Obrázky stránek
PDF
ePub

or existing fact, viz., that, if the representation consists merely of a promise or a statement as to a future event, it will not serve as a basis for fraud, even though it was made under circumstances as to knowledge and belief which would give rise to an action for fraud had it related to an existing or past fact. The question of fraudulent intent is considered subsequently in the annotation, and it will be noted

Wright (1885) 64 Wis. 289, 25 N. W. 10; Sheldon v. Davidson (1893) 85 Wis. 138, 55 N. W. 161; Tufts v. Weinfeld (1894) 88 Wis. 647, 60 N. W. 992; Warner v. Benjamin (1895) 89 Wis. 290, 62 N. W. 179; Spence v. Geilfuss (1895) 89 Wis. 499, 62 N. W. 529; Louis F. Fromer & Co. v. Stanley (1897) 95 Wis. 56, 69 N. W. 820; Krouskop v. Krouskop (1897) 95 Wis. 296, 70 N. W. 475; Field v. Siegel (1898) 99 Wis. 605, 47 L.R.A. 433, 75 N. W. 397; Horton v. Lee (1900) 106 Wis. 442, 82 N. W. 360; Milwaukee Brick & Cement Co. v. Schoknecht (1901) 108 Wis. 457, 84 N. W. 838; Hubbard v. McLean (1902) 115 Wis. 9, 90 N. W. 1077 (recognizing rule); Urwan v. Northwestern Nat. L. Ins. Co. (1905) 125 Wis. 349, 103 N. W. 1102; J. H. Clark Co. v. Rice (1906) 127 Wis. 451, 106 N. W. 231, 7 Ann. Cas. 505; James Music Co. v. Bridge (1908) 134 Wis. 510, 114 N. W. 1108; Jones v. Brandt (1921) 173 Wis. 539, 181 N. W. 813 (recognizing rule); Industrial Coop. Union v. Lewis (1921) 174 Wis. 466, 182 N. W. 861; Jeleniewski v. Eck (1921) 175 Wis. 497, 185 N. W. 540; Farmers' Co-op. Packing Co. v. Boyd (1922) 175 Wis. 544, 185 N. W. 234; Gauthier v. Atchison, T. & S. F. R. Co. (1922) 176 Wis. 245, 186 N. W. 619; Wells v. Talham (1923) 180 Wis. 654, 33 A.L.R. 827, 194 N. W. 36; Legler v. Tyler (1924) 184 Wis. 238, 199 N. W. 149; First Nat. Bank v. Hizer (1926) 189 Wis. 359, 207 N. W. 688. Wyoming. BUSHNELL V. ELKINS (reported herewith) ante, 13; First Nat. Bank v. Swan (1890) 3 Wyo. 356, 28 Pac. 743; Farmers' Lumber Co. v. Luikart (1927) — Wyo. —, 256 Pac. 84.

England. - Vernon v. Keys (1810) 12 East, 632, 104 Eng. Reprint, 246, affirmed in (1812) 4 Taunt. 488, 128 Eng. Reprint, 419 (representation as to intention of another); Jorden v. Money (1854) 5 H. L. Cas. 185, 10 Eng. Reprint, 868 (representation of

that there are many exceptions or limitations to this general rule, in cases where the promise or representation is made with an actual fraudulent intent.

The Federal Supreme Court has said that a promissory statement is not, ordinarily, the subject either of an indictment or of an action, and other courts have laid down similar rules regarding the right to predicate fraud on such statements.10

intention to abandon right); Feret v. Hill (1854) 15 C. B. 207, 139 Eng. Reprint, 400; Bold v. Hutchinson (1855) 5 De G. M. & G. 558, 43 Eng. Reprint, 986; Ex parte Wollaston (1859) 7 Week. Rep. 645; Citizen's Bank v. First Nat. Bank (1873) L. R. 6 H. L. 352; Bellairs v. Tucker (1884) L. R. 13 Q. B. Div. 562; Chadwick v. Manning [1896] A. C. 231. See also Re Hull & L. Life Assur. Co. (1858) 2 De G. & J. 275, 44 Eng. Reprint, 994; Denton v. Macneil (1866) L. R. 2 Eq. 352; Hallows v. Fernie (1868) L. R. 3 Ch. 467. Australia. Civil Service Co-op. Soc. v. Blyth (1914) 17 C. L. R. 601.

Canada. Kny-Scheerer Co. V. Chandler (1903) 2 Ont. Week. Rep. 215; Smythe v. Mills (1908) 17 Manitoba L. R. 349; Latus v. Beardsley (1909) Alberta, -, 10 West. L. R. 653; Gowganda-Queen Mines v. Boeckh (1911) 24 Ont. L. Rep. 293; Jackson v. People's Trust Co. (1912) 22 West. L. R. 325, 7 D. L. R. 384; Bergeron v. La Compagnie de Meubles de Jonquiere (1913) Rap. Jud. Quebec 22 B. R. 341; Kert v. Starland (1914) 24 Manitoba L. R. 832; Graver v. Morris (1916) 26 Manitoba L. R. 452; Dawson v. Quinlan & Robertson (1919) 15 Ont. Week. N. 352.

8 See III. infra.

Sawyer v. Prickett (1874) 19 Wall. (U. S.) 146, 22 L. ed. 105.

10 Statements of forecast, opinion, or expectation, which are in substance merely matters of inference, cannot be made the subject of a false representation. Greene v. St. Denis Soc. (1897; C. C.) 81 Fed. 64, appeal dismissed in (1898) 28 C. C. A. 682, 50 U. S. App. 493, 84 Fed. 1017.

Neither promises, prophecies, nor expressed opinions or beliefs concerning future events or conditions will sustain a rescission of a contract or a sale. Farwell v. Colonial Trust Co. (1906) 78 C. C. A. 22, 147 Fed. 480.

If the party who is in default for

It has been said that, were the rule otherwise, any breach of contract

failure to perform promises inducing the execution of a contract is not insolvent or unable to respond in damages, it is well settled that such failure to perform the promises is not a fraud authorizing a rescission or repudiation of a conveyance accomplished by means of the contract. Burton v. Platter (1893) 4 C. C. A. 95, 10 U. S. App. 657, 53 Fed. 901 (promises by assignee under assignment for the benefit of creditors, to keep up the stock and continue the business).

In Banque Franco-Egyptienne v. Brown (1888; C. C.) 34 Fed. 162, the court, in holding that no right of rescission could be founded upon the breach of promissory statements in a prospectus inducing the purchase of railway bonds, said: "Promissory statements may be made in terms which imply that a certain condition of things exists at the time, and forms the basis of the promised future state of things. When they are of this description, if they are intentionally false, they are fraudulent and form the basis of a right of rescission; but otherwise fraud cannot be predicated of promises not performed, for the purpose of avoiding a contract. Like untruthful expressions of expectation or opinion, even though when made they are made with intent to deceive, they are not fraudulent in legal definition, because they are not misrepresentations of existing facts."

There must be an element of bad faith and intention to deceive, or a recklessness or extravagance of statement that is scarcely to be distinguished from bad faith, before a promissory representation constitutes deceit or fraud available to avoid a contract. Mamaux v. Cape May Real Estate Co. (1914) 131 C. C. A. 63, 214 Fed. 757.

A fraud must relate to facts then existing or which had previously existed; hence nonperformance of a promise made in the course of negotiations is not of itself either a fraud or evidence of a fraud. Adams v. Schiffer (1887) 11 Colo. 15, 7 Am. St. Rep. 202, 17 Pac. 21.

The general rule as to promises is that they are without the domain of law unless they create a contract; and when they create a contract, a breach gives to the injured parties simply a right of action for damages, and not a right to treat the other party as guilty of fraud. M. T. Jones Lumber Co. v.

Villegas (1894) 8 Tex. Civ. App. 669, 28 S. W. 558.

In McCoy v. Bankers' Trust Co. (1918) Tex. Civ. App. —, 200 S. W. 1138, it is said: "A statement which is promissory in its nature, or an assurance of what will thereafter be done, is not a representation, but rather in the nature of a contract, and is not the basis of an action for deceit. So that representations having reference to the future merely, however much relied on, do not constitute a cause of action or ground of defense. It is said that a person to whom such statements are made had no right to rely on them."

And it is said in Robertson v. Parks (1892) 76 Md. 118, 24 Atl. 411: "A representation which merely amounts to

a

statement of opinion, judgment, probability, or expectation, or is vague and indefinite in its nature and terms, or is merely a loose, conjectural, or exaggerated statement, goes for naught, though it may not be true; for a party is not justified in placing reliance on such statement or representation. Such an indefinite or speculative representation should put the person to whom it is made upon inquiry; and if he chooses to put faith in such a statement, and abstains from inquiry, he can have no ground of complaint."

Statements promissory in their character, that one will do a particular thing in the future, are not misrepresentations, but are contractual in their nature, and do not constitute fraud. Boston Piano & Music Co. v. Pontiac Clothing Co. (1917) 199 Mich. 141, 165 N. W. 856; Barker v. Finley (1918) 200 Mich. 166, 166 N. W. 996.

And, even if considered as representations, promises relating to what one will do in the future cannot, from their nature, be true or false at the time they are made, and so cannot serve as a basis for fraud. Wellington v. Rugg (1922) 243 Mass. 30, 136 N. E. 831.

It is said in Nelson v. Berkner (1918) 139 Minn. 301, 166 N. W. 347, that as a general rule unfulfilled promises as to future acts or events will neither support an action for deceit nor avail as grounds for rescinding a contract induced by such promises. And in Luchow v. Kansas City Breweries Co. (1916) Mo. App. -, 183 S. W. 1123, the court said that as a general rule representations made

[ocr errors]

would amount to fraud;11 and that to permit a rescission for fraud by one who has no ground for complaint except an unfulfilled promise—a broken contract-would obscure elementary distinctions between remedies, and tend to nullify the Statute of Frauds.12

But it has been held that, if one is induced to execute a contract under a false representation that it contains a during the negotiation of a contract, which show on their face that they were not intended as a statement of existing facts, but as a prophecy of things to come, do not constitute actionable representations, however wide of the event the predictions may turn out to have been.

An agreement to do something in futuro, relieved of all the elements indicating specific fraud, is regarded as a mere expression of opinion, or a mere promise or conjecture, upon which the other party has no right to rely, particularly where the means of information or investigation are equally within the range of both parties. Halpern v. Cafarelli (1922) 98 N. J. L. 77, 118 Atl. 684.

So, in Kley v. Healy (1896) 149 N. Y. 346, 44 N. E. 150, the view was taken that where representations consist in mere expressions of hopes, expectations, and the like, the party to whom they are made is not legally justified in relying upon them and assuming them to be true.

To render nonperformance of a promise fraudulent, the intention not to perform must exist when the promise is made; and if it is made in good faith when the contract is entered into, there is no fraud, although the promisor subsequently changes his mind and fails or refuses to perform. Rogers v. Harris (1919) 76 Okla. 215, 184 Pac. 459.

In J. C. Corbin Co. v. Preston (1923) 109 Or. 230, 212 Pac. 541, 218 Pac. 917, the court said that it is a well-established rule that actionable fraud cannot be based upon erroneous predictions of the future conduct of independent third parties.

11 Brooks v. Pitts (1919) 24 Ga. App. 386, 100 S. E. 776; Atlanta Skirt Mfg. Co. v. Jacobs (1910) 8 Ga. App. 299, 68 S. E. 1077; Chicago, T. & M. C. R. Co. v. Titterington (1892) 84 Tex. 218, 31 Am. St. Rep. 39, 19 S. W. 472.

12 Basye v. Basye (1899) 152 Ind. 172, 52 N. E. 797.

promise by the other party to do something in the future, this is a misrepresentation of fact and may constitute fraud; and the representor cannot avoid liability on the ground that the representation was merely an unfulfilled false promise of something to be done in the future, made at the time of the execution of the contract and in variance with its terms.13

It was said in Lovett v. Taylor (1896) 54 N. J. Eq. 311, 34 Atl. 896, that fraud cannot be predicated on a mere failure or refusal to perform a parol promise originally made in good faith but void under the Statute of Frauds; that to hold otherwise is to annul the statute.

13 Night Commander Lighting Co. v. Michelsen (1924) 226 Mich. 668, 198 N. W. 188, where the principle was applied to a case in which a purchaser of a lighting system, who was unable to read the contract of purchase, signed it, relying on the salesman's statement that it contained a provision to the effect that the lighting plant was to remain the property of the seller for six months after its installation, and that, if it did not work satisfactorily at that time, the seller would remove it without expense to the purchaser. (However, in J. B. Colt Co. v. Cousino (1924) 226 Mich. 518, 198 N. W. 222, it was held that representations by a sales agent of a lighting system, relating to the terms and medium of payment, and consisting of promises by the agent that he would subsequently incorporate in the contract certain provisions in this regard, which were at variance with the express terms of the written agreement, could not be shown as a basis for fraud, since the rule applied that false representations must relate to past or existing facts, and not to a promise to perform an act in the future. The court pointed out that the pleadings and the proof did not call for application of the rule that fraud may be predicated on a promise made without an intention of performance.) See also Phelan v. Kuhn (1893) 51 Ill. App. 644 (where the lessor of a farm represented to the lessees, who were illiterate, that the lease contained a provision relating to drainage tile, which the lessor was to furnish); St. Louis, I. M. & S. R. Co. v. Morgan (1914) 115 Ark. 529, 171 S. W. 1187 (representation that release contained contract for permanent employment).

III. Exceptions to and limitations of rule, in general; promises made without intention of performance.

While the general rule previously stated seems clear in itself, yet, as already indicated, when the courts have come to deal with cases in which an actual fraudulent intent existed, and gross injustice would result from application of the rule, they have made various exceptions and limitations, and generally have declined to make the application. It is doubtless true that where the alleged fraud consists merely in promises which are not fulfilled, or statements as to future events, the courts are less inclined to infer a fraudulent intent than when the statements relate to a present or pre-existing fact. If one makes a statement regarding an event to take place in the future, obviously the statement should ordinarily be regarded merely as an expression of opinion, and the courts will frequently stop at this point and hold that such a statement cannot serve as a basis on which to predicate fraud. But if there are circumstances tending to show an actual fraudulent intent at the time the promise or representation regarding a future event is made, then the situation is entirely changed. According to the weight of authority, if the per

14 United States.-Fenwick v. Grimes (1839) 5 Cranch, C. C. 603, Fed. Cas. No. 4,734; Old Colony Trust Co. v. Dubuque Light & Traction Co. (1898; C. C.) 89 Fed. 794; Rogers v. VirginiaCarolina Chemical Co. (1906) 78 C. C. A. 615, 149 Fed. 1; Wright v. Barnard (1917; D. C.) 248 Fed. 756; Tevander v. Ruysdael (1918) 166 C. C. A. 18, 253 Fed. 918, writ of certiorari denied in (1919) 248 U. S. 585, 63 L. ed. 433, 39 Sup. Ct. Rep. 182; Knudsen v. Domestic Utilities Mfg. Co. (1920; C. C. A. 9th) 264 Fed. 470; Fernandina Shipbuilding & Dry Dock Co. v. Peters (1922; D. C.) 283 Fed. 621; Scott v. Empire Land Co. (1925; D. C.) 5 F. (2d) 873.

Alabama. Manning v. Pippen (1888) 86 Ala. 357, 11 Am. St. Rep. 46, 5 So. 572, later appeal in (1891) 95 Ala. 537, 11 So. 56; Brock v. Brock (1890) 90 Ala. 86, 9 L.R.A. 287, 8 So. 11; Nelson v. Shelby Mfg. & Improv. Co. (1892) 96 Ala. 515, 38 Am.

son making the promise or statement as to a future event is guilty of an actual fraudulent intent, and makes the promise or misrepresentation with the intention of deceiving and defrauding the other party, and accomplishes this result, to the latter's injury, fraud may, under many circumstances, be predicated thereon, notwithstanding the future nature of the representations. This result is reached frequently on the theory that a person's intention or belief is a matter of fact, and that, therefore, if a misrepresentation is made with regard to the same, the misrepresentation is one of fact. But the particular circumstances determine largely the result in this class of cases. This seems to be true, partly, at least, for the reason that the questions whether a representation should be regarded as a mere expression of opinion, and whether one to whom it is made ordinarily does and has a right to rely thereon, depend on the nature of the representation and the relation of the parties.

The weight of authority holds that fraud may be predicated on promises made with an intention not to perform the same, or, as the rule is frequently expressed, on promises made without an intention of performance.1 It has been said that when a promise is made,

St. Rep. 116, 11 So. 695; Ansley v. Bank of Piedmont (1896) 113 Ala. 467, 59 Am. St. Rep. 122, 21 So. 59; Gewin v. Shields (1910) 167 Ala. 593, 52 So. 887; Clarkson v. Pruett (1918) 201 Ala. 632, 79 So. 194; Johnson v. Chamblee (1919) 202 Ala. 525, 81 So. 27; St. Louis & S. F. R. Co. v. McCrory (1911) 2 Ala. App. 531, 56 So. 822; Southern Loan & T. Co. v. Gissendaner (1912) 4 Ala. App. 523, 58 So. 737. See also Bradfield v. Elyton Land Co. (1890) 93 Ala. 527, 8 So. 383 (recognizing rule); Birmingham Warehouse & E. Co. v. Elyton Land Co. (1890) 93 Ala. 549, 9 So. 235 (same); Piedmont Land Improv. Co. v. Piedmont Foundry & Mach. Co. (1891) 96 Ala. 389, 11 So. 332 (same); Cooke v. Cook (1893) 100 Ala. 175, 14 So. 171 (rule implied); Preston Motors Corp. v. Wood (1922) 208 Ala. 172, 94 So. 70 (same).

[blocks in formation]

1

the promisor, by necessary implication, asserts a present and bona fide

(1920) 144 Ark. 422, 222 S. W. 712 (obiter statement apparently in conflict with earlier cases from this state cited under note 34, infra).

Connecticut. Ayres v. French (1874) 41 Conn. 142; Dowd v. Tucker (1874) 41 Conn. 197; Sallies v. Johnson (1911) 85 Conn. 77, 81 Atl. 974, Ann. Cas. 1913A, 386; McLaughlin v. Thomas (1912) 86 Conn. 252, 85 Atl. 370; Moran v. Holmes Mfg. Co. (1923) 99 Conn. 180, 121 Atl. 346; Macrie v.

Torello (1927) Conn. - 136 Atl. 479. Contra, Kennedy v. Howell (1850) 20 Conn. 349.

[blocks in formation]

District of Columbia. Hight v. Richmond Park Improv. Co. (1918) 47 App. D. C. 518.

Georgia. Thrasher v. Cobb Real Estate Co. (1913) 12 Ga. App. 718, 78 S. E. 254. See also Weems v. Georgia Midland & G. R. Co. (1890) 84 Ga. 356, 11 So. 503; Printup v. Rome Land Co. (1892) 90 Ga. 180, 15 S. E. 764. Contra, see Thomson v. McLaughlin (1913) 13 Ga. App. 334, 79 S. E. 182. Hawaii. Keanu v. Kamanoulu (1910) 20 Haw. 96 (confidential relations); Notley v. Notley (1917) 23 Haw. 724.

[blocks in formation]
[ocr errors]

Iowa. Oakey v. Ritchie (1886) 69 Iowa, 69, 28 N. W. 448; Blaul v. Wandel (1908) 137 Iowa, 301, 114 N. W. 899; City Deposit Bank V. Green (1908) 138 Iowa, 156, 115 N. W. 893; City Nat. Bank v. Mason (1922) 192 Iowa, 1048, 186 N. W. 30; Faust v. Parker (1927) Iowa, 213 N. W. 794. See also Sullivan v. Gaul (1924) 198 Iowa, 630, 200 N. W. 12 (recognizing rule).

[ocr errors]
[ocr errors]

Kansas. Douthitt v. Appelgate (1885) 33 Kan. 395, 52 Am. Rep. 533, 6 Pac. 575; National Bank v. Mackey (1897) 5 Kan. App. 437, 49 Pac. 324. But see Kiser v. Richardson (1914) 91 Kan. 812, 139 Pac. 373, Ann. Cas. 1915D, 539. Kentucky. Oldham v. Bentley (1846) 6 B. Mon. 428; Electric Hammer Corp. v. Deddens (1924) 206 Ky. 232, 167 S. W. 207; Tauner v. Clark (1892) 13 Ky. L. Rep. 879, 922. See also Daniel v. Daniel (1921) 190 Ky. 210, 226 S. W. 1070.

Maryland. COUNCIL V. SUN INS.

[ocr errors]

intention to perform, and if, therefore, the intention to perform does not exist, OFFICE (reported herewith) ante, 29; Price v. Read (1828) 2 Harr. & G. 291; Adams v. Anderson (1815) 4 Harr. & J. 558. See also Lamm v. Port Deposit Homestead Asso. (1878) 49 Md. 233, 33 Am. Rep. 246; Gale v. McCullough (1912) 118 Md. 287, 84 Atl. 469 (false representation of intention of lessee).

Massachusetts. McCusker v. Geige: (1907) 195 Mass. 46, 80 N. E. 648 (recognizing rule); Comstock v. Livingston (1912) 210 Mass. 581, 97 N. E. 106; Ciarlo v. Ciarlo (1923) 244 Mass. 453, 139 N. E. 344; Feldman v. Witmark (1926) 254 Mass. 480, 150 N. E. 329. See also Pike v. Fay (1869) 101 Mass. 134; Sweet V. Kimball (1896) 166 Mass. 332, 55 Am. St. Rep. 406, 44 N. E. 243. (Contra, see cases from this state under note 34, infra.)

Michigan. Laing v. McKee (1865) 13 Mich. 124; Crowley v. Langdon (1901) 127 Mich. 51, 86 N. W. 391; Barker v. Finley (1918) 200 Mich. 166, 166 N. W. 996; Kefuss v. Whitley (1922) 220 Mich. 67, 189 N. W. 76; J. B. Colt Co. v. Cousino (1924) 226 Mich. 518, 198 N. W. 222; Matteson v. Weaver (1924) 229 Mich. 495, 201 N. W. 473.

Minnesota. Albitz v. Minneapolis & P. R. Co. (1889) 40 Minn. 476, 42 N. W. 394; Olson v. Smith (1912) 116 Minn. 430, 134 N. W. 117; Schaeffer v. Rush (1912) 118 Minn. 174, 136 N. W. 754; Cox v. Edwards (1913) 120 Minn. 512, 139 N. W. 1070; Holmes v. Wilkes (1915) 130 Minn. 170, 153 N. W. 308; Nelson v. Berkner (1918) 139 Minn. 301, 166 N. W. 347; Hansen v. Daniel Hayes Co. (1922) 152 Minn. 222, 188 N. W. 317; Guy T. Bisbee Co. v. Granite City Invest. Corp. (1924) 159 Minn. 238, 199 N. W. 14; Roman v. Lorence (1925) 162 Minn. 198, 202 N. W. 707; Smith v. Vosika (1925) 163 Minn. 12, 203 N. W. 428; Powers v. American Traffic Signal Corp. (1926) 167 Minn. 327, 209 N. W. 16. See also Hodsden v. Hodsden (1897) 69 Minn. 486, 72 N. W. 562 (rule implied); McElrath v. Electric Invest. Co. (1911) 114 Minn. 358, 131 N. W. 380.

[ocr errors][merged small][ocr errors][merged small]
« PředchozíPokračovat »