on the marriage the husband does was brought about by the wife's repre- not take (under the statute of 27 Eliz.) sentations and promises that her prop- as a purchaser. Doe d. Richards v. erty should be kept for their support, a Lewis, 11 C. B. 1035. secret voluntary conveyance of it by ^ Wrigley v. Swainson, 3 De G. & her will be a fraud upon him, and may S. 458. be impeached by him with success. ' Comp. Prewit v. Wilson, 103 U. S. Green v. Green, supra. So where such 22 ; Andrews v. Jones, 10 Ala. 400 ; fraud is committed by the husband fraud on creditors, upon the wife. Petty v. Petty, 4 B. 606 DECEPTION. [chap. IX. on the ground of fraud upon the marital right, equity will take into consideration any meritorious object of such convey- ances, and the situation of the intended husband in point of pecuniary means.^ As for antenuptial conveyances by a woman after a treaty of marriage, Mr. Justice BuUer con- sidered that they were not invalid merely because the feme did not disclose the transaction to her intended husband. He said that in most of the cases the husband had actually made some settlement or provision on the wife, in the expectation of being admitted to the enjoyment of the property conveyed. In the case referred to the husband had not only not made any provision for his wife, but avowed his intention not to do so. Relief was therefore denied him ; and, upon a rehearing before the Lord Chancellor, the decision of Mr. Justice Buller was affirmed.^ In the same case the learned judge last named said that the result of the cases in regard to conveyances by women not previously married, or by widows without children, was, that if the wife were guilty of any fraud, professing to the hus- band that there was nothing to interfere with his rights, any deed executed by her in prejudice of such representation was void. But this was considered to be the extent of the cases. The mere non-disclosure of an antenuptial conveyance would not of itself render the transaction impeachable by the hus- 1 St. George v. Wake, 1 Mylne & K. cuted on the 10th. Mr. Bowes was a 610. perfect stranger to Lady Strathmore till " Strathmore v. Bowes, 2 Cox, 28. the 16th, and it is rather material to Several of the old cases were doubted consider how he became acquainted with or explained by him. Carleton v. Dor- her. A sham duel is fought between set, 2 Vem. 17 ; Edmunds v. Denning- Mr. Bowes and another gentleman, in ton, cited in that case ; Howard v. which Mr. Bowes is supposed to be as- Hooker, 2 Ch. Gas. 31. Mr. Justice serting the honor of Lady Strathmore. Buller thought the circumstances of the In consequence of this she pays atten- marriage worthy of consideration also, tion to him, which ends in a marriage 'It is clear,' said he, 'that, down to on the next day. He who begins with the 16th Januaiy, Lady Strathmore such a stratagem is not entitled to much meant to marry Mr. Grey [a third per- favor either in law or in equity.' son]. The deed complained of was exe- CHAP. IX.] SILENCE : DUTY TO SPEAK. 607 band ; nor, when provision was made by a widow for the chil- dren of a former marriage, would the deed be invalid. Though a settlement then by an intended wife be voluntary, and not disclosed to the intended husband, it is not necessarily fraudulent. The courts will consider the nature of the pro- vision, the situation of the husband in point of pecuniary means, and any other facts which tend to show that no fraud was intended. The equity which arises in cases of this nature depends upon the peculiar circumstances of each case, as bear- ing upon the question whether the facts do or do not amount to fraud upon the intended husband.i It is held in North Carolina however, contrary to the Eng- lish doctrine, that, if a widow during a treaty for a second marriage convey her property secretly and with intent to de- ceive her intended husband, he can avoid the conveyance, though it be. made to children of the widow by her former husband, and they be innocent of the fraud.^ But it is held that in order to establish the husband's right to have an antenuptial conveyance of the wife set aside, as in fraud of his marital rights, it is not necessary that he should prove actual deception ; deception will be inferred, if, after the commencement of a treaty of marriage, the wife should have attempted to dispose of her property without the knowl- edge of her intended husband.^ Indeed it is not a valid objection, it seems, to the husband's claim against the validity of such an antenuptial conveyance of the wife, that he was ignorant until after the marriage that the wife owned the particular property.* Lord Eldon once made the observation that, in the absence of any representa- tion by the wife of her ownership of specific property, no implied contract existed on the part of the lady, during the ^ Gregory v. Winston, 23 Gratt. 163 ; Logan v. Simmons, 3 Ired. Eq. 102. 487. 2 Tisdale v. Bailey, 6 Ired. Eq. ' Taylor v. Pugh, 1 Hare, 608. 358 ; Goodson v. Whitfield, 5 Ired. • Taylor v. Pugh, 1 Hare, 608, 613. 608 DECEPTION. [chap. tX. treaty for marriage, that her property as it existed at the commencement of the treaty should in no way be diminished.^ But this probably shows no more than that in Lord Eldon's opinion not every alienation of the wife's property during the treaty can be regarded as fraudulent, where the husband is ignorant of the transaction. The observation is not to be understood as going to the extent of upholding cases in which every farthing of the wife's property has, without the hus- band's knowledge of the extent of the wife's estate, been withdrawn from him. Lord Eldon is thought to mean simply this ; that, there being no implied contract on the part of the lady that her property should not be in any way diminished, it is for the courts to determine whether, having regard to the condition in life of the parties, and the other circumstances of the case, a transaction complained of by the husband should be treated as fraudulent or not. And it was conceded that where the husband had by his conduct rendered retirement from the treaty of marriage impracticable, as where he had induced her to cohabit with him before the marriage, he would not be permitted to object to the antenuptial conveyances of the wife.2 1 De Manneville v. Crompton, 1 to decide the present case. I could not Ves. & B. 354. give my individual consent to the suffi- ' Wigram, V. C, in Taylor i). Pugh, ciency of any of the reasons I have supra. 'Several circumstances,' said mentioned. The poverty of the hus- this learned judge, ' would certainly ap- band, the absence of any settlement pear to have been sometimes thought upon the wife, the reasonable manner material as negativing the imputed in which she desires to deal with her fraud ; such as the poverty of the hus- property, may be very material consid- band, the fact that he had made no erations for the guidance of the parties settlement on the wife, the reasonable in determining in what manner the character of the settlement, as in the wife's fortune should be settled ; but case of a settlement upon the children why they should constitute a reason of a former marriage, and the ignorance for concealing the arrangement from bf the husband that his wife possessed the- husband, I cannot comprehend, the property. Upon these, I am not It might be very proper to bring these called upon to say more than that I am considerations to the attention of the glad to find other grounds upon which intended husband. He might he told CHAP. IX.J SILENCE: DUTY TO SPEAK. 609 It is clear that an obligation founded on a valuable con- sideration, executed by a woman pending a treaty of marriage, cannot be set aside merely because it is concealed from the husband.^ But the transaction must be accomplished bona that the lady has a certain fortune, but, regard being had to the claims upon her and to his circumstances, the settle- ment ought to be made in a particular way ; and upon this statement, if he does not approve of the proposed settle- ment, the marriage contract may be de- termined. But I cannot comprehend the reasoning which says that any one of the reasons suggested is a sufficient ground for practising concealment upon the husband, or treats such coucealment as immaterial. So also with respect to the ignorance of the husband of the property of the wife : that, no doubt, materially lessens his disappointment at finding the wife's fortune has been withdrawn from his control ; but the equity is not founded upon his disap- pointment, for, if that were so, it would follow that his ignorance of the exist- ence of the property would always be an answer, however that ignorance was produced. The equity would never arise where the wife had contrived to conceal her property from the husband ; but this is not so, for the cases clearly show that practised concealment by the wife will be treated as a fraud on the husband. . . . But, without calling any one of these reasons to tlie aid of my judgment, there is one fact which de- termines me in refusing the relief which the husband asks in this suit ; and it is that the husband before the marriage put it out of the power of the wife ef- fectually to make any stipulation for the settlement of her property. By his conduct towards her, retirement from the marriage was on her part impossible. She must have submitted to a marriage with her seducer, even although he should have insisted on receiving and spending the whole of her fortune. The only way in which a woman can insist upon a settlement is by making it a part of the marriage treaty that her property shall be settled. The husband, by bringing the intended wife to his house, and inducing her to cohabit with him before the marriage, deprived her of the power to protect herself, and thereby precluded himself from telling this court with any effect that his wife had committed a fraud upon him, be- cause she has taken the precaution to have her property secured to herself and her children. ' If a marriage settlement be set aside on the ground that it is a fraud upon the inchoate marital rights of the hus- band, or that it was obtained from the wife by undue influence, the person at whose suggestion tlie settlement was made, especially (though this appears to be unnecessary, Harvey i). Mount, 8 Beav. 439 ; Baker v. Loader, L. R. 16 Eq. 49) if he be guilty of actual misconduct aside from suggesting the settlement, and defend the suit, may be ordered with the defendant to pay the costs. Prideaux v. Lonsdale, 4 Giff. 159 ;■ s. c. 1 De G., J. & S. 433 ; Har- vey V. Mount, 8 Beav. 439 ; Baker v. Loader, L. R. 16 Eq. 49 ; In re Clark, L. R. 4 Oh. 515. See also Huguenin v. Baseley, 14 Ves. 273 ; Bridgman v. Green, 2 Ves. Sr. 627 ; Beadles d. Burch, 10 Sim. 332. 1 Blanchet v. Foster, 2 Ves. Sr. 264 J Gregory v. Winston, 23 Gratt. 102, 12&. 610 DECEPTION. [CHAV. IX. fide ; if the wife meditate a fraud, and the other party be aware of the fact, the obligation will be void against the husband.^ The rule at common law relating to conTeyances of the property of a woman or the giving of securities by her with- out value during the treaty for marriage, and without notice to the intended husband, rests, as we have said, upon the pe- culiar right which a husband has in his wife's property. A wife has, at common law, no similar equity to have a convey- ance or security of the intended husband set aside on the ground of fraud upon her marital rights.^ But circumstances may change this rule. In the case just cited it appeared that upon the subsequent marriage of a son the father agreed to give up to him a farm and stock, in consideration of the wife's fortune being paid to the father ; it being then stated that the intended husband was not indebted to any extent. A deed was drawn up and executed in pursuance of this agreement ; and on the same day the intended husband gave his father a promissory note for ^200. Upon the death of the son it was held that this security could not be enforced against his es- tate, since, coupled with the statement that the son was not indebted to any extent, it was a fraud both upon the intended wife and upon her father, who had given the fortune. An antenuptial conveyance by the intended husband for the purpose of defeating his intended wife of dower is invalid by statute in North Carolina.^ And in Kentucky it is held that for the husband before marriage to convey the whole or a val- uable portion of his property without the knowledge of his intended wife is a fraud on her rights, even when the property is given to children by a former marriage ; * the consideration being love and affection.^ ' Gregory v. Winston, supra. ' Littleton ». Littleton, 1 Dev. & B. 2 McKeogh V. McKeogh, L. R. i Irish 327. Eq. 338. 4 Leach v. Duvall, 8 Bush, 201, on 5 See also Smith v. Smith, 2 Halst. Ch. 515. CHAP. IX.] SILENCE : DUTY TO SPEAK. 611 The several classes of cases above set forth ^ indicate with tolerable directness the principle upon which a duty to speak arises, so as to make silence a fraud. Silence under certain circumstances has the effect of an active principle ; it operates upon the opposite party, now like some admission, now like some statement. True it is not representation ,2 nor does it rest upon the ground of representation ; but it is closely anal- ogous, and is attended with legal consequences for the same reason, though of course with diminished force, which governs representation, to wit, that it is an agency in effecting con- duct. The action taken may be said, without a paradox, to be drawn out by the silence under the circumstances ; in a word the silence is a true cause, or one of the causes, of the action. Two or three special cases will now serve to emphasize the teaching of the classes of illustrations already given. It was held in a recent case that a person who, knowing that he had a loathsome and infectious disease, obtained board in the fam- ily of another ignorant of the fact, could not resist a termina- tion of the contract for board when the fact became known ; silence, with the appearances, was an active agency, grossly misleading the other party .^ So it is held to be a fraud for a tenant who wishes to quit, to offer in his place another whom he knows to be insolvent, the landlord accepting the person in ignorance of the fact ; the first tenant may still be held.* And the same would be true if A should sell to B the check of C, knowing at the time that C had failed, and B being autliority of McAfee v. Ferguson, 9 facts, may te added. Silence may well B. Mon. 475, the case of an antenuptial be deemed misleading in such cases, conveyance by the wife. Petty u. Petty, ^ In Lee v. Jones, 17 C. B. N. s. 4 B. Mon. 216, however, is a direct au- 482, ante, p. 601, the silence spoken of thority for Leach v. Duvall ; and in as a representation was silence in regard that case it was held that the wife was to a material part of a statement ; it entitled to relief in the lifetime of the was telling part of the truth and keeping husband. back the rest. It was not pure silence. 1 Perhaps the case of implied war- ' Douglas v. McFadin, 15 Kans. 336, ranty, where the warrantor knows the * Bruce v. Ruler, 2 Man. & R. 3. 612 DECEPTION. [chap. IX. ignorant of the fact;^ though a sale of such paper would not ordinarily require disclosure of facts naerely affecting its mar- ket value. ^ The New Jersey case just cited is a strong illustration. A bought stock in a bank of B, its treasurer, who had every two or three months made sworn, but false and fraudulent state- ments to the comptroller of the currency, which had been published in newspapers ; the statements indicating that the bank was in a flourishing condition, which was grossly untrue. A, who had seen the statements, supposed the bank to be sound, and bought upon that footing, B making no representa- tions to him. It was held that the sale was fraudulent, and that A might rescind it. The case is put by the court as one of trust and confidence on the part of A, but it was not such in any technical sense.^ And then the court says that the case was as if A had said to B, ' I know what declaration you have made public touching the facts on which depends the value of this stock. Your means of information are such that it is reasonable to believe those declarations. I have no other available means of ascer- taining the bank's condition ; I believe your declarations, and therefore offer you this price for your stock.' And the court now significantly says that although no such words were 1 Brown v. Montgomery, 20 N. Y. supra. It may indeed he said that in. 287. See Kean v. James, 39 N. J. Eq. the particular case there is trast or cou- 527, referring to these and other cases. fidence ; and surely there is sometimes, 2 People's Bank v. Bogart, 81 N. Y. as where A throws himself upon the 101. honor and integrity of B in a transaction, . 2 All the classes of cases above con- and B accepts the duty implied. See sidered would perhaps in the same ante, p. 491 ; also Worley v. Moore, 77 general sense be cases of trust and Ind. 567 ; Kenner v. Harding, 85 111. confidence ; and so they have been 264. But in other cases it is only put- treated. See Kean v. James, supra, re- ting the difiiculty a step further back, fening to 2 Pomeroy, Equity, § 902. and then making a fiction of it, to speak That may be well enough with regard of trust or confidence. The true gimind to marine insurance, a contract standing is the immediate and certain one, that upon uberrima fides ; but the same can- the silence operates, under the circum- not be said of fire, life, or accident in- stances, as an active agency, like a rep- surance, or of the other classes of cases resentation. CHAP. IX.] SILENCE : DUTY TO SPEAK. 613 spoken, yet this ' represents the mental processes of the buyer before making the offer and ... the seller's own mind on re- ceiving the offer.' ' Silence was equivalent in conscience to reassertion' of the published statements. The silence, it will be seen,, is compared here and elsewhere to representation ; still it is important to emphasize the fact that it is only comparison. ' Quod simile non est idem.' There are cases of great authority which directly show that liability does not rest upon the ground of representation. Thus it has recently been laid down in the House of Lords that a person who knows that a bank is relying upon his forged signature to a bill of exchange cannot lie by and not disclose the fact until he sees that the position of the bank is altered for the worse ; ^ but silence in such a case could in no sense be regarded as a representation. The ground of lia- bility is change of position caused by negligent ^ or fraudulent silence constituting an adoption of the signature.^ To put the case upon the ground of representation would lead to very great difficulties and probably to downright con- fusion. If silence is to be considered a case of representation, it might well be urged that innocent silence, i. e. silence with- out knowledge of the real state of things, would be attended with legal consequences ; affording ground e. g. for the rescis- sion of a contract, or for defence or recoupment in an action upon the contract by the party who kept silent. Such is the law, at least in courts of equity if not at last in all courts, of innocent misrepresentation;* the very opposite has always been the law in regard to silence.^ Silence must be fraudu- lent, or wrongful at the time, to have any effect. 1 McKenzie v. British Ltnen Co., 6 " MoKenzie v. Britisli Linen Co., App. Gas. 82, 109, Lord Watson. Si- supra, lence was considered nothing until a * Ante, pp. 410 et seq. change of position. See Zell's Appeal, * If it should be said that there is 103 Penn. St. 344, to same effect. the same reason for legal consequences '^ People V. Bank of North America, in the one ease as in the other, because 75 N. T. 548, 562. See Bigelow, after the silent party has learned of the Estoppel, 613, -4th ed. facts it is wrong for him to insist upon 614 DECEPTION. [chap. IX. It will be seen from the case in the House of Lords just re- ferred to^ that it is not necessary that the party to be affected by silence should have been present at the time of the change of position by the opposite party, or at any time. Presence of the silent party makes a clearer case indeed ; and generally where silence has been held fraudulent, the parties have been together. Still there may well be a duty to speak even when the silent party is absent ;2 and this though there be no rela- tion, in the legal sense, of trust or confidence between the parties. But this can only be the case, as before, where the silence may be treated as a true cause (not necessarily the entire or even main cause, but one of the causes) of the change of position.^ The silent party should, know, or at least have reason to know, if that can be enough, of the par- ticular transaction or situation ; and perhaps the party acting should, in some cases,* know that the silent party is aware of what is going on. Then it may well be said that, the silence amounted to an active agency and misled, where there has in fact been a change of position.^ his targain, the answer is (1) that a ^ McKenzie v. British Linen Co., 6 direct representation is a more active App. Cas. 82. agency towards inducing a change of ^ gge Anderson v. Hubble, 93 Ind. position than silence, and (2) that the 570, 573. representation is made for the very pur- " Ante, p. 16. pose of inducing action, while silence * As in cases like McKenzie v. British when innocent implies absence of any- Linen Co., supra, thing of the sort. ^ There had been none in McKenzie V. British Linen Co. CHAE. X.] SUNDAY LAWS. 615 CHAPTER X. SUNDAY LAWS. The Sunday statutes make illegal all acts done on Sunday, excepting only acts of necessity or of charity. Such statutes of course render invalid contracts made on that day, and with them all the preliminary transactions of the same or any other day ; so that an action for damages ^ or for re- scission, based upon false representations made on that day, could not be maintained, any more than an action upon the contract.^ If however the action, even when upon contract, cannot be considered to be founded upon a contract made upon such day, the result will be different.^ In the case cited the plain- tiff brought an action of contract for the price of cattle sold to and slaughtered by the defendants ; and it appeared that a contract of sale had been made between the parties, and the cattle delivered, on Sunday, but upon false representations made upon another day, and that upon a week day, after such contract, the defendants promised to pay. It was held that the plaintiff was entitled to recover, upon the ground that the cause of action could not be considered ' in any degree founded upon a contract executed on the Lord's day, or upon any rights growing out of it, or any deceit then practised.' The contract sued upon was treated as resting upon the plain- tiff's right of property, consequent upon a rescission of the 1 Kobeson v, French, 12 Met. 24 ; an action to recover the property. Mer- Gunderson v. Richardson, 56 Iowa, ritt v. Eobinson, 35 Ark. 483. 56. ' Winchell v. Carey, 115 Mass. ^ An offer or demand of rescission on 560. Sunday is invalid and will not justify 616 DECEPTION. [chap. X. Sunday bargain for the misrepresentation, and a subsequent sale and promise to pay for it lawfully made.^ ' ' But, treating that contract as never having been her contract at all, by reason of the fraud practised on her upon a previous day, [the action] would rest wholly upon her previous right of propei-ty and the subsequent lawful sale. and would not therefore be affected by the Lord's day act. Stebbins v. Peck, 8 Gray, 553 ; Hall v. Corcoran, 107 Mass. 251 ; Cransou v. Goss, ib. 439.' Gray, C, J. in Winchell v. Carey, su- pra. § 1.] VOID TRANSACTIONS. 617 CHAPTER XI. VOID TRANSACTIONS. There remains a phase of deception in which the fraud is such as to prevent the existence of any new relation based upon it, a phase of fraud alluded to in earlier pages of this volume,^ but not developed there. Oases of the kind may arise by misrepresentation, or by act not misrepresentation. § 1. MiSSEPRESENTATION. While in ordinary cases misrepresentation has the effect of rendering a contract voidable only, and not void,^ this assumes that the case was such that the misrepresentation still permitted the creation of a contract. The contrary may in fact be true. But to prevent by misrepresentation the existence of a new and binding relation into which the wrongdoer has sought to put his victim, there must have been a radical misrepresentation, a misrepresentation i. e. of the very nature itself of the relation in question, as distinguished from such matters as its usefulness, properties, purpose,^ 1 Ante, pp. 73, 74 ; and see especially held a defence ; the ground teing that chapter on Silence, pp. 594, 595. B still had the equitable title to the 2 The result of this, as we have else- property, and C was only a tnistee for where seen (ante, pp. 73, 74), is that him. Hall v. Erwin, 66 N. Y. 649. the contract is hinding until properly The case is not fully reported, rescinded. Whether this has heen' suf- " In a recent case certain persons who ficiently observed in all cases may be had pledged goods with the plaintiffs doubted. In a New York case a mort- obtained the same from the pledgees gage by A to B had been assigned to by misrepresentation of the purpose for C under fraudulent representations, and which they wanted them, and then C now brought suit to foreclose. A pledged them for value to the defend- answcred payment to B, and this was ants, who had no notice of the fraud. 618 DECEPTION. [chap. XI. extent, or its bearing upon other things.^ When however it is of that radical nature, the result will be that for the greater part^ no rights can grow out of the transaction. Thus if a person seek to bring about a contract of any sort, his purpose will utterly fail if he misrepresent the very kind of contract which the other party is to enter into, as- suming that the latter has acted in the matter with due care. No contract at all would result in such a case, for want of union of minds ; not only could the wrong-doer acquire no rights by the transaction, — others could acquire none out of it which they could enforce against the party upon whom the fraud was perpetrated.^ Illustrations of this proposition may be drawn from cases already presented in these pages. Thus if the payee of a negotiable bill of exchange represent the instrument to be a contract of guaranty, and induce another to indorse it in blank, without fault, upon that footing, no liability can arise against the supposed indorser even in favor of a purchaser for value without notice.* Again if a negotiable instrument, executed but not put into circulation, were obtained from the owner of the paper by a false representation that the wrong- doer was taking something else, the instrument would have no validity against the party deceived (if without fault), in favor of any one whomsoever into whose hands it might hap- pen to pass.^ The same would be true, a fortiori, of obtain- It was held that the plaintiffs could not fault. It was held invalid in the hands recover the goods ; they had only a of a hona fide purchaser for value ; this special property in them, and i^ej had under statute, given that up, under a, fraud indeed, ^ See ante, p. 74, note, which would have entitled them to res- ^ Foster v. Mackinnon, L. K. 4 C. P. toration against the wrong-doers, but not 704, ante, p. 258 ; Gross v, Drager, 66 against the defendants. Baboock v. Wis". 150. Lawson, 5 Q. B. D. 284, af'g 4 Q. B. D. * Poster v. Mackinnon, supra. 394. ' See Burson v. Huntington, 21 Mich, 1 In Hewitt v. Clark, 91 111. 605, 415 ; Gibbs v. Linabury, 22 Mich. 479 a note supposed and intended by the Whitney v. Snyder, 2 Lans. 477 ; Chap maker to be for $10.00 was made out man «. Rose, 56 N. Y. 137 ; Kellogg d, for 1300.00, and signed by him without Steiner, 29 Wis. 626 ; Corby v. Weddle, §1-J VOID TBANSACTIONS. 619 iug possession of a deed in that way ; no right whatever would pass, and the property could be recovered even from a bona fide purchaser for value.i Indeed this would be true of a deed, or a note, deposited in escrow, and so obtained before the terms of the deposit had been complied with.^ Not a few cases have arisen in recent times of misrepresen- tation, of the same radical character, by personation ; A representing himself to be B, and in the supposed character of B obtaining a contract with C. This sort of fraud has generally been practised in sales of goods, the wrongdoer being the purchaser, and directly selling for value and with- out notice, or disappearing after receiving the goods from a carrier. The question in the first form is, whether the second buyer acquires a good title against the deceived vendor ; and this turns upon the further question whether a de facto con- tract was effected in the first transaction.^ 57 Mo. 452 ; Briggs v. Ewart, 51 Mo. 245 ; Martin v. Smylee, 55 Mo. 577 (but quaere if the Missouri cases have not gone too far) ; ante, p. 73, note. Comp. Midland R. Co. v. Hitchcock, 37 N. J. Eq. 549 ; Ballard v. Burgett, 40 N. Y. 314 ; also such cases as Holmes V. Trumper, 22 Mich. 427 ; Greenfield Bank v. Stowell, 123 Mass. 196 ; and Angle u. Northwestern Ins. Co., 92 U. S. 330. 1 Abingdon v. Butler, 1 Ves. Jr. 206 ; Taylor v. Davis, 72 Mo. 291 ; Henry v. Carson, 96 Ind. 412 ; Fisher V. Beckwith, 80 Wis. 55 ; Everts v. Agnes, 4 Wis. 343 ; s. c. 6 Wis. 453. See Windett v. Hurlburt, 115 111. 403 ; Weaver v. Carpenter, 42 Iowa, 343, long delay. 2 See Henry v. Carson, supra ; Bur- son V. Huntington, 21 Mich. 415 ; Pow- ell V. Conant, 33 Mich. 396 ; Andrews V. Thayer, 30 Wis. 228 ; Hutchinson V. Crane, 100 III. 269, purchaser with notice ; Cotton v. Gregoiy, 10 Neb. 125. Comp. Biederman v. O'Connor, 117 lU 493. ^ Cundy v. Lindsay, 3 App. Cas. 464 In re Cooper, 20 Ch. D. 611, C. A. Hardman v. Booth, 1 Hurl. & C. 803 Eodliff V. Dallinger, 141 Mass. 1 ; Ed- munds, V. Merchants' Transp. Co., 135 Mass. 283 ; Moody v. Blake, 117 Mass. 23 ; Alexander v. Swackhamer, 105 Ind. 81 ; ante, p. 403, note. See also Smith V. Wheatcroft, 9 Ch. D. 223, that where personal considerations do not enter into the case, mistake will not avoid a con- tract ; but quaere if that would be so when the mistake was caused by fraud. ' If A, personating B, executes a deed in the name of B, purporting to convey B's property, no right or interest can possibly pass by such an instrument. It is not a deed. It makes no difference in law that A had the same name as B, if the false personation is established ; still the instrument is not a deed, and that plea would be a complete answer by B or any one claiming through him.' 620 DECEPTION. [chap. XI. The case first cited is the most valuable and authoritative decision upon the subject. L was a manufacturer in Ireland. Alfred Blenkarn, who occupied a room in a house looking into Wood Street, Cheapside, London, wrote to L, proposing a considerable purchase of L's goods, and in his letter used this address, ' 37 Wood St., Cheapside,' and signed the letters (without any initial for a Christian name) with a name so written that it appeared to be ' Blenkiron & Co.' There was a respectable firm of that name, ' W. Blenkiron & Co.,' carry- ing on business at 123 Wood Street. L sent letters and afterwards supplied goods, the letters, the goods, and the in- voices being all addressed to ' Messrs. Blenkiron & Co., 37 Wood St.' The goods were received by Blenkarn at that place, and disposed of for value to the defendants, who were entirely ignorant of the fraud. Upon these facts the House of Lords, in an action against such purchasers to recover the value of the goods, held that no contract had been made with Alfred Blenkarn, that no property whatever passed to him, not even a possessory title, and hence that nothing had passed to the defendants, who were accordingly liable.^ Lord Cairns said that Blenkarn had caused the plaintiffs to believe that they were dealing, not with him, but with Blenkiron & Co., and that Blenkarn had acted as if he had forged that firm's signature and inter- cepted goods intended for them. ' How is it possible,' said his lordship, ' to imagine that in that state of things any con- tract could have arisen between the respondents and Blen- karn . . . ? Of him they knew nothing, and of him they never thought. . . . Their minds never even for an instant of time rested on him, and as between him and them there was no consensus of mind which could lead to any agreement Kay, J., sustained on appeal, in In re contra, on the ground that the carrier. Cooper, supra. The other cases supra in delivering the goods, was the. plain- are to the same effect. tiff's agent, is wrong. 1 Perkins v. Anderson, 65 Iowa, 398, § !•] VOID TEANSACTIONS. 621 or any contract whatever.' The court therefore, it was added, were not dealing with a de facto contract ; such a contract would have made a different case. A contrasting case^ may now be presented, in which a some- what similar question arose, more recently, in this country. Three actions of tort were brought against a common carrier for a wrongful delivery of goods ; in two of them a person falsely representing himself to be Edward Pape, of Dayton, Ohio, a reputable merchant there, appeared in person in Bos- ton and bought of the plaintiffs the goods which were the subject of the suits. The court held that, upon these facts, and upon the test of the English case just stated, there was a sale, and that the title to the goods passed to the purchaser. The minds of the parties, the court said, had met upon all the terms of the sale, and upon the seller and the buyer. The seller ' could not have supposed that he was selling to any other person ; his intention was to sell to the person present and identified by sight and hearing ; ' and it did not defeat the sale that the buyer assumed a false name. There was a de facto contract within the rule of the English au- thority ; the contract was only voidable, not void ; and the defendant, the carrier by whom the goods were forwarded, had no duty to inquire into the validity of it.^ 1 Edmunds v. Merchants' Transp. court in Samuel v. Cheney, supra, 'is Co., 135 Mass. 283. not that he will ascertain who is the '^ ' It delivered them to the person owner of the goods and deliver them to who bought and owned them, who went him, but that he will deliver the goods by the name of Edward Pape, and thus according to the directions. If a man answered the direction upon the pack- sells goods to A, and by mistake directs ages, and who was the person to whom them to B, the carrier's duty is per- the plaintiff sent them. Dunbar i). Bos- formed if he delivers them to B, al- ton R. Co., 110 Mass. 26.' lb., Morton, though the unexpressed intention of the C. J. ; Samuel v. Cheney, 135 Mass. forwarder was that they should be de- 278; Eobertson v. Coleman, 141 Mass. livered to A.' The case of an action 231 ; Dodge v. Bank, 30 Ohio St. Ill ; against a carrier was distinguished from Empire National Bank v. Shotwell, 35 Cuudy v. Lindsay, supra. See Perkins Kans. 360. v. Anderson, 65 Iowa, 378 ; Dunbar i'. ' The contract of the carrier,' said the Boston K. Co., 110 Mass. 26 ; McKean 622 DECEPTION. [chap. XI. In the other of the three actions however the contract, as the court said, did not purport, nor did the plaintiffs intend, to convey to the person who was present and ordered the goods. The buyer introduced himself as a brother of Edward Pape, of Dayton, buying for him. The plaintiffs now un- derstood that they were dealing with the real Edward Pape, and intended to sell to him. Hence, upon these facts, there was no contract ; the relation of vendor and purchaser had never been created ; and the defendant was liable for the value of the goods. ^ In another recent case,^ an action of tort to recover the value of two hundred bedsteads, it appeared that P went to the plaintiff in Maine and gave to him the business card of H. & Co. of Boston, and falsely said that he was A. P., a mem- ber of the firm. He wanted bedsteads, of which the plaintiff was maker. The plaintiff agreed, and sent the goods to Boston directed to H. & Co., who refused to receive them. P then took them from the carrier and sold them to the defend- ant for value and without notice. It was held that the plain- tiff was entitled to recover, on the ground that no contract had been made with P. We have seen that in certain cases silence, in negotiations for insurance, may have the effect to prevent a contract from coming into existence. It follows a fortiori, and it has been laid down, that misrepresentation may have the same effect.^ V. Mclvor, L. E. 6 Ex. 36 ; Heugh v. upon the question whether the pris- London Ky. Co., L. R. 5 Ex. 51 ; Clough oner was guilty of larceny at common V. London Ry. Co., L. E. 7 Ex. 26. law. Comp. upon the whole subject Ash- i To the same effect Alexander v. well's Case, 16 Q. B. D. 190, where a Swackhamer, 105 Ind. 81. coin was loaned to the prisoner as a 2 Moody v. Blake, 117 Mass. 23. shilling, which was in fact, but not so 3 Campbell v. New England Life known at the time to either of the Ins. Co., 98 Mass. 381, 390, 396, Wells, parties, a sovereign. The prisoner hav- J. citing 3 Kent, 282, 6th ed. ; Curry ing afterwards discovered the fact, ap- v. Commonwealth Ins. Co., 10 Pick. propriated the coin, and was indicted 535 ; Wilbur v. Bowditch Ins. Co., 10 for larceny. The judges were divided Cush. 446 ; Kimball v. /Etna Ins. Co., § 2.] VOID TKANSACTIONS. 623 Still it cannot be true that misrepresentation, even fraud- ulent misrepresentation, always has the effect of preventing the creation of a (de facto or voidable) contract of insur- ance ; for the minds of the parties may have met perfectly notwithstanding the misrepresentation, as where the fact un- truly stated is of the name of another company in which the plaintiff is insured, or of the amount insured in that com- pany, or of its solvency, or of any other fact not changing sub- stantially the complexion of the risk. If however facts which would make a particular risk are so misrepresented as to make an entirely different risk, especially a greater one, then it may be said that the minds of the parties have not met, and there is no contract ; ^ there has been mistake on the part of the underwriter in regard to the real risk to be insured.^ § 2. Act not Misrepresentation. It is probable that fraud of the kind under consideration may be committed as well by deceptive acts (short of larceny) not of the character of misrepresentation as by misrepresenta- tion. A negotiable or an unnegotiable instrument may be obtained from a party to it, before its delivery, by stratagem or other artful manoeuvre consisting of true deception, where nothing has been said or done in the way of representation, in the natural sense of that term. Such a case would perhaps arise where a mere custodian had delivered the instrument contrary to the directions of the maker.^ It is perfectly clear that if the instrument was obtained by 9 Allen, 540 ; Sawyer v. Coasters' Ins. a life insurance, of the age of the ap- Co., 6 Gray, 231; 1 Arnould, Insurance, plicant ! 494, 495, and cases cited. ' So held in Chipman v. Tucker, 38 1 Goddard v. Monitor Ins. Co. 108 Wis. 43, Roberts v. McGrath, ib. 52, Mass. 56. and in Roberts u. "Wood, ib. 60. But 2 But what difference can there be there is some ground for doubt. Chip- between a misrepresentation, in a sale man v. Tucker was based upon Burson of a horse, of the age of the animal, v. Huntington, 21 Mich. 415 ; but that and a misrepresentation, in negotiating case hardly goes so far. 624 DECEPTION. [chap. XL a criminal act, no liability can arise against the parties to it at that time, in favor of any holder whomsoever; and this though the party against whom the crime was committed may have been somewhat careless, as by leaving the paper in an unlocked drawer to which his clerk, or some other servant or person, had access.^ The case, it seems, would be different where there was no criminal act, on the ground of negli- gence.2 But where Ihere has been no negligence, it is be- lieved that no liability can be created through a delivery effected by fraud, though no crime was committed ; there can be no assent, nor anything tantamount to assent, in such a case. 1 Baxendale v. Bennett, 3 Q. B. D. ' Burson v. Huntington, supra ; 525, C. A. ; Bursou v. Huntington, 21 Chapman v. Eose, 56 N. Y. 137 ; Whit- Mich. 415 ; Fisher v. Beckwith, 30 ney v. Snyder, 2 Lans. 477 ; Foster v. Wis. 55. Mackinnon, L. R. 4 C. P. 704. § l.J CONSEQUENCES OP DECEPTION. 625 CHAPTER XII. CONSEQUENCES OF DECEPTION. Thus far we have had under consideration what constitutes actionable or relievable deception ; it remains to consider the consequences attending the wrong. And we are concerned now only with the substantive law; remedies have already been considered, in treating of the adjective law. § 1. Measure op Damages. The measure of damages will demand attention first. Dam- ages have sometimes, as in Massachusetts, been treated as belonging to the law of remedies rather than to that of sub- stantive rights ;i but that in principle is a clear mistake. How much a plaintiff is entitled to recover is as much a matter of substantive law as is his right to recover at all.^ The general rule in regard to the measure of damages in actions for deception is commonly stated in substance thus: The defendant is liable, not for everything that follows upon his fraud, but for what may be presumed to have been within his contemplation at the time, as a man of average intelligence.^ The following has been set down in illustration: If one should merely sell timber, which was used to prop up a build- ing, and, by reason of the imperfection of the timber, the building should fall and be destroyed, the seller, though he 1 See Ayer v. Tilden, 15 Gray, Lowell, J. denying the Massachusetts 178. Contra of stipulated interest, rule. lb. There is no sound reason for ^ Crater v. Binninger, 4 Vroom, 503 ; such a distinction. Noyes v. Blodgett, 58 N. H. 502 ; Faris 2 Ex parte Heidelback, 2 Lowell, 526, v. Lewis, 2 B. Mon. 375. 40 626 DECEPTION. [chap. XII. had been guilty of fraud in the sale, would not be liable be- yond the difference in value between good timber and that sold. The falling of the building could not have been con- templated from the point of view of the parties in the matter of tlie sale. But if the timber was sold for the very purpose of propping the building, the seller would be liable for all the damage done to the building as within his contemplation.^ And so it was held that if a plaintiff has been fraudulently enticed into an oil speculation by the defendant, the defend- ant would be answerable for all money put into the business by the plaintiff in the ordinary course.^ It is consistent with the rule under consideration that, in an action for damages caused by the communication of dis- ease by sheep of a vendor who had falsely represented them to be sound, the purchaser, if not at fault,^ may recover for the loss of other sheep infected, which he owned at the time of the purchase, though the vendor did not know that he owned other sheep.* For it was to be presumed that one who was buying sheep had other sheep. Again if the vendor of a horse, cow, or other animal fraud- ulently conceal the fact that the animal has a contagious or infectious disease, and the purchaser, not knowing or having reason to know the fact, places the animal with others of the same kind, to which the disease is communicated, the pur- chaser can recover as damages the value of all the animals lost thereby ;^ or in case none are lost or rendered worthless by taking the disease, he can recover the difference between their value after sickness and before, together, no doubt, with the cost of attempting to cure them. The rule under consideration implies that the defendant is 1 Crater v. Binninger, i Vroom, 513. Wentz v. Morrison, 17 Tex. 372 ; Brad- 2 lb. ley V. Eea, 14 Allen, 20. 8 Marsh v. Webber, 16 Minn. 418 ; ^ Mullett ». Mason, L. E. 1 C. P. Noyes v. Blodgett, 68 N. H. 502. 559 ; Johnson v. WoUower, 18 Minn. * Sherrod v. Langdon, 21 Iowa, 288 ; s. c. 15 Minn. 474. 518 ; Marsh v. Webber, 16 Minn. 418; § l.J CONSEQUENCES OP DECEPTION. 627 not liable for any loss caused by the plaintiff's own act, or by his omission of duty.^ In an action on the case for deceit in the sale of apples delivered to the plaintiffs at a railroad depot in Exeter, New Hampshire, and by them shipped to Canada, the jury were instructed, against objection by the defendant, that they might consider the loss directly resulting from the inferior quality of the apples, and all expenses, trouble, and annoyance which were the necessary consequences of the fraud ; and the instruction was held erroneous by the Su- preme Court, apparently on the ground that the jury were not told that it was the duty of the plaintiffs to use reason- able care to prevent incidental losses. The plaintiffs, it was said, could recover for such damages only as could not have been avoided by due care on their part.''^ Thus much of cases of positive damage produced by fraud. Negative damage, that is, the failure of property bought to equal representations made concerning it, has been found somewhat more difficult to deal with ; but the principle as settled in the modern cases is virtually the same as that above considered, to wit, that the plaintiff is entitled to receive what he had reasonable ground to expect, that is, what was in con- templation in the transaction. Thus : — It is now well settled that, in actions for deceit or breach of warranty in sales, of personalty or realty, the measure of damages is the difference between the actual value of the property at the time of the purchase, and its value if the property had been what it was represented or warranted to be.2 The price pai,d for the property is strong but not con- 1 Noyes v. Blodgett, 58 N. H. 502 ; 2 Allen, 52 ; Noyes v. Blodgetrt, 58 N. Marsh v. Webber, 16 Minn. 418. H. 502 ; Fisk -u. Hicks, 31 N. H. 535 ; 2 Noyes ' v. Blodgett, supra. But Bowman v. Parker, 40 Vt. 410 ; Wood- was that not implied in the expression ward v. Thacher, 21 Vt. 580 ; MuUer v. ' necessary consequences ' ? Eno, 4 Kern. 597 ; Sherwood v. Sutton, » Gray, J., in Morse v. Hutchins, 5 Mason, 1 ; Estell v. Myers, 66 Miss. 102 Mass. 439 ; Stiles v. White, 11 Met. 800 (realty) ; Young v. Filley, 19 Neb. 356 ; Tuttle v. Brown, 4 Gray, 457 ;. 543 ; Drew v. Beall, 72 111. 164 ; Wal- Whitmore v. South Boston Iron Co., lace v. Wren, 32 111. 146 ; Loader v. 628 DECEPTION. [chap. XII. elusive evidence of its value, as it was represented to be.^ And, where the price paid for one animal is another animal, the age, appearance, and qualities of the latter animal, and the price for which it sold, are competent to be considered by the jury as determining the value of the former. So too the price at which other property, of like character, was actu- ally sold in the vicinity, at or about the same time, may be shown in evidence;^ and, in the case of horses, evidence of such sales a year after the date of the transaction in contro- versy is competent.^ But all this only shows that the injured party is entitled to recover for what he had reasonable ground to expect to receive. In an action for false representations in the sale of corpo- ration stock, the general rule of the measure of damages is Kekule, 3 C. B. N. s. 128 ; Dingle v. Hare, 7 C. B. u. s. 145 ; Jones v. Just, L. R. 3 Q. B. 197. Comp. Schulze v. Great Eastern Ry. Co., 19 Q. B. D. 30, 0. A. In the absence of fraud the measure of damages for the breach of an executory contract of sale is the sum paid and ex- penses Incurred. If therefore no money has been paid, the recovery is nominal. But, if there be fraud in the defendant, the plaintiff may recover the value of his bargain. Thompson v. Sheplar, 72 Penn. 160. In Harris v. Harris, 70 Penn. St. 170, the court by Thompson, C. J. says : ' The rule in actions for damages for a breach of contract to con- vey, under a parol sale of land, is not to be measured by the value of the land but by the consideration paid and com- pensation for improvements made in clearing, fencing, building, planting or- chards, &c., in reliance on the contract, deducting therefrom a reasonable rental for the use of the premises.' But it is held that where the owner puts it out of his power to convey, so as to de- feat his agreement, the measure of dam- ages is not merely price paid, interest. and loss in the ordinary way, but also any enhanced value of the property at the time the contract should have been performed. Burdick v. Seymour, 39 Iowa, 452, distinguishing such an action from an action upon a warranty. Foley 1). McKeegan, 4 Iowa, I. 1 Can- V. Moore, 41 N. H. 131 ; Ksk V. Hicks, 31 N. H. 535 ; Gary v. Gru- man, 4 Hill, 625 ; Page v. Parker, 40 N. H. 47 ; s. o. 43 N. H. 363 ; Stiles V. White, 11 Met. 356. 2 Carr o. Moore, 41 N. H. 131 ; White V. Concord K. Co., 30 IT. H. 188 ; Beard v. Kirk, 11 N. H. 397. ' Can- V. Moore, supra. ' Where a person is induced by false representa- tions to buy an article at an agreed price, to be delivered on his future order, he can recover as damages for the deceit the diminution caused thereby in the market price at the time of delivery,' i. e. ' the difference between the agreed price that was procured by fraudulent representations and the market price of the article purchased, at the time when the sale was made.' Cooper v. Schle- singer, 111 U. S. 148. § 1-J CONSEQUENCES OF DECEPTION. 629 the difference between the value of the stock, as it really was at the time of the plaintiff's purchase, and what its value would have been, had the representations of the vendor been true. The sum paid by the purchaser for the stock, and afterwards as assessments thereon, with interest, does not constitute the measure, except in so far as such assessments were rendered necessary by the false representations.^ Nor is the market value of the stock at the time of purchase conclu- sive of its actual value, since the real condition of tlie company may not be known at the time. The purchaser is not bound to sell it then, but may keep it until its true value at that time can be ascertained, as the basis of his right to damages.^ Again in an action for false representations in the sale of an interest in a partnership, the measure of damages, where there is no rescission, is the difference between the actual value of the defendant's interest and its value as it would have been had the representations been true.^ "Where how- ever the contract of sale has been rescinded, the rule requires that the defendant should repay all that has been paid to him, with interest, and return all that has been transferred to the defendant, or its value, with interest, indemnify the plaintiff for liabilities incurred, and pay a reasonable compensation to him for the time spent by the plaintiff in the business for the defendant.* And whether the purchase is rescinded or not, the plaintiff will further be entitled to a lien upon the surplus of the partnership assets after satisfying the partner- ship debts, in respect of the sum paid on entering the firm ; and in respect of any surplus paid in satisfying partnership debts he will be entitled to stand in the place of the partner- ship creditors to whom he has made payment.® 1 Bo^vman v. Parker, 40 Vt. 410. Rawlins v. Wickliam, 3 De G. & J. 2 Hubbell V. Meigs, 50 N. Y. 480. 304 ; Mycock v. Beatson, 13 Ch. D. 384. ' Morse v. Hutchins, 102 Mass. 439. The plaintiff may enjoin the defendant * Eichards v. Todd, 127 Mass. 167. from further using his name. Smith v. See also Perry v. Hale, 143 Mass. 540, Everett, supra. 543 ; Smith v. Everett, 126 Mass. 304; ^ Mycock v. Beatson, supra. 630 DECEPTION'. [chap. XII. The measure of damages in au action for falsely represent- ing a note to be due and unpaid, thereby inducing the plain- tiff to purchase it, is the full amount of the note. The jury will not be allowed to make an estimate of the market value of the note.^ So in an action for damages sustained by false representations of the quantity of land conveyed by the de- fendant, the measure of damages is ordinarilj' the contract price per acre, with interest, for the amount of the deficit ;2 but if other damage has been sustained, which should have been in contemplation, the plaintiff may recover therefor.^ But in cases of rescission the courts will adopt a valuation set upon the property or parcels of it by the parties, only when such valuation appears to be not unconscionable, and free from fraud, and both parties had an equal opportunity to judge of such value.* In a Massachusetts case^ the plaintiff sued in deceit for false and fraudulent representations of the age of a vessel sold to the plaintiff ; the vessel being twenty-eight years old, whereas she was represented to be but eighteen. There was evidence that the plaintiff had sent the vessel to sea under the belief that she was only eighteen years old, and had not learned the fact of her age until the condemnation of the vessel in a foreign port, or a short time before. The de- fendant contended that the measure of damages was the difference between the value of a vessel eighteen and one twenty-eight years old ; and the judge instructed the jury that if the vessel was at home or elsewhere in the hands of the plaintiff for future use, that would be the true rule. But he said that if the plaintiff had sent her to sea under a belief in the representation made, and she had been wholly lost, the 1 Sibley v. Hultert, 15 Gray, 509. jection to the rule came from the de- In Adams v. Bowman, 51 Mich. 189, fendant. the measure of damages as to a worth- ^ Hallam v. Todhunter, 24 Iowa, 166. less note (with mortgage), was treated ' Tracy v. Gunn, 29 Kans. 508. as the sum paid for it, as money paid * Franklin v. Greene, 2 Allen, 519. withont consideration. But the oh- ^ Tuckwell v. Lambert, 5 Gush. 23. § l.j CONSEQUENCES OK DECEPTION. 631 plaintiff would be entitled to recover her whole value, if he had sustained damage to that amount ; if on the other hand he had sent her to sea knowing her real age, he could recover only the difference between a vessel such as she was repre- sented to be and such as she really was. And this instruction was upheld. In purely money transactions interest may be allowed by way of damages. Thus, in an action for money had and received, if it appear that the defendant has fraudulently obtained the plaintiff's money, he is chargeable with interest from the time he so obtained it, and not merely from the time of the demand.^ Indeed it is held in Michigan that interest may be allowed by way of damages for falsely and fraudu- lently representing tlie value of land bartered to tlie plaintiff in exchange for land of the defendant, where the difference in value will not make good the loss.^ The measure of damages however is not to be changed by the mere turn of subsequent events. The fraudulent conduct e. g. of a trustee towards his cestui que trust is not to be effected by evidence of subsequent events of a mere accidental nature, which injuriously affected the interest of the cestui que trust. The trustee must account for his misconduct, without regard to such events. Thus where a trustee colluded with a remainder-man and with tenants of the cestui que trust, ten- ant for life, and caused her to be ejected and to lose her rents, it was determined that the subsequent insolvency of some of these tenants could not be taken into consideration in measur- ing the damages due the beneficiary from her trustee by reason of his misconduct.^ In a leading case in England the Lord Chancellor, having a similar matter in view, put this question : Suppose an estate to be of the value of £50,000, and a trustee buys it for him- self for £40,000, committing a great fraud upon his cestui 1 Atlantic Bank v. Harris, 118 Mass. " Snow v. Nowlin, 43 Mich. 383. 147 ; Wood V. Bobbins, 11 Mass. 504. 3 Kaye v. Powel, 1 Ves. Jr. 408. 632 DECEPTION. [chap. XII. que trust. By reason of the calamities of war or other general distress, landed property sinks in value more than one fifth, and the trustee then sells the estate for £35,000. Would it not be true that he would be bound to pay the £10,000 as a satisfaction for the fraud committed by him, though he had actually received less for the estate than he had paid for it ? The money would be due, not in consequence of what the trustee sold the land for, but of what the cestui que trust lost by the first act of the trustee at the time. The only conse- quence in a court of equity, it was observed, is that what one party lost by the undue advantage taken by the other must be made good.^ The same rule is illustrated by a Massachusetts case^ of exchange of mortgages. The plaintiff had given to the de- fendants a mortgage in part payment of a mortgage purchased by him from the defendants, and the defendants were about to foreclose this latter. The plaintiff now filed a bill to re- strain the proceeding, upon the ground that the defendants had made false and fraudulent representations about the mortgage which they sold to the plaintiff, so that it had not realized (on sale under a power in the mortgage) what it would have brought had the representations been true ; and the plaintiff prevailed though the defendants urged that the sale had not been judiciously managed. That appears to have meant that by waiting the plaintiff would have had a better market ; which the court said he was under no obligation to do. This rule of the irrelevancy of accidental subsequent events operates of course as well in favor of the defendant as of the plaintiff. In an action for deceit in the sale of stock and bonds by the defendant to the plaintiff the declaration al- leged that by reason of the defendant's misrepresentations the plaintiff had been ' greatly injured, inasmuch as said stock is worthless,' and ' said bonds if of any value are of much ' Fox V. Maokreth, 2 Cox, 320, 322. 2 Franklin v. Greene, 2 Allen, 519. § 1-] CONSEQUENCES OF DECEPTION. 633 less value than the amount so paid for them,' and ' the plain- tiff has never received the least benefit from ' the purchase, 'but only loss and damage.' This was held bad for not alleging that the property was not worth at the time it was bought all that was given for it.^ Loss of contingent ^ or speculative benefits are not within the rule.8 In the Michigan case the plaintiff, on the strength of misrepresentations by the defendant, had paid a subscrip- tion to a bonus to induce a manufacturing company to locate in the town where he lived. The company turned out to be insolvent, and none of the advantages set forth by the defend- ant, such as increase of population and rise of the value of property, were realized. It was held that this gave no claim to damages. When a person has obtained title to a piece of land by fraudulent misrepresentations, he will not be able, on a re- scission of the purchase, to require compensation for improve- ments made upon the property, or for incumbrances lifted.* On the contrary the rescission relates back to the time of the sale ; and from that time the wrongdoer will be chargeable with the rental value of the estate.^ In cross-actions for damages, whereby a party has been drawn by fraud into a contract which has passed into judg- ment (without issue in regard to the matter of fraud), it would seem that the measure of damages would be the extent of the injury suffered by reason of the fraud, less any benefit derived under the contract, regardless of the existence of the judgment for the opposite party. If the contract had been accepted without suit, it is clear that the measure of damages in an action for the fraud would not be affected by the fact 1 Squier v. Plunkett, 11 Gray, 11. » Fitzsimmons ■«. Chapman, 37 Mich. Quaere if even with that allegation the 139. See Schulze v. Great Eastern Ry. declaration would have been good. See Co., 19 Q. B. D. 30, C. A. Malaohy v. Soper, 3 Bing. N. C. 371 ; * Milwaukee E. Co. v. Soutter, 13 Bigelow's L. C. Torts, 42, 47, 51. Wall. 517; Moselyt;. Miller, 13 Bush, 408. 2 Kimmansu. Chandler, 13 Iowa, 327. * Mosely u. Miller, supra. 634 DECEPTION. [chap. XII. that the injured party had elected to treat the contract as binding, except in so far as he had received a benefit from it ; and the fact that the contract has passed into the higher form of a judgment could not make the case different. We have said that the rule of the measure of damages is generally assumed to embrace all loss within the reasonable contemplation of the defendant at the time of the wrongful transaction. If this is to be taken as the limit of liability, there is a difference between the law of fraud and that of negligence in this particular. According to the current of recent authority a defendant is liable, in an action for negli- gence, not only for damage which he might reasonably have contemplated, but for all that happens in regular course by reason of his negligence, whether such as might have been expected to follow or not.^ Is there ground for any distinction favorable to the man who commits fraud ? Suppose the following case : A is going in the morning to his shop, in ignorance of the fact that it is just taking fire. B, who knows the fact, meets him and fraudulently induces him to go elsewhere, until the flames in the shop have got beyond control. The fire consumes the shop, and is communicated, without act of man, to a building far away, which was not likely to be reached. Is B liable for the loss of or damage to this latter building ? If it were a case of negligence, the answer would be in the affirmative. Is it to be said that the law of negligence does not stand well ? The true rule in cases of fraud, as in cases of negli- gence, probably is that the defendant is liable for all loss which happens in the direct and natural course of things from the wrong.^ 1 Higgins V. Dewey, 107 Mass. 494 ; ^ Mallett v. Mason, L. E. 1 C. P. Smith V. London Ey. Co., L. R. 6 559. It need hardly be said that this C. P. 14, Ex. Oh., afg L. R. 5 C. P. rule would not make the defendant liable 98. The cases are well stated in Whar- in the case, ante, p. 625, of the fall of ton, Negligence, §§ 18-21. a building unless he sold the lumber for § 2.] CONSEQUENCES OP DECEPTION. 635 Exemplary damages are allowable, it is held, in an action for deceit, when the evidence tends to show that the defend- ant wilfully purposed to deceive and defraud the plaintiff.^ But the case, it seems, would need to be an aggravated one. § 2. DiSCHAEGE IN BANKRUPTCY. Another of the special consequences of fraud is that a dis- charge in bankruptcy is rendered of no effect in regard to previous liabilities incurred by the bankrupt through inten- tional ^ deception, not to mention the case of a discharge itself obtained by fraudulent practice.^ The consequence is that the creditor may, upon discovering the fraud, sue for the amount of the debt, replying the fraud to a defence of discharge.* Nor will a discharge in bankruptcy bar a right of action for fraudulent representations previously made, as e. g. touching the amount of business and profits of a fiirm of which the defendant was a member, and thereby inducing the plaintiff to buy him out.^ props. ' Natural ' in the rule means Morse v. Hntchins, 102 Mass. 439 ; following in regular consequence of the Stewart v. Emerson, 52 N. H. 301 ; wrong. Bank of North America v. Crandall, 87 1 Nye V. Merriam, 35 Vt. 438 ; By- Mo. 208. ram v. McGuire, 3 Head, 530 ; Oliver v. ^ Morse u. Hutchins, supra ; Turner Chapman, 15 Tex. 400. v. Atwood, supra ; Strang v. Bradner, 2 Merchants' Ins. Co. v. Abbott, 131 114 U. S. 555, afg Bradner v. Strang, Mass. 397 ; Mudge v. Wilmot, 124 Mass. 89 N. Y. 299. 493 ; s. c. 103 U. S. 217 ; Peel v. Bry- The plaintiff may however have pre- son, 72 Ga. 331 ; Maxwell v. Evans, 90 eluded himself from rescinding a con- Ind. 596 ; Brown v. Broach, 52 Miss, tract fraudulently obtained from him 536. by his debtor by proving for it against ^ Eev. Sts. U. S. § 5117. The same his estate. Thus the defendant fraud- would probably be true in the absence ulcntly bought silk of the plaintiff on 8f statute, unless the language concern- credit, and went into bankruptcy. The ing the discharge precluded inquiry, plaintiffs proved against his estate, upon But impeachment of the discharge as a note given for the price of the silk, itself obtained by fraud was a matter for He now attempted to rescind the sale the Federal courts. Way w. Howe, 108 for the fraud ; but it was held that the Mass. 502; Black i). Blazo, 117 Mass. 17. claim was inconsistent with the proof * Turner v. Atwood, 124 Mass. 411 ; in bankruptcy. Seavey v. Potter, 121 636 DECEPTION. [chap. XU. § 3. Collateral Deception. It is often said that fraud vitiates all transactions into which it enters ; and this is true within certain limits. Fraud in the ' concoction ' of a judgment will make the judg- ment invalid ; false testimony, intended and calculated to deceive, will not.^ Fraud in obtaining a contract will render the contract invalid between the parties ; it will not affect the rights of innocent purchasers or creditors.^ Fraud may prevent the existence of any contract, as e. g. of sale ; and innocent third persons (not creditors) may thus have to suffer, to the extent of losing any rights resting upon the supposed contract.^ They may still, it seems, have rights growing out of care of the property or of necessary expense incurred upon it.* There is another limit to the effect of fraud ; it cannot vitiate collateral engagements or transactions which may have grown out of it. There is a clear distinction e. g. be- tween the case of an attempt to enforce an agreement (as by an action upon it) tainted with fraud, and a proceeding growing out of the agreement, to which the fraud is but a collateral incident.* Thus the terms of a lease obtained by a fraud upon the lessor in regard to the intended use of the premises cannot be enforced against him in an action upon any of the covenants. Indeed if, after putting the lessee into possession under the lease, the lessor forcibly eject the lessee, the latter can maintain ejectment against the former for a restoration of the premises ; and the fraud by which the lease was obtained will be no defence. By the execution of the lease and the giving of possession an estate passes to the Mas3. 297 ; Ormsby v. Dearborn, 116 ^ Ante, p. 403. Mass. 386. But this is a matter only » Ante, p. 617. of the remedy. The plaintiffs sue for * Ante, p. 74, note, the fraud. See ante, p. 68. « Feret v. Hill, 15 C. B. 207; Noel 1 Ante, pp. 86, 87. v. Horton, 50 Iowa, 687. § 3.] CONSEQUENCES OF DECEPTION. 637 lessee, of which he cannot be divested by a collateral fraud. The lessor's remedy is in a court of equity, or by an action at law for false representations.^ It is sometimes difficult however to determine whether the fraud in question is collateral to the main transaction, and not the foundation of it. In a Scotch case 2 in the House of Lords it appeared that a tottering concern had furnished money to the defendants and induced them by fraud to buy shares in it; furnishing the money for that purpose. The shares became worthless, and the company now brought an action to recover the money advanced ; to which the de- fendants pleaded the fraud by which they were induced to buy. But the action was upheld, upon the ground that the fraud was not in Scotch law ' dans locum contractui,' i. e. it was collateral to the present demand. The Lord Chancellor said that if the plaintiffs (' pursuers ') were right in saying that the loan was one independent transaction and the purchase another, the fact that the defendants (' de- fenders') had been induced by the fraud of the lenders to make the alleged fraudulent purchase would not vitiate the loan. His lordship however did not consider that to be the case. ' The transaction,' said he, ' cannot be properly described as a loan. The company wished to induce the defenders to pur- chase the shares, and for that purpose they made a fraudulent representation, under which they offered to make the pur- chase for them ... I think that this makes the advance of money not an independent loan but a part of the machinery for giving effect to the fraud.' In regard to all this it may be urged that collateral fraud presents only a question of the remedy to be applied. But that is not true ; it presents a question of the remedy, and something else. As a matter touching the remedy the 1 Feret v. Hill, supra. 2 National Exoh. Bank v. Drew, 2 Macq. 103. DECEPTION. [chap. XII. question was considered in its place ; ^ it is noticed here as a matter of substantive law, to show that the consequent contract or transaction, to which the fraud is only collateral, stands good. § 4. Eights op Innocent Paeties inter sesb. One of the consequences of fraud may be that a question of right has arisen, not against the wrongdoer or some one standing in his place, but between two innocent parties both of whom have been made victims of the fraud; as where a note and mortgage are made to A for his accommodation, and the two are fraudulently separated by him, one being sold to B, the other to C. What are the rights of B and C, inter sese, in such a case ? The principle upon which all such cases are to be decided, where the whole loss is to be put upon the shoulders of one, appears to be that he must suffer at whose door any charge of want of diligence can be laid, applying to the case a more searching scrutiny than in other cases would be just ; or, if, this fail, that he who has been the instrument of loss to the other should bear the same. Several illustrative cases have recently found their way into the books.2 In one of them ^ it appeared that a note, payable to order, and a mortgage had been made to A, that A in- dorsed the note to B, and afterwards assigned the mortgage to 0, fraudulently making another note to C corresponding to the note called for by the mortgage. B and C were both innocent parties, holding for value ; B files a bill in equity to have the mortgage assigned to him, and prevails. The ground of the decision was that B had the legal title to the note, that A held the legal title to the mortgage for him, and that 1 Ante, pp. 76, 77. See also chapters Strong v. Jackson, ib. 60 ; Blunt v. 3 and 4, ' Adjective Law.' Morris, ib. 55. 2 MoiTis V. Bacon, 123 Mass. 58 ; ' Morris v. Bacon, supra. § 4.] CONSEQUENCES OP DECEPTION. 639 A, having neither the title nor the possession of the note, nor any authority to make another, could not deprive B of the right to the mortgage, which was made to secure the note. C was a trustee of B. The result would have heen different had there been no indorsement of the note to B ; f or B would then have been only an assignee.^ In another case ^ a bill in equity was brought against J and his assignee in bankruptcy and others to redeem a mortgage. On April 28, 1874, the plaintiff had been owner of a note niade to her by defendant M for 13500, secured by mort- gage. On June 30, K, son-in-law of the plaintiff, wished to borrow of J $3200, which J agreed to lend upon receiving an assignment of the said mortgage. To accommodate K the plaintiff assigned the note and mortgage to J, the assignment being recited to be collateral to K's note for 13200, which was to run for five years. On January 7, 1875, J assigned the mortgage to the Tremont National Bank as security for a debt of his, indorsing the K note in blank and passing it and the assignment of the mortgage to the bank, but retaining possession of the M note. On January 25, 1875, J passed the M note with his indorsement in blank to the First Na- tional Bank as security for a loan ; he also assigned the M mortgage upon a separate paper to the latter bank, no refer- ence being made to the K note. Both banks acted in good faith ; both were defendants. The decree was that the First National Bank should deliver the M note to the Tremont National Bank, and that the plaintiff should be allowed to redeem from the latter the M note and mortgage upon pay- ment of the K note. The case turned upon questions of notice peculiar to the particular situation. It was considered that a five year note was not what was usually termed commercial or business paper, and that it was subject to equities to which ordi- nary business paper might not be subject ; not indeed that 1 Blunt V. Morris, 123 Mass. 55. ^ Strong v. Jackson, 123 Mass. 60. 640 DECEPTION. [chap, XII. there was any different rule of law in the two cases but that what would attract no attention in the one case would be apt to attract attention in the other; and the First Na- tional Bank could not, in such a case, be considered as a holder of the note in the ordinary course of business with- out notice. INDEX. 41 INDEX. \The italic lines indicate the titles to sections or chapters.'] ABATEMENT, of purchase price, 436. ACCEPTANCE OF PROPERTY, 533. ACCOUNTS, lapse of time as to, 33. before arbitrators, 99. in probate, 114, 115. evidence required to open, 145. opened when, 145, n. 2. impeachment of settled accounts, 145. between attorney and client, 292. required of servant in cases of collusion, 302, n. 2. required of factor, when, 302. of agents, 301. of partners, 312. of trustees, 323. of guardians, 340. of executors and administrators, 345, 347. ACKNOWLEDGMENT, of married woman, 253 ACQUIESCENCE, 321. (See Waiver.) ACTION, (See Remedies.) survivorship of, 212-214, 251, 558, note, 560, note. ACTIONS FOR DAMAGES AND CROSS ACTIONS, fraudulent disposition of property by debtor gives creditor no action at law for damages, 69. effect of fraudulent representations by debtor in such case, 69, 70. 644 INDEX. ACTIONS FOR DAMAGES AND CROSS ACTIO'SS, — continued. independent cross lights of action made subject to statutes in some states, 70. dependent cross rights of action, 70, 71, 72. ADJECTIVE LAW OF FRAUD, 3-193. ADVERTISEMENTS, 388, 491. ADVICE, in transactions between parties to fiduciary relations, 263, 264. AGED PERSONS, dealings with, 373, 374. {See Illiterate, Weak-minded, and Drunken Persons.) AGENCY, (See Principal and Agent.) ALTERATION OF WRITTEN INSTRUMENTS, if an instrument be altered in a material point, no recovery generally upon it, in either its present or original form, 255. material alteration of bill or note avoids it in hands of innocent in- dorsee for value, 255. parol evidence of real contract, 255. suit upon original consideration, 256. removal of marginal terms, 256. correction of mistake, 256, 257. the fact that the instrument has been restored by chemicals to its original form does not revive it, 255, 256. even in favor of a bona fide indorsee for value, 255. ANIMALS, communication of disease by animals sold under false representations of soundness, 468, 626. ANNUITY, 280, note. ANTENUPTIAL CONVEYANCES, 605-610. {See Husband and Wife.) , ANTICIPATION, restraint of, 222, 223. ARBITRATORS, misconduct of, 96, 98, 99. ART, terms of, how interpreted, 499, 500. ASSIGNMENT, acts of assignor after, 171. of cause of action, 214, 215. assignee a purchaser for value, when, 409. ASSUMPSIT, effect of suit in, on right of rescission, 435, 436. ATTACHMENTS, cannot be procured by fraud, 142, note. INDEX. 645 ATTACHMENTS, — continued. prevented by fraudulent representations, 541, 542. causing abandonment of, 542. ATTORNEY AND CLIENT, client must go into equity to impeach gift or sale to attorney, 138. privileged communications, 186. confidential relation between, 265. presumptions against validity of transactions between, in interest of attorney, 265-295. notice to client through attorney, 239, 240. {See Fiduciary, Confidential, and Kindred relations.) AUCTIONS, {See Public Sales.) AWARDS, {See Judgments and Awards.) B. BADGES OF FRAUD, 183, 184. BANK, how far affected with knowledge by director, 239. BANKER, misrepresentation of law by, 4S9. BANKRUPTCY, {See Creditor and Debtor.) assignee in, may go behind judgments w^hen, 92, note. creditors should not sue in, 112. plea of discharge, 120, 157. attorney cannot purchase from his client's assignee in, 282, note. BELIEF, used sometimes as synonymous with opinion, 140. BIDDINGS, stifling, 580-584. puffing, 584, 585. {See Public Sales.) BILLS AND NOTES, fraud in obtaining execution, 73, n., 74, 257, 258, 618, 619. burden of proof of fraud, 132-134. representations of maker's solvency, 149. alteration of bill or note, 165. cancellation for fraud, 200. {See In.junction; Jurisdiction.) may render the same void in the hands of a bona fide holder for value, 255. {See Alteration of Written Instruments.) 646 INDEX. BILLS AND -ROTES,— continued. partnership paper in hands of partner, 895. misrepresentation of legal effect of note, 489. indorsement obtained by fraud not actionable till payment, 541. non-disclosure of incompetency of party, 593, 594. negotiating check payable to bearer, or under blank indorsement of another, 611, 612. (See Void Transactions.) BILLS OF DISCOVERY, particulars in, 119. BLIND, false reading to, 55. BLOOD RELATIVES, when in confidential relations, 365, 866. BONDS, (See Principal and Surety.) BROKER, confidential situation of, 304. same of his clerk, 296, note. selling property to principal in which broker is secretly interested, 304. commissions of, 306. (See FiDuciAKY, &c. Relations.) BROTHER AND SISTER, relation not fiduciary or confidential, 354, note, 365, 366, note. BURDEN OF PROOF, i-ests on party making allegation of frand, 123. examples, 123, 124, 125, 126, 181, 182. I'ule the same although evidence in support comes from opposite party, 127. rule the same in cases of denial as distinguished from avoidance of fraud, 127, 128. examples, 128, 129, 130. wife's separate estate, 128, 129, 130. effect of purchase for value, 130, 131. when proof of notice or of voluntary conveyance requisite, 131, 132. where note obtained from maker by fraud, 132, 133, 134. where fiduciary relation exists between the parties, 135. between mortgagor and mortgagee, 135, 136. in regard to the Statute of Limitations, 136. (See Db:ceptiox ; Misrepresentation.) in cases of fraud by partner, 244. 'BURGLAR PROOF^ 471, note. BUSINESS SIGNS, 568. BY-BIDDING, 159, 585. (See Public Sales.) INDEX. 647 c. CARRIERS, notices by, in restriction of liability, 599, 600. communication to carrier of value of articles, 599. notices contained in contract of shipment, 600. notices not in the contract, 600. misdelivery by, 621, 622. false personation of consignee, 621, 622. (See Personation.) CATCHING BARGAINS, in contracts with heirs, 369-372.. CAUSE OF ACTION FOR FRAUD, when it accrues, 23, 24. CAVEAT EMPTOR, 413, note, 528, note. (See Deception; Misrepresentation.) CESTUI QUE TRUST, (See Trusts and Tuustees.) CHARACTER, evidence of, 150. CHARITY, inadequacy of rent of charity estates as an indication of fraud, 331. CHASTITY, misrepresentations concerning, 468, 549-552. CHURN, capacity of, 479, note. CIRCUMVENTION, as distinguished from deception, 4-7, 17, 18. intention in cases of, 198. CLERGYMEN, confidential situation of, 352, 353. CLERK, confidential situation of, 296, n. 1. CODISTRIBUTEES, not liable for each other's fraud not participated in, 252. . COEXECUTORS OR ADMINISTRATORS, when liable for each other's frauds, 248-252. COLLUSION, of agent with another, 18, 302. of trustee with another, 18, 333. judgment obtained by, 94, 106. evidence of, 167, 168. certificate of work withheld by, 254. COMPANY, buying shares in, 228. 648 INDEX. COMPOSITION WITH CREDITORS, fraud in, 204, 205. CONCEALMENT, (See Deception ; Fiduciary, &c., Relations ; Miseeprksentation; Silence ; Statute of Limitations and Lapse of Time.) fraudulent, of cause of actiou, 23-32. of fraud, 27, 28. CONDUCT SUBSEQUENT, Introductory, 384. Notice : its Relation to Fraud, 385, 386. (See Notice.) taking title under wrong-doer, without participation in the fraud, 385. notice of fraud on creditors not enough to make fraud in Mass., 386. Constructive Notice : Duty tn inquire, 380-396. (See Notice.) Innocent Misrepresentation : Rescission, 410-438, (See Rescission.) Statute of Frauds in Cases of Part Performance and Resulting Trusts, 444-461. (See Part Performance; Resulting Trusts.) Surprise, 461, 462. (See Surprise.) CONFESSION AND AVOIDANCE, (See Burden of Proof.) CONFESSION OF JUDGMENT, 379. CONFIDENTIAL ADVISERS, 365-367. CONFIDENTIAL RELATIONS, (See Fiduciary and Confidential Relations.) Introduction, 351. Parent and Child, 354-360. (See Parent and Child.) Physician and Patient, 360, 361. (See Physician and Patient.) Draftsman of Will Taking Benefit, 272, 361-365. (See Draftsman of Will.) Engagement to Marry, 351, 352. (See Engagement to Marry.) Illegal Marriages or Relations, 367, 368. (See Marriage.) Spiritual Advisers and Spiritualists, 352, 353. Confidential Advisers: Blood Relatives, 365-367. (See Blood Relatives; Confidential Advisers.) CONFIRMATION, (See Waiver.) voidable acts of attorney, 281 , 295. INDEX. 649 CONFUSION OF GOODS, person fraudulently mingling another's goods with his own may lose the whole, 575. Koman law on this subject, 575. mixture must be more than intentional, 575. where separation is practicable, 576. where not, 576. CONSIDERATION, in specialties, 53-55. connection with misrepresentation, 53-55. history of, 53. recitals of, 280, note. CONSISTENCY OF REMEDIES, (See Remedies.) CONSOLIDATION OF ACTIONS, meaning of term, 63, note. CONSPIRACY, joinder of parties to, 109. allegation of, 231, note, to obtain loan of money, 544, 545. cross-suits for conspiracy, 71, 87. liability of one conspirator for acts of another, 246, 247. immaterial that some obtain no benefit, 247. evidence of conspirators and joint trespassers against each other by acts or declarations, 166-109. {See EviDEK'CE.) CONSTRUCTION OF RAILROADS, directors acting in double capacity, 327-329. CONSTRUCTIVE FRAUD, what is included in this term by Judge Story, 9. description of, 9-13. Fiduciary, Confidential, and Kindred Relations, 261-383. {See FiDDCiAKY and Confidential Relations.) The General Principle, 261-265. Attorney and Client, 265-295. {See Attorney and Client.) Principal and Agent, 295-310. {See Principal and Agent.) Partners and Joint Purchasers, 310-315. (See Partners.) Trustee and Cestui que trust, 315, 336. {See Fiduciary and Confidential Relations ; Trusts and Trustees.) Guardian and Ward, 336-341. (See Guardian and Ward.) 650 INDEX. CONSTRUCTIVE FRAUD, — continued. Executors or Administrators, and Claimants of the Estate, 341-347. (See Executors and Administrators.) Mortgagor and Mortgagee, 347-351. (See Mortgagor and Mortgagee.) Hushand and Wife, 3o3, 354. relation not fiduciary, 353. gifts between them, 353, 354. {See Husband and Wife.) Parent and Child, 354-360. (See Parent and Child.) Physician and Patient, 360, 361. (See Physician and Patient.) Draftsman of Will Taking Benefit, 361-365. (See Draftsman of Will.) Engagement to Marry, 351, 352. (See Engagement to Marky.) Illegal Marriages or Relations, 367, 368. (See Illegal Marriages.) Spiritual Advisers and Spiritualists, 352, 353. (See Spiritual Advisers.) Confidential Advisers: Blood Relatives, 365-367. (See Confidential Advisers; Blood Relatives.) Volunteers : Purchase without Value, 403-410. (See Volunteers; Porchase without Value.) Cotenants and Tenants for life, 368, 369. (See Cotenants; Tenants.) Expectant Heirs, 369-373. (See Expectant Heirs.) Sailors, 373. (See Sailors.) Aged Persons, 373, 374. (See Aged Persons.) Illiterate, Weak-minded, and Drunken Persons, 374-383. (See Illiterate, Weak-minded, and Drunken Persons.) Conduct Subsequent, 384-462. (See Conduct Subsequent.) Notice, 385-410. {See Notice.) Notice : Its Relation to Fraud, 385, 386. (See Notice.) Constructive Notice : Duly to inquire, 386-396. (See Notice.) Lis Pendens, 396-398. (See Lis Pendens.) INDEX. 651 CONSTRUCTIVE FRAUD, — continued. Registration, 398-402. {See Registration.) Purchasers without Value, 403-410. (See Purchasers for Value.) Innocent Misrepresentation, 410, 411. (See Misrepresentation.) Innocent Misrepresentation : Rescission, 411-438. (See Rescission.) principal and agent, client and attorney, &c., 236-240. (See Attorney and Client; Principal and Agent; Notice.) CONSTRUCTIVE NOTICE, (See Notice.) CONTAGIOUS DISEASE, non- disclosure that animals have, 468. CONTRACTS, (See Fiduciary, Confidential, and Kindred Relations; Decep- tion; Rescission; Specific Performance; Void Transactions.) CONTRIBUTION, not allowed in cases of combinations for fraud, 201. where fraud contrived against several is successful against only one, he cannot call for contribution to the damage, 201. CONVERSION, evidence of, will not sustain allegation of fraud, 180. CORPORATIONS, secretary fraudulently issuing certificates of debenture stock, 226. liable for fraud of proper agents, 246. suit by stockholders on behalf of corporation, 56, 57. director issuing prospectus containing false information, 233, 234, 509, 512. representations contrary to the charter, 531, 532. prospectuses issued by the company, containing false representations, 545, 546. acts ultra vires by misrepresentation, where corporation is innocent, 227, note, buying shares in, through agent's misrepresentation, 228, 229. liabilities of directors, trustees, and stockholders for fraud of agents, 233, 234. knowledge and participation, 233, 234. officers and directors are trustees for, 325, 326, note, duties of directors, 325-331. misrepresentation of law by directors, 487. when transactions for their benefit are valid, 327, 328. director may deal in regard to his own shares, when, 330. 652 INDEX. CORPORATIONS, — continued. making calls for the stockholders, 330. president and non-offieial stockholder, dealings between, 330, 331. directors not necessarily liable personally for acts of managing ofiScers, 233, 234. fraudulent overissue of stock, 546, note. CORRUPTION, of arbitrators, 96, 98, 99. of judge, 107. COST OF PROPERTY, 493. COSTS, ■when proper parties are omitted, 113. COTENANTS, relation between, 368, 369. COTKUSTEES, when one trustee liable for fraud of his associates, 248. all parties to a breach of trust equally liable, 248. COURTS, (See Jurisdiction.) COVENANTS FOR TITLE, eviction not necessary for breach of, 416. CREDITOR AND DEBTOR, fraud upon creditor in suit at law, 60. in suit in equity, 60. setting aside debtor's conveyance not rescission, 61, 429. action against debtor and others for conspiracy, 69. right of creditor to impeach judgment against debtor, 91, 92. right of surety, 92. right of assignee in bankruptcy, 92, note. individual creditors should not sue in bankruptcy, 112. plea of discharge in bankruptcy, 119, 120. burden of proof in impeachment of conveyance, 130-134. notice to purchaser, 131-134. Massachusetts rule, 134, note, 386. evidence of financial repute of debtor, 152, 153. or of his condition, 155. acts and declarations of debtor, 171-173. secret trusts, 178. circumvention, 198. conveyances between husband and wife, 202, note, 207, note. particeps criminis of debtor with grantee, 203, 204, 206. composition deeds, 204, 205. secret preferences, 205, 206. mortgage in fraud of creditors, 206. INDEX. 653 CREDITOR AND DEBTOR, — conimuerf. discharge of surety obtained by debtor's fraud, 210, 211. communications of debtor to surety, 253. transactions where either party is aged or dependent, 374. pre-existing debts, 405, 406. attaching creditor not a purchaser for value, 407. rights of creditors against purchasers, 432. Collusion against Creditors, 587, 588. CRIMINAL FRAUD, evidence in case of, in civil suit, 144. CRIMINATING ONE'S SELF, 192, 393. CROSS-ACTIONS, fraud not involving impeachment of former judgment may be ground of cross-action, 71, 96, 98. . recovery of judgment on a contract no bar to an action for deceit by ■which the contract was obtained, when, 66, 67, 71. recovery back of money obtained under fraudulent judgment, 72. to cancel contract pending suit thereon, 72. damages in, 633, 634. CUSTOM, of cigar trade, 481, note. D. DAMAGES, damage generally necessary in actions for fraud, 541, 542. exceptions, 277, 320. general principle stated as to connection of damages with the wrong complained of, 625. examples, 625, 626, 627. communication of disease by animals sold through fraud, 468, 626. measure of damages in actions of deceit or breach of warranty, 627. price paid for property as evidence of value, 627, 628. in suits on securities given for price of property, defendant may go back and show fraud in the sale, 120, 121. in exchange of lands, 631. in exchange of mortgages, 632. false representations in sale of a partner's interest, 629. false representations in sale of corporation stock, 628, 629. market value of the stock, 629. falsely representing a note to be due and unpaid, 630. misrepresentations of the quantity of land conveyed by a deed, 630. valuation set upon property by the parties, 630. putting it out of one's power to convey property agreed to be sold, 628, note. 654 INDEX. DAMAGES, — continued. interest in money cases, 631. evidence of subsequent events in mitigation of trustee's fraud, 631. examples, 631, 632, 638. damages in allegations of fraud in actions ex contractu, 70, 181. in action ex contractu damages for fraud not recoverable, 70, 179, n. 5, 181. damages in cross-action after contract has passed into judgment, 633, 63-1. exemplary damages, 635. . (See Deception; Misrepresentation. ) DEBTOR AND CREDITOR, (See Creditor and Debtor.) DECEIT, (See Deception; Evidence.) procuring another to indorse note or bill, 467. DECEPTIOISr, distinguished from circumvention, 4-7, 17, 18. definition, 465. Misrepresentation, 465-573. {See this and following heads down to and including Wills, for matters relating to misrepresentation.) Elements of the Wrong, 465, 466. What constitutes a Representation, 466-473. Opinion and Prediction, 473-483. Promise, 483-487. Representations of Law, 487-490. Representations of Value, 490-497. Materiality, 497. Falsity, 497-508. Knowledge of Falsity, 509-520. Ignorance of Falsity hy Party Wronged, 521-534. Intention to induce Action, 535-539. Acting on the Representation, 540-548. Marriage, 549-554. Stranger to the Action, 555-573. The General Rule of Law, 555-557. Slander of Tide, 557-559. Trade Maries, 559-568. Business Signs, 568-571. Wills, 571-573. Deception hy Act: Collusion, 574-589. Confusion of Goods, 574, 575, 576. Collusion with one in Fiduciary or Confidential Relations, 576-579. examples, 578, 579. INDEX. 655 DECEPTION, — continued. Collusion in Public Sales, 580-586. sale how invalidated, 580. depressing price, 580, 581. combination of interests when allowed, 581, 582. restraint upon competition caused by auctioneer, 582, 583. appeal by purchaser to the benevolence of bidders, 583, 584. puffing, 581. by-bidding, 585. who may avoid sale and when, 585, 586. Collusive Conveyances: Rerjistration, 586, 587. Collusion against Creditors, 587, 588. Collusion against Wife, 588. working upon fears, 588. Collusive Litigation, 589. collusive agreements, 589. collusive judgments, 589. collusive divorces, 589. Silence : Duty to Speak, 590-614. Sunday Laws, 615, 616. Void Transactions, 617-624. Consequences of Deception, 625-640. Measure of Damages, 625-635. (5ee Damages.) belongs to law of substantive rights rather than to remedial law, 625. general rule of damages, 625. examples of positive damage, 625, 626. injured party must use due care to prevent incidental loss, 626, 627. examples of negative damage, 627, 628. in sale of animals, 628. in sale of stock, 628, 629. in sale of interest in partnership, 629. in sale of note, 630. in sale of land, 630. in sale of vessel, 630. interest allowed as damages in purely money transactions, 631. subsequent events not to affect damages, 631. trustee must account for misconduct regardless of subsequent events, 631, 632. exchange of mortgages, 632. rule operates in favor of both parties, 632. example in sale of stock, 632, 633. loss of contingent benefits not within the rule, 633. wrong-doer chargeable with rents, and not allowed for improvements, nor for incumbrances lifted, 633. 656 INDEX. DECEPTION, — continued. rule of damages in cross-actions, 633, 634. distinction in limit of liability for fraud and for negligence con- sidered, 634. exemplary damages, 635. Discharge in Bankruptcy, 635. effect upon liabilities for intentional deception, 635. Collateral Deception, 636-638. within what limits fraud vitiates transactions, 636. cannot vitiate certain collateral transactions, 636. what fraud is collateral, 637. presents more than question of remedy, 637, 638. Rights of Innocent Parties inter sese, 638-640. depend upon diligence, 638. or upon which has been instrument of loss, 638. examples, 638, 639. (See Collusion ; Confusion of Goods ; Marriage ; Slander of Title ; Substitution ; Trade Marks.) DECLARATIONS, 167, note, 188-190. (See Conspiracy; Evidence; Wills.) DEED, executed or obtained by fraud, 73, note, 618, 619. DEFINITION OF FRAUD, 3-19. DELIVERY OF INSTRUMENTS, obtained by fraud, 618-624. deed stolen from grantor, 623, 624. DEMURRER, when proper to allegations of fraud, 122. DESTRUCTION OF AVRITINGS, by an heir, of deed or will of ancestor, 191, 192. DIRECTORS OF CORPORATIONS, 233, 325-33L DISCOVERY, equity will compel disclosure of fraud, 193. DISEASE, CONTAGIOUS, 468, 626. DISTRIBUTEES, fraud by one of several codistributees, 252. no relation of agency, 252. disherison of half-sister, 382. DIVORCE, (See Marriage.) pregnancy of wife by third person before marriage, 468 and n. 4, 531, 550, 551. statutory grounds of, do not exclude fraud, 550-554. marriage brought about by fraud, 552, 553. rule in Delaware as to fraud, 550, n. 3. IKDEX. 667 DIVORCE, — continued. effect of cohabitation upon right to divorce for fraud, 553. collusive litigation in, 589. DOWER RIGHTS, fraud on, 60i-610. DRAFTSMAN OF WILL, taking benefit thereunder, 272, 361-365. presumption against such party, 361, 362, 363. not conclusive, 362. capacity and volition of testator, 363. what sort of evidence thereof required, 364. reading will to testator, 364, 365. DRUNKEN PERSONS, (■See Illiterate, Wkak-minded, akd Drunken Persons.) E. ECCLESIASTICAL COURT, jurisdiction of, 42, 43. EJECTMENT, not maintainable by defrauded grantor, 76 and n. 5. by the gi'antee, 77, note. ELECTION, 436, 437. ENGAGEMENT TO MARRY, undue influence under this relation, 351, 352. EQUITY, (See Jurisdiction.) ESTOPPEL, whether doctrine of estoppel in pais for fraud applies to infants, 218. whether it applies to married women, 219, 220. created by silence, 16, 598. what necessary to raise an estoppel in pais, 16, 218, 219, 233, 598. forgetfulness, 515, 530, 531. EVICTION, unnecessary to action for deceit, 416, 527, 543. EVIDENCE, Courts of Law and Courts of Equity, 137-138. whether any difference prevails as to rules of evidence in these courts, 137. the only difference founded upon a difference in jurisdiction, 137, 138. Law and Fact, 139-142. how they differ, 139. province of court distinguished from that of jury, 139, 140. matters of ' opinion ' or ' belief ' in representations, 140, 141, 142. A2 658 INDEX. EVIDENCE, — continued. Preponderating Evidence, 142-146. indisputable proof of fraud not required, 142, 143. jury should be so instructed, 143. exception in cases of resulting trust, 143. evidence which satisfies conscience of common man sufficient, 143. circumstances consistent with honesty, 144. proof in civil actions of indictable fraud, 144, 145. in cases of settled accounts, 145. in cases where there is a presumption of honesty to be overcome, 145, 146. Circumstantial Evidence, 146-159. great latitude allowed in trial of fraud, 146. evidence of other frauds, 150, 151. slight circumstances admissible, 147. examples, 147, 148, 149, 150. of intent not to pay, 158. of fraud on testator by beneficiary under will, 159. of pufiing and by-bidding, 159. evidence of good character, 150. of general financial repute, 152, 153, 154, 155, 156. of previously declared fraudulent intent, 157. of personal habits tending to cause insolvency, 157. Evidence of other Frauds, 160-164. general rule as to admissibility of evidence of, 160. examples, 161. ground of admissibility, 160. impeachment of writing as forged or fraudulent, 161, 162. examples, 161, 162. representations of vendor of machine as to efficiency, 479, 480. pretended and fraudulent purchase of property, 162. other like cases, 162. evidence of other frauds not received unless forming part of scheme with the fraud complained of, 1G2, 163. must be of similar transactions, 164, 165. rule in New York as to admissibility of evidence of other frauds, 165. rule in Connecticut, 165, 166. Evidence of Conspirators and Joint Trespassers, 166-169. when evidence of one admissible against the rest, 166, 167. declarations of one, 167. conspiracy should be shown, 167. slight indications of, sufficient, 167. from which combination may be inferred, 167, 168. combination of partners to suborn witnesses, 168. declarations of a partner, 169. INDEX. 659 EVIDENCE, — continued. Declarations of Defendant or his Predecessor, 169-174. general rule of their admissibility, 169. examples, 169, 170. declarations subsequent to transaction in question, 169, 170. declarations of fraudulent grantor, 170, 171, 172, 173. of present grantee, made before the grant, 174. Parol Evidence, 174-178. admissible to prove fraud in written contract, 174. examples, 174, 175. misrepresentations made as inducement to the contract, 175. secondary evidence of ■writing, 175. notice to produce writing, 175, 176. promise to do some additional act not contained in the writing, 176. deed absolute may be shown to have been intended for a mortgage, 176. evidence should be clear, 176, 177. recitals of consideration in deed attacked for fraud, 274, 277, 278, 280, n. 4. parol evidence to establish resulting trust, J 77. examples, 177, 178. Statute of Frauds cannot be set up against evidence of fraud in iden- tity of land sold, 178. Variance: Allegata ei Probata, 179-186. if case based on fraud, relief cannot be given on other gro;jnds, 179. the fraud charged must be proved, 179 and note 5. unnecessary allegations, 179, 185, n. 3. proof of mistake, 179. allegation of fraudulent representation, 180. proof of knowledge, 180. evidence of designed partial statements, 180, 181. evidence of breach of warranty, 181. allegation of fraud not supported by evidence of simple illegality, 181, 182. effect of evidence of badges of fraud, 182, 183, 184 suflRcient to prove substance of allegation, 185. inadequate to prove fraud may however support some other equity, 185, 186. allegations as to the means employed to commit fraud, 185. example, 185. Privileged Communications, 186, 187. Credibility/ of Witnesses, 192. Criminating One's Self, 192-193. non-criminal frauds must be disclosed, if desired, 192, 193. 660 INDEX. EVIDENCE, — continued. when communications or papers from client to attorney may be required in evidence, 186. conspiracy between client and attorney to defraud, 187. Fraud on Testators, 187-192. broad range of inquiry permitted when will is contested, 187. examples, 187. fact of testator's living in adultery with a beneficiary, 187. influence used for selfish purpose, 187. evidence of subsequent acts and declarations of testator, 187, 188. declarations before and at the time of executing will, 188, 189. what party offering declarations must show, 189, 190. effect of Pennsylvania Statute of Wills, 190. facts tending to show a motive for the use of fraud or undue influence, 190. declarations of executor and legatee, 190. inquiry whether provisions of will are just and reasonable, 190. fraud need not be proved by direct and positive testimony, 191. slight circumstances, 191. old age, 191. evidence of declarations against a party charged with destroying a will, 191, 192. (See Burden of Proof.) EXECUTIOISr, fraud in execution of instrument, 54, 73, note, 175, note. of will, 187-192. EXECUTORS AND ADMINISTRATORS, dealings inter sese, 341-347. stand in relation of trust, and subject to general rule governing per- sons in confidential relations, 341. examples, 341. cannot in general buy the trust property, 342, 343. but may buy from purchaser, when, 343, 344. purchase with assent of interested parties, 344. purchase from distributee just of age, 342. purchasers with notice, 344, 345 and n. 1. fraudulent settlements, 345. voluntary interference in estates, 345, 346. treating with heirs in such cases, 346. gifts to person transacting business for administrator, 346. sale to executor or administrator may be opened, and will be con- firmed if no higher bid is made, 346. composition of claim by executors and administrators, 347. dealings with third persons, 347. survivorship of actions, 251. INDEX. 661 EXECUTORS AND ADMINISTRATORS, — conhnuerf. how far one executor or administrator is liable for the fraud of an associate, 248-252. participation in the fraud must be proved, 249. payment of money by executor to his associate who misapplies it, 249. when an executor, in selling, is bound by the fraud of an interested party, 249. personal assets acquired by executor's breach of trust, 249, 250. when one becomes a party to such wrong, 250. examples, 250, 251. no implied warranty of title or soundness in sales, 251. proper remedy for actual fraud in such oases, 251. when decedent's estate liable, 251. EXPECTANT HEIRS, favored in equity, 369, 370. sale of reversion by, 370. what necessary to render valid, 370, 371. valuation of expectant interest, 871. absence of actual fraud in purchaser, 371 and n. 5. effect of repeal of usury laws, 372. meaning of ' fraud ' in such transactions, 372. mortgage by heir with consent of owner, 372. sale of fixed and absolute legacy, 372, 373. EXPERT, liability of, for false information, 477. F. FACTOR, charging his principal with mercantile profits, 226, 227. FACTUM, fraud in, 54, 55, 73, note. FALSE REPRESENTATIONS, (See Deception; Misrepresentation.) FALSITY, 497-508. (See Misrepresentation.) FAMILY SETTLEMENTS, 359. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS, Fiduciary Relations, 261-350. The General Principle, 261-265. definition, 262. none between vendor and purchaser, 262, 263. sales in agency, 263. misrepresentations of law in, 264, 322, n. 1, 488. 662 INDEX. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. presumption of fraud, 261, 262. what constitutes such relation, 262. principle of equity as to bounties in such oases, 263. trifling gifts, 26i. principle of relief, 263, 264, 265. Attorney and Client, 265-295. a relation of close confidence, 265. gratuity by client to attorney generally invalid, 265. examples, 265-267. volunteer under the client may claim relief, 267, 268. residuary legatee of the client, also, 268. no absolute incapacity in attorney, 268. past services, 269, 290. pending and prospective services, 268, 269. what attorney must show to hold the bounty, 269. client need not prove undue influence in the first instance, 269. proof of debt for which client's securities are given, 270, n. 2. how presumption of influence may be rebutted, 270. testimony of recipient of bounty, 270, 271. question of undue influence, as inferred from nature of the transac- tion, a question of law, 271. testamentary provision in favor of attorney, 271. whether gifts of legacies stand on same footing as gifts inter vivos, 271. bequest in favor of attorney who writes will, 272. what attorney must prove in such cases, 272, 273. sales by client to attorney, 273-281. same presumption against attorney as in case of bounties, 273, 274. presumption not removed by recitals in deed, 274. purchasers with notice, 274. sales valid where grantee is not attorney in hac re, 274. termination of relation, 274, 275, 276. necessity of advice to client, 276 and n. 2, rule in America on this subject, 277. there must be damage to client, 277. relation differs from that of trustee to cestui que trust, 277. inadequacy of consideration, 277, 278, 280. statement of consideration in deed, 278. purchase by attorney, even on speculation, may be sustained, 278-281. nature and extent of consideration closely scrutinized, 280, 281. purchases by attorney at public sales, 281-284. at judicial sales, 281, 282, 294. inadequacy of price, 281, 282, 283. INDEX. 663 FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. confirmation o£ sale by court, 281, 282. whether attorney's incapacity to purchase at such sales is absolute, 282-284. attorney engaged to prevent condemnation of land may purchase at sheriii's sale, 281, n. 3. English rule in bankruptcy, 282, n. 3, 283 and n. 2. purchasing in fictitious name, 283, n. 3. attorney cannot purchase outstanding title against client, 281-284, 288, 292. request by client to buy outstanding title for attorney's benefit, 284, 293. request to buy client's property for sale for taxes, 284. purchase of equitable interests or choses in action of client, 284. sales to client by third persons through influence of attorney, 284, 285 and n. 1. securities given attorney for fees, 286. consideration closely scrutinized, 286. securities for debts of third persons, 287. attorney bound to advise client of misrepresentations of third persons, 287. assigning securities to client without advising him as to them, 287. improperly obtaining grant to third person, 287, 288. how relation of attorney and client may be created, 288, 289. litigation not necessary, 288. when the relation ceases, 289. obtaining a grant to third person from which attorney is to derive a benefit, 287, 288. attorney purchasing interest of opposite party, 288, 289, 293. lapse of time in transactions between attorney and client, 291, 292, 294 and n. 2. persons standing in relation of quasi attorneys, 289, 290. principle of the whole doctrine, 290, 291. attorney not precluded from contracting in advance for value of his services, 290, n. 2. contest concerning counsel fees, burden of proof, 291. attempts of client to defraud attorney as to fees, 292. accounts between attorney and client, 292. other circumstances indicative of fraud by attorneys, 294. confirmation of voidable act of attorney, 295. rights of client purely personal, 295. {See Attorney and Client.) Principal and Agent, 295-310. agents occupy similar relation of trust, 295. 664 INDEX. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. also clerk of agent, 296, n. 1. no rule prohibiting dealings witli principals, 296. but presumption against agent, 296, 297. Low position of agent differs from that of attorney as to damage, 297. damage uimecessary, 297. when agent may buy from principal, 297, 298. broker making himself principal, 298. agent leasing property corruptly for low rent, 298, 299. his estate liable after his death, 299. purchase by agent at inadequate price, 299. ■what agent must show in such cases, 299. agent cannot take advantage of knowledge acquired by himself and use it against his principal, 299, 300, 308. agent taking tax-deed of principal's property, 295, n. 4. lease obtained by agent or servant through false though innocent mis- representation, 451. stranger entering into corrupt bargain with servant, 302, and n. 2. agent of vendor colluding with purchaser, 302, 303. factor charging his employer with mercantile profits, 302. accounts granted in such cases, 302. agent selling his own property to principal as belonging to third per- son, 262, 263, 303 and n. 4. broker so selling property in which he is secretly interested, 303. concealment of facts that cannot prejudice the principal not fatal, 303, 304. broker engaging to find a purchaser may purchase himself, when, 804, 305, 306. secretly acting as double agent, 304, 305, 306. recovery of services in these cases, 304, 305, 306. agent to purchase for principal buying for himself, 306-308. concealment by agent of offer of higher price than that obtained for property, 299. voluntary settlement by principal, 300. agent may receive gratuities, when, 300, 308, 309. no excuse that agent has obtained a good bargain for his principal ■when agent obtains secret advantage, 297, 309. agent may purchase principal's property after termination of relation, when, 366. gratuitously interfering for another, 309, 310. persons employed as mere in.struments not subject to the rule per- taining to agents, 310. (See Principal and Agent.) Partners and Joint Purchasers, 240-246, 310-315. IKDEX. 665 FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. duty inter se to refrain from concealment, 310-312. all clandestine bargains by a partner forbidden, 312, 313. object of the prohibition, 313, 314. partner engaging in another business in conflict with his duties to the firm, 313, 314. lease of premises where the joint trade is carried on, obtained by partner, 334, n. 4. partner making secret profits out of the firm, 312, 313. effect of counter fraud by the other partners, 314, 315. partners presumed to have equal access to books and business, 311, 312. inter-alienations of their interests, 311, 312. joint purchasers of property, 315. (See Partners.) Trustee and Cestui que trust, 315-336. duty of trustee to obtain advice for cestui que trust, 315, 316. whether necessaiy information given, how determined, 31G. when a trustee may buy from his cestui que trust, 317-319. what disclosure required, 318. how cestui que trust may repudiate sale, 318. partial dissolution of trust relation, 319. trustee must purchase openly, 319. cestui que trust need not prove damage, 319, 320. trustees of marriage settlement, 332. creditor procuring his appointment as trustee, 332. lessee of charity estate held a trustee, when, 331, 332. trustees joining collusively with remainder-man in putting out tenant of trust estate, 333, 631. trustees colluding with tenant for life, 333. trustees joining in destruction of contingent remainders, 332, 333. trustee joining with remainder-man to bar entail, 333. conduct of trustees towards infant cestuis que trust, 333, 334. trustee renewing leasehold interest, 334. cannot obtain reversionary interest for their own use, 334. purchasers with notice, 319, 320, 324, 335. when the new lease may stand for the benefit of the trustee, 335, 336. conversion of trust property, how remedied, 336. trustee buying at his own sale, 317, 318, 320, 321. sale may be treated as a nullity though trustee paid a fair price, 318, 320. rule applies equally to sales under decree of court and other cases, 320. trustee protected as to outlays, when, 320, 321. when trust title absolutely fails, trustee may purchase, 334, n. 2. 666 INDEX. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS, — continued. what trustee must show to validate his purchase, 321. long acquiescence by cestui que trust, 321. cestui que trust should act with reasonable promptness, 321. purchase by trustee from one to whom the trust property has been sold, 322, 323. there should be an understanding between the trustee and bidder at or before the sale to render subsequent sale to trustee invalid, 323. ratification by cestui que trust, 322. what constitutes, 322. taking accounts between trustee and cestui que trust, 323. laches on part of cestui que trust, 324. releases by cestui que trust, 316, 317, 324. trustee of property conveyed in trust for creditors may purchase other property of the debtor, 325, n. 4. officers and directors of corporations are trustees, 325-327. when transactions for their personal benefit may be supported, 327. director may deal in regard to his own shares, when, 330. making calls for the stockholdei's, 330. president and non-official stockholder, 330, 331. (See Trusts and Trustees.) Guardian and Ward, 336-341. property transactions between, 336. guardian may justify them, how, 336, 337. appi'opriatiug ward's property, 338, n. 3. innocent purchasers, 337, n. 2. conversion of ward's stock, 337, n. 3. improvements made on land bought of ward, 337, n. 3. will in favor of guardian, 337. negotiable security obtained from ward, 338. acts of guardian on ward's attaining majority, 338, 340. when gifts in such cases valid, 338, 339. voluntary guardian, 339. deeds of release to guardian, 339, 340. settlements and allowances in probate, 340. (See Guardian and Ward.) Executors or Administrators, and Claimants of the Estate, 341-347. subject to general rules governing persons in relations of confidence, 341. examples, 341. cannot in general buy the trust property, 342, 343. but may buy from purchaser, when, 343, 344. purchase with assent of interested parties, 344. purchase from distributee just of age, 342. purchasers with notice, 344, 345, and n. 1. INDEX. 667 FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. fraudulent settlements, 345. voluntary interference in estates, 345, 846. treating with heirs in such cases, 346. gifts to person transacting business for administrator, 346. sale to executor or administrator may be opened, and will be con- firmed if no higher bid made, 346. composition of claim by executor or administrator, 347. {See ExECUTOKS and Administrators.) Mortgagor and Mortgagee, 135, 347-350. right of redemption after conveyance of equity, 347. when sale of equity binding, 347, 348, 349. sale under power in a mortgage, 349. mortgagee in such case a trustee, 349, 350. may purchase, when, 349, 350. mortgagee selling under power of attorney, 350. what will constitute evidence of fraud, 350. dealings with other, 350. mortgagee of leasehold premises obtaining renewal lease, 350. (See Mortgagor and Mortgagee.) Confidential Relations, 351-367. Introduction, 351. Husband and Wife, 353, 354. relation not fiduciary, 353. gifts between them, 353, 354. (See Husband and Wife.) Parent and Child, 354-360. bounty by child to parent, how j-egarded, 354, 355. gifts by child shortly after majority, 355, 356. burden of proof rests on parent, 356, 357. only prima facie invalid, 356, 357. what will invalidate the bounty, 357. gifts from parent to child stand on different footing, 357, 358. family settlements in charge of child, 359. relation between grantor and his son, grandson, or son-in-law, 358, 359. gifts by parents when aged or infirm, 359, 360. parent may favor one child over another though partially intoxicated at the time, 360. son employed to procure deed disposing of father's property, 360. relation of son-in-law to mother-in-law, 360. (See Parent and Child ) Physician and Patient, 360, 361. gifts from patient to physician, 360, 361. 668 INDEX. FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS, — continued. agreements between, 361. ■when fvaud not presumed, 361. Draftsman of Will taking Benefit, 272, 361-365. presumption against such party, 361, 362, 363. not conclusive, 362. rule is independent of capacity or volition of testator, 363. bounty may be valid though testator a person of weak mind, 363. but increased scrutiny required, 363, 364. what sort of evidence required, 364. reading the will to testator, 364, 365. Engagement to Marry, 351, 352. undue influence may be exerted under this relation, 351, 352. Confidential Advisers : Blood Relatives, 365, 367. blood relationship, 365. trusted friend, 368. effect of advice by creditor of mortgagor to mortgagee, 366, 367. Kindred Relations, 367-383. Illegal Marriages or Relations, 367, 368. mai'riage of widower and sister-in-law, 368. advice necessary as to property transactions if marriage be illegal, 368. existence of unlawful relation between testator and object of his bounty, 367, 388. Spiritual Advisers and Spiritualists, 352, 353. procuring will to be drawn in favor of a church, 352. Spiritualists, 353. Volunteers, Purchase without Value, 403-410. voluntary guardian, 339. voluntary administrator, 345, 346. taking advantage of project proposed, 366, 367. undertaking to aid another, 367. Cotenants and Tenants for Life, 368, 369. cotenants not in a relation of trust, 368. tenant for life not in a relation of trust to remainder-man or rever- sioner, 369. Joint Purchasers, 315. ' stand in relation of confidence to each other, 315. Expectant Heirs, 389-373. favored in equity, 369, 370. sale of reversion by, 370. what necessary to render valid, 370, 371. valuation of expectant interest, 371. absence of actual fraud in purchaser, 371. effect of repeal of usury laws, 372. INDEX. 669 FIDUCIARY, CONFIDENTIAL, AND KINDRED RELATIONS,— continued. meaning of ' fraud' in such transactions, 372. mortgage by heir -witli consent of owner, 372. sale of a fixed and absolute legacy, 372, 373. Sailors, 373. under the special protection of the courts, 373. Aged Persons, 373, 374. when transactions with, invalid, 373, 371. Illiterate, Weak-minded, and Drunken Persons, 374-3S3. evidence of undervalue in transactions with illiterate persons, 374- 376. what will overturn presumption of fraud, 376. what the other party may show, 376, 377. weak-minded persons can sell or give away their property, 377-379. but presumption against grantee, 377, 378. when grantee allowed for improvements, 379. confession of judgment by weak-minded person, 379. general rule stated, 379. examples of imbecility, 379, 380. what circumstances attending it sufficient to invalidate a transaction, 38L contracts with drunken persons, 382. when contract of drunken person voidable, 382. habitual drunkards, 382. imposition in obtaining wills, 382, 383. gifts by drunken persons, 382. (5ee Partnership; Statutes of Limitation.) ' FIREPROOF,' 478. FLOURING-MILL, capacity of, 479. FOREIGN JUDGMENTS, may be impeached for fraud, how far, 94-96. FORGERY, (See Alteration of Instkijments ; Bills and Notes.) FORGETFULNESS, 514, 530, 531. FRAUD, definition of terms, 1-19. adjective law of, 3-193. in the factum, 54, 55, 73, note. (5ee Jurisdiction; Rescission.) deception and circumvention distinguished, 4-7. constructive, 9. legal, 8. 670 INDEX. FRAUD, — continued. upon the law, 7, 14. upon powers, 12, 438-444. upon the sovereign, 14. surprise, 13. in rem, 17. in personam, 17. juristic, 19. statutory, 19. cause of action for when accrues, 23. distinction between fraud and other wrongs, 227, 228. of Third Persons, 252-258. (&e Particeps Ckiminis; Notice; Third Persons.) G. GIFTS, (See Fiduciary and Confidential Relations.) GLANDERS, 185. ' GOOD,' 495. GOOD CHARACTER, evidence of, 150. GRAFT, doctrine of, 334. GUARANTY, misrepresentation as to legal effect of, 10, 76. GUARDIAN AND WARD, dealings inter sese, 336-340. property transactions between, are piima facie fraudulent^ 336. but guardian entitled to justify them, how, 336, 337. inadequacy of price, 340. appropriating the ward's property, 338, n. 3. innocent purchasers, 337 n. 2. conversion of ward's stock, 337, n. 3. improvements made on land bought of ward, 337, n. 3. wills in favor of guardians by wards, 337. acknowledgment of debt, 337. negotiable security obtained from ward, 338. acts of guardian on ward's attaining majority, 338, 340. when gifts in such cases valid, 338, 339. voluntary guardian, 339. deeds of release and acquittance to guai'dian, 339, 340. settlements and allowances in probate, 340. dealings with third persons, 340, 311. INDEX. 671 H. HAY, misrepresentations concerning amount of, 493. HEATER, misrepresentation in regard to, 152. HEIRS, expectant, dealings with, 369-37.3. (See Expectant Heirs.) ' HORSE-POAVER,' 502. HOSPITALITY, causing loss of, 557, note. HUSBAND AND AVIFE, conveyances between, in fraud of creditors, 202, note, 207, note. agency, 230. fraud of wife in purchase of goods for household, 251. relation not fiduciary, 353. gifts between, 353, 354. representations by intended wife as to chastity, 468, n. 4, 4C9, 551, 5.52. action maintainable by woman against man for fraudulently inducing her to contract a void marriage with liim, 554. whether the action survives against wrong-doer's representative, 213, n. 5, 554, n. 2. fraud on husband's marital rights by wife's antenuptial conveyance, 604-610. such conveyances prima facie valid, 604, 605. doctrine of the English courts upon this subject, 605. conveyance must be secret, and made in contemplation of marriage, 605. meritorious object of the conveyance, 605-607. rule in North Carolina, 607. deception in such cases presumed, when, 607. conveyance of property of existence of which husband was ignorant, 607, 608. Lord Eldon explained on this point, 608. secret settlement by wife before marriage, 605, n. 1. obligation of wife made on valuable consideration before marriage, without knowledge of intended husband, valid, 609, 610. costs iniiicted upon pai'ty or attorney inducing intended wife to make a conveyance in fraud of liusband's marital rights, 609, note, securities given by woman without consideration pending ti'eaty of marriage, 610. antenuptial conveyances by husband, 610. 672 INDEX. HUSBAND AND WIFE, — continued. statutory grounds of divorce do not exclude fraud as a ground, 550. marriage brought about by fraud, 549-551. deception of a mature woman, 551. examples of fraud in this connection, 551-553. rule in Delaware as to fraud, 550, n, 3. effect of cohabitation upon right to divorce for fraud, 553. third persons cannot object in these cases, 553, 554. notice to husband not notice to wife, 229, 230, n. 1. converse also true, 229, 230. wife's participation in husband's fraud, 221-223. (See COKFIDENTIAL RELATIONS.) I. ILLEGAL MARRIAGES OR RELATIONS, contracting marriage through fraud, 549-554. (See Fiduciary, Confidential, and Kindked Relations ; Husband AND Wife.) undue influence under, 367, 368. ILLITERATE, WEAK-MINDED, AND DRUNKEN PERSONS, false reading of instrument to illiterate person, 55. to a blind man, 55. burden of proof, 376, 378. independent advice, 373. when transactions with aged persons invalid, 373, 374. evidence of undervalue, 374, 375. what will overturn presumption of fraud, 376. what the opposite party may show, 376, 377. weak-minded persons may sell or give away their property, 377-379. but presumption against grantee, 377, 378. when grantee allowed for improvements, 379. confession of judgment by weak-minded person, 379. general rule stated, 379. examples of imbecility, 379, 380. what circumstances attending it sufficient to invalidate a trausaction, 381. contracts with drunken persons, 382. gifts by drunken persons, 382. IMPLIED REPRESENTATIONS, 469-473. IMPROVEMENTS, in case of land sold by verbal contracts, 446. INADEQUACY OF CONSIDERATION, in purchases by attorney atjudicial sale, 282, 283. INDEX. 673 INADEQUACY OF CONSIDERATION, —conft'nuerf. in transactions between parties to fiduciary relations, 299. (_See Fiduciary, Confidkntial, and Kindred Relations.) mere inadequacy not fraud, 376, 377. long leases of charity lands, 331. transactions with weak-minded persons, 375, 876. in cases of specific performance, 449, 450. INCONSISTENT REMEDIES, 65, 66. INCUMBRANCES, misrepresentations as to the existence of, 416, 527, 543. INFANTS, infants not protected in committing pure tort, 216-218. but not liable if the action suppose a contract as the foundation of the claim, 217. since infant's deceit in sales or contracts is not actionable, 217, 218. contrary held in several cases, 217. whether doctrine of estoppel in pais for fraud applies to infants, 218, 219. cestuis que trust, 333, 334, 338, 339. rescission of contracts of, 421. suit by next friend claiming equitable interest in the property, 310. INJUNCTIONS, to restrain enforcement of judgment, 64, 65. remedy for fraud committed in course of trial, 84, 85. supplementary relief granted only when complainant not negligent, 85. cases where complainant may have double right and election, 71, 86, INJUNCTIONS, VACATING JUDGMENTS, AND NEW TRI- ALS, 84-107. (See Injunctions ; Judgments ; New Trials ; Vacating Judgments and Awards.) INJURY, (See Damage.) INNOCENCE, presumption of, 123, note, 138, note. INNOCENT MISREPRESENTATIONS, (See Misrepresentation.) INQUIRY, (See Notice.) duty to make, 30, .31, 516, 522-534. INSANITY, deed of insane grantor, 124. INSOLVENCY, concealment of, in sales, 484-486, 611, 612. 43 674 INDEX. INSURANCE, agent of insurance company assisting applicant, 234, 235. rescission and return of premium, 80-82, 426. of neutral property, 208, 209. doctrine of concealment in marine, 237, 595-597. (See Concealment.) non-disclosure, 595-597. misrepresentation of risk, 622, 623. INTEMPERATE HABITS, evidence of, on issue of insolvency, 157. INTENTION, change of, after obtaining credit, 6. allegation of, 117. intent of purchaser, 134, note. rule in Massachusetts, 134, note, 153, note. intent not to pay, 158, 484-487. taking advantage of one's own unintentional wrong, 201. in the form of malice, 558, 559. INTEREST, as damages, 631. INTERROGATORIES, particulars in, 119. INVENTIONS, representations in regard to, 479, 480. JOINDER OF PARTIES, 108-113. of plaintiffs at law, 108. of defendants at law, 109. in equity, 110. illustrations, 110, 111. rule in cases of fraud on creditors by insolvent debtor, 112. when rule as to joinder, in equity, may be modified, 113. JOINT CONTRACTORS, joinder of, 109. cannot sever, 52, 205. .rOINT FRAUD, 109, 110, 205, 247, note. .JOINT PURCHASERS, relation of confidence between, 315. JOINT STOCK, companies, 241, note, 244, note. JOINT TENANTS, joinder of, 109. INDEX. 676 JUDGMENTS AND AWARDS,. cross-action impeaching judgment, 71, 86. cross-suit for conspiracy, 71, 87. cross-action after, for fraud, 71. recovery of judgment on a contract no bar to an action for the fraud by which contract was obtained, when, 71. recovery back of money obtained under a fraudulent judgment, 72. property attached by fraud and sold under judgment of court, 72. may be set aside for fraud, 86-100. meaning of this rule, 86. fraud in obtaining jurisdiction, 88, 89. foreign judgments, procedure as to, 89. fraudulent detention of witnesses, 89. collusive litigation, 89. deceit practised upon the court, 89, 90. obtaining judgment in violation of agreement, 90. false testimony, 86, 94, 98. trustee or guardian consenting to collusive judgment, 90. fraud on third persons, 90, 91. strangers not bound by judgments, 91. qualification of rule, 91, 92. creditors may attack judgment, when, 92 and n. 1. concealment of facts, when ground for relief from judgments, 92. mere suspicion of fraud, 92. opening decree of probate court, 93. what constitutes a judgment, 93, note, distinction between frauds which render judgments void and frauds rendering them voidable, 93. fraud not involving an impeachment of a judgment may be shown, 96, 98. the preferable proceeding in such cases, 98. foreign judgments in rem or in personam may be impeached for fraud, 94. meaning of this rule, 94, 95. judgments of sister states, 95. law as to, not fully settled, 95. rule at law, 96. limitations as to, suggested, 96. fraud in awards, 96-100. award in pais cannot be set aside at law, 96. it may be in equity, 96. awards under rule of court stand on footing of judgments, 97. practice as to, 97. fraud cannot be alleged in action on arbitration bond or on award, when, 97. 676 INDEX. JUDGMENTS AND AWARDS, — conimuerf. award in pais a contract merely, 97. fraud whereby the claim arbitrated was obtained, 97, 98. cross-action therefor, 98. award assailable for corruption or misconduct of arbitrators, when, 98, 99. what constitutes evidence of corruption, 99. strong evidence required to impeach award, 99. when equity will restrain collection of amount of award, 99, 100. arbitrators may open judgments submited to them, when, 100. (See Vacating Judgments and Awards.) JUDICIAL SALES, (See Public Sales.) purchases by attorneys at, 281, 282. purchase at, by administrators, 342-344. JURISDICTION, 41-62. fraud in obtaining jurisdiction, 87-89. may be collaterally shown, 88. outlines of, as to fraud in the various courts, 41-62. tendency to unite power of courts of equity with that of courts of law, 41. of ecclesiastical courts, 42, 43. of courts of probate and matrimonial causes, 42-44. whether bill in equity maintainable for damages on account of deceit, 44-47. when equity can grant relief as to wills, 43, 44. general result- of authorities as to jurisdiction over fraud, 44-47. deceit in sale of patent maintainable in state court, 44. one who acquires an estate by fraud liable in equity as trustee, 46, 48, 49. what redress given, 47. where judgment collusively assigned in fraud of rights of some of the defendants, 49, 50. fraud in ejectment, 47. undue influence in obtaining deed, 48, 50. trustee's deed tainted with fraud, 50. conveyances in fraud of marital rights, 50. fraud upon a partner in settlement, 50, 51. all must be entitled to judgment at law, 51, 52. not so in equity, 52. when assumpsit maintainable in such cases, 50. conspiracy to defraud one of land, 48. setting aside deed and compelling account, 52. proceedings for partition, 52. judgment at law as to fraud conclusive in equity, when, 58. INDEX. 677 JURISDICTION, — coitinued. effect of suing first at law, ■where courts of law and of equity have concurrent jurisdiction, 58, 59. right of cross-action, 59. order of court obtained for fraudulent purpose may be set aside in equity, when, 59. when motion necessary, 59. equity having acquired jurisdiction for incidental purpose may give full relief, 59. when equity will interfere in proceedings at law, 61, 62. specialty obtained by false representations not pleadable at law, 53. otherwise of execution of the deed, 53, 54. ground of the rule, 53. rule not universal, 53. applies to' conveyances, 54. what considered the factum or execution of deed, 54, 55. matter discoverable upon reading deed, 55. plaintiff cannot show fraud in defendant in suit at law on deed of defendant, 55. bond may be annulled for fraud before any attempt to enforce it, 55, 56. restraining railroad company having made track over plaintiff's land from using it, 56. actions by stockholders for benefit of the corporation, 56, 57. not maintainable at law, 56. when in equity, 56, 57. suit by creditor against debtor for fraudulently disposing of his prop- erty, 59, 60, 61, 69. effect of false representations by debtor in such cases, 69, 70. effect of actual levy under false representations, 70. JURORS, misconduct of, 99, 102. tampering with, 100-105 K KNOWLEDGE, means of, in cases of conceded fraud, 29, 30. of falsity in deceit, 509-520. {See Misrepresentation.) 678 INDEX L. LACHES, (See Statutes of Limitation and Lapse of Time.) LANGUAGE, interpretation of, in deceit, 495, n. 3, 497-500, 503. LAPSE OF TIME, (See Statutes of Limitation and Lapse of Time.) LAW, misrepresentations of, generally not relievable, 487, 488. exceptions, 488-490, 322, n. 1. frauds on administration of the law, 67, 89. sales with knowledge of intended fraud on the law, 206. LAW AND FACT, questions of, 139-142, 547. LEASEHOLD, renewal of by employee, 334, 335. LEGACY, obtained under false character, 554. (See Confidential Relations ; Wills.) LEGISLATURE, fraud on, 208. LIBEL, by lunatic, 224. LIEN, discharge of prerented by fraud, 200. LIMITATIOlirS, (See Statutes of Limitation.) LIS PENDENS, doctrine of, 396. applies only to purchaser deriving title from litigating party, 397. party purchasing adversely, 397. rule does not apply to tax-sales, 397. ground of the doctrine, 397. burden of proof, 397. mere service of subpoena, 397, 398. subsequent filing of bill or declaration, 398. question must relate to the estate in suit and not to securities, 398. failure of suit for defect of process, 398. (See Deception.) 'LOST OR NOT LOST,' 237. INDEX. 679 M. MACHINES, representations in regard to, 479. MALICE, 558, 559. MARINE INSURANCE, insurance 'lost or not lost,' 237. non-disclosure, 237, 595-597. MARITAL RIGHTS, (5ee Concealment; Husband and Wife.) MARRIAGE, 549-554. on faith of false representations as to pecuniary standing, 482. contracting void marriage through fraud, 554. conveyances in such cases to innocent parties, 554. {See Husband and Wife.) undue influence under engagement to marry, 351, 352. marriage of widower and sister-in-law, 368. advice necessary as to property transactions, if marriage be illegal, 368. MARRIAGE SETTLEMENTS, 332, 609, note. when a fraud on marital rights, 604-610. (5ee Husband AND Wife; Deception; Misrepresentation.) acts of trustees of, 332. refusal to perform agreement for, 450. MARRIED WOMEN, (See Deception; Husband and Wife; Misrepresentation.) whether estoppel in pais applicable to them, 219, 220. examples of liability for fraud, 220, 221. their estate may be bound, 221. participation in fraud of husband, 221, 222. equitable interference with income, 222, 223. acknowledgments of, 253, 254. rescission of contracts of, 421. antenuptial conveyances in fraud of husband's marital rights, 604-610. meritorious object of conveyance, 606, 607. how far liable for fraud, 219-223. MASTER AND SERVANT, {See Principal and Agent.) MATERIALITY, 497. {See Misrepresentation.) MAXIMS, {See Pari Delicto ; Particeps Criminis.) ex dolo malo non oritur actio, 120, 121. Tolenti non fit injuria, 200. 680 INDEX. MAXIMS, — continued. nemo allegans turpitudinem suam audiendus est, 200. caveat emptor, 413, note. ignorantia legis neminem excusat, 487. simplex commendatio non obligat, 490. quod simile non est idem, 613. MEANS OF KNOWLEDGE, 30, 31, 516, 522-534. MECHANICS' LIEN, fraud against, 587. MENTAL IMBECILITY, 379-382. MIDDLEMEN, (See Bkokeks.) MILLS, misrepresentation of capacity of, 17. MINERAL DEPOSITS, 471, note, 477. MISDESCRIPTION OF LAND, 471. MISREPRESENTATION, Innocent Misrepresentation, 410-438. General Doctrine, 410, 411. effect of retaining advantage, 410. defences against! 410, 411. Rescission, 411-438. Rule of Equity, 411-413. Tendency at Law, 413-419. Tender, 419-431. Consequences nf Rescission, 431-433. Compensation instead of Rescission, 433, 434. Waiver : Subsequent Events, 434-438. (See Deception.) Misrepresentation, 465-574. Elements of the Wrong, 465, 466. definition of representation, 466, 467. an act ordinarily necessary, 467, 468. (See Silence.) representation of chastity, 468. (See Deception; M.\uriage; Miseepkesentation.) uncertainty, 469-473. words* ' more or less,' 470, 471 'probably,' 472, 473. implied representation, 472, 474-476. Opinion and Prediction, 473-487. opinion generally not regarded, 473. difficulty of distinguishing opinion from fact, 473, 474. in matters susceptible of knowledge, 474. prediction, 474-476. INDEX. 681 MISREPRESENTATION, — continued. implied representation in opinion or prediction, 474-476. professing expert knowledge, 477. construction of language, 477-483. examples, 478-483. fire-proof building, 478. new, fresh, and salable goods, 478, 479. capacity of flouring-mill, 479. • utility of machine, 479, 480. invention, 479, 480. representations of solvency, 481-483. to be in writing, when, 481, note. custom of cigar trade, 481, note. proof of insolvency, 482, note. one's own solvency, 483. Promise, 483-487. must generally come to contract, 483, 484. intent not to perform, a fraud, 484-487. intent not to pay, 484-486. non-disclosure of insolvency, 485. consciousness of inability, 485. intent at outset, 485. bank on eve of failure receiving deposits, 485. Representations of Law, 487-490. not noticed generallj', 487. ground of rule, 487, 488. exceptions to rule, 488, 489. relations of confidence, 489. statement by bankers, 489. that a note is ' good,' 489. what makes a statement of law, 489, 490. Representations of Value, 490-496. not noticed generally, 490. ground of rule, 490. ' trade talk,' 490. self-commendation, 491. ' undoubted security,' 491. productiveness and capacity of land, 491. misrep]-esenting price, rental, or the like, 492, 493. example, 493, 494. value of notes, 494, 495. whether value is a question of law or fact, 495, note. ■when representations of value are deemed facts, 496. Materiality, 497. several inducements, 497. 682 INDEX. MISREPRESENTATION, — continued. Falsity, 497. difficulty in determining whether representation is false, 497. questions of law and fact, 497, 498. ' A is solvent,' 498. language to be taken in ordinary sense, 498-500. ambiguous language, 499. terms of art, 499, 500. particular cases of construction, 500-503. ' available capital,' 501. horse-povfer, 502. 'desirable tenant,' 503. literal interpretation not allowable, 503. criterion, 503. part of the truth only, stated, 504. examples, 504-507. effect of partial misrepresentation, 507. giving false meaning to words, 507, 508. time of falsity, 508. turn of events after representation, 508. Knowledge of Falsity, 509-520. forms of scienter, 509. damages dependent upon proof of scienter, 509, 510. examples, 510. statement, bona fide, as to a judicial decision, 510, 511. good reason for belief is not knowledge, 511. director issuing prospectus of company, 511, 512. statement made upon information of another, 512. statement of director that bank is sound, 513. statement of one's own financial condition, 513, 514. statement made upon one's own knowledge, 514. forgetfulness, 514, 515. representations by public officers, 515. honest advice, 516. special means of knowledge, 516, 517. implied warranty, 517, 518. examples, 518. agent not possessing authority professed, 519. difference of liability as to principal and as to third persons, 519. liability of person professing to be a partner, 519, 520. attorney ordering levy, 520. taking advantage of misrepresentation after knowledge of its falsity, 520. Ignorance of Falsity by Party wronged, 521-534. general rule, 521. INDEX. 683 MISREPRESENTATION, — continued. example, 521, 522. means of knowledge, 522, 523. representations counteracting means of knowledge, 523, 524. examples, 525, 526. negligence in signing negotiable instrument, 526, 527. fraudulent misrepresentations as to title, 527. as to what is covered by patent, 527, 528. rule upon means of knowledge stated, 528. distinction in Massachusetts between means of knowledge at hand and not at hand, 529. present knowledge of facts once familiar, 530, 531. false representations, by agent, clearly ultra vires, 531. representations inducing failure to inquire into value, 532. diverting attention from defects, 532, 533. acceptance and payment induced by artifice, 533. burden of proof, 533, 534. sale at risk of purchaser, 534. Intention to induce Action, 535-539. general rule as to proof, 535. chief force lies where third persons are concerned, 535. solvency of third person, 535, 536. burden of proof, 536. corrupt motive of gain not necessary to give action, 536, 537. examples, 537, 538. where inquiry is made it must show clearly its purpose, 538. example, 538. intention to injure not necessary, 538, 539. Acting on the Representation, 540-548. fundamental rule, 540. damage necessary, 540. examples, 541. what constitutes damage, 541, 542. examples, 542. preventing gratuity from testator, 542. causing loss of hospitality, 542. loss must be proved in cases of sale of interest in patents, 542, 543. causing person to forego right to terminate a contract, 543. reliance upon misrepresentations solely, not necessary, 544. conspiracy to obtain loan upon forged note together with other secur- ities, 545. ■who may act upon representation, 545. prospectus of company, 545, 546. representations made through third persons, 546, 547. letter marked ' confidential,' 547, 684 INDEX. MISREPRESENTATION, — continued. time when representation must be acted upon, 547. examples, 547, 548. continued credits, 548. Marriage, 549-554. fraud must touch ' essentialia ' to be redressed, 549. fraud as ground for divorce, 550. frauds as to pregnancy, 550. false representations as to respectability, 551. concealment of unchastity, 551, 552. procured by fraud as to paternity of offspring, 552. ceremony licensed through fraud, 552. fraud practised by third persons, 522, 553. distinction between cases consummated by cohabitation and those not so consummated, 553. when third persons cannot apply for redress, 553, 554. redress where marriage. is void, 554. Stranger to the Action, 555-573. the General Rule of Law, 555-557. interference with contracts, 555, 556. where contract not known to exist, 556. where contract rights had not been consummated, 557. Slander of Title, 557-559. in what it consists, 557. resemblances to deceit and to slander, 557, 558. actual malice required to be proved, 558. damage, 559. rules apply to both real and personal property, 559. Trade Marks, 559-568. definition, 559, 560. not protected when containing deceptive misrepresentation, 560. when damages given for infringement, 560. not necessary that party should have exclusive right, 560. examples, 561. nature of the wrong, 561, 562. what resemblance makes infringement, 562. scienter, 562. whom deceived, 563. intention to deceive, 563, 564. damages, 564. who must be injured, 565. injunction, 565. right must be exclusive generally, 565. where there is fraud, rule otherwise, 566. what may be exclusively appropriated as trade-mark, 566, 567. INDEX. 685 MISREPRESENTATION, — continued. family and place narnes, 567. Business Signs, 508-571. rights of property in, 568, 569. neither monopoly, nor fraud protected, 569. ground of action for imitation, 569, 570. injunction, 570, 571. examples, 571. Wills, 571-573. distinction between fraud and undue influence, 571, 572. fraud does not necessarily invalidate whole will, 572. pi'ohibition by testator against questioning will, 572, 573. {See Deception; Silence; Sunday Laws; Void Transactions.) MISTAKE, not provable under allegation of fraud, 179. effect of, on bill for specific performance, 461, 462. of law, 322, n. 1, 488-490. MIXTURE OF GOODS, when title lost by, 574-576. {See Confusion of Goods.) ' MORE OR LESS,' 470, 471. MORTGAGE, deed absolute may be shown by parol to have been intended for, 460, 461. MORTGAGOR AND MORTGAGEE, 347-351. confidential relation of, 135. mortgage executed in fraud of creditors, 206. dealings inter sese, 347-350. sale of equity of redemption to mortgagee, 347-350. purchase by mortgagee under power of sale, 349, 350. mortgagee of leasehold obtaining renewal, 350. {See Fiduciary Relations.) MOUSSELINES DE LAINE, 154. N. NAMES, trade-mart in, 567, 571. NEGLIGENCE, cross right of action for, 71, 72. in execution of contract, 74, note, 524, 526, 534. contributory, 524, note. measure of damages in cases of, 634. INDEX. NEWSPAPER, advertisements in, not notice, 388, 491. NEW TRIALS, what sort of misconduct ground for, 100. ■where papers have been surreptitiously handed to the jury, 100, 101, 102. ■where a party has improperly approached a juror, 100, 102, 103. ■where there has been neglect to correct improper attempts to influence the jury, 100, 104. ■where indirect measures are employed to influence or prejudice the jury, 100, 101, 104, 105. ■where an attempt is made to mislead the court and jury, 101, 105, 106, 107, examples and qualifications of the rules under these heads, 100-107. misconduct of the judge, 107. NON-DISCLOSURE, (See Silence.) NOTICE, by carriers, 599, 600. (See Carriers.) Its Relation to Fraud, 385, 386. (See Conduct Subsequent.) Duly to Inquire, 386-396. purchasers -with notice, 258, 386. ■what is constructive notice, 386, 387. fraud on creditors, notice not enough, in mass, 386. examples, 387. notice of unrecorded lien, 387. omission of indorsement of interest on note, 387. sale of crops on leasehold premises, 387. mere ■want of caution in not inquiring, 387, 388. advertisements in newspaper, 388. facts must be definite, 388. rumor insufficient, 388. general reputation, 388, 389. from whom notice must proceed, 389. knowledge that public lands ai-e reserved from sale, 389. purchase with notice of another's contract for purchase of same prop- erty, 387. purchase of negotiable instrument with notice, 388. when purchasers are bound to inquire, 386, 387. unsuccessful inquiry, 387, 388. between what parties the doctrine of constructive notice is applicable, 388, 389. when agent's knowledge imputable to principal, 237, 238. INDEX. 687 NOTICE,— continued. agent's fraud or collusion, 239. possession as notice, 390-393. general rule, 390. possession of cestui que trust, 390. possession of tenant, 390, 391. what sort of possession necessary as notice, 390, 392. fraudulent sales and subsequent purchasers, 393. vendor remaining in possession, 393. adverse possession, 393. possession not taken by purchaser, 393. trustee of stock pledging the same, 393, 394. evidence should be strong against purchaser, 394. purchasing property from executor, 394. securities payable to guardians or agents, 394. property or paper of firm taken for private debt of a partner, 395. firm note in the hands of a partner, 395. piu-chasers' county warrant affected by facts appearing on its face, 396. what purchaser, charged with notice, bound to show, 395. by Lis Pendens, 396-398. doctrine of, stated, 396. rule applies only to purchaser deriving title from litigating party, 397. party purchasing adversely, 397. rule does not apply to tax-sales, 397. ground of the doctrine, 397. notice extends only to the facts of record at the time of the purchase, 397. bui'den of proof, 397. mere service of subpoena, 397, 398. subsequent filing of bill or declaration, 398. question must relate to the estate in suit and not to securities, 398. failure of suit for defect of process, 398. hj Registration, 398-402. actual notice, 398, 399. only to those bound to make search, 399, n. 3. abstaining from inquiry, 399. indexes, 399, 400. whether grantee must ascertain if previous grantors have made any other conveyances, 400, 401. registered mortgage operates as notice until discharged, 401. nominal purchaser at administrator's sale conveying to administrator, 402. deed defectively acknowledged is not notice, 402. notice extends only to fraud on face of deed, 402. INDEX. NOTICE, — continued. and affects only those claiming under the grantor, 402. doctrine of notice does not apply where there was a false representa- tion of title, 402. earlier registration of deed obtained in fraud of a grantee registering later, 401. what will constitute notice of prior deed, 402. possession as notice, 390-393, 401. purchaser without notice of deed can convey good title to another, with notice, 402. Purchasers without Value, 40.3-410. bona fide purchaser for value obtains a good title, 403. examples, 403, 404. qualification in case of receiver of money raised on trust property, 404. vendor must have had a title, 403, n. 1. innocent purchasers at judicial sales not affected by artifice of defend- ant, 403, n. 1. otherwise, if he has himself been guilty of artifice, 403, n. 1. burden of proof in cases of fraud, 131-134. who is a purchaser for value, 404-406. rule in New York, 405, 406. mere agreement to pay for property not sufficient, 405, n. 1. execution creditor, 406, 407. attaching creditor, 407. who are purchasers for value as against creditors, 407. inadequacy of consideration in such cases, 407. where an interest ad rem remains in the intermediate fraudulent ven- dor, the property can be followed, 407, 408. fraud of such a nature as to prevent title passing, 408. to be a bona fide purchaser, a party must have paid before notice, 408, 409. the purchaser must have acquired the legal title, 410. Principal and Agent, Client and Attorney, Ij'c, 236-240. to agent is notice to principal, 236-239. formula ' knowledge of agent is knowledge of principal ' considered by Lord Esher, 236, 237. general principle of constructive notice, 236. notice to agent is notice to principal, when the presumption is reason- able, 238, 240. no presumption of knowledge when agent himself commits a fraud on his principal, 239. presumption applies only in controversies between persons holding prior equitable rights and subsequent purchasers, 240. whether notice to agent or attorney must be in connection with the transaction for which he is employed, 237, 238 and n. 1, 239, 240. INDEX. 689 NOTICE, — continued. collusion of an agent with another agent to defraud either's principal, 239. sale to joint owners through fraud of one of the purchasers, 317, 318. when directors of a corporation chargeable with notice of acts of man- aging officers, 239. notice to husband not notice to wife, 229, 230 and n. 1. notice to wife not notice to husband, 229, 230. O. OFFICE, agreements to buy, 207. OIL, false representations of existence of deposits of, in land, 471, n. 2, 477, 492, 493. OPINION AND PREDICTION, submission to jury of questions of, 140-142. misrepresentations concerning matters of, 473-483. (See MlSRKPRESENTATION.) OTHER FRAUDS, evidence of, 160-166. (See Evidence.) P. PARENT AND CHILD, bounty by child to parent, how regarded, 354-360. gift by child shortly after majority, 35-5, 356. burden of proof rests on parent, 354, 356. only prima facie invalid, 357. what will invalidate the bounty, 357. gifts from parent to child, 357, 358. family settlements placed in charge of child, 359. relation between grantor and his son, grandson, or son-iij-law, 358, 359. gift by aged or infirm parent, 359, 360. parent, though partially intoxicated, may favor one child over another, 360. son employed to procure deed disposing of father's property, 360. relation of son-in-law to mother-in-law, 360. appointments by parent, 442. PARI DELICTO, 203, 204. (See Particeps Criminis.) PARLIAMENT, fraud on, 208. 44 690 INDEX. PAROL EVIDENCE, (See Evidence.) admissible to establish resulting trust in lands, 176-178, 446, 448, 453, 456-460. (See Resulting Trusts.) courts of equity disregard the literal terms of the Statute of Prauds, when, 445. (See Specific Performance.) admissible to contradict terms of written contract obtained by fraud, 174. examples, 174, 175. admissible to prove fraudulent representations, the inducement to a contract, 175, 176. also to prove a promise to do some further act forming part of the consideration, 176. deed absolute may be shown to have been intended for mortgage, 176. PARTICEPS criminis, evidence, 182. one cannot in general set up his own fraud, 200. examples, 200, 201. one cannot show that he has been outwitted in fraud, 200. rule applicable whether the wrong was intentional or not, 201. but the rule is not universal, 203. evidence tending to show fraud in some other matter, 202. where the party is not in pari delicto VTith adverse party, 202. transactions contravening public policy, 202, 203. effect of suppressing debt, 203. party may show that a contract was made in fraud of creditors, 203, 204. notes made in such cases void, 204. securities given to effect composition with creditors, 204. eifect of failure of the composition, 204, 20.5. composition itself made void by secret preference, 205. distinction between preferences to obtain composition and other cases, 205-207. -' distinction between executed and executory contracts, 207. though conveyance cannot be impeached, security given for purchase price may be, 206, 207. whether mortgagor can resist bill for foreclosure by showing mortgage to have been in fraud of creditors, 206, 207. contract to procure an office, 207. contract by agent to play false to principal, 207, 208. combination to defraud government, 208. insuring belligerent's property as neutral's, 208, 209. INDEX. 691 PARTIES, Concerned, 197-258. Party Defrauded, 197-^15. Subject of the Chapter, 197. The Person intended, 197-200. only those to whom misrepiesentation is made or for whom intended can have relief in cases of deception, 197-200. criticism of Lord Erskine's opinion in such a case, 199, n. 1. otherwise in circumvention, 197, 198. damage to person not intended, 198, 199, n. 1. Consent: particeps crhninis, 200-209. cannot set up own fraud as ground of action or defence, 200. examples, 200, 201. same rule whether the wrong is intentional or not, 201, n. 5. contribution between wrong-doers, 201. legal defence allowed although evidence tends to show fraud in other matter, 202. examples, 202. exceptions to general rule as to particeps criminis, 202-208. agent obtains receipt in full from employee by fraud, principal liable to employee for any balance unpaid, 20.5, n. 4. test whether demand connected with illegal transaction can be en- forced, 206. distinction between executed and executory contracts where both parties are guilty of fraud, 207. agreement to procure office in corporation, 207. agreement of agent to be false to his principal, 207, 208, 285, n. 1. combination to defraud government, 208. contract to procure act of legislature by fraudulent means, 208. in.suring belligerents as neutrals, 208, 209. Personal Nature of Fraud, 209-212. only party injured can claim active relief, 209. examples, 209, 210. cases of fraud in government land grants, 210. cases of misrepresentations made to agent, 210. creditor's rights restored against innocent surety who had been re- leased through fraud of the debtor, 210, 211. fair arrangement not invalid merely because induced by fraud of third party with intent to benefit himself, 211, 212. sales by auction where creditors are interested, 212. Suits by Personal Representatives, 212-214. deed fraudulently obtained from decedent may be impeached, 212. not so of deed fraudulently made by decedent, 212, 213. when administrator de bonis non may recover property sold by fraud of predecessor, 213. 692 INDEX. PARTIES, — continued. what actions for fraud survive by statute in Maine, 213, Massachusetts, 213, 214. New York, 213. Assignee of Right of Action, 214, 215. cannot sue at law or in equity, 214, 215. The Party Defrauding, 216-258. Officers of State, 216. fraud by, when and how relieved, 216. Infants, 216-219. when liable in action ex delicto, 216, 217. not liable in any form by reason of contracts made through their own false representations, 217, 218. liable for pure torts, 218. how affected by doctrine of estoppel in pais, 218, 219. Married Women, 21-9-223. not liable at common law on contracts procured by them through fraudulent means, 219, 220. nor ex delicto for the means employed to procure such contracts, 220. how affected by doctrine of estoppel in pais, 220. enabling acts, 220. liable for some frauds, 220. examples, 220, 221. inactive participation in fraud of husband, 221, 222. active participation under some coercion by husband, 222. restrained from anticipating, not liable to have income applied to make good consequences of fraud, 222, 223. Lunatics, 223-225. whether liable in action founded on fraud, 223-225. whether liable for slander or libel, 224. Employers: Agency, 22o-2W. (See Principal and Agent; Notice.) Partners, 51, 240-246. joint contractors, 51, 108, 109. (See Fiduciary, Confidential, and Kindred Relations; Partners.) Corporations, 246. stockholders made defendants, 110. liable for fraud of their proper agents, 248. Conspirators and the like, 246-248. liability of each for acts of the others, 246, 247. Co-trustees, 248. when liable for fraud of associates, 248. Co-executors or administrators, 248-252. (See Executors and Administrators.) IKDEX. PARTIES, — continued. Co-distributees, 252. Fraud of Third Persons, 252-258. (See Fraud; Infants; Joinder of Parties; Married Women; Particeps Criminis; Practice; Third Persons.) PARTITION IN EQUITY, 52. PARTNERS, circumvention by partner, 18, n. 1. all must join in suing at law, 51, 52, 242. not so in equity, 52. joinder in suits against, 109. suits between partners engaged in fraud, 201. taking partnership security in discharge of individual partner, 184, 244, 395. appropriation of partnership assets by one partner to pay his own debt, 51, 52, 242-244. ■when firm bound by fraud of partner, 240, 241, 244. examples, 241. debt fraudulently incurred by one partner, 245. partner absconding with funds intrusted to firm, 245. notice to opposite party, 242, 243. misapplication of funds, 241-245. borrowing money by one partner on firm note, 244. retiring partner's liability, 242, 245, 246. waiver of misapplication, 244. burden of proof, 244. persons dealing with a firm through a single member, without notice that his acts are fraudulent, 244. partners entering into contract to defraud creditors, 245, 246. dissolution as affected by such cases, 246. what relief equity will give, 311, 812. party induced to sell his interest in a firm through fraud, 312. duty of partners towards each other, 310-315. clandestine bargains, 313. engaging in business incompatible with that of partnership, 313. making secret profits out of the firm, 313, 314. counter fraud by other partners, 314. partners presumed to have equal access to books and business, 311. interalienations of interests, 311, 312. joint purchasers of property, 315. rescission of sale of partner's interest, 426. false representing one's self as partner, 519, 520. misrepresentation of partner's authority to bind the firm, 519, 520. 694 INDEX. PARTNERS, — continued. party induced to join firm by fraud entitled to relief, 629. (See Fiduciary and Confidential Relations.) PART PERFORMANCE, of parol contract for sale of land, 446-449. PATENTS, misrepresentations as to, 479, 480, 497, note. PAYMENT OF MONEY, on verbal sale of land, 447. PERJURY, 98, 99. PERSONAL REPRESENTATIVES, actions against, for fraud of decedent, 213, 214, 404, 554, n. 2. actions by, for fraud upon decedent, 212-214. PERSONATION, in sale of goods, 619, 620. to obtain delivery of goods from common carrier, 621. liability of innocent purchaser for value without notice, 622. PHYSICIAN AND PATIENT, gifts from patient to physician, 360, 361. agreements between, 361. ■when fraud not presumed, 361. PLEADING, Allegation of Fraud, 114-120. fraud must be distinctly alleged, 114. example, 114, 115. allegation of breach of trust, 115. setting out false representations, 116, 117. connection between them and the damage, 115. general charges of fraud, 115, 116. particular acts, 116. example, 116. ■where the facts alleged clearly show fraud no direct averment of fraud necessary, 116. alleging the substance of a misrepresentation, 116, 117. objections in court of error, 117. charging fraudulent intent, 117. scienter need not be averred in actions for breach of warranty, 117. allegation of immaterial facts, 118. allegations as to stale trusts, 118. particulars of fraud need not be alleged in case of filing bill for dis- covery, &c., 119. charges of fraud on information and belief, 119. Denial of Fraud, 120-122. general denial of fraud insufficient in a bill, 120. when answer on remembrance or belief insufficient, 120. INDEX. 695 PLEADING, — continued. waiver of objection, 120. plea in bar to action on note for land, 120. averment of tender, 120. plea to action against shareholder for shares, 121. absence of benefit from contract obtained by fraud, 121. plea of fraud to action on specialty, 121. Demurrer, 122. proper allegations of fraud must be answered, 122. when charges of fraud are demurrable, 122. demurrer cannot be good in part and bad in part, 122. example, 122. demurrer to plea of fraud in obtaining judgment should be special, 122. POSSESSION, retention of, 148. of title-deeds, 157, 158. as notice, 390-393. under parol contract for sale of land, 445-447. POWER OF SALE, (5ee Mortgagor and Mortgagee.) POWERS, FRAUD ON, how committed, 12, 438. illusory appointment remedied in equity, 50. appointment of fund subject to agi-eement to loan it to appointor, 439. giving benefit to appointor, 439, 440. in certain cases not fatal, 439. giving benefit to a stranger, 440. invalid though the stranger did not know of it, 440. appointment approved by parties interested, 441. property conveyed to separate use of married woman with power of sale and investment, 442. exercise of powers by parents, 442. purchaser under fraudulent appointment, 443. consideration ex post facto, 443. cases in which wrongful exercise of power is void in part only, 443. principles applying to discretionary trusts in general are applicable to trusts of this kind, 444. mere suspicion of improper exercise of power, 444. PRACTICE, Parties, 108-113. releases fraudulently obtained from one of several joint contractors, 109. who should be made parties in equity, 110. INDEX. PRACTICE, — continued. bill by minority of stockholders of corporation to set aside a sale, 110. action against directors of insurance company for refusing to pay loss, 110. bill alleging that municipal bonds are invalid and calling for surren- der of securities given for them should make the bondholders parties. 111. bill for impeachment of judgments should make the plaintiffs therein parties, 111. bill by heirs to set aside deed of ancestor obtained by fraud, 111, 112. bill to set aside fraudulent receipt obtained by administrator from distributee, 112. sureties in bond of admini.strator may be joined in action for fraudu- lent administration, 112. costs where proper parties are omitted, 113. exception to the rule that all interested persons should in equity be parties, 113. Remedy, 63-67, 73-84. election to sue for damages, 65-67, 436, 437. election to rescind, 66, 67. sale may be rescinded for fraud, or damages may be recovered, 74, 75 and n. 1. ejectment not maintainable by defrauded grantor, 76. ejectment by the grantee, 76, n. 5. cross- action to cancel contract pending suit thereon, 70-72. cross-action for fraud after judgment on the contract, 70, 71. one not a party to judgment may sue for suborning false witnesses, 86, 87 and n. 1. failing to recoup damages, 71. ignorance of facts entitling one to file cross-bill, 71, n. 4. fraud as a collateral incident to a contract, 636, 637. persons not competent to contract sued ex contractu when liable ex delicto, 216-219. Denial of Fraud, 120, 121. when answer insufficient, 120. when repudiation should be pleaded, 120, 121. general denial, when insufficient, 120. what necessary in plea of fraud to action on sealed contract, 121. Discovery, 193. when equity will compel disclosure of fraud, 193. Variance, 179-186. charge of actual fraud not established, 179-181. statement of other facts, 179, n. 5, 185, 186. proof of constructive fraud, 179, n. 5. proof of mistake, 179, n. 5, 181, 185. INDEX. 697 PRACTICE, — continued. use of the word ' fraud ' immaterial, 116. Law and Fact, 139-142. •when fraud a question of law and when a question of fact, 139. materiality of statements, 139, 140. interpretation of written statements of fact, 140. opinion and belief, 140, 141, 142. Survivorship of Actions, 213. PRE-EXISTING DEBT, 158, 405, 406. PREFERENCE OF CREDITORS, fraudulent and pleadable by debtor, 202-207. (See Creditor and Debtor.) PREPONDERATING EVIDENCE, 123. (See Evidence.) PRESUMPTION OF FRAUD, 137. (See Fiduciary and Confidential Relations.) PRESUMPTION OF INNOCENCE, 123, note, 138, note. PRINCIPAL AND AGENT, agent betraying his principal, 207, 208, 285, n. 1. (See Notice.) p)'inciple of employer's liability stated and considered in respect of fraud, 225-226. no implied authority to commit fraud, 225-229. effect of taking benefit from agent's fraud, 226, 227. limitations to the rule of liability of principal, 229, 230. limited agency, 229. agent engaged with principal in committing fraud liable with him, 230, 231. sheriff in execution not agent of defendant, 231. nor of plaintiff, 231. when equity will convert a party into an agent, 231. example, 231, 232. how opposite party may become participant in fraud of agent upon principal, 232, 233. treating third person as agent of vendor, 233. relation of joint owner, 233. violation of duty by agent, 232, 233. directors and stockholders not necessarily bound personally by acts of managing ofBcers of a corporation, 233, 234. notice through agent, 236-240. when bank affected with knowledge by director, 239. position of insurance agent when assisting applicant for insurance, 234-236. conflict of authority on this point, 234-236. agent occupies a relation of trust towards his principal, 295. 698 INDEX. PRINCIPAL AND AGENT, — coniinuei/. how far dealings between them at the instance of the agent will be supported, 295-310. {See Confidential Relations.) specific performance refused for agent's misconduct, 298. agent's misrepresentation of extent of his authority, 518-520. liability to principal, 519. misrepresentation by agent ultra vires, 227, note, 531, 532. knowledge by principal, 504, note, 591, note. PRINCIPAL AND SURETY, {See SuKETiES.) discharge of surety by principal's fraud, 210, 211. misrepresentation by principal, 252, 253. non-disclosure by principal, 600-604. misrepresentations to sureties of the extent of the principal's liabili- ties, 601, 604. not necessary for creditor to disclose every material circumstance, 601. assumed that principal debtor has acquainted the surety with the facts, 601. what creditor is not bound to disclose, 604. sureties for good conduct, 601-604. PRIORITY OF REGISTRATION, 401. PRIVILEGED COMMUNICATIONS, rule as to, does not apply to cases of collusion by client and attorney to defraud, 186, 187. PROBATE COURT, jurisdiction of, 42-44. settlements in, 93, 114, 115. {See Jurisdiction.) PROCEDURE, statutes ot limitation, 23-37. {See Statutes of Limitation and Lapse of Time.) laches, 37-40. {See Statutes of Limitation and Lapse of Time.) jurisdiction, 41-62. {See Jukisdiction.) cross-actions, 68-72. {See Actions for Damages and Cross- Actions.) rescission, 73-83, 412-438. {See Damages ; Rescission.) practice, 84-114. {See Practice.) new trials, 100-107. {See New Trials.) INDEX. 699 PROCEDURE, — continued. pleading, 114-122. (See Pleading.) evidence, 137-193. (See Evidence.) who may allege fraud, 197-215. ( trustee protected as to outlays, when, 320, 321. acquiescence by cestui que trust, 321. when trust title absolutely fails, trustee may purchase, 334, n. 2. what trustee must show to validate his purchase, 321. long acquiescence by cestui que trust, 3'21. cestui que trust should act with reasonable promptness, 321. purchase by trustee from one to whom the trust property has been sold, 322, 323. there should be an understanding between the trustee and bidder at or before the sale to render subsequent sale to trustee invalid, 323. ratification by cestui que trust, 322. s what constitutes, 322. taking accounts between trustee and cestui que trust, 323. laches on part of cestui que trust, 324. releases by cestui que trust, 316, 317, 324. trustee of property conveyed in trust for creditors may purchase other property of the debtor, 325, n. 4. officers and directors of corporations are trustees, 325-327. when transactions for their personal benefit may be supported, 327. examples, 328-330. director may deal in regard to his own shares, when, 330. making calls for the stockholders, 330. INDEX. 711 TRUSTS AND TRUSTEES, — continued. president and non-offlcial stockholdei-, 330, 331. notice of breaches of trust, 393-396. power of appointment trust, 444. U. ULTRA VIRES, misrepresentation by agent of corporation, 227, note, 531, 532. UNDERVALUE, 374, 375. UNDUE INFLUENCE, 187-192, 277, 571, 572. (See Confidential Relations; Wills.) USURY LAWS, repeal of, does not affect doctrines of equity in regard to expectant heirs, 372. VACATING AND IMPEACHING JUDGMENTS AND AWARDS, 86-100. collaterally, when, 86, 87. for fraud in manner of obtaining jurisdiction, 88. for fraud in offering or suppressing testimony, 89. for collusive litigation, 89. for deceit practised upon the court, 90. for fraud in concoction of a judgment, 90, 636. examples, 90. by third persons, 91, 92. for concealment of facts which would have prevented judgment, 92. distinction between fraud which is and fraud which is not ground for impeaching judgment, &c., 93, 94. of courts of foreign powers, 94, 95. of courts of sister states, 95, 96. awards, not made rule of court, set aside for fraud in equity, not at law, 96. after judgment upon award, remedy in equity for fraud, 97. (See Judgments and Awakds.) VALUE, misrepresentations of, 264, 490-496. VARIANCE, (See Evidence.) what constitutes, 179-186. evidence of mistake, 179. action for fraud of agent, 180. 712 INDEX. VARIANCE, — continued. allegation of deceit not supported by evidence of breach of warranty, 180, 181. acts short of presumptive fraud, 181. conversion of check, discharge in bankruptcy, 182. secret agreement between creditor and insolvent debtor, 182. badges of fraud, 183, 184. not necessary to prove all the allegations as to means, 185. allegations cannot be picked out of biU to make case, 185. rehef asked in alternative, 186. VESSEL, misrepresentation of age of, 630. VOID AND VOIDABLE, meaning in cases of rescission, 73, 74. doctrine of fraud, 121, note, 265, 317, 337, 342, 343. VOID TRANSACTIONS, Misrepresentation, 617-623. as to kind of contract, 617, 618. examples, 618, 619. personation, 619', 620. delivery by carrier to one who had purchased under false name, 621. to one who falsely assumed to be another person, 622. goods obtained by false representation as to agency, 622. making insurance risk less hazardous than true risk, 623. Act not Misrepresentation, 623, 624. obtaining instrument by trick, 623. by criminal act, 624. VOLUNTEER, not the same as one having notice, 131, note. voluntary guardian, 339. voluntary administrator, 345, 346. stands in relation of confidence, when, 366, n. 4, 867. purchasers without value, 403. W. WAIVER AND CONFIRMATION, waiver by cestui que trust of acts of trustee, 321-324. when making new agreements with respect to transactions will amount to waiver of fraud, 434. retaining and using subject of fraudulent transaction after knowledge, 434. performance of contract tainted with fraud, 434. contract tainted with fraud may be confirmed, how, 434, 435. INDEX. 713 WAIVER AND CONFIRMATION, — con(m«erf. purchaser remaining in possession after tender by way of rescission, 435. assignee in insolvency suing in contract and tort, 435. assumpsit not affirmance of contract, 435, 436. claiming abatement from consideration, 436. only one election to rescind, 438. election how determined and exercised, 436, 437. issuing writ, 437. declaration of intention to rescind, 437. obtaining judgment, 437. subsequent events, 438. efieots of promptness and delay, 438. by accepting goods, 533. WARRANTY, treated as a case of deceit, 70, 117, 118, 181, 185, note, 518, note. cross right of action for, 71, 72. of soundness, 251. concealment of defects, 251. implied warranty, 251, 517-520. (See Deception.) WEAK-MINDED PERSONS, transactions with, 374-383. (See Illiterate, Weak-minded, and Drunken Persons.^ WHARFINGER, misrepresentations by, 516, note. WILLS, jurisdiction of ecclesiastical courts, 42, 43. jurisdiction of courts of probate, 42-44. draftsman taking benefit under will made trustee in equity, 43. (See Attorney and Client; Fiduciary, &c., Relations; Drafts- man or Will.) equity has no jurisdiction to set aside or restrain probate, 43. but may set up a suppressed or destroyed will, 44. evidence of fraud on testators, 187-192. undue influence, 187-192, 277, 571, 572. benefits bestowed on draftsman, 271-273, 360-365. by client in favor of attorney, 271-273. by wards in favor of guardians, 337. influences of relation of husband and wife, 354. imposition upon weakness, 883. strong evidence when required, 383. effect of proving testator's capacity, 383. promise of devisee to conform to testator's wish, 457-459. revocation obtained by fraud, 542. 714 INDEX. WILLS, — continued. distinction between undue influence and fraud, 572. alteration of legacy does not necessarily avoid whole will, 572. prohibition against questioning validity of will, 572, 573. WITNESSES, actions against, for false testimony, 87, note. illegal detention of, 89, 104. perjury by, 98, 99. credibility, 192. WORDS, ' belief,' 140, note. 'burglar proof,' 471, note. ' concealment,' 590, note. 'conclusive,' 142, note. 'corn,' 489, note. ' desirable tenant,' 503. ' estimate,' 140, note. ' fancy word,' 567, note. 'fire proof,' 478. ' gem,' 567, note. ' good,' 142, note, 495. ' good sale,' 516. ' horse-power,' 502. ' judgment,' 140, note. ' large mineral deposit,' 471, note. ' lost or not lost,' 237. ' Melrose,' 567, note. ' more or less,' 470, 471. ' National sperm,' 567, note. ' patent,' 560, note. 'satisfactory,' 142, note. ' undoubted security,' 491. University Press : John Wilson & Son, Cambridge.