is equivalent in its effect upon the remedy, to an offer accepted by the seller, and the contract is rescinded, and the vendee can

not calculated to embody all the nice, or arbitrary, or fanciful distinctions that are to be met with in the reports. I do not regard the distinction alluded to as well founded or supported. It is disregarded or rejected by some of the best authorities cited. The true rule of damages is the value of the article at the time of the breach, or when it ought to have been delivered.1 Mr. Sedgwick seems himself to come to that conclusion amid the contrariety of opinion and cases which he cites. Treatise, pp. 260-280. This is the plain, stable, and just rule within the contract of the parties. Damages for breaches of contract are only those which are incidental to, and directly caused by, the breach, and may reasonably be supposed to have entered into the contemplation of the parties, and not speculative profits, or accidental or conse quential losses, or the loss of a fancied good bargain.2 Walker v. Moore, 10 B. & C. 416. In Masterton v. Mayor of Brooklyn, 7 Hill, 62, the question of damages was well discussed, and it was held that profits or advantages which were regarded as the direct and immediate fruits of the contract, are to be considered as parcel and elements of the contract, and to be allowed. See also Hayden v. Cabot, 17 Mass. Rep. 169. Deyo v. Waggoner, 19 Johns. Rep. 241. Sedgwick's Treatise, pp. 81-88. 6 Toullier, sec. 286. Flureau v. Thornhill, 2 Blacks. Rep. 1078. Williams v. Barton, 13 Louis. Rep. 404. Blanchard v. Ely, 21 Wendell, 342. But Lord Ch. J. Denman, in Cox v. Walker, cited in a note to Clare v. Maynard, 6 Adolph. & Ellis, 519, and also in the last case, laid down the rule of damages to be, the difference between the value of a horse at the sale, considering him to be sound, and the value with the defect complained of, and not the difference between the price of the first purchase and of the actual sale. So, in Shannon v. Comstock, 21 Wendell, 457, it was held, that in an action to recover damages for non-performance of a contract, the rule of damages was held to be the loss sustained, and not the price agreed to be paid on actual performance. In Cary v. Gruman, 4 Hill, 625, the rule as declared by Lord Denman was adopted, and the price paid was only prima facie evidence of the then value. In O'Conner v. Forster, 10 Watts's Rep. 418, on a breach of contract to carry wheat from P. to Philadelphia, the difference between the value of the wheat at P. with the freight added, and the market price at Philadelphia, at the time it would have arrived there, if carried according to contract, is the measure of damages.3 Bracket v. M'Nair, 14 Johnson, 170. Davis v. Shields, 24 Wendell's Rep. 322, to

1 Whitney v. Allaire, 1 Comst. R, 305. Kingsbury v. Smith, 13 N. Hamp. 109. Giles v. O'Toole, 4 Barb. S. C. Rep. 261. N. Y. & H. R. Co. v. Story, 6 ibid. 419. Beals v. Terry, 2 Sandf. (Law) R. 127. Freeman v. Clute, 3 Barb. S. C. Rep. 424.

2 Giles v. O'Toole, supra. Lawrence v. Wardwell, 5 Barb. S. C. Rep. 423. Waters v. Towers, 20 Eng. L. & Eq. 410. The rule of damages on sale of goods is said, in West v. Pritchard, 19 Conn. R. 212, to be the value at the time the contract was broken, except when the goods were paid for in advance, or on the sale of stocks, when, if they have risen in value, the purchaser may recover the value at time of trial.

3 Thompson v. Alger, 12 Met. R. 428. Camp v. Pulver, 5 Denio's R. 48. Comstock v. Hutchinson, 10 Barb. 211. Reggio v. Braggiotti, 7 Cush. 166. Marshall v. Wood, 16 Ala. 806. Foster v. Rogers, 27 Ala. 602. But see Wilson v. Little, 2 Comst. R. 443. As to the effect on the measure of damages of fraud, malice, or gross carelessness on the part of the vendor, see Sharon v. Mosher, 17 Barb. 518.

sue for the purchase-money in case it has been paid. (a) But a contract cannot be rescinded without mutual consent, if circumstances be so altered by a part execution that the parties cannot be put in statu quo; for if it be rescinded at all, it must be rescinded in toto. (b) The parties to a contract may rescind it at any time before the rights of third persons have intervened; but a resale of the disputed articles does not of itself rescind the contract, or destroy the right to damages for non-performance of the contract, to the extent of the loss in a resale, provided the same be made after default and due notice. (c) If the sale be absolute, and the contract remains open and unrescinded, and without any agreement to rescind, the vendee of the unsound article must resort to his warranty, unless it be proved that the vendor knew of the unsoundness, and the vendee tendered a return of the article within a reasonable time. (d) 2

In South Carolina and Louisiana, the rule of the civil law has been followed, and, as a general rule, a sale for a sound price is understood to imply a warranty of soundness * 481 against all faults and defects. (e) * The same rule was for many years understood to be the law in Connecticut; but if it did ever exist, it was entirely overruled in Dean v.

S. P. In Badgett v. Broughton, 1 Kelly, 591, the rule declared by the Supreme Court in Georgia was the difference between the price paid for an article warranted sound, and the value of the article in its unsound condition.

(a) Thornton v. Wynn, 12 Wheaton, 183.

(b) Hunt v. Silk, 5 East's Rep. 449.

(c) Sands & Crump v. Taylor, 5 Johns. Rep. 395. Maclean v. Dunn, 4 Bing. Rep.

722.

(d) Thornton v. Wynn, 12 Wheaton, 183. (e) Timrod v. Shoolbred, 1 Bay's Rep. 324. Lester v. Graham, 1 Const. Rep. S. C. 182. Dewees v. Morgan, 1 Martin's Louis. Rep. 1.

1 See post, n. 1, p. 497.

Whitefield v. M'Leod, 2 ibid. 380.
Crawford v. Wilson, 2 ibid. 353.

2 It is settled law in England, that a mere breach of warranty without fraud, is no answer to an action for the price, but only a ground for a reduction of damages. Parson e. Sexton, 4 M. G. & S. Rep. 899. West v. Cutting, 19 Vt. R. 536. Freeman v. Clute, 3 Barb. S. C. Rep. 424. Dawson v. Collis, 4 Eng. L. & Eq. 338.

If a person conveys property to another, for which he is to be paid in other specific property of greater value, and for the surplus of which he is to pay cash, and he fails to pay such cash, by reason of which the other party rescinds the contract, the party in default cannot recover the value of the property conveyed. Battle v. R. City Bank, 3 Comst. R. 88.

Mason, (a) in favor of the other general principle which has so extensively pervaded the jurisprudence of this country. Even in South Carolina, the rule that a sound price warrants a sound commodity, was said to be in a state of vibration; and it is not applied to assist persons to avoid a contract, though made for an inadequate price, provided it was made under a fair opportunity of information as to all the circumstances, and when there was no fraud, concealment, or latent defect. (b)

If the article be sold by the sample, and it be a fair specimen of the article, and there be no deception or warranty on the part of the vendor, the vendee cannot rescind the sale. But such a sale amounts to an implied warranty that the article is in bulk of the same kind, and equal in quality with the sample. (c) If

(a) 4 Conn. Rep. 428.

(b) Whitefield v. M'Leod, 2 Bay's Rep. 383. The law in South Carolina seems at last to be conformable to the old general rule. It was held, in Carnochan v. Gould, in the court of appeals, 1 Bailey's Rep. 179, that a vendor of cotton was not liable for a defect in the quality of the cotton of an unusual character, which extended equally through the bulk, and was fully exhibited in samples. The law in that case would not raise an implied warranty, for there was no fraud, and the buyer was possessed of all the information necessary to enable him to make a correct estimate of the value of the article. In Osgood v. Lewis, 2 Harr. & Gill, 495, implied warranties upon the sale of chattels, and arising by operation of law, were held to be of two kinds: 1. In cases where there was no fraud, as, that the provisions purchased for domestic use were wholesome, or that the article contracted for in an executory contract, and which the purchaser had no opportunity to inspect, should be salable as such in the market. 2. Where the fraud existed, as if the seller, knowing the article to be unsound, disguises it or represents it as sound.

(c) Parkinson v. Lee, 2 East's Rep. 314. Sands & Crump v. Taylor, 5 Johns. Rep. 395. Bradford v. Manly, 13 Mass. Rep. 139. Woodworth, J., in 20 Johns. Rep. 204. The Oneida Manufacturing Society v. Lawrence, 4 Cowen's Rep. 440. Andrews v. Kneeland, 6 ibid. 354. Gallagher v. Waring, 9 Wendell's Rep. 20. Boorman v. Jenkins, 12 ibid. 556. Waring v. Mason, 18 ibid. 425. Phillipi v. Gove, 4 Rob. Louis. R. 315. Civil Code of Louisiana, art. 2449. Moses v. Mead, 1 Denio, 378. In the sale of an article, as hemp in bales, it is held that there is no implied warranty that the interior shall correspond in quality with the exterior of the bales, and if the purchaser is at liberty to open the bales and examine, there is no sale by sample, though the interior does not correspond with the external part. Salisbury v. Stainer, 19 Wendell, 159.

1 Beirne v. Dord, 2 Sandf. S. C. Rep. 89. Brower v. Lewis, 19 Barb. 574. In a late English case, for a false representation on a sale of cotton by sample, which the vendor falsely represented to correspond with the bulk, it was held, that the vendee could not recover, without showing that the representations were false to the knowledge of the vendor,

the article should turn out not to be merchantable, from some latent principle of infirmity in the sample, as well as in the bulk of the commodity, the seller is not answerable. The only warranty is, that the whole quantity answers the sample.1

* 482

*VI, Of the duty of mutual disclosure.

If there be an intentional concealment or suppression of material facts in the making of a contract, in cases in which both parties have not equal access to the means of information, it will be deemed unfair dealing, and will vitiate and avoid the contract. There may be some difference in the facility with which the rule applies between facts and circumstances that are intrinsic, and form material ingredients of the contract, and those that are extrinsic, and form no component part of it, though they create inducements to enter into the contract, or affect the price of the article. As a general rule, each party is bound to communicate to the other his knowledge of the material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the

or that he was otherwise guilty of a breach of good faith. Ormrod r. Huth, 14 M. & W. R. 651. In Pennsylvania, it seems, a sale by sample, without express warranty, implies a warranty of the kind or species only, and not of the quality. Fraley v. Bispham, 10 Barr's Rep. 320. But in Nichols v. Godts, 26 Eng. L. & Eq. 527, a sale was made of oil, represented as foreign rape oil, but warranted only equal to samples. The article delivered was not foreign rape oil, but was equal to samples. Held, that the statement as to sample applied only to the quality of the oil, and that the buyer was not bound to pay for an article different in kind from the description in the bill of sale. In Hargous v. Stone, 1 Seld. 73, and Beirne v. Dord, ib. 95, S. C. 4 Duer, 69, it is held, that the mere exhibition of a sample is not enough to create a warranty that the bulk of the goods correspond in quality therewith. See also Ormrod v. Huth, cited supra.

1 By a law of New York, passed April 10, 1850, (Laws, p. 673,) if there be a deficiency in quantity of dry goods sold at public auction, or otherwise, the vendor forfeits to the vendee an amount in value equal to the quantity short, in addition to the deficiency.

See Bagley v. Peddie, 5 Sandf. S. C. R. 192, where the court give the rules for distinguishing stipulated damages from a penalty. The courts lean strongly in favor of construing agreements as providing penalties, rather than fixed, stipulated damages. 1st. Where the construction is doubtful, the agreement is considered as intending a penalty merely. 2d. Where the instrument provides for the payment of a large sum, on failure of payment of a less sum, the larger sum is a penalty merely. 3d. Where a stipulated sum is to be paid on the performance or omission of act or acts not measureable by a pecuniary standard, such sum is liquidated damages. 4th. Where the damages for such acts or omissions are certain, or ascertainable by a jury, the sum agreed on is a penalty merely. See Cheddick v. Marsh, 1 New Jersey R. 463.

483

reach of his observation. (a) In the sale of a ship, which had a latent defect known to the seller, and which the buyer could not by any attention possibly discover, the seller was held to be bound to disclose it, and the concealment was justly considered to be a breach of honesty and good faith. (b) So, if one party suffers the other to buy an article under a delusion created by his own conduct, it will be deemed fraudulent and fatal to the contract; as, if the seller produces an impression upon the mind of the buyer, by his acts, that he is purchasing a picture belonging to a person of great skill in painting, and which the seller knows not to be the fact, and yet suffers the impression to remain, though he knows it materially enhances the value of the picture in the mind of the buyer. (c) One party must not practise any artifice to conceal defects, or make any representations for the purpose of throwing the buyer off his guard. The same principle had been long ago declared by Lord Hardwicke, when he stated, (d) that if a vendor, knowing of an incumbrance upon an estate, sells without disclosing the fact, and with knowledge that the purchaser is a stranger to it, and under representations inducing him to buy, he acts fraudulently, and violates integrity and fair dealing. The inference of fraud is easily and almost inevitably drawn, when there is a suppression or concealment of material circumstances, and one of the contracting parties is knowingly suffered to deal under a delusion. It was upon this ground that Lord Mansfield must

(a) The rule here laid down, though one undoubtedly of moral obligation, is perhaps too broadly stated to be sustained by the practical doctrine of the courts. The qualification of the rule is, that the party in possession of the facts must be under some special obligation, by confidence reposed or otherwise, to communicate them truly and fairly. Vide infra, pp. 484, 490. Bench v. Sheldon, 14 Barb. R. 72.

(b) Mellish v. Motteux, Peake's Cases, 115. This case was afterwards overruled by Lord Ellenborough, in Baglehole v. Walters, 3 Campb. Rep. 154, and the latter decision confirmed in Pickering v. Dowson, 4 Taunt. Rep. 779; but it was upon another point, respecting the effect of a sale with all faults; and the principle of the decision, as stated in the text, remains unmoved. The same principle was urged in Southerne v. Howe, 2 Rol. Rep. 5, and it was stated, that if a man sells wine knowing it to be corrupt, an action of deceit lies against him, though there be no warranty. (c) Hill v. Gray, 1 Starkie's Rep. 434. Pilmore v. Hood, 5 Bingham, N. C. 97. (d) 1 Vesey, 96.

1 Baker v. Seahorn, 1 Swan, 54.