promise is made the promisor does not intend to perform it, there is but an unexecuted intention which is insufficient to constitute fraud;36 and if an ance. The case turned on the sufficiency of the complaint, it being held that the allegations were insufficient to support a cause of action for fraud. It was alleged that, in order to induce the plaintiff to make an exchange of property so that the defendants (realestate brokers) would benefit by receiving commissions from both the plaintiff and the other party, the defendant "falsely and fraudulently, and with intent to deceive and defraud the plaintiff," represented to her, before the contract for the exchange was made, that they had a buyer for the other property which she was to receive in exchange, that the proposed buyer resided in another state, but was coming the next week, and that they were sure to sell the property; also, that they had a letter in their office authorizing them to buy the property, and that they would obtain the money for the plaintiff the next week. The court regarded the allegation as to the letter as too "unsubstantial," coupled as it was with the assertion as to the future, to support an action for fraud. The case may possibly be explained on the theory that the allegations were too general, and did not specifically allege an intention not to perform the promise, although this is not clear. See notes 160-163, infra.

There is an obiter statement in Lilly v. Barron (1920) 144 Ark. 422, 222 S. W. 712, which seems out of line with the earlier decisions in this state (which are not cited in the later case), to the effect that, if the promise is accompanied with an intention not to perform it, and is made for the purpose of deceiving the person to whom it is made, and induces him to act in the premises, the same constitutes fraud. The court, however, observed that no such state of facts existed in this case. And the doctrine of the earlier cases is reiterated in Lawrence v. Mahoney (1920) 145 Ark. 310, 225 S. W. 340, without reference to this decision.

The rule is laid down in Thomson v. McLaughlin (1913) 13 Ga. App. 334, 79 S. E. 182, that a promise to do certain acts or perform certain services, made to induce the execution of a promissory note, though made with no intention of performance, is not such a fraud as will authorize the admis

intention not to perform constitutes fraud, every transaction may be avoided where the facts justify an inference that a party did not intend to sion of parol evidence thereof, to vary the terms of a note which contains no such condition or stipulation. The court said, however, that it was perhaps true that a fraud might have its inception in a promise made with such apparent sincerity as to deceive the promisee, but which the promisor had no intention whatever of fulfilling (this view being taken apparently if there was any special reason why the promisee should have reposed confidence in the promisor). In the absence of such special relations, the court seems to take the view that the promisee is not justified in relying on the promise. See, contra, cases from this state cited under note 14, supra.

36 Murphy v. Murphy (1901) 189 Ill. 360, 59 N. E. 796.

It is said (dictum) in Phelan v. Kuhn (1893) 51 Ill. App. 644, that an intention as to the future is not a fact, and that although the promisor, when he made the agreement, may have intended, however fraudulently, not to perform it, but to break it, the only remedy for the breach is upon the agreement.

In Gray v. Suspension Car Truck Mfg. Co. (1889) 127 III. 187, 19 N. E. 874, the doctrine is approved that false representations of an intention, not amounting to a matter of fact, will not justify rescission of a contract or excuse nonperformance.

And it is said in Jones v. Parker (1916) 197 Ill. App. 338 (abstract), that the rule that a false representation as to a matter of intention not amounting to a matter of fact is not fraud in law, even though the transaction is influenced thereby, applies to the representation of an intention by a third party as well as to a representation of the defendant's intention.

or

Representations of intention promises having reference merely to the future constitute no ground of action, and an action for deceit does not lie for failure to perform a promise which the promisor does not intend and subsequently refuses to perform, even though the promisee acted in reliance on such promise, to his damage. Hunt v. Lewis (1914) 87 Vt. 528, 90 Atl. 578, Ann. Cas. 1916C, 170; Girard v. Jerry (1921) 95 Vt. 129, 113 Atl. 533.

38 In

37 Miller v. Sutliff (1909) 241 Ill. 521, 24 L.R.A. (N.S.) 735, 89 N. E. 651. Dawe v. Morris (1889) 149 Mass. 188, 4 L.R.A. 158, 14 Am. St. Rep. 404, 21 N. E. 313, it was held that an action in tort cannot be maintained on an unfulfilled promise by reason of

nonperformance of which the plaintiff is injured, although at the time of making it the promisor did not intend to perform it, because to permit such an action would violate the policy of the Statute of Frauds by relieving

party from the necessity of observing those statutory formulas which are ecessary to the validity of certain executory contracts.

39 Miller v. Fulmer (1904) 25 Pa. Super. Ct. 106. The case was one of fraudulent representations as to the purpose for which land was desired by the purchaser, who in fact was buying it for a competitor of the vendor. The court held that at law such fraud was not shown as to avoid the contract, but that a court of equity would not specifically enforce it.

40 See Stebbins v. Petty (Ill.) note

108, infra.

40 See Rorer Iron Co. v. Trout (Va.) note 19, supra; McElrath v. Electric Invest. Co. (Minn.) note 22, supra; Oakey v. Ritchie (Iowa) note 68, infra, as to promise inducing con

51 A.L.R.-6.

he should have, superior and accurate knowledge concerning the matters to which his statements relate, or the parties occupy a trust or confidential relationship, the ordinary rules with respect to inability to predicate fraud on promises or statements with regard to future events have been somewhat modified.40 Thus, it has been held that where the parties do not stand on an equal footing, but one of them is in a position where he relies, and is justified in relying, on the other's opinion, the rule that representations made during the negotiation of a contract which are not statements of existing facts, but prophecies of things to come, do not constitute actionable representations, is inapplicable, that the rule that a forecast of what will happen in the future is merely promissory, and not a statement of existing facts, does not apply, where the matter involved is peculiarly within the speaker's knowledge, and that a veyance by weak-minded person. See also note 87, infra, as to stock subscriptions induced by representations as to special knowledge of the affairs of the corporation.

41 State ex rel. St. Louis & S. F. R. Co. v. Daues (1927) Mo. 290 S. W. 425, quashing writ of certiorari in Whitlow v. St. Louis-San Francisco R. Co. (1926) Mo. App., 282 S. W. 525. In this case it was held that representations by the claim agent of a railroad, inducing settlement of a claim for personal injuries, that the road was going into the hands of a receiver and the releasor probably would not obtain over 10 cents on the dollar, might constitute a basis for fraud, as a ground for avoiding the release, since the statements were regarding

matters as to which the agent was in a better position to know than the releasor.

false representation and promise as to what will result in the future, when made by one professing to have superior knowledge based on experience,

42 Seimer v. James Dickinson Farm Mortg. Co. (1924; D. C.) 299 Fed. 651, affirmed in (1926; C. C. A. 7th) 12 F. (2d) 772, where the fraud consisted in false representations by a vendor as to the quality of the land sold, the crops which it would produce, and irrigation facilities which would be furnished, and the entire project showed a scheme to defraud one unacquainted with the conditions.

See HOLCOMB & H. MFG. Co. v. AUTO INTERURBAN Co. (reported herewith), ante, 39, in which the agent of the seller of a popcorn machine represented himself to the purchaser as an expert on the question of profits from its operation, and his statements in that regard were held sufficient basis for fraud avoiding the contract.

It is said, also, in Wendell v. Ozark Orchard Co. (1917) Mo. App. -, 200 S. W. 747, that false representations and promises as to what will result in the future, when made by one having or professing to have superior knowledge based on past experience of himself or others, are in effect false representations of existing conditions and support allegations of fraud. The case was one in which the alleged false representations were as to the productiveness of an orchard and the inherent value of the land, inducing its purchase. It seems that representations of this kind may be regarded as only remotely related to the future, and as primarily concerned with the existing qualities of the property offered for sale.

The doctrine that fraud may be predicated on representations made by persons holding themselves out as skilled in a particular industry, that their work will endure for a certain length of time, where their assurances are not palpably impossible, is supported by McGar v. Williams (1855) 26 Ala. 469, 62 Am. Dec. 739, where persons who were in the business of putting on tin roofs represented that they would put on a roof which would not leak for twenty years, whereas in fact it did leak in less than two years. And it was held that in such a case the question was whether the representation, if made, was false, and whether injury resulted therefrom, and not

are in effect false representations of existing conditions and support allegations of fraud.42 And the relative knowledge of the contracting parties whether or not it was practicable to make good the assurances.

In Kefuss v. Whitley (1922) 220 Mich. 67, 189 N. W. 76, in which it was said that representations, if untrue, intended to be understood as mere promises or expressions of opinion, do not constitute fraud, especially when honestly made or entertained, but that, when uttered under circumstances importing that they are expected to be relied upon and acted upon, promises will become undertakings and opinions treated as assertions of fact, the case was one of alleged misrepresentation made by one experienced in handling real-estate subdivisions, as to the value of the property for this purpose, and the amount which the purchaser would have to expend, the time would take to dispose of the lot, and other statements as to the reason for making the sale, all of which the court held were more than statements merely of promises or expressions of opinion.

it

It was held in Smith v. Griswold (1877) 6 Or. 440, that fraud might be predicated on representations made by one to induce the sale to him of claims against the Federal government which the other party had, and was endeavoring to collect, to the effect that the government would not allow certain of the claims, and would not allow more than a specified sum on all of the claims, if the representations were made by one who had been prosecuting claims against the government and the seller was aware of this fact and placed confidence in the statements, and the same were false and fraudu

lent, and were made for the purpose of inducing the holder of the claims to sell them for less than their value.

In Buena Vista v. Billmyer (1900) 48 W. Va. 382, 37 S. E. 583, while the court recognized the general rule that a promise, to be actionable on the ground of fraudulent misrepresentations, must be of a fact alleged to exist in the present or past, and not a promise as to future events, it laid down the rule, in the syllabus, that, if a person, being in a situation to know, takes advantage of the confiding ignorance of another, not equally well situated, and falsely represents that a future event will certainly come to

is a factor to be taken into consideration in determining whether the representation relating to the future should be regarded as one of fact or merely of opinion.43

Even though the representations relate to the future, and the person making them does not intentionally deceive the other party, it seems that, if pass, and thereby induces the one deceived to enter into a disadvantageous contract, such representation cannot be excused as a mere expression of opinion, but will be regarded as the utterance of a known falsehood for fraudulent purposes, and is actionable and renders the contract voidable.

It is held in Maxwell Ice Co. v. Brackett (1921) 80 N. H. 236, 116 Atl. 34, among possibly other cases of the kind, that representations by an expert on power, to one not having equal knowledge as to the amount of energy which standard makes of motors and engines will develop, are not future promises, but are statements with reference to known facts based on tests and mathematical computation, and that such representations differ materially from "seller's talk" or mere opinions expressed to one having equal knowledge or equal opportunity for knowledge.

By way of illustration of cases involving statements as to value, attention is called in this connection to Lentz v. Landers (1919) 21 Ariz. 117, 185 Pac. 821, in which it is said that while, as a general rule, statements as to the present or future value of corporate stock are mere matters of opinion, and do not constitute actionable fraud although they may be false, yet there is a well-recognized exception to the rule, where the party making the false

statements has, or assumes to

have, special knowledge of its value, and knows that the other party is ignorant of such value and is relying upon his representations on the subject,

the false representations under these circumstances being regarded as the statement of an existing fact, and not mere opinion.

43 In a suit to rescind a contract of lease on the ground that the lessee was induced to enter into the same by false representations on the part of the les

sor,

the court in Garrett v. Finch

(1907) 107 Va. 25, 57 S. E. 604, said that it is not always an easy matter to determine whether a given statement

they are positively stated as facts by one who is in a position to know, and whose duty it is to know, the truth, and are relied on to his injury by one in ignorance of their falsity, they may be found to be misrepresentations of fact on which fraud may be predicated.43

on

In various cases the trust or confiis one of fact or opinion; that the relative knowledge of the parties, their intentions, and all the surrounding circumstances, which can only be gathered from the evidence, affect the interpretation which the courts put uprepresentations in determining whether they are of fact or opinion; that the alleged representations in this instance were sufficient to entitle the plaintiff (the lessee) to a hearing, and that the sustaining of a demurrer to the bill was erroneous. It was alleged that, as an inducement to the plaintiff to enter into the lease, he was assured (by the lessor) that a certain pier then in progress of construction would be completed and maintained, that plans had been consummated with steamboat lines whereby steamers would stop regularly at the pier, and that arrangements had been made whereby a certain street was to be opened and graded to the approach of the pier, and warehouses erected, so that the pier would become the leading one in the city; whereas, the leased premises were so situated as to be peculiarly benefited by the completion and maintenance of the pier, and that, unless the representations were fulfilled, the premises were not worth the rental agreed upon, as the lessor knew.

43 Whitehurst V. Life Ins. Co. (1908) 149 N. C. 273, 62 S. E. 1067. There was evidence from which it seems a jury might have inferred intentional fraud on the part of the representor, but the decision does not appear to be based on this ground. The representor was an insurance agent who, to induce one to discount a policy of insurance, read over to the prospect (who was blind) a provision of the policy stating that, if the insured was living at the end of ten years, the policy might be surrendered and the insured received the cash value, with interest; the agent explained to the prospect that this meant that the company would, at the end of the ten-year period, return the whole amount paid by him, with interest. The court said that

dential relation of the parties has been held to render inapplicable the rule precluding the predicating of fraud

it is not always required, for the establishment of actionable fraud, that a false representation should be knowingly made; that under certain conditions, if a party to a bargain avers the existence of a material fact recklessly, or affirms its existence positively, when he is consciously ignorant whether it is true or false, he may be held responsible, and that this doctrine is expressly applicable where the parties are not on equal terms with reference to the representation; that the stipulations in the policy were to some extent ambiguous and indefinite, and that it was a question for the jury as to whether the assurances given by the agent were intended as statements of fact, accepted and reasonably relied upon by the plaintiff as a material inducement to the contract; that the verdict established actionable fraud imputable to the insurance company, entitling the plaintiff to recover the premiums paid and interest.

44 See Daniel v. Daniel (Ky.) note 22, supra, where the relation was that of father and son, the latter having purchased at execution sale land belonging to the former, and making certain promises which prevented the father from redeeming. See also Thomson v. McLaughlin (Ga.) note.35, supra.

In Koehler v. Dennison (1914) 72 Or. 362, 143 Pac. 649, in which it was held that a sale of personal property used in conducting a barber shop would be set aside on the ground of false representations as to the future profits of the business and the possibility of securing a lease of the premises, the court regarded the relation between the purchaser and one of the defendants who had introduced the seller to the purchaser and represented that he was engaged in securing business locations for other persons, as so far confidential as to require such party to make a full disclosure, and to render him liable for misstatements that a lease would be executed, when he and the seller knew to the contrary.

In Wood v. Rabe (1884) 96 N. Y. 414, 48 Am. Rep. 640, an action to enforce an oral promise by a mother to hold an interest acquired in real estate for her son's benefit, and to reconvey it to him upon being paid her liens and advan

upon promises or statements as to future events, or at least has affected the decision.44

ces, the land having been sold on execution against the son, and the promise having been made in order to induce the latter to confess judgment in favor of the mother, so that as a judgment creditor, after the redemption period had expired against the son, she could redeem from the execution sale, the decision that a case for equitable relief was stated is based on the confidential relations of the parties, the youth and inexperience of the son, the fact that he acted without independent advice, on assurances by the mother and her attorney, and the injustice which would result in case the agreement should not be enforced. The court regarded the case as not within the rule that fraud upon which a court acts must be something more than a mere breach of an oral agreement.

In Pollard v. McKenney (1903) 69 Neb. 742, 96 N. W. 679, 101 N. W. 9, the court applied the rule that a promise made without intention of performance is fraudulent, to a case where a wife prevailed upon her husband, who was fatally ill, to convey property to her by promising to make a certain disposition thereof among his heirs. Apart from the confidential relation of the parties, the court regarded the rule as applicable that a promise is fraudulent if made without intention of performance, although the relation of the parties seems to have affected the question of proof of intent. See this case under note 158, infra.

It was held in Keanu v. Kamanoulu (1910) 20 Haw. 96, that fraud warranting equitable relief through cancelation of the deed and reconveyance of the property was warranted, where a daughter procured a conveyance of land from her parents on her representation to them that she merely desired the property in order to mortgage it to secure funds of which she was in need, and would not disturb their possession, her representations being shown to have been made in bad faith, with intent to deceive. It was contended that the mere making of a promise to do something in the future does not constitute fraud, even though the promise was made in bad faith. But the court said: "Whatever application this doctrine may have in other cases, we do not think it applies in the case before us. We are not now deal