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It is also indispensable that the buyer should have been deceived,' 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. 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 circum. stances 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 V. 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
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 value of that which he parts with and the actual value of that which he receives under the contract. It is the loss which he has sustained and not the profits which he might have made by the transaction. It excludes all speculation and is limited to compensation" [citing Smith v. Bolles, supra; Busterud v. Farrington, 36 Minn. 320; Reynolds v. Franklin, supra; Stickney v. Jordan, supra; Fixen v. Blake, 47 Minn. 540, 50 N. W. R. 612; Wallace v. Hallowell, 56 Minn. 501, 58 N. W. R. 292; Woolenslagle v. Runals, 76 Mich. 545, 43 N. W. R. 454; McAleer v. Horsey, 35 Md. 439; Buschman v. Codd, 52 Md. 202; High v. Berret, supra].
Fargo Gas L. & Coke Co. v. Fargo Gas & Elect. Co., supra [citing Page v. Wells, 37 Mich. 415; Williams v. McFadden, 23 Fla. 143; Nysewander v. Lowman, 124 Ind. 584; Noyes v. Blodgett, 58 N. H. 502; Stiles v. White 11 Metc. (Mass.) 356, 45 Am. Dec. 214; Lunn v. Shermer, 93 N. C. 164; Vail v. Reynolds, 118 N. Y. 297; Morse v. Hutchins, 102 Mass. 439; Doran v. Eaton, 40 Minn. 35; Woolman v. Wirtsbaugh, 22 Neb. 490; Drew v. Beall, 62 Ill. 164; Cox v. Gerkin, 38 Ill. App. 340; Wynn v. Longley, 31 Ill. App. 616; Krumm v. Beach. 96 N. Y. 398; Whitney v. Allaire, 1 N. Y. 305; Horne v. Walton, 117 Ill. 130; Jack son v. Armstrong, 50 Mich. 65; Matlock v. Reppy, 47 Ark. 148, 14 S. W.
R. 546; Reggio v. Braggiotti, 7 Cush. (Mass.) 166; Woodward v. Thacher, 21 Vt. 580, 52 Am. Dec. 73; Page v. Parker, 43 N. H. 363, 80 Am. Dec. 172].
In Warner v. Benjamin (1895), 89 Wis. 290, 62 N. W. R. 179, it is said: "The well-established rule of damages upon a sale of personal property which is voidable on account of fraudulent representations is the difference between the real value of the article sold at the time of the sale and what the value would have been had the representations been true."
To same effect: Potter v. Necedah Lumber Co. (1899), 105 Wis. 25, 81 N. W. R. 118; Whiting v. Price (1898), 172 Mass. 240, 51 N. E. R. 1084.
In the case of a horse, this difference in value plus the expense of keeping him a reasonable time to test his correspondence with the representations. Peak v. Frost (1894), 162 Mass. 298, 38 N. E. R. 518.
Misrepresentation as to selling price.- Where the seller falsely asserts that the price made is the same as that at which he sold to another person, and the sale is made on that express understanding, the measure of damages will be the difference between these two sums. Kilgore v. Bruce (1896), 166 Mass. 136, 44 N. E. R. 108. Compare Potter v. Necedah Lumber Co. (1899), 105 Wis. 25, 81 N. W. R. 118.
2 Fargo Gas L. Co. v. Fargo Gas & 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
1 Steigleman v. Jeffries (1815), 1 Serg. & Rawle (Pa.), 477, 7 Am. Dec. 626; Peden v. Moore (1831), 1 Stew. & Port. (Ala.) 71, 21 Am. Dec. 649; McAlpin v. Lee (1837), 12 Conn. 129, 30 Am. Dec. 609; Getty v. Rountree (1850), 2 Pin. (Wis.) 379, 54 Am. Dec. 138; Falconer v. Smith (1851), 18 Pa. St. 130, 55 Am. Dec. 611; Huntington v. Lombard (1900), 22 Wash. 202, 60 Pac. R. 414; Tacoma Coal Co. v. Bradley (1891), 2 Wash. 600, 27 Pac. R. 454, 26 Am. St. R. 890; Underwood v. Wolf (1890), 131 Ill. 425, 23 N. E. R. 598, 19 Am. St. R. 40; Har
row Spring Co. v. Whipple Harrow Co. (1892), 90 Mich. 147, 51 N. W. R. 197, 30 Am. St. R. 421; Hodge v. Tufts (1896), 115 Ala. 366, 22 S. R. 422; Wilbur Lumber Co. v. Oberbeck Co. (1897), 96 Wis. 383, 71 N. W. R. 605; Parry Mfg. Co. v. Tobin (1900), 106 Wis. 286, 82 N. W. R. 154; Kester v. Miller (1896), 119 N. C. 475, 26 S. E. R. 115; St. Anthony Lumber Co. v. Bardwell-Robinson Co. (1895), 60 Minn. 199, 62 N. W. R. 274; Springfield Milling Co. v. Barnard (1897), 49 U. S. App. 438, 26 C. Ç. A. 389, 81 Fed. R. 261.