VII. Reliance on representations and inducement to act; duty to investigate. Hoge, 18 L.R.A. (N.S.) 94, 211 Mo. 444, 111 VIII. Materiality of representations. § 40. Generally. As affecting question of estoppel, see Es- As to insurance, see INSURANCE, § 265. a. Misrepresentations which would vitiate a contract of sale and prevent a court of equity from aiding its enforcement must relate to a material matter constituting an inducement to the contract, and respecting which the complaining party did not possess at hand the means of knowledge. Pigott v. Graham, 14 L.R.A. (N.S.) 1176, 48 Wash. 349, 93 Pac. 435. b. Representations as to the character, condition, or quality of land are representations of material facts. Woodward v. Western Canada Colonization Co. L.R.A.1917C, 270, 134 Minn. 8, 158 N. W. 706. c. A misrepresentation of the location, with reference to a suburban street, of platted lots, involves a material matter; and where the location of such lots is shown on the plat by the government subdivision only, their location with reference to the city limits or suburban street is not a matter so readily ascertainable that a purchaser is not justified in relying on the representa tion made in reference thereto by the seller. Ballard v. Lyons, 38 L.R.A. (N.Š.) 301, 114 Minn. 264, 131 N. W. 320. (Annotated) S. E. 673. b. Mere fraud without damage gives no cause of action; the two must concur before an action will lie, and it is as necessary for a party complaining to prove the one as the other. Hoffman v. Toft, 52 L.R.A. (N.S.) 944, 70 Or. 488, 142 Pac. 365. c. Fraud without damage, or damage without fraud, gives no cause of action, but when these two concur an action lies. Kountze v. Kennedy, 29 L.R.A. 360, 147 N. Y. 124, 41 N. E. 414. d. A party cannot claim to have been defrauded who is induced to do by artifice what the law would otherwise have compelled him to do. Deobold v. Oppermann, 2 L.R.A. 644, 111 N. Y. 531, 19 N. E. 94. § 42. Sufficiency of damage. § 43. Causal connection between fraud and damage. a. The fraud and injury must be connected, so that one bears to the other the relation of cause and effect, in order to recover in an action for fraud and deceit. Kuelling v. Roderick Lean Mfg. Co. 2 L.R.A. (N.S.) 303, 183 N. Y. 78, 75 N. E. 1098. b. To sustain an action for fraud and deceit the fraud and injury must bear the relation of cause and effect, and it must be seen in an appreciable sense that the damage flows from the fraud as the proximate, and not as the remote cause. Rothmiller v. Stein, 26 L.R.A. 148, 143 N. Y. 581, 38 N. E. 718. c. A false statement made by one and believed by another is not per se a legal injury, and actionable, but to be actionable it must be the direct means of obtaining the latter's property. Re Payne, 33 L.R.A. 418, 65 Conn. 397, 32 Atl. 948. d. To constitute an action for "relief upon the ground of fraud," the fraud must be the substantive cause of the action without which the action would not exist. Golden Eagle Min. Co. v. Imperator-Quilp Co. L.R.A. 1917C, 113, 93 Wash. 692, 161 Pac. 848. e. The deceit of one in securing a contract to prepare plans for a building and supervise its construction, by false representations that he has skill as an architect, permeates the execution of the contract so as to render him liable to the owner in case he suffers loss through absence of knowledge and skill on the part of the one making the representations. Edward Barron Estate Co. v. Woodruff Co. 42 L.R.A. (N.S.) 125, 163 Cal. 561, 126 Pac. 351. X. Persons entitled to sue or obtain relief. Stockholder's right of action for fraud of § 44. Generally. corporate officers, see CORPORATIONS. §§ Effect of laches on right to relief, see LIMI237 o, 242 g, i. Concurrent jurisdiction of equity and law, TATION OF ACTIONS, § 46 a. see ACTION OR SUIT, § 64 e. Who entitled to claim estoppel by representation, see ESTOPPEL, § 101 m. Action by wife for deceit in making false representations to her about her husband, see HUSBAND AND WIFE, § 135 i. stock of a corporation has parted with it a. That one defrauded into purchasing does not affect his right to hold the one caused thereby, or to sue upon his promise, guilty of the fraud liable for the damages made to avoid an action for the fraud, to see that the purchaser got his money back. a. That one is compelled to pay a note McKay v. McCarthy, 34 L.R.A. (N.S.) 911, which he was induced to indorse for another 146 Iowa, 544, 123 N. W. 755. through fraudulent misrepresentations of b. The right of one who trades property the latter as to his property imports some for corporate stock to recover for false damage within the rule that damage must representations by the owners of the stock X. Persons entitled to sue or obtain relief. f. False statements in a certificate required by Mass. Stat. 1884, chap. 330, § 3, to be filed with the commissioner of corporations to enable a foreign corporation to do business in Massachusetts, will not render the persons signing it liable for deceit to one who, relying upon them, takes the corporation's notes and thereby suffers loss. Hunnewell v. Duxbury, 13 L.R.A. 733, 154 Mass. 286, 28 N. E. 267. (Annotated) as to the amount of the corporate property | 13 L.R.A. 733, 154 Mass. 286, 28 N. E. 267. is not affected by the fact that some of the stock is taken in the names of various members of his family, and does not stand in his own name. Boddy v. Henry, 53 L.R.A. 769, 113 Iowa, 462, 85 N. W. 771. c. A vendee in an executory contract for the sale of land cannot maintain an action for damages for false representations, when it appears that he has failed to make the stipulated payments, and by reason thereof the vendor has lawfully terminated the contract. Olson v. Northern P. R. Co. L.R.A. 1915F, 962, 126 Minn. 229, 148 N. W. 67. (Annotated) d. One who has been induced by fraud and deceit to enter into an executory contract to sell stock cannot, if he performs his contract after discovering the fraud, maintain an action for damages therefor. McDonough v. Williams, 8 L.R.A. (N.S.) 452, 77 Ark. 261, 92 S. W. 783. (Annotated) § 45. Limiting relief to persons for whom representations were intended. a. One who suffers loss as the result of reliance on a dishonest representation cannot recover such loss unless he is able in one way or another to bring himself within the class of persons for whom the representation was intended. Webb v. Rockefeller, 6 L.R.A. (N.S.) 872, 195 Mo. 57, 93 S. W. 772. b. Persons purchasing corporate stock in reliance on a dishonest representation cannot recoup the losses suffered thereby, unless they bring themselves within the class of persons for whom such representation was intended. Hindman v. First Nat. Bank, 57 L.R.A. 108, 112 Fed. 931, 50 C. C. A. 623, certiorari denied in 186 U. S. 483, 46 L. ed. 1261, 22 Sup. Ct. Rep. 943. c. One who makes a false representation owes no duty of care to tell the truth to those to whom he does not communicate it, and to whom he does not anticipate that it will be conveyed, and a person of ordinary prudence and intelligence would not anticipate that it would be conveyed; and such parties have no cause of action against him for injuries they sustain in reliance upon it. Western U. Teleg. Co. v. Schriver, 4 L.R.A. (N.S.) 678, 141 Fed. 538, 72 C. C. A. 596. d. One who has been guilty of fraud or deceit in the passing off of a thing may be held in damages to persons injured thereby who may reasonably be deemed to be within the contemplation of the parties to the transaction. McCaffrey v. Mossberg & G. Mfg. Co. 55 L.R.A. 822, 23 R. I. 381, 50 Atl. 651. g. False representations made to the public at large for the purpose of influencing the action of any who may be led to act thereupon, are actionable at the suit of anyone so acting thereupon, and who sustains injury thereby. Kuelling v. Roderick Lean Mfg. Co. 2 L.R.A. (N.S.) 303, 183 N. Y. 78, 75 N. E. 1098. § 46. Party in pari delicto. a. The maker of a note given for Bohemian oats purchased at a price greatly beyond their value and never delivered, who was induced to give it by persistent arts and misrepresentations concerning the salable prospects of the oats to be grown, and the responsibility and legal character of a mythical corporation whose bond is given him, agreeing to sell for him twice as many bushels at the same price per bushel, may recover from the person defrauding him the damages thereby sustained, when he has been compelled to pay the note to a bona fide holder; and he will not be denied relief on the ground that he is in pari delicto. Hess v. Culver, 6 L.R.A. 498, 77 Mich. 598, 43 N. W. 994. (Annotated) Liability of corporation for, see CORPORA- Liability of officers of corporation issuing Liability of married woman, see HUSBAND Liability of principal for agent's fraud, see e. To sustain an action for deceit for alleged misstatements in the certificate required to be filed in order to enable a foreign corporation to do business in the state, misrepresentations must either have been made a. One is equally liable for a false repreto the plaintiff individually or as one of sentation which he causes or authorizes to the public or as one of a class to whom they be made as though it were made by himself are in fact addressed, or have been intended personally. Kuelling v. Roderick Lean Mfg. to influence his conduct in the particular of Co. 2 L.R.A. (N.S.) 303, 183 N. Y. 78, 75 which he compains. Hunnewell v. Duxbury, N. E. 1098. XI. Persons liable. b. Stockholders of a corporation are not liable for false representations as to the amount of the corporate property by an agent of the corporation in charge of the property with power to sell it, upon which reliance is placed by a third person in purchasing the interest of such stockholders. Boddy v. Henry, 53 L.R.A. 769, 113 Iowa, 462, 85 N. W. 771. c. That one who assisted in securing a note for stock in a corporation by fraud was not an officer of the corporation does not relieve him from liability for the fraud, if he was acting as its agent and conspired with its officers to defraud the maker. Hoffman v. Toft, 52 L.R.A. (N.S.) 944, 70 Or. 488, 142 Pac. 365. d. An insurer of an employer who fraudulently induces the guardian of a minor employee injured by the employer's negligence, to bring an action for the injuries for a nominal sum, and secures entry of the judgment therein, is liable to the minor for the full amount of the actual damages caused by the injury. McGillvray v. Employers' Liability Assur. Corp. 46 L.R.A. (N.S.) 110, 214 Mass. 484, 102 N. E. 77. (Annotated) § 48. Lack of interest of, or benefit to, defendant. a. One who makes a representation known to be untrue and which he has reason to believe will be relied and acted upon by others to their loss, is responsible for the loss sustained, although he has no direct interest in the transaction and receives no consideration or benefit from it. E. G. Rall Grain Co. v. Missouri P. R. Co. L.R.A.1916C, 429, 94 Kan. 446, 146 Pac. 1180. b. It is not essential to show in an action for fraud and deceit that any benefit was derived from the deceit. Hindman v. First Nat. Bank, 57 L.R.A. 108, 112 Fed. 931, 50 C. C. A. 623, certiorari denied in 186 U. S. 483,46 L. ed. 1261, 22 Sup. Ct. Rep. 943. c. One who merely answers the inquiries of a stranger, or courteously volunteers information in a matter which does not concern him, cannot be held liable to an action for fraud on account of misstatements, if he did not intentionally mislead, but answered honestly to the best of his ability. Nash v. Minnesota Title Ins. & T. Co. 28 L.R.A. 753, 163 Mass. 574, 40 N. E. 1039. Of wife acting as husband's agent; effect on husband's rights, see HUSBAND AND WIFE, § 22. Ratification of husband's fraud, see Hus- a. One who wilfully makes false representations, to be fraudulently used by another as an inducement to a third person to enter into a contract with the one repeating them, is equally guilty with him of the deceit, and equally liable to the one so deceived. James v. Crosthwait, 36 L.R.A. 631, 97 Ga. 673, 25 S. E. 754. b. An action by one induced by fraud to purchase property, to recover the difference between what he paid and the value of what he received, can be maintained either against the vendor or a third party who intentionally deceived him into making the purchase. Cheney v. Dickinson, 28 L.Ř.A. (N.S.) 359, 172 Fed. 109, 96 C. C. A. 314. c. Directors of a corporation who falsely represent its condition to a stockholder, knowing that he seeks information to guide his decision as to selling his stock, are liable for the damages sustained by him on account of their misrepresentations, although they were not made with the purpose of inducing the sale. Rothmiller v. Stein, 26 L.R.A. 148, 143 N. Y. 581, 38 N. E. 718. d. One who knowingly makes false representations in respect to the capital of a corporation, for the purpose of inducing another to buy its stock, is liable to him for the loss sustained by the purchase of the stock in reliance upon the truth of the statement. Hindman v. First Nat. Bank, 57 L.R.A. 108, 112 Fed. 931, 50 C. C. A. 623, certiorari denied in 186 U. S. 483, 46 L. ed. 1261, 22 Sup. Ct. Rep. 943. e. The liability of a third person for fraud in inducing a contract is not defeated by the rescission or attempted rescission of the contract, so long as no satisfaction for the injury is obtained from the other contracting party by restoration, recovery of consideration, or otherwise. Nash v. Minnesota Title Ins. & T. Co. 28 L.R.A. 753, 163 Mass. 574, 40 N. E. 1039. § 50. Third person inducing creditor to forbear action. d. A mere friend of the family, acting action against a third party for fraudu a. A general creditor may not maintain an without compensation, who advises as to lently inducing such creditor to forbear the investment of funds, does not sustain legal action to collect his debt. Evans v. such confidential relations to the lender Burson, L.R.A.1917E, 1146, Okla. that he can be held personally liable in case Pac. 471. the loan is lost because of his misrepresen- § 51. One misrepresenting character. tations as to the credit of the borrower. Knight v. Rawlings, 13 L.R.A. (N.S.) 212, 205 Mo. 412, 104 S. W. 38. § 49. Fraud of third persons generally. -, 164 (Annotated) identity, or financial responsibility of another. Of one contending in prize contest, see PRIZE CONTEST, § 1 c. a. Fraudulent representations as to an asistence, and whose pretense of legal existalleged corporation which has no legal exence is a fraud, are not within the Michigan statute which requires fraudulent represenLiability of bank giving deceptive credit to tations as to the character, etc., of another Bank's liability for false representations to responsibility of customer, BANKS, § 42. customer, see BANKS, § 182. see party to be in writing in order to sustain an XI. Persons liable. action for fraud. Hess v. Culver, 6 L.R.A. 498, 77 Mich. 598, 43 N. W. 994. b. False representations as to the identity of a person are actionable, if made to induce another to act thereon, and such other does so act thereon to his prejudice. Raser v. Moomaw, 51 L.R.A. (N.S.) 707, 78 Wash. 653, 139 Pac. 622. c. One who, with knowledge of the fraud, introduces to a money broker without knowledge of or means of knowing the facts, a person impersonating the owner of real estate, stating that he desires to borrow money on the property, and thereby enables him to secue a loan which cannot be recovered because the borrower is an impostor and insolvent, is liable to make good the loss resulting to the broker from the transaction. Raser v. Moomaw, 51 L.R.A. (N.S.) 707, 78 Wash. 653, 139 Pac. 622. (Annotated) d. One difference between a guaranty and a letter which fraudulently misrepresents the financial responsibility of another, is that one who so commits the fraud may not defend that his writing had unexpected consequences. Farmers Sav. Bank v. Jameson, L.R.A.1916E, 362, 175 Iowa, 676, 157 N. W. 460. XII. Effect; remedies; defenses. § 52. Generally. Survivability of action for fraud, see ABATE- Conditions precedent to suit based on, see b. Remedy in case of fraudulent attempt to dismiss action to deprive attorney of fees, see ACTION OR SUIT, § 74 e. Joinder of causes of action for, see ACTION for deceit, see ACTION OR SUIT, § 107 c. Arrest for, see ARREST, § 17 c. Attack for, on order confirming auditor's report as to disposition of funds for creditors, see ASSIGNMENT FOR CREDITORS, § 30 a. Recovery back of money obtained by, see ASSUMPSIT, § 30 t. As ground for attachment, see ATTACHMENT, §§ 10-12. As ground for setting aside attachment, see ATTACHMENT, § 37 f, g. Deceit by attorney as ground for reprimand, suspension, or disbarment, see ATTOR NEYS, II. c, 2. Recovery from purchaser's trustee in bankruptcy of proceeds of goods bought without intent to pay therefor; see BANKRUPTCY, § 33. Giving right to preference in bankruptcy proceedings, see BANKRUPTCY, § 96 b. Effect of failure to disclose assets or list property to prevent discharge of bankrupt from releasing him from liability, see BANKRUPTCY, § 108. Of shipper, effect on carrier's liability, see CARRIERS, § 523. Liability for fraudulently inducing another to refrain from bringing action, see CASE, § 17. Liability on oral representations fraudulent ly made, as to another's credit, see CONTRACTS, § 116 a. Granting relief to one defrauded in betting on race, see CONTRACTS, § 441 c, d. In decision of arbiter, see CONTRACTS, § 488 b. Effect on right to vote corporate stock, sea CORPORATIONS, § 317 e. As ground for impeachment of finding of In criminal prosecution, effect on jeopardy, Mitigation of damages for fraud, see DAM As As ground for equitable relief against judg Power of equity in case of, see EQUITY, II. ment, see EQUITY, § 62. d. As ground for setting aside award of inDiligence as prerequisite to remedy, se surance appraisers, see EQUITY, § 95 c. EQUITY, § 100 a. As bar to relief in equity, see EQUITY, §S 102-107. Estoppel by fraudulent representations, see ESTOPPEL, III. g. Estoppel by fraud, see ESTOPPEL, III. h. Effect of fraud in obtaining on credit goods In As deposited in warehouse on rights of transferee of warehouse receipts, see EVIDENCE, § 429 x. connection with breach of contract for services, as justifying imprisonment, see IMPRISONMENT FOR DEBT, § 3 b-d. justifying imprisonment for debt, see IMPRISONMENT FOR DEBT, §§ 5-8. XII. Effect; remedies; defenses. Indictment or information for, see INDICT-| As defense to enforcement of local improve MENT, ETC., §§ 29, 56, 57. As ground for injunction against judgment, see INJUNCTION, § 118. In use of tradename or label as a defense, see INJUNCTION, § 181. As ground for relief against judgment, generally, see JUDGMENT, §§ 284-289, 305. As ground for collateral attack on judgment, see JUDGMENT, § 361. As ground for impeachment of foreign judgment, see JUDGMENT, §§ 388, 399. As relieving purchaser at judicial sale from rule of caveat emptor, see JUDICIAL SALE, § 23. As ground for setting aside judicial sale, see JUDICIAL SALE, $$ 35, 36. Defense of fraud in action upon judgment, see JUSTICE OF THE PEACE, § 7 d. Right of fraudulent business to protection against libel, see LIBEL AND SLANDER, § 140. Effect of, on running of limitations, see LIMITATION OF ACTIONS, II. g. Effect of, on bar of limitations, see LIMITATION OF ACTIONS, III. g. Effect of new promise to remove bar of limitations against action based upon, see LIMITATION OF ACTIONS, § 236 c. In procuring marriage license, effect on validity of marriage, see MARRIAGE, § 14. Annulment of marriage for, see MARRIAGE, $ 56. Effect of fraud of one obtaining title to realty, upon rights of bona fide mortgagee, see MORTGAGE, § 12 c. Annulling release of mortgage for fraud, see MORTGAGE, § 63 b. Litigating question of fraud in securing assignment of note, in action to foreclose mortgage securing it, see MORTGAGE, 72 c. New trial for, see JUDGMENT, § 331 f; NEW TRIAL, § 24. Liability of notary taking acknowledgment to fraudulent instrument, see NOTARY, § 3 b. Effect of agent's fraud on imputing agent's notice to principal, see NOTICE, §§ 2325, 32, 35. Who may maintain action for, see PARTIES, §§ 1 f, 19 j. Joinder of parties plaintiff in action for, see PARTIES, § 79 a. Liability of partnership for fraud of one member, see PARTNERSHIP, § 47 i, 1. Action against copartner for, see PARTNERSHIP, § 103 f. Recovery under common counts for money obtained by fraud, see PLEADING, § 97 a. Necessity of pleading, to render available In issue of money order, see POSTOFFICE, § 10 c. Effect of false report by girl as to age on liability for harboring female for purpose of sexual intercourse, see PROSTITUTION, § 1 c. ment assessment, see PUBLIC IMPROVEMENTS, §§ 93 d, 93 i, 95 d. Appointment of receiver, see RECEIVERS, § 16 j. Joinder of parties to prevent removal of cause to Federal court, see REMOVAL OF CAUSES, §§ 17, 18, 25 c, e, f, 26 a. Replevin for goods obtained by, see CoxTRACTS, § 37 c; REPLEVIN, §§ 11 q, 12 c, 13 d, e, 14 g; SALE, § 42 b. Rights of seller as against third persons, in case of fraud of purchaser, see SALE, §§ 171, 172. Subrogation as remedy, see SUBROGATION, § 4 h. Criminal liability for evading payment of tolls with intent to defraud, see TOLLS AND TOLL ROADS, § 7 a. Fraud as defense to infringement of trademark or tradename or unfair competition, see TRADEMARKS, TRADENAMES, AND UNFAIR COMPETITION, § 50. Constructive trust arising from, see TRUSTS, I. d. Relief from waiver of vendor's lien fraudulently procured, see VENDOR AND PURCHASER, $ 59 e. Fraud of vendee upon others associated with him in the purchase, see VENDOR AND PURCHASER, § 73 f. Effect on validity of will, see WILLS, § 110. As giving right to revoke election to take under will, see WILLS, § 351 a. Exemption from service of summons of person induced by fraud to enter jurisdietion, see WRIT AND PROCESS, § 66 b. a. Equitable principles are applicable to every case of fraud as it occurs, however new it may be in its circumstances. Meldrum v. Meldrum, 11 L.R.A. 65, 15 Colo. 478, 24 Pac. 1083. b. Courts will not be controlled in giving relief by any specific and definite rules in regard to fraud. Meldrum v. Meldrum, 11 L.R.A. 65, 15 Colo. 478, 24 Pac. 1083. c. Every doubt must be resolved against the parties to a fraudulent act. Stone v. Goss, 63 L.R.A. 344, 65 N. J. Eq. 756, 55 Atl. 736. d. Where an obligation otherwise lawful is challenged as working a collateral fraud, a court will look first for a lawful ground upon which to rest its judgment, rather than look for an excuse to overturn the obligation. Skagit State Bank v. Moody, L.R.A.1916A, 1215, 86 Wash. 286, 150 Pac. 425. e. The equity acquired by a party who has been misled is superior to the interest in the same subject-matter of the one who wilfully procured or suffered him to be thus misled. Hooper v. Central Trust Co. 29 L.R.A. 262, 81 Md. 559, 32 Atl. 505. f. One who wrongfully deceives or misleads another to whom he owes the duty of truthful statement, to his damage, is liable for the natural and probable consequences of his act. Bank of Havelock v. Western U. Teleg. Co. 4 L.R.A. (N.S.) 181, 141 Fed. 522, 72 C C. A. 580. |