Potts v. Chapin

133 Mass. 276 | Mass. | 1882

Field, J.

Taking the somewhat ambiguous language of the declaration most strongly against the pleader, and in the sense in which both parties in their briefs, and at the argument, agreed it was to be understood, namely, that the clause in the declaration, that “ Edwards’s Sons had not, for a long time prior to the said August, been able to meet their current obligations when due by payment, and had procured extensions by new discounts,” &c., was to be construed to mean, not “ that their paper had been dishonored, but only that they had resorted to the methods afterwards set forth to meet it,” it is plain that there is no allegation that the statement contained in the letter of the defendant, that “ Edwards’s Sons have paid all paper with their name upon maturity without protest promptly,” &c., was false. There is no allegation that this statement, though literally true, was false in the sense in which the plaintiff understood it, and as reasonable men had a right to understand it. The other allegations are in substance that the defendant knew that Edwards’s Sons were insolvent, and that they were “ meeting their current obligations in irregular and unbusinesslike ways, and were transacting their business in an unusual, risky and deceptive manner,” the particulars of which are set out in the declaration; and that the defendant in making the representations to the plaintiff contained in the letter “ did not deal fairly with the plaintiff and give him honestly such information as he had relative to the subject matter of the inquiry, but intended to and did deceive the plaintiff,” &c. This is a statement that the defendant concealed material facts which he knew, for the purpose of deceiving the plaintiff, so that he - would give credit to Edwards’s Sons which the defendant believed he would not give if these facts were made known. It is undoubtedly true that the fraudulent concealment of known facts with the intent to mislead, and which does in fact mislead another to his damage, does not constitute actionable fraud, unless there be some obligation which the law recognizes to disclose the facts concealed.

No relation existed between these parties which imposed any obligation in this respect upon the defendant. He was not bound to answer the plaintiff’s letter, but if he answered it at all, he was bound to tell the truth. If he expressed an opinion upon the solvency of Edwards’s Sons, it must be his real opinion; if he stated a specific fact, he must state it as he believed it to be; and if he stated a fact positively as of his own knowledge, he must know the fact to be as stated.

The inquiry of the plaintiff was as to the “ standing and responsibility ” of Edwards’s Sons. The defendant in reply stated one fact, which, it is contended, had some tendency to show that Edwards’s Sons were of “ good standing and responsibility.” If the defendant purposely concealed any fact, the existence of which rendered the representation he made untrue, then it is strictly a case of false representations, even although the decision is put upon the ground of a fraudulent concealment of a material fact; but the concealment in the case at bar is of independent facts, which do not contradict the representation made, but from which, it is contended, an inference in regard to pecuniary standing and responsibility might be drawn different from that naturally to be drawn from the fact represented.

The plaintiff relies upon Tryon v. Whitmarsh, 1 Met. 1. There the representation was that one Whitney was entitled to credit, and the decision was that the jury should have been instructed “ that notwithstanding they should find all the said propositions in favor of the plaintiffs, still the defendant would not be liable, if they were of opinion, from the evidence, that he gave an honest opinion, and truly believed that the persons recommended were trustworthy; ” and, although it is said in the opinion “ that the question for the jury was, whether the defendant knew that the assertion or opinion contained in his letter was false, or that he did not fully believe it to be true; or whether he did not conceal a material fact from the knowledge of the plaintiffs, with the intent to deceive them; ” yet the case did not call for any.determination of the question whether the mere concealment of material facts with the intention to deceive would support an action for deceit.

Kidney v. Stoddard, 7 Met. 252, is a stronger case for the plaintiff. . The representation was “ that A. D. S. Jr.’s contracts, of whatever nature, will unquestionably be punctually attended to,” and the concealment was of the fact that A. D. S. Jr., who was the son of the defendant, was a minor. The decision is put distinctly upon the ground of an intentional concealment of a material fact important to be known, with the design to obtain credit for his son, which he knew could not be obtained if the fact of his infancy were known; and Tryon v. Whitmarsh, ubi supra, and Lobdell v. Baker, 1 Met. 193, are cited.

But Lobdell v. Baker was decided upon the ground, that if one puts into circulation a promissory note indorsed by a minor, “ with nothing to rebut the natural inference to be drawn from it, he by necessary implication affirms that the indorser is a person capable of indorsing, and binding himself by such indorse ment; ” and that this implied representation, being false to the knowledge of the defendant, was a fraud in law, if not in fact, and would support an action of tort for false representations. S. C. 3 Met. 469. Apart from the form of the action, the foundation of the obligation of the defendant was the warranty, implied in the sale of negotiable paper, that the names upon it are genuine and of persono competent to contract. Merriam v. Wolcott, 3 Allen, 258, 260.

In Kidney v. Stoddard, ubi supra, it appears to have been assumed that the representation made by the defendant was a representation that the son of the defendant was a person worthy of credit; and the decision can be reconciled with the rule of law, as generally stated, by holding that the concealment of the fact of the infancy of the son was the concealment of a fact which rendered the representation made false, because an infant may avoid his contract, and is therefore not a person worthy of credit. Indeed, it is reasonable to hold that, if one person recommends another as entitled to credit, he impliedly represents that he is a person who can bind himself by a contract.

In Peels v. Grurney, L. R. 6 H. L. 377, 403, Lord Cairns states the rule of law as follows: “ Mere non-disclosure of material facts, however morally censurable, however that non-disclosure might be a ground in a proper proceeding at a proper time for setting aside an allotment or a purchase of shares, would in my opinion form no ground for an action in the nature of an action for misrepresentation. There must, in my opinion, be some active misstatement of fact, or, at all events, such a partial and fragmentary statement of fact, as that the withholding of that which is not stated makes that which is stated absolutely false.” And Lord Chelmsford, on p. 391, says, “ Assuming that mere concealment will not be sufficient to give a right, of action to a person who, if the real facts had been known to him, would never have entered into a contract, but that there must be something actively done to deceive him and draw him in to deal with the person withholding the truth from him, it appears to me that this additional element exists in the present case.” “I cannot doubt that there was, beyond the passive concealment of the state of affairs of the old firm, an active misrepresentation of the truth by the respondents.”

Baron Bramwell, dissenting in Lee v. Jones, 17 C. B. (N. S.) 482, 508, says: “ To constitute fraud, there must be, —first, the assertion of something false; which is not the case here, — or, secondly, the suppression of something true, where there is a duty or profession of stating everything material; and here there is no such duty, — or, thirdly, what perhaps is included in one of the foregoing, a suggestion of falsity, by statement of some facts, and suppression of others which would qualify those stated.” Mr. Justice Crompton, concurring with the majority, in the same case, p. 510, says: “ To constitute a fraudulent misrepresentation, it need not be made in terms expressly stating the existing of some untrue fact: but, if it be made by one party in such terms as would naturally lead the other party to suppose the existence of such state of facts, and if such statement be so made designedly and fraudulently, it is as much a fraudulent misrepresentation as if the statement of the untrue facts were made in express terms.” These statements of the law differ in the nearness or remoteness of the connection required betwéen the facts stated and the facts concealed in order to constitute a suggestion of what is false or a misleading representation.

The decision of the case at bar must depend upon the question whether the declaration describes such “ a suggestion of falsity ” in the representations made as to constitute a fraudulent misrepresentation. The defendant disclaimed all knowledge of the details of the business of Edwards’s Sons, and expressed no opinion generally upon their “standing and responsibility.” He did not undertake to make any representation upon the manner in which they obtained funds for the payment of their notes, or the terms upon which they obtained discounts, or the amount of their obligations. He did not profess or undertake to state all the facts material to be considered in determining their solvency. He did mot request or invite the plaintiff to sell merchandise to them on credit; He stated a single fact which was true. The significance of this fact standing alone it is impossible judicially to declare; but it must be known to all merchants that the length of time which a person will continue to pay his notes at maturity cannot be determined by the length of time he has already so paid them. If it is said that the representation made suggested something that is false, it is impossible with any reasonable definiteness to state the facts which it suggested. The answer of the defendant implied that he was unwilling to take the responsibility of saying that Edwards’s Sons were of good standing, but it implied nothing in regard to their methods of doing business except what it expressly stated, namely, that they had paid their notes at maturity. We think it would be an unwarrantable extension of the law relating to fraudulent misrepresentations to hold the defendant liable on the facts stated in this declaration.

Judgment affirmed.