Chapter IV: Deceit (6)

The correctness of the first of these instructions is challenged. It
is in exact accordance with the law as laid down in Gordon _v._
Parmelee, 2 Allen, 212, and Mooney _v._ Miller, 102 Mass. 217. The
facts in the case at bar are similar in all material respects to these
cases. An attempt is made to distinguish them on the ground that the
present plaintiffs were Syrians, ignorant of our language, and that
hence a trust relation existed between them and the defendant. But
whatever else may be said of this contention, it fails because they
were accompanied by two of their own countrymen, who were thoroughly
familiar with our language and acted as interpreters for them. In
effect, the contention of the plaintiffs amounts to a request to
overrule these two cases. They have been cited with approval in
Roberts _v._ French, 153 Mass. 60, and as supporting authorities,
without criticism, in other opinions. The court, however, has refused
to apply the rule of those decisions to other facts closely analogous.
See Lewis _v._ Jewell, 151 Mass. 345; Holst _v._ Stewart, 161 Mass.
516; Whiting _v._ Price, 172 Mass. 240; Kilgore _v._ Bruce, 166 Mass.
136. This court in recent years, by pointed language and by
conclusions reached, has indicated a plain disposition not to extend
legal immunity for the falsehood of vendors in the course of
negotiations for sales beyond the bounds already established....

This judicial attitude perhaps reflects an increasingly pervasive
moral sense in some of the common transactions of trade. While the
science of jurisprudence is not, and under present conditions cannot
be, co-extensive with the domain of morality, nor generally undertake
to differentiate between motives which mark acts as good or bad, yet
it is true, as was said by Mr. Justice Brett, in Robinson _v._
Mollett, L. R. 7 H. L. 802, 817, that “The courts have applied to the
mercantile business brought before them what have been called legal
principles, which have almost always been the fundamental ethical
rules of right and wrong.” This is only a concrete expression of the
broader generalization that law is the manifestation of the conscience
of the Commonwealth.

In many other jurisdictions the rule of Gordon _v._ Parmelee and
Mooney _v._ Miller has not been followed and false representations as
to area of land, even though true boundaries were pointed out, have
been held actionable. McGhee _v._ Bell, 170 Mo. 121, 135, 150. May
_v._ Loomis, 140 N. C. 350. Boddy _v._ Henry, 113 Iowa, 462, 465; S.
C. 126 Iowa, 31. Antle _v._ Sexton, 137 Ill. 410. Estes _v._ Odom, 91
Ga. 600, 609. Lovejoy _v._ Isbell, 73 Conn. 368, 375. Cawston _v._
Sturgis, 20 Ore. 331. Starkweather _v._ Benjamin, 32 Mich. 305. Paine
_v._ Upton, 87 N. Y. 327. Mitchell _v._ Zimmerman, 4 Texas, 75.
Walling _v._ Kinnard, 10 Texas, 508. Speed _v._ Hollingsworth, 54
Kans. 436. See also Fairchild _v._ McMahon, 139 N. Y. 290; Schumaker
_v._ Mather, 133 N. Y. 590.

Other cases apparently opposed to the Massachusetts rule, on
examination prove to go no further than to decide that
misrepresentations as to area, when there is no evidence that
boundaries were shown, constitute deceit. Griswold _v._ Gebbie, 126
Penn. St. 353. Cabot _v._ Christie, 42 Vt. 121. Coon _v._ Atwell, 46
N. H. 510. Ledbetter _v._ Davis, 121 Ind. 119. Perkins Manuf. Co. _v._
Williams, 98 Ga. 388. Sears _v._ Stinson, 3 Wash. 615. Hill _v._
Brower, 76 N. C. 124. Stearns _v._ Kennedy, 94 Minn. 439. This is the
substance of the latter part of the instruction given in the Superior
Court, and is the law of this Commonwealth.

The rule of Mooney _v._ Miller seemingly has been approved or followed
in Lynch _v._ Mercantile Trust Co., 18 Fed. Rep. 486; Crown _v._
Carriger, 66 Ala. 590; and Mires _v._ Summerville, 85 Mo. App. 183,
although the last case has been overruled in Judd _v._ Walker, 114 Mo.
App. 128, 135.

If the point were now presented for the first time, it is possible
that we might be convinced by the argument of the plaintiffs and the
great weight of persuasive authority in its support, especially in
view of Lewis _v._ Jewell, 151 Mass. 345. But there is something to be
said in support of the two earlier decisions now questioned. A
purchase and a sale of real estate is a transaction of importance and
cannot be treated as entered into lightly. People must use their own
faculties for their protection and information, and cannot assume that
the law will relieve them from the natural effects of their
heedlessness or take better care of their interests than they
themselves do. Thrift, foresight and self-reliance would be undermined
if it was the policy of the law to attempt to afford relief for mere
want of sagacity. It is an ancient and widely, if not universally,
accepted principle of the law of deceit that, where representations
are made respecting a subject as to which the complaining party has at
hand reasonably available means for ascertaining the truth and the
matter is open to inspection, if, without being fraudulently diverted
therefrom, he does not take advantage of this opportunity, he cannot
be heard to impeach the transaction on the ground of the falsehoods of
the other party. Salem India Rubber Co. _v._ Adams, 23 Pick. 256, 265.
Slaughter _v._ Gerson, 13 Wall. 379, 383. Long _v._ Warren, 68 N. Y.
426, 432. Baily _v._ Merrell, 3 Bulstr. 94. This rule in its general
statement applies to such a case as that before us. It is easy for one
disappointed in the fruits of a trade to imagine, and perhaps persuade
himself, that the cause of his loss is the deceit of the other party,
rather than his own want of judgment.

It is highly desirable that laws for conduct in ordinary affairs, in
themselves easy of comprehension and memory, when once established,
should remain fast. The doctrine of _stare decisis_ is as salutary as
it is well recognized.... While perhaps it is more important as to
far-reaching juridical principles that the court should be right, in
the light of higher civilization, later and more careful examination
of authorities, wider and more thorough discussion and more mature
reflection upon the policy of the law, than merely in harmony with
previous decisions (Barden _v._ Northern Pacific Railroad, 154 U. S.
288, 322), it nevertheless is vital that there be stability in the
courts in adhering to decisions deliberately made after ample
consideration. Parties should not be encouraged to seek re-examination
of determined principles and speculate on a fluctuation of the law
with every change in the expounders of it. As to many matters of
frequent occurrence, the establishment of some certain guide is of
more significance than the precise form of the rule. It is likely that
no positive rule of law can be laid down that will not at some time
impinge with great apparent severity upon a morally innocent person.
The law of gravitation acts indifferently upon the just and the
unjust. A renewed declaration of law that is already in force,
supported by sound reason and not plainly wrong, in the long run
probably works out substantial justice, although it may seem harsh in
its application to some particular case. These considerations are
regarded as so weighty by the House of Lords that it cannot overrule
any of its own decisions. London Tramways Co. _v._ London County
Council, [1898] A. C. 375.

The conclusion is that we do not overrule the decisions whose
soundness has been debated at the bar, although we do not extend their
scope, but confine them strictly to their precise point, namely, that
where the seller of real estate shows upon the face of the earth its
true boundaries to the purchaser and does not fraudulently dissuade
him from making full examination and measurement and the estate is not
so extensive or of such character as to be reasonably incapable of
inspection and estimate, and there is no relation of trust between the
parties, the purchaser has no remedy for a misrepresentation as to the
area alone....

_Exceptions overruled._[366]

EASTERN TRUST & BANKING COMPANY _v._ CUNNINGHAM
SUPREME COURT, MAINE, FEBRUARY 20, 1908.
_Reported in 103 Maine Reports, 455._

SAVAGE, J. But the defendant contends further, that, if the plaintiff
did not know, it ought to have known, and would have known but for its
own negligence. We think this defence cannot avail. There are cases
which hold that where one carelessly relies upon a pretence of
inherent absurdity and incredibility upon mere idle talk, or upon a
device so shadowy as not to be capable of imposing upon any one, he
must bear his misfortune, if injured. He must not shut his eyes to
what is palpably before him. But that doctrine, if sound, is not
applicable here. We think the well-settled rule to be applied here is
that if one intentionally misrepresents to another facts particularly
within his own knowledge, with an intent that the other shall act upon
them, and he does so act, he cannot afterwards excuse himself by
saying, “You were foolish to believe me.” It does not lie in his mouth
to say that the one trusting him was negligent. In this case the fact
whether or not there were funds in the Gardiner bank to meet the
checks was peculiarly within the knowledge of the defendant. The rule
is stated in Pollock on Torts, § 252, as follows: “It is now settled
law that one who chooses to make positive assertions without warrant
shall not excuse himself by saying that the other party need not have
relied upon them. He must show that his representation was not in fact
relied upon. In short, nothing will excuse a culpable
misrepresentation short of proof that it was not relied upon, either
because the other party knew the truth, or because he relied wholly on
his own investigations, or because the alleged fact did not influence
his action at all.” In Linington _v._ Strong, 107 Ill. 295, we find
this language: “The doctrine is well settled that as a rule a party
guilty of fraudulent conduct shall not be allowed to cry ‘negligence’
as against his own deliberate fraud.... While the law does require of
all parties the exercise of reasonable prudence in the business of
life, and does not permit one to rest indifferent in reliance upon the
interested representations of an adverse party, still, as before
suggested, there is a certain limitation to this rule; and, as between
the original parties to the transaction we consider that, when it
appears that one party has been guilty of an intentional and
deliberate fraud by which to his knowledge the other party has been
misled or influenced in his action, he cannot escape the legal
consequences of his fraudulent conduct by saying that the fraud might
have been discovered had the party whom he deceived exercised
reasonable diligence and care.” See Griffin _v._ Roanoke R. & Lumber
Co., 140 N. C. 514, 53 S. E. 307, 6 L. R. A. (N. S.) 463.[367]

S. PEARSON & SON, LIMITED, _v._ LORD MAYOR OF DUBLIN
IN THE HOUSE OF LORDS, MAY 30, 1907.
_Reported in [1907] Appeal Cases, 351._

The Dublin Corporation having by their agents furnished the appellants
with plans, drawings, and specifications, the appellants contracted to
execute certain sewage outfall works according to the plans, &c. In
the plans, &c., representations were made as to the existence and
position of a certain wall. In the contract (clauses 43, 46, 47, 48)
it was stipulated that the contractor should satisfy himself as to the
dimensions, levels and nature of all existing works and other things
connected with the contract works; that the corporation did not hold
itself responsible for the accuracy of the information as to the
sections or foundations of existing walls and works; and that no
charges for extra work or otherwise would be allowed in consequence of
incorrect information or inaccuracies in the drawings or
specifications. The appellants performed the contract, and brought an
action of deceit against the corporation, claiming damages for false
representations as to the position, dimensions and foundations of the
wall, whereby the appellants were compelled to execute more costly
works than would otherwise have been required. The plans, drawings and
specifications were prepared by engineers employed by the
corporation.[368]

[At the trial before PALLES, C. B., the plaintiffs offered evidence
tending to show that the aforesaid representations were not sincerely
believed by the engineers to be true.] PALLES, C. B., refused to leave
any question to the jury, and entered judgment for the respondents on
the ground that the contractors were bound by their contract to verify
for themselves all the information given in the plans, &c.

The King’s Bench Division (Wright, Boyd, and Gibson, JJ., Lord
O’Brien, C. J., dissenting) reversed the decision of Palles, C. B.,
and entered judgment for the appellants on the ground that there was a
question of fact for the jury upon the allegation of fraud.

The Court of Appeal (Sir Samuel Walker, L. C., Fitzgibbon and Holmes,
L.JJ.) reversed that decision, and restored the decision of Palles, C.
B.

Plaintiff appealed to the House of Lords.

The House of Lords (LORDS LOREBURN, HALSBURY, ASHBOURNE, MACNAGHTEN,
JAMES OF HEREFORD, ROBERTSON, ATKINSON, and COLLINS) reversed the
order of the Court of Appeal, and restored the judgment of the King’s
Bench Division. Portions of the opinions are as follows:—

LORD LOREBURN, L. C.... Now it seems clear that no one can escape
liability for his own fraudulent statements by inserting in a contract
a clause that the other party shall not rely upon them. I will not say
that a man himself innocent may not under any circumstances, however
peculiar, guard himself by apt and express clauses from liability for
the fraud of his own agents. It suffices to say that in my opinion the
clauses before us do not admit of such a construction. They
contemplate honesty on both sides and protect only against honest
mistakes. The principal and the agent are one, and it does not signify
which of them made the incriminated statement or which of them
possessed the guilty knowledge.

* * * * *

EARL OF HALSBURY.... The action is based on the allegation of fraud,
and no subtilty of language, no craft or machinery in the form of
contract, can estop a person who complains that he has been defrauded
from having that question of fact submitted to a jury....

LORD ASHBOURNE.... [As to clause 43.] Such a clause might in some
cases be part of a fraud, and might advance and disguise a fraud, and
I cannot think that on the facts and circumstances of this case it can
have such a wide and perilous application as was contended for. Such a
clause may be appropriate and fairly apply to errors, inaccuracies,
and mistakes, but not to cases like the present....

LORD JAMES OF HEREFORD.... Now the learned Chief Baron in respect of
this clause expressed the opinion that the contractor was not entitled
in point of law to say he acted upon the statement contained in the
plans. He was told to act upon his own judgment, and ought to have
done so.

If this dictum be read as general in its terms, and so applied, it may
be read as conferring considerable advantage upon the designers of
fraud. At any rate, by inserting such a clause those who framed it
would run a fair chance of the contractor saying, “I assume that those
with whom I deal are honest and honorable men. I scout the idea of
their being guilty of fraud. An inquiry testing the plan will be
expensive and difficult, and so I will not make it.” The protecting
clause might be inserted fraudulently, with the purpose and hope that,
notwithstanding its terms, no test would take place. When the fraud
succeeds, surely those who designed the fraudulent protection cannot
take advantage of it. Such a clause would be good protection against
any mistake or miscalculation, but fraud vitiates every contract and
every clause in it. As a general principle I incline to the view that
an express term that fraud shall not vitiate a contract would be bad
in law, but it is unnecessary in this case to determine whether
special circumstances may not create an exception to that rule.

* * * * *

LORD ATKINSON.... If, therefore, the _direction_ given to the jury is
to be upheld on the grounds upon which it was purported to be based,
it must, in my opinion, be because these several articles of the
contract, on their true construction, are to be held to embody a
contract by the plaintiffs that they in effect are not, under any
circumstances, to have a remedy by action for deceit for any fraud
which may be practised upon them by the defendants or by those acting
on their behalf in the nature of a false representation, that is a
contract to submit to a fraud.

As at present advised I am inclined to think, on the authority of
Tullis _v._ Jacson, [1892] 3 Ch. 441, and Brownlie _v._ Campbell,
(1880) 5 App. Cas. 925, 937, 956, that such a contract would be
illegal in point of law. And, with the most profound respect for the
Chief Baron, I do not think that the articles of the contract relied
upon can, on their true construction, be held to have had fraud,
whether conscious or unconscious, within their purview or
contemplation, or to apply at all to such a case of fraud as the
present is alleged to be. They were, I think, intended to apply, and
do apply, to inaccuracies, errors, and mistakes, or matters of that
sort, but not to fraud, whether of principal or agent, or of both
combined.[369]

* * * * *