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true; but the rule has been settled for the English courts, in the great case of Derry v. Peek, in accordance with what is believed to be the weight of authority, that, to sustain an action for deceit, actual fraud must be shown.

or a mere belief of its existence, will not warrant or excuse a statement of actual knowledge. This rule has been steadily adhered to in this Commonwealth, and rests alike on sound policy and on sound legal principles. Cole v. Cassidy, 138 Mass. 437, 52 Am. R. 284; Savage v. Stevens, 126 Mass. 207; Tucker v. White, 125 Mass. 344; Litchfield v. Hutchinson, 117 Mass. 195; Milliken v. Thorndike, 103 Mass. 382: Fisher v. Mellen, 103 Mass. 503; Stone v. Denny, 4 Metc. 151; Page v. Bent, 2 Metc. 371; Hazard v. Irwin, 18 Pick. 95." See also Goodwin v. Massachusetts Loan Ass'n, 152 Mass. 189, 202.

In Connecticut the Massachusetts rule, as laid down in the Chatham Furnace Co.'s case, supra, is cited with approval. Scholfield Gear & Pulley Co. v. Scholfield (1898), 71 Conn. 1, 40 Atl. R. 1046.

In Maine the Massachusetts rule is approved. Braley v. Powers, 92 Me. 203, 42 Atl. R. 362.

In the United States supreme court it is said that "a statement recklessly made without knowledge of its truth was a false statement knowingly made " (Cooper v. Schlesinger (1883), 111 U. S. 148); and that "a person who makes representations of material facts, assuming or intending to convey the impression that he has actual knowledge of the existence of such facts, when he is conscious that he has no such knowledge, is as much responsible for the injurious consequences of such representation, to one who believes and

acts upon them, as if he had actual knowledge of their falsity." Lehigh Zinc & Iron Co. v. Bamford (1893), 150 U. S. 665.

In Oregon it is said that false representation made recklessly as of one's own knowledge, without know. ing whether it was true or not, is fraudulent. Cawston v. Sturgis, 29 Oreg. 331, 43 Pac. R. 656.

In Missouri it is said: "A distinct, wilful statement, in ignorance of the truth, is the same as the statement of a known falsehood, and will constitute scienter." Walsh v. Morse (1883), 80 Mo. 568. Cf. Dulaney v. Rogers, 64 Mo. 201; and see Bank of Atchison v. Byers, 139 Mo. 627, 41 S. W. R. 325, where Derry v. Peek is cited with approval.

In Wisconsin it is said that "it makes no difference whether the misrepresentations are wilful. The seller is bound to know that the representations which he makes to induce the sale of his property are true." Beetle v. Anderson (1897), 98 Wis. 5, 73 N. W. R. 560, citing Miner v. Medbury, 6 Wis. 295; Cotzhausen v. Simon, 47 Wis. 103; Montreal River L. Co. v. Mihills, 80 Wis. 540; Gunther v. Ullrich, 82 Wis. 222.

In Nebraska it is said: "It is the settled law of this State that to entitle a party to relief on the ground of false representations, it is not necessary for him to allege or prove that the party making them at the time knew they were false; in other words, whether the defendant acted in good faith or not is immaterial."

$ 876. -Derry v. Peek.-"To believe without reasonable grounds," said Lord Bramwell, "is not moral culpability, but (if there is such a thing) mental culpability." And Lord Herschell said: "I think the authorities establish the following

Field v. Morse (1898), 54 Neb. 789, 75 N. W. R. 58, citing Phillips v. Jones, 12 Neb. 213; Foley v. Holtry, 43 Neb. 133; Hoock v. Bowman, 42 Neb. 80; Johnson v. Gulick, 46 Neb. 817.

In Texas it is said that if the representations are intended to and do influence the other party's conduct, the party making them should "be held responsible for their verity, if they should prove false, no matter how innocently made or honestly believed." Loper v. Robinson (1881), 54 Tex. 510.

In Minnesota the Massachusetts cases are cited with approval, though the court finally put the rule upon substantially the same ground as the English rule, saying: "It is fraudulent to affirm what is false, knowing it to be false. It is equally as fraudulent to affirm what is false, knowing that the affirmation is of the existence of a fact about which one is in entire ignorance." Bullitt v. Farrar (1889), 42 Minn. 8, 43 N. W. R. 566, 18 Am. St. R. 485, citing Merriam v. Pine City Lumber Co., 23 Minn. 314; Wilder v. De Cou, 18 Minn. 471. See also Busterud v. Farrington, 36 Minn. 320, 31 N. W. R. 360; Riggs v. Thorpe, 67 Minn. 217, 69 N. W. R. 891.

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it had proceeded from a vicious purpose, he would have a right of action for the damages caused thereby either at law or in equity." Per Morse, J., in Holcomb v. Noble, 69 Mich. 396, 37 N. W. R. 497, citing Baughman v. Gould, 45 Mich. 481, 8 N. W. R. 73; Converse v. Blumrich, 14 id. 109; Steinbach v. Hill, 25 id. 78; Webster v. Bailey, 31 id. 36; Starkweather v. Benjamin, 32 id. 305; Beebe v. Knapp, 28 id. 53. And in a still later case, Totten v. Burhans (1892), 91 Mich. 499, the same judge said: "The rule of law is well settled in this State since the case of Holcomb v. Noble, supra, that it is immaterial whether a false representation is made innocently or fraudulently, if by its means the plaintiff is injured."

The Pennsylvania rule differs in little except form from the English rule. Thus in Hexter v. Bast (1889), 125 Pa. St. 52, 17 Atl. R. 252, 11 Am. St. R. 874, it is said: "The general rule is, that to support an action of deceit, properly so called, it must appear that the fraudulent representation complained of was untrue; that the defendant knew, or ought to have known, at the time it was made, that it was untrue; that it was calculated to induce the plaintiff to act upon it, and that, believing it to be true, he was induced to act accordingly. Cox v. Highley, 100 Pa. St. 249. As a general rule, the statement must be both false and fraudulent; but if a person take upon himself to state as true that of which he is

propositions: First, in order to sustain an action of deceit there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false.

wholly ignorant, he will, if it be false, incur the same legal responsibility as if he had made the statement with knowledge of its falsity; the fraud consists in representing that he knows that of which he is in fact consciously ignorant." And in Griswold v. Gebbie (1889), 126 Pa. St. 353, 17 Atl. R. 673, 12 Am. St. R. 878, it is still more clearly put as follows: "There can be no question at this date that in an action of deceit the scienter must not only be alleged, but proved, and the jury must be satisfied that the defendant made a statement knowing it to be false, or with such conscious ignorance of its truth as to be equivalent to a falsehood. This is the general rule, and it has been declared with notable emphasis in several recent cases in this State." Citing Dilworth v. Bradner, 85 Pa. St. 238; Duff v. Williams, 85 id. 490; McCandless v. Young, 96 id. 289, and Hexter v. Bast, supra. See also Erie City Iron Works v. Barber, 106 Pa. St. 125, 51 Am. R. 508.

In Illinois honest belief in the truthfulness of the representation is a bar to the action of deceit. Endsley v. Johns (1887), 120 Ill. 469, 12 N. E. R. 247, 60 Am. R. 572; Holdom v. Ayer (1884), 110 Ill. 448. See also Jones v. Foster, 175 Ill. 459, 51 N. E. R. 862. And so in New Hampshire. Griswold v. Sabin (1871), 51 N. H. 167, 12 Am. R. 76.

In Iowa the representation must have been knowingly false. Avery v. Chapman (1883), 62 Iowa, 144, 17

N. W. R. 454; Scroggin v. Wood (1893), 87 Iowa, 497, 54 N. W. R. 437.

In New York knowledge of the falsity and an intent to deceive must be shown. Wakeman v. Dalley (1872), 51 N. Y. 27, 10 Am. R. 551. In Kountze v. Kennedy (1895), 147 N. Y. 124, 41 N. E. R. 414, 49 Am. St. R. 651, it is said: "It has been held that one who falsely asserts a material fact, susceptible of accurate knowledge, to be true of his own knowledge, and thereby induces another to act upon the fact represented to his prejudice, commits a fraud which will sustain an action for deceit. This is not an exception to, but an application of, the principle that actual fraud must be shown to sustain such an action." In Hadcock v. Osmer (1897), 153 N. Y. 604, 47 N. E. R. 923, it is said: "An action to recover damages for deceit cannot be maintained without proof of fraud as well as injury. Actionable deceit cannot be practiced without an actual intention to deceive, resulting in actual deception and consequent loss. But while there must be a furtive intent, it may exist when one asserts a thing to be true which he does not know to be true, as it is a fraud to affirm positive knowledge of that which one does not positively know. Where a party represents a material fact to be true to his personal knowledge, as distinguished from belief or opinion, when he does not know whether it is true or not, and it is actually untrue, he is guilty of falsehood, even if he be

Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made."1

lieves it to be true, and if the statement is thus made with the intention that it shall be acted upon by another, who does so act upon it to his injury, the result is actionable fraud." The New Jersey rule seems also to accord with the English. Thus in Cowley v. Smyth (1884), 46 N. J. L. 380, 50 Am. R. 432, after a full review of the authorities, it is said: "In such an action (deceit) a false representation, without a fraudulent design, is insufficient. There must be moral fraud in the misrepresentations to support the action." See also Cummings v. Cass, 52 N. J. L. 77.

In Mississippi it is said that to maintain an action for deceit "the defendants must have made a false statement knowing it to be false." Sims v. Eiland, 57 Miss. 83, id. 607.

In Virginia knowledge of the falsity must be shown. Proctor v. Spratley, 78 Va. 254.

1 Derry v. Peek was an action of deceit brought by Sir H. Peek against Mr. W. Derry, the chairman, and Messrs. J. C. Wakefield, M. M. Moore, J. Pethick and S. J. Wilde, four of the directors, of the Plymouth, Devonport and District Tramways Company, claiming damages for alleged

fraudulent misrepresentations made by the defendants, whereby the plaintiff was induced to take shares in the company. The directors had issued a prospectus in which they set forth, as one of the chief inducements, that they had the right to use either animal, steam or mechanical means of locomotion. They also sent out a circular letter in which they referred to "special privilege” enjoyed by the company of using steam power instead of horse power. As matter of fact, the company had the right to use steam power only upon obtaining certain consents, which required to be renewed every seven years. These consents had not then been obtained, and were subsequently refused. The directors claimed, and the court found, that they believed, when they issued the prospectus and the letter, that these consents had already been practically obtained and would not be refused-that it was a mere matter of requirements to be complied with on the part of the company, "and that, if those requirements were complied with, there was no practical danger that the consent would be refused." The case was tried before Stirling, J.,

It is true that Derry v. Peek was an action for deceit, but the same principles apply where a rescission is sought at law, although, as has been seen in a preceding section,' equity may relieve where there was no actual fraud.

§ 877. Representation must have been made to be acted upon by injured party. The representation must be made with the intention that it should be acted upon by the party

who dismissed the case both because the representations were not fraudulent in such a sense as to make the defendants liable for deceit, and because the plaintiff was not really misled by the representation. Peek v. Derry (1887), L. R. 37 Ch. Div. 541. Plaintiff appealed to the court of appeal, and the case was argued before Cotton, L. J., Sir J. Hannen and Lopes, L. J.. who unanimously reversed the judgment below and gave judgment for the plaintiff. Each of the judges delivered an opinion, all concurring that to make a statement as true which one does not know and has no reasonable ground to believe to be true was such fraud as would sustain an action for deceit. Peek v. Derry, 37 Ch. Div. 563. From this decision defendants appealed to the House of Lords, which unanimously reversed the court of appeal and affirmed the judgment of Stirling, J. Derry v. Peek (1889), 14 App. Cas. 337. Lords Halsbury, Bramwell, Watson, Fitz Gerald and Herschell delivered opinions. Lord Herschell made an exhaustive review of the decisions, beginning with Pasley v. Freeman (1789), 3 T. R. 51, 2 Sm. L. Cas. 74, and including Haycraft v. Creasy (1801), 2 East, 92; Foster v. Charles (1830), 7 Bing. 105; Corbett v. Brown (1831), 8 Bing. 33; Polhill v. Walter (1832), 3 B. & Ad. 114; Crawshay v. Thompson (1842), 4 M. & Gr. 357; Moens v.

Heyworth (1842), 10 M. & W. at p. 157; Taylor v. Ashton (1843), 11 M. & W. 401; Evans v. Collins (1844), 5 Q. B. 804; Evans v. Edmonds (1853), 13 C. B. 777; Western Bank of Scotland v. Addie (1867), L. R. 1 H. L. Sc. 145, 162; Reese Silver Mining Co. v. Smith (1869), L. R. 4 H. L. 64; Peek v. Gurney (1873), L. R. 6 H. L. 377: Weir v. Bell (1878), 3 Ex. Div. 238; Arkwright v. Newbold (1881), 17 Ch. Div. 301; Edgington v. Fitzmaurice (1885), 29 Ch. Div. 459; Smith v. Chadwick (1882), 20 Ch. Div. 27, 9 App. Cas. 187.

Derry v. Peek has been both vigorously assailed and defended. Sir Frederick Pollock writes a trenchant article in 5 L. Q. Rev. (1887), 410, in which he says: "The purpose of this paper is to show that the grounds assigned in Derry v. Peek, whether necessary for the decision or not, are erroneous in law, and ought to be disregarded by every tribunal which is at liberty to disregard them;" and as to these he subsequently says (6 L. Q. Rev. 72, n.) he "was thinking chiefly of American courts." William R. Anson, on the other hand, comes to its support in 6 L. Q. Rev. 72. See also, per Lord Esher, in Tomkinson v. Balkis Consolidated Co., [1891] 2 Q. B. 614. In this country the decision has been quite generally criticised. 23 Am. L. Rev. 1007, 24 id. 154, 155. § 863.

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