This is a suit upon a promissory note brought by the appellee, Standard Oil Company of New Jersey, a corporation, as payee, against the Public Motor Service, Inc., a corporation, as maker, and the appellants, Paul B. Cramer, Joseph Ii. Nicholson and Grace E. Nicholson, as endorsers. The Public Motor Service, Inc. (hereafter referred to for convenience as Motor Service) defaulted below and is not concerned in the appeal; reference to the appellants hereafter is meant to include only the three individuals named. The appellants admitted that they had signed the note as endorsers. They defended upon the single ground that fraud had been used in procuring their signatures. The case was tried on the merits to a jury and at the close of the evidence the trial judge granted a motion made by the appellee for a directed verdict for the full amount sued for with interest. 1 This appeal was then taken. The only question involved in it is whether or not the trial court properly granted the appellee’s motion, that is to say, whether or not there was in the case sufficient evidence of fraud in obtaining the appellants’ signatures to take the case to the jury.
In support of their pleas of fraud the appellants introduced evidence to the ,efffect that: Motor Service operated three gasoline stations in Washington and one in Virginia. Cramer was its president and a minor stockholder. Grace E. Nicholson was the controlling stockholder and had furnished the money for the formation of the company. Joseph H. Nicholson was the husband of Grace E. Nicholson; he had no financial interest in the company. Motor Service was in business in the years 1931 to 1933, and from about May 1, 1931, to November 23, 1933, it purchased its gasoline and oil exclusively from the appellee — about 20,000-25,000 gallons of gasoline a month. But it had become seriously in arrears in moneys owing to the appellee for gasoline and oil, and representatives of appellee presented the note in suit as evidencing the amount due on the date thereof, October 10, 1933, and demanded that as a condition upon the extension of further credit to Motor Service the note be executed by it and endorsed by the appellants. For the reasons hereafter set forth, the face of the note did not represent the exact amount due upon October 10, 1933, and had the appellants known this they would not have endorsed it.
Throughout the business dealings between Motor Service and the appellee there had been a question about a gasoline shortage noted at the service stations. This shortage commenced as early as the first month of Motor Service’s business. The appellee had aided in attempting to find the cause of the shortage by sending auditors during a period of three months to go over the accounts of Motor Service and by testing the tanks and pumps of Motor Service. It was suspected that some of the employees of Motor Service were responsible for the shortage. No test was made of the tank trucks, in which deliveries of gasoline and oil were made by the appellee, before the execution of the note. But in November, 1933, one of the Washington stations of Motor Service was leased to a concern named Hill & Tibbitts, and Cramer was hired by this concern to operate the station. Like Motor Service, Hill & Tibbitts bought all of its gasoline from the appellee, and Hill & Tibbitts also noticed a gasoline shortage in its accounts. It had its pumps and tanks tested by the District of Columbia and they were found correct. It then occurred to Hill & Tibbitts to ask for a check upon the accuracy of the tank trucks of the appellee, which were the same tank trucks that had been serving the stations of Motor Service. This test, the exact date of which does not appear, was made by bucketing off the compartments of the tank trucks through a measure^ certified by the District of Columbia, and it was dis *126 covered that the compartments were inaccurately marked. They were from 5 to 9 gallons short per compartment. No evidence was introduced tending to prove ■that the appellee knew, prior to this test, of inaccuracy in the marking of its tank truck compartments. No evidence was introduced showing the amount by which the Motor Service- had been overcharged as a result of inaccuracy in the compartment markings.
We think that the trial court correctly ruled that there was insufficient evidence of fraud to take the case to the jury. The rule is settled that in an action at law where the issue is fraud the party relying upon fraud must show that the misrepresentations asserted were made either With knowledge of their untruth or in reckless disregard of the truth. New York Title & Mortgage Co. v. Hutton,
“The action here was deceit, and on such an issue misrepresentations believed to be true, though the result of ignorance or negligence, will not sustain the action. No doubt a false statement recklessly made without knowledge of its truth or falsity is actual fraud, but in that case there must be knowledge of the falsity, or reckless disregard of the truth, to justify saying the misrepresentation was fraudulent.” [63 App.D.C. 266 , at page 271,71 F.2d 989 , at page 994], [Italics supplied]
It is settled also that fraud must be shown by clear and convincing evidence — Security Investment Co. v. Garrett, 1894,
Since there was no evidence tending to prove that the appellee knew, prior to the test above referred to, of the inaccuracy in the markings in its tank truck compartments, there was' nothing to show that 'it had any actual knowledge that the face of the note represented at the time of its execution, because of the im accuracy in the compartment markings, a sum greater than the amount actually due from Motor Service. Therefore there was no evidence of knowledge of an untruth in the representation of the amount due. Furthermore, there was no substantial evidence of a representation made in reckless disregard of the truth. The mere fact of inaccuracy in the markings, without any showing that the appellee had some reason to question their accuracy, is not substantial evidence of recklessness, much less clear and convincing proof thereof.
On what constitutes sufficient evidence of recklessness of the truth to take an issue of fraud to a jury there are many decisions. .But each case must be determined on the basis of the evidence in it; and as there is usually such difference between cases that a ruling in one on the question of the sufficiency of evidence is not highly persuasive in respect of another, ~we think it not useful to review the decisions in any detail. Reference may be made, however, to Alpher-Kur-Greenberg Co. v. Holober, 1924,
“That there was a confidential relation between plaintiff ... and the two Holobers may be admitted, but what evidence is there to warrant the inference that the relation had been sinned against. There is no proof that the goods had been sold at an unreasonably high price. The testimony that Holober [the maker of the note] had declared to Kur [the plaintiff], T am overcharged between 100 and 350 per cent,’ is not equivalent to testimony that he had been so charged. He might have told the truth when he said that he had made the statement to Kur, but the fact that he did so would not be proof that the statement was true. - In another place he said:
“ ‘The first instance T found that articles had been sold to me for gold were *128 brass was when a customer * * * had been in and bought a chain supposed to be solid gold, which had‘been sold to me as solid gold, and charged the price of solid gold.’
“He does not say that the chain was not exactly what it was supposed to be. True, he does say that it was then he learned for the first time that articles sold to him for gold were brass. While this is not a direct statement that they were brass, perhaps it warrants the inference that they were. But he does not tell us how many articles there were, or whether they were worth 5 cents each, or $1 each. Certainly this was not enough on which to base a finding of fraud, in view of the fact that an expert put upon the stand by defendant . . . had testified that he could not tell by looking at it whether a piece of goods was solid gold, gold plate, or brass — -that jobbers accepted the word of the manufacturers as to the quality of the goods. If the goods were not as represented, that might be ground for rescission, but, taken alone, would not be proof of fraud. If the goods referred to were brass, there is nothing to show that the plaintiff . . . knew it, or that the delivery of them was not the result of an innocent mistake. The defendant . . . says that, if he had known the plaintiff ■. . . had charged his brother-in-law 300 per cent on. his merchandise, he would not have signed the notes. This, however, is not the same as saying that he had charged that much.
“It may be that the records disclose a scintilla of evidence indicating fraud; but, if so, that would not be enough to sustain a verdict of wrongdoing. [Authorities cited] ... A careful scrutiny of the records has failed to reveal sufficient evidence upon which to predicate verdicts to the effect that fraud had been committed upon the defendant . . . .” [54 App. D.C. 236 , at pages 238, 239,296 F. 983 , at pages 985, 986]
Reference may be made also to Pittsburgh Life & Trust Co. v. Northern Central Life Ins. Co., 3 Cir., 1906,
“But we think the case is utterly barren of any evidence which would justify such an inference [of intent to deceive and injure the plaintiff]. It does not appear by whom the statements were prepared. The evidence, as it stands, proves that they were incorrect, but they were prepared some years before the plaintiff was organized and while the defendant was carrying on its business without any purpose of disposing of it, and were relied on as correct by the defendant in the transaction of its own business. Presumably the errors were the result of carelessness on the part of bookkeepers or other subordinate employees of the defendant. The proofs in the case fail to show that any of the officers of the defendant with whofn the plaintiff carried on its negotiations . . . had any knowledge whatever that the statements were incorrect, and there is nothing showing or tending to show that there • was any intent on the part of any of those officers, or indeed, of any of the employees or agents of the defendant to deceive the plaintiff.” [148 F. 674 , at page 676]
See also Lalone v. United States, supra; National Bank of Commerce v. Rockefeller, 8 Cir., 1909,
We have considered the cases cited by the appellants. Most of them are from other jurisdictions and on that account not controlling. Moreover, all of them differ so materially from the case at bar that they are not persuasive, and we think it would serve no useful purpose to review them in detail. Some of them reflect rules not applicable to the facts in the instant case, such as the rule that in suits for equitable relief, for example rescission, innocent mistake alone is a sufficient predicate. McMullin’s Adm’r v. Sanders, 1884,
If, in view of the evidence that there was greater inaccuracy in the markings upon appellee’s tank wagon compartments than is conceded by appellee in its replications, it be thought hard that the appellants must pay the whole of the note, less the conceded credits, it is to be borne in mind that the appellants chose to adopt a course of defense intended either to subject them to liability for the whole of the note, less the credits, or to relieve them from any liability whatever notwithstanding the fact that it is not disputed that the appellee performed its part of the bargain with the appellants themselves; that is to say, it is not disputed that the further credit which was the consideration for the appellants’ signatures was extended to Motor Service. The appellants might have chosen an action in equity to reform the note for mutual mistake of fact in respect of the amount due from Motor Service, and thus have limited their liability to that amount. Ivinson v. Hutton, 1878,
Affirmed.
Notes
Tlie face of the note was $18,906.79. Interest was at 6%. There were admitted payments amounting to $588.72. The appellee had credited a further sum of $113.18 “in settlement of overcharges.” According to the replications to the pleas of fraud, the appellee had discovered, in January, 1934, an inaccuracy in one of its tank trucks amounting to 32% out of a total of 2065% gallons, and the credit was to compensate for the effect of this to- overcharge lire Motpr Service. The appellants joined issue, however, on the replications. As we note below, no evidence was introduced, by either appellee or appellants, showing the exact shortage and consequent overcharge.
The cases cited in Milson v. Gerstenberg were: Gordon v. Parmelee, 1860,