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not plead the breach of warranty as a defense, as he might have done, is not a bar to his maintaining a separate suit for the breach of warranty;1 but a judgment against him where he did plead it would be a bar.2
§ 1837. Or though he may have resold the goods.The mere fact, moreover, that the buyer has sold the goods to another does not preclude his recovery of damages for a breach of the warranty of quality. Such a resale, as has been seen, is often contemplated by the parties at the time of the original purchase; and even where it is not, the fact of the resale cannot affect the warrantor's liability except as the price received upon the resale may furnish some evidence of the actual value of the goods.
§ 1838.- Or though he may have made a profit on them. So the fact that the goods sold subsequently enhance in price so that the buyer makes a profit on them is held to be imma- . terial. "Any advance in the market was the legitimate fruit of the venture, just as the purchaser would have had to bear the loss of any decline in the market price prevailing at the time of delivery."4
than a cold. After the death of the horse he brought suit on the warranty. Held, that there had been no waiver of the warranty.
In Northwestern Cordage Co. v. Rice (1896), 5 N. D. 432, 57 Am. St. R. 563, 67 N. W. R. 298, it is held that where goods are sold under a warranty (implied), the giving of a note by the purchaser for the purchase price, with knowledge that the goods did not conform to the warranty, does not prejudice his rights, where he expressly reserves his right to insist upon damages.
1 Cook v. Moseley (1835), 13 Wend. (N. Y.) 277; Gilmore v. Williams
(1894), 162 Mass. 351, 38 N. E. R. 976, citing many cases.
2 Gilmore v. Williams, supra.
3 Eagle Iron Works v. Des Moines Suburban Ry. Co. (1897), 101 Iowa, 289, 70 N. W. R. 193. A purchaser of merchandise that has been warranted, and proves worthless, may defeat a recovery for any amount, though he sold a part of the merchandise for cash, and the buyer made no claim on account of defects. Western Twine Co. v. Wright (1899), 11 S. Dak. 521, 78 N. W. R. 942, 44 L. R. A. 438.
4 Andrews v. Schreiber (1899), 93 Fed. R. (Ct. Ct. W. D. Mo.) 367.
§ 1839. Remedies for deceit or fraud.- It is entirely consistent with liability for breach of warranty that the seller acted in the best of faith. There may, of course, be fraudu lent warranties, and remedies for these have already been referred to. There may, however, be many cases into which fraud or deceit will more actively enter, in which the remedy as for breach of warranty will not be the most desirable or adequate, and a brief consideration of the remedies appropriate to the case is necessary.
The buyer who has been imposed upon or misled by the fraud of the seller has usually his choice of a variety of remedies. For example: (1) He may rescind the contract, restore what he has received and recover what he has parted with. (2) He may retain the property and bring an action for damages for the deceit. (3) He may retain the property, and in an action by the seller for the price may be allowed damages for the injury caused by the deceit.3
Enough has already been said of the buyer's right to rescind. The third remedy will be considered in later sections," and the action for deceit or fraud will be considered here.
§ 1840. Elements of fraud.- What the various elements are which must be present to establish fraud in law, and what are the chief forms of fraud upon the buyer,' have been already considered in previous sections and need not be repeated. There must, of course, be fraud. The false representation relied upon must have been made with knowledge of its falsity, or, at least, without belief in its truth. The somewhat diverse views upon this question have been already noticed, and it will suffice to refer to that discussion.
1 See ante, § 1239.
2 See ante, § 820.
3 See ante, § 940; Lukens v. Aiken (1896), 174 Pa. St. 152, 34 Atl. R. 575; Wilson v. Cattle Co. (1896), 36 U. S. App. 634, 20 C. C. A. 244, 73 Fed. R. 994; Olcott v. Bolton (1897), 50 Neb. 779, 70 N. W. R. 366.
4 See ante, § 930 et seq.
5 See post, § 1844.
6 See ante, §§ 866-885; Bank of Atchison v. Byers (1897), 139 Mo. 627, 41 S. W. R. 325; Wilman v. Mizer (1895), 60 Ark. 281. 30 S. W. R. 31. 7 See ante, §§ 930-942.
8 See ante, § 875 et seq.; Scholfield Gear & Pulley Co. v. Scholfield (1898), 71 Conn. 1, 40 Atl. R. 1046.
It is also indispensable that the buyer should have been deceived,1 and he cannot claim to have been deceived where he had ample experience and the alleged defects were open to his view.2
§ 1841. Reliance on representations.- At the same time, as has also been seen,3 the buyer is not bound to be suspicious or to investigate the truthfulness of the seller's representations before relying upon them. He cannot close his eyes to what is obvious; but, on the other hand, the seller who has made false statements to influence the action of the buyer cannot defend upon the ground that the buyer ought not to have believed him or was too readily deceived."
If the seller made positive representations as to matters of fact, the falsity of which is not obvious, the buyer may rely upon them, and it is no excuse that had he been more suspicious and investigated for himself he might have discovered that they were false. Especially is this true where the facts are
1 See ante, § 934.
2 See ante, §§ 879, 880; Max v. Harris (1899), 125 N. C. 345, 34 S. E. R. 437.
3 See ante, § 881. 4 See ante, § 879.
5 See ante, § 881; Strand v. Griffith (1899), 38 C. C. A. 444, 97 Fed. R. 854; Wilman v. Mizer (1895), 60 Ark. 281, 30 S. W. R. 31.
6 See ante, § 881. See also Fargo Gaslight Co. v. Fargo Gas Co. (1894), 4 N. Dak. 219, 59 N. W. R. 1066. 37 L. R. A. 593, and the exhaustive note in the last-named volume. Corliss, J., also discusses the question fully, say ing: "The defendant, as a matter of law, had a right to rely implicitly upon the statements made by plaintiff touching the character of this plant. So long as defendant did not actually know the representations to be false, it was under no obligation to investigate to determine their truth or
falsity. In Mead v. Bunn, 32 N. Y. 275, the court says: 'Every contracting party has an absolute right to rely on the express statement of an existing fact, the truth of which is known to the opposite party, and unknown to him, as the basis of a mutual engagement; and he is under no obligation to investigate and verify statements, to the truth of which the other party to the contract, with full means of knowledge, has deliberately pledged his faith.' In Redding v. Wright, 49 Minn. 322 (a case very much in point), the court says: If the representations were fraudulently made, with the intent to induce the plaintiff to rely upon the fact being as represented, and to act upon the belief thus induced, the wrong-doer who succeeds in such a purpose is not to be shielded from responsibility by the plea that the defrauded party would have discov
peculiarly within the knowledge of the seller, and there is nothing to arouse the buyer's suspicion.1
Whether, under the circumstances, the buyer was justified
ered the falsity of the representations if he had pursued such means of information as were available to him.' While the rule has been in some cases stated in terms more favorable to plaintiff, yet no decision can be found which establishes a doctrine under which defendant would be bound, under the circumstances of this case, to make any investigation or inquiry touching the truth or falsity of the statements made in connection with the sale. There are many well-considered cases which sustain our view that defendant had a right implicitly to rely upon the representations made by plaintiff with respect to the character of the property to be purchased by defendant.
In addition to the cases already cited, we refer to Maxfield Schwartz, 45 Minn. 150, 10 L. R. A. 606; Gardner v. Trenary, 65 Iowa, 646; Schumaker v. Mather, 133 N. Y. 590; McClellan v. Scott, 24 Wis. 81; Caldwell v. Henry, 76 Mo. 254; Oswald v. McGehee, 28 Miss. 340; Cottrill v. Krum, 100 Mo. 398; Campbell v. Frankem, 65 Ind. 591; Kerr, Fraud & Mistake, 77, 80, 81: Erickson v. Fisher, 51 Minn. 300; Alfred Shrimpton & Sons v. Philbrick, 53 Minn. 366; Barndt v. Frederick, 78 Wis. 1, 11 L. R. A. 199; Bigelow, Fr. 522-528. We are aware that cases can be found which exact from the buyer more care in ascertaining the truth or falsity of representations than the decisions just cited. These cases appear to us to have been rightfully
decided, in view of the facts. In determining what the courts in such cases intended to hold, the language of each opinion must be read, in the light of the facts of the particular case. The unmistakable drift is towards the just doctrine that the wrong-doer cannot shield himself from liability by asking the law to condemn the credulity of his victim. The falsity of the statement may be apparent because the thing misrepresented is before the buyer, and the most casual look will suffice to discover the falsehood, no artifice being used to divert his attention; or the statement may carry its own refutation upon its face,—may be so absurd or monstrous that it is palpably false, as a statement by a person carrying on a business known to the purchaser to be very small that the receipts of the business are $1,000,000 a year. In these and other similar cases, the law will not allow a person to assert that he was deceived. But the general rule is, and, upon principle, must be, that the question is one of reliance by the buyer upon the false statements of the seller. Whether it was wise for him to rely upon it, whether he was prudent in so doing, whether he is not chargeable with negligence in a certain sense in not investigating,— these inquiries are, in general, immaterial, provided the purchaser has in fact been deceived. The circumstances under which fraud is accomplished are so varied, the nature of the property and the character of the mis
1 Stewart v. Stearns (1884), 63 N. H. 99, 56 Am. R. 496.
in relying upon the representations, is, as has been seen,1 usually a question for the jury.2
$ 1842. Representations must have been proximate cause of injury complained of. It is essential also here, as in any other case, that the loss complained of shall have been the natural and proximate result of the fraud alleged. "Pecuniary loss is the test of actionable fraud when damages are sought," but this must be a pecuniary loss happening in the natural course of things as the consequence of the fraud perpetrated. "Lost profits come within that rule when there is a definite standard from which to determine such profits, but otherwise they are regarded as too remote."
§ 1843. Measure of damages. With respect of the measure of damages which the defrauded buyer may recover, two rules seem to prevail. One, that the buyer may recover the difference between the actual value of the article as delivered and the contract price; the other, that he is entitled to
representations are so widely different, in different cases, that it is unwise to attempt to enunciate with precision a general rule by which all cases shall be governed. It is better to decide the cases as they arise, keeping in view the general principle that courts will not readily listen to the plea that the defrauded party was too easily deceived."
1 See ante, § 883.
2 Whiting v. Price (1898), 172 Mass. 240, 51 N. E. R. 1084; Ingalls v. Miller (1889), 121 Ind. 188, 22 N. E. R. 995.
3 See Potter v. Necedah Lumber Co. (1899), 105 Wis. 25, 81 N. W. R. 118. In an action of tort for the false warranty that a horse was kind, damages for injuries to the buyer's wagon and harness in consequence, as alleged, of the unkindness of the horse, cannot be recovered. Case v. Stevens (1884), 137 Mass. 551.
4 See Fargo Gaslight & Coke Co. v. Fargo Gas & Electric Co. (1894), 4 N. Dak. 219, 59 N. W. R. 1066, 37 L. R. A. 593 [citing Crater v. Binninger, 33 N. J. L. 513, 97 Am. Dec. 737; Atwater v. Whiteman, 41 Fed. R. 427; Glaspell v. Northern Pac. R. Co., 43 Fed. R. 900; High v. Berret, 148 Pa. St. 261, 23 Atl. R. 1004; Smith v. Bolles, 132 U. S. 125, 33 L. ed. 279; Reynolds v. Franklin, 44 Minn. 30, 46 N. W. R. 139; Redding v. Godwin, 44 Minn. 355, 46 N. W. R. 563; Alden v. Wright, 47 Minn. 225, 49 N. W. R. 767; Stickney v. Jordan, 47 Minn. 262, 49 N. W. R. 980].
In Rockefeller v. Merritt (1896), 40 U. S. App. 666, 22 C. C. A. 608, 76 Fed. R. 909, 35 L. R. A. 633, it is said: "The true measure of the damages suffered by one who is fraudulently induced to make contract of sale, purchase or exchange of property is