Leonard v. Springer

197 Ill. 532 | Ill. | 1902

Mr. Justice Wilkin

delivered the opinion of the court:

The sole question is whether or not this declaration states a good cause of action. It is not denied by counsel for appellee that the declaration sufficiently alleges, in substance, that appellant was fraudulently induced to invest her money in fictitious and worthless securities, nor that the scheme by which they were executed and placed on the market was originated and put forward by appellee, but his position seems to be, that if the appellant could have investigated the true condition or value of the property constituting the supposed security for the payment of the notes which she purchased, and failed to do so, she must take the consequence of her imprudence.

The consideration of §100,000, stated in the deeds, (which would usually tend to indicate the value of the property,) is alleged to be false, but counsel says it is a well established rule that the purchaser cannot maintain an action against the vendor for false statements in reg'ard to the value of the property purchased, or its good quality, or the price he has been offered for it. It is true that the general rule is, that statements as to the value of a business or of real or personal property, made for the purpose of inducing another to buy or to invest money, may be, and generally are, treated as mere expressions of opinion, and if so intended and understood will not constitute fraud, in the absence of any misrepresentation of material, extrinsic facts or concealment of such facts. (14 Am. & Eng. Ency. of Law,—2d ed.—41.) The reason of the rule is, that such statements are expressions of opinion; but where they are made with the intention that they shall be understood as statements of fact, and not as the expressions of opinions, they will constitute fraud. (Murray v. Tolman, 162 Ill. 417.) We said in that case, (p. 423,) quoting from Pickard v. McCormick, 11 Mich. 68: “It is only because statements of value can rarely be supposed to have induced a purchase without negligence, that the authorities have laid down the principle that they cannot usually avoid a bargain.” Here the consideration for the conveyance from appellee to Maginnis was stated to be §100,000, the conveyance from the latter to Miller again stated the consideration to be $100,000, and the deed of trust purported to secure the payment of $75,000,—and these are three things alleged to have been done in pursuance of a design to cheat and defraud the plaintiff and others. It cannot be denied that the consideration stated in the two deeds and trust deed was calculated to lead any one to believe that the property mentioned therein was, to say the least, of greater value than it really was; neither can it be said that the statements so made in the deeds, and especially that in the deed of trust, are mere expressions of opinion, which should not have been relied upon by persons examining the record. As was further said in the Murray case, supra, quoting from the Pickard case: “It cannot be laid down as a matter of law that value is never a material fact, and we think the circumstances of this case illustrate the impropriety of any such rule. They show a plain and aggravated case of cheating, and it would be a deserved reproach to the law if it exempted any specific fraud from a remedial action where a fact is stated and relied upon, whatever may be the general difficulty of defrauding by means of it.” (See Allen v. Hart, 72 Ill. 104.) The rule relied upon by appellee does not apply to the facts of this case. The statements of value in said deeds, as alleged in the declaration, having been made in pursuance of a scheme on the part of the defendant, constituted fraud and deceit.

Counsel further contends there is no allegation that the defendant ever knew the plaintiff or ever made any representations of any sort to her. It is true, the representations were not by means of conversations between the parties; but the rule is as stated in the Law of Fraud, by Bigelow, (p. 467,) that a representation is anything short of a warranty, “proceeding from the action or conduct of the party charged, which is sufficient to create upon the mind a distinct impression of fact, conducive of action. The most usual and obvious example is an oral, written or printed statement. But statement is by no means necessary. Any conduct capable of being turned into a statement of fact is a representation. There is no distinction between misrepresentations effected by words and misrepresentations effected by other acts. It is sufficient that there were acts such as to mislead a reasonably cautious or prudent man in reg'ard to the existence of a fact forming a basis of or contributing an inducement to some change of position by him.” In this case, the recitals in the deeds and trust deed, stating a consideration which inferred that the property was of great value whereas the interest of the defendant therein was of no value whatever; the memorandum on the notes that they were secured “by a trust deed to Chicago Title and Trust Company, trustee, of even date herewith, on seven-story and basement building, No. 188 Bast Monroe street, city of Chicago,” implying that the trust deed conveyed the fee simple title; the recital in the trust company’s certificate that these notes were a part of a series of notes amounting'to $75,000, “secured by trust deed,” and likewise the statement that “in consideration of the interest being paid in full the time is extended to May 1, 1899," signed by Miller, are in law representations calculated to deceive and mislead any third persons dealing with those notes. Especially is the statement by Miller misleading and deceptive. It amounted to a statement that the notes were originally given to him as a part, only, of the purchase price for the property; and that statement, taken with the recitals of consideration §100,000, naturally leads to the inference that he received §25,000 of the purchase price in money and §75,000 in said notes. Accepting as true the allegations of the declaration, as we must on this general demurrer, the scheme was an artful one, calculated to lead an innocent third party to believe that the property was ample security for a much larger sum of money than that invested by the plaintiff. Moreover, if appellee concocted a scheme for placing fraudulent and worthless securities upon the market, he cannot be heard to say that parties induced to buy them shall suffer for their failure or neglect to discover his fraud. The rule is, that a -party guilty of fraudulent conduct, whereby he induces another to act, will not be allowed to impute negligence to the latter as against his own deliberate fraud. K “Even where parties are dealing at arm’s length, if one of them makes to the other a positive statement, upon which the other acts (with the knowledge of the party making such statement) in confidence of its truth, and such statement is known to be false by the party making it, such conduct is fraudulent, and from it the party guilty of fraud can take no benefit.” Linington v. Strong, 107 Ill. 295.

Counsel says there is no allegation that the defendant ever obtained any portion of plaintiff’s money, and he assumes that defendant is not, therefore, liable in damages to plaintiff. It is not necessary, in an action of this kind, to show that the defendant had any interest in the subject matter or that he received any benefit therefrom. (Weatherford v. Fishback, 3 Scam. 170; Eames v. Morgan, 37 Ill. 260; Endsley v. Johns, 120 id. 469.) “He is liable, not upon any idea of benefit to himself, but because of his wrongful act and the consequent injury to the other party.” 14 Am. & Eng. Ency. of Law,—2d ed.—153.

We think the declaration stated a good cause of action, and the demurrer should have been overruled.

The judgments of the Appellate and superior courts are reversed and the cause is remanded, with directions to overrule the demurrer.

5eymZ and remaM

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