177 Iowa 509 | Iowa | 1916
To affect plaintiff with the consequences of his inspection, defendant gives a very exaggerated account of what the plaintiff saw on the inspection. One item is that he saw a piece of land, nearly half an acre, fall into the river. Plaintiff responds that all this is grossly exaggerated, and that he would have been a lunatic had he consummated the deal after seeing what defendant claims he saw: We think defendant’s account is grossly exaggerated, and that the truth is, plaintiff came away believing that whatever cutting there was, was temporary, and would cease when a point containing three acres, and just south of a bend in the river, would be cut away, and that this would soon occur. Plaintiff answers him
It is the theory of appellant that he owed no duty to speak, because this is not a case.of the river’s cutting, but of continuing to cut as it did when plaintiff saw the land; that.both had equal opportunity to learn of this change; and that while, in the authorities presented by appellee, there was some new element of which one party had knowledge, and which he concealed from the other, in this case there was no element which did not exist from the beginning. He illustrates : One might as well say that there was an actionable misrepresentation because a horse was represented as perfectly sound, when inspection made before buying showed that the horse had lost a leg. Is there not more here than a mere ease of silence which amounts to a failure to state that which both knew, or had equal means of knowing? Is there not affirmative concealment, intended to lead another to his injury? Is not appellant proceeding on the lines that he might tenably use if he, too, had been ignorant of what, of necessity, occurred since plaintiff inspected the land? If neither had been advised, and the change had occurred since the inspection, there would be room for saying that defendant had no duty to make sure whether conditions had not changed, and advise plaintiff. But defendant knew not only that plaintiff had made inspection, but that he would naturally rely upon what he found then, and knew that conditions had changed for the worse since then, and that plaintiff .did not know it. It is undenied, too, that defendant was not content with mere silence. It appears that, on May 2d, before the
Defendant explains that he did not tell Noble anything, because Noble had seen the farm and knew more about it than he (Renner) did. It is a sidelight that, somehow, after the deal was safely landed, and on May 7th, Renner all at once found occasion to tell .Noble that the buildings were in danger. There are other suggestive sidelights. The telephone talk from Kelley was about eleven in the forenoon of May 1st, and, as defendant himself puts it, he went straight to Cedar Falls in the afternoon, and again opened negotiations with Noble, to make this deal — kept it up until the morning of the second, and “until I got him into- this contract.”
More: Hill, a witness for defendant, says the latter told him to go to Waterloo for the purpose of putting a clause into the contract, “subject to changes of the Missouri River.” This is explained by saying that it was desired to create a merger to exclude testimony as to oral guaranties of acreage. No doubt it may have that effect, but the desire to avoid an oral guaranty seems to have been carried to a point where only a very guileless man may fail to see some other and additional purpose. The contract contains the statement that the land to be conveyed contains 114 acres, more or less, as shown by a described survey, “subject, however, to the changes of the bed of the Missouri River, which bounds said land on the west. ’ ’ That fairly well accomplishes shutting out a quarrel over how much land was to be conveyed. Why, then, was added this further phrase: “Said land
“If a person makes a representation by which he induces another to take a particular course, and the circumstances are afterwards altered to the knowledge of the party making the representation, but not to the knowledge of the party to whom the representation is made, . . . it is the imperative duty of the party who has made the representation to communicate . . . the alteration of those circumstances; and that this court will not hold the party . . . bound unless such a communication has been made.”
But the decision is a refusal to grant specific performance. As this is a discretionary act, the case is not square authority for the claim that such silence constitutes fraud.
20 Cyc., page 24, declares that, even if representations are true when made, and they subsequently become false by change in the subject-matter, it is the duty of the person who made these representations to inform the other, and if he fails so to do, he is guilty of fraud. It cites Cable v. United States Life Ins. Co., 111 Fed. 19, 27, and Loewer v. Harris, 57 Fed. 368, at 373-4. The last is a case where representations were made concerning the output and profits of a business that defendant was selling plaintiff, and, before formal conclusion, defendant discovered and failed to communicate that conditions had changed from what plaintiff supposed them to be. It is said to. be an elementary proposition in the law of fraud
“Deceit may sometimes take a negative form, and there may be circumstances in which silence would have all the legal characteristics of actual misrepresentation.”
The Laewer case says this:
‘ ‘ The law requires disclosure to be made only when there is a duty to make it, and this duty is not raised by the mere circumstance that the undisclosed fact is material, and is known to the one party and not to the other, or by the additional circumstance that the party to whom it is known knows that the other party is actually in ignorance of it; but when one of the parties, pending negotiations for a contract, has held out to the other the existence of a certain state of facts material to the subject of the contract, and knows that the other is acting upon the inducement of their existence, and, while they are pending, knows that a change has occurred of which the other party is ignorant, good faith and common honesty require him to correct the misapprehension which he-he has created. It becomes his duty to make disclosure of the changed state of facts, because he has put the other party off his guard. The doctrine is thus stated by Mr. Pollock, in his work, Principles of Contracts, page 491: ‘ It is sufficient if it appear that the one party knowingly assisted in inducing the other to enter into the contract by leading him to believe that which was known to be false. Thus it is where one party has made an innocent misrepresentation, but, on discovering the error, does nothing to undeceive the other.’ ”
The Cable case, supra, holds that a statement in the application of good health and freedom from disease, and specifically from pneumonia, constitutes a warranty of the con
In Piedmont & A. Life Ins. Co. v. Ewing, 92 U. S. 377, the court held there was no valid contract, saying:
“It cannot for a moment be contended that, while parties are still in negotiation as to the terms of a contract, one of them, learning of a total change in the condition of the subject-matter of the contract of which the other is ignorant, can at that moment accept terms which he has refused before, and by doing so, bind the party who had offered those terms when.the condition of affairs was wholly different.”
In Guilford v. Roberts (Ind.), 62 N. E. 711, a woman applied for a position as school teacher, and, in her first interview with the trustee, stated that she was not married, and ’ did not intend to be during the school year, the trustee telling her he would not employ a married woman as a teacher. Two months thereafter, she signed a contract in her maiden name, at which time she had been married four days, without the
In Cable v. Life Ins. Co., 111 Fed., at 27, it is said:
“With respect to fire insurance, it has been held that if one knowing of a conflagration near his property, without disclosing the fact, procure insurance of an underwriter ignorant of the fact, the contract is void.”
Both are cases in which investigation was open to the person wronged. But that did not avail; because, while both might have known, one did know, and kept silent in the hope that the other would not learn. As to a contention like the one that the inspection was a cure-all, the Cable case says:
“It is true that a medical examination will ascertain many things necessary to be known; but there is a large field of inquiry which cannot be so disclosed, and which may be essential to the risk to be assumed . .So, also, in the interval between, the medical examination and the execution and delivery of the policy, a serious change in the health of the assured may have occurred, of which the insurer might be and probably would be wholly ignorant. The insurer has, therefore, a right to rely upon the utmost1 good faith upon the part of the assured, and though the latter may not be bound to communicate, if uninquired of, all the details of his life which might affect the judgment of the insurer with respect to the assumption of the risk, he is certainly bound to disclose any impending peril to life not known to the insurer, and of which the latter cannot reasonably be said to be put upon inquiry.”
It was held, in Sun Ins. Co. v. Ocean Ins. Co., 107 U. S. 485, that it was the duty of the assured to communicate all material facts, and he cannot allege, as an excuse for his omission to do so, that they were actually known to the underwriter, unless the knowledge of the latter was as full and particular as his own information. There may not be a silence which is aided by what is calculated to mislead. Thus, where insurance was applied for upon a vessel “lost or not
“"When the company came to make this instrument, they were entitled to the information which the plaintiffs had of the loss of the vessel.” Insurance Co. v. Lyman, 15 Wall. (U. S.) 664.
It is said in Cable v. Life Ins. Co., 111 Fed., at 26:
. “It is a general rule that meditated silence, there being no duty to speak, will not avail to avoid a contract. There being no duty to communicate intelligence, the one party is not bound to speak although he may know that the other "party lies under a mistake. This is because the parties are dealing with each other at arm’s length. But even in such case the suppressw veri must rest in silence, not in partial and misleading statement. The latter amount to suggestio falsi; for, as it has well been said, ‘ a half truth is often the greatest of lies.’ If one would deal at arm’s length, he must remain silent. He may not speak that which is certain to deceive and suppress' that which would challenge attention, disclosing the truth. If the matter be with respect to a material fact, which, if known to the one party and not to the other, would, if disclosed, induce that other to refrain from contracting, either wholly or upon the terms proposed, the one having knowledge of the fact, if under no duty to disclose, may not, by a partial statement, throw the other party off his guard, when disclosure of the truth and the whole truth would have prevented his action.”
The Cable case deals with what is said to be a casual statement, partial and misleading, the manner of its delivery being such as to .ward off, rather than to invite inquiry, and to convey to McCabe the impression that Cable was, if at all, but slightly indisposed.
This is not a case of suing for false representation that a horse had two good eyes, when before buying he was inspected
Aside from plaintiff’s denial, there are other things that militate most strongly against this special avoidance on part of defendant. Two witnesses say that, on inquiry by defendant as to what the stock was worth, he was informed that it invoiced between $12,000 and $13,000, and that he answered that, if it was worth $5,000, he would come out all right on the deal. 'Defendant responds that he doesn’t think he inquired of one of these witnesses and said this to him, and says he made no such statement to the other. The court found that plaintiff’s interest in the property- transferred to defendant was $9,684.-31, and we thixxk the evidence fairly shows that it was substantially worth about $10,000. Where