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It is also indispensable that the buyer should have been deceived,' and he cannot claim to have been deceived wbere he had ample experience and the alleged defects were open to his view.?
$ 1841. Reliance on representations.- At the same time, as has also been seen, 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, S 934
falsity. In Mead v. Bunn, 32 N. Y. 2 See ante, SS 879, 880; Max v. Har- 275, the court says: “Every contractris (1899), 125 N. C. 345, 34 S. E. R. ing party has an absolute right to 437.
rely on the express statement of an 3 See ante, S 881.
existing fact, the truth of which is 4 See ante, $ 879.
known to the opposite party, and 5 See ante, & 881; Strand v. Griffith unknown to him, as the basis of a (1899), 38 C. C. A. 444, 97 Fed. R. 854; mutual engagement; and he is under Wilman v. Mizer (1895), 60 Ark. 281, no obligation to investigate and 30 S. W. R. 31.
verify statements, to the truth of 6 See ante, & 881. See also Fargo which the other party to the conGaslight Co. v. Fargo Gas Co. (1894), tract, with full means of knowledge, 4 N. Dak. 219, 59 N. W. R. 1066. 37 L. has deliberately pledged his faith.' R. A. 593, and the exhaustive note in In Redding v. Wright, 49 Minn. 322 the last-named volume. Corliss, J., (a case very much in point), the court also discusses the question fully, say- says: “If the representations were ing: “The defendant, as a matter of fraudulently made, with the intent law, had a right to rely implicitly to induce the plaintiff to rely upon upon the statements made by plaintiff the fact being as represented, and to touching the character of this plant. act upon the belief thus induced, the So long as defendant did not actually wrong-doer who succeeds in such a know the representations to be false, purpose is not to be shielded from it was under no obligation to investi. responsibility by the plea that the gate to determine their truth or defrauded party would have discor
peculiarly within the knowledge of the seller, and there is nothing to arouse the buyer's suspicion.'
Whether, under the circumstances, the buyer was justified ered the falsity of the representa- decided, in view of the facts. In de tions if he had pursued such means termining what the courts in such of information as were available to cases intended to hold, the language him.' While the rule has been in of each opinion must be read, in the some cases stated in terms more light of the facts of the particular favorable to plaintiff, yet no decision case. The unmistakable drift is to can be found which establishes a wards the just doctrine that the doctrine under which defendant wrong-doer cannot shield himself would be bound, under the circum. from liability by asking the law to stances of this case, to make any in. condemn the credulity of his victim. vestigation or inquiry touching the The falsity of the statement may be truth or falsity of the statements apparent because the thing misrepremade in connection with the sale. sented is before the buyer, and the There are many well-considered cases most casual look will suffice to diswhich sustain our view that defend. cover the falsehood, no artifice being ant had a right implicitly to rely used to divert his attention; or the upon the representations made by statement may carry its own refutaplaintiff with respect to the char- tion upon its face,- may be so absurd acter of the property to be purchased or monstrous that it is palpably by defendant.
false, as a statement by a person "In addition to the cases already carrying on a business known to the cited, refer to Maxfield v. purchaser to be very small that the Schwartz, 45 Minn, 150, 10 L. R. A. receipts of the business are $1,000,000 606; Gardner v. Trenary, 65 Iowa, a year. In these and other similar 646; Schumaker v. Mather, 133 N. Y. cases, the law will not allow a person 590; McClellan v. Scott, 24 Wis. 81; to assert that he was deceived. But Caldwell v. Henry,76 Mo. 254; Oswald the general rule is, and, upon prinv. McGehee, 28 Miss. 340; Cottrill v. ciple, must be, that the question is Krum, 100 Mo. 398; Campbell v. one of reliance by the buyer upon Frankem, 65 Ind. 591; Kerr, Fraud 'the false statements of the seller. & Mistake, 77, 80, 81; Erickson v. Whether it was wise for him to rely Fisher, 51 Minn. 300; Alfred Shrimp- upon it, whether he was prudent in ton & Sons v. Philbrick, 53 Minn. 366; so doing, whether he is not chargeBarndt v. Frederick, 78 Wis. 1, 11 L. able with negligence in a certain R. A. 199; Bigelow, Fr. 522–528. We sense in not investigating,—these inare aware that cases can be found quiries are, in general, immaterial, which exact from the buyer more provided the purchaser has in fact care in ascertaining the truth or been deceived. The circumstances falsity of representations than the under which fraud is accomplished decisions just cited. These cases ap- are so varied, the nature of the proppear to us to have been rightfully erty and the character of the mis1 Stewart v. Stearns (1884), 63 N. H. 99, 56 Am. R. 496.
in relying upon the representations, is, as has been seen,' usually a question for the jury.?
$ 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. “Pecun
" iary 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.” 3 $ 1813.
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; 4 the other, that he is entitled to
representations are so widely differ- 4 See Fargo Gaslight & Coke Co. v. ent, in different cases, that it is Fargo Gas & Electric Co. (1894), 4 N. unwise to attempt to enunciate with Dak. 219, 59 N. W. R. 1066, 37 L. R. A. precision a general rule by which all 593 [citing Crater v. Binninger, 33 cases shall be governed. It is better N. J. L. 513, 97 Am. Dec. 737; Atto decide the cases as they arise, water v. Whiteman, 41 Fed. R. 427; keeping in view the general principle Glaspell v. Northern Pac. R. Co., 43 that courts will not readily listen to Fed. R. 900; High v. Berret, 148 the plea that the defrauded party Pa. St. 261, 23 Atl. R. 1004; Smith v. was too easily deceived."
Bolles, 132 U. S. 125, 33 L. ed. 279; 1 See ante, S 883.
Reynolds v. Franklin, 44 Minn. 30, 46 2 Whiting v. Price (1898), 172 Mass. N. W. R. 139; Redding v. Godwin, 44 210,51 N. E. R. 1084; Ingalls v. Miller Minn. 355, 46 N. W. R. 563; Alden v. (1889), 121 Ind. 188, 22 N. E. R. 995. Wright, 47 Minn. 225, 49 N. W. R.
3 See Potter v. Necedah Lumber Co. 707; Stickney v. Jordan, 47 Minn. (1899), 105 Wis. 25, 81 N. W. R. 118. 262, 49 N. W. R. 980). In an action of tort for the false war- In Rockefeller v. Merritt (1896), 40 ranty that a horse was kind, damages U. S. App. 666, 22 C. C. A. 608, 76 for injuries to the buyer's wagon and Fed. R. 909, 35 L. R. A. 633, it is said: harness in consequence, as alleged, of " The true measure of the damages the unkindness of the horse, cannot suffered by one who is fraudulently be recovered. Case v. Stevens (1884), induced to make contract of sale, 137 Mass. 551,
purchase or exchange of property is
the difference between the value of the article if it had been as represented and its actual value as delivered."' “It is obvious," said the court in a recent case, “that these two rules cannot be reconciled. One gives to the party deceived the full benefit of his bargain. The other does not. We are clear that the best reason is with the doctrine that, where one is deceived and defrauded, he can recover as damages the difference
the difference between the actual R. 546; Reggio v. Braggiotti, 7 Cush. value of that which he parts with (Mass.) 166; Woodward v. Thacher, and the actual value of that which 21 Vt. 580, 52 Am. Dec. 73; Page v. he receives under the contract. It Parker, 43 N. H. 363, 80 Am. Dec. 172). is the loss which he has sustained In Warner v. Benjamin (1995). 89 and not the profits which he might Wis. 290, 62 N. W. R. 179, it is said: have made by the transaction. It The well-established rule of damexcludes all speculation and is lim- ages upon a sale of personal property ited to compensation" [citing Smith which is voidable on account of v. Bolles, supra; Busterud v. Far- fraudulent representations is the difrington, 36 Minn. 320; Reynolds v. ference between the real value of the Franklin, supra; Stickney v. Jordan, article sold at the time of the sale supra; Fixen v. Blake, 47 Minn. 540, and what the value would have been 50 N. W. R. 612; Wallace v. Hallo- had the representations been true." well, 56 Minn. 501, 58 N. W. R. 292; To same effect: Potter v. Necedah Woolenslagle v. Runals, 76 Mich. 545, Lumber Co. (1899), 105 Wis. 25, 81 N. 43 N. W. R. 454; McAleer v. Horsey, W. R. 118; Whiting v. Price (1898), 35 Md. 439; Buschman v. Codd, 52 172 Mass. 240, 51 N. E. R. 1084. Md. 202; High v. Berret, supra). In the case of a horse, this differ
Fargo Gas L. & Coke Co. v. Fargo ence in value plus the expense of Gas & Elect. Co., supra (citing Page keeping him a reasonable time to v. Wells, 37 Mich. 415; Williams v. test his correspondence with the McFadden, 23 Fla. 143; Nysewander representations. Peak v. Frost (1894), v. Lowman, 124 Ind. 584; Noyes v. 162 Mass. 298, 38 N. E. R. 518. Blodgett, 58 N. H. 50:2; Stiles v. White Misrepresentation as to selling 11 Metc. (Mass.) 356, 45 Am. Dec. 214; price.- Where the seller falsely asLunn v. Shermer, 93 N. C. 164; Vail serts that the price made is the same v. Reynolds, 118 N. Y. 297; Morse v. as that at which he sold to another Hutchins, 102 Mass. 439; Doran ve person, and the sale is made on that Eaton, 40 Minn. 35; Woolman v. express understanding, the measure Wirtsbaugh, 22 Neb. 490; Drew of damages will be the difference v. Beall, 62 III. 164; Cox v. Gerkin, 38 between these two sums. Kilgore v. Ill. App. 340; Wynn v. Longley, 31 M. Bruce (1896), 166 Mass. 136, 44 N. E. App. 616; Krumm v. Beach, 96 N. Y. R. 108. Compare Potter v. Necedah 398; Whitney v. Allaire, 1 N. Y. 305; Lumber Co. (1899), 105 Wis. 25, 81 N. Horne v. Walton, 117 III. 130; Jack- W. R. 118. son v. Armstrong, 50 Mich. 65; Mat. Fargo Gas L Co. v. Fargo Gas & lock v. Reppy, 47 Ark, 148, 14 S. W.
Elec. Co., supra.
between the value of what he would have obtained had the statement been true, and the value of what he actually received. This represents his actual loss by reason of the fraud of the seller, on the theory that he does not rescind the contract. Of course, if he sees fit to rescind for fraud, he can only recover back what he has paid. But if he desires to stand by the agreement, as he has a perfect right to do, he can logically say to the wrong-doer, “If you had told me the truth, the property would have been worth so much. It is not worth so much because it is not as you represented it. I demand that you make good the difference in money.' ”
The weight of authority seems clearly with the latter view.
$ 1844. Buyer may recoup damages in action by seller for price.- Instead of taking active steps for the recovery of his damages by bringing an action against the seller, the buyer who has not paid the price may wait until he is sued for it by the seller, whether the action be upon the count for goods sold, etc., or upon a note given for the price, and may then avail himself of his demand, whether for failure to perform, breach of warranty or fraud, by way of recoupment or counter-claim.' Where he does so, the same general rules govern his right to damages as where he takes the initiative. In this case, as in that, he is not bound to offer to return the goods or to give
Steigleman V. Jeffries (1815), 1 row Spring Co. v. Whipple Harrow Serg. & Rawle (Pa.), 477, 7 Am. Dec. Co. (1892), 90 Mich. 147, 51 N. W. R. 626; Peden v. Moore (1831), 1 Stew. 197, 30 Am. St. R. 421; Hodge v. Tufts & Port. (Ala.) 71, 21 Am. Dec. 649; (1896), 115 Ala. 366, 22 S. R. 422; WilMcAlpin v. Lee (1837), 12 Conn. 129, bur Lumber Co. v. Oberbeck Co. 30 Am. Dec. 609; Getty v. Roun. (1897), 96 Wis. 383, 71 N. W. R. 605; tree (1850), 2 Pin. (Wis.) 379, 54 Am. Parry Mfg. Co. v. Tobin (1900), 106 Dec. 138; Falconer v. Smith (1851), Wis. 286, 82 N. W. R. 154; Kester v. 18 Pa. St. 130, 55 Am. Dec. 611; Hunt- Miller (1896), 119 N. C. 475, 26 S. E. R. ington v. Lombard (1900), 22 Wash. 115; St. Anthony Lumber Co. v. Bard202, 60 Pac. R. 414; Tacoma Coal Co. well-Robinson Co. (1895), 60 Minn. 199, v. Bradley (1891), 2 Wash. 600, 27 Pac. 62 N. W. R. 274; Springfield Milling R. 454, 26 Am. St. R. 890; Under Co. v. Barnard (1897), 49 U. S. App. wood v. Wolf (1890), 131 Ill. 425, 23 438, 26 C. Ç. A. 389, 81 Fed. R. 261. N. E. R. 598, 19 Am. St. R. 40; Har