plicable to this class of cases, since a statement as to future profits necessarily involves many elements of uncertainty, and should in ordinary cases be regarded as a mere expression of opinion on the part of the person making it. But it also seems that the misrepresentations may easily amount in such cases to misstatements of fact, and that fraud may be predicated on a statement regarding future terprise would be certain, and amount to a specified sum, these representations being merely expressions of opinion by parties who were without knowledge or experience on which to found them, Kulesza v. Wyhowski (1921) 213 Mich. 189, 182 N. W. 53;

representation by seller of eating house, fixtures, and furniture, as to what the purchaser would realize from the business in the future, Markel v. Moudy (1881) 11 Neb. 213, 7 N. W. 853;

- statement that a certain restaurant business was a "money maker,” inducing a trade of land therefor, Black v. Irvin (1915) 76 Or. 561, 149 Pac. 540;

- representations as to future profits of rooming house business, made to induce an exchange of property therefor, by parties who were familiar with that business, and were informed about the particular premises, Haney v. Parkison (1914) 72 Or. 249, 143 Pac. 926, Ann. Cas. 1916D, 1035;

- representations, inducing one to invest money in a business, that it would yield large profits, or that it was a good paying business, Sparman v. Keim (1880) 83 N. Y. 245;

-representations by society which engaged for picnic purposes a park from one who was to have the privilege of furnishing refreshments, as to the number to be in attendance and the profits to be derived, Societa Italiana Di Beneficenza v. Sulzer (1892) 29 Jones & S. 325, 19 N. Y. Supp. 824, appeal dismissed in (1893) 138 N. Y. 468, 34 N. E. 193;

representations, inducing one to go to another state and become state agent for a fraternal insurance association, that if he did so he could make big money, although the rules of the order in that state, of which he was a member, operated to bar solicitation of insurance for the association, Davis v. Masonic Protective Asso. (1917) 94 Wash. 406, 162 Pac. 516;

profits, if the person making it has no reasonable grounds on which to base it, and has no honest belief in its truth, but makes the statement merely for the purpose of misleading and defrauding the other party; as, where a business sold is being conducted at a loss, and the positive assertion is made by the seller to the purchaser, to induce the purchase, that the latter will receive large profits therefrom.65 This

representation by seller to purchaser of packing plant that the same would prove profitable in the hands of the purchaser, Farmers' Co-Op. Packing Co. v. Boyd (1922) 175 Wis. 544, 185 N. W. 234.

In Kert V. Starland (1914) 24 Manitoba L. R. 832, where the purchaser of a motion picture business sought to set aside the contract of sale on the ground of misrepresentations, the court held that the statement of expenses constituting the alleged misrepresentations should be regarded as intended as an estimate of what the expenses of management would or might be in the future, rather than a definite and positive allegation of what they had been for some period in the past, and that it did not constitute a ground for rescission or for damages.

In Zalapi v. Holcomb & H. Mfg. Co. (1926) 241 Ill. App. 102, it was held that fraud warranting rescission of a contract for the sale of a popcorn machine was not shown by representations of the seller's agent, to the effect that the buyer's location was a good one, that business would be increased 50 per cent, that he was sure the business would pay for the machine out of the proceeds, and that, if it did not, he would take back the machine and return the purchase price, or sell the machine at small loss.

But see HOLCOMB & H. MFG. Co. v. AUTO INTERURBAN Co. (reported herewith) ante, 39, in which statements by the agent of the seller of a popcorn machine, as to the amount of profits which the purchaser would derive from its operation, were held to be a sufficient basis for fraud avoiding the contract, in view of the agent's representation of himself as an expert in such matters.

65 Where the seller of a shoe-repairing outfit, together with a lease on the premises where the machinery was located, represented to the purchaser,

may be construed as a misrepresentation of existing conditions.

c. Conveyances and exchange of real property in general.

In many cases involving conveyas an inducement for the latter to buy the business, that the latter could make more than a certain sum per month net profit from the shop, the court, in Starnes v. Motsinger (1926)

Tex. Civ. App. —, 278 S. W. 496, held that fraud could not be predicated on such representation, even though it proved false, if the business had been earning a larger sum than that specified. But, after stating the But, after stating the rule that a representation as to future earnings or profits by the seller must be regarded as a mere expression of opinion, the court said: "There are probably exceptions to the above rule, and if, in the present case, appellant had been losing money in the business, or the earnings had been far below the amount he represented it would earn appellee, and he had dishonestly made the representation for the express purpose of deceiving appellee, then the representation might be actionable fraud, but where the evidence shows, as it does in this case, that the business had been earning more than the amount represented as its future earning capacity, we are of the opinion that such representation was merely the opinion of appellant as to what he believed the appellee would be able to make out of the business, and should have been so accepted by appellee. Common experience is replete with instances where one person has made a success of a business, and where a subsequent purchaser of the business has made an absolute failure."

Attention is called also to Koehler v. Dennison (Or.), notes 44, supra, and 77, infra, as to representation of profits to be derived from barber business.

Representations as to the profits of a business which it is proposed to sell (in this instance, the sale of a lease of mineral lands) may be representations of existing facts, and not mere predictions as to the future, if based upon existing profits as carried on by the owner. Hotchkiss v. Bon Air Coal & I. Co. (1911) 108 Me. 34, 78 Atl. 1108. The court regarded it as well settled that representations as to the cost and selling price of articles manu

ances of real property, some of which are set out in other parts of the annotation,65 the doctrine that fraud may not ordinarily be predicated on an unfulfilled promise or statement as to a future event finds application or recfactured, and the profits of the manufacturer, were material and actionable, and that, if false and fraudulent, and relied upon, money paid by their inducement may be recovered.

And representations made by an importer of liquor to induce one to accept an agency for it as a distributor in a certain locality, to the effect that the importer was selling a certain number of cars of liquor in that place, and that the distributor would handle that number of cars per annum, were held, in Luchow v. Kansas City Breweries Co. (1916) Mo. App., 183 S. W. 1123, to be representations of existing facts upon which fraud might be predicated, so that it was held erroneous to instruct the jury in effect that if they believed that the importer made representations with reference to the probable future sales of its liquor, such representations, if any, were mere matters of opinion, and did not give the distributor any right to damages for fraud and deceit. The court took the view that the instruction should have been so worded as to avoid misleading the jury into believing that, even if the importer represented that he was selling a certain number of cars annually in that vicinity to customers, his representation that the distributor would sell that quantity was a mere matter of opinion, and not a false representation, the latter, the court said, being a false representation if the principal fact, to which this was a corollary, was false.

65 As to conveyances induced by promissory statements blended or associated with statements of fact, see V. supra.

As to special considerations affecting rule in equity, in cases of conveyances and exchange of real property, see VI. supra.

As to purpose for which realty is purchased, see VII, d, infra.

As to conveyances for railroad purposes or for railroad stock, or as a bonus to railroad, see VII. g, infra.

As to questions of evidence, pleading, and practice, see VIII. infra. See Fox v. Duffy (N. Y.) note

21, supra; Metcalf v. Hart (Wyo.) note 24, supra; Tauner v. Clark (Ky.) note 29, supra; Abbott v. Abbott (Neb.) note 29, supra (dismissal of action for alienation of affections, on promise of conveyance of property); Nelson v. Berkner (Minn.) note 33, supra; Horton v. Lee and Legler v. Tyler (Wis.) note 35, supra; Seimer v. James Dickinson Farm Mortg. Co. (Fed.) note 42, supra.

For cases of conveyances between parties occupying trust or confidential relations, see note 44, supra.

See also note 64, supra, as to representations regarding profits from exchange of realty for a certain business; Neff v. Mattern (Cal.) note 79, infra, as to conveyance in consideration of corporate stock, on promise to resell the land and use the money in a certain way; American Cotton Co. v. Collier (Tex.) note 88, as to representations inducing conveyance, in consideration of corporate stock in ginning company.

See notes 96, 98, infra, as to promises of employment inducing convey

ances.

As to conveyances on promises of marriage, and domestic relations cases generally, see note 100, infra.

As to unfulfilled promise of payment inducing conveyance, see note 101, infra.

As to conveyance of land as security for loan, or on representation that loan would be made, see note 102, infra.

As to conveyances in consideration of support of the grantor, see notes 108-110.

As to conveyance of mineral lands or interests therein, see note 114, infra.

As to promises or representations regarding irrigation, waters, and water rights, made on conveyances of land, see note 123, infra.

See Harris v. Trueblood (Ark.) note 124, infra, as to promise not to compete in business, inducing conveyance of farm therefor.

The general rule has been applied, or at least recognized as applicable, with regard to

-representations by a real estate agent to induce a widow to trade her homestead for other property, to the effect that she was making a good trade and bettering her condition, and that she could sell enough lots off the 51 A.L.R.-7.

tract of land purchased by her to pay for a house, these statements being mere matters of opinion. Brady v. Cole (1886) 164 Ill. 116, 45 N. E. 438;

representation by seller of lots that the purchaser could lose nothing, as he could pay the notes given for the purchase price out of the proceeds which he would derive from a resale of the lots, State Bank v. Brown (1909) 142 Iowa, 190, 134 Am. St. Rep. 412, 119 N. W. 81;

representations by seller of lot, inducing purchase, that the property could be sold the next spring at a profit, and that he, the vendor, could sell the property for the vendee before the purchase-money mortgage thereon came due, at a profit, Meritas Realty Co. v. Farley (1915) 166 App. Div. 420, 151 N. Y. Supp. 1052, affirmed without opinion in (1918) 224 N. Y. 671, 121 N. E. 879;

promise by agent in selling real estate that, if the purchaser desired, the vendor would resell the property in a year at a profit of at least 10 per cent, Gotteberg v. Park Terrace Co. (1915) 168 App. Div. 800, 154 N. Y. Supp. 387, affirmed without opinion in (1917) 222 N. Y. 600, 118 N. E. 1060;

representations inducing

pur

chase of an interest in real estate, that the representor knew of a customer who would shortly purchase the property for a much larger sum, Davis v. Reynolds (1910) 107 Me. 61, 77 Atl. 409;

- representation by vendor of land that the proceeds from the sale of crops would meet the deferred payments as they accrued, Ott v. Pace (1911) 43 Mont. 82, 115 Pac. 37;

-representation by vendor's agent, inducing a purchase of land, that the vendor was purchasing a "business lot in the business section" of a certain town, which then existed only on paper, as the purchaser knew, that the purchaser would be able to dispose of the land at from two to three times the price paid before all the payments became due, and that a certain street would be the principal one, in Jackson v. People's Trust Co. (1912) 22 West. L. R. (Can.) 325, 7 D. L. R. 384;

--

representation by an heir, to induce widow holding a dower interest to join in conveyance of land, that he would use the proceeds to purchase a home for her, Adkins v. Adkins (1874) 48 Ind. 12;

representation inducing one to purchase an interest in real estate that certain parties would in the future join in and make up a syndicate to purchase the property, Saunders v. McClintock (1891) 46 Mo. App. 216;

- representation by one desirous of exchanging land on which there were no buildings that adjoining land, on which buildings were located, could be purchased very cheap, Mooney v. Miller (1869) 102 Mass. 217 (apparently the representor tried to prevent the other party from interviewing the adjoining landowner, but whether there was an actual fraudulent intent is not clear, the court saying merely that what was stated on, this subject was obviously the expression of a mere opinion on which a purchaser should not rely);

-promise by one trading land for personal property to discharge unpaid taxes and interest standing against the land, Love v. McElroy (1905) 118 Ill. App. 412;

-representations and promises, inducing conveyance of land, that the grantee would pay back taxes on the premises, would support and care for the grantor during her lifetime, and would pay her a certain sum in money, Chambers v. Wyatt (1912) - Tex. Civ. App., 151 S. W. 864, later appeal in (1915) Tex. Civ. App. -, 182 S. W. 16 (generally, as to promises of support, see VII. 1, infra);

representations on an exchange of land to the effect that the representor would pay off encumbrances on the land which he proposed to convey in exchange for other land, and that his wife would join with him in the deed, Burt v. Bowles (1879) 69 Ind. 1;

- promise by real estate agents, upon the sale by them of property on commission, that they would take up a second mortgage on the property at any time the vendor so requested, Pile v. Bright (1911) 156 Mo. App. 301, 136 S. W. 1017;

-representation by attorney for mortgagee to purchaser of land which was subject to a mortgage that the mortgage would be canceled upon payment of a certain sum, inducing purchase of the property, although this promise was not kept, because the mortgagee in the meanwhile had assigned the mortgage, Halpern v. Cafarelli (1922) 98 N. J. L. 77, 118 Atl. 684;

- promise by vendee of property to pay certain indebtedness of the vendor, Hewett v. Dole (1912) 69 Wash. 163, 124 Pac. 374 (there being no evidence that the vendee did not enter into the contract in good faith);

- promise by real estate agent to return, on a certain contingency, a deposit made by a customer on a proposed purchase, Trieper v. Bulkley & H. Co. (1922) 119 Misc. 597, 197 N. Y. Supp. 88 (the court saying that this was merely a promise as to future action, and was contractual in its nature, and not fraudulent);

- promise to reconvey land on request, Fouty v. Fouty (1870) 34 Ind. 433;

promise made to holder of life estate, to induce him to join in conveyance, that he would be put into possession of another tract of land, Farrar v. Bridges (1842) 3 Humph. (Tenn.) 566;

statement inducing purchase of farms that there were enough wood and timber on the farm to pay the price asked, this being a mere opinion or estimate predicated upon uncertain or conjectural data, Belka v. Allen (1909) 82 Vt. 456, 74 Atl. 91 (representations of this kind, however, may be regarded as relating to existing facts or conditions rather than to the future, and no attempt is made to cover exhaustively such cases; see I. supra);

statement by vendor of timberland as to the price at which the timber, when cut into cordwood, would sell, Saxby v. Southern Land Co. (1909) 109 Va. 196, 63 S. E. 423 (the same conclusion was reached regarding a statement as to what the land would produce; see I. supra);

of

representations to vendors land that a warranty deed was necessary to enable the vendee to recover the land from a third party, who had an outstanding executory contract for its conveyance, but had not made full payment therefor, and that the vendors should not be bound by their warranty in case of failure to recover the land from the third party, Bigham v. Bigham (1882) 57 Tex. 238;

-representation by agent in selling burial crypts that the price of the crypts would be shortly advanced; that the contracts were mere scraps of

paper, and that the purchasers would never be called on to carry out their contracts (also, promise to resell the crypts before the second payment on the contracts became due, this promise, however, being regarded as purely personal, and not one which he was authorized to make), O'Neil v. Washelli Cemetery Asso. (1926) 138 Wash. 566, 244 Pac. 990;

representation by vendor of ice plant that with some repairs it would turn out about a certain amount of ice per day, the same being a mere expression of opinion as to a future event, made to a vendee having knowledge of the condition of the plant and full opportunity of investigation, Williamson v. Holt (1908) 147 N. C. 515, 17 L.R.A. (N.S.) 240, 61 S. E. 384;

-promise by vendor of farm that the balance of the land which remained unsowed would be seeded with good seed, Latus v. Beardsley (1909)

Alberta,, 10 West. L. R. 653;

- promise by vendor that he would include in the deed a certain strip of land to which he did not then have the legal title, but of which he had been declared the owner by judicial decree, Lembeck v. Gerken (1914) 86 N. J. L. 111, 90 Atl. 698, later appeal in (1915) 88 N. J. L. 329, 96 Atl. 577.

The general rule that fraud cannot be predicated merely on a failure to perform a promise seems to be assumed in such cases as Cleveland v. Herron (1921) 102 Ohio St. 218, 131 N. E. 489, holding that failure of the grantee to perform a promise which constitutes the whole or a part of the consideration for the execution of a conveyance gives rise to no right of rescission in the grantor, where such failure is not expressly made a ground of forfeiture. The court says that, in the absence of fraud, a deed will not be set aside as for a failure of consideration on the sole ground that the promises and agreements which entered into its execution, which were to be performed in the future, have not been performed.

Representations as to the taxes on the property, and as to the expense of the purchase-money mortgages to be placed thereon, were held in De Salvo v. Anderson (1916) 200 Ill. App. 29, an action to recover earnest money paid under a contract for the purchase of real estate, to be in the nature of promises to be carried out in the future,

and not representations of existing facts, and therefore not to constitute fraud, although the contract was entered into in reliance on such representations.

But it was held in Hinchey v. Starrett (1913) 91 Kan. 181, 137 Pac. 81, that the representation related to an existing condition, and was not a mere promise or opinion, where it was alleged that, by falsely and fraudulently pretending that one of the defendants was ready and anxious and financially able to take a certain tract of land at a specified price in cash, the plaintiff was defrauded into trading therefor, to the other defendant, certain personal property worth that sum.

And in Garry v. Garry (1904) 187 Mass. 62, 72 N. E. 335, it was held that one could not avoid the effect of fraudulent representations on the ground that they were merely promissory and related to the future, where a wife was induced to release her right of dower in real estate of which her husband had been a tenant in common with the defendant, on his representation that the husband would receive half of the purchase money from a sale of the property, whereas he had in fact previously conveyed his interest to the defendant.

Whether or not a statement regarding the income from an apartment house, which was exchanged for farm land, related to the past, or was intended as a mere expression of an opinion as to possible future income, was held to be a question for the jury, in Champneys v. Irwin (1919) 106 Wash. 438, 180 Pac. 405, in an action for damages for fraud alleged to have been practised in the exchange.

67 As to misrepresentations of existing facts combined with promises of improvements inducing purchase of real estate, see V. supra.

See annotation in 27 A.L.R. 343.

In addition to e cases cited in the above annotation, attention is called to the following, in which the rule that fraud may not be predicated on unfulfilled promises or statements as to future events has been applied or recognized as applicable with regard to

representations as to contemplated improvements inducing purchase of lot, Mamaux v. Cape May Real Estate Co. (1914) 131 C. C. A. 63, 214 Fed. 757;

- representation by vendor to pur