that it is a fundamental principle of law, as well as of morals, public policy, and fair dealing, that a party cannot contract against liability for his own fraud; that fraud which enters into the making of the contract cannot be excluded from the reach of the law by any form of phrase inserted in the contract itself; that parties cannot by written words prevent the law from inquiring into and granting relief for fraud in the substance of the contract.

See also GANLEY BROS. v. BUTLER BROS. BLDG. CO. (reported herewith), in which the court observes that the law does not permit a covenant of immunity to be drawn that will protect a person against his own fraud; that language is not strong enough to write such a contract, fraud destroying all consent. Discussion of the principles involved will be found in quotation from this decision in note 89, infra.

53 Where the defense to an action on a written contract is fraudulent representations of the plaintiff's agent inducing the same, the fraud, when established, vitiates and destroys the contract, and the restrictive stipulations in the contract fall with it, so that the admission of parol evidence to show the fraud is not objectionable on the ground that it varies the terms of the written order, notwithstanding the same contains a clause limiting the authority of the agent. J. I. Case Threshing Mach. Co. v. McKay (1913) 161 N. C. 584, 77 S. E. 848.

So, to the effect that fraud in that the agent of one of the parties to a contract misrepresented the contents of the paper writing witnessing the agreement may be shown by parol evidence, in order to avoid the effect of the contract, in an action by the principal to enforce it, notwithstanding the contract contains a stipulation that it cannot be countermanded, since fraud vitiates everything, the stipulation indicated as well as the rest of the contract, is Brenard Mfg. Co. v. Pearson (1925) 213 Ala. 675, 106 So.

171.

And it is held in Alabama Machinery & Supply Co. v. Caffey (1925) 213 Ala, 260, 104 So. 509, that a stipulation in a written contract (for the sale of personal property) that there are no verbal understandings not incorporated therein does not estop a party to set up fraud in verbal misrepresentations inducing the contract; the

court observing that fraud vitiates the contract as a whole, and that the law does not countenance a contract against the consequences of fraud.

It is said in Loyless v. Hesse Envelope & Lithographing Co. (1912) 10 Ga. App. 660, 74 S. E. 90, that misrepresentation of an agent in procuring a contract may amount to fraud upon the purchaser, and a plea setting up these facts would be a good defense to an action brought upon the contract, and evidence in support of such a plea would be admissible, notwithstanding the fact that the contract stipulates that no other representations except those contained therein would be binding on the seller.

The rule is laid down in Simpson v. J. I. Case Threshing Mach. Co. (1918) 170 N. Y. Supp. 166, a case of sale of personal property, that misrepresentations or suppressions with reference to material facts may be shown by parol evidence in an action to rescind a contract for fraud, although the written contract provides that no representations contrary to the terms of the contract shall be binding.

That fraud on the part of an agent in the procurement of a written contract of sale may be shown by parol evidence, notwithstanding a provision of the contract that no representation made by any person as an inducement to give the order should bind the company, is supported by the conclusion reached also in J. I. Case Threshing Mach. Co. v. Feezer (1910) 152 N. C. 516, 67 S. E. 1004, in which the view was taken that, when the contract fails because of fraud, its stipulations are no longer available. It was said that to hold the contrary would be to strengthen the principle that the deeper the guile the greater the immunity, and enable fraud by its own contrivance so to intrench itself that its position would in many instances be practically unassailable. The question of the effect of the parol-evidence rule, however, is not discussed.

To a similar effect is Miller v. Howell (1922) 184 N. C. 119, 113 S. E. 621, where, in an action on notes given for the purchase price of a stock food, the court, speaking with reference to the effect of a provision of the contract of sale that the defendant "would adhere and be strictly bound by its terms, and releasing the vendor from any verbal agreements or conditions not men

merous applications of these principles will be found in other parts of the annotation.54

It has been said that the law is so

tioned on the face of the order," said: "As pointed out in some of our decisions on the subject, restrictions of this character may be made effective where they appear in a written agreement which abides as the contract of the parties and is controlling in the controversy between them, but they are not allowed to prevail on an issue of fraud involving the validity of the contract itself, and the statements of the agent are offered as tending to show false and fraudulent representations inducing the contract and pertinent to such an issue."

It was unsuccessfully contended in Hubert v. Apostoloff (1921; D. C.) 278 Fed. 673 (affirmed in (1922; C. C. A. 2d) 285 Fed. 161), that, when a contract states that it is made under representations therein expressed, other representations cannot be alleged, in the absence of proof that a party was deceived as to the contents of the contract or otherwise prevented from ascertaining the same, the court saying that it had been decided that a contract procured by fraud is void, and that one is not estopped from setting forth the truth by anything contained in the contract itself.

And in Hofflin v. Moss (1895) 14 C. C. A. 459, 32 U. S. App. 200, 67 Fed. 440, without specifically discussing the effect of the parol-evidence rule, the court takes the view that false and fraudulent representations made by one party to a contract, by which the other party is induced to enter into it, render it voidable, at the election of the defrauded party; and that a stipulation in such a contract, to the effect that the false and fraudulent representations by which the one party induced the other to enter into it do not affect its validity, as it is itself of no validity; that no one can be estopped by anything contained in an instrument which instrument is in itself obtained by fraud and deceit; and the law will not give effect to a stipulation intended to grant immunity to iniquity and fraud. The case was one of a contract for advertising, which contained a provision that no representation, understanding, or agreement not in the contract, should bind either party unless in writing and signed by

diligent in discovering fraud, and relieving against its consequences when relied on as a defense, that an admission by the vendee that there was no both parties, as the instrument was a complete agreement of the parties thereto. The court took the position that this clause expressed no more than the law would imply without it, and held that, if the plaintiff was guilty of fraud consisting in false representations which induced the defendant to enter into the contract sued on, the stipulation would not preclude the defense of fraud on which the defendant relied, and that a demurrer to the answer had been erroneously sustained.

Attention is called, also, to Strand v. Griffith (1899) 38 C. C. A. 444, 97 Fed. 854, which relies on the Moss Case (Fed.) supra, and supports the same rule, but which does not consider particularly the effect of the parolevidence rule. The contract in this instance for the sale of merchandise by the defendants to the plaintiff declared that the merchandise had been fully inspected by the plaintiff, and that he accepted the same in the condition in which it then was, and waived all claims for damages to the goods, shortages, etc. But it was held that such a stipulation did not estop the buyer from claiming that he had not examined the goods, and asserting a right to damages for fraudulent misrepresentations regarding the condition of the same and their wholesale value.

See also in Western Mfg. Co. v. Cotton (1907) 126 Ky. 749, 12 L.R.A. (N.S.) 427, 104 S. W. 758, in which it was held that the words, "Read this," and "I have read this contract, have had delivered to me by your salesman a copy of same, and this is all of the contract between us," conspicuously printed upon the face of the contract, did not prevent setting aside the contract for fraud in securing its execution, where the party sought to be charged did not read the contract, but relied on a false reading by the agent, who did not call attention to such words. The question of the effect of failure of a party to read the contract is, however, as already indicated, beyond the scope of the annotation.

54 See notes 84, 87, 89, 91, 114, 119, 144-149, and 153, infra.

fraud in the sale, even when there has been an independent investigation by him of the property, will not prevent him from showing fraud that was present in the making of the contract and was unknown to him at the time.55

It has been held, however, that prior misrepresentations regarding the guaranty which the written contract of sale would contain, made by the seller's agent, cannot be relied on so as to invoke the principle enabling one to avoid a contract for fraudulent misrepresentations, where the subsequent contract was entered into freely and knowingly by the purchaser, without any fraud or concealment in its procurement, and contained provisions to the effect that the entire contract of the parties was embodied therein, and that the seller would not be bound by any agreement or representations not specified therein.56

The Georgia court in several cases seems to take a minority view as to the effect of such stipulations in a written contract, the cases dealing with this phase of the subject being generally contracts for the sale of personal property, and being set out in another connection. Some of these decisions may be explainable on the ground of fail

-

55 Omar Oil & Gas Co. v. Mackenzie Oil Co. (1926) Del. —, 138 Atl. 392. 56 Tockstein v. Pacific Kissel Kar Branch (1917) 33 Cal. App. 262, 164 Pac. 906. It is not clear in this instance that the prior representations were actually fraudulent. Regarding this case it is said in Mooney v. Cyriacks (1921) 185 Cal. 71, 95 Pac. 922: "The alleged fraudulent misrepresentations in that case were as to what the seller (the defendant) would guarantee in respect to the car which was the subject of the sale. But the plaintiff actually bought the car under a written contract which did not contain these guaranties which it had been represented to the plaintiff would be made, and which also expressly provided that there were no guaranties other than those set forth. The case was one, therefore, where the alleged fraudulent misrepresentations went to the character of the contract which the plaintiff was to receive. She very evidently could not recover in such a case unless she had been deceived into ac

ure of the purchaser to read the written contract, or on grounds already noted in cases of negotiations which were regarded as preceding, and not entering into, the written agreement.57

A distinction has been made in Massachusetts between cases of fraud which enters into the execution of the contract and cases of antecedent fraud or fraud in the negotiations leading up to the signing of the contract, as regards the effect of stipulations purporting to negative extrinsic representations by the agent of one of the parties in procuring the contract. But the fact that the misrepresentations are made by an agent is not apparently a material part of the doctrine, and it is not clear but that the same results might be reached even without special contract stipulations. Thus, there are various cases in that state to the effect that a party to a written contract which contains such provisions as that verbal conditions made by agents will not be recognized, that agents are without authority to make any representations not contained therein, etc., is precluded from proving fraudulent misrepresentations of the agent inducing the contract, which do not relate to its execution.58 But cepting the contract, which she did receive in lieu of that which she expected to receive, and this is all that the case decides."

The special provisions of the contract in the Tockstein Case (Cal.) supra, were regarded in a subsequent case in the same state (Yuba Mfg. Co. v. Stone (1919) 39 Cal. App. 440, 179 Pac. 418) as not adding anything to the effect of the written agreement which the law would otherwise regard as complete in itself. See these cases also in notes 28 and 29, supra.

57 See Georgia cases set out in annotation in 10 A.L.R. 1472; also notes 26-28, supra, and note 148, infra.

58 Generally as to a possible distinction between fraud in the inducement or consideration of the contract and fraud in its execution, as regards the present subject, see notes 25-29, supra.

In Eastern Adv. Co. v. E. L. Patch Co. (1920) 235 Mass. 580, 127 N. E. 516, it was held that a party to a contract by which he agreed to take ad

it has been held that fraud which enters into the making of a contract,

vertising space in street cars was precluded by the terms of the written agreement, in an action thereon, from showing that the plaintiff's agent induced him to sign the contract by representing that, although the plaintiff would not insert such a clause in the contract, the defendant would have a right to cancel the contract at any time it found the advertising unprofitable, on thirty days' notice, even if such representations were made for the purpose of defrauding the defendant, without any intention of performing them. The contract provided that no verbal conditions made by agents would be recognized, and that every condition must be specified on the face of the contract. It was said that, if the plaintiff's agent, acting honestly, intending to keep the promise, agreed that the contract should be canceled on thirty days' notice, it was not shown that he had authority to make such an agreement, and that if it were known when the terms were made that it would not be fulfilled and it was made for the purpose of deceiving the defendant, the express stipulations of the written contract were to govern, and the plaintiff was not to be held by the parol representations of the agent; and that, as the evidence offered by the defendant was inadmissible, it was unnecessary to consider whether the statements of the agent were of such a nature that the defendant could rely upon them as fraudulently made.

And where a contract for the sale and purchase of real estate contained the statement: "Do not sign this agreement without reading. No agent . . . has authority to make any representations or agreements not contained in this contract. This agreement is made under inducements and representations herein expressed, and no other," -it was held in O'Meara v. Smyth (1922) 243 Mass. 188, 137 N. E. 294, that, in an action by the vendor against the vendee on the contract, it was not a defense that the contract had been induced by false representations as to the nature and quality of the property, contained in prior advertisements of the plaintiff, or by false, material representations made by the plaintiff's agent, in the absence of evidence that the defendant was induced to sign the contract by misrepresenta

as distinguished from that which is antecedent to it, cannot be excluded tions of its contents or meaning, or that any material statement therein was not true. The court said that it was not affirmatively shown that the defendant read the agreement before signing it; but whether he did or not, in the absence of fraud, he was assumed to have assented to all the provisions thereof and agreed to be bound by its terms; that the representations relied on were antecedent to the making of the contract, and did not enter into it, and were therefore no defense.

Also in Boss v. Greater Boston Mortg. Corp. (1925) 251 Mass. 455, 146 N. E. 686, it was held that one who subscribed for stock in a mortgage corporation was precluded by the terms of the written contract from rescinding the same on the ground that it had been induced by fraud and false pretenses on the part of the agent of the corporation, consisting in representations as to what the company would do for the plaintiff in case he became a stockholder, when the contract provided that it was expressly agreed that no salesman or agent had authority to make any representation or agreement not contained therein, or in any wise affect the validity of the contract, and that all statements were merged and set forth in the contract.

The rule that a party to a written contract may be precluded by its express provisions from relying on antecedent fraudulent misrepresentations of the other party's agent inducing the contract, either as a defense to an action on the contract or as a ground for an independent action for deceit, was applied in Colonial Development Corp. v. Bragdon (1914) 219 Mass. 170, 106 N. E. 633, where a contract to purchase real estate from a corporation contained a provision: "No agent of this company has authority . . to make any reference, representation, or agreement not contained in this contract, and none not contained herein shall be binding upon the seller, or in any wise effect [sic] the validity of this contract or form any part thereof, but all statements made have been merged and set forth herein." In actions by the vendor against the vendee on the contract, and by the latter for deceit, the court held that evidence was improperly admitted to show that the vendee was induced to

from the reach of the law by any form of phrase inserted in the contract itself; that parties may stipulate by their contract that the statements inducing its execution are all included in its recitals, and that no agent has authority to make any representations

sign the contract by reason of false material representations knowingly made by agents of the vendor as to the lots sold, being part of a tract cut and laid out in streets, as to there being substantial buildings upon other parts of the tract, the immediate availability of the land for building and occupancy, and distance from a railroad station. It was said: "The question is whether these facts and findings constitute a defense to an action on this contract. The representations plainly were fraudulent in their nature, and, apart from the paragraph of the contract quoted at length, would invalidate any agreement made in reliance upon them. But the parties chose, after all the preliminary statements and negotiations were ended, to put the contract in writing. It is not contended that the defendant was induced to sign that contract through any misrepresentation as to its contents or meaning. On the contrary, his own evidence was that, before signing, he read it through and understood its terms. One of those terms, to which he himself assented, was that no agent of the plaintiff had any authority to make any representations not contained in the contract. Further stipulations, to which he likewise assented, were, in substance, that every representation to which he would undertake to hold the seller was written in the contract, and every statement upon which he relied was set out in it. He intentionally and intelligently, without any trick, mistake, duress, covin, or fraud as to its contents, signed this written contract, which was plain in its phraseology. In the light of the evidence and findings of the jury, it was a most unwise agreement for him to make. But he made it freely, when he knew what he was about. It is a fundamental principle of law that contracts in writing voluntarily executed with full knowledge of their contents by rational beings acting on their own judgment must be enforced. The defendant relies on the proposition that fraud vitiates every contract. But there is a distinction between a fraud 56 A.L.R.-5.

not therein contained; but that they cannot by written words prevent the law from inquiring into, and granting redress for, fraud which enters into the very substance of the contract itself.59 The same conclusion, also, as to antecedent fraud, was reached in a which is antecedent to a contract, and fraud which enters into the making of the contract. The present case belongs to the former class. It constitutes no defense to an action on this contract. Nor does it afford ground for an independent action."

And in International Textbook Co. v. Martin (1915) 221 Mass. 1, 108 N. E. 469, where the written contract sued on contained a statement, "Do not sign this subscription without reading it. . . . Agents are not authorized to change its conditions,”-it was held that the defendant could not prove alleged false and fraudulent representations of the plaintiff's agent, inducing the execution of the contract, as to the meaning thereof, in that it was contended that the agent falsely represented that the payments (for a course of study in a correspondence school) need not be made if the course were discontinued.

So, in Cannon v. Burrell (1907) 193 Mass. 534, 79 N. E. 780, it was held that a merchant who ordered goods from a salesman was precluded by the terms of the contract, in an action by the seller for the price of the goods, from showing an alleged false oral representation of the seller's agent, inducing the execution of the contract, that he would be given the exclusive sale of the goods in that vicinity. The contract for the goods stated that they were ordered "in accordance with all the terms above specified; which we have carefully read and find it to be complete and satisfactory. We have no agreement or understanding with salesman except as printed or written on this order," and it was further provided in the contract that "separate verbal or written agreements with salesmen are not binding" on the seller, and that "all conditions of sale must be shown on this order, this sale being made under inducements and representations herein expressed, and no others."

59 Butler v. Prussian (1925) 252 Mass. 265, 147 N. E. 892. This rule was applied in a case involving the conditional sale of an automobile