§ 973. What subsequent cred- § 980, 981. Delivery as a requisite to itors may avoid. the transfer of the title. § 865. Purpose of this chapter.- In the preceding chapter there has been considered the effect, as to the avoidance of the contract, of representations which were untrue in fact, but which were made without any intention to deceive. Passing from these innocent misrepresentations, there is next to be considered the case in which the misrepresentation was not innocent,—a case to which the term "fraud" is usually applied. It will be considered, first, as respects its general aspect, and then as it applies particularly to the seller and purchaser of the chattels, and finally as it respects creditors and vendees of the seller. I. OF FRAUD IN GENERAL. § 866. Definition of fraud.— Many definitions of fraud have been attempted with varying success, but that of Sir William Anson may be adopted as best suited to the present purpose: Fraud is a false representation of facts, made with a knowledge of its falsehood, or recklessly without belief in its truth, with the intention that it should be acted upon by the complaining party, and actually inducing him to act upon it.1 1 Anson on Contract (7th ed.), 165. It is not necessary here to go extensively into an analysis of this definition, as that is fully done by the leading writers upon contract, but the chief features of the question may be touched upon with special reference to the subject now in hand. Thus § 867. Must be false representation. In the first place there must be false representation,— not necessarily false statement, but a false appearance given to the fact. The method employed is immaterial. "It does not matter whether the representation is made by express words, or by conduct, nor whether it consists in the positive assertion or suggestion of that which is false, or in the active concealment of something material to be known to the other party for the purpose of deciding whether he shall enter into the contract."1 $868. Whether concealment of truth is equivalent to false representation. The concealment which shall amount to a false representation is that only which may properly be designated as active. Mere passive non-disclosure which, as has been seen, may suffice to vitiate a contract uberrimæ fidei, will not be sufficient here; "there must be an active attempt to deceive, either by a statement which is false or which is true so far as it goes, but is accompanied with such a suppression of facts as to convey a misleading impression." "There must be some active misstatement of fact, or, at all events, such a partial and fragmentary statement of fact as that the withholding of that which is not stated makes that which is stated absolutely false." Thus, where one, seeking credit, being asked "how he stood," correctly stated his means, but did not mention that he owed two-thirds as much as he had, the court said: "To tell half a truth only is to conceal the other half. Concealment of this kind, under the circumstances, amounts to a false representation." But it has been held that 1 Pollock on Contract (4th ed.), 513. 2 Anson on Contract (7th ed.), 166. 3 Per Lord Cairns, in Peek v. Gur. ney, L. R. 6 H. L., at p. 403. 4 Newell v. Randall (1884), 32 Minn. 171, 19 N. W. R. 972, 50 Am. R. 562. So where a trader had made statements respecting his financial stand the mere failure to answer a question relating to a matter concerning which one party had important information is not equivalent to a misrepresentation.1 ing to a commercial agency for the purpose of gaining credit, and subsequently, when his financial condition had greatly changed, bought more goods without notifying the agency of the change, it was held to be such a false representation as entitled the seller to rescind. Mooney v. Davis (1889), 75 Mich. 188, 42 N. W. R. 802, 13 Am. St. R. 425. See also Croyle v. Moses, 90 Pa. St. 250, 35 Am. R. 654; Kenner v. Harding, 85 Ill. 264, 28 Am. R. 615; Graham v. Stiles, 38 Vt. 578; Wheeler v. Wheelock, 34 Vt. 553, and other cases more fully stated post, in notes to § 894. "To represent untruly that a glandered horse had the distemper only, or to conceal the fact that he had glanders, would be as much a suggestio falsi and suppressio veri as to represent an unsound horse as sound, or as to conceal the unsoundness." George v. Johnson, 6 Humph. (Tenn.) 36, 44 Am. Dec. 288. The rule is well stated by Mr. Justice Gray in Stewart v. Wyoming Ranch Co. (1888), 128 U. S. 383, 388, 9 S. Ct. 101, as follows: "In an action of deceit it is true that silence as to a material fact is not necessarily, as matter of law, equivalent to a false representation. But mere silence is quite different from concealment; aluid est tacere, aluid celare; a sup 1 Laidlaw v. Organ, 2 Wheat. (U. S.) 178. This was a contract for the sale of tobacco. On the morning of the sale the buyers knew, but the sellers did not know, that peace had been concluded between the United States and England, and this enhanced the pression of the truth may amount to a suggestion of falsehood; and if, with intent to deceive, either party to a contract of sale conceals or suppresses a material fact, which he is in good faith bound to disclose, this is evidence of and equivalent to a false representation, because the concealment or suppression is in effect a representation that what is disclosed is the whole truth. The gist of the action is fraudulently producing a false impression upon the mind of the other party; and if this result is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant, or his concealment or suppression of material facts not equally within the knowledge or reach of the plaintiff.” In Ennis v. Borner (1900), 40 C. C. A. 249, 100 Fed. R. 12, it appeared that the seller sold three cargoes of ore, to be paid for in accordance with an analysis to be made by one of two chemists to be selected by the seller. Instead of making the selection, the seller requested the buyer to make the selection and notify seller. The buyer made no selection, but, on the arrival of first cargo, had the ore analyzed by both chemists, and sent to the seller the one most favorable to the buyer, with a draft in payprice. The sellers asked if there was any news affecting the market price. The buyers gave no answer and the sellers did not insist on having one. Held, that their silence did not amount to a fraudulent concealment. See criticism, Story, Eq. Jur., § 149. |