§ 2. Misrepresentation.

(i.) Misrepresentation distinguished from fraud.

NOTE. For cases under this topic, see the cases on "Effects of Misrepresentation," post, p. 268, and on "Knowledge of Falsity," post, p. 298.

(ii) Representations distinguished from tern

DAVISON v. VON LINGEN.

113 UNITED STATES, 40.- 1884.

Libel in personam, in admiralty, against the owners of the steamer Whickham, to recover damages for breach of charterparty. Cross-libel in personam against the charterers for damages for breach of charter-party.

The charter-party was executed at Philadelphia on August 1, 1879, and provided that the steamship Whickham "now sailed or about to sail from Benizaf with cargo for Philadelphia, with liberty to take outward cargo to Philadelphia for owner's benefit, shall, with all convenient speed, sail and proceed to Philadelphia or Baltimore, at charterers' option, after discharge of inward cargo at Philadelphia, or as near thereunto as she may safely get, and there load afloat from said charterers, or their agents, a full and complete cargo of grain and (or) other lawful merchandise." The owners had submitted a charter-party in which the vessel was described as "sailed from, or loading at, Benizaf," but this the charterers declined to accept, and the charter-party was executed with the description "now sailed or about to sail from Benizaf." In fact the vessel was then loading at Benizaf, and did not sail until August 7th. On the 9th the charterers learned that she had that day passed Gibraltar, and being satisfied that she would not arrive in time to load in August, procured another vessel, which they loaded at an increased rate of freight, as favorable as possible. The Whickham discharged her cargo at Philadelphia on September 7th and was tendered to the charterers at Baltimore on the 11th. The charterers declined to accept her on the ground that she had neither sailed nor was about to sail from Benizaf on August 1st. Another charter was then obtained at a loss, on as favorable terms as possible, and for this loss the owners filed the cross-libel.

It further appeared that all parties understood that the charterers wanted a vessel which could load in August; that they had asked a guaranty that the Whickham would arrive in time, but this was refused; that the basis of the belief that the Whickham would arrive rested on telegraphic information from Gibraltar, a day's sail from Benizaf.

Decree for cross-libellants in District Court, which was reversed in the Circuit Court and a decree entered for the libellants.

MR. JUSTICE BLATCHFORD. . . The decision of the Circuit Court proceeded on the ground that the language of the charterparty must be interpreted, if possible, as the parties in Baltimore understood it when they were contracting. In view of the facts,

that all the contracting parties understood that the vessel was wanted to load in August, that, as soon as the charterers learned that she did not leave Gibraltar until the 9th, they took steps to get another vessel, and that they declined to sign a charter-party which described the vessel as "sailed from, or loading at, Benizaf," the court held that the language of the charter-party meant that the vessel had either sailed, or was about ready to sail, with cargo; and that the vessel was not in the condition she was represented, being not more than three-elevenths loaded.

The argument for the appellants is, that the words of the charter-party "about to sail with cargo" imply that the vessel has some cargo on board but is detained from sailing by not having all on board, and that she will sail, when, with dispatch, all her cargo, which is loading with dispatch, shall be on board; and that this vessel fulfilled those conditions. As to the attendant circumstances at Baltimore, it is urged that the charterers asked for a guaranty that the vessel would arrive in time for their purposes, and it was refused, and that the printed clause as to an option in the charterers to cancel was stricken out, and that then the charterers accepted the general words used.

The words of the charter-party are, "now sailed, or about to sail, from Benizaf, with cargo for Philadelphia." The word "loading" is not found in the contract. The sentence in question implies that the vessel is loaded, because the words "with cargo" apply not only to the words "about to sail," but to the word "sailed," and as, if the vessel had "sailed with cargo," she

must have had her cargo on board, so, if it is agreed she is "about to sail with cargo,' ," the meaning is, that she has her cargo on board, and is ready to sail. This construction is in harmony with all that occurred between the parties at the time, and with the conduct of the charterers afterwards. The charterers wanted a guaranty that, even if the vessel had already sailed, or whenever she should sail, she would arrive in time for them to load her with grain in August. This was refused, and the charterers took the risk of her arriving in time, if she had sailed, or if, having her cargo then on board, she should, as the charterparty says, "with all convenient speed, sail and proceed to Philadelphia or Baltimore." Moreover, the charterers refused to sign a charter-party with the words "sailed from, or loading at, Benizaf," and both parties agreed on the words in the charterparty, which were the words of authority used by the agents in Philadelphia of the owners of the vessel. The erasing of the printed words, as to the option of cancelling, was in harmony with the refusal of the owners to guarantee the arrival by a certain day. So, also, when the charterers learned, on the 9th of August, that the vessel did not leave Gibraltar till that day, they proceeded to look for another vessel. It was then apparent that the vessel had not left Benizaf by the 1st of August, or with such reasonable dispatch thereafter, that she could have had her cargo on board, ready to sail on the 1st of August.

That the stipulation in the charter-party, that the vessel is "now sailed, or about to sail, from Benizaf, with cargo, for Philadelphia," is a warranty, or a condition precedent, is, we think, quite clear. It is a substantive part of the contract, and not a mere representation, and is not an independent agreement, serving only as a foundation for an action for compensation in damages. A breach of it by one party justifies a repudiation of the contract by the other party, if it has not been partially executed in his favor. The case falls within the class of which Glaholm v. Hays (2 Man. & Gr. 257), Ollive v. Booker (1 Exch. 416), Oliver v. Fielden (4 Exch. 135), Gorrissen v. Perrin (2 C. B. N. S. 681), Croockewit v. Fletcher (1 H. & N. 893), (Seeger v. Duthie (8 C. B. N. S. 45), Behn v. Burness (3 B. & S. 751), Corkling v. Massey (L. R. 8 C. P. 395), and Lowber v. Bangs (2 Wall.

728) are examples; and not within the class illustrated by Tarrabochia v. Hickie, 1 H. & N. 183; Dimech v. Corlett, 12 Moore P. C. 199; and Clipsham v. Vertue, 5 Q. B. 265. It is apparent, from the averments in the pleadings of the charterers, of facts which are established by the findings, that time and the situation of the vessel were material and essential parts of the contract. Construing the contract by the aid of, and in the light of, the circumstances existing at the time it was made, averred in the pleadings and found as facts, we have no difficulty in holding the stipulation in question to be a warranty. See Abbott on Shipping, 11th ed. by Shee, pp. 227, 228. But the instrument must be construed with reference to the intention of the parties when it was made, irrespective of any events afterwards occurring; and we place our decision on the ground that the stipulation was originally intended to be, and by its term imports, a condition precedent. The position of the vessel at Benizaf, on the 1st of August the fact that, if she had not then sailed, she was laden with cargo, so that she could sail - these were the only data on which the charterers could make any calculation as to whether she could arrive so as to discharge and reload in August. rejected her as loading; but if she was in such a situation, with cargo in her, that she could be said to be "about to sail," because she was ready to sail, they took the risk as to the length of her voyage. The decree of the Circuit Court is affirmed.1

They

(iii.) Effects of misrepresentation.

a. In contracts generally.

WILCOX v. IOWA WESLEYAN UNIVERSITY.

32 IOWA, 367.-1871.

Action to foreclose a mortgage executed by defendant college to secure a promissory note. Defense, accord and satisfaction of

1 See also Norrington v. Wright, 115 U. S. 203, post, p. 584; Wells, Fargo & Co. v. Pacific Ins. Co., 44 Cal. 397; Morrill v. Wallace, 9 N. H. 113; Wolcott v. Mount, 36 N. J. L. 262, post, Pt. V. Ch. III. § 2.

note and mortgage, in consideration of certain lands agreed by defendant to be given and by plaintiff to be taken as payment. Plaintiff sets up that he was induced to enter into such agreement by the false representations of defendant as to the location, character, and value of the land. Such representations are found to be in fact false, but also that the agent of the defendant made them in good faith, believing each piece of land to be as described.

A decree was entered by the trial court cancelling the note and mortgage and releasing defendant from all liability thereon. Plaintiff appeals.

MILLER, J. . . . Is the plaintiff entitled to be relieved from his agreement compounding his claim against defendant, and, if so, to what extent?

The appellee cites Holmes v. Clark (10 Iowa, 423), which holds, that in order to sustain an action on the ground of false and fraudulent representations in the sale of land, it must be shown that the representations were false and fraudulent within the knowledge of the party making them; and he argues that appellant is, in view of the law, without remedy in this case. The rule laid down in that case is well established and universally followed in all actions at law for damages sustained by false and fraudulent representations in a sale (see cases cited by appellant in that case); but equity will grant relief on the ground of fraud, although the party representing a material fact made the assertion without knowing whether it was true or not. The consequences to the person who acted on the faith of the representations are the same whether he who made them knew them to be false or was ignorant whether they were true or not. And if the representations were made to influence the conduct of another party in a matter of business, and they did influence him to his prejudice, equity will interfere and grant him relief. Willard's Eq. Jur. 150; Ainslie v. Medlycott, 9 Ves. 21; Harding v. Randall, 15 Me. 332; Smith v. Richards, 13 Pet. 38; Turnbull v. Gadsden, 2 Strobh. (S. C.) Eq. 14; McFerran v. Taylor, 3 Cranch, 281.

And even if by mistake, and innocently, a party misrepresents a material fact, upon which another party is induced to act, it is