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(146 Md. 137, 126 Atl. 229.)

timony appears to have been a policy writing agent of the insurance company, and in some undisclosed way to have been connected with the Finance & Guaranty Company, and the draft after Councill had indorsed it was left with him for that company, and by it indorsed to the Auto Mart Company. Although it had been paid $100 more than its estimate, that company failed to properly repair the machine, and Cowan finally took it out of its hands and employed Fred S. Orn to complete the repairs. He did work on it which he valued at $418, and finally sent a bill for that amount to Councill, who refused to pay it, because he had never employed Orn, and had never authorized any one else to employ him. Orn then sold the car for his bill, and notified Council that, after deducting from the proceeds of the sale his repair bill, storage, insurance, and other incidental expenses, together aggregating $589.75, there was a balance of $19.25, which he was ready to pay to Councill, or to Cowan, on the request of both. Councill, however, declined to accept that amount, but demanded that the insurance company reimburse him for the loss he had sustained through its failure to repair his motor car. That company, however, very courteously, but very firmly, disclaimed any further responsibility, and in consequence the appellant instituted this suit to recover the loss which he claimed to have sustained through the appellee's failure to make such repairs.

Briefly restated, free from obscuring detail, the essential facts are these: The appellant was insured by the appellee against the loss of his motor car by theft. It was stolen and recovered in a badly damaged condition. The insurance company took possession of the machine, and made a contract with the Auto Mart Company to have it repaired. Before it was repaired they induced the appellant to sign a proof of loss, to accept a draft, and to sign a release by promising that, if he

did accept the draft and sign the release, it would see that the car was repaired. The draft and release referred to were in the following form:

"At sight, pay to the order of Dr. W. A. Councill and Finance & Guaranty Co. five hundred thirty and no/100 dollars, being in full for all demands and in release of all claims or rights of action against said company for loss or damage by theft on the 15th day of Feby., 1921, to property insured under policy No. 45,392 -Ctf. 1191 of New York City. . .

"Received of the Sun Insurance Office of London by sight draft the sum of five hundred thirty and no/100 dollars ($530.00), being in full satisfaction of all claims for loss or damage by theft on the 15th day of Feby., 1921, under policy No. 45,392-Ctf. 1191 of the Sun Insurance Office, issued at the New York City agency of the said company, and in consideration of said payment the said company is hereby released and discharged forever from all further claims by reason of said theft and the said policy is hereby reduced in amount of $530. ceipts are signed in duplicate."

Re

After the draft and release had been signed the appellee took the car from the Auto Mart which had al

ready been paid by the draft for repairing it, and employed Orn to complete the repairs. When he did so it failed to pay him, and the car was sold to pay the bill.

In connection with these facts the following provisions of the policy referring to the rights and privileges of the company in the event of a loss must be considered: "It shall be optional with this company to take all or any part of the property at such ascertained or appraised value and also to repair, rebuild, or replace the property lost or damaged with other of like kind and quality within a reasonable time, on giving notice within 30 days after the receipt of sworn statement of loss. herein required of its intention so to do; but there can be no abandon

ment to this company of the property described."

The plaintiff declared on the six common counts in assumpsit, and one special count on defendant's alleged contract to repair, and he subsequently filed an additional special count, whereupon the defendant demurred to each count of the amended narr. While it does not appear that the court acted on that demurrer, the subsequent proceedings indicate that it was overruled. Since the propriety of that ruling was not questioned in this court, it is sufficient to say that in our opinion the several counts in the declaration each sufficiently states a cause of action, and we fully concur in the ruling of the lower court on the demurrer.

This brings us to the exceptions. The first relates to the exclusion of a letter written by plaintiff's counsel to the appellee, but as the letter does not appear in the record it is impossible for us to say whether the appellant was injured by that ruling, or to assume that it was

Appeal-exclusion of evidence-nonappearance in record.

erroneous.

The second exception which was taken to the action of the lower court in striking out all testimony relating to the appellee's contract to repair the appellant's automobile may be considered in connection with the third, which relates to the court's action in granting the defendant's prayer to take the case from the jury, on the ground that there was no evidence in the case legally sufficient to entitle the plaintiff to recover.

In support of those rulings the appellee submits these propositions: (1) That parol evidence was inadmissible to show that when the plaintiff signed the draft and release the appellee undertook in addition to paying the $530 to repair the automobile; (2) that there was no evidence in the case legally sufficient to show that the appellee had at any time elected to repair the car; and

(3) that such an election was not within the scope of the policy, and that therefore Cowan, as a mere agent for adjustment, had no power to bind the company by such an election. election. For convenience we will deal with these questions in inverse order.

As already pointed out, the policy itself gave the appellee the right to elect to "repair, replace, or rebuild" the property lost, and without further elaboration that is a sufficient answer to the contention that such an election was not within the scope of the policy. of the policy. Cowan was an adjuster for the company, clothed with apparent authority to adjust or settle the plaintiff's claim, and as an election to repair Insurance-pow

was one form of set- er of adjuster to repair. tlement, or adjustment reserved to the insurance company by the policy, he had the power to make such an election.

Trial-question

car.

Nor does the contention that there is no evidence in the case legally sufficient to show that the insurance company did elect to repair the car present any difficulty. The letter of the insurance company, upon which some reliance seems to be placed, is in some respects in conflict with other testimony as to whether an election was in fact made by the company, but that for jury-elecconflict is a question tion to repair for the jury and not for the court. Baltimore Consol. R. Co. v. Pierce, 89 Md. 495, 45 L.R.A. 527, 43 Atl. 940, 6 Am. Neg. Rep. 539. The evidence shows that after the car was stolen Cowan, the company's agent, took full charge and possession of it, that he gave the work of repairing it to the Auto Mart Company, and that he afterwards took it from that company, and employed Orn to complete the repairs, and too that the appellant at no time either made any contract himself for the repair of the car, or authorized any one else to do so for him, or recognized or ratified any contract for its repair. Certainly

Evidence-of

(146 Md. 137, 126 Atl. 229.)

from those facts it may be inferred that Cowan, as the election to re- insurance compapair automobile. ny's agent, elected to repair the car instead of paying Council in money for his loss. Whether these facts are so, we do not of course decide, since we only deal with them in connection with a prayer which concedes them. Whether the clause in the policy allowing the company to make such election was made for its benefit, as appellee contends, or for the benefit of the insured, is wholly immaterial, since the inquiry here is directed not to the reason for the power but to its existence.

This brings us to the proposition that parol evidence was inadmissible to show that, when the appellant signed the receipt and release and indorsed the draft, the insurance company agreed to repair the automobile in addition to paying the $530. Strictly speaking, that proposition does not present the legal question arising from the facts adverted to, because the evidence was not offered to show that the promise was to repair in addition to paying the $530, but rather an undertaking to see that the contract made by the company for the repair of the motor car for which the money was paid was fully performed. At the time the draft was given, the insurance company was indebted to the Auto Mart Company, under the repair contract it had made with it, and it was interested in seeing that the draft was applied to the payment of that indebtedness. So far as Councill was concerned, however, the Auto Mart Company was paid for work to be done in the future, under a contract to which he was not a party, and he was interested in seeing that the insurance company compelled its performance. And the evidence was offered not to show that the company agreed to pay $530, and repair the car, but that it agreed to see that the car was repaired for the $530.

No rule is more firmly established

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ing instrument.

rule, in cases where the execution of a written instrument has been induced by false or fraudulent statements or promises, does not prevent the introduction of -to show evidence showing fraud in secursuch facts in any action on the instrument, because such evidence is not offered to vary or to contradict the instrument, but to destroy it, and cases dealing with evidence which, while conceding the. validity of such an instrument, nevertheless is offered to contradict or vary it, are parallel to the question.

The evidence in this case is that when the release and receipt were signed the repairs to the car which constituted the real consideration for the release were not completed, and that, to induce him to sign the release and receipt and to accept the draft, the company agreed to see that the repairs were completed; that is, the draft was not a money settlement of Councill's loss, but in payment of an indebtedness under a contract for the repair of his car, which the insurance company itself had made, and which it undertook to see performed.

It may be inferred from the evidence that at the time it made that promise it never intended to perform it, but made it merely to induce the appellant to execute the release. Whether under such circumstances that promise amounted to a fraud is a question upon which there is much confusion and conflict in the authorities, but, in our opinion, reason and justice, as well as the trend of the best-considered cases, support the proposition that a false promise, not intended to be per- in promise. formed, but made

-to show fraud

to trick and deceive another into the execution of a written instrument, is a fraud, and may in any action on

the instrument be shown by any competent evidence, whether oral or documentary. It is true that in a sense a promise to do some act or refrain from some act in the future may establish a merely contractual relation, but where it is made with a fraudulent design to induce the promisee to do something he would not otherwise have done, it is more than that, it is a misrepresentation of the promisor's state of mind, which may be, and in a case such as that before us is, a very material thing. The insurance company had made the contract for repairs, but that contract had not been completed. It was in a position to compel its completion if it wished to do so. Whether it was willing to do so was therefore a material fact. In dealing with a somewhat similar question, Bowen, L. J., in Edgington v. Fitzmaurice, L. R. 29 Ch. Div. 483, said: "But when we come to the third alleged misstatement I feel that the plaintiff's case is made out. I mean the statement of the objects for which the money was to be raised. These were stated to be to complete the alterations and additions to the buildings, to purchase horses and vans, and to develop the supply of fish. A mere suggestion of possible purposes to which a portion of the money might be applied would not have formed a basis for an action of deceit. There must be a misstatement of an existing fact; but the state of a man's mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man's mind at a particular time is, but if it can be ascertained it is as much a fact as anything else. A misrepresentation as to the state of a man's mind is therefore a misstatement of fact."

And in 3 Williston on Contracts, § 1496, that learned and careful author says: "It is frequently said that a promissory statement cannot be the basis of an action for deceit, and a prediction of future events is at best a statement of opinion. It

is undoubtedly true that failure to perform a promise cannot amount to fraud. And in many jurisdictions, without consideration of the question whether a promise was made with an intention not to perform it, it is held that the making of the promise cannot be an actionable fraud. It has been pointed out, however, that, when a promise is made with intention not to perform it, the promisor is guilty of misrepresentation. And in a number of cases, generally of recent date, the doctrine doctrine seems broadly accepted that a promise which the promisor does not intend to carry out may be a misstatement of material fact."

In a very exhaustive note to Cerny v. Paxton & G. Co. 10 L.R.A. (N.S.) 646, in connection with the authorities referred to, the annotator says: "The position taken in Cerny v. Paxton & G. Co. 78 Neb. 134, 10 L.R.A. (N.S.) 640, 110 N. W. 882, that an apparent exception to the general rule is that, if the intention not to perform exists when the promise is made, the promise is fraudulent, has strong support in the authorities; but the courts are divided on that question, some refusing to make any exceptions to the rule."

And the position thus stated is in principle, we think, supported by the decisions of this court. Price v. Read, 2 Harr. & G. 291; Adams v. Anderson, 4 Harr. & J. 558. And without going to the extent of holding that as a general rule a contemporary parol agreement to do or give something in addition to the consideration named in a written contract may be shown, in our opinion, where such an agreement was made in the execution of a design to induce the execution of the written agreement by parol promises not intended to be performed, it may be shown by oral testimony as evidence of fraud; for to hold that under such circumstances such evidence was not admissible would be to subvert a rule of law intended to pre

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October 21, 1926.

(140 Wash. 581, 250 Pac. 34.)

Fraud, § 22 representation by vendor as to possibilities of machine. 1. Representations by a vendor of a popcorn machine that he has investigated the possible trade to be secured for the product, and his assertion, based on his experience in such matters, that it will produce a specified sum per month above expenses, if untrue, are actionable. [See annotation on this question beginning on page 46.] Sale, § 1 cloak for fraud. 2. Provisions in a contract for sale of merchandise, that the order is not subject to countermand and does not depend for its validity upon any con

condition in contract not

dition not set forth therein, and that no representation shall have any force unless contained in the order, cannot be used as a cloak for fraud.

[See 10 R. C. L. 1058; 6 R. C. L. Supp. 636.]

Messrs. McCarthy, Edge, & Lantz, for respondents:

APPEAL by plaintiff from a judgment of the Superior Court for Spokane County (Webster, J.) in favor of defendants in an action brought to recover the amount alleged to be due on a promissory note. Affirmed. The facts are stated in the opinion of the court. Mr. E. H. Belden, for appellant: Representations, to be actionable, must relate to existing material facts, and not to future expectations. judgment, however gross, or want of caution in the making of statements, however marked, is not fraud.

Mis

Kimball v. Bangs, 144 Mass. 321, 11 N. E. 113; Jackson v. Collins, 39 Mich. 557; 20 Cyc. p. 49; West Seattle Land & Improv. Co. v. Herren, 16 Wash. 665, 48 Pac. 341; Davis v. Masonic Protective Asso. 94 Wash. 406, 162 Pac. 516; Kirkland v. Dressel, 104 Wash. 668, 177 Pac. 643.

The provision in the contract, to the effect that "no agreement, representation, or claim of any kind shall be of any force" unless contained therein, did not preclude oral evidence of fraudulent representations.

Producers Grocery Co. v. Blackwell Motor Co. 123 Wash. 144, 212 Pac. 154; Flint v. Owl Land & Invest. Co. 122 Wash. 401, 210 Pac. 811; Dieterich v. Rice, 115 Wash. 365, 197 Pac. 1; Schroeder v. Hotel Commercial Co. 84 Wash. 685, 147 Pac. 417.

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