statement of fact of this kind made with knowledge of its falsity and operating as an inducement to the sale is ground either for avoiding the sale or for an action of deceit. Statements are sometimes made, however, which are merely matters of opinion, not statements of fact, and, therefore, not within the rule just stated. This is especially likely to be true of misrepresentations made, not by the buyer himself, but by third persons,

§ 1521. Intention not to pay for the goods.

The law is well settled that where the buyer at the time of the purchase is insolvent and intends not to pay for the goods, it is a fraud which will render the purchaser's title voidable.97

with... sound policy or the principles of business honesty”).

In Pennsylvania, however, it is essential that some positive representation be made or some trick, artifice, or conduct which involves a false representation be added. Secret intention not to pay is there insufficient.98 It may be urged that a mere intention does not amount to a representation of an existing fact by the buyer and that if a court gives relief to the buyer the only ground can be that circumstances exist though the seller has no knowledge of them which render the transaction unfair. The answer to this, however, is that the purchase of goods implies a promise to pay for them even if there is no express promise; and a promise to pay, whether express or implied, involves a representation that the buyer intends to keep his promise. Accordingly, not only is the bargain voidable, but it has been held the seller may maintain an action of deceit.99 This, S.) 245; Powell v. Bradlee, 9 G. & J. 220; Dow v. Sanborn, 3 Allen, 181; Watson v. Silsby, 166 Mass. 57, 43 N. E. 1117; Ayers v. Farwell, 196 Mass. 349, 82 N. E. 35; Phinney v. Friedman, 224 Mass. 531, 113 N. E. 285; Shipman v. Seymour, 40 Mich. 274; Ross v. Miner, 67 Mich. 410, 35 N. W. 60; Frisbee v. Chickering, 115 Mich. 185, 73 N. W. 112; Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; Fox v. Webster, 46 Mo. 181; Stewart v. Emerson, 52 N. H. 301; Hall v. Naylor, 18 N. Y. 588, 75 Am. Dec. 269; Hennequin v. Naylor, 24 N. Y. 139; Whitten v. Fitzwater, 129 N. Y. 626, 29 N. E. 298; Ash v. Putnam, 1 Hill, 302; Cary v. Hotailing, 1 Hill, 311, 37 Am. Dec. 233; Durrell v. Haley, 1 Paige, 492, 19 Am. Dec. 444; Des Farges v. Pugh, 93 N. C. 31, 53 Am. Rep. 446; Richardson v. Vick, 125 Tenn. 532, 145 S. W. 174; Davis v. McWhirter, 40 U. C. Q. B. 598.

98 Smith v. Smith, 21 Pa. St. 367, 60 Am. Dec. 51; Rodman v. Thalheimer, 75 Pa. St. 232; Bughman v. Bank, 159 Pa. St. 94, 28 Atl. 209 (in this case Mitchell, C. J., though regarding the Pennsylvania rule as established, and, therefore, following it, said that it "was not in harmony

99 Edgington v. Fitzmaurice, 29 Ch. D. 459; Swift v. Rounds, 19 R. I. 527, 35 Atl. 45, 33 L. R. A. 561, 61 Am. St. Rep. 791. But see Dawe v. Morris, 149 Mass. 188, 192, 21 N. E. 313, 4 L. R. A. 158, 14 Am. St. Rep. 404, where Devens, J., said: "The plaintiff further contends that, as where goods have been obtained under the form of a purchase, with the intent not to pay for them, the seller may, on discovery of this, rescind the contract and repossess himself of the goods as against the purchaser, or any one obtaining the goods from him with notice or without consideration, an action of tort should be maintained on an unfulfilled promise which at the time of making the promisor intended not to perform, by reason of which nonperformance the plaintiff has suffered injury in having been induced to enter into a contract which depended for its successful and profitable performance upon the performance by the defendant of his promise. Assuming that the plaintiff's declaration enables him to raise this question, which may be doubted . . . there is an obvious

3

however, is not universally admitted.1 If the reasoning is sound it would follow that it is immaterial whether the buyer is insolvent or not; the intention not to pay would be the only material circumstance. This result seems correct and would doubtless generally be reached, but not perhaps everywhere.2 It would also logically follow that in any case where a promise was made with a preconceived intention not to perform it, the promisor would be guilty of a fraudulent misrepresentation of fact. Many courts certainly would not be prepared to go to this length. If it cannot be said that making a promise with intent not to perform it involves a misrepresentation of fact, the seller's right to rescind must be based on the ground that the circumstances of the case of which the seller was ignorant, and which the buyer, knowing their materiality, failed to disclose, render the transaction fraudulent and make it equitable to avoid it. If this be accepted as the true ground, it would seem to follow that hopeless insolvency on the part of the buyer, not disclosed to the seller, ought of itself to afford ground for rescinding a sale; and though it is generally held that mere nondisclosure of insolvency will not suffice to avoid a sale,' where

difference between the case where a contract is rescinded, and thus ceases to exist, and one in which the injury results from the nonperformance of that which it is the duty of the defendant to perform, and where there is no other wrong than such nonperformance. To term this a 'tort' would be to confound a cause of action in contract with one in tort, and would violate the policy of the Statute of Frauds by relieving a party from the necessity of observing those statutory formalities which are necessary to the validity of certain executory contracts."

1 See Pollock, Torts (2d ed.), p. 252, and note (m). Also extract from Dawe v. Morris in the preceding note, and Kitson v. Farwell, 132 Ill. 327, 23 N. E. 1024; Donovan v. Clifford, 225 Mass. 435, 114 N. E. 681. In Commonwealth v. Althause, 207 Mass. 32, 93 N. E. 202, 31 L. R. A. (N. S.)

999, it was held that no prosecution for obtaining property by false pretences could be maintained.

2 La Grand v. Eufaula Nat. Bank, 81 Ala. 123, 1 So. 160 (but see Maxwell v. Brown Shoe Co., 114 Ala. 304, 21 So. 1009). Insolvency was not mentioned as requisite in Donovan v. Clifford, 225 Mass. 435, 114 N. E. 681; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 6 L. R. A. (N. S.) 556. In Ditton v. Purcell, 21 N. Dak. 648, 132 N. W. 347, 36 L. R. A. (N. S.) 149, it was held that the giving of a check in payment of the price of personal property with intent, after obtaining possession, to set off note of the seller barred by bankruptcy or obtain a discount from the purchase price in settlement, was a fraud on the seller, for which he might rescind, and recover the property.

See supra, § 1495.

Ex parte Whittaker, L. R. 10 Ch.

the buyer knows that his financial condition is such that it will be impossible for him to pay, the inference is strong that he did not intend to pay.5

Fraud upon a buyer will generally consist of some misrepresentation in regard to the character of the property or in regard to the title, quantity, or value. Misrepresentations as to quantity and value have already been sufficiently discussed." Representations in regard to the character of the goods have also been considered both in connection with the law of warranty and in connection with fraudulent representations by the seller. A representation in regard to goods will frequently

be not only a warranty but, if fraudulently made, also ground for an action of deceit. False representations as to title, though to some extent involving a statement of law and sometimes also of opinion, involve also such assertions of fact as to constitute actionable fraud. And misrepresentations as to mortgages or other liens upon the property are likewise actionable if made with knowledge of their falsity.10 It seems also that offering goods for sale without disclosing a defect in the title or an incumbrance is itself a representation of good title and freedom from incumbrance. It is, at least, partly on this ground that warranties of title and freedom from incumbrances are implied.11 And if the seller knew of the defect in his title his offer to sell would amount to a fraudulent misrepresentation.12

1523. Remedies of defrauded party.

Although relief may be obtained by a defrauded party to a contract in a variety of ways, such relief is always based on one of three general remedies which are open to the defrauded party: (1) A right to damages for being led into the transaction. Under this form of relief the injured party does not seek to undo the fraudulent transaction but claims sufficient compensation to make his position as good as it would have been had he not entered into the transaction at all. (2) Rescission of the fraudulent transaction and restoration of the situation which the parties occupied before the fraudulent transaction was entered into. (3) Enforcement against the fraudulent person of the kind of bargain which he represented that he was making. This relief is possible in at least two classes of cases. Frequently a fraudulent representation to induce the sale of goods will amount to a warranty. In such a case the buyer may recover damages sufficient to put him not simply in as good a position as he occupied before the fraudulent transaction, but in as good a position as he would have occupied had the fraudulent state'Simpson v. Wiggin, 3 Woodb. & M. 413; Hale v. Philbrick, 42 Iowa, 81; McGibbons v. Wilder, 78 Iowa, 531, 535; Case v. Hall, 24 Wend. 102, 35 Am. Dec. 605; Halsell v. Musgrave, 5 Tex. Civ. App. 476, 24 S. W. 358

10 Stevenson v. Marble, 84 Fed. 23; Merritt v. Robinson, 35 Ark. 483; Dinwiddie v. Kelley, 46 Ind. 392; Loucks v. Taylor, 23 Ind. App. 245. 11 See supra, §§ 975-980, 1503. 12 Merritt v. Robinson, 35 Ark. 483; Abbott v. Marshall, 48 Me. 44.