From the Library of the Late ROBERTS WALKER Friend and Partner of Justin DuPratt White (Cornell 'go) Presented to Cornell University In Memory of That Relationship by MR. WALKER'S FAMILY Cornell University Library KD 1963.B78 The law of actionable misrepresentation, 3 1924 022 237 766 (JornfU ICam Bc\^m\ Eibraty Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924022237766 THE LAW OF ACTIONABLE MISREPRESENTATION Complete in 17 volumes. Eoyal 8vo. Price 27/6 net per volume. ENCYCLOPAEDIA OF FORMS AND PRECEDENTS Eminent Conveyancing and Commercial Counsel UNDKI! THK GENERAL EDITORSHIP OP ARTHUR UNDERHILL, M.A., LL.D. Of Lincoln's Inn, BarHster~at-1.aw One of the Cojivcyancinii Convsel of the High Court Full Prospectus on application to — BUTTERWORTH & CO. 11 & 12, Bell Yard, Temple Bar, W.G. THE LAW OF ACTIONABLE MISREPRESENTATION STATED IN THE FORM OP A CODE POLLOWED BY A COMMENTARY AND APPENDICES BY GEORGE SPENCER BOWER ONE OF HIS MAJESTir's COUNSEi: Author of ** A Code of the Law of Actionable Defamation," ttc, (£c. '• Quam ilia aurea : Inter boxos bene agieb. oportet et sine EBAUDATiONE ! At qui sint boni, et quid est bene agi, magna queestio est."— Cic, De Off. III. 17. " What shall be given unto thee, or what shall be done unto thee, thou false tongue V " — Psalm cxx. 3. LONDON : BUTTEEWOETH & CO., 11 & 12, Bell Yabd, Temple Bab. %n\v iPubllBbers. Sydney : BcTTBRWORTU & Co. (Australia), Ltd , 76, Elizabeth Street. Calcutta : BuTTERWORTn & Co. (India), Ltd., 8/2, Hastings Street. 1911. iSi)A¥^ PEINTED BY TVtLLIAM CLOWES AND SONS, LIMITED, LONDON AND BECCLES. 12 1939 PEEFACE. It has been insisted by a courtlj- writer of the eighteenth century that a preface to a book is, in all cases, a seemly concession to the ceremonial conventions and amenities, if not to the decencies, of literature. " A preface," he observes, " is part of the habit of a book, and no author can appear full dressed without it." The convention referred to can no longer claim the universal alle- giance it enjoyed in the days of Queen Anne ; but it is still true to say that a preface is expected from any work which aspires to deal M-ith a scientific or serious subject. An explanation of this demand, conceived in a spirit of sardonic gloom and somewhat overdone modesty, is given by the late Sir Leshe Stephen, when introducing to the world his Science of Ethics : "a preface is generally the most interesting, and not seldom the only interesting, part of the book. It is useful to the hasty critic who -wishes to avoid the trouble of reading at all, and to the more serious student who wishes to have the clue to the author's speculations put into bis hands at the earhest possible period." This dehverance sounds a rather harsh note, and seems gratuitously churHsh to the pro- spective critic. The author who was accustomed to describe the lector benevolus as " that beast, the general reader," did not do so in a preface. A more graceful justification of the custom is to be found in the preface to the Examen of Koger North, who there reflects that " it is some ease to a Eeader to be advertised, first, of the design the writer proposes, and next, of the Methods he hath chosen to obtain it." Adopting, then, this last and most simple and genial formula, and ^^•ith the view to the " ease " of the reader, let me say at once that " the design the writer proposes " in this work is, as its title indicates, a statement of the law relating to misrepresentation, in so far as it is the subject of civil proceedings, whether at com mon law, or by statute. For a more detailed explanation of what " actionable vi Peeface. misrepresentation" includes, and what it excludes, I refer the " hasty critic " to the short Introductory Chapter of the Com- mentary, in the hope that his " haste " will not prevent him tres- passing for a matter of some three pages beyond the confines of the exiguous territory assigned to him by the cynical humour of Sir Leslie Stephen. The " methods chosen to obtain this design " — reverting again to Eoger North's prescription — are these. First, the law is stated in the form of a Code. Then follows a Commentary, the first twelve Chapters of which are intended to justify and illustrate, step by step, and in the same order of treatment, the several propositions of the Code which precedes it. Marginal references to the respective Chapters and Sections of the Commentary are set opposite the successive Articles of the Code. The plan adopted differs from that of my work on Actionable Defamation, in which the Commentary was contained in footnotes to the Code, and thus made continuous with it. There are incon- veniences in the " continuous " system, which some readers have kindly pointed out to me. There may be others in the present method ; but it seemed at least worth while to give it a trial. The last three Chapters of the Commentary deal with matters which find no place in the Code, viz. Statutorj- Proceedings (Ch. XIII), Misrepresentation to Courts or to the State or to the pubhc (Ch. XIV), Jurisdiction and Procedure (Ch. XV). My original intention was to comprise in one treatise not only Misrepresentation, but Xon-disclosure and Estoppel as well, since the two latter topics in some of their aspects are, with Misrepresenta- tion, joint tenants of large tracts of English jurisprudence. But this joint tenancy was soon found to be severed as regards so many important topics that the attempt became hopelessly distracting. I was in fact aspiring to write three books at once. It requires more skill in literary equitation than I can claim to drive, troika- fashion, three horses abreast, one trotting and the others galloping. In more homely phrase, I found that I had bitten off more than I could chew. Non- disclosure, therefore, except in so far as it con- stitutes a form of misrepresentation [see Ch. IV, Sect. 4, Sub-s. (2)], and Estoppel, except in so far as its principles feed the law of misrepresentation with illustrations and analogies, have been thrown overboard for present purposes, perhaps to be picked up again and dealt with separately, if fates are Idnd—liahe^it sua fata libelli — on Preface. vii some future occasion. A single Horatius can only hope to overcome three Curiatii singly. It will be noticed that the rights of shareholders and others against companies and their directors, officers, and agents, in respect of misrepresentation in prospectuses, and otherwise, constitute the subject-matter of very considerable portions of the book. Particular attention has been paid to these matters, for their importance obviously demands it. Not only are company transactions by far the most prolific in examples of the working of the principles of misrepresentation law, but they have received the special attention of the legislature, and of the courts interpreting the legislature, in regard to rectification of the register, variation of the list of con- tributories and the hke, on the ground of misrepresentation, and also as to hquidation, which has so vital a bearing on the rights of share- holders in respect of misstatements whereby they are induced to take shares. All these matters are treated separately in their proper places [see Ch. XI, Sect. 8, Sub-ss. (3) and (4), and Sect. 4, Sub-s. (6)]. But by far the most important matter in this con- nection, and the one which has accordingly been subjected to the most detailed examination, is the statutory law, as to untrue state- ments in prospectuses, which was introduced by the Directors' Liability Act, 1890, and is now incorporated in the Companies (Consolidation) Act, 1908. This topic is minutely dealt with in Ch. Xm, Sect. 1. The statutory provisions affecting the employment of puffers at auction sales are the subject of similarly detailed treatment in Sect. 2 of the same Chapter, whilst Sect. 3 briefly, but, it is hoped, completely, deals with other enactments relating to mis- representation. Chapter XIV is devoted to certain causes of action not now deemed in the strictest sense actions for misrepresentation, but which involve most of its elements, being based on misrepresentation, though that misrepresentation is not alleged to have been made to the person suing. This subject involves consideration of the remedies of a party htigant against whom a judgment has been given, or of an individual prejudiced by the grant to another of a charter or patent or privilege, where such judgment or grant has been procured by deceit practised upon the courts or the State. It also includes " passing off" cases, which indeed did once undoubtedly belong, and even in modern times have been regarded by high authorities (such viii Preface. as Hellish, L. J., and Vaughan Williams, L.J. — see § 417) as belong- ing, to the class of " actions of deceit " properly so called. The vital questions in the consideration of any title of the law are first, the nature of the alleganda et probanda ; next, the question on whom the burden of such allegationand proof rests in thefirst instance, and when and under what conditions it may be shifted ; and, thirdly, the question which of the matters in dispute are matters of law, and which are matters of fact. As regards the two first of these. Lord Thuelow pertinently observed, mFoxy.Mackreth (1788), 12 Cox, 320, 330 : " it is of very little consequence to the public to lay down definite rules of law, if you have indefinite rules of evidence " ; and the paramount necessity of a clear statement of the ingredients in any cause of action, and of a sharp distinction between questions of law and fact, is implied, if not expressed, in the course of Lord Halsbury's eulogy on the modern rules of pleading in Scotland, and his corre- sponding disparagement of the English system [see Clydesdale Bank V. Paton, [1896] A. C. 381, at pp. 388, 389 : " by the precision of the Scottish pleading there is still a necessity to set out the real cause of action . . ., which I regret to say is no longer the case in Enghsh pleadings. I therefore speak with some degree of envy when I say that, at all events, the Scottish jurisprudence has preserved something hke a system in which a definite and precise allegation of the cause of action is required to be set out before a htigant is allowed to incur considerable expense in proving what may after all turn out to be no cause of action at all "]. Accordingly, in the case of every species of remedy or relief based on misrepresentation (see Chapters X, XI, and XII of the Commentary, expounding Parts VII, VIII, and IX of the Code), I have endeavoured to state definitely and separately what I con- ceive the law to be as to (1) the constituent elements of the cause of action or ground of defence ; (2) the burden of allegation and proof ; and (3) the questions of law and fact ; but not until after having first considered and defined successively, in Chapters II-VIII, the various constitutive concepts in this branch of the law (representation, misrepresentation, fraud, innocence, inducement, materiahty, altera- tion of position, damage, and parties to the representation). The principles which govern the law of defamation are, in many cases, identical with those which are apphed to the law of misrepre- sentation. Authorities illustrative of the one department serve frequently to elucidate the other. Accordingly my references to Peepace. ix these iiiiakigies luive been abundant, not to say (as, I fear, it may be said) " painfnl, and frequent, and free." I hope it will not be considered that in these references (see §§ 47, 50, 53, 54, 08, 70, 80, 93, 94, 99, 100, 102, 108, 126, 128, 144, 162, 318, 417, 431, 450, 461, and 467) I have been too ready to detect points of contact and resemblance on the principle of Fluellen's identification of Monmouth ■with Macedon ; or that, in citing for that purpose my work on Defamation, I have exhibited undue partiality to my own intel- lectual offspring. If I have sinned in this respect, I take refuge in the Aristotelian plea of the natural instinct and human tendency of literary parentage. In the citation of authorities, I have carefully abstained from referring to judicial observations made in the course of the argument, unless those observations formed part of, or were at least consistent with, the judgment afterwards delivered ; or, rather, I have abstained from relying on such observations as authoritative, or as anything more than subjects of discussion and comment. The reasons for this course are stated in note (c) to § 162, and are enforced by the vigorous protest of Bacon, V.-C, at p. 46 of Re Great Wheal Polgooth Co. (1883), 53 L. J. (Ch). 42, against the " by no means satisfactory " practice " that words dropped by the judges in the course of dis- cussions before them, or in the course of judgments pronounced by them, should be seized hold of, as if they were expositions of the law. They are not expositions of the law ; they are not to be so treated." In a similar strain, I have heard Yaughan- Williams, L.J., express his strong objection to the practice, adding that, while the argument is proceeding, he is always, in a sense, contra proferentem. In other words, the Socratic method, than which none better has ever been discovered by mortal mind, that is, to test and prove by objection, query, and challenge (Sl Ifj^Tiiauog koi cnroKpiatuc i^tp^w^v Trjv aXr'iOtiav), is, during the debate, as proper a function of judica- ture as it is of philosophy. Obviously any remark made by a judge for the purpose of this testing process does not necessarily represent his opinion even at the moment when the remark is made, still less the opinion which he is to form after the conclusion of the arguments on both sides. On the other hand, one cannot lose sight of the fact that in the reports of an earher time, the ars longa was in the arguments, and the vita hrevis in the judgments, and that the judicial dicta of those days far more commonly than at present cast their shadows before ; added to which, we find in many instances that B.M. ^ X Preface, those preliminary and interjected observations were often more pithily and epigrammatically expressed, or more apt in illustration, than the formal propositions subsequently enunciated. It is further to be remembered that there are dicta and dicta ; and that the dictum of this judge may be worth more than several considered judgments of that. Another objectionable tendency — ^judges being as much to blame in this case as advocates and writers — is disclosed in the imputations constantly made on the accuracy of the reporters for the purpose, as stated in note (c) to § 162, of " saving the face of some eminent authority shown to have been betrayed into the use of an indiscreet expression." Even Lord Esher, outspoken as he usually was, on one occasion almost yielded to this temptation : "I do not think," he says at p. 26 of Be Terry and White's Contract (1886), 32 C. D. 14, C. A., " that the judgment was very satisfactory ; or, if the judgment was very satisfactory, all I can say is that some- body else must take a burden which is often thrown upon judges, and that some reporter has not very satisfactorily reported what the judge said." An example of this tendency is to be found in connection with the famous, and utterly erroneous, proposition to which Sir Geoege Jbssbl undoubtedly committed himself, that from proved materiality an inference in law of inducement can be made. This statement has again and again, with gross injustice to the reporters, been declared by the too idolatrous apologists of a clarum ct venerdbile nomen to be an error in the report, and not (as it was) a manifest heresy in grcmio judicis. Manj of such indiscretions are to be found in the deliverances of this distinguished judge and jurist, as was frequently pointed out in direct and emphatic terms by his successor at the Eolls, and in more urbane phraseology by Bowen, L.J., who described him as " a great lawyer, but a rapid laAvyer, and one who certainly sometimes brushed away cases in a speedy and perhaps somewhat imperious way." He is said to have never reserved a judgmeirt, and to have never doubted. Hinc illai lacrimal. If he had occasionally doubted, or had occasionally reserved a judgment, he would not have permitted himself those absolute, unqualified, and " imperious " statements which he undoubtedly pronounced, and for which the unfortunate reporters have been made in many cases to take the blame. One is reminded of Ben Jonson's exclamation : " would that he had blotted a thousand ! " in reference to Hemynge and Condell's triumphant Preface. xi announcemeiit that yiiakespoaro " never blotted a line," — ^^an exelanui- tion ^Yllicll in no way detracted from the lesser poet's admiration of the greater " on this side idolatry " ; just as the present observations are not offered in any spirit of detraction to the memory of SirGEOEGB Jessel, but in justice to those at whose expense his fame has been exalted to a greater altitude than even it can justly claim. Of the four Appendices, the first contains historical and critical matter ; the second institutes a comparison between ethics and jurisprudence in relation to misrepresentation ; the third deals with the Eoman law of Dolus, on which many of the English principles are based ; and the fourth is devoted to a short statement of the principles of the Scottish law of misrepresentation. It did not seem proper to include the subjects of these Appendices in the Commentary; but possibly they may be considered as not altogether without importance or relevance, if, as Dr. Wendell Holmes says at the outset of his profound treatise on Tlie Common Law (Lecture I, p. 1), " the life of the law has not been logic : it has been experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy, avowed and unconscious, even the prejudices which judges share with their fellow men, have a good deal more to do than the syllogism in determining the rules by which men should be governed. The law embodies the story of a nation's development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics. In order to knoAV what it is, we must know what it has been, and what it tends to become." When examining the principles of theological casuistry in relation to the duty of veracity, as compared with those of jurisprudence (App. B, Sect. 2), I was greatly assisted by the kindness and erudition of Father Carolan, S.J., and Father George H. Pollen, S.J. To each of these gentlemen my hearty acknowledgments are due. G. SPENOBE BO WEE. 2, Hare Coubt, Temple. October, 1911. TABLE OF CONTENTS. PAGE Preface -_-__--_--_-v Table of Cases ---------- xxi Table of Statutes -__-_--_ xxxix THE CODE -----------1 Paet I. Ebpresentation (Arts. 1-9) _ - _ _ _ l Part II. Misrepresentation (Arts. 10-12) - - - - 3 Part III. Misrepresentation in relation to the Mind OF the Ebpresentor (Arts. 13-lG) - - - 5 Part IV. Misrepresentation in its Effect on the Eepre- sentee (Arts. 17-21) ------ 6 Part V. Parties to the Ebpresentation (Arts. 22, 23) - 8 Part VI. When Misrepresentation is Actionable (Arts. 24-27) ---------10 Part VII. Action for Damages for Misrepresentation (Arts. 28-32) --------11 Part VIII. Proceedings for Eescission or Analogous Eeliep (Arts. 33-41) - - ----- 16 Part IX. Eelief by way of Defence to an Action or Proceeding to enforce the Contract or Transaction (Arts. 42, 43) - - - - - 24 THE COMMENTARY ---------27 Chapter I. Introductory ___---- 27 Sect. 1. Scope of the Treatise -------27 Sect. 2. Excluded Topics --------27 Sect. 3. Topics included ------ -28 Sect. 4. Leading Conceptions — Order of Treatment - - - 29 Chapter II. Ebpresentation ------- 30 Sect. 1. The Constituent Elements of Keprcsentation - - - 30 Sub-sect. 1. Communication between two persons - - 30 Sub-sect. 2. Relation to Matter of Fact - - - - 31 xiv Table of Contents. PAGE Chapter II. Ebpeesentation — continued. Sect. 2. Statements of Intention, or otherwise relating to the Future 32 Sub-sect. 1. Statement of the Representor's Own Intention - 32 Sub-sect. 2. Statements which are Promises only - - 37 Sub-sect. 3. Statement of a Third Person's Intention - - 46 Sub-sect. 4. Other expressions de futiiro (Expectation, Hope, &c.)- ____-_- 47 Sect. 3. Statements of Opinion, Belief, or Information - - - 48 Sub-sect. 1. Statement of the Representor's Own Opinion, Belief, or Information, as such - - - 49 Sub-sect. 2. Statement of a Third Person's Opinion, BeKef, or Information, as such - - - - 51 Sub-sect. 3. Statement of Matters of Opinion, &c., as Fact - 51 Sub-sect. 4. Statement of Matters of Fact as Opinion, &c. - 52 Sect. 4. Statements of Law _______ 53 Sub-sect. 1. Statements of Mixed and Indivisible Law and Fact- _______ 54 Sub-sect. 2. Statements, in a Separate Form, of Inference of Law from Given Facts - - - - 56 Sect. 5. Statements as to Documents ------ 57 Sub-sect. 1. Statements as to the Existence of a Document - 58 Sub-sect. 2. Statements as to Actual Contents of a Document 58 Sub-sect. 3. Statements as to Effect and Purport of a Docu- ment ----- --59 Sub-seot. 4. Statements as to the Character, Nature, C'lass, or Description of a Document - - - 59 Sect. 6. Exaggeration, Puffery, &c. ------ 60 Chapter III. How a Eeprbsbntation may be made - 63 Sect. 1. Express Representations ------ 63 Sect. 2. Implied Representations (Acts and Conduct) - - - 64 Chapter IV. Misrepresentation --_-__ 72 Sect. 1. What constitutes Falsity in Fact ----- 72 Sect. 2. Substantial Falsity Necessary and Sufficient to prove a Misrepresentation ______ _73 Sect. 3. When the Falsity must be shown to have existed - - 76 Sect. 4. Canons of Construction for the purpose of determining the Question of Falsity ---____ 73 Sub -sect. 1. Sense in which a Representation is to be under- stood ---____ 7g Sub-sect. 2. Falsity by Omissions, Silence, or Inaction - - 84 Sub-sect. 3. Where several Statements, Effect of the Whole to be considered- - - - _ _ gg Sub-sect. 4. Questions of Law and Fact as to the Meaning of Representations, with a view to determining their Falsity or Truth - - - - - 100 Chapter V. What Constitutes Fraudulent, and Inno- cent, Misrepresentation respectively - 102 Sect. 1. Fraudulent Misrepresentation - - _ _ _ ]^o2 Sub-sect. 1. Fraud as distinguished from mere Falsity - - 103 Table of Contents. xv PAOB Chapter Y. What Constitutes Fraudulent, and Inno- cent, Misrepresentation respectively — cont. Sect. 1. Fraudulent Misrepresentation — coniinved. Sub-seet. 2. Non-Belief in Truth renders Misrepresentation Fraudulent - - - - - -104 Sub-sect. 3. Motive and Intention of Representor immaterial- 107 Sub-sect. 4. When the Non-Belief must be shown to have existed _______ no Sect. 2. Innocent Misrepresentation ______ 114 Sub-sect. 1. Honest Actual Belief constitutes Innocence in Misrepresentation _ _ - - _ 114 Sub-sect. 2. Negligence, Absence of Reasonable Grounds, &c., consistent with Innocence - _ 115 Chapter VI. Inducement and Materiality - _ _ 120 Sect. 1. Inducement ________ 121 Sub-sect. 1. Burden on Representee of proving that the Representation was made vidth the object and result of inducing _____ 12I Sub-sect. 2. Co-existence of other Inducing Causes does not negative Inducement _ _ _ - _ 129 Sub-sect. 3. The Entirety of Statements or Documents (where more than one) to be considered _ - - 130 Sub-sect. 4. Where Representee must assign the meaning in which he understood, and relied upon, the Representation - - _ _ - - 132 Sect. 2. Materiality ----____ 133 Sub-sect. 1. What Materiahty means _____ 133 Sub-sect. 2. Burden of Proof, as regards Materiality - - 140 Sect. 3. Questions of Law and Fact in relation to Inducement and Materiality _ ______ 141 Sub-sect. 1. Inducement and Materiality, when Questions of Fact ---__--- 141 Sub-sect. 2. ^Vhat are Questions of Law in relation to In- ducement and Materiality _ _ _ _ 144 Sub-sect. 3. Matters to bo considered in determining the Issues of Inducement and Materiality - - 144 Chapter VII. Alteration of Position and Damage - 146 Sect. 1. Alteration of Position __--___ 146 Sub-sect. 1. Meaning of the Expression _ _ _ _ 140 Sub-sect. 2. Classes of Contracts and Transactions which may constitute Alteration of Position _ - _ 147 Sub-sect. 3. Burden of Proof and Questions of Law and Fact- 148 Sect. 2. Damage - - - - - - - - -149 Sub-sect. 1. What constitutes Actionable Damage _ - 149 Sub-sect. 2. Burden of Proof and Questions of Law and Fact - 157 Chapter VIII. Who are deemed Parties to a Misrepre- sentation ---_-_- 158 Sect. 1. The Representor ________ 158 Sub-sect. 1. General Statement ___--_ 158 xvi Table op Contents. PAGE Chapter VIII. Who are deemed Paetibs to a Misrepre- sentation — continued. Sect. 1. The Representor — continued. Sub-sect. 2. Principal liable for his Agent's Act of Misrepre- sentation - - - - - - -159 Sub-sect. 3. The Position of Co-agents and Sub-agents - - 161 Sub-sect. 4. The Liability of Principal and Agent respectively for Fraudulent Misrepresentation - - - 161 Sub-sect. 5. Imphed Authority ------ 170 Sub-sect. 6. Liability of Joint Representors - - - 171 Sub-sect. 7. Burden of Proof and Questions of Law and Fact 172 Sect. 2. The Representee - - - - - - - -173 Sub-sect. 1. The Person to whom the Representation is made, or his Principal or Partner - - - - 174 Sub-sect. 2. Any Person to whom the Representor actually or presumptively intended the Representation to be passed on - - - - - - 175 Sub-sect. 3. A member of a class of Persons to whom the Representation is addressed - - - - 176 Sub-sect. 4. Burden of Proof and Questions of Law and Fact - 178 Sect. 3. Note on the Cases of B. v. De Berenger, Bagshaiv v. Seymour, and Bedford v. Bag.shaw _ _ - - 181 Chapter IX. When Misrepresentation is Actionable - 185 Sect. 1. To what Proceedings Fraudulent Misrepresentation is amenable ------- 185 Sect. 2. To what Proceedings Innocent Misrepresentation is amenable - - - - — - -186 Sect. 3. Misrepresentation not amenable to Non-Statutory Pro- ceedings except as above - - - - - - -187 Chapter X. The Action for Damages for Fraudulent Mis- representation - - - - - - -196 Sect. 1. Ingredients of the Cause of Action - - _ _ _ 196 Sect. 2. Aflfirmative Defences to Actions for Damages for Fraudulent Misrepresentation ------- jgg Sub-sect. 1. Representee's Knowledge of the Truth - - 200 Sub-sect. 2. Agreement to waive Inquiry, or take all risks, or accept with all Faults, or assume facts, etc. - 205 Sub-sect. 3. Previous Avoidance of Contract - - - 211 Sub-sect. 4. Statutory Defence in Cases of Oral, or Unsigned, Representations as to Credit - - - - 212 Sub-sect. 5. Misrepresentation by Agent within the Scope of his Authority, but for his own ends - - 216 Sect. 3. Mode and Quantum of ReHef— Rules for the Assessment of Damages ------___ 218 Sect. 4. Questions of Law and Fact ------ 225 Sect. 5. Parties --------- 226 Sub-sect. 1. Who may sue ------ 226 Sub-sect. 2. Who may be sued ------ 227 Sub-sect. 3. Incapacity of Shareholder in certain cases to sue Company for Damages _ - _ - 228 ' Tablk op Contents. xvii PAOE Chapter XI. Rescission and Consequential or Analogous Relief ----____ 230 Sect. 1. Nature and Limits of the Eight to avoid a Contract in- duced by Misrepresentation _____ 230 Sub-sect. 1. General Statement ______ 230 Sub-sect. 2. For Purposes of Rescission, Fraud and Innocence immaterial - _ _ - - _ -231 Sub-sect. 3. Immateriality of Question whether the Contract was detrimental or beneficial to the Repre- sentee _______ 233 Sub-sect. 4. Contracts induced by Misrepresentation voidable, not void, with certain exceptions — Repre- sentee's Option or Right of Election - - 234 Sect. 2. What must be alleged and proved by the Representee in Proceedings for Rescission _---__ 240 Sect. 3. Form and Extent of Rehef -_--__ 245 Sub-sect. 1. Action for Rescission _____ 247 Sub-sect. 2. Action for Money had and Received - - - 252 Sub-sect. 3. Statutory Procedure and Rehef in the case of Contracts to take Shares in a Company, where the Company is a going concern - _ _ 254 Sub-sect. 4. The like Statutory Procedure and Relief where the Company is in Liquidation _ _ _ 258 Sub-sect. 5. Rehef in cases of Sales by Order of the Court _ 261 Sub-sect. 6. Physical Resumption or Recapture of Property parted with under a Contract voidable for Mis- representation --_-__ 262 Sect. 4. Affirmative Defences to Proceedings for Rescission - - 264 Sub-sect. 1. The Representee's Knowledge of the Truth - 264 Sub-sect. 2. Agreement by the Representee to waive Inquiry, dispense with Information, or take with all Risks, Faults, or Defects, etc _ _ _ 264 Sub-sect. 3. Agreement by Representee to waive Rescission and accept Compensation instead - - - 265 Sub-sect. 4. Affirmation of the Contract _ _ _ _ 268 Sub-sect. 5. Where Rescission and Restitution would be unjust to the Representor, or to Third Parties - 271 Sub-sect. 6. The Liquidation of the Company, in cases of Contracts to take Shares _ _ _ _ 275 Sub-sect. 7. Delay, Laches, and Acquiescence may constitute Evidence of, or give scope for, certain of the foregoing Defences, but do not per se constitute Defence to Rescission _____ 282 Sect. 5. Questions of Law and Fact in Proceedings for Rescission - 287 Sect. 6. Parties to Proceedings for Rescission _ _ _ _ 287 Sub-sect. 1. The Persons entitled to initiate or maintain the Proceedings ______ 288 Sub-sect. 2. The Persons liable to the Proceedings - - 289 Chapter XII. Misrepresentation as a Defence or Invali- dating Cause- __-__- 294 Sect. 1. To what Proceedings Misrepresentation is a Defence or Answer __---___- 294 xviii Table of Contents. PAGE ChAPTEE XII. MiSKBPRESBNTATION AS A DEFENCE OR INVALI- DATING Cause — continued. Sect. 2. Extent of Applicability of the Rules relating to Proceedings for Rescission -------- ^yb Sect. 3. Where the Defence is available against Assignees of Pro- perty or Rights under a Contract procured by Misrepre- sentation --------- 300 Chapter XIII. Statutory Provisions as to Misrepresenta- tion __------ 306 Sect. 1. The Statutory Law relating to Misrepresentations in Pro- spectuses of Companies --_--- 306 Sub-sect. 1. Origin and Object of the Enactment - - 306 Sub-sect. 2. To what Representations the Enactment relates - 307 Sub-sect. 3. The Persons to and against whom respectively the Statutory Right is given - - - 310 Sub-sect. 4. What must be alleged and proved in the first instance by Persons entitled to maintain the Statutory Proceedings ----- 322 Sub-sect. 5. Statutory Grounds of Excuse and Affirmative Defences ------- 326 Sub-sect. 6. The Statutory Remedy ----- 334 Sub-sect. 7. Miscellaneous points in connection with the Statutory Procedure ----- 334 Sect. 2. Statutory Provisions as to Implied Misrepresentations on Sales by Auction ------- 338 Sub-sect. 1. The Law as to the Employment of Puffers at Sales by Auction existing at the time of the passing of the Act of 1867 - - - - 340 Sub-sect. 2. The Statute of 1867 and the Enactment of 1893 342 Sect. 3. Other Statutory Provisions relating to Misrepresentation - 345 Chapter XIV. Misrepresentation as a Ground of Eemedy or Eelief at the instance of Persons other than Eepresbntees - - - - 349 Sect. 1. Remedies available to a Person injured by a Misrepresenta- tion not made to him --__-_ 349 Sub-sect. 1. English Judgments, etc., procured by Fraudulent Misrepresentation ----- 350 Sub-sect. 2. Foreign Judgments procured by Fraudulent Misrepresentation ----- 355 Sub-sect. 3. Awardsof a Domestic Forum procured by the like means ------- 35(5 Sub-sect. 4. Misrepresentation to the C'ro\\'n or Public Authorities ---__-_ 357 Sub-sect. 5. " Passing Off " Cases - - - - - 361 Sect. 2. Misrepresentations which operate for the Benefit or Relief of Persons A\ho were neither Representees nor injured thereby --------- 30:; Table of Contents. xix ^ _ PAGE Chapter XV. Jurisdiction and Procedure- - _ _ sgg Sect. ] . Jurisdiction ----_--__ 355 Sub-sect. 1. In Actions for Damages ----- 366 Sub-sect. 2. In Proceedings for Rescission - - - - 366 Sub-sect. 3. In Statutory Proceedings - _ - _ 368 Sub-sect. 4. In Proceedings to set aside Judgments, Charters, Patents, etc., procured by Misrepresentation, and in " Passing Off " Actions _ - - 359 Sub-sect. 5. In Arbitrations -___-_ 359 Sect. 2. Procedure ----_____ 379 Sub-sect. 1. Rules of Pleading in their Application to Mis- representation and Fraud _ _ _ _ 370 Sub-sect. 2. Certain Rules of Practice relating to Proceedings for Misrepresentation - _ - _ _ 373 Sub-sect. 3. Rules as to Costs in relation to Actions for Misrepresentation - _ - _ _ 376 APPENDICES ----------381 Appendix A. History and Criticism op the Place and Treatment of Deceit and Fraud in English Jurisprudence - - - _ 381 Sect. 1. History of the Common Law Action of Deceit - - - 381 Sub-sect. 1. Earliest Form of the Writ of Deceit - - - 381 Sub-sect. 2. The Action of Deceit in its Second Stage - - 382 Sub-sect. 3. The Action of Deceit in its Present Form - - 385 Sect. 2. The Conception and Treatment of Fraud as applied to Misrepresentation at Common Law _ - - - 386 Sect. 3. The Conception and Treatment of Fraud as applied to Misrepresentation in Equity _____ 387 Sect. 4. The Distinction between " Legal " and " Moral " Fraud necessitated by the above History _ _ _ _ 388 Sect. 5. Criticism of the Existing Law of Misrepresentation - - 393 Sub-sect. 1. Terminology. InutiUty and Inconvenience of the term " Fraud " as applied to Actionable Misrepresentation _____ 393 Sub-sect. 2. Criticism of the Substance of the Law of Mis- representation ______ 400 Appendix B. Comparison between English Juridical and Ethical Treatment of Misrepresen- tation AND Fraud _____ 403 Sect. 1. English Law of Misrepresentation considered in relation to Current Morality and Custom _ - _ _ _ 403 Sect. 2. English Law of Misrepresentation considered in relation to Philosophical and Tlieological Casuistry _ _ _ 408 XX Table op Contents. PAGE Appendix C. The Eoman Law of Dolus and Misrepre- sentation __----- 422 Sect. 1. General View of the Conception of Dolus and its place in Roman Jurisprudence ____-- 422 Sect. 2. The Principles of the Roman Law of Misrepresentation compared mth those of English Law - - - - 424 Sub-sect. 1. As to what is deemed a Representation - - 424 Sub-sect. 2. As to the Elements and Forms of Misrepresenta- tion -_- ___--425 Sub-sect. 3. As to Fraud and Innocence in Misrepresentation 427 Sub-sects. 4-15. As to other Topics ----- 428 Sect, 3. Applications of, and References to, the Principles of the Roman Law of Dolus in English Judgments - - 434 Appendix D. The Scottish Law of Misrepresentation - 437 Sect. 1. As regards Relief by way of Damages (Reparatio Damni) - 437 Sect. 2. As regards Relief by way of Rescission ("Reduction") and Defence ________ 438 Sect. 3. As regards Statutory Proceedings _ _ - - - 438 Sect. 4. As regards Pleading and Procedure - - _ _ 439 Index __________ __n"| TABLE OF CASES. A. A. \V. (.AMAGE. Lid. t-. Chark'sworth .... 47, 124, -138 Aaron's Reefs, Ltd. v. Tmss 35, 84, 88, !l(i, 98, 131, 132, 234, 241, 204, 275, 283, 281 294, 299,' 300 Abrath v. N. E. Ry. Co 107 AbouIofE V. Oppenheimur 351, 355, 35(i Adam v. Newbiggia .......... 251 273 Ada^mson, Ex parte. Re VoUie 104,172^225 V. Evitt ........... 75 V. Jervia 113, 148, 172, 199 Addis V. Campbell .......... 250, 251 Ajello V. Worsley .......... 00, 153 Alcock V. Cooke 357, 338,' 359 Alderson v. Maddison . . . . . . . . . . .418 Allen V. Flood ........... 383, 397 Alman v. Oppert ........... 329 Alton Woods, Case of .......... . 357 Ambrose Lake Tin and Copper Mining Co., Re 31, 181 Ames V. MUward 88, 198, 38(i Amos V. Chadmck, No. 1 (order for test action) .... . 374 No. 2 (order substituting plaintiff) ..... 375 ^indcrson'a Case, Me Scottish Petroleum Co. ... 78, 130, 250, 257, 282 Anderson v. Costello ........... 300 V. Thornton 232, 233 Andrews v. Mockford . . 98, 99, 120, 132, 141, 153, 154, 155, 178, 180, 182, 199 Angel V. Jay ............ 242 Anglo-Austrian Printing and Publishing Union, Re . . . . 289 Anglo-Danubian Steam Navigation and Colliery Co, Re : Walker's Case . . 281 Angus V. CUfford . . 33, 48, 79, 106, 107, 114, 110, 138, 153, 198, 378, 388 Anon. (1505) Cro. Eliz. 59 35 (temp. Eliz.), Gloucestershire Clothier's Case .... 302, 384 (1684), Skin. 159 . . . . . . . . 58, 238, 421 Anstey v. British Natural Premium Life Association ..... 207 Archbold v. Commissioners of Charitable Bequests in Ireland .... 232 Archer v. Stone 122, 135, 137, 295 Arkivright v. Newbold . 59, 81, 86, 88, 89, 90, 106, 107, 113, 139, 190, 220, 225 Armory v. Delamirie ........... 224 Armstrong v. Turquand .......... 235 Arnison v. Smith . 77, 108, 110, 111, 112, 131, 141, 143, 186, 197, 201, 203, 200, 209, 211, 212, 221, 373, 374 03, 98, 203, 205, 247, 202 Arnold, Re ....... Ashley's Case, Re Estates Investment Co. Askew's Case, Re Ruby Consolidated Mining Co. Assets Development Co. v. Close Bros. & Co. Atkinson v. Newcastle and Gateshead Waterworks Co. Att.-Gen. v. Ray ...... Attwood V. Small . . 75, 120, 122, 123, 124, 125, 130, 201 . 281 . 253, 250 . 378 . 346 52, 388, 390 203, 242, 272, 435 Australia, The ............ 172 XXll Table oi? Cases. Avery's Patent, Be ..... . Ayles V. Cox ....... Ayre, Ex park. He Deposit and Life Association Co. PAGE . 3()0, 393 290, 297 35, 231, 259 B. Babci ir'K V. Larson Bagleliole v. Walters . Bagnall (Joiin) and Sons v. Carlton Bagot V. Chapman Bagsha«' v. Lane V. Seymour Baily v. Mcrrell . Bain v. Fothergill Baker v. Moss V. Wads worth . Banister, Re 206, 35, 207, GO, 237, 246, 181, 151, 157 182, 197, 207, 201 209 378 304 103 184 382 224 Bank of Australasia v. Nias Bank of Hindustan, China and Jajjan, Re Campl)eirs and Hippisley's Gases Ex parte Kintrea Snow's Case Bannerman v. White . Banque d' Hochelaga v. Murray . Barber v. Fletcher Barley v. ^\'alto^d Barned's Banking Co., Re : Peel's Case Barnes v. Addy .... Barry v. Croskey Bartlett v. Salmon Barwick v. English Jomt Stock Bank Baty V. Keswick 106, 107, 47, 100, 149, 179, 123, 124 47, 90, 100, 101 Bawden v. London, Edinburgh and Glas; Beachey v. Brown Beadles v. Burch Bear v. Stevenson Beatlie v. Lord Ebury Beaumont v. Dukes ...... 35, 47, 62. 63 Bedford?;. Bagshaw ...... 177, 178, 182 Begbic V. Phosphate Se^\age Co, Behn v. Burness . . .39, 40, 41 Bellairs v. Tucker Benham v. United Guarantee and Life Assurance Co, Bennett v. Lord Bury Bentinck v. Fenu Bentley & Co., Ltd. v. Black Betjemann v. Betjemann Betts V. Doughty Bevan v. Adams Bexwell v. Christie Biddle v. Levy .... Biggar v. Rook Life Assurance Co. Bigge, Ex parte, Re Northumberland and Durham District Banking Co. Bile Bean Manufacturing C'o. v. Davidson Billage (or Billmg) v. Southee Bingham v. Bingham . Birch V. Birch Bishop V. Balkis Consolidated Co. Blackburn, Low & Co. v. Vigors Blaiberg v. Keeves Blair v. Bromley .... .... 70 Blake's Case, Re Life Association of England Blake v. Albion Life Assurance Co 46, 65, 80, 35, 163, 164, ^o^^' Assurance C 124, 150, 146, 147, 165, 166, 183, 203, . 119, 87, 244, 247 . 351 262, 297 . 355 227, 270 . 261 . 261 294, 296 357, 358, 359, 360 47, 175 153, 199, 204, 372 . 275 . 160 153, 155, 179, 182 99 170, 171, 199, 123, 125, 201, 203, 134, 144, 58, 160, : 75, 157, . 33, 56, 373 145 430 244 247 161 71 246, 183, 295, 299 184, 199 2(11, 365 198, 395 145, 198 33, 35 . 378 92 296, 371 . 205 . 354 . 136. 142 139, 341, 342, 406 35, 199 171, 203 123, 171 61, 364 . 58 . 243 351, 354, 370 . 215 . 397, 408 . 207 163, 190, 253 264 136. 259, 282 35, 69, 164, 253 Table of Cases. XXlll and S. AV. Rail. CV: Blakomore i: Bristol and Exeter Kaihvaj' Co. Blanchard ,'. Hill Bloomeuthal i'. Ford Bodenham v. Huskins Bodgcr ('. Nicholls Bold V. Hutchinson Bos !'. Helsham . Boswcll V. C'oake Bowles V. Stewart Bo«Ting V. Stevens Bo\ d and Forrest v. Glasgow Bramley v. Alt . Brandling i'. Pluramer Brazilian Rubber Plantation and Estates, Ltd., Ee Breckenridge's Case. Ee Scottish Universal Finance Bank Brewer and Hankin's Contract, Ee . . . Bridgman v. Green ...... Brigg's Case, Ee Hop and Malt Exchange Warehouse Co, Ee A\estcrn Insurance Co. Bright V. Legerton ...... Brinsmead (T. E.) & Sons, Ee, Tomline's Case Bristol (Earl) v. Wilsmere ..... British Burmah Lead Co., Ee, Ex parte Vickcrs Linen Co. v. Cowan ..... 50, (.( 87: 80,' •111, 89, 247, 249, 299, 350, ' 220, Mutual Banking Co. v. Charnwood Forest Rail. Co. Sugar Refining C'o., Ee . . . . . Workmen's and General Assurance Co. v. Cunliffc Brockwell, Ex parte, Ee Royal British Bank Bromley v. Holland Brooke v. Lord Mostyn Brookes v. Hanson Broome i\ Speak Bro-mi V. Edgington Brownlie v. Campbell Brunton v. Hawkes Buckingham v. Murray Burgess's Case, Be Hull and County Bank Burnes v. Pennell . ... Burrell, Ex parte ..... Burrowes v. Lock ..... Burrows v. Matabele Gold Reef and Estates Co, V. Rhodes ..... Burtsal v. Bianchi ..... Bwlch-y-Plwm Lead Mining Co. v. Baynes Bywater v. Richardson .... IGG, 52, 112, 114, 119: 352, 325, 206, 68, 71; PA(!E 151, 17!l, 181 . 384 08, 141, 205 . 408 68, 73, 103 33, 45, 193 . 243, 244 351, 353, 354 . 378 199, 202 1!!!), 207, 210, 438 199, 202, 260. 201 87, 99, 199, 202 . 317 . 200 . 297 . 291 . 270 . 282 . 286 . 236, 241 35, 56 256, 372 . 91 173, 199, 216, 217 . 256 55, 253 177, 278 249 389, 390 323, 328 334, 393 . 384 243, 438 358, 360 . 100 276, 279 435, 438 39, 93 . 119 . 309 199, 200 160, 198 . 300 206, 384 201, 168, 169, '. 163, 354, 387, 75, 328, 329, 210, 242, 357, 274, 275. 171, 296. 148, 155. 151, c. , Caballero v. Henty ...... Cachar Co., Be : Laiwence's Case Gackett v. Kes\vick ...... Cadman v. Horner ...... CammeU v. Sewell ...... Campbell's Case : Be Bank of Hindustan, China, and Campbell v. Fleming ...... Canadian Native Oil Co., Be : Fox's Case Canham v. Berry ...... Cann v. Wilson ....... Capel & Co. V. Sim's Ships Composition Co. . Capital and Counties Bank v. Henty Cargill V. Bower ....... Carlill V. Carbolic Smoke Ball Co. Jap; 133. . 202, 295 . 270, 275 88, 220, 325, 392 . 295, 298 . 355 . 227, 270 . 270, 271 . 282 136, 140, 295 106, 107, 180, 199 141, 145, 244, 248, 251 101, 108, 134 61, 99, 161, 271, 371 76, 150, 170 XXIV Table of Cases. Carling's Ca.so ; lie Lundon and Leeds Banking Co Carlish v. Salt ...... Carlisle and Cumberland Banking Co. v. Bragg Carr, Re . . . . Carter v. Boehm Cassaboglou v. Gibb Cavalier v. Pope Cave V. Mills .... Central Klondyke Cold Mining antl 1'rading Co., Jt'c, Tho Central Raihvay of Venezuela v. Kisch . 01, 1)0, 11 Clhadwiek v. Manning . Chalmers v. Payne Cihamberlain v. Boyd . Champion v. Rigby Chandelor v. Lopus Cihandler v. Webster . Chapman v. Shilleto Cliarlton v. Hay t^harter v. Trevclyan . Clhilders v. WooUey C'hr. Salveson v. Reden Aktiebolaget Nordstjernan Chvno\\'cth's Case, lie Wheal Unity Wood Mining ( Citizens Bank of Louisiana v. Firnt National Bank of Now Citizens Life Assurance Co. v. Brown Civil Serviee Co-operative Society v. General Navigation Clark V. Molyneux ..... Clarke v. Army and Navy Co-operative Stores V. Dickson, No. 1 (action for rescission) V. , No. 2 (action for damages) Cleveland Iron Co., Re, Ex parte Stevenson Clough V. L. & N. W. Ry. Co. . 35, 234, 235, 236^ C'lydesdale Bank v. J. & ( i. Baton Coaks V. Bos well. Coal Economizing Gas t'o.. Re, Cover's Case Coats (J. & R.) w. Crossland Cockbum v. Edwards CockcU V. Taylor ..... Cocksedge v. Metropolitan Coal Consumers' Association Coles V. Langford Coleman v. North V. Riches CoUen V. Wright Collie, Re, Ex parte Adamson Collins V. Blantem V. Cave . V. City and County Bank V. Evans ..... Co. v. Hioym .... Colonial Bank v. Cady and Williams Colt V. WooUaston .... Compania Sansinena ii. Houlder . Components Tube Co. v. Naylor . Connecticut Fire Insurance Co. v. Kavanagh Conolly V. Parsons .... Consort Deep Level Gold Mines, Ltd., Re, Ex parte Stark Cook V. Fountain Cooper V. Joel — V. Phibbs Corbett v. Bro-nai Cordingley v. Cheeseborough Comfoot V. Fowke Cory V. Gerteken Couch V. Steel Coverdale v. East\\ood PAOi; 129, 130, 248, 249, 279 . 89, 251, 252, 253 60, 62, 237, 304, 305 . 368 . 406, 435 187, 194, 222 33, 36, 42, 46, 94 . 129 mson's Case . . 282 202, 204, 205, 235, 247, 274 . 46 98 . 147, 149 . 377 . 198 . 246 . 58 ; 101 242, 286, 351 . 198 . 187 261, 271, 348, 393 Orleans ... 45 . 108, 191 . 376 . 105, 115 . 150 80, 240, 272, 273 . 199, 236 . 280, 281 263, 269, 270, 272, 297, 303 33, 40, 45, 157, 214, 438, 439 90, 94, 110, 123 89, 90, 320 107, 199, 311, 324, 328, 329 . 257 288, 104, 04, 59, 88, 289, 280, 55. 165, 199 290 372 . 350 46, 198 199, 435 . 195 172, 225 . 403 128, 153, 179 253 279 114, 198 . 384 . 301 35, 65 375 96, 248, 249 233 435 377 417 249 47 . 110 299 384, 435 55, 139 . 346 45, 192, 193 35 243 248, 244, : Table op Cases. xxv PAOE Coverley v. Burrell ........... 87 Cowley V. Newmarket Local Board ........ 346 Cowper V. Earl Cowper .......... 417 Craig V. Phillips ............ 52 Crawshay » Thompson ......... 110,384 Cromford and High Peak Rail. Co. v. Lacej' ....... 361 Croskey v. Bank of Wales .......... 374 Crouch V. Credit Foncier ol England 301, 302, 304 Crowder v. Austin ........... 342 Cuenod v Leslie . . .......... 228 Cullen V. Thompson's Trustees 172, 439 Cundy v. Lindsay ........ .91, 240 Curson v. Belworthy ........... 60 Curtis V. Bottomley ........... 36 D. Daffdj v. Mexican Co. .......... 256 Dalbiac v. Dalbiac ........... 364 Dalglish V. Jarvie .......... 134, 351 Daniell v. Royal British Bank 278 Dash wood v. Jermyn ......... 45, 153, 193 Davenport v. Stafford 351, 352, 355 Davidson v. Tulloch ........... 438 Da vies v. London and Provincial Marino Lisurancc Co. . . . .17, 90, 111 Davis and Cavey, Be 97, 247, 267, 268, 368 Davis V. Chanter 290 Davoren v. Wootton ........... 228 Davy V. Garrett 370, 395 Dawes v. Harness 294, 300 Dawson v. Great Northern and City Bail. Co. 288, 289 De Bussohe t;. Alt 161 De Graves v. Smith 386 De Hoghton v. Money 227 Debeuham v. Sawbridge . . . . 242, 243, 262, 265, 266 Delves v. Delves ........... 344 Denham & Co., Ltd., Re 161, 162 Denny v. Hancock 63, 87, 98, 99, 296 Denton v. Great Northern Rail. Co. . 42, 109, 113, 150, 163, 167, 178, 199, 389 V. McNeil '15 Deposit and Life Assurance Co., JJe, Aa; parte Ayres . . . 35,231,259 — V. Ayscough ....... 300 Derry v. Peek .... 55, 59, 73, 88, 103. 104, 105, 106, 108, 110, 114, 115, 116, 117, 131, 180, 196, 197, 231, 306, 307, 308, 390, 391, 400, 402, 417, 419 Devaux v. Stenikeller 214, 216 Dick V. Yates 362 Dickinson v. Burrell ........... 288 Dickson v. Renter's Telegram Co. 116, 195, 198 Dimmock v. Hallett 61, 62, 87, 266, 341 Discovers' Finance Corporation, Be, Lindlar's Case '201 Dobell V. Hutchinson 253, 267 t). Stevens 199,202 Dobson V. Sotheby 75 Donaldson v. Gillott 247 Dooby V. Watson 200 Dott «. Brickwell 199,200 Downes v. Ship 278, 279 Drincqbier v. Wood . . 98, 99, 130, 132, 309, 310, 316, 323, 324, 325, 373, 399 Duffel V. Wiison 48, 235, 253 Dulieu V. White . 152 Duncan, Be 221, 227, 228 V. Worrall 249 Dunlop-Truffaujt Cycle Tube Manufacturing Co.. Br. Ex parte Shearman . 88, 271 5,M, C XXVI Table op Cases. Dunn, Re . V. Cox ....•• Duranty's Case, Ee Liverpool Borough Bank Dyer v. Hargrave . . . . • PAGE . 195 351, 352, 355 . 171 201, 202, 203 E. Eaolesfield v. Marquis of Londonderry Eastern Archipelago Co. w. R. Eastgate, Re, Ex parte Ward Edelston v. Russell .... Eden v. Ridsdale Rail. Lamp and Lighting Co, Edgington v. Fitzmaurice Edinburgh United Breweries v. MoUeson Edwards v. Bro^^'n, Harries & Stephens . Emma Silver Mining Co. v. Grant V. Lewis Englishman, The .... Erlanger v. New Sombrero Phosphate Co. Espey V. Lake . . . . - Estates Investment Co., Re, Ashley's Case Pawle's Case Etna Insurance Co.. Re, Persse's Case , — , Ex parte Shiels Slattery's Case European Bank, Re, Master's Case Evans v. Edmonds Evans v. Bicknell Everett v. Desborough Eyre v. Smith 33 35, 48, 54, 160, 201, 209 357, 358, 360 35, 263, 292 . 371 . 320 106, 107, 130, 199 66, 176, 438 60, 239 . 320 318, 320 . 172 . 234 . 232 . 281 259, 281 . 281 260, 281 241, 260 . 261 92, 108, 294 116, 190, 198, 386 . 208 295, 351, 352, 354 P. Fane v. Fane .... Fawcett and Holmes. Re Fellowes v. Lord Gwydyr Fenn v. Craig .... Fenton v. BrOAvne Feret v. Hill .... Ferguson v. Wilson Fickus, Re .... Firbank's Executors v. Humphrey's Fitzpatrick v. Kelly Fitzroy v. Cave .... Flaban, Re .... Flight V. Booth .... Flinn v. Headlam Flint V. Woodin .... Flower v. Lloyd, No. 1 V. , No. 2 Foote V. Hayne .... Forbes & Co.'s Case, Re Universal Non Ford V. Stiers .... Forester v. Read . . , Forman & Co. Proprietary, Ltd. v. S.S. Forrester v. Jones Forster v. Farquhar Foster v. Charles, No. 1 (first trial) V. , No. 2 (second trial) V. Mackinnon . V. Mentor Life Assurance Co. Tariff Fire Lidderdale 89, 204, Ins. C 35, 136, 234, 53, 231, 32, 46, 233, 265, 266, . 137, 247, 249, 235, 252, 253, 123, 351, 351, 144, 377, 367, 86, 110, 108, 109, 199, 389, 60, 237, 304, 247 297 138 299 60 242 438 192 195 67 289 353 266 141 342 353 354 295 141 244 378 234 376 376 199 392 305 101 Table op Cases. xxvn Fox'a C'aso, He Canadian Native Oil Co. Fox V. Mackrcth .... Erankenbiirg v. Groat Horseless Carriage Co. Franks v. Weaver .... Freeman c. Baker .... Frescoe v. May ..... Frowd, Ex parte, Be Royal British Bank Fuller V. ^\'ilsou VKQE . 282 94, 418 334, 335, 371 40.') 198 86 171 163 82,1 G. Gamage (A. W.), Ltd. V. Charlesworth . Garraud v. Frankel .... Gates's Case (^'aughan v. Vanderstegen) General Rail. Syndicate, Be, AVliiteley's Case George VVhitechurch, Ltd. v. Cavanagh Gerhard v. Bates .... Gerson v. Simpson .... Gibbs V. Guild Gibson's Case, Be Hull v. London Life Assurance Co Gibson v. D'Este .... Gilbert v. Endean .... Giles, Be, Ex parte Stone Gill V. McDowell .... Gillett V. Peppercome Gilliatt V. Gilliatt .... Glasier v. Rolls ..... 79, Gledstanes v. Earl of Sand-nich Gloucestershire Clothier's Case Glubb, Be Gluckstein v. Barnes .... Gomersall, Re . Goode V. Benion & Harrison Gordon v. Street .... Gorrie v. Scott ..... Gossain v. Gossain .... Gover's Case, Be Coal Economizing Gas Co. Gowans v. Dundee Steam Navigation Co. Gower v. Couldridge .... Gower's Case, Be London & Provincial Starch Grant v. Easton ..... Great Berlin Steamboat Co., Be . Great Eastern Rail. Co. v. Goldsmid Great Wheal Polgooth Co., Be Green v. Baverstock .... Greenfield v. Edwards Greenwood v. Humber & Co. (Portugal), Ltd. ■ V. Leather Shod Wheel Co. 79, 207, 210^ 18, l(i Co. 47, 48^ 26, 130, 13, 248 2, 198 137; 124, 220, 138, 47, 124, 176, 200, 280, 177, 178 . 199 89, 148, 70, . 234, . 343, .311,320,321 357, 358, 359, . 302, 148, 230, 241' 139, 144, 294. 89, 90, 256, 334, 241, 357, 339, 342 249, 250, 251 Guardhouse v. Blackburn . 225, 321, 323, 333, , 438 242 140 295 217 , 180 337 200 46 435 174 225 199 406 344 328 360 384 234 320 364 78 , 297 346 355 320 438 375 200 355 305 359 319 435 295 336 .328, 334 354 H. Haie, Ex parte, Be London and Provincial Electric Light and Power Co. 132, 256, 260, 271 Halbot V. Lens ............ 195 Hall V. Hall 244 ■ V. Wright 244 Hallows V. Femie 36, 46, 73, 78, 81, 136, 374 Hamilton v. Ball 3G4 . V. Watson ........... 02 xxvm Table of Cases. Hammeraley v. De Biel Hardman v. Booth ....•••• Hare's Case, iJe London and County General Agency Association Hargreaves and Thompson's Contract, Re . . • ■ Harley v. Stone 40, 43, 45, 69 PAQB 192, 193 91 240 281 368 246 Harrington v. Victoria Graving Dock Co. ..... ■ • *^^ Harris v. Kemble ■ V. Pepperell 202, 295, . 213, 52, 106, 174, 291, 385, 386, Harse v. Pearl Life Assurance Co. ..... Haslock V. Fergusson ........ Haycraft v. Creasy ....... Haygarth v. Wearing .... 148, 246, 250, 251, Heaven v, Pender ••'''"'''' no Hemingway v. Hamilton ......... ' ^ „„ Hemminss v. Sceptre Life Association ....... "07, 297 Henderson v. Lacon 247, 248, 249, 250^ V. Royal British Bank 278, ■«. Williams 240, 297 242 56 214 198 389 151 42 Hendriks v. Montagu .......•■• HO, Hanson v. Cleeve ........... Hickson v. Lombard .......... 232. Higgins V. Samels ........ 106, 130, V. Pitt Higgons V. Burton ......... 69, 240, Hill V. Gray 97, 139, 251 279 304 361 371 233 135, 202 362 — V. Thompson ....... Hills V. BaUs Hindle v. Brown ....... Hippisley's Case, Re Bank of Hindustan, China, and Japan Hirschfield v. L. B. & S. C. Rail. Co Hirst V. West Priding Union Banking Co. 59, 304 235 358 198 171 . 227, 270 148, 294, 295 . 214, 215 08, 142, .357, 123, Hodgson V. Sidney ........... 226 Hoghton V. Hoghton ........... 60 Holland v. Manchester and Liverpool District Banking Co. .... 77 Home Counties v. General Life Assurance Co., Re, Ex parte WooUaston . 45, 241 Hoole V. Speak 162, 171, 309, 310, 312, 335 Hops and Malt Exchange Warehouse Co., Re, Briggs' Case .... 270 Homcastle v. Moat ........... 198 Horsfall v. Thomas 66, 93, 103, 124 HorweU v. London General Omnibus Co. ....... 172 Houldsworth v. City of Glasgow Bank 228, 438 Hovenden & Sons v. MUlhoft 407 Howard v. Castle .... 340, 342 Howatson v. Webb 60, 238, 239, 246, 304, 302 Hudson's Case, Re Hull and London Life Insurance Co. ..... 46 Hughes V. Jones . 202, 298 V. Twisden 143, 216 Huguenin v. Baseley .......... 291, 434 Hull & County Bank, Re, Burgess's Case .... 228, 274, 275, 276, 279 Hull and London Life Insurance Co., Re, Gibson's, Kemp's, and Hudson's Cases 40 Humber Ironworks and Shipbuilding Co., Re, Williams' Case .... 261 Hunter v. Sharpe ........... 371 V. Walters Hutchinson v. Morley Hyde v. Bulmer . V. Johnson V. Watts . 60, 205, 239, 304, 305 . 253 . 157 . 215 . 245 I. Impeeial Credit Mercantile Association, Re, Payne's Case ■ , Williams' Case Ingram v. Thorpe ....... 130, 211 . 201 . 199 Table op Cases. XXIX J. V.J.. Jack V. Kipping . Jackson v. Duchairc V. Turquand Jacobs V. Revell Jarrett v. Kennedy Jennings v. Broughton Joel V. Law Union and Cro-vvn Insurance Co. Johnson v. Pye . Joint Stock Discount Co., Re, Nation's Case Joliffe V. Baker . Jones, He, Ex parte Jones V. Bowden V. Bright . • V. CUfford V. Edney . V. Grordon V. Keene . V. Pacaya Rubber and Produce Co V. Rimmer Jorden v. Money Jury V. Stoker . PAGE . 244 . 226 . 363 . 68 247, 250, 266, 267, 268, 295 112, 269 61, 129, 160 . 392 139, 140 . 260 198, 244 68, 139 . 199 . 384 243 55, 204, 253 246, 364 53, 254 252 . 87 32, 33, 44, 46, 191, 193 88, 219, 220, 225 K. Kaebbeg's Case, Be Metropohtan Coal Consumers' Association 47, 160, 250, 257, 270, 280 Keates v. Cadogan .......... 94, 98 Keighley, Maxsted & Co. ■!;. Durant . . . . . . . .163 Kelly V. Sherlock 295 V. Solari 119, 203, 206 Kemp's Case, Be Hull and London Life Insurance Co. ..... 46 Kent V. Freehold Land and Brickmaking Co. .... 248, 249, 279 Kettlewell v. Refuge Assurance Co. . . 36, 56, 150, 199, 221, 235, 242, 253, 254 w. Watson 117 Kennedy v. Green 60, 238, 247, 291 V. Panama, New Zealand, and Australian Royal Mail Co. . . . 236 Kincaid's Case, Me Russian (Vj'ksounsky) Ironworks Co. . . . 270, 275 King, Be, Ex parie Unity Joint Stock Bank Association . . . . 139, 140 V. Smith 60 V. Wilson 203, 298 King (F.) & Co. V. GiUard & Co 365, 376 Kingsland v. Merry ........... 240 Kingston (Duchess of). Case of 350, 351, 352, 353 Elintrea, Ex parte, Ee Bank of Hindustan, China, and Japan .... 261 Kirk V. Todd 227 Knatchbull v. Grueber 295 Knox V. Hayman ........... 199 Krell V. Henry 246 L. Lachlan v. Reynolds ..... Lady Forrest (Murchison) Gold Mine, Ltd., Re Ladywell Mining Co. v. Brookes . Lagunas Nitrate Co. v. Lagunas Syndicate Lamb v. Sambas Rubber and Gutta Percha Co. Langridge v. Levy ..... Laver v. Fielder ...... La'ivTance v. Lord Norreys .... . 261, 269 . 320 . 319 198, 227, 228, 273 252 'l51, 175, 179, 197, 199 . 45 200,286,371,372 XXX Table of Cases. S3: ss Ec, Ex parte. Storey La^\Teiicc's C'asc, Be, C'achar Co. ...... Le Lievrc r. Gould . . 31,103,114,116,117,179,107,388 Le Ne\e v. Le Nunc ..... Leather Cloth Co. v. American Leather Cloth Co. Lcdtlel i\ MeDougal . . . . Lee !'. Angas ...... r. Jones ...... Leeds (Duke) r. Amhurst (Earl), No. 1 (acquieseeuc V. No. 2 (damages) Leiteh w. Abbott . .... Lempriere v. Lange Lennox Publishing Co Leslie v. Thompson Levene v. Brougham ..... Levy V. Abercorris Slate and Slab Co. . V. Langridge. See Langridge v. Levy. Lewellin v. Cobbold ..... LewTs's V. Goodbody ..... Lej'land and Taylor's Contract, Ee Life Association of England, Be, Blake's Case Life and Health Assurance Association v. Yule Lindman v. Desborough .... Lindlar'a Case, Ee Discoverers Finance Corporation Loffus 1'. Maw ...... Lindsay Petroleum Co. r. Hurd Liverpool Borough Bank, Ee Duranty's Case Lloyd V. Grace, Smith & Co. Lloyd's Bank v. Bullock .... Load V. Green ...... London Assurance Co. v. Mansel . London Chartered Bank of Australia v. Lcmpriive London County General Agency Assoc., Ec Hare's London Electrobus Co., Be . London General Omnibus Co. v. Lavel . London, Hamburgh, and Continental Exchange Case ....... London and Joint Stock Bank v. Simmons London and Leeds Banking Co., Ee Carling's Case London and Mediterranean Bank, Ec Wright's Case, No. 1 (List A. No. 2 (List B, London and Provincial Eleetrie Light and Power Co., Be, Ex parte Ca Bank, 67, Be \\ TAG a . 271), 215 390, 394, 395, 4(I8 . 434 . 304 '. 100, 109, 199 00. 238 12, 294, 409, 434 209, 280 . 224 . 371 247, 2.51 280, 282 . 265 139, 140 . 308 139, 185, 47, 292, 9, 60, 238 82, 304 . 266, 271 136, 259, 282 . 257, 438 . 134 . 201 . 191 204, 273, 283, 284 . 171 . 217, 239 . 239 35, 291 . 134, 351 . 232, 233 . 281 . 2.50 . 140, 362 and Henry's . 255 293, 301, 302, 304 130, 248, 249, 279 ) ) Hale London and Provincial Starch Co., Ec, Gower'.s Case London and Staffordshire Eire Insurance Co., Be, Wallace Long V. Yonge .... Low V. Bouverie Buddy's Trustee v. Peard Ludgater v. Love Lumley v. Desborough Lurgan's (Lord) Case, Ee Metal Constituents, Ltd. Lyde v. Barnard ..... Lydney v. Wigpool Iron Ore Co. v. Bird L3'neh v. Ejiight ...... Lynde v. Anglo-Italian Hemp Spinning Co. . : Case 241, 260 241, 260 132, 256, 260, 271 241, 260 203, 256 373 82, 84,' 114, 119, 128, 190, 198 49, 51 165, 172, 199, 392 . 201 160, 242, 271, 275 213, 214, 216, 386 . 318, 319 . 152 . 159, 171 M. McCallttm, Be . JlcCarthy v. Decaix ..... McConnell v. Wright Mackay v. Commercial Bank of New Brunsw iek JIcKeo^iTi V. Bouchard-Pevcril Gear Co. Maclagan's Case, Ee Scottish Petroleum Co. . 109, 204, 389 148, 294, 295 132, 219, 220, 221, 222, 225. 328 . 89, 164, 166, 168, 171, 173 . 61, 75, 89 . 136, 281 Tablk of Cases. XXXI & Soi; Miicloay r. 'I'aiL .... MciMillaii I". Aci'idi'ulal liiKiinuieu Co. Maddisdii c. AldcrNon . Miulolcy (>. Booth Madrid Bank, lii\ WilkiuKou's Cu.so iMafji'iiiiia )■. Kallon Maliomcil Kala Mca v. A. \'. llai|iiTiiik Malcolm, Brunkcr & Co. v. WaleiliouKc Malcvorer v. I'rilshaw Mallaliou v. Hodfrsim . iMaimors v. Whilcluwl . Mamhain v. Weaver , Martin, l{r .... v. ( 'oopcr MashTH' (.laao. Re. Eurojjcan Bank Matthias v. Yd Ih . . 48, Maturin w. Trodcnnick . Maunsell v. Hedges (or White) May V. Piatt .... Mayhew v. l?oyen MeadoMK V, Turner Melbourne Banking Corporation v. Brougham Meldon v. Lawless Mcrcwcthor v. Shaw Merry weather v. Nixan Metal Con.stitucnts, Ltd., Re: Lord Lurgan's Case ftletropolitan Ccjal C'onmjraer.s AsHociation, Re, Ex parlc Edwards Karbcrg's Case . Wainwright's Case 19, 1 U, 130, 110: 325, 44, 50, 87, .■!2i>, i71, l PAOE I eek s Vase, Re Overend and Guruey Co 392 Peck V. Dorry 118, 200, 220, 328, 390 V. Gurney . . . .86, 88, 98, 108, 153, 180, 183, 184, 196, 209, 227 r— «■ Turquand 84, 88, 276, 277, 278 ii'eel s Case, Re Barned's Banking ( Vi 275 Penhale and Lomax Consolidated Silver Lead Mining Co., Re . . . .367 Pentelow's Case, Re Warren's Blaclcing Co 259, 280 Perry v. Meadowcroft 351, 352, 353, 354 Persse's Case, Re Etna Insuraneo Co 281 Pe\\'tress v. Austin ~ 199 Pharmaceutical Society v. London Provincial Supply Association . . .167 Phillips V. Duke of Buckingham 136 ■;;. FoxaU ........... 92 ■ V. Homfray, No. 1 (duty of disclosure) 94, 96 "■ • , No. 2 (estate of deceased representor) .... 227 Phosphate Sewage Co. u. Hartmont 172, 225 -7 ■ V. Molleson 438 Pickering v. Dowson 198, 206, 384 Pidcock i\ Bishop 364 Pidding v. How 364 Piggot V. Stratton . 36, 80, 84, 191, 409 Polak V. Everett 92 Polhm V. Waller 109, 153, 178, 180, 194, 218 Pontifex's Case, Re New Quebrada Co 257 Pontifex v. Bignold 219, 222 Post V. Marsh 365 Powell and Thomas v. Evans, Jones & Co 161 Powis V. Harding ........... 278 Price V. Dewhuxst 355, 356 • V. Macaulay 202, 204, 295, 296 Priestman v. Thomas 350, 352 Pritty V. Child 52, 107, 150, 199 Prole V. Soady 192, 193 Prosser v. Edwards 288, 289 Puckett and Smith's Contract, Re 297 Pulsford V. Richards 129, 100, 270 E. Railway Time Tables Publishing Co., Re 257 Ralston's Patent, Re 360, 393 Ramshire v. Bolton 35, 199 RaudeU v. Trimmen ........... 194 Ranger v. G. W. Rail. Co 94, 167 Rashdale v. Ford .....' 56, 198 RatcUfie V. Evans 396 Rawlins v. Wickham .... 202, 247, 250, 271, 283, 377, 378, 388, 389 Read v. Bailey ............ 225 V. Hutchinson 39, 385 Reddaway v. Banham .......... 405 Redgrave v. Hurd . - 99, 142, 143, 196, 198, 202, 203, 204, 206, 209, 231, 247, 248, 253, 283, 295, 296, 297, 370, 388 Reese River Silver Mining Co. v. Smith . . 52, 245, 248, 249, 259, 260, 280 Reeve v. Gibson ............ 240 Refuge Assurance Co. v. Kettlewell ....... 36, 253 R. V. Aspinall 72, 73, 78, 184 — V. Bancroft ............ 37 — V. Barnard ............ 69 — V. Boucher 96, 357, 358, 359 ■ — V. Cooper ............ 36 — V- Copeland ............ 67 — V. De Berenger 07, 153, 177, 181, 182 — V. Giles 36, 70 XXXIV Table of Oases. R. V. iUiriUni — V. Hazlcton — V. JonoH — V. Kcmpo — V. Kcnrick — V. MiddJidun — V. Silvcrlock ■ — V. WaiHon — ■ V. WhoelCT Jlcynoll V. Spryi; Spryo V. Itcyuell RichardHon v. ]Junn . D. Sy)vc:Kt(;r Rickards v. Murdock . Riding v. Hawkinn Ripley V. Paper Bottle Co. . liobbiiiH V. .Jones Robi'rtu, Itn Rfjbinnon, R",, Kx jxirle Burrell V. Chadwick . V. Currey 1>. MoUet V. Wall Rfjid V. London and StaHordwhire J''ire Insurance (Aj. Roddy V. Williams .... Ross V. Estates Investment fjo. V. Rugge-Price .... RouBsell V. Burnham .... Royal British Bank. He, Kx jmrU Brockwell , Ex 'parU: Fro wd , MixCT's Case . , Niwjl's Case Itoj'al Victoria Fah^:<; Theatre Syndicate, J{f, Moore and Ruby Consolidated Mining C'j., lie, Askcw's Case Ruck V. Williams ..... Pvussell p. Russell .... Russian (Vyksounsky) Ironworkw Co., Jie, Kincaid's Case , Stewart's (jase ■ , Taite's Case , Whitehousc's Case 59, De la Ryan v. Macmath I'AOB 33, 34, 37, 40 . ;" . 307, 359 . 139 . 410 . 17S 00 . 357, 300 112, 129, 103,202,204, 242, 247, 248, 290, 430 . 199 00, 109, 150, 199,218 • 01 , 372 . 252 . 94 01, 208, 247 . 39 . 374 . 335 . 407 , 178, 339 . 271 . 247 231,248,390 . 346 . 310 103, 177, 278 . 171 . 270 , 130, 278 J'orre's Case . 194 . 203, 250 . 170 . 370 . 270, 270 . 250 . 270 . 270, 271 . 249 s. S., a SoUcitfjr, lie ... , H. Pearson & Sons v. Itablin Corporation Sachs V. Spi'draan .... Salaman v. Warner .... Salvesen (Chr.) v. Reden Aktiebolaget Nordxtji Saridbach and Jidmond«ori's Ojntract, Ite Schneider v. Heath .... Scholefield v. Templer Scholcy V. Central RaiL Co. of Venezuela Schroeder v. Mendel .... Scott V. Brown, Uoering, MoNab & (jj. . V. Dixon ..... V. Hanson .... — — V. Sebright .... V. Snyder Dynamite Projectile fJo. 8cotti»h Petroleum Co., Me, Anderson's Case Maclagan's Case Wallace's Case 105, 199, 200, 207, 210, 124, 125, 178, , 187, 100, 200, 209, . 270, 81, 190, 07, 180, 184, 305, . 177, 60, 62, 78, 84, 88, 98, 99, 78, 136, 206, 207, . 136, 136, 234, 241, 204 279, 301 389 .371 180 438 207 253 00 274 198 M)fi 199 298 244 248 282 281 277, 282 Table of Cases. XXXV Scottish Uni\ iTSiil Fuiaiico Bank, Be, Bi-cckcuriilgc'a Ciisc Soaton i\ Heath .... Scildon V. North-eastern Salt Co. . Sen Sen Co. v. Britten Shackleton, Ee. Ex parte Whittakcr V. Sutchffo Sharpley v. London and East Cbast Ry. Co. Shearman, E.r ptirtr. Be Dunlo])-Truliault, &e., Co. Sheificld (Earl) v. London Joint Stock Bank ShefBeld Nickel Plating Co. v. Unwin Shepheard v. Bray .... V. Broome .... 10 Shepherd v. Croft .... Sherwell v. Incandescent Mantle Co. Shiels, Ex park. Be Etna Insurance C'o. Ship's Case. ..... V. Crosskill .... Shrewsbury v. Blount .... Shurrock v. Littlejohn Sikes V. Wild SUlem V. Thornton .... Simmons v. Liberal Opinion, Ltd., Ee Dunn Simpson v. Lord H(i\\'den i\ Thomas Moy, Ltd. . Sims V. Tuffs ..... Singer Manufacturing Co. v. Wilson Skelton's Case, Be Snyder's Dynamite Projectile Co Skidmore v. Bradford .... Slattery's Case, Be Etna Insurance C'o. . Sleigh V. Transvaal Options, Ltd. Slim V. Croncher .... Slingsby v. Bradford Patent Truck and Trolley Co. Smith V. Bank of Scotland . . . . . V. Chad\rick 73, 81, 84, 101, 109, 110, 120^ 220, 22, 204, 118, 75 310, 205, 121 124. Ill, 121. 208, 242 . 08, 82, 101: 209, 295, 29(), 271, 280, 88, . 292, :!2;i, !2:!, 206, 78, 124, 125, TAG E 200 no 271 3(i4 35 377 2H7 271 :!02 272 324, 325, 337, 338 324, 328, 334, 393 207, 208, 295, 297 . 309 . 200, 281 . 278 180, 190, 211, 221 145, 177, 190, 198 350, 352, 354 . 223 . 77 . 195 . 249 205, 207 304, 305 . 302 . 275 147, 190 241, 200 312, 438 128, 190 03, 305 . 438 ■50 309. 119, 418 295 199 94 121, 133, 130, 143, 144, 145, 157, 190, 197, 248, 375 V. Clarke 341 V. Cuff 364 V. Green 223 U.Hughes 83,90,91,93,94,410 U.Kay 70,130,137,138,371: • V. Land and House Property Corporation . . 48, 51, 53, 143, 247 V. Pooocke ........... • V. Scott ............ V. Stott 308 • V. Thomaa ........... 105 • V. Wheatcroft 136, 137, 138 Smith's Case, Be Eeese Silver Mmmg Co. . . . 52, 245, 248, 249, 260, 280 Smout V. Ilbery 194 Snow's Case, Ee Bank of Hindustan, China, and Japan ..... 261 Snyder's Dynamite Projectile Co., Be, Skelton's Case ..... 275 Soper V. Arnold ............ 242 South Wales Miners' Eederation v. Glamorganshire Coal Co. .... 397 Southern v. How .......... 151, 384 Sprye v. ReyneU. Sec Beynell v. Sprye. Stainbank v. Fernley 207, 250, Stanton v. Tattersall .......... 247; Stark, Ex parte, Ee Consort Deep Level Gold Mines, Ltd. Starkey ti. Bank of England . . . . . . . . .194: Stevens v. Adamson .......... 89, V. Hoare 124, 157, 324, 328, Stevenson, Ex parte, Ee Cleveland Iron Co. ...... 280 272 266 377 195 253 329 281 V. Chown ........... 346 V. Newnham .......... 234 Stewart's Case, Be Russian (Vyksounsky) Iron Works Co. .... 256 V. Kennedy 59, 231, 438 xxxvi Table of Cases. PAGB Stiteman v. Dawson 90, 434, 436 Stone, Ex parte. Be Giles 225 V. City and C'onutv Bank 253, 279 r.Compton .' 294,389 Storey, Ex parte. Re Lennox Publishing Co. . ... • 280, 282 Stroud !-. La-srson 374, 375 Stubbs V. Slater 1*5 Stump V. Gatey 288, 289 Stuart r. WiUans ^^^ Sturge V. Sturge 242 Sturla V. lYeccia .......-••- ^^2 Sullivan v. MiteaKe ........••• ^25 Sussex Brick Co.. iJe 257, 260 Swann v. PhiUips 214, 215 Swinf en b. Lord Chelmsford ......■••■ 232 Sirift V. KeUy 244, 361 II. Jewsbuxv 168, 172, 174. 214, 215, 216 V. Winterbbtham 172, 174, 175. 178 Synge v. Synge 45, 192, 193 T. Tait Vale Bail. Co. f. A S. R. S 169, 170 Taite's Case, Re Russian (Vrksounsky) Ironworks Co. ..... 270 TaUermant'. Dowsing Radiant Heat "Co 148,157,362 Tappp. Lee 86, 88, 199, 386 Tatam v. Haslar 302 V. Reeve ........... 418 Tatton V. Wade 130, 214, 215 Taylor v. Asbton 106, 116, 198, 386, 389, 392 V. CaldweU 246 Tennent c. Qty of Glasgow Bank 277, 288, 289, 438 Terrv v. Sweeting, Re Duncan ......... 221 Terry and White's Contract, Re . . . . 84, 265, 266, 267, 268, 298, 299 Thiodon v. Tindall 116, 125, 198 Thom r. Bigland 187, 233 Thompson v. Bond 39, 385 r. Eastwood 377, 389, 395 V. Lambert .......... 96 Thomson's Case, Re Central Klondyke ........ 282 • V. Lord aanmorris 219, 328, 334, 335 r. Hefier 77 V. Weems 39, 75, 130 Thome and Heard v. Marsh 70, 160, 173, 264 Thomett v. Haines .......... 253, 435 Thoroughgood r. Coles 58, 237, 238, 304 Thorp V. Dakin 347 Tiedemaim (P.) v. Liedermann Freres ........ 73 TiUey v. Bowman 225, 262, 292 Tomline's Case, Re Briusmead (T. E.) & Sons, Ltd. .... 236, 241 Torrance r. Bolton ............ 247 Traill v. Baring 36, 113, 247, 378, 389 Trigge v. Lavalle ........... 435 Truman r. Attenborough .......... 293 Tullis r. Jacson ........... 210, 356 Tumbull r. Grordon ........... 407 Turner v. Green ........... 61, 435 V. Harvey 77^ g3\ §4^ 94^ 95 Twimng v. Morrice •••........ 340 Twycross v. Grant, No. 1 (measure of damages, etc.) 219, 220. 222, 318, 319, 320, 325, 374, 401 ». , No. 2 (estate of deceased party) .... 226, 227 Table of Casks. XXXV J 1 U. Cdeix v. Atherton Union Bank v. iliiister ...... United Shoe Machinery Co. of Canada v. Brunet . . : Unity Joint Stock Bank Association, Ex parte. Be King . Universal Non-Tariff Fire Insurance (.'o., Jit J-'orbes & (o.'s CaHe Urquhart v. Macpherson ..... PAOB . 103, 199 . 340 ::i4, 24 (J. 29lj. 297, 300 . 139, 140 . 141 . 297 V. Vadaia c. Lawes 355, 356 Vaughan v. Vanderstegen ; Gates's Case ; Othwaite's Case . . . 1 40 Vernon v. Key .■i2, 47, 73, 81, 157, 421 \'ickers, ^a; jjar/e ; i?e British Btirmah Lead Co 201, 2.'j0, 372 Vigere v. Pike 124,181,201,272 ^■orley v. Cooke 60, 237 W. Waddeix v. Blockey 199, 220. Wainwright's Ca^e ; Ee Metrop. Coal Consumers Association 98, 130. 231, 2.'jii, V. Bland .......... Wakefield v. Xormanton Local Board ...... 297. Walker's Case ; He Anglo-Danubian .Steam Navigation Co. .... Wallace'.^ Case ; Be London and Staffordshire Fin- Insurance Co. . . 203. ; Re Scottish Petroleum Co. . 78, 136, 134, 241, 2'A>. 277, 279, WaUingford v. Mutual Society ..... Walsham v. Staunton ....... Walters v. Morgan ....... Ward, Ex parte ; Be Eastgate V. Hobb ........ Warlow V. Harrison ....... Warren's Blacking Co., Re ; Pentelow's Case Wagteney v. Wasteney Waterhouse v. .Jamieson Watts V. Assets Co. Wav V. Heam . 67, 190, 247, . 64. 90. 35, 263, 206, 207, 209, 339, 341, . 259, . 124, Waynes, Merth'.T & Co. v. D. Piadford & Co. Webb V. Korke ........ Weir V. Bell WcKt, Ex parte. Re Mount Morgan (West) Gold Mine, Ltd. 124, 51 109, 199, 390, 59, 63, 88, 256, West London Commercial Bank )■. Kitson We -tern Bank of Scotland v. Addie Insurance Co., Re, Brigg's Case Wharton v. Lewis ..... Wheal Unity Wood ilining '' ■ upon by the representee, was false. 4 CODE. Article 11. What Constitutes Falsity. Gh. IV. A representation is false when there is a substantial Sects. 1, 2. (iigci-epancy between it and any material fact which it ex- pressly or imphedly purports to state. A discrepancy is substantial when it would be deemed material by any normal representee in the circumstances of the individual case. Article 12. C'ano7is of Construction. Ch. IV. The following are rules for the determination of the falsity Sect. 4. ^^ truth of any representation : — Ch. IV. Rule 1. — The meaning of any representation is that Sect. i. which was thereby conveyed to the mind of the representee, and, in the absence of special circum- stances, the meaning deemed to have been so con- veyed is the natural and ordinary meaning (hereinafter called " the primary sense ") of the words or other signs used : provided that it is competent to either party to allege, in which case the burden is on such party of proving, special circumstances in virtue of which the representee in fact understood the repre- sentation in a sense other than the primary sense (hereinafter called a " secondary sense "). Where the representation is susceptible of more than one primary sense, the burden is on the representee of alleging and proving in which of such possible senses he understood it, and that in that sense it was false : provided nevertheless, that where there is other and inde- pendent evidence that the representor used ambiguous language or other signs for the express purpose of misleading, the burden is on the representor of proving that the representee in fact understood it in some one of such possible senses in which it was true, eii. IV. Bule 2. — Where a representation, by reason of the s^lT*' m omission therefrom of ah reference to quahfying con- ditions, subject to which- alone it would be true, or by reason of the representor's suppression of facts which in the circumstances of the individual case it ARTS. 11-13. 5 was his duty to disclose, is rendered a partial, frag- mentary, incomplete, or misleading representation of the entirety of the facts to which it relates, it is deemed false, notwithstanding that the statement, or each of the statements, if more than one, made by the repre- sentor may be, when taken by itself, Hterally accurate. Except as aforesaid, silence or reticence is not a misrepresentation. Rale 3. — In the case of a representation which is com- C;li- iv. pounded of several connected statements, or contained ,s,ii,.s' (Hj. ' in several connected documents, the question to be determined is whether, in the primary, or in any alleged and proved secondary, sense (as the case may be) of the entirety of such statements or documents, in their bearing upon and relation to one another, such representation is false or true, and not whether any particular one of such statements or documents is false or true, unless it is complete and inteUigible in itself, and neither incorporates by reference, nor purports to qualify, any other of such statements or documents. Bule 4. — -The question whether the representation in any Ch. i\'. case is or is not capable of any primary or (as the case Sub-s! (4) may be) secondary meaning alleged, is a question of law. Further, the question of the primary sense of any representation the terms of which are wholly in writing or undisputed, is a question of law. All other questions as to the meaning conveyed to the representee by any representation are questions of fact. PART III. MISREPEESENTATION IN RELATION TO THE MIND OF THE REPRESENTOR. Article 13. What Constitutes Fraud in Misrepresentation. A fraudulent misrepresentation is a misrepresentation Ch. v. which, when made, or (in the case of a continuing representa- ^^^^^1^ n\ tion) when acted upon by the representee, the representor and (2). did not in fact honestly beheve to be true. 6 CODE. Abticle 14. Motive of Representor Irrelevant. Ch. V. For the above purpose, it is immaterial whether the Sub'-s. \z). representor, in making the misrepresentation, had or had not any intention to deceive, defraud, or injure the representee or any other person, or to benefit himself or any other person, or what, if any, was his motive for making the same. Article 15. What Constitutes Innocence in Misrepresentation. Ch. V. An innocent misrepresentation is a misrepresentation Sub-s.' (1). which, when made, or (in the case of a continuing representa- tion) when acted upon by the representee, the representor did in fact honestly beheve to be true. Article 16. Unreasonableness or Negligence not Fraud. Ch. V. An innocent misrepresentation is not rendered fraudulent Sub-s! ("2'). by the mere fact that the behef of the representor was un- reasonable, or was based upon inadequate materials, infor- mation, or inquiry, or arose from negligence, forgetfuljiess, inadvertence, or incompetence. PART IV. MISREPRESENTATION IN ITS EFFECT ON THE REPRESENTEE. Article 17. Inducement. Ch. Yi. The representee is deemed to have been induced to alter Sect. 1. j^jg position by the representation, if he was, and was intended by the representor to be, influenced in so doing by his belief in the truth thereof. Provided that — (i) If inducement be proved as a fact, it is not necessary to show that the representation was the sole inducement, or that, but for his behef in the truth thereof, the representee would not have altered his position in the manner alleged : ARTS. 14-19. 7 (ii) In the case of a number of connected representa- tions, or a representation compounded of a number of statements, it is sufficient to prove that the representee was induced to alter his position by his behef in the truth of such representations or statements in their entirety, and it is not necessary to prove that he was separately induced by any particular one or more of them : (iii) It is sufficient to prove that the representee relied upon some one or more of several representations or statements not so connected as aforesaid : (iv) Where the representation rehed upon is not reason- ably capable of more than one primary sense, it is necessary and sufficient to prove that the representee was induced by it in that sense. Where the representation is so capable, the repre- sentee must specify the sense in which he alleges that he understood it, and prove that hq was induced by it, in that sense, to alter his position. It is nevertheless competent to the representee to allege and prove that the representor intended him to, and that he did, assign a secondary sense to the representation, and that he was induced by it, in that sense, to alter his position. Article 18. Materiality. A material representation is a representation the tendency, Ch. vi. or the natural and probable effect, of which, either in the ordinary course of events, or in special circumstances of the case known to the representor, was to induce the representee to alter his position in the manner alleged. Article 19. Questions of Fact and Law in Belation to Inducement and Materiality. (1) It is a question of law whether there is any evidence Ch. vl. of the alleged inducement, and also whether the proved or '^^^' admitted representation is capable of being considered material, or of a sense in which it can be so considered. » CODE. Subject to the above, all questions in relation to inducement and materiality are questions of fact. (2) Inducement and materiality are separate and distinct facts, and must be proved independently : provided that inducement may be inferred, as a fact, from proved materiaHty of a sufficiently obvious character to justify such an inference : but it cannot be so inferred as a conclusion of law. Aeticlb 20. Alteration of Positio7i. Ch. VII. A representee is deemed to have altered his position on the faith of a representation when he was induced by his behef in the truth thereof to become a party to any contract or transaction either with the representor or with a third person, or to do, or abstain from doing, any act of whatsoever nature which he was not compelled by law to do, or abstain from doing. " Transaction " herein means and includes any act done, or relationship established, between two persons, which is of a binding or irrevocable nature, though it may not of itself amount in law to a contract. Article 21. Damage. Ch. VII. A representee is deemed to have sustained damage by reason of his behef in the truth of a representation, — (i) when any alteration of position induced thereby has, either in the ordinary course of events, or as the consequence actually foreseen and intended by the representor, resulted in loss to the representee of money, or money's worth, or in any temporal detriment, or physical injury ; or (ii) when, with- out having so altered his position, the representee has in fact suiJered personal and physical injury in consequence of such belief. PART V. PARTIES TO THE REPRESENTATION. Article 22. The Bepresentor. Ch. Vlli. A " representor " means and includes — (i) Any person who actually and personally made the ARTS. 19-23. representation ; provided that, where several persons concurred or combined in making it, all such persons are deemed joint representors, and, in the case of a fraudulent misrepresentation, joint and several representors : (ii) Anv person, whether principal or partner of the actual representor, by whose express or implied authority the representation was made ; pro- vided that, in case of a misrepresentation, whether fraudulent or innocent, principal and agent are deemed one person, and it is immaterial whether the principal only, or the agent only, or both, had the fraudulent mind (where fraud is alleged), or whether the principal was a natural person, or a body corporate or politic : (iii) Any principal, by whose sub-agent the representa- tion was made, if, but not unless, it was in the ordinary course of business, or was contemplated, or was necessary in the circumstances of the case, that the immediate agent should delegate any of the duties of his agency, and the sub-agent when making the representation, was acting within the scope of any duty so delegated ; pro- vided that a co-agent of any agent who made the representation is not, merely as such, deemed a representor. Article 23. The Befresentee. A " representee " means and includes — Ch. Vill. (i) Any person to whom the representation was actually ^^°*- ^^ and personally made : (ii) Any principal, or partner, of such person : (iii) Any other person to whom the representor in- tended that the representation should be, and to whom in fact it was, transmitted or communicated : (iv) In the case of a representation made or addressed to the pubhc or a class, — ^any member of the public," or of such class, to whose notice it came, and who acted upon it. 10 CODE. PART VI. WHEN MISKEPRESENTATION IS ACTIONABLE. Article 24. When Subject of Action for Damages. Ch. IX. Fraudulent misrepresentation is the subject of an action for damages, in accordance with the provisions of Part VII. Article 25. When Subject of Proceedings for Rescission, or Gi'ound of Defence. Ch. IX. Where the representee's alteration of position consisted Sect. 2. jj^ becoming party to a contract or transaction with the representor, the misrepresentation, whether fraudulent or innocent, is the subject of proceedings for rescission, and a ground of affirmative defence to any action to enforce such contract or transaction, pursuant to the provisions of Parts VIII. and IX. respectively. Article 26. To what Proceedings Statutory Misrepresentation is Amenable. Oi, XIII. Where misrepresentation is the subject of any statute or enactment, it is actionable under the conditions, and amen- able to the several proceedings, mentioned in such statute or enactment, and not otherwise. Article 27. When Innocent Misrepresentation not Actionable. Ch. IX. Except as aforesaid, innocent misrepresentation is not. Sect. 3. j^g g^gj-,^ ^i^g subject of any civil action, proceedings, or liability whatsoever. Sect. 1. ARTS. 24-29. 11 PAET VII. ACTION FOE DAMAGES FOE MISEEPRESENTATION. Article 28. Constituent Elements of the Cause of Action. An action may be maintained for damages for misrepre- ^Ch. X sentation under the following conditions. It is necessary and sufficient, in order to establish the plaintiff's right to relief in any such action, to allege, with such particulars as are reasonably adequate to the requirements of the individual case, and, having alleged, to prove (except in so far as any allegation may be expressly or impliedly admitted at or before the trial) each and every of the following matters : — (i) That the alleged representation was in fact made, and was a representation within the meaning of Part I. : (ii) That the defendant was the representor within the meaning of Article 22, or is otherwise liable for the representation within the meaning of Article 32 : (iii) That the plaintiff was the representee within the meaning of Article 23, or is otherwise entitled to sue in respect of the representation within the meaning of Article 32 : (iv) Inducement and materiaUty, within the meaning of Articles 17 and 18 respectively : (v) Falsity of the representation at the material date, within the meaning of Articles 10, 11, 12 : (vi) That the representation was fraudulent at the material date, within the meaning of Articles 13 and 14 : (vii) Alteration of position, and resultant damage, or physical and personal injury, within the meaning of Articles 20 and 21. Article 29. Affirmative Defences. It is competent to the defendant in any such action, with Ch. x. or without a denial of all or any of the plaintiff's allegations, to set up any one or more of the affirmative defences avail- able to a defendant in any action of tort, and also any one Sect. 2. 12 CODE. or more of the affirmative defenoeH special to aotioixH for damages for fraudulent misrepresentation : provided that the burden is on such defendant of allogijig, with such particulars as are reasonably adequate to the requirements of the individual case, and, having so alleged, of proving, all such matters as are nocoHHiuy to oHl/iibliHli tho dofenoo or defences so set up. Buch special affirmative defences are as follows : — ch. X. (i) 'I'hat, at the date of the representation, or before Hcet. 2. altering his position on thn faith ihtmot, the plaintiiT had uciiiiirod exact and coiriploto know- ledge of the truth in relation to the facts alleged to have boon miHreprc^Hontod ; providc^d that proof that the ]laintifThad tho moans of acquiring such knowledge docis not of itsolf constitute any defence : Ch. X. (ii) '^'•ha't tho plaintiff had expressly, or (by his acts and Sect. 2. conduct) impliedly, agrood to waive all inquiry into tho subject-matter of the ropresentation, and to dispense with, or not to rely upon, any information, or faciUties for investigation, given or offered by the defendant ; or had expressly agreed to take any property purchased from tho d«»fondant with all faults, or at his own risk, or with such title thereto as the defendant could give, or on the basis of an express refusal by tljo defendant to give any warranty : provided, nevertheless, that none of the foregoing facts constituio any dofonco in any case where it is shown that the roprosontor had fraudulently concealed any such fault, risk, or defect of title, by uctivo devices or positive means : provided also that any stipulation between the parties that the representor shall not be liable for fraudulent misrepresentation is a nullity : Ch. X. (i") T^'i ^^y case in which the plaintiff's alteration of sfr*' ni position consisted in becoming a party to a contract or transaction with the defendant, — that the plaintiff had, before action, avoiihfd such contract or transaction; but rjot rnoroly ihat ho was in a position to avoid it : Ch. X, ^^^ ^^ ^'^y ^^'^^ ™ which tho representation was as to S'ct. 2, the credit of a third porson,— that the rctprosentation Sub-». (4). ARTS. 29, 30. 13 was not ill -\vl■itill^^ or, if iii writing, was not per- sonally signed l>y the representor, within the mean- ing of sect. 6 of the Statute of Frauds Amendment Act. 1S-2S : (v) 111 any case in which the representation was made C'h. X. by a person acting within the scope of his employ- s,X.t (5). ment by, or partnership with, the defendant, but not ^\•ith his express authority, — that it was made by such person for his own, or another's, private ends, and not for the intended or actual benefit of the defendant. Article 30. Nature and Quantum of Helief. A plaintiff who succeeds in any action for damages for Ch. X. fraudulent misrepresentation is entitled to recover, as such "^^ ' ' damages, the then present money value of the whole of the net loss, damage, or injury which has resulted, or will result, within the meaning of Article 21, from his having altered his position, in the manner alleged and proved, on the faith of the fraudulent misrepresentation. The following are rules for the ascertainment and computation of such damages : — (i) Where the plaintiff's alteration of position consisted in becoming a party to any contract or transaction with the defendant, or with a third person, the sum recoverable as damages in the amount of the excess (if any) of all moneys paid or payable, and the money value (if any) of all property trans- ferred or transferable, by the plaintiff under such contract or transaction, over and above the total of all moneys (if any), and the money value (if any) of all property, received or receivable by him thereunder : provided that the money value of property received or receivable by the plaintiff means the real value which such property had, in the proved circumstances of the case, imme- diately after the conclusion of such contract or transaction : (ii) Where the plaintiff's alteration of position consisted in the bestowal of time, services, or labour, the 14 CODE. sum recoverable is the money value thereof on a fair estimate in all the circumstances of the case : (iii) Where the plaintiff's alteration of position consisted in the incurring of any habiUty, which has not been discharged at the date of the trial, the sum recover- able is the estimated then present money value thereof : (iv) "\^liere the plaintiff's alteration of position consisted in the doing of or abstaining fi'om some act, in con- sequence of which he has sustained physical and personal injury, or where he has sustained such injury in consequence of his behef in the truth of the representation, without having altered his position as abovementioned, the sum recoverable is that which would be recoverable if the plaintiff were suing for damages for personal injuries caused by neghgence. Article 31. Questions of Law and Fact. Ch. X. In any action for damages for fraudulent misrepresenta- '"^^' ■ tion, the following are questions of law : — (i) ^Miether the alleged, or proved, representation is a representation in law, mthin the meaning of Articles 1-6 : (ii) Whether the alleged, or proved, representation is capable of the meaning assigned to it by either party : (iii) A^Tiether the alleged, or proved, representation is capable of being deemed material, within the meaning of Article 18 : (iv) A^Taether, in the case of an affirmative defence of the kind maintahied in Article 29 (iv), the aUeged, or proved, representation relates to the credit of a thu-d person, or to any of the other matters referred to in sect. 6 of the Statute of Frauds Amendment Act, 1828 : (v) Whether the damages claimed are recoverable in law, and all questions as to the proper measure of damages : ARTS. 30-32. 15 (vi) Generally, in the case of any of the necessary allega- tions on the part of the plaintiff, or of the defendant, as stated in Articles 28 and 29 respectively, whether there is any evidence thereof, or whether, j^rimd facie evidence of any such allegation having been adduced, there is any evidence to the contrary thereof. Except as aforesaid, all disputed questions are questions of fact. Article 32. Parties to the Action. (1) Any representee, within the meaning of Article 23, Ch. x. or any person who, in virtue of the rules of common law su'b-gf or any statutory provision relating to parties to actions (i), (2). of tort in general, is entitled to stand in the place of such representee, in case of his death, disabiHty, incapacity, or otherwise, may maintain an action or counterclaim for damages for fraudulent misrepresentation ; and any repre- sentor, within the meaning of Article 22, or any person who, in accordance with any such rule or statutory provision, is required to stand in the place of such representor, in case of his death, disabiHty, incapacity, or otherwise, is liable to be sued in such action, or proceeded against by such counterclaim. In the foregoing Articles of this Part, the expression "plaintiff" includes a party so counter- claiming, and, where the action or counterclaim is brought, not by the representee, but by some person in right of him or his estate, it means such representee only : and the expres- sion " defendant " in like manner includes a party resisting such counterclaim, and where the action or counterclaim is brought, not against the representor, but against a person required to stand in his place, it means such representor only. (2) A bare right to sue for damages for fraudulent mis- Ch. X. representation is not assignable inter vivos. Sub^s' (i) (3) An action or counterclaim against a corporation or ^j^ x. firm for damages in respect of any fraudulent misrepresenta- Sect. 5. tion, whereby the plaintiff alleges that he was induced to become a member thereof, is not maintainable whilst the plaintiff remains such member. 16 CODE. PAET VIII. PEOCEEDINGS FOE EESCISSION OE ANALOGOUS EELIBF. Article 33. Nature and Limits of the Bight to avoid a Contract or Trans- action induced by Misrepresentation. Ch XI WheiL' a representee has been induced to enter into a Sect. 1, contract or transaction with the representor by any mis- "'sfsub'-s!' representation on the part of such representor, the contract (*^)- or transaction, whether the representee has, or has not, sustained, or is, or is not, hkely to sustain, damage by reason of his having entered into it, and whether the mis- representation was fraudulent or innocent, is voidable at the option of the representee, on discovery of the truth of the facts misrepresented, but remains vaUd and binding unless and until he elects to repudiate it (not having pre- viously in words, or by acts and conduct, elected to affirm it), and gives notice of such repudiation to the representor. On such notice being given, if the representor refuses to accept or recognize the repudiation, or to treat the contract or transaction as at an end, the representee is entitled to enforce his avoidance by any of the proceedings in Articles 35-38 mentioned, subject to the conditions stated in Article 34: : provided that, without resort to any such proceedings, he is entitled to resume physical possession of any property delivered under the contract or transaction, if and when he becomes in a position to do so without violating the rights of any third person. The avoidance must be of the entire contract or transaction ; provided that the representee is entitled to avoid a particular term or part thereof, without avoiding the residue, or to avoid it as against one of the parties thereto, without affecting the rights or liabilities thereunder of any other party, if, but not unless, such term or part is wholly distinct and recoverable from such residue, or if, but not unless, the party against whom it is sought to aA'oid the contract or transaction is a party severally liable thereunder. AKTS. 33, 34. 17 Article 34. Sect. 2. Wliat must be alleged and proved by the Beprcscntce in any Proceedings for Bescission or Analogous IlelieJ. la any of the proceedings mentioned in the next Article Ch. xi. for the purpose of obtaining a judicial rescission or avoid- ance of any contract or transaction induced by misrepre- sentation, or for analogous wliei, it is necessary and sufficient, in order to establish the plaintiffs right to such relit-f, to allege, with such particulars as are reasonably adequate to the requirements of the individual case, and (except so far as any allegation may be expressly or imphedly admitted at or before the trial) to prove, each and every of the following matters : — (i) That the alleged representation was in fact made, and was a representation within the meaning of Part I : (ii) That the defendant was the representor within the meaning of Article 22, or is otherwise hable for the representation within the meaning of Article ... ^^^^^) = (iii) That the plaintiff was the representee within the meaning of Article 23, or is otherwise entitled to maintain the proceedings, within the meaning of Article 41 (1) : (iv) That the plaintiff in fact entered into the contract or transaction sought to be rescinded, and that he was induced to do so, within the meaning of Article 17, by the alleged representation, being a material one, within the meaning of Article 18 : (v) Falsity of the representation at the material date, within the meaning of Articles 10, 11, and 12 : (vi) That the alleged contract or transaction is in law subsisting and binding, and is still voidable at the plaintiff's instance, or by the Court : that is to say, that it was concluded ; and, having been concluded, has never been put an end to by mutual consent, forfeiture, or otherwise; and that it is still executory, and has not been completely executed on both sides by conveyance or otherwise, unless the misrepre- sentation was fraudulent, or was a misrepresentation of the entire substance, nature or essence of the B,M. c 18 CODE. subject-matter of the contract, in either of which cases such complete execution is immaterial; provided that a contract or transaction induced by a misrepresentation as to the entire nature, character, or class thereof, or as to the identity of the person with whom it purported to have been entered into, is not voidable, but void : (vii) That the alleged contract or transaction was one which in law created and affected contractual rights and liabiUties only. Article 35. Action for Rescission. Ch. XI. On allegation of the several matters set forth in Article Sect. 3. 34 the representee may maintain an action for the rescission Sub-ss. (1) ^ ^ , . . ..... and (5). of the Contract or transaction, wherem he is entitled to claim, and, on proof of such matters, to obtain, the following remedies, or such of them as may be appropriate to the circumstances of the particular case : — (i) A declaration that the contract or transaction is void, and that it is to be treated as having been void since his repudiation thereof : (ii) An order for rescission or annulment of the contract or transaction ab initio, in its entirety, or under the conditions mentioned in Article 33, but not other- wise, partially ; provided that, in a proper case, any instrument purporting to contain or record the contract or transaction may be set aside in one character, or for one purpose, and allowed to stand in another character, and for another purpose : provided also that the mere fact that the contract sought to be rescinded was a contract for the pur- chase of property sold under the direction of the Court in any cause or matter, in no way affects the title of the representee to rescission : but in that case his remedy is not by action, but by appUcation to the Court directing the sale in such cause or matter : (iii) An order for the cancellation, or deHvering up to be ABTS. 34, 35. J 9 cancelled, of any instrument or document purjiort- ing to contain or record the contract or transaction, where there is an appreciable danger that, if allowed to remain in the defendant's possession, it may, though judicially declared void, be negotiated (if negotiable), or \ised thereafter for the purpose of harassing the plaintiff by frivolous and vexatious proceedings, or, so as otherwise to injuriously affect the plaintiff's title or rights : (iv) Where the contract sought to be rescinded was a contract to take shares in a company, within the meaning of the Companies (Consohdation) Act, 1908, — an order for the rectification of the register of members : (v) An order for the repayment to the plaintiff (with interest, in the absence of special circumstances) of all moneys, and the retransfer to him of all property, received by the defendant under the con- tract or transaction, together with aU rents, profits, dividends, and benefits received in respect of such property (less the cost of any permanent improve- ments thereto in the case of real property), as against the like repayment and retransfer by the plaintiff to the defendant of all moneys and property (if any) received by the plaintiff thereunder, and payment of all rents, profits, dividends, and benefits received by him in respect of such property : (vi) T\Tiere necessary, an indemnity against any habihty of the plaintiff to third persons under the contract or transaction : (vii) Where necessary, an injunction restraining the defendant from deaUng or parting with any property the subject of the contract or transaction : (viii) Payment, by way of indemnity, of the amount of any expenses or Uabihties incurred by the plaintiff in relation to the property the subject of the contract or transaction, and pursuant thereto, during the period when he was in possession of the property : (ix) Generally, all such directions for inquiries, accounts, or otherwise, as may be necessary for the purpose of effecting a restoration of the status quo, and 20 CODE. mutual restitution m specie of all moneys, property, and benefits acquired by the parties under the con- tract or transaction. Article 36. Action for Money Had and Beceived. Ch. XI. Where the representee has paid money to the representor Sub-s. (2). pursuant to the contract or transaction, and has received from him no money or money's worth thereunder, he is entitled to recover what he has so paid in an action for money had and received, on proof of the matters set forth in Article 34. Article 37. Statutory Proceedings for Bedification of the Begister of Members of a Company. Ch. XI. Where the representee alleges that he was induced by Sub^s'(3) *^® misrepresentation of a company, within the meaning of the Companies (Consohdation) Act, 1908, to agree to become a shareholder therein, or where the representee is such a company, and alleges that it was induced by the misrepre- sentation of a shareholder to accept and register another person as the transferee of his shares, it is competent to the representee, in either of such cases, to apply to the Court for rectification of the register of members of the company in the summary manner provided by sect. 32 of the said statute, instead of by action, unless, in the discretion of the Court, such summary proceedings are deemed inconvenient and inappropriate to the circumstances of the case. Article 38. Proceedings for Variation of the List of Contributories of a Company in Liquidation. Ch. XI. In any such case as that mentioned in the last Article, Sub"-s. fi). ^^ the company is in hquidation, the apphcation must be made in the winding up of such company, pursuant to sects. 163, and 173, of the Companies (Consohdation) Act, 1908, to vary the list of contributories by striking out the apph- cant's name therefrom, on which apphcation the Court has ARTS. 36-39. 21 jurisdiction also to rectify the register of members. No contributory is entitled to an order on such appUcation except subject to the conditions stated in Article 39 (vi). Article 39. Affirmative Defences to Proceedings for Rescission. It is competent to the defendant in any proceedings for ch. xi. rescission, with or without a denial of all or any of the ^^°*" *• plaintiff's allegations, to set up any one or more of the affirmative defences available to a defendant in any action of contract, and also any one or more of the affirmative defences special to proceedings for the rescission of contracts and transactions on the ground of misrepresentation : pro- vided that the burden is on such defendant of alleging, with particulars reasonably adequate to the requirements of the individual case, and, having so alleged, of proving, all such matters as are necessary to estabUsh the defence or defences so set up. Such special defences are as follows : — (i) The affirmative defence set forth in Article 29 (i), Ch. X. subject to the proviso therein stated : Sub^s fi) (ii) Tlie affirmative defence set forth in Article 29 (ii), ch. XI. subject to the provisoes therein stated : sj^v,"*' *' (iii) In the case of any contract of purchase and sale, — ^^ ^ that the plaintiff had expressly agreed to accept Sect. 4. compensation in heu of rescission in respect of " "^" ^ '" any misrepresentation as to the property the subject of such contract : provided that such agreement constitutes no defence in any case where it is proved that the misrepresentation was fraudulent, or that it was a misrepresentation of the entire substance and nature of the property, or where the compensa- tion does not admit of pecuniary assessment : (iv) That by expiess agreement, or impHedly by acts g^^^-^- and conduct, or by inaction, the plaintiff, with Sub-s. (4). full and precise knowledge of all the material facts, had elected to affirm, and adhere to, the contract or transaction sought to be rescinded : (v) That it has become physically, commercially, or ^■^^• legally impossible to restore the parties to the gub-s.' (5). 22 CODE. position in which they were before the contract or transaction was entered into, or impossible to do so without injustice to innocent third parties who have acquired rights thereunder for value, or without injustice to the defendant : Ch. XI. (vi) Where the defendant is a company within the ^^"^^ *• meaning of the Companies (Oonsohdation) Act, 1908, and the contract sought to be rescinded is a contract to become a member thereof, — ^that the company is in Hquidation, whether voluntary, compulsory, or under the supervision of the Court : provided that it is competent to the plaintiff to displace such prima facie defence by proof that before the commencement of such liquidation he had not only given the company notice of his repudiation of the contract, but had effectively avoided the same by a binding agreement for that purpose with the company, or had commenced proceedings against the company for rescission thereof, or had agreed with the company to be bound by the result of a test action or proceeding against the company on the part of some other person for the like purpose, and based on the same misrepresentation ; or that, before the com- mencement of the liquidation, the contra,ct had been in fact determined by forfeiture of his shares, or otherwise, or that it was void ab initio, and not merely voidable, or had never been a concluded contract at all. Article 40. Questions of Law and Fact. Ch. ixi. In any proceedings for rescission, the following are ^'"=*- ^- questions of law :— (i) Whether the alleged, or' proved, representation is a representation in law, within the meaning of Articles 1-6 : (ii) Whether the alleged, or proved, representation is capable of the meaning assigned to it by either party : (iii) Whether the alleged, or proved, representation is ARTS. 39-41. 23 capable of being doomed material, within tlio meaning of Article IS : (iv) Whether, in the proved or admitted circumstances of the case, it is, or is not, legally possible to restore the parties to their former position : (v) Whether the contract or transaction is voidable, or void ; and whether it was ever a concluded contract, or had been lawfully determined : (vi) Generally, in the case of any of the necessary allega- tions on the part of the plaintiff, or of the defendant, — ^whether there is any evidence thereof, or whother, prima facie evidence of any such allegation having been adduced, there is any evidence to the contrary thereof. Except as aforesaid, all disputed questions are questions of fact. Article 41. Parties to the Proceedings. (1) The persons entitled to institute any of the pro- cii. xi. ceedings in this Part mentioned, are the following : — Sub^s. (i). (a) Any representee within the meaning of Article 23 : (b) Any person who, in virtue of the rules of common law or any statutory provision relating to parties to actions of contract in general, is entitled to stand in the place of such representee, in case of his death, disabihty, incapacity, or otherwise : (c) Any person who, by assignment or devolution, has acquired property to which the contract or trans- action relates, and who is accordingly deemed to have at the same time acquired such equities to avoid or rescind the same as his predecessor in title had : provided, nevertheless, that a bare right to rescind is not assignable. Any person entitled to sue, or to make an appHcation to the Court, for any of the remedies in this Part mentioned, may also counter-claim or make a cross-appUcation therefor. In the foregoing Articles of this Part, the expression " plain- tiff " includes a person so counter-claiming, applying, or making such cross-apphcation. Where such action, counter- claim, application, or cross-application is brought, set up, Sect. 6. Sub-s. (2) 24 CODE. or made, not by the representee, but by some person in right of him or his estate, the said expression is intended to apply to such representee only. Ch. XI. (2) The persons against whom any of the proceedings in this Part mentioned may be instituted are the foUowing : — (a) Any representor, within the meaning of Article 22 : (b) Any person who, in accordance with the rules of common law or any statutory provision relating to parties to actions of contract in general, is required to stand in the place of such representor, in ease of his death, disability, incapacity, or otlierwise : (c) Any assignee of a chose in action from a representor who acquired the same under the contract or trans- action sought to be rescinded : (d) Any assignee of property in possession from a repre- sentor who acquired the same under the contract or transaction, if, but not unless, the property was assigned after the representor had avoided such contract or transaction, or if such assignee took the property otherwise than for value, or with notice of any circumstances rendering the contract or transaction voidable, or in bad faith. The expression " defendant," in the foregoing Articles of this Part, includes a person resisting any such counter- claim, application, or cross-application as aforesaid. Where the proceeding is brought, not against the representor, but against a person defending in right of him or his estate, the said expression is intended to apply to such representor only. PAET IX. EELIEP BY WAY OF DEFENCE TO AN ACTION OE PKOGEEDING TO ENFOECE THE CON- TEACT OE TEANSACTION. Article 42 Wlien Misrepresentation may he set up as a Defence. Ch. XII. Where any action, or other proceeding of whatsoever Scot. 1. kind, is instituted by one of the parties to a contract for the ARTS. 41-43. 25 purpose of enforcing the same, whether speciacally or other- wise directlr, or for the reco\-ery of damages for the breach thereof, or for an injunction, or otherwise for the purpose of nidn-ectlj^ enforcing the same, it is competent to the party aganist whom the proceedmg is instituted to set up as a defence or answer thereto, with or without any cross-claim for rescission, that he was induced to enter into the contract by the misrepresentation of the party seeking to enforce it. Article 43. What must be proved to establish the Defence or to Defeat it. The defence or answer is established by allegation and Ch. Xil. proof of all matters required to estabUsh a right to rescission, ^°*^-2'^- as stated in Article 34, and of the further fact that, on discovering the truth, the representee repudiated the con- tract, and has never since recognized it as vahd, or taken any benefit thereunder : provided that, where the action is for specific performance, the representee is only required to estabhsh such of the said matters as may be sufficient, in all the circumstances of the particular case, to satisfy the Court, in its discretion, that the special remedy is not appropriate, and to refuse accordingly to grant it, either absolutely, or except upon terms. It is competent to the representor to resist such defence or answer by allegation of any of the matters stated in Article 39, and, on proof of the same, the defence or answer is invaUdated. Article 40 (as to questions of law and fact), and Article 41 (as to parties), in respect of proceedings for rescission, apply mutatis mutan- dis to the defences and answers in this Part referred to, with the following variation in the case of Article 41, viz. that, where the defence or answer is set up against an action or other proceeding instituted by an indorsee or transferee of a negotiable instrument, it is sufficient in the first instance to allege and prove that such negotiable in- strument was obtained from the person setting up the defence or answer by the misrepresentation of some person through whom the plaintiff claims, whereupon the burden of proof is shifted, and it is incumbent on the plaintiff, in order to invalidate the defence or answer, to establish 26 CODE. affirmatiTely that he acquii'ed title to the instrument for value, ■without notice, and in good faith. [XoTE. — ^It has not been ttought necessary or advisable to include in this Code any of the matters which are the subject of Chapters XIII, XIV, and XY.] THE COMMENTAEY. CHAPTER I. INTRODUCTORY. Sect. 1. Scope of the Tkeatise. 1. This Commentary, and the Code which it is designed to justify and illustrate, are concerned with misrepresentation only so far as it conduces to acts, or abstention from action, on the part of the person to whom it is addressed, whereby his portion is altered, and only so far as it confers upon that person a right to civil remedy and relief. So much, indeed, appeiu-s from the title itself, which indicates substantially which of the topics, more or less connected with statements made by one person to another, are excluded from, and which on the other hand fall within, the scope of this treatise. Sect. 2. Excluded Topics. 2. A representation, and a promise, are mutually exclusive of, and antithetical to, one another. In the case of a statement which has formed the inducement to another's alteration of position, there is no question of any contractual engagement having been violated : whereas in the case of a contract, or term or condition of a contract, or warranty> the sole question is, breach or no breach ; and the application of the terms " fsdse " or " true," except in a highly metaphorical sense, to such breach or observance, would be inapposite and grotesque (a). 3. " Misrepresentation " also excludes " mistake," which imports a self-induced misapprehension, either on the part of each of the parties to a transaction, or on the part of one of them, but in neither case resulting from any misrepresentation. Every misrepresentation does, no doubt, induce " mistake " in the literal sense of the word : but a " mistake " (a) See § 21, in Ch. II, Seot. 3, Snb-3. (2), mt^ as to the assimilation to, if not idontUloation with, one another of " Veritas and " oonstantia " in Roman jm'is. pradenoe, and of Yeraoity and Good Fnith in modem systems of etliios. 27 28 COMMENTARY, CH. I, SECTS. 2-4. so induced brings the case within the legal definition of " misrepresenta- tion," and not within the quite different and distinct judicial conception of " mistake." 4. Ex vi termini, " misrepresentation " has no concern with cases of non-disclosure, as such, that is, with cases of the mere violation of a duty, imposed by the policy of the law on parties standing in certain relations to one another, to observe the utmost good faith by (in particular) disclosure of all known material facts (&). But, where non-disclosure takes the form of such concealment, omission, or suppression of facts as renders false a representation already made, and which the revelation of these facts is required to make true, it amounts in law to misrepresentation and falls accordingly within the limits of this work (c). 5. There are several legal ■ consequences of misrepresentation besides liability to civil proceedings at the suit of the person to whom the misrepresentation was made. Estoppel in pais is one (d) ; criminal responsibility, where the misrepresentation is a false pretence, is another (p). But, since neither of these constitutes or confers, as such, a cause of action, neither of them comes within the scope of actionable misrepresentation. Sect. 3. Topics Included. 6. On the other hand, the subject comprehends innocent as well as fraudulent, and implied as well as express, representation (/). Further, those causes of action, or grounds of defence, in respect of misrepresentation which are established by statute, are the subject of special treatment (&) The relations referred to are those of insurance, suretyship, trustee and cestui que trust, guardian and ward, solicitor and client, medical man and patient, spiritual adviser and penitent, principal and agent, promoter and company, and various others, V here uberrima fides, or at least bona fides, in the matter of disclosure is peremptorily required, as s. duty quite independent of the duty not to mislead by suppression or concealment of facts qualifying those which have already been the subject of a repre- sentation. All such cases belong to a separate chapter of law (Non-Disclosure). Another species of misrepresentation which lies ^^'holly outside the limits of actionable misrepresentation (in the strict sense of the word), is that kind of misstatement, misinformation, or misreporting, which constitutes a mere breach of duty on the part of an agent or servant to give accurate and complete information, and careful reports, to his principal or employer, and -which therefore ranges itself (so far) irader the head of negligence. It is to be observed, boMever, that "there are some cases {e.g. the " invitation " and " trap " cases), usually dealt -nith under the head of negligence, which might equally be described as ca.ses of misrepresentation bv conduct.' See § 145, post. (c) In Ch. IV, Sect. 4, Sub-s. (2), from iihich it Tiill be seen how the tendency to include cases of non -disclosure in the class of implied misrepresentation has gromi, and is steadily growing, in modern times, (d) Estoppel is a rule of evidence, not a cause of action. The same facts -which establish the estoppel may of course be ground for an action of misrepresentation ; but this is only an accident. Estoppel, as such, merely removes a barrier in the way of, or interposes an obstacle to, a cause of action, which ^\ould otherwise fail or succeed in the respective cases. (c) Certain statutory offences are referred to in § 397, post. (/) As to innocent and fraudulent misrepresentation, see Ch. V, post. As to express and implied representation, see Ch. Ill, post. §§ 4-9. 29 apart from, and in addition to, those which are established hj the common law ig). 7. There are certain causes of action, and affirmative defences, fomided on misrepresentation and deceit addressed to and practised upon persons other than the party setting up the claim or plea, but resulting in injury, either to that party, or to the public at large. These are not, in the strictest sense, cases of misrepresentation ; but have sufficient elements in common with it to justify inclusion in this Commentary, and separate treatment in the proper place (A). Sect. 4. Leading Conceptions — Order of Treatment. 8. The proposition underlying the whole law of actionable misrepresen- tation may be stated, broadly and summarily, as follows. Any false repre- sentation made by one person to another, with the object and result of inducing him to enter into a contract or transaction with the representor, or otherwise to alter his position to his prejudice, is the subject of civil proceedings at the instance of the latter person, for the purpose of avoiding such contract or transaction, or, where the misrepresentation was fraudulent, is the subject of an action for damages. 9. It will be apparent from the above summary statement that tlio following are the leading conceptions, and constituent elements, in the jurisprudence of the subject, which it is accordingly essential in the first instance to analyze and discuss in the following (which is conceived to be their logical) order : — (i) Representation (t) : (ii) Misrepresentation — Falsity (k) : (iii) Fraudulent and Innocent Misrepresentation (Z) : (iv) Inducement and Materiality (m) : (v) Alteration of Position and Damage (w) : After which it will be possible and necessary to consider — (vi) The Parties to the Misrepresentation (o) : (vii) Relief and Remedies {p) : (viii) Statutory Proceedings (q) : (ix) The kinds of misrepresentation referred to in § 7, sup. (r). (x) Jurisdiction and Procedure (s). {g) See Ch. XIII, post. (h) See Ch. XIV, post, (i) See Ch.o. II and III, post. (k) See Ch. IV, post, (l) See Ch. V, post. (m) See Ch. VI, post, in) See Ch. VII, post. (o) See (^h. VIII., post, (p) In Chs. IX, (When Misrepresentation is Actionable), X. (Action for Damages), XI (Proceedings for Rescission), and XII (Misrepresentation as a Defence), post. (?) See Ch. XIII, post. (r) See Ch. XIV, post, (s) See Ch. XV, post. COMMENTARY, CH. II, SECT. 1, SUB-SECTS. (1), (2). CHAPTER II. REPRESENTATION. 10. Nothing can be a misrepresentation whicli was never, in law, a representation at all. It is essential, therefore, in the first place, to form a clear conception of what it is which the law pronounces to be a representa- tion. Not all statements answer to the legal description. Some clearly contain all the necessary elements : others, as clearly, fall short of the requirements of the law ; but there is a third class — an important and increasing one — of statements ancipitis sensus, the designation of which is doubtful and difficult, and which, according to the aspect in which it is proper to regard them, may be placed in the one category or the other, such as expressions of intention, opinion, and the like (a). Sect. 1. The Constituent Elements of Repeesentation. 11. The legal definition of a " representation " is contained in Article 1 of the Code. " A representation is a statement made by, or on behalf of, one person (hereinafter called ' the representor ') to, or with the intention that it shall come to the notice of, another person (hereinafter called ' the representee '), which relates, by way of affirmation, denial, descrip- tion, or otherwise, to a matter of fact. ' Matter of fact ' means either an existing fact or thing, or a past event." The above points to two dis- tinguishing marks of a " representation " : (i) communication between two (or more) persons, and (ii) relation to a fact, present or past. Sub-sect. (1). Communication between Two Persons. 12. It takes two to make a representation, just as it takes two to make a contract. That which is still either in scrinio or in gremio is innocuous. A statement made in the course of a soliloquy which is overheard, or con- tained in a diary, or private document, which is overlooked, or surrepti- tiously read, is not made to the person so overhearing, overlooking, or reading, or to any one, and is, therefore, no representation. " Lying at large " will not do. There must be two parties, a " representor " and a representee " (6), who must be distinct from one another, in substance as (a) See Sect. 2, inf. (6) The term "representee" is novel; it is, moreover, unscientifically framed, and uncouth, but not more so than the terms (long since in established use) 30 §§ 10-13. 31 well as in name and form (c). A man can no more lie to himself, except in the highly metaphorical sense of the philosopher or the theologian, than he can defame himself {d), or assault himself. " To thine own self be true " may result in, " thou canst not then be false to any man " ; but it is only this result of which any court can take cognizance. The virtue and vice attendmg truth and falsity in statement are not " self -regarding " qualities. In law, as in morals, " del ev irXuacnv dvayKt] etmi TO dSiKov"(e). Plato's "lie in the soul" has no place in any scheme of jurisprudence. "Except only in words, there is nothing but truth in the world. . . . Truth supposes mankind, for whom, and by whom alone the word is formed, and to whom only it is applicable. If no man, no truth"!/). Sub-sect. (2). Relation to i\Ialter of Fad. 13. It is commonly said that a statement, in order to constitute a representation, must be one of " existing fact." In so far as this form of expression serves to distinguish and exclude all statements de futuro, and to include in the definition, as " statements of existing fact," all such as do not relate in any way to the future, it is intelligible enough ; but, except in this rough and broad sense, it is not adequate, or strictly accurate ; for, in the first place, a past event is not an existing fact, and yet a state- ment as to a past event is, without doubt, a representation ; and, secondly, a statement wholly denying a fact is not, literally, a " statement of fact," and yet it is certainly a representation. It is now well settled that any statement which purports to affirm, deny, describe, or otherwise relate " mortgagee," " vendee," " pledgee," " bailee," " obligee," " addressee," " sendee," (used by the court of Queen's Bench in relation to a telegram at p. 714 of Playford v. United Kingdom Telegraph Co. (1869), L. R. 4 Q. B. 706), and " promisee"; and the enormous convenience of such a term in avoiding reduplication of language, and involution of sentences, will be appreciated by any one who has had occasion, in a book, essay, judgment, or opinion, to deal in any detail with the principles of mis- representation. This, and the respectability and antiquity of the family of abbre- viated words with which it has associated itself, must be the excuse for its intro- duction. (c) See Ee Ambrn.se Lake Tin and Copper Mining Co. (1880), 14 C. D. 390, C.A.. where, as Beett, L.J., at pp. 396-397 observes, the people claiming to be deceived were practically the same as those who were alleged to have practised the deceit, and the action was an absurdity and " a farce." (d) This aspect of defamation is dealt with in the author's Law of Actionable Defamation, App. IV., p. 293. (c) So, in the law of negligence, there is no such thing as " negligence in the air," as BowEN, L. J., said in one of the cases on this topic. Jehu may be as careless as he pleases of his own safety when he is driving across a lonely moor, and in that sense reckless and negligent ; it is only when another person comes upon the scene, and there are thus irheioves in the Aristotelian phrase, that he can become negUgent in the legal sense. C'p. the observations of Lord Eshbe, M.R., at p. 497 of Le Lievre v. Oould, [1893] 1 0. B. 491 : " if a man is driving on Salisbury Plain and no other person is near him, he may drive as fast and as recklessly as he pleases. But if he sees another carriage coming near to him, immediately a duty arises not to drive in such a way as is likely to cause an injury to that other carriage." (/) Home Tooke, Diversions of Purley, Part II., Ch. V (" Of Abstraction "), in a passage parodied bv Thomas Love Peacock in the mouth of Mr. Jenkinson in Ch. VII of Headlong Hall. 32 COiDIEXTARY, CH. II, SECT. 2. SUB-SECT. (1). to any existing fact, circumstance, or thing, or its qualities, attributes, state, or condition, or to any past event, amounts in law to a representa- tion. So far, all is plain. The diiSculties arise when the rule is applied to expressions of mental states and other matters which form the subject of the remainder of this Chapter. Sect. 2. Statements of Intextiox. or otherwise eelatixg to the Future. 14. -\iticle 2 of the Code is framed as follows : " A statement of the representor's, or of a third person's, intention, readiness, or capacity to do or abstain from doing anj-thing, or of his expectation as to a matter i» futuro, is a representation of the then existence of such intention, readiness, capacity, or expectation ; but any statement as to a matter in futuro which was intended or expressed by the parties to constitute, or which can onlr be construed as constituting, a promise, is not a representation." This proposition involves the consideration of (1) statements of the representor's own intention, (2) statements which can only be regarded as promises on the part of the representor, (3) statements of a third person's intention, and (i) other statements de futuro. Suh-sect. (1). Statement of the Representors oicn Intention. 15. In early times it was frequently said that statements by a man of his own intention, or generally as to his own mental state, are not statements of fact, and therefore not representations {g). It has now, however, been recognized that, in this unqualified form, the proposition is quite incorrect. " The state of a man's mind," according to BowEN, L.J., " is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man's mind at a par- ticular time is. but, if it can be substantiated, it is as much fact as anything else. A misstatement of the state of a man's mind is a misrepresentation [g) As, for instance, by Lord Eij.e>'B0E0T7GH, C. J., at p. 637 of Vernon v. Keys (ISIO), 12 East. 632 (an opinion criticized by Sir Frederick Pollock in his Preface to 11 R. R.) ; by Pakke, B., at p. 122 of Heminqvay v. Hamilton (ls3si. i il. & \A'. 115 (" there is no misrepresentation of an existing fact, but only an intention at the time of the contract to depart from it " — by which dictum it is implied that intention is not fact) : and by Lord Ceaitwoeth, L.C, at pp. 214-216 of Jorden v Momti (lSo-4). 5 H. L. C. 1S5. Even in very recent times, C'ozens-Habdy, J., at pp. 334, 335 of Re Fichus, [19001 1 Ch. 331,'^uses language which at first sight, and divorced from the context, seems to point in the same direction : "" a mere representa- tion that the writer intends to do something in the futnre is not, though the person to whom it is made relies upon it, sufScient to entitle that person to specific performance or damages. There must be a contract in order to entitle the party to obtain ajiy relief." But here the "relief " referred to was relief of the kind .-ought in the action being tried, which was based entirely on contract, and in which no misrepresentation was suggested ; so that C'oze>'3-Hasdv, J., clearly meant only that, where a party asserts a contract, he does not prove it by evidence of a mere representation de futurn. He never intended to say that the existence of an intention is not n. fact, and if the action had been for misrepresentation of the existence of an intention. §§ 13-16. 33 of iat:t ' (h). And, in a later cas«, the sarn'; hi^h authority expres.^es Wimcif to the »ame effect : " a man may tell a lie about the state of his own min/], just as much as he can tell a lie about the state of the weather, or th« irtat* of hi* own digestion," though " the inquiry," as he again (Am-rvin, may be " a difficult and complicated one " (t)- 16. The above diffio-nlty in proving the falsity of the fact stated does not make the statement any the I«»8 one of fact : nor does the difficulty (a muf h more serious one) of proving inducement, which, as will be seen hereafter, is an essential ingredient in any cause of action, or in any defenf;*f, founded on misrepresentation. Nobody doubts the futility of establishing that a statement was a representation, if it is impossible to show that the representation was false: but the reprraentee is in an equally hopeless position if (after having surmounted this obstacle) he cannot prove that he was induced by the representation, in the only sense in which it was or could have been a false representation, to act as he did to his injury. Now the mere fact that the intention was not fulfilled is in itself no proof of its non-existence at the date of the represen- tation (k), though it may perhaps, in certain cases, tend, with other circumstances, to raise such an inference (1) ; but what the representee is generally found, in the last resort, to complain of, is the non-execution of the intention, which is tantamount to an acknowledgment that what induced him to alter his position was his belief that the intention would ripen into accomplishment, in other words his reliance upon the statement as a promise, and not as a representation. His belief that the representor had a then present intention to act according to his statement would, in he wcnilc] donhUium have tixed very difEerent language, or would have added the nece»»«ry mijmlements or qualifications. Lord ATKursoir, at p. 432 of Cavalier v. Pope, fi906] A. C. 428, H. L., uses still more absolute and unqualified language in A paMa<(e which, however, wa* not necessary to the decision, was not adopted by the citJier learned VuitCus, and was indeed carefuUy prefaced by the words, " speaktng for mymAf." (h) Kd^ingUm v. Fitzmumrke (1885), 29 C, D. 459, C. A., at p. 483. (i) Angui v. CUffrnd, [1891] 2 Ch. 449, C. A„ at p. 470. Cp. Wills, J., at p. 260 of R. V. Qordm (1880), 23 Q, B. D, 364, IMv. Ct. (k) Henrnujva/i/ v, HamilUm (iM lup.) ; Benham v. United Qvaravlie and lAfe Atmrawe Co. (1862), 7 Kxch. 744 (per VouuiCK, C.B., at pp. 752, 753); Jorden v. Money (lAi sup.); Bold v, HiUrhinson (1856), 6 "De G. M. & CI. 558 (per Lord Craswortb, L.C., at p. 666) j and BeaWe v. Lord Ebiwy (1872), 7 Ch. App. 777 (per Mtolkh, L.J., delivering the judgment of the Lords Justices, at p. 804). A subsequent change of purpose, whethifr the purpose wa» announced to another or not, does not even argue mconstancy or inconsistency, according to Cicero (" nemo doctus unquam mutationem consiUi inofmstantiam dixit esse"); much less does it prove insincerity in the annonriocfflent of it. " If I merely assert my intention of abstaining from alcohol for a vear, and then after a week take some, I am at worst ridiculed as inconsistent ; but if I had pledged myself to abstain, I am blamed as untrustworthy " (Sidgwick, Methods of MMes, p, 279) ; to which might be added the case of a person who, in order to obtahi an appirfntment from one who is a strong believer in abstinence, asserts an intention to abstain : in that case, if it could be proved that, when so assertmg, he was making arrangements for a bout or debauch in a week's time, he would have misreprc- senterl the fact of his intention ; but the mere circumstance that he took to drinking in a week would not of itself prove the non-existence of the intention, though it might be smm evidence of it, and, with other facts, might entablish it. See the next note. (I) Olydudrde Bank v. J. and G. PaUm, [18961 A. C. 381, H. L., pn Lord Halsbuby, L.C., at pp. 380-388, and Lord Hbbschbi.l at p. 396. B,M. ° 34 COMMENTARY, CH. II, SECT. 2, SUB-SECT. (1). the ordhiaiy run of cases, have no efieot on his mind, unless he also believed that performance would follow ; " I do believe you think what now you speak. But what we do determine oft we break," is a not uncommon attitude : whereas any one who entertains the latter belief would have abundant justification for relying upon it, without taking into consideration in the slightest degree the then state of the representor's mind. Still, though not easy to establish, it is by no means impossible, or even very unusual, for a man to be able to assert truthfully that in the particular case he considered himself to be dealing with justum et tenacem propositi virum, — one whose word was (as the phrase is) as good as his bond, or even better, as in the case of that not uncommon type of person who will much sooner break a legally enforceable contract than defeat expectations raised by language binding only in honour (m), — and that he was accordingly influenced mainly, if not solely, by his trust in the representor's bare assertion of his purpose, which, in a man of such a character, he was justified in believing to mean inevitable fulfilment («.)• And, as will be seen hereafter, it is not necessary to prove that the mis- representation complained of was the sole, or even the main, inducement to the course of action which resulted in the damage (o). 17. The knowledge that these difficulties will stand in the way of a simple-minded and trustful representee, when at last driven to assert his rights, emboldens the dolosus to practise upon his victims "the glib and oily art To speak and purpose not." It is not congenial to such a nature to adopt Cordelia's straightforward alternative — " What I well intend I'll do it, before I speak " (p). He deals in, amongst other generalia, " honourable intentions." Forms of expression, which he hopes can never be construed into either a repre- sentation, or a binding promise (q), are his stock in trade. Nevertheless, (m) Such a man is Emerson's " obUgable man." The frame of mind and dis- position alluded to in the text is illustrated by the story of the tradesman who, on attending one of Sheridan's levies of creditors armed with a bundle of bonds bearing the debtor's seal, was met with an appeal to his honour : " You, sir, as a man of honour," said Sheridan, " \vill readily understand that all my available cash must be applied to the satisfaction of my debts of honour, before I can discharge a mere legal obligation," whereupon the tradesman, throwing the bonds into the fire, replied : " Now, Mr. Sheridan, your debt to me is a debt of honour," and was promptly paid in full. (n) See the passage from Sidgwick cited in note (fc), sup. And cp. what Wills, J., says at p. 360 of B. v. Gordon ( 1889), 23 Q. B. D. 354 : " Suppose that by an arrangement for the settlement of litigation, a man was to pay a sum of money, and when the time came, he said : " I shall not pay until I loiow that A. has the intention of acceding to this arrangement. I do not insist on having his promise. I shall be content if I know what his present intention is. Otherwise I shall not pay ... I should have thought that the allegation as to A's intention was one of existing fact." (o) Vide post, Ch. VI, Sect. 1, Sub-s. (2). (p) " King Lear," Act I, Scene 1. (q) By reason of the provisions of some statute, requiring thecontract to be in writing. §§ 16, 17. 35 a not inconsiderable chain of decisions, in whicli the law has been some- what astute to interpret as statements of fact expressions which might admit of being regarded also in the light of promises, must have served to disappoint the more extravagant of these hopes. Thus the following statements have been held or assumed to constitute representations : statements, implied from the act of ordering goods, of a then present intention of paying for them (r) ; statements that the representor was prepared to lend money, or hand over moneys («) ; statements as to the objects to which subscriptions to an issue of shares or debentures of a company' were intended to be applied (t) ; a statement of matrimonial intentions, not amounting to a promise to marry (m) ; a statement of intention to cultivate land for the purpose of developing an invention for extracting oil from radishes (x) ; a statement of an intention to relinquish business in favour of the representor's son (y) ; an expres- sion of intention to make a lane giving access to property sold, and a new street (2) ; a statement as to an intended mode of keeping accounts (a) ; a statement of the use which the representor intended to make of demised premises (6) ; a statement that the representor had power to stop a sale of certain goods under an execution, and would stop it (c) ; or rendering it unenforceable on other grounds (limitation of actions, infancy, etc.). To escape criminal responsibility for " false pretences," he is only concerned to avoid making a representation ; a promise ■\vill not affect him : to escape civil liabilitj-, he must be careful to use some form of words which will not amount to either the one or the other. (r) Bristol (Earl of) v. Wilsmere (1823), ] B. & C. 514; Load v. Green (1846), 15 M. & W. 216, Exch. Ch. ; White v. Garden (1851), 10 C. B 919 ; Clough v. London and North Wextem Railway Co. (1871), L. R. 7 Exch. 26, Exch. Ch, ; Ex parte Whittaker, Re ShacUeton (1875), 10 Ch. App. 446 (per Melt.ish, L.X, at pp. 449, 450: " I think that Shackleton, when he -went for the goods, mu.st be taken to have made an imphed representation that he intended to pay for them, and if it were clearly made out that at that time he did not intend to paj' for them, I should consider that a case of fraudulent misrepresentation was shown ") ; and Re Eastgate, Ex parte Ward, [1905] 1 K. B. 465 (per Bigham, J., at pp. 466, 407). (s) Barwick v. English Joint Stock Bank (1867), L. R. 2 Exch. 259, Exch. Ch. (per Cur. at pp. 264. '265); Ramshire v. Bolton (1869), L. R. 8 Eq. 294; Blake v. Albion Life AssuranceCo. (1878), 4 C. P. D. 94; and Babcock v. Lawson (1880), 5 Q. B. D. 281, C. A. (t) Re Deposit and Life Assurance Co., Ex parte Ayre (1858), 27 L. J. (ch.) 579 ; Edgington v. Fitzmaurice (1885), 29 C. D. 459, C. A. (per Cotton. L.J., at pp. 479, 480, and BowEN, L..T., at pp. 482, 483) ; Aaron's Reefs, Ltd. v. Twiss, [1896] A. C. 273, H. L. (per Lord Haisbury, L.C, at pp. 283-285, and Lord Watson at p. 286). (u) Anon. (1505), referred to in Com. Dig. " Deceipt," as an instance of " falsity," and in Cro. Eliz. 59 : a case where a woman gave a man " blanda verba matrimonio aequipollentia," on the strength of which he gave her presents, and rendered her services. The jury found for the man on this issue, meaning presumably that the lady's statement of her intentions was a misrepresentation of an existing fact, and the court gave him judgment thereon, though he had judgment against him on other 1SS116S (x) Colt V. Woollaston (1723), 2 P. Wms. 153. (y) Biddle v. Lem/ (1815), 1 Stark. 20. (2) Beaumont v. 'D^^kes (1822), Jac. 422; 23 R. R. 110, per Plumer, M.R., at p. 424. (a) Benham v. United Ouarantie and Life Assurance Co. (1852), 7 Exch. 744. (b) Feret v. Hill (1854), 15 C. B. 207, where, however, on other grounds the party., setting up the representation failed. (c) Cooper v. Joel (1859), 1 Dc G. F. & J. 240 (Lord Campbell, L.C). 36 COMMENTARY, CH. 11, SECT. 2, SUB-SECTS. (1), (2). a statement that the representor was bound not to build on certain land (d) ; a statement that a company intended to commence operations with a certain number of steamships of a certain type (e) ; a statement that a company was minded to take a third of a certain insurance risk (/) ; and a statement that the holder of a policy of life insurance would, on payment of premiums for four years, become entitled to a full policy (g'). The above illustrations amply justify the view entertained by Bowen, L.J., as above stated (h). 18. The criminal ofiences of obtaining money, goods, or credit, by " false pretences " or fraud, are established by much the same evidence as that which is required to substantiate an action for fraudulent mis- representation. In both the one and the other, there is the same necessity of proving something which amounts in law to a representation, and the same distinction between a statement of existing intention, which is a representation, and a promise, which is not. Decisions, therefore, on the expressions of intention which constitute " pretences " are strictly material to the present inquiry {i). They proceed on the same lines and principles as the authorities relating to civil liability, as will appear on reference to any of the treatises on criminal law (k). Out of a somewhat lengthy series of such cases, four may be selected as specially illustrative of the distinction between statements of present intention, readiness, or capacity, and statements amounting to nothing beyond promises. In these the following statements were the subject of the following respective rulings. A statement by a woman that by means of " the cards " and " the stuff " (drugs) she " ivould bring " the prosecutrix's " husband back," and again, that " she could do it," was held to be a false pretence of an existing power and capacity, and not a mere promise, or promisory pretence (l). Where a money-lender had induced the prosecutors to pay him a sum of money by a statement that he " was prepared to pay them, or one of them, £100," this was held to be a false pretence of a fact ; Lord Coleridge, C.J., {d) Piggott V. Stratton (1859), 1 De G. F. & ,1. 53. (e) Hallows v. Fernie (1868), 3 Oh. App. 467. ( / ) Traill v. Baring (1864), 4 De G. J. & S. 318. (g) KeUlewell v. Refuge Assurance Co., [19081 1 K. B. 545, C. A. This decision M'as affirmed by the House of Lords, suh nom., Refuge Assurance Co. v. Keftlewell, [1909] A. C. 243. On this occasion the tribunal of ultimate resort contented itself with dis- charging the functions of silent registration : " Lord Lokbbuen, L.C," we are told on p. 245, " without giving any reasons, moved that the appeal be dismissed. The Earl of Halsetiry, and Lords Ashbourne, Macnaghten, and James of Herefokd silently concurred." Curtis v. Bottomley (1911), "Times," 1st Aug., C.A., may perhaps be regarded as an illustration of this species of representation. {h) See § 15, sup., and cp. Mathew, L.J., at p. 767 of Cavalier v. Pope, [1905] 2 K. B. 757, C. A. : "I see no reason for saying that a misrepresentation, though prospective, may not be equally deceptive. Sect. 4 of the Moneylenders Act, 1900, refers in terms to " deceptive promises." (i) See R. V. Hazleton (1874), L. R. 2 C. C. R. 134 ; R. v. Cooper (1877), 2 Q. B. D. 510, and the authorities cited in those two cases ; also the four cases cited in notes {I), \m), (n), and (o), inf. (Tc) And see Lord Halsbury's Laws of England, title " Criminal Law and Pro- cedure," vol. ix., pp. 689, et seq., and Ch. XIII, Sect. 3, post. (I) R. V. Giles (1865), 34 L. J. (m. c.) 60. §§ 17-20. 37 cousidering the words equivalent to " here is the money ready for you," and the rest of the court concurring, though Wills, J., entertained some little doubt, discriminating between a statement with reference to a third person's intention— (" I am in a position to let you know A. B. is minded to pay you this money ")— which there could be no possible difficulty in deciding to be a statement of fact, and a similar statement as to the representor's own intention, in which case he thought that much greater care should be exercised before coming to the conclusion that anything more than a promise had been meant (/»)• By the act of ordering a meal at a restaurant, it was held that the prisoner did not impliedly represent that he had a then present intention of paying for it ; but, the jury having found that this intention had not in fact existed, it was held by the court that the prisoner had " obtained credit by means of fraud," within the meaning of sect. 13 of the Debtors Act, 1869, though he was not guilty of a false pretence. But how there could have been any " fraud," unless there had been a " false pretence," or unless he had not merely made a promise and broken it, but had stated a fact and lied about it, it is extremely difficult to discover (w). A statement that a certain projected work was to be published by a certain date was held capable of being construed as a statement and pretence of a fact, viz. a present intention and power in the representor of carrying out what he said, particularly when taken in conjunction with another statement of the accused, that " everything was in order " (o). Sub-sect. (2). Statonents which are Promises only. 19. Contrasted with, and distinguishable (though often with difficulty) from, the above class, is the type of statement which is shown (by evidence or argument) to have been intended by the representor, and accepted by the representee, as a promise, if anything, and as a promise only, or which, whatever the parties meant and intended at the time, can only be construed as such, on any fair principle of interpretation. In all such cases, the words amount either to a promise, or to nothing at all which entails any legal liability. If a promise is made out, then, as in any other case of contract, the only questions are whether the promise has been performed or broken, and, in the latter event, whether there is any obstacle by statute or at common law to its enforcement. To such an issue the question of the promisor's intention, or statement of intention, at the time of making the promise, is just as irrelevant as (conversely) the question of fulfilment or non-fulfilment of a declared intention is to an issue of misrepresentation of such intention. 20. There is a clear psychological distinction between a statement of a present intention to act in a certain manner, and an undertaking or (to) R. v. Gordon (1889), 23 Q. B. D. 354. (») E. V. Jones, [18981 1 Q- B. 119. (o) M. V. Bancroft (1909), 26 T. L. R. 10. 38 COMMENTARY, CH. II, SECT. 2, SUB-SECT. (2). engagement so to act. A representation means, as the etymology of the word import's, a presentment over again, — a reproduction, repetition, or reflection, in words or equivalent signs, of a fact or tiling which has already occurred, or already exists, in rerum naturci. A promise, on the other hand, obviously does not represent anything. It is not a portrait, or transcript, of any fact or thing. A promise, or proposal, or ofier, puts forward (" promittere, proponere, proferre, offerre ") something sur le tapis, or in medium, which was not there before, for consideration or acceptance. It deals with a faciendum, not z. factum. In either case, there must be a correspondence between word and action, if the representation is to be true, or the promise is to be kept. But the duty of the representor is " to suit the word to the action " ; of the promisor, to " suit the action to the word." 21. In the province of ethics, indeed, and in the earlier stages of our own and other systems of jurisprudence, where ethical and legal principles were scarcely distinguishable, the responsibility attaching to a false declara- tion of intention is considered much the same as that attaching to a breach of a promise. In the view of moralists, and primitive jurisprudence, veracity and good faith occupy practically the same ground, or, at least, " thin partitions do their realms define." Truth and Justice are treated as conterminous, in such phrases as the " true and just in all my dealings " of the Church Catechism, in Cicero's definition of " justitia," " fides," and " Veritas " (y), and in several passages of the Digest [q). A modern writer on ethics experiences a difficulty in distinguishing between the character- istic qualities of the two duties : "we fulfil," he says, " the obligations of Veracity and Good Faith alike by effecting a correspondence between words and facts — in the one case by making fact correspond with statement, and in the other by making statement correspond with fact " (r). 22. In law, however, though (as has been said) the judges and jurists of early days made little distinction between a representation and a pro- misory engagement, and treated every breach of contract as a form of deceit [s), it has been recognized since the time of Lord Mansfield that there is a broad line of demarcation between the two causes of action, both in theory and as regards their practical consequences, and that, so far from their having some elements in common, they are absolutely exclusive of one another. The theoretical distinction has been insisted on (to take two out of a number of illustrations) by the Exchequer Chamber in a celebrated case, where a representation was defined as " a statement . . . made by one party to the other before or at the time of making the contract of some matter or circumstance relating to it, and which is not (p) " Fundamentum justitise est fides, id est dictorum oonventorumque constantia et Veritas," De 0£E. I. 9. ((/) Vide post, App. C, Sect. 2, Sub-s. (1). (r) Sidgwicli's Methods of Ethics, p. 279. («) See App. A, Seot. 1, Sub-s. (2), post. §§ 20-24. 39 an integral part of the contract " {t), and afterwards by Hellish, L.J., who pointed out that " it is always necessary to distinguish, when an alleged ground of false representation is set up, between a representation of an existing fact, and a promise to do something in the future " (u). 23. The important difference between the practical consequences in law of misrepresentation, and of breach of contract or warranty, respectively, which flow from the above distinction in principle, would seem to be obvious, but for the fact that the courts have found it necessary from time to time, since at least the year 1778, to insist and enlarge upon this theme, and to point out that neither falsity, nor fraud, nor inducement, nor materiality, all of which are vital elements in any proceedings founded on misrepresen- tation, has the slightest relevance to any issue in an action for breach of warranty or contract (a;). He who promises or warrants, undertakes for exact and literal performance of that which he promises or warrants : but he who makes a statement, inducing another to contract or otherwise alter his position, undertakes only for the absence of any untruth which misleads, that is, for the absence of any substantial untruth of sufficient materiality to be capable of inducing, and which does in fact induce. All these matters are made of absolutely no importance by the parties them- selves in the case of a contract or warranty, the very object of which is to make it impossible for either of them to raise any such question there- after (y). Consequently not only is it the law, as will be seen immediately, that he who sues on a promise, as if it were a representation, must fail ; but it is equally true that he who sues on a representation, as if it were a promise, cannot succeed either (z). 24. In determining whether the words used in the particular case amount to a representation or a promise, the law regards the substance rather than the form, with the view of accomplishing the primary object of all rules of construction, viz. to give effect to the intention of the parties, or rather the intention which each legitimately supposed the other to have(a) . It happens, as has already been shown, that language which reads at iirst sight as a promise, or contains promisory expressions, may be shown to have been intended as a statement of the fact of an existing purpose. (<) Behn v. Burness (1863), 3 B. & S. 751, Exoh. Ch., at p. 753. (m) Ex parte Burrell, Re Robinson (1876), 1 C. D. 537, C. A., at p. 552. (x) See Pawaon v. Watson (1778), Cowp. 785, per Lord Mansfield, C.J., at pp. 788-790. (y) See Thomson v. TTeems (1884), 9 App. Cas. 671, H. L., per Lord Biackbuk'n at pp. 683, 684, and Lord Watson at p. 689, as applied to life insurance, and s. 33 (3), as contrasted with s. 20 (4), of the Marine Insurance Act, 1906 (6 Edw. 7, i;. 41), as regards marine insurance. And cp. Ch. VI, Sect. 2, post, on the question of materiality generally. (z) On this latter ground the plaintiff was non-suited by Lord Ellenboro ugh, C.J., in Thompson v. Bond (1807), 1 CampL 4, and Read v. Hutchinson (1813), 3 Campb. 362. (a) This principle runs through all departments of the law. Cp. the cases where what is described as a condition is held to be a warranty, and what is expressed to be a warranty is treated as a condition ; also the cases where " liquidated damages" (so described) are deemed " penalties," and " penalties " (so described) are deemed " liquidated damages." 40 COMMENTARY, CH. II, SECT. 2, SUB-SECT. (2). Thus even a recital appearing on the face of a contract may be construed as a representation, and not as a part or term of the contract (b) . Conversely, it is quite possible to make the truth of an existing fact the subject of a contract or warranty, and, where the words bear this construction, they will be so treated; or, though the promisor used words expressive of " intention," it may be apparent from other expressions used by him, and the surrounding circumstances generally, that what was really meant to be conveyed was a promise or offer, and nothing else (c). I may choose, or be required, not merely to assert, but to engage, undertake, or (in one sense of the word) wager, that a certain thing is so. The result is : if the thing is not as I wager or undertake it to be, I pay damages, or (if the undertaking is in the nature of a condition) the other party is relieved from the performance of his part of the contract. Though I made a statement de proBsenti, such statement was no inducement to the other party to contract with me, since it was a part of the contract itself, which I break if the statement be unfounded, however firmly I believed in its truth, and which I perform if it turns out to have been true, however little I may have at the time believed that it was. The fact is that there are very few representations of inten- tion which ingenious casuistry cannot plausibly treat as involving promises ; and very few promises in which a representation of existing capacity and readiness to perform the engagement is not equally implicit. This has been well expressed by a philosopher whose discussions of ethical themes are conceived in the spirit of sound jurisprudence. " You may either," writes Paley, " simply declare your present intention, or you may accom- pany your declaration with an engagement to abide by it. . . . In the first case, the duty is satisfied if you were sincere, that is, if you entertained at the time the intention you expressed, however soon, or for whatever reason, you afterwards change it. In the latter case you have parted with the liberty of changing. All this is plain ; but it must be observed that most of these forms of speech which, strictly taken, amount to no more than declarations of present intention, do yet, in the usual way of under- standing them, excite the expectation, and therefore carry with them the force of absolute promises. Such as " I intend to leave you this estate," "I propose giving you my vote," "I mean to serve you." In which, although the " intention," the " design," the " purpose," the " meaning " be expressed in words of the present time, yet you cannot afterwards recede from them without a breach of good faith,". . . for " there can (fi) Behn v. Burners (1863), 3 B. & S. 751, Exch. Ch. at p. 754. Cp. Lord Herschf-LL, at p. 394 of Clydesdale Bank v. J. & G. Paton, [1896] A. G. 381 : " that which is in form a promise may be in another aspect a representation." There are some proceedings which operate both as a contract and as a declaration of existing intention, e.ri. marriage, which is in law a contract, and in virtue of the operative words de pioesenti, " I take you for my wife," " I marry you," is also a declaration which creates a relation and confers legitimacy and status. Cp. the observation of Mathew, L.J., cited in laote (h), sup. (c) As in Hammersley v. De Biel (1845), 12 CI. & F. 45, which is the subject of more detailed consideration in § 27, inf. §§ 24-26. 41 be no reason for communicating your intention, but to excite some degi-ee of expectation "(d). In a later passage the otlaer aspect of the question is presented : " when any one promises a thing he asserts lais belief at least of the possibility of performmg it ; as no one can accept or understand a promise under any other supposition. Instances of this sort are the following . . /' ; and the author then takes the cases, by way of illustration, of a promise of a place which the promisor knows to be engaged ; of a father promising to settle on his daughter, in contempla- tion of her marriage, an estate which he knows to be entailed upon the heir male ; of a merchant promising a share in a ship which he is secretly advised is lost; and of an incumbent promising to resign a living, when he is privately assured that the bishop will not accept his resignation (e). 25. Where the language used is capable of either of the above construc- tions, one of them must be adopted to the exclusion of the other. If it were the case that the same legal consequences flow from the facts, in whichever light they be regarded, there would be no necessity to make this choice ; but (as has been pointed out) this is not the case. When the words are in writing, or, if oral, are admitted, the question of which construction is to be adopted is ordinarily for the court (/) : in other cases, it may be, or become, a question of fact. The tendency of the courts is, and always has been, to so interpret the meaning of the expressions used, where the facts admit of it, ut res (or spes, perhaps) mcujis valeat quam pereat. With this view, two opposite leanings have been developed. On the one hand, there has been a tendency, in the so-called " making good " cases, which will form the subject of discussion hereafter {g), to construe a promise as a representation, because otherwise the promise, being obnoxious to the provisions of some statute, or without considera- tion, would fail altogether, and the legitimate expectations of the party complaining would be defeated : on the other hand, in the " misrepresenta- tion of authority " class of case, also considered in a later part of this Commentary (h), the inclination has been to treat implied representations of existiag authority as implied undertakings that the representation is true, because otherwise in many cases the representor would escape altogether by reason of the inability of the representee to prove fraud. 26. There is no objection to a party resting his case on both con- structions, as long as he recognizes that they are strictly alternative to, and exclusive of, one another, and that difierent facts are required to support them. In the " time-table " case, the plaintiff asserted, (1) that the railway company had promised him that a certain train would (d) Principles of Moral and Political Philosophy, vol. i, ch. v. As to the high value of Paley as an authority on the principles of jurisprudence, for which purpose he is frequently cited in the text, .see App. B, Sect. 2, § 487, post. (e) lUd. ( / ) Behn v. Bwness (ubi sup,), at p. 754. (g) See Ch. IX, Sect. 3, Sub-s. (1), post, (h) See Ch. IX, Sect. 3, Sub-s. (2), post. 42 COMMENTARY, CH. II, SECT. 2, SUB-SECT. (2). be at a certain station at a certain liour, and (2) that if they did not so promise, they at all events represented that such a train was then running, as a fact, though they knew the contrary, and that he relied on such repre- sentation, which was false and fraudulent, to his damage {i). But what the plaintifi cannot do is to halt between two opinions, and set up a case com- pounded of ingredients in both causes of action, not being able to establish either by the proper evidence. There is a curious case in which this desperate device was resorted to, and met with the fate which might be expected (k). There the allegation (raised in the form of an affirmative plea) was that the plaintiff had made a contract with the defendant which, at the time of maldng it, he fraudulently intended to break. This was neither a good plea of breach of contract, because the defendant never alleged that in fact the plaintiff had broken it, nor a good plea of fraudulent misrepresentation, because there was no averment that the plaintifi had expressed any intention to perform it, still less that the defendant had been induced by such declaration of intention to enter into the contract. Even assuming that this " double plea," as Parke, B., calls it (l), could be split up and amended into two good alternative pleas, there were, in the view of the court, no suificient facts to substantiate either of them. The plea of a broken contract, even if it could have been proved, which it was not, was in no way assisted by the ludicrously irrelevant allegation of a wicked intention to commit the breach. " Suppose," asked Abingee, C.B., in the course of the argument, " a man contracts to sell goods . . . and after- wards delivers them, could the buyer plead that at the time of the contract the seller fraudulently intended not to deliver them, but to dispose of them otherwise ? " («i). Similarly, and conversely, the " imperfections " in the proof of a properly pleaded plea of fraudulent misrepresentation could not be " pieced out," or propped up, by any allegation that the contract had in fact been broken ; for, if there had been such misrepresentation, the averment was unnecessary and otiose ; if the fact was that there had been none, the allegation could not possibly alter this fact, or tend to alter it. 27. AVhere the language used, and the other circumstances of the case, clearly indicate a promise, and not a statement of present intention (except in the general ethical sense in which, as pointed out by Paley in the passage already cited, every promise involves such a statement), the courts have not shrunk from their duty to regard the matter in this light only, though the result has been in many cases to leave just expectations unrealized, and absolve from all consequences conduct which was at least morally censurable. In a series of cases, dating from 1845, some of them decided by the House {i) Denton v. Great Northern Railway Co. (1856), 5 E. & B. 860, per Lord Campbell, C.J., at p. 867. (k) Hemingway v. Hamilton (1838), 4 M. & W. 115. {1} Ibid, at p. 121. (m) Ihid. at p. 122. The same kind of " double " contention was raised in the House of Lords (though not in any of the courts below) in Cavalier v. Pope, [1906] A. 0. 428, H. L., and was equally unsuccessful. §§ 26, 27. 43 of Lords, and most of the remainder by the Court of Appeal, tlie above rule has been rigidly applied. In several of them, the plaintiff succeeded as on a promise made for good consideration and otherwise enforceable; in others he failed, either because there was no consideration for the promise, or because a statute stood in the way of its enforceability, or because it was too vague to be the subject of specific performance, or was not sufficiently proved. But, in all of them, it was held that there had been no representa- tion : it was a case of promise, or nothing. For the complete elaboration of the doctrine, the four leading decisions of the House of Lords must be consulted. The first of these cases, Hammersley v. De Biel (n), is from time to time, but quite incorrectly, cited as an authority for the proposition that at all events for the purposes of the theory of " making good " (o), a promise, unenforceable as such, may be treated as a representation, against contra- dicting which there is an equitable estoppel. But, putting aside certain dubious dicta of Lord Cottenham, L.C, in the court immediately appealed from, which have not been since followed in any authoritative pronounce- ment, the actual judgment of the House of Lords was that there had been a valid promise for good consideration which could be, and therefore must be, enforced. In this case, two brothers of a lady, with the authority of their father, one J. P. Thompson, wi-ote ,to Baron de Biel, the plaintiff and respondent, that " Mr. J. P. Thompson . . . intends to leave a further sum of £10,000 in his will to be secured on her and her children. These are the bases of the arrangement, subject of course to revision, but by will be sufficient for Baron de Biel to act upon." In another document the above statements were referred to as " proposals." Thereupon Baron de Biel, who was contemplating marriage with the lady, and who had been requested to provide a jointure for her, did so, and married her. The father died without having made any settlement or bequest of the £10,000. Baron de Biel accordingly sued the appellant, as representing the estate of the father, to have the £10,000 satisfied out of such estate, and succeeded before Lord Langdale, M.E.., who held that the above letters, and other documents in the case, amounted to proposals which, by acceptance, " have ripened into an agreement." His judgment was supported by Lord Cottenham, L.C, who again was affirmed by Lord Lyndhurst, L.C, and Lords Brougham and Campbell, in the House of Lords, on the ground of contract. It is true that in one passage of his judgment. Lord Lyndhurst speaks of there being no proof of a contract, but a later passage shows that he meant by this expression to indicate no more than absence of proof of a formal instrument of contract. In Maunsell v. Hedges (p), it was again held that the language used was either a promise, or nothing ; but here Lord Cranworth, L.C, and Lord St. Leonards thought that no binding promise had been established by proof of a mere expression of " confidence " on the part of the lady's guardian that he would never alter his will to the intended husband's (») (1845), 12 a. & F. 45. (o) See Ch. IX, Sect. 3, Sub-s. (2), post. ip) (1854), 4 H. L. C. 1039. 44 COMMENTARY, CH. II, SECT. 2, SUB-SECT. (2). disadvantage, though followed by the statement " my Tipperary estates will come to you at my death," particularly when regard was had to the fact that the guardian had expressly refused to settle these estates on the lady, and it was therefore held that the husband (the appellant) was not entitled to relief of any kind. In Jorden v. Money {q), the defendant and appellant, Mrs. Jorden (who at all material dates was Miss Marnell) had used expres- sions in correspondence and conversation with the plaintiff (respondent) indicative of a purpose to cancel a certain bond given and debt owing to her by him. The respondent sued the appellant lady and her husband, whom she had in the mean time married, for an order to cancel the bond, declare the debt abandoned, and execute a release, etc., on the footing of mis- representation of intention. He could not sue as on a promise, because the Statute of Frauds stood in his way, and, further, it appeared that the lady had always expressly refused to make any promise, when urged to do so, saying, " No, you must trust me." Lord Romilly, M.R., made the decree, as prayed. On appeal, the Lords Justices differed, Lord Cranworth, L.J., being for reversing it, whilst Knight Bruce, L. J., was for sustaining it. It therefore stood. In the House of Lords, however, Lord Cranworth, L.C. (who had by that time been raised to the woolsack, and adhered to his former opinion), and Lord Brougham, diss. Lord St. Leonards, reversed the courts below on the ground that, per Lord Cranworth, L.C. (r), however the words were twisted about, they amounted to a promise, if anything (which promise, however, had been proved by the evidence not to have been made), and did not constitute a declaration of intention, and, per Lord Brougham (s), on the additional ground that, even if the statement was a representation, it had not been shown that it was untrue : " she simply stated what was her intention ; she did not misrepresent her intention ; and I have no manner of doubt that, at the time she made that statement, she had the intention which it is stated she professed." (It may be doubted whether Lord Brougham's reasoning is not to be preferred to Lord Cran- worth's.) Lord St. Leonards, in his dissentient judgment, does not dis- agree with the view that the language used amounted to a promise, and not a representation, for he speaks of it as a " binding undertaking " (t), and again as " a promise " (m), but he differs from his colleagues in so far as he holds that such a promise or " declaration of intention " (by which he means promise) should be put on the same footing, for the purpose of an order " to make good," as a representation of fact. Lastly, in Maddison v. Alderson {x), where the defendant counter-claimed for a declaration that she was entitled to a life-interest in a certain farm, on the ground that the deceased, whose heir-at-law the plaintiff was, had orally promised to make a will in her favour to that effect, in reliance on which she had rendered him services as housekeeper for many years without wages, it was not pretended that the statements were other than promises, but it was argued that, though (q) (1854), 5 H. L. C. 185. (r) At pp. 214-216. (s) At p. 226. (t) At pp. 251, 252. (u) At p. 256. (x) (1883), 8 App. Gas. 467, H. L. § 27, 45 prima facie unenforceable by reason of the Statute of Frauds, these promises were taken out of the statute by part-performance, and, further, that they could be treated as representations so as to operate by way of estoppel. The House of Lords, however, affirming the Court of Appeal, who had reversed the judgment of Stephen, J., in favour of the defen- dant's counter-claim, held that there had been no enforceable promise, by reason of the statute, which the acts suggested as amounting to part- performance were not sufficient to get rid of, not being referable to the contract, and, further {per Lord Selborne, L.C), that " the doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence, and not to promises defuturo, which, if binding at all, must be binding as contracts," a proposition which seems to give the quietus to the theory, so persistently urged by equity lawyers in previous cases, that a statement which, for all other purposes is a promise and not a representation, may yet be treated as a representation for purposes of estoppel, or " making good " (i/). In the other cases belonging to the class here referred to, the principles enunciated by the House of Lords were followed, or assumed, and applied (2). (y) Cp. the judgment of Lord Selboenb, L.C, at p. 360 of CitizeTis' Bank of Louisiana v. First National Bank of New Orleans (1873), L. R. 6 H. L. 352. In Clydesdale Bank v. J. cfc G. Baton. [1896] A. C. 381, H. L., Lord Watson, at p. 391, expressed the view, or assumed, that a statement that no portion of the proceeds of a certain acceptance would be apphed to the extinction of any obhgation to the bank, might be just susceptible of being construed as a statement of an existing intention, and, therefore, of a fact. (z) See Moorhouse v. Colvin (1851), 15 Beav. 341 (a statement by the defendant's testator, on proposals for his daughter's marriage, that he would give her £2000 as a portion : held a promise, and enforceable) ; Bold v. Hutchinson (1855), 5 De G. M. & 6. 558 (per Lord Ck.otwobth, L.C, at p. 565 : " if ... a person merely says ' I ■wiU leave my daughter £1000,' it -will not amount to a misrepresentation if he does not leave her that sum, though it might amount to a contract to do so ") ; Home Counties and General Life Insurance Co., Ex parte Woollaston (1859), 7 W. R. 645, where it was held by Knight-Bruce and Turnek, LL. J J. , so far agreeing ^vith Kindees- IjEY, V.C, that a statement that two medical referees would be appointed to the company, and that W. would be one of them, was not a representation, but a promise : with this decision, however, a later case of Newlands v. National Employees Accident Association (1885), 54 L. J. (q. b.), 428, C A., should be contrasted, where Brett, M.R. (see pp. 429, 430), obviously thought that a similar kind of statement, viz. that the plaintiff " would receive the appointment of solicitor to the company," was a repre- sentation as well as the subsequent statement that he had been so appointed : Laver v. Fielder (1862), 32 Beav. 1 (where the expression, — " I still adhere to my former pro- position, viz. to allow Elizabeth £100 a year," — was a promise, and having been made in a letter by the father of a lady to her intended husband, was enforceable as such) ; Coverdale v. Eastwood (1872), L. R. 15 Eq. 121, where Bacon, V.-G, held similar state- ments, under similar circumstances, to amount to a promise in la^-, and an enforce- able one : this being so, it was quite unnecessary to found himself (as he did at pp. 131. 132), on the " making good " theory on which Lord Cottenham. L.C, had with equal irrelevance (for there, too, an enforceable contract had been established) dilated in Hammersley v. De Biel {ubi sup.) ; Dashwood v. Jermyn (1879), 12 C D. 776, where a similar tjrpe of expression of intention had been used , but not under any circumstances sufficient to show the slightest causal relation between the promise and the alleged alteration of position, and Bacon, V.C, accordingly dismissed the action ; but the statement was held to be a, promise, not a representation ; Synge v. Synge, [1894] 1 Q. B. 466, CA., (a case of an antenuptial statement by the defendant to the plaintiff, his intended wife ; " you . . . thoroughly understand the terms . . . y^hich 46 COMMENTARY, CH. II, SECT. 2, SUB-SECTS. (3), (4). Sub-sect. (3). Statement of a Third Person's Intention. 28. If a statement by a person of his own intention may be a representa- tion, a fortiori may a statement by him of a third person's intention, which obviously lends itself more readily to this construction, and less naturally assumes the aspect of a contractual obligation (a). If I say something as to my own proposals or purposes, or as to what I am contemplating for the future, it is far more plausible to construe my language in a promisory sense than when I am asserting the intentions of another person, over whose actions I may have, and may be understood by the representee to have, no control whatever. In that event, if I am to be supposed to assume any liability at all as a promisor, it can only be a secondary, not a primary, liability ; and neither law nor mercantile usage is prone to fix a man with the responsibilities of a surety, unless his declarations are plain and clear to this efiect, and (so far as regards the law) unless they comply with certain ceremonial conditions (b). 29. Accordingly a statement as to a third person's intention or purpose has nearly always been held to be a statement of fact, viz. the fact of the present existence of that intention or purpose in the mind of the third person, and therefore a representation (c), and not a guarantee, even where are that I leave house and land to you for my lifetime." The plaintiff acted on this, by marrying the defendant, who afterwards put it out of his power to leave the property by settling it on his daughter, whereupon the plaintifi sued, as for an anticipatory breach. Both Mathew, J., and the C. A. thought that the statement was not a representation, but a promise or nothing, the difference between the two Courts being that Mathew, J., thought it was nothing, but the G. A. thought it was an express promise. There again Kay, L.-T., delivering the judgment of the Court, went out of his way to encumber a plain case of contract, which needed no such fortification, with the " making good " theory) ; Coleman v. North (1898), 47 W. R. 57 (promise to make a gift); Ee Fickus, [19001 1 Ch. 33], where a letter by the deceased to the proposed husband of his daughter, contain- ing {infer alia) the phrase, " she will have a share of what I leave after the death of her mother," and urging him to make a settlement, which he did, was held by Cozens-Haedy, J., to amount to a. promise, or to nothing, and, in all the circumstances of the case, he thought it was not a promise, and therefore not anything actionable ; and Cavalier v. Pope, [1906] A. C. 428, H. L., where it was held that out of a contract of a landlord with his tenant to repair a dilapidated house it was impossible to extract a representation of an existing intention to do so, or to make the landlord liable as for misrepresentation, on proof of his never having so intended (though it so happened that in this case such proof was wholly wanting). Cp. the estoppel case of Chadwick v. Manning, [1896] A. C. 231, P. C, where it was held that a statement, by conduct and inaction, of an intention to waive a stipulated right to indemnity was, if anything, a promise, as in Jorden v. Money (vbi sup.), and not a representation. (a) So Wills, J., appears to have thought in R. v. Gordon (1889), 23 Q. B. D. 354. See his judgment at p. 360. (6) Required by the Statute of Frauds, sect. 4. (c) Hamar v. Alexander (1806), 2 B. & P. (N. R.) 241, vnih which compare the other " credit " cases cited in note {p) to § 204, post ; Barley v. Walford ( 1846), 9 Q. B. 197 (a statement that the persons entitled to a certain registered design intended to proceed against the plaintiff 'for infringement) ; Re Hull and London Life Insurance Co., Gibson's Case, Kemp's Case, Hudson's Case (1858), 2 De G. & J. 275 (a statement that two persons would execute a deed of settlement) ; and Hallows v. Fernie (1868), 3 Ch. App. 467 (where, amongst others, there was a statement in the prospectus that two named persons had consented to become directors, which Lord Chelmsford, L.C., agreeing with Page-Wood, V.C, treated as a statement of fact, but one which was §§ 28-30. 47 sucli words as " I durst be bound to pay for him," or " we do not liesitato to guarantee," accompany tlie assertion (d). Suh-sect. (4). Other Expressions " de futuro." (Expcctalion, Hope, etc.) 30. When the alleged representor uses merely the general and indefinite language of hope and sanguine anticipation of the future, his expressions are not construed as statements of fact in any sense, or to any extent (e) ; but if he expresses his own, or another's, expectation of the happening of a definite event at a definite future date, or within definable limits, his state- ment is a representation, in the same way, and to the same extent, as any statement of his own, or another's, intention ; that is to say, he is understood in law to assert the fact that the expectation is at the time entertained by himself, or by the third person, but not the fact that the expectation is to be realized (/). not proved to have been false by the mere fact that after allotment these persons retired from the directorate. Some of the expressions in the judgments of jSir James Mansfield, C.J., and of Lord Ellbnbokouqf, G.J., in Vernon v. Keys (1810), 12 East, 632, Exch. Ch. (see p. 637), and in that of Plumer, M.R., in Beaumont, v. Dvkes (1822), Jao. 422 ; 23 R. R. 110 (at p. 424 : "the subject of the representation was not a future project contemplated by a third person. If that had been the case ... it would only be holding out a hope iis to the future conduct of a third person not under his control ; and it would be the fault of the bidder, if he relied on so loose and vague a report"), which, if literally understood, and taken apart from the subject-matter and context, would seem to imply that the statement of a thu'd person's intention can never be actionable, are clearly at variance with the later authorities, and cannot be relied upon as law. (d) In Hamar v. Alexander (vbi sup.), the defendant had assured the plaintiff orally that " Christopher Leo is a good man, and may be trusted to any amount, and I durst be bound to pay for him," and the plaintiff reUed upon the latter ex- pression as amounting to a guarantee, which of course would have been unenforceable as such by reason of the Statute of Frauds. Lord Mansfield, C. J., however, assuming it to be capable of being so construed, held that (the plaintiff not having relied on it at the time as a guarantee) it must be regarded as a mere phrase intended to add force and weight to the previous lie direct (cp. such popular forms of expression as " I wiU go bail that, etc.," or " I warrant that, etc.," or " I will be bound that, etc."); but Lord Mansfield might very well have gone much further, since obviously the words were not capable of being interpreted as a promise to assume a secondary liabiUty, then and there, but only as a statement by the defendant that, if called upon, which he never was. he would not object to bind himself by such an engagement. In Qerhard v. Bates (1853), 2 E. & B. 476, where the directors of the company had stated in the prospectus that they " did not hesitate to guarantee a minimum dividend of 33 per cent.," Coleeidoe. .T., observed, at p. 482, " surely a man when he says ' I do not hesitate to guarantee ' means to say, ' I represent.' " (e) Beaumont v. Dukes, ubi sup., per Plumee, M.R., at p. 424 (" holding out a hope," "loose and vague report"); Bellairs v. Tucker (1884), 13 Q. B. D. 562, Div. Ct., where the expressions used in the prospectus as to anticipated profits of the company were held not to be representations, per Dbnman, J., at pp. 572-574 ; and Bentley and Co., Ltd. v. Black (1893), 9 T. L. R. 580, C. A. {per Lord Eshee, M.R.). (/) Willes V. Glover (1804), 1 B. & P. (N. R.) 14 (statement of a shipper that he " expects the captain to sail to morrow," which, said Sir James Mansfield, C.J., at p. 16, " imports that he who writes knows the ship to be in such a condition as to give a just expectation of her sailing at that time ") ; Ee Metropolitan Coal Con- sumer's Association, Karberg's case, [1892] 3 Ch. 1, C. A., where Lindley, L.J., says, at p. 11, that a statement of expectation is a statement of fact that the party does actually expect as stated ; and A. W. Gamage, Ltd., v. Charlesworth, [1910] Sc. Ct. of Sess. Cas. 257 (statement of pecuniary " expectations "). On the other hand, in Barber v. Fletcher (1779), 1 Dougl. 305, where the statement was — "the ship is expected to leave the coast of Africa in November or December," Lord Mansfield, C. J., described it as 48 COMMENTARY, OH. II, SECT. 3, SUB-SECT. (1). 31. There are instances of statements as to the future which, even though clearly expressed in the future tense, may import an existing state of things. Thus, a statement, by one who had insured another against being drawn for the militia under the provisions of a certain Act of Parlia- ment, that " all billetings under the Act would cease " on a certain day, was treated as a representation, being presumably considered a statement of fact as to the existing procedure established by a statute then in force {g) ; statements that a certain mine would yield so much, and that a dividend of 33 per cent, was so confidently anticipated that the directors " did not hesi- tate to guarantee it," were held to be statements of the present state and capacity of the mine, and of the present flourishing conditionof the company, respectively (/;) ; and, in a third case, Jessel, M.K., was of opinion that a statement to the effect that certain costs loould he paid out of a sum described as applicable for that purpose was not a statement as to the future, but as to the present, viz. that these costs were payable out of the designated fund {i). Sect. 3. Statements op Opinion, Belief, oe Information. 32. When it is pronounced (as it frequently is even now, and ex cathedra) that statements of opinion are not statements of fact, the proposition, in its absolute and literal sense, is quite incorrect and misleading. "It is often fallaciously assumed," observes Bowen, L.J., " that the statement of an opinion cannot involve the statement of a fact " (Jc). As in the case of statements of intention, a statement of opinion, belief, information, or other condition of mind, whether of the representor or of a third person, does involve at least one statement of fact, viz. that the representor or other person did entertain the alleged opinion or belief, or was possessed of the alleged information, at the date of the representation (1) . It is not, however, a statement of the subject-matter of the opinion, etc., as a fact,' — always presuming that the statement only purports to be a statement of opinion, belief, or information : for if a man chooses to express in the form of a statement of fact that which he merely believes as opinion, or as informa- tion, the statement is for all purposes a representation ; and, conversely, if what he states is fact, his statement is not the less a representation because he cloaks it in the language of opinion, belief, or information, or in language susceptible of being so construed by an ingenious meta- physician or philologist. The above rules of law, which are embodied in " only an expectation," meaning presumably that it was not a representation ; but he was probably also referring to the vagueness and generality of the words used, which did not impute the expectation to any person in particular. (g) Duffel V. Wilson (1808), 1 Campb. 401. (h) Gerhard v. Bates (1853), 2 E. & B. 476. (i) Mathias v. Yetts (1882), 46 L. T. 497, C. A., at p. 503. {k) Smith V. Land and House Property Corporation (1884), 28 C. D 7 C A at p. 15. ' ■ " (l) See the observations of Bowen, L.J., ^^'hich are of quite general application, and refer to any state of a man's mind, at p. 483 of Edgington v. Fitzmaurice (1885), 29 C. D. 459, C. A., and at p. 470 of Angus v. Clifford, [1891] 2 Ch. 449, C. A. These are cited in notes (h) and (i) to § 15, ante. §§ 31-33. 49 Article 3 of the Code, may now be considered separately in relation to the four species of statement to which they apply, viz. : (1) statements of a man's own opinion, etc. ; (2) statements of a third person's opinion, etc. ; (3) statements of opinion, etc., as fact; and (4) statements of fact as opinion, etc. Sub-sect. (1). lilalement of the Representor's own Opinion, Belief, or Information, as such. 33. The principles enunciated above with reference to statements of a man's own intention (m) apply equally, inutatis mutandis, to statements of a man's own opinion, belief, or information. In this, as in that, class of statement, the mere subsequent occurrence of events which are in disaccord with, in the sense of failing to realize or justify, the declared intention or opinion or other mental condition or attitude, does not falsify the statement; but disproof of the existence of the declared condition of mind does falsify the statement, because this was the fact, and the only fact, which it im- pliedly asserted. Thus an expression of opinion on the part of the directors of a railway company that there was no probability of a rival line being constructed, was treated by the House of Lords as a statement of the fact that they entertained such an opinion, but of no other fact, and the mere circumstance that a rival line was afterwards constructed, did not make the statement a misrepresentation, because there had never been a repre- sentation at all as regards the future ; whilst, on the other hand, there was no proof of the falsity of the statement in the only respect in which it was a representation, that is to say, no proof that the directors did not believe what they said they believed (n). Similarly, the Privy Council considered a bank's valuation of a security to be a statement of the fact that the bank had bona fide formed the opinion which they expressed as to its value, and not a statement of the correctness of such valuation : and, the only fact as to which the statement was in law a representation not having been negatived, there was held to have been no misrepresentation (o). On the other hand, where a solicitor had both formed an opinion of his own, and had taken another opinion, to the effect that a certain person's intei'est under a will was absolute, and had concealed both the one and the other from the party to whom he was under a duty of disclosure, thereby leaving him under the impression that his interest was contingent only, he was held liable for such concealment (p) ; a fortiori, if he had stated as his own, or as the third person's, opinion, that the party's interest under the will was contingent only, he would have been liable for misrepresentation, because he would have falsely stated, not that the interest was contingent, but that he or the third person, believed it to be. Again, in a later case, which has (m) See §§ 15, 16, ante. {n) New Brunswick Railway and Land Co. v. Conyheare (1862), 9 H. L. (J. 711 (per Lord Westbury, L.C.). (o) Melbourne Banking Corporation v. Broiiyham (1882), 7 App. Cas. 307, P. C, at pp. 319, 320. {p) Litddy's Trustee v. Pcard (1886), 33 C. D. 500. B.M. ^ 50 COMMENTARY, CH. II,, SECT. 3, SUB-SECTS, (1), (2), (3). since been overruled on the question of contractual privity, but not on the question under discussion, Chitty, J., considered that a document put forward by a valuer as a valuation amounted to a representation of the fact that there had been an actual valuation and exercise of professional judgment and skill, — a representation which was therefore falsified by proof that there had been no real valuation at all (q). In reference to contracts of marine insurance, the rule is neatly and succinctly stated in Sect. 20 (5) of the Marine Insurance Act, 1906 (r). Similarly, as regards information, a book purporting to be a " journal of bores," and handed as such to railway contractors, was held to involve a representation that it was a faithful record of information supplied by those who had actually taken the bores («). 34. The obstacles which beset the path of the representee in cases of statements of intention, and which have already been adverted to, are not present to the same extent in the case of statements of opinion. There is no doubt the same difficulty of provLug another man's state of mind, to which BowEN, L. J., more than once alludes [t), but the further difficulty of credibly asserting, when it comes to the question of inducement, that the representee reUed upon the personality of the representor is not present here to the same extent as it is there (m). It is quite natural, particularly where the opiuion or belief is as to a matter involving scientific, mercantile, artistic, or professional knowledge, experience, or skill, or where the informa- tion is said to be that of a person expert in collecting it, to trust to the name and reputation of the individual ; indeed, a layman can trust to nothing else. In most cases of this description, the representee can truthfully affirm that he relied not so much upon the correctness of the opinion, as to which there was no rep^-esentation, but on the fact that such and such a well- known authority in the branch of knowledge or business in question did actually hold the opinion expressed, as to which there was a representation. Cuique in sua arte credendum. " I was told," he might fairly say, "that ^h. X., an eminent future lawyer, man of science, literary or art critic, valuer, accountant, financier, stockbroker, or expert in trade, whose name was well-known to me, was of such and such an opinion as to the merits and value of an invention, picture, drama book, business, enterprise, security, or estate. I should not have entered into the contract or transac- tion which I did enter into, if I had known that this particular individual did not in fact entertain the alleged opinion. To teU me that I am damaged only by the opinion turning out to be wrong, is not to the purpose ; because, if I had known that the opiuion did not carry with it the authority of the name on which alone, in my ignorance, I did or could rely, I should not have touched the concern at all, or have been drawn iq) Cann v. Wilson (1888), 39 C. D. 39. (r) " A representation as to a matter of . . . belief is true, if it be made in good faith." (.s) Boyd & Forrest v. Glasgow ct S. W. Railway Co., [1911] Sc. Ct. of Sess. Cas. 33, 73. {t) Vide ante, notes (A) and (i) to § 15. («) See § le, ante. §§ 33-36. 51 into a jjosition in wliicli the incorrectness of the opinion could have hail any effect upon my interest." In the case, however, of statements of intention, it is far more unlikely that the representee trusted to the personality of the representor, rather than to the promisory aspect o£ his statement, in proportion as the individual skill and eminence of the specialist is a rarer quality than common honesty. The above oVjservations of course do not apply to a case where the person professing the opinion is, and is known to be, as much an iStwr^s as the representee. There both parties are on equal terms, and no importance is attached to the fact that either of them has such and such views, or to the views themselves (x). Sub-sect. (2). Slatcincnt of a Third Person's Opinion, Belief, or Infonna- tion, as such. 35. The rules applied to statements as to the representor's own opinion, belief, or information, are equally applicable to statements of a third person's similar condition of mind. Thus, a statement as to the belief of the owners of a vessel with respect to her safety, in a marine insurance case {y), or a description of the effect of counsel's opinion (a), or a version in a prospectus of a report or valuation of an expert («), are all statements of fact to the extent above indicated, but not further or otherwise. Sub-sect. (3). Statement of Matters of Opinion, etc., as Fact. 36. If a man, having a genuine opinion on any matter (&), chooses, nevertheless, to state it as a fact, or, having information, expresses the subject of it, in Beatrice's phrase, " better than reportingly," he must take all the risks, and abide by all the consequences, attending a representation pure and simple If, on the other hand, he expresses his opinion, or informa- tion, merely as his view, or as hearsay, he makes no representation except to the extent already stated. So where a seller of a cargo of coffee stated to the purchaser that it had been invoiced to him as of first shipping quality, he did not thereby represent that it was of that quality, and Lord Ahinger, C.B., refused to ask the jury the question whether he had or had not so (x) " In a casG where the facts are equally well known to both parties, what one of them aays to the other is frequently nothing but an expression of opinion. The statement of such an opinion is in a sense a statement of fact, about the condition of the man's own mind, but only of an irrelevant fact, for it is of no consequence what the opinion is " : Bowen, L.J., at p. 15 of Smith v. Land and House Properly Cor- poration (1884), 28 C. D. 7, 0. A. (y) Bickarda v. Murdoch (1830), 10 B. & C. 527 (a case of non-disclosure of a letter stating the belief in question : but, obviously, a decision that the existence of the belief was a, fact which ought to have been disclosed is a decision that any statement concerning it would have been a statement of fact, and therefore a representation). (2) Luddy'a Trustee v. Peard (1886), 33 C. D. 600; and Ee Moberts, Roberts v. Bdberls, [1905] 1 Gh. 704, 0. A. (a) Be Mount Morgan (Weal) OoU Mine, Ltd., Ex parte West (1887), 56 L. T. 622, per Kay, J., at p. 624. (6) The oases where a man states as fact that about which he has no opinion at all are dealt with in Ch. V, Sect. 1, Sub-s. (2), post. These are even more obviously pure statements of fact. oz COMMENTARY, CH. II, SECT. 3, SUB-SECT. (4). represented (c) ; and where a prospectus adopted what had been stated to the directors by the vendor, but professed to give the information only as information, there was held to have been no representation that the informa- tion corresponded with the facts, and therefore no misrepresentation merely because it did not (d). On the other hand, where a man states as a positive fact that which is merely the outcome of an imperfect recollection, he makes a representation that the fact is so : and, if it is not so, it is no defence that he had forgotten something (e). So, where the defendant, in a case of representation as to a person's credit, took upon himself to assert, in answer to a question expressly directed to the very point, that what he had pre- viously communicated was the fact, and that he was speaking of his own knowledge, and not from mere hearsay. Lord Kenyon, C.J-., was of opinion that the statement should be treated as, for all purposes and in every sense, a representation (/). Similarly, where an insurance company, having been misinformed as to the facts relating to the birth and parentage of a certain person, passed on this information to the government when purchasing an annuity, but as fact, and not as information (g), and when a professional " water-finder " stated, apparently as a fact, but certainly not in the form of an opinion, that water could be found at a certain depth (A), the same construction was adopted. Sub-sect. (i). Statement of Matter of Fact as Opinion, etc. 37. The representor is equally responsible, as for a representation to all intents, in the converse case ; that is, where what is really matter of fact is stated either in the form of an opinion, or in a form which is susceptible of being so cohstrued. In the former type of case, the proposition is of course se"f-evident : a statement that at such and such a time and place something gross and palpable to the senses, and not merely " probal to thinking," happened, is a statement of fact, however much it may be en- trenched behind, or prefaced by, expressions of opinion. Examples, how- ever, of the latter kind of case, where the construction is not so obvious, are not wanting. A statement, for instance, as to the credit, character, or reputation of another, relates to a matter' of fact, however plausibly it may be suggested afterwards, when responsibility is sought to be affixed to the statement, that the language used must be taken to have pointed to mere belief, judgment, or inference, though not expressly assuming that guise ; or that " whether" the person in question " deserved credit, depended on the (c) Moens v. Hey worth (1842), 10 M. & W. 147. (d) Craig v. Phillips (1876), 3 C. D. 722. Contrast Re Reese River Silver Mining Co., Smithes case (1867), 2 Ch. App. 604, per Lord Caiens, L.J., at p. 625. (e) Brownlie v. Campbell (1880), 5 App. Cas. 925, H. L. at pp. 936, 945, and 953. ( / ) Haycraft v. Creasy (1801), 2 East, 92. at pp. 102-104. {g) A.-G. V. Ray (1874), 9 Ch. App. 394, per James, L.J., at p. 405. (A) Pritty V. Child {ld02), 71 L. J. (k. b.) 512, Div. Ct., per Lord Alvekstone, C.J., at p. 513, and Darling, J., at p. 514. §§ 36-38. 53 opinion of niany, for credit consists in the good opinion of many " (i). It is strange that Grose, J., who is responsible for the above observa- tion, did not realize that though an opinion is an opinion, the existence of that opinion, still more the existence of many " golden opinions," the joint effect of which is to confer " credit," is a fact. In another case (k) the defendant, having stated, as his opinion and valuation, that a life policy was worth so much, though he knew that in fact the person whose life was insured had just died, was not heard to say that the statement was one of opinion, or (to put it as the Court of Appeal did in the case next cited), the expression of opinion here was considered to be of such a character as to involve the assertion of facts, known to him, which justified the opinion. So, where the statement was that a certain person was " a most desirable tenant," it was vainly argued {inter alia) in the Court of Appeal that this was a mere expression of opinion (I), Bowen, L.J., observing that " if the facts are not equally known to both sides, then a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion " (m) ; to which Fey, L.J., adds, in the course of his judgment : " it seems to me that the vendors, by describing him " — the person in question — " as such, stated in substance that they knew no fact which showed him not to be a desirable tenant " (n). Sect. 4. Statements of Law. 38. The distinction between questions of law and questions of fact so widely permeates, and is so vital an element in, the whole fabric of our jurisprudence, by reason of the separation of the judicial functions assigned to judge and jury respectively, that there is a tendency to draw a sharp contrast between law and fact in reference to every single topic to which those terms can be applied. It must have been owing to this tendency that judges and jurists have so persistently marked off statements of law from statements of fact, in dealing with the principles of misrepresentation, as if they were two separate and self-contained species of statements, standing to one another in a relation of opposition and mutual exclusion. And it is by way of concession to this inveterate habit that statements of law are here dealt with separately. Yet, if the matter be considered closely, it is plain that, for purposes of the doctrine of misrepresentation, a statement of law (i) Pasley v. Freeman (1789), 3 Term. Rep. 51, the famous leading case on repre- sentation as to a third person's credit. The dissentient judgment of Gkosb, J., which contains the dictum cited, is at pp. 52-56. Cp. the other "credit" cases cited in note (f) to § 204, post. Of course where the representation as to credit takes the form of an inference from facts stated or documents referred to, the inference is pure opinion, and the basis of that opinion is pure fact, as in the case of the banker's report in Parsons v. Barclay and Co. (1910), 103 L. T. 196, C. A. (yfc) Jones v. Keene (1841), 2 M. & Rob. 348 ; 62 R. R. 804. (I) Smith V. Land and House Property Corporation (1884), 28 C. D. 7, C. A. (m) Ibid, at p. 15. Cp. Willes v. Glover, cited m note (/) to § 30, as to a case of statement of expectation. (n) Ibid, at p. 17. Cp. Firguson v. Wilson (1904), 6 F. 779, 783 (statement of profits of a business held not to be a mere speculative forecast or estimate). 54 COMMENTARY, CH. II, SECT. 4, SUB-SECT. (1). is only a subspecies of tlie species just discussed, and that any such state- ment constitutes a representation in precisely the same sense, to the same extent, and for the same reasons, as any other statement of opinion. That is to say, it is not a statement of the fact of the law being thus, or thus, and is not falsified by the law turning out to be other than as stated : but it is an implied statement by the representor of the fact that the opinion expressed as to the law is actually entertained by him, or by the person to whom it is attributed, and to that extent is a representation. He who expresses his views on law to another is in exactly the same position as one who expresses his views on any other question of science, art, or busi- ness, and the inquiry as to whether, and to what extent, his statement is a representation is governed by the same considerations. 39. Further, the same difficulties in the way of the representee's assertion that he relied upon the personality of the individual to whom the opinion is attributed, rather than upon the correctness of his opinion (o), are encountered when the opinion is one of law, as when it relates to any other matter, but to a much greater degree, if, as Bowen, L. J., thought, " where there is a representation made as to a mere matter of law, it is, in nineteen cases out of twenty, made by a person who does not know the law better than the person to whom it is made, and at whose risk it is taken and acted on " (p). 40. Nice questions, however, arise very frequently, as to whether the form of expression used makes the statement one of law wholly, or one of fact wholly, or involves several separate statements, some one or more being of pure fact, and the other or others an inference or inferences of pure law. The rules applicable to these several classes of case are stated and distinguished in Article 4 of the Code. Two main types of statement are there indicated : (1) statements of fact, involving and inextricably inter- mingled with inferences of law, or statements of the existence of a particular document or thing which is alleged to confer a legal right or impose a legal liability ; and (2) statements of abstract propositions of law, or of legal inferences from facts separately stated or within the common knowledge of the parties. The former are statements of fact, and wholly representations; the latter are statements of law, and not therefore representations, except in so far as they involve statements of the fact that the person alleged to entertain the legal opinion does actually entertain it. Of these in their order. Sub-sect. (1). Statements of Mixed and Indivisible Lmo and Fact. 41. This is the common type of so-called " statements of law." And naturally so, because, as pointed out, and illustrated with a variety of common instances, by Jessel, M.E. (g), it is extremely difficult to make (o) See § 34, ante. (p) West London Commercial Bank v. Kitson (1884), 13 Q. B. D. 360, C. A., at p. 362. ii) ^^ PP' 702, 703 of EaglesfieU v. Londonderry {Marquis} (1870), 4 C. D, 693, C. A. §§ 38-41. 55 any statement in a matter of business wliioh does not involve some inference or proposition of law. Such statements, however, are not merely by this eiroumstanco rendered statements of law, if law and fact are inseparably interwoven as the compound substructure of the statement, or if the state- ment is susceptible of being construed either as one of fact, or as one of law, and, owing to the representor's remissness or fraud in hiding his meaning under ambiguous or ambidextrous phraseology, it is impossible to say with certainty which is the proper construction, whereupon every intendment is made contra profcrciitriii, and the statement is deemed one of fact. Thus, where an auctioneer on the sale of a public house by auction stated that it was a " free " house, and that there had been a recent decision of Lord Ellexborough, C.J., that " tying " clauses in leases of such property were invalid, — an admittedly incorrect statement, — the auctioneer might have been regarded either as having said that Lord Ellenborough had so ruled (which would be fact), or that the inference which he drew from a perusal of his judgment was that he so held (which would be law). The statement was treated as one of fact (r). An attorney tells the trustees of a marriage settlement that they can safely advance money to his client, who was, in fact, an infant. This statement could fairly be construed either as a statement of fact that his client was not an infant, or as a statement of law that such trustees would safely advance money to an infant. Plumer, V.-C, dealt with it as a statement of fact (s). Similarly, a statement that the representee took no interest under a certain will, though his heir possibly might do so {t), a statement as to the powers of companies under private Acts of Parliament (u), and a statement as to a title or interest to or in a particular estate by virtue of certain deeds and circumstances (x), have all been regarded as statements of fact. Again, statements by insurance com- panies as to the validity of their policies in certain events, or on compliance with certain conditions, though they might very well be deemed propositions of general insurance law, can also be, and they accordingly have been (wherever it was possible), construed as statements of the fact of the existing regulations or practice of the company (y). (r) Jones v. Edney (1812), 3 Campb. 285. (s) Cory V. Oertcken (1816), 2 Madd. 40 ; 17 R. R. 180. {t) Reynell v. Sprye : Sprye. v. Reyndl (1852), 1 De G. M. & G. 6G0. (u) West London Commercial Bank v. Kitson, ubi sup., per Brett, M.R., at p. 362, BowBJT, L.J., at p. 363 (who says that such a statement in no way differs from a statement " that I have a particular bound copy of Johnson's Dictionary "), and Fry, L.J., at p. 363. In Derry v. Peck (1889), 14 App. Gas. 337, the H. L. did not differ from the C. A. in so far as the latter treated the statement in the prospectus regarding the statutory powers of the company as a statement of fact. [x) Cooper v. PUhhs (1867), L. R. 2 H. L. 149. This was a case of "mistake," but the same principles apply to both classes of case, as regards the question of what is fact, and what law. Moreover, it appears from the judgment of Lord Cbanwoeth, L.C., at p. 164, that there was a misrepresentation too, though an innocent one. Lord Westbury, at p. 170, says that " a private right of ownership is a matter of fact ; it may be the result also of matter of law." {y) British Workman's and General Assurance Co. v. Cunliffe (1902), 18 T. L. R. 425, Div. Ct. per Lord Alveestone, C. J., at p. 425, and Channell, J., at p. 426, who 56 COMMENTARY. CH. II, SECT. 4, SUB-SECT. (2). Sub-sect. (2). Statements, in a Separate Form, of Inference of Law from given Facts. 42. In contrast with the above is the class of case where, the facts being separately stated, or being common to both parties, the representor offers an opinion as to the legal incidents of those facts, or the proper legal inference to be drawn from them. In such cases, the matter asserted is only matter of opinion on law, and is not otherwise a representation than as stating impliedly the fact that the person to whom the opinion is attributed actually holds it. It is generally a very nice question to which class the particular statement belongs : but the line has to be drawn in accordance with the above principles, as laid down by Lord Westbuey (a) and afterwards by Jessel, M.E. (a). Accordingly, the following have been held to be statements of law, and, as such, not statements of the correctness of the legal proposition put forward, or such as to render the r epresentor answerable for it, if it turns out otherwise ; — a statement by the secretary of a company, all the relevant facts and documents being known to both parties, that the company had, or would shortly have, in virtue of those facts and documents, power to issue debentures (6) ; a statement by a company, assuming it to have been made (which was not proved), that it had power to overdraw, the facts and documents again being common to both parties (c) ; and a statement on behalf of an insurance company that a policy on the life of the representee's mother, who had no insurable interest, would be a valid insurance {d). 43. It was recognized, however, in several of the cases already referred to, that if the law \s, fraudulently misstated, the representor will be liable for misrepresentation (e) ; which is only another way of saying that a state- ment of law implies a representation of fact that the person professing to expound it believes it to be as stated. appear to have so treated the .statement ; but the C. A., who affirmed the decision ( 1 302), 18 T. L. R. 502, seem to have regarded it rather as a fraudulent representation of the general law. See also Kettleirell v. Refuge Assurance Co., [1908] 1 K. B. 545, C. A., pf-r Lord Alveestone, C.J., at p. 550, and Sir GoKELt, Babnes, P., at p. 551 ; ■\\'ith which compare and contrast Harse v. Pearl Life Assurance Co., [1904] 1 K. B. 558, (A A., cited in note (d), inf. (z) See note (x), sup. {a) See note ((/), sup. (6) Rashdall v. Ford (1866), L. R. 2 Eq. 750. (c) Beattie v. Ebunj {Lord) (1872), 7 Oh. App. 777. {d) Harse v. Pearl Life Assurance Co., [1904] 1 K. B. 558, C. A. The statement was clearly one of abstract \&v: (insurance law), unlike the statements in the two cases first cited in note (y) above. (e) Sashdall v. Ford, ubi sup. ; West Ltindon Commercial Bank v. Kitson (1884), 13 Q. B. D. 360 (per Bowen, L. J., at pp. 362, 363 : " I am not prepared to say, and I doubt whether, if a man wilfully misrepresented the law, he would be allowed in equity to retain any benefit he got by such misrepresentation," — a proposition worded with needless caution, for it cannot be supposed that if a statement of law is a repre- sentation to the extent indicated for one purpose, it is not so for all, or that the appli- cation of the rule is confineil to equity, or to proceedings for rescission) ; Harse v. Pearl Life A.s-xiiranee Co., ubi sup., per Collins. M.R., at p. 563, and Romee, L..I., at p. 566; and British Workman's and General Assurance Co. (1902), 18 T. L. B. 502, C. A. §§ 42-45. 57 44. The above observations would of course apply, a fortiori, to any enunciation of an abstract proposition of pure law without reference to any facts at all. Such a case is hardly conceivable, because a man would hardly ever be in a position to prove that he was induced to alter his position by the bare statement of a juridical principle in vacuo. But even where no facts whatsoever are alleged by the representor, the representee might, no doubt, in many cases, be able to show that both he, to the knowledge of the representor, and the representor, had in mind certain facts and proposals with reference to which alone the statement could have any significance. For instance. A., having proposed to purchase goods of B., is afterwards asked by him whether a contract for the sale of goods is required to be in writing, and, if so, under what conditions, and answers (with the intention to set up the statute, if sued), that no contract for such a sale is ever required to be in writing. This would be a statement in relation to facts, though not to any facts stated by the representor, and in such a case the representee would have no difficulty in proving not only, if the representor did not believe his bad law to be good, a misrepresentation of the impliedly stated fact that he did, but also inducement. Sect. 5. Statements as to Documents. 45. In many departments of the law, particularly in those concerned with rules of evidence (/), or practice {g), it has been found necessary to draw a sharp line of demarcation between documents and facts, or, rather, between facts proved by documents, and facts proved otherwise. For this reason it has been thought advisable to deal with statements relating to documents as if they constituted a special class of statement. But, in truth, this is not the case, if " matter of fact " is correctly defined (see Article 1 of the Code) as " an existing fact or thing, or past event." A document is a tiling. Its existence or non-existence is a fact. Its actual contents, in the sense of the words, figures, or other permanent signs, contained in or appearing upon it, constitute fact. Its purport, office, object, or purpose is fact. Still more clearly, its nature, character, class, or description is fact. All these facts may be the subject of statement and misstatement, description and misdescription. The four classes of state- ment above referred to are enumerated separately in Article 5 of the Code, and all of them are expressed to be representations. It will be seen here- after that there is a highly important distinction between the mere void ability of false representations of the first three types, and the absolute voidness of those belonging to the last class {h) ; but, for the purpose of (f) E.g. the rules as to the construction of a document being for the court, tlie rule, as to a document " speaking for itself," the rules as to primary and secondary evidence, etc., etc. (g) E.g. discovery of documents, as contrasted with discovery of facts (by inter- rogatories), etc., etc. {h) Vide post, Ch. XI, Sect. 2, and Sect. 4, Sub-s. (0), and Ch. XII, Sect. 3. 58 COMMENTARY, CH. 11, SECT. 5. tlie topic now under discussion, there is no signiiicance in tliis distinction. Statements of all four Ivinds are alike representations, whatever differences may exist in the respective legal consequences of their falsity. Sub-sect. (1). Stalemcnts as to tJie Existence of a Document. 46. From the earliest times, there has never been any doubt but that the existence of a document, of whatever kind, is a matter of fact. The judges, in answer to one of the questions addressed to them by the House of Lords on the consideration of Fox's Libel Bill, declared that " whether there exists such a letter " — the question related to threatening letters — " is doubtless matter of fact. ... It is also matter of fact whether an Act of Parliament, public or private, exists. And the same may be said of every other writing, from records of the highest nature down to any scrap of paper whereon words are written " (i). Where the document happens to be a statute, it has been argued that any statement relatiag to it must necessarily be a statement of law, but Bowen, L.J., effectually disposed of this erroneous view. " Suppose," he says, " I were to say that I have a private Act of Parliament which gives me powers to do so and so. Is no': that an assertion that I have such an Act of Parliament ? It appears to me to be as much a representation of a matter of fact as if I had said I have a particular bound copy of Dr. Johnson's Dictionary " (Jc). Sub-sect. (2). Statements as to Actual Contents of a Document. 47. Equally, of course, a statement as to the wording, or the contents (in this sense), of a document, is a statement of fact ; and a misdescription, or a misreading, or a mistranslation of such contents to the representee is a misstatement of fact. Thus the following were held to have been misrepre- sentations, which of course implied that they were deemed representations, — a misreading of a writing of release as a mere acquittance for arrearages of rent {I) ; a misreading of a lease for one year as a lease for twenty-one years {vi) ; a statement that a deed of compromise corresponded with the draft settled by counsel {n) ; misdescriptions of the contents of a draft lease (o), of the figures on a negotiable instrument {f), of the provisions of (i) These Questions, whicli were intended to elicit the then state of judicial opinion as the proper functions of judge and jury respectively in eases of criminal defamation, were presented on the 27th April, 1792, and Lord Aeinger, C.B., laid the Answers thereto of the judges on the table of the House on the 11th May, 1792. The Question referred to in the text was the fifth on the list. See Pari. Hist., vol. 29, col. 1366. (k) West London Commercial Bank v. Kitsmi (1884), 13 Q. B. D. 360, C. A. at p. 363. (I) Thoroughgood v. Cole (1582), 2 Coke Rep. 9a. (m) Anon. (1684), Skin. 159. (n) Beadles v. Burch (1839), 10 Sim. 332. (o) Clapham v. Shilleto (1844), 7 Beav. 146. (p) Billage v. Southee (1852), 9 Hare, 534, reported sub nam. Billing v. Southee, 29 L. J. (CH.) 472. The statement, however, was not proved here to have been made. §§ 46-49. 59 a will (q), of the contents of an Act of Parliament (r), and of the conditions of an engineering contract (s) ; and a mistranslation to an Indian native of an English proclamation of sale (t). Sub-sect. (3). Statements as to Effect and Purpori of a Document. 48. Statements as to the general effect, import, or object, of a document, or of anyprovision or clause thereof, stand on the same footing as statements purporting to record or report the actual language used ; the only difference bemg that the one assumes to be a transcript, and the other a summary, or version, or analysis, of the contents of the document. Instances of state- ments of this character which have been held to be representations, and, on proof of falsity, misrepresentations, are : a description of the effect of a deed of release of claims for personal injuries (m) ; a statement of the purport of contracts for the remuneration of directors [x) ; a summary or version of a government ofScial's report on a mining district {y) ; a state- ment of the import of a letter offering property for sale (2) ; a version of the effect of certain contracts and orders for patented articles (a) ; a statement as to the tenor of counsel's opinion [h) ; and a description of the purport of a public announcement of a sale by direction of the court (c) . To these may be added (though they have not formed the subject of any reported dis- cussion) the street crying of news, and the placards and contents bills which purport to summarize the events recorded in the journals, and publishers' announcements or abstracts of forthcoming works, and the like. State- ments as to the legal effect of documents have already been dealt with {d). Sub-sect. (4). Statements as to the Character, Nature, Class, or Description of a Document. 49. A statement of the character or nature of an instrument, or of the class to which it belongs, is not only a statement of fact, and, therefore, a representation, but a representation of a kind so vital to any transaction founded on it, that, in the event of its falsity, the transaction is deemed (?) Reyndl v. Sprye, Spryz v. Reyndl (1852), 1 De G. M. & G. 660. (r) West London Commercial Bank v. Kitson (1884), 13 Q. B. D. 360, C. A. ; Deny V. Peek (1889), 14 App. Gas. 337. («) Moss and Co. v. Swansea Corporation (1910), 74 J. P. 351. (t) Mahomed Kola Mea v. A. V. Harperink (1908), 25 T. L. R. 180, P. C. The like effect of mistranslation in conveying a false imputation of fact for purpose of defama- tion is dealt with in tlie author's Law of Actionable Defamation, App. VI, Sect. 7. (u) Huschfirld v. L. B. and 8. C. Railway Co. (1876), 2 Q. B. D. 1. (x) Arkwright v. Newbold (1881), 17 C. D. 301, G. A. (y) Re Mount Morgan (West) Cold Mine, Ltd., Ex parte West (1887), 66 L. T. 622 (described by KIay, J., at p. 624, as a " travesty of " the official's " report "). (Jp. the observations of James, L.J., at p. 318 of Arkwright v. Newbold [ubi sup.). (z) Stewart v. Kennedy, No. 2 (1890), 15 App. Gas. 108, H. L. (a) Components Tvhe Co. v. Naylor, [1900] 2 Ir. R. 1. (6) Re Roberts, Roberts v. Roberts, [1905] 1 Gh. 704, C. A. (c) Mahomed Kala Mea v. A. V. Harperink, ubi sup., where a statement of this kind was made, in addition to the mistranslation above referred to. {d) See Sect. 4, Sub-s. (2). 60 COMMENTARY, CH. 11, SECT. 6. wholly void ah initio, and the document the proper subject of a plea of non est factum.. There are numerous illustrations in the books of this type of representation, to which it will be sufficient in this place to draw attention by a mere reference to the decisions of which they were the subject (e), reserving further notice of them for its proper place hereafter, when the topic of voidability and voidness comes to be discussed (/). Sect. 6. Exaggeration, Puffing, etc. 50. Simplex commendatio non nocet, or (as otherwise expressed) non obligat. Self-praise is no recommendation, and, for that reason, is no representation either, because nobody trusts to it as such. In mere general laudation of a man's own wares, or inventions, or projects, if the party confines himself to puffery and pushing, and does not condescend to particulars, there is no statement of any "issuable" fact (so to speak), and nothing is put forward which can be supposed to mislead or influence any rational being. The vauntings, or sanguine anticipations, of the advertiser, the prospectus-monger, or the inventor, can deceive nobody. Indiscriminate commendation in the law of misrepresentation is as distin- guishable from a statement of fact as, in the law of slander, indiscriminate abuse is from the imputation of a crime {g). Exaggeration of this desciip- tion is not taken by the community au pied de la lettre, but only for what it is worth, and what it is. It is within what is called " the showman's privilege " (A). Thus, vague indefinite or loose expressions such as that a leasehold property was " nearly equal to freehold " (i), or that certain land was " uncommonly rich water meadow-land " (k), " warm protestations of " a person's " power and influence," and " coloured expressions " of certain appointments being "in his gift '' (?), "exaggeration of the prisoner's prosperity,'' in a criminal case of false pretences (m), and a description of farms as " fertile and improvable," and such as might be considerably (e) Thorougligood v. Oole (1582), 2 Coke Rep. 9a ; Edwards v. Brown, Harries and Stephens (1831), 1 Cr. & J. 307 ; Kennedy v. Green (1834), 3 My. & K. 199 ; Hoghton V. Hoghton (1852), 15 Beav. 278 ; Curson v. Belworthy (1852), 3 H. L. C. 742 ; LewelUn V. Cobbold (1853), 1 Sm. & G. 376 ; Vorley v. Cooke (1857), 1 Giff. 230 ; Lee v. Angas (1866), 7 Ch. App. 79n. ; Foster v. Mackinnon (1869), L. R. 4 C. P. 704; Hunter v. Walters (1871), 7 Ch. App. 75 ; National Provincial Bank of England v. Jackson (1886), 33 C. D. 1, C. A. ; King v. Smith, [1900] 2 Ch. 425 ; Bagot v. Chapman, [1907] 2 C^h. 222 ; Howatson v. Webb, [1908] 1 Ch. 1, C. A. ; and Carlisle and Cumberland Banking Go. V. Bragg, [1911] 1 K. B. 489, C. A. (/) Vide post, Ch XI, Sect. 1, Sub-s. (4). ((/) This is dealt with in the author's Code of Actionable Defamation, Article 12, (6), (c), and note (/) thereto. The same distinction is drawTi between mere innocent vaunting and actionable " disparagement of property " in Article 61 (2), and note (c) thereto, of the same work. (/») A phrase largely used by the defendant in a recent trial {Irving v. Bodie, Novem- ber, 1909, unreported), who, however, grossly and impudently exceeded the widest hmits assigned to this elastic expression even by himself. (i) Fenton v. Broiime (1807), 14 Ves. 144. {k) Scott v. Hanson (1829), 1 Russ. & M. 128 ; 27 R. R. 141. (l) Neeley v. Lock (1838), 8 C. & P. 527. (m) E. V. Watson (1857), 4 Jur. (k. s.) 14. §§ 50, 51. 61 iniprovod at a in:>dcrak' cost (w), were all held to be too general and indefinite to amount to representations. With regard to prospectuses in particular, It was recognized in the House of Lords that " some high colouring and even exaggeration is to be expected "' in such documents (o), though, in the particular case, it was held that the directors had exceeded the limits of legitimate allurement. So, where " the glowing and exaggerated colours " of another prospectus (p), and the sanguine expectations expressed in a third ((/), and the "puffery" of a fourth (r), were "unmixed with baser matter," in the shape of false statements of fact, they were held not to be representations. The above principle is summarily expressed in ^Vrticle 6 of the Code («). 51 . Where, however, the exaggeration or puffery, instead of being based on facts separately stated (in which case the two things stand on their own footings), is punctuated by " detail, to lend verisimilitude to an otherwise bald and unconvincing narrative " (t), or is quantified by figures, it assumes the aspect, and renders the representor liable to the consequences, of a simple statement of fact, however turgid or flamboyant its literary surroundings and atmosphere may be. A newspaper which professes to have " the largest circulation in the world," though in a literal sense stating a fact, would be considered in law to be using the mere language of harmless exaggeration ; but when the announcement takes such a form as " daily circulation ^t)e times as large as that of any penny London morning journal," there can be no doubt that this would be held to be not mere vaunting, but a definite representation (m). If I say that my pills are " worth a guinea a box " (though this again is, in a sense, a statement of fact), no one could possibly understand the expression as referring to anything but my confident opinion* of the intrinsic merits of the pills, or a " guinea " as more than a mere laudatory phrase. But if I say that my "bile beans" contain a new ingredient discovered by such and such an explorer in such and such a tropical country (x), or that my " carbolic smoke ball " is a prophylactic (n) Dimmock v. HalUtt (1866), 2 Ch. App. 21. (o) Central Railway Co. of Venezuela v. Kisch (1867), L. R. 2 H. L. 99, 113. {p) Jennings v. Broughton (1854), 5 De G. M. & O. 128, per Romilly, M.R., whu was affirmed by the LL.JJ. (?) Cargill v. Bower (1878), 10 C. D. 502. (r) McKeown v. Bouchard- Peveril Gear Co. (1896), 65 L. J. (cH.) 735, C. A., per LiNDLEY, L.J. and Lopes, L.J., at p. 736. (s) Cp. Roman law on this topic ; see App. C, Sect. 2, Sub-s. (1). {() The sprightly expression of Pooh Bah in the late Sir W. S. (iilbert's " Miliado." («) And it was so intended by the proprietors of the journal referred to (the Daily Mail), who deUberately, and very straightforwardly, put their statement in a form in which, unlike the similar aimouncements of other journals, it would, if false, render them liable to proceedings, either for misrepresentation at the suit of any person induced thereby to contract -with them for advertisements, or for " disparagement of property " at the suit of any rival newspaper. (x) Bile Bean Manufacturing Co. v. Davidson (1906), 8 F. 1181, where it was held that, in actions for misrepresentation, though " mere puffing \\'ill not do," and ''exaggeration, however gross, of the merits and virtues of a remedy will not do" (Lord Shobmont-Dabling at p. 1200), and phrases such as "incomparable," " unique," " worth a guinea a box," come to nothing, yet it is a totally different matter where there is proof, as there was in that case, of " statements of alleged facts, carefully 62 COMMENTARY, CH. II, SECT. 6; CH. Ill, SECT. 1. against catching a cold, if used so many times (y), I am stating facts, and cannot escape liability, if the facts are false, by urging that they were embedded in a mass of encomiastic generalities. If a statement is made of a fact such as that A. B. is dead, it may be open to the subject of the state- ment to protest, in the modest spirit of Mark Twain on a memorable occasion, "that the report is much exaggerated," but it certainly does not lie in the mouth of the maker of the statement to say so. An auctioneer is entitled to say, with Thackeray's Mr. Kobins, that a desirable residential estate is buried under rose leaves, or drowned in the songs of nightingales (2), but if he deserts the pathless realm of generalities for the high road and terra firma of fact, it is no longer a case of the " loose opinion " or " puffery " of an "auctioneer or vendor" (a). The same judge who decided that " rich watered meadow-land " was not a representation, as regards the mere assertion of richness, held nevertheless that it was a statement of the fact that the land was water meadow-land (6). And in the same case in which it was held that the description of farms as "fertile" and " im- proveable at a moderate cost " was not a statement of fact, it was held that a description of their occupation and tenancy was (c). elaborated, and intended to be accepted as facts " (per the Lord Justice Clerk, at p. 1197). (?/) Carlill V. Carbolic. Smoke Ball Co., [1893] 1 Q. B. 256, C. A. This was a case of contract, but the observations of Lindley, L.J., at p. 261, and A. L. Smith, L.J., at p. 273, to the effect that the advertisement was not a mere puff, but an offer, which, on acceptance, would become a contract, are distinctly germane to the present question, because it is obvious that, if a statement that a man will give £100 to any one who catches a cold after having used the remedy so many times, is not a mere puff, a state- ment that the remedy has the preventive effect invariably, or almost invariably, ^^-ould stiU less be so. If the one is an offer, the other is certainly a representation. (z) These " absurd puffs " arc nothing but " flourishes which in practice mislead nobody ; Mhich no purchaser ever acts upon " ■ Magennis v. Fallon (1829), 2 Moll. 561, 587. (a) Seaumont v. Didcs (1822), Jac. 422 ; 23 R. R. 110 {per Plumbk, M.R., at p. 426) ; and Scott v. Hanson (1826), 1 Sim. 13, per Leach, V.-C., at p. 15, whose opinion ^^"as, on this point, affirmed by Lord Eldon, L.C. (1 Russ. & M. 128). (6) Scott V. Hanson (uhi sup.), where Lord Eldon, L.C. (1 Russ. & M. 131), reversed Leach, V.-C, as to two out of the fourteen acres in dispute, on the ground stated in the text, affirming him as to the other tAvelve acres, as stated in the preceding note. (c) Dimmock v. Hallett (1866), 2 Ch. App. 21. §§ 51-53. G3 CHAPTER III. HOW A REPEESENTATION MAY BE MADE. 52. The modes and forms of representation are infinite. Any pliysical symbol wliicli reproduces or assumes to reproduce a fact, presents or assumes to present it over again, and is, therefore, literally, as it is sub- stantially, a representation. These symbols, as stated in Articlec 7 and 8 of the Code, may be either express or implied. When express, they consist either of writing or analogous permanent signs, or of speech or other transi- tory signs. AVhen implied, the implication may arise from the conjoint effect of several express statements, or from all that is said coupled with all that is left unsaid ; or it may arise from acts and conduct, or (in a limited class of case) even from silence and inaction. Sect. 1. Express Representations. 53. Besides words and figures expressed in writing or print, or by analogous processes, a representation may be made by the use of any other permanent symbols or means, such as plans and drawings (a), maps (6), pictures and photographs (c), or any like scientific or artistic transcript of thought {d). {a) In Beaumont v. Dukes (1822), Jac. 422 ; 23 R. R. 110, a plan was used to add force to a verbal representation. In Denny v. Hancock (1870), 6 Cli. App. 1, a plan played a very important part. It was a queistion -n-hether certain trees and shrubs had been represented as passing on the sale of land. The vendor relied on this plan as correcting the falsity of his representation in words, and as negativing deceit. It was held, on the contrary, to have been part of it (per Jambs, L. J., at pp. 11, 12. and Hellish, L. J., at pp. 13, 14). Be Arnold (1880), 14 C. D. 270, C. A., A\'as a case in which it was held by Bagoallay, L.J., at p. 282, and Beamwell, L. J., at p. 284, that it was impossible to exclude the plan from the particulars of sale in determining \\-hether there had been a misrepresentation or not. Lastly, in S. Pearson and Sons, Ltd. v. Dublin Corporation, [1907] A. C. 351, H. L., the representation complained of, as to the existence and position of a certain wall, was contained in, inter alia, jilans and drawings prepared by the defendant's engineer. (6) Be Mount Morgan (West) Gold Mine, Ltd., Ex parte West (1887), 56 L. T. 022, where the company in vain relied upon a map accompanying the prospectus as reveal- ing the truth, and so neutralizing the express and implied false statements therein. (c) Nevmian and Co. v. Pinto and Soris (1888), 57 L. T. 31, C. A. (pictures and emblematic designs on the Hds of cigar-boxes for the purpose of representing cigars imported from Germany as " Havana cigars ") ; and Slinxjshy v. Bradford Patent Truck and Trolley Co. (1906), W. N. 51, C. A. (picture of buildings, described as " a photograph, not a sketch," to the negative or printing-block of which the plaintiff's name had been added by hand, though it did not appear on the actual buildings, or in the photograph). In the Times of the 15th July, 1910, there is a report of two actions brought in the City of London Court by the proprietors of a newspaper for damages for fraudulent misrepresentation by the delivery of " faked " photographs of certain genuine public events for reproduction and publication in the newspaper. {d) The like potency of pictorial representations, or faked or " composite " 64 COMMENTARY, CH. Ill, SECTS. 1, 2. 54. Similarly, it is not only the spoken wurd wliicli conveys a statement of fact. " A nod or a wink, or a shake of the head, or a smile " (e) may equally well serve the purpose. The very meaning of innuendo is a nod. Gestures and demeanour are, under some circumstances, as efficacious to convey a deceptive representation, as, in cases of slander, to insinuate a defamatory imputation (/). " Let but mysterious expressions be aided by significant looks and tones, and you may cajole a hot and ignorant audience to believe anything by saying nothing " (g). In this way looks and gestures may subsidize language ; they may also stand altogether in the place of words, or even contradict them, and the representor may by the use of such means convey a statement as clearly as another may convey a menace, and, as Lord Redesdale said of such a person, "prevail without using a single word of threat, like the beggar in Gil Bias who, with his gun at his shoulder, extorted money from the traveller without uttering a word " (A). Whenever there is such a discrepancy, it is safe to say that, in nine cases out of ten, the representation is made in a more real sense by manner, glance, and gesture than it is by voice (i) ; but it is sufi&cient, for present purposes, to note that the one is a3 much a medium of representa- tion as the other. Sect. 2. Lmplied Representations. (Acts and Conduct.) 55. The types of representation which are implied from direct and express representations (such as implied statements of an existing intention, opinion, or belief), or from absolute representations coupled with silence as to matters which it was the duty of the representor not to suppress, are discussed elsewhere {k). Li the present place it is proposed to consider the otlier clas^ of implied representation — that which is inferred from acts and conduct — a class which, in the growing complexity of modern life, assumes ever increasing proportions and importance. 56. To take the simplest illustrations, " a man may act a lie,'' says phtili-)graph.s, to defame, as Avell as to decei\e, is well known. This topic is dealt with iu the author's Code of Actionable. Defamation, Article 1(1. and note (y) thereto. (e) Walters v. Morgan (1861), 3 De G. F. & J. 718 (yer Lord Campbell, L.C, at p. 724), a case cited and relied upon by Chitty, J., at p. 209 of Turner v. Green, [1895] 2 Ch. 205. (/) This question is discussed in the author's Code of Actionable Defamation, Article 11, and note (z) thereto, and in App. V, Sect. 1, and App. VI, Sect. 5. (g) Coleridge, Lay Sermons (ed. Derwent Coleridge, 1852), pp. 169, 170. (h) At p. 668 of Wehh v. Rorke (1806), 2 Sch. & Lefr. 661 ; 9 R. R. 122. The incident referred to by Lord Redesdale, then L.C!. of Ireland, is to be found in Ch. II of Cil Bias. (/) It is only in the realms of fancy (e.g. Sir \V. S. Gilbert's " Palace of Truth "), that the voice speaks truth and the gestures lie. Ovid's " ne vultu destrue verba tuo," was wise counsel, gravely applied by Bacon to weightier matters than the poet was MTiting about. " It is good," says the philosopher, in discussing Simulation and Dissimulation (Essaj' \L), " that a man's face give his tongue leave to speak. For the discovery of a man's self by the tracts of his countenance ... is many times more marked and believed than a man's A\-ord." (k) See, as to the former class, §§ 16, 33, and 38, ante, and, as to the latter, Ch. 1\, Sect. 4, Sub-ss. (1), (2) and (3), imii. §§ 54-58. 65 Paley (1), " as by pointing his finger in a wrong direction, when a traveller inquires of him the road, or when a tradesman shuts up his windows to induce his creditors to believe he is abroad ; for, to all moral purposes, and therefore as to veracity, speech and action are the same." Indeed, con- duct in many cases is a more real expression of thought than language, just as circumstantial evidence is often more valuable and cogent than direct evidence. The silent witness is the more convincing — " for, in such business. Action is eloquence, and the eyes of the ignorant More learned than the ears " (m). 57. Apart from the above simple cases, where the inference is plain and palpable, there are a variety of others where it is a somewhat more compli- cated or subtle process to extract the representation from the acts and conduct. In the succeeding paragraphs of this section a rough classification of these is attempted. 58. In cases of delivery of property under a contract of sale, or otherwise, the following implications of a representation may be made. On the one hand, the purchaser of goods, by the mere act of ordering them, is understood to represent that he then has the intention of paying for them («)• On the other hand the person assuming to sell or let or transfer property impliedly represents that it exists (o) ; he who delivers or hands over documents or {I) Principles of Moral and Political Philosophy, Book I, Ch. XV (cp. Book I, Ch. V, on " tacit promises " by acts and conduct). In Barley v. Walford (1846), 9 Q. B. 197, Lord Denman, CJ., at p. 208, speaks of the absurdity of supposing that a man, " having a conspicuous clock too slow," could be liable to any one who went b\' it. No doubt this would be ridiculous ; but the act of pomting to a clock, kno^\'n to be too slow or too fast, might well be a misrepresentation of the kind mentioned by Paley. (m) " Coriolanus," Act III, Sc. 2. The same view is expressed in the famdiar lines : — " Scgnius irrita nt animos demissa per aures Quam qu» sunt oculLs subjecta fidehbus." A.s to the Roman law on this topic, see App. C, Sect. 2, Sub-s. (2). Slander is similarly conveyed by acts and conduct, or (in the phraseology of Scots law) " actings." See Article 18, Rules 4, 5, and 6, and notes thereto, in the author's Code of Actionable Defamation. (re) See the cases cited in note (r) to § 17, ante. (o) Colt V. Woollaston (1723), 2 P. Wms. 153, the quaint and delusive headnote of which is : " bill in equity hes to recover back money paid on a bubble." The defendants were the projectors of the " bubble," M'hich was called the " Land Security and Oil Patent," the object being " to extract oil out of radishes." The project failed, no oil having been made, or radishes grown on the land which was supposed to have been dedicated to that purpose, and which was offered as security to the adventurers. The land turned out to be subject to charges amounting to £85,000, after payment of which, it was worth considerably less than nothing. This was held to be " an im position," the giving of this security being one of the principal features in it. " It is giving them moonshine, instead of anything real " (p. 156), which statement involves the hypothesis that the mere giving of the security was an implied representation that it was " something real," that is, had some value as a security, and was not " moon- shine." A similar case (unreported) was referred to in the judgment (at p. 157). of a patent for extracting oil out of beech, the invention of Aaron Hill (well knowoi in his day as a Avriter on dramatic subjects and a lifelong assailant of Pope (vide Sir Leshe StefhBxV, std) noin., in the Dictionary of National Biography), where " a security was agreed to be made of lands which came out to be terra incognita within the degrees B.M. 1' 66 COMMENTARY, CH. Ill, SECT. 2. grants leases impliedly represents that tliey are genuine (p) ; and the seller of an article presenting a certain appearance to the senses of the purchaser, impliedly represents that the article est quod videtur~is in fact what ex facie it purports to be — for, when this is not so, and falsehood's " goodly outside " is manufa'ctured by a concealment of defects, there is a misrepresentation ; and this there could not be unless there were an implied representation in the first instance of the kind indicated. Thus selling sea-damaged pimento by samples from bulk, which showed no damage (this being only apparent on unpacking), and sending out the advertisements of the sale too late to enable any purchaser to inspect and so discover the defect, was held to be a misrepresentation of the pimento as sound (q) ; on the sale of a patented Invention for baking bread without the use of spirit or ferment, the con- ducting of a demonstration or experiment which appeared to satisfy the description, but in which spirit and a special ferment had been secretly intro- duced, was treated as one of the means by. which an implied misrepresenta- tion of the nature of the invention had been made (r) ; and the " false packing " of goods, or the covering up of a defect in a cannon by artifice (s), have been treated as acts and conduct amounting to misrepresentation (t). So clearly, indeed, is any such device deemed a representation that not even an express term in the contract to take the property with all faults, or at all risks, will countervail it, if false and (as in all such cases must follow) fraudu- lent (i{). Conversely, an intending buyer of shares, who conceals and depreciates their value by " fraudulent manoeuvres," such as manipulating accounts of dealings in them, is as guilty of implied misrepresentation of latitude 50 and 57." C'p. Riclmrdson v. Sylvester (1873), L. K. 9 Q. B. 34 (advertis- ing a farm to let held a representation that the party has a farm to let), and Ajello v. Worsley, [1898] 1 Ch. 274 (advertisement of piano held to involve a representation that party had pianos in stock). (p) Edinburgh United Breweries and Dunn v. MoUeson, [1894] A. C. 96, H. L. (handing over of books, which Dunn was entitled to have examined by an accountant as a condition of sale of a business, deemed an implied representation that they were genuine, per Lord Heeschell, L.C, at p. Ill); Marsham v. Weaver (1899), 80 L. T. 412, where the putting forward as security of fictitious leases (by the party to himself mider an ahas) was held an imphed misrepresentation of their genuineness ; and Boyd a7id Forrest v. Glasgow and S. W. Railway Co., [1911] Sc. Ct. of Sess. Gas. 33 (where the putting forward of a "journal of bores" was held an implied representa- tion of its genuineness as a record of bores actually taken). So, in ScJiolefield v. Tempter (1859), 4 De G. & J. 429, where a debtor and his surety proposed to execute a transfer of a mortgage. Lord Campbell, L.G., held this to be a representation that there was such a mortgage. (q) Jones v. Bowden (1813), 4 Taunt. 847. (r) Lovell v. Hicks, No. 1 (1836), 2 Y. & G. (exch.) 46, per Aldeeson, B., at pp. 53-55. (.s) Ormerod v. Huth (1845), 14 M. & ^A'. 651, and Horsfall v. Thomas (1862), 1 H. & C. 90. In the first case the defendant escaped because he was not proved to have had anything to do vnth the " false packing," and, in the second, because the covermg up of the defect in the cannon was not proved ; but in neither case was it doubted that acts and conduct of the character in c[uestion constitute implied representation. (t) Cp. the devices of "salting " mmes, and "faking " furniture, whether for the purpose of making old present the appearance of new, or new that of antique the latter a particularly flourishing industry at the present time. False weights and measures, etc. (see Gh. XIII, Sect. 3), are also " silent assertors " (u) Vide post, Ch. X, Sect. 2, Sub-s. (2). §§ 58, 59. 67 as the intending seller who, !>>■ the like niana'uvros, conceals and minimizes faults and defects in the property to be sold (r). The mere handing to a customer of an article of a certain substance and quality, without saying a word, is a representation that it is of that substance or quality {y). Lastl)', the common device of " rigging the market," or (more euphemistically) " making a market," by procuring persons to pretend to buy and sell in the market at fictitious prices, is clearly an implied misrepresentation, and a fraudulent and indictable one (2). 59. Another class of representation by conduct comprises cases in which an act or transaction may be lawfully or unlawfully carried out, and where (since the law presumes against illegalit)') the mere doing of the act or entering into the transaction is e(juivalent to a repre- sentation that all those circumstances and conditions exist but for which the act or transaction would be unlawful. Thus the act of delivering an article of food to a customer, at his request, the delivery of which article in an adulterated state would be a statutory offence, is, of itself, a representation that it is unadulterated (a) ; the mere paying of addresses to a lady with a view to matrimony, may, even in a criminal case, be deemed tantamount to a representation or pretence that the person so acting is unmarried (b) ; the mere act of sending an animal to a repository or market or place for public sale may raise the inference of a representation that, so far as the party knows, the animal is not sufiering from any con- tagious or infectious disease which would make the act unlawful, or a (x) Walsham v. Stainton (1863), 1 De G. J. & S. 678 (p&r Turnbk, L.J., at pp. 689, 690). ly) See Lord Halsbury's Laws of England, title " Pood and Drug.s," vol. xv, p. 20 {h). {z) In National Exchange Co. of Glasgow v. Drew (1855), 2 Maeq. H. L. 103, the company lent shareholders money to buy further shares with, assuring them that they would not be called upon for any further contribution till the stock could be sold at a profit. The defence to the action (A\'hich wns to recover the money so advanced) was that the above acts and conduct amounted to an implied misrepresentation of the then flourishing state of the company, and (per Lord Brougham in the course of the argument) that a turpis causa was shoMTi, viz. an attempt by the company to do that which was equivalent to " rigging the market." This defence prevailed. In Scott V. Brown, Doering, McNab and Co., [1892] 2 Q. B. 724, C. A., the parties -were sho^^-n to have conspired to create fictitious prices for shares in a company by procuring imaginary bargains to be made and quoted as real on the Stock Exchange. This was misrepresentation by conduct, said the V. A., and, further, an indictable conspiracy, as in E. v. De Berenger (cited in Ch. \'III, Sects. 2 and 3, post). " I see no distinc- tion," observed Lopes, L.J. (see p. 730), " between rumours (as in this case) and false and fictitious acts." " Test it in this A\ay," added A. L. jSmith, L.J., at p. 734, — " suppose a purchaser induced to purchase shares ... by means of a lictitious premium created by them " (sc. the parties to the action) " solely for the purpose of inducing such purchaser hi buy, could he, or not, ha^-e successfull\' sued either or both for a false and fraudulent misrepresentation ? 1 say that he could." In this connection a somcM'hat similar description of case, Liiidsuij Petrohnin Co. v. Hnrd, (1874), L. R. 5 P. C. 221, should be noted. There a scheme was devised Avhereby communications were to pass between a person posing as absolute OA\-ner of property and another person making him sham offers at fictitious prices, and this M'as held to be an implied fraudulent misrepresentation (see p. 243). (a) Fitzpatrick v. Kelly (1873), L. R. 8 Q. B. 337, 341, 342, U:i. {b) R. v. Copcland (1842), Car. & M. 516, per Lord Denman, C.J. 68 COMMENTAEY, CH. Ill, SECT. 2. violation of any statute for the time being in force (c) ; in company transac- tions, tte declaration of a dividend may amount to a statement that the dividend has not been paid out of capital, which would be illegal ; and the issue of fully paid shares is, similarly, an implied representation that cash has been paid for them, in any case where there has been no filed contract (ti) . On the other hand, the mere act of trading is not a representation that the trader is of full age, because it is not unlawful for an infant to trade (e) ; nor is the mere advertisement of an article, with the description " trade mark" appended, an implied representation that the party has registered the trade mark, for it is not illegal to have and use one which is unregistered (/). 60. Where a person, in entering into a transaction, conducts himself as if he bore a certain character or persona he is deemed to represent that he actually fills that character or persona. Thus a party, by sending bought and sold notes to the other party, and guaranteeing the performance of the contract, impliedly states that he has a principal {g), and all the cases of implied warranty of authority from assuming to act as if such (c) Bodger v. Nieholls (1873), 28 L. T. 441, where Blackbubs, J., says, at p. 449 : " I entertain no doubt, but it is not necessary to decide the point, that the defendant by taking the cow to a public market to be sold, though he does not warrant her to be sound, yet thereby furnishes evidence of a representation that, so far as his know- ledge goes, the animal is not suffering from any infectious disease. To say otherwise A\'ould be to run counter to the common sense of mankind." In Ward v. Hobbs (1878), 4 App. Cas. 13, H. L., the House of Lords did not differ from this very strong pro- nouncement, which was cited and much relied upon in argument. There pigs, suffering from typhoid fever, had been sent to a market, contrary to the provisions of a statute : but the seller who so sent them expressljf refused to warrant their soundness, and on that ground escaped. It was not necessary, therefore, to consider whether the seller's act was a " representation by conduct," Ai-hich Lord Cairns, L.C, evidently thought it might be, though he added (at p. 22) : " I desire, so far as I am concerned, to hold mj-self unpledged, if such a case had to be considered." Therefore the opinion, or (if it be a dictum) the very strong dictum, of Blackbukn, J., remains unaffected, and it would seem to be quite sound. Of course in any case where there is no statute prohibiting the act in question, no impUcation of a representation arises. In Hills V. Balls (1857), 2 H. & N. 299, there was no clear allegation that the glandered horse had been sent to a public place (which was all that the statute prohibited), and no representation of its soundness was implied from the mere act of selling it at a rejiository, which, for aught that appeared, might have been a private place. (rf) In Jackson v.,Turquand (1869), L. R. 4 H. L. 305, the question whether a declaration of a dividend and bonus (^vhich it would be illegal to pay out of capital) amounts to a representation by conduct, was discussed by Lord Hatheb- LEY, L.C, at pp. 308, 309, and Lord AVestbuby at p. 315, but not decided, because the conclusion of the House that there had at any rate been no dis- honesty in any representation which might have been made, rendered it un- necessary to do so ; but in a previous case in the House of Lords, Burnes v. Pennell (1849), 2 H. L. C. 497, Lord Campbell, at pp. 524, 525, and Lord Bkotjgham at p. 531, express, in the strongest possible language, confident opinions that such pay- ment is an implied declaration to the world by acts and deeds that " the company has made profits which justify such a dividend." The case as to the issue of fuUy paid shares (a case of representation for the purpose of estoppel) is Bloomenthal v. Ford, [1897] A. C. 156, H. L. (per Lord Halsbuey, L.C, at pp. 163, 164, and Lord Hbrsohell at p. 169). (e) Re Jones, Ex parte Jones (1881), 18 C. D. 109, C. A., per Jessel, M.R., in the argument at p. 115 ("a boy selling oranges in the street does not represent himself to be of fuU age "), and in his judgment at p. 121 ; and Lush, L.J. at p 125 (/) Sen Sen Co. v. Britten, [1899] 1 Ch. 692, per Stiehkg, J. {(j) Wilson V. Short (1847), 6 Hare, 360. §§ 59-62. 69 authority existed may also be, and in some instances liave been, put as cases of implied representation (h). Nearly all the non-disclosure cases also, though usually considered not to fall within the province of representation, strictly so called, may be, and have been, treated as implied statements that the transaction which the party purports to have entered into is, so far as he knows, of the normal and usual type, and that he has withheld nothing which, if revealed, would show it to be otherwise (i). 61 . Personation by " make-belieye," a device as old as Jacob and Esau, is of course as much a representation as an assumption of an alias by direct statement. The appearance of a man at a shop in the cap and gown of a member of a university is, by itself, a representation that he is such a member (k). So the giving of a business card of a firm is a representation that the person so acting is a member of that firm, even if no words are used (/). A man who had been agent for another, but had ceased to be so, by continuing to do business with those who had known him as such agent, without more, was held to have impHedly represented himself to be still acting in that capacity (m). On the other hand, a man who is in fact agent or partner or confederate of another may, by conduct, represent himself to be entirely independent of him (w), or, by granting leases to himself under another name, may represent that there is a person who bears that name, and is distinct from himself (o). 62. Where it is necessary to make periodically repeated representations in order to maintain a deception once- practised, and to keep the victim in his original state of delusion and false security, such representations are {h) Vide Ch. IX, Sect. 3, Sub-s. (2), post. (i) Vide post, Ch. IV, Sect. 4, Sub-s. (2). (k) B. V. Barnard (1837), 7 G. & P. 784, wkere Bolland, B., in summing up said : " If nothing had passed in words, I should have laid down that the fact of the prisoner's appearing in cap and go^^'n would have been pregnant evidence from which a jury should infer that he pretended he was a member of the university, and, if so, would have been a sufficient false pretence to satisfy the statute." C'p. Cora. Dig. Deceipt. A. 3. Direct misrepresentations of personality or status are dealt with in Ch. VI, Sect. 2, Sub-s. (3). As to the Roman laM' on this topic, see App. C, Sect. 2, Sub-s. (2). (l) Hardman v. Booth (1863), 1 H. & C. 803. In a modern comedy, one of the characters is a German of abnormal taciturnity, who refuses to commit himself by the use of any words at all except the " so " of his own language. Various devices are resorted to by other characters to induce him to exceed these seK-imposed limits. Amongst other things, he is asked his name by one who pretends to have forgotten it. He hands his card, accompanying the act Mith the invariable monosyllable. This (like the handing of the card in the case cited, though not with the same fraudulent intent), and aU his other communications throughout the play, are excellent illustra- tions of representation by acts. Cp. the personation by acts and conduct in Cundy- V. Lindsay (1878), 3 App. Cas. 459, cited in note (o) to § 89, post. (to) Higgons v. Burton (1857), 26 L. J. (bxch.) 342. (ra) Moens v. Heyworth (1842), 10 M. & W. 147, where it was held that it was for the jury to say whether a party, by the act of exhibiting an invoice stating goods to be of first shipping quaUty, had or had not impliedly represented that the shippers so stating were independent persons, and not mere agents or partners {per Lord ABiNaER, C.B., at p. 156, Pabk, B., at p. 156, who speaks of a representation " by A\'ords or acta," and Aldebson, B., at pp. 156-158) ; Blake v. Albion Life Assurance Go. (1878), 4 C. P. D. 94, where an agent and confederate of the defendant company by conduct assumed and pretended to be another person having no connection with it. (o) Marnham v. Weaver (1899), 80 L. T. 412. 70 COMMENTARY, CH. Ill, SECT. 2. frequently made by acts and conduct alone ; as, for instance, by regularly transmitting to tte party entitled the exact amount which would represent interest payable under a mortgage, as if the mortgage had been effected according to the instructions of, and with the moneys deposited by, the other party (p), or by producing, without handing over, the title deeds of the property supposed to have been mortgaged (g) ; which acts are, of course, so many implied representations that the moneys deposited have been invested as required. 63. Further, the practice of employing puffers at auction sales (r), the various modes of " passing off " goods, by " dressing " and " making up "(s), the "invitation" and "trap" cases (t), and the various forms of malingering and cheating {u), all of which are dealt with elsewhere in their appropriate places, may be treated as species of representation by conduct. 64. Other illustrations of a miscellaneous and unclassifiable character are the following. A man, in order to induce a lady to marry him, procures his brother to give him a note for a large sum of money as the pretended balance of account due to him. The production of this note was held an implied representation to the lady of possession of property to the amount of the note {x). A man procures another to become the apparent owner of a farm : he may thereby represent him to be a person of substance {y). A woman by her conduct assumes to possess magical powers : this of itself is a " pretence," for "it is not necessary that the false pretence should be made in express -words,- if the idea is conveyed," and " her acting as ' a cunning woman,' coupled with all that passed," and her "conduct and conversations " evidence such a pretence (z). Two curious cases of the utilization of ambiguous objects of sense, as instruments of misrepresentation, are the following. A man sent to a public place for the sale of bullocks and heifers three animals, one a bullock, one a heifer and the other a hermaphrodite, or lusus naturce, having some of the properties of a male and others of a female. This was held a representation by conduct that the animal was either a bullock or a heifer (a). So, the sale of an article by a dealer in antiques was regarded as in itself, and apart from the express statements accompanying the act, an implied representation that the articl , was a curio of some kind. (p) Blair v. Broinley (1847), 2 Ph. 354 ; Moore v. KnigU, [1891] 1 Ch. 547 ; and Thorne v. Heard and Marsh, [1895] A. C. 495, H. L. {per Lord D.wey at p. 506). (g) Re Murray, Dickson v. Murray (1887), 57 L. T. 223. ()■) Vide post, Ch. XITI, Sect. 2, post. (s) Vide post, Ch. XIV, Sect. 1, Sub-s. [5), post. {t) See § 145, and § 183, post. (u) Many of these are statutory offences : see § 397, post. (x) Montefiori v. Montefiori (1762), 1 W. Bl. 362 (Lord Mansfield, C.J.). (y) O'Herlihy v. Hedges (1803), 1 Sch. & Lefr. 123 ; 9 R. R. 23. (z) R. V. Oiles (1865), 34 L. J. (m. c.) 50, per Blackburn, J., at p. 53. (a) Gill V. M'Dowell, [1903] 2 Ir. R. 463, per Lord O'Brien, C.J., at p. 467, and Gibson, J., -who, at p. 469, saj's rather unkindly to the \\Tetched freak, -who, after a brief, miserable, and blameless, Ufe, must needs be defamed in death : " the animal ] -was misleading, a sort of living lie . . the beast told its ovm lie : it was a machine 1 of fraud which the defendant utilized." §§ 62-66. 71 The article itself was a " silent asserter," and it was a case of res ipsa loquitur (b). 65. Indictments for false pretences present numerous analogies. Some of these cases have already been referred to (c). 66. Of course no implication of a representation from acts and conduct arises where the only statement which can be implied does not fulfil the other conditions and requisites of a representation, as stated in Chapter II, either because the implied statement is not a statement to the effect alleged((?) , or because it is not a statement to the alleged representee, or to any person in particular, such as the simulation of wealth by " keeping up appear- ances " (e), or the miser's pretence of distress and penury (/), which, without more, no individual could claim to have been a statement made to himself, or on the faith of which, as so made, he acted to his detriment. (5) Patterson v. Landherg (1905), 7 F. 675, per Lord Killachy at p. 681. (c) See Lord Halsbury's Laws of England, title, " Criminal Law and Procedure," vol. ix., pp. 690-704 ; and § 397, in Ch. XIIT, Sect. 3, post. (d) Beattie v. Ebury (Lord) (1874), L. R. 7 H. L. 102, was a case of this kind. See the observations of Lord Cairns, L.C, at pp. 109-112, Lord Chei-mspord at p. 121, and Lord Hatherley at p. 128. (e) ^^^en Bassanio, not "without an eye to the fair Portia, -w&s showing " a more swelling port Than his faint means ^lould give continuance," he was not making a direct representation to the lady, such as was made in Montefiori v. Montefiori {ubi sup.). From general appearances, individuals who ask no questions, and therefore receive no crooked answers, whether by words or acts, must draw their o\i'n conclusions at their perO. Lord Brotjgham, at p. 531 of Burnes v. Pennell (1849), 2 H. L. C. 497. observes that " it is not every false representation by acts and deeds . . . that would vitiate any contract that may be made " on the faith of it, and he proceeds, at pp. 532, 533, to give an illustration of an o-\vner of land making a pretence of the general prosperity of his estate and tenantry, by remitting rent to the tenants, and says that no one purchasing on the faith of these " appearances " could claim that they constituted a misrepresentation. {/) Instances will readily occur to any one, from ordinary life and history, of pro- fessional men or tradesmen rashly drawing inferences from a display of all the out- ward and visible signs of poverty by wealthy and mean men and women, inferences which induce them to make reductions in their charges, or to grant time, or consent to compromises of their claims, but inferences of their o^vn drawing from mere general appearances, and on which, therefore, they could found no cause olfaction. 72 COMMENTARY, CH. IV, SECT. 1. CHAPTER IV. MISREPRESENTATION. 67. A REPRESENTATION which' when made, or, in the case of a con- tinuing representation, when acted upon by the representee, was false in fact, is in law a misrepresentation (see Article 10). This involves con- sideration of the questions of (1) the constituents of falsity, (2) the date or dates at which the falsity must be shown, and (3) the canons of construction applied for the purpose of determining whether a representation is to be deemed false or true. Sect. 1. What Constitutes Falsity in Fact. 68. For the purposes of the present discussion, the knowledge or belief of the representor, all-important as this matter is, when the question of fraud or innocence comes to be considered (see Chapter V), is wholly irrelevant. Falsity in fact is all that need be established to show a misrepresentation. A man may unintentionally make a misstatement. He may also uninten- tionally make a correct statement, and, in so doing, behave " like white witches, mischievously good " (a). But neither is the former representa- tion thereby made true, nor the latter false. The modest claim of Autolycus that he is " sometimes honest by chance " (b) may be a difficult one to make good ; but it is quite certain that a man may tell the truth sometimes by chance (c). And, if he does tell the truth, however much he intended to lie, he has made no statement which can ever be actionable (or indictable, either, as a false pretence), or as to which, therefore, there can ever be any occasion to institute the further inquiry which otherwise would follow, as to the state of the representor's mind, the inducement to the representee, and the like, inasmuch as the first condition of all has not been satisfied. "Although the accused," said Brett, J. A., in a criminal case, "had a criminal intent and believed his statement was false, yet if in fact by chance the state- ment was not incorrect, the charge is not supported " (d). So, in a civil case, where the defendant had made an implied representation that the plaintifi (a) Dryden in " The Medal," aiming at Lord Shaftesbury. (6) " Winter's Tale," Act IV, So. 4. (c) Cicero (De Div. II, 11) speaks of "testes" who " casu veri aut malitia falsi fictique esse possunt." {d) E. V. Aspinall (187C), 2 Q. B. D. 48, C. A., at p. 58. §§ 67-70. 73 would have the right to sell liquor off the premises, if he acquired them, the representation which, so far as he knew, was false (there being, to his knowledge, restrictive covenants in a previous conveyance), turned out to have been, mahjn' hii, true all the time, because no one during a period of twenty-six years since the date of the conveyance had interfered with the sale of liquor off the premises, and the defendant, on that ground, was held entitled to judgment (e). An averment tliat a representation had been made which the representor believed to be false, without averring that it was false in fact, would be as demurrable as the " double plea," in a case already cited, where it was pleaded that the opposite party had entered into a contract with the fraudulent intention of breaking it, without adding that he had broken it in fact (/). To the question — misrepresentation or no misrepresentation — the nice distinctions which philosophers or philologists draw between objective and subjective truth {g), or, as Lord Bramwell put it, between " absolute " and " contingent " truth {h), and all considerations of the personal equation, are wholly immaterial. Objective, not subjective, truth is alone relevant. The falsuni, not the falsus, is, at this stage, the sole subject of the inquiry. 69. Since in any form of proceeding a misrepresentation must be estab- lished, it follows that the burden of alleging and proving falsity in fact, which alone turns a representation into a misrepresentation, rests on the party who sets it up, whatever the form of proceeding may be (i). Whether a representation is false or not, if there is any evidence, is of course a question of fact (k). Sect. 2. Substantial Falsity Necessary and Sufficient to prove A Misrepresentation. 70. Falsity and truth are, for the purposes of the law, opposites and mutually exclusive. What is not true is false, and what is not false is (e) Hepworth v. Pickles, [1900] 1 Ch. 108. So, in Re an Arbitration between F. Tiedemann v. Ledermann Frires, [1899] 2 Q. & B. 66, the implied representation of a certain person that he had a principal who was in a position to assume the obliga- tions of his contract, turned out, malgr^ the representor, to be true. (/) Vide § 26, ante. The same is true of a plea of justification in cases of libel and slander. See Article 25 of the author's Code of Actionable Defamation, and note (I) thereto. ig) See App. A, Sect. 5, Sub-s. (1), post. (h) Derry v. Peek (1889), 14 App. Cas. 337, H. L., at p. 348. (i) Vernon v. Keys (1810), 12 East, 632, affirmed (1812) 4 Taunt. 488, Exch. Ch., where, after verdict for the plaintiff, judgment was arrested on the ground that no unequivocal falsehood had been proved ; Hallows v. Fernie (1868), 3 Ch.. App. 467, per Lord Chelmsford, L.C, at p. 477 (" the precise representation must be distinctly stated"); Bodger v. Nicholls (1873), 28 L. T. 441, where there was no proof of the unsoundness of the animal, assuming there to have been an implied representation of its soundness; Melbourne Banking Corporation v. Brougham (1882), 7 App. ('as. 307, P. C, at pp. 314, 315; and Smith v. Chadwick (1884), 9 App. C'as. 187, H. L. (per Lord Seleokne, L.C, at pp. 190-192). C!p. the criminal cases, such as R. v. Perrott (1814), 2 M. & S. 379, where, there being no allegation that any specific material pretence was false, the indictment was held bad, and R. v. Aspiiuill, uhi sup., per Bkett, J.A., at p. 57. And see generally the cases cited in the notes to this Cliapter. (k) For whether the fact corresponds with the statement, must, obviously, and ex vi terminarum, be a question of fact, but, on the other hand, it is a (jucstion of laAV 74 COMMENTARY, CH. IV, SECT. 2. true. The question therefore — what is falsity — depends on the question which, though in another application, " jesting Pilate " asked ex cathedra, but " stayed not for an answer." That answer, for the purposes of the law of misrepresentation, has been given by English jurisprudence in reasonably plain terms. Truth, as has already been pointed out, is not truthfulness : verity is not veracity. Neither is it mathematical truth. In science, absolute exactitude alone is truth, and a departure from it by a hair's breadth is error. To speak of De Moivre's tlieorem, or a proposition in Euclid, or the law of gravitation, as being substantially or practically true, or, in the cautious language of the undergraduate, " one in favour of which there is much to be said," would be an absurdity. But, in the case of communications between man and man for the purpose of influencing conduct, there are necessarily degrees of truth and falsity. The facts may correspond with the statement entirely, or partially, or not at all. The important features may be correctly described, whilst the unimportant details are misstated, or vice versa. Yet since, for the purpose of determining legal liability, law must resort to dichotomy and set over against one another the two categories of falsity and truth, in one or other of which every representation is to be included, it follows that some criterion, other than the scientific (which is obviously inapplicable), must be adopted for deciding which of the only two possible characters must be assigned to any particular representation. That criterion (see Article 11) is fixed byreference to the effect of the statement on the mind of the representee. The question is — was it, as between him and the representor, true or false ? The answer depends on whether the material particulars were correctly or incorrectly stated. That is to say, if the discrepancy between the facts as represented, and the facts as they existed, is such as would have reasonably influenced the mind of a normal representee in considering whether or not to alter his position as he did, the representation is false, if otherwise true. This is one way of stating the rule. Another (which is perhaps the commoner form, but amounts to exactly the same thing) is to say that falsity in sub- stance is, on the one hand, necessary, and, on the other, adequate to establish misrepresentation ; for " substance " is here applied to those features in the statement which were intended to have, and had, an efiect on the repre- sentee, or, in other words, which to him appeared — reasonably appeared, of course — material. The two forms of the rule are combined in its statu- tory application to contracts of marine insurance {I). A similar principle governs that part of the law of defamation which relates to the plea of justification (m). 71 . It results from the above that where the entirety of a representation -ivhether there is any evidence of facts either contradicting, or supporting, the state- ment, as the case may be. (I) Sec sect. 20 (4) of the Marine Insurance Act, 1906 (6 Edw. 7, c. 41) : " a repre- sentation as to a matter of fact is true, if it be substantially correct, that is to say, if the difference bet^i'cen what is represented and what is actually correct would not be considiTcd material by a prudent insurer." (in) Sec the author's Code of Actionable Defamation, Article 26, Rule 2, and notes thereto. §§ 70-72. 75 forms a faithful picture or transcript of the facts, its truth is established and is not affected by any number of inaccuracies in unimportant details. These are matters of mere fringe and superficies, the sort of "errors" which " like straws upon the surface flow." " He who would search for " falsity " must dive below." On the other hand, if the general impression con- veyed is false, the utmost precision and the most punctual and scrupulous accuracy in a number of immaterial niinutiis will not avail to stamp the misrepresentation with the sign of truth : on the contrary it may be treated as part and parcel of the misrepresentation, and as an instrument of fraud as well (n). The difference in this respect between a misrepresenta- tion and a breach of warranty, where exact correspondence between sense and fact is the very thing contracted for, was insisted upon by Lord Mans- field (o), and, since his time, there have been numerous illustrations in the books of the rule that proof of falsity in the substance (understood as above) of a representation is proof of its having been a misrepresentation. Less than this will not suffice : more is not required {p). 72. No falsity is " substantial " which does not amount to falsity in relation to the very fact actually or impliedly stated. In the case of state- ments of intention, opinion, or law, which only involve or presuppose a very limited statement of fact, as has already been indicated, this proposition (which, as applied to other t}^es of statement, may seem a truism) becomes of great importance (q). In such cases, the existence of the intention, opinion, (n) Like the conspicuous and blatant honesty of the first few games wth which the cardsharper deludes his victim, or the innocent details of his performance to which the prestidigitateur diverts the audience's attention when the actual trick is being enacted. " Fraus fidem in parvis sibi praestruit ut, quum operse prebium sit, cum mercede magnS, fallat " : Q. Fabius Maximus, apvd Liv. (o) Pawson v. Watson (1778), Co^\■p. 785, at pp. 788-790. Cp. Atwood v. Small (1838), 6 CI. & Fin. 232, per Lord Bkotjgham at p. 444, and Lord Blaokbuen's observa- tions at pp. 683, 684, and Lord Watson's at p. 689, of Thomson v. Weems (1884), 9 App. Cas. 671, H. L., and those of Rigby, L.J., at pp. 141, 142 of Hambrough v. Mutual Life Insurance Co. of New York (1895), 72 L. T. 149, C. A. (p) Dobson V. Sotheby (1827), M. & M. 90 (a fire insurance case, in which the premises had been described as a bam, where Lord Tentebden", C.J., at p. 92, directed the jury to consider whether the description, though not strictly accurate, was substantially so, having regard to its effect on the mind of the insurer in estimating the risk) ; Adam- son V. Bvitt (1830), 2 Russ. & M. 66 (in which Leaoh, M.R., considered a statement " substantially " correct which referred to a man as having an annual income of " about £1000," though mfacthehad only £900) ; Dentonv. McNeil{1866), L. R. 2Eq. 352 (inaccurate statements as to an invention held by Romilly, M.R., not to have been substantial or material, and action accordingly dismissed) ; Bear v. Stevenson (1874), 30 L. T. 177, P. C. (where the representation was that only one incumbrance existed on certain sheep and wool : in fact there were two others, but the instruments created by them had been handed back by the incumbrancers to the representors, on the understanding that they should be, as they afterwards were, satisfied out of the advance then being negotiated for : held not false in substance, though not literally true) ; McKeown v. Bouchard-Peveril Gear Go. (1896), 65 L. J. (ch.) 735, C. A. (where as to certain of the representations, there were " inaccuracies " merely, or " trifling errors," or " trivial " mistakes, which, therefore, did not make the representations false : per Lindley, L.J., and Lopes, L.J., at p. 736, and Rigby, L.J., at p. 737) ; Seddon v. Nwth-Eastern Salt Go., [1905] 1 Ch. 326 (where Joyce, J., at p. 335 held that there was no proof that a balance-sheet showing a certain result was substantially, though it was strictly, incorrect) ; and Brookes v. Hansen, [1906] 2 Ch. 129 {per Joyce, L.J., at pp. 137, 138). (q) See § 16 (as to the statements of intention), § 33 (as to statements of 76 COMMENTARY, CH. IV, SECT 3. belief, or expectation being the only fact which is stated, and also in cases where the representor qualifies his statement by " so far as I know," or similar expressions, the only falsity which can be shown necessarily involves dishonesty also. Bad faith is untruth, and similarly innocence is truth (r). This in no way negatives the statement (see § 68) that the representor's condition of mind is irrelevant to the question of falsity or truth in fact, because it so happens that, in the class of case under consideration, the representor's belief or intention is the fact which is either truly or untruly represented, — the curtain is the picture. Sect. 3. When the Falsity must be shown to have Existed. 73. It is commonly said that the representation must be shown to have been false when made. But this is not quite correct. The only real issue is — was it true or false when it was acted upon ? The question is whether the representee was deceived, misled, or damaged. And this question can only be answered by reference to the point of time at which he altered his position on the faith of the representation. If at this point of time, assuming it to be later than the date when it was made, the statement (which in that event would be a continuing one) was not a true portrait or transcript of the facts then existing, the representee is injured, however closely, when made, it may have corresponded with the facts existing at that earlier date. Con- versely, however false when made, the representation, if true whenacted upon, would leave the representee without any possible cause of action or ground of complaint. The abovementioned incorrect mode of stating the proposi- tion comes down to us from asimpler age when it almost invariably happened either that the making of the statement and the acting upon it were synchronous, or that the facts were the same at both dates. The inexacti- tude does no practical harm when applied to such cases, but, in relation to continuing representations, where the facts are not the same at the two dates, it has a distinct tendency to mislead. A continuing representation is deemed to be made and repeated during every moment of the interval of time which separates the first statement from the representee's alteration of position, where there is any such appreciable interval. Like a continuing offer, in the case of a contract (s), it may be withdrawn altogether or modi- fied at any time before it is acted upon, but, unless so withdrawn or modified, and, if modified, subject to the modification, it endures until that time {t). opinion), and § 38 (as to statements of law), and the cases cited in the notes thereto respectively. See also § 98, post. (r) See, again, § 98, post. This rule, as applied to representations in marine insurance, is neatly expressed in Sect. 20 (5) of the Marine Insurance Act, 1906 (6 Edw. 7, 0. 41) : "a representation as to a matter of expectation or belief is true if it be made in good faith." {s) C!p. (amongst numerous other cases) Garlill v. Carbolic Smoke Ball Co., [1893] 1 Q. B. 256, C. A., per Lindley, L.J., at p. 262. (t) See Smith v. Kay (1859), 7 H. L. C. 750, where the acceptance of certain bills was procured by misrepresentation, for which bills a bond was afterwards substi- tiited, and, in answer to the argument that the plaintiff was not induced to execute §§ 72-74. 77 And any revocation or correction must be in the most clear and explicit terms {u). 74. During the abovementioned interveninij; period the situation may be altered in two ways. The representor may discover that what he believed to be true when making the statement was in fact at that time untrue ; or circumstances may supervene which render a statement, true when made untrue when acted upon. The former class of case is discussed elsewhere (x) ; it has no concern with the present discussion, inasmuch as, in such cases, no question of supervening falsity arises ; what was origuially false remains false, and the representor's subsequent discovery can only have the effect (if anything) of turning innocence into fraud. But, in the latter class, the subsequent events convert a true representation into some- thing which, whether to be regarded as fraudulent or not (y), is at all events a misrepresentation in fact, unless the representor supplements it b}' such timely modifications as will render it in accord with the new facts. Thus, where a bankrupt's interest in certain property was subject to {inter alia) his wife's life interest, and the bankrupt's assignees, in attempting to sell the bankrupt's interest, described itsnature,but before the contemplated purchaser contracted to purchase, the wife died, without the assignees disclosing this fact, the description was false at the date of the purchase, and Lord Eldon, L.C, set aside the sale (2) ; and where, in a case of a fire insurance, the party had added a third story to the premises after his original statement (which merely described the premises as they then existed), the representation became false when acted upon, and the policy was held not enforceable (a). So, if directors of a company, announced as suchinthe ptospectus, retire before allotment, t\\.& representation the bond by any false statement, Lord Chelmsford, at p. 769, said : " it is a continuing representation. The representation does not end for ever A\-h.en the representation is made. The . 3'oung man ... in stating his case, would say, Before I executed the bond I had been led to believe, and I therefore continued to believe, that . . . etc." As to the right of the representor to withdraw or modify within the limits of the interval mentioned, see Holland v. Manchester and Liverpool District Banking Co. (1909), 25 T. L. B. 386 (as to an erroneous entry in a pass-book which, it was there held, can be set right by the banker at any time before the customer draMS upon his supposed balance, but unless and until so corrected, is a continuing representation), with which compare (as applied to marine insurance) the Marine Insurance Act, 1906 (6 Edw. 7, c. 41), s. 20 (6) : " a representation may be mthdrawn or corrected before the contract is concluded." Article 9 of the Code gives a definition of a continuing representation. (m) See the observations of Lord Halsbxjby, L.C, at p. 370, Cotton, L.J., at pp. 371, 372, and Lindley, L.J., at p. 373 of Arnison v. Smith (1888), 41 C. D. 348, C. A. (x) Vide § 102, post. Both classes are referred to by Fry, J., at p. 475 of Davies v. London and Provincial Marine Insurance Co. (1878), 8 C. D. 469. (y) Vide §§ 103, 106, post. (z) Turner v. Harvey (1821), Jac. 169 ; 23 R. E. 15. (a) SilUm v. Thornton (1854), 3 E. & B. 868, at pp. 882-884, where it was said that the " warranty " (the language used would equally apply to a representation) was a " continuous one." There seems some reason to think that the court may have intended to go even further than the proposition in the text, and may have thought that the warranty or representation would continue during the currency of the policy, that is, beyond the expiration of the interval mentioned. If so, and to that extent, the decision is overruled by Thompson v. Hoffer (1860), \i. B. & E. 1033, Exch. Ch., at p. 1049. The 78 COMMENTARY, CH. Ill, SECT. 4, SUB-SECT. (1). is false at the latter, wliicli is the only material, date (6) : not so, Low- ever, where the retirement is after allotment (c). On the same principle, where a man sells a horse by auction, describing it truly as his property, but, while the auction is proceeding, it is sold privately, and the vendor notwithstanding authorizes the sale to continue, he is deemed to continue therewith his description of the horse as his property, and the person who eventually purchases on the faith of his continuing representation is entitled to rescind the contract {d). 75. Conversely, a representation which was false when made may in virtue of supervening facts become true when acted upon, in which case there is no falsity at the only material date, and therefore no misrepresenta- tion. Thus, where a statement in a prospectus that more than half the shares had been subscribed for, which was untrue at the date of the issue of the prospectus, became true before allotment to the representee, and even before his application, the shareholder obtained no relief (e). Sect. 4. Canons of Construction for Purpose of Determining Question of Falsity. 76. In Article 12 of the Code three Eules of construction are set out, which are to be applied where the falsity or truth of am' representation is in issue. The first of these relates to the sense in which the words, or other signs constituting the representation, are to be understood ; the second, to the effect of omission and silence ; the third, to the necessity of considering any complex representation as a whole, and not piecemeal. Suh-sect. (1). Sense in which a Representation is to he understood. 77. A representation is understood in the sense in which it was reason- ably understood by the representee. What the representor professes to representation most certainly does not last a minute be3-ond the act whereby the representee has irretrievably altered his position in the manner alleged. See the case cited in note (c), inf. (b) Re Scottish Petroleum Co., Anderson" .-i case (1881), 17 C. D. 373, per Maiixs, V.-C, at p. 377, distinguishing the ease cited in the next note ; and Re Scottish Petroleum Co., Wallace's case (1883), 23 C. D. 413, CI. ^\., where the Court of Appeal, disagrccmg in this point mth Kay, J., held that the contract to take shares was voidable by reason of the representation having become false before allotment ; see the observa- tions of Baggallay, L. J., at p. 432, Lindley, L..J., at p. 435, and Fry, L. J., at p. 438. (c) Hallows V. Fernie (1868), 3 Ch. App. 467, where Lord Chelmsfokd, L.C, at p. 472, pointed out that the retirement of the directors in question after allotment could not possibly make the representation false, even as a continuing representation. (d) Whurr v. Devenish (1904), 20 T. L. R. 385. With, the cases cited under this Section, the authorities on the liability by estoppel of a partner Avho retires from a firm without notifying his retirement may be compared ; see those cited m the various treatises on partnership, and particularly Goode and Bennion v. Harrison (1821), 5 B. & Aid. 147, per Bayley, J., at p. 158, who speaks of the retiring partner in that case " having done nothing to correct the mistake," and of his " suffering that delusion to continue," and points out that such a person " may protect himself from the eon- sequences of that misrepresentation by giving notice," etc. On the whole, it is submitted that the date at which alone falsity is material, in the case of a continuing representation, is correctly stated in Article 10 of the Code. (e) Ship V. Crosskill (1870), L. R. 10 Eq. 73, per Romilly-, M.R., at pp. 85, 8G. §§ 74-79. 79 have meant or intended, wlien making it, is wliolly immaterial {/). But tlie representee cannot establish falsity by putting an unnatural or strained interpretation upon the words used, however clearly he may prove that in fact he so understood them. Prima facie the meaning deemed to have been conveyed is the primary, ?.('. the natural, customary, and ordinary meaning, — that which would be conveyed to a normal person (. Tennyson's "Harold." Act III, Sc. 1, \\-hcre Stigand says : " I have heard a sayino- of my father GodAN-in That, -were a man of state nakedly true, Men would but take him for the craftkr liar." (») Barley v. Waljord (1840), 9 Q. B. 197, 199. (o) Ibid., p. 209. §§ 79-81. 81 more than a named sum for a certain property might mean either that they had in fact refused to do so, or that they were not likely to do so in the futm'e ; it was for the plaintiff to prove the former meaning, in whicli alone the statement would have been an unequivocal falsehood, and, not having done so, his action failed (p). Words in a prospectus capable of being construed either as a description of the present intention of the company to start business with a certain equipment of steamships, or as an engagement to provide itself with them in the future, were not alleged by the plaintiff to have been construed by liim in the present tense, and he was therefore held not to have established any misrepresentation (q). Where the vendors in London of a cargo of rye at Gibraltar advertised it as " in perfect condition," and added, " by telegram," it was held that the re- presentee had no right to assume that this meant that the cargo had been inspected, but only that a telegram stating its condition had in fact been received, which was true (r). A prospectus stated that no remuneration was to be given hj the company to the directors. According to the plain meaning of the words this was true, because the directors, though they received remuneration, did not receive it from the company, but from the promoters. Assuming, however, that the representation might reasonably be construed as negativing the receipt of remuneration from any one con- cerned with the company, it was held to be for the plaintiff to prove that he so understood it (s). Another representation in a prospectus that " the present value of the turnover or output of the entire works is over £100,000 per annum," was capable of importing either that the works had in some year in fact produced the amount stated, or that they were capabls of doing so. In the former sense it was false ; in the latter, true. The plain- tiff, however, refused to say what sense he put upon the words, stating in answer to an interrogatory directed to the point, that he " under- stood the meaning to be that which the words obviously conveyed," and that he was " unable to express in other words what he understood to be the meaning thereof." If there had been only one reasonable meaning of the words, this would have been a proper and sufficient answer ; but since there were two possible senses, and the plaintiff nevertheless elected to stand or fall by his supposed single and obvious sense, he found himself in the position of having refused even to attempt to discharge the burden which the House of Lords, affirming the C. A., held to lie upon him, of, first, assigning a meaning, and then proving that he understood, and was in- duced by, the representation in that sense, and that in that sense it was false (t). On the other hand, when a similarly ambiguous statement in a (p) Vernon v. Keys (1810), 12 East, 632, per Lord Ellenborough, ('.J., at p. 636. (g) Hallows v. Fernie (1868), 3 Ch. App. 467, per Lord Chelmsford, L.C., at pp. 476, 477 ("if the words are susceptible of a different meaning, ho is deceived, not by the words, but by his construction of them "). (r) Schroder v. Mendel (1877), 37 L. T. 452, C. A. (s) Arhwright v. NewboM, (1881), 17 0. D. 301, C. A., per Cotton, L.J., at pp. 324, 325. (t) Smith V. Chadwich (1884), 9 App. Cas. 187, H. L., per Lord Selborne, L.C, at pp. 190-192, and Lord Bt,ackburn at pp. 197-201. B.M. G 82 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (1). prospectus tliat " the business had paid 17 per cent, upon the capital employed in it " was false, if the company's premiums were included in the capital, but true, if they were not, and the plaintiff put the former sense, which was a reasonable one, upon the statement, and proved that he so understood it, it was held that a misrepresentation had been proved, and the burden of proof had been discharged (u) . A statement, in answer to a question which the representor was under no obligation to answer, as to the incumbrances on certain property of a third person, might under the circumstances, mean either that there was no such incumbrance in fact, or that there was none so far as the representor could remember : it was held that the onus was upon the representee of showing that the representation had been construed, and reasonably (not necessarily) con- strued, by him in the former sense, in which it would have been false, and not in the latter, in which it would have been true ; in other words, of establishing an unequivocal misrepresentation. This he failed to do, and the judgment accordingly went against him {x). Where, in a " passing off" case, it was contended that the use of the words " Trade Mark " in the advertisements of an article involved a statement to the public that the mark had been registered, it was thought to be incumbent on the party, either to establish by evidence that the public would reasonably regard the representation as involving the statement in question, or, in the absence of such evidence, to show that the implication alleged was a necessary one {y). 82. The above type of ambiguous statement is one which throws a difficulty in the way of the representee. But there is another type of ambiguity in representation which counts against the representor, and where the onus is on him, and not on the representee. We find this type when there is evidence of the representor having resorted to ambiguous, which then becomes ambidextrous, language for the express purpose of afterwards falling back on the literal, or it may even be the plain and ordinary, interpretation of the words, though he well knew and intended that the representee should take them in another and perhaps less natural sen^e. The contrast is between natural and spontaneous ambiguity, and that which is artificial and premeditated. In the latter class of case, every (u) Glasier v. Rolls (1889), 42 C. D. 436, C. A. The view stated in the text was that o£ Kekewich, J., at p. 454, and was not dissented from by the C. A. who reversed his decision solely on the grourd that the misrepresentation was not fraudulent, whilst agreeing that there had been a misrepresentation in fact. In Capel and Co. v. Sim's Ships Composition Co. (1888), 58 L. T. 807, the same learned judge, at pp. 808, 809, expresses the same opinion as to the onus which rests on the plaintiff, where the statement is capable of more than one mterpretation, to allege and prove a particular sense, and that he reasonably understood it in that sense. {x) Low V. Boiiverie, [1891] 3 Ch. 82, C. A., per Lindley, L.J., at p. 101, and BowEN, L.J., at p. 106. [y) Sen Sen Co. v. BritUn, [1899] 1 Ch. 692, per Stiklino, J., at p. 696, who, in reference to the earlier case of Lewis's v. Goodbody (1893), 67 L. J. 194, the report of \\-hich seems to indicate a decision en sens contraire, observed that he had made inquiries, and, as the result, had " some reason to bilicvc," that evidence was there adduced. §§ 81, 82. 83 presumption is made against him who uses dubious phraseology as an instrument of fraud. Fortius vcrha accipiuntur contra proferentem is, as Bacon justly observes, " a rule drawn from the depths of reason " (.;), and there can be no juster application of the principle than to the inter- pretation of the statements of him who, without expressly or literally lying, or concealing truth, fallendi causa obscure loquitur (a), or whose practice it is spargerc voce^ in vuhjum ainhiguas. " Equivocation will undo " all such representors. The law has no tenderness for " those juggling fiends That palter with us in a double sense. And keep the word of promise to the ear, But break it to the hope," or for the Sibyl who horreinlas canit ambages . . . obscuris vera invohens. The ancient " oracles are dumb," but if they yet lived to " palter with us in a double sense," they would find as little favour in the courts as do their modern counterparts — the kind of statements sanctioned, if not encouraged, by the more questionable of the various casuistical theories of "mental reservation," and of "the Economy" (6). "If," said Lord Eldon, L.C, "one man understands an expression in one sense, and another in a difierent sense, though the court would impute to both that they understood it in the right sense, yet ... if the expression used by one party has at all misled the other" — by which phrase he must have been referring to independent evidence that the first party intended to mislead — " it is always material in considering what a court of equity will do with the case "(c). Lord Blackburn similarly, (z) Bacon's Maxims of the La-n', Reg. Ill, vol. vii, p. 333 (Spedding and Ellis's edition). (a) Dig. 18. 1. 43. 2. See App. C, Sect. 1, as to the Roman law on this topic, and cp. Shee, J., at pp. 496, 497, of Lee v. Jones (1864), 17 C. B. (n. s.) 482, Exch. Ch., who there relies on the obmure loquitur doctrine. (6) Momus, in one of Lucian's Dialogues, jeers at Apollo's oracles, each of which required another oracle to explain it. " If you cross the Halys, you wiU destroy a mighty empire," said the Delphic priestess to Croesus. He did so, and destroj^ed his o\fn, which Apollo indignantly claimed to be a vindication, not a disparagement, of the scrupulous veracity of his oracles. Many of the defences set up by the modern prospectus- monger are conceived in this vein, and not a whit less ridiculous. As to the doctrines of the " Economy," and the restrictio mentalis, see App. B, Sect. 2. Paley {Moral and Pol. Philos., vol. i, ch. v) lays do^^Tl, in reference to deceptive promises, some sound moral propositions which would equally apply, mutatis mutandis, to deceptive representations : " where the terms of a promise admit of more senses than one, the promise is to be performed in that sense in -vN'hich the promisor apprehended at the time that the promisee received it. It is not the sense in which the promisor actually intended it, that always governs the interpretation of an equivocal promise ; because, at that rate, you might excite expectations -n'hich you never meant, nor would be obliged, to satisfy. Much less is it the sense in which the promisee actually received the promise, for, according to that rule, you might be drawn into engage- ments which you never designed to undertake. It must, therefore, be the sense (for there is no other remaining) in which the promisor believed the promisee accepted the promise." Substitute here " representation," " representor," and " representee," for " promise," " promisor," and " promisee," and enlarge the proposition by adding that the sense must be shown to have been in fact so understood by the representee, and reasonably so understood, and there results a correct and complete enunciation of the rules relating to the construction of both the classes of ambiguous statements which are discussed in the text. Paley's expressions were cited in argument to the Court of Q. B. in Smith v. Hughes (1871), L. R. 6 Q. B. 597, and approved and applied by Hannbn, J., at p. 610. (c) At p. 176 of Turner v. Harvey (1821), Jac. 169; 23 R. R. 15. See ^ 74 for the facts of this case. 84 COMMENTARY, CH. IV, SECT. 4, SUB.-SECTS. (1), (2). but more strongly, expresses the view that the ambiguity of a represen- tation may be a badge of fraud, from the consequences of which it is for the representor to escape if he can, and that he cannot do so by the mere plea that the representee ought to have taken it in the other of the two pos- sible senses (d). To the same effect, Lindley, L. J., in reference to ambiguous conditions of sale (e), and Lord Halsbury, L.C, on the " ambidextrous language" of a prospectus (/). The canon thus enunciated has been applied in a variety of cases {g), the most illustrative perhaps of which is one in which, answering a lady's question as to. whether she would have an unimpeded sea view from the premises slie was being induced to acquire, the representor replied, with absolute accuracy in the literal sense of the words, that he was bound not to build on the intervening land. Having regard, however, to what he must have gathered from the lady's question as to her apprehensions, it was held that he deliberately framed his answer so as to remove them, and must, therefore, be taken to have intended her to understand by it that she was safe in taking the house from any such inter- ruption as she feared, and that the representation, so construed, was false because she was not in fact protected from the event which after- wards happened, viz. the making by the representor of other arrangements with his lessor, whereby he became no longer subject to any restrictions as to building (h). Sub-sect. (2). Falsity by Omissions, Silence, or Inaction. 83. It has been shrewdly said, though the poet has put the words into the mouth of a fool, that there are " those That therefore only are reputed {d) Smith V. Chadmck (1884), 9 App. Cas. 157, H. L., at p. 201 : " if with intent to lead the plaintiff to act upon it, they put forth a statement which they know may bear two meanings, one of which is false to their laiOA\'ledge, and thereby the plaintiff putting that meaning on it is misled, I do not think they can escape by saying he ought to have put the other. If they palter Ai'ith him in a double sense, it may be that they Ke like truth ; but I think they he, and it is a fraud." (e) At p. 28 of Terry and White's Contract (1886), 32 0. D. 14, C. A. (/) Aaron's Reefs, Ltd. v. Twiss, [1896] A. C. 273, H. L., at pp. 282, 283. Cp. the observations of Kay, L.J., at p. 113 of Low v. Bouverie, [1891] 3 Ch. 82, C. A. : " if there was fraud, and the statement was intended to mislead, its ambiguity would not be a defence." (g) Turner v. Harvey {ubi sup.) ; Pigott v. Stratton (1859), 1 De G. P. & J. 33 ; Scott V. Snyder Dynamite Projectile Go. (1892), 67 L. T. 104, C. A., per Lindley, L.J., at p. 106 : " the prospectus is catchy and misleading in nine-tenths of its paragraphs. It suggests that the company have acquired an existing patent, though it is possible, by subjecting it to a microscopic examination, to say that that is not what is reaUj meant. Like the well-known introduction to the Ingoldsby Legends " (the reference is to Canon Barham's two humorously mystifying prefatory letters addressed "to Richard Bentley, Esq. ": there is no Litroduotion ) "it appears to say a great deal, whilst not saying anything " ; and Aaron's Reefs, Ltd. v. Twiss (vhi sup.). (h) Pigott V. Stratton {ubi sup.). Cp. the story, referred to by Paley {Moral and Pol. Philos., vol. i, ch. v), when deahng with deceptive promises, of the general who promised the garrison of Sebastia that, if they would surrender, no blood would be shod, and, on their surrendering, buried them all alive ; and the miserable quibble, with which Portia tickled the fancy of EUzabethan groundlings, in construing Shylock's §§ 82-84. 85 wise For saying notliiag " (i). It is certain that there are otlaers who, for the like reason, are reputed in law misrepresentors. Apart from cases of pure non-disclosure in the strictest sense of the term, when no falsehood is told, but some absolute duty of disclosure imposed by considerations of public policy is violated, there are cases where a man may positively lie by saying nothing, and where the circumstances are such that reticence or concealment may amount to active misrepresentation. One (and the more obvious) of the two main types of such reticence is the omission from a statement of all reference to qualifying facts, leaving what is stated to stand as an absolute, and therefore a false, representation. The other is to be found in those who " do a wilful stillness entertain," when their previous declarations or acts bid them speak, in order to remove a delusion for the creation of which they are themselves responsible. Both these classes are intended to be comprised in Article 12, Rule 2, of the Code. 84. The law requires from the representor what it requires from the witness, "the truth, the whole truth, and nothing but the truth." It is not sufficient that nothing be added to make false what would otherwise be true ; the representor must not willingly omit anything which is required to render true what would otherwise be false. Such an omission amounts to that form of suppressio veri which not merely is equivalent to but which actually is, suggestio falsi. In this respect moralists, philosophers, and men of the world, are, now at all events, at one with jurists (k). The " meiosis " or " leitotes " which in ancient times was not only a figure of speech, but a recognized instrument of persuasion in the mouth of such accomplished bond, before she fell back on the plain and sound plea of illegality (" This bond doth give thee here no jot of blood ; The words expressly are ' a pound of flesh.' . . . Shed thou DO blood, nor cut thou less, nor more. But just a pound of flesh "). (»■) "Merchant of Venice," Act 1, Sc. ]. {k) See Paley {Moral and Pol. Philos., vol. i, ch. xv) : " there may be lies of omission. A -nTiter of English history who, in his account of the reign of Charles I., should wilfully suppress any evidence of that prince's despotic measures and designs might be said to lie " — in fact, this was just what Forster did afterwards say of Lord Clarendon's history — " for by entitling his book ' A History of England,' he engages to relate the whole truth of the history, or at least aU that he knows of it." So Mark Pattison (Memoirs, p. 245) ascribes to Conington's biographer a " dexterous friendship which, without misrepresentating the facts " (so. such facts as the biographer selected) " contrived to conceal from his readers the true history." Coleridge {Lay Sermons, ed. Derwent Coleridge, 1852, pp. 167, 168) enumerates among the deceits practised upon the multitude by demagogues — " stating particular facts which, dissevered from their context, enable a man to convey falsehood while he says truth," and " the display of defects without the accompanying advantages, and vice versa," and " the statement of positions that are true only under particular conditions to men when ignorance and fury make them forget that these conditions are not present, or lead them to take for granted that they are." But the moral and juridical view of the matterhas never been more aptly expressed (though with immediate reference to the lies which defame rather than to the lies which deceive) than in the weU-lmown lines which Tennyson puts into the mouth of the parson in " The Grandmother," who, in his sermon — " said likewise That a lie which is half the truth is ever the blackest of lies, Eor a lie which is all a lie may be met and fought with outright, But a lie which is part a truth is a harder matter to fight." 86 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (2). masters of the craft as Odysseus (I), and was countenanced by the casuistry of St. Alfonso Liguoii (m), has never found favour in the more modern stages of English jurisprudence. To state a thing which is only true with qualifications known to, but studiously withheld by, the representor, is to say the thing which is not. Such a statement is a " lie," and one of the most dangerous and insidious forms of lie. " If a man," says a judge of Lord Mansmeld's day, " professing to answer a question, select those facts only which are likely to give a credit to the person of whom he speaks, and keep back the rest, he is a more artful knave than he who tells a direct falsehood " (n). 85. It is not because a statement is incomplete, that it is necessarily a misrepresentation, any more than a report of a trial is necessarily deemed to fall short of a " fair and accurate report," entitling it to protection from the usual consequences of defamation, merely because it is an abbreviated version or abstract. But both in the one case and in the other, he who summarizes does so at his peril. If his summary is a faithful portrait, it is none the worse for being a miniature ; if, however, the incompleteness is one-sided and partial,- — if the artist ita mentitur, sic veris falsa retniscet, that the picture presented is out of perspective and distorted, then the pretended transcript is untrue in the one case, and " unfair " in the other (o). The rule is bestexpressed by Lord Chelmsford and Lord Cairns respectively in two of the cases arising out of the Overend and Gurney disaster. The language used by the former was : " it is said that everything which is stated in the prospectus is literally true, and so it is. But the objection to it is, not that it does not state the truth as far as it goes, but that it conceals most material facts with which the public ought to have been made acquainted, the very concealment of which gives to the truth which is told the character of falsehood " (j)). Lord Cairns describes the process as " such a partial and fragmentary statement of fact, as that the with- holding of that which is not stated makes that which is stated absolutely false " {q). In accordance with the above rule, the following statements, from which the following qualifying or otherwise material facts were (l) See Soph. Philoct. 50-134, where Neoptolemus accurately estimates the real meaning of Odysseus' proposals, and realizes that he is being solicited to commit the double villainy of concealing what he is under a duty to reveal, as well as saying what it is disgraceful to say {Seiripoi' . . . icaKds KpvwToiv 8' & firj SeT, Kal Xiyav aiax^'^'^' (m) See, as to the doctrine of " Partial Truth,'' and " the Economy," App. B, Sect. 2. (») Chambke, J., at p. 371 of Tapp v. Lee (1803), 3 B. & P. 367, cited with approval by Park, J., at p. 403 of Foster v. Charles, No. 1 (1830), 6 Bing. 396. Cp. the (Quotation from Tennyson in note (k), sup. (o) See such cases as Frescoe v. May (1860), 2 F. & F. 123, where the pretended report " put forward what is inculpatory', mthholding what is exculpatory," and was held entirely unprotected. ip) Oakes v. Turquand ; Peek v. Same (1867), L. R. 2 H. L. 325, at pp. 342, 343. (5) Peek v. Gurney (1873), L. R. 6 H. L. 377, at p. 403. Cp. the observations of James, L.J., at p. 318 of ArkwrigU v. Newbold (1881), 17 C. D. 301, 0. A. §§ 84, 85. 87 respectivel}' omitted or witlilield, were deemed misrepresentations, in rela- tion to contracts of sale and purchase : — particulars of an annuity, wliicli were quite accurate as far as tliey went, without adding that the annuity was terminable in five years (r) ; a statement that certain farms were let, without stating that the tenants had given notice to quit (s) ; a plan of an estate which was correct in every respect, except tliat it omitted certain particular trees, though showing an indiscriminate mass of trees as intended to pass (t) ; particulars of sale which were silent as to a ground rent to which the property was subject (u) ; a statement by the defendant's solicitor that he did not know of any restrictions on the use of certain premises, without adding that he had never looked at the deeds to see if there were any (v) ; a description of property as " leasehold business premises," without mentioning that the lease contained restrictive covenants against certain specified businesses [x) ; a statement of the existence of an ofi-licence in respect of certain premises, which was true, omitting to add that there were covenants in a previous conveyance to the representor's predecessors in title against the user of them as an inn, tavern, or beer- house (y) ; an advertisement of land as " capital freehold huildincj land," without any reference to the fact that the local authority had, under byelaws, prohibited building thereon until all the refuse with which certain excavations had been filled up should have been removed (z) ; and a pro- clamation of the sale of land as at the instance of the mortgagees, without any reference to the incumbrances which amounted to a sum in excess of the utmost value of the land (a). " In all cases of sale, it is the obvious duty of the vendor ... to describe everything which it is material to know in order to judge of the nature and value of the property. It is not for him just to tell what is not actually untrue, leaving out a great deal that is true, and leavuig it to the purchaser to inquire whether there is any error or omission in the description or not " (6). A second, and very fruitful, nursing ground of the type of misrepresen- tation under consideration is the company prospectus, and it is to these documents, perhaps, that the occasion most frequently arises to apply the rule that an omission may render the entire document so (r) Coverky v. Burrell (1821), 5 B. & Aid. 257. is) Dimmoch v. Hallett (1866), 2 Ch. App. 21 (per Turner and Cairns, LL.JJ.). \t) Denny v. Hancock (1870), 6 Ch. App. 1. See particularly the observa,tions of Mellish, L.J., at p. 14 : " it really almost requires, to my mind, some charity . . . to suppose that he did not prepare his plan with a view of leading a purchaser to suppose the trees to be included, and omit these particular trees, in order that he might be able to say afterwards — ' these were not intended to pass.' " (tt) Jones V. Mimmer (1880), 14 C:. D. 558, per Jessel, M.R., at p. 591, who held this to be a misrepresentation, though an innocent one, particularly having regard to the extreme precision with which all the items of receipt and profit had been stated. (v) Nottingham Patent Brick and TiU Co. v. Butler (1886), 16 Q. B. D. 778, C. A. (x) Re Davis and Cavey (1888), 40 C. D. 601, per Stirling, J., at p. 605. (y) Hepworth v. Pickles, [1900] 1 Ch. 108, per Farwbll, J., at pp. Ill, 112. (2) Baker v. Moss (1902), 66 J. P. 360. (a) Mahomed Kola Mea v. A.-V. Uarperink (1908), 25 T. L. R. 180, P. C. (6) Per KiNDBRSLEY, V.-C, at p. 430 of Brandling v. Plummer (1854), 2 Dr. 427 ; 100 R. R. 209. 88 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (2). partial and fragmentary as to be positively false (c). Another species of case inviting the application of the rule consists of imperfect and incomplete statements as to the credit and dealings of a third person {d) ; (c) New Brunswick and Canada Railway and Land Go. v. Muggeridge (1860), 1 Dr. & Sm. 363, wherein it was held, at pp. 381, 382, that framers of prospectuses " arc bound . . . not only to abstain from stating as fact that which is not so, but to omit no one fact Avithin their knowledge, the existence of which might in any degree affect the mind of any applicant for shares " (mth whif;h compare the like enunciation of the duty of prospectus-framers by Fry, J., at pp. 310, 311 of Arkwright v. Newbold (1881), 17 0. D. 301, C. A.); Oakes v. Turquand; Peek v. Same (1867), L. R. 2 H. L. 325, per Lord Chelmspokd, L.C, at pp. 341-345, and Lord Cranworth at p. 368, in which the prospectus concealed the true state of the affairs of Overend, Gurney & Co., whilst stating nothing actually false : see note (p), sup. ; Peek v. Gurney (1873), L. R. 6 H. L. 377 (the same prospectus, and the same decision, so far as the question of misrepresentation in fact is concerned) : see note {q), sup. ; Jury v. Stoker (1881), 9 L. R. (Ir.) 385, C. A. ; Edgington v. Fitzviaurice (1885), 29 C. D. 459, C. A., where Benman, J., who was affirmed by the C. A., expressed the view, at p. 472, that the concealment of the real object of the issue (which was to pay off pressing liabihties) was sufficient to render the prospectus as a whole such a " partial and fragmentary " statement as to amount to positive falsity ; lie Mount Morgan {West) Gold Mine, Ltd., Ex parte West (1887), 56 L. T. 622, where the prospectus stated that the company was formed to acquire fourteen acres of the famous Mount Morgan, in Queensland, and contained glowing reports of the value of the Mount Morgan property, but omitted to add that the fourteen acres did not belong to the proved auriferous portion of Mount Morgan to which alone the reports related, and where Kay, J., accordingly, at p. 623, pronounced the prospectus to be both false and fraudulent ; Derry v. Peek (1889), 14 A. C. 337, H. L. (a statement that the company had power to use steam on their tramways, without adding that this power was subject to the consent of the Board of Trade, and two local authorities) ; Scott v. Smyder Dynamite Projectile Co. (1892), 67 L. T. 104, C. A. (reference to " firing experiments " ■with a projectile, ^vithout adding that the experiments took place five years previous^, and related to a different patent) ; Aaron's Reefs, Ltd. v. Twiss, [1896] A. C. 273, H. L., where the prospectus omitted reference to the provisions and contents of certain material contracts, though satisfying the bare statutory requirements of the law by inserting the dates and names of the parties thereto, and it was held that the whole prospectus was thereby rendered false at common law, per Lord AN'atson, at p. 287, and Lord Davey, at pp. 293, 294, and A\here documents were referred to which described the state of the mine, without mentioning that the condition described was that of the mine several years back, — see observations of Lord Halsbury, L.C, at pp. 282, 283, as to this " ambidextrous language " ; Re Dunlop-Truffault Cycle and Tube Manufacturing Co., Ex parte Shearman (1896), 66 L. J. (cH.) 25, ^^'he^e it was held by Kbkewich, J., that the repre- sentation (implied from the company's name) that a Dunlop was connected with the companj', which was true, unaccompanied by any statement that this Dunlop had no connection whatever with the famous Dunlop Pneumatic Tyre Co., amounted to a misrepresentation ; Components Tube Co. v. Naylor, [1900] 2 Ir. R. 1, where there is to be found a luminous discussion of the whole question by Palles, C.B., at pp. 37—60, and A\-here, the jury having found, in answer to one of the questions left to them, that certain omissions were material, and such as to render the prospectus " as a whole, substantially misleading and calculated to deceive," the court refused to disturb the verdict ; and Cackett v. Keswick, [1902] 2 Ch. 456, per Romer, L. J., at p. 476 : " wholly apart from the provisions of sect. 38, in my opinion, in common fairness to the intending investor, to whom a prospectus of this kind is issued, such a contract as we have had to deal with ought to be specified and referred to in the prospectus." See also some of the cases on prospectuses cited in Ch. XIII, Sect. 1, post. {d) Tapp V. Lee (1803), 3 B. & P. 367; Ames v. Milward (1818), 8 Taunt. 637, where an assertion by the representor that one Bates had paid him well, which was hterally true as regards a certain agreement between these parties, was held sub- stantially false, by reason of the representor's silence as to his dealings with Bates generally, and the security he held of him ; and Lee v. Jones (1864), 17 C. B. (n. s.) 482, Exch. Ch., per Shee, J., at p. 498, who based his decision on the ground that the creditors had been guilty of such a "partial, inaccurate, and subdolous setting forth ... of facts within their loiowlcdge, material for the proposed sureties to be informed of as, along with the communication of other facts material for them to know, §§ 85, 86. 89 aud there are other, and miscellaneous, illustrations of the prin- ciple {e). 86. On the other hand, unless the omission makes the residue false, though the representor may thereby render himself obnoxious to some otlier rule of statutory or common law, the representation is not only devoid of fi-aud (/), but it is not a misrepresentation at all. " If a person relies, as a ground for rescission of a contract, on the omission of a state- ment, he must show that the omission of that statement makes what is stated misleading " (g). amounted to a misrepresentation," and in the Court of C. P. below, (1863), 14 C. B. (k. s.) 386, per Byles, J. (" pregnant with the assertion that," etc.), and Keating, J. ("active misrepresentation "), at p. 398. (e) Such as Stevens v. Adamson (1818), 2 Stark. 422; 20 R. R. 707, where the representor sold premises ^vithout informing the representee that onlj' the day before the contract he had been served with notice of re-entry by the superior landlord unless certain repairs were executed in a specified time; Flight v. Booth (1834), 1 Bing. (N. C.) 370, where premises were let on the representation that there were restrictions on the use of them for the purposes of any offensive trade, and two other named trades, which was held to be a clear impUed representation that there were no restrictions as to any inoffensive business except the two specified, the fact being that a large number of other inoffensive callings were prohibited (see pp. 377, 378) ; and Carlish v. Salt, [1906] 1 Ch. 335 (concealment of the fact that the vendor had, two days before the contract, been apprised of a party- wall award against him in respect of the premises sold). See also Brooke v. Mostyn (Lord), (1865) 33 Beav. 457, where the production of several relevant documents, coupled \vith the keeping back of a certain very material valuation, was held a misrepresentation justifying the setting aside of the compromise founded thereon; Gilbert v. Endean (1878), 9 C. D. 259, C. A., another compromise case, where the solicitor of the defendants stated to the plaintiff's solicitor that one of the defendants was penniless, but omitted to add that his father had died, leaving a will, and possessed of some property : which was held by Brett, L.J., at p. 268, and Cotton, L.J., at p. 270, to amount to an absolute misrepresentation ; Mackay V. Commercial Bank of New Brunsicick (1874), L. R. 5 P. C. 394, where, in the Colonial Court, the jury had been directed that the sending of a telegram to the plaintiff in the name of one Lingley, which stated truly that certain moneys had been remitted, amounted to a misrepresentation, by reason of the omission to notify the plaintiff that the telegram had not been sent by Lingley, and that Lingley was insolvent and had absconded, and where, though it was not necessary to pronounce expressly upon the point, the Judicial Committee assumed, and clearly thought, that the direction was right; and Boyd and Forrest v. Glasgow rf- iS. IF. Railway Co., [191 J] Sc. Ct. of Sess. Cas. 33, where " a journal of bores " was put forward for railway con- tractors to tender upon, A\'ithout stating that the bores had been taken by the company's servants, and that the "journal" had been added to, altered, and edited, to suit the company's purposes, by their engineer (pp. ()2-74). C'p. Ch. II., Sect. 5, Sub-ss. (2) and (3), ante, and some of the cases cited in the notes thereto, as to misrepresentation of the effect of a document. One may also instance the daily and nightly mendacity, in this respect, which characterizes newspaper placards and " biUs of contents." There was a glaring example of this some years ago when a, respectable evening paper made on its placards the flamboyant announcement " war declared," in huge type and prominent position, followed by the word " imminent " in the next line in very small type which not one person in a hundred would notice, the fact being that the European war which was then possible had been " declared to be imminent " by some Pleet Street oracle, and by no one else. Again, a pub- lishers' announcement of such and such a work by an eminent novelist, without the addendum — " and other stories," which is to be found on the title-page, but not till the book is bought, is a clear misrepresentation by which, instead of a new novel, a collection of old magazine stories, probably the immature output of the author's extreme youth, is palmed off upon the public. ( / ) " No mere silence will ground the action of deceit," per James, L. J., at p. 318 of Arkwright v. Newbold (1881), 17 C. D. 301, C. A. (g) Per Rigby, L.J., at p. 736, of MeKeown v. Bouchard-Peveril Gear Co. (1896), 65 L. J. (ch.) 735. Cp. the observations of Brett, J., at p. 199 of Be Coal liconomiziny 90 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (2). 87. It remains to consider the other class of case abovementioned, where silence, though not in itself a misrepresentation, may, in conjunction with something previously said or done, help to convert truth into falsehood. This class comprises the three species in the next three paragraphs re- spectively discussed. 88. Where a man has unnecessarily said something, a duty may at once arise to say more, in which case, if he violates this duty, his reticence thence- forth becomes an implied misrepresentation, though complete silence in the first instance would not have been either misrepresentation or even action- able non-disclosure (h). It has already been seen that this duty arises in the case of a continuing representation, where, before it is acted upon, facts came to the notice of the representor falsifying a statement which when made was true (i). But there are other cases where in the course of the negotiations the party has let fall something which, whether he so intended or not, he immediately perceived to have a delusive effect on the mind of the representee, and where, by not correcting the delusion, he is deemed to confirm and perpetuate it, and so to misrepresent (j ) . In a curious case (k) relating to the sale of oats by sample which were in fact new oats, but Gas Co., Goi'cr's Case (1875), 1 C. D. 182, C. A. ("for a mere non-disclosure . . . which has not the effect of rendering that which was disclosed or stated a misrepre- sentation . . . there was no remedy, either at law or in equity "), and Bentky & Co., Ltd. V. Black (1893), 9 T. L. R. 580, C. A. (where it was held that the mere non-dis- closure of the figures on which an accountant's certificate was based did not render the certificate a misrepresentation). (h) Davies v. London and Provincial Marine Insurance Co. (1878), 8 C. D. 469, per Pby, J., at p. 475 : " in ordmary contracts " — sc. such as are not uberrimce fidei — • " the duty may arise from circumstances which arise during the negotiation." He then instances such cases as subsequent discovery of falsity in the original representa- tion, and the supervening of events which falsify facts which were true when stated. Cp. the subsequent observations of the same authorit3'', to the same effect, in the Court of Appeal, at pp. 310, 311 of ArkiorigU v. iVewftoH (1881), 17 C. D. 301, C. A. See also what is said by Lord Campbell, L.C, at pp. 723, 724 of Walters v. Morgan (1861), 3 De G. r. & J. 718, as to the " duty to sa}' more " being created by even " a single word, or (I may add) a nod, or a wink, or a shake of the head from the purchaser," and by Lord Selbobne, L.C, at p. 236 of CoaJcs v. Boswell (1886), 11 App. Cas. 232, where, after stating that mere silence is not deceit, unless the party " undertakes or professes to commmiicate " the facts withheld, he adds : " this, however, he may do, if he makes some other communication which, mthout the addition of those facts would be necessarily, or naturally and probably, misleading." See also the general state- ments (which would apply equally to all the forms of reticence mentioned in this Section) of Knight-Bruce, V.-C, at p. 104 of Stikeman v. Dawson (1847), 1 De G. & Sm. 90 ("a fraudulent suppression or a fraudulent concealment may be, and some- times is, equivalent, civiUv, to a false assertion fraudulently made in express terms ") ; of Lord Romilly at p. 114 of Central Railway Co. of Venezuela v. Kisch (1867), L. R. 2 H. L. 99 ("the suppression of a fact "will of ten amount to misrepresentation "); and of RoMER, L.J., at p. 792 of Seaton v. Heath, [1899] 1 Q. B. 782, C. A. (" misrepre- sentation might undoubtedly be made by concealment "). (i) Vide Sect. 3, ante, and Ch. V, Sect. 1, Sub.-s. (4), post. (j) Nicholson v. Hooper (1838), 4 My. & Cr. 179, per Lord Cottenham, L.C, at pp. 185, 186 : " if Hooper had no such right " — sc. to deposit certain warrants, and give the defendants a good title to sell them for repayment of moneys advanced — " it was the duty of the plaintiff, when informed of his having assumed it, and that the defendant had on the faith of it advanced a large sum of money, to have apprised them of his intention to dispute it. Not only did he not do so, however, but ... he confirmed them in the error into which they are supposed to have fallen, and himself derived benefit from the delusion so perpetuated." (k) Smith V. Hughes (1871), L. R. 6 Q. B. 597. §§ 87-89. 91 whicli the purcliaser believed to be old, and, therefore, commanding a higher price, Blackburn, J., laid down that, if the purchaser had believed not merely that the oats were old, but that the seller was contracting to sell them as old (l), — to which Hannen, J., added that the seller must also be shown to have believed that the purchaser so believed {vt), — the pur- chaser's refusal to pay, and consequently his defence to the action, would have been justified ; not, however, on the ground of misrepresentation by silence on the part of the vendor, but because the parties in that case would not have been ad idem, and the invalidating cause would thus have been " mistake " in the strict technical sense of the word. 89. A misrepresentation may also be made by silence, when either the representee, or a third person in his presence, or to his knowledge, states something false, which indicates to the representor that the representee either is being, or will be, misled, unless the necessary correction be made. Silence, under such circumstances, is either a tacit adoption by the party of another's misrepresentation as his own, or a tacit confirmation of another's error as truth. Thus, where the plaintifi called at the office of a certain firm called Edward Gandell and Co., and one Edward Gandell presented himself in answer to his inquiry, and handed to him a card of " Thomas Gandell and Co.," knowing that this was the firm with which the plaintiff was desirous of doing business, and said nothing to remove the delusion, or to reveal the fact that the two firms were quite distinct, thereby obtaining an order for Thomas Gandell and Co. in which he was interested, this was treated as a misrepresentation (w) ; and so also was the conduct of a party in leaving uncorrected the form in which letters were addressed to him, as and for a person of good repute of somewhat similar name to his own in the same street, for whom he knew he was being mistaken by the party on whom he was attempting to foist the contract (o) . In addition to these cases of personation by silence, there are illustrations of a violated duty to correct a delusion being held tantamount to misrepresentation, where a person stands by and allows in silence an erroneous statement made by a third person to, or in the presence and hearing of, the representee (^j). (I) Ibid., at p. 608. (m) Ihid., at p. 611. (n) Hardman v. Booth (1863), 1 H. & C. 803. (o) Cundy v. Lindsay (1878), 3 App. Cas. 459, H. L., where Lord CIaibns, L.C, at p. 465, says that " they " — the jurors — " have found that by the form of the signatures to the letters which were written by Blenkarn, by the mode in which his letters and applications to the respondents \\-ere made out, and by the way in which he left uncorrected the mode and form in which, in turn, he ivas addressed by the respondents ; that by all these means he led and intended the respondents to believe, that the person with whom they were communicating was not Blenkarn, the dishonest and irresponsible man, but was a weU-known and solvent house of Blonkiron & Co., doing businesss in the same street." Contrast with this case British Linen Co. v. Coivan (1906), 8 F. 704. {p) In Pilmore v. Hood (1838), 5 Bing. (n. c.) 97, the defendant made a mis- representation to a third person who (to the defendant's knowledge) communicated it to the plaintiff, the defendant meanwhile standing by and saying nothing, and this reticence was held (per Tindal, C.J., and Vaughan, J., at p. 107) to constitute a misrepresentation to the plaintiff. Cp. North British Insurance Co. v. Lloyd (1854), 10 Exch. 523, where Aldeeson, B., at p. 529, expresses the view that one who kllo^^'s 92 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (2). 90. Lastly, there are cases wMcli are usually classed as belonging to the province of non-disclosure, pure and simple, and not to that of mis- representation, but which, nevertheless, certain very learned authorities have preferred to treat as examples of positive misrepresentation to be implied from silence. It has been held that the mere entering into any transaction of a well-known business type, without revealing matters which would be considered unusual and abnormal in such transaction, amounts to a representation that there are no such matters, and, therefore (if it be proved that in fact such matters did exist, and that the transaction was not of the regular and normal description which from the representor's silence the representee was entitled to expect) a false representation (q). that a misrepresentation is being made by a third person, and " allows it in silence, is himself misrepresenting. Story {Eq. Jurispr., vol. i, §§ 384, 390) treats such conduct as an illustration of the rule (which he neatly adapts from a weU- known artistic canon) of fraus est celare fraudem. The doctrine is further illustrated by the analogous cases of partnership by estoppel (as to which see the treatises of Lord Lindley, and Sir Frederick Pollock). See also the observations of Blackbubn, J., at p. 673 of Polak V. JEverett (1876), 1 Q. B. D. 669, in referring to the estoppel rule that " if a man stands by, and allows another to act mthout objecting, when, from the usage of trade or other^^'ise, there is duty to speak, his silence would preclude h im as much as if he proposed the act himself." The rule stated in the text is the same as the rule of the Digest — " Qui taoet, consentire videtur ; qui potest et debet vetare, jubet si non vetat," and the moral canon stated in Aiist. Eth. iv. 8. 8 : & yap iiro/xem aKoiav, ravTo. KoX iroieLv l'0Ke7, or in the proverbial " silence gives consent." Cp. Story's Sq. Jurispr. vol. i, §§ 384, 385, 389, 390, on this question. (?) Hamilton v. Watson (1845), 12 CI. & F. 109, a suretyship case, per Lord Campbell at p. 119 : " I should think that this might be considered as the criterion whether the disclosure ought to be made voluntarily, namely, whether there is any- thing that might not naturally be expected to take place between the parties who arc concerned in the transaction " ; Evans v. Edmonds (1853), 13 C. B. 777, where, in an action by a trustee of a separation deed for payment of the allowance covenanted to be paid by the husband, it was held that the proved concealment by the plaintiff of the fact that he had seduced the wife, and that the object of the deed was not the usual and ordinary object of a separation deed, but to give the plaintifi access to the wife and opportunities for continuing his clandestine intrigue, amounted to a fraudu- lent misrepresentation (per Jebvis, C. J., at p. 784, and Maitle, J., at pp. 785, 786 ; Lee V. Jones (1864), 17 C. B. (n. s.) 482, Exch. C'h., a suretyship case, where at p. 500, Shee, J., cites the above dictum of Lord Campbell, and Blackbukn, J., at pp. 503, 504, says : " I think, both on authority and on principle, that, when the creditor describes to the proposed surety the transaction proposed to be guaranteed (as in general a creditor does), that description amounts to a representation, or at least is evidence of a representation, that there is nothing in the transaction that might not naturally be expected to take place between the parties to a transaction such as that described. And, if a representation to this effect is made to the intended surety by one flho knows that there is something not naturally to be expected to take place between the parties to the transaction, and that this is unknown to the person to M'hom he makes the representation, and that, if it were kno'\\'n to him, he would not enter into the contract of suretyship, I think it is evidence of a fraudulent representa- tion on his part " ; Phillips v. Foxall (1872), L. R. 7 Q. B. 666, where the same eminent authority observes (at p. 679) : " I stiU adhere to the opinion that I expressed in Lee V. Jones, that if such a transaction as is alleged in the plea had taken place before the defendant entered into the contract of suretj'ship, and had been concealed from him, it would have furnished evidence of a false representation to the surety that no such thing existed " ; though he adds, " further than this, I am not at present pre- pared to go, and it must be remembered that a minority in the Exchequer Chamber refused to go so far " ; and Bentinck v. Fenn (1887), 12 App. Cas. 652, H. L., a case involving the question of the duty of disclosure owed by an agent to his principal, where Lord Macmaghten, at p. 671, discusses the position of the agent who is alleged to have concealed his interest, "and so to have represented that he was not interested in the property, and that it belonged to other persons who were not connected with §§ 90, 91. 93 91 . In no other class of case than those already mentioned is silence tantamount to a representation, or actionable in law or equity as such however amenable it may be to the civil consequences of a breach of tlio duty of disclosure which arises in transactions uhcrri)ii(E jidci, under another head of jurisprudence, or however censurable it may be in foro am- scientio) (r). It is not silence, or reticence, which in itself can amount to a misrepresentation. It must be conceal imnit, or suppirssia vcri. And these terms import the existence of a duty. A man lannot be said to conceal what he is not bound to reveal, suppress what he is under no duty to express, or keep back what he is not required to put forward. This distinction is insisted upon in a famous passage from Cicero (s), which has been constantly cited as the basis of many of the most important judgments on misrepresentation, whether at law and in equity (t). There must be a duty of some sort to speak, arising out of the circumstances, in accordance with some one or other of the principles enumerated in this Section, before the representee can legally complain of the representor's silence. Tacit acquiescence in the self-delusion of another, if nothing is said or done to mislead, or silence which does not make that which is stated false, draws with it no legal liability. " Mere silence as regards a material fact which the one party is not under an obligation to disclose to the other, cannot be a ground for rescission, or a defence to specific performance " (m) ; much the scheme." Cp. the secret agreements of a creditor with his debtor, in fraud of the other creditors, referred to in Ch. XIII, Sect. 3. For the Roman law on this subject, see App. C, Sect. 2, Sub-s. (2). \r) As to the moral aspect of the question, compared with the judicial, see App. B, Sect. 2. (s) De Off. III. 13 : " Neque enim id est celare quicquid reticeas ; sed quum quod tu solas ignorare emolumenti ; tui causa veUs eos quorum intersit id scire." The latter part of this sentence, however, requires some modification to make it in strict accordance either with sound ethics or -with. English law. As to the Roman law on this topic, see, generally, App. C, Sect. 2, Sub-s. (2). [t) See App. C, Sect. 3. (u) Fry, Specific Performance, § 705, and Story, Eq. Jurispr. vol. i, §§ 204, 385, where the passage from Cicero quoted in note (s), sup., is cited (though it must not be forgotten that the proposition there stated, and its application by Cicero in De Off. Ill, 12, 13, goes distinctly further than the actual decisions in our law would warrant) ; Horsfall v. Thomas (1862), 1 H. & C. 90, per Bramwell, B., at p. 100 (no duty to communicate defect in cannon sold, therefore no misrepresentation, the defect not having been proved to have been concealed or covered up) ; Smith v. Hughes (1871), L. R. 6 Q. B. 597, where Blaokbubn, J., at p. 607 says : " I agree that evrn if the vendor was aware that the purchaser thought that the article possessed that quality, and would not have entered into the contract unless he had so thought, still the purchaser is bound, unless the vendor was guilty of some fraud or deceit upon him, and that a mere abstinence from disabusing the purchaser of that impression is not fraud or deceit, for, whatever may be the case in a court of morals, there is no legal obligation on the vendor to inform the purchaser that he is under a mistake nor induced by the misrepresentation of the vendor " ; A\ith which compare Hannen, J., at pp. 610, 611 ("a behef on the part of the plaintiff that the defendant was making a contract to buy the oats under the mistaken behef that they were old would not reHeve the defendant from liabihty unless the mistaken behef was induced by some misrepresentation of the plaintiff, or concealment of a fact which it became his duty to communicate "), and Cockbuen, C.J., at p. 603 (" the question is whether . . . the passive acquiescence of the seller in the self-deception of the buyer will entitle the latter to avoid the contract. I am of opinion that it will not " ) ; Ex parte Burrell (1876), 1 C. D. 537, C. A. {per Mellish, L.J., at pp. 551, 552, and Mellor, J., 94 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (2). less, of course, can it constitute a cause of action for di.a,m.a.ges ioi fraudulent misrepresentation. The most familiar illustrations of this principle are the cases where a purchaser buys at the price of grazing or prairie land from an ignorant native owner land which he knows to contain valuable minerals {x) or through which he has privately ascertained that a railway authorized by Parliament is intended to pass ; or an " old master," or a rare manuscript, from a peasant who thinks it rubbish, and sells it as such (y) ; or, conversely, where a vendor sells land with a mine under it which he knows to be nearly worked out, or where a licence is granted which, to the grantor's laiowledge, has no validity or value (z), or where a lessor demises premises which he knows to be ruinous or unsafe (a), or an employer is silent as to the difficulties which the contractor will experience by reason of the nature of the soil to be excavated (b) . In all these instances, assuming at p. 554) ; Coalcs v. Boswell (1886), 11 App. Gas. 232, H. L., per Lord Selboene, L.C., at pp. 235, 236 : " inasmuch as a purchaser is (generally speaking) under no antecedent obligation to communicate to his vendor facts which may influence his o\m conduct or judgment when bargaining for his oati interest, no deceit can be implied from his mere silence as to such facts, unless he undertakes or professes to communicate tlicm ") ; and Seddon v. North Eastern Salt Co., [1905] 1 Ch. 326 {per Joyce, J., at pp. 334, 335). (x) Fox V. Mackreih ; Pitt v. Mackreth (1788), 2 Cox, 320 ; 2 Bro^ra C. C. 400 ; 2 R. R. 55, per Lord Thtjelow, L.C, at p. 321 : " Let us put this case. Suppose A., Imo-ning of a mine on the estate of B., and kno-ning at the same time that B. was ignorant of it, should treat and contract with B. for the purchase of that estate at only half its real value, can a court of equity set aside this bargain ? No ; but why is it impossible ? Not because the one party is not aware of the unreasonable ad- vantage taken by the other of this knowledge, but because there is no contract existing between them by which the one party is bound to disclose to the other the circumstances which had come mthin his knowledge. ... It is therefore not only necessary that great advantage should be taken in such a contract, and that such an advantage should arise from a superiority of skill or information ; but it is also necessary to show some obligation binding the party to make such a disclosure. Therefore, the question is, not \\'hether the transaction be such as a man of honour would disclaim and disdain, but it must fall within some settled definition of %vrong recognized by this court " ; Turner v. Harvey (1821), Jac. 169 ; 23 R. R. 15, per Lord Eldon, L.C, at p. 178 : " the purchaser may use his own knowledge, and is not bound to give the vendor information of the value of his property ... if an estate is offered for sale and I treat for it, knowing that there is a mine under it, and the other party makes no inquiry, I am not bound to give him any information of it ; he acts for himself, and exercises his o^^Tx sense and lmo%\'ledge " ; and Smith v. Hughes (1871), L. R. 6 Q. B. 597, per Cockbuk:^?, C. J., at pp. 603, 604 : " the question is not what a man of scrupulous moraUty or nice honour would do under such circumstances. The case put of the purchase of an estate, in i\'hich there is a mine under the surface, but the fact is unkno\TO to the seller, is one in which a man of tender conscience or high honour would be un'n'iUing to take advantage of the ignorance of the seller; but there can be no doubt that the contract for the sale of the estate would be binding." {y) See Phillips v. Homfray, No. 1 (1871), 6 Ch. App. 770, where Lord Hathekley, L.C, at p. 779, observes : " I apprehend it would be an error to say generally that you cannot enforce a contract in this court where the one party knows more of the value than the other does. It happens frequently in the purchase of pictures, for instance, that one party knows a great deal more of the value than the other, and yet the bargain is perfectly good." (z) Smith V. Scott (1859), 6 C B. (n. s.), 771, per Wniss, J., at p. 782, and Byles, J., at p. 783, as to the plea of fraud. {a) Keates v. Gadogan [Earl of) (1861), 10 C B. 591 ; Bobbins v. Jones (1863), 15 C B. (n. s.) 221, per Eklb, CJ., at p. 223 ; and Cavalier v. Pope, [1906] A. C 428, H. L., per Lord Maonaghten at p. 430. (6) Banger v. Great Western Bailway Co. (1854), 5 H. L. C 72, per Lord Ckanwobth, L.C, at pp. 86, 87. § 91. 95 that no single word has been let fall which might mislead, and no device of any sort employed, reticence is innocuous. It is often simply a case of one man bringing his knowledge, experience, skill, or technical judgment, to bear upon the transaction, and using the weapons with which, perhaps at great cost of time labour and money, he has equipped himself for the business of life (c). No doubt, such dealings would be repugnant to a man of high honour and delicacy, who might think that in him who has a giant's strength, " 'tis tj'rannous To use it like a giant," that minimum dccct libere cui midtmn licet, that it is not always right to exercise a right, and that Icnowledge, like wealth, is power, which may be abused, as well as used. Into these considerations, however, it is obvious that the law cannot enter. The only concern of jurisprudence must always be to declare under what circumstances, and in whom, a right is vested, and not to inquire whether the exercise of that right is conformable to the higher standards of refined ethics (d). But the law nevertheless so acutely appreciates the importance and value of " justifying its ways," wherever it is possible, to the moral sense of the community, that it has again and again cast a powerful searchlight over the entire res (jestce of any case to see whether anything is to be found in them to prevent this right of reticence from operating, or to destroy it if it has begun to do so. Thus Lord Eldon, after laying down the general principle, as already stated, is careful to add : " but a very little is sufficient to affect the application of that principle. If a word, if a single word, is dropped which tends to mislead the vendor, the principle will not be allowed to operate " (e). And to this " single word " Lord Campbell, L.C, in a later case adds " a nod, or a wink, or a shake of the head from the purchaser," as facts which may make all the difference (/). Accordingly, in a case where a purchaser had concealed from the vendor of a mine the fact that he (c) It will be observed tkat the expression caveat emptor, very commonly used as a summary statement of tlie proposition enunciated in the text, has been studiously avoided. In the first place, in common with all similarly abbreviated maxims, such as " the law favours the heir," " estoppels are odious,*' in jure proxima causa spectatur, de minimis non curat lex, and the like, it is too absolute to be either of any utility in practice, or scientifically correct in theory ; and, in the second place, this particular phrase is more than ordinarily misleading, inasmuch as it seems to imply that it is only a purchaser who takes all risks, and has no rights against the reticent vendor, whereas, in the like absence of positive misrepresentation or breach of duty to disclose, a vendor is equally %vithout protection against the reticent pur- chaser. Thirdly, the principle is not limited to silence in relation to transactions between seller and buyer, but to any transaction to which the law can give effect. Lastly, caveat gives no information at aU. Where the one party is under no duty to disclose, ,it is for the other party cavere ; but where there is such a, duty, it is for the first party, and not for the other, cavere. So that caveat emptor is as utterly meaningless an expression as caveant omnes or caveat unusquisque. Every one who enters upon any business must take care of himself in respect of all matters as to which he has no right to insist that another shall take care of him. As to when he has, and when he has not these rights, the phrase in question is absolutely -without guidance. (d) See App. B, Sect. 2, post, and some of the passages cited in notes {u) and (x), sup. (e) Turner v. Harvey (1821), Jac. 169 ; 23 R. R. 15 (at p. 178). { / ) Walters v. Morgan (1861), 3 De G. F. & J. 718, at pp. 723, 724. 96 COMMENTAEY, CH. IV, SECT. 4, SUB-SECT. (2). had been secretly abstracting coal therefrom, which fact gave the vendor rights against him of a different nature from, and of a larger pecuniary value than, the mere vendor's right to the price of the coal, Lord Hathebley, L.C, was of opinion that there had been acts and conduct of his own which cast upon the purchaser a duty of disclosure which otherwise would not have arisen (g), and he likened it to the case of one " killing a man's horse and then making an offer to buy it, leaving him to suppose that it is still alive " (/i), adding by way of further illustration, that where " a picture- dealer, employed to clean a picture, scrapes off a part of the picture to see if he can discover a mark which will tell him who is the artist, and then finds a mark showing it to be the work of a great artist ; that would not be a legitimate mode of acquiring knowledge for the purpose of enabling him to buy the picture at a lower price than the owner would have sold it for had he known it to be the work of that artist " (i). In other words, suppression by a purchaser of facts affecting the value of the property which are not merely within his own knowledge, but the issue of his own volition and wrongful action, is equivalent to a misrepresentation. So also, where a man, in treaty with another for the purchase of a policy on the life of a third person, is in the course of the negotiations apprised of an accident to the "life," he may lawfully keep silence as to the incident if he has never made any representation at all in the first instance, but if he should thereafter insinuate in the slightest degree that the health of the " life " continues as before, his silence would become " under the circum- stances equivalent to an active misrepresentation " (Jc). " Though a person may be deceived by another with the knowledge of a third person, if that third person is not party to the deceit, and owes no legal duty or obligation to the party deceived, and does nothing hut pre;erve silence, however morally blameworthy . . he cannot be held liable ... at the instance of the party deceived," but where the party is not a mere " passive spectator," and " actively assists in the deceit," it is otherwise (I). 92. In their anxiety that the juridical ideal of veracity and honour should not lag behind the highest standards of ethical casuistry, the courts have from time to time committed themselves to more expansive propositions than legal principle and authority warrant. These proposi- tions, it cannot be too emphatically insisted, are, in so far as they exceed the limits above indicated, opposed to a long chain of decisions, and cannot ig) Phillips V. Homfray, No. 1 (1871), 6 Ch. App. 770, at pp. 778-780. (A) Ibid, at p. 777. (»■) Ibid, at p. 780. Cp. E. v. SoucJier (1842), 3 Q. B. 641, where a charter of incor- poration was obtained from the Cro^vn by a petition which referred, inter alia, to the " condition of the gaol," when in fact there was then no borough gaol in existence ; and the observations of Lord Halsbuby, L.C, at p. 283 of Aaron's Reefs, Ltd. v. Twiss, [1896] A. C. 273, H. L., as to a person negotiating \rith a bank for a loan on mortgage of his house, without disclosing that he was not the o-vvner of the house. {k) Per Walsh, M.R. (Ireland), at p. 113 of Thompson v. Lambert (1868), 17 W. R. 111. See, generally, on the distinction between "intrinsic" and "extrinsic" cir- cumstances, and the duty of disclosure of the former. Story's Ea Jurisor vol i §§ 204-212. J 'i ^ ; ■ , (I) Per RoMER, J., in Marnhim v. Weaver (1899), 80 L. T. 412. §§ 91, 92. 97 be accepted as law, or as more than the generous and high-minded aspira- tions of the judges who enunciated them. Thus the dictum of Bullbr, J., sittmg m Chancery, that " it is always considered a constructive fraud when the party knows the truth, and conceals it, and such constructive fraud always makes the party liable," is, without the necessary qualifications, grotesquely inaccurate. Indeed, it is the very opposite of the truth ; for it would be correct to say that, on the contrary, it is never " considered a constructive fi-aud, when the party knows the truth and conceals it," without more ; imless, that is, the term " conceal " was intended by Buller, J., to connote all those elements, already mentioned, which would make silence tantamount to a misrepresentation. But the decision which it is absolutely necessary to take notice of here, once for all, because for several generations it kept its place in the books, and was treated by the courts with a respect which it never deserved, is the decision of Lord Ellenborough, C.J., in the nisi prius case of Hill v. Gray (m). There the action was brought to recover £1000, the agreed price of a Claude. The defendant asked the plaintiff's agent whose property the picture was, and the agent point blank refused to answer. Thereupon the defendant chose to assume tliat the picture belonged to Sir Felix Agar. The plaintiff's agent did and said nothing to correct the mistake under which he loiew the defendant to be labouring. But it was not on this ground that the defendant refused to pay, nor did he suggest that he had been deceived in this respect. His case was that the picture was not a genuine Claude. Lord Ellen- borough, C.J., nevertheless, delivered himself of this amazing pronounce- ment : " I take it for granted you " (addressing the plaintiff's counsel) " will prove it is a genuine Claude, but the plaintiff ought not, by his agent, to have deceived the defendant by not removing his delusion," and he positively non-suited the plaintiff on this ground, and on this alone. A richer or more monumental collection of errors it is impossible to imagine. Apart from the fact that the defendant had never even alleged that he was induced to purchase by any implied misrepresentation as to the owner- ship of the picture, even if such ownership could have been material under the circumstances, or that there had been any misrepresentation at all, express or implied, on this point, — a clearer case of mere self-deception on the part of the defendant, and of the total absence of even moral obliquity on the part of the plaintiff, can hardly be conceived. The plain duty of the judge, so far from non-suiting the plaintiff, was to direct the jury to find for him, the defendant not having sustained any part of the burden even of allegation, much less of proof, which rests on one who sets up (though in fact he did not set it up) an affirmative plea that he was induced to enter into the contract sued upon by an implied misrepresentation of a material fact (w). This extraordinary case, the dateo' which is 1816, was assumed byVAUGHANand CoLTMAN, JJ., in 1838, to have been correctly decided, (o) but Jervis, C.J., (m) (1816), 1 Stark. 434; 18 R. R. 802. («) Vide Ch. XII. Sect. 2, post. (o) In PUmore v. Hood (1838), 5 Bing. N. 0. 97, per Vauo.han, .!., cat pp. 107, 108, B.M. H 98 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (3). in 1851 {p), and Lord Chelmsford, L.C, in 1873 (q), obviously disapproved of it, tliougli they did not formally overrule it. It should be noted here that even Shee, J., in his eloquent judgment in the Exchequer Chamber in Lee V. Jones (r), based his decision on grounds which (though not of course exhibiting the errors of Lord Ellenborough to their full extent) were rather more consistent with the ethico-legal doctrines of Cicero (whom he freely quotes) and of Paley, than with the carefully limited, considered, and settled propositions of the law of England (s). Sub-sect. (3). Where Several Statements, Effect of the Whole to he regarded. 93. Where it is a case of a number of statements forming one entire complex representation, the primary principle of construction is that all the statements or documents, if connected by express reference or identity of subject-matter, but not otherwise, must be considered in their inter- relation and bearing upon one another, in order to ascertain whether the conjoint effect of the whole is a true or a false transcript of the facts {t). This rule, which is Rule 3 of Article 12 in the Code, is applied both to a series of statements comprised in one document (m), or to a number of docu ments, such as the particulars and plan of a property to be sold («), or, in the case of companies, a prospectus accompanied by a covering letter {y), or followed by a telegram printed in the newspapers, alleged to have come from the scene of the company's operations (z), or in connection with other documents to which it refers {a). Such an examination may result either in rendering the entirety of the complex representation false, though the component statements taken by themselves may be true (&), and CoLTMAN, J., at p. 108. In § 212a of vol. i of the 9th edition of Story's Eq. Jurispr. the decision seems to have been approved by the editor who was respon- sible for that paragraph, though not by Dr. Story himself. (p) At p. COO of Keate-i v. Cadogan {Earl of), (1851), 10 C. B. 591. \q) At pp. 390, 391 of Peek v. Gurney (1873), L. R. 6 H. L. 377. (r) (1864), 17 C. B. (n. s.) 482, Exeh. Ch., at p. 498. (s) As to Cicero's views on the Uability attaching to silence, see App. C, Sect. 1, Sect. 2, Sub-s. (2), post. As to Paley and the moral view generally, see App. B, Sect. 2, post. (t) The same rule apphes to the construction of alleged defamatory matter. See the author's Code of the Law of Actionable Defamation, Article 18, Rules 1 and 2, and the cases cited in the notes thereto, particularly Chalmers v. Payne (1835), 2 C. M. cfc R. 156, per Lord AEmoEK, C.B., at p. 159 ('" the bane and the antidote must be taken together "). (u) Cargill v. Bower (1878), 10 C. D. 502, per Fky, J., at p. 516 ; Ee Metropolitan Coal Consumers Association, Wainwright's case (1890), 63 L. T. 429, C. A. ; Scott v. Snyder Dynamite Projectile Co. (1892), 67 L. T. 104, C. A., — see the passage cited in note ig) to § 82, ante ; Aaron's Reefs, Ltd v. Tioiss, [1896] 1 Q. B. 273, C. A., per Lord Halsbuby, L.C, at p. 281 ; and Component Tubes Co. v. Naylor, [1900] 2 Ir. R. 1, where amongst the questions held to have been properly left to the jury, was this : " was the prospectus as a whole misleading and calculated to deceive ? " The document containing the several statements was, in each of the above cases, "■ pros- pectus. (x) Denny v. Hancocle (1870), 6 Ch. App. 1 ; Re Arnold (1880), 14 C. D. 270, C. A. (y) Drincqbier v. Wood, [1899] 1 Ch. 393. (z) Andreios v. Mockford, [1896] 1 Q. B. 372, C. A. (a) Cargill v. Bower, ubi sup. (6) As in Re Metropolitan Coal Consumers Association, Waiiuvrir/ht's case, sup.. §§ 92-94. 99 or in rendering the entirety true, though some of the component statements, talven separately, may be false (c). Or the complex repre- sentation may be so homogeneous in its falsity, that, of necessity, the whole is as false as every constituent-part, and every part is as false as the whole (d). 94. The above general rule is, however, subject to this qualification, that if one out of the several statements or documents, not inseparably or necessarily inter-connected with the other statements or documents alleged to make up the compound representation, has a clear and definite meaning, and is clearly and definitely false, the representee is entitled to rely on this one statement by itself as a misrepresentation, and it is no answer to say that, if he had carefully examined the other statements or documents, he might have discovered something which would have led him to the truth (e) . Conversely, if the representor can point to some one statement which where two of the statements in the prospectus were (1) that a large part of the capital had been privately taken up, and (2) that 2000 noblemen had approved of the objects of the company, and a, large number of them had subscribed to the capital. Each of these, standing by itself, %\as literally true, but it was held that their conjoint effect was that the " noblemen " had " privately taken up " the capital, and had " subscribed to the capital " in that sense, and not in the ordinary sense of sendino- in apphcation forms for the shares. Cp. Scott v. Snyder Dynamite Projectile Co., uhi SMp.,and the passage from the judgment of Lindley, L.J.,at p. 106, which is cited in note (gr) to § 82, ante, and Drincqhier v. Wood, ubi sup., where the prospectus stated that a site had been acquired for the company's works at Edmonton, and the letter covering the prospectus spoke of "the assets of the company" as including its " freehold land," etc. Both these statements, taken separately, were true, but Bykne, J., held that they must be construed in the hght of one another, and that, when so interpreted, they amounted to a representation that the " site " was " free- hold land," which was false. (c) Bartlett v. Salmon (1855), 6 De G. M. & G. 33, per Lord Crakworth, L.C, at pp. 41, 42, where a statement as to ground rent, misleading in itself, was rendered innocuous by the actual figures set out in another part of the complex representation, and thus, in Lord Abinger's phrase — see note (t), sup. — the antidote followed the bane. Cp. Cargill v. Bower, ubi sup., per Fay, J., at p. 516. (d) Brandling v. Plummer (1854), 2 Dv. 427 ; 100 R. R. 209, where Kinderslbv, V.C, at pp. 430, 431, whilst recognizing that it was proper to read the whole of the particulars of sale together, came to the conclusion that the effect of the whole was as misleading as that of the statement (which was admittedly false) when read by itself ; Denny v. Harwoch (1870), 6 Ch. App. 1, where the plan of the property to be sold, and the particulars of the sale, so far from correcting each other's inaccuracies, Mere both regarded as instruments designed to co-operate in misleading the representee, per James, L.J., at pp. 11, 12, and Mellish, L. J., at pp. 13, 14, — see the passage from the latter's judgment which is cited in note (<) to § 85, ante ; and Andrews v. Mock- ford, [1896] 1 Q. B. 372, C. A., where it was held that »■ telegram pubKshed in the Financial News as to the supposed success of the company's mine was intended " to strengthen " the effect of the prospectus previously issued, and that both docu- ments were steps in one continuous fraud, per Lord Eshbr, M.R., at pp. 377, 378, A. L. Smith, L. J., at p. 382, and Rigby, L. J., at pp. 382, 383. (e) White v. Cuddon (1842), 8 01. & Fin. 766, where the conditions under which fines were payable by the custom of a manor were distinctly misrepresented, though the actual amount of income derived was not over-stated ; Re Arnold (1880), 14 C. D. 270, C. A., per Bagoerlay, L.J., at p. 282, and Beamwell, L.J., at p. 284, where, the plan being false, it was in vain that the vendor urged that if the purchaser had looked at the particulars in conjunction with the plan, he must have discovered that there was a blunder somewhere ; and Redgrave v. Hurd (1881), 20 C. D. 1, C. A., per Jessbl, M.R., at p. 14. See Ch. X, Sect. 2, Sub-s. (1), post, and some of the cases cited thereunder, where it was held that references in a prospectus to other documents which, on examination, might enable the applicant for shares to discover the falsity 100 COMMENTARY, CH. IV, SECT. 4, SUB-SECT. (4). presents the material facts truthfully and candidly, the representee cannot rely on the necessary imperfection and incompleteness of some other statement which does not purport to do more than refer him to the first statement, such as a marginal note, or index (/). Sub-sect. (4). Questions of Law and Fact as to the Meaning of Representa- tions with a view to determining their Falsity or Truth. 95. Where the representation is contained in a document, or its terms (if orally made) are admitted, and where it is self-contained and self- luminous (as it were), that is to say, where there are no surrounding cir- cumstances, or res gestw, of such a nature as to suggest an artificial or special meaning, or the possibility of several meanings, the question of the sense to be assigned to the representation is one of law to this extent, that the court is entitled, and bound, to pronounce whether it is capable of the meanino- alleged, or of any other meaning than that alleged, or of any meaning in which it would be false, or true, as the case may be (17). Subject to the of some plain misrepresentation in the prospectus itself, are of no avail to prove the affirmative plea of knowledge, if the representor did not in fact choose to make the examination. (/) This -was what happened in Moore v. Explosives Co. (1887), 56 L. J. (cj. b.), 235, C. A., where in the body of a prospectus it was stated that " the completion of the works will enable the company to increase their present capacity for manufacture from 400 to 1000 tons of explosives per annum" and to this paragraph there was affixed a marginal note in red ink — " Increase of present manufacture." The para- graph stated the absolute truth, but the plaintiff claimed to read it, in conjunction ■\nth the marginal note, as meaning that the company's actual present manufacture was 400 tons per annum, which would have been untrue. It was held, however, that the marginal note, the office of which was merely that of an index finger or clue-word to the paragraph, could not possibly have the effect of adding to, or detracting from, its meaning (per Lord Esher, M.R., and Fry, L.J.). Quaere, however, as to the soundness of this decision, having regard to the undoubted rule of construction in analogous cases of defamation, where the jury is at liberty to consider whether a heading, or marginal note, or an index-entry, does not contain defamatory matters in itself, apart from the body of the book, chapter, paragraph, or contents to which it relates. See Buckingham v. Mutray, [1825] 2 C. & P. 46. (g) Bcllairs v. Tucker (1884), 13 Q. B. D. 562, Div. Ct., per Denman, J., at p. 575, disagreeing mth the view taken by Lopes, J., at the trial : " I think it was for the judge and not for the jury to say whether, Avith reference to the surrounding circum- stances, the statements in question were expressions of hope and belief only, or statements of existing facts." But qucere, whether, having regard to the recognition by Denman, J., himself of " surrounding circumstances," it was not for the jury to determine what sense, in the light of those circumstances, was to be attributed to the statements in the prospectus. Having regard to subsequent decisions of the C. A. and the H. L., see cases cited in note (I), inf., it seems clear that Lopes, J., took the only proper and safe course, and that Denman, J's, opinion was \VTong, though, but for the existence of the surrounding circumstances, it may have been right. It is curious to find that, three years later, Denman, J., even in the absence of any surrounding circumstances, took the same course, in another prospectus case, as he had criticized Lopes, J., for taking, when there did exist such circumstances, but the C. A. (Lord ESHEE, M.R., and Fry, L.J.) disagreed mth him on this point, holding that the paragraph there in question was capable of only one meaning, and that he ought not to have left it to the jury to say what that meaning was, or whether a marginal note affixed to the paragraph had any and what effect in altering it : Moore v. Ex- 2ilosives Co. (1887), 56 L. J. (q. b.) 235. So also, in Bentley and Co., Ltd. v. Blaci §§ 94, 95. above, ever)- question as to the meaning in fact conveyed to tlie muid of the representee is an issue of fact ; and, in the case of a suggested special or secondary sense, evidence may be admissible, or even necessary. Thus it is a question of fact what " sound timber " means in a representation describing certain timber as such, and evidence is receivable on the point (h); where particulars are given to a life insurance company of the health and physical history of a " life," to which is appended a reference to papers containing similar particulars on a previous application to another society, it is a question for the jury whether, by this reference, the representation was intended to convey that the health of the assured was the same as it had been at the previous date, in which case it would have been false, or merely that his health at the earlier date was as it was then described to be, in which construction it would have been true (i), and to this issue evidence of surrounding facts (conversations and oral statements, etc.) may be relevant (k) ; and, where prospectuses of companies are concerned, the exact meaning of paragraphs, clauses, and expressions therein, upon the ascertainment of which the whole question of falsity or truth may depend, has, in every case of reasonable doubt, always been considered a matter for the jury to determine (l). Similarly, the question whether the mere use of the words " Trade Mark " in advertisements of an article constituted an implied representation to the public that such a mark had been registered, was treated as one of fact, to be established (if at all) by evidence of mercantile witnesses as to the meaning which the words in question would have conveyed to their minds (m). (1893), 9 T. L. R. 580, C. A., Lord Eshbb, M.R., said that there the proper construc- tion to be put upon the words of the prospectus " was for the Court." (h) Woodhouse v. Swift (1836), 7 C. & P. 310. (j) Foster v. Mentor Life Assurance Co. (1854), 3 E. cfe B. 48, per C'olekidqe, J., at pp. 71-74, and Lord Campbell, C.J., at pp. 77-81. (k) Ibid., per Lord Campbell, C. J., at pp. 78, 79. (l) Clarice v. Dickson, No. 2 (1859), 6 C. B. (n. s.) 473, where the falsity or truth of a statement in the prospectus depended on the question to whom the expression " the proprietors " was intended to apply, and Cockburn, C. J., at pp. 469-471, said that this question had been rightly left to the jury ; Charlton v. Hay, No. 2 (1875), 32 L. T. 96, where the prospectus stated that the produce of the company's mills was 800 barrels a day, and the profits £100,000 a year, and referred to certain vouchers and documents from which those figures were taken, and Cockbubn, C.J. (some- what charitably to the defendants), left it to the jury to say whether this meant merely that the directors had these documents in their possession, showing the above figures, and that they had no reason to doubt their genuineness — on which construction the representation was true, — or that the produce and profits in fact were as stated, — in which case it was false; and Smith v. Chadivick (1884), 9 App. Cas. 187, H. L., per Lord Blackburn, at p. 195. (m) Sen Sen Co. v. Britten, [1899] 1 Ch. 692, per Shirley, J., at p. 69() : " I have no evidence before me as to the effect which the representation has had upon anybody. I have nothing before me but the bare fact that these words appear upon the pacliages." See also the cases cited in the notes to Ch. XIV, Sect. 1, Sub-s. (5), post. The canons of construction stated in this section are precisely the same as those applied to the determination of the meaning of alleged defamatory matter : see Article 16, (5), (0), and (7), of the author's Code of the Law of Actionable Defamation, and the cases cited in the notes thereto, particularly Capital and Counties Bank V. Henty (1882), 7 App. Cas. 741, H. L., per Lord Blackburn, at pp. 769-778. 102 COMMENTARY, CH. V, SECT. 1, SUB-SECT. (1). CHAPTEE V. WHAT CONSTITUTES FRAUDULENT, AND INNOCENT, MIS- REPRESENTATION RESPECTIVELY. 96. Having considered what a representation is in relation to the facts which it purports to represent, it remains to investigate representations, first from tlie point of view of the belief and mental attitude of the repre- sentor, and, next, in their effect upon the mind and material interests of the representee. This Chapter is concerned with the former, and the next two Chapters with the latter, of these questions. The former, it is true, only becomes material m certain, of the various possible proceedings for misrepresentations, and is wholly irrelevant to the others, as wiU be seen hereafter (a), whereas the topics next to be discussed, such as inducement and materiality, like all those which have preceded, are vital to every form of action or defence which is based upon misrepresentation. But, in tracing the progress of falsehood from its source to its destination, with a view of establishing how and when it becomes actionable, it seems desirable to observe the order of time, which in this case is also the logical and psycho- logical order ; and, if so, the next stage in the progress is obviously the mind of the representor. Sect. 1. Fraudulent Misrepresentations. 97. In certain cases (&), the party complaining of haviag been misled by a representation to his injury, has no remedy unless the represen- tation was not only false, but fraudulent. Fraud, no less than falsity, is a question of fact (c), and the burden of establishing this fact, in every such case, is on the representee {d). The question, however, of what are the constituent elements of fraud, as applied to a representation, is a question of law, in the sense that it has been settled by judicial authority, which it is now proposed to examine. (o) See Ch. IX, post. (6) See Ch. X, Sect. 1, post. (c) See generally the cases cited in the notes to this Section, and also to Ch. X, post. {d) See Ch. X, Sect. 1, post. §§ 96-98. 103 Sub-sat. (1). Fraud as distiiyuished from Dwrc Fahilij. 98. It is now well ostablislied that fraud in law, and fi'aud in equity, are one aud tlie same (c). It lias also been laid down that juridical fraud is conterminous and co-extensive with moral fraud. Whether this be a strictly correct form of expression or not (/), one thing is clear, that the law has determined what fi-aud is, in its application to representations, and that / there is no such thing as " imputed," " constructive," " technical," | " artificial," or " legal fraud," if these terms are used for the purpose of { suggesting that any court will impute fraudulent misrepresentation to a man who has not been guilty of actual fraud. If, and in so far, only as these phrases serve to indicate that the ingredients in actual fraud have been defined by the law, they are correctly employed ; but, by their constant use in other and less legitimate senses, they have wrought havoc in the domain of scientific terminology, and have been the occasion of all the many heresies which flourished until finally dispelled by Lord Herschbll's acute and exhaustive analysis (g). From early times (A), it has been re cognized that " every deceit comprehends a lie, but a deceit is more than a lie " {i). It connotes more and denotes less. There cannot be a fraudu- lent representation which is not false, but there can be a misrepresentation which is not fraudulent. Except in those cases where the very fact ex- pressly or impliedly represented is the knowledge or belief or other state of mind of the representor, and where, therefore, it so happens that falsity is conterminous with fraud, and truth with innocence {k), untruth does not of itself import a dishonest mind any more than, conversely, an intention to deceive necessarily involves that the statement made was untrue in fact [l). " In an action of deceit " (said Lord Hersohell in the latest of the leading cases on fraudulent misrepresentation, as (c) L& Lidvre v. Gould, [1893] 1 Q. B. 491, C.A., per Lord Esheb, M.R., at p. 498 ; cp. Derry v. Peeh (1889), 14 App. Cas. 337, H. L. (/) Reasons are given in App. A, Sect. 4 and Sect. 5, Sub-s. (1), yosi, for think- ing the expression incorrect, and also for questioning whether the use of the term " fraud " at all has not been unnecessary, and even mischievous. (g) In Derry v. Peeh, sup. at pp. 359-380. (h) Though no very clear distinction was drawn between mere falsity and fraud in the very early stages of our jurisprudence, as may be seen from the references given in App. A, Sect. 1, Sub-s. (2), post, to the views of judges and practices of pleaders of those days. {»■) BuLLER, J., at p. 56 of Pasley v. Freeman (1789), 3 Term. Rep. 51. (k) It has been seen — see §§ 16, 33, 38, ante — ^that expressions of intention, beUef, opinion, etc., constitute an implied statement of the fact that the representor has the intention, beUef, or opinion which he professes to have. If, therefore, such imphed statement is false, it must necessarily be fraudulent also. So also, where the representor expressly adds such quaUfications as " so far as 1 know," " to the best of my behef," etc. : see Milne v. Marwood (1855), 15 0. B. 500. Illustrations of innocence, in this class of case, being exactly equivalent to truth, are : Horsjall v. Thomas (1862), 1 H. & C. 90, per Bbamwell, JB., at pp. 100, 101 ; Bodger v. Nicholls (1873), 28 L. T. 441, per Blackbukn, J., at p. 445 ; and Melbourne Banking Corporation V. Brougham (1882), 7 App. Cas. 307, at pp. 319, 320, with which compare, as apphed to marine insurance, the rule stated in the Marine Insurance Act, 1906 (6 Edw. 7, c. 41), s. 20 (5) : " a representation as to matter of . . . behef is true if it be made in good faith." See also § 72, ante. {I) See § 68, ante. 104 COMMENTARY, CH. V, SECT. 1, SUB-SECT. (2). BuLLER, J., had laid down, in the passage above cited from the earliest of them) " it is not enough to establish misrepresentation alone ; it is conceded on all hands that something more must be proved . . . though it has been matter of controversy what additional elements are requisite " (m). Sub-sect. (2). Non-belief in Truth renders Misrepresentation Fraudulent. 99. What then are the " requisite additional elements " referred to by Lord Heeschell ? It is submitted that there is only one, viz. absence of honest belief by the representor, at the material date, that the statement made by him was true (n). This is the genus : all the conditions of the representor's mind which are usually enumerated as distinct genera are merely so many species of this main class, or instances, with more or less aggravating circumstances, of this single proposition. The non-belief referred to covers everything. It is, so to speak, the least common multiple, from one point of view, or the greatest common measure, from another. It is usually stated that a misrepresentation is fraudulent when the repre- sentor (1) knew it to be false, or (2) believed it to be false, or (3) did not know or believe it to be true, or (4) made it in reckless indifference as to its truth or falsity. This is as unscientific a classification as a division of the animal creation into horses, vertebrates, and animals, would be. It is obvious, as Lord Herschell points out in his famous judgment (o), that (4) is the same thing as (3), with a needlessly added term of opprobrium (p) ; ' and equally obvious that (2) is an a fortiori case of (3), and (1) of (2), ' and that all four cases are comprehended ia the formula that " a fraudulent ! misrepresentation is a misrepresentation which, when made, or (in the case of a continuing representation) when acted upon, the representor did not in (m) Per Lord Heksohell at p. 359 of Derry v. Peek (1889), 14 App. Cas. 337, H. L. (n) See App. A, Sects. 1, 2, and 3, as to the successive stages in the histor_v of the doctrine, culminating in the present possibility of expressing it in the siinple and comprehensive formula of the text. As to the " material date," vide post, Sub-s. (4). (o) At p. 374 of Derry v. Peek (1889), 14 App. Cas. 337, H. L. (p) In many of the cases cited under § 100, it ^\'ill be noticed how frequently judges have thought it necessary to characterize the putting forth of a statement mtSout behcf in its truth as a thing done "recklessly," or with culpable "indiffer- ence" as to its truth or falsity, or "in a gambling spirit." All these purpurei panni, and rhetorical supplements, are entirely unnecessary, and (what is worse) they tend to mislead, as will be seen in Sect. 2, post, where it is shown that the heresy of assimilating negligence in beUef to absence of behef is the outcome of the contusion in thought between want of care in arriving at the belifef, and the making of a representation without behef, and A\ithout caring whether ■ it is true or not, — a confusion which could never have arisen if the expressions in question had not been tacked on to the phrase " absence of behef." If in fact the representor does not honestly beheve his representation to be true, it is utterly im- material in what spirit — speculative, reckless, or deliberate — he propounds it. The mere propounding it is the fraud. But the terms in question would lead the unwary to suppose that, if the absence of belief is not characterized by the gambler's spirit, it does not indicate fraud. This delusion is encouraged by the inveterate practice of pleaders, whose tendency it is never to desert a phrase, however unnecessary or erroneous, of which they have once become enamoured. §§ 98-100. 105 fact honestly believe to be true '' (q). And, though he had previously, in deference to current modes of expression, mentioned (1), (3), and (4) as so-called classes of fraudulent representation, this was the opinion finally expressed by Lord Herbchell : " 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 "(/). In other words, it " covers the whole ground " to say that, where this " honest belief in its truth " is not to be found, the misrepresentation is fraudulent ; where it is, it is innocent. The expression " honest belief " imports that there may be an actual and real belief which yet will not save the misrepresentation from being fraudulent. This happens when the beUef itself is generated by a resolution to avoid all sources and means of information which would lead to suspicion, — by a wilful an^ sedulous abstention from, or curtailment of, investigation for the express purpose of putting the representor in a position to say that he in fact believes what he professes to believe,— by that " diligence in ignorance " (to use the felicitous expression of Knight- Bruce, V.-C), in order not to ascertain the truth, or have any doubt thrown on what he desires, and is determiaed, to believe, which plays so important a part in. the doctriue of constructive or imputed notice. A belief so engendered may be as much a badge of fraud as the absence of any belief at all. The qualification of " honesty " is mentioned in several of the authorities, but without any apparent meaning being attached to the term " honest," other than " actual " or " real " (s) ; but Lord Herschell ex- presses his view that it has a precise and important signification, which he describes thus : " if I thought that a person making a false statement had shut his eyes to the facts, or purposely abstained from inquiring into them, I should hold that honest belief was absent, and that he was just as fraudu- lent as if he had knowingly stated that which was false " (t). A precisely similar doctrine is apphed, in the analogous province of defamation, to the question of actual malice, which may be shown as much by that sort of belief in the truth of the defamatory matter which has been itself en- gendered by malice, as by the absence of any belief (m). 100. No authority need be cited, for the obvious proposition that Icaowledge or belief of falsity is fraud. This has never been doubted in modern times, and, even in the early history of our jurisprudence, such positive knowledge or belief was always regarded as at least an element in fraud, though it was then erroneously considered that other (?) This is Article 13 of the Code. (r) Derry v. Peek, vhi sup., at p. 374. (s) See, for instance, Shrewsbury v. Blmmt (1841), 2 M. & G. 475. per Ekskine, J., who, at p. 507, uses the expressions " really believed in their truth," and " honestly believed the representations to be true," as if they were convertible. (t) Derry v. Peek, sup., at p. 376. (u) See the observations of Tindal, C.J., at p. 382 of Smith v. Thomas (1835), 2 Bing. N. G. 372 (direct malice against the plaintiff may have gone far in producing the defendant's belief "), and those of Brett, L. J., at p. 248 of Clark v. Molyneux (1877), 3 Q. B. D. 237, G. A., where he speaks of a state of mind created by " wilful blindness and obstinate adherence to a;n opinion," as a possible indication of malice. 106 COMMENTARY, CH. V, SECT. 1, SUB-SECTS. (2), (3). elements, sucli as intention and motive (x), were necessary to establish action- able deceit. But, as to absence of belief in the truth of the misrepresen- tation, the principle enunciated by Lord Herschell, as above stated {y) , was not by any means accepted to its full extent all at once. Beginning with the year 1778, indeed, it was held by Lord Mansfield, C.J., Lord Kenyon, C.J., and Sir James Mansfield, C.J., in succession, that to undertake to state as a fact that which the representor does not Icnotv to be true, or as to which he is ignorant (that is, does not Jcnow) whether it is true or not, is fraudulent (2) ; but it was not until 1843 that mere non-helief in the truth was definitely pronounced sufficient to make a false representation fraudulent also (a). From that date down to the present time this last proposition has been reasserted in different language, and applied to various representations and circumstances (6), though in many of the {x) See Sub-s. (3), inf. {y) Derry v. Peek, sup., at p. 374. (s) Pawson v. Watson (1778), Covrp. 785, per Lord Mansfield, C.J., at p. 788 (" it is equally false " — by which, as is clear from the context, he meant " fraudulent " — " to undertake to say that which he knows nothing at all of, as to say that is true which he knows is not true ") ; Haycraft v. Creasy (1801), 2 East, 92, per Lord Kenyom", C.J., at p. 103 (" it was enough . . . that the defendant aiBrmed that to be true within his o^vn knowledge which he did not know to be true ") ; and Schneider v. Heath (1813), 3 Campb. 506 (per Sir James Mansfield, C.J., where a false commen- dation of the condition and quahties of a vessel by one who had never examined her was deemed fraudulent). (a) Taylor v. Ashton (1843), 11 M. & W. 401, where Pakke, B., dehvering the judg- ment of the court, laid do^^Ti in clear and precise terms, at p. 415, the proposition that "it is not necessary to show that the defendants knew the fact to be xmtrue ; if they stated a fact which was untrue " (the report has "true "■ — an obvious clerical error), " for a fraudulent purpose, they at the same time not believing that fact to be true, in that case it would be both a legal and moral fraud." (6) Evans v. Edmonds (1853), 13 C. B. 777 (per Maitle, J., at p. 786 : " I conceive that if a man, having no knowledge whatever on the subject, takes upon himself to represent a certain state of facts to exist, he does so at his peril, and if it be done with a view to secure some benefit to himself or to deceive a third person, he is in laAv guilty of a fraud, for he takes upon himself to warrant his ovm belief of the truth which he asserts ") ; Higgins v. Samels (1862), 2 J. & H. 460 (per Page-Wood, V.C, at p. 468) ; Behn v. Burness (1863), 3 B. & S. 751, Exch. Ch. (per Cur. at p. 753, where the phrase " reckless ignorance whether it may be true or untrue " is for the first time introduced) ; JReese River Silver Mining Co. v. Smith (1869), L. R. 4 H. L. 64 (per Lord Caikns at pp. 79, 80 : "if persons take upon themselves to make asser- tions as to which they are ignorant whether they are true or untrue " — explained by Lord Herschbli in Derry v. Peek, sup., at pp. 370, 371, to mean " conscious of their ignorance, or having no belief, as to whether they are true or untrue " — " they must in a civil point of view, be held as responsible as if they had asserted that which they knew to be untrue ") ; Arktvright v. Newhold (1881), 17 C. D. 301, C. A. (per Cotton, L.J., see p. 320 : "reckless disregard," etc.) ; Leddell v. McDougal (1881), 29 W. B. 403, C. A. (per Jessel, M.R., at pp. 404, 405, James, L.J., at p. 405, and Lush, L.J., at p. 405) ; Edgington v. Fitzmaurice (1885), 29 C. D. 459, C. A. (per Denman, J., at pp. 465, 466, who, sitting in Chancery in the court below, had said that a state- ment made " in a gambling spirit, without properly inquiring into the truth or falsity of the thing, mthout caring sufficiently whether it is true or false, and wUl, or will not, mislead people ... is, in the eye of a law, a fraudulent statement as much as if the persons making it had kno^^'n it to be false " ; op. also pp. 472, 473 : this view was approved in the C. A. by Cotton, L.J., at p. 480, and Bowen, L.J., at pp. 481, 482) ; Cann v. Wilson (1888)", 39 C. D. 39 (per Chitty, J., at pp. 43, 44, as to " reckless " statements : his views on this point not being dissented from by the C. A. in the case which overruled the decision itself on the question of privity) ; Angus v. Clifford, [1891] 2 Ch. 449, C. A. (per Bowen, L.J., who, at p. 471, describes the " indifference " in question as " the moral obUquity which consists in the wilful §§ 100, 101. 107 authorities the element of "recklessness," "indifference," etc., above referred to, has been needlessly imported, with the object, appareutl)-, of reconciling the jiu-idical, with the popular, conception of dishonesty (c) . Further than as already stated, the law has steadily refused to define a fraudulent misrepresentation. The man of guUe would welcome precision and specification in any sucli definition ; for he would assuredly at once invent some form of lie which would fall just outside the limits of any particular species or prohibited area. The courts must be as subtle in dolus bonus when hunting him, as he is in dolus malus when trying to escape from them. If the dolosus versatur in generalilus, so must the law. The Eoman jurists, with the same wise motive, described their dolus in similarly wide and unrestricted terms (d). Sub-sect. (3). ilotive and Intention of Representor Immaterial. 101. It has resulted from the policy of the law to set no unnecessary limits to the connotation of the term " fraudulent," which should, above all others, be a nomen generalissimum, that, as is now at least well settled, " for the above purpose, it is immaterial whether the representor, in making the misrepresentation, had or had not any intention to deceive, defraud, or injure, the representee, or any other person, or to benefit himself or any other person, or what, if any, was his motive for making the same " (e). This rule has only been evolved by slow degrees. Having (quite unnecessarily) introduced the term " fraud " in connection with the doctrine of civil liability for mis- representation, and having invested this futile phantom with the attributes and apparel of sacro-sanctitude, instead of simply declaring that a mis- representation made without behef in its truth to a person acting thereon, and damnified thereby, is the subject of an action for damages at the suit of the latter, the courts found themselves, like Frankenstein, embarrassed by the necessity of explaining, and playing up to, the monster which they were powerless to extinguish (/). Consequently, as fraud involves a wicked mind, and, further, a person defrauding on the one side and a person disregard of the importance of truth ") ; Pritty v. Child (1902), 71 L. J. (k. e.) 512, Div. Ct. (per Chanttell, J., who, see p. 514, was evidently of opinion that the water- finder's reckless statement was, and might very well have, though in fact it had not, been found fraudulent by the Coumty Court Judge) ; and J. E. Coats, Ltd. v. Crossland (1904), 20 T. L. R. 800 (per Swinfbn-Eady, J., at pp. 803-806, who found "reckless " non-behef in the case of one of the directors issuing the prospectus). (c) See the passages cited or referred to in the foregoing note from the several judgments in Behn v. Burness, Arhioright v. Nevibold, Edgington v. Fitzmaurice, Cann V. Willsan, and Angus v. Clifford, sup. As to the ethical views entertained on this question by popular, and by theological, casuistry, see App. B., Sects. 1 and 2, respec- tively, post. There is the same insistence on the element of "recklessness" and " indifference " in non-belief, as an ingredient in that actual malice which is required to defeat a plea of immunity in cases of defamation : but here, perhaps, with some reason ; see the author's Code of the Law of Actionable Defamation, Article 38 (iv), and notes (e) and ( / ) thereto, and Article 38 (v) and note (j) thereto. (d) Vide post, App. C, Sect. 1. (e) This is Article 14 of the Code. (/) See App. A, Sect. 5, Sub-s. (2), post. 108 COMMENTARY, CH. V, SECT. 1, SUB-SECT. (3). defrauded on the other, it was thought necessary in early times to impute or invent an intention or motive on the part of the representor to do two things, viz. both injure the representee, and benefit liimself — in other words, take money or money's worth out of the pocliet of the repre- sentee, and put it into liis own. The law has at last, but only by very gradual and hesitating efforts, emancipated itself from this self-created entanglement {g). 102. The first advance towards the sound principle which now prevails was made when the law began to recognize that an intention either to injure the representee, or to benefit the representor, was enough, and that it was not necessary to establish both intentions {h) ; the next step was taken when it was held that it was immaterial that the representor did not mean to cheat the representee (i) ; the next, when it was recognized that it is equally irrelevant that he intended to benefit, not himself, but a third person, as in the " representation of credit " cases (k) ; the next, when it ig) See App. A, Sect. 2, post. (h) Evan9 v. Edmonds (1853), 13 C. B. 777, per Maitle, J., at p. 786. {«■) Foster v. Charles, No. 2 (1830), 7 Bing. 105, where the jury's frnding was — " we consider that there was no actual fraud on the part of the defendant and that he had no fraudulent intention, although what he has done constituted a fraud in the legal acceptation of the word " ; and the Court of Common Pleas, perTiNBAL, C.J., at p. 107, held that the absence of this fraudulent intention was immaterial, the only meaning of the jury's verdict being that they exculpated the defendant from the charge of the more "gross," "base," or "sordid" species of fraud, — an exculpation which was of no legal significance or effect, — and that the verdict had rightly been entered for the plaintifi ; Milne v. Harwood (1855), 15 C. B. 778, where again the jury, in their natural repugnance to brand with the stigma of fraud a misrepresenta- tion %\'hich was not fraudulent in the popular, though it was in the legal, sense, appended to their finding for the plaintiff this rider — " but we acquit the defendant of any fraudu- lent intention "; and again the Court of Common Pleas held, as in the last case, that the rider had no effect in law, and that the jurors had merely " thought fit to add something to make it go do-rni more easil3' \vith the defendants," per Maui-e, J., at p. 783 ; Peek v. Gurney (1873), L. R. 6 H. L. 377, per Lord Caiens, at pp. 409, 410 : " they " (the directors) " may be absolved from any charge of a wilful design or motive to mislead or defraud the public," after which he goes on to say that this is whollj' immaterial, the only question being, " was there, or was there not, a misrepresenta- tion in fact ? " by which, judging from the context, he clearly meant, " was there a fraudulent misrepresentation in fact ? " — that is, by virtue of the mere fact of making it without behef in its truth — as explained by Lord Hbbschbll at p. 371 of Derry v. Peek (1889), 14 App. Cas. 337, H. L. ; and Arnison v. Smith (1888), 41 C. D. 348, C. A., per Lord Haisbuby, L.C, at p. 368 (" if men tell for business purposes what in plain English is called a he, they are guilty of fraud, and to talk about their having had no intention to deceive is no more a defence than it would be a defence to a prosecution for forgicg a bill of exchange to say that the forger meant to pay it when it became due "), and Lindley, L.J., at pp. 372, 373. (k) Pasley v. Freeman (1789), 3 Term. Rep. 51, per Btjllbk, J., at p. 58: "if A. by fraud and deceit cheat B. out of £1000, it makes no difference to B. whether A. or any other person pockets that £1000 " ; Foster v. Charles, No. 2 (1830), 7 Bing. 105, per TiNDAL, C.J., at pp. 106, 107 ; and Leddell v. McDougal (1881), 29 W. R. 403, C. A. Similarly, it is conceived, if the misrepresentation, being other\\ise fraudulent, was made i\ith the object of injuring a person other than the repre.senlcc, who was to be only the channel through which that person was to be cheated, it can make no difference to the result, whether the representee -Has in fact misled and injured, or not. There is no authority dii-ectly in point, but, in dealing with the analogous case of intention in publishing defamatorj' matter. Lord Blackbukn, at p. 772 of Capital and Counties Bank v. Henty (1882), 7 App. Cas. 741, H. L., after showing that "the question is not whether the defendant intended to convey the imputation," uses the very case as an illustration, when he says that, if the tendency of the matter published §§ 101, 102. 109 was determined that it does not matter even if the representor intended neither to injure the representee, nor to benefit himself, but to do right, or positively to benefit the representee {I) ; and the last, when it was decided that a representation made without belief in its truth, is, though made without any assignable motive or intention whatsoever, as fraudulent in contemplation of law as any lie told with the grossest and most personal obliquity of purpose imaginable ; so that, for instance, an advertisement of a farm to let by a representor who had, and knew he had, no farm to let, whereby another person was induced on the faith thereof to incur expense, has been deemed a fraudulent misrepresentation, though no motive for this apparently idiotic lie was proved or even alleged (m), and a false statement made by way of a " practical joke " to a woman that her hus- band had been injured in an accident has been held equally actionable (n). was defamatory, the defamer " must (at least civilly) be responsible, though his object may have been to injure another •person than the plaintiff." {I) Foster v. Charles, No. 2 (1830), 7 Bing. 105 (per Tiudal, C.J., at p. 107 : " it is fraud in law if a party makes representations wbich he knows to be false, and injury ensues, although the motive from which the representations proceeded may not ha\ o been bad ") ; Polhill v. Walter (1832), 3 B. & Ad. 114 (per Lord Tenterden, C.J., at pp. 123-125, who there approves the contention for the plaintiff that it is "not necessary to prove that the false representation was made from a corrupt motive of gain to the defendant, or a wicked motive of injury to the plaintiff ") ; Leddell v. McDougall (1881), 29 W. R. 403, C. A. (per James, L. J., and Lush, L.J., at p. 405, who, recognizing that the misrepresentation in that case may have proceeded from mere kindness to the person whose credit was commended, considered this circumstance absolutely immaterial, in accordance with the well-settled principle, that it is needless to prove that the representor intended either to deceive or injure the repre- sentee, or to benefit himself) ; Smith v. Chadwick (18S4), 9 App. Cas. 187, H. L. (per Lord Blackbtjkn at p. 201 : " the defendants might honestly beheve that the shares were a capital investment, and that they were doing the plaintiff a kindness by tricking him into bu5ring them. I do not say that is proved : but if it were, they are civiUy responsible as for a deceit "), wdth which compare what Jessel, M.R., had said, when this case was before the C. A. (20 C. D. 27, at p. 44), " he cannot be allowed to escape merely because he had good intentions " ; Be McCallum, McCallum v. McCallum (1901), 83 L. T. 717, C. A. (per Kekewich, J., at p. 718: "fraud in the legal sense is quite consistent with every wish and intention to do that which is right," and ^pcr.WiliiAMS, L. J., in the C. A., at p. 725). Cp. Denton v. Oreat Northern Railway Co. (1856), 5 E. & B. 860, where it is obvious that the inaccurate statement in the company's time-table could not have been intended either to injure the plaintiff or to benefit themselves, and yet, as the company had no belief in its truth, but, on the contrary, knew its falsity, it was treated as fraudulent. Similarly, it is of no avail to plead that the object of deceiving the individual is the pubhc good, which was the excuse Pamell put forward for having avowedly misled the House of Commons, or the ultimate spiritual welfare of the individual himself : " the honourable men, whose daggers have stabbed Caesar," could not cancel their responsibility by reference to their patriotic motives : still less could they have done so, if they had betrayed him. " Pious frauds," are not exempt from the rule of law, or, where they are, this is not because of the piety of the frauds, but because in fact they have not resulted in damage . (m) Richardson v. Sylvester (1873), L. R. 9 Q. B. 34, per Blackbtjen, J., at p. 30. (n) Wilkinson v. Dovmton, [1897] 2 Q. B. 57, per Wbight, J., at p. 58. " They do but jest, — poison in jest : no offence i' the world," is a plea that cannot be made for these acts of misrepresentation, any more than it can for similar acts of defamation. " As a madman who casteth firebrands, arrows, and death. So is the man that de- ceiveth his neighbour, and saith, Am not I in sport ? " (Prov. xxvi. 18, 19). The " jest " and " sport " do not make the deceit less a deceit. The motive may be mere caprice, devihy, or the mischievous " love of roguery " on the part of " an entire stranger," which is referred to by Bbamwell, L.J., at p. 243 of Weir v. Bell (1878), 3 Ex. D. 238, C. A. Or it may be some unintelligible mahgnity of the kind which so perplexed " him that was Othello," and moved his piteous request to those who 110 COMMENTARY, CH. V, SECT. 1, SUB-SECTS. (3), (4). The net result is the absolute rule that, as Lord Heeschell expresses it, " if fraud be proved, the motive of the person guilty of it is immaterial " (o). The same proposition is expressed in a more cumbrous and circuitous form when it is said that, though it is necessary to prove an intention, such intention is at once and peremptorily presumed, as a conclusion of law, from the mere act of making a misrepresentation (p), just as, in actions of defamation, the unnecessary practice of pleading that malice in law actuated the publication of the defamatory matter is defended on the similar theory that malice must be shown, but is instantly presumed in law from the fact of publication per se (q). Sub-sect. (4). When the N on-helief must he shoion to have existed. 103. In ordinary cases — that is, when there is either no appreciable interval of time between the making of the misrepresentation and the representee's alteration of position on the faith of it, or where no change in the situation takes place during such interval — it may be said that to establish fraud it is necessary and sufficient to prove that the representor, stood around : " Will you, I pray, demand that demi-devil Why he hath thus ensnared my soul and body ? " The absence of any human purpose or motive, except the indiscriminate spite of one who felt himself a, misfit Avith the universe (" Demand me nothing," says lago himself, " what you know, you know : From this time forth I never ■\vill speak word ") would be as ineffectual to deprive the " demi-devil's " falsehoods to Othello of their fraudulent character, as they would be to render them non-defamatory of Desdemona and Cassio. The " jest " class of case in defamation, and generally the rule as to the irrelevancy of the representor's intention, or absence of intention, are fully discussed in note (e) to Article 17 (4) of the 'svriter's Code of the Law of Actionable Defamation. (o) Derry v. Peeh (1889), 14 App. Cas. 337, H. L., at p. 374. Cp. Stone v. Campion (1838), 5 Bing. (N. C.) 142. at pp. 155, 156 ; Crawshay v. Thompson (1842), 4 M. & G. 357, per Maulb, J., at p. 382 ; and Hendriks v. Montague (1881), 50 L. J. (CH.) 456, C. A., per Brett, L.J., at pp. 458, 459. (p) Foster v. Charles, No. 1 (1830), Bing. 396, per TiNDAL, C.J., at p. 403 (not " material what the motive was." The law mill infer an improper motive, if what the defendant says is false with his own knowledge, and is the occasion of damage to the plaintiff) ; Corhett v. Brown (1831), 8 Bing. 33, per Alderson, J., at p. 37 ("the quoKtion is whether, from the statements being false mthin the defendant's knowledge, the court must not infer fraud ") ; Crawshay v. Thonrtpson, sup., per Maule, J., at p. 381 (from a proved "natural tendency " to deceive, "iAc intention to defraud will follow as a matter of law, as well as of common sense "), and at p. 382 (" if a Awong be done by a false representation of a party who knows such representation to be fake, the lau' will infer an intention to injure ") ; Smith v. Chadwich (1884), 9 App. Cas. 187, H. L.,^er Lord Selborne, L.C.,atp. 190 ("the intention which the la w justly imputes to every man to produce those consequences which are the natural results of his acts " is stated to be one of the tests by which " actual fraud " must be " judged ") ; Coaks V. Boswell (1886), 11 App. Cas. 232, H. L., where Lord Selborne, L.C, at p. 236, again insists, in relation to the making of " a communication which would he neces- sarily, or naturally and probably, misleading," that " if it is a fair conclusion that he did this intentionally, and mth a view to mislead in any material point, that is fraud. A man is presumed to intend the necessary or natural consequences of his own words and acts, and the evidentia rei would therefore be sufficient without other proof of intention " ; Arnison v. Smith (1888), 41 C. D. 348, C. A., per Lindley, L.J., at p. 372 ; and Wilkinson v. Downton, [1897] 2 Q. B. 57, per Wright, J., at p. 59 (" it is diflicult to imagine that such a statement . . . could fail to produce grave effect under the circumstances upon any but an exceptionally indifferent person, and therefore an intention to produce such an effect must be imputed.") (5) This is the subject of App. II of the author's Code of the Law of Actionable Defamation. §§ 102-105. Ill when making tlie misrepresentation, did not believe in its truth. But wliere there is such an interval— tliat is, in the case of a continuing re- presentation (r) — and there is some alteration of the circumstances in that interval, the time at which the representor's state of mind becomes material to the question of fraud or innocence is, it is conceived, the latei-, and not the earlier, of the above two dates. 104. The change in the situation may assume either of these forms. It may come to the knowledge of the representor, during the interval, that his original statement was false, when made, though he then believed it to be true. Or, though the representation was, when made, not only believed to be, but in fact, true, it may become, by reason of events super- vening in the course of the interval, in substantial discrepancy with the facts existing at the date of the representee's alteration of position, and, therefore, as has already been seen (s), false in fact. Both types of case are mentioned in a frequently quoted passage from a judgment of Fry, J., and in both he expresses the view that there rests on the one party " an obligation to disclose to the other the change of circumstances " (t). But, in the case before him, which was one of rescission, it was not necessary for Fry, J., to, nor did he, expressly decide whether the failure to discharge such obli- gation would render the misrepresentation fraudulent when the change of circumstances, to the knowledge of the representor, takes place, and thenceforth until acted upon by the representee (m). This is the question which it now becomes necessary to consider. 105. As to the former class of case, where the representor discovers, before his misrepresentation is acted upon, that it was false when made, and does not immediately correct it in the amplest and clearest language (x), (r) Defined in Article 9 of the Code. (s) Vide Ch. IV, Sect. 3, ante. (t) Dames v. London and Provincial Marine Insurance Co. (1878), 8 C. D. 4G9, at p. 475 : " Again, in ordinary contracts," — he had just been dealing with tlie duty of disclosure in relations and contracts uherrimce fidei — " the duty may arise from circumstances which occur during the negotiations. Thus, for instance, if one of the negotiating parties has made a statement which is false in fact, but which he believes to be true, and which is material to the contract, and during the course of the negotia- tions he discovers the falsity of that statement, he is under an obhgation to correct his erroneous statement ; although, if he had said nothing, he very Ukely might have been entitled to hold his tongue throughout. So, again, if a statement has been made which was true at the time, but which in the course of the negotiations becomes untrue, then the person who knows that it has become untrue is under an obhgation to dis- close to the other the change of circumstances." (u) In this case one of the parties had (impliedly at least) represented to the other at an interview that a third person was liable to a criminal prosecution. At a sub- sequent interview, though in the mean time facts had occurred (such as the advice of counsel) sho\ving that the success of such proceedings was highly doubtful, these intervening facts, of which he party was aware, were not disclosed, and, on the faith of the original and uncorrected representation, the other party entered into a certain contract, which Pby, J., accordingly ordered to be rescinded. It was not a case of damages, and therefore the question of fraudulent representation which would be relevant to such a ease alone (see Ch. X) did not strictly arise. [x) Arnison v. Smith (1888), 41 C. D. 358, C. A., per Lord Halsbury, L.C, at p. 370, Cotton, L.J., at pp. 371, 372, and Lindley, L.J., at p. 373 (a case in which the directors, on ascertaining the falsity of the prospectus, sent out an ambiguous circular so framed as " to avoid bringing to the mind of the plaintiff the real facts of the case, 112 COMMENTARY, CH. V, SECT. 1, SUB-SECT. (4). ttere has never been any question. It is obvious that if, when the re- presentee alters his position, the representor knows that his representation was untrue when made, he cannot displace the allegation of fraud by saying that he originally believed it to be true. Since at least 1848, this has never been doubted in any authority, either at common law {y), or in equity {z). The rule has been expressed in unambiguous and emphatic terms by Lord Blackburn : " when a statement or representation has been made in the bond fide belief that it is true, and the party who has made it afterwards comes to find out that it is untrue, and discovers what he should have said, he can no longer honestly keep up that silence on the subject after that has come to his knowledge. . . . That would he fraud " (a). 106. On principle, and in accordance with the general current of authority, it would seem equally clear that a misrepresentation becomes fraudulent in the second of the two classes of case abovementioned, viz. where the representor fails to reveal to the representee the occurrence of supervening events which have come to his notice in the interval, in virtue of which the statement which was, when made, in substantial accordance with the material facts then existiag, becomes in substantial disaccord with the material facts existing at the time when the representee alters his position on the faith of the representation. For if, as has been shown (6), it is the characteristic of a continuing representation that it is, in contem- plation of law, repeated at each successive moment from the terminusa quo, when it was put forth as an inducement, to the terminus ad quern when the inducement operates and materializes, for the purpose of determining whether it is false or true at the latter date, it surely follows that the mental state of the representor must be carried along with the representation in its passage between the two termini, for the further purpose of deter- mining whether, at such latter date, it is also fraudulent or not. It is clear that the representation under such circumstances becomes false when acted upon, so as to entitle the representee to avoid the transaction. On what possible theory can it be supposed that it does not become fraudu- lent also, for the purpose of entitliag the representee to damages ? If the representor is to be regarded as saying at the last moment of the interval, " what I originally stated is in accordance with the facts now existing," why is he not to be also responsible in damages, as for a fraudulent, and whilst stating enough to enable the defendant to say that the plaintiffs were informed of those facts." (j/) Jarrett v. Kennedy (1848), 6 C. B. 319, per Wilde, C.J., at p. 323 (discovery by directors before allotment, that all the statements in the prospectus were false when made, was not revealed to applicants, and plaintiff obtained damages accordingly as for a fraudulent suppression and misrepresentation). (z) Reynell v. Sprye ; Sprye v. Reynell (1882), 1 De G. M. & G. 660, per Lord Cban- WOBTH, L.J.,atp. 709 ("this, from the date of the discovery" — sc. of the fact that the plaintiff's interests under a aiiU were much larger than the defendant had originaUy represented or supposed — " becomes, in the contemplation of this court, a fraudulent misrepresentation, even though it was not so originally ") ; and Arnison v. Smith, ubi sup, (a) Broumlie v. Campbell (1880), 5 App. Gas. 925, H. L., at p. 950. (6) ride ante, Ch. IV, Sect. 3. §§ 105, 106. 113 not merely false, vcpresentation, if (as, ex liypothesi, is the case) lie not onl_y does not believe in the truth of that which he so asserts, but knows or believes the contrary ? It would not have been thought necessary to labour this point, were it not that a high authority, Jambs, L.J., has (without, however, giving any reasons) expressed a distinctly contrary view to that now put forward (c). It is submitted that the dicluni, in question — for it is nothing more — is opposed to sound reason, and also to the main current of authority, both at common law {d), and in equity (e) ; and that the very class of case now under consideration clearly falls within the comprehensive statement by Lord Blackburn which immediately follows the passage (relating to representations subsequently discovered to have been false irheti Dtadc) which is cited above (/). This statement runs as follows : " where there is a duty and an obligation to (c) At p. 329 of ArktprigU \. XewboU (1881), 17 C. D. 301, C. A., where, after delivering his judgment and hearing those of Cotton and Lush, LL. JJ., James, L.J., supplemented his o^\Ti b)- stating : " I think it right to add that I entirely agree mth what Lord Justice Cotton has said, that we cannot accede to the suggestion made by counsel for the plaintiffs, that the persons issuing a prospectus are liable to an action of deceit " (which they could not be except in the case of a, fraudulent misrepresenta- tion — see Ch. X), " because they do not mention a fact coming to their lmo^^•ledgc before the allotment of shares, \\-hich falsifies a statement in the prospectus." But Cotton, L.J., who is thus vouched as a party to this positive expression of opinion, had not in fact gone so far. All he had said (at p. 325), after mentioning the question •• how far the plaintiff could have obtained any relief if the statement in the ])ro- spectus had, to the knowledge of the directors, become untrue before the contract had been completed," was this : — " on this point I give no opinion, but I must not be considered as acceding to the view that the coming into existence of a fact which would have made a statement in the prospectus untrue, if it had existed at the time of the issuing of the prospectus, %\'ould, in an action of deceit, entitle the plaintiff to reUef " That is to say, he neither accedes, nor differs, but reserves his opinion. This is a very different thing from expressing a final and definite adverse view. Lush, L. J., did not mention the point at all. So that the doctrine rests entirely on the statement of J.\>iES, L.J.,not supported by any reasoning, and quite unnecessary to the decision, which was in favour of the defendants on other grounds. (d) See Adamson v. Jervis (1827), 4 Bing. 66, which neatly raises the point : for the action there was for damages for fraudulent misrepresentation of authority from the OAvner to sell. This was true when the representor made the statement, but at the time of the auction sale it had ceased to be so, he no longer having that authority. Best, C.J., at p. 74, delivering the judgment of the CVjurt of Common Pleas, said ; " for this injury the plaintiff is entitled to compensation, whether the affirmation was false or true at the time it was made. If the defendant had authority to sell at the time he employed the plaintiff, but ceased to have that authority at the time of the sale, he should have informed the plaintiff of this change in his situation." So, also, in Denton v. Great Northern Railway Co. (1856), 5 E. & B. 860, it was held that the company's announcement in their time-table that a certain train ran at a certain time, which was true when first made, became subsequently fraudulent, ■v\'hen the train was taken off, as against any one, who, Hke the plaintiff, acted on the faith of the un- corrected time-table as a continuing representation of the truth : per Lord Campbell, C. J., at pp. 866, 867, and Wightman, J., at p. 867. (e) Traill v. Baring (1864), 4 De G. J. & S. 318, where there was an implied repre- sentation by one insurance company to another that they had the intention of taking a third of the risk, and procuring another company to take another third, if the representees would take the remaining third, and it was held by Knight- Bkucb and TuBNBR, LL.JJ., that, assuming the representors bond fide had this intention when making the representation, it was their duty to inform the representees of their sub- sequent change of mind before the latter acted upon it as originally made, and that their failure to do so constituted, " in the eyes of this court," a frautlulcnt misrepre- sentation. (/ ) § 105, sup. B.M. i 114 COMMENTARY, CH. V, SECT. 2, SUB-SECTS, (1), (2). speak, and a man in breach of that duty or obligation holds his tongue and does not speak, and does not say the thing he was bound to say, if that was done with the intention of inducing the other party to act upon the belief that the reason why he did not speak was because he had nothing to say, I should be inclined myself to hold that that was fraud also " {g), — by which last words it is evident that he was intending to distinguish this species of case, or a class which includes it, from, and to add it to, the species which he had just been considering, and which answers to the first of the two types of continuing misrepresentation above indicated. Sect. 2. Innocent Misrepresentations. 107. Fraudulent and innocent misrepresentations constitute two opposite and mutually exclusive categories, just as much as true and false representations. For purposes of legal proceedings, a representation can no more be compounded of dishonesty and honesty, than it can be of un- truth and truth. It follows that a misrepresentation is innocent when at the material date the representor did in fact honestly believe it to be true {h). What " honest belief " is, has already been considered (i). It remains to examine the nature of " belief in fact." Sub-sect. (1). Honest Actual Belief constitutes Innocence in Misrepresen- tation. 108. Actual belief in the truth of the misrepresentation is the test of its innocence. Less than this, as we have seen, will not suffice ; but, on the other hand, more is not required. This proposition was clearly laid down by the Exchequer Chamber in 1844 {k), but, owing to certain dubious dicta which had in the mean time made fitful appearances in the Court of Chancery, and afterwards in the Chancery Division, it had to be restated by the House of Lords in 1889 {I), as it was, beyond all cavil, question, or dispute (in), in the luminous and penetrating exposition of Lord Heeschell, ' ig) Brownlic v. Campbell (1880), 5 App. Cas. 925, H. L. at p. 950. (h) This is Article 15 of the Code. (j) Vide ante, § 99, and notes (t) and (u) thereto. (k) Collins V. Evans (1844), 5 Q. B. 820, Exch. Ch. (yerTiXDAL, C.J., delivering the judgment of the Exchequer Chamber, at pp. 827, 830). It was held that " a statement or representation, which is false in fact, but not known to be so by the party making it, but on the contrary made honestly, and in the full beUef that it is true," is not the subject of an action for damages — in other words, is not deemed fraudulent. {I) Derry v. Peek (1889), 14 App. Cas. 337, H. L. (m) Though, at p. 503 of Le Liivre v. Gould, [1893] 1 Q. B. 491, Bowen, L.J., com- plains of " the reappearance to some extent ... of the old misapprehension of the effect of the decision in Derry v. Peek, for," he adds, " I have myself stated, until I am almost tired of doing so . . . exactly what Derry v. Peek did decide and did not decide." It certainly is amazing that Lord Hekschell's judgment should have been incompletely apprehended even for the short period of four years or so to which BowEN, L.J., refers ; but it may safely be said that the principles laid doiin in that judgment are, now at least, beyond dispute, after the supplementary disquisitions (needless though one would have antecedently supposed them to be) delivered by Bowen, L. J., in Angios v. Clifford, [1891] 2 Ch. 449, C. A., and in Loiv v. Souverie, [1891] 3 Ch. 82, C. A., as well as in the Le Licvre v. Gould, sup. §§ 106-109. 115 whoso judgmeut is, and always will be, tlie locus classicufi on this sultject (w). Belief, not loiowledge, is tlie criterion. It is no more necessary to con- stitute innocence that the representor should know the stated fact to be true, than it is necessary to constitute fraud that he should know it to be false. " Justification by faith " is a doctrine which applies to the law of misrepresentation, as much as to the Articles of Eeligion, and faith is not knowledge for the former purpose, any more than for the latter (o), nor need it be rational, or based on sound premises ; it may, indeed, be violently opposed to reason and good sense (f), but it must be good faith, that is to say, it must be sincere. If, under these conditions, belief in fact accompanied the misrepresentation, no mere intellectual shortcomings will avail to destroy its character of innocence, any more than the like defects, in the law of defamation, will render " comment " unfair, or deprive an honest defamer of the immunity which attaches to any other protected publication (g). Sub-sect. (2). Negligence, Absence of Reasonable Grounds, etc., consistent with Innocence. 109. Care, skill, and competence being irrelevant to the question of whether a misrepresentation is innocent or fraudulent, it follows that any statement which fulfils the one condition of innocence above stated, is not rendered fraudulent " by the mere fact that the belief was unreasonable, or was based upon inadequate materials, information, or inquiry, or arose from negHgence, forgetfulness, inadvertence, or incompetence {r). It is the existence and genuineness of the representor's belief on which alone rests his 7noral qualification to be free of any imputation of fraud. By what mental processes he arrived at the conclusion, or whether his mind was sluggish or active, suspicious or credulous, rational or irrational, prone to investigate or ready to take everything for granted, are questions which, per se, have no relevance. This proposition has now been clearly and (n) Deny v. Peek, sup., at pp. 359-380. At pp. 359, 360, Lord Hekschell dis- tinguishes proceedings for rescission, and " maldng good," and also cases of estoppel, in none of which is the question of fraud or innocence relevant. At pp. 360-363, he criticizes the judgments of the Lords Justices, ^^'hich the House was reversing. At pp. 363-374, he makes a " close and critical examination of the earlier autho- rities," and at pp. 374-376 lays down the principles which he educes from them, when purged of their occasional errors. (o) " Faith is not knowledge, no more than three is four, but eminefatly contained in it ; so that he that knows believes, and something more ; but he that beUeves many times does not know — nay, if he doth barely and merely behevc, he doth never know." - — ChiUingworth's Religion of Protestants, p. 412. Cp. the patristic dictum : apparentia nan hahent fidem, sed agnitionem. (p) On the credo quia incredibile principle of TertulUan. (q) The subject is discussed in note {g) to Article 38 (iv), and note (Ic) to Article 38 (v), of the author's Actionable Defamation. See particularly the two cases there cited of Clark v. Molyneux (19.11), 3 Q. B. D. 237, G. A., and McQuire v. Western MI orning News, [1903] 2 K. B. 100, 0. A. (r) This is Article 16 of the Code. Cp. the definition of " good faith " in s. 90 of the Bills of Exchange Act, 1882, and s. 62 (2) of the Sale of Goods Act, 1893 : " A thing is deemed to be done in good faith, when it is in fact done honestly, whether it be done negligently or not." 116 COMMENTARY, CH. V, SECT. 2, SUB-SECT. (2). finally established by the decision of the House of Lords above referred to, but, before that decision, there had been, as Lord Hbrschell points out in reviewing the authorities («), an occasional judicial use of un- guarded expressions which, particularly when divorced from their context, might not unnaturally encourage the heresy that certain things, if other- wise grossly culpable, might, though not amounting to fraud, be treated as if they did, merely because their consequences are just as serious {t). 110. Thus, negligence, however gross, is not fraud. Indeed, it may be said to be its direct antitheton. This is now well established (u) ; but it lias often been said that negligence may be so gross as to amount to evidence of fraud {x). In its literal sense, this proposition is of course quite in-, accurate. Negligence no more indicates fraud, than it constitutes it. Black cannot be evidence of white, any more than it is white. But the alleged white may be of so exceedingly dingy a hue that any person called upon to decide whether it is black or white, there being no middle colour possible, may be justified in saying that the thing described as white is in fact black. So on a plea of actual, though negligent belief, the tribunal which has to decide as to the existence and reality of the belief may be forced to the conclusion that the suggested negligence, if it were a case of negligence, would be so outrageous and abnormal that the theory of want of care must be rejected in favour of the alternative hypothesis of no belief at all. As an elliptical mode of expressing the above judicial attitude, the phrase — " gross negligence may amount to evidence of fraud," — can be accepted, but in no other sense, and to no further extent. The proper ampli- fication of this misleading brachylogy is to be found in judgments of Lord Ceanworth {y), and Bowen, L.J. (z) ; but even in the expositions of these accurate jurists the unfortunate term " evidence " is used. The only (s) 14 App. Gas. 337, H. L., sup., at pp. 363-374. (i) As to the history of the fluctuating meanings of the term " fraud," vide post, App. A. (tt) Evans v. Bicknell (1801), 6 Ves. 174 {per Lord Eldon. L.C.,at pp. 188, 191, 192) ; Taylor v. Ashton (1843), 11 M. & W. 401 {per Parke, B., at p. 415 : " it is insisted that oven that," so. gross neghgence, " accompanied by a damage to the plaintiff in consequence of that gross negligence, would be sufficient to give a right of action " — sc. for damages. " From this proposition we entirely dissent ") ; Dickson V. Renter's Telegram Co. (1877), 3 C. P. D. 1, 0. A. {per Bramwell, L.J., at p. 6: " it is never laid down that the exemption from liability for an innocent misrepre- sentation is taken away by carelessness ") ; Derry v. Peek (1889), 14 App. Gas. 337, H. L. {per Lord Hbrschell at p. 361) ; Angus v. Clifford, [1891] 2 Ch. 449, C. A. {per LiNDLEY, L.J., at pp. 462^68); Thiodon v. Tindall (1891), 65 L. T. 343, Div. Ct. {per Denman and Wills, J.J.) ; and Le Ligore v. Gould, [1893] 1 Q. B. 491 {per Bowen, L.J., at p. 501). Similarly, neghgence is not mahce in defamation : See Pittard •>. Oliver, [1891] 1 Q. B. 474, 476, G. A. (x) For instance, by Lord Eldon, L.C'., in Evans v. Bicknell, ubi sup. ly) At p. 168 of Western Bank of Scotland v. Addie (1867), L. R. 1 H. L. (Sc.) 145 ; " if a little more care and caution must have led the directors to a conclusion different from that which they put forth, this may afford strong evidence to show that they really did not believe in the truth of what they stated, and so that they were guilty of fraud." (z) Le Liifore v. Gould, sup., at p. 500 : " if the case had been tried mth a jury the judge would have pointed out to them that gross negligence might amount to evidence of fraud, if it was so gross as to be incompatible with the idea of honesty, but that even gross negligence in the absence of dishonesty did not of itself amount to fraud." §§ 109-111. 117 statement of the principle (it is believed) wliicli avoids this terminological pitfall, and is characterized by both literal and substantial accuracy and completeness, is that of Fry, J., in a case which involved the question of what degree of wilful avoidance of the truth amounts to constructive notice. " It has been said," he there observes, " that there may be negligence which amounts to fraud. That language has always seemed to me not strictly accurate. Fraud imports design and purpose. Negli- gence imports that you are acting carelessly, and without that design. But what is meant is this — that conduct which might be negligent, or might be attributable to negligence, is really attributable to a design not to know more " (a). It is partly owing to the above ambiguity of expression, and partly to the confusion between intellectual carelessness in forming an opinion, and the moral carelessness involved in putting forward a state- ment without any belief at all, one way or the other (b), that the notion ever gained ground that an innocent misrepresentation can be rendered fraudulent by mere proof of negligence. 111. In like manner, and for the same reasons, irrational or ill-founded belief is not the same thing as the absence of belief, nor can it be said to be indicative thereof, except in some such elliptical form of words as has been used in reference to negligence. A representor may have acted on inquiry and materials which would not have satisfied a person of normal intelligence, much less a trained judge of evidence ; but this goes for nothing if the belief — the individual being what he was — really and truly existed. Belief is none the less belief because it is irrational. Innocence is not negatived by proof of the representor's stupidity, but only by proof of b is (o) At p. 706 of Kettlewell v. Watson (1882), 21 C. D. 685. (6) Lord Heeschell, at p. 361 of Derry v. Peek (1889), 14 App. Cas. 337, H. L., in the course of his criticism of the views expressed in the C. A. by Cotton, L. J., says : " to make a statement careless whether it be true or false, and therefore without any real belief in its truth, appears to me to be an essentially different thing from making, through want of care, a false statement, which is nevertheless honestly believed to be true. And it is surely conceivable that a man may believe that what he states is the fact, though he has been so wanting in care that the court may think that there were no suflScient grounds to warrant his belief." So also Bowen, L.J., at p. 501 of Le lAivre v. OovM, sup., observes : " there seems to have been some sort ol an idea there, when a jury was asked the . . . question, whether the man had made the representation not knowing and not caring whether his statement was true or false, the expression ' not caring ' had something to do with his not taking care " — (a very natural idea, it may be added, the naturalness of which illustrates forcibly the harm done by the needless introduction of rhetorical phrases as fringe and supplement to the simple "non-behef " which is adequate to aU the requirements of the rule) — " but that expression did not mean not taking care to find out whether the state- ment was true or false ; it meant not caring in the man's own heart and conscience whether it was true or false, — and that would be wicked indifference and recklessness." A third reason, or historical explanation, of the confusion between the two ideas, is given by the Lord Justice, at p. 500 of the same case, viz. " the fact that equity judges had to decide questions of law and fact together. An equity judge, when he had to deal with a question of fraud, discussed his reasons for coming to the conclusion that there had been fraud, and it very often happened that an equity judge decided that there was fraud in a case in which gross negligence had been proved. . . . Cases of gross negligence, in which the Chancery judges decided that there had been fraud, were piled up one upon another, until at last a notion came to be entertained that it was sufficient to prove gross neghgence in order to establish fraud. That is not so. In aU those cases fraud and dishonesty were the proper ratio decidendi." 118 COMMENTARY, CH. V, SECT. 2, SUB-SECT. (2). bad faitli. The notion that absence of reasonable grounds for a belief wMcli actually existed can convert innocence into fraud, or into some- thing equivalent thereto in contemplation of law, though apparently under- lying certain dicta in the earlier cases (c), %vas never expressed in plain terms imtil 1867 by Lord Chelmsford, L.C. [i), and then was promptly disavowed and dissented from by Lord Granwoeth (c). These, more- over, were individual opinions : there was no actual decision of any court to the above effect until that of the Court of Appeal in Peek v. Deny (/), which was overruled by the House of Lords, suh noni. Derrij v. Peeh (g). Here, however, as in the case of negligence, the alleged unreasonableness of any belief may be so glaring that a jury would be justified in inferring that the belief could never really have existed, and that the supposed believer was not so irrational, incompetent, or foolish, as, for his own pur- poses, he may profess to be when an attempt is made to saddle him with responsibility for the consequences of his misrepresentation {h). 112. A man may believe in the truth — that is, the complete truth — of his representation, by reason of his not remembering a qualifymg circum- stance which at one time he had known. This forgetfulness, again, does not, (c) For instance, the expressions used by Matile, J., at p. 507, of Shrewsbury v. Blount (1841), 2 M. & Gt. 475 : " it would be an answer to the action that he had good reason to believe the representations which he had made," and again, " beUef reasonably well grounded," and " well founded belief." {d) At p. 162 of Western Bank of Scotland v. Addie (1867), L. R. 1. H. L. (Sc.) 145 : " if an untrue statement is made founded upon a beUef which is destitute of all reasonable grounds, or which the least mquiry would immediately correct, I do not see that it is not fairly and correctly characterized as misrepresentation and deceit." (e) At p. 168 of the case last cited : " if persons , . . make statements . . . which they bond fide beheve to be true, I cannot think they can be guilty of fraud because other persons think, or the court tliinks, or j'our Lordships think, that there was no sufficient ground to warrant the opinion which they had formed." (/) (1887), 37 C. D. 541, C.A. (g) (1889), 14 App. Gas. 337, H.L., acted upon and apphed immediately afterwards by the C. A. in Glasier v. Rolls (1889), 42 C. D. 436, C. A. As regards prospectuses of companies, the law has been altered by statute : vide Ch. XIII, Sect. 1, post. (h) See the observations of Lord Heeschell at p. 369 of Derry v. Peeh (1889), 14 App. Cas. 337, H. L. : "I think there is here some confusion between that which is evidence of fraud, and that which constitutes it. A consideration of the grounds of belief is no doubt an important aid in ascertaining whether the behef was really entertained. A man's mere assertion that he believed the statement he made to be true is not accepted as conclusive proof that lie did so. There may be such an absence of reasonable ground for his belief as, in spite of his assertion, to carry conviction to the mind that he had not really the belief ^\'hich he alleges." Agam, at pp. 375, 376, Lord Hekschell says : " I can conceive many cases where the fact that an alleged behef was destitute of all reasonable foundation would suffice of itself to convince the court that it was not reaUy entertained, and that the representation was a fraudu- lent one." So, at p. 380 : " the statements of mtnesses are by no means to be accepted blindfold. The probabilities must be considered. Whenever it is necessary to arrive at a conclusion as to the state of mind of another person, and to determine whether his belief under given circumstances Avas such as he alleges, ^^'e can only do so by applying the standard of conduct which our ovm. experience of the waj's of men has enabled us to form ; by asking ourselves whether a reasonable man would be likely under the circumstances so to beheve." It mil be noticed that both Lord Ceai^wokth and Lord Hekschell, though the context puts their meaning beyond doubt, use the unfortunate expression " evidence " which, but for that context, would, it is submitted, tend to mislead. See § 110, ante, as to the use of the term in connection with negligence. §§ 111, 112. 119 per se, negati\'e innocence. Once more, tlie only question is— liad he really and truly forgotten the circumstance ? In an action for fraudulent mis- representation, lie cannot be punished for a bad memory, any more than in the other cases discussed above he can be punished for want of dili- gence in inquiry, or soundness in judgment (i). Of course in any proceeding in whicli it is enough to establish an innocent misrepresentation, the mere circumstance that tlie omitted fact was not present to the mind of the re- presentor at the time does not excuse him if the omission was such as to render his statement false {k). Nor, again, if a man chooses to state a thing as the absolute fact, and therefore, impliedly, as a fact not con- tradicted or qualified by any other fact which has ever been within his ow-n knowledge, can he successfully plead that his representation, if false, was not fraudulent also, because, on that hypothesis, he did not believe in the truth of that which he was impliedly asserting (1). (i) Bain v. Fothergill (1874), L. R. 7 H. L. 158 {per Lord Hatherley, at p. 212) ; Mathias v. Tetts (1882), 46 L. T. 497, 0. A. (per Lindley, L.J., at p. 506); and Low v. Bouverie, [1891] 3 Ch. 82, C. A. (per Lindley, L.J., at p. 101, and Bowen, L.J., at p. 106). In the last case, it was held that, of the two authorities which would appear to lay down a different doctrine, Burrowes v. Lock (1805), 10 Ves. 470 (per Grant, M.R.), and Slim v. Croucher (1860), 1 De G. F. & J. 518, the former can only be supported on the ground of estoppel, where of course no fraud need he shown, and the latter on no ground. The same principle is applied to actions for money had and received, on the ground of " mistake " : see Kelly v. Solari (1841), 9 M. & W. 54. (k) See the cases cited in the last note, particularly Mathias v. Yetts, sup., per Jessel, M.R., at p. 502 (where he says that " forgetting a fact " does not prevent a representation being fraudulent " in law," by which he means an innocent mis- representation, but one which is amenable to proceedings for rescission), and see Sir Jailes Hanne^-, at p. 504. (I) Broiimlie v. Campbell (1880), 5 App. Gas. 925, H. L., per Lord Selborne, L.C., at p. 936, Lord Hatherley at p. 945, and Lord Blaokbtjrn at p. 953. 120 COMMENTARY, CH. VI, SECT. 1, SUB-SECT (1) CHAPTER VI. INDUCEMENT AND MATERIALITY. 113. Having considered, in the preceding Chapter, the legal consequences of the representor's state of mind, in making a misrepresentation, it now becomes necessary to deal with the representee's mental condition when receiving it. Of the two inquiries the latter is of the greater importance because it is of universal application, whereas the former is only important in certain forms of proceeding. Wheth^ damage or rescission be sought, the plaintiff is out of court unless he establishes inducement and materi- ality (a) ; but it is only where deceit is alleged that the question of the representor's fraud or innocence has any relevance. 114. Inducement and materiality are two separate and distinct facts, just as malice and absence of reasonable and probable causes are, in actions of malicious prosecution. Both must be proved (b) ; it is of no avail to show that the representee was in fact induced to act to his prejudice by a falsehood, unless that falsehood was of a nature to induce any normal person to so act in the circumstances of the case ; whilst, on the other hand, it is useless to show the ii jiriori probability of its proving an induce- ment, unless it is shown that it did in fact induce. It is true that in certain extreme cases inducement may be inferred as a fact from materiality (c), just as, in malicious prosecution, there are cases where malice may be inferred as a fact from very gross want of probable or reasonable cause ; but in neither province of the law does this circumstance negative the existence of the clear distinction between the two alleganda et probanda, each of which must be separately established as a fact {d). (a) Vide post. Chapters X, XI, XII, XIII, XIV. (6) Smith V. Chadivick (1884), 9 App. Cas. 187, H. L., per Lord Sblbokne, L.C, at p. 190 : " secondlj', he " (the plaintiff) " must establish that this fraud was an inducing cause to the contract, for which purpose it must be material, and it must have produced in his mind an erroneous belief, influencing his conduct." (c) Vidr post, Sect. 3, Sub-s. (1). {d) AV'arrant y, or an express condition or term in a contract, of course, gets rid of all questions of both inducement and materiality : Pawson v. Watson (1778), Cowp. 785 {per Lord Mansfield, C.I., at pp. 788-790) ; Atwood v. Small (1838), U CI. & Fin. 232 {per Lord Beouqham, at p. 444) ; Thomson v. Weems (1894), 9 App. Cas. 071, H. L. {per Lord Blackbubs, at pp. 683, 684, and Lord A^'ATSON, at p. 689) ; Hambrough \'. Mutual Life Insurance Co. (1895), 72 L. T. 140, C. A.; and the insurance cases ifcneralh'. §§ 113-116. 121 Sect. 1. Inducement. 115. Inducement in fact, as distinguished from a tendency to induce (whicli is materiality), is, ei- vi termini, a question of fact (c), and the burden of proving it is, as already stated, on the representee. However likely a misrepresentation may have been to influence an average individual, — however " calculated " (in both senses of the word) it may have been to lead a normal representee to take just the steps which he did take, — how- ever inconceivable even it may be that he could have remained insensible to the allurements held out, — yet, if in fact he was not induced, the mis- representation is not actionable (/). It now becomes necessary to con- sider what are the precise elements in this burden of proof, and what are the contents and limits of the conception of " inducement." Sub-sect. (1). Burden on Representee of proving that the Representation was made ivith the object and result of inducing. 116. Inducement in fact is shown by proof that the representation was made both with the object, and with the result, of inducing the representee to alter his position {g). Neither element suffices without the other. To prove the representor's intention to produce the efiect comes to nothing, unless the efiect itself be proved ; and to establish the result is idle, unless it be shown that the representor actually, or presumptively, intended to bring it about. And the representor is presumed to have so intended, if he wilfully used language calculated, or of a nature, to induce a normal person in the circumstances of the case to act as the representee did (Ji) ; (e) Vide post. Sect. 3. (/) For instance, nothing could have been more calculated to induce the representee to purchase shares than the prospectus and scrip-certificates in Shrewsbury \. Blount (1841), 2 M. & G. 475, but the jury chose to find that in fact he was not so induced, and the Court of C. P. refused to disturb the verdict. Again, in Nmiih v. Chadirick (1884), 9 App. Cas. 187, H. L., it was obvious that a statement in the prospectus as to a, certain person being one of the directors (which was false) must have made a deep impression on any person of ordinary business habits and experience acquainted with the particular trade and locality, and both Lord Selborne, L.C, at p. 190, and Lord Blackbubn, at p. 194, expressed no little astonishment that the plaintiff had not professed to rely upon it : but, so far from doing so, he admitted in cross-examina- tion that in fact he was not influenced by any of the names on the " front page," (see p. 194), but solely by statements in the body of the prospectus as to output and profits, which were ambiguous, and to which he steadily refused to assign any par- ticular meaning ; it was impossible, therefore, that, being unable, on his own admission , to prove that he was in fact induced by the only misrepresentation which ■v\'a8 both intended, and likely to, mislead him, he could succeed in his claim. {g) See Article 17 of the Code. This is supposed to be expressed by the common formula : " the representation must be one dans locum contractui." But this ex- pression is not very felicitous or exact : dans locum is too broad, since it would obviously include any sort of contracts for the making of which a representation may give the occasion or opportunity, which is a viTy^ different thing from inducement; and con- tractui is too narrow, because the rule applies to many modes of altering a man's position on the faith of a representation, besides the entering into a contract ^^^th the representor, or A\ith any one. (h) Hence it follows that the question of materiality is very much involved in the question of the presumptive intention of the representor, and the authorities cited post, under Sect. 2 (which deals with materiality) are ad rem to so much of § 118, post, as deals with the representor's presumed intentions, and vice versd. See also several of the cases cited in Ch. VII, Sect. 2, post, as to presumptively intended damage. 122 COMMENTARY, CH. VI, SECT. 1, SUB-SECT. (1). whilst, on the other hand, he is presumed not to have so intended, or, rathei;, the representee cannot claim to have been so induced, if the representor was under no duty to make a truthful representation, or a i-epresentation at all, or was under a duty to tell a falsehood (i). 117. The proposition that there is nothing actionable in a mere inten- tion to induce which fails of its effect altogether, would seem to be suffi- ciently obvious. " An action cannot be supported for telling a bare naked lie," as was said by Buller, J., in one of the earliest of the misrepre- sentation authorities (k), or, to apply the equitable metaphor of a more recent judgment, " a man may with impunity lie in gross . . . but he cannot . . . tell a lie appurtenant " (Z) . In such a case the representor's "... act did not o'ertake his bad intent. And must be buried, but as an intent, That perished by the way " (m). The class of case, however, where the representee was undoubtedly moved by something, but where there are several possible motives and inducements besides the misrepresentation, has occasioned some doubt and difficulty, which is the justification for the large number of decisions dealing expressly with the point, and for the many successive restatements of the rule, in more or less elaborate terms, by various judges from Lord Brougham, L.C, to Lord Selborne, L.C. The former of these Lord Chancellors expressed his views on the question with the utmost precision and detail : " Thirdly and chiefly," he says, after enumerating two of the ingredients in any proceeding for misrepresentation, " it should be this false representation which gave rise to the contracting of the other party. Dolus dans locum contractui is the language of the civil law, not dolus malus generally ; not the mere fraudulent conduct of the party trying to overreach his adversary ; nor mere misconduct and falsehood throughout, unless dedit locum contractui " (n) ; then, after reviewing the previous decisions, he proceeds — " Now, my lords, what inference do I draw from these cases ? It is this, that general fraudulent conduct signifies nothing ; that attempts to overreach go for nothing ; that an intention and design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design, can be connected only with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which this transaction took place, and must have given rise to this contract. If a mere general intention to overreach were enough, I hardly know a contract, even between persons of very strict morality, that could stand; we generally (i) Vide post, § 119. {k] In Pasley v. Freeman (1789), 3 Term. Rep. 51, per Buller, J., at p. 56. (l) Per NOBTH, J., in Archer v. Stone (1898), 78 L. T. 34. He defines a, "lie appurtenant " as follows : " that is to say, if he tells a he relating to any j)art of the contract, or its subject-matter, which induces another person to contract," etc. (m) " Measure for Measure," Act V. Sc. 1. {n) Atu'ood V. Small (1838), 6 CI. & Fin. 232, H. L., at p. 444. §§ 116, 117. 123 find the case to be that there has been an attempt of the one party to over- reach the other, and of the other to overreach tlie first ; but that does not make void the contract. It must be sliowu that tlu^ attempt was madi\ and made with success, cum fructu. The party must not only have been minded to overreach, but he must actually lia\'e overreached . . . and, moreover, the representations so made must have had the effect of deceiving the purchaser ; and, moreover, the purchaser must have trusted to these representations, and not to his own acumen, not to his own perspicacity, not to inquiries of his own " (o). And to the same effect, but in much terser language, Lord Selboene, L.C, observes, in refererLce to a case where the representee was a vendor — in the last case the representee was a purchaser — that " if the vendor was not in fact misled, the contract could not be set aside, because a dolus which neither induced nor materially affected the contract is not enough "(p). Accordingly, whenever the representor has failed to discharge the burden of establishing that he was in fact induced, he has failed altogether. This failure may arise from proof or admission that he relied solely (q) on something other than the misrepre- sentation on which his action or defence is founded, whether that " some- thing " be an assurance or certificate or warranty which he insisted on obtaining, and obtained (r), or a statement in the prospectus or docu- ment the subject of the proceedings, other than the particular repre- sentation alleged to have been the inducing cause (s), or the representee's own skill or judgment (t), or his own general knowledge of business, or faith in the venture, or special inquiries or researches (m), or actual knowledge of the truth {x). Or, without the representor proving out of the representee's own mouth, or otherwise, any of such affirmative matters — and there is no onus on him to do so — the representee may simply fail to establish what is incumbent on him, either because he cannot even swear that he saw or read the document alleged to contain the misrepresentation («/), or that (o) Ibid., at pp. 447, 448. (p) Cooks V. Boswell (1886), 11 App. Cas. 232, H. L., at p. 236. (q) Mere proof that he relied on something in addition to the misrepresentation sued upon does not negative the fact of inducement, if other-ndsc proved : see Sub-s. (2), inf. (r) As in FUnn v. Eeadlam (1829), 9 B. & C. 693, where the jury found that the plaintiff relied solely upon a certificate of seaworthiness, which he insisted on and obtained, and not on the alleged misstatements as to the vessel's cargo. (s) As in -Re Northmnberland and Durham, District Banking Co., Ex parte Bigge (1858), 28 L. J. (Ch.) 50, where the shareholder was not misled by the reports and accounts of the company, which was the case set up by him, but solely by the oral statements of an individual director. He had never even seen these reports and accounts. So, also, in Baiy v. Keswick (1901), 85 L. T. 18, the plaintiff was sho'ivn to have relied on the names of the directors, and not on the statements in the bodj' of the prospectus, as alleged by him in his claim. . (t) As in Hills v. BaUs (1857), 2 H. & N. 299 (purchase of glandered horse). (u) See Bellairs v. Tncker (1884), 13 Q. B. D. 562, Div. Ct., per Manisty, J., at p. 582 (as to "personal knowledge of business," and "faith in the product," etc.) ; and, as regards reliance by the representor on his own investigation and skill, see the last sentence of the passage cited in the text from Lord Brougham's judgment in Atwood V. Small, sup. (x) Vide post, Ch. X, Sect. 2, Sub-s. (1). (y) As in Re Northumberland, ^nd in Lord Halsbury's Laws of England, title, " Companies," vol. v, pp. 123, 124. As applied to marine insurance, a " material representation " is defined in s. 20 (2) of the Marine Insurance Act, 1906 (G Edw. 7, c. 41), as " a representation which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he wiE take his risk." (a) See Capital and Counties Bank v. Henty (1882), 7 App. Cas. 741 (per Lord Blackburn at pp. 769-778). (6) In Beachey v. Broini (1860), E. B. & E. 796, an action for breach of promise of marriage, to which the defendant set up that he had been induced to make the promise by the lady's fraudulent concealment of certain material facts, Crompton, J., says, at p. 803 : " I do not think that the non-disclosure of a fact which is material, in the mind of the defendant is enough." This view would of course apply to a case of a positive misrepresentation as much as to one of concealment. (c) AVhere there is a duty of disclosure, it is no excuse that the party failing in such duty considered the undisclosed matters not material, if in fact they were so : Lindenauv. Deshorough (1828), 8 B. & C'. 586 (per Bayley, J., at p. 592, and Little- dale, J., at p. 593) ; Dalglish v. Jarvey (1850), 2 Macn. & C. 231 (per RoLFE, B., at p. 243) ; London Assurance Co. v. Hansel (1879), 11 C. D. 363 (per Jessel, M.R., at p. 368). Still less would such a belief be an answer in the case of a misrepresenta- tion of an actually material fact. Similarly, in defamation, the intention and meaning of the dcfainer is wholly irrelevant, as explained in Article 17 (5) of the author's Code of the Luio of Actionable Defamation, and note (e) thereto. §§ 126-129. 135 alleged. But, to tlie knowledge of tlie representor, the representee may be au abnormal person, influenced by particular fancies, fads, or super- stitions {d) ; or it may be that, again to the knowledge of the representor, there are circumstances of a character such that any statement respecting them, though it would be utterly inoperative on the mind of any other person, will make all the difference in the world to the particular repre- sentee to whom he addresses it ; in which type of case it is obvious that the belief of the representor is all-important, because it is that belief alone which makes a representation material as against him, which would not be material as against any one else (e). 129. There is no occasion to refer to authorities illustrative of the former of the above two classes of material representation, as to which little difficulty has ever arisen ; the materiality, or the want of it, being in most of them obvious, or not challenged (/) ; but the decisions relating to the latter type have given rise to nice questions, particularly those decisions in which the materiality, as between the parties, of a representation as to the (d) It is matter of history, and common observation, that the acutest minds have been, and are, subject to the domination of special prejudices, antipathies, predilections, and superstitions ; and that those whose life is spent in tempting fate per mare per terram, — soldiers, and " they that go doAMi into the sea in ships, and have their business in great waters," — and other classes, such as the theatrical profession, are peculiarly under such influences. Suppose that a representor loiows that his repre- sentee wiU. never sign a contract, or do any business, on a Friday, or on the 13th of a month, or enter ujmn any enterprise in which an individual believed to bring him iU- luck is concerned, and, \rith this knowledge, misrepresents the date of a contemplated or past transaction , or the personnel of those interested therein, it would seem that, on principle (no such extreme case has yet been the subject of any report), such a misrepresentation would be material as between the parties, — material, that is, to the inducement, which (see § 129) is all that is required to be established. (e) Higgins v. SameU (1862), 2 J. & H. 460, per Page-Wood, V.-C, at p. 468 (" he admits that he knew the lime would be useless to the defendant unless it was fit for the London market," — which loiowledge would deprive the representor of his right to contend that, if the lime was good and merchantable, the question of a par- ticular market was immaterial) ; Archer v. Stone (1898), 78 L. T. 34, where the plaintiff had falsely represented to the defendant that he was not purchasing for a certain individual, and Nokth, J., in giving judgment for the defendant, based it on the fact that the plaintiff knew that the particular individual was so distasteful to the defendant that he would not have sold his land to him, or his " party," or to any one through whom it would eventually get into his hands ; Gordon v. Street, [1899] 2 Q. B. 641, C. A., where A. L. Smith, L.J., at p. 648, lays stress on the fact that the plaintiff himself was thoroughly aware of the importance in his o^^'n interest of sup- pressing his identity, which fact tended to establish and confirm the view taken by the Court of Appeal, and the jury in the court below, that the plaintiff's misrepre- sentations as to his personality were, as between the parties, material to the induce- ment ; and Whurr v. Devenish (1904), 20 T. L. R. 385, where it was proved in evidence, to the satisfaction of Lord Alvbkstone, C. J., that the defendant knew of the materiality of the representation made by him, at the sale of a horse by auction, that the horse was a private gentleman's property (his own), and not that of a horse-dealer, and where it was further proved that a statement of that character to a buyer under the circumstances would tend to establish a belief in " the hona fides and genuineness of the sale," and "yield better prices." An analogous principle is applied to those cases in defamation where a secondary sense is sought to be imputed to the lan- guage used, and where, the defamer's knowledge of the special circumstances in virtue of which it would convey such extended or unnatural meaning to the particular person to whom the words were published, is not only a relevant, but an essential, fact : see Article 16 (4), and note (m) thereto, in the author's Code of the Law of Actlovfihle Defamation. ( / ) Sec, generally, the cases cited in Chapters X, XI, and XII, post. 136 COMMENTARY, CH. VI, SECT. 2, SUB-SECT. (1). personality, identity, or status of any individual or as to the ownership of any property to which it relates, has been debated. Putting aside statements as to the position, credit, character, or business of one contemplated as the person with whom the representee is to contract, or whom he is to accept as his debtor, or to trust, or as to the personality of a proposed tenant or occupant of lands or premises, the subj ect of the contract induced by the mis- representation {g), or as to the personnel of the directorate or management of a company or concern in which the representee is induced to take an interest, — all which are of manifest materiality (A), and come rather within the first class, — there are several examples in the books of representations as to personality which, though of no conceivable importance under ordinary circumstances, have, on proof of the knowledge by both parties of special circumstances, been held material. Thus, in the absence of any special circumstances, it is a matter of no concern to the vendor, or to the purchaser, of property, to know who is the particular individual for whom such property is to be bought, in the one case, or for whom it is being sold, in the other ; but where it is known to the representor that, in fact, for whatever reason or caprice, the personality of the principal is so odious and objectionable to the representee that he would never enter into the contract if such personality were disclosed to him, then whether the " Dr. Fell " in question be a purchaser, or a vendor, any misrepresentation as to this matter becomes a material one (i). On the other hand, where it is not shown {g) Ferct v. Hill (1854), 15 C. B. 207, in which case it was held that a lease com- pleted by actual possession could not be avoided, or treated as a nullity, though it had been induced by a fraudulent misrepresentation, but it was recognized that the state- ment as to the intended user of the premises for a perfumery business was a material one, which would have justified the representee in refusing to grant the lease, or give possession, in the first instance ; Canham v. Berry (1855), 15 0. B. 597, where the plaintiff, knowing that the defendant could not assign the lease in question without his lessor's consent, and would not, therefore, do so, unless one Morris, the intended occupant of the farm, was a responsible person, fraudulently stated that Morris answered this description, with the object and result of inducing the defendant to sell his leasehold interest, and it was held that this misrepresentation was not " col- lateral" (a very stupid expression, used in Ferei v. Hill), or " foreign," the term used by Williams, J. (sec pp. 615, 621) ; in other words, it was material {per Maule, J., at p. 616, who distinguished Feret v. Hill, at pp. 611, 612) ; Cundy v. Lindsay (1878), 3 App. Gas. 459, H. L., where the misrepresentation of the intended debtor and contractor as being the honest and solvent Blenkiron and Co. (whereas in truth it was a firm of the name of Blenkarn in the same street, which was dishonest and impecunious) was of obvious materiahty ; and Morrison v. Robertson, [1908] Sc. Ct. of Sess. Cas. 332, Avhere the representor, a person fl'hom the pursuer would not have trusted, stated himself to be the son, and the agent, of a person whom the pursuer did trust. Cp. the other eases of personation in the notes to Ch. Ill, Sect. 2, Sub-s. (2), ante. (h) Re Life Association of England, Blalce's Case (1865), 34 Beav. 639, per RoMiLLY, M.R., at p. 642; Hallows v. Fernie (1868), 3 Ch. App. 467; Bevan v. Adams (1870), 22 L. T. 795; Re Scottish Petroleum Co., Anderson's Case (1881), 17 C. D. 373 ; Re Same Co., Maclagan's Case (1882), 51 L. J. (cH.) 841 ; Re Same Co., Wallace's Case (1883), 23 C. D. 413, C. A. ; Smith v. Chadwick (1884), 9 App. Cas. 187, H. L. (per Lord Selboexe, L.C, at p. 190, and Lord Blackburn, at p. 194) ; and Re Metropolitan Goal Consumers' Association. Waimvright's Case (1890), 63 L. T. 429, C. A. Cp. the class of cases cited in the notes to § 291 in Ch. XI, Sect. 3, Sub-s. (4), where a misrepresentation of the status or position of a proposed transferee of shares in a company was held a material inducement to the directors to sanction the transfer. (i) Phillips V. Buckingham (Duke of), (1683), 1 Vcrn. 226 ; Smith v. Wheaicroft § 129. 137 clearly that the representee would not have entered into the contract on the same terms with any one else, and where the identity of the purchaser or vendor is neither of the essence of the contract, nor part of the conside- ration for it {h), or where it is not proved that the representor told any falsehood, but only that (not being 'imder any duty to disclose the truth) he kept silence {I), no materiality is established. Again, under ordinary circumstances, if a man is willing to borrow money on certain terms, it IS a matter of no moment whatever to him who the intended creditor is ; but if it is known to the representor that the representee has (again, whether for good reason or bad, does not signify) such a horror or dislike of a particu- lar person that he would not at any price incur any liability to him, and, knowing this, ie suppresses and misrepresents the identity of the creditor so objected to, whether it be himself or another, the misstatement is material (m). Other representations which illustrate the subject under (1878), 9 C. D. 223, where the principle was recognized by Pky, J., at p. 230, though the representee in that case did not bring himself iiithin it ; and Archer v. Stone (1898), 78 L. T. 34, per North, J. {k) Fellowes v. Gwydyr (Lord) (1829), 1 Russ. & M. 83, which was a case of a misrepresentation of the personahty of a vendor, not a purchaser, and which took the form, not of a suppression of the identity of an unacceptable individual, but of a false allegation that the representor had a principal, and that this principal was Lord Gwydyr, a persona grata to the representee ; whereas he had no principal, and had bought the Coronation fittings and decorations in question from Lord Gwydyr, and was reselling them at a profit, and Lord G^vydyr (so it Avas urged), if he had been the vendor, would not have entered into the transaction with any such commercial view, or allowed the representee to be a loser by it ; here Lord Lyndhukst, L.C, said tliat, if it had been shown that the representee would not have treated with any one but Lord Gwydyr, he would have been entitled to relief, but as this was not clearly made out, he was not ; Smith v. Wheatcroft, uhi sup., per Fby, J., who, at p. 230, after citing Pothier on the effect of error personce, says : " 1 ask myself here whether the defendant has shown that any personal consideration entered into the contract. Has he shown that he would have been unwilling to enter into a contract on the same terms with any one else ? I say distinctly that he has failed to produce any such effect on my mind, and, that being so, I think the second branch of the defence " (which was based on an alleged misrepresentation that the plaintiff was buying the land for his ovm use, and not for that of a certain colliery company) " fails, as well as the first." (Z) Nash V. Dix (1898), 78 L. T. 445, which A\'as decided shortly after Archer v. Stone, ubi sup., and by the same judge (North, J.) : the claim (specific perform- ance by purchaser against vendor), and the defence (misrepresentation by the plaintiff that he was buying for himself, and not for a particular individual or class to whom the representee objected) was the same in both cases, but in Nash V. Dix, the plaintiff had not (as the plaintiff in Archer v. Stone had) told any falsehood whatever, for, though he knew that the defendant objected to sell to the Roman Catholics, and though he had entered into a contract to resell at a profit to persons of that faith, he was in a position to say with truth (as he did) that he was not buying for them, or as their agent, and there was no duty to reveal the intended and agreed resale. (m) Smith v. Kay (1859), 7 H. L. C. 750, where it was urged that the representee would equally have been ready to execute the securities he did in favour of any one who would give him the terms to which he wiUingly became subject, and that it did not matter that Smith (the representor) bought up these securities, or hoAv he became the owner of them, but the contention was rejected by Lord Chelmsford, L.C. (at pp. 758, 759), and Lord Ckanworth (at pp. 769, 770) ; and Gordon v. Street, [1899] 2 Q. B. 641, C. A., where a notorious money-lender, "the hottest and bitterest " of his tribe, according to his own description of himself, had, by fraudulently misrepre- senting and concealing his oaati identity under an alias or pseudonym, induced a necessitous person to borrow money of him on extortionate terms, which (as the representee alleged and proved) he would, to the representor's knowledge, never have 138 COMMENTARY, CH. VI, SECT. 2, SUB-SECT. (1). discussion are statements that a specified person is independent of other persons or influences, wlien in fact he is not so, or vice, versd (n), and state- ments as to the ownership, or late ownership, of certain kinds of property, consented to do, had he been aware that he was dealing with this particular usurer, and it was held that the misrepresentation was material to the inducement, if not to the contract, — per A. L. Smith, L.J., who cites, at p. 646, Smith v. Kay, ubi sup., and, at pp. 647-649, deals mth Pry, J.'s, judgment, and the passage from Pothier referred to by him, in Smith v. Wheaicroft, — see note (k), stip., — and shoAYS how the same principles which justified Fby, J., in refusing the representee relief in that case required the Court of Appeal to grant it in the case before them. It was the object — by no means attained, unfortunately — of that ill-drafted measure, the Money Lenders Act, 1900 (63 & 64 Vict. c. 41) to render pseudonymity and anonymity im- possible and illegal, in the case of a usurer, or, in other words, to make their registered representations as to their identity material by statute. (re) Fellowes v. Gtvydyr (Lord), ubi sup., — see note (h), — was the case of a man repre- senting himself to be an agent of another, when in reality he was independent of him, being a purchaser from him. On the other hand, Moens v. Heyivorth (1842), 10 M. & W. 147 (representation that goods had been " invoiced to sellers as of first shipping quality " by shippers having distinct and independent position, whereas they were agents or partners of the representors), Smith v. Wheatcroft, cited in note [k), sup., Archer v. Stone, cited in note (■(), svp., and Gordon v. Street, cited in note (m), sup., were cases of the converse type, sc. of statements by the representor of his separate individuality, when in fact he was identical with, or the agent of, another person. Here again, the Money Lenders Act, 1900, was intended to give statutory materiahty to all such representations b3' usurers. A curious point, which should be noticed under this head, arose in Angus v. Clifford, [1891] 2 Ch. 449, C. A., where the question was mooted, though it became unnecessary to decide it, whether an express or implied statement as to a report of an expert being independent and disinterested, when in fact it was prepared at the instance and in the interests of a third person, is or is not, capable of being considered material, when there is no misrepresentation in the report itself. RoMEE, J., M-hose vie^v of the case rendered it incumbent on him to decide the point, held (pp. 456-458), that such a representation might be, and in that case ■was, most material, that is, to the inducement, and he instanced the cases of a valua- tion of a surveyor, or the opinion of a patent expert, as to which it might be most important for the representee to Itnow whether it had been prepared on behalf of Uie vendor, or the purchaser, of the land or invention, or was independent of either. The Court of Appeal differed from Rombr, J., as to the meaning of the representation contained in the prospectus in that case, Avhich, in their view, conveyed merely that the report referred to had been prepared " for the directors " in the sense of " for submission to the directors," and not (as Rombb, J., had held) in the sense of " under the instructions of the directors," in "\\'hich case there had been no falsehood at all, and it was not necessary to express anj- decisive opinion as to the materiality of the representation on the construction put upon it in the court below ; but Lihdley, L.J. (pp. 468, 469), expressed some doubt on the point, though he was careful to preface his remarks by describing it as " a matter on which I do not intend to rest my judgment"; whilst Bowek, L.J. (p. 476), said : "as to the materiality of the mis- representation I Ai-iU say nothiirg. It is a difficult point," and Kay, L.J. (at p. 480) : "I am not satisfied that in this case the statement is proved to be sufficiently material," any more than, in his view, a statement that it was reported by a particular mining engineer a certain mine existed in a certain place, and the mine did exist there, though the report had not been made by the specified engineer, could be considered material ; but, later, at p. 181, when dealing with the ciuestion of damage (which, for the purposes of that case, and his observations thereon, is not distinguishable m principle from the question of inducement), Kay, L.J., seems to reaUze that such a type of mis- rej)resentation at least might be material : " I can quite conceive it might, by way of argument, be put in this way . . . ' / should not have taken the shares at all if it had not been for this statement, and having taken the shares now, . . . damage has resulted to me,' '' and he concludes, " I am not quite conviiaced in my o-wn mind at present, and I wiU not gi\e any decided opinion upon it, that there is a damage which results direcUy from the false statement." It is submitted that the decision— for it was a decision — of Romee, J., A\as quite sound, and that it has in no way been over- ruled by the famt expressions of doubt contained m the dicta— for they amounted to no more— of Lindley and Kay, LL.JJ. §§ 129, 130. 139 siicli as horses, or pictures, and tlie like (o) ; all which representations, under the conditions above stated, but not otlierwise, may be material. In such cases it is idle to urge that the representation was immaterial to the contract, because this presupposes that the contract has already been entered into, and so begs the qu(>stion. The point is whether, but for the statement, the representee would have ever entered into the contract at all, or, in other words, whether the statement was material, not to the contract, but to the inducement ( p). 130. Representations by an infant that he is of full age {q), or by a (o) Generally speaking, the value of a picture gallery, library, stable, or collection of curios, is independent of the question who owns them, or has lately owned them, but is it well kno^^■n by auctioneers and agents for sale that in many cases a repre- sentation that such property comes from private hands is a great inducement to pur- chase, and that the fact that a horse, or a collection, belongs to, or has come from, a dealer, would debar many persons from having anything to do mth the sale. Hero again it is a question of materiality, not to the contract, but to the inducement. " New lamps for old " is the ordinary desideratum, but there are many cases where, to the knowledge of the representor, " old lamps for new " is the inducement. The poems which Chatterton attributed to the mediaeval priest were none the less works of genius because no Rowley ^vrote them, or existed ; nevertheless his falsehoods were intended to be, and were, an inducement to others to buy them, and, if they had been kno-mi to be the work of the unkno\^'n Bristol boy, they would never have commanded even the small sale they had, or procured the temporary patronage of Walpole. Phoedrus, mth a similar, and afterwards avowed, intention to induce purchases of his Fables, attributed many of his own compositions to jEsop, " ut quidam artifices nostro faeiunt saeculo, Qui pretium opcribus majus inveniunt, novo Si marmori ascripserunt Praxitelen suo." Statements of the above character as to the ownership, or recent o^vnership, of " goods and chattels " generally, wines, pictures, or horses, have been considered material, as between the parties, in Bexwell V. Christie (1776), Cowp. 395 ("sale of goods and effects of a gentleman deceased, at liis Jiouse in the country, by order of the executors " M-as the announcement, which was untrue, and Lord Mansfield, C.J., described it as a fraud on the public, and mentions, by way of illustration, the then well-knOAVn case of the sale of " a gentleman's wines " — the reporter in a note gives his name as Bradshaw — " where large quantities had been sent in belonging to other persons, and all sold at a very high price, under an idea they were his. The consequence was, most of the buyers were taken in "), Hill v. Gray (1810), 1 Stark. 434 (where the only point correctly decided, or assumed, by Lord Ellenborouqh, O.J., was that a representation, if it had been made, that the pictures there being sold were being sold for Sir Felix Agar, might have been a material representation), Arkivright v. Newbold (1881), 17 C. D. 301, C. A. (where it was argued, at p. 314, that " if I am induced to buy a picture by the statement that it comes out of the gallery of some well kno^^Ti collector, I cannot recover damages on the ground that it did not, if the picture be worth what I gave for it," on which James, L.J., at once observed : " that appears a dangerous doctrine. If I could repeat the observa- tion as true, I could sell the picture for more "), and Whurr v. Devenish (1904), 20 T. L. R. 385 (a case of a sale of a horse, in which Lord Alverstone, C.J., held that a false statement as to the horse being the property of the defendant, a private gentleman, whereas at the moment of the sale, it was owned by a jobmaster, was material, for it tended to induce a, belief in the hona fides of the sale, and to fetch better prices). With the last case cp. E. v. Kenriclc (1843), 5 Q. B. 49, where a representation to the same effect was held a false pretence. (p) This point was insisted upon by A. L. Smith, L. J., at pp. 645, 640, of Gordon v. Street, [1899] 2 Q. B. 641, C. A. (q) This is one of the illustrations given of " false affirmations " on which an action for deceit ^vill lie in Com. Dig. Action on the Case, A. 10. See Johnson v. Pye (1665), 1 Keb. 905, 913; Cory v. Gertcken (1816), 2 Madd. 40, 17 R. R. 180; Overton v. Banister (1844), 3 Hare, 503 ; Nelson v. Stocker (1859), 4 Do G. & J. 458 ; Re King, Ex parte The VnityJoint Stock &mi-^OToda«ion(1858),27 L. J. (Bankr.) 33 ; Lemprieve v. Lange (1879), 12 C. D. 075; ReJonen, Ex parte Jones (1881), 18 0. D. 109, C. A. ; and Levene v. Brougham (1909), 53 Sol. J. 243, C^. A. 140 COMMENTARY, CH. VI, S. 2, SUB-S. (2); S. 3, SUB-S. (1). married woman that she is a feine sole or a widow (r), are of obvious materiality, when made to one who, to the representor's knowledge, would not advance money or give credit to, or contract with the representor, if believed by him to be under age, or married, as the case may be, though it is not always quite easy to determine in what form, and to what precise extent, relief can be given {s). This sort of materiality, however, belongs rather to the first of the two classes abovementioned, inasmuch as repre- sentations of the character indicated must necessarily be material in all ordinary commercial transactions, and do not require the existence of special conditions, and the representor's knowledge of such conditions, to make them so. Sub-sect. (2). Burden of Proof , as regards Materiality. 131. From what has already been said, and the authorities generally on misrepresentation, it is quite clear that, unless expressly or impliedly admitted (as it very frequently is), materiality must be established by the representee (i) in addition to, and apart from, actual inducement (m) . This burden is usually discharged by a comparison of the terms of the representation itself with the proved or admitted circumstances of the case. Where the statement, in relation to those circumstances, is alleged to disclose ex facie its own materiality, the matter is the subject of argument only, when once the circumstances are shown ; but, in certain cases {e.g. where the representation is only an implied one, say, from the external appearance of an object) it may be necessary to produce some evidence of its tendency to deceive, which will not in all cases be presumed, as a matter of course, on the res ipsa loquitur theory {x). (r) Ganham v. Farmer (1849), 3 Exch. 169; Vav^han v. V anderstegen, Oates^s Case (1854), 2 Dr. 363 ; 100 R. R. 173 ; and Same v. Same, Othwaite's case (1854), 2 Dr. 408 ; 100 R. R. 199. (s) Thus, whilst it was decided, or recognized, that relief might be given in equity in respect of misrepresentations of the character in question, either by way of rescission, or " malcing good," in most of the cases cited in the last two notes, and, further, in Be King, Ex parte Unity Joint Stock Bank Association, sup., that they might support an estoppel; — it was held in Johnson v. Pye, sup., at p. 905, that no relief could be given at law by way of damages ("the judgment will stay for ever, else the whole foundation of the common law will be shaken ") ; and in Ganham v. Farmer, sup. {per Parke, B., at p. 699), as to coverture, and Levene v. Brougham, sup., as to infancy, it was held that no estoppel could be created by such representations. (t) See, generally, the cases cited in this Section, and in notes to § 204 in Ch. X, Sect. 1, post. (u) Per Jessel, M.R., at p. 502, and Sir Jambs Hannen at p. 504 of Mathias v. Yetts (1882), 46 L. T. 497, C. A. (x) Thus, in London General Omnibus Go. v. Lavell, [1901] 1 Ch. 135, C. A., it was held that the judge was not entitled to infer a tendency to deceive from a mere inspection of the external appearance of the rival omnibuses, but that evidence was necessary to estabUsh it. On the other hand, in the " hermaphrodite " case, and the " antique " case, cited in notes (a) and (6) to § 64, in Ch. Ill, Sect. 2, it was thought that the malformed animal, in the former, and the curio, in the latter, " told its own lie," and bore on its face the evidence of its capacity to induce and mislead. §§ 130-133. 141 Sect. 3. Questions op Law and Fact in Relation to Inducement AND Materiality. 132. Both materiality and inducement are questions of fact, as stated below in Sub-sect. (1), but subject to certain preliminary considerations wliicli may be matters of law, as explained in Sub-sect.(2) . In the determina- tion of any such issue of fact, the several matters mentioned in Sub-sect. (3) are to be borne in mind by the tribunal entrusted with this duty. Sitb-sect. (1). Inducement and Matcrialitij when Questions of Fuet. 133. That inducement, and also materiality, whenever either of tlicm is put in issue, are primd facie questions of fact, may be gathered from all the cases generally which have been cited in the preceding part of this Chapter {y). Whether the representee was actually induced, cannot be inferred as a matter of law. In a case where, out of a large number of plamtifis in an action based on misrepresentations in a prospectus, twelve did not appear at the trial, and afterwards appealed against the judgment which was necessarily given against them (the others, who did appear, having succeeded), the Court of Appeal had no alternative but to dismiss their appeal, Lord Halsbury, L.C, observing that " it certainly is in the highest degree improbable that these plaintiffs did not see the pro- spectus, or that they were not influenced by the representation contained in it ; but we are all of opinion that there is no evidence of those facts upon which a court of justice can act " {z). And it is no less well established that primd facie materiality is an issue of fact, to be left to the jury, if there is one (a), and to be found as a fact by the judge, if there is not (6) ; and where the judge has taken upon himself to withhold this issue from a (y) See Article 19 (1) of the Code, and the authorities referred to in the notes to Sects. 1 and 2 of this chapter, and, particularly, Andrews v. Mockford, [1896] 1 Q. B. 372, C. A., at p. 374 (as to the questions left to the jury — see Questions 4 and 11). (2) Arnison v. Smith (1888), 41 C. D. 348, C. A., at p. 374. The same high authority expressed himself in similar terms, in relation to a question of estoppel by representa- tion, in Bloomenthal v. Ford, [1897] A. U. 156, H. L., at p. 162 : " I entertain a doubt whether it is ever true, in a case where one person has been induced to act by the misrepresentation of another, that you can go beyond the fcict whether it is so, or not. In arriving at a conclusion upon this question of fact, like every other question of fact, all the circumstances must be considered. A statement may be made so preposterous in its nature that nobody could believe that any one was misled." (a) In Flinn v. Headlam (1829), 9 B. cfe i'. 693, the question was left to the jury ; and in Andrews v. Mockford, ubi sup., it appears from p. 374 that, besides the two questions referred to in note {y), sup., addressed to the issue of inducement. Lord RrrsSELL, C.J., left to the jury the further question (Question 10) of materiality (" was it " — the telegram — " calculated to bring about the result that the plaintiff and others would buy shares in the market ? "). In Flinn v. Headlam, sup., the jury found that the representation was not material, and the court considered this finding so unreabon- able that they ordered a new trial, but no one suggested that it was not a question for a jury to determine. (6) In Be Universal Non-Tariff Fire Insurance Co., Forbes dk Co.'s Case (1875), L. R. 19 Eq. 485 (see pp. 493, 494, 496), Capel & Co. v. Sim's Ships ComposUioii Co. (1888), 58 L. T. 807 (see pp. 809, 810), and Whurr v. Devenish {WOi), 20 T. L. R. 385, a judge, sitting without a jury, determined the issue of materiality as a fact. 142 COMMENTARY, CH. VI, SECT. 3, SUB-SECT. (1). jury, tlie conditions not being such as are described in tire next Sub-section, lie lias been lield to have usurped the functions of the jury, and a new trial has been ordered (c). In relation to marine insurance, this rule finds a place in the provisions of the statute which codifies the law on this subject {d). 134. Inducement and materiality are, as has been already observed (e), not only questions of fact, but separate questions of fact, requiring indepen- dent proof. Very frequently, it is true, the probability of inducement is so great, or, in other words, the materiality is so palpable, that actual in- ducement may be found with little, or even in some extreme cases, with no further evidence ; just as, in cases of malicious prosecution, the absence of reasonable and probable cause may be so gross and glaring as to justify the further step of finding malice as an inference of fact from this cir- cumstance alone. But, in the one class of the case as in the other, the two things are distinct issues. A theory, indeed, was prevalent in the earlier stages of the history of the law of misrepresentation — a theory which was the natural outcome of the law of evidence then existing (/), and which even in recent times, when such excuse had ceased to be admissible, received the embarrassing imprimatur of no less an authority than Jessel, M.E. (g) — ^that from proved materiality the court is at liberty to infer actual inducement, as iiiatter of laiv, without any evidence whatso- ever. This heresy has now been effectually exploded, or explained away, by the highest authorities, who have placed beyond doubt that only in (c) Bevan v. Adams (1870), 22 L. T. 795, where, the representation being that half the first issue of shares in a company had been subscribed for, which was taken to imply a further statement that the .deposits had been paid. Best, C.J., took upon himself to withdraw from the jury the question of whether the paj^ment of the deposits was material or not, and to hold, as matter of law, that it could not be so. This was held til be flxong, and a nc^r trial A\'as ordered. On the other hand, in Hill v. Gray (ISIO), 1 Starlf. 434, Lord Ellesbokough, C'.J., ignoring the jury, took upon himself lo rule that the representation as to the ownership of the picture was material, and must have induced the representee, A\-ho was setting up the misrepresentation as a defence, and he non-suited the plaintiff accordingly. This ruling would of course at the present day be held quite impossible. {d) See s. 20 (7) of the Marine Insurance Act, 1906 (6 Edw. 7, c. 41) : " whether a particular representation be material or not is, in each case, a question of fact." (e) See § 114, ante. {/) Before the passing of the Evidence Act, 1851 (14 & 15 Vict. c. 99), whereby (see s. 2) the parties in an action were for the first time aUo-\\'ed to give evidence, the representee obviously could not prove inducement as a fact otherwise than by evidence of materiality as a fact. It was natural, therefore, that in those days, the two issues should be confounded. Accordingly, whilst -n'c find a great deal of discussion in the early authorities as to materiality, we find very little importance attached to inducement, except as involved in, and consequent upon, if not identical irith, materiahty. See the observations of Lord Blackburn on this point, cited inf. in note [h). {(/) The deliverance in question (which has necessitated so much subsequent explanation, with a view to shomng that Jessel, M.R., could not have meant what he appears to have said, or correction, on the assumption that he did) is to be found on p. 21 of Redgrave v. Hurd (1881), 20 C. D. 1, C. A. : " A\-hen a person makes a material representation to another to induce him to enter into a contract, and the other enters into that contract, it is not sufficient to say that the party to whom the representation was made does not prove that he entered into the contract relying upon the representa- tion. If it is a material representation calculated to induce him to enter into the contract, it is an mference of law that he was induced by the represontition to enter. §§ 133, 134. 143 the rarest instances can such an inference be drawn at all, and that, when it is drawn, it is still an inference oi fact (h), and has, even tlien, no further operation than to shift the burden from the shoulders of the representee to those of the representor ; that is to say, that when once the former has established a case of obvious materiality, he may thereby have established at the same time a strong primd facie case of inducement also, such a case as makes it incumbent on the latter to prove the absence thereof (*'), but not an irrebuttable case, which would be the corollary of any rule that the implication is one of law. And, even in such circumstances, the fact that the representee does not choose to go into the box, is some evidence tending to qualify the conclusion which might otherwise result from proof of palp- able materiality, and ought to be taken into consideration from this point of view by the tribunal to whom it falls to adjudicate on the issue {k). {h) Smith T. Chadwick (1882). 20 C. D. 27, C. A., where, at p. 44, Jbssel, M.R., states the rule correctly : " the inference " (so. of fact — this is clear from what follows) " is, if he entered into the contract, that he acti-d on the inducement so lield out : but even then you may show that in fact he did not so act;" Matliias v. Yeits (1882), 4(5 L. T. 497, C. A., per Jessel, M.R., at p. 502 (•\\'ho here again tacitly revokes his previous error), Sir James Haxxen at p. 504. and Lush, L.J., at p. 507 ; Smith v. Chadii-irk (1884), 9 App. Cas. 187, H. L., aflfirming the decision of the G. A. reported as above, where Lord Blackeukn, at p. 196, says : " I do not think it is necessary . . . that the plaintiff always should be called as a witness to swear that he acted on the induce- ment. At the time when Pasley v. Freeman was decided, he could not be so eaUed," and then, after referring to the language of Jessel, M.R., in the Court of Appeal, as cited above, and approving it, he proceeds : " in Redgrave v. Hurd, the late Master of the EoUs is reported to have said that it was an inference of law " — (and not merely, as Lord Blackbubn held it to be, " a fair inference of fact "). " If he really meant this, he retracts it in his observations in the present case. I think it is not possible to maintain that it is an inference of law. ... I quite agree that, being a fair inference of fact, it forms evidence proper to be left to a jury that he was so induced " ; Smith v. Land and Hoibse Property Corporation (1884), 28 C. D. 7, C. A., per Bowen, L. J., at p. 16 : "I cannot quite agree ^^ith the remark of the late Master of the Rolls in Red- grave v. Hurd that " — he then quotes the passage cited in the last note — " and I think that probably his Lordship hardly intended to go so far as that, though there may be, strong reason for drawing such an inference, as an inference of fact " ; Hughes \. Twisden (1886), 55 L. J. (CH.) 481, where, after discussing the above-cited authorities, and remarking that Jessel, M.R., could not have meant what he is reported to have said in Redgrave v. Hurd, sums up as follows : " looking at all these cases ... I come to the conclusion that it is not a presumption of law, but an important piece of evidence, from which, if there is nothing else, the court may draw the inference of fact that the plaintiff was induced by the statement to enter into the contract " ; and Arnison v. Smith (1888), 41 C. D. 348, C.A., per Lord Halsbuby, L.C, at p. 369, where he endorses the statement of the law contained in the passages above cited from the judgment of Jessel, M.R., in the Court of Appeal in Smith v. Chadwick, and not the statement made by him in Redgrave v. Hurd. For the application of the above principles to the statutory cause of action in relation to prospectuses, see Ch. XIII, Sect. 1, Sub-s. (4). (i) See the passages cited in the last note from the judgment of North, J., and Lord Halsbuey, L.C. In Moss G. Paton, [1896] A. C. 381, H. L. [per Lord Davby at pp. 397, 398); Tallerman v. Dowsing Radiant Heat Co., [1900] 1 Ch. 1 ; and Stevens v. Hoare (1904), 20 T. L. R. 407, per Joyce, J., at p. 409. See, as to the proof of damage in the statutory action against directors of companies in respect of prospectuses, Ch. XIII, Sect. 1, post. 158 COMMENTARY, CH. VIII, SECT. 1, SUB-SECTS. (1), (2). CHAPTER VIII. WHO AKE DEEMED PARTIES TO A MISREPRESENTATION. 152. In any proceeding of whatsoever nature, in which misrepresentation is set up, either as a cause of action, or ground of complaint, or as an aflirmativeplea or answer, the only person entitled to relief is the representee, and the only person liable is the representor, subject to the rules of pro- cedure as to the transmission of such title and liability by reason of death, marriage, insolvency, assignment, and the like, and as to the right and duty of certain persons to sue and defend on behalf, or as representing the estate, of any person under disability (a). It is necessary, therefore, before discussing in detail the various remedies and forms of relief avail- able to the representee against the representor (&), to ascertain precisely who are the persons deemed in law to come within these several designations. Sect. 1. The Representor. 153. A representor is described in Article 1 of the Code as a person by or on behalf of whom the representation is made. This involves an examination of the topics of agency, co-agency, sub-agency, and joint and several responsibility in respect of representations. Sub-sect. (1). General Statement. 154. The following is a general statement of the rules for deternnning what persons are deemed " representors," and responsible as such (c). In the first place, only he who actually makes the representation is liable for its consequences, if there was no principal or partner on whose behalf he made it; but if there was any person by whose express or imphed authority he purported to, and did, make it, such latter person is deemed the representor or one of the two representors, as the case may be {d). Secondly, one of two co-agents, or a sub-agent, does not, merely as such, render the other co-agent, or the intermediate agent, respectively, liable (a) These rules, as regards actions for damages, proceedings for rescission, and afiirmative defences, are stated, or referred to, in Ch. X, Sect. 5, Ch. XI, Sect. 6, and C'h. XII, Sect. 3, post, respectively. (6) See Chapters X, XI, and XII, posi. (c) These rules are stated in Article 22 of the Code. [d) Vide Sub-s. (2), post. §§ 152-156. 159 as a principal for liis misrepresentation (e). Thirdly, where it is necessary to show fraud, an innocent principal is liable for the fraud of his agent in making the misrepresentation, and, for this purpose, it makes no difierence that the principal is a corporation (/). Lastly, all who concur in making any misrepresentation are jointly responsible to the representee for the consequences of its untruth, and, where it was fraudulent also, are jointly and severally responsible (g). Suh-sect. (2). Principal liable for his Agent's Act of Misrepresentation. 155. Any person, whether principal or partner, and whether generally or for the purposes of the particular transaction, by whose express or implied authority a representation purported to be and was made, is accountable to the representee, if it turns out to have been false, in any proceedings for resciss'on or analogous relief. Where damages are claimed, and fraud therefore must be proved, different considerations arise, which form the subject of separate treatment below (h). But in an action of contract, which an action for rescission is, the agent's representation, where he both purported to, and did, make it on behalf of a principal, whether an individual, or a firm in which he is a partner, is the act of such principal. Where the authority conferred was express, no difficulty arises ; where it is alleged to have been an implied authority, the question, in each case, must be determined in accordance with the principles of the law of agency, or of partnership, which for this purpose is only a branch of the law of agency (i). 156. In relation to misstatements by agents of a company, Eomer, J., has made some useful observations, which can easily be adapted so as to admit of a general application {Jc). He classifies the agents who can bind a company by such misrepresentations as follows : (1) general agents, e.g. the directors, acting at a board meeting, or otherwise as a board ; (2) special agents, i.e. persons expressly authorized to procure subscriptions for shares, or whose acts in so doing are afterwards adopted and ratified by the company ; (3) persons who, without authority, have induced contracts to take shares by misrepresentations, of the making and the falsity of which representations the company becomes aware before the contracts are completed ; and (4) persons who, without authority, or even before the company has been incor- porated, have issued a prospectus or other document, where the company knows of the issue, and knows that applications for sjiares have been (e) Vide Sub-s. (3), post. if) Vide Sub-3. (impost. {g) Vide Sub-s. (5), post. (h) Vide Sub-s. (4), post. (i) See, as to the various classes of agents. Lord Halsbury's Laws of England, title, " Agency," vol. i, pp. 152, 153, and the various treatises on agency and partner- ship. The same principles apply to representations on which estoppel is founded, see Lawi of England, title, "Estoppel," vol. xiii, pp. 385, 386. As to principal and agent, in relation to dolus, see App. C, Sect. 2, Sub-s. (4). {k) Lynde v. Anglo-Italian Hemp Spinning Co., [1890] 1 Ch. 178, at pp. 182, 183. 160 COMMENTARY, CH. VIII, SECT. 1, SUB-SECTS. (2), (3), (4). based on representations contained in such prospectus or document, and, though ignorant in the first instance of the nature of the representations, discovers, before the contracts are completed, what they were, and that they were false. Wherever the alleged agent has been shown to have had the implied authority of the alleged principal, and to have purported to act thereunder, such principal has, in accordance with the above and other principles applicable to the determination of this question, been held liable as a representor {I) ; where otherwise, he has been held not so liable (m). 157. In cases of the above description, that is to say, where rescission merely is sought, and the proceedings are not framed in tort, and the - alleged principal escapes, the alleged agent remains, as he always was from the first, liable (assuming, of course, that all other requisites of the cause of action are satisfied). Conversely, where the alleged principal is held to have been such, the agent escapes (w), for the contract which is sought to be avoided was not made with him, but with the principal ; and the old and disreputable practice of adding agents, particularly solicitors, as co-defendants to such proceedings, whether for the purpose of mulcting them in costs, or to obtain discovery, or with the still more shameful motive of inducing them to put pressure on their client co-defendants to settle the action, has long since been denounced by the highest judicial authority (o), and is now, happily, obsolete. (Z) As in Ee Metropolitan Coal Consumers Association, Karberg's case, [1892] 3 Ch. 1, C. A. (per Ldstdley, L.J., at p. 13) ; and in Re Metal Constituents, Ltd., Lord Lurgan's Case, [1902] 1 Ch. 707, where the company would have been held Uable, on the principle of the last case, but for the fact that the appUcant had disabled himself from relying on the point by having signed the memorandum of association (see pp. 709, 710). Both the above were cases where the company knew of the prospectus, and of the misstatements therein, before they were acted upon, though it had been issued by persons who were not, and (since the company had not then been registered) could not have been its agents at the time. (m) As was the case in New Brunswick and Canada Railway and Land Co. v. Cony- heare (1862), 9 H. L. C. 711 (secretary of company held to have no impKed authority to make representations as to the value of its shares) ; Western Bank of Scotland v. Addie (1867), L. R. 1 H. L. (Sc.) 145, per Lord Ceanwokth, at pp. 166-168; and Tliorne v. Heard and Marsh, [1895] A. C. 495, H. L., where it was held that the alleged agunt was not in law the agent of the alleged principals, the mortgagees, but of the mortgagor, per Lord Hebschell, L.C, at p. 502, and Lord Davey at p. 506. (n) Eaglesfield v. Londonderry [Marquis) (1878), 26 W. R. 540, H. L., per Lord Blackburn at p. 541, disagreeing, to this extent, with certain expressions used by Jessel, M.R., in the court appealed from — (1876), 4 C. D. 693, C. A. — though agreeing \vith the decision itself : "as to the directors, it seems to me that neither at law nor in equity is an agent personally Liable upon a contract by which he, mthin the scope of his authority, renders his principal hable, though it is of course otherwise in the case of a tort." The opinion to the contrary which was expressed by Romilly, M.R., in Pulsford V. Richards (1853), 17 Beav. 87, and again at pp. 238, 239 of Jennings v. Broughion (1854), 17 Beav. 234, clearly cannot now be accepted at law if it ever was. (o) Lord Selbobne at p. 255 of Barnes v. Addy (1878), 9 Ch. App. 244, H. L., and at pp. 40, 41 of Burstall v. Beyfus (1884), 26 C. D. 35, C. A., as also Jessel, M.R., at p. 502 of Mathias v. Yetts (1882), 46 L. T. 497, C. A., reprobate the practice in the strongest terms. It is no longer possible to say, as Shadwell, V.-C, did in Beadles r. Burch (1839), 10 Sim. 332, that solicitors, to whom " pusity of intentions " are expressly attributed, can be properly joined as defendants. Aliter, if they are shown to have assisted, or been implicated in, any improper conduct, in which case they may be mulcted in costs : see Ch. XV, Sect. 2, Sub-s. (3), post. §§ 156-160. 161 Suh-scct. (3). The Position ofOo-af/ciilti and Sub-agents. 158. One of several agents of the same principal does not, as such, by any representation wliich he may make, render his co-agent liable to the representee for the consequences thereof (jo). Some express authority must be shown in Mc re, if such a result is to follow {q). The only persons liable in such cases, failing proof of particular instructions, are (1) he who actually made the representation ; (2) those who concerted it, or took part in it ; and (3) the principal for whom the agent, in the performance of his duties as agent, made it (f). 159. A sub-agent may render the ultimate principal liable for his representations, on the basis of implied authority, if the proved circuni- stances are such that it must be deemed to have been intended and agreed by and between the ultimate principal and the intermediate agent, that the latter should appoint a substitute for the purpose of discharging in his stead, but on behalf of the former, duties including or involving the making of representations of the character of that sued upon (s). Other- wise, direct intervention and express authority on the part of the ultimate principal must be shown by evidence {t). In no other way can the principal become responsible as a representor. Sub-sect. (4). The Liability of Principal and Agent resfectively for Fraudulent Misrepresentation. 160. Hitherto the respective liability of principal and agent for mis- representation has been considered from the point of view of contract. It remains to examine the more difficult questions which arise when the action is to recover damages, and when (since such an action can only be brought for fraudulent misrepresentation) there are involved the separate characteristics, not only of tort, as distinguished from contract, but also of a state of the mind, as distinguished from a physical act. To any one who reviews the history of the growth of the now settled principles of law in relation to this particular kind of tort, it will be apparent that only by very slow and painful stages has English jurisprudence at length evolved a just and sound body of doctrine, and that a long and persistent succession of fallacies had first to be routed and overthrown before this desirable result could be achieved. It may now be stated summarily that the rules applicable to principal and agent, in reference to fraudulent misrepresen- tation as a tort, are, with one exception, exactly the same as those Op) Weir V. Bell (1878), 3 Ex. D. 238, C. A. {per Bkamwbll, L.J.,at p. 245, and CoCKBTJBN, C.J., at pp. 247, 248, 250). Cp. Be Denham priv o/xaj/xox ', r) Se yXSxra-' dvwfx.oTO';. 164. The third misconception in relation to the question of a principal's responsibility for the fraudulent misrepresentation of his agent- — which, again, was the outcome of the persistently hesitating and illiberal attitude make representations which will not render such principal liable, the rule laid down would not apply), and at p. 364 (where Parke, B., expresses his concurrence with this view)- This was exactly what happened in Imdgater v. Love, cited in note (to), i?ifrHI), 2 U. &G. 475; Taylor v. Ashton (\%ii), 11 M. & W. 401 (perPABKE,B.. at p. 413) ; Collins v. Evans (1844), 5 Q. B. 820, Exch. Ch. (at pp. 827-830) ; Ormerod V. Huth (1845), 14 JI. & W. 651, 664, Exch. Ch. ; Longmeid v. Holliday (1851), 6 Exch. 761 (per Cur. at p. 766) ; Dickson v. Renter's Telegram Co. (1877), 3 C. P. D. 1, C. A. (at pp. 6, 7) ; Schroeder v. Mendel (1877), 37 L. T. 452, C. A. ; Joliffe v. Baker (1883), II Q. B. D. 255, Diy. ( 't. ; Bellairs v. Tucker (1884), 13 Q. B. D. 562, Div. Ct. (j)cr Desman. J., at p. 576, and Manisty, J., at pp. 580-582); Burtsal v. Bianchi (1892), 05 L. T. 678 ; and Parsons v. Barclay <(■ Co. (1910), 103 L. T. 196, C. A. The foUomng are the equity cases, in which fraud not being proved or (in some cases) even alleged, the action failed ': Bvaiis v. Bicknell (1801), 6 Ves. 174 (per Lord Eldon, L.C, at pp. 188, 191, 192) ; Rashdall v. Ford (1866), L. R. 2 Eq. 750, 754; Ship v. Crosskill (18V0), L. R. 10 Eq. 73 ; Redgrave v. Hurd (1881), 20 C. D. 1, C. A. (where the counter-claim, so far as it claimed damages, was dismissed, because there was no proof of fraud ; so far as it claimed rescission, where such proof was unnecessary, it succeeded : per Jessel, M.R., at p. 12) ; Derry v. Peek (1889), 14 App. Cas. 337, H. L. (per Lord HBRSCHELLat p. 374) ; Glasier v. Rolls (1889), 42 C. D. 326, C. A. ; Angus v. Clifford, [1891] 2 Ch. 449, 0. A. (per Lindley, L. J., at pp. 462-468, Bowen, L. J., at p. 471, Kay, L.J., at p. 479) ; Low V. Bouverie, [1891] 3 Ch. 82, C. A. ; Coleman v. North (1898), 47 W. R. 57 ; Manners v. Whitehead (1898), 1 F. 171 ; and Lagunas Nitrate Co. v. Lagunas Syndicate, [1899] 2 Ch. 392, C. A. (per Lindley, M.R., at pp. 427^31). As to the con- sequence of alleging fraud unnecessarily, see Ch. XI, Sect. 1, Sub-s. (2). (p) 1'he cases cited in the last note are of far more importance, as being what Bacon calls " prerogative instances," which test the principle of law for which §§ 204, 205. 199 Sect. 2. AFPiRjrATivE Defences to Actions for Damages for Fraudulent Misrepresentation. 205. A representor, for the purpose of resisting an action or counter- claim for damages for fraudulent misrepresentation, is entitled to set up they are cited, than the oases now to bo mentioned ; but it may, nevertheless, be of some use to give a roui^h classitication (-according to the subject-matter of the repro- seutation) of the more important decisions in which the representee was held entitled to damages on proof of fraud in addition to falsity, or would have been so held, but for defects of other kinds in Ms evidence. The groups are as follows : ( 1 ) Representations on sale of interests in land : Pewtress v. Austen (IS16), 6 Taunt. 522 ; Brandling v. Plummer (ISoi), 2 Dre-iiTy 427, 100 R. R. 209 ; Richardson v. Sylvedcr (1873), L. R. 9 Q. B. 34 ; and Cann v. Willson (1888), 39 C. D. 39, a case which is no longer law, by reason of the unsound decision that the plaintiff was a representee, but not on any ground which affects its correctness in any other respect ; see also Ch. XIII, Sect. 2. Sub-s. (1), as to oases of implied misrepresentation on auction sales of land. (2) Representations on sale of chattels : Jones v. Bowden (1813), 4 Taunt. 847 ; Adamson V. Jen-is (1827), 4 Ring. 66 ; Langridge v. Levy (1838), 4 M. & W. 337, Exch. Ch. ; Wright V. Crookes (1840), 1 Scott (s. e.) 685, Exch. Ch. ; Coleman v. Riches (1855), 16 C. B. 104 ; Udell v. Atherton (1861), 7 H. & N. 172 ; Mvllett v. Mason (1866), L. R. 1 C. P. 559 ; Waddell v. Blochey (1879), 4 Q. B. D. 678, C. A. ; Ludgater v. Love (1881), 44 L. T. 694, C. A. ; Gill v. ipDowell, [1903] 2 Ir. R. 463 ; and Malcolm Brunker & Co. V. Waterhonse & Sons (1908), 24 T. L. R. 854 ; and see Ch. XIII, Sect. 2. Sub-s. (2), as to impUed misrepresentations on auction sales of chattels. (3) Representations in prospectuses, and sim ilar documents, issued by companies, as to their undertakings, property, and affairs : Clarke v. Dickson, No. 2 (1859), 6 C. B. {n. s.) 453 ; Scott v. Dixon (1859), 29 L. J. (exch.) 62 n. ; Bedford v. Bagshaw (1859), 4 H. & N. 538 ; Peek v. Chirney (1873), 6 H. L. 377 ; Weir v. Bell (1878), 3 Ex. D. 238, C. A. ; Edgington v. Fiizmaurice (1SS5). 29 C. D. 459, C. A. ; Knox v. Hayman (1892), 67 L. T. 137, C. A. ; Andrews v. Mockford, [1896] 1 Q. B. 372, C. A. ; Gerson v. Simpson, [1903] 2 K. B. 197, C. A. ; and J. & P. Coats, Ltd. v. Grassland (1904). 20 T. L. R. 800. (4) Representations hy firms or individuals as to takings, earnings, profits, etc., of a business or undertaking : Dobell V. Stevens (1825), 3 B. & C. 623 : Pearson v. Wheeler (1825), Ry. & M. 303 ; 27 R. R. 751 ; Bowring v. Stevens (1826), 2 C. & P. 337 ; Pilmore v. Hood (1838), 5 Bing. N. C. 97 ; and Richardson v. Dunn (1860), 8 C. B. {n. s.) 655. (5) Representations as to validity of transactions, authority and power to do certain acts, genuineness of instru- ments, etc. : Barley v. Watford (1846), 9 Q. B. 197 ; Eastwood v. Bain (1858), 3 H. & N. 378 ; West London Commercial Bank v. Kitson (1884), 13 Q. B. D. 360, C. A. ; British Mutual Banking Co. v. Charnwood Forest Railway Co. (1887), 18 Q. B. D. 714, C. A. ; Marnham v. Weaver, [1899] 80 L. T. 412 ; and Kettlewell v. Refuge Assurance Co., [1908] 1 K. B. 545, C. A. : with which compare the cases cited in note (I) to § 199, as to fraudulent misrepresentation of authority. (6) Representations as to a third person's credit : Pasley v. Freeman (1789), 3 Term. Rep. 51 ; Tapp v. Lee (1803), 3 B. & P. 367; Hamar v. Alexander (1806), 2 B. & P. (n. k.) 241 ; Biddle v. Levy (1815), 1 Stark. 20; Foster v. Charles, No. 1 (1830), 6 Bing. 396; Foster v. Charles, No. 2 (1830), 7 Bmg. 105 ; Corbett v. Broum (1831), 8 Bing. 33 ; Bar wick v. English Joint Stock Bank (1867), L. R. 2 Exch. 259 ; Ramshire v. Bolton (1869), L. R. 8 Eq. 294 ; Leddell v. McDougal (1881), 29 W. R. 403, C. A. ; and the oases of fraudulent misrepresentation of credit, orally made, which failed only because of the statutory objection, cited in the notes to Sect. 2, Sub-s. (4) of this Chapter, post. (7) Representa- tions as to personality, and identity : see several of the cases cited in the notes to § 129, ante. (8) Representations as to the safety of a place, a chattel, or an investment . see, as to the two former species, some of the oases cited in the notes to § 145, ante ; and, as to safety of investments, Ingram v. Thorpe (1848), 7 Hare, 67, and Smith v. Pococke (1854), 2 Drewry 197; 100 R. R. 80. (9) Miscellaneous representations: Denton v. G. N. Ry. Co. (1856), 5 E. & B. 860 (railway time-table), Burrows v. Rhodes ; [1899] 1 Q. B. 816, C. A. (misrepresentation that the " Jamieson Raid " had the sanction and approval of Her Majesty) ; Pritty v. Child (1902), 71 L. J. (k. b.) 512, Div. Ct. (water- finder) ; Dott V. Brickwell (1906), 23 T. L. R. 61 (misrepresentation by a money- borrower inducing an unregistered money-lender to make a loan) ; 8. Pearson ib Son, Ltd. V. Dublin Corpn., [1907] A. C. 351, H. L. (misrepresentation on plan of existence and position of a certain wall) ; and Boyd and Forrest v. Glimgoto and. S. W. Railway Co., [IQll] So. Ct. of Sess. Cas. 33 (misdescription of nature of soil to bo excavated by contractors). 200 COMMENTARY, CH. X, SECT. 2, SUB-SECT. (1). certain affirmative defences, special to this class of tort, in addition to those which may be raised to actions of tort in general, whether at com- mon law or by statute, such as release {q), illegality (r), estoppel by res judicata («), or a statute of limitations (i). With this latter class of plea this treatise is not immediately concerned. The former class, however, which contains five species, four of them non-statutory, and one the creation of statute in reference to misrepresentations of a certain description, it is necessary to discuss separately. The burden of establishing any affirma- tive defence, as the word " affirmative " itself imports, is upon the repre- sentee (x). Sub-sect. (1). Representor's Knowledge of the Truth. 206. A representee who knows the truth is not deceived. Proof, there- fore, by the representor of such knowledge on the representee's part is a good answer in whatever form of proceeding the representee is setting up the misrepresentation, whether in a form which necessitates the establish- ment of fraud (y) as in the kind of action now under consideration, or by {q) Article 29 of the Code states the several affirmative pleas to actions for damages. Where release is set up, the exact terms and limits of the instrument must be scruti- nised : thus, in Turguand v. Marshall (1869), 4 Ch. App. 376, Avhere the liquidator had released a shareholder from all claims against him as such shareholder, or as a contributory, this was held to be no release of the liquidator's claims against him as a director for fraud. (r) This plea is of no avail when the very misrepresentation consisted either in a fraudulent misrepresentation of the general law (see Ch. II, Sect. 4, Sub-s. (2), anU), or in a statement of facts which, if true, would have rendered the transaction legal : Burrows v. Rhodes, [1899] 1 Q. B. 816, Div. Ct. And a money-lender who, being unregistered, could not recover the amount of his loan, the contract being illegal, was nevertheless held entitled to sue for damages for a fraudulent misrepresentation whereby he was induced to advance the money, and a plea of illegality to such an action is bad : Dott v. Brickwell (1906), 23 T. L. R. 61. (s) See Lord Halsbury's Laws of England, title, " Estoppel," vol. xiii, pp. 325-361. But, if the judgment was itself obtained by fraud, there is no estoppel : ibid., pp. 351, 352. As to setting aside of judgments so obtained, see Ch. XIV, Sect. 1 , Sub-s. ( 1 ), post. (t) See the various treatises on the Statutes of Limitations, and Ch. XI, Sect. 4, Sub-s. (1), post. The statutes afford no answer to a case of fraud against a trustee : Dodby V. Watson (1888), 39 C. D. 178 ; and, in any action, whether founded on fraudu- lent misrepresentation, or on any other cause of action, it is a good reply to a plea of the statute, that the plaintiff did not discover, and had no reasonable means of discovering, the fraudulent character of the representation mthin six years of action brought : Oibhs V. GhiOd (1882), 9 Q. B. D. 59, C. A. ; Latorance v. Norreys, [1890] 15 App. Cas.'210, H. L. (where, however, the concealed fraud was not even alleged in a form which the court could take any notice of). Fraudulent misrepresentation cannot be " an act done in pursuance of a public duty," "within the meaning of the Public Authorities Protection Act, 1893 : S. Pearson & Son, Ltd. v. Dublin Gorpn., [1907] A. C. 351, H. L. (per Lord Lokeburn, L.C, at p. 354, Lord James at p. 362, and Lord Atkikson at pp. 367, 368). (x) See, generally, the cases cited in the notes to this Section where, not having discharged this burden, the representee failed in his action. (y) It has been thought convenient to deal in this place, once for all, ^vith the affirmative plea in question, since it is common to all forms of proceeding for mis- representation, and, when describing hereafter the affirmative pleas to rescission, and the affirmative replies to a defence setting up misrepresentation, — see Ch. XI. Sect. 4, Sub-s. (1), and Ch. XII, Sect. 2, respectively — it a\t11 be sufficient merely to refer to this present statement. It is clear from the many cases cited in the notes immediately following that, where a case of actual and full knowledge is made out, the defence is complete : but the paucity of the reported decisions in which the plea has succeeded is some evidence of the extreme difficulty in discharging the very serious burden §§ 205-207. 201 way of a claim to avoid a contract (j), or an affirmative plea to an action brought to enforce it («), when it is immaterial whether the mis- representation was fraudulent or innocent. In all eases alike the repre- sentee cannot be heard to say that he was misled by a statement whicli was intended to, but did not in fact, mislead him, or to complain even of a deliberate and proved perversion of facts, of the exact truth of wliich he had complete information and cognisance. 207. It is sufficient, in order to make good the plea to prove either that the facts were within the knowledge of the representee when the statement was made, or that they were subsequently made known to him from other sources of information, or disclosed by the representor himself, before the representation was acted upon (6) ; for, as has been seen (c), every repre- sentation is a continuing one during the interval, if there is an interval, between the making of it and the representee's alteration of position. If the representor's disclosure is made after the latter date, it is entirely ineffectual, unless accornpanied by complete restitution or compensation, or at least an offer thereof {d). imposed on the representee, as stated in the next three paragraphs of the text. There does not seem to be a single example of its success in any action for fraudulent mis- representation, imless it be Eaglesfield v. Londonderry [Marquis) (1878), 26 W. R. 540, H. L. (per Lord Hathebley at p. 541, who refers to the plaintiff's full Imowledge of the acts and circumstances of the company, as one amongst other reasons why his action ought to fail), and only a very few instances in the other two classes of case, as to which see the next two notes. (2) Examples of proved knowledge of the truth constituting a bar to an action or analogous proceeding for rescission are : Atwood v. Small (1838), 6 Cll. & F. 232 [per Lord CoTTENHAM, L.C., at p. 390, and Lord Brougham at pp. 448-^50) ; Vigers v. Pike (1842), 8 CI. & Fin. 562 {per Lord Cottenham, L.C, at p. 648) ; Lumley v. Des- horough (1870), 22 L. T. 597 ; Beghie v. Phosphate Sewage Co. (1875), L. R. 10 Q. B. 491 (per Cur., at pp. 498, 499) ; Be British Burmah Lead Co., Ex parte Vickers (1887), 56 L. T. 815 ; and Wasteneys v. Wasteneys, [1900] A. C. 446, P. C. (a very curious case, in which it was proved (see p. 449), that the plaintiff, who professed to have been deceived by his \\'ife's asseverations of chastity into executing a deed of separation, did not in fact believe a word of them, and positively so stated orally, when executing the deed, and afterwards in a letter to the alleged fraudulent misrepresentor : " you and I know it to be false " : it is not often that, from the representee's o^vn contem- poraneous and subsequent declarations, evidence of such a complete and convincing character is available to establish the plea of knowledge). In Nelson v. Stocker {18Q5), 4 De G. & J. 458, where a misrepresentation of majority was set up as a reply to a defendant's plea of infancy, it was proved that the intended wife laiew the truth, though her solicitor to whom the representation was made did not. Held that this constituted a good answer to the plea. (a) Dyer v. Hargrave (1805), 10 Ves. 505, where the representee's complete know- ledge of the property he was purchasing, having lived there all his life and having had its situation specially pointed out to him, was held to be an answer both to his affirma- tive defence to the vendor's action for specific performance, and also to his cross-bill to set aside the contract : per Grant, M.R., at pp. 508, 509 ; and Bawden v. London, Edinburgh and Glasgow Assurance Co., [1892] 2 Q. B. 534, C. A., where the defendants set up, as a defence to an action on an accident policy, the fraudulent misrepresentation of the plaintiff that he had no physical infirmity, whereas in fact he was a one-eyed man : but, inasmuch as the company, through their agent, had ocular cognizance of this palpable fact, the defence failed. (6) See the cases cited in notes (2) and (a), sup., in some of which the knowledge was derived aliunde, in others, from the representor ; in fither.s, both from liim and from outside sources. (c) Ch. IV, Sect. 3, ante. (d) Arnison v. Smith (1888), 41 C. D. 348, C. A. (per Lord Halsbury, T..( 1., at j<\i. 369, 370, Cotton, L.J., at pp. 371, 372, and Lindley, L.J., at p. 373). 202 COMMENTARY, CH. X, SECT. 2, SUB-SECT. (1). 208. The knowledge must be clearly proved to have been full and com- plete. Partial and fragmentary information, or mere suspicion, will not do (e). 209. Moreover, actual (/) and personal {g) knowledge must be proved. Constructive (/i), or imputed {i), notice is entirely out of the question (k). (e) Martin v. Cooper (1846), 3 Jo. & Lat. 496 (at pp. 507, 508, per Lord St. Leonards, then Sir Edwakd Sugden, L.C, of Ireland) ; Wilson v. SAori (1847), 6 Hare, 366 (per WiGKAM, V.-C, at p. 376, who points out that the onus is on the representor to prove clear and distmct notice) ; Hughes v. Jones (1861), 3 De G. F. & J. 307 (notice must be as " clear, precise, and definite " as the misrepresentation, per Knight- Brtjce, L.J., at p. 312) ; Higgins v. Samels (1862), 2 J. & H. 460 (where the mis- representation was that limestone in a certain quarry would produce lime " fit for the London market," and the representor set up, as an answer, that the representee had looked at the stone in the quarry, but Wood, V.-C, at p. 468, pointed out that this was no proof that knowledge of the incapacity of the stone to produce the lime was brought home to the representee, who was not a lime-burner) ; and Redgrave, v. Hurd (1881), 20 C. D. 1, C. A. (per Jessel, M.R., at pp. 15-17). ( / ) As distinguished from " constructive." (g) As distinguished from " imputed." (li) Constructive notice is the name usually given by equity lawyers to that kind of notice which is deemed to arise in contemplation of law from wilful blindness, or as Knight-Bkuoe, L.J., termed it, " diligence in ignorance." (i) Imputed notice is that notice which the law imputes to a principal through his agent, if he is his agent to know, or to be informed as to, the matters in question ; or the notice which the law Infers of facts and documents from proved actual notice of a fact or document pointing to their existence. (k) Dyer v. Hargrave (1805), 10 Ves. 505, where, as to two minor misrepresentations, relating to the state of repair of the house, and the cultivation of the marsh land. Grant, M.R.,held that, though these were " objects of sense," yet knowledge of the truth could only be brought home to the purchaser by proof of the actual minute examination which was necessary for that purpose, and, since the vendor had not discharged this burden, he was ordered to make an allowance : as to the third, and most important, misrepresentation, however, viz. that the land was enclosed in a ring fence, whereas in fact it -was distributed, no relief whatever was granted to the repre- sentee, — see note (a), sup. — because this was a matter palpable to the view, and it was sho^\'n that the representee had in fact had this view ; Ddbell v. Stevens (1825), 3 B. & C. (i23 (plea that plaintiff might have inspected the books of the public house failed) ; Pearson v. Wheeler (1825), Ry. & JI. 303, 27 R. R. 751 (same pomt, and same result); Bouring v. Stevens (1826), 2 tl. & P. 337 (same point); Harris v. Kenible (1831), 5 Bligh. (K. s.) 730 (per Lord Lyndhurst, at pp. 749, 750 ; the mere fact that the representee had access to the books of the theatre went for nothing, in the absence of proof that he had derived full knowledge from them, which he probably could not do M-ithout the assistance of accountant) ; Eeynell v. Sprye, Sprye v. Eeynell (1852), 1 De G. M. & G. 660 (mere provision of means of knowledge, or suggestion to take advice, is no answer : per Knight-Bruce, L.J., at p. 687, and Lord Cranwokth, L.J., at pp. 709, 710) ; Price v. Macaulay (1852), 2 De G. M. & G. 339 (per Kniqht-Beuoe, L.J.,at pp. 346, 347 : " it is said that subsequently he had such notice as might have led him to ascertain hoAv the facts stood. This, however, is not sufficient in a case of mis- representation ; he must be shown clearly to have had information of the real state of the facts ") ; Brandling v. Plummer (1854), 2 Drew. 427, 100 R. R. 209 (per Kindebs- ley, V.-C, at pp. 431, 432 : mere fact that the representee was a resident and might have inspected the land Avhich he was deceived into purchasing, is no defence) ; Baw- lins V. Wickham (1858), 3 De G. & J. 304 (representee held entitled to rely on the representation, and not bound to look at the books, or investigate : per Kniqht- Bbuoe, L.J., at pp. 313, 314) ; Central Railway Co. of Venezuela v. Kisch (1867), L. R. 2 H. L. 99 (a mere reference in a company case to documents, such as the memoran- dum and articles of association, and reports, etc., which, if inspected, would at once have set the representee on the road to discovery, held to be ineffectual : Lord Chelmsford, L.C, at pp. 118, 120, 121, and Lord Cbanworth at pp. 123, 124); Caballero v. Henty (1874), 9 Ch. App. 447 (where the misrepresentation was that the public house being sold was in the occupation of a tenant, and it was held that it was no answer to the defendant's plea setting up this misrepresentation to say, " if you had gone to the tenant and inquired, j-ou would have found out all about it " : per §§ 208, 209. 203 There is absolutely no exception to tliis rule (Z). Thus it is of no avail to James, L.J., at p. 450) ; Re Arnold, Arnold v. Arnold (1880), 14 CJh. D. 270 (where it •\\'as urged that, if the representee had compared the plan with the particulars, or even noticed the discrepancies in the particulars themselves, he would liave discovered that there was a bkmder somewhere, which contention was forcibly answered by the observation of Jatiies, L.J.,at p. 281, cited in note (7), pout); Sedgrave v. Hurd (1881), 20 0. D. 1, C. A., where Jessel, M.R., gives a \ery lucid exposition of the princi|iles stated in the text as to the insufficiency of proof of mere means of knowledge, ]icr- fimctory inquir}', partial discovery, &o.,iind takes occasion to point out thati'Kv J.'s reading of Atwood x. Simdl. cited in note (z), sup., -w-as incorrect, in so far as he added " means of knowledge " to " knowledge," and was not justiiied by anything in fact decided hj the House. This case is a particularly useful one, because in it all the three main types of proceeding for misrepresentation became the subject of the exposi- tion, since the defendant defended the action, counter-claimed for rescission, and also counter-claimed for damages, in respect of one and the same misrepresentation ; Mathias v. Yetts (1S82). 46 L. T. 497, V. A. {per Jessel, M.R., at p. 502, and Sir James Hansen at p. 504, to the same effect as in the last case) ; Re London and Staffordshire Fire Insurance Co. (1883), 24 C. D. 149 (where Peakson, J., held, at pp. 154, 156, that the onus is on the representor to show that he actually brought home knoA\Iedge of the truth to the representee, and not that he did so by means which, in accordance ■irith the statutory provisions of Table A, would, in all ordinary matters of business of the company, which this Avas not, have been deemed to amount to notice) ; White v. Haymen (1883), C. & E. 101 (per Mathew, J., at p. 103, who held that a mere reference in a prospectus to other documents, assuming it to amount to constructive notice, would no more avail the representor than any other form of constructive notice) ; Amison v. Smith (1888), 41 C. D. 348, C. A. (where Lord Halsbtjey, L.C, at p. 370, points out that " it obviously lies on thqse Ai'ho rely on a subsequent explanation to show that such explanation w is quite clear," and then shoAra how, in the particular case, the representors had carefully -ttTapped up their pretended explanation in order " to avoid bringing to the notice of the plaintiffs the real facts of the case, whUst stating enough to enable the defendants to say that the plaintiff was informed of these facts " ; to the same effect Cotton, L.J., at pp. 371, 372, and Lindley, L.J., at p. 373) ; and Moss cfc Co. V. Siiansea Corporation (1910), 74 J. P. 351. Exactly the same rule pre- vails even in the case of mistake ; see Kelly v. Solari (1841), 9 M. & W. 54. As to the Roman law on this point, see A^jp. (J, Sect. 2, Sub-s. (8). For the variations in the common law on this subject effected by statute, see Ch. XIII, post. (I) The cases in which judges have dilated on the subject-matter of the misrepre- sentation being an " object of sense " form no exception to the rule : for, on a close examination of these, it will be apparent that in every one of them, except, perhaps, Bailey v. Merrell (1615), 3 Bulstr. 94 (where the plaintiff failed because he might have weighed the load), the fact that was really found, and on which the decision was based, was that the representee had actual knowledge of the properties or situation or quantity of the land or the qualities of the article, and the fact that the thing was palpable to the senses of any person who used them went a long way to induce such a finding, but there was ahvays some evidence beyond this to justify it ; see Dyer v. Hargrave, the first case cited in note (k), sup. So, in Bawden v. London, Edinburgh, and Glasgow Assurance Co., [1892] 2 Q. B. 534, C. A., the defendants, being a corporation, could only see an " object of sense " with the eyes of an agent, and it was proved that this agent saw that the assured had only one eye : in other words, this was actual knowledge in the only way in which a company can have actual knowledge. On the other hand, see King v. Wilson (1843), 6 Beav. 124 (where it was strongly urged that the representee, being positively in occupation of the property, must have known its depth, but Lord Lanodaie, M.R., declined to impute any such knowledge to him, and there being no proof that he had actually measured it, the representor's contention failed : " I see no reason," he says at p. 129, " why he was to test the reiterated repre- sentation by an actual admeasurement ") ; Biggar v. Rock Life Assurance Co., [1902] 1 K. B. 516, where Weight, J., at p. 526, distinguished Bawden v. London, Edinburgh and Qlasgow Assurance Co., sup.; and M'Millan v. Accident Insurance Co., [1907] Sc. Ct. of Sess. Gas. 484, where, in Scotland, this case was openly dissented from, though it was not really necessary to do so for the purposes of the decision. To take the simplest possible illustrations : a man sells to another, who has eyes to see, a vessel as sound, though it has a hole in its side as wide as a church-door, or as deep as a well ; or a case of "nine lying open, and represented to contain a dozen bottles, when in fact it is palpable to anyone who will count them that there arc only ten ; or a piece of land reiwesented 204 COMMENTARY, CH. X, SECT. 2, SUB-SECTS. (1), (2). show merely that the representee had the means of knowledge within liis reach, the use of which would have enabled a person of ordinary business habits and normal sagacity to discover the real facts {vi), and this, though the representor may himself have supplied such materials (n) ; nor is it even sufficient to show that the representor, " with all appliances and means to boot," had in fact made a cursory, or even a diligent, use of them, unless it be also proved that such investigation led to a revelation of the entire truth (o). The good sense of this is obvious. A man who has told even an innocent untruth, by which he has induced another to alter his position, — much more one who has fraudulently lied with that object and result, — has debarred himself from ever complaining in a court of justice, any more than he could in a court of morals, that the representee acted on the faith of his misstatement in the manner in which he, the representor, intended that he should. He can never be heard to resent the fact that another believed the lie that was told for the very purpose of inspiring that belief, or plead as an excuse that, if the representee had not been such a fool as to trust such a knave no harm would have been done ( p). The representee never owed any duty to the representor to be water-meadow land, ^^'itl^ not a trace of water to be seen upon it, or the like : the fact that all these discrepancies between the object of sense and the representation sautent aux yeuz, and are patent to the representee when the statement is made to him, would of course require very slight additional evidence to establish that he actually used his eyes, and, using them, saw the truth : but this additional evidence, slight though it be, is necessary : and if it be the proved fact that he did not choose to look at the ship, or the open case, or the field, or deliberately turned his back on it, fixing his averted gaze on the trusted representor, no knowledge would be established. In Jones v. Edney (1812), 3 Campb. 285, and Flight v. Booth (1834), 1 Bing. (N. C.) 370, 379, it was in vain argued that the representee migrAi have heard the lease read out in the auction-room, or might have inspected it, there being no proof that in fact he had done so. So in Shepherd v. Croft, [1911] 1 Ch. 521, 528, 529, the representee might have peered down the hole in the garden, and so have discovered the watercourse, but she did not, and was not bound to. A second exception has been suggested in the case of the notice which is undoubtedly imputed by the provisions of the Companies Acts to an applicant for shares in a company of the contents of its memorandum and articles of association : but, here again, there is no real exception ; for no such Imow- ledge is imputed so as to deprive the applicant of his right to say that he was deceived by a misrepresentation which preceded the registration of these documents, as is carefully explained bj' Lord Ckanworth at pp. 123, 124 of Central Railway Co. of Venezuela v. Kisch (1867), L. R. 2 H. L. 99 ; the importance of the imputation is that it marks the date from which, where the complaint is as to a misstatement of the objects of the company, it behoves the shareholder, in his o^vn interests, to take prompt measures to repudiate, if he is intending to do so : see Ch. XI, Sect. 4, Sub-s. (5), post. (m) See the cases cited in note {k), sup, (n) See several of the same cases. (o) Ibid., particularly Redgrave v. Hurd, sup. ip) Sue Barley v. Walford (1846), 9 Q. B. 197 {per Cur. at p. 209 : " the defendant has no right to say that the plaintiff was wrong in giving him credit for what he said ") ; Wilson V. Short (1847), 6 Hare, 366 (per Wigkam, V.-C, at p. 377 : " where A., dealing with B., makes a particular and distinct representation, material to the interests of B., I cannot admit that A. has a right to say to B. that he, B., should have doubted A.'s word, bv reason of any general statement made by A., in which a cautious man might iiossiljly have detected an inconsistency with the particular and distinct representa- tion ") ; Reynell v. Sprye, Sprye v. Reynell (1852), 1 De G. M. & G. 660 (per Lord Cbanwobth, L.J., at p. 710 : " no man can complain that another has too implicitly relied on the truth of what he has himself stated ") ; Price v. Macaulay (1852), 2 De G. M. & G. 339 {per Knio.ht-Bkuce, L.J., at pp. 346, 347 : " no man can be heard to say that lie is to be assumed not to have spoken the truth ") ; Neii' Brunswick and §§ 209, 210. 205 to bo circumspect, or to be active in suspicion, or clilif2;ent in detective research ; and, even if lie ever had been under sucli a dut^^ it was the very office and effect of tlie misrepresentation to discharge him of it, and to put his mind at rest (q) . Sub-sect. (2). Agreenienl to waive Inquiry, or take all Risks, or accept ivith all Faults, or assume Facts, etc. 210. The above is a second affirmative plea available to the repre- sentor. Though at first sight appearing somewhat akin to the plea already considered, it is in reality antithetical to it. In the one case it is sought to establish that the representee was not deceived, because he knew the truth ; in the other, that he was not deceived because he undertook, Canada Railway and Land Co. \. Miujgeridge (1860), 1 Dr. & Sm. 363 (^er Kindbksley, \.-C., at p. 382) ; Central Railway Co. of Venezuela v. Kisch (1867), L. R. 2 H. L. 99 [per Lord Chelmsford, L.C, at pp. 120, 121 : " when once it is established that there has been any fraudulent misrepresentation or ^vilful concealment by which >■• person has been induced to enter into a contract, it is no answer to his claim to bo relieved from it to tell him that he might have known the truth by proper inquiry. He has a right to retort upon the objector, ' You, at least, who have stated what is untrue . . . for the purpose of drawing me into a contract, cannot accuse me of want of caution because I relied implicitly upon your fairness and honesty ' ") ; Hunter v. Walters (1871), 7 C'h. App. 75 (per James, L.J., who, at p. 86, ridicules the notion that the representor is to be excused, because the representee might have discovered this, that, and the other : " it appears to me that the proper place for such an argument would be some satirical ■\\'ork ridiculing, by clever exaggerations, the doctrines of the Court of Equity with reference to constructive notice ") ; and Mathias v. Tetts (1882), 40 L. T. 497, C. A. {per Jessel, M.R., at p. 502). Similarly, as regards misrepresentation for the purposes of estoppel in pais, in Bloomenthal v. Ford, [1897] A. C. 156, H. L., Lord Halsbtjey, L.C, has some equally pungent and emphatic observations, at pp. 161, 162, on the idea that " it is competent for him " — the representor — " to turn round and say, ' You should have observed certain circumstances ; and, if you had done that you would have been better advised than to have advanced the money ' ", or that " it is open to the person who made the representation to say, ' I told you so-and- so, but you ought not to have believed me. You were too great a fool. I had a right to mislead you, because you A\'ere too great a fool ' " ; and Lord Hebschell, at p. 168, delivers himself to the same effect : " the very person who makes a statement of that sort has put the other party off making further inquiry. He has produced on his mind an impression as a result of which further inquiry is thought to be unnecessary or useless." Cp. also Betjemann v. Betjemann, [1895] 2 C^h. 474, C. A., a case of con- cealed fraud in relation to a plea of a statute of limitations, and the observations of LisDLEY, L.J., at p. 479, and Rioby, L.J., at p. 482 (" -what is the duty of a man to inquire ? To whom does he owe this duty ? Certainly not to the person who has committed the concealed fraud "). (q) And this, whether the misrepresentation was fraudulent or innocent. In several of the cases cited in the immediately preceding notes, it was innocent, or not alleged to be otherwise. The representor is in this dilemma, even on the assumption, — for which, however, there is no foundation, — that the representee owed any duty whatever to him to exercise care and caution : either the representor knew the truth, when he told the untruth, in which case he was fraudulent, and it does not lie in the wrong-doer's mouth to complain of the result which, by his fraud, he intended to bring about ; or he believed what he said, and was innocent, in that he had not himself discovered the truth, in which case the observations of James, L.J., at p. 281 of Re Arnold, Arnold y. Arnold (1880), 14C. D. 270, C. A., a case where the misrepresentation was assumed to be innocent, apply \vith unanswerable force : " if a man makes a description calculated to mislead, I do not think that it is well for him to say, ' If you had been very careful, you would have found out the blunder.' How was it that he did not himself find it out ? How can the vendors be heard to say that the purchaser ought to have found out for them this very blunder which they never found out for themselves ? " 206 COMMENTARY, CH. X, SECT. 2, SUB-SECT. (2). or agreed, to go on with tlie contract or matter wHcli was tlie subject of the misrepresentation, in complete indifierence as to what the truth was, or might turn out to be ; in other words, because he neither knew, nor wanted to know the truth, but was so pleased with the prospect of profit and advantage to himself on the transaction, and so eager to conclude it, and bind the representor irrevocably without a moment's delay, that he was content to take upon himself all the risks, and dispense with all in- quiry. The mutually exclusive character of the two defences is brought out and pointed by certain expressions made use of by Jessel, M.E. (r), and, later, by Halsbuey, L.C. (s), in two remarkable judgments. 211. This affirmative plea, like the first (since both show that the re- presentee was not misled, though for opposite reasons), is available whether the misrepresentation was innocent or fraudulent, and whatever the form of proceeding may be [t). 212. To prove merely that the representee in fact abstained from inquiry or investigation, as has already been shown (m), comes to nothing. It must be established by the representor that the representee agreed or undertook to waive all inquiry or disclosure of the misrepresented facts, and not to rely upon the representor's statements with reference to them. This agreement or undertaking, however, may be implied from acts and conduct, as well as expressed in a written or oral contract (cc). 213. Where there is an express agreement, such as to take a chattel " with all faults," or land " with all risks as to errors in the par- ticulars " iy), or to put up with a direct refusal to warrant (z), or to assume (r) At p. 21 of Redgrave v-. Hurd (1881), 20 C. D. 1, C. A. : "it nmst be shown either that he had knowledge of the facts contrary to the representation, or that he stated in terms, or showed clearly by his conduct that he did not rely upon the repre- sentation." (s) At p. 369 of Arnison v. Smith (1888), 41 C. D. 348, C. A. : " unless it is shown that he knew the facts, or that he avowedly did not rely upon the statement, whether he knew the facts or not." So too, in cases of " mistake," ^\-here a defence of this character is set up to an action for money had and received, the defendant must show that " the money intentionally passed without any reference to the truth or falsity of the fact, the plaintiff meaning to waive all inquir}^ into it " : per Parke, B., at p. 59 of Kelb/ V. Solari (1841), 9 M. & W. 54. (t) Consequently, the rules and authorities are dealt ^\'ith here once for all (as in the case of the first affirmative plea), and, in Ch. XI, Sect. 4, Sub-s. (2), and C'h. Xll, Sect. 2, it mil be sufficient, when noticing the affirmative defence in question, to make reference to this Sub-section. (u) See § 209, sup. (x) See the passage from Jessel, M.R.'s, judgment cited in note (r), sup. {y) Baglehole v. Walters (1811), 3 Campb. 154; Pickering v. Dowson (1813), 4 Taunt. 779; Schneider v. Heath (1813), 3 Campb. 506; and Ward v. Hobbs (1878), 4 App. Cas. 13, H. L. These were all cases of actions for damages for fraudulent mis- representation inducing the sale and purchase of a chattel. The first three related to a vessel, the last to animals. In all except the third — as to which see note (() to § 215, inf. — the plea succeeded. As to a term in an agreement to take land " with all risks of errors in the particulars," see Brownlie \. Campbell (1880), 5 App. Cas. 925, 936, 937, 956, 957, H. L. (z) Bywaier v. Richardson (1834), 1 A. & E. 508 (alleged fraudulent misrepresenta- tion, inter alia, as to the soundness of a horse ; a rule of the repository, of which it was found that the plaintiff had notice, limited the warranty to 24 hours, and the alleged defect was not discovered till after that time : held that, from and after the expiration of the 24 hours, the plaintiff agreed to take the horse with all risks) ; and §§ 210-213. 2U7 the corrortness of statements as to titk', or of plans or measurements ((/), or to waive any duty of disclosure or of exact statement, in a prospectus, imposed by statute or otherwise (b), the representee is priind facie defeated (c), though the bar may be removed on proof of the matters mentioned below (d), the burden of establishing which, llo\vc^'er, is thereupon shifted on to his shoulders. Thus, there may be an express condition or term in a contract, such as a policy of life insurance, that it shall not be impeachable for misrepresentation, other than fraudulent, at any time (e), or after the lapse of a certain period (/), or that, as in most contracts for the sale of land, it shall not be the subject of rescission and restitution, but only of compensation, in the event of any innocent misdescription ((/) ; and such conditions and terms are valid and enforceable ; but a condition or term in a contract that it shall not be impeachable for fraudulent misrepresentation, or any other species of fraud, is probably a nullity (h). Ward V. Hobbs, sup. (where there was an express refusal to warrant, as well as a sale with all faults). {a) Be Banister, Broad v. Munton (1879), 12 G. I). 131, a case of rescission, where the representor set up a condition of sale requiring the purchaser to assume certain facts, which was •prima facie a good answer, but failed for the reasons stated in § 215 inf., and note (2) thereto ; Be Sandbach and Edmondson's Contract, [1891] 1 Ch. 99, C. A., where a plea to a similar action, setting up a similar condition, sueceeded, per Lord Halsetjby, L.C, at pp. 103, 134) ; Blaiberg v. Keeves, [1906] 2 Ch. 175 (same point) ; S. Bearson .t p. 522, differing from Vattohan- Williams, J., who, in the court below, had held that an oral representation that certain documents had been lodged \vdth a, company on a transfer of shares was a representation within the section. 216 COMMENTARY, CH. X, SECT. 2, SUB-SECTS. (4), (5). might be the largest, or practically the sole, shareholder would still be " another person," and, though a firm is not a person, yet if A. makes a representation as to the credit of a firm consisting of himself and B., he is making a representation about " a third person," viz. B., and none the less because he is also making one about himself (r) . 226. Where the statutory plea is raised, it has been said that, in cases of oral — as distinct from written but unsigned — representations, it is the preferable course to get a finding from the jury as to the matters to which the oral statement was intended to relate, if this question fairly admits of doubt, and then to rule on the question of law whether, accepting the finding of fact, the representation is within the section or not (s). In cases of written but unsigned, or not personally signed, representations, or where, in the case of any oral representation, there is no dispute or difiioulty, either as to the substance or the meaning of the words used, all questions raised by the statutory plea are questions of law (i). Sub-sect. (5). Misrepresentation hy Agent within the Scope of his Authority, hut for his own Ends. 271 ■ Where a representee has made a prim() facie case of fraudulent misrepresentation on the part of an agent of the representor, by proving facts from which an implication of authority in that behalf is to he made (m), the representor may rebut such primd facie case by estabhsh- ing that, though the agent was, in making the representation, doing an act which otherwise might be deemed the act of his employer or principal, yet, having regard to the actual facts, he was making the representation neither for the purpose, nor with the. result, of benefiting the principal, but on the contrary, with the intention of defrauding, or at least violating his duty to him as well as the representee, and for the sole purpose of benefiting himself, or some third person (x). Such facts, if proved, (r) Devaux v. Steinkeller, sup. (s) Lyde v. Barnard, sup., per Aldekson, B., at p. Ill, and Parke, B., at p. 112. The other course, viz. after a full and proper direction as to what legal consequences flow from M'hat facts, to leave it to the jury to find for the defendant or the plaintiff, is quite permissible, and, as in cases of malicious prosecution, where " reasonable and probable cause " is in question, or in cases of defamation, where the dispute is as to whether the publication is protected or not, judges frequently adopt it in preference to the other. {t) Most of the cases cited in note {y), sup., were cases of either non-suit, or de- murrer, or their modern equivalents. (tt) The burden of which is on him in the first instance. See Ch. VIII, Sect. 2, Sub-s. (4), ante. {x) As in Sivift v. Jewsbury (1874), L. R. 9 Q. B. 301, Exch. Ch., where the bank manager was shown to have made the misrepresentation he did for his own private ends, and not in the interest of the bank who employed him ; Hughes v. Twisden (1886), 55 L. J. (ch.) 481 (a partnership case, per Nokth, J., at p. 485, quoting a passage from Lord Lindley's treatise : " a fraud committed by a partner whilst acting on his own separate account is not imputable to the firm, though, had he not been con- nected with the firm, he might not have been in a position to commit the fraud ") ; British Mutual Banking Co. v. Charnwood Forest Railway Co. (1887), 18 Q. B. D. §§ 225-227. 217 I'oiistituto a, Viilid and c^omploto answor to the pn'iiid facie case of autliority made by the rcprescutoc. It appears to be implied in some of the decisions that the burden is on tlio representee to establisli that the representation was an act in fact done for the intended benefit of his empUiyer, as well as an act of the kind which would ordinarily be supposed to lie for his benefit, as being within the scope of his employment, and that, in all cases of the description now under consideration, when the defendant has succeeded, such success is due to the plaintiff's failure to sustain this full burden of proof (y) ; but it is surel)' more logical, and more consistent with the principles of pleading and evidence, to say that it is due to the defendant's failure to discharge the onus which is shifted on to him as soon as the plaintiflt has proved that the representation belongs to the class of acts which the agent was impliedly authorized to do, and that, at the outset, the plaintiff is not called upon to do more than pro\c that the representation does so belong (j). 714, C. A. (M'here tlio defendant company's secretary hax-ing made a false .statement to the plaiixtiff as to the vaKdity of certain debentvue stock, and the jnr,\' having found that he had been held ont as a person to answer inquiries relating thereto, it was nevertheless proved that the falsehood was told mthout the actual knowledge or pri\ity of the defendant company, and solely to serve the secretary's o\Mi fraudu- lent purposes, and those of a thu-d person, his friend, and the C A. accord- ingly, accepting the above finding of the jury, held that it came to nothiirg in face of the other proved facts which showed that the presumption of authority which would ordinarilv flow therefrom could not be made in this particular case : per Lord EsHER, JI.R., at pp. 716, 717, Bowen, L,J., at pp, 717-719, and Fky, L.J.. at p. 719) ; and Lloyd v. Orace, Smith & Co., [1911] 2 K. B. 489, C. A., where a solicitor's clerk, having implied authority to advise clients as to their deeds, &c.,and how they should be dealt with, induced a client by misrepresentation to execute conveyances of property to himself, and it was held that the solicitor could not possibly be liable, -per VaughaN- WiLLiAJis, L,J., at pp. 511-515, and Farwell, L,J,, at 509. The action here was not for damages, but for recovery of deeds, but the ease is an authority for the pro- position in the text. So, in the estoppel case of Gcoiye WhUecUiirch, Ltd. v. Cavanagh, [1902] A. C. 117, H. L., the alleged representors succeeded, because, though the jury had specifically found that the representation was made both tor the benefit of the alleged principals, and for that of the agent himself, there was, in the opinion of the House of Lords, no (-\idencc whatexer that the agent made it for any purpose but his own : per Lord JUcnaghten at pp. 124, 125, Lord James at pp. 133, 134, and Lord Brasu'ton at pp. 139-141. (y) It was apparently- .so thought liy Bowen. L.J., judging from his observation at p. 718 of Brilifh Mutual Baiikiiu/ Co. v. Charnwood Forest Railway Co., tiiip.. that the representation in that case did not fall -nithm " the class of acts " which the alleged agent was authorized to do, and that to say that it did, begged the question ; but, surely, there can be no doubt that it did belong to such class, and that the correct way "of putting the ca.se was, whilst recognizing this, to point to the facts proved by the defendants, which destroyed the implication which would other>\-ise arise from its so belonging, (;) There can be only one answer to the question, if the usual test is applied. Assume that uncontradicted evidence has hrm given by the representee that the fraudulent misrepresentation was of a kind which it was within the scope of the alleged agent's employment to make, and that, thereupon, no counter allinnative evidence is adduced by the representor. Who would, on that state of the evidence, be entitled to the verdict 1 t.:iearl>- the representee, which is the same thing as saying that, at that juncture, the burden is shifted on to the shoulders of t)ie representor. And this «ns evidently the view of Fabwell, L.J., who, at p. 509 of Lloyd v. Grace, Smith r, (at p. 42) ; HimjiHoii. v. Lord Ilowden (\mi), 3 My. & Or. 97 (per Lord Oottbniiam, L.C, at p. 102) ; /'V«h, v. OraUi (]h:!H), :i Y. & (). (exoh.) 216 ; 5J R. R. 305 (per Aldebson, 15.) : Odoper v. -lod (1859), I Oe «. V. & .L 240 (per Lord (jAMi'jiioix, L.C. at |i|i. 215, 2(6), atfirndng Lord H,c)Mir,r.Y, M.R.. in the (oiirt below, rc'|ior(,ed 27 I'.eav. .'{I.'! (sue p. 317) ; mid Oii-liiii.i v. Oolini (1865). 2 II. & M. 354 (per Paoe-Wood, V.-O.). In Moor/uiii.w v. WoolJ'e ( IHH2), 46 I,. 'I'. :i7'l. 250 COMMENTARY, CH. XI, SECT, 3, SUB-SECT. (1). above rules are now well settled, though in early times equity judges seem to have been rather chary of exercising their jurisdiction in this respect, deem- ing it apparently something of a profanity to lay violent hands upon a solemnly executed instrument and hesitating, as Portia did in a memorable case {y), to " tear the bond," unless with the consent of the parties. 274. Having decreed rescission, the next step in the remedial procedure of the court is to provide for the undoing of the past on both sides, by mutual restoration in specie of all benefits, if any, received by each party under the contract (z). The representor must repay all moneys (a), and, unless the circumstances are exceptional, with interest (&), and reconvey or retransf er or redeliver (by appropriate instruments, where necessary) all property and rights, whether in possession or in action, which he has received (c), on the terms that the representee on his part makes a corre- sponding restoration, or allowance in account (d). For this purpose, all the bill of sale there in question was ordered to be delivered up by the representor moneylender as a matter of course, without cavil or question on his part. (y) Sliyloch v. Antonio, reported in verse by William Shakespeare, siA nom. The Merchant of Venice, Act IV, So. 1, where the deputy of the " learned Bellario," appointed assessor to the court of which the Doge was President, urges the plaintiff — " bid me tear the bond," which shows that the " wise young judge " did not consider that this could be done without the plaintiff's permission. Even after the declaration of the court that the bond was void on the ground of statutory illegality, it does not appear from the narrative of the learned and gifted reporter that the bond was ordered to be given up to the defendant, or that it was in fact torn or destroyed by the acting Associate, the learned Nerissa, or any other officer of the court. (z) If the representor has received nothing, or if neither party has received anything, this kind of relief is not required. On the other hand, if the representee has received nothing, but the representor has acquired under the contract money or chattels capable of manual delivery, the representee's remedy is of the kind described in Sub-s. (2), inf. {a) No difficulty ever arises as to the order for repayment of money, which is common form. See the cases generally. (h) There is no doubt about the right of the representee, in all ordinary cases, to interest on such moneys from the date of the representor's receipt thereof to the date of the judgment : such interest being regarded as restitution, and not damages : see Re Metropolitan Coal Consumers Association, Karherg's Case, [1882] 3 Ch. 1, C. A. at p. 17. As to the rate of interest, the practice of the courts has not been uniform. Whenever fraud or misconduct is proved, 5 per cent, is now usually allowed : see, for instance, Capel & Co. V. Sim's Ships Composition Co. (1888), 58 L. T. 807 (per Kekewich, J., at p. 811), and Greenwood v. Leather Shod Wheel Co., [1900] 1 Ch. 421, C. A. On the other hand, in Eauiins v. Wickham (1858), 3 De G. & J. 304, and Newbiggin v. Adam (1886), 34 C. D. 582, C. A., 4 per cent, only was given. And this is the usual rate of interest allowed where the deposit is ordered to be returned on the rescission of a contract for the sale of land : see, for instance, Jacobs v. Eevell, [1900] 2 Ch. 858. In Henderson V. Lacon (1868), L. E. 5 Eq. 249, Page-Wood, V.-C, for some reason (not stated) disallowed interest altogether (see pp. 263, 264). (c) This also is ordinary practice. See generally the cases cited in the notes to this Section, and particularly Addis v. Campbell (1841), 4 Beav. 401. (d) See Addis v. Campbell, sup. Where it is a mere question of money paj'ments, or of accounts, no difiieulty arises, as, for instance, where the representee is entitled to receive back his application or call moneys on a subscription for shares in a company, less any dividends he may have received thereon, or where, as in Addis v. Campbell, sup., and in Haygarth v. Wearing (1871), L. R. 12 Eq. 320, the representor is ordered to account for the rents and profits of the land which he acquired under the contract, against which the representee is required to allow the cost of permanent improvements (if any) made by the representor. In Stainbanlc v. Fernley (1839), 9 Sim. 556, the representee was required to give the representor an indemnity against liability on the shares the purchase of Avhich was set aside, as well as to retransfer them, and account for dividends, as a condition of relief. Where the representee is required to give back §§ 273-275. 251 necessary account? and inquiries will be directed (e). Tj;f; representor must indemnify the representee at'aiost all pa}-3aents made by him pursuant to obligations under which he came in virtue of the contract, but not against all payments made pursuant to obliiiations or matters " arising out of the contract," for this erpression, if construed literally, would be wide enougli to include damages in the ordinary sense, which clearly caimot be awarded in rescission proceedings (/). In certain cases of mi-repre- sentation of title by a vendor, the purchaser is allowed the costs of investigating such title (g). 275. Where it is necessary to protect the representee from possible attempts in the future on the part of the representor to enforce against him any term of the rescinded contract, or to deal with property acquired thereunder as if there had been no rescission, a perpetual injunction will be granted at the trial in terms adequat« to meet the particular mischief contemplated ; as, for instance, to restrain a representor from transferring shares {h), or making calls (i), in company cases, or parting with furniture obtained under a contract of sale which has been set aside (j). Further, a representee is entitled, on proper tenns, to an interlocutory injunction restraining the representor until the trial of the action from forfeitin" property of the representee under powers conferred by the contract sought to be rescinded, and which the representee has repudiated, and cannot, property other tlian money, and he is unable to do so specifically, no rescission can h': ordered : see Sect. 4, Sub-B. (5;, post. (e) See Addis t. Campbell, and Haygarth v. Wearing, sup., and the rescission cases generally. (/) In Newbigging v. Adam. (l^SG . 34 C. D. 582, C. A., this question was elabo- rately discussed. The qualified proposition stated in the text represent* the view of BowEx. L.J. Some of the expressions used by Cottos, L. J. (at pp. 588-590; possibly, and those of Fey, L.J. (at p. 59GJ certainly, are of a wider and more unqualified character, and, to that extent, are not sound. In the House of Lords, this case sub nam. Adam v. Seu^igging (1888), 1.3 App. Cas. 309, H. L., was so dealt with that it became uimecessar\ to decide the point in question, and Lord 'W'jiTSO.v (p. 'AH), and Lord Hbescheu, (p. 341) expressly decUned to exfjrees any opinion on it. In Whitlington v. Seale-Hayne (1900), 82 L. T. 49, Fabwell, J., after noticing the above divergent language in the judgments of the C. A. in SeuiiiggiTig \. Adam, sup., expressed his preference for that of Bowex, L.J., and applied the doctrine as enunciated by that Lord .Jtistice to the ciicurnstances of the case before him, -nhich v.cre these. The plaintiffs had been induced to take a lease of premises by a false representation that they were in sanitar;,' condition and in good repair. The plaintiffs used the premises for breeding prize poultry. The relief J>ra3ed, besides rescission, was (I) indemnity against the costs incurred by them in connection vrith the requirements of the local authoritj' that the premises should be put in good and sanitarj- state or repair, and against rent, rates, and taxes, and the expense of repair generally, and (2) value of stock lost during their occupation of the premises, loss of profit on the sale of such stock, loss of breeding season, etc. Faeweli,, .J., in accordance with the principles stated in the text, held that the plaintiffs were entitled to (1), but not to '2;, a repre- sentee under such circumstances having a right to comiequential relief only " so far as regards the rights and obligations which had been created by the contract into which he was induced to enter," and not to an indemnity against " losses arising out of the contract " generally, which would include damages, and claim 12} being obviously in the nature of such damages, and none the less so, because they were descriljed in the prayer for relief as " indemnity." {g) See, for instence, Carlish v. Salt, [1906] 1 (Jk. 33.5. (fe) WaUliam v. Stainkm (1863), 1 He G. J. & S. C78. (!) Henderson v. Lacon (1808;. L. R. 5 Eq. 249. (j) Li-mpriire v. Lumje (1879), 12 C L>. ')75. 252 COMMENTARY, CH. XI, SECT. 3, SUB-SECTS. (1), (2). tlierefore, consistently with tte attitude lie lias taken up, recognize. By such an order an ingenious device of companies, in shareholders' actions, may now be checkmated (k), the only case in which it succeeded having been overruled (l). Sub-sect. (2). Action for Money Had and Received, etc. 276. Where the representee has received nothing under the contract or transaction, and has nothing therefore to restore to the representor as the condition of relief, but has paid money thereunder, or where the re- presentor is not enforcing the contract, or attempting or intending to enforce it, or has abandoned it («i), the representee's claim is simply for the recovery of the money which he has paid, and is the proper subject of an action for money had and received. This form of proceeding is one of those equitable remedies introduced by Lord Mansfield into the common law on the lines of Koman jurisprudence, the salutary effect of which is attested alike by the contemporary denunciations of Junius, and the subse- quent approval and adoption of successive generations of English jurists (n). 277. In any such action, relief is given or withheld on precisely the same principles as in an ordinary action for rescission, of which, indeed, it is, to all intents and purposes, a species, the sole differentim of the species being that the restitution is necessarily unilateral, and not bilateral, for the simple reason that on the representee's side, nothing having been re- ceived or acquired, there is nothing to restore ; and also that, though relief (k) The device was of this nature. The shareholder, on discovery of the untruth of the representation whereby he was induced to subscribe for his shares, repudiates his contract, and sues for rescission, which involves the necessity of refusing to pay calls, since such payment would be evidence of affirmation — see Sect. 4, Sub-s. (4), post — whereupon, pursuant to the contract between the parties contained in the articles of association, the company purports to forfeit the shares, with the view of doubly entrenching themselves ; on the one hand, even if the representee succeeds, they are no worse off by reason of the forfeiture, whilst, if he fails, and seeks to retain the benefits which he acquired under a contract not invalidated by any misrepresenta- tion, they will be in a position to retort upon him that the contract has been determined pursuant to its terms. To meet this manoeuvre, it was decided by Neville, J., in Lamb v. Sambas Rubber and Guita Percha Co., [1908] 1 Ch. 845, and by the C. A. in Jones V. Pacaya Rubber and Produce Co., [1911] 1 K. B. 455, C. A., that, in such circumstances, a plaintiff, on paying the amount of the caUs into court and under- taking in damages, is entitled to an interlocutory injunction, so that, if he is unable to establish a case for rescission at the trial, neither his position, nor the company's, is prejudiced : he still holds his shares, and the company have in court, ready to be paid out to them, the amount of the calls and of any damage they may have sustained. See the observations of Btjckley, L.J., at pp. 457, 458 of the last cited case. (I) This case is Ripley v. Paper Bottle Co. (1887), 57 L. J. (oH.) 327. Neville, J., declined to foUow it in the first, and the C. A. expressly overruled it in the second, of the two authorities cited in the last note. (m) In Flight v. Booth (1834), 1 Bing. (n. c.) 370, the defendant had put forward no claim on the contract before the arbitrator (see p. 373), and in Carlish v. Salt, [1906] 1 Ch. 335, the defendants had themselves treated the contract as abandoned, and had pulled down the premises the subject of the sale. (re) See Article 36 of the Code. In Moses v. Macferlan (1760), 2 Burr. 1005, Lord Mamsfield, C. J., at p. 1012, says that " this kind of equitable action lies for . . . money got through imposition (implied or express)," amongst other acts, which he enumerates, rendering it contra (squum, et fconum to retain or mthhold from the plaintiff money \vhich has come to the defendant's hands. §§ 275-278. 253 is granted on tlie theory that the contract is voidable, the above circum- stances render it unnecessary to ask for a formal decree of rescission (o) . 278. Accordingly in every case of money had and received founded on misrepresentation, the representee succeeds where, and only where, he alleges and proves all such matters as are required to be established in an action to set aside a contract. The moneys for the recovery of which this form of proceeding has been successfully resorted to comprise deposits on con- tracts for the purchase of property ( p), premiums on insurance policies (q), application and allotment moneys or subscriptions for shares in com- panies (r) , and the like (s) . In most of the cases -wfliere the action has succeeded, the obtaining by the representor of the money was in fact fraudulent, but it is not essential, any more than it is in actions for rescis- sion, that fraud at this stage should be shown (t) ; the " imposition " and " unconscientiousness " mentioned by Lord Mansfield as an ingredient in the cause of action applies to the retention of money which it is contra mquum et honum in the representor to withhold, notwithstanding that the acquisition of it might have been not unrighteous, as would be the case where the misrepresentation was innocent (m). Where the contract (o) See Flight v. Booth, sup., per Tindal, C.J., delivering the judgment of the court, at pp. 375, 376, the observations of Lindley, J., at p. 294, Bbett, L..J., at pp. 309, 310, and Cotton, L.J., at p. 312, of Stone v. City and County Bank (1877), 3 C. P. D. 282, C. A., and Manners v. Whitehead (1898), 1 F. 171, as to the identity of the principles to be applied. As to the uselessness of rescission, see Be Buby Consolidated Mining Co., Aslcew's Case (1874), 9 Ch. App. 664, where, in a case of fully paid shares, the court refused to rectify the register of members, such an order being unnecessary. (^) Jones V. Edney (1812), 3 Campb. 285 (a public house) ; Schneider v. Heath (1813), 3 Campb. 506 (a vessel) ; Stevens v. Adamson (1818), 2 Stark. 422 ; 20 R. R. 707 (leasehold premises) ; Flight v. Booth (1834), 1 Bing. (n. c.) 370 (the like) ; Dobell V. Hutchinson (1835), 3 A. & E. 355 (the like) ; Hutchinson v. Morley (1839), 7 Scott, 341 (fixtures and fittings) ; Thornett v. Haines (1846), 15 M. & W. 367 (leasehold premises) ; and Carlish v. Salt, [1906] 1 Ch. 335 (freehold property). See also .some of the cases of sales by auction which are cited in the notes to Oh. XIII, Sect. 2, j)o«<. {q) Blake v. Albion Life Assurance Co. (1878), 4 C. P. D. 94 ; British ]\'or/nniiii's and General Assurance Co. v. Cmliffe (1902), 18 T. L. R. 502, C. A.; and Kettlewell x. Befuge Assurance Co., [1908] 1 K. B. 545, C. A., " silently " aflinned by the H. L., sub nom. Befuge Assurance Co. \. Kettlewell, [1909] A. C. 243, H. L. (r) Stone v. City and County Bank, sup. ; and Be Buhy Consolidated Mining Co., Askew's Case, sup. (in which it was recognized that the representee would have a remedy, on proof of the facts, in an action for mone}' had and received, and, indeed, that this was his only proper course, the shares having been fully paid, and that relief in the nature of rescission by a summary order under the Companies (Consolidation) Act, 1908 (see the next Sub-section), was out of the question until after the trial of such an action. (s) In Duffel v. Wilson (1808), 1 Campb. 401, the money recovered was a sum paid to insure the representee against being drawn for the militia. In Blair v. Bromley (1847), 2 Ph. 354, it was a sum paid for the purpose of being invested in a mortgage. In Moss & Co. V. Swansea Corporation (1910), 74 J. P. 351, it was a deposit paid to secure the performance of a contract for the construction of works. (t) In Uuffel V. Wilson, Flight v. Booth, and Moss ii.rn v. Edwards (1881), 18 C D. 449, as wholly uiadmissible in any form of action or proceetling. B.M. S 258 COMMENTARY, CH. XI, SECT. 3, SUB-SECTS. (3), (4). general power to tlie Supreme Court to deal with " the costs of aU proceed- ings." The repealed section of the Act of 1862 conferred express authority in this behalf, but this provision, having been rendered unnecessary by the enactment referred to, has been omitted from the corresponding section of the Act of 1908 ; and for a similar reason, the jurisdiction to direct an issue as to any question of fact, which was provided for by the earher section, has also disappeared (t). Sub-sect. (4). The like Statutory Procedure and Relief where the Company is in Liquidation. 287. If the company goes into liquidation at a time when the repre- sentee's name is on the register of members, this fact, as wiU be seen hereafter when the various affirmative defences to a case of rescission come to be discussed, constitutes per se a bar to relief of this character, unless certaiu conditions have been satisfied by the representee (m). Where these con- ditions are satisfied, and the representee is in a position to proceed with his claim to be relieved of his shares, or rather of his babiUty as a con- tributory in respect thereof, he can only do so by a summons in the winding up, claiming that the list of contributories be varied by omittiug his name therefrom, and that the necessary rectification be made in the register of members. 288. The above procedure is regulated by the relevant provisions of the Companies (Consolidation) Act, 1908, and the Companies (Winding Up) Rules, 1909, framed thereimder. On liquidation, there is no longer any company, except in name, or any shareholders, but only a body of con- tributories. The statutory provisions regulating the rights and liabilities of these contributories, both as agaiast creditors, and inter se, are contaiaed in sects. 12S-128 and sects. 163-173 of the Act, and these provisions, except where otherwise stated, equally apply, whether the winding up be by the court, or voluntary, or subject to the supervision of the court (sect. 122). " The term contributory means every person liable to contri- bute to the assets of the company in the event of its being wound up, and, in all proceedings for determiaing, and in all proceedings prior to the final determination of, the persons who are to be deemed contributories, in- cludes any person aUeged to be a contributory " (sect. 121). The persons so " liable " are " present " and " past members," and the pecuniary extent of their liability is measured by the amount required for the payment of the company's " debts and liabilities and the costs, charges, and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves " [sect. 123 (1)] ; but in no case can any such person be held liable for any sum in excess of the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member [sect. 123 (1), (iv)]. A " past member " is a person who ceased to be a member (t) Because Orders 33 and 34 of the R. S. 0. fully provide for these matters. {u) Sect. 4, Sub-s. (6), post. §§ 286-289. 259 within the year immediately preceding the commencement of the winding up [sect. 123 (1), (i)], and he is only to be called upon to contribute if it appears to the court that the present members are unable to satisfy the contributions above mentioned [sect. 123 (1), (iii)]. By sect. 163 (which is a reproduction of sect. 98 of the Companies Act, 1862), it is provided that " as soon as may be, after making a winding-up order, the court shall settle a list of contributories, with power to rectify the register of members in all cases where rectification is required in pursuance of this Act." The list is settled by the liquidator of the company, as the officer of the court (x), and consists, in the first instance, of the present members only, commonly called List A, to which at a later date, if it appears to the court necessary, but not otherwise, a List B of past members may be added. Notice is to be given to all persons proposed to be included in the list, of the time and place appointed for the settlement, and, after hewing any objections on the part of any such person, the liquidator at that time and place is to finally settle the list, and thereupon give notice to every person finally placed thereon, with an intimation that he is at liberty, within twenty-one days, to apply to the court by summons for the removal of his name therefrom, or for a variation thereof {y). It is at this point that the alleged contributory, unless, on the hearing of his objection, he has already persuaded the liquidator to vary the provisional list by striking his name out, must bestir himself, for unless he applies to the court in the prescribed manner and within the prescribed time, a call will in- evitably be made upon him, followed by a " balance order," which will be conclusive (z). If, therefore, having taken the proper steps, he is in a position, notwithstanding the winding up, to assert his daim to relief on the ground that he was induced by misrepresentation to take the shares in respect of which he is sought to be fixed as a contributory, he must do so by initiating the proceedings authorized by the statute and rules, for no otherMrise can he get rid of the efiect of the two statutory documents which will otherwise conclude him, viz. the register of members, and also the finally settled list of contributories, whether it be List A or List B. 289. The matters to be established on such application are precisely the same as in any case where the company is a going concern and the application is for the rectification of the register simply, which," again as has been seen, are identical with the alleganda et probanda in an ordinary action of rescission (a). Where all such alleganda et probanda are estab- lished, the order for variation of the list by removing the representee's name, and for rectification of the register, is made (6) ; where the applicant's (a;) See rr. 75 (1) of the Companies (Winding Up) Rules, 1909. (y) See rr. 77-82 of the same. (z) See rr. 83-87 of the same. (o) See Sub-s. (3), sup. (6) As in the following oases : Re Deposit and Qeneral Life Assurance Co., Ex parte 4yre(1858), 27L. J. (Ch.) 579 (under a oorrespondina section of the Joint Stock Com- panies Act, 1856) ; lie Life Association of ErtgUmd, Blake's Case (1865), 34 Beav. 639 ; Re Warren's Slacking Co., Pentelow's Case (1869), 4 Ch. App. 178 ; Re Estates Investment Co., Paide's Case (1869), 4 Ch. App. 497 ; Resse River Silver Mining Co. v. Smith 260 COMMENTARY, CH. XI, SECT. 3, SUB-SECTS. (4), (5). proof falls short in any respect of what is so required, the application fails (c). 290. As to the nature and extent of the statutory relief, there is juris- diction to rectify the register of members after the winding up, both for the purpose of, and as auxiliary to, the settling or variation of the list of contributories {d), and also where the rectification is not required for that purpose (c) ; and the court has the same power to fix a date from which the rectified entry is to take efEect, and even to make a retrospective order (if no jus tertii is interfered with), as it has when the company is not in liquidation (/). The only difierences between the remedies granted in the winding up, and those granted when the company is a going concern, are that (1) in the former case, the list of contributories will be varied where the applicant requires it (which ordinarily he does), as well as the register of members rectified ; (2) in the former case, the only means of obtaining any relief at all is by the statutory procedure, whereas in the latter, it is alternative to an ordinary action for rescission ; and (3) in the former case, any order for the repayment of moneys paid by the representee in respect of his shares, with or without interest, though enforceable in the winding up (since such moneys and interest are not to be regarded as unliquidated damages in the ordinary sense, but as an equitable debt), can only be the subject of a proof, on which a dividend may be received, and cannot, as in the latter case, be enforced by the ordinary procedure {g). 291. In some cases it is not the alleged contributory, but the liquidator, who has reason to complain of an incorrect entry in the register of members on the ground of misrepresentation. Thus, where the directors of a company, having power by the articles to approve or refuse registration of transfers of shares, have been induced by the misrepresentation of the (18(1!)), L. R. 4 H. L. 64; Re London and Mediterranean Bank, Wright's Case, No. 1 (1871), L. R. 12 Eq. 334 n. (where the apphcant obtained an order for the removal of his name from List A) ; lie Same, Wright's Case, No. 2 (1871), 7 Ch. App. 55 (where the same applicant, on the same grounds, got his name removed from List B also, on ^\'hich the liquidator had placed it after his failure to keep it on List A, as above) ; lie Etna Insurance Co., Slattery's Case (1873), Ir. R. 7 Eq. 245 ; Re Same, Ex parte Shiels (1873), Ir. R. 7 Eq. 264; and Re General Railway Syndicate, Whiteley's Case [1900] 1 Ch. 365, C. A. All the above, except the first, were decided under sect. 98 of the Act of 1862. (c) As, for instance, in Re Madrid Bank, Wilkinson's Case (1867), 2 Ch. App. 536, and Re London and Provincial Starch Co., Qowers' Case (1868), L. R. 6 Eq. 77. No reference of course is here made to the far more common tj'pe of case, where the failure of the application was due to the representee's not having taken the necessary steps to remove the bar created by the mere intervention of the winding up, as to which see Sect. 4, Sub-s. (6), post. (d) Reese River Silver Mining Co. v. Smith, sup., per Lord Hatherley, L.C, at pp. 75, 76, and Lord Cairns at p. 80. (e) Be Scottish Universal Finance Bank, Breckenridge's Case (1865), 2 H. & M. 642, and Re Sussex Brick Co., [1904] 1 Ch. 598, 605, 607, 609, C. A. {f)Re Joint Stock Discount Co., Nation's Case (1866), L. R. 3 Eq. 77 ; Reese River Silver Mining Co. v. Smith, sup., per Lord Cairns at p. 80 ; and Re Sussex Brick Co., ubi sup. (g) Re London and Provincial Electric Lighting and Power Co., Ex parte Hah (1887), 55 L. T. 670. §§ 289-292. 261 transferor, or the transferee, or both, to pass any siicli transfer, the liqui- dator may resort to the statutory procedure for the purpose of putting the transferor's name on, and striking the transferee's name oil, the register of members and the list of contributories. The kind of statements which are deemed material for this purpose are misdescriptions of the circum- stances and position in life of the transferee, and of the amount, nature, or reality of the consideration supposed to have been given by him to the transferor (h). " The principle is that the transferor cannot escape liability if he has actively by falsehood, or passively by concealment, induced the directors to pass and register a transfer (even though it be an out-and-out transfer) which, if he had not so deceived or concealed, they would liave refused to register " {i). The application in such cases can only be made in the name of the company, and by leave of the court, and there is jurisdic- tion to order the transferor to pay the costs of the proceedings {k). Sub-sect. (5). Relief in cases of Sales hy Order of the Court. 292. Where property is sold under the direction of the court, in the course of administering a trust, partnership, or insolvent estate, or in any other cause or matter, any person who has been induced by misrepre- sentation to enter into a contract to purchase such property is entitled to come to the court in that cause or matter, and apply to be discharged from his purchase ; and an order will be made for that purpose on proof of the facts which it would be necessary to establish in an ordinary action for rescission, and subject in all respects to the same principles and conditions (Z). (h) Instances of successful applications by the liquidator, on the ground of such misrepresentations are : Re Bank of Hindustan, China, and Japan, Ex parte Kintrea (1869), 5 Ch. App. 95, 100, 101, (where no money passed at all, and the alleged con- sideration was merely colourable) ; Be Same, Snow^s Case (1871), 25 L. T. 406 {per WicKENS, V.-C'., where the consideration was stated to be £1326 expressed to be then paid, whereas nothing happened but the handing over of a promissory note for that amount which both transferor and transferee knew to be worthless, and where, further, the transferee's financial position was misstated) ; Be Imperial Mercantile and Credit Association, Payne's Case (1869), L. R. 9 Eq. 223, where Jambs, V.-C, followed his own previous decision in the same liquidation in Williams' Case (1869), ibid., p. 225 n. (misdescription of transferee's position in life, and misstatement of pretended consideration) ; and Be Discoverers Finance Corporation, Lindlar's Case, [1910] 1 Ch. 312, C. A. In Be Wheal Unity Wood Mining Co., Chynoweth's Case (1880), 15 C. D. 13, C. A., the liquidator's application would have succeeded, on the like grounds, but for the fact that the cost-book mining company had made calls on the transferee, forfeited his shares, and sued him to judgment, and had thereby affirmed the transaction, and estopped themselves and the liquidator from disputing its validity. On the other hand, in Be European Bank, Masters' Case (1872), 7 Ch. App. 292 (per Jambs and Mbllish, LL.JJ., reversing Malins, V.-C), and Be Humher Ironworks and Shipbuilding Co., Williams' Case (1875), 1 C. D. 576 (per Jessbl, M.R.), the mis- representation of the transferee as a " gentleman " (the other circumstances of the case pointing to complete bona fides), was deemed immaterial, and the liquidator failed. See, generally, the decisions in the European Arbitration which are collected in note (x) at p. 38 of Buckley on Companies (9th edit.). (i) Re Discoverers Finance Corpn., Lindlar's case, sup., at p. 321. (k) Re Bank of Hindustan, etc.. Ex parte Kintrea, sup., per Gutfard, L.J., at p. 102. (I) Such orders were made at the instance of the purchaser in Martin v. Cooper (1846), 3 Jo. & Lat. 496, 72 R. R. 100 ; Lachlan v. Reynolds (1853), Kay 52 ; Brandling 262 COMMENTARY, CH. XI, SECT. 3, SUB-SECTS. (5), (6). 293. The fact that the sale is, in a sense, by the court, and that the misrepresentation, if any, is made by the officers of the court, does not in the slightest degree weaken the purchaser's title to relief, or diminish the vendor's liability to submit to it (m). Indeed, this circumstance renders the contract, if anything, more readily impeachable than if the sale had no judicial sanction or authority. " The court," said Lord St. Leonards (n), " expects from vendors, and particularly from officers of the court, a clear and express statement " ; for, in the language of Page- Wood, V.-C. (o), " it would be strange indeed if in sales made by the direc- tion of the court this rule " (sc. the rule of good faith) " should be less stringent." In such cases there should be, as was observed by Jessel, M.R., " at least as much good faith shown towards the purchaser as, and perhaps a little more than, is required by ordinary vendors out of court " {p) : it is the clear duty of the court to see that its ministers are at least as honest as other people, and the no less clear right of a purchaser to rely with absolute confidence on the discharge of this judicial duty (q). Suh-sect. (6). Physical Resumption or Recapture of Property parted tvith under a Contract voidable for Misrepresentation. 294. There are certain cases in which the representee, without in- voking the aid of any judicial tribunal to annul the contract, may obtain rescission, or rather the fruits of rescission and all the practical advantages which he could derive from it, by taking the law into his own hands, just as (for instance) a person injured by a nuisance may abate it propria 7nanu, instead of resorting to the court for an injunction or damages. Where goods and chattels, the possession of which is capable of passing by manual delivery, have been parted with pursuant to a contract voidable for mis- representation, the representee, if fortunate enough to discover them afterwards, whether in the hands of the representor, or of his trustee in bankruptcy, or other third person, may lawfully revindicate or " resume " the property in such goods and chattels by physical recapture ; and this summary method of enforcing the rule je prends ines Mens ou je les trouve operates as an implied, but a most effectual and emphatic, election to avoid the contract (r). Of course there must be no incidental violence or trespass, V. Plummer (1854), 2 DrsAv. 427 (here the petition was for compensation) ; Whiitetrwre V. WhMemore (1860), L. E. 8 Eq. 603 ; Me Banister, Broad v. Munton (1879), 12 C. D. 131, C. A. ; Be Arnold, Arnold v. Arnold (1880), 14 C. D. 270, C. A. ; and Mahomed Kala Men v. A. V. Harperiiik (1908), 25 T. L. R. 180, P. C. (m) In the Roman law of sale. It A^-as other^^•ise : see App. C, Sect. 2, Sub-s. (10). (n) AA'hcn Sir Edw. Sugden, and L. G. of Ireland, in Martin v. Cooper, sup., at p. 505. (o) At p. 55 of Lnchlan v. Reynolds, sup. (p) At p. 141 of Be Banister, sup. ; with which compare his observations to the same effect at pp. 273, 274, 277 of Be Arnold, sup., and those of Bykne, J., at the com- mencement of his judgment in Dehenliam v. Sawbridge, [1901] 2 Ch. 98. ((/) See the very strong observations of the Privy t'ouncil on the conduct of the Indian court in Mahomed Kala Mea v. A. V. Harperinh, sup. (r) This was the course successfully adopted by the representee in, amongst other §§ 293, 294. 263 and the fortitcr in re must be characterized by the suaviter in modo (s) ; further, if there is anythiag which under a judgment for rescission would have to be restored to the representor as part of the mutual restitution which is a condition of the relief, such restoration must be made or offered by the representee when " resuming " the possession of, and property in, the chattels in question {t) ; or, if the article is found in the hands of a third party who has acquired it, or has the possession or custody of it, in good faith and for value, payment must be made or tendered by the repre- sentee of what has been paid by such third party in so acquiring it, or what has been advanced by him on the security of it, or the amount of his proper charges for warehousing and the like (m), as the case may be. Where there is nothing to restore to the representor or pay to a third party, or where the contract is not voidable but void {x), so that no property ever passed at all, the representee's right is unconditional. In any case, like any other person who takes the law into his own hands, and assumes it to be in his favour without obtaining a judicial declaration to that eSect, the representee accepts the risk (slight or serious, according to all the circumstances) of his acts turning out to be unjustified. oases, Clough v. London and North Western Railway Co. (1871), L. R. 7 Exch. 26, Exoh. Ch., where the goods were obtained by the London Pianoforte Company (who were the representees, and the real defendants to the action) from the defendant railway company, on agreeing to indemnify them (see pp. 34, 37, where the right of any repre- sentee to " resume the property which he parted with under " the contract is dis- cussed) ; iJe Eastgate, Ex parte Ward, [1905] 1 K. B. 645, where the swindled creditors of the representor, after the act of bankruptcy but before the receiving order was made, broke into the house of the debtor and recaptured the goods which they had been induced to part with by the debtor's implied false pretence of his intention to paj' for them, and BiGHAM, J., held that they were entitled to disaifirm the contract by this somewhat lively procedure as against the representor's trustee in bankruptcy ; and Tilley v. Bowman, [1910] 1 K. B. 745, 750, where the circumstances were the same, except that in this case the " recapture " was subsequent to, not only the act of bank- ruptcy but the receiving order also, which fact, however, was considered by Hamil- ton, J., not to affect the application of the rule. (s) In lie Eastgate, sup., Bigham, J. (p. 467), expressed his disapproval of the manner in which the " resumption " was effected, but did not consider it serious enough to affect his decision. (() See Clough v. L. ofc N. W. Railway. Co., sup., per Cur. at p. 37 : " No man can at once treat the contract as avoided by him, so as to resume the property which he parted with under it, and at the same time keep the money or other advantages which he obtained under it ; and therefore the London Pianoforte Company were bound to restore to Adams the money and the acceptance which they had obtained from him." Here the above company were the representees, and Adams was the representor, but the non-payment of these moneys to Adams was immaterial, since Adams was the only person who could assert a right to such payment, and he (for very good reasons) was not suing. (u) In Tilley v. Bowman, sup., the representee paid the pawnbroker the money advanced, with the interest chargeable, and so obtained possession of the goods, his right to retain which was established in the action, together with his right to be recouped by the representor the moneys so paid by way of set-off in the representor' s bankruptcy. (x) See Sect. 2, Sub-s. (2), ante. 264 COMMENTARY, CH. XI, SECT. 4, SUB-SECTS. (1), (2), (3). Sect. 4. Afbiemative Defences to Proceedings for Rescission. 295. Apart from the afdrmative defences which are available in the case of actions in general for the rescission of contracts, whether on statu- tory {y) or non-statutory [z] grounds, there are certain affirmative pleas or answers, which are special to actions or other proceedings instituted for the purpose of avoiding a contract or transaction on the ground of misrepre- sentation (a), and which it is proposed to consider separately and success- ively (6). The burden of allegation and proof, in the case of each of these, is (as the name " affirmative defence " imports) on the representor who affirms (c), and not on the representee who denies ; though that burden may be discharged, in whole or in part, by the representee's admissions at or before the trial or hearing, whether express or implied (d), or may, in the course of the proceedings, be shifted from the shoulders of the representor on to those of the representee (e). Sub-sect. (1). The Representee's Knowledge of the Truth. 296. If, when the representation was made, the representee knew the whole truth as to all the material facts, he was never deceived or misled, and he is, therefore, debarred from all relief by way of rescission, as much as he is from all relief by way of compensation or damages (/). Suh-sect. (2). Agreetnent hy the Representee to waive Inquiry, dispense loith Information, or take with all Risks, Faults, or Defects, etc. 297. Where the representee either expressly, in virtue of a term in the contract, or impliedly by his acts and conduct, has undertaken or agreed (y) Such as the various Statutes of Limitation, as to which see the treatises on the Limitation of Actions, and the authorities collected therein, and, particularly, as to when the statutory period begins to run in cases of fraudulent misrepresentation, Blair v. Bromley (1847), 2 Ph. 354 (per Lord Cottbnham, L.C, at p. 350), Thome v. Heard and Marsh, [1895] A. C. 495, H. L. [per Lord Hekschell, L.C, at p. 503, and Lord Davey at p. 506), and Be McCallum (1901), 83 L. T. 717, C. A. (z) Such as release, estoppel, and the like, as to which see the various treatises on the law of contracts in general, estoppel, etc. (a) These are the subject of Article 39 of the Code. (6) In the first six Sub-sections of this Section. (c) See the observation of the Privy Council at p. 241 of Lindsay Petroleum Co. v. Hurd (1874), L. R. 5 P. C. 221, and those of Lord Davey at p. 295 of Aaron's Beefs, Ltd. V. Tmiss, [1896] A. C. 273, and generally, the cases cited, in the notes to this Section, and also (as regards the two defences of knowledge, and waiver) in the notes to Ch. X, Sect. 2, Sub-ss. (1) and (2). (d) Admissions may be implied from non-denials in a pleading, or from the very form and title of the proceeding, as (e.g.) where an application is made in the winding up of a company, and the very title of the motion, " Re the X. Co.," admits the primd facie right of the representor to set up the liquidation as a bar to rescission. (e) Illustrations of this tossing to and fro of the onus of proof will be found in the case of the defences dealt with in Sub-sections (2), (3), (5), and (6), post. (/) See Ch. X, Sect. 2, Sub-s. (1), ante, which deals with this plea as one which is common to both of the two remedies for misrepresentation — damages and rescission. §§ 295-299. 265 to dispense with information, or not to rely upon it, or to accept the pro- perty or rights purporting to be conveyed or transferred by the contract " with all faults," or with all defects of title, or " at all risks," he cannot be heard to complain of misrepresentation in any proceedings for rescission, any more than he can be heard to so complain in an action for damages {g). Sub-sect. (3). Agreement hy Representee to waive Rescission and accept Compensation instead. 298. If the representor can show that the representee, without having made any such agreement as is the subject of the last-mentioned class of plea, has nevertheless undertaken not to insist on rescission, but to accept pecuniary compensation in lieu of it, it is obvious that he \\a,s,priiiM facie at all events, a valid defence to any proceedings founded on misrepresenta- tion in so far as it is sought thereby to obtain an annulment of the con- tract, but no further or otherwise. Here, of course, in contrast with the type of defence referred to in Sub-sect. (2), where the agreement may be implied from acts and conduct as well as expressed in terms, the undertali- ing relied upon must be found, if at all, in the contract itself ; it must be " so nominated in the bond " ; that is to say, the representee must be in a position to point to some clause or condition of the contract in which the renimciation of this particular form of relief is clearly declared. The question usually arises in contracts for the sale of land, a common con- dition of which is that the sale shall not be vitiated or annulled for any error or omission in the particulars of sale, but shall be the subject only of compensation, or allowance, in money {h) . Where such a condition forms part of the bargain of the parties, the representor is entitled to succeed (^), unless the representee on whom the burden of proof thereupon rests, can bring the case within one or other of the two recognized exceptions to the rule. 299. These two exceptions are the outcome of the principles of in- terpretation applied by the courts in relation to claims and conditions of the character in question. It has been found necessary to put some reason- able limitation upon the generality of the expressions " error," "mistake," " omissions," " misdescription," " misstatement," " defect in title," etc. In the first place, a deliberate and fraudulent misrepresentation has been {g) See Ch. X, Sect. 2, Sub-s. (2), ante, which similarly deals with this defence in its twofold application to both forms of proceeding. {h) There is considerable variety in the precise language employed in the various cases, but this is the substance common to them all. As to the form of condition providing that there shall be neither rescission nor compensation see § 300, inf. («') In the following cases the plea prevailed : Leslie v. Thompson (1851), 9 Hare, 268 ; Whittemore v. Whittemore (1869), L. R. 8 Eq. 603, 605, 606 ; Re Terry and White's Contract (1886), 32 C. D. 14, C. A. ; Ee Fawcett and Holmes (1889), 42 0. D. 150, C. A. (where the representor suing for specific performance set up the condition to defeat a plea of misrepresentation) ; Debenham v. Sawbridge, [1901] 2 Cli. 98 ; Re Simpson and Thomas May, Ltd. (1909), 53 Sol. J. 376 ; and Shepherd v. Croft, [1911] 1 Ch. 521. 266 COMMENTARY, CH. XI, SECT. 4, SUB-SECT. (3). held not to come within the class of " errors " or " mistakes " or " omis- sions " intended by such a term in the contract, that class being meant to comprise only such misstatements as are innocent and accidental. Secondly, error in suhstantialihus, or a misrepresentation as to the essence, character, or substance of the subject-matter of the contract, is not deemed to be covered by any of the above expressions (/<;). The rule is best stated by the Court of Common Pleas, in a case which has always been regarded as the foundation of the law on this topic, as follows : " where the mis- description, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed, that, but for such misdescription, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation " (/). This does not, however, mean that such conditions are necessarily taken to refer only to errors which are trifling and trivial in mere point of quantity or figures (m). Where there is a "misdescription in a material or substantial poiat" of any sort, the plea fails, though the difference in value is difficult to assess or insignificant {n). Conversely, where it is a question of compensation only, the question of difference in character is immaterial (o). In accordance with the above principles, the defence has always been defeated and rescission has been granted notwithstanding the condition, whenever fraud has been established (p), or where the thing tendered in discharge of the contract was shown to materially differ in quality, or substance, or title, from that which it had been represented to be (q). (Ic) See, for both exceptions, the judgment of the Court of C. P. at pp. 376 (as lo fraud), and 377 (as to misrepresentation of the substance), in Flight v. Booth (1834), 1 Bing. N. C. 370 ; also the observations of Lord Esher, M.R., at p. 22, and Lind- LEY, L. J., at pp. 28-30, of Re Terry and White's Contract, sup. ; and those of Bykne, J., at p. 109 of Debenham v. Saivbridge, sup. {I) Flight V. Booth, sup., at p. 377. (m) Be Terry and White's Contract, sup., per Lixdley, L.J., at p. 28 ; Be Fawcett and Holmes, sup., per Lord Esher, M.R., at p. 156 ; and Jacobs v. Bevell, [1900] 2 C'h. 858, per Bucki.ey, J., at p. 865. (n) See Flight v. Booth, sup., at pp. 378, 399 ; and Madeley v. Booth, cited in note (e), '■"/• (o) White V. Cudden (1842), 8 CI. & Fin. 766 (where the misdescription of the fines payable by the custom of the manor was deemed to affect the whole substance of the contract sufficiently to entitle the representee to rescission, if that remedy had been asked for, but, compensation being the only subject of the suit, and such compensation being incapable of estimation, the representee failed, the substantiality of the mis- description being irrelevant to that question : per Brougham, L.C, at p. 786, and Lord Cottenham, at pp. 792-794) ; Be Leyland and Taylor's Contract, [1900] 2 Ch. (i25, 630 ; and Shepherd v. Croft, sup., at p. 529. ip) As in Dimmoch v. Hallett (1866), 2 Ch. App. 21. (q) As in Stanton v. Tattersall (1853), 1 Sm. & G. 529, where the property was described as " No. 58, on the north side of Pall Mall, opposite to Marlborough House," ■with an access (described) to No. 57, whereas in fact it was not in Pall Mall at all, and had no such access, and where, therefore, Stuart, V.-C, refused to give effect to the plea, holding that " what is presented to the purchaser as the subject-matter of liis contract is something so different from what must be understood by the description in the particulars of sale " (p. 536) that the condition became inapplicable. Similarly, in cases where the representee claims the return of his deposit, which are decided on precisely the same principles as cases of rescission — see pp. 375, 376 of Flight v. Booth, §§ 299, 300. 267 300. A form of condition is occasionally used in wliicli ib is stipulated that any error or omission or misdescription shall neither vitiate the sale, nor be a ground for compensation (r). To any such case the same rule, and the same exceptions, apply, mutatis mutandis. That is to say, where the case is within the rule, and not within either of the exceptions, the condition is a bar to amj form of relief (s), though it has been observed that " it is sup., and Sect. 3, Sub-s. (2) of this Chapter, ante — the relief prayed is granted, not- ^vithstanding the condition, -^Yhere there is error in suhstantialibus, as was the case in Flight V. Booth, sup. (where a property was described as one in which no offensive trade, nor either of two specified trades, could be carried on — leaving it to be inferred that any inoffensive trade, other than the two specified, was permissible ; whereas in fact the tenant could be ejected by the superior landlord if he exercised any of a large number of such other inoffensive trades : see pp. 377, 378) ; Dobell v. ifufc/smson (1835), 3 A. & E. 355 (tenancy from year to year misrepresented as a. twenty-three years' lease, and the property incorrectly stated to comprise a certain yard) ; and Madeley v. Booth (1849), 2 De G. & Sm. 718, a very strong case, in which Knight-Bruce, V.-C, held that the difference between the residue of a term, as the interest was described, and an underlease for such residue, less three days, as in fact it \\as, notmthstanding that most people would consider the latter had positive advantages over the former, by reason of the absence of liability to the head-landlord, and notwithstanding that the difference in value had been assessed by an arbitrator at the nominal figure of 5s., was sufficiently vital to justify a disregard of the condition, and » decision that the representor, who was suing the representee for specific performance, not only failed in his suit, but was bound to return the deposit to the representee on the agreement being delivered up by him to be cancelled) ; Se Davis and Cavey (1888), 40 C. D. 601 (where there was a condition that no objection should be taken in respect of anything contained in the original lease, but, the premises being sold as leasehold business premises, it was held by Stiklhtg, J., — see pp. 608, 609 — that the representee could not be forced to take premises which turned out to be subject to covenants in the original lease restraining the carrying on thereat of various specified businesses, including that of the representee ; that the condition had no application, and afforded no answer ; and that the representee was entitled to have his deposit repaid to him, though there was no jurisdiction to order such repayment then and there, having regard to the form of proceeding which had been adopted, viz. a summons under the Vendor and Purchaser Act, 1874, as to which see Ch. XV, Sect. 1, Sub-ss. (3), post) ; and Jacobs v. Eevell, [1900] 2 Ch. 858 (mis- statement of area to which vendor had title). See further, on this point, some of the cases cited in note (») to § 341 in Ch. XII, Sect. 2, post, which illustrate both the rule, and the exceptions thereto, stated in the text, as applied to the assertion by defence, and not by action, of a right to have a contract treated as void. (r) There was a condition of this character in Whittemore v. Whittemore (1869), L. R. 8 Eq. 603, Be Terry and White's Contract (1886), 32 C. D. 14, C. A., Re Davis and Cavey (1888), 40 C. D. 601, Jacobs v. Mevell, sup.. Be Simpson and Thomas Moy, La. (1909), 53 Sol. J. 376, and Shepherd v. Croft, [1911] 1 Ch. 521. See also some of the cases cited in the notes to § 342. («) As in iJe Terry and White's Contract, sup., where the representee failed to convince a majority of the C. A. that the difference in the area of the property as represented and its actual area was sufficiently substantial to bring the case within the second exception. Be Simpson and Thomas Moy, Ltd., sup., where the representee similarly failed to persuade Joyce, J., that the description of the premises as freehold, without mentioning that they -were subject to a rent-charge, was other than an " honest mistake," or fell within either of the exceptions ; and Shepherd v. Croft, [1911] 1 Ch. 621, where, the only question being one of material difference in the property by reason of latent defects of title, Pakkeb, J., held that a house and grounds described as " a, desirable residential property " OTth certain " building advantages " was not rendered a different property by the fact, discovered afterwards, but not disclosed at the time, that a natural watercourse, culverted and piped, ran underneath the property, though this circumstance would affect the value and price). In Whittemore v. Whitte- more, sup., there were two conditions, one of the ordinary type, and the other in the less usual and more stringent form : in reference to the former, Malins, V.-C, held that the deficiency in area proved did not constitute such a discrepancy in point of substance as to defeat the plea, and that, under this condition, the representee was entitled only to the alternative relief of compensation (pp. 605, 606). It was then 268 COMMENTARY, CH. XI, SECT, 4, SUB-SECTS. (3), (4), obviously easier to arrive at the conclusion that the purchaser shall be compellable to take the land, and have money for the deficiency, than that he is to take less than he bargained for, and have no compensation " (t). Where, however, the representee can establish either fraud, or misdescrip- tion in substance, the defence fails, and he is entitled to rescission, no less than if the condition had been in the form more commonly used (m). Sub-sect. (4). Affirmation of the Contract. 301. The three defences hitherto discussed are founded on proof of the representee's knowledge, belief, or intention at or before the time when the contract or transaction was entered into : the next affirmative plea to be considered is concerned with his state of mind and will, as evinced by his acts and conduct, after the contract and in relation to it. 302. It has already been explained that, on discovery of the true facts, the representee has the right of choosing whether he will affirm or disafiirm the contract or transaction induced by a mirespresentation of those facts, and that this option, when once exercised, is exhausted, and the representee can never afterwards resile from it (a;). It follows that, if it can be estab- lished that, with full and exact knowledge of all the facts which gave him a title to avoid the contract, the representee has definitely and unequivocally elected to adhere to it, the representor has a valid defence to any pro- ceedings for relief by way of rescission, whether he has or has not any defence to an action for damages, which is a question depending upon other con- siderations {y). 303. Though the representor may prove conduct on the part of the representee amounting to affirmation, so as to establish a 'pritna facie contended on behalf of the representor that, under the latter condition, the representee was not entitled to compensation either, but the Vice-Chancellor held that this latter condition " must be construed as intended to cover small unintentional errors and iaaccuracies, but not to cover reckless and careless statements," such as he found the misrepresentation in question to be (p. 606). Obviousty, this view is hopelessly illogical, for either the recklessness and carelessness alluded to amounted merely to honest negligence (see Ch. V, Sect. 2), or to fraudulent disregard of his moral responsibility (see Ch. V, Sect. 1 ). In the former construction, it would no more invalidate the plea founded on the second condition, than that which rested on the first : on the latter, it would invalidate the one defence as much as the other, and rescission ought to have been granted accordingly, instead of being refused, when the first condition was being dealt -with, and thereupon it would have been unnecessary to consider the second. If the decision of Malins, V.-C, was right, as it probably was, on the first point, it was clearly wrong on the second, and so Lord EsHEB, M.R., seems to have thought, judging from his observation on this case in Re Terry and White's Contract, sup. Note that, it no material discrepancy is shown, that being the only question, the representor's knowledge is immaterial. Shepherd v. Croft, sup., at pp. 530, 531. (t) Per Buckley, J., at p. 864 of Jacobs v. Bevell, sup. {u) See Jacobs v. Eevell, sup. Or the vendor may get a return of his deposit, which assumes the right to rescission : see Be Davis and Cavey, sup., though the form of the proceedings precluded Stiblinq, J., from giving effect to his opinion by any order on the summons before him. (x) See Sect. 1, Sub-s. (4) hereof, ante. It must always be remembered that if the contract is not voidable, but void, it can no more be affirmed that it can be dis- affirmed : see Sect. 1, Sub-s. (4), ante. (y) See Ch. X, ante. §§ 300-304. 269 defence, the representee may still repel this inchoate plea by establishing — -and the onus is from that point upon his shoulders — that, when apparently so affirming, he had not complete knowledge of all the material discrepancies between the representation and the real facts, though he may have had partial information as to some of them, sufficient, perhaps, to engender a suspicion as to the whole. This is only an application of the general principle of jurisprudence, — a principle by no means confined to the present, or to any particular, subject-matter, — that there can be no election where there is no precise cognizance of the material facts (including the rights arising out of these facts) upon which that election is to operate, and from which it derives vitality and significance. This principle has been applied to cases of release of rights (z), surrender of property (a), and, generally, the con- firmation of impeachable transactions (6), as well as to cases of misrepre- sentation in particular, in which, whenever knowledge to the full extent stated has been shown to have been in the possession of the representee at the time of the alleged confirmation, the plea has prevailed (c), but, whenever the representor's proof has fallen short of the required minimum, or the representee has established affirmatively such deficiency, the plea, in the one case, has failed from its inherent weakness, and, in the other, has been displaced by the strength of the counter-evidence {d). 304. Further, it is incumbent on the representor to prove an un- equivocal election by the representee to adhere to the contract. It is not necessary that this election should be indicated by express or direct language : indeed, it is rarely, if ever, that the affirmation takes this form. Acts and conduct, including written and spoken words, from which such an inference may be fairly drawn, are sufficient (e), and it is by this means that the (z) Leeds (Duhe) v. Amherst [Earl), No. 1 (1846), 2 Ph. 117 {per Lord Cottbn- HAM, L.C., at p. 123 : " for that purpose " — so. to establish a case of release — " it is not only necessary to show that the plaintiff knew of the acts of waste having been committed, but that he knew of the rights which they gave him . . . and that, having such knowledge, he did some act amounting to a release of that right "). (a) Wilson v. Thornbury (1875), 10 Ch. App. 239 {per Jambs, L.J., at p. 248, " election by conduct must be by a person who has positive information as to his rights to the property, and, with that knowledge, really means to give that property up." So Mellish, L.J., at p. 249 : " we have to see whether the plaintiff Imew what his rights were, and what the material facts on which they depended were, and whether, knowing them, he determined to elect," etc.). (6) Murray r. Palmer (1805), 2 Soh. & Lefr. 472, per Lord Rbdesdale at p. 485. (c) As in Ogilvie v. Gurrie (1868), 37 L. J. (oh.) 541 (where Lord Caiens, L.C, pointed out that the shareholder had full knowledge of all the circumstances which gave him the right of election which he exercised), and Sharphy v. Louth and East Coast Railway Go. (1876), 2 C. D. 663, C. A. {per James, L. J., at p. 685 : " the plaintiff, after he knew what the company had done, what it was doing, and what it was able to do . . . for months continued to act as a shareholder, with full knowledge of every circumstance which entitled him, if he ever was so entitled, to be relieved from his {d) As in Jarrett v. Kennedy (1848), 6 C. B. 319, 326 ; Lachlan v. Reynolds (1853), Kay, 52, 101 R. R. 523 {per Wood, V.-O., a case in which the representee knew that a certain person was an occupant, but not that he was a hostile occupant, of the property there in question, and therefore had no exact knowledge on the material point) ; and Glough v. L. & N. W. Railway Go. (1871), L. R. 7 Exoh. 26, Exch. Ch. {per Gur., at pp. 29, 30, 31). (c) Com. Dig. Election, C. 1, and Glough v. L. dh N. W. Railway Co., sup., per Cm:, at p. 34. 270 COMMENTARY, CH. XI, SECT. 4, SUB-SECTS. (4), (5). defence is in. the vast majority of cases sought to be proved. But the acts and conduct relied upon must be inconsistent with any attitude of mind except that of affirmation (/), or at all events more consistent with an intention to affirm, than with an intention to repudiate the contract {g). It is idle to point to indecisive or equivocal acts or language which may evince no more than a state of doubt, suspicion, or suspended judgment ; in that case the representor proves, not an election, but an abstention from election, which not only does not support the plea, but negatives it (h). 305. Where, however, the acts and conduct relied upon indicate with reasonable clearness a definite election to affirm, and there is no allegation or proof on the other side that the representee's election was founded on inadequate knowledge of the material facts, the defence succeeds, and the action or other proceeding for rescission fails. Of the numerous decisions illustrative of the success of the defence now under discussion, by far the larger part are cases relating to contracts to take shares in companies (i). (/) In ihe case of a contract for the sale of goods, this is the rule expressed in sect. 35 of the Sale of Goods Act, 1893. {g) Cp. again, as to sale of goods, the above cited sect. 35 of the Sale of Goods Act, 1893. (h) The representee is entitled to suspend his judgment, and to make no election at all : see Sub-s. (7), post. Positive and unequivocal acts must be proved : see Clough V. L. S N. W. Bailivaij Co., sup., per Cur. at p. 34. Instances of acts held not to amount to such unequivocal exercise of election are to be found in Wontner v. Shairp (1847), 4 C. B. 404 (attending a meeting of shareholders for the mere purpose of proposing the very thing which Avas the object of the suit) ; Clough v. L. & N. W. Railway Co., sup. (at pp. 33, 35) ; lie Metropolitan Coal Consumers Association, Ex parte Edwards (1891), 64 L. T. 651 (where the applicant attended only one meeting of shareholders, at which he stayed for a few minutes and did not wait for the discussion, and on one occasion made an inquiry of the secretary as to the price of the shares) ; and Be Metrop. Coal Consumers Assocn., Karbcrg's Case, [1892] 3 Ch. 1, C. A. (where the applicant was not proved to have done any act at all, but merely to have waited for some time till the decision of the C. A. in the ease of another shareholder in respect of the same misrepresentation, which was held to be a reasonable course to adopt). (i) Campbell v. Fleming (1834), 1 A. & E. 40 (selling the shares after knowledge of the facts) ; Pulsford v. Richards (1853), 17 Beav. 87 (purchasing further shares after full knowledge) ; Ee Royal British Bank, 3Iixer's Case (1859), 4 De G. & J. 575 (receipt of dividends on the shares : per Lord Campbell, L.C, at pp. 586, 587) ; Re Hop and Malt Exchange Warehouse Co., Briggs' Case (1866), L. R. 1 Eq. 483, 487 (instructing broker to sell shares at a premium, though no actual sale took place) ; JRe Cachar Co., Laurence's Case (1867), 2 Ch. App. 412 {per Lord Caiens, L.J., at pp. 423, 424; here the applicant paid a call without protest, and with knowledge from the memorandum and articles of association that the objects of the company were not as representcil in the prospectus, and that his son M'as attending a committee of investigation in his interests) ; Re Russian {Vyksouiisky) Ironworks Co., Kincaid's Case (1867), 2 Ch. App. 420 {per Lord Cairns, L.J., at p. 42li, and Tukneb, L..I., at p. 427), Whiteliouse's Case (1867), L. R. 3 Eq. 790, Taite's Case (1867), L. R. 3 Eq. 795 ; Scholey v. Central Railway Co. of Venezuela (1868), L. R. 9 Eq. 266 n. (where the plaintiff " paid a call without remonstrance, and received a dividend," upon which state of facts Lord Caikus, L.J., at p. 267 n., observed : " if anj^thing could affirm a voidable contract, it would be conduct of that kind. By receiving a dividend, he elected to continue a member of the company, and having done that he could not come next day, or next week, and file his bill, etc.") ; Ogilvie v. Gurrie (1868), 37 L. J. (oH.) 541 (where the plamtiff, after months of suspicion, did nothing at all, but relied on the promise of the company to appoint a new secretary and auditor, in the hope, as he admitted, that a compromise would result) ; Be Bank of Hindustan, China, arid Japan, Campbell's and Hippisley's Cases (1872), 9 Ch. App. 7 (where the applicants, after a compromise sanctioned by the judge, remained on the list of contributories, took part in the appointment of liquidators, and, without raising any objection, paid calls under balance orders) ; Sharpley v. Louth and East Coast Railway Co. (1876), 2 C. D. 66:;, C. A. (^vhere the §§ 304-307. 271 306. It should be noted that the affirmation of a contract, based on the discovery of the falsity of one of two separate and distinct misrepre- sentations, though made in one and the same document, or at one and the same time, is no bar to a proceeding for rescission of the contract based on the subsequent discovery of the falsity of the other representa- tion (k). Nor will affirmation of a contract, and even recovery of damages, against one of two representors, even though they be partners, prevent the representee obtaining rescission against the other representor (/). But where only one representation is complained of from first to last, though it may be false in two or more particulars, the representee who has once affirmed the contract with knowledge of one of such discrepancies onlv) is precluded from ever afterwards obtaining an order to sot it aside on discovery of a fresh point of falsity in the same representation (m). Sub-sect. (5). Where Rescission and Restitution ivould he unjust to the Representor or to Third Parties. 307. Mutual restitution being a condition of rescission, unless the repre- sentee has nothing to restore (w), it follows that the court wiU never set plaintiff, after knowledge that the company's ro])rosentation as to the capital necessary for making the line was false, insisted on the line not being abandoned, and took an active part in meetings of his fellow-townsmen for the purpose of urging on the company the continuance of the enterprise) ; Cargill v. Bower (1878), 10 C. D. 502, 508, 509 (where the plaintiff, having supported the petition for liquidation of the company, and got his costs in that character, and having commenced an action against it and its directors for damages and rescission, dropped the claim for rescission) ; Re Wheal Unity Wood Miniruj Co., Chynoweth's Case (1880), 15 L'. D. 13, C. A. (where the liquidator of the cost-book raining company had made calls upon the transferee, forfeited his shares, and sued him to judgment, which acts were held to amount to a clear affirmation of the transfer which was sought to be avoided on the ground of the transferor's misrepresentation, and, therefore, a bar to the liquidator's claim to settle such transferor's name on the list of contributories) ; Heid v. London and Staffordshire Fire Insurance Co. (1883), 53 L. J. (CH.) 351 (where the plaintiff, after commencing his action for rescission and rectifioation of the register, gave notice of discontinuance, and did nothing until he heard that another shareholder had succeeded in the C. A. in a similar action) ; Re Dunlbp-Truffault Cycle and Tube Manufacturing Co., E.r parte Shearman (1896), 66 L. J. (oh.) 25 (where the applicant, after a clear notice of repu- diation, paid allotment-moneys and instalments in respect of her shares, in the mistaken belief that such payment would strengthen her position, and Kekewick, .]., held that her conduct in so doing was in fact an affirmation, though she intended the exact contrary) ; Re Leyland and Taylor's Contract, [1900] 2 L'h. 625, C'. A. (where, on the sale of land, there being a claim for compensation of the kind mentioned in § 299, ante, the representee deliberately resorted to the clause, and elected not to ask for rescission) ; Re Metal Constituents, Ltd., Lord Lurgan's Case, [1902] 1 Ch. 707 (where Buckley, J., at pp. 710, 711, "reviewed the facts in detail, and found that Lord Lurgan had elected to keep the shares after he had become suspicious about the company ") ; and Seddon v. North Eastern Salt Co., [1905] 1 Ch. 326 (where the plaintiff, after full knowledge, continued to carry on the business of the London Salt Co., and at a profit, and, was held by Joyce, J., to have thereby affirmed his contract to purchase all the shares of such company). (i) Re London and Provincial Electric Lighting and Power Co., Ex parte Bale (1887), 55 L. T. 670. (l) Rawlins v. Wickham (1858), 3 De G. & J. 304 {per Knight-Bbuce, L.J., at p. 315, and Ttjbnek, L. J., at p. 322). {m) Campbell v. Fleming (1834), 1 A. & E. 40, and Re Russian (Vyksounsky) Iron Works Co., Whitehouse'8 Case (1867), L. R. 3 Eq. 790. (re) In which case rescission is unnecessary', and the remedy available is that described In Sect. 3, Sub-s. (2), ante. 272 COMMENTARY, CH. XI, SECT, 4, SUB-SECT. (5). aside a contract or transaction in any case where complete restitutio in integrum on both sides, and in specie, where the property is specific, cannot be effected, for to do so would be unjust to the representor. Nor will rescission be granted, even though such restitution is practicable as between the immediate parties, if the undoing of the contract would prejudicially afiect the rights or interests which any third party has, in good faith and for value, acquired under it, whilst it was still unavoided, because this would be obviously unjust to the third party, who would thus be punished for no fault of his own, and for the benefit of the person by whose conduct or inaction he was encouraged to acquire those rights and interests (o). 308. First, as to the class of case where it would be inequitable as between the representor and the representee to avoid the contract. If the representor can prove — and it is probably for him to do so ( p) — that the representee received something specific under the contract, that is to say, something other than money or securities or goods incapable of an individual character, and that, by his own act, the nature, quality, or substance — the species, in fact — of this something has been destroyed or changed, the representor establishes a valid afiirmative defence, since the representee is not able to satisfy the condition upon which alone rescission is possible. Thus where the property acquired under the contract, such as a mine, a colliery, or a business, has been either worked out or exhausted, or so dealt with as to result in an entire alteration of its physical or com- mercial character (q), or where shares or securities so acquired have lost (o) The two classes of case are referred to in a passage from the judgment of the Exchequer Chamber in dough v. London and North Western Railway Co. (1871), L. R. 7 Exch. 26, Exch. Ch., at p. 35 : " we think that, so long as he " — the representee — " makes no election, he retains the right to determine it either way, subject to this that if, in the interval while he is deliberating, an innocent third party has acquired an interest in the property, or if, in consequence of his delay, the position even of the uirongdoer is affected, it wHl preclude him from exercising his right to rescind." (2>) Though the burden is sometimes said, or assumed, to be on the representee of .shoANTng that he is in a position to make specific restoration ; see, for instance, Stain- hunlc V. Fernley (1839), 9 Sim. 556, Avhere, by his bill, the representee offered to retransfcr the shares to the representor and repay the dividends he had received in respect of them. It seems, however, to be more sound to regard the restoration as a condition subsequent, as in cases of specific performance, where the decree is made subject to subsequent proof of title, but the defendant may by way of defence allege that the plaintiff not only has no title, but can never acquire one, in which case the onus is elearty on him. Similarly it is conceived that, in cases of rescission, if the rej)resentor does not aver, or, having averred, does not prove, impossibility of specific restitution, the order for rescission would go, subject to such restitution; and, if it turns out afterwards that the restitution cannot be effected, the order would become inoperative. See the alternative form of decree in the case cited in note (w), inf, (q) As in Atwood v. Small (1838), 6 CI. & E. 232 (collieries, and iron works and mines, described by Lord Cottenham, L.C, at p. 357, as " a property of this description, varying from day to day," and, therefore, peculiarly the subject of the rule in its most stringent application) ; Vigers v. Pike (1842), 8 CI. & E. 562 (per Lord Cotten- ham, L.C, at p. 651, a case where the representee company had worked out and exhausted the mines which it had acquired under the contract) ; Clarke v. Dickson, No. 1 (1858), E. B. & E. 148 (where the representee had worked the mine, and where Eble, J., at p. 153, likens the case to that of a man offering to return to the representor a lottery ticket which had turned up a blank, and Ckompton, J., at p. 155, to that of a butcher ^\•ho had bought cattle from a grazier offering to return the carcase) ; Shejjield Nickel and Silver Plating Co. v. Univin (1877), 2 Q. B. D. 215, §§ 307-309. 273 their original status, and have become shares or securities of a different legal quality, and with different legal incidents (r), the plea prevails, and rescission is refused. But it is of no avail to show a mere depreciation or deterioration of the property, arising in the ordinary course of events, or from natural decay or inherent defects, and in nowise imputable to the positive acts and conduct of the representee (s). Further, even where the defence is otherwise good, it is open to the representee to defeat it by proof that the representor has deliberately stood by, and silently encouraged the acts of the representee which are alleged to have produced the altera- tion or extinction of the property, with full consciousness of his own mis- representation, and for the sole purpose of providing himself with materials for the assertion of the plea, if and when his fraud should be discovered {t). Where there is a doubt whether the representee will or will not be able to make, or procure to be made, a restoration in specie to the representor, the judgment may be framed in the alternative, that is to say, for rescis- sion, if the restoration is effected within a stated time, and, if not, for dismissal of the action (m). 309. In the second of the two classes of case above referred to, though the representor is not in a position to complain of the slightest injustice towards himself by reason of any acts of the representee, he is in a position, and has a right, to call the attention of the court to the fact that innocent third parties who have for value acquired property or rights under the con- tract will be prejudicially afiected by an order for rescission, and to rely 223, 224 {where tlie position of both parties in relation to the patents and businesses the subject of the contract had been entirely changed) ; and Lagunas Nitrate Co. v. Lagunas Syndicate, [1899] 2 Ch. 392, C. A. (where, at p. 433, Liudlby, M.R., observes that " the real difficulty in the way of rescission lies in the impossibility of restoring the parties to their original position," and, at pp. 433, 434, enumerates the circum- stances which resulted in this impossibility, viz. that the plaintiff companj' had called upon the defendant syndicate to make, and the syndicate had made, outlays upon the property ; that the company had worked the property at a profit and received dividends ; that the syndicate had sold shares received in part payment ; that after- wards an entirely new board of directors had been formed, who even then claimed no rescission, and worked the business as before at a profit, etc.). (r) Clarice v. Dickson, No. 1, sup. {per Ekle, J., at pp. 153, 154, and Ckompton, .!., at p. 155, where, besides the working out of the mines, the additional fact is referred to that the representee, having been instrumental in getting the cost-book mining company converted into a joint stock company had disabled himself from returning the shares in the same plight as that in which he had received them) ; and": Western Bank of Scotland v. Addie (1867), L. R. 1 H. L. (Sc.) 145 (where an incorporated company under the Banking Act, 7 Geo. 4, c. 67, had been put an end to, and was thereupon registered as an incorporated company under the Joint Stock Companies Acts, 1856 and 1857, whereby, says Lord Ckanwoeth, at pp. 165, 166, the representee was not in a position to restore the very thing which he had acquired, and on this ground, quite apart from the bar constituted by the winding up, was precluded from obtaining rescission : cp. the observations of Lord Chblmsfobd, L.C, at p. 160). (s) Western Bank of Scotland v. Addie, sup., per Lord Ceanwobth at pp. 165, 166 ; and Adam v. Newbigging (1888), 13 A. C. 309, H. L., per Lord Watson at p. 323, and Lord Herschell, at pp. 330, 331. {t) Maturin v. Tredennich (1864), 12 W. R. 740. (u) See the form of the decree set out at p. 245 of Lindsay Petroleum Co. v. Hurd (1874), L. R. 5 P. C. 221, where there was a question whether the company, ha\iug been dissolved, could eventually, through other parties, procure the property to he reconveyed to the representors, B.M. T 274 COMMENTARY, CH. XI, SECT. 4, SUB-SECTS. (5), (6). upon that fact as an affirmative defence ; and, on furnisliing the necessary proof, the assistance of the court so invoked will be given to the representor, not in the least' out of any consideration for him, or the merits of the plea (for there are none), but simply because no court will pronounce a judgment which, however equitable as between the immediate parties, must necessarily have the effect of taking away or injuring the property or rights of others. Whilst such a refusal of relief is an act of justice to the third party, it cannot be deemed unjust to the representee who, though he has actively done no injury to such third party, has, by inaction, made it possible for him, and indeed encouraged him, to enter into transactions, payments, incur liabilities, give credit, or otherwise alter his position, on the faith of the continuing subsistence and validity of the contract which it is sought to annul. The representee is under no obligation to make his election whether to affirm or avoid the contract within any specified time, or at all : he may sit on the fence and adopt a waiting policy for as long as he pleases, but he does so at his own risk, and cannot complain if in the meantime rights have been acquired by others which must be respected, and which cannot be respected without depriving him of the rights which he would otherwise have been entitled to enforce against the representor {x). 310. The plea in question is most frequently raised, and established, where the contract sought to be rescinded is a contract to take shares in a company. Apart from the class of case in which the company is in process of liquidation, which circumstance is a bar in itself, as will presently be seen (y), and apart, therefore, from the question of the rights of creditors, it has always been held that a very slight delay on the part of the share- holder, after knowledge of the falsity of the representation, will disentitle him to avoid his contract, the ground being that, from the moment when his name is entered on the register of members, which is a document accessible to the public («), it is at least possible that other persons may have inspected that register and joined the company on the faith of such entry (a). No delay can be imputed to the shareholder until he is apprised (x) See Sub-s. (7), post, as to the significance of dela}' in this respect. (?y) See Sub-s. (6), inf. (z) See sect. 30 of the Companies (Consolidation) Act, 1908. (a) Central Railway Co. of Venezuela v. Kisck (1867), L. R. 2 H. L. 99 {per Lord ROMILLY at p. 125 : " a contract between a company and an individual differs from a contract between two individuals alone in this respect that, upon the faith of his being a member of the company, various persons are induced to deal with the company, and to become shareholders. . . . The result is that it becomes necessary for him, in order to set aside a contract of this description, that he should come with the utmost diligence for that purpose, so that no person may be misled by the fact of his remaining a member of the association ") ; Scholey v. Central Railway Co. of Venezuela (1868), L. R. 9 Eq. 266 ii. {per Lord Cairns, L.C, at p. 267 n. " the court would be most careful to see, in a company going on and trading, in which the rights of the share- holders and others varied from day to day, that a person coming to complain of misrepresentation of this kind, and coming to avoid a voidable contract, came within the shortest limit of time that was fairly possible in such a case ") ; Ogilvie v. Gurrie (1868), 37 L. J. (oh.) 541 {per Lord Cairns, L.C, at p. 546 : " there was this company trading, every day of necessity involving an alteration in its position, and the position of his fellow-shareholders ") ; Re Hull and County Bank, Burgess's Case (1880), 15 C. D. 507 (fio- Jessel, M.R., at p. 512 : " they " — the other shareholders — " acquired §§ 309-311. 275 of the whole of the real fiicts, but where the discrepancy between the actual and the represented facts relates to the objects and business of the company, he is presumed to have had such knowledge immediately upon the registration of the memorandum and articles of association ; whence ^t follows that, in such cases, the period during which he must act in order to preclude the possibilitj' of the defence under discussion being raised against him, besides being of brief duration, commences at a specially early stage (&), and, where the memorandum and articles are registered at the same time as, or before, the issue of the prospectus (which is now usually the case), it commences at once (c). Sub-sect. (6). The Liquidation of the Company, in Cases of Contracts to take Shares. 311. Where the contract sought to be set aside is a contract to take shares in a company registered or formed pursuant to the statutory enact- ments in that behalf, and the company goes into liquidation, every person whose name is properly on the register of members at the date of the commencement of the liquidation is a contributory to the debts and liabilities of the company, to the extent (if any) to which his shares are not fully paid up, and the liquidator is not only entitled, but bound, to place his name on the list of contributories in discharge of his duty as an rights as iuuocent parties, which this applicant seeks to take away from them ") ; Re Snyder Dynamite Frojectile Oo., iSfeZton's Case (1893), 68 L. T. 210 (per STmLiNO, J. I ; Aaron's Reefs, Ltd. v. Twiss, [1895] A. C. 273 {per Lord Davdy, who, at p. 294, insists that the representee " must exercise his right of repudiation with extreme promptness after his discovery of the fraud or misrepresentation, for this reason : the putting of his name on the register may have induced other persons to give credit to the company, or to itcome members of the company ") ; and Re Mdal Constituents, Ltd., Lord Lurgan'a Case, [1902] 1 Ch. 707 (per Buckley, J., at p. 710 : " his "—Lord L.'s— " signature to the memorandum of association made him on registration a member of the company, and bound him not only in favour of the company, but in favour of every other person who became a member of the company," whence it followed that, if judgment were given for Lord L., the unjust result would be " that every person who subsequently became a member would be deprived of the benefit which he supposed he had by Lord L. being a member "). (5) By sect. 14 (1) of the Companies (Consolidation) Act, 1908 (which is a reproduc- tion of corresponding sections in previous Companies Acts), every member is deemed to have executed the memorandum and articles of the company when registered. See the observations of Lord Westbuey, L.C, at p. 734 of New Brunswick and Canada Railway and Land Go. v. Conybeare (1862), 9 H. L. C. 711 : " when the respon- dent took these shares ... in the eye of the law, and by force of the statute under which this company was formed, he must be considered as having impliedly executed this deed of association," and, therefore, to have had notice of all the provisions of the contract thereby created." This being so, it was always held, and with particular insistence and emphasis by Lord Cairns, L.J., that it was the duty, or at all events the business and the interest, of the shareholder, if he was desirous of removing a possible or probable bar to all relief by way of rescission, to move with more than ordinary promptitude : see his observations at pp. 423, 424 of Re Cachar Co., Lawrence's Case (1867), 2 Ch. App. 412 ; pp. 426, 427, of Re Russian (Vyksounshy) Iron Works Co., Kincaid's Case 1867), 2 Ch. App. 420; pp. 540, 541, of Re Madrid Bank, Wilkinson's Case (1867), 2 Ch. App. 536 ; and p. 684 of Re Barned's Banking Co., Peel's Case (1867), 2 Ch. App. 674. (c) It is provided by sect. 81 (1) of the Companies (Consolidation) Act, 1908, that every prospectus must state {inter alia) " the contents of the memorandum." 276 COMMENTARY, CH. XI, SECT. 4, SUB-SECT. (6), ofEcer of the court. If such a person therfefore is minded to proceed against the company for rescission of his contract, or for rectification of the register, or for the removal of his name from the list of contributories, on the ground of misrepresentation, the mere commencement of the wind- ing up whilst his name is in fact, and properly, upon the register, is an absolute defence and bar to such proceedings. The representee may be in a position to prove the falsity of the representation, the inducement, and the materiality ; he may even have repudiated the contract, so far as giving notice of such repudiation is concerned, and may have taken this step immediately upon, or within what would otherwise have been deemed a reasonable time after, discovery of the truth ; but, if he has not in fact procured the actual physical removal of his name from the register, nor taken any of the steps, mentioned below (d), which the law deems equivalent thereto, his name is none the less properly on the register at the date of the liquidation, and this fact is still an insuperable obstacle in the way of rescission. 312. The theory upon which the defence imder discussion rests, and by which it is justified, is substantially the doctriue of the inviolability of the jus tertii in conjunction with, and in application to, the express provisions of company legislation. The liquidation, by force of these statutory provisions, alters entirely the position and relation to one another of the various parties concerned. There is no longer, except in name, a company at all ; there are no longer shareholders in the same sense as before ; for the winding-up order " makes the shareholders contributories, and contributories in a totally difierent way, in some respects, as regards the debts and liabilities of the concern, from what they were before " (e). If, in favour of any one of these contributories, rescission were to be granted, the burden on the other contributories, presumably as innocent as himself, would be proportionally increased ; whilst the creditors would lose a pro- portionate part of the fund, or rather of the responsibihty of the body of persons answerable for the satisfaction of their claims, to which, on the faith of the subsistence and validity of the contract, they had justifiably looked (/). Each of these results being manifestly unjust, the court wUl not make an order which wiU produce both. " The general principle is that no contract can be rescinded so as to aSect rights acquired bona fide by third parties under it. It is true that the creditors and the other shareholders have not acquired direct interests under the contract, but they have (d) See §§ 316-320, inf. (e) Per Jessel, M.R., at p. 511 of Be Hull and County Bank, Burgess's Case (1880), 15 C. D. 507. 1 n. ,1 f. -, , . ■. (/) See the observations of Lord Ckanwokth at p. 366 of Oalces v. Turqnand, Peek V. Same (1867), L. R. 2 H. L. 325 : " this is obviously the reason why the new statute " — he is referring to sect. 11 of the Act of 1862, which is now sect. 30 of the Act of 1908 — " opened the register to the inspection of all the world. . . . The permission to all persons not shareholders to inspect the register, and so to ascertain who are shareholders, and to what extent they are liable would have been an unwarrantable exposure of the afiairs of the company, were it not that all persons have an interest in knowing who are liable, and to what extent." §§ 311-313. 277 acquired an indirect interest. The shareholders have got a co-contributory, the creditors have got another person liable to contribute to the assets of the concern, so that, although in the case of ordinary voidable contracts simple repudiation is enough, there must be, in the case of a voidable contract to take shares, repudiation and something more before the wind- ing up commences " {g), and " equities which would be suf&cient as between the shareholders and the company cannot be set up against the creditors and co-contributories " (h). 313. Of the two classes of persons concerned, the class of creditors is that which is the more seriously affected, and against which the release of a shareholder would operate with the more obvious injustice. If A. is in partnership with B., and C. is a creditor of the firm, it would be a violation of the plainest principles of equity and honesty, that A. should be allowed to retire from the firm, on the ground that he was induced to become a member by the misrepresentation of B., without remaining liable to C. And, in the case of an ordinary partnership at common law, A. does so remain liable, and therefore an order to set aside a contract between two persons to enter into such a partnership can properly be made, because no jus tertii is in the slightest degree disturbed thereby (*'). But the case of a company registered or framed under the Companies Acts, which is a partnership or association legalized by the statutes only and subject to the conditions and restrictions imposed thereby, is very difierent ; the shares in such a company are transferable without the consent of the creditors whilst the company is a going concern, and during that period, therefore, the creditors have no right to complain of any shareholder throwing back his shares on the company for misrepresentation, or any other cause ; but, directly the company has become insolvent, a new state of things arises, and the creditors must be injured by the withdrawal of a contributory from the body of persons, now crystallized and no longer fluctuating, whose responsibility, to the extent of the forced contributions leviable upon them, is the only security they thenceforth can have for the satisfaction of their claims {k). This view has been adopted and acted upon throughout the whole history of company legislation, which, so far as material to the point under discussion, is as follows (Z). Under the Acts of 1844, 1848, and 1849, a creditor could levy execution on any shareholder. In 1855, by the statute 18 & 19 Vict. c. 133, limited liability was introduced, but creditors, to the extent of such limited liability, could still levy (g) Per l?By, L.J., at p. 439 of Re Scottish Petroleum Co., Ex parte Wallace (1883), 23 C. D. 413, C. A. (h) Per Baqqallay, L.J., at p. 429 of the same case. (i) Tennent v. City of Glasgow Bank (1879), 4 App. Gas. 615, per Lord Caiens, L.C, at pp. 621, 622. {k) Hid. {I) This short sketch of company legislation, in connection with the topic dealt with in the text, down to 1862, is given by Lord Chblmsfobd, L.C, at pp. 346, 347 of Oakes v. Turguand, Peek v. Same (1867), L. R. 2 H. L. 325. Sec Lord Halsbury's Laws of England, title " Companies," vol. v, pp. 25 et seq., for a complete history of company legislation. 278 COMMENTARY, CH. XI, SECT. 4, SUB-SECT. (6). execution as before. Then came tlie Joint Stock Companies Acts of 1856, 1857, and 1858, whicli provided for winding up in case of insolvency, and, in that event, restricted the rights of creditors to the exaction of forced contributions in the liquidation, and abolished the old power of levying execution on the property of individual shareholders. The Companies Acts, 1862 and 1867, the material provisions of which are now reproduced in the Companies (Consolidation) Act, 1908, followed ; but all these statutes, beginning with those of 1856, " merely changed the security which the creditor previously possessed by issuing execution against the shareholders . . . into a right to obtain satisfaction of his debt by means of forced contributions." The principle, however, has always been the same, viz. that every creditor has a right to look to the responsibility of any person who is at the material date on the register under a contract which, though voidable, has not in fact been avoided, and it has always been held, whether in cases under the statutes before 1862 (m), or in those of a later date (n), that no relief by way of rescission will ever be granted (m) See the four oases decided in reference to the Royal British Bank by the Courts of Q. B., C. P., Exoh. and Chancery respectively, viz. Henderson v. Boyal British Bank (1857), 7 E. & B. 356 [per Lord Campbell, C.J., at pp. 364, 365), Powis V. Harding (1857), 2 C. B. (n. s.) 533 {per Cockbtjen, C.J.), Daniell v. Royal British Bank (1857), 1 H. & N. 681, and Re Royal British Bank, Ex parte Nicol (1859), 3 De G. & J. 387. The decision of KmDBKSLBY, V.-C, to the contrary in Be Royal British Bank, Ex parte Brockwell (1857), 26 L. J. (oh.) 855 cannot be accepted as sound. {n) Oakes v. Turguand, sup. {per Lord Chelmsfokd, L.C, at p. 350 : " it is true that there was no contract between the creditor and the shareholders . . . but he must be taken to have knoAvn what his rights were under the Act, and that he had the security of all the persons whose names were to be found upon the register, and who had agreed to become shareholders," and, at p. 353, " if this allottee could escape, so could all the others, and the creditor would be left with no remedy except against the contributions ... of those who were fraudulent," and Lord Ckauworth at p. 367 : " it " — the Legislature — " intended to put the persons whose names are on it " — the register — " in the same position towards creditors (subject of course to the statutory restrictions) as persons engaged in ordinary partnership, or persons trading formerly under the Act of 1844 ") ; Tennent v. City of Glasgow Bank, sup. ; and, generally, the cases cited in the notes to this Sub-section. In Dovmes v. Ship (1868), L. R. 3 H. L. 343, the opinion of the House of Lords was in accordance with the above decisions, though, in consequence of a chapter of blunders in practice at an early stage of the proceedings, the House was disabled from giving efieot to this opinion. What happened in this curious, and almost comical, case, was this. On Ship's application to have his name removed from the register of members and list of contributories, Wood, V.-C. (quite wrongly), made an order as prayed, notwith- standing the liquidation of the company: Ship's Case (1865), 13 W. R. 450. There- upon one Downes, a promoter of the company who was responsible for the prospectus, asked for, and (very strangely) was granted by the Lords Justices, leave to intervene and appeal — (1865), 13 W. R. 531 — the liquidator being apparently un-s^dlling, or not having the funds to do so. Not till the appeal of this very unmeritorious person came on to be heard did it dawn upon the Lords Justices that they had acted without the slightest jurisdiction in giving leave to appeal to one who was not a party to the proceedings, and could by no possibility have any locus standi, and they expressed their repentance of this error by dismissing the appeal which they had themselves encouraged, and on grounds which showed that such encouragement never ought to have been given— (1865), 13 W. R. 599 ; 2 De G. & J. 544. Nothing daunted, Downes appealed to the House of Lords, and his appeal was again dismissed, and on the same ground : but the opinion was clearly expressed that, if the liquidator, who was the only person entitled to do so, had appealed from the order of Wood, V.-C, he would have succeeded {per Lord Ckanwokth, at p. 356), and it was intimated that it might not be too late even then for him to take the necessary steps, and, indeed, he was almost invited to take them. But, so far as the reports are concerned, " the rest is silence." §§ 313-316. 279 wliich will prejudice this established right of the creditors, as, after winding up, it inevitably must. 314. Though it is the creditors who in most cases are mainly, if not solely, interested in the withdrawal of any name from the list of contri- butories, it is clear that an order for rescission would, on precisely the same principle, work a similar injustice towards those who were the representee's fellow shareholders, and are now his co-con tributories, since, by such with- drawal, the amount of the call to be made by the liquidator on them would be proportionately increased for the purpose of satisfying the creditors (o), or (where there are sufficient assets to meet their claims) for the purposes of discharging the costs of the winding up, and the adjustment of the rights of the contributories inter se {p). 315. It is immaterial in which of its three possible forms (q) the company is being wound up (r). The date at which the liquidation is deemed to have commenced, for the purposes of the defence in question, is the date of the petition, not of the order, because, by the statute, the order when made relates back to the former date (s). Further, it is not absolutely necessary that the liquidation should have formally commenced, in order to support the plea, if the company has actually stopped payment, and given public notice thereof, and closed its doors (t) ; but it is not enough to prove the mere fact of insolvency, where no steps of any kind, formal or informal, have been taken towards the initiation of the winding-up, and, in such circumstances relief may be given, at aU events on proof that no creditor is likely to be prejudiced (m). 316. It has been noticed that the plea may be defeated, notwithstanding that the representee's name was on the register of members at the commence- ment of the winding up, by proof of facts which the law deems equivalent to the removal of his name ; that is to say, if, in the language of Fry, (o) In Henderson v. Royal British Bank (1857), 7 E. & B. 356 {per Lord Campbell, C.J., at p. 364), Doumes v. Ship, sup. {per Lord Ckanworth, at pp. 355, 356 : " or even against other innocent shareholders "), Ogilvie v. Currie (1868), 37 L. J. (CH.) 541 (per Lord Caikus, L.C, at pp. 543-547), Re Hull and County Bank, Burgess's Case (1880), 15 C. D. 507 {per Jessel, M.R., at pp. 511-514), and Re Scottish Petroleum Co., Ex parte Wallace (1883), 23 C. D. 413, C. A. {per Fry, L. J., at p. 439), the point of view of the fellow-shareholders and co-contributories is discussed, and the injustice done to them, apart from that done to the creditors, by an order for rescission in favour of one who was on the register at the date of the commencement of the liquidation, is insisted on. (p) In Hull and County Bank, Burgess's case, sup., it was admitted that there was enough to pay all the creditors, and it was strongly, but vainly, urged upon the court that this fact made a difference. {q) Voluntary, compulsory, or under the supervision of the court See the Companies (Consolidation) Act, 1908, s. 122. (r) Stone v. City and County Bank, Collins v. Same (1877), 3 G. P. D. 282, C. A. {per Bbamwell, L.J., at pp. 305, 306, Brett, L.J., at pp. 310-312, and Cotton, L.J., at pp. 313-315). In that case the liquidation was voluntary. (s) Kent V. Freehold Land and Brickmaking Co. (1868), 3 Ch. App. 493 {per Lord Caibks, L.C, at p. 494). {t) Tennent v. City of Glasgow Bank (1879), 4 App. Cas. 615 (per Lord Cairns, L.C, at pp. 622, 623). (m) Be London and Leeds Bank (1887), 56 L. J. (Ch.) 321 {per Stirling, J., at pp. 324-326, where he explains how very special, and unlikely to recur, the oircumatanccs were in Tennent v. Glasgow City Bank). 280 COMMENTAEY, CH. XI, SECT. 4, SUB-SECT. (6). L.J. (x), the representee can show that he has " done something more than" merely repudiate his contract to take shares. It is now well settled what this " something more " comprises, and what it excludes. The representee must estabhsh that, before the date of the commencement of the liquidation, he has commenced proceedings against the company for rescission, or asserted his claim to such rehef in proceedings instituted against him by the company ; or that the company has entered into a binding agreement with him to remove his name from the register, and is therefore in default in not having done so, in which case his name is oif the register in contemplation of law ; or that he has entered into an agreement with the company whereby he and it have both undertaken to be bound by the result of proceedings for rescission already commenced by some other shareholder in respect of the same misrepresentation as that in question, in which case, he is, in contemplation of law, as against the company, in precisely the same position as if he were a party to those proceedings (y) . 317. The theory upon which the commencement of proceedings by the representee before the liquidation operates as a good answer to the plea, and entitles him, if otherwise entitled, to have the contract set aside, or the register or list of contributories rectified or varied, is that, just as the Avinding-up order, if and when made, relates back to the filing of the petition, so the order for rescission, if and when made, relates back to the commencement of the proceedings, and, indeed, as has been seen («), to an even earlier date, viz. that of the contract itself, which is thereby declared void ab initio. And not only is the representee entitled to succeed, as against the defence in question, when he has himself been the actor in a suit or application against the company (a), but also where, in an action for calls brought by the company, he has asserted his right to have the contract avoided in a counter-claim or affirmative defence (b), or even in an affidavit in answer to the company's application for judgment under 0. xiv, in which he has stated his intention of so counter-claiming, and on which he has obtained leave to defend (c). {x) See § 312, ante, and note (e) thereto. ly) All three modes of surmounting the primd facie bar are the subject of a com- prehensive statement by Kay, J., in Ee Lennox Pvhlishiiig Co., Ex parte Storey (1890), 62 L. T. 791. (z) Vide ante, § 271. (a) As in Reese River Silver Mining Co. v. Smith (1869), L. R. 4 H. L. 64, and Re Metropolitan Coal Consumers' Association, Karberg's Case, [18^2] 3 Ch. 1, C. A. (see the observations of Lindley, L.J., at p. 10). It is to be observed that if a representee, having commenced proceedings before the winding up in respect of a specified mis- representation, desires to amend his statement of claim after that date, he will not be allowed to do so, if the amendment consists in the assertion of another misrepresenta- tion, and so in effect amounts to the bringing of a fresh action, for to this fresh action the liquidation would clearly be a bar ; but if limited to the mere expression of the origmal claim in a better shape and with greater precision and detail, the amendment will be allowed, and, in that case, the liquidation avUI no more be a bar to the claim as amplified than it was to the claim as originally pleaded : see Cocksedge v. Metro- politan Goal Consumers Association (1891), 65 L. T. 432, C. A. (6) Re Warren's Blacking Co., Pentelow's case (1869), 4 Ch. App. 178, and Re General Railway Syndicate, Whiteley's case, [1900] 1 Ch. 365, C. A. (c) See the case last cited. The decisions in Be Cleveland Iron Co., Ex parte §§ 316-319. 281 318. Secondly, if tlie parties have obviated the necessity of resorting to litigation at all by means of an agreement for good consideration bind- ing the company to remove the representee's name from the register, such agreement having been definitely concluded before the commencement of the liquidation, this again is sufficient to render the plea ineffective, for the name is, in such case, not properly or de jure on the register (d). But where the agTeement to remove the name is made between several repudi- ating shareholders acting by an agent, and the particular representee seeking to have his contract to take shares set aside, fails to prove that he has expressly or impliedly authorized such agent, he fails to prove the agree- ment so far as he is concerned, and, therefore, to obtain rescission (e). And where the company's agreement is, not to remove the name from the register, but to allow the representee to transfer his shares to one of the directors, and the agreement has not been completed by registration of the transfer at the date of the liquidation, so that the name is then still on the register, the representee has not established what is required to authorize the plea, and no rescission can be ordered (/). 319. The third class of case is where the representee, though he has neither sued the company for rescission, nor entered into any agreement with it that such rescission shall be voluntarily effected, has nevertheless done something which partakes of the nature both of a proceeding in invitos and a voluntary arrangement ; that is the say, where the representee has agreed with the company that both he and it shall be bound by the result of a pending action or application by another shareholder for rescission in respect of the same misrepresentation, which is regarded as tantamount in law to his having been a co-plaintiff or co-applicant in such pending proceeding. In all such cases, therefore, the representee has always been held as much entitled to relief as if they fell within the first class (g). But where such an agreement, binding both parties and con- cluded before the commencement of the winding up, is not alleged, or, having been alleged, is not fully proved, the plea succeeds and the representee fails {h). Stevenson (1867), 16 W. R. 95, and iJe Etna Insurance Co., Persse's Case (1871), Ir. R. 6 Eq. 298, so far as they are in conflict with. Whiteley's Case, must be considered to have been overruled thereby. {d) Me Etna Insurance Co., Ex parte Shiels and Others (1873), Ir. R. 7 Eq. 245, where the applicants had demanded, as of right, the removal of their names from the register on the ground of misrepresentation, and the directors had agreed to do so, and were in default in not having done so ; and Se Scottish Petroleum Co., ilaclagan's Case (1882), 51 L. J. (CH.) 841, where a similar agreement wag made Ijetween the applicant and one director of the company only, there being authority conferred by the articles on a single director to bind the company. (e) Be London and County General Agency Association, Hare's Case (1869), 4 Ch. App. 503. (f) Be Angh-Danuhian Steam Navigation and Colliery Co., Walker's Case (1868), L. R. 6 Eq. 30. (g) Asia Be Estates Investment Co., Pawle's Case (1869), 4 Ch. App. 497. 0i) Be Estates Investment Co., Ashley's Case (1870), L. R. 9 Eq. 263 (where a com- mittee of repudiating allottees had agreed to be bound by the result of another share- holder's proceedings against the company, but Ashley failed to prove that he was a 282 COMMENTARY, CH. XI, SECT. 4, SUB-SECTS. (6), (7). 320. Whenever the representee is not in a position to bring the case withia any of the three classes above mentioned, his claim to rescission has always been defeated (i), imless, of course, he can show that his name has somehow or another, whether on the ground of misrepresentation (k), or on any other ground, disappeared from the register before the winding up, or that his shares have been in fact forfeited for whatever cause, or that there never was any concluded or blading contract at all between him and the company to take the shares (I). Sub-sect. (7). Delay, Laches, and Acquiescence may constitute Evidence of, or give Scope for, certain of the foregoing Defences, hut do not per se constitute Defence to Rescission. 321 . Delay, laches, and acquiescence are constantly referred to ia con- nection with proceedings for rescission as if, of themselves, they constituted aiSrmative defences thereto. This is quite a mistake. And it is a still graver error to use these expressions (as the term "laches" iaparticular is frequently used) with an underlying suggestion that the representee owes a duty to the representor in the matter, the failure to discharge which renders him " guilty " of conduct which, of itself, raises a personal equity against him in favour of the representor. The only legal consequence of the representee's inaction is either to furnish some evidence, with other facts, ia support of a plea of knowledge, or aflGirmation, against himself, or to give scope for the iatervention of the jus tertii, or of the plea of inability to make specific restitution to the representor ; but where the inaction, for however long a period it extends, is not sufficient to constitute such evidence, or where, notwithstanding the lapse of time, no innocent person has in fact acquired rights or interests under the contracts sought to be set aside, and the property to be restored to the representor, as the condition of rescission, can be so restored in the same plight as that in which it was received, the member of this committee, or a party to the agreement) ; and Be Scottish Petroleum Co., Ex parte Wallace (1883), 23 C. D. 413, C. A. (where one Anderson, whilst the company was a going concern had obtained an order for the rectification of the register, on the ground of the same misrepresentation as that of which Wallace was complaining — see Anderson's Case (1881), 17 C. D. 373 — but there was no binding agreement that this case should govern those of the other repudiating allottees, and therefore no relief could be given : per Bagqallay, L.J., at pp. 432-435, Lqidley, L.J., at pp. 435-437, and Fey, L. J., at pp. 439). {i) As it was in (e.g.) Be Lennox Publishing Co., Ex parte Storey (1890), 62 L. T. 791, and Be Central Klondyke Gold Mining and Trading Co., Thomson's Case (1898), 5 Mans. 282. (h) Asm. Be Ldje Association of England, Blake's Cose (1865), 34 Beav. 639 (where, the representee having threatened criminal proceedings, the company were only too pleased and anxious not only to repay his deposit, but to take his name off the register, before the commencement of the winding up, and the liquidator in vain sought to fix him as a contributory). The mere return of the deposit, without rectification of the register, is not enough to defeat the plea, and the two decisions of RoMiLLY, M.R., to the contrary in Be Canadian Native Oil Co., Fox's Case (1868), L. R. 5 Eq. 118, and Be Western Insurance Co., Brigg's Case (1869), 19 L. T. 758, are clearly bad : see the observations of Lindley, L.J., at p. 437 of Be Scottish Petroleum Co., Ex parte Wallace, sup. (l) See § 261 in Sect. 2, ante. §§ 320-322. 283 delay, laches, or so-called "acquiescence" goes for notliing, — wliich is tantamount to saying that, -per se, these matters constitute no defence. 322. To take the first two of these expressions (which in reality both mean the same thing as applied to cases of rescission), " delay " indicates either the mere lapse of time (like the French delai) — in which sense it is obviously ridiculous to attribute it to any one as a default (yet this is implied in the very common phrase " guilty of delay "), — or an omission or neglect on the representee's part to avoid the contract or transaction within a reasonable time (this being also the connotation of " laches "), which again cannot be described as a default on his part unless it can be shown (which it cannot) that he owed any duty to the representor in that behalf. A representee is neither punished for, nor prejudiced by, delay in itself ; though he may be seriously prejudiced by the rights which, during his inertia and supineness, he has allowed others to acquire against him. " I take it to be a settled doctrine of equity," said Jessel, M.E. (m), " not only as regards specific performance, but also as regards rescission, that this is not an answer, unless there is such delay as constitutes a defence under the Statute of Limitations. That, of course, is quite a different thing." The period during which the lapse of time counts for any purpose whatever does not even begin to run until the representee's right of election accrues, that is, until he has knowledge of all the facts giving him that right (n) ; and then only for the purposes mentioned. The repre- sentee may, after full consciousness of such rights as he ever had, remain inactive and impassive for so long a period as to justify an inference of fact that from the first he never had any such rights as he pretends to have had, and that he never was deceived at all (o), or that he had originally agreed to waive inquiry, or not to rely upon the alleged or any misrepre- sentation (p), or tha);, without having so agreed in the first instance, he afterwards deliberately elected to affixm the contract which, if he had chosen to do so, he might have rescinded {q) ; or the representee's delay, (m) At p. 13 of Redgrave v. Hurd (1881), 20 0. D. 1. Cp. the passage from lAndaay Petroleum Co. v. Hurd (1874), L. R. 5 P. C. 221, which is transcribed in the text. (n) Eawlins v. Wickham (1858), 3 De 6. & J. 304 (per Knight-Bkuob, L.J., at p. 314, and Tuener, L.J., at pp. 318-321) ; and Lindsay Petroleum Co. v. Hurd, sup., at p. 241 ("in order that the remedy should be lost by laches or decay, ... it is necessary that there should be sufficient knowledge of the facts constituting the title to relief ">. (o) See Ch. X, Sect. 2, Sub-s. (1), ante. (y) See Ch. X, Sect. 2, Sub-s. (2), ante, and the passage from Lindsay Petroleum Co. V. Hurd, sup. cited in the text. (g) Clough v. London and North Western Railway Company (1871), L. R. 7 Exch. 26, Exch. Ch. (at p. 34 : " we think the party defrauded may keep the question open so long as he does nothing to affirm the contract"; and at p. 35: "lapse of time without rescinding will furnish evidence that he has determined to affirm the contract, and when the lapse of time is great, it probably would in practice be treated as conclusive evidence that he has so determined ") ; and Aaron's Reefs, Ltd. v. Twiss, [1896] A. C. 273, H. L. {per Lord Bavby at p. 294 : " lapse of time without rescinding may furnish evidence of an intention to affirm the contract. But the cogency of this evidence depends upon the particular circumstances of the case, and the nature of the contract in question "). 284 COMMENTARY, CH. XI, SECT. 4, SUB-SECT. (7). without furnishing, or contributing to, evidence of anything, may give " room and verge " for the intervention of the jus tertii, or for an alteration in the character of the subject-matter of the contract, or, in company cases, the winding up of the company ; and, whether in any particular case any of these events supervenes or not, it is clear that the longer the delay, the greater the peril and possibility of their so doing must be. " "We think," said the Exchequer Chamber, " that, so long as he " (the representee) " makes no election, he retains the right to determine it either way, subject to this that, if in the interval while he is still deliberating, an innocent third party has acquired an interest in the property, or if, in consequence of his delay, the position even of the wrongdoer is affected " — that is, where the representee has incapacitated himself from restoring to the representor in specie that which he originally received from him in specie — " it will preclude him from exercising his right to rescind " (r). To the same effect it has been laid down in the Privy Council that " the doctrine of laches in courts of equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where, by his conduct and neglect, he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him, if the remedy was afterwards to be asserted, in either of these cases lapse of time and delay are most material. But in every case, if an argument against relief, which would otherwise be just, is founded upon mere delay, that delay, of course, not amounting to a bar to any statute of limitations, the validity of that defence must be tried upon principles substantially equitable " (s). 323. It would appear, therefore, that where a representee is said to have been " guilty " of delay or laches, what is meant is that his delay or laches amounts to waiver, or affirmation, or that it has given rise to the other affirmative pleas above mentioned (in which case it is unnecessary and misleading to make use of the phrases in question at all, or any phrases other than those appropriate to characterize such pleas). Unless this is meant, the expressions, since they point to nothing which is a defence at all, have no meaning whatsoever, except in the highly metaphorical sense in which a man may be said to have been guilty of a breach of duty to himself, or of a neglect of that regard for his own interests which is dictated by counsels of worldly wisdom and ordinary business sagacity, embodied in such proverbial philosophy as " strike while the iron is hot," or lago's " dull not device by coldness and delay " (<). Very frequently, indeed, as will be noticed on reference to the language used arguendo in the authorities, ()•) Clough V. L. & N. W. Railway Co., sup., at p. 35. (s) Lindsay Petroleum Co. v. Hurd, sup., at pp. 239, 240. Op., as to the inter- vention of the jus tertii, the judgment of Chitty, J., in Re Murray, Dickson, and Murray (1887), 57 L. T. 223. (i) "Generally," says Bacon in hisessay "Of Delays "(XXI), "it is good to commit the beginnings of all great actions to Argus with his hundred eyes ; and the ends to Briarens with his hundred hands : first to watch, and then to speed." §§ 322, 323. 285 " laclies " and " delay " — like many other terms of equally convenient ambiguity in meaning and laxity in use, such as the expression " arrange- ment," when something has to be dressed up in the guise of a contract which is not so in law — serve to indicate a consciousness on the part of the advocate that he cannot support a case of affirmation or waiver, or whatever the affirmative defence may be, and must escape from rescission, if at all, like Venus in a mist, under cover of some such large and generous terminology, for the application of which to the case in question he may find specious warrant in not a few incautious deliverances of equity judges. Nor will he be without assistance from that unfailing resource of unsound reasoning, the " maxims of the law," of which an anthology might easily be extracted, in parallel columns, of so-called rules or principles capable of supporting both sides of any question. Vigilantibus, non dormientibus , jus subvenit is extensively relied upon in this connection by those who fail to see that this, like other maxims, is only true with the proper restric- tions and qualifications, and, when extended beyond these limits, is demonstrably false. It is true when limited to acquiescence in the proper sense of the word, or to " equitable estoppel," as it is sometimes called, which doctriae, as has been said by a very profound jurist (m), " applies in all cases where rights, once valid, are lost by delay, and the implied acquiescence from such delay," that is to say, in all cases where inaction and standing by amounts either to a representation by conduct which induces another to alter his position to his prejudice, or to a license or encouragement to another to adopt or continue in a certain course of con- duct, such license or encouragement being implied from the party's refraining from exercising the right which he knows is his, and knows is being violated by a person who is expending money in the honest belief either that there is no such right, or that it is being waived. The maxim, however, has no application to cases of misrepresentation, and, if applied literally to such cases, is totally false. The law does not, and cannot, refuse its aid and countenance to the dormiens, if he wakes up and demands it before the other party, or any third person, has the right to insist that it shall be refused. He may have slept as long as Eip Van Winkle, but if nothing has happened afEecting his title to relief during his slumber, that relief is not to be granted or withheld accordingly as he has slept for a short or a long time. On the other hand, if something has happened afEecting his title, it does not signify how brief his nap may have been. If AchiUes wakes up in time to beat the tortoise at the winning-post, the law has no business to inquire how long it was before he woke up. No doubt, lapse of time, without any attempt on the part of the representee to assert his rights, besides being a peril to him in the manner and to the extent already indicated, is also calculated to excite, even in gremio judicis, a certain human sympathy with the mis- representor, at all events where his misrepresentation was innocent, and {u) Story's Equity Jurisprudence, vol. ii, § 1634. 286 COMMENTARY, CH. XI, SECT. 4, SUB-SECT. (7) ; SECTS. 5, 6. a correspondingly critical attitude towards the slackness and laxity (wMch is all that the term " laches " means in point of etymology) exhibited by the representee in nursing a stale claim. " It has beautifully been re- marked," said Lord Campbell, L.C. (x), " with respect to the emblem of Time, who is depicted as carrying a scythe and an hour-glass, that while with the one hand he cuts down the evidence which protects innocence, with the other he metes out the period when innocence can no longer be assailed." There is a not unnatural tendency to support, if possible^ the defence of one who, after many years, is charged with misrepresentation on prima facie plausible grounds, where, in the course of that period, the persons and documents by which, if the accusation had been made dum fervebat opus, he could have established the truth of his representation, may have perished or been lost or mislaid or destroyed, and in such cases the idea of an ethical period of limitation presents some attraction to the sternest and most unbending judicial mind. But the efiect of delay not amounting to, or affording evidence of, or scope for, any of the defences referred to, cannot be put higher than this, even in the case of innocent misrepresentations ; whilst, in any case where the misrepresentation was fraudulent, and where the representor, so far from being an object of commiseration, has enjoyed for the period of delay an entirely unmerited good fortune, this sympathetic attitude is absolutely out of place. " No time," said the same Lord Campbell, L.C, "will assure" such persons " in the enjoyment of their plunder, but their children's children will be compelled in this court to restore it " (y). 324. The term " acquiescence," in its proper sense, is an even more inappropriate and inexact description or title of any of the affirmative defences to proceedings for rescission than the expressions " laches " and " delay." The meaning of " acquiescence " has been well stated by Lord CoTTENHAM, L.C. : " if a party," he says, " having a right, stands by and sees another dealing with the property in a manner inconsistent with that right, and makes no objection while the act is in progress, he cannot afterwards complain. This is the proper sense of the word acquiescence " (z) . Acquiescence, in fact, is more than quiescence, which is all that is connoted by " delay " and " laches " ; it is a quiescence under such circumstances as indicate an assent to, and encouragement and permission of, a course of conduct on the part of another. Manifestly, acquiescence has no possible meaning in relation to the right to avoid a contract for misrepresentation, except when used in the above sense as the equivalent of " affirmation," as it sometimes is (a). {x) At p. 617 of Bright v. Legerton (1860), 2 De 6. F. & J. 606. Cp. Lawrance v. Norreys (1880), 15 App. Gas. 210, 219, 221, H. L. («/) At p. 741 of Charter v. Trevelyan (1844), 11 CI. & Fin. 714. (z) Leeds {Duke) v. Amherst {Earl), No. 1 (1846), 2 Ph. 117, at p. 123. Cp. the passage from Story, cited in note («), sup. {a) In Sharpley v. Louth and East Coast Railway Go. (1876), 2 C. D. 663, C. A., Malins, V.-C, in the court below, though not the C. A., used "acquiescence" to denote conduct which was evidence of an election on the part of the representee to §§ 323-326. 287 Sect. 5. Questions of Law and Fact in Proceedings for Kescission. 325. As regards all those elements and ingredients which are common to both the two main tj'pes of proceeding founded on misrepresentation, it has already been pointed out which of the matters of controversy arising therein are questions of law, and which are issues of fact (6). The questions special to proceedings for rescission, whether arising on the consideration of the representee's case, or on those of any affirmative case set up by the representor, such as whether the representee has exercised his right of election by affirming the contract before the initiation of the proceedings, or by avoiding it, or at all, — whether he is in a position to restore the pro- perty in the same physical plight as that in which he received it, — whether, by his acts and conduct, he has evinced an intention to take all risks, waive all inquiry, or not to rely on the alleged or any representation, and the like, — are questions of fact, subject to these overriding rules, — that it is a question of law whether there is any evidence is support, or in contradiction, of any allegations of the nature indicated ; and also that, in case of any agreement said to be wholly contained or recorded in documents, or to depend on undisputed facts, it is a question of law whether the alleged agreement is, or is not, contained or recorded in, or to be implied or extracted from, such documents in their proper construction, or such undisputed facts (c). Further, any question as to the representee's capacity to restore rights having the same legal character and incidents as they possessed when they passed to him under the contract or transaction, is obviously a question of pure law (d). Sect. 6. Parties to Proceedings for Eescission. 326. The question of what persons are deemed in law to have been parties to the representation sued upon has already been discussed (e), as also has the question of what persons, other than the parties to the representation, may, or (in certain cases) must, be parties to an action for damages founded on misrepresentation (/). It remains to consider who, besides the parties to the representation, may or (in certain cases) must, be parties to proceedings for rescission (^r). afSxm the contract, and of nothing else. It should be noted that it is possible for the representee to rely upon the doctrine of acquiescence, in its proper sense, as a means of defeating the representor's plea that he (the representee) has by his acts and conduct altered the character of the property passing under the contract : see § 308, and the case cited in note {t) thereto. (6) See Ch. X, Sect. 4, ante. (c) See, generally. Sect. 2, and Sect. 4, of this Chapter, ante, and the cases cited in the notes thereto respectively. (d) See § 308, ante, and note (r) thereto. The rules stated in the text are the subject of Article 40 of the Code. (e) See Ch. VIII, ante. if) See Ch. X, Sect. 5, ante. ig) These questions are the subject of Article 41 of the Code. See, generally 288 COMMENTARY, CH. XI, SECT. 6, SUB-SECTS. (1), (2). Sub-sect. (1). The Persons entitled to initiate or maintain the Proceedings. 327. In cases of transmission or devolution, by act or operation of law, of a cause of action for rescission, by reason of tbe death, insolvency, infancy, or lunacy, of tbe representee (A), or in cases wbere the representee is a married woman (i), the rules as to the persons who, in right of the re- presentee or his estate, are entitled to commence, or (as the case may be) continue, proceedings against the representor, are the same as those which govern actions of contract in general, and do not call for special treatment in this place. But to cases of devolution or assignment other than the above, there are two rules specially applicable, which require to be examined. 328. In the first place it is well settled that, where specific property is devised or conveyed or assigned from one to another, there pass with it all such equities to rescission as the person devising, conveying, or assign- ing was entitled to, when so doing. So long as the right is coupled with possession, physical or constructive (as by receipts of rents), the mere initia- tion or maintenance of an action in relation to the property, though pro- ceedings for rescission may be involved in such litigation, is in no way obnoxious to the objections of champerty or maintenance {k). " An assignment of property is valid, even although that property may be incapable of being recovered without litigation " (1). As was said by Lord RoMiLLY, M.R., in a judgment which has been repeatedly cited and approved, " the right of suit is a right incidental to the property conveyed," and also " incidental to each interest carved out of it " ; therefore " any interest which, but for the previous deed, would have been sufficient to enable a person interested to ask this court to secure this property for the benefit of the persons interested therein, would, in my opinion, enable that person to ask this court to set aside the deed obtained by fraud, which, if valid, would have prejudiced or destroyed his interest in the property purporting to be conveyed to him " (m). Thus a man may devise, so as to defeat his heir, an equity to set aside a conveyance on the ground of fraud to the very person guilty of it, just as he can, with the like consequences to the heir, devise away from him any other equitable and devisable interest (m). the various treatises on Parties, and Lord Halsbury's Laws of England, title " Actions," vol. i, pp. 17-22. {k) See Williams on Executor-'^ and Administrators, Vaughan-Williams on Banlc- rwptcy, Buckley on Companies, Simpson on Infants, and Archbold on Lunacy, respectively, and 0. 16, of the R. S. C. (i) See Lush on Husband and Wife, and Eversley on Domestic Edaiions, and 0. 16 of the R. S. C. {h) This principle was recognized by Lord Abingeb, C.B., at pp. 486, 487, and 499 of Prosser v. Edwards (1835), 1 Y. & 0. 481, Eq. Exch., and applied in Cockell v. Taylor (1852), 15 Beav. 103, 116, 117. Cp. the non-disclosure case of Wilson v. Short (1847), 6 Hare, 366, per Wigkam, V.-C, at pp. 376, 384. (I) Dawson v. Great Northern and City Raihoay Co., [1904] 1 K. B. 260, per CoLLms, M.R., at p. 271. (m) Dickinson v. Burrell (1866), L. R. 1 Eq. 337, at p. 342. (n) Stump V. Gahey (1852), 2 De G. M. & G. (i32, per Lord St. Leonards, L.C. §§ 327-331. 289 329. But, secondly, it is no less firmly established, on grounds of public policy, that a bare right or equity to rescind on the ground of misrepre- sentation, or on any other ground, divorced from any specific property or fund, is not saleable or assignable, for, as has been held over and over again, as, for instance, by Lord Eldon, L.C. (o), Lord Abinger, C.B. (p), Collins, M.E. (5'), and Cozens-Hardy, L.J. (r), all such sales and assign- ments of litigated titles savour of, if not actually constituting, champerty in the one case, and maintenance in the other. But a claim to recover on the principles of rescission, and on the ground of misrepresentation or concealment, a specific fund which is earmarked and can be traced, ''nd which may properly be described as in equity the money of the claimant, or as an equitable debt, is not exceptionable on this ground (s), the fund in question being regarded as specific property within the meaning of the first rule. Hence it is that misfeasance claims against the delinquent directors and officers of a company have always been held the proper subject of assignment and sale, whether by private treaty (t) or public auction (m). 330. The procedure, by test action or otherwise, where several repre- sentees are seeking rescission against the same representor in respect of the same representation, is dealt with elsewhere (x). Sub-sect. (2). The Persons Liable to the Proceedings. 331 . The persons, other than the representor, against whom, in case of his death, insolvency, infancy, or lunacy, or where the representor is a at pp. 630, 631. For an instance of a sale to the person against whom the relief would be obtainable, see Be Park Gate Waggon Works Co., cited in note (t), inf. (o) In Wood V. Dowries (1811), 18 Ves. 120, at p. 125. (jo) In Prosser v. Edwards, sup., at pp. 496, 500. (g) In Dawson v. Oreat Northern arid City Railway Co., sup., at pp. 270, 271 : " a court of equity is as much bound as a court of common law by the rules relating to champerty and maintenance, and if an assignment of a chose in action is obnoxious to those rules, it is bad in equity no less than in law. An assignment of a mere right of litigation is bad." (r) In Fitzroy v. Cave, [1905] 2 K. B. 364, C. A., at p. 371 . " there are undoubtedly many choses in action which are not, and never were, assignable, either at law or in equity. A right to set aiide a deed on the ground of fraud is a typical instance.'''' (s) See Cockell v. Taylor, sup., where the distinction is drawn between an assign- ment of a naked right to sue, or a bare litigated claim, which would be bad, and (as was the case there) a claim to an interest in a specific fund actually lodged in court. {t) As in iJe Park Gate Waggon Works Co. (1881), 17 C. D. 234, C. A. (where, the liquidator having sold all the property of the company to a certain person, a mis- feasance claim against delinquent officers of the company was held to be comprised therein, and the proper subject of sale, notwithstanding that the purchaser was the agent of these very officers, who accordingly on this ground obtained an injunction against the liquidator proceeding with the misfeasance claim against them, on this ground, though the order was made without prejudice to any application which the liquidator might make to set aside the deed of sale) ; and Re Anglo- Austrian Printing and Publishing Union, Brabourne (Lord) v. Same, [1895] 2 Ch. 891 n. (where a mis- feasance claim was assigned to the debenture holders). (u) As in Wood v. Woodhouse and Eawson, United, [1896] W. N. 4, where misfeasance claims were ordered by the court, in a debenture holder's action, to be put up for sale by auction. (x) See Ch. XV, Sect. 2, Sub-s. (2), post. E.M. U 290 COMMENTARY, CH. XI, SECT. 6, SUB-SECT. (2). married woman, proceedings for rescission may be initiated, continued, or maintained, are, ordinarily, those who, according to the rules as to parties applicable to actions of contract in general, would be so liable {y). But in cases of assignment by voluntary act of the parties, or in any case where neither a claim under the contract, nor the property the subject thereof, passes by mere operation of law, there are certain rules which in their application to proceedings for rescission demand attention. 332. Where the representor has assigned a mere chose ■ in action (as distiaguished from property in possession) which he has acquired under a contract or transaction voidable for misrepresentation as against him at the instance of the representee, the assignee, though taking in good faith, for value, and without notice, stands in no better position after the assign- ment than the assignor before it. No rule of law is better established, or more inflexibly applied, than the ancient equitable rule {z), now made part of the statutory law of the land, and equally applicable to all Divisions of the High Court (a), that the assignee of a chose in action takes subject to aU equities which, before the assignment, were, and, but for the assign- ment, would contiaue to be, enforceable against the assignor ; and amongst such recognized equities is the equity to avoid on the ground of misrepre- sentation. 333. On the other hand, where property in possession (physical or constructive) passes under the assignment to one who acquires it for value, without notice, and in good faith, or (to borrow a convenient phrase from the Bills of Exchange Act, 1882) to an assignee " in due course," no election to avoid on the ground of misrepresentation, or proceedings in rescission, which would have been available against the assignor, will be in the slightest degree effectual to take the property out of the hands of the assignee. Such election to avoid must have been in fact exercised by the representee, either in the form of a notice of repudiation, and that " resumption of his property " (in a legal sense) which is implied therefrom, or by the institu- tion of proceedings for rescission, in which case the assignee is simply put in possession of that which it was not in the power of the assignor to («/) See the same treatises and Order as are referred to in notes (h) and (i) to § 327, ante. (z) See Cockell v. Taylor, sup. {per Romilly, M.R. . " the rule relative to the equities which attach to a chose in action has been discussed and established in many cases. It has not been disputed here, nor can it be doubted, that a purchaser of a chose in action does not stand in the situation of a purchaser of real estate for valuable consideration without notice of any prior title ; but that the purchaser of a chose in action takes the thing bought subject to all the prior claims against it." In that case, accordingly, a mortgage of a charge upon a fund in court was declared void for fraudulent misrepresentation and pressure as against not only the mortgagee, but also sub-mortgagees who took without notice and for value) ; and Davis v. Chanter (1855), 3 W. R. 321 (where, a compromise having been made between five children, A., B., C, D., and E., and A. having proved that it had been brought about by the fraud of B., Kindeksley, V.-C, set it aside, not only as against the fraudulent B., but also as against the innocent C. and D., and also a purchaser without notice of E.'s interest and rights under the compromise, on the ground that the purchaser had thereby acquired a mere equitable chose in action). (a) Judicature Act, 1873, s. 25, sub-s. (6). §§ 331-334. 291 bestow ; in other words lie acquires nothing, for nemo dat quod non hahet. But where there has been no such avoidance of the voidable contract before the assignment thereunder of any chose in possession, the assignee cannot be deprived of the property unless his acquisition of it was wanting in some one or more of the elements necessary to constitute what we have termed " due course," that is to say, unless (1) he gave no value, and was a mere donee or volunteer, or (2) took with notice, or (3) in bad faith (&). 334. That the property may be taken out of the hands of an assignee who is a mere volunteer, or the recipient of bounty, whether he acted in good faith and without notice or not, has been established from the earliest times. The rule is forcibly stated in a celebrated case (c), where the question arose whether the innocent donees of portions of the property acquired by imposition could retain what they had so been given, and where Wilmot, C.J., one of the Lords Commissioners of the Great Seal, delivered himself thus : " there is no pretence that Green's brother or his wife was party to any imposition, or had any due or undue influence over the plaintiff ; but does it follow from thence that they must keep the money ? No ; whoever receives it must take it tainted and infected with the undue influence and imposition of the person procuring the gift. His partitioning and cantoning it out amongst his relations and friends will not purify the gift and protect it against the equity of the person imposed upon. Let the hand receiving it be ever so chaste, yet, if it comes through a corrupt, polluted channel, the obligation of restitution will follow it " {d). And in numerous subsequent decisions, both of misrepresenta- tion and of undue influence, unconscionable dealing, and non-disclosure, this doctrine, which is common to all cases of imposition and oppression, has been consistently and rigorously applied (e). It is to be observed that, for this purpose, any person to whom property is assigned by operation of law, or by force of some statutory provision, such as a trustee in bank- ruptcy, is a volunteer and not a purchaser for value, and a representee may exercise as against him any right of avoidance or rescission (and thereby recover property otherwise distributable amongst the creditors) which he might have exercised against the bankrupt (/). (6) See the defmition of a " holder in due course " in the Bills of Exchange Act, 1882, s. 29. (c) Bridgman (or Bridgeman) v. Green (1755), 2 Ves. Sr. 626 ; (1757) Wilmot's Opns. and Judgmts., 58. This case was decided by Lord Hardwickb, L.C., in 1755, as reported in Vesey Sr. ; and, in 1757, it came before the Lords Commissioners of the Great Seal (Willbs, C.J., Sir Sidney Stafford Smythe, and Wilmot, C.J.), and it is the judgment of Wn:.MOT, C.J., on this appeal or rehearing, which is reported in Wilmot's Opns. and Judgmts., sup. {d} Wilmot's Opns. and Judgmts., 64. (e) See Huguenin v. Baseley (1807), 14 Ves. 273, per Lord Eldon, L.C, at pp. 288-290, citing and approving Wilmot, C.J.'s, statement of the rule ; Vaughan v. Vanderstegen, Gates's Case (1854), 2 Drew. 363 ; 100 R. R. 173 ; Same v. Same, Othwaite's Case (1854), 2 Drew. 408; 100 R. R. 199; Haygarth v. Wearing (1871), L. R. 12 Eq. 320 ; and Babcock v. Lawson (1880), 5 Q. B. D. 284, C. A. The first of these was an undue influence case, with which compare a later case of this nature, Morley V. Loughnan, [1893] 1 Ch. 736 (per Weight, J., at pp. 757, 758). The others were misrepresentation cases. (/) See Kennedy v. Green (1834), 3 My. & K. 699 ; Load v. Green (1846), 15 M. & 292 COMMENTARY, OH. XI, SECT. 6, SUB-SECT. (2). 335. Secondly, if the assignee had notice of the fact which gave the representee his equity to avoid the contract and resume the property, he cannot retain such property, though he gave value, and was not guilty of any intentional dishonesty or bad faith (g). 336. Lastly, though the assignee gave value and in fact had no express notice of the facts which rendered the contract voidable, if he acted in bad faith, that is to say, if with fraudulent deliberation he escaped notice of that which he abundantly suspected, again he is not permitted to retain the property (h). 337. The burden of proving that the assignee was not an assignee " in due course " is on the representee ; there is no burden on the assignee of proving that he was. It has never been doubted that it is incumbent on the representee to show that the assignee gave no value for the property, or had notice of the facts in virtue of which the contract was voidable, but, until recently, there seems to have been some conflict of judicial opinion as to whether the onus of establishing good faith is not on the assignee. It has now, however, been decided by the Court of Appeal that this is not so, and that the representee must prove the assignee's absence of good faith, just as much as he must prove the absence of either of the two other elements, if he intends to rely on such absence, which are necessary to constitute " due course " (i). Whenever the representee has either not alleged, or, W. 216 ; Re Eastgate, Ex parte Ward, [1905] 1 K. B. 645 ; and Tilley v. Bowman, [1910] 1 K. B. 745, 750. ig) In Sheffield [Earl of) v. London Joint Stock Bank (1888), 13 App. Gas. 333, H. L., such notice was proved ; on the other hand, in London Joint Stock Bank v. Simmons, [1892] A. C. 201, H, L., it was not proved. (ft) Whitehorn Brothers v. Davison, [1911] 1 K. B. 463, C. A., where, however, the alleged mala fides was not made out. The distinction between notice and bad faith is recognized by Vaughan Williams, L.J., at p. 476 in the passage cited in the next note. (i) Whitehorn Bros., v. Damson, sup., where the C. A. set aside the verdict obtained by the plaintifE in the court below, and entered judgment for the defendant, on the ground, i)iter alia, that it was for the plaintiii — the representee — to prove bad failh, as much as it was for him to prove absence of value or notice, and that the juiy had been misdirected that it was for the defendant — the assignee of the property from ihe representor — to prove his good faith. The rule, and the reason for it, is stated -with admirable lucidity by Vatjghan WttLiAMS, L. J., at pp. 476, 477 : " where yon have a contract of sale which is voidable on the ground of fraud, or for any other reason, and before it is avoided by the seller, the buyer, as against whom it could have been avoided, has transferred the subject-taatter of the contract to an innocent third person who has given value and has accepted the transfer without either knowledge of anything «Tong, or any knowledge of such circumstances as might lead him to "vvish not to make any further inquiry lest he should find that there was something wrong, the contract cannot be avoided as against that person ; and I am of opinion that the onus of proving that there are such circumstances as prevent the third person so purchasing from being such an innocent purchaser rests on the plaintifE who seeks to recover the subject-matter of the contract from him, and not on the defendant. . . . The very statement which occurs again and again that in such cases the contract is a voidable and not a void contract, i.e. that it is valid till avoided, seems to me to indicate that the onus for the purpose of avoiding it against the third person must lie on the person who is seeking to impeach that which up to that time is a valid con- tract. Common sense appears to me to point to the same conclusion." And, one may add, common fairness too. To take property out of the possession of another, it cause of action, — a legal justification, — must be sho^vn. As against the representor, such justification consists in his misrepresentation ; but as against a person who did not make or join in the misrepresentation, and who never had any contractual privity, §§ 335-337. 293 having alleged, lias failed to prove, the absence of some one of these three elements, his claim against the assignee has been dismissed (/c), unless he has been in a position to rely upon some estoppel against him (I), or has been able to show that there had never been any contract at all under which any property could pass to the assignee (m). or relationship of any kind with the representee, it must be shown either that, by reason of notice or bad faith, it is morally right that the third person should suffer, or that, by reason of his being a mere volunteer or donee, he will not in fact suffer, or will not in fact suffer any injury which the law can recognize. Further, to put it in another way, a man in possession of property is presumed to be in innocent and lafldiul possession of it, until the contrary is shown. These aspects of the matter are insisted upon by Buckley, L.J., at pp. 481, 482 (who there explains that the form in which the proviso to sect. 23 of the Sale of Goods Act, 1893, is expressed, though at first sight lending some countenance to the opposite contention, could not have been intended to revolutionize plain principles of evidence as to the onus probandi in such cases), and by Kennedy, L. J., at p. 487. (k) As in London Joint Stock Bank v. Simmons, sup., where the plaintiff failed to prove notice; in Truman v. Attenhorough (1910), 103 L. T. 218, a case arismg out of the same kind of misrepresentation of the same representor as in Whitehorn Brothers V. Davison, sup., where the representee relied on estoppel, and did not even allege either absence of value, or notice, or bad faith ; and in Whitehorn Brothers v. Davison, sup., where again the representee did not allege, or attempt to prove, any of the above, but insisted (wrongly, as the G. A. held) that it was for the defendant to prove his good faith. (/) See Truman v. Atteriborough, sup., where, however, the estoppel was not made out, and compare some of the cases cited in the notes to § 348 in Gh. XII, Sect. 3, post. (to) See §§ 256, 257, and 259 ui Sect. 1, Sub-s. (4) of this Chapter, ante. 294 COMMENTARY, CH. XII, SECT. 1. CHAPTBK XII. MISREPRESENTATION AS A DEFENCE OR INVALIDATING CAUSE. 338. Misrepresentation operates as an absolvent, as well as a dissolvent, ' — an invalidating cause, no less than a cause of action. Though more frequently used as a sword, it may serve as a shield. Hitherto it has been considered in the former capacity. It remains to examine it in the latter. Sect. 1. To what Proceedings Misrepresentation is a Defence OR Answer. 339. Subject to the qualifications and conditions mentioned in the next Section, it may be stated broadly that, wherever a representee is in a position to claim, or obtain, rescission of any contract on the ground of misrepresentation, he is also in a position to set up, or make good, re- spectively, an answer on the same ground to any proceeding instituted by the representor against him under or in respect of such contract (a), whether the proceeding be for the direct, though not the specific, enforcement of the contract by recovery of a debt due thereunder (6), or for the indirect {a) See Article 42 of the Code. (6) Thus misrepresentation was successfully set up as an answer to the following claims or affirmative oases respectively, for the purpose of directly, though not specifically, enforcing contracts, in the following cases respectively : — M'Carthy v. Decaix (1831), 2 Russ. & M. 614 (to a case of an agreement to renounce all claims under a marriage settle- ment, set up as an affirmative defence to an action to recover arrears of annuity there- under : per Leach, V.-C, at pp. 620-623) ; Wainu-right v. Blmid (1836), 1 M. & W. 32 (to a claim under a policy of life insurance) ; Stone v. Compton (1838), 5 Bing. N. C. 142 (to a claim on a promissory note) ; Evans v. Edmonds (1853), 13 C. B. 777 (to claim on covenant in deed) ; Bannerman v. WMte (1861), 10 C. B. (n. s.) 844 (to claim for price of hops) ; Lee v. Jones (1864), 17 C. B. (n. s.) 482 (to action on guarantee of fidelity) ; Dawes v. Harness (1875), L. R. 10 C. P. 166 (to action on cheque) ; Hirsch- field V. L. B. cfc -S. C. Railway Co. (1876), 2 Q. B. D. 1 (to affirmative plea of release) ; Eyre v. Smith (1877), 2 0. P. D. 435 (to plea of liquidation by arrangement under the Bankruptcy Act, 1869, the plaintiff replied that the resolution had been obtained by fraud, and the reply was held good on demurrer) ; Aaron's Reefs, Ltd. v. Tiviss, [1896] A. C. 273, H. L. (to action to recover calls, as debt, on forfeited shares) ; Gordon v. Street, [1899] 2 Q. B. 641, C. A. (to action on promissory note) ; and Com- ponents Tvie Co. V. Naylor, [1900] 2 Ir. R. 1 (to action for calls on shares). In Mallalieu v. Hodgson (1850), 16 Q. B. 689, the plaintiff representee's replication to an affirmative plea of release failed, but only because both parties were shown to have combined in a scheme to defraud the other creditors. No reference has been here made to any insurance case other than Wainioright v. Bland, sup., for the reason that, in most of the cases of this kind, the truth of all representations by the assured in answer to inquiries is, by a term in the contract, made the condition and basis of its validity. §§ 338-340. 295 enforcement of it by recovery of damages for breach (c), or for specific performance of its terms {d). 340. Misrepresentation may in such cases be pleaded and set up eitlier by a defendant representee as a defence to any action or proceeding insti- tuted by a plaintiii representor, or by a plaintifi representee as a reply or answer to any counter-claim, or afiB.rmative case, pleaded or set up by a defendant representor (e), even when such counter-claim or afiirmative case is itself one of misrepresentation, whereby it results that, iu a sense, one misrepresentation is set ofE against another (/). It may be insisted on as an answer to applications as well as actions {g). It is immaterial whether the representee adds to his defence or answer a counter-claim for rescission or not (h). (c) See Wharton v. Lewis (1824), 1 C. & P. 529, and Foote v. Hayne (1824), 1 C. & P. 545, two actions for damages for breach of promise of marriage, in both of which Abbot, C.J., directed the jury that misrepresentation of the lady's circumstances and character would be a defence. So in Canham v. Berry (1855), 15 C. B. 597, a plea of misrepresentation to an action for damages for breach of an agreement to deliver possession of leasehold premises was held good on demurrer. (d) The follo\ving are illustrations of successful answers, on the ground of mis- representation, to claims or counter-claims for specific performance : Cadman v. Horner (1810), 18 Ves. 10 ; Knatchbidl v. Grueber (1817), 3 Mer. 124 ; 17 R. R. 35 ; Beaumont v. Dukes (1822), Jacob 422; 23 R. R. 110; Harris v. Kemble (1831), 5 BUgh (N. s.) 730 ; White v. Cudden (1842), 8 CI. & Fin. 766 ; Broohe (Lord) v. Roun- thwaite {lSi6), 5 Hare 298 ; Shackleton v. SutcUffe (1847), 1 De G. & Sm. 609 ; Eeynell V. Sprye, Sprye v. Eeynell (1852), 1 De G. M. & G. 660 ; Price v. Macaulay (1852), 2 De G. M. & G. 339 (as to one of the two lots the subject of the contract) ; Caballero V. Henty (1874), 9 Ch. App. 447 ; Redgrave v. Hurd (1881), 20 C. D. 1, C. A. ; Smith V. Land and House Property Corporation (1884), 28 C. D. 7, C. A. ; Archer v. Stone (1898), 78 L. T. 34 ; and Jacobs v. Revell, [1900] 2 Ch. 858. (e) The following are instances of the misrepresentation being set up by a plaintiff as an answer to a counter-claim or counter-case of contract set up by the defendant : M'Carihy v. Decaix, sup. ; Mallalieu v. Hodgson, sup. ; Nelson v. Stacker (1859), 4 De G. & J. 458 ; Hirschfield v. L. B. & S. C. Railway Co., sup. ; Eyre v. Smith, sup. ; and Jacobs v. Revell, sup. In Reynell v. Sprye, Sprye v. Reynell, sup., the defence was successfully pleaded to Sprye's cross-bOl (which would now be set up in the form of a counter-claim) for specific performance of the contract which it was the object (attained) of Reynell's original bill to rescind. (/) This is illustrated by the curious case of Greenfield v. Edwards (1865), 11 L. T. 663. There the plaintiff sued for an injunction to restrain the defendant from acting contrary to the terms of a mortgage deed. The defendant set up and proved misrepresentation by the plaintiff in the recitals and frame of the deed, but it was shown that the defendant was also guilty of misrepresentation in relation to this deed : whereupon Stuart, V.G., thought that, in this sense, the defendant's misrepresentation might be set off against the plaintiff's, and neutralized it, and he accordingly granted the injunction prayed. The doctrine, however, of setting off one tort against another seems a somewhat dangerous one. As applied to a case of defamation, — Kelly v. Sherlock (l^&&), L. R. 1 Q. B. 686,— it was emphaticallydissentedfrom by Blackburn, J. (at p. 698), though it was also said that the jury were justified in taking the cross-libels into account in reduction of damages. (g) As, for instance, by way of answer to a claim in respect of a sale by direction of the court in the administration of an estate ; or to an application to settle the representee's name on the list of contributories of a company ; or to a summons under 0. XIV, as in Re General Railway Syndicate, Whiieley's case, [1900] 1 Ch. 365, C. A. [h) Such a counterclaim was added in Redgrave v. Hurd, sup.. Smith v. Land and House Property Corporation, sup., Components Tube Co. v. Naylor, [1900] 2 Ir. R. 1, and, though unsuccessfully, in Shepherd v. Croft, [1911] 1 Ch. 621. 296 COMMENTARY, CH. XII, SECT. 2. Sect. 2. Extent of Applicability of the Rules relating TO Proceedings for Rescission. 341. With the two exceptions mentioned below (i), the representee who relies upon misrepresentation as a defence or answer to proceedings instituted, or an affirmative case set up, by the representor, must allege and prove precisely the same facts and matters as those which the repre- sentee who relies upon misrepresentation as a ground for rescission is required to allege and prove (k), and the evidence which is on the one hand necessary, and, on the other, sufficient, for the latter purpose is necessary and sufficient respectively for the former (I). Further, all such evidence as is essential and adequate to sustain any of the recognized affirmative pleas to proceedings for relief (m), is equally essential and adequate to support a reply or answer to any case of misrepresentation raised by way of defence to an action on the contract (n). (i) In §§ 342 and 344, inf. respectively. {k) As to the alleganda et probanda in proceedings for rescission, see Cli. XI, Sect. 2, ante. (I) This proposition is stated in Article 43 of the Code. The authorities are : — as to the general identity of the elements of allegation and proof in the two classes of case, United Shoe Machinery Co. of Canada v. Brunet, [1909] A. C. 330, P. C. (at p. 338) ; as to particular elements essential in rescission which have been deemed equallj' so in a defence. Nock v. Neumian (1832), 1 L. J. (n. s.) (ch.), 175; 36 R. R. 436 (question of who is deemed the representor), Burnes v. Pennell (1849), 2 H. L. C. 497 (questions of materiality and mducement, per Lord Campbell at pp. 522, 523, and Lord Beouqham at pp. 529-533), and Bentley v. Black (189S), 9 T. L. R. 580, C. A. (questions of falsity, and whether alleged representor was so in fact). On the other hand, that it is as unnecessary to prove fraud for the purpose of the defence as it is for the purposes of rescission, as to which see Ch. XI, Sect. 1, Sub-s. (2), ante, is clear from Bannerman v. White (1861), 10 C. B. (n. s.) 844, and Redgrave v. Hurd (1881), 20 C. D. 1, C. A. {per Jbssel, M.R., at p. 12). That, where fraud is alleged, though unnecessarily, in the defence, the representee is as much bound to give particulars, as when he is making similarly unnecessary allegations as the actor in proceedings for rescission, is illustrated by some of the cases cited in the notes to Ch. XV, Sect. 2, Sub-s. ( 1 ), post. As to the irrelevance in the one class of case as much as in the other — see Ch. XI, Sect. 1, Sub-s. (3), ante, as to actions for rescission — of the question whether the representee was likely to benefit more by repudiating, than by adhering to the contract, or was reasonable in preferring the former course to the latter, see KrmtchbuU V. Grueber (1815), 1 Madd. 153 (per Plumer, V.-C, at p. 167), and, on appeal (1817), 3 Mer. 124 [per Lord Eldon, L.C, at p. 146); Brooke [Lord) v. Rounthwaite (1846), 5 Hare 298 (per Wigbam, V.-C, at pp. 302; 303) ; Madeley v. Booth (1849), 2 De G. 6 Sm. 718 (per Knight-Bhtjce, V.-C, at p. 722) ; Ayles v. Cox (1852), 16 Beav. 23 (per RoMiLLY, M.R., at pp. 24, 25) ; and Denny v. Hancock (1870), 6 Ch. App. 1 [per James, L.J., at p. 10). (m) These affirmative pleas, six in number, are dealt with in the first six sub- sections respectively of Ch. XI, Sect. 4, ante. (n) As to the kiaowledge of the representee, and agreement to waive inquiry, etc., see Nelson v. Stacker (1859), 4 De G. & J. 458, and some other of the cases cited in the notes to Ch. X, Sect. 2, Sub-ss. (1) and (2), respectively, ante. As to the indentity of the principles applicable to the two classes of case where the representor sets up an express condition to forego rescission, wiih or Avithout compensation as a substitute, as mentioned in Ch. XI, Sect. 4, Sub-s. (3), ante, compare 'H'ith the oases there cited, the following : White v. Cudden (1842), 8 CI. & Fin. 766 ; Shackleton v. Sutcliffe (1847), 1 De G. & Sm. 609 (per Knight-Bbtjce, V.-C, at pp. 620-623 : here the plaintiff's misdescription of the premises (impliedlj') as unincumbered, and as fit for " build- ing purposes," etc., was deemed both substantial, and also " consciously " made ; the answer, therefore, founded on the condition, to the defence of misrepresentation, failed) ; Price v. Macaulay (1852), 2 De G. M. & G. 339 (where the condition §§ 341, 342. 297 342. The first of the abovementioned exceptions applies to those cases only where misrepresentation is set up as an answer to a claim of specific performance. In such cases it is not always essential to prove as much as would be required if the representee were suing for rescission. " The considerations which induce a court to rescind any contract, and the considerations which induce a court of equity to decline to enforce specific performance, are by no means the same " (o). The reason for this divergence in practice will be apparent from a consideration of the essential distinction between an action for the specific performance of a contract, and an action or proceeding for its enforcement by other means, whether direct (as for the recovery of money due thereunder), or indirect (as where pecuniary damages for the breach thereof are claimed). In the latter class of proceedings, the party is entitled (if his cause of action is estab- lished) to the relief he claims ex dehito justitiw ; whence it follows that the other party can only invalidate this absolute title by strict proof of all facts required to negative the validity of the contract itself, in other words, of everything which it would be incumbent on him to establish in an action to rescind the contract ; whereas, specific performance being relied upon by the plaintiff was held sufficient to defeat the defence as to one of the two lots in question, but not as to the other) ; Ayles v. Cox, sup. ; Re Faivceit and Holmes (1889), 42 C. D. 150, C. A. («-here the representor plaintiff failed) ; Be Brewer and Hankin's Contract (1899), 80 L. T. 127, C. A. (where the representor plaintiff succeeded); Be Puckett and Smith's Contract, [1902] 2 Ch. 258, C. A. (where the representor plaintiff failed) ; and Shepherd v. Croft, [1911] 1 Ch. 521 (where the representor plaintiff succeeded). As to affirmation being an answer in both classes of case, see Clough v. London and North Western Bailway Co. (1871), L. R. 7 Exch. 26, Exch. Ch. (where it was held that for purposes of an answer to a defence as well as to a claim of rescission, no affirmation is estab- lished in the absence of proof of complete and exact knowledge on the part of the representee, and where, at pp. 33 and 35, it was also held, impliedly, that it is not for the representee to prove previous acts in pais amounting to avoidance, but for the representor to prove previous acts amounting to affirmation, and that mere delay, as in cases where rescission is sought — see Ch. XI, Sect. 4, Sub-s. (7) — is, per se, not necessarily of any significance in this regard) ; Wakefield v. Normanton Local Board (1881), 44 L. T. 697, C. A. (where the plaintiff representor failed to prove that the defendant representees had knowledge when they were supposed to have affirmed) ; Bedgrave v. Hurd, sup. (where Jbssbl, M.R.'s, observations, at p. 13, as to the unim- portance of delay in itself, applied equally to the defence set up by the representee and to his counter-claim for rescission) ; Gordon v. Street, [1899] 2 Q. B. 641, C. A. (per A. L. Smith, L.J., as to delay, at pp. 650, 651) ; Hemming v. Sceptre Life Associa- tion, [1905] 1 Ch. 365 (where the plaintiff representor succeeded in proving the affirma- tion : per Kekewich, J., at pp. 369, 370) ; and United Shoe Machinery Co. of Canada V. Brunei, [1909] A. C. 330, P. C. (the like : see p. 339). As to the representor's incapacity to make specific restitution being an answer to an affirmative case of misrepresentation, no less than to a claim for rescission on that ground, see Harris v. Kemble (1831), 5 Bligh (n. s.) 730 (where the representee who set up misrepresentation as a plea to an action for the specific performance of an agreement to let a theatre, was met by the allegation that he had been two years in possession of the theatre and had made alterations in it, and in its management ; but, whUst recognizing that this would have been an answer if it could be shown that thereby the defendant representee had rendered himself unable to restore the subject of the contract substantially as he received it, Lord Lyndhurst, L.C, at p. 752, held that it was not so shoAMi in that case) ; and Urquhart v. Macpherson (1878), 3 App. Cas. 831, P. C. (where it was the plaintiff who set up misrepresentation as a replication to the defendant's affirmative plea of release, and was met by allegation, and in this case, proof, that he — the plaintiff — was unable to make restitution of the property in specie). (o) Re Banister (1879), 12 C. D. 131, C. A., per Jessel, M.R., at p. 142. 298 COMMENTARY, CH. XH, SECT. 2. a particular form of equitable remedy which it is within the discretion of the court to grant, or to refuse either wholly, or except upon such terms and conditions as may appear in the circumstances of the particular case just and convenient, less evidence of questionable or unfair dealing will induce the court to decline the exercise of the discretionary jurisdiction thus invoked, and to withhold from the representor a form of remedy which is, in a sense, almost an indulgence, than will induce it to adjudge and declare, at the instance of the representee, that the contract is wholly and for all purposes void. Or, inverting the proposition, more evidence of good faith on the part of the representor is required to entitle him to the special relief, where misrepresentation is suggested by the representee, than where the ordinary remedies only are in question, and, if " upon the evidence, the plaintiff " — in a suit for specific performance — " has been guilty of a degree of misrepresentation, operating to a certain, though a small, extent, that misrepresentation disqualifies him from calling for the aid of a court of equity. ... He must, to entitle him to relief, be liable to no imputation in the transaction," and such a case is to be sharply dis- tinguished from " a case where the court is called upon to rescind an agree- ment . . . which would admit of a different consideration " (;p). "In all applications to the court involving the exercise of that discretion which the court invariably does exercise in ordering or refusing specific perform- ance, it is necessary not to confound the principle or rules by which con- tracts are interpreted with the principles or rules which guide the court in enforcing or declining to enforce specific performance " (q). Nor is this rule in the slightest degree unjust to the representor, because he is not being deprived of all possible relief for ever, as he is when rescission is decreed against him, but he is still at liberty to proceed against the repre- sentee by way of alternative claim for damages (r), from which claim the representee cannot escape by proving less than what is essential to prove in a claim to rescind ; and thus the representee, though his burden of proof may be less, obtains a correspondingly less complete measure of relief when he has discharged that burden. Moreover, it is always open to the court, in a proper case, instead of refusing to grant specific perform- ance on any terms, to refuse it only in the event of the representor's declin- ing to make pecuniary compensation by abatement of price, or allowance, specified or to be assessed, or to submit to any other terms which may be deemed equitable (s). The representor in such cases is given an option [p) Cadman v. Horner (1810), 18 Ves. 10, -per Gkant, M.R., at pp. 11, 12. (q) Re Terry and White's Contract (1886), 32 C. D. 14, C. A., per Lindley, L.J., at p. 27. (r) Which is the modern practice : in earlier times, the party was remitted to his remedy at law. (s) Thus specific performance was only granted on the terms of compensation, etc., in the follo\\ing cases where misrepresentation was established : Scott v. Hanson (1829), 1 Russ. & M. 128 (by Lord Eldon, L.C.) ; King v. Wilson (1843), 6 Beav. 124 {per Lord Langdale, M.R., at pp. 128, 129) ; and Hughes v. Jones (1861), 3 De G. F. & J. 307 {per Kniqht-Bbuce and Ttjbnek, LL.JJ., who ordered a reference to ascertain the amount and terms of the compensation. Of course no reference is made §§ 342-344. 299 of obtaining equity on doing equity, whicla is tlie fundamental condition of all discretionary relief. It must not be supposed, however, that he has an absolute right to specific performance with an abatement or an allowance. Nor, on the other hand, can the representee claim, as of right, that abate- ment shall accompany the order for specific performance, unless he can point to an express term in the contract to that eSect, though he might resist the representee's claim to specific performance without such abate- ment (t). Where it appears to the court that the case is not one for a qualified refusal, or a conditional grant, of relief, specific performance is refused absolutely, or granted absolutely, as the case may be (m) . 343. It should be noted that, though it may (having regard to the above rules of practice) be justifiable and prudent in the representee to remain on the defensive where there is a doubt whether the evidence available is sufficient for rescission, it is by no means wise to do so, where there is no such doubt ; for, generally speaking, a representee who comes promptly to the court to annul a contract procured by misrepresentation before the actual accrual of liability thereunder has a better equity to relief than if he waits to be sued by the representor on such accrual {x). This observa- tion, of course, does not apply to a case where the contract has been put an end to by the representor, and where, therefore, the representee cannot be blamed for awaiting the enemy's attack {y) ; indeed, in such a case, it would seem illogical to apply for rescission of that which ex hypothesi does not exist (z). 344. The second of the exceptions referred to relates to the question of alleging and proving a previous repudiation, or at aU events non- recognition, of the contract. Where the representee is suing for rescission, there is no burden on him either of allegation or proof as regards this in the text to the class of case referred to in Ch. XI, Sect. 4, Sub-s. (3), where compensation is a term of the contract. («) This was decided in Cordingley v. Cheeseborough (1862), 4 De G. F. & J. 379 {per Stuakt, V.-C, at pp. 384-389), and Be Terry and White's Contract (1886), 32 C. D. 14, C. A. {per Lindlby, L.J., at pp. 30, 31, citing Cordingley v. Cheeseborough with approval). (tt) See Knatchhull v. Krueger, cited at the end of note {I) to § 341, ante ; Beaumont v. Dukes (1822), Jacob 422 ; 23 R. R. 110 {per Plumek, M.R., at p. 426 : " it must stand or fall to the full extent ; we cannot cut do^^'n the price, and say how much would have been given if this had not been done") ; White v. Cudden (1842), 8 CI. & Fin. 766 (at pp. 786, 792-794) ; and Brooke {Lord) v. Bounthwaite (1846), 5 Hare 298, per Wigeam, V.-C, who, at pp. 303-305, pointed out that it was impossible to estimate the compensation, there being no materials for that purpose before the court, and he accordingly was compelled to dismiss the bill, though the defendant himself was anxious to submit to a decree with compensation. In such circumstances, it is a case of either an unqualified grant or an unqualified refusal of performance in specie, as Portia decided in Shylock v. Antonio ("Thou shalt have nothing but the forfeiture. To be so taken at thy peril, Jew "). {x) Fenn v. Craig (1838), 3 Y. & C. (bxch.) 216, per Aldeeson, B., at p. 222. ly) Aaron's Beefs, Ltd. v. Twiss, [1896] A. C. 273, H. L., per Lord Macnaghten at p. 293. See also the observations of Lord Watson, at p: 291, who seems to think that, even apart from such special circumstances, a representee who is defendant in all cases stands in a somewhat more favourable position, as regards the quantum of proof, than a representee who is suing for rescission. But this view, if it was intended, is clearly not in accordance with principle or authority. (z) See Ch. XI, Sect. 2, § 261, ante. 300 COMMENTARY, CH. XII, SECTS. 2, 3. question (a): But it has been held in several cases that, where the repre- sentee is defending an action or proceeding on the contract, whatever form that action or proceeding may assume, it is incumbent on him both to allege and prove that, siuce discovery of the truth, he has repudiated the contract, and has taken no benefit, exercised no right, made no claim, and recognized no interest or liability, under or in respect of it. A plea which contains averments to the above effect is good (6) ; a plea which fails to satisfy these requirements is bad (c) ; the reason being that merely to assert in a defence that the contract was induced by misrepresentation is to confess, without avoiding {d), whereas, in proceedings for rescission, the writ itself is the avoidance (e). And, having so pleaded, the onus is on the representee to prove the allegations so contained in his plea (/). Sect. 3. Where the Defence is available against Assignees of Property or Eights under a Contract procured by Misrepre- sentation. 345. Where the representee is being sued, not by the representor but by a person who claims to be the assignee from him of property (a) Ibid., § 267, a7ite. (6) As in Bwlch-y-Pliinn Lead Mining Co. v. Baynes (1867), L. R. 2 Exoh. 324. (c) See Deposit Ldfe Assurance Co. v. Ayscoiujh (1856), 6 E. & B. 761 (which was ail action for calls in the then statutory form against the defendant *' as holder " of certain shares : plea, that defendant was induced to become the holder by the mis- representation of the plaintiffs. Held bad on demurrer, because it admitted that the defendant was such a holder, without going on to aver a previous disaffurmance or repudiation : per Lord Campbell, C.J., at p. 763, contrasting the cases, such as infancy, where the contract is void ah initio, and not voidable merely, and where, therefore, it is enough to allege the bare fact of infancy : see also what is said by Coleridge, J., at pp. 763, 764, and Comptou, J., at p. 764) ; Meldon v. Lawless (1870), 18 W. R. 261 (an Irish case, where to a claim for rent, the defendant pleaded that the lease had been obtained by misrepresentation, but, since he did not allege repudiation, or deny that he had taken possession of the premises, the plea was held bad) ; Anderson V. Costello (1871), 19 W. R. 628 (another Irish case where, to an action for breach of a contract of indemnity, a similarly defective plea was pleaded, with a similar result) ; and Dawes v. Harness (1875), L. R. 10 C. P. 166 (where, to an action on a cheque, the defendant pleaded that the cheque was for the price of a business the profits of which had been misrepresented by the plaintiff, and it was held that, after verdict, the plea must be taken to have included an allegation that the defendant had disaffirmed the contract, because otherwise it would have been bad. In Aaron^s Reefs, Ltd. v. Tioiss, [1896] A. C. 273, H. L., the defence merely alleged misrepresentation, but the contract in respect of which the action was brought had been put an end to by forfeiture of the shares the subject thereof, so that from that time there had been nothing to repudiate : consequently the plea was not deemed to be defective as, but for this circumstance, it might have been : see the observations of Lord Halsbuky, L.G., at pp. 277-279, who refers to the decision of Deposit Life Assurance Co. v. Ayscough, sup., without any disapproval. {d) See the case last cited, and Meldon v. Lawless, and Dawes v. Harness, sup. (e) See § 267 in Ch. XI, Sect. 2, ante. ( / ) See Dawes v. Harness, sup. {per Beett, J., at p. 167, and Grove, J., at p. 168) ; and United Shoe Machinery Co. of Canada v. Brunei, [1909] A. C. 330, P. C. (at p. 338). In Aaron's Beefs, Ltd. v. Twiss, sup., for the reasons above given, the onus was con- sidered rather to be on the representor company to prove affirmation, than on the representee shareholder, whose shares had been forfeited, to prove a previous repudia- tion, which would have been an idle and illogical proceeding, and as " there was no evidence, or contention, that the defendant had adhered to the contract " (per Lord Halsbtjry, L.C, ubi sup.), his defence succeeded, and the claim failed. §§ 344-346. 301 under a contract or transaction voidable on the ground of misrepre- sentation as against the representor, such third person not being one who is suing merely in right of the representor or his estate (g), the determination of the question of the validity or invalidity of the defence depends upon whether the property assigned is a chose in action, and, if so, whether it is negotiable or not, or a chose in possession (h). The general principle applicable alike to all three classes of property is that the assignor transfers what he has acquired and nothing beyond ; if he has a limited or defeasible interest, he can only transfer an interest subject to the same limitations, or liable to be defeated by the same events ; if lie has no title at all, he can confer none ; nemo dat quod non luihet (i). The different consequences which result from the application of this governing principle to assignments of the different kinds of property abovementioned have abeady been dealt with in discussing the right of the representee to recover property from one who has taken an assignment thereof from the representor under a contract voidable as against the representor (k) . The rules there expounded apply mutatis mutandis, in most respects, to the case of a representee who is resisting the claim of such an assignee to recover the assigned property as much as to the case of a representee who seeks to recover the assigned property from the assignee. 346. Thus, as regards choses in action [1), the general rule is that the assignee takes subject to all equities which, until the assignment, were and, but for the assignment would continue to be, available against the assignor, and amongst such equities is the equity to rescind the contract for mis- representation. Consequently, where a contract has been procured by this means, the representee has as good a defence against an assignee from the representor of a bare right to sue in respect thereof, as he had against the representor himself (m), which right of defence he retains after the assign- ment unless and until he so conducts himself in relation to the assignee as to give him an independent affirmative answer to the plea (w). (g) Such as an executor or administrator, or a trustee in banlcruptcy, or a guardian ad litem, or committee, or next friend, or husband, in cases of the death, insolvency, lunacy, or infancy, of the representor, and the like, as to which see the various treatises referred to in notes (h) and (i) to § 327, ante. (h) See Article 43 of the Code. (i) See, for a clear general statement of the principles applicable to the three classes of assignment respectively, Crouch v. Credit Fancier of England (1873), L. R. 8 Q. B. 374 (at pp. 380, 381) ; Colonial Bank v. Cody and Williams, [1890] 15 A. C. 267, H. L. (■per Lord Heesohell at p. 283) ; and London Joint Stock Bank v. Simmons, [1892] A. C. 201, H. L. (per Lord Hekschell at p. 215). (k) In Ch. XI, Sect. 6, Sub-s. (2), ante. (I) As to what " chose in action " means and includes, see Lord Halsbury's Laws of England, title " Choses in Action," vol. iv, pp. 360-365. (m) See Cory v. Oertcken (1816), 2 Madd. 40; 17 R. R. 180 (per Plumer, V.-C, at p. 51) ; Wakefield and Burnley Banking Co. v. Normanton Local Board (1881), 44 L. T. 697, C. A. (per Bbamwell, L.J., at p. 699) ; and Lord Halsbury's Laws of England, title " Choses in Action," vol. iv, pp. 386-391. Cp. § 332, sup., and the cases cited in the notes thereto, where the same principle is applied to actions by the representee to rescind the .contract as against such an assignee. (n) See the observations of Lush, L.J., at p. 700 of the case last cited. The answers to the plea which the assignee may thus set up against the representee on 302 COMMENTARY, CH. XII, SECT. 3. 347. There is, however, a well-established exception to the rule last stated in the case of negotiable instruments, whether made so or recognized as such by statute (o), as, for instance, the Bills of Exchange Act, 1882 (p), and the Bills of Lading Act, 1855 {q), or by the custom of merchants (r). In such cases the assignee is primil facie free from all personal equities existing as between his assignor and the representee, and is presumed, until the contrary is shown, to have acquired, and to hold, the instrument " in due course," that is to say, for value, without notice, and in good faith ; and the onus is therefore on the representee of showing, not only the mis- representation of the assignor, but also the fact that the assignee acquired his alleged title to the instrument otherwise than in due course (s). It is enacted, however, with reference to bills of exchange, that " if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is afiected with " {inter alia) " fraud " — which would cover fraudulent misrepresentation — " the burden of proof is shifted unless and until the holder proves that, subsequent to the alleged fraud . . . value has in good faith been given for the bill " (<), which means that both value and good faith must be established, and that value without bona fides is as inefficacious to discharge the full burden imposed on the holder as bona fides without value (m). The above enactment, which is expressed to relate to bills only, is applied by other sections of the statute to cheques, and, with the necessary modifications, to promissory notes {x), also. If the instrument comes to the hands of the holder when overdue, or after dishonour, or in a form which shows irregularity on its face, the above rules have no application, and the holder is in the position of any other assignee of a chose in action {y). 348. Where the thing assigned is a thing in possession, physical or constructive (as, for instance, by receipt of rents and profits), whether it be land, or chattels, there is no presumption whatever against the assignee, or in favour of the representee, for the purposes the ground of the representee's acts and conduct subsequent to the assignment are those specified in Ch. XI, Sect. 4, Sub-ss. (4) and (5), ante. (o) See Lord Halsbury's Laws of England, title " Choses in Action," vol. iv, pp. 393-397. (p) 45 & 46 Vict. c. 61. See Chalmers' Bills of Exchange. (q) 18 & 19 Vict. c. 111. See Carver's Carriage of Goods hy Sea, and Pease v. Gloahec (1866), L. R. 1 P. C. 219. (r) There are two marks of an instrument recognized as negotiable by the law merchant : (1) it must pass from hand to hand by delivery, (2) -vWth the intention and effect of conferring a right to sue thereon : see Crouch v. Credit Fancier of England (1873), L. R. 8 Q. B. 374 {per Blackbueu, J., delivering the judgment of the court at pp. 381, 382). As toAvhat documents are comprised Avithin the class of instruments negotiable by mercantile custom, see Lord Halsbury's Laws of England, title " Bills of Exchange," etc., vol. ii, pp. 564-570 ; Sheffield [Earl] v. London Joint Stock Bank (1888), 13 App. Cas. 333, H. L. ; and London Joint Stock Bank v. Simmons, [1892] A. C. 201, H. L. (s) See, as regards bills of exchange, etc., sects. 29, 30, and 38 (2), of the Bills of Exchange Act, 1882. (t) Sect. 30 (2) of the same Act. (u) Tatam v. Haslar (1889), 23 Q. B. D. 345, Div. Ct. (x) See sects. 73 and 89 (1), respectively, of the Act of 1882. (f/) Ibid., sects. 29 and 36. §§ 347-349. 303 of a defence founded on misrepresentation, when the representee is seeking to retain the property against the assignee, any more than there is for the purposes of a claim so founded, when the representee is actively asserting his right to take it out of such assignee's possession (z). In the one class of case, as much as in the other, the representee, having first established such facts as would amount to a good defence on the ground of misrepresentation against the representor, if such representor were suing, must go on to show, if he can, one of three things : (i) that he actually avoided the contract before the assignment (a) ; or (ii) that the assignee was a mere donee or volunteer (6) ; or (iii) that the assignee acted in bad faith, or with notice of the circumstances render- ing the contract voidable (c). Proof of any one of these three matters is su£&cient, and such as to make it unnecessary to consider the others (d). In the first case, the assignee acquires title from that which was a nullity at the date of assignment ; in the second, he has purchased no right to consideration, and, therefore, will sufier no damnum which the law can recognize, in handing over that which came to him as a mere gift or windfall ; in the third, he will sufier a damnum, but no injuria, because he will thereby be most righteously punished for direct or constructive complicity in the very wrongdoing of which the representee has a right to complain. 349. If the representee, though fading to make his plea good on the theory of the contract being voidable, is in the fortunate position of being (z) As to which, see §§ 333-336, ante. (a) In the following cases there had been no such avoidance, and the representee's defence failed on that ground : White v. Garden (1851), 10 C. B. 919 ; Pease v. Oloahec, sup. (at p. 229 : " so long as the bill of lading remained mth the parties who had fraudulently obtained it, the vendors who had been cheated out of the possession might have reclaimed and recovered it. But the moment it passed into the hands of Pease. & Co., to whom it was pledged and indorsed for valuable consideration without notice, the right of the vendors to follow it was taken away ") ; and cp. § 333, ante, and the cases there cited. (6) Cp. § 334, ante, and the cases cited in the notes thereto. (c) This was established by the defendants in Clough v. L, i.), trade marks (n), and other exclusive rights and licences {n). 412. The party entitled to raise the question of the invalidity of the grant by reason of misrepresentation to the Crown or State is, in the iirst place, the Attorney-General, as representing the Crown or State who have been deceived (o) ; and, secondly, every fellow-subject of the grantee who is directly or indirectly injured by the grant {p), or even one who is not interested, but only if those interested would be entitled to relief if they chose to apply for it {q), since the prerogative of the Crown in this respect is the privilege of the subject, and the Crown cannot fetter the exercise ((■) For the general principles applicable when the Kmg is " deceived in his grant," see Com. Dig. Grant, G. 8. Similar rules obtained in Roman law ynth respect to the fallax petitor who obtained grants and privileges from the Emperor by misrepresenta- tion : see App. C, Sect. 2, Sub-s. (14), post. (k) See the followmg : Case of Alton Woods (1600), 1 Coke Rep. 406 ; M. el Rcrj. V. Kcmpe (1694), 1 Ld. Raym. 49 ; Morgan v. Seaward (1837), 2 M. & AV. 544 {per Cur. at p. 561) ; Gledslanes v. Earl of Sandwich (1842), 4 M. & G. 095 ; and Great Eastern Railway Co. v. Goldsmid (1884), 9 App. Cas. 927, H. L. (/) See R. V. Boucher (1842), 3 Q. B. 641 ; Eastern Archipelago Go. v. R. (1853), 2 E. & B. 568, Exoh. C'h. ; and La Banque d'Hoclielaga v. Murray (1889), 15 App. Cas. 414, P. C. (m) R. V. Wheeler (1819), 2 B. & Aid. 345 ; Hill v. Thompson (1818), 8 Taunt. 375 ; Brunton v. Haiokes (1821), 4 B. & Aid. 541 ; Morgan v. Seaward, sup. ; and Xickells V. Rolls (1849), 8 C. B. 679.' Letters patent in respect of inventions are now sealed with the seal of the Patent Office, and not, as previously, with the Great Seal of the United Kingdom : see Patents and Designs Act, 1907 (7 Edw. 7, u. 29), s. 14, sub-s. (1), and the procedure for revocation is altered, but the theory on which a patent is revoked in case of misrepresentation, viz., that the State is deceived thereby into granting a privilege that it otherwise would not have granted, remains the same. (n) Such as a right to take wreck : Alcock v. Cooke (1829), 5 Bing. 340. (o) Case of Alton Woods, sup. ; R. et Reg. v. Kempe, sup. ; E. v. Wheeler, sup. ; Eastern Archipelago Co. v. R., sup. ; La Banque d'Hochelaga v. Murray, sup. ; and O. E. Railway Co. v. Goldsmid, sup. (p) See Alcock v. Cooke, sup., Morgan v. Seaward, sup. {per Pabke, B., delivering the judgment of the Court of Exchequer, at p. 561 : " such a grant is void not against the Crown merely, but in a suit against a third person ") ; Eastern Archipelago Co. v. R., sup. ; and Bangui d'Hochelaga v. Murray, sup. (where the defendants, who were entitled to raise the question of the invalidity of the grant of a charter of incorporation to a certain company, as corporators of which they were being sued, fortified their position by procuring the Attorney-General of the Colony to proceed, on their relation, by way of scire facias against the company to repeal the charter, such proceedmg being consolidated with the action). {g) Great Eastern Railway Co. v. Goldsmid, sup., per Lord Selborne, L.C, at pp. 937, 940. 338 COMMENTARY, CH. XIV, SECT. 1, SUB-SECT. (4). and enio3anent of a privilege wliicli is vested in it for tlie public good, so that, \\'lietlier directly or indirectly in virtue of his right to call upon the Crown to exercise its prerogative, the subject is ax dehito justilice entitled to have a franchise procured by misrepresentation forfeited (r). 413. The mode in which effect is given to the opinion of the court that the grant is void on the ground of misrepresentation, is either by a repeal — whicli must be in toto, or not at all(s) — of the charter or patent, at the instance of the Attorney-General, whether moving ex officio, or on the relation of a subject aggrieved (i), or by treating the grant as a nullity on the establishment by a party litigant of a right to have it so treated, where it IS relied upon by the opposite party as the foundation of his case or a link in his chain of proof {u). The procedure to obtain the repeal of a charter, patent, or other grant, is information or action by way of scire facias, for which, however, in respect of patents, a petition to the court for revocation at the instance of the Attorney-General, or of any person aggrieved, is now substituted (x), and, in the case of trade marks, an application to the court by a person aggxieved, or, where the registration has been procured by fraud, the registrar himself, to make, expunge, or vary any entry in the register of trade marks {y). The defensive relief available to the party may be claimed by way of plea to an action for infringement of the patent (z), charter, or other instrument granting the privilege (a) ; and, further, in the case of patents for inventions, it is provided by statute that any such patent granted to the true and first (r) Eastern Archipelago v. R.. sup., per Pi,att, B., at p. 884, Crbswell, J., at p. 88G, and Jeevis, (_'..!., at p. !)14 in the Exchfqucr Chamlier. (s) Banque d^ Hochelaga v. Murray, sup., at pp. 420—428. Cp. Ch. XI, Sect. 3, Sub-s. (1), for the like rule in rcsci.ssion. (() See the cases cited in note {p), sup. {ii) As in Hill v. Thompson, sup., Brunton v. Hnwlrs, stip., Alcock v. Cooke, sup., Morgan v. Seaward, sup., Glcdstaiirs v. Earl of Sandwich, sup., Nickclls v. Bolls, sup., and other cases cited in the various treatises on patent and trade mark law. In B. V. Boucher (1842), 3 Q. B. 041, A\hcre the immediate question for decision was the validity of « rate, which raised incidentally the further question of the validity of the charter of incorporation of the borough making the rate, the (lourt of Q. B., but Mith great doubt and hesitation, thought it safer not to decide the latter question, and to take the facts as they found them, the rate having been made by a borough ivhioh de facto existed as such, and none of the inhabitants having taken any steps to get the charter revoked. (x) This procedure was introduced, and the old scire facias procedure abolished, in the ease of patents for inventions, by sect. 20 of the Patents Designs and Trade Marks Act, 1883 (46 & 47 Met. c. 57), which is reproduced in sect. 25 of the Patents and Designs Act, 1907 (7 Edw. 7, c. 29). The petition may be presented by the Attorney-(icneral, or by any person authorized lay him, or by a party aggrieved who can establish the prescribed matters : sect. 25 (3) of the Act of 1907. See Terrell on Patents. \y) By sect. 12 of the Trade Slarks Act, 1905 (5 Edw. 7, c. 10), any person may apply to the Registrar to register a trade mark in the register Avhich (sect. 4) is to be kept at the Patent Office, an Palatine Courts, and the County Courts. (m) See sect. 4 of the Arbitration Act, 1889, and Lord Halsbury's Laws of England, title " Arbitration," vol. i, pp. 451-454. B.M. 2 B 370 COMMENTARY, CH. XV, SECT. 2, SUB-SECT. (1). has no right to a public trial of matters which he has agreed to submit to arbitration, if the other party expresses no desire for such a trial (n). Sect. 2. Procedure. 428. Under the head of procedure, it may be convenient to notice such rules of pleading, and points of practice (including costs), as are peculiar to actions or proceedings based upon misrepresentation, or upon fraud, and also to consider certain geireral rules of procedure in their application to such actions or proceedings. Sub-sect. (1). Eules of Pleading in their AjjjAication to Misrepresentation and Fraud. 429. ^Mienever fraud (which, of course, includes fraudulent misrepre- sentation) is intended to be relied upon by either party to any action or pro- ceeding, whether in support of, or by way of answer to, any claim, counter- claim, or affirmative defence, it must be distinctly alleged in that party's pleading, or afiidavit(o). This does not mean that the partyneed necessarily use the word " fraud," if he sufficiently indicates, by apt and unambiguous language, that he means to rely upon the thing, as, for instance, by alleging acts and conduct which in law amount thereto ( p). 430. Whenever fraud or misrepresentation is in fact alleged by a party, whether it was necessary for him to do so or not {q), and whether the allega- tion is contained in a statement of claim, counter-claim, or other pleading which asserts a right to active relief (r), or in a defence, reply, or other (h.) BusscU v. Hu.ssdl (1S80), 14 C. D. 471, per .Jessel, M.R., at pp. 475^77, M'ho criticized, in this respect, the observations of A\'ickens, V.-C, at pp. 577, 578 of Willesford v. Watson (1871), 14 Eq. 572, as being too Aridely exjiressed. (o) See Davy v. Garrett, cited in llie next note, as to claims, etc. As to defences, see Woodhoii^e v. Swift (1836), 7 C. & P. 310 (where, under the practice of those days, it was ruled that misri'presentation of the quality of goods sold could not be set up as an answer to a claim for the price unless specially pleaded), and, for the modem practice, see 0. 19, r. 15. (p) Myddldon v. Lord Kenyon (1794), 2 Ves. 391, per 'Lord Eldon, L.C, p. 412; and Davy v. Garrett (1878), 7 C. B. 473, ('. A., jjer Thesigek, L.J., at p. 489: ' ' There is another still stronger objection to this statement of claim. The plaintiffs say that fraud is intended to be alleged, yet it contains no charge of fraud. ... It may not be necessary in all cases to use the Avord ' fraud ' — indeed, in one of the most ordinary cases it is not necessary. The allegation that the defendant made to the plaintiff representations on which he intended the plaintiff to act, AA'hich repre- sentations were untrue, and knov\'n to the defendant to be untrue, is sufficient. The word ' fraud ' i« not used, but expressions are used pointmg at the state of mind of the defendant, that he intended the representations to be acted upon, and that he kneA\' them to be untrue. It appears to me that the plaintiff is bound to show dis- tinctly that he means to allege fraud." See Ch. V, Sect. 1, ante. {q) As to the results, in the matter of costs, of unnecessarily pleaduag fraud, see § 443, post. (r) Redgrave v. Hurd (1881), 20 C. D. 1 {per Jessel, M.R., at p. 12, refusing relief by nriy of damages on the defendant's counter-claim, on this ground), and Birch v. Birch, [1902] P. 130, C. A. {per Cozess-Haedy, L.J., at p. 138 : " a mere general allegation of fraud, without particulars, cannot avail"). The action here was to set aside a judgment on the ground that it had been obtained by fraud. §§ 427-430. 371 pleading by way of answer to any claim («), or in any aflidavit (<), full particulars of the alleged fraud or misrepresentation must be given (u), if tlie opposite party requires it, but not otherwise ; for, though the party alleging fi'aud is rigorously confined at the trial to such par- ticulars as he has given, or has been compelled by his adversary to give (x), it is too late to object to any insufficiency in this respect after' verdict {y), and, on the same reasoning applied to modern practice, it would equally be too late at the trial, and before verdict (r). There would seem to be no reason why, in an ordinary case of misrepresentation, the party alleging it should be excused from giving the iccjuired particulars until he has obtained discovery (a). (s) Lauruiicc v. Xorrcys (1890), 15 A|ip. ('as. 210, H. L. {'pcr Lord Herschell at p. 219 : '■ a statement of claim \\hich, if il discloscH a concealed fraud A\ithm the mean- ing of the statute, docs so in the barest fashion, with much that is most material left vague and undefined, when there ouylit to have been distinctness and precision " : and Lord Watson at pp. 221, 222 : " there must be a probable, if not a necessary, cormection between the fraud averred and the injurious consequences which tlie plaintiff attributes to it ; and if that connection is not sufliciently apparent from the particulars stated, it cannot be supplied b3' general averments. Facts and circum- stances in that case must be set forth , and iir every genuine claim are capable of being stated. . . . The amount and kind of explanatory statement required in order to impart relevancy to such charges ■will necessarily vary according to circumstances." The action was one in which the plaintiff set up a case of concealed fraud by way of anticipatory answer to the defendant's plea of a statute of limitations) ; and Bentley V. Black (1893), 9 T. L. R. 580, C. A. (t) Wallingford v. Mntual Society (1880), 15 App. Cas. 685, H. L. {per Lord Selborne, L.C., at p. 697, mth reference to an affidavit under 0. XIV, setting up fraud as a ground on which the defendant claimed to be alloMcd to defend : "with regard to fraud, if there be any principle which is perfectly -tt'ell settled, it is that general allegations, however strong may be the words in which they arc stated, are insufficient even to amount to an averment of fraud of ■which any court ought to take notice "). (a) See 0. 19, r. 6, which expressly mentions " fraud " and " misrepresentation " as among the matters which the party pleading must particularize. The observations of Lord Watson, cited in note (s), sup., as to the amount and kind of details required being dependent upon the circumstances of the individual case, should always bo borne in mind. (x) Cargill v. Bower (1878), 10 C D. 502 (per Frv, J., after referring to the previous authorities, at p. 516 : " above all in cases of fraud the decision of the court must proceed secundum allegata et probata "). (y) Smith v. Kay (1859), 7 H. L. C. 750 [per Lord Chelmsford, L.C, at pp. 757, 758, and Lord Cranworth at pp. 763-768). (z) Similarly, where justification is pleaded to an action of defamation, if the plaintiff is content with no particulars, or with inadequate particulars, of such plea, and does not apply for further and better, the defendant is left completely at large at the trial : Hunter v. Sharpe (1868), 4 F. & F. 983, and Henson v. Cleeve, [1904] 2 Ir. R. 536. (a) The cases in which discovery has been ordered to precede particulars are non-disclosure cases, where a fiduciary relation exists between the parties, and where, therefore, the party from A\honi the discovery is required is, in virtue of that relation, under a duty to make the disclosure, for breach of which duty he is being sued, such as Whyte V. Ahrens (1884), 26 C. D. 717, C. A. ; Leileh v. Abbott (1886), 31 C. D. 374, C. A.; Sachs v. Spielman (1887), 37 G. D. 295; and Edelston v. Russell (1888), 57 L. T. 927 ; and cases in which the party alleges fraud upon a third person, such as Waynes Merthyr & Co. v. D. Radford & Co., [1896] 1 Ch. 29 (though, in this ease, Chittv, J., on consideration, came to the conclusion that the particulars should come first, and, further, expressed his view that that was no hard-and-fast rule). It is obvious that, in both the above classes of case, the plaintiff does not, and cannot reasonably be expected to know the entire facts as to matters which, in the one case, are studiously concealed from him, and, in the other, pass between the defendant 372 COMMENTARY, CH. XV, SECT. 2, SUB-SECTS. (1), (2). 431. An amendment of a pleading whicli raises a charge of fraud whicli has not appeared in any previous pleading, and where the charge is new in substance, and not merely in form, is not ordinarily allowed (6). But where the proposed amendments are designed merely to put into better shape, and to expand with greater detail, a case of misrepresentation which has already been raised in substance, it is proper to give leave to amend (c). And, in very special circumstances, and on special terms, an amenditient raising a case of fraud for the first time, even at the trial, may be allowed (d). Where, in a motion for rectification of the register of a company which is based on fraudulent misrepresentation, there is at the hearing insufficient evidence of the fraud, or even of the falsity, alleged, an application for an adjournment will usually be refused (e). 432. Where a fraudulent state of mind (or its equivalent, the scienter) is alleged, it is not necessary to particularize the state of mind, any more than in other actions malice is required to be particularized. It is enough to give details of the misrepresentation or acts amounting thereto ; any farther description of the moral and mental condition of the person re- sponsible could not possibly be anything but evidence, which is not plead- able (/). Nor is it incumbent on a representee to put a meaning upon the words alleged to have been used by the representor, or to add an innuendo, as if the action were one of defamation {g). 433. Where' it is alleged that a fraudulent representation was made by and a third person. But, where a misrepresentation to himself is alleged, it is no less obvious that he is in a position to give full particulars mthout discovery, or, if he is not, he should not have brought his action. On precisely the same principle, the defamcr who pleads justification to an action of defamation is not entitled to discovery from the man he has defamed before he gives particulars of the alleged truth of his imputations : Zierenberg v. Liibouchcrc. [1893] 2 Q. B. 183, C. A. (per Kay, L.J., at p. 187, \\'ho there carefully distmguishes the non-disclosure type of case above referred to). (6) Laivrance v. Lord Xorreys (1890), 15 App. Gas. 210, H. L., at p. 213 of which it appears that the plaintiff had been refused leave to amend by settmg up concealed fraud, or a more adequate statement thereof, in the Q. B. D. (c) Coclcsedge v. Metropolitan Coal Consumers^ Association (1891), 65 L. T. 432, C. A. (d) Siding v. Hawkins (1889), li P. D. 56, A\-here, in a probate action, it appeared from admissions made by the defendant in cross-examination at the trial that the plaintiff might have had a possible case of fraud, which he had not pleaded, where- upon Butt, J., gave him leave to amend by adding an allegation, with particulars, that the execution of the "ndll was obtained by the fraud and misrepresentation of the defendant, at the same time offering the defendant a postponement of the trial to enable him to meet the new charges. This course, though a new trial was ordered on another ground, was approved by the Divisional Court, Sir James Haxnen, P., and A. L. Smith, J., who said (at p. 59) that, under such circumstances, it was the judge's " duty to allow the plaintiff to amend his pleadings, always taldng care that the defendant was exposed to no hardship," which precautions had been taken in the case under appeal. (e) Be British Burmah Lead Co., Ex parte Tickers (1887), 56 L. T. 815 (per Kay, L.J.). (/) See 0. 19, r. 22. \g) Barley v. Walford (1846), 9 Q. B. 197, where, at p. 199, there are thirteen lines of innuendo pleaded, in the form used in cases of defamation or the quasi-dctamation constituted by " disparagement of propertj'," and where Lord Denman, C'.J., at p. 209, observes that " the objection that the innuendo is larger than the representa- tion " — an objection appropriate to actions of defamation — " is answered by the remark that no innuendo is required." §§ 431-437. 373 one wlio had tlie express or implied authority of another, and that other is sued, it is correct to plead such facts as the fraudulent misrepresentation of the principal (/*). 434. Where misrepresentation is set up as a defence to an action to enforce a contract, it is incumbent on the defendant to allege in his pleading that, from the time when he discovered the truth, he never recognized any liability, or asserted any right, or derived any benefit, under the con- tract, but did what in him lay to disaffirm it (i). 435. Except as above stated, there is nothing special or distinctive in any rule of pleading as applied to actions for misrepresentation. Sub-sect. (2). Certain Rules of Practice relating to Proceedings for Misrepresentation. 436. There are certain general rules of practice as to (1) joinder of parties and causes of action, and (2) mode of trial or hearing, and procedure thereat, which, in their application to actions of misrepresentation, seem to demand some notice (k). 437. As to joinder of parties and causes of action, it is first to be noted that, where there are several persons claiming to have been deceived by the same misrepresentation, as, for instance, allottees of shares suing in respect of misstatements in a prospectus, each of them can sue separately, or all, or any number of them, can sue together (l), but each of them must nevertheless in that case prove his separate right to relief (m) ; or an order may be made for one of several actions to be tried first as a test action (n) : no " representative " proceedings, however, can be instituted in such a case ; that is to say, none of the representees can sue on behalf of himself and all others constituting the class of persons deceived, or for this purpose take advantage of the modern rule relating to " numerous persons '' (o) ; (h) Banoick v. English Joint Stock Bank (1807), L. R. 2 Exoh. 259, Exch. Ch., per Cur. at pp. 266, 267. (i) See § 344 in Ch. XII, Sect. 2, ante. (k) The first of these topics is considered in §§ 437^39, and the second in §§ 440, 441, inf. (I) In Arnison v. Smith (1881), 41 C. D. 348, C. A., there were fifty-two shareholders suing together. In Drincqbier v. Wood, [1899] 1 Ch. 393, several debenture holders joined as plaintiffs. (m) Arnison v. Smith, sup., is a good practical illustration of this necessity. Out of the fifty-tivo plaintiffs, only forty appeared at the trial, to prove their individual cases ; the other twelve were absent, in the mistaken idea that any judgment in favour of the forty who did appear wo'uld ensure for their benefit also. The consequence was that Kekewich, J., wan compelled to give judgment against them, though the forty, who proved inducement and the other ingredients in the cau.se of action, Kucceeilcd, and the C. A. was unable to say that there was any escape from this result, howc\ or probable it may have been that the absent twelve would have established their case as easily as the others, if they had been there to do so : their appeal, therefore, was dismissed, though " without prejudice to a fresh action " (pp. 374, 375). (w) See the cases cited in note (r), inf. (o) Community of interest or of liability alone justifies a representative suit : per Shadwell, V.-C, in Long v. Yonge (1830), 2 Sim. 369. There is no such community in proceedings for damages or for rescission on the ground of misrepresentation : the case of each representee, quoad inducement and other matters, has its o^\'n separate 374 COMMENTAUY, CH. XV, SECT. 2, SUB-SECT. (2). the reason being that, though questions as to the making of the representa- tion, and its falsity or fraud, and materiality, are common to every member of the so-caUed " class," every other question, and particularly that of inducement, is special to the individual. A. may prove that he read the prospectus, and was induced ; B. may not be able to prove both these facts ; C. may not be able to prove either ; whilst D. may not be able to prove damage, or E. his title to rescission, if the action is for that species of relief (^). If, however, no application is made before the trial to strike out so much of the title of the action as purports to give it a " repre- sentative " character, the plaintiff's case cannot be dismissed, but wiU be heard as if he were suing on his own behalf alone {q). 438. The usual practice, in such cases, is to resort to the " test action " form of order above referred to. The procedure is as follows. The repre- sentees issue separate writs in the first instance, and immediately upon doing so an application is made in chambers to select one of the actions as a test, and to stay all the others until after the trial of the test action, the plaintiffs in the other actions to be bound by the result if the defendant succeeds, but the defendants not to be bound if the plaintiff in the test action succeeds, for some of the other plaintiffs may not be able to prove inducement, damage, etc., or affirmative defences may be available against some of them which were not available against the plaintiff in the test action. Terms are inserted in the order to protect any of the plaintiffs in the outstanding actions from being prejudiced by any collusive or incompetent conduct of the test action (r). equity : Croskerj v. Bank of Wales (1860), 4 Giff. 314 {per Stuaet, V.-C, at p. 330); and Hallows v. Fernic (1868), 3 Ch. App. 467 {per Lord Chelmsfokd, L.C, at p. 471). The rule relating to representative actions is 0. 16, r. 9. {p) See Arnison v. Smith, sup. A good illustration of the distinction between an action which is representative, and one which is not, is furnished by Stroud v. Lawson, [1898] 2 Q. B. 44, C. A., where the plaintiff (1) on his o^ni behalf sued directors of a company for damages for misrepresentation, and (2) in the same action, sued the company, on behalf of himself and the other shareholders of the company, in respect of an alleged improper payment of dividend, and it was held [per A. L. Smith, L.J., at pp. 48, 49, and Chitty, L.J., at pp. 51, 52) that the two causes of action were abso- lutely distinct, and mutually exclusive, since, in the first, the plaintiff could not sue on behalf of the other shareholders, and, in the second, he could not sue otherwise. (^r) This course was adopted in Hallows v. Fernie, sup. (r) See Twycross v. Grant, No. 1 (1877), 2 C. P. D. 469, where, vrithout applying to the court, an arrangement Avas made between the parties to the effect stated in the text (see pp. 473, 474). In Amos v. Chadwici, No. 1 (1877), 4 G. D. 869, there were seventy-eight actions for misrepresentation in a prospectus of the Blochairn Iron Co. ; on the application of the plaintiffs in all of them to consolidate, Maliks, V.-C., declining to make an order for this purpose on the ground that it could only be made at the instance of a defendant, acceded to an alternative application that, on the plaintiffs in two of the actions, Robinson v. Chadwick, and Smith v. Chadtcicl-, undertaldng to prosecute them with due diligence, these two should be taken as test actions, and the time for the delivery of statement of claim in the others enlarged until after the trial of such test actions, imposing the condition that if the plaintiffs therein failed, all the other plaintiffs were to accept the result as conclusive, but that if they suc- ceeded, the defendants were not to be bound, but might call on any of the other plaintiffs to proceed to trial (pp. 872, 873). These terms gave no adequate protection to these other plaintiffs against collusion between the plaintiffs in the test actions and the defendants, as was made apparent in Robinson v. Chadirick {1818), 7 G. D. 878, when an application was first made by Robinson to Malins, Y.-C, to stay proceedings, which §§ 437-440. 375 439. Another rule that has an important bearmg upon actions for mis- representation is that several plaintifEs may sue, and several defendants may be sued, together in respect of several causes of action, if those causes " arise out of the same transaction, or series of transactions " (s), and if evidence in support of the one cause of action would be evidence in support of the other (i), but not otherwise. Thus it is not allowable for a repre- sentee to sue on his own behalf three directors of a company for fraudulent misrepresentation, and also, on behalf of himself and all other share- holders, sue the company for a declaration that the payment of a certain dividend was illegal and ultra vires, and for consequential relief (u) ; but a plaintifi may in one action sue several defendants for misrepresentation and non-disclosure in a prospectus, though the remedies sought as against these various defendants are separate and distinct remedies (such as rescission, repayment, and rectification of the register as against the com- pany, and damages for common law and statutory misrepresentation, and for statutory non-disclosure, against the directors), because the act or transaction which furnishes the plaintifE with his ground of complaint is one and the same, viz. the issue of the prospectus (x). 440. As to place and mode of trial or hearing, the rules applicable to actions of tort or contract in general apply to actions of deceit and rescis- sion respectively («/). In the King's Bench Division, it is usual to order trial by jury in cases of fraud, though " fraud " is not one of the causes of action mentioned in 0. 36, r. 2 of the K. S. C, as giving the parties a right to this mode of trial. There is power in the Chancery Division to direct an issue involving a charge of fraud to be tried by a jury, but the power is rarely exercised, except in cases where it is proposed to transfer the whole action to the King's Bench Division, and, even in these, it is was refused on the ground that he was not dominus litis, but a trustee for the other plaintiffs, and again to Fky, J., at the trial, for postponement or leave to discontinue, which was also refused, and the action dismissed mth costs. Thereupon the plaintiffs in the other actions, — -see Amos v. Chadwick, No. 2 (1878), 9 C. D. 459, C. A. — applied successfully to Majlins, V.-C'., to reinstate Smith v. Chadwick a.s a test action, the other having proved no test, and the C. A. affirmed this decision. To complete the history of this litigation, the plaintiff in the last-named action succeeded, and the judgment was affirmed by the C. A., and ultimately by the H. L., in Smith v. Chadwick (ISiii:), 9 App. Cas. 187, H. L. For an elaborate form of order for a test action, see that made by Field, J., in Bennett v. Lord Bury (1880), 5 C. P. D. 339, at p. 346. («) 0. 16, r. 1, which should be read in conjunction with 0. 18, r. 1. (t) Stroud V. Lawson, [1898] 2 Q. B. 44, C. A., A\-here, on the ground stated in note (j)), sup., the statement of claim "was ordered to be struck out, unless the plaintiff elected to abandon his claim against either the company or the directors (per A. L. Smith, L.J., at pp. 50, 51, Chitty, L.J., at p. 52, and Vauohan-Williams, L.J., at pp. 54, 55). (u) Ihid, (x) Franhenhurg v. Great Horseless Carriage Co., [1900] 1 Q. B. 504, ('. A., per LiNDLEY, M.R., at pp. 508, 509 (who distinguished Gower v. Couldridge, [189iS] 1 Q. B. 348, C. A.) and Romeb, L.J., at pp. 510-512. This case was followed and applied, though the action was not for misrepresentation, in Compafiia Sansinena v. Houlder, [1910] 2 K. B. 354, C. A. iy) See Parts I and II of Order 36 of the R. S. C, as to modt^ of trial generally in the High Court. As to the mode of trial in other courts, see the books of practice relating to such courts respectively. 376 COMMENTARY, CH. XV, SECT. 2. SUB-SECTS. (2), (3). often thought more convenient to make the larger form of order at once (z). 441. The rules of procedure applicable to various statutory and special remedies and forms of relief in respect of misrepresentation have been incidentally discussed in foregoing portions of this Commentary (a). Sub-sect. (3). Rules as to Costs in relation to Actions for Misrepresentation. 442. No practice is more firmly established than that which visits a party with the costs of an unproved charge of fraud, though he succeeds in his action or defence. This rule, which is of course not a regula scripta, but a rule of conduct or judicial discretion, has been applied in the normal type of case by a long succession of equity judges, whose decisions on questions of costs are unappealable, unless there are no materials on which the court could have exercised the discretion by which it purported to be guided (b). But where the trial is by judge and jury, and not by judge alone, the occasions for the exercise of the discretion are less frequent, and the process is a little more circuitous ; but on the whole, the discretion is exerciseable within much the same limits, and on substantially the same principles, in the two classes of case. For though costs follow the event where the trial is by judge and jury (c), the " event " is construed distributively ; so that, if there is a distinct issue of fraud, the party who fails to prove it is liable to pay the opposite party his costs of such issue, without any special order, though succeeding on all other issues {d) ; and, further, even when the improved allegation of fraud is not an issue in the technical sense, yet, if it has added to the burden and bitterness of the litigation, there is abundant " good cause " to deprive the successful party of the whole of his costs (e), and, a fortiori, to deprive him of the costs involved in making the allegation, and to order him to pay to the opposite party his costs of resisting it, or to make any other exceptional form of order which in the circumstances may be just(/). It is true that the discretion does not exist if there is no (z) As was done in Jie Martin (1882), 20 C. D. 365, C. A., and Forrester v. Jones, [1899] W. N. 78. (o) Rcc Ch. X, Sect. 3 (§ 240) ; Cli. XI, Sect. 3, Sub-ss. (3), (4), and (5), and Sect. 4, Sub-s. (6) ; Ch. XIII ; and Ch. XIA'. Sect. 1, ante. (6) As was held to be the case in F. King Co., Ltd. v. Dublin Corporation, [1907] A. C. 351, H. L., and is criticized, and entirely dissented from, by Lord Atkinson, in the H. L., at pp. 364, 365. An " unconscious fraud " is as obvious and egregious a contradiction in terms as " a square circle." (z) New Brunsunck and Canada Railway and Land Co. v. Conyheare (1862), 9 H. L. C. 711 {per Lord Westbuey, L.C, "what the Court of Equity holds to be fraud," which is enough for rescission) ; Traill v. Baring, sup, (per Knight-Bkuce and TuENEE, LL.JJ. . "fraud in the eyes of this court ") ; Brooke v. Lord Mostyn (18C5), 390 APPENDIX A, SECT. 4. fraud in its normal and natural and ordinary sense, variously described as "actual," "positive," "personal," "moral," "intentional," "conscious," or " in the offensive sense," on the other ; as if fraud could ever be described as other than actual, positive, personal, moral, intentional, and conscious, or could be used in any but an offensive sense, except for the purpose of the antithesis necessitated by tlie initial mistake in scientific terminology. 458. This error, however, having been made at the outset, the distinction between "legal" and "moral" fraud, and that between "equitable" fraud and both " legal " and " moral " fraud, are not only not deserving of the con- temptuous criticism to which they have been subjected by Lord Bkamwell, in the one case («), and Lord Eshee, in the other (6), but, for reasons already indicated, have become absolute requirements of what one may call terminological honesty, and have acquired the character of something even more than the mere "convenience" which Sir James Hannen rightly, but inadequately, ascribed to them (c). If a man announces that for the purposes of a certain biological discussion he proposes to use the word " animal " invariably in its strict biological, and not in its popular sense, no harm is done, so long as he rigidly adheres to his announced intention ; but, if in a science which involves human conduct, such as jurisprudence, ethics, or casuistry, he is found to be taking a term in common use, which has a definite meaning in that use, and apply- ing to it at one time the ordinary sense, and, at another, a specific invented sense of his own, — above all, when the term in question carries with it to the non- scientific mind a moral stigma, — it is his plain duty to declare, on every occasion, whether the popular, or the artificial, meaning is intended. Therefore, when Lord Bramwell, who, though courteously dubbed a " great master of language " by Sir J. Hannen (d), might, perhaps, more correctly be denominated a great slave of language, says that " legal fraud " has no more meaning than " legal heat," or " legal light," the criticism is as inept and ridiculous as it, at first sight, makes its subject to appear. Whenever judicial or parliamentary authority has " deemed " a thing to be, for certain purposes, what it is not for any other purpose, the absurdity and deceptiveness lies not in the calling the one " legal," and the other " actual," but in the omission to do so. For instance, to take Lord Beam- well's own example, suppose that, for the purpose of a certain statute, " heat " 33 Beav. 437 {per Tukneb, L.J. : " meaning by fraud, not moral fraud, but what in the eye of this court is considered as amounting to fraud ") ; Boss v. Estates Investment Co. (1868), 3 Ch. App. 682 {per Lord Cairns, L.C, at p. 687: " in the eye of the court a fraud upon the public ") ; and A.-G. v. Say (1874), 9 Ch. App. 397 {per Hall, V.-C, in the court below, at p. 403 n. : "not as understood in its offensive sense, but what the court treats as fraud "). {a.) At p. 243 of Weir v. Bell (1878), 3 Ex. D. 238, C. A. (" I do not understand legal fraud. To my mind it has no more meaning than legal heat or legal cold, legal light or legal shade "), and, again, at pp. 346 and 351 of Derry v. Peek- (1889), 14 App. Cas. 337, H. L. (where he returns to the charge again, and expresses his disagreement with the view of Sir J. Hannen, expressed in the C. A., whose decision was being reversed, that the expression was at least " a convenient one "). (6) At p. 498 of Le Lievre v. Gould, [1893] 1 Q. B. 491, C. A. (c) At p. 582 of Peek v. Derry (1887), 37 C. D. 541, C. A., where he criticizes the view expressed by Lord Beamwell in Weir v. Bell, sup., in a passage which, in its turn, is criticized by Lord Bkamwell iu the H. L., as stated in note (a), sup. This passage is ; " reliance has been placed upon some observations by Lord Beamwell, expressed in his usual striking manner, and certainly I am very unwilling to enter into discussion with so great a master of language as Lord Beamwell. But I must venture to express my opmion that this expression ' legal fraud,' which has been in constant use by judges for very many years, is, to say the least, an exceedingly con- venient expression ; that is to say, it is an expression which very clearly conveys an idea, which is the object of language, and it appears to mean this : that degree of moral culpability in the statement of an untruth to induce another to alter his position, to ^^•hich the law attaches responsibility. . . . The word ' fraud ' is, in common parlance, reserved for actions of great turpitude, but the law apphes it to lesser breaches of moral duty." {d) See the passage cited m the last note. §§ 457-459. 391 were to bo defined as a temperature of so many degrees Fahrenheit, a temperature which by most people would be considered only luke--«arm or tepid, or " legal cold " as a temperature which by oi-dinary persons would be considered to con- stitute heat, or suppose " bght " and " dark " to be defined by Act of Parliament (as indeed it has been, in statutes requiring lamps of vehicles to lie lighted at certain hours), there -s^-ould be nothing ridiculous in describing the statutory teniTierature as " legal heat " or " legal cold," respectively, or the statutory limits as defining " legal h'ght," and everything ridiculous in describing it otherwise. Again, if equity in fact, however unnecessarily, has chosen to call the mere breach of a duty of disclosure, or a mere innocent misrepresentation (for purposes of re- scission), "a fraud in the eye of this court " (e), it is almost perverse to assert, as Lord EsHEE does(/), that "equitable fraud" is the same as "legal fraud," or that there is no necessity for distinguishing them. No doubt, fraud ought to mean in equity what it means in la^v, and, in both, -what it means to men of the world ; and, if this were so, there would be no necessity for the distinction. But when it is said that this identity of meaning exists, and has always existed in fact, it is impossible to argue against such a proposition ; one can only deny it simpliciter, and appeal to the history of our law, and to the common sense and knowledge of mankind, in support of that deiual. 459. The fact, which cannot be gainsaid, is that there not only has been in times past, but is still, a real difl^erence between the fraud which is deemed such in law, and the fraud which is accounted such by the normal intelligence of mankind, and that the former, as apphed to misrepresentation (with which alone the present discussion is concerned), includes many statements which the plain man would deem, though reprehensible on other grounds, not fraudulent. It may bo seriously doubted whetherthe average man would designate as fraudulent a state- ment made without belief in its truth, but with no knowledge or belief in its falsity, which is undoubtedly fraudulent in law {(j). But it is certain that the plain man would never impute fraud to the personally blameless principal of a fraudulent agent, or to one who represents what is in fact false, but not known to him to be so, without any intention of injuring the representee, or any one else, or benefiting himself or his friend, or without any assignable motive whatever, as, for instance, a statement made as a " practical joke," or from mere diablerie and mischievous- ness, or, to take a hypothetical ease put by Lord Blackburn, with the motive of benefiting the representee. And yet all these types of misrepresentation are in law " fraudulent " (h). That there is this discrepancy between the artificial . nomenclature of the courts and the ordinary sense of the community was re- cognized not only by Sir .L Hannbit, who was a party to the decision of Derry v. Peek in the Court of Appeal (i), but oven by Lord HEBScnELL in the House of Lords when reversing that decision {I). The discrepancy is also reflected (c) See note (z), sup. ( / ) See note (6), sup. Ig) See Ch. V, Sect. 1, Sub-s. (2), ante. Surely it is questionable whether the average member pf society would subscribe to the uncompromising statement of Lord Bramwell at p. 350 of Derry v. Peek, sup., that " a man who makes a state- ment Avithout care or regard for its truth or falsity commits a fraud : he is a rogue " ; or that of Lord Esheb, M.R., who did " not hesitate to say that a man who thus acts must have a wicked mind " ; or that of Bowbn, L. J., who said that such " ^^^cked in- difference " constitutes " the fraud " as much as " the knowledge of the falsehood " would (at pp. 498, and 501, respectively, of Le Lievre v. Gould, sup.) ; and whether he would not rather consider it a case of that " careless handling of the truth," which the costermonger, with such discrimination and courtcK3-, imxmtcd to the constable whom he declined to charge with perjury. (h) See Ch. VIII, Sect. 1, Sub-s. (4), ante, as to the fraud imputed to the principal, and Ch. V, Sect. 1, Sub-s. (3), § 102, nnte, and the throe cases cited in notes [1), (m), and (w) thereto, as to the other examples. (i) See note (c), sup. (k) At p. 365 of Derry v. Peek, sup. : " the popular use of the word perhaps involves generally the conception of such a motive as one of its elements," the motive referred 392 APPENDIX A, SECT. 4; SECT. 5, SUB-SECT. (1). in the deliverances of juries, who by their answers to questions put to them, when the questions gave them any opportunity, or by the riders appended to their verdicts, have, from time to time, expressed (impliedly, but all the more significantly on that account) their repugnance to accept the judicial definition of fraud, whilst at the same time manifesting their readiness to act upon the judicial enunciation of the limits of civil responsibihty IJ). Further, the judges, and amongst them Lord Bbamwell himself {m), have lost no opportunity of contrasting and distinguishing frauds created by the legislature, where there may be no actual dishonesty, from other frauds, and have expressed in no doubtful language their extreme aversion to the task imposed upon them by Parliament of giving effect to these "statutory fictions," and have refused to do so without at the same time emphasizing the vital importance of making the distinction clear (n). Then why, it may be asked, if statutory fictions of to being " a desire to defraud or injure the person to whom the representation was made," or at least a motive of either " gala to the person making the assertion," or " injury to the person to whom it is made." Lord Hekschbll's conclusion, at p. 374, — "if fraud be proved, the motive of the person guilty of it is immaterial," — must seem an astounding contradiction in terms to any one not accustomed to use " fraud " in a wholly unnatural sense. (1) Thus, in Foster v. Charles, No. 2 (1830), 7 Bing. 105, the jury appended the following rider to their verdict : " we consider that there was no actual fraud on the part of the defendant, and that he had no fraudulent intention, although what he has done constituted a fraud in the legal acceptation of the term " ; in Brown v. Edgington (1841), 2 M. & G. 279, the jury "returned their verdict for the plaintiff . . . but negatived any ' guilty knowledge ' (as they termed it) on the part of the defendant " (p. 283) ; in Taylor v. AsUon (1843), 11 M. & W. 401, the jury adopted the converse course of finding for the defendants, but adding that " they had been guilty of gross and unpardonable negligence in publishing the report " ; in Milne v. Marwood (1855), 15 C. B. 778, the jury, in finding for the plaintiff, made haste to add (p. 780) : " but we acquit the defendant of any fraudulent intention " ; in Ludgater V. Love (1881), 44 L. T. 694, the verdict was that " the son knew that the sheep had rot, but there was not enough evidence to say it was fraudulently done," which of course was held to be a finding of " fraud in law," though the jury did not consider it moral, or actual, fraud ; and in Joel v. Laio Union and Oroiim Insurance Co., [1908] 2 K. B. 863, C. A., the jury, in answer to a question, whether the deceased had fraudulently concealed a certain fact from the defendants, found that " she foolishly, but not fraudulently concealed this fact," which answer, whatever it meani; — and the C. A. considered it to be so ambiguous as to justify an order for a new trial — at least implied » strong probability that the jury hesitated to regard as fraud that which they were conscious that the law did so regard. (m) See the next note. (m) Mellish, Q.C. — afterwards Mellish, L.J. — in his argument at pp. 608, 609 of JRe Overend, Gurney, dk Co., Ex parte Cakes and Peek (1867), L. R. 3 Eq. 576, says truly that " there are certain statutes . . . which make things fraudulent which may be most innocent things in the eyes of the world. As, for instance, under the statute of Ehzabeth agamst fraudulent conveyances, a man may have made a conveyance without consideration, and yet under that statute it would be held to be fraudulent against a subsequent convej'ance for value ... It is a misfortune that the word ' fraud ' has ever been applied to transactions which do not involve any moral fraud at all." It is curious that this was the very case which is supposed to have occasioned the introduction of sect. 38 of the Companies Act, 1867, a few months later in the same year, — the enactment (now happily repealed) which affords the most glaring example of the " misfortune " alluded to in the above argument, and which, had it been in force at the time, would have added emphasis to the observations there made. This section has been condemned more than once for the odious compulsion it put upon the interpreters of the law to " deem fraudulent " an omission from a prospectus which might have been perfectly innocent. The judicial attitude towards this and all other statute-made frauds, which are even more repulsive than judge- made frauds, is expressed with admirable force and lucidity by Vatjghan Williams, L.J., at p. 471 of Cackett v. Keswick, [1902] 2 Ch. 456, C. A. " I thmk," he there says, " that the 38th section, Avhich m effect provides that a man . . . shall although acting honestly be deemed fraudulent, is a section which no judge can give effect to, not only mthout a feeling of repugnance, but mthout a feeling that that which he is §§ 459-461. 393 fraud are properly distinguished from actual fraud, is criticism of an adverse, and even contemptuous, character passed upon those who, with no less propriety, have discriminated between judicial fictions of fraud, and actual fraud ? Why is this " divorce between the tongue and the heart " (o) to be condemned in the one case and ignored in the other ? Sect. 5. Criticism of the Existing Law of Misrepresentation. 460. There is very little, either in the form or the substance of the English law of misrepresentation, which one would desire to see amended, with two e:!tceptions, upon which it is proposed now to oifer some observations. The first raises a question of terminology ; the second, a question of principle. The former, however (as will be seen, and as, indeed, has already been illustrated in some degree) incidentall}', and in its consequences, is of quite as much importance as the latter. Suh-sect. (1). Terminology. InutilUii and Inconvenience of llie Term " Fraiid " as applied to Actionable Misrepresentation. 461. " All human Spirit and Reason does yet what Father Adam began hfo by doing ; strive to name the new Things it sees of Nature's producing, — often helplessly enough " { 71). The importance of terminology in any department of knowledge which ranks as a science, above all in such a science as jurispru- dence (q), one would suppose to be manifest. And yet, in nearly every branch of doing does not really tend to the maintenance of commercial honesty and commercia morahty. To herd together, under a collective word like ' fraudulent,' people who are honest and people who are dishonest, to my mind, cannot possibly tend to the maintenance of commercial morality." And, in the same case, Farwbll, J., in the court below, had (at p. 463) observed that " the Act not only makes non-disclosure a cause of action, but makes it a cause of action based on fraud not proved to exist, but deemed to exist as a statutory fiction for the purpose of supporting the action." Cp., on the " painful duty " thrust upon the court by this enactment, the observations of Cozens-Haedy, L.J., at pp. 628, 629, and Romer, L.J., at p. 624 of Broome v. Speah, [1903] 1 Ch. 586, C. A., which are concurred in and adopted by Lord Hals- Bimy, L.C., at p. 345, and Lord Lindley at p. 346, of the same case, on appeal to the House of Lords, sub nom. Shepheard v. Broome, [1904] A. C. 342, H. L. Another enactment of the same description, which provoked the like criticism was that which is set out in § 399, sup., — sect. 35 of the Stannaries Act, 1869 — providing that a transfer of shares to certain persons, and under certain conditions, " shall be presumed to be a fraudulent transfer," with reference to which Bramwbll, L.J., at pp. 19, 20 of Be Wheal Unity Wood Mining Co. (1880), 15 C. D. 13, C. A., was moved to " say in passing that this is a most unfortunate expression, because it is quite certain that a transaction within the meaning of the clause may be a perfectly bond fide and honest one ; for instance, a, man may think he is making a handsome present of a share to a servant, nevertheless it is to be deemed a fraudulent transaction." It is to be noted that the above criticism is wholly inapplicable to two classes of enactment in which the word "fraud " is used : (1) where the term is applied to that which is already fraudulent at common law, as in sect. 58 of the Sale of Goods Act, 1893, and in the bankruptcy statutes relating to fraudulent preference, and, perhaps, the statutes of Elizabeth against fraudulent conveyances, and (2) where there is no " deeming " or "presuming," but certain consequences are made to attach to representations or acts described as fraudulent, or " in fraud of " a person's " rights," etc., in M'hich cases "fraud" is construed to include no more than what, strictissimo sensu, it would include at common law: see Be Avery's Patent (1887), 36 C. D. 307, 0. A., per Stielinc, J., at p. 319, and Bowen, L.J., at p. 325 (" it would be monstrous to apply the same reasoning " — sc. the equitable reasoning as to the liability of an agent to his principal for non-disclosure, however innocent his motives — " to the clear words of the statute ") ; and Be Balston's Patent (1909), 100 L. T. 386 (\A'ARMNaT0N, J.). (0) The expression of Roger Asoham in a passage cited in § 461, inf. (p) Carlyle's French Revolution, Book V, Ch. I. (}) See the citation from Phillips in § 466, inj. 394 APPENDIX A, SECT. 5, SUB-SECT. (1). English law, precision and luciditj' in nomenclature, as well as in classification and formal expression generally, has been either openly professed to be, or in practice treated as, a thing of no account, or, at any rate, of quite subsidiary interest. If it may be permitted to repeat here what the author has said in another connection (r), " it is an old fallacy, exposed again and again by accurate thinkers, but still flourishing like a green bay tree in the English mind, that things and thoughts are the realities, and that names do not matter. The truth is that terminology reacts on thought. Loose definitions encourage loose conceptions. Words, maxims, aphorisms, phrases, which are good servants, but bad master.=, have a tendency to dominate ideas, and, when once this perverted and unnatural sovereignty is established, there is danger of a Saturnalian orgy in which Mind, the Master, will wait upon Language, the Slave. It is true of scientific, as of artistic, naming that (pais tSiov rov vov to, kuAo. ovofi-ara, (Long. De Subl.). And equally true is it that, from this point of view, it is impossible to ignore the ' practical ' evils and perils of false terminology. The wise Roger Asoham warns his readers of these in his ' Soholcmaster.' ... ye know not what hurt ye do to learning, that care not for wordes, but for matter, and so make a devorse betifeen the tong and the hart,' which ' devorse,' he adds, ' in all ages, first in philosophies, and again in Religion,' has caused ' right judgment of all thing? to be perverted.' So Bacon {Nov. Org. lix) describes ' the Idols of the Marketplace ' as ' the most troublesome of all ; idols which have crept into the understanding through the alliance of words and names. For men believe that their reason governs words, but it is also true that words react upon the understanding ' ; and again (De Augm. Scient. Book V) he emphasizes this truth : ' the juggleries and charming of words will in many waj'S seduce and forcibly diiturb the judgment, and (after the manner of the Tartar bowmen) shoot back at the understanding from which they proceeded.' " 462. The violation of the first law of scientific terminologj', viz. that each term should express a distinct concept, and one only, and should always be used in one and the same sense, has been conspicuously violated in the judicial maltreat- ment of that unhappy expression ' ' fraud. ' ' No doubt the science of jurisprudence, since it involves an application of logic and ethics to the common affairs and daily transactions of life, is forced to draw largely upon the popular vocabulary for purpose of expression. It is also true that this course, in any science, has some conveniences, but it is always subject to far greater inconveniences and perils, the two principal of which, as pointed out by Dr. Whewell (s), are that the laxity of themdgare cloqiiium may infect the terminological apparatus of the science, and that vernacular expressions are usually tinged with sentiment, emotion, imagination, and other subtly pervading personal elements. Consequently, it is unwise in any science to father a current expression for the purposes of any proposition, if it is possible to state that proposition clearly and fully without resovirce to the expression at all. But, if the expression be adopted, it is before all things necessary that the position which it is to occupy in its adoptive home should be exactly defined, and afterwards strictly adhered to. Both these rules, or counsels of prudence, have been disregarded in the case of the word " fraud." 463. In the first place, it was from tlie outset wholly unnecessary to use the word at all for the purpose of the civil law of misrepresentation. The law has chosen to say that every misrepresentation which the representor did not in fact honestly believe to be true, is to be called " fraudulent," and, then, that a fraudu- lent misrepresentation is actionable. But what necessity was there for the introduction of this middle term at all ? " Whenever it is said," observes Professor Holmes (t), " that a certain thing is essential to liability, but it is (r) App. XXI, Sect. 2, of the author's Code of the Law of Actionable Defamation. In this department of the law the instances of loose and misleading terminology are much more numerous and grave than in the case of misrepresentation, or, indeed, any other branch of English la^v. (s) In his Novum Orgammi Benovatum, Book IV (" Of the Language of Science "). {t) The Cowjnon Law. Lecture IV (Fraud, Malice, and Intent), at p. 134. §§ 461-464. 395 conclusively presumed from something else, there is always ground for suspicion that the essential is to be found in that something, of ■\\ hat is said to be presumed." So it is mth fraud ; the essential thing is that the misrepresentation should have been made ^^-ithout a behef in its truth ; from this fact alone, if proved, the exist- ence of a fraudulent intent, whether there was such an intent or not, is instantly and irrebuttably presumed. What is this but to confess that the essential thing is the non-belief, and that " fraud " is a mere unnecessary label 1 One need not, however, resort to implied confessions ; there are judicial declarations in express terms to be found in abundance throughout the reports, beginning at a dale earlier even than Pasleij v. Freeman (u), that a good cause of action for damages would be disclosed by a declaration or statejiient of claim in which the "word " fraud " does not appear at all, provided that the " essential thing "^viz. the scienter (enlarged in modern times tooovcr non-belief of thetruth) — docs appear (:r). 464. Secondly, the use of this unfortunate expression lacks the positive, as well as the negative, merit of Shylock's " harmless necessary cat." It has proved as misleading in its history, as it Avas urmeccssary in its origin. Being a term, above all others, " tinged an ith sentiment," in WhewcH's phrapc, or a " question- begging name," in Bentham's, and suffused, as it is, with inevitable suggestions of moral reprobation and odium, " fraud," if applied at all to questions of civil responsibility for damage caused by misrepresentation, should at least have been confined, at whatever cost of involved qualifications in stating the necessary propositions of law, to its popular signification. And yet, as has been seen ( im- pute anything of the sort (a). In earher times, indeed, even lawyers undei stood "falsity " as the equivalent of deceit {b) ; and, in recent years, it has been seriously argued that an "untrue statement " means a statement which is believed to be untrue, or, in other words, which is fraudulent (c) ; M'hilst, conversely, an acute judge has in one and the same sentence used the word "untruth " in both senses in a hopelessly confusing manner (d). 470. For these reasons it is suggested that a good and sufficient definition of the generic term " misrepresentation " might be framed which -w ould exclude the word " false," just as that species of misrepre.sentation which is the subject (m) For example, " a false prophet," " false to his country, his flag, his ICing," etc. ; " a false -ivitness," etc. The two oppositcs arc combined in Shakespeare's, " to thine O'ivn self be true, And it must folloM', as the night the day. Thou canst not then be false to any man"; and in Tennyson's, "faith mitaithful kept him falsely true." So in Roman literature, faUios homo was a fallax homo : " ambitio multos mortalcs falsos fieri subegit " (Sallust, Critil. 10. 5) ; " Phalaris licet impcret lit sis Falsus, et admoto chctet perjuria tauro " (Juv.) ; and "testes aut casu vcri, aut malitia falsi fictiquc esse possunt " (Cic. De Div. 2. 11. 27). (x) The use in trade of weights, measures, scales, etc., :\'luch are descriiied as "false and unjust," is a criminal ofEencc under the AW'ights ami Measures Act, ISVy, ss. 25-27. C'p. the Lex Cornelia De Falsis (see Dig. 48. 10), and the French crime of " faux." {y) Sub voc. (z) It is a matter of doubt and difficulty, on ■which the Speaker is still occasionally called upon to rule, whether, and m what circumstances and contexts, the word " false " is parliamentary or unparliamentary. (a) See Ch. IV, Sect. 1, ante. (6) See Com. Dig. Deceipt, A. 8, where he includes "other falsili/," after enu- merating various examples, under the head of deceit. (c) In Drincqbier v. Wood, [1899] 1 Ch. 393, 0. A., this interpretation of " untrue statement " in the Directors' Liability Act, 1890, was contended for in argument. Needless to say, it did not prevail : but the C. A. considered it %vith urbane gra\'ily. (d) This was Lord Bbamwell, who, at p. 352 of Derry v. Peek (1889), 1-1 App. tjas. 337, H. L. says : " it is a man's duty sometimes to tell an untruth," from which statement one would suppose that an intentional untruth was meant, — one which, but for the existence of a conflicting and higher duty, such as to save life, or prevent a crime, would be immoral, as the same authority had stated at p. 930 of Gave v. Mills (1862), 7 H. & N. 913. But he immediately proceeds to show that, after all, he is using the term in the other sense. " For example," he adds, when asked as to a servant's character, he must say ■\\hat he believes is the truth, however ho may have formed his opinion and however wrong it may be." This, from one A\hom Sir J. Hannen described as " a great master of language,'' does not seem to exhibit such mastery at its best. 400 APPENDIX A, SECT. 5, SUB-SECT. (2). of an action for damages might in like manner be defined without resort to the word " fraudulent " (e). Suh-sect. (2). Criticism of the Bvhstance of the Law of Misrepresentation. 471. Excellent as are the substantive principles of the Enghsh law of mis- representation as a whole, it is perhaps permissible to criticize, as defective and somewhat illogical, two rules obtaining in this department, one a rule of the common law, and the other statutory. 4'72. The common law rule to which exception is taken, on the ground of irra- tionality, is that which prescribes that, though rescission may be granted for any misrepresentation, whether innocent or fraudulent, no action mil lie for damages unless fraud is established ( / ). It is difficult to discover any good reason, theoretical or practical, for this distinction. The theory and basis of civil relief is, ordinarily, though there are certain recognized exceptions (g), compensation to the party injured, — reparatio damni, — not punishment of the wrongdoer {h), whether by way of preventive or retaliatory justice, or penance in salutem animce, or public odium and reprobation, which may be left to the criminal courts, the Church, the forxim conscieniice, or the moral sense of the community, as the case may be. In this province, the function of justice is, as Aristotle expresses it, SiopBicTiKov (i) ; it aims at redressing, so far only as material interests are concerned, a balance which has been disturbed by, in its literal sense, iniquity. For this purpose it is immaterial whether the balance has been unduly weighted by craft or by accident ; the object being, in the language of Demosthenes, cited in the first title of the Digest (dealing "with the fundamental prin- ciples of jurisprudence), ^TravopQoi^a. twv kKovaiuiv naX aKOVffiav afJ-apTTj/xdrcov (&). Whether regard is had to this compensatory or restitutive nature of the rehef granted by a civil court, or to the material interests of the person to whom the relief is to be granted, it is, from either point of view, wholly immaterial whether a misrepresentation was dishonest or honest. Rescission is one way of redressing tl\e balance ; compensation in money is another, and a less complete and satis- factory one. Both remedies are alike designed to put back the parties in statu qiio, — specifically and exactly, in the one case ; generally, and so far as money can do it, in the other. If an innocent misrepresentation entitles the representee to rescission, or the undoing of the past, which is the ideal remedy, why should it not a fortiori entitle him, at his option, to the less satisfactory and perfect remedy of recompensing him for the past ? It is not as if a greater measure of damages were awarded for a fraudulent misrepresentation inducing a contract, than for an ordinary breach of contract ; if this were so, there might be some force in the contention that there should be a corresponding distinction between fraudulent and innocent misrepresentation ; but any such theory, as has been pointed out already (I), is unsupported by authority. Whether the cause of action be a wicked falsehood, or a mere breach of contract, if any damage at all be proved to have resulted, the quantum of that damage is assessed on precisely (e) As thus : " misrepresentation is a representation which, when made, was not in substantial accordance mth the material facts to which it related. Any misrepre- sentation which, when made, was not honestly believed to be in such accordance is the subject of an action for damages." It need hardly be said that the author has not considered the time ripe for the introduction of such an innovation into his suggested Code. (/) See Ch. IX, Sects. 1, 2, and Ch. X, Sect. 1, ante. (g) E.g. malice in defamation, assault, malicious prosecution, etc. (h) See Bacon's Maxims of the Law, Reg. VI : " our law, when the injury is already executed and inflicted, thinketh it best satisfaction to the party grieved to reUeve him in damages, and to give him rather profit than revenge." (i) Ethics, ii. 113. {k) Dig. 1. 3. 2, which is founded on Marcianus, who, m his Instit. Lib. I, cites the passage from Demosthenes. {I) Sec § 238 m Ch. X, Sect. 3, ante. §§ 470-475. 401 the same basis (m) ; and, this being so, it is impossible to see why the victim of an innocent untruth should not be entitled to compensation, since he can get no greater damages than he would clearly be entitled to if the action were for a mere breach of warranty or contract. 473. Further, from the point of view of the representee, the injury to him is exactly the same, whatever the motive of the representor was. Why, there- fore, is his remedy to be less extensive ? " Neque enim interest emptoris," say the Roman jurists in reference to contracts of sale, " cur fallatur, ignorant! venditoris, au calliditate " (n). 474. The second reform which may be suggested in relation to the law of misrepresentation has reference to statutory provisions. The effect of the Directors' Liability Act, 1890, as now reproduced, with slight modifications, in sect. 84 of the Companies (Consolidation) Act, 1908, has been considered in an earlier Chapter (o). This enactment, quite apart from its numerous defects in detail, and its looseness of expression ( p), has seemed to many of those best qualified to speak on the subject {q), objectionable in principle. Indeed, a perusal of its contents, and the history of its introduction, and afterwards of its judicial interpretation, provoke the suggestion that either it ought never to have been passed at all, or that the legislature should have made it of general, and not limited application. 475. The Act of 1890 is a privilegium in the original sense oP the word, that is, a statute directed against a particular individual or class (r), as well as uprnilefiivm in the later sense of an Act conferring special favours on a particular individual or class. In respect of untrue statements in prospectuses of companies, it is a " privilege " in favour of the class of representees who take shares in such com- panies, and a " privilege " against the class of directors, and others who issue, or are by the statute deemed to have issued, the prospectus. In either sense of the term, such privilegia are odioiis, and require the strongest possible grounds to justify them (s). In the case of the Directors' Liability Act, 1 890, there seems to be a " plentiful lack " of reasons for its introduction. Like all enactments passed ad hoc in a state of panic, to meet a sudden situation, or to serve as a sop to a popular (and, nearly always, irrational) clamour, this statute not only was of doubtful justice and policy in its origin and object, but was so framed as to defeat the purposes which the legislature had in view. The like unfavourable conditions attended the birth and subsequent career of the notorious sect. 38 of the Companies Act, 1867 (t), and of the Moneylenders Act, 1900 (u), and brought about, in the one case, extinction (x), and, in the other, a series of judicial (m) Viz. that stated in §§ 228-237, ante. (n) Dig. 21. 1. 1. 1. (o) Oh. XIII, Sect. 1, ante. ip) Ibid. See, particularly, §§ 354, 357, 359, 361, 363, 375, 381, 382. iq) See Lord Lindley's observations on the enactment in his treatise on Com- panies. (r) The XII Tables (Tab. 9) prohibited privilegia in this sense of the word, privilegia ne irroganto ; see Cic. Leg. Ill, 19: "m privos homines leges ferri noluerunt : id est enim privilegium : quo quid est injustius 1 quum legis haec vis est ut sit scitum et jussum in omnes." (s) As, for instance, a burden cast by the State on public occupations such as that of an innkeeper, in exchange for which a special lien is justly conferred ; or a service rendered to the State, as e.g. by an author, who is properly given a limited monopoly as recompense. (t) " The occasion of this Act must be remembered, viz. the omission from a prospectus of a company of a contract in the Ovcrend and Gumey case which burdened the company " : per Bbamwell, L.J., at p. 499 of Twycross v. Grant, No. 1 (1877), 2 C. P. D. 469, C. A. (u) This was the outcome of Gordon v. Street, [1899] 2 Q. B. 641, C. A. (a;) Repealed by the Companies (Consolidation) Act, 1908, s. 286, and Sixth Schedule. B.M. 2 D 402 APPENDIX A, SECT. 5, SUB-SECT. (2). criticisms, "painful and frequent and free," which, if ridicule can kill, have resulted in at least semi-annihilation (y). 476. Dirry v. Peelc(z) was the father of the statute in question. The decision of the House of Lords in that case that a misrepresentation honestly believed to be true, though without any reasonable grounds for such belief, is not the subject of an action for damages, came as a shock to the moral sense of the com- munity, and even fluttered the dovecotes of some exponents of the law. Now it was quite natural and proper that an amendment of the rule of law should be demanded ; but, more suo, the popular critics, instead of attacking the principle, attacked the class of persons in whose favour the objectionable principle had been applied, and insisted that against them, and them only, the legislature should intervene ; in other words, they clamoured for a privUegmm, quo quid est injvs- tius ? (a). The consequence is that, instead of a measure being placed upon the statute book which would substitute a full and complete rule for a defective one, to be universally applied, — which was obviously the suggestion intended to be made by Lord Hbrschell in a significant passage of his judgment in the case cited (6), — -just such a piece of class or " exceptional " legislation as Lord BR.4MWELL in the same case deprecated (c), was introduced, marking down as objects of special suspicion and treatment a particular body of men, and a par- ticular kind of misrepresentation, for no other reason than that they had happened to be the subjects of the decision which provoked the discussion. 4-77. The above observations on the two rules — common law and statutory respectively — governing the existing law of misrepresentation, in their combined effect, lead to the suggestions that the common law rule should be altered by making mere misrepresentation, as such, the subject of a primti facie right to relief, whether by way of damages or rescission : and that this •prima facie title to relief should, in both cases, be made defeasible on proof, and only on proof, by the representor, whoever he may be, that at all material dates he believed in fact, and on reasonable grounds, that the misrepresentation was true. (y) See amongst other decisions, Whiteman v. Sadler, [1910] A. C. 514, H. L. (z) (1889), 14 App. Gas. 337, H. L. (a) See note (r), sup. (6) At p. 376 of Derry v. Peek, sup. : " I think there is much to be said for the view that this moral duty ought to some extent to be converted into a legal obligation. ... If it is to be done, the legislature must intervene, and expressly give a right of action in respect of such a breach of duty." Not a word here to suggest that the right of action should be given against a class. (c) Ibid., at p. 352 : " the objection is to exceptional legislation, and the danger of driving respectable and responsible men from being promoters, and of substituting for tliem those who are neither." §§ 475-479. 403 APPENDIX B. COMPARISON BETWEEN ENGLISH JURIDICAL AND ETHICAL TREATMENT OP MISREPRESENTATION AND FRAUD. 478. In this Appendix it is proposed to consider the English law of misrepresenta- tion in relation to, and in contrast with, (1) the current views and practices of the community, and (2) the ideals and teaching of philosophical and theological casiiistry. Sect. 1. English Law of Misrepeesbntatton consideeed in relation to cuekent moeauty and ccstom. 479. Tlie English common law (in the sense of ler non scripta) defers to, and is built upon, and indeed, as the word " common " imports, is in a sense the custom of the community (a). For this reason, English judges have in times past expressed a passionate attachment to and admiration of the common law of the land, and a corresponding distrust and disparagement of its lex scripta (h) ; though it was occasionally thought decent to pay a purely formal deference to statutory law in the form of such grotesque theories as that of Wilmot, C.J., that " common law is nothing but statutes worn out by time ; all our law," in his view (quite contrary to history) " beginning by consent of the legislature," and " whether it is law by usage or writing," he adds, " it is the same thing." He concludes, however, " I am not tor giving any preference to either, but, if to either, I should be fcr giving it to the common law " (c). Custom, in all ages and countries, has not only regulated the business of life, but has determined the subsidiary and derivative rules of ethics (d), and constituted at least one of (a) Among the origines juris, mos et consuetudo are mentioned in Dig. 1. 3. 32 : " inveterata consuetudo pro lege non immerito custoditur, et hoc est jus quod dicitur moribus constitutum." All law being founded on consent, it matters not, whether that consent be expressed in written law, or rebus ipsis et facto. Consequently, law is unmade by desuetudo as effectually as it is made by consuetudo : " quare rectissime etiam illud acceptum est ut non solum suffragio legislatoris, sed etiam consensu per desuetudinem abrogentur" (Ibid.). (b) Maleverer v. Eedshaw (1670), 1 Mod. 35, where Twisden, J., at p. 36, says : " I have heard Lord Hobart say . . . that . . . the statute is like a tyrant . . . but the common law is like a nursing father." Exactly the same Contrast between a statutory prescription (kotb ripavvov Ka) SeffTrdrrii' rd^avra koI airdX-^aavTo) and a general principle of law (iv TtaTp6s tc koX ftrirphs a'X'llfJ-'"), is drawn by Plato, Legg. IX, 859, and Polit. IV, 722, 723. The view of Twisden, J., is cited with approval by the court {per Wilmot, C.J.), in Collins v. Blantern (1766), 2 WUs. 341. So it is said of Coke that, whenever a friend, over a game of bowls, told him that he had a question of law to propound, he asked whether it was a point of common, or of statute law ; adding, that, in the former case, he should be ashamed if he could not answer it, — in the latter, he should be ashamed if he could. (c) Collins V. Blantern, sup. (d) Not the primary, immutable, and elementary principles, which are antecedent to all experience, and unaffected by social conventions, as Kant, in his doctrine of the 404 APPENDIX B, SECT. 1. the foundations of jurisprudence. Originally, indeed, as the etymology of " manners " and " mores " (e) indicates, custom and morality were regarded as practically indistinguishable from one another, and also, as is imported in the various senses of the word vS/xos ( / ), from law. 480. Custom, then, being, whether for good or evil (g), " the principal Magistrate of Man's life (h), or, as Pascal puts it, une seconde nature (i), it follows that jurisprudence must mould, and undoubtedly English law within certain limits has moulded, its rules, and from time to time varied them, go as to give effect to the usages and requirements of contemporary society. What are these limits, beyond which the law refuses its conformity to current customs and practices ? The answer is,' — the " certi fines Quos ultra citraque nequit consistere rectum. " In all those concerns of daily life wh ere society has adopted conventions and rules of conduct which, however irrational or useless, in no way conflict with the elementary principles of morality, the law has been content to follow Custom. Here even error facitjvs, if it be a case of error ; for, where no principle is involved, it is better that law should enforce the tacit conditions, however foohsh they may appear, subject to which mercantile transactions may be deemed to take place, than that it should introduce confusion by refusing to recognize them. To this extent, as " homo est minister et interpres naturse," in the Baconian formula, so " jus est minister et interpres consuetudinis " ; and Justice, by waiting on Custom, wins acceptance and confidence from those "\vith whom the custom originated. But where usage rebels against the primary rules of right and wrong, the common law has always set its face sternly and unflinchingly against it, however violently the trading community may resent this attitude, and however closely and im- penetrably the " damned custom " may have " brassed " the public conscience " so. That it be proof and bulwark against sense." In such cases to apply the principle of non nisi •parcndo vincUur, justly applied to innocuous practices, would be an act of the basest treason ; for Custom here is no longer the subject whose lawful wishes are to be respected, but the insurgent, whose pernicious attempts are to be frustrated and suppressed, and with whom no terms can be made. 481. It is a commonplace, both of ethical and of juridical philosophy, that fraud is manifold, and rectitude single (h) ; and that, whether as a consequence Categorical Imperative, has most clearly established. These are the v6ii.oi v^'mohes ovpaviav 5i* alB^pa. reKywdeyT^s, wv "'OKv/nros "^rar^p fi6vos, ovSe viv Oyarot. tj)i/{ns avepaiv (TiKTfv, ouSe firfTTOTc xdBa. KaTaKot/xia-it, the subject of the famous chorus in the Anti- gone (865, et seq.), and again (455, 456), ov yip n vvv ye /caxfles, a\X' aei irore (ij Tavra, KoiiSets oTSey 6^ '6tou ipdyTj, — of which, in Platonic phrase, the eternal irapaStiyiia a.vdK€nai iv ovpav^ (Plat. Hep.). (e) " Manners," in old English, meant " morals " (as in the motto of William of Wykeham's " twins of learning," — " manners makyth man "). So " mores," — the root- word of morality, — meant originally nothing but customs, ways, practices : and " mos " at all times meant no more. See the citation from the Digest in note (a), sup. if) This term has in all periods of Greek literature borne these three senses— viz. (1) custom ; (2) a moral law, whether built on custom, or independent of it, and superior to it, such as the uifiTrdSej v6/ioi referred to by Sophocles, as cited in note (d) sup. ; and (3) a statute, decree, or ordinance. (g) Por good, on the whole, as most people believe ; for ill, in the view of those who think with J. S. Mill (On Liberty, Oh. Ill) that " the despotism of custom is everywhere the standing hindrance to human advancement." (A) Bacon— Essay XXXIX ("Of Custom and Education"). (t) " Qu'est ce que la nature ? Peut-etre une premiere coutume, comma la coutume est une seconde nature " (Pemges, Art. Ill, § 13). So Greek philosophers, poets, and historians were never tired of extolling the paramountcy of custom in morals, and in social life. Pindar's v6p.oi i iravTav $acn\€vs, iva-rSiv t€ kh! aBat'drav (Fragm.) is cited with approval by Herodotus (III, 18, who again in VII, 104, speaks of the ieiriro-ri\s viiios), and by Plato, Oorgias, 484 B. (h) The Platonic contrast was between the simphcity, unity, and therefore divinity, of the elSos or archetype, and the diversity, and therefore the evU, of the §§ 479-482. 405 of this essential distinction, or as a simple matter of history, there has been a constant growth and development in the variety of shapes and disguises behind which dishonesty may seek to hide itself, pari pasi%t, with the grow- ing complexity of social and business transactions and the continual invention of new trades and devices (I). " Deceit is a very extensive head of the law," said BuLLER, J., in an early and famous case [m). Its multiformity has again and again been insisted upon by judges, and was even given as a reason by Lord Langdale, M.R. — though it is a very insufficient one (n) — for the supposed fact, which, however, is not a fact (o), that " nobody has been able to define what fraud is " ( p). At a much more recent date, it has been observed by Lord Macnaghten that " fraud is infinite in variety ; sometimes it is unblushing ; sometimes it pays a sort of homage to virtue, and then it is modest and retiring ; it would be honesty itself if it could only afford it" [q). The genera, species, and s\ib-speoies of misrepresentation are legion. In the motives which actuate the representor, in the modes and forms in which it may be conveyed {r), in the amount and kind of departure from the truth, — by plain perversion, by equivoca- tion, by " economy," as the case may be, — the Lie, whether in the sixth or seventh degree of Touchstone's philosophy is), is Protean. To say that "age cannot wither it. Nor custom stale its infinite variety," is to say much too little. Age propagates it, and multiphes its progeny, and custom gives ever new scope and vitality to its infinite variety. 482. The consequence of this growth in the complexity of fraud has been a corresponding increase in the complexity of the problems with which the law has been confronted. It is true that, as Buckle has observed, the main principles of morality have remained fairly constant in the history of civilization (t) ; but manifold. Aristotle puts the matter in a more homely and practical fashion, when he insists that there is only one way of hitting the bull's eye, but many of missing it : rh fj.hi> yap afiaprdt^etif TroWax^s 4(rTi, rh 5e Karopdovy /xoifax^s, and he adopts the popular view, expressed in a proverbial form in the verse cited by him, — ia-dKol /xhy yap awXas, iravToSaTriis Si KaKol. And all language points in this direction, emphasizing, as it does, the contrast betA\'ccn the one straight line, or the one mark, and the manifold departures from this one line, or misses of this one mark: cp. the expressions "rectus," " 6pB6s," " straight," " square," " direct," " correct," " simple," " simplex," etc., on the one side, with "pravus," "crooked," "tortuous," "oblique," "indirect," "o/uaprijfia," " double," " duplicity," etc., on the other. {I) Thus the various frauds connected mth companies, trusts, rigging of markets, auction sales, outside brokers, furniture dealers, etc., have been of gradual growth. Every new business, in opening up an avenue for honest enterprise, has at the same time proved a nursing ground for new " trade tricks " of its own. (m) At p. 56 of Pasley v. Freeman (1789), 3 Term. Rep. 51. (n) Because to define fraud in general terms is not precluded by the multiplicity of matters to which the term so defined may be applicable. (o) The Roman jurists defined dolus, though necessarily and properly, in terms of the utmost generality, as either simulation or dissimulation for the purpose of misleading another person : see § 504 in App. C, Sect. 1, post. ip) At p. 303 of Franks v. Weaver (1847), 10 IJeav. 197. The true view is expressed by Dr. Story {Equity Jurispr., vol. i, § 412), where he points out that fraud, lilce accident and mistake, by reason of its " infinite variety in form, character, and cir- cumstances, is incapable of being adjusted," — ^that is, applied, — " by any single and uniform rule. Of each of them, one might say, mille trahit varios adverse sole colores." This statement recognizes, by implication, that the condition of adverso sole or " against the light " may be defined, without limiting judicial discretion in its applica- tion of the definition to the particular colours which the turn of the kaleidoscope may in the individual case disclose. (?) At p. 221 of Beddaway v. Banham, [1896] A. C. 199, H. L. With reference to the last sentence of the passage cited, the theory would have appealed to the ingenuous American merchant who " had tried both " ivith greater force in an inverted form, viz. that honesty would be fraud itself if it could only afford it. (r) See Chapters III, IV, and V, ante. («) As You Like It, Act V, Sc. 4. (t) In the Uterature of all countries and ages the primary rules of ethics, in reference 406 APPENDIX B, SECT. 1. this proposition in no way conflicts with the equally true one that the science of casuistry, or the application of these simple principles to particular oases has become more and more difficult, in proportion as the cases them- selves have multiplied, together with those "divided duties" which are the inevitable outcome of a more complicated state of society. In primitive times, the questions addressed to jurisprudence and ethics admitted of a prompt and plain answer, because the matters of fact to which the ethical rules were to be applied were as simple and direct as the rules themselves, and there was little or no conflict between juridical and popular sentiment. But when, in the course of time, the problems submitted for decision became less easy oi solution, because the same simple principles had to be applied to highly complex facts, and when these problems began to far exceed in number those of the old type, and the mercantile community set itself to introduce and encourage dubious practices, and, after a decent interval, clamoured for their recognition by the law as customs, merely because they were customs,— the courts of the land stood at the parting of the ways, and were faced with a clear duty, which, unmoved by the civium ardor prava jubentinm, they discharged with unbending constancy. Thus began, in reference to commercial customs opposed to plain principles of honesty, a contest between the uncompromising inflexibility which comports with the high office of judicature, and the pliant casuistry demanded by mercantile interest. This warfare, in one form or another, has been waged ever since, and is not even now by any means extinct. For the moral fibre once relaxed, never regains its tone " nee vera virtus, cum semel excidit, Curat reponi deterioribus," so long as the convenient "justification by custom " remains an article of commercial faith, and the individual trader's conscience is stupefied and debauched, and made to assume baser shapes, by these Circean enchantments. 483. As early as the time of Lord Mansfield, and probably much earher, merchants began to sohcit the courts to incorporate their knaveries into the com- mon laAV on the ground that they had been consecrated by usage. The solicita- tions were vain. The law, which is " founded on the reason and custom of generations " (w), and not on custom alone, devoid of reason or right, " rejecit alto [jussa] nooentium vultu, et per obstantes oatervas exphcuit sua victor arma." Dishonest practices and dubious customs in the matter of auction sales (x), " rigging the market " (if), insurance («), secret commissions (a), and misrepre- to veracity, are expressed in much the same terms : cp. Homer (whom Justinian, in one of the epistolm prefixed to the Digest, commends as patrem orrniis virtutis), II. ix, 309 sqq.— fl Trep St/ (ppoyto: Te, Kai ^s TereXeo-fieuoy siTTai iX^P^^ 7«P f^oL Ki'ivos djjLUis 'AiSao irvXriffiv OS X eVepov fiey K€u9r} iA oT4pois, irp^Tepov S' 4v To7s yfieuSefftv {Sep. II, 377). This is what Cardinal Newman calls " representative truth," and illustrates at pp. 343-347 of his Apologia. See § 489, sup. {y) Against a question which the interrogator has no right to ask. Bacon acutely observes that a downright lie, and not either silence or equivocation, is the only possible protection avaOable : " Dissimulation . . . followeth many times upon Secrecy, by a necessity : So that he that will be Secret, must be a Dissembler, in some degree. For Men are too cunning, to suffer a man to keep an indifferent carriage between both, and to be Secret, without Swaying the Balance, on either side. They will so beset a man with Questions, and draw him on, and pick it out of him, that, without an absurd Silence, he must show an Inclination one way : Or if he do not, they will gather as much hy his Silence, as hy his Speech. As for Equivocations, or Oraculous Speeches, they cannot hold out long. So that no man can be secret, except he give himself a little Scope of Dissimulation ; which is, as it were, but the Sliirts, or Train, of Secrecy " (Essay VI : " Of Simulation and Dissimulation"). As to mendacious contradictions of authorship, as in the well-kno%vn case of Sir Walter Scott, see Newman's Apol., p. 351, and (as to professional secrets) pp. 361, 362. With regard to the former. Cardinal §§ 494, 495. 417 495. On the other hand, since ethical casuistry regards mainly the motive of the representor, whereas law looks principally to the effect upon the repre- sentee (2), it must necessarily be the case that many questions of vital import to morality are wholly outside the domain of jurisprudence, or, at least, of civil jurisprudence. " It is not every moral and social duty the neglect of which is the ground of an action. For there are some which are called in the civil law duties of imperfect obligations, for the enforcing of which no action lies." The officia virtutis which Lord Kenyon, C.J., in the above passage (a), and, a century later, the House of Lords (6), described or treated as duties of imperfect obhgation, are, from the point of view of some moralists, such as Kant (c), duties of perfect obligation, whilst the officia juris which the law regards as of perfect obligation, are, in an ethical aspect, since their sanction is not purely moral, of imperfect obligation. Nothing could more significantly illustrate the distinction between the attitude of the casuist and the attitude of the lawyer towards all such questions of conduct as are the common subject of both systems, including questions of veracity and good faith ; as to which, after enunciating the equitable principles apphcable. Dr. .Story observes : ' ' the principles of natural justice and social morals do, indeed, go further ; and require the most scrupulous good faith, candour, and truth in all deahngs whatever. Put courts of justice generally find themselves compelled to assign limits to the exercise of their jurisdiction, far short of the principles deducible ex cBquo el bono, and with reference to the concerns of human Ufc, they endeavour to aim at mere praotieal good and general convenience '" (d). Or, as Cicero puts it, " alitor leges, aliter philosophi, tollunt astutias : leges, quatenus manu tenere possunt, philosophi, quatenus ratione et intelligentia " (e). And equity, in times when its principles were more liberal than those of law and were administered by different courts, was under no less disabihty, in respect of all such matters as are within the exclusive jurisdiction of the forum conscientice. " With such a con- science," said Lord Nottinghaai, L.C, as is only naturalis et interna this court has nothing to do ; the conscience by which I am to proceed is merely civilis et poUlica, and tied to certain measures " { / ) ; and, to the same effect, Jekyll, M.R., observed that " though proceedings in equity are said to be secundum discretionem viri boni, yet, when it is asked, vir bonus est qnis ? the answer is. Qui consulta patrum, qui leges juraque servat " {g). " There is a well-known case in the books," Newman thinks the question is complicated by the further inquiry, which may be necessary, whether a writer is justified in publishing anything for which he is not prepared to accept responsibility. The doctrine, however, of the right to conceal the truth from the officious inquisitor, is a delicate one : it may easily suggest, and slide into, a theory of the right to lie to an official inquisitor, as in the iUustrations given by St. Alfonso (Tkeol. Mor., Lib. Ill, Tract. II, §§ 154-171) of permissible lies in a court of justice, and as in the case of that " local and special morality " which, says Leslie Stephen (Science of Ethics, pp. 202, 203), " is often developed in regard to this virtue," or, the still more convenient theory of mendacity as a weapon of defence in all critical situations which was expressed in the board-school girl's ingenuous definition of a lie as " an abomination unto the Lord, but a very present help in the time of trouble," or in the reasoning of Odysseus in the opening scene of the PhUostetes. Tor the rules of law in relation to all these questions, see §§ 118, 119, ante. (2) Like history, as contrasted with the social judgment of the moment : " con- temporaries look at the agents, their motives, and characters ; history looks rather at the acts and their consequences " (Hare, Guesses at Truth). (a) From his judgment in Pasley v. Freeman (1789), 3 Term. Rep. 51 (at p. 63). (b) See Derry v. Peek (1889), 14 App. Gas. 337, H. L. (c) See the Second Section of his Metaphysic of Morals. (d) Eq. Jurispr., vol. i, § 194. (e) De Off. in, 17. (/) At p. 600 of Cook V. Fountain (1670), 3 Swanst. 585. (3) At p. 753 of Cowper v. Earl Covjper (1734), 2 P. Wms. 720. This was a ease in which he felt himself constrained to give judgment for the plaintiff, though " were I " (he says at p. 734) " to consider the matter, not as sitting in judicature, but taking in all manner of considerations, such as honour, gratitude, private conscience, etc., I must think this claim should never have been made." B.M. 2 E 418 APPENDIX B, SECT. 2. said Lord CEANWOEra,. L.C., " with which those that practise in the courts ai very familiar (h), in which upon a counsel saying to Lord Thxjelow, ' Yoi lordship would think in point of honour,' so and so, Lord Thiielow said, ' upo that pcint you must apply to the person himself. I do not give any opinion o that subject ' " (i). 496. Accordingly, in the matter of disclosure, jurisprudence, though rcquirin the utmost openness and candour in the particular classes of transaction whic it deems uberrimcEfidei, and though prohibiting in all cases every such concealmen and incomplete or partial statement as renders what is stated false {k), has fouu' it impracticable and impolitic to enforce conformity to the high Stoical ideal o complete revelation under all circumstances of everything which the other part to the oontract or transaction is interested in knowing, and, without knowin; which, ho would not be on equal terms with the party on whom the duty is cast [l] Thiis Lord Thurlow, L.C, in reference to an illustration of a man purchasinj an estate without imparting to the vendor his knowledge that a valuable min is underneath the surface, says : " the question is, not whether the transactioi be such as a man of honour would disclaim and disdain, but it must fall -withii some settled definition of wrong recognized by this court"; otherwise thi court would be " undoing all the common transactions of mankind," and " render ing all their dealings too insecure " (m). And, on this topic, Dr. Story remarks tha " Pothier has expounded this subject with his usual force and sterling sense ' As a matter of conscience,' says he, ' any deviation from the most exact anc scrupulous sincerity is repugnant to the good faith that ought to prevail in con tracts. Any dissimulation concerning the object of the contract and whai the opposite party has an interest in knowing, is contrary to that good faith for, since we are commanded to love our neighbours as ourselves, we are nol permitted to conceal from him anything which we should be unwilling to hav( concealed from ourselves. But in civil tribunals something plainly injurious to good faith ' (that is, to positive rules of jurisprudence) ' must be shown to justifj their interference' " (n). 497. So also, there are many misrepresentations implied from acts anc conduct, by which delusive hopes and expectations are raised, and the mosi cruel injuries are inflicted, and which all ethical teaching on that account severely denounces, but of which the law, by reason of its necessary limita- tions, can take no account or notice (o). Similarly, the cases of mere exaggera- (h) Fox V. Mach-cth, cited in note (m), inf., may have been the case referred to by Lord Ckanworth. Cp. the observations of Lord Colekidge, C.J., at p. 46 of Tatam V. Reeve. [1893] 1 Q. B. 44, Div. C.'t. : " if one man chooses to trust another in matters which are called matters of honour, he must do so at his oato risk, and mth full know- ledge that he must suffer, if the person whom he has trusted chooses to repudiate what is called his debt of honour." (i) At p. 773 of Smith v. Kay (1859), 7 H. L. C. 750. {k) See Ch. IV, Sect. 4, Sub-s. (2), ante. {I) As to the Stoical and Ciceronian views, see App. C, post. {m) At p. 321 of Fox v. Mackreth (1788), 2 Cox, 320, 2 R. R. 55. See also for this and other Ulustrations of non-disclosure which are not amenable to civU consequences, § 91, and particularly the cases cited in notes (m), (x), («/), (z), (a), and (6) thereto. (re) Story, Eq. Jurispr., vol. i, § 194. (o) Stephen, J., at p. 296 of AUerson v. Maddison (1880), 5 Ex. D. 293, remarks that " there is a class of false representations which have no legal effect. There are cases ui which a person excites expectations Arhich he does not fuliil, as, for instance, when a person leads another to believe that he intends to make him his heir, and then leaves his property aii'ay from him. Though such conduct may inflict greater loss on the sufferer than almost any breach of contract, and may involve greater moral guilt than many common frauds, it involves no legal consequences, unless the person making the representation not only excites an expectation that it will be fulfilled, but legally binds himself to fulfil it." The actual decision of Stephen, J., was reversed by the C. A., which reversal i\-as confirmed by the H. L., sub nom. Maddison v. Aldersm (1883), 8 App. Cas. 467, H. L. ; but the above observations of Stbphek, J., were ap- proved by, and, indeed, formed the basis of the decisions of both appellate tribunals, §§ 495-499. 419 tion ( p), and tlio falsehoods told in jest, producing no tangible loss or injury (q), and the misrepresentations made without due inquiry or care (r) which are not amenable to civil procedure, are undoubtedly condemned by the ethical code. 498. It is needless to say that neither the EngUsh, nor any system of juris- pradenoe can concern itself in the least degree with any form of misrepresenta- tion of, or laxity connected with, the investigation or exposition of abstract or scientific or intellectual truth, unless the material interests of some individual or class are intended to be, and are in fact, affected thereby (s). It is doubtful, indeed, whether all systems of morals would take cognizance of such acts {t) ; but, unquestionably, the more ideal and exalted of them would do so. Plato, for instance, not only regarded error as falsehood, but as the most serious form of it, — as the ws aKrieHs if/eOSos, in contrast with the far less important type of lie to which the name is ordinarily confined, the mere i p \6yois i|/f C5os. SeK-deception was " the lie in the soul," which engendered a state of moral, as well as intellectual, (ttoVis, conflict, and insurrection. But the obligation " to seek truth and ensue it," in the sense of loyalty and allegiance to religious, scientific, political, or metaphysical truth, is a duty which, whether it may be deemed a social or moral obligation, has no juridical quality or import. Similarly as to the imparting or teaching of false doctrine in any of the above domains of thought. It is certain that jurisprudence cannot deal with such matters (u), and equally certain that nothing is more severely reprobated by any sound system of ethics than this poisoning of the wells of truth by the (whether wilful, or careless) dissemination of intellectual error. 499. Amongst the matters over which jurisprudence must needs disclaim authority, but which are yet well within the province of casuistry, the doctrine of the " categorical imperative " has not been expressly mentioned, for the reason that this doctrine is not accepted by the main body of moral philosophers ; and if the law is justified in its pohcy of non-intervention in the cases already given, a fortiori it is justified in that poUcy, where to depart from it would be to " rush in, where angels fear to tread." The theory in question, which proceeds on the basis that moral duty is absolute and autonomous, and admits of no exception under any circumstances, is the theory worked out by Kant in his Fundamental the only difference being in the application of them to the facts. Other illustrations of the moral duty are given by Pale}', 3Ioral and Politicid Philosophy, vol. 1, ch. v, cited in § 24, ante, with which cp. § 66 in Ch. Ill, Sect. 2, ante, for examples of its non- enforceability in law. Another instance is the simulatctl passion of a poor man for a woman of wealth or rank, for the purpose of inducing her to confer material benefits upon him, than which no conduct could be more morally censurable, or more pro- ductive of acute misery : yet the law cannot touch such a case, unless the misrepre- sentation of emotion is accompanied by some misrepresentation of fact. (p) See Ch. 11, Sect. 6, ante. (q) See Ch. V, Sect. 1, Sub-s. (3), ante, where it is established that of the cases of misrepresentation by way of practical joke, or otherwise apparently motiveless, only those which produce material loss, or physical injury, are actionable. All such cases are nevertheless condemned by moralists : see note (m) to § 489, sup, (r) See p. 376 of Derry v. Peek (1889), 14 App. Cas. 337, H. L., where Lord Herschell recognizes this to be a " moral duty," but explains that it is not and never has been, though he suggests that it ought to be (as it was, in a limited form and application, shortly afterwards) converted by the legislature into, a legal duty. {s) See Ch. II, Sect. I, Sub-s. (1), ante. (t) Ibid., and the reference tfierein to Aristotle's views on the subject. Leslie Stephen {Science of Ethics, p. 209), dealing OTth A\hat he calls the " prudential qualities of a hatred for error," says : " the man, indeed, who hates error wHl generally hate falsehood. ' To thine own self be true. And it must follow, as the night the day, Thou canst not then be false to any man.' This kind of virtue ^^'ould belong, how- ever, in the highest degree to the man who approximates as closely as possible to the calculating machine. Such a man, no doubt, would have, what may be called a purely intellectual love of truth ; but of truth as opposed to error, and equivalent to accurate knowledge." (m) See § 140, in Ch. VII, Sect. 1, Sub-s. (1), ante. 420 APPENDIX B, SECT. 2. Principles of the Metaphysics of Morals and his Analytic and Dialectic oj Pure Practical Reason, and has been approved and applied by Cicero and St. Augustine ; but it is subject, even in the sphere of conscience itself, to all manner of difficulties, and raises at every point, particularly when applied to the duty of veracity, an infinity of ^problems (x) which render its acceptance, as a working rule of practical casuistry, almost impossible, and, as a rule of law, wholly impossible. The proposition laid down by Kant was that " I am never to act otherwise than so that I could also will that my maxim " — that is, the rule of conduct determining the particular act — " should become a universal law " (y). Such a principle is designated by him a " categorical imperative," because it "represents an action as necessary of itself Avithout reference to another end," as distinguished from what he calls a " hypothetical imperative," which " repre- sents the practical necessity of a possible action as means to something else "(2). It is obvious that such a. principle (qiiod semper, quod uhique, quod ab omnibus) in its application to human conduct admits of no exceptions, and no subservience to empirical or individual or occasional precepts or counsels ; and that the theory has to face the objection that conformity to it in every case might involve the gravest social consequences, and the breach of other duties equally autonomous and mdependent. Conformity, for instance, to the absolute imperative of veracity, would require the disclosure to the murderer of the hiding-place of his intended victim (a), and it is said that Kant, when asked this question, did not shrink from declaring the necessity of such disclosure under such circumstances. Nor did St. Augustine repudiate the consequences of such a view of the absolute sanctity of the duty, holding that there could be no justa causa for a lie (b). But the Categorical Imperative ignores the case of " divided duty," and Kant never attempted to deal with this difficulty ; which is the more strange, as every duty is conceived by him as of equal and co-ordinate sovereignty, like so many independent States, and he is continually speaking of " a kingdom of ends." And we find that even Cardinal Newman, after stating, in a passage of tremendous majesty and power, that " the Catholic Church holds it better for the sun and moon to drop from heaven, for the earth to fail, and for all the many milhons on it to die of starvation in extremest agony, as far as temporal affliction goes, than that one soul . . . should commit one venial sin," mentions amongst his illustra- tions of " sin " the telling of " one wilful untruth . . . without excuse " (c). On the whole, therefore, it may surely be concluded that the main teaching of practical casuistry, and certainly that of jurisprudence, in relation to misrepresentation, as in relation to all other departments of morals, must take into consideration the possible coexistence and conflict with the duty of veracity, of other duties of equal sanctity, and cannot treat any one as supreme over the rest ; though neither laAv nor ethics gives any countenance to the lax principles which interested wrongdoers may seek to derive from this recognition, such as "do evil that good (x) " Soufire beaucoup de_ difficulte, meme dans le for de conscience," as Pothier says, with reference to Cicero's Stoical theorj'. See § 512, post. (y) Metaphysic of Morals, Pirst Section. (2) Ibid., Second Section. (a) This case is put as a manifest exception by Dr. Johnson. See note (m) to § 494, sup. (6) See Newman's Apol, p. 349. Cp. Cicero's tribute to the famous act of Regulus in De Off. Ill, 26, and Horace's similar encomium in noble verse {Carm. Ill, 5). This act was an example, if there ever was one, of homage to the Categorical Imperative, and it is surprising that Kant, when casting about for examples of pure and un- adulterated obedience to dutj', which he had some difiSculty in finding, did not think of this case, though he does cite Juvenal's " Phalaris licet imperet ut sis Falsus, et admoto diotet perjuria tauro, Summum orede nefas animam praeferre pudori Et propter vitam Vivendi perdere causas," and says that the poet there gives " such an example " as he is seeldng "ma climax, which makes the reader feel vividly the force of the spring that is contained m the pure law of duty, as duty " {Critique of Pure Practical Season, Second Part). (c) Apol, p. 247. §§ 499, 500. 421 may come," " the end justifies the means," or " to do a great right, do a little wrong." To all such suggestions, the answer of both is that of Portia : "it must not be " {d). 500. From the foregoing review of the doctrines of law and ethics respectively in relation to misrepresentation, one may fairly draw the conclusion that English jurisprudence, at all events in its high modern state of development (e), has never, except for good reasons, lagged behind the ideals of moral philosophy, and that, in language applied to a historian who well merited it (/ ), it has been " inspired by one unconquered resolve, the aim of securing universally the recognition of the paramountcy of principles over interests, ... of truth over all forms of evasion or equivocation." (d) Merchant of Venice, Act V, So. 1. (e) In earlier times, no doubt, English law took a somewhat light and cjmioal view of the duty of veracity, and was iiaolined to consider the representee to be as punishable for his stupidity, as the representor for his knavery. It was on this theory, presumably, that the old Writ of Deceit did not comprehend ordinary cases of mis- representation at all : see § 447 in App. A, Sect. 1, Sub-s. (1), and cp. Ancm. (1684), Skin. 159 ("' being able to read, it was his own folly," — a case of a, grossly fraudulent transaction). And even at a much later date we find in Vernon v. Keys (1812), 4 Taunt. 488, Exch. Ch., a judicial pronouncement which certainly does not display a very exalted morality : "the question is whether the defendant is bound to disclose the highest price he chooses to give, or whether he is not at liberty to do that as a pur- chaser, which every seller does every day, who tells every falsehood he can to induce a buyer to purchase." This from the Exchequer Chamber ! (/) Lord Acton. The tribute is paid by the editors of his History of Freedom and otlier Essays, in their Introduction, p. xviii. 422 APPENDIX C, SECT. 1. APPENDIX C. THE ROMAN LAW OF DOLUS AND MISREPRESENTATION. 501. Having regard to the undoubted fact that no small part of the English law of misrepresentation is expressed to be, if not founded on, at least fortified and illustrated by the principles of the Roman jurists in relation to Dolus, whilst, as regards the remainder of it, our courts have independently arrived at con- clusions which in the main are identical with those of the Digest (a), it may be useful and instructive to institute a comparison between the two systems in respect of this department of jurisprudence. Sect. 1. General View of the Conception op Dolus and its Place IN Roman Jtjkisprudence. 502. In the legis actiones of early Roman jurisprudence there was no actio doU mali, or de dolo malo, nor was dolus mains admitted as an exceptio, or plea, to any of the forms of proceeding which in those times could be instituted ; though the XII Tables in general terms enjoined good faith in tutelis, and afterwards the Lex Plastoria prohibited the circumscripUo adolescenlimn by fraudulent abuse of influence, or other unconscionable means (6). It was not until the time of C. Aquilius Gallus, an official colleague, personal friend, and relative of Cicero, that an action on the case for deceit was invented, and made part of the Roman system. In this respect the early history of the English action of Deceit exhibits an almost exact parallel (c). 503. The Aquilian Formula is set out in the Digest (d), and runs thus: " Quae dolo malo facta esse dicentur, si de his rebus alia actio non erit, et justa causa esse videbitur, judicium dabo." The introduction of this form of action was due to Stoical teaching, by which Aquilius, like Cicero, was deeply influenced. The Stoic philosopher Pansetius taught Mutius Sceevola, under whom both Aquilius and Lucilius Balbus studied. The latter is made responsible for the (a) So called : it should strictly be " Digests," the title prefixed to the First Book of this collection of extracts from the treatises of jurists being " Domini Noatri Sacratissimi Principis Justiiiiani Juris Enucleati ox omni vetere jure coUecti Digestorum sive Pandectarum Liber Primus." It is curious that, whilst every one spealis correctly of the Pandects, jurists have conspired to use the singular number in the case of its equally plural Latin equivalent. The mode of citing from the Corpus Juris used in the folloA\-ing notes is tliat now generally used : " D." stands for " Digest," and " C." for " Codex " (Justinian's collection of Imperial Constitutions, roughly analogous to our statute-law). The first figure after the D., or C.,as the case may be, indicates tlie number of the Book ; the second, the number of the Title (or Chapter) ; the third, that of the section ; and the fourth (where there is a fourth), the number of the paragraph or clause or " fragment " ; or where the matter cited is in an introductory and unnumbered clause, or " prinoipium," the abbreviation " pr." is used. (6) Cic. De Off. Ill, 15. Cp. also De Nat. Deorum, II, 30, for a similar summary of the gradual enlargement, by statutes and additions to the Edict, of the juridical view of good and bad faith. (c) See App. A, Sect. 1, Sub-ss. (1) and (2), ante. {d) D. 4. 3. 1. 1. Cicero (DeNat. Deorum, III, 20) calls his friend's formula " everri- culum maiitiarum omnium." §§ 501-504. 423 Stoical side of the discussion in Cicero's Da Nti/iira Deoriim, and lie taught the renowned jurist, Scrvius Sulpioius. Cicero's De Officiis, whether it is to be regarded as a treatise on ojjicia juris or officia virtutis, on law or etliios (e), is saturated with Stoical doctrine, whicli, through him and others, sank deeply into the fabric of the Digest (/) in relation to all departments of the corpus juris, but pre-eminently in relation to Dolus. Passing over, for the moment, the exalted but (from the point of view of jurisprudence) somewhat extravagant views of Cicero on this subject, which will receive more detailed considciiition presently ((/), and proceeding at once to the Digest, we find that dolus iiudus is there sometimes used as a nomen generalissimum to include not only fraud in its ordinary sense, but all kinds of oppressive, unconscionable, extortionate, or malicious acts, evincing a wicked and deliberate intention to inflict injury, as distinguished from mere negligence and unintentional wrong, just as the term "fraud " was extended by our equity judges in earlier times to cover a similarly miscellaneous collection of transgressions against wquum et bomim {h). It was never supposed, even in the larger of its two meanings, to include culpa, which was its direct antithesis. Culpa, however, might be either leii's, or magna, lata, latior, or lafissima ; and, in more serious degrees, it is frequently spoken of as either equivalent to dolus (i), or next door to it (h). 504;. Even in the more restricted interpretation which is put upon the term in the Digest whenever it is used in connection with contracts and transactions induced thereby, dolus mains still includes a great deal which would not, with us. be included in the correspondingly more restricted equitable sense of the word " fraud." Thus it includes innocent misrepresentation, non-disclosure, and certain breaches of contract or warranty, as well as ambiguous deliverances, covering up of defects, misrepresentations implied from acts and conduct, and the like. In the passage usually cited for the definition of dolus malus, which, is taken from Ulpian, Ad Edictum, lib. xi, the Aquilian rule is first stated to have been aimed at dolosi of all descriptions, with the object of rendering their fraud unprofitable to them, and innocuous to their intended victims (I). The rule is then set out (to), and the passage proceeds to contrast the definitions of the opposite schools of Servius and Labeo, and to point out that the former is too narrow in one respect and too broad in another, and that the latter is therefore to be preferred, and adopted as law. Labeo's definition is : " every kind of craft, fraud, or covin, used for the purpose of circumventing or deceiving another " (m), (e) It has generally been considered a juridical treatise both by Roman la-\vycrs, and by English, judges (see Sect. 3, post), and English, American, and Frencli \vriters on legal subjects, e.g. Sir Edward Fry {Specific Performance), Dr. Story {Equity Juris- prudence), and Pothier. In one or two instances, however, Cicero liimsclf admits, and regrets, that he is expounding some purely ethical principle ("lege naturto sanctitum "), which is not, though it ought to be, positive law. See, lor instance, De Off. Ill, 17, the passage cited in note (e) to § 495, ante, and others. ( / ) In the very first book of the Digest, Chrysippua, described as " philosoplius summse stoicse sapientiae," is cited for his definition of fu'/ios (D. 1. 3. 2). (ff) See Sect. 2, Sub-s. (2), inf {h) See §§ 455, 456, ante. (»') D. 16. 3. 32 (from Celaus, Digesta, lib. xi) : " Quod Ncrva diccret latiorcm culpam dolum esse, Proculo displicebat, raihi verissimum videtur. Nam . . . nisi ad suum modum curam in deposito prsestat, fraude non caret : neo enini salva fide minorem is quam suis rebus diligentiam prsestabit." {k) D. 17. 1. 29. pr. : " dissoluta negligentia prope dolum est." This, it will be observed, was the view entertained by many equity lawyer.s before Dernj v. Peek (1889), 14 App. Cas. 337, H. L. {I) D. 4. 3. 1. pr. {m) D. 4. 3. 1. 1. See the commencement of § 503, sup. {n) D. 4. 3. 1. 2 : " Dolum malum Servius quidem ita dofiniit machmationem quandam alterius decipendi caus^, cum aliud simulatur ct aliud agitur. Labeo autem posse et sine simulatione id agi ut quia oircumvoniatur : posse et sine dolo male aiiud agi, aliud simulari, sicubi faoiunt, qui per ejiismodi dissimulationem de.'ierviant et tuentur vel sua vel aliena ; itaquc ipse sic definiit dolum malum oskc omncm 424 APPENDIX C, SECT. 2, SUB-SECTS. (1), (2). — which does not carry matters much further, and is really an almost ludicrous example of a circulus in definiendo, since it amounts to no more than this : " fraud is every kind of fraud used for the purpose of defrauding another " (o). It is from other passages scattered about the Digest, where the conception of dolus is being apphed to concrete cases, that the abstract emptiness of the so-called definition acquires content and meaning, such as the passage which lays down that it may consist both in ambiguous representation and in wilful suppression, in dissimulation as well as simulation ( p), and numerous other subordinate pro- positions, to be noticed hereafter in their proper places {q). 505. The expression dolus rnalus obviously implies the possibihty of such a thing as dolus bonus (r), or that kind of artifice and stratagem which is rendered by circumstances either justifiable or excusable, as, for instance, when used in defence of a man's own or another's property (s) against, or in circumventing, criminals or public enemies [t). Misrepresentation under such conditions would be excusable in English law also (u). Sect. 2. The Peinciples op the Roman Law of Miseepresentation COMPAEED WITH THOSE OF ENGLISH LaW. 506. It is now proposed to consider, side by side and seriatim, the principles and rules of the two systems of jurisprudence, in the same order of topics as that adopted in the Commentary, omitting, of course, all those subjects which, though dealt with in one of the two systems, is ignored by the other. Sub-sect. (1). As to what is deemed a Representation. 507. It would appear that the Roman law in theory draws the same distinction between statements which induce a contract and those which enter into it, and form part of it, as is drawn in the English system (x), the Digest terming the former dicta, and the latter promissa (y) : though, in the particular apphcation of their rules to various conditions, the distinction is often lost sight of. 508. Statements of intention, e.g. an intention to pay (z), or of opinion, whether in the form of advice (o), or in the form of a statement as to the credit of a third person (b) or the value of property (c), and exaggeration and vaunting or com- mendatio (d), are aU deemed in the Digest statements of fact, and actionable as calliditatem, fallaciam, machinationem ad circumveniendum, fallendum, alterum adhihitam. Labeonis definitio vera est." (o) Dr. Hunter, in his valuable work on Roman Law, characterizes the definition as " neither very precise, nor very accurate." It certainly is not at all " precise," but for that very reason is not inaccurate, because the thing to be defined was not precise, and was never othermse than a concept of the utmost possible generality and comprehensiveness. (p) D. 18. 1. 43. 2 : " Dolum malum a se abesse prsestare venditor debet, qui non tantum in eo est, qui fallendi caus obscure loquitur, sed etiam qui insidiose obscure dissimulat." (q) See Sect. 2, inf. {r) D. 4. 3. 1. 3 : " Non fuit autem contentus prsetor dolum dioere, sed adjecit malum, quoniam veteres dolum etiam bonum dicebant et pro soUertifi. accipiant." («) See note (n), sup. : " tuentur vel sua vel aliena." (t) D. 4. 3. 1. 4 : " si adversus hostem latronemve quis machinetur." iu\ Sgg § 4Q4 cLfitc (x) See §§ 20-23 in Ch. II, Sect. 2, Sub-s. (1), and note {d) to § 114, ante. (y) As in D. 4. 3. 37, and D. 21. 1. 19. 3. (z) D. 47. 2. 43. 3. (a) D. 50. 17. 47 : " consdu non fraudulenti nulla obligatio est : ceterum si dolus et calliditas intercessit, de dolo actio competit." (6) D. 4. 3. 8. (c) D. 4. 3. 9. 1. (d) D. 4. 3. 37 (if the statement is mere puffery, whether it forms part of the contract, or is preliminary to it, it counts for nothing : but if a real intention to §§ 504-512. 425 such if made falsely (which, under the circumstances, must nccessaiily mean fraudulently also) in the same sense, and within the same limits, as in Enghsh law (e). Sub-sect. (2). As to the Elements and Forms of Misrepresentation. 509. Dolus being omnis calliditas, machinatio, fallacia, it follows that acts of any description to which the above moral qualities may bo imputed, and which result in the deception of another, are actionable in Roman law ( / ), just as in our law they may constitute an imphed actionable misrepresentation (g). Examples abound in the Digest and elsewhere of dolus by conduct of the same kind as has formed the subject of English decisions, such as personation (h), the use of false weights (i), the secret employment of puffers {k), " salting," and the hke (I). 510. As in Enghsh law (m), a representation is deemed by the Roman jurists to continue untU acted upon. For instance, if facts to the knowledge of the representor supervene during the interval between the representation and the representee's alteration of position, such as the destruction by tempest of trees forming part of the description of an estate the subject of sale, the representor must pay damages in an actio CBstimaioria{ii). On the other hand, a representor is liable according to Roman law, though he would not be so according to the English rule, in the converse case of supervening facts rendering the representation true when acted upon, if it was false and fraudulent when made (o),the Roman theory being, apparently, that the representor ought to be punished in any event, quia dolo fecit, nee dolus purgatur ; whereas our civil jurisprudence aims only at compensation. 511. A studied ambiguity, or ambidexterity, of language, counts against the representor in the one system ( p), as much as in the other (q). 512. Dissimulation is regarded in the Digest as an index, or form, of dolus, as much as simulation (r), which is the Roman way of expressing the English deceive is shown, an actio doli mali mil lie) ; and D. 21. 1. 19. 3 : " ea autem sola dicta sive promissa admittenda sunt quaeounque sic dicuntur ut prjestentur, non ut jactentur "). (e) See Ch. II, Sects. 2, 3, and 6, ante. (/) "Totius injustitiaj," says Cicero (De Off. I, 13), "nulla capitalior est quam eorum, qui cum maxime fallunt, id agunt ut viri boni esse videantur." (g) See Ch. Ill, Sect. 2, ante. (h) D. 47. 2. 52. 21 (" cum Titio honesto viro pecuniam credere vellem, subjecisti mihi alium Titium egenum, quasi ille esset locuples ") : D. 47. 2. 80. (" falsus procurator . . . nomine . . . veri procuratoris . . . adsumpto "). (i) D. 4. 3. 18. 3 (" de eo qui sciens accommodasset pondera "). (Ic) Cic. De Off. Ill, 15 : " non illicitatorem venditor, non, qui contra se liceatur, emptor apponet." \l) Such as the fraudulent devices resorted to by Pythius of Syracuse for the purpose of selling his estate, in the story told by Cicero (De Off. Ill, 14), who laments that the law, as it then existed, could not touch the subtle " argentarius," since the Aquihan Formula had not yet been introduced into the Prsetorian law. (m) See Ch. IV, Sect. 3, ante. (») D. 18. 6. 9. (o) D. 19. 1. 13. 14 (Titius describes his estate as one of 100 acres, Imowmg that it contains only 90. Before completion, the missing 10 acres are added to the estate by allumo, or accretion. He is liable, nevertheless, to the purchaser, in an action ex empto). (p) D. 18. 1. 43. 2 (" qui faUendi causa obscure loquitur "). (?) See Ch. IV, Sect. 4, Sub-s. (1), ante. (r) D. 18. 1. 43. 2 {" qui insidiose et obscure dissimulat "). Cp. Cic. De Off. Ill, 15 : " quod si Aquilliana deflnitio vera est : ex omni vita simulatio dissimulatioqut- toUanda est. Ita neo, ut emat melius, neo ut vendat, quidquam simulabit aut dissimulabit vir bonus." 426 APPENDIX C, SECT. 2, SUB-SECTS. (2), (3). doctrine that, in certain circumstances and ivithin certain limits, a misrepre- sentation may be made by silence, omission, suppression, concealment, or inac- tion {s). Most of the illustrations of this typo of misrepresentation which are given in the Digest (<) correspond very closely with those which form the subject of the English authorities ; so also do many of those to be found in the well- known passages in Cicero's treatise where the duty of good faith is discussed (u). In many of these passages, however, the jurisconsult is merged in the moral philosopher ; and, inspired by Stoicism, Cicero permits himself a wider range, and a more exalted note, than sound legal doctrine, whether Roman or English, can countenance. Thus, whilst acknowledging that mere reticence is not neces- sarily culpable, as concealment is, he proceeds to define the kind of suppression of facts which, in his opinion, is a breach of good faith, in terms much wider than those of any juridical statement of the duty of disclosure. " Aliud est celare," is the oft-quoted proposition, " aliud tacere ; neque enim id est celare, quicquid reticeas ; sed quum quod tu scias, id ignorare emolumenti tui causa velis eos, quorum intersit id scire " {x). The offence, it will be observed, is complete on proof of the mere failure by the one party to communicate to the other any fact which it is material to the former's interest to conceal, and to the latter's to ascertain. In its literal sense, the proposition is so grotesque, and so inconf ormable to the principles even of sound ethics (y), not to speak of law, that one doubts [s). See Ch. IV, Sect. 4, Sub-s. (2), ante. {t) Such as selling a slave with, vices, diseased cattle, decayed timber, incumbered land, and the like. See D. 19. 1.1.1; D. 19. 1. 4. pr. ; D. 19. 1. 6. 9. ; D. 19. 1. 13. pr., 1, 2, and 3 ; D. 19. 1. 21. 1 ; D. 19. 1. 41 ; and D. 19. 2. 19. 1. The non-disclosure of any such defects, if kncmi to the vendor and unknowTa to the purchaser, is dolus. Apart from these, there were certain vitia the disclosure of which was specially enjoined by the ^dilician Edict — see sub-s. (15), inf. — -which roughly corresponds to such statutory requirements in our law as those contained in the Companies (Con- solidation) Act, 1908, s. 81, and other enactments. (it) Cic. De Off. Ill, 12, 13, IG, 23. In the examples given, Cicero admits that there was a difference of opinion among Stoics themselves — Antipater holding in every case the exalted view, and maintaining the inviolable sanctity of what Kant would call the categorical imperative ; whilst Diogenes Babylonius, who taught Antipater, confined the rule within the limits of utility, to which he thought that in such matters, the moral law should be, if not subordinate, at least conformable : "in liujusmodi causis aliud Diogeni Babylonio vidcri solet, magno ct gravi Stoico, aliud Antipatro, discipulo ejus, homini acutissimo " (III, 12). Cicero obviously inclines to the view of Antipater, which is the essence of pure Stoicism, and often much " too good for human nature's daily food." Diogenes' opinion is usually in accordance with juridical principles. The examples are : ( 1 ) sales of land which the vendor knows, but the purchaser and the rest of the world do not laiow, to be insanitary, or infested irith serpents (the English cases relate to a minuter pest), or dilapidated or ruinous or jerry-built (III, 14 : vendat tedes vir bonus propter aliqua vitia qua; ipse novit, eeteri ignorent ; pestilentes sint, et habeantur salubres ; ignoretur in omnibus cubiculis apparerc serpentes ; male materiatae sint, ruinosae ; sed hoc prseter dominum nemo sciat. Qusero, si haec emptoribus venditor non dixsrit, sdesque vendiderit pluris multo, quam se venditurum putarit, num id injuste aut improbe fecerit ? ") ; (2) the case of the corn-merchant referred to in the text : see note (;;), ittf. : (3) the sale of a house kno\\'n to the vendors, but not to the purchaser, to have been condemned by the augurs as an obstruction to the taking of the auspices ; or the sale of property subject to undisclosed servitudes (III, 16) ; and (4) the case of wine which is " going off," of slaves given to lying, gambling, thieving, or drunkenness, or of orichalcum as gold (III, 23). (x) De Off. Ill, 13. After the sentence cited in the text he adds, from his copious vocabulary, this rhetorical flourish : " hoc autem celandi genus quale sit, et cujus hominis, quis non videt ? Certe non aperti, non simplicis, non ingenui, non justi, non viri boni : versuti potius, obscuri, astuti, fallacis, malitiosi, callidi, vetcratoris, vatri. Ha2C tot et alia plura, nonne inutile est, vitiorum subire nomina 1 " Ho says that Antipater likened such cases to a man's refusal or neglect to put on the right path a wanderer who has lost his way, which in the early days of Athens was an offence punishable by public execration (ibid.). (y) See the view of Pothier, in note (gr), inf. §§ 512, 513. 427 whether Cicero could have intended it to bo understood in that sonso. But, on examining the context, and the examples ho gives, and, above all, his conclusion of the whole matter — that "it is agamst the law of nature for one man to profit by the ignorance of another " (,~) — it is apparent that he did mean the rule he enunciated to be taken stridissimo sensu, and without any other quahfica- tion than is stated by him. He expressly describes it, however, as a " law of nature " ; and therefore it is not perhaps fair to criticize it as if it were put forward as a maxim of jurisprudence, though most Avritors have so treated it. Regarded in the latter light, it is of course a proper subject of the criticism which has been applied to it by Pothier (a),Grotius (6), Puffendorf (c),Kant (tZ), Story (e), and Sir Edward Fry (/). Pothier is particularly severe on the "case of con- science " which Cicero puts of the man who takes corn from Alexandria to Rhodes, where there is a famine, and sells it to the Rhodians at famine prices, keeping back from them the fact that, on the voyage, he had passed ships loaded with provisions, making for the famished city, and sails away with his profits before the other vessels arrive (g), Sub-sect. (3). As to Fraud and Innocence in Misrepresentation. 513. There is no such sharp distinction in Roman, as there is in English, law between fraudulent and innocent misrepresentation (h), for the simple reason that misrepresentation of any kind is not the subject of a distinct title in Roman jurisprudence. For the purposes both of the actio doli mali, and the exceptio doli mali, something must be proved which amounts to this dolus malus. How comprehensive this term is has already been explained (i). It is wide enough to include every sort of misrepresentation, however innocent in the sense of Derry v. Peeh (h), and every kind of non-disclosure of material facts, even though the party was ignorant of the facts withheld (Z). Not only does the Digest (m) agree with the decisions of our courts that to state what is not known to be true is fraudulent {») ; but it also adopts the strained view of several equity lawyers (o), that it is a mark of dolus or fraud to put forward an unfounded claim, such as to (z) De Off. Ill, 17 : " ex quo intelligitur, quoniam juris natura fons est, hoc secundum naturam esse, neminem id agere, ut ex alterius prsedelur inscitia." (a) De Vente, pp. 233-242, 297, 298. (6) De Jure Belli et Pads, lib. ii, ch. 12, ». 9 : " non ergo generaliter sequendum illud ejusdem Ciceronis, celare esse, quum quod tu scias, id ignorare emolumcnti tui caus^ velis eos quorum intersit id scire ; sed tum demum id locum liabet, quum de iis agilur qum rem subjectam per se contingunt.'^ (c) Law of Nature, Book V, Cli. 3, § 4. (d) Commentaries, vol. ii. Lecture 39, pp. 485^91. (e) Equity Jurisprudence, vol. i, § 205. {/) Specific Performance, § 705, in a note to which he cites the above extract from Grotiua, and observes that the qualification introduced by the Dutch jurist would probably make the proposition accord \vith English law. (d) The case is put in De Off. Ill, 12. Pothier's criticism is in his De Vente p. 241, where he says that most writers on the subject regard " la decision de Ciceron " as " outrfc," and he himself thinks that it " souffrc beaucoup de difficulte', mdne dans le for de conscience." {h) See Ch. V, ante. (i) § 503, ante. (k) (1889), 14 App. Gas. 337, H. L. (/) At all events in regard to all those " redhibitory " defects the absence of which was required by the jEdilician Edict : sec D. 21. 1. 1. 2 : " dummodo sciamus vcndi- torem, etiamsi ignoravit ea qua; ajdiles priEstari jubent, tamen deberi tcnetur." (m) D. 19. 1. 13. 3 : " atqui ignoravit : sed non debuit facile qute ignorabat adseverare .... non debuit facUis esse ad tomerariam indicationem." (n) See Ch. V, Sect. 1, Sub-s. (2), ante. (o) See App. A, Sect. 3, ante. 428 APPENDIX C, SECT. 2, SUB-SECTS. (3)— (8). insist on retaining a benefit which was obtained by an innocent representation since discovered to be false ( p). 51 4. But, though dolus characterizes equally all forms of misrepresentation, the Digest continually distinguishes between the character and quantum of the liabihty, accordingly as it was accompanied by scientiafacti, or ignorantia faoti (g). This distinction is based on the attitude of Roman jurisprudence towards dolus, as something to be punished, rather than, as in English law, something for which the party injured is to be compensated (r). 515. Roman law discriminates, as ours does, between the dolus which causes error personoe, or error as to the substance of the thing which is the subject of the alleged misrepresentation, in which case no contract is created at all, and no property passes, and the dolus which induces a contract or transaction by misrepresentations of other kinds, in which case a real contract ensues which passes property, and the dolus may, on discovery of the truth, bo made the subject of relief and restitutio at the instance of the representee (s). Sub-sect. (4). As to the Parties to the Representation. 516. The persons hable for dolus in Roman law are much the same as those who are deemed representors in English law (t). Thus, whether for the purposes of an action or a plea, it is necessary, and sufficient, to show that the alleged dolus was committed either by the person charged, or his principal ; and in the latter case the persona or character in which the principal is sought to be made liable must be clearly established (m). The scientia of the " procurator " is, as in our law, the scientia of the dominus {x). 517. The persons entitled to sue for dolus are, as in English law, those on whom the dolus was practised (y), or those who succeed to their general estate (z), but not apparently an assignee of the particular subject of the contract or trans- action (a). [p) D. 44. 4. 2. 5 : " dolo facit quicumque id, quod quaqua exceptione elidi potest, petit ; natn et si inter initia nihil dolo mala facit, attamen nunc petendo facit dolose." iq) Sec generally the illustrations given in the Digest of contracts of sale induced by misrepresentation or concealment of the qualities, skill, or peculium of a slave, or the properties or condition of a house, or chattels, etc. ; where, in case of ignorantia, the party merely has to make good (" prsestare ") ; but, in case of scientia, may be liable in damages (" quanti intersit emptor id scire "), and in some cases double damages (" in duplum "). (r) This is the theory, though it is probably erroneous, on which some authorities have contended that the measure of damages in cases of breach of warranty should be larger where the contract-breaker was guilty of fraud, than when he was not : see § 238, ante. (s) As to the rule of English law in this matter, see § 259, ante. For the similar Roman theory, see D. 47. 2. 52. 21, D. 47. 2. 80. 6, where illustrations are given of cases of personation, which are deemed to constitute furtum (larceny), because no contract was intended to be made with the personator, and no property therefore passed, as distinguished from other cases of fraud which are only the subjects of proceedings in dolus. (t) See Ch. VIII, Sect. 1, ante, for the English law on the subject. (m) D. 44. 4. 2. 1. (x) D. 14. 4. 5. pr. (citing Ulpian, lib. xxix, ad Edictum) : " procuratoris scientiam et dolum nocere debere domino neque Pomponius dubitat nee nos dubitamus." iy) See Ch. VIII, Sect. 2, ante. The Digest has no references to the questions of transmitted representation which have occupied so much judicial attention in our courts : see §§ 177, 178, 179, ante. (z) D. 21. 1. 19. 5 ( " successoribus ejus, qui in universum jus succedunt "). {a) In our law, a mere right to sue for damages for fraud is not assignable : see Ch. X, Sect. 5, Sub-s. (1), ante. But a right of rescission may pass -ndth the property forming the subject of a contract induced b}' misrepresentation : see Ch. XI, Sect. 0, Sub-s. (1), ante. §§ 513-521. 429 Suh-secl. (5). As to the Bights of Contribution and liidemnilij. 518. Roman jurisprudence " recognizes contribution where there is a civil wrong " (6). Here the EngUsh system, Avhich still denies a right of contribution or indemnity to tortfeasors, differs (c). Scots law, in this, as in other respects {d), follows the Roman. Sub-sect. (6). As to Burden of Proof. 519. The Digest docs not discuss those nice and difficult questions of the burden of proof with which EngUsh law has been so much concerned (e), though of course the general principle, ei incuinbit probatio qui dicit, non qui negat. runs through the entire Roman system. In regard to dolus in particular, there is an imperial Constitution requiring, as English law requii'es, the utmost strictness of proof ( / ). Sub-sect. (7). As to Alteration of Position and Damage. 520. Here the Digest is not quite so precise and detailed as English law {g), and, as above indicated, its rules differ from ours in certain respects, by reason of the quasi-criminal character attached to dolus by the Roman jurists, which led them rather to concern themselves with the question of how to penalize the offender, than how to recompense and reinstate his victim, and to devise a scheme of pecuniary punishments graduated according to the degree of guilt which accompanied the dolus, rather than according to the loss which it inflicted {h ). Sub-sect. (8). As to how far the Representee's Knowledge is a Defence. 521. The proved knowledge of the representee is a good aifirmative plea to a proceeding founded on dolus [i], as it is to a proceeding in Enghsh law founded on misrepresentation (k). But Roman law also attached importance to means of knowledge, as distinguished from actual knowledge ; that is to say, it inferred the latter in some cases from the mere existence of the former, an inference which our courts, except perhaps as regards patent defects — so patent as to be glaring — in " objects of sense," refuse to draw {I). In the case of the representee, (6) This was so stated by eminent Scottish advocates (and not disputed on the other side, or by any of the law Lords), at p. 320 of Palmer v. ]Viclc and PuUciieytoion Steam Shipping Co., [1894]- A. C. 318, H. L., but the references given in the report (to D. 9. 3. 1. and I). 27. 3. 13. 14) are incorrect. I have not been able to discover the passages intended to be referred to. (c) See Ch. VIII, Sect. 1, Sub-s. (6), ante. (d) See App. D, generally, post. (e) See Ch. X, Sect. 1, and Ch. XI, Sect. 2, ante. (/) C. 2. 20 (or 21). 6: " Dolum perspicuis insidiis " — Pothier on Obligations cites this as " indiciis," which was perhaps the word intended — " probari convenit." (g) See Ch. VII, Ch. X, Sect. 3, and Ch. XI, Sect. 3, ante. (h) See Sub-s. (15), inf. In one case, indeed, it is said that the dolosus must suffer for his intention to deceive, though the intention is unaccomplished : see § 510, and note (n) thereto, ante, citing D. 19. 1. 13. 14. (i) i>. 19. 1. 1. 1 : "non videtur esse celatus qui soit, neque certiorari debuit qui non ignoravit." (k) Ch. X, Sect. 2, Sub-s. (1), ante. (I) As to " objects of sense," cp. the cases cited in note (I) to § 209, ante, with D. 18. 1. 43. pr. (a representation that a slave is good-looking, or a house well built, is a statement the untruth of which, if it is untrue, palam apparet, and must be lociown to the emptor : — English law would not agree as to the house, though it might as to the slave : — but, where the statement is that a slave is learned, or skilled in some art, no knowledge can be imputed to the purchaser : cp. Plato, Legg. xi, 916, 917, where it is said that knowledge of a defect in a slave, such as epilepsy, will be imputed 430 APPENDIX C, SECT. 2, SUB-SECTS. (8)— (15). as in that of the representor, the knowledge of the procurator is imputed to the dominus. Here, again, there is a difference between the two systems (to). Sub-sect. (9). As to how far an Express Contract to waive Inquinj, etc., is a Defence. 522. The rule that an express engagement by the representee to take the subject of a contract with all faults, or at all risks, or to waive inquiry or investi- gation, or to put up with a refusal to warrant, constitutes a defence (n), is common to both systems. So also is the countervailing rule that the defence is destroyed by proof of fraudulent devices on the part of the representor for the purpose of covering up or hiding away any particular defects or risks or facts (o). Sub-sect. (10). As to Sales by AiUhority of the State. 523. In Roman law, sales by the authority of the State were impeachable for fraud, if the party would not have purchased at any price, had he known the truth ; but not otherwise ( p). In EngUsh law, sales by the direction of the courts are impeachable for misrepresentation in precisely the same way as any other sale {q). Sub-sect. (11). As to Agreements excluding Liability for Fraud. 524. All such agreements were invahd in Roman law (?■), as they probably also are in our law (s). For the same reason an express stipulation for good faith is stated in the Digest to be unnecessary and nugatory (t). Sub-sect. (12). As to Specific Restitution. 525. The rules stated in the Digest as to specific restitution in cases of sale, are, first, that where it is the vendor's fault that the purchaser cannot give back what he received, the inabihty to restore constitutes no defence to the actio redhibitoria (action for rescission) ; secondly, that, where neither party is in fault, to an expert representee such as a physician or trainer, but not to a layman) ; D. 18. 1. 43. 1. (sale of a slave luminibus ejfossis, as sound, cannot deceive the purchaser : this is lilie the case of the one-eyed man in Bawden v. London Edinburgh and Glasgow Assurance Co., cited in the above-mentioned note to § 209) ; D. 21. 1. 1 (patent blemibhes) ; D. 21. 1. 14. 10 (the like, as to a visible scar or blindness). The Roman law, herein going further than the English, imputes knowledge to a party who has taken no trouble to acquire it : D. 18. 1. 15. 1 (" ignorantia emptori prodest qusa non in supinum bominem cadit ") ; and D. 22. 6. 9. 2 (" facti ignorantia ita demum cuique non nocct, si non ei summa negligcutia objiciatur . . . recte Labeo definit soientiam neque curiosissimi neque negligentissimi hominis accipiendam "). (m) D. 21. 1. 51. (n) Cp. Oh. X, Sect. 2, Sub-s. (2), ante, mth D. 19. 1. 1. 1 (where the case is put of a man who, on selling a house, says, " so far as I know the property is not subject to any servitudes, but 1 Mish to protect myself against any unknown servitude being hereafter discovered " : here, if he knoAi's of no servitude, the condition protects him : if he does know of anj', and is concealing it, the condition is no defence) ; D. 19. 1. 6. 9 ; and D. 19. 1. 13. 6. In French law (see Civil Code, Article 1643) the vendor is not liable for hidden defects if he expressly refuses to give a warranty. (o) See Ch. X, Sect. 2, Sub-s. (2), ante, and compare D. 19. 1. 1. 1 (cited in the last note), and D. 21. 1. 14. 9 (to an exceptio pacti, that is, a plea founded on an express agreement, a proved concealment is a good subject of a replicatio doli mali). (p) D. 21. 1. 1. 3. In French law (Code Civil, Article 1649) no action for rescission %\'ill lie " dans les ventes faites par autorite de justice." (?) Ch. XI, Sect. 3, Sub-s. (5), ante. (r) r>. 2. 14. 27. 3 ; D. 13. 0. 17. pr. ; D. 50. 17. 23. (s) See § 297, ante. (t) J). 18. 1. 68. 1. §§ 521-530. 431 the like result follows ; but, thirdly, if it is the purchaser's f;iult entirely, as, for instance, if ho has manumitted the slave who, or deliberately alienated the thing which, passed under the contract, there is a good defence both to any proceedings for redliibition, and to any action qiianii minoris (sc. for damages), and a fortiori to any actio duplex (m). The first and third rules are the same as in Enghsh law (x). The third rule, indeed, points to what in our courts would be regarded also as a case of affirmation ()/). The second rule is not in accordance with the English decisions (z). Sitb-sect. (13). As to Selling off one Fraud against another. 526. Eoman law does not permit this course to be adopted (a), nor does Enghsh ; though, in one curious case, the decision seems to be founded on some such theory (6). Sub-sect. (14). As to Misrepresentation to Public Autlwrilies whereby Grants, etc., are obtained. 527. Certain imperial Constitutions provided that any grant of privileges or benefits made by an officer of State, or a public department, if shown to have been obtained by deceptive statements, might be revoked (c). Grants from the Crown are, under the Hke conditions, revocable in English law (d). Sub-sect. (15). As to Remedies and Relief. 528. Originally Roman jurisprudence admitted neither of an actio nor an exceptio founded on dolus malus. In later times the Praetor introduced formulas for both. It is convenient to consider these in order. 529. First, as to the actio. The history and form of the Aquilian Formula has already been given (e). The Roman jurists recognized that, since the charge of dolus was a grave one, and involved infamia. if proved, it ought not to be lightly brought, and that indiscriminate resort to the actio was not desirable. Hence it was only allowed si alia actio non erit ( / ), just as, in the earher history of the Enghsh action of deceit, it was resolved that the action would not lie if there was any other remedy (17). And, even where the cKtio could not have been refused, if insisted on, a practice was introduced and encouraged of moulding the issues in factum, so as to avoid the use of the word dolus altogether (h). 530. The general nature of the remedy given in any action founded on dolus was restoration of the parties in one form or another to then- former position. This, too, is the principle governing the English forms of action. The party who procured a contract by dolus was compelled to "make good" (prcestare) ; some- times in one sense of the word, that is, to make good the other party's loss, some- times, in the other sense, viz. to make good his own representation. The former type of rehef included rescission {actio redhibitoria) and compensation (actio quanti minoris or cestimatoria), which are the two main species of rehef granted («) For the third rule, see D. 21. 1. 47. pr. For illustrations of the other two, see D. 21. 1, passim. (x) See Ch. XI, Sect. 4, Sub-s. (5), ante. (y) Ibid., Sub-s. (4), ante. (z) Ibid., Sub-s. (5), ante. (a) D. 44. 4. 4. 13 (a replicatio doli is not pleadable to an cxceptio doli). (6) See § 340, ante, and note (/) thereto. (c) C. 1. 22. 2 3 4 5. (d) See 'Ch.'xiv'. Sect. 1, Sub-s. (4), ante. (e) Vid. sup., §§ 502, 603. (/) D. 4. 3. 1. 4. (g) See Com. Dig., Action on the Case for a Deocipt, E. 5. (h) It has been shown that, in our law, it is quite unnecessary to use the word " fraud " : see § 463, ante. 432 APPENDIX C, SECT. 2, SUB-SECT. (15). in our jurisprudence (i). On the other hand, EngHsh law, as has already been shown {k), does not now, if it ever did, require the representor to make good his representation, in the sense of performing the contract as if the representation were a promise forming part of it. 531. The actio redhihitoria was the outcome of the jEdihcian Edict (I), which required the disclosure of certain facts and defects (vitia) in contracts of sale in the market. These, at first, very limited requirements — hinited both as to the subject-matters of the contract, and as to the "redhibitory" defects — were gradually extended so as to embrace nearly every kind of property, and most of the ordinary defects (m). The action was so called because the seller was thereby forced to take back what he had before, which imphed an undoing or annulment of the sale : " redhibere est facere, ut rursus habeat venditor quod habuerit " (n). 532. Where the vitium in question was not one of those contemplated by the Edict, that is to say, was not " redhibitory," it was the subject of an actio ex empio by the purchaser for damages (o) ; the measure of such damages being the measure adopted in English law in cases of breach of warranty, viz. the difEerence between the value of the thing dehvered and the value which it would have had if it had answered to the representation { p), except in some cases of scientia, or fraud, where the vendor might be ordered to pay double the amount of the differ- ence (g). This form of proceeding was also called, or rather the same result was arrived at by, an actio osstimatoria, or qitanti minoris {r). Kotwithstanding that the primary object of the action was compensation, the judex, in certain cases (as, for instance, when the mancipium or subject of the sale was entirely valueless) was empowered to grant redhibitory relief, that is to say, to order the return of the whole price on restoration of the articles (s). 533. The formula used to raise an exceptio doli mali was as follows : "Si paret Numerium Negidium Aulo Agerio . . . dare [facere] oportere, si in ea re nihil dolo malo Auli Agerii factum est, neque fiat, condemna. Si non paret, absolvito " [t). It is evident from the above that, as in English law, the burden of establishing this affirmative plea was on the defendant ; also that (herein differ- ing from our law) the Roman jurists considered the plea established by proof that the fraud existed at any time down to the trial (u), and not merely as an inducement to the contract or transaction in question. Redhibitory rehef or damages, in a proper case, could be granted to a defendant setting up the plea, which means that every such plea was deemed to involve a counter-claim. 534. Whatever was sufficient to support the actio, was sufficient to support (i) Sec Chs. X and XI, respectively, anle. (Jc) See Ch. IX, Sect. 3, Sub-s. (1), ante. (I) Set out in D. 21. 1. 1. 1. (m) Tor the history and development of the principles introduced by this Edict, and for illustrations of their application, see Cicero, De Off. Ill, 16, 17, and D. 21. 1 (De jEdilicio Edicto et Redhibitione et Quanti Minoris), generally. (n) D. 21. 1. 21. pr. Ulpian, from whose Commentary on the jEdUician Edict this passage is extracted in the Digest, adds (with philological inaccuracy, but juridical soundness) " quia reddendo id fiebat, idoirco redhibitio est appellata, quasi redditio." (o) D. 21. 1. 4. pr. {p) D. 19. 1. 1. pr. The damages are "quanti emptoris interfuit non deoipi," or " quod rem habere interest emptoris." For illustrations, see D. 19. 1 (De Actionibus Empti Venditi), passim. (q) Illustrations are frequent in the Digest. It is difficult to deduce from them any principle on which the award of double damages is, or is not, to be made. (r) These were two different names for one and the same action : D. 21. 1. 43. 6. («) D. 21. 1. 43. 6. (t) Eor illustrations, see generally D. 44. 4 (De Doli Mali et Metus Exceptione), passim. Cp. Ch. XII (Misrepresentation as a Defence), ante, for the English law M'hich, except as stated in the text, is precisely the same as the Roman. (tt) D. 44. 4. 2. 3. §§ 530-536. 433 the excepHo doli mali (x). The same principles applied to each form of proceed- ing. Consequently the exceptio, like the actio (y), and for the same reason, viz. that it was famosa, A^'as frequently raised by a statement in factum. The fraud to be established was the fraud of the actor or plaintiff, or of some person for whose acts he was responsible, and not the fraud of a third person (z). 535. In the case of all actions honce fidei, as opposed to actions stricti juris no exceptio doli mali was required ; because the action itself involved a considera- tion by the judex of whether good faith had been observed or not by both, or either, of the parties, the formula being : quicqidd paret dare (facere) oportere ex fide, bond, etc. As in the case of the equitable form of proceeding introduced by Lord Mansfield, known as the action for money had and received (a), the utmost latitude was permitted both to the " actor " in formulating his equitable claims, and to the reus in resisting them on equitable grounds. The principles of oequum et honum could be invoked on either side. Not only dolus, but usage, and set-off, could be raised by the defendant or plaintiff, without any special exceptio or repli- catio, and the judex had ample authority to do what was right between the parties, entertain cross-claims, order reduction of prices, strike a balance {deduciio or compensatio), and give effect to equities all round. The actions which were deemed bonce fidei comprised not only those which were concerned with such fiduciary relations and transactions as Enghsh equity considers the subject of special obligations of disclosure, but also others, such as contracts of purchase and sale, hiring, and the like. Cicero traces shortly the introduction and gradual enlargement of this class of action, where it was not only permissible, but essential, to investigate the good faith or dolus of the parties (6), and says that these conditions exist "in tuteHs, societahbus, fiduciis, mandatis, rebus eniptis venditis, locatis conductis," and that proceedings relating to any of these con- tracts or transactions are all bonce fidei (c) ; to which may be added, gestio negotii, depositum, familice ersciscundce, and communi dividundo. 536. In a criminal aspect the obtaining of advantages by false pretences, if not the subject of any express jwZiciMTO, was considered to amount to the offence of stellionatus {d). This crime stood to the offence of furtum in the same sort of relation as that in which our " false pretences " stands to larceny by a trick or otherwise. That is to say, just as in our jurisprudence, a fraudulent misrepre- sentation, whether in words or by acts and conduct, would support either an action for damages or (where money or goods are obtained thereby) an indictment for obtaining money, etc., by false pretences, so, in Roman law, similar conduct would expose the party either to an actio doli mali, or to a charge of stellionatus (e). (x) " Palam est autem banc exoeptionem ex eftdem causS, propositam, ex qua causa proposita est de dolo malo actio " - D. 44. 4. 2. pr. iy) See § 529, sup. (z) D. 44. 4. 2. 1. (o) See the description of the nature, and fairness and convenience, of this form of action which is given by Lord Mansfield, C.J., himself at p. 1012 of Moses v. Macferlan (1760), 2 Burr. 1005. (6) See Cic. De Off. Ill, 17, with which compare a similar summary in his De Natnrd Deorum, II, 30. (c) Cic. De Off. Ill, 17. {d) " SteUio," literally a kind of newt with speckled back (" steUa "), and mentioned by Virgil as one of the insects which eat away honeycombs (" ssepe favos ignotus adedit Stellio," Georg. iv, 243), was afterwards used in a secondary sense to designate a rogue or swindler. " Stellionatus," therefore, means swindling or roguery, and answers to the common law English offence of cheating. In the impeachment of the Duke of Buckingham, Sir John BUot charged the Duke with " stellionatus," and it was, no doubt, the low and vulgar associations of the name which moved the special wrath and resentment of Charles I's favourite. The offence is described, and illus- trated by examples, in D. 37. 20 (SteUionatus), and further illustrated in D. 13. 7. 36 ; D. 17. 1. 29. 5 ; and C. 9. 34. (c) D. 37. 20. 3. 1 : " stellionatum objici posse his, qui dolo quid fecerunt, sciendum est, soiUcet si aliud crimen non est quod objiciatur ; quod enim in privatis judtciis est de dolo actio, hoc in criminitus stellionatus persecutio." B.M. 2 F 434 APPENDIX C, SECT. 3, If no property was intended to pass at all, the ofience would hefurlum in the c case, and larceny in the other ( / ). Sect. 3. Applications of, and RErERBNCES to, the Pkinciples of THE Roman Law of Dolus in English Judgments. 537. The references to Cicero and the Digest in the judicial deliverances our courts on questions of misrepresentation are not infrequent or unimporta In most of these, the principles of Roman jurisprudence are appealed to in suppi of the existing rules of EngUsh law ; but, in one or two cases, they are pray in aid of the individual judge's personal predilections in favour of an extensi of those rules {g). The words, and even the substance, of the matters referred are sometimes inaccurately reproduced ; and, still more frequently the boc title, section, and fragment of the Digest given by the reporters in the notes a not to be rehed on, and the famous counsel given by the venerable scholar < leaving hfe to one who was just entering upon it — " always verify your references — has been sadly neglected (h). The topics in reference to which the most freque allusions are made to the views of Roman jurists are the following : the defli tions, in Cicero and the Digest, of dolus malus, its characteristics and incident the rule of cequum et bonum ; the duty of disclosure, and the difference betwei celare and tacere ; the employment of puffers at auction sales ; and the imput tion of knowledge of falsity to the representor, or knowledge of the truth to t] representee (i). 538. The definition and examples of dolus malus found in Cicero and tl Digest, as already cited (k), are referred to by Lord Haedwicke (l), by Knigh Bruce, V.-C. (m) ; and by Shbe, J. {n), in important judgments ; as also l Sir S. RoMiLLY (o), and Serjeant Best ( p), in their arguments of other, and i (/) D. 13. 7. 36. {(/) As, for instance, Lord Mansfield, C.J. — see notes {a), and (6), inf., ai Sheb, J. — see notes (n), and (a;), inf. [h) See, for illustrations, several of the notes to the remainder of this Section, in In some instances, the hash made of sense, syntax, and words, is so deplorable i to call to one's mind, if not to justify, the doggerel verses once addressed by the Oxfoi civilians to the la-\\'-courts — " In Institutis, Compare vos brutis : In Digestis, Nihil potestis : In Codice, Satis modicii : In Novellis, Similes aselUs." («') See the next four paragraphs, for reference to these topics respectively. {k) See § 504, sup., and particularly note (m) thereto. {I) In Le Neve v. Le Neve (1747), Ambl. 436, 445, 1 Ves. 64, 68, 3 Atk. 646, 65' 655 (a case of constructive notice : in the report in Ambler havoc ia made of tl spelling of some of the words cited). (m) At p. 109 of StiJceman v. Dawson (1847), 1 De G. & Sm. 90 (where the referent is given as D. 4. 3. 12, instead of, as it should be, D. 4. 3. 1. 2.). (re) At p. 496 of Lee v. Jones (1864), 17 C. B. (n. s.) 482, Exch. Ch., where, in suretyship case, he gives a translation of D. 18. 1. 43. 2 (which the reporter incorrect! cited as D. 43. 2), and relies upon this passage to support his views of the duties ( disclosure in a suretyship case, which, perhaps, went further than sound principi warrants, or than the other members of the court cared to go. At p. 502 he cit( D. 17. 1. 29 (" dj^soluta negligentia prope dolum est "), which is a doubtful propositio in English law. (o) In Huguenin v. Baseley (1807), 14 Ves. 273, 9 R. R. 276, he cites the passag from Cio. De Off. I, 13, set out in note (/) to § 509, ante. This is, says Sir E. Police (at p. vi of his Preface to 9 R. R.), " perhaps the only modern case in which a reporte argument has acquired by later judicial approval an authority equal to that of th judgment itself." (p) In a case to which I have lost the reference, where Serj. Best cited the " dif simulation " passage in D. 18. 1. 43. 2 — sec note (r) to § 512, ante — a reference wjuc. §§ 536-541. 435 less, important cases ; whilst the duty of good faith, and tho observance of (rqiiKin et bonum, as enunciated by the Roman jurists, is relied upon by Lord Mansfield, O.J., in justification of the equitable action for money had and received which, under his auspices, was adopted into the EngUsh law (g). 539. The Ciceronian view of the distinction between innocent silence and culpable concealment (r) is cited freely in many of the authorities ; notably by Lord Mansfield, C.J. (s). Lord Abingee, C.B. {t), Knight-Beuob, V.-C. (w), Shee, J. (x), and Chitty, J. (;/). 540. The passage in Cicero as to the secret employment of bidders at auction sales {z) was the foundation of Lord Mansfield's decisions on this topic (a), and is cited at a later date by Byles, J., in deahng with the same question (6). 541. The rules of the Digest as to the knowledge which should be imputed to the representee, and which is deemed suifioient to defeat any suggestion that he was deceived (c), are relied upon by Knicht-Brijce, V.-C. (d) ; whilst the Roman rule whereby the knowledge and dolus of the agent is imputed to the principal, is cited by Jervis, C'.J. (e). Certain statements in the Digest as to the the reporter misheard or misread for D. 4. 3. 2, and remarked that he could not find the passage there, which is not surprising : " the Spanish fleet thou canst not see Because 'tis not in sight." Either Serj. Best, or the reporter, probably the former, cited the words inaccuratelv, and inverted the order of the sentences. In Atwood v. Small (1838), 6 01. & Fin. 232, Lord BKOUGHAjr, at pp. 444, 445, says that " dolus dans locum contractui " is the language of the civil law, and not " dolus malus " merely, which, in that general and unqualified form, is an incorrect statement. In Triqge v. LamlU (1863), 11 W. R. 404, P. C, the old French Canadian law of " dol " (or tho Roman " dolus ") was discussed. (?) See Moses v. Macferlan (1760), 2 Burr. 1005, at p. 1011. (rj See § 512. ante, and, particularly the " aliud est celare " passage from Cic. Do Off. Ill, 13, which is there set out. («) At p. 1910 of Carter v. Boehm (1764), 3 Burr. 1905. (t) At pp. 380, 381 of Cornfoot v. Fowke (1840), 6 M. & W. 358, where, after citing the illustrations given by Cicero as to concealment of defects in a house offered for sale — see note (m) to § 512, ante, — Lord Abinger proceeds : " he " (Cicero) " then gives the arguments on both sides, and concludes that the vendor ought not to have con- cealed the defect in the house from the buyer." The " aliud est celare " passage is next cited, and Lord Abingeb adds : " then this illustrious moralist gives his own opinion of the moral turpitude of such a concealment. ' Hoc autem celandi genus,' " etc. : see note (x) to § 512, ante. The " illustrious moralist," it is to be feared, was leading the illustrious judge over somewhat treacherous ground in the course of this discussion. (u) At p. 571 of Gibson v. D'Este (1843), 2 Y. & C. (ch.) 542. {x) At pp. 495 and 498, of Lee v. Jones (1864), 17 C. B. (n. s.) 482, Exch. Ch. As to the views there expressed somewhat transcending tho limits of the English rule, see note (gr), sup. (y) At pp. 208, 209 of Turner v. Green, [1895] 2 Ch. 205. (2) Cited in note (m) to § 509, ante. (a) See § 392 in Ch. XIII, Sect. 2, Sub-s. (2), ante, and note (y) thereto. Lord Eldon, L.C, though agreeing \\'ith these decisions, thought that, following, as they did, the doctrines of Stoical ethics, some of Lord Mansfield's dicta went too far : see Conolly v. Parsons (1797), 3 \^es. 625 n. (6) At p. 208 of Green v. Baverstock (1863), 14 C:. B. (n. s.) 204. Instead of •' qui contra se liceatur," the words cited are " qui contra asse liceatur," which makes non- sense of the passage. Bylbs, J., as Sir J. Byles, had previously cited it correctly in his argument at p. 368 of Thornett v. Haines (1846), 15 M. & W. 367, as " the rule of ethics laid down by Cicero," on which " this doctrine of our law is founded," adding that, on these questions, " Lord Mansfield followed the rule of the civil law." (c) See § 521, ante. ^ {d) At p. 687 of Beynell v. Sprye (1852), 1 De G. M. & G. 660, evidently having in mind D. 22. 6. 9. 2, though the words he cites, — " qui vult decipi, deoipiatur " — are not to be found, — in this passage at any rate. (e) At p. 108 of Coleman v. Riches (1855), 16 C. B. 104, citing D. 14. 4. 5. pr., the passage set out in note (x) to § 516, ante, but the spoiling and syntax are hopelessly inaccurate : " procurationi^ " being substituted for " procuratoris," and " dominus " 436 APPENDIX C, SECT. 3 ; APPENDIX D. materiality of representations relating to the conditio or stakis of a person ai used by Knight-Bbuce, V.-C, to illustrate his views as to the materiality of a infant's misrepresentation of having attained his majority (/ ). for " dominum." As to the Roman view of the knowledge which should be impute to a representor, Knight-Bkuce, V.-C, at p. 106 of Stikeman v. Dawson, (1847), 1 D G. & Sm. 90, cites the passage from the Digest which bears on this question. ( / ) At p. 107 of Stikeman v. Dawson, sup., where he appends to his citatioi the remark — " I am not satisfied that, as a general rule, the law of Englani dissents." §§ 541-543. 437 APPENDIX D. THE SCOTTISH LAW OF MISKEPRESENTATION. 54'2. The Scots law, in the department of misrepresentation, as in most others, follows the Roman system. The result is that in substance (a), its principles differ very little from those of English law, which also coincide in the main with, and in some cases even purport to be derived from, the doctrines of the Digest (6). Where such differences exist (c), it will generally be acknowledged that the Scottish rule is the more logical and just of the two (d). It is proposed now to compare very briefly the two systems in relation to (1) the action for damages, (2) proceedings for rescission, (3) statutory provisions, and (4) pleading and procedure (e). Sect. 1. As eegaeds Belief by way of Damages ("Eepaeatio DAMNI "). 543. With reference to the action for damages for fraudulent misrepresenta- tion {reparatio damni), the rules of the two systems are identical, and relief is granted or refused in the Scottish Courts on precisely the same principles as it (o) See, generally. Bell's Principles of the Law of Scotland, (9th cdtu.) §§ 13, 13a. There are great differences, however, in terminology between the two systems, for Scots law has always adopted a special and highly technical system of nomenclature, which, though sometimes provoking the derision of unreflecting persons, presents this enormous advantage that it tends to accuracy in definition, which means precision in thought, whereas the English practice of drawing upon, and deferring to, popular language tends to promote confusion. On this topic, see App. A, Sect. 5, Sub-s. (1), ante. (6) See App. C, Sect. 3, ante. (c) These differences — they are very few — are noted in their proper places below. (d) Lord Cockbum is not without justification, when, in his Life of Lord Jeffrey, he boldly asserts that " with a little deduction on account of the feudality which naturally adheres to real property, it is perhaps the best and the simplest system in Europe. It is deeply founded on practical reason, aided by that conjoined equity which is equity to the world, as well as to lawyers. There can be no more striking testimony to its excellence than the fact, that most of the modern improvements in English law, on matters already settled in the law of Scotland, have amounted, in substance, to unacknowledged introductions of the Scotch system." This " striking testimony " has been added to since Lord Ckjckbum's time. Eor instance, in the Sale of Goods Act, 1893, the legislature deliberately chose the Scotch rules in preference to the English, where there was a discrepancy between them, as the rules which were to govern the sale of goods in the whole of the United Kingdom. One reason of the greater logicality and simplicity of Scotch jurisprudence is that, following the Prse- torian (which was equitable) law, it never had any occasion to establish or recognize a pair of parallel and conflicting set of rules, as in England, or to hamper themselves with such absurd distinctions as that, for instance, between " legal " and " equitable " fraud, or between " legal " and " equitable " estoppel, and the like, which once flourished so amazingly, and so persistently, in our courts. W^ See the four Sub-sections, respectively, of this Appendix. 438 APPENJ^lX D, SECTS. 1-4. is granted or refused in ours (/ ), with tlieso two (^xt;lt|ltio]ls : first, that tlio rule of no contribution ljct\v<'cii tortteasors is not recognized in Scotland (ly), and secondly, that the- estate (jf a See Questions op Law and Fact to be alleged and proved, in the various proceedings. See Burden of Allegation ajstd Proof proof of. See Evidence " in fact." See Actual And see Circumstaijces FAIR, version of facts or documents, what is, 86 et seq., 331, 332 FALSE PRETENCES, equivalent in criminal law to fraudulent misrepresentation in civil ; examples, 36,37 misrepresentation which would amount to, as distinguished from larceny by a trick, renders contract voidable only, 240 FALSITY, of representation is question of fact, burden of establishing which is on representee, 73 what kind and degree of, is necessary to constitute misrepresentation. See Misrepresentation when falsity is necessarily fraud also, 75, 76 at what date the falsity must have existed, 76 — 78 rules for construction of representations with a view to the question of. See Meaning in prospectus. See Prospectus false packing, 66 weights and measures, 346 alarm of fire, 152, 346 rumours, spreading of, 181 FAMILY ARRANGEMENT, agreement to dispense with inquiry, etc., more readily inferred in case of, than in others, 207 FAULTS, agreement to take " with all," prima facie a vahd plea, 206, 207 how defeated, 209, 210 external and patent, how question of knowledge is affected by, 203, 204 [ 28 ] Index. FEAll, statement as to, of soK or another, when a representation, 47, 48 FEME SOLE, misrepresentation by married woman that she is, 139, 140 FICTIONS, judicial, of " fravid," 388—398 statutory, of " fraud," 392, 393 FICTITIOUS, prices caused by '' rigging the market," and spreading false rumours, 07 178, 181, 182 biddings at auction sales, 340, 341 name and character, assumption of, by an author, when a misrepresentation, and when not, 364, 365, 414 FIGURES, exaggeration, when accompanied by, may be a misrepresentation, 61, 02 FIRE, insurance. See Insueance false alarm of, 152, 346 FIRM. See Paetnebship FOOD, articles of, impUed representation when selling, 67 FOREIGN, judgments, when defence to, or ground of fraud, 355, 356 country, pubHeation of prospectus in, and of another and different one in this country ; effect of, on statutory liability, 310 when representation deemed " foreign " to the transaction, in the case of a lease of premises, completed by possession, 136 FORFEITURE, of shares, leaves contract incapable of either affirmation or avoidance, 240, 241 such forfeiture, it before liquidation, renders affirmative pleas useless, 282 above rule apphes to a defence on ground of misrepresentation, 299 injunction against forfeiture of shares sought to be set aside may be granted on terms until trial, 252 FORGERY, hterary, 414, 415 FORGETFULNESS, misstatements made in, are imiocent misrepresentations, unless stated as fact within knowledge, 119 FORUM, conscienticB ; contrasted with juridical, 403 — 421 domestic. See Aebiteation FRAGMENTARY, statement, when a misrepresentation, 84 — 98 knowledge, not enough to support plea, 202 FRANCHISE, granted by fraud on Crown, may be set aside, 357 — 361 FRAUD, is " extrinsic, collateral act," 350 generally, as applied to misrepresentation, 5, 6, 102 — 114 same rules for determining what is, in law and in equity, 103 more than a mere lie, 103, 104 certain eases in which falsity necessarily involves fraud also, 75, 70, 103 true meaning of, is absence of actual and honest behef in the truth of the misrepresentation at the material date, 104 [29] Index. FKAUD — continued. three degrees of, viz. (i) knowledge of falsity, (ii) belief of falsity, and (iii) conscious ignorance or non-belief in truth, 104, 107 actual but dishonest belief is, dishonesty moaning " diligence in ignorance," or wilful abstention from inquiry, etc., 105 motive or intention of representor, whether to injure representee, or benefit himself, or a third person, or even the representee, or no motive at all, is immaterial to question of fraud, 6, 107 — 110 " practical joke " oases, 109 — 110 in case of continuing representation, non-belief must have existed at date of representee's alteration of position, to constitute, 110 — 114 during period of continuing representation, suppression of supervening facts known to representee, as well as subsequent discovery that representation was false when made, probably amounts to, 112 — 114 agreement not to impeach contract for, is probably a nuUity, 210 but agreement not to attack an award for, is valid, 210, 356 operation of, in defeating certain affirmative pleas, or rights of assignee. Sea Bad Faith no higher measure of damages where breach of contract was characterized by, than where not, 223, 224 no difference in rules as to " remoteness " of damage by reason that repre- sentation was accompanied by, 155, 156 pleading and practice rules relating to cases in which there are allegations of. See Pleading, Procedure, Costs history of conception and treatment of, at common law, 386 — 387 the like, in equity, 387, 388 history and criticism of expressions " legal," " equitable," " moral," " per- sonal," " actual," " artificial," " technical," etc., as appHed to, 388 — 393 history and criticism of the substantive law relating to, 393 — 402 FULL. See Complete FULLY PAID, case of implied representation that shares are, 68 FUTURE, statements as to, when representations, 1, 32 — 37 GENERAL, proposition of law, statement of, when a representation, 57 statement, when mere exaggeration, and when representation, 60, 61 GENUINE, imphed representations that articles, documents, transactions, etc., are, 65, 68, 70—71 behef , what it is, 105 absence of such behef, though entertained in fact, is fraud, and existence thereof is innocence, 104, 105 GESTURE, representation by, 64, 65 GIFT, is alteration of position, 148 GOOD, " cause " for making exceptional order as to costs, 376, 377 " making." See Making Good faith, presumed in respect of every common law cause of action, affirmative plea, and transaction, in relation to misrepresentation, until the contrary is shown. See therefore Bad Faith burden of proof on representor to establish, when a prima facie case of an untrue statement in prospectus has been made under the statute, 326 — 329 [30] Index. GOODS. Sec Article GRANT, of charters, privileges, etc., obtained by misrepresentation to Crown, may be revoked, 357—301 GROSS, negligence, is not fraud, but, as suggested, may be so gross as to lead to the alternative inference that there was no negligence at all, butfraud, 115 — 117 lie " in gross," not actionable, 122 GROUNDS, unreasonable, of belief in truth, not fraud at common law, 115 — 117 imder statute relating to prospectuses, defendant may be put to proof of reasonable, for belief, 326 — 329 of complaint, where substantially one, different remedies may be sought in same action against different defendants, 334, 374, 375 GUARANTEE, where statement as to third person's credit is a representation, and not a, 46,47 expressions of wilhngness to, may be figurative form of making a representa- tion, 47 by representor, of performance of contract, may involve a representation that he has a principal, 68 HERMAPHRODITE, animal, which " told its own He," and was a silent instrument of fraud, 67, 68 HIDE. See Concealment HIGH COURT OE JUSTICE. See Jueisdiction HIGHER SCALE OP COSTS, not given merely because fraud charged, 378 " HIGHEST BIDDER " at auction sales means highest real bidder, excluding vendor's puffer, 340, 341 HISTORY, of action of deceit, 381 — 388 fraud at common law, 386, 387 fraud in equity, 387, 388 generally, of the law of misrepresentation, 388 — 393 of early company legislation, 277, 278 statutory provisions as to prospectuses, 401, 402 the law relating to the employment of puffers at auction sales, 340 — 344 HOLDER, " in due course " of negotiable instrument. See Negotlablb Instrument other rights and property. See Chose in Action, and Chose in Possession HONESTY, in beKef, what is, 105 generally. See Innocence and Good Faith HOPE, expressions of, to what extent representations, 47, 48 HORSE, sending diseased, to repository, implied representation of soundness, 67, 68 continuing representation of ownership of, at an auction sale, 78, 139 HOUSE. See Land HUSBAND AND WIFE. See Marriage, and Parties [31 ] Index, identity, of principal and agent in fraudulent niisrepresentation, 164, 165, 172 continuous, required to constitute " body of persons," 169, 170 of person, misrepresentation of, by acts and conduct, 68, 69 contracting, or dealing, misrepresentation of, may render the contract or transaction void, 239, 240 question of the author's right to preserve the secret of his own, by telling a lie in answer to question, 128, 129, 416, 417 of subject-matter of contract, alteration of, when a bar to rescission, 272, 273 property, or fund, which has preserved its, and can be traced and earmarked, may be deemed not the subject of a claim for unliquidated damages, but equitable debt or property, 225, 289 IGNOEANCE, honest, of truth, is imiocence, 114 — 119 " dihgence in," is dishonest behef, 105 conscious, as to truth or falsity of what is stated as a fact, renders repre- sentation fraudulent, 104, 107 ILLEGALITY, implied representation of absence of, when, 67, 68 when a defence to proceedings for misrepresentation, 200, 204 of contract, renders it void, not voidable, 242 ILLITERATE, person, plea of nmi est factum not confined to, 238, 304, 305 IMMATERIAL. See Materiality IMMEDIATE, " cause of damage," a questionable phrase, 154 — 157 IMPLIED, representations, 3, 64 — 71 authority. See Authokity affirmation of contract. See Apfiemation waiver, when. See Waivek IMPOSSIBILITY, of specific restitution, a bar to rescission, 271—275 INACCURACY. See Accukacy INADEQUATE, statement of the entire facts, when misrepresentation, 84 — 98 grounds of behef , misrepresentation not rendered fraudulent by, 114 — 119, — but, in prospectus cases, untrue statement may be rendered thereby actionable under the statute, 326 — 329 INADVERTENCE, consistent with innocence, 114—119 INCAPABLE. See Capable INCAPACITY, INCOMPETENCE, of parties to representation, in case of, what i^ersons become parties to the proceedings. See Parties belief arising from, may be innocent, 114 — 119 INCOMPLETE. See Complete INCORPORATION, of company, who may be agents, before and after, 159, 160 promoters, before and after, 319, 320 of reports and memoranda -with prospectus, for purposes of the statutory proceedings, 310 of documents with one another, generally. See Connected charter of, procured by fraud may be annulled, 357, 358 [32] Index. INCORRECT. Sec CoERECT INDEMNITY, between misreprcsentors in case of contract, but not where acUon is for damages for deceit, 171, 172 rule as to, between defendants jointly liable to statutory proceedings in respect of prospectus, 336 — 338 may form part of relief given in proceedings for rescission, if not in nature of damages, 250, 251 statutory " damages " in enactment as to rectification of the register mean no more than, 257, 258 INDEPENDENCE. See Dependence INDEX, to a document, not to be construed by itself, 100 INDIEEERENCE, " reckless," as to truth or falsity, 104, 107 INDIRECT. See Direct INDUCEMENT, generally as to, 6, 120—133, 141—145 question of, is distinct from that of materialitj', 12(1, 133, 141 burden of proving, on representee, 121, 125, 133 most questions in relation to, are questions of fact, 7, 8. 121, 133, 141, 142 what are questions of law as to, 7, 8, 144 warranty gets rid of all questions of, 120 to prove, it must be shown that representation was made both Mith object, and with result, of inducing, 121 — 129 intention may be presumed, if representation was calculated to induce a normal representee to act as he did, 121, — but cannot be presumed from the mere act of representation, 125 no inducement, where misrepresentation was in answer to question which representee had no right to ask, 128, 129 but is, where representee had such right, 129 no inducement, where there was a duty to lie, 122, 129 shown, unless proved that representor contemplated the representee, or a class of which he was one, as likely to be influenced, 125 need not have been sole, 6, 129, 130 necessary to show that representee relied only on something other than the representation, e.g. warranty, certificate, another statement, or his own skill or judgment, and not merely that there were other inducing causes, 122—124 kinds of representation which arc held not to be, 128 where several statements, or documents, the whole are to bo considered together, unless some one of them is severable and distinct from the others, for the purpose of determining question of, 7, 130 — 132 where several possible meanings, representee must assign a sense, and show that the representation was inducement to him in that sense, 7, 133 materiality may be inferred as a fact, but not presumed as law, from, 8, 142, 143 all circumstances to be considered in determining question of ; kinds of circumstances relevant, 144, 145 difficulty in proving, in oases of statements of intention, opinion, and law, 33, 34, 50, 54 how far rules as to, apply in case of statutory proceedings in respect of prospectuses, 324 — 326 [ 33 ] Index. INFANCY, statements denying, are material misrepresentations, 139, 140 doubtful questions as to relief in such oases, 140, 141 where one of parties to representation is, how may sue or be sued. 8ee Paeties INFERENCE, of fraud, may be made from proved " dihgeiioe in ignorance," and wUful abstention from inquiry, 105, 116, 117 intention to induce, from result, but not from the mere act of representa- tion, 121, 125 inducement, may be made from materiality, as an inference of fact, in extreme cases, but not as a presumption of law, 8, 142, 143 generally, as to inferences of fact, and presumptions of law, see Questions OF Law and Fact INFORMATION, statements as to, when representations, 2, 49 — 52 made on inadequate, not on that account alone fraudulent, 114—119 wUful blindness to, may indicate fraud, 105, 116, 117 plea of representor's knowledge not made out, unless representee had full, 202,— nor by proof of merely furnishing sources or means of, 204, 205 no election, or affirmation, unless representee had full and exact, 269, 282 INFRINGEMENT, of patent, trademark, copyright, etc., defences to actions for, on ground of fraud on pubho, 359 — 365 whether " passing off " actions are actions for infringement of proprietary rights, or can still be deemed actions of deceit, 361, 362 INJUNCTION, to restrain calls or forfeiture may be granted in proceedings for rescission, 251, 252 misrepresentation to court on affidavit in support of ex parte apphcation for, by omission and suppression, 351 INJURY, immaterial to question of fraud, whether representor intended to inflict, 107 rescission, whether contract, if affirmed, would have injured representee, 233, 234 misrepresentation causing, to person other than representee, when actionable, 349—362 INJUSTICE, where rescission would work, to representor or third persons, relief wiU be refused, 271—275 application of rule to cases of setting aside judgments, 355 INNOCENCE, in misrepresentation, is constituted by actual and honest belief in the truth thereof, 6, 114, 115 if such behef existed, innocence is not negatived by proof that the belief arose from negligence, or incompetence, or was based on mireasonable grounds, or inadequate inquiry, or other merely intellectual failing, 115 negligence neither constitutes, nor is evidence of, 115 — 118 conduct which would denote abnormal or gross neghgence, may lead to an inference negativing the pretended innocence; terminological criticism of the dictum that " neghgence may be evidence of fraud," 116, 117 [34 ] Index. IXNOCENCK— co«^:«Me(L forgetfuliiess iif qualifying circumstance or fact is not oi itsi'll! stiiBcicnt to negative, but where the statement purports to bo one of absolute fact, it may be otherwise, 119 iiinoceut misrepresentation exempt from actions of deceit, 197 — 199, — but not from proceedings for rescission, 231 — 233, — ■ nor from statutory proceedings founded on untrue statements in pro- spectuses, 322. And see Prospectus innocent misrepresentation of authority, the subject of an action for damages, because it may also be regarded as breach of contract or warranty, 194, 195 cases where truth necessarily involves innocence also, 75, 76 INNUENDO, not required m actions for misrepresentation, 80 INQUIRY (IN SENSE OF INVESTIGATION), abstention from, does not negative innocence, 114 — 110. — unless abstention is with fraudulent object of escaping the truth, 105, 116, 117 means of, is not knowledge, 204, 205 agreement to waive, valid answer, prim-.'i facie, 206, 207 unless bad faith, or positive devices to conceal, etc., 209, 210 INQUIRY (IN SENSE OE QUESTION), false answer to, if no right in questioner to make, is not misrepresentation, 128, 129, 416, 417,— secus, i£ questioner has such right, 129 where no duty to answer, agent (e.g. secretary of company) cannot make principal liable, 217 INQUIRY (IN TECHNICAL SENSE), writ of, 225 as to damages, in equity, 350, 351 pursuant to ^vrit of ad quod damnum, in case of grants irom Crown, 359 INSEPARABLE, law and fact, to what extent statements of, are representations, 54, 55 documents, to be considered in their entirety. See Connected INSOLVENCY, efiect of, where bankruptcy. See Parties, and Damages where hquidation of company. See Liquidation actual, without liquidation, of company, when a bar to rescission, 279 INSTRUMENT, statement as to, is a representation, 59, 60 false statement as to, renders it voidable, 234 — 236 misdescription of character or nature or class of, renders it void, 236 — 238, 303—306 terms and effect, renders it voidable only, 238, 239 negotiable. See Negotiable Instrument INSURANCE, life, illustrations of material representations in, 36, 101 fire, example of continuing representation in case of, 77 marine. See Marine Insurance usual warranty or condition in policies of, gets rid of questions of misrepre- sentation, 120 INTENTION, statements as to representor's own, when representations, 1, 32, 37, — and when contracts or promises, 37 — 45 [35] Index. INTENTION— continued. statements as to third person's, when representations, 46, 47 representor's, immaterial to question of falsity, 72, 73 fraud, 6, 107—110 to induce, inferred from fact of inducement, where representation was of nature to induce, 121 not inferred from mere act of representation, 125 no use to prove intention to induce, without also proving effect, 122 — 124 fact of inducement does not establish, without actual or presumed intention to induce, 124—129 in certain cases, actually intended, though not the natural, meaning of state- ment is deemed the true meaning as between the parties, 79, 80, 82 — 84 of representor, when relevant to questions of inducement and materiality, and when not, 135 — 140 where representor had no intention to execute a misdescribed instrument, it is void, 236—238, 303—305,— secus, where he had such intention, though deceived as to provisions thereof ; instrument then voidable only, 238, 239 where representor had no intention to contract with the person misrepresented to be contractor, contract is void, 239, 240 ■ intentional fraud " ; expression criticized, 389, 390 " ;., INTEREST (IN ORDINARY SENSE), act or abstention affecting temporal, is alteration of position, and actionable damage, 147, 150, 151 of third persons, where affected, rescission refused, 271 — 275. See Thied Person persons other than representee, where injured by a representation to court, or State, or the pubhc, subject of relief (judgments, charters, grants, patents, etc.), 349 — 362 INTEREST (IN FINANCIAL SENSE), repayment of money with, on rescission, 250 return of deposit with, 253 may be awarded, on order for rectification of register, 69, 70 payment of sums equivalent to what would be due for, on mortgage, is implied representation that mortgage has been executed, and in subsisting security, 69, 70 INTERLOCUTORY, injunction. See Injunction order, may be set aside, when procured by fraud on court, 357 INTERPRETATION. See Meaning INTRINSIC, facts, duty in certain cases to reveal, on sale and purchase, 93 — 98 INVALID. See Void INVENTION, misrepresentation of merits of, by acts and conduct, 66 scientific pubhcation as to, not usually deemed an inducement, but, under special circumstances, may be, 127 deceit practised on State by misrepresentations as to, 357 — 359 INVENTOR, exaggerations of, when representations, and when not, 60, 61 INVESTIGATION. See Inquiry (in Sense ot Investigation) [36 ] Index. investment, implied representation of having made, as instructed, 70 misrepresentations as to safety of, 199 representations for purpose of inducing, 144, 145, 177, 178, 180, 181 where claim is based on acts involving a fraudulent procurement of the pubhc to make, there is a defence on the ground of public poKcy though defendant not defrauded, 363—365 INVITATION, to pubhc to use land or chattel by acts and conduct, when an implied repre- sentation of security, 70 injury (physical and personal) resultmg from the acceptance of, so made, is actionable damage, 150, 151 to pubhc to subscribe for shares, 177, 178. And see Pkospectus INVOICE, " salting," 407 lERATIONAL, beUef in truth, does not negative innocence, 107, 108 but it is otherwise, in case of statutory action for compensation for mis- representation in prospectus. See Peospecttts IRREBUTTABLE, presumptions. See Pbesumption IRRELEVANT, charges of fraud, result of making, 377, 378 matters, in determiniag questions of meaning, fraud, or raateriaUty. See Meaning, Eratjd, Materiality IRREVOCABLE, election is, when once made, 230 ISSUE (IN ORDINARY SENSE), of prospectus inviting subscriptions for shares, etc.. See Pkospectus shares, by company. See Prospectus shares, when an implied representation that they are fully paid, 68 bill of exchange, affected by fraud, 302 ISSUES (IN TECHNICAL SENSE), of fact. See Questions op Law and Fact setthng, Scottish procedure as to, 439 rules of practice as to directing, and trial of, and otherwise. See Rescission Procedure, Costs JEST, misrepresentation in, actionable, 109, 110 physical and personal injury caused, whether indirectly or directly (as in case of shock) by misrepresentation made in, is subject of damages, 151, 152 JOINDER, of parties and causes of action. See Procedure JOINT, responsibihty in cases of misrepresentation, with right of indemnity and contribution, where action to rescind contract, 171, 172 and several liabiUty, where action is to recover damages for fraudulent mis- representation, and no right of indemnity or contribution, 172 different rule as to habihty of persons jointly hable under the statute for untrue statements in prospectus, 336 — 338 JOKE, practical. See Jest [37 ] Index. JUDGE, functions of. See Jurisdiction, Pkoceduee, Costs, Rescission, Questions of Law and Fact JUDGMENT, when may be set aside, or, in case of foreign judgment, resisted, on ground that it was procured by fraud on court, 350 — 356. And see Jurisdiction, Procedure, and Costs JUDICIAL, acts. See Judgment fictions of " fraud," 392, 393 repugnance to statutory fictions of fraud, iMd. terminology. See Terminology JURISDICTION, in actions of deceit, 366 ■ for rescission, 366, 367 various statutory proceedings (rectification of register, variation of hst of contributories. Vendor and Purchaser Act, 1874, action for compensa- tion in case of prospectuses, etc.), 368, 369 proceedings to set aside judgments, revoke charters, patents, and grants, expunge trademarljs from register, etc., 350 — 365, 369 arbitrations, 369, 370 as to costs. See Costs JURY, functions of. See Jurisdiction, Procedure, Deceit (Action of), and Costs instances of repugnance of, to accept judicial definition of " fraud," 392 JUS TEBTII. See Third Person KING, The. See Crown KING'S BENCH DIVISION. See Jurisdiction KNOWLEDGE, of falsity, is fraud, 104, 105 hand ihcipiliir qui scit se decipi, 126, 127 of truth, or of supervening circumstances, acquired by representor before representation acted upon, when raises a duty to communicate, 80 — 98, 110—114 in its bearing on questions of inducement and materiahty, 135 guilty, of true facts, immaterial whether possessed by principal or by agent, in case of fraud, 9, 164, 165 that a representation will be " passed on," 9, 173, 174, 179 — 184 of representee, is a defence to any proceedings for misrepresentation, 200, 201 but representee must be proved to have had such knowledge before he altered his position, 201, — and that the knowledge was fuU and precise, 202, — and was actual and personal, not constructive or imputed, 202, 203 proof of means of, is not proof of existence of, 204, 205 but inference of, may in cases of " objects of sense," be inferred as a fact, 203, 204,— and, as against a shareholder, knowledge of contents of memorandum and articles of Association is inferred by statute, 274, 275 agreement to waive inquiry, or dispense mth information, or take with all faults, is valid, whether representor has knowledge of faults or not, 205, 206 [38] Index. KNOWLEDGE— coHtoffff/. unless the representor added " so far as I know," and in fact did know of some fault, in which case the representation is false, and (necessarily) fraudulent, 75, 76, 209, 210,— or unless he has hidden away, or covered up, a defect by positive devices, 209, 210 where, in executing an instrument, the representee has knowledge that he is conveying, or doing something with his estate, the instrument is not void for misrepresentation, but voidable only, 239 no election or affirmation without, 269, 282 prospectus issued without director's, when a defence to statutory pro- ceedings, 315, 316 what is issuing a prospectus with, 316 of foreign tribunal, is no answer to proceedhigs to set aside foreign judgment obtained by fraud, 356 LACHES, effect of, 282—286 LADING, bill of. See Negotiable Instrument. LAND, statement as to intended use of, is a representation, 35 effect of condition on sale of, waiving certain rights, 208 — 210 knowledge of representee that he is conveying, by an instrument the purpose of which has been misrepresented to him, prevents its being deemed void, 239 provisions as to secret employment of puffers by vendor in auction sale of, 338—344 the Vendor and Purchaser Act, 1874, gives no direct relief in respect of contracts for sale of, induced by misrepresentation, 368 sale of, by order of court, same rules apply as in other cases, 261, 262 setting aside grants of, by Grown, on ground of fraud, 357 restitutive terms of reUef, in judgments for rescission of contracts relating to, 250 illustrations of rescission of contracts as to, 199. And see Conveyance LARCENY, by a trick, where transaction amounts to, in criminal law, it is void in civil law, 240 LAW, statements of, when representations, and when not, 2, 53 — 57 when King mistaken as to, grant cannot be set aside, 352 questions of, what are. See Questions of Law and Eact LAWFUL, implied representation of existence of conditions required to render trans- action, 67, 68 LEASE, tender or dehvery of, implied representation by, 65 LEGAL, effect of instrument, statement as to, is a representation, 59, 60,^ but does not render instrument void, unless its nature and character is misdescribed, 238, 239 " fraud," now held to be equivalent to moral, 103 criticism and history of this expression, 386 — 393 representatives. See Parties [39] Index. LEGISLATURE, amendments and declarations of common law of misrepresentation by. See Statute deception of, by false statement in preamble, 361 LETTERS PATENT, ^ee Patent LIABILITY, assumption of civil, and (in certain oases) of criminal, is alteration of position, 148 LICENSE, I giving a, is alteration of position, 148 f for marriage, cannot be set aside for fraud, unless marriage itself can be, 301 LIE, kinds of, -which are misrepresentations, 30, 31 " naked," or " in gross." is not actionable, 122 acting a, 64, 65 objects of sense which tell their ovm, 80 where the truth (in a sense) is a, 80 fraud is more than a mere, 103, 104 when right or duty to tell, 122, 128, 129, 410, 417 LIMITATION, any statute of, is defence to proceedings for misrepresentation, 200, 214 delay of representee, if within statutory period of, is per se of no effect, 208, 209, 282—286 ordinary statutes of, apphcable to statutory remedy in respect of misstate- ments in prospectus, 335 LIQUIDATION OF COMPANY, is prima facie a bar to rescission of contract to take shares, in the case of any one whose name is in fact and properly on the register of members at the date of the commencement of the Hquidation, which relates back to filing of petition or passing of resolutions, 275 — 282 shareholders, as well as creditors, may be prejudiced, by allowing the share- holder to escape, 279 immaterial whether liquidation is compulsory, voluntary, or under super- vision, or the company has in fact stopped payment, and given public notice thereof, 279 shareholder may remove the bar, by proof of commencement of proceedings before commencement of liquidation, or assertion of his claim in an affidavit, in certain cases, or binding agreement with company to remove his name, or agreement to be bound by result of test action brought by another shareholder, or by proof that in fact, as by forfeiture (if not collusive), the contract had been put an end to, 282 procedure of shareholder in, if 'claim maintainable, is to apply under the Companies Act for variation of the hst of contributories, whether List A (of present members), or List B (of past), 258, 259 same rules and burden of proof apply to statutory procedure on, as in ordinary actions for rescission, 259, 260 statutory procedure for rectification of the register may be resorted to m, as auxiliary, or otherwise, 260 liquidator may resort to statutory remedy in, where registration of transfer was procured by misrepresentation, 260, 261 LITERAL. See Exact LITERARY, frauds on pubhc, 364, 365 [40 ] Index. L1T:E.UARY— continued. forgeries, 414, 415 anonymity or pseudonyiuity, right to lie for purpose of preserving, 128, 129, LITIGATION, bare right of, not assignable, 227, 289 but is incidental to property in actual or constructive possession, 288 LOSS. See Damage LUNATIC. See Paktibs MAINTENANCE, assignment of bare right to sue for misrepresentation savours of, 227, 289 but assignment of property to which such right is incidental does not, 288, 299 MAJORITY, assertion of, by infant. See Infancy "MAKE UP," of articles, nn impUed representation, and a " passing off," 70, 361, 302 person and appearance, also an implied representation C personation), 69 "MAKING GOOD," a representation, doctrine of, as a special equitable remedy, exploded, 188 in supposed cases of, the expression stands for either the ordinary remedies, or estoppel, or performance of contract or promise, 189 — 194 IIALA FIDES. See Bad Faith MANCEUVRES, use of, to cover up defect, defeats plea of agreement to take with all faults, etc., 209, 210 MARGINAL NOTE, to document, must be read with the body thereof, to determine whether the whole true or false, 100 MARINE INSURANCE, codified rules as to misrepresentation in contracts of, contained in the Marme Insurance Act, 1906. See references to this Act in the Table of Statutes, p. xl. MARK, trade-. See Tbademabk MARKET, sending diseased animal to, when an implied representation of soundness, 67,68 " rigging " the, 67, 178 member of class of purchasers of shares in, when representee, 183, 184 prices not to be taken into consideration in assessing damages, if not repre- senting real value in the proved circumstances existing at the time, 219, 220 MARRIAGE, statements of intention to settle or leave property on marriage, when promises and when representations, 42 — 45, 192 — 194 paying addresses with a view to, when an impUed representation, and of what, 67 B.M. [ 41 ] 2 1 Index, MA RRIAGE— coMiMiaef/. giving a note of hand for a fictitious indebtedness to another to enable him to procure a marriage by appearance of means, 70 suppression of, by married woman, and representation that she is a, feme sole, 139, 140 not voidable for misrepresentation or fraud in any case, but may be subject of decree of nullity, if the misrepresentation was as to the essential character of the ceremony, or as to the personahty of either of the spouses, 244 where marriage cannot be nullified, neither can a settlement on, 244, — nor can a hoense for, 361 rights and liabiKties for misrepresentation conferred and imposed by, on husband and wife. See Parties MATERIALITY, prima facie a question of fact, to be estabKshed separately from fact of inducement, 130, 133, 141—143 warranty gets rid of aU questions of, 120 where questions of law involved in, 7, 8, 144 burden of proof on representee, 133, 140 defined as tendency to induce the representee to alter his position in the particular manner aEeged, either in the ordinary course of events, or in special circumstances of the case known to the representor, 7, 134, 135 belief of representor as to materiahty, irrelevant to question of, in the former class of case, 134 but relevant and necessary to be proved, in the latter, 135 illustrations of representations which may be material as between the parties to the representation under special circumstances which would not be relevant as between other parties, or under other circumstances (per- sonality of vendor, purchaser, creditor, moneylender, o\vner or late owner of property, dependence or independence of representor, etc.), 135 — 140 in above cases, representation, though not material to the contract, may be material to the inducement, 138, 139 of representations as to age and marriage, 139, 140 where evidence required, to determine question of, and where not, 140, 144, 145 in marine insurance, statutory definition of, 142 inducement may be inferred from palpable, as a fact, but not presumed as a matter of law, 8, 142, 143 illustrations of circumstances which may be considered relevant to question of — such as character of document, nature of contract or transaction or property, profession, business, general and particular experience of parties, object of transaction {e.g. whether to speculate, or invest, or underwrite), etc., 144, 145 MEANING, rules for determining meaning of a representation, for the purpose of question of falsity or truth, 4, 5, 78—101 of representation is primd facie that in which the representee, being a normal person, understood it (primary or natural sense), 78, 79 but representee may prove that a secondary or unnatural meaiung was actually intended by the representor, in virtue of special circumstances, 79,80 where several reasonable meanings, burden on representee to prove in which sense he understood the representation, and that it was false in the sense so assigned, 80 — 82 burden is the other way, where the ambiguity of the representation resulted from the fraudulent intention of the representor to mislead, 82 — 84 [ 42 ] Index. UKA^I^G— continued. principles for determining meaning of a representation from which necessary qualifications are omitted ("partial and fragmentary" statements, half- truths), so as to render what is stated false, siippressio veri, etc., 85 — 88 where residue not rendered false, no remedy, 89 of representation true when made, but falsified by subsequent discovery, or events, in case of continuing representation, duty to correct, etc., 90, 91 where no duty to speak, silence or reticence is not construed to mean mis- representation, 93 — 98 where representation is complex, sc. compounded of several statements, connected with one another by express reference or otherwise, the meaning of the entirety is the true meaning, 98, 99, — ■ but not in case of any separate and unconnected document or state- ment, 99, 100 what are questions of law in determinuig, 100 fact in determining, 101 where evidence admissible to determine, 101 illustrations of application of above rules to construction of prospectuses, 81, 82, 84, 87, 88, 98, 99. And see Peospbotus rules for ascertaining, with a view to questions of inducement and materiality. See Inducement, and Materiality MEANS, of knowledge, proof of, is not proof of knowledge, 204, 205 use of positive, to conceal a defect, defeats plea of agreement to take with all faults, etc., 209, 210 MEASURE, of damages. See Damages false weights and measures, statute as to, 346 MEMBER, of community or class, when a representee. See Class, and Public (The) company. See Company, and Liquidation MEMORANDUM, of association, shareholder has imputed notice of contents of, 274. 275 incorporated with jirospectus, statutory provisions as to misrepresentation in, 310 MEMORY, failure of, when making misrepresentation, 118, 119 MENTAL, condition of seK, or another, statement of, when a representation, 1, 2, 12—53 shortcomings in arriving at behef, not indication of fraud, 115 — 119 " reservation," not tolerated in Enghsh law, 83 ethics, 410—415 distress, is not damage, 151, 152 state, need not be particularized in pleading, 372 MERCANTILE. See Commercial MINE, nondisclosure of existence of, beneath land purchased, or of exhaustion thereof in land sold, when not actionable, 95, 96 scientific statement to pubhc as to, when may be actionable, 126 — 128 exhaustion of, illustration of bar to rescission, 272, 273 MINING COMPANY, cost book. See Cost Book Mining Company MINORITY. See Infancy [43 ] Index. MISDESCRIPTION. See Miseepeesentation MISFEASANCE, claims assignable, 289 MISLEADING, statement in prospectus, is " untrue," within the statute, but need not have been fraudulent, 322 generally. See Miseepeesentation MISREADING, a document, is misrepresentation, 58 if as to the character and nature of the document, renders it void, 237 MISREPRESENTATION, generally as to, 3 — 5, 72 — 101 difference between, and non-disclosure (in the strict sense), 28, 85, 93 means a representation (as to which see Representation) which was false at the material date, 4, 72 — 76 falsity necessary to constitute, means falsity in fact, to which questions of intention and behef of representor are immaterial, 72, 73 substantial falsity, so. such a discrepancy between the facts and the repre- sentation as would be deemed material by a normal representee, is necessary and sufficient to establish, 73 — 76 burden of proof of, is on representee, 73 is a question of fact, 73 falsity in substance is, though accompanied by hteral exactitude in details, and truth in substance is not, though details inaccurate, 75 cases where falsity in, is necessarily fraud also, and where truth in, is neces- sarily mnocence also, 75, 76 rules of construction for the purpose of determining whether representation is, 4, 5, 78 — 101. See Meaning material date at which misrepresentation must be shown to have been false is when the representee altered his position on the faith thereof, 76 — 78 continuing representation rendered false by subsequent discovery of falsity or by supervening events, in which case duty of representor to correct or supplement, whereupon it ceases to be a misrepresentation, 76, 77 illustrations, 77, 78 when misrepresentation is fraudulent, and when innocent. See Fbaot), and Innocence effect of, on mind, and on material interests of representee. See Inditoement, Materiality, Alteration of Position, and Damage parties to. See Parties remedies and reHef in respect of. See Deceit (Action or), Rescission, and Defence statutory proceedings in respect of. See Prospectus, Auction, Statute to Court, State, or PubHc. See Judgment, Crown, Patent, Trademark, and Public (The) of authority, 194, 195 terminology in law of, criticized, 393 — 400. And see Terminology substance of law of, criticized, 400 — 402 ethical treatment of, 403 — 408 Roman law of, 422 — 436 Scots law of, 437-^39 MISSTATEMENT. See Misrepresentation MISTAKE, (in ordinary sense). See Eeeor in juridical sense), distinguished from misrepresentation, 27, 28 [44 ] Index. MISTBANSLATION of docvimonfc, a misropieaciitatiou, 59 MODE, of making a re presentation, 2, 63 — 71. /See Kepresentation trial. See Procedure estimating damages. See Damages MONEY, statement of readiness to pay or hand over is a representation, 35 — 37 obtaining, by false pretences, 36 loss of, or of money's worth, is damage, 149 had and received, action for, 20, 252 — 254 when plea under Lord Tenterden's Act may be pleaded to such action, 214 paying, by way of interest on mortgage, may be a " continuous fraud," 69, 70 MONEYLENDEE, statement by, that he is prepared to pay or hand over money is a repre- sentation, 36, 37 misrepresentation by, as to the terms on wliich he does business ; bUl of sale procured by, ordered to be dehvered up, 247, 249, 250, 254 personality of, may be material to the inducement, if not to the contract, 137 fraud by money borrower on, 199 statute of 1906 relating to, 346, 401, 402 MORAL, " fraud," 388—393 philosophy, doctrines of, as to misrepresentation, 403 — 421 indifference or recklessness, necessary to constitute fraud, 117 MORTGAGE, paying money equivalent to interest on, may be a continuous fraudulent misrepresentation that mortgage is a subsisting and valid security, 69, 70 misdescribing, as a document of a different nature, may render it void, 237 MOTION. See Procedure, and Register MOTIVE, not relevant to fraud, 6, 107—110 MUTUAL restitution in specie a condition of rescission, 245, 246 NAKED, he, not actionable, 122, 128 right to sue, not assignable, 227, 289 NAME, removal of, from register of members, 264^-258 hst of contributories, 258 — 261 register of trademarks, 358, 359 assumption of another's, for purposes of fraud, 69, 136 — 139, 240, 304 for literary purposes, when fraudulent, and when not, 128, 129, 364, 365, 414—417 where name of person is inserted in prospectus as a director or future director, statutory consequences, 314 — 317 NATURE. See Character (in Sense of Nature ok Substance) NATURAL, meaning, prima facie taken as true meaning iov purpose of falsity, 79.— and for purposes of the question of mducemont, 133 [45 ] Index. NATURAL— comfomed " and probable result,'' for the purpose of the question of inducement, 121 the like, as to question of materiality, 133, 134 damage, 152 — 154 for the purpose of the question who is a representee, 173 — 178 NEGLIGENCE, as to places and articles, when imphed representation of security, 70, 150, 151 in arriving at behef, not fraud, 105 — 107, — unless it amounts to wiKul blindness, or moral recklessness, 117 suggested, may be so gross, as to invite the alternative mferenoe of fraud, 116, 117 estoppel by, from claiming that instrument procured by misrepresentation of its nature, is void, 304, 305 in oases of assignment, 301 ill the case of prospectuses, may result in statutory responsibility, 326 — 329 none, in the sense of breach of duty to representor, in not exercising election to avoid, 208, 209, 282—286 when representee is not entitled to fall back on case of, having failed to prove fraud alleged, 232, 233 NEGOTIABLE INSTRUMENT, representation on executing, is a representation to all to whom it may come in the course of circulation, 178 when defence of misrepresentation or fraud is vaUd against assignee of, 301, 302 if representee shows that the acceptance, negotiation, or issue of, was affected with fraud, he puts the assignee to proof that he took it in good faith, for value and without notice, 302 assignee who takes bill of exchange, etc., when overdue, takes subject to equities, including equity to rescind, 302 biUs of exchange, promissory notes, cheques, bills of lading, and other instruments rendered negotiable by statute or mercantile custom, are, 302 estoppel as against assignee of, 301 NEWSPAPERS, false entries in register of, 346 NOD, representation by, 64, 65 NON EST FACTUM, plea of, vahd if execution of instruments procured by misrepresentation of nature, character, or class thereof, 303 — 305 may be defeated by estoppel, 238 NON-BELIEE in truth of representation is fraud. See Feaud NON-DISCLOSURE, in strict sense, not misrepresentation, 28, 85, 93 but may be, in sense of rendering false what is, or has previously been stated, 80—98, 110—114 NORMAL, sense of representation is primed facie that in which normal representee would have understood it, 79 representation is false when it differs from the facts to an extent which normal representee would consider material, 79 which would induce a normal representee, is deemed an inducement, 121 is material which would be considered so by a normal repre- sentee, 133, 134 implied representations by acts and conduct that a transaction is of normal type, 92 [46] Index, NOTE, marginal, to document, must bo read with the body of the document, to determine question of falsity, 100 NOTICE, of repudiation. See Repudiation public, of insolvency, when equivalent to liquidation, for purposes of bar to rescission proceedings, 279 corrective, of misleading document, when effectual, 201, 221 of facts affecting title, defeats assignee's defence to rescission, 290 — 293, — and also his claim on contract to which defence of misrepresentation is set up, 302, 303 public, of not having authorized issue of prospectus, when defence to statutory action, 315, 316 in sense of knowledge. See Knowledge NULLITY. See Void "NIMEROUS PERSONS," in case of, desirous of suing in respect of the same misrepresentation, repre- sentative suit by one of them is not competent, but a test action is, 373, 374 OBJECT (IN SENSE OP ARTICLE OR CHATTEL). See Abticlb OBJECT (IN SENSE OF MOTIVE). See Motive OBJECT (IN SENSE OE PURPOSE OR EFFECT), of subscriptions for shares, etc., representations as to, 35, 199 company, when shareholder is affected with notice of, in virtue of memo- randum of association, 274, 275 of document, misrepresentation as to, renders the document voidable, not void, 238, 239,— unless the misrepresentation is as to the entire nature, character, or class thereof, 236—238, 303—305 OBLIGATIONS, contractual, indemnity against, granted in rescission proceedings, but not damages, 250, 251 of other kinds. See Duty OFFENCE, criminal. See Ceiminal Offence OFFER, unaccepted. See Contract disclosure of truth, or admission of falsity, after alteration of position, is of no avail unless accompanied by offer of complete restitution, 209 in the absence of such offer, the representee is entitled and bound to con- tinue payments under the contracts in respect of which he sues in deceit, 221 of shares for pubKc subscription, what is, within the meaning of the statute lating to prospectuses, 308 OFFICER, OFFICIAL, of State, responsibility of, as public agent, whether any, for misrepresenta- tion, 170 court, the same honesty expected from, in eases of sale by order of court, as in other cases, 262 right to, rely on public official document, in statutory action for misrepre- sentation in prospectus, 331, 332 set aside official act of State procured by misrujircscntation, 357 — 361 [ 47 J Index, officious, question, misrepresentation in answer to, when not actionable, 128, 129, 416, 417 OMISSIONS, when amounting to misrepresentations, 84 — 98, 110 — 114 0NU8 PROBANDI. See Burden of Allegation and Peoof OPEN COURT, right of party to trial in, when, where there has been submission to arbitra- tion, 369, 370 " OPENING BIDDINGS," statutory provisions as to, in auction sales, 344 OPINION, statements as to, when representations, 2, 49 — 53. And see Repbesenxa- TioN, and Belief counsel's. See Counsel's Opinion OPTION, of representee to avoid or affirm. See Election ORAL, expression of representation, 64, 65 representations as to credit, subject of statutory plea, 212 — 216 ORDER, of Enghsh Court may be set aside on ground of fraud, 350 — 355 foreign Court, defence to, on like grounds, 355, 356 sale by order of court, reMef from on the ground of misrepresentation, on same principles as in other cases, 261, 262 power to make. See Jueisdiction, Resclssion, Peoobdfke exceptional, as to costs. See Costs ORDINARY COURSE OF EVENTS, when regard had to, in determining question of inducement, 121 materiality, 133, 134 damage, 152 — 154 possibility of mutual restitu- tion, 273 imphed authority to "pass on " a representation, 173, 174, 178 imphed authority to make representation, 159, 160, 171 ORDINARY MEANING, of words, prima facie the real meaning, for purpose of determining issue of falsity, 79 the like, for purpose of determining issue of inducement, 121 OVERDUE, negotiable instrument is held subject to equity to avoid, 302 OWNERSHIP, of pictures, horses, effects, etc., being sold, materiahty of statements as to existing or recent, 138, 139 PACKING, false, 66 PARLIAMENT, deception of, 361 amendment of law of misrepresentation by. See Statute. [48 ] Index. PARTIAL, statement, when misrepresoiitatiou, 84 — 98 knowledge, proof of, not sufficient to support plea of, 202 where representee has only partial, no election, 2G9, — or affirmation, 246 rescission, only possible in case of separate covenants, parties, or characters, 246 setting aside of judgment for misrepresentation, may be, 352 revocation of charters, grants, etc., none, 358 PARTICULARS, necessary in proceedings where allegations of fraud are made, 370 — 372 of sale, errors in, unsubstantial and accidental, are intended by a condition to waive rescission in case of, 265 — 268 but not misstatements in, which have been made in bad faith, or errors of substance, such that purchaser would not have entered into contract, if he had known the truth, 265 — 268 above principles apply also to the case of a representee who set up misrepre- sentation as a defence, to which the plaintiff rephes by setting up agrce- mient of above character, 296, 297 PARTIES TO REPRESENTATION. See Representee and Repbesentok. PARTIES TO PROCEEDINGS, 1. In Actions of Deceit (15, 226—228), plaintiff may be the representee, or any poiscm who on devolution or transmission by operation of law (death, marriage, insolvency, lunacy, infancy), is entitled to stand in his place, as in any other action of tort, 226, 227 defendant may be the representor, or any person who is suable in right of him or his estate as in other cases of tort, 226, 227 in case of death of representor, estate not liable unless augmented by property obtained by misrepresentation from the repre- sentee which can be identified, 227 insolvency, the Uke rule apphes, unless damages can be re- garded as equitable debt, 225 shareholder cannot sue company for damages for misrepresentation whereby he was induced to become a member, until he severs his connection with the company, 228, 229 2. In Proceedings for Rescission (23, 24, 287—293), parties may be the parties to the representation, or, in case of death, marriage, insolvency, lunacy, infancy, any person who may sue or be sued in right of either of such parties, or his estate, as in any action of contract, 288 in case of assignment of property passing under contract voidable for misrepresentation as between the representee and the assignor, but not in fact avoided before the assignment, representee has no right to rescind against assignee, unless property was a chose in action, or unless, if a chose in possession, the assignee took without value, or in bad faith, or with notice ; burden on representee of proving the above, 290—293 3. In Defences founded on Misrepresentation (25, 300 — 305), as to assignments, same principles apply as in cases of rescission, mutatis mutandis, except that in cases of negotiable instruments, the rules as to burden of proof are different, 300 — 305. And see Negotiable Instbitment where plea of representee is defeated by estoppel in such cases, 301 if instrument void, and not merely voidable, nothing passes, and the above rules do not apply, unless the representee has estopped himself, 304, 305 [49 ] Index. PARTIES TO PROCEEDINGS— cow^wmetZ. 4. In Statutory Actions for untrue Statements in Prospectus, 317, 320, 321 5. In otlier Proceedings. See Judgment, Crown, Patent, Tbademaek, and Pbooeduee PARTNERSHIP, liability of, for act of misrepresentation committed by any partner, 9, 159, 160 also for fraud of any partner, 9, 162 — 165 joint liability of members of, in every case, and joint and several liability, where fraud, without contribution or indemnity, 172 in certain oases, recovery of damages against one member of, does not pre- clude rescission against the other, 271 may be " another person," within the meaning of Lord Tenterden's Act, though the representor be a member, 215 comparison of principles of law of, with those applied to the contributories on the winding up of a company, 277, 278 member of, misrepresenting solely for his private ends, does not make firm liable, 216 misrepresentations as to representor's membership of, or connexion with, 91 by estoppel, 92 PASSBOOK, banker's, continuing representation by, 77 PASSING, of property, under voidable contract, but none under void. See Void, Voidable "PASSING OEF," articles by " make up," etc., 70 actions for, 360, 363, 365 '' PASSING ON," representations, 9, 173, 174 PAST, event, statement as to, is representation, 1, 31, 32 undoing the, is object of rescission ; pecuniary compensation for the, is object of action of deceit, 230 PATENT, obtained by misrepresentation, when may be revoked at instance of Crown or aggrieved subject, 357 may be subject of defence to action of infringement on the like ground, 358, 359 parties, 357, 258 statutory provisions, 358 — 360 not invalidated by application made in fraud of inventor, or by provisional protection obtained, or user thereunder, 358, 359 may be revoked, if in fraud of petitioner's rights, 360 PAYMENT, statement of intention of, may be representation, 35 ordering goods is an imphed representation of intention of, 65 representation of third person's intention of, 35 when statement of third person's willingness or abihty to make, is repre- sentation, and not guarantee, 46, 47 having made, or liability to make, is damage, 150 orders and directions for, in proceedings for rescission. See Rescission riglit to, in action for money had and received, 250, 251 payment of periodical sums equal to interest on mortgage, is representation that mortgage has been executed pursuant to instructions, 69, 70 [ 50 ] Index. PENSION, statutory provisions as to fraud in relation to, 340 PERFORMANCE, complete, of contract on both sides, precludes rescission, unless fraud or essential difference in subject-matter, 242, 243 specific, misrepresentation as a defence to, 297, 298 PERIOD. Sec Time PERMANENT, signs, by which a representation may be made, what arc, C4 improvements to land, allowed for, in effecting mutual restitution, 250 PERSON, PERSONAL, PERSONALITY, representation must be between two distinct persons, 1, 30, 31 for the purposes of law of misrepresentation, " person " includes an artificial or juridical person, 9, 1G7 — 169 an artificial person is entitled to the benefit of the statutory plea under Lord Tenterden's Act, 215, 216, — and is " another person " concerning whose credit the representation may be made, within the meaning of above statute, 215, — and may sue in the statutory action for false statements in prospectus, 311,— be liable as promoter in such statutory action, 321 third person. See Third Pebson misrepresentation of personahty, when rendering contract void, 239, 24U, 304 personality of one who is represented to hold a certain opinion may be material to the inducement, irrespective of the merits of the opinion, 51 peraonal injury is actionable damage, if caused by misrepresentation, 150 — 152 signature required to representations as to credit, under the statute, 215 to support plea of knowledge, personal knowledge must be proved, 202, 203 choses in action are ordinarily taken by the assignee subject to personal equities, including the equity to rescind, 290, 301, 302 nature of proceedings available to numerous persons aggrieved by the same misrepresentation, 273, 274 " personal fraud " ; expression criticized, 389, 390 PHOTOGRAPH, misrepresentation by, 64 PHYSICAL, injury, caused by misrepresentation, is actionable, 150 — 152 destruction or alteration of nature of subject-matter of contract, ^\'hcn a bar to rescission, 272, 273 resumption of possession and property in subject-matter of contract voidable for misrepresentation, 262, 263 PICTURE, representations by, 64 no duty in purchaser to disclose facts as to value of, and name of painter, etc., as a rule, 96 — 98 misrepresentations as to ownership, or late ownership of, may be material to inducement, 139 PLACE, representation as to safety of a, 150 — 152, 199 where different prospectuses arc issued sinmltaneously in diiferent places, each is a prospectus, but only that one on the faith of which the rcpie- sentee acts, is " the prospectus, " within the moaning of the enactment, 309, 310 of trial, 375 [51 ] Index, pleading, rules of, special to ])rocoedings for misroprcKontatioii, 370 — 373 if acts amounting in law to fraud are alleged in the pleading, tlio word " fraud " need not be used, 370 in any pleading (whether statement of claim, defence, reply, or af&davit) in which fraud is alleged, whether necessarily or not, it must be particularized, and, ordinarily, before party has discovery, 370, 371 a state of mind, as such, e.g. fraud, need not be particularized, 372 an innuendo is unnecessary, 372 the fraud of the agent may be pleaded as the fraud of the principal, 372, 373 where a representee sets up misrepresentation as a defence to an action to enforce a contract, he must plead that he has repudiated it, and has never taken any benefit, or recognized any right or liabihty thereunder, 299, 300, 373 particulars of " reasonable grounds" required to be given in case of statutory defence to action on prospectus, 329 POSITION, alteration of, by representee. See Alteration or Position in life of the parties, in relation to the questions of inducement and materiality, 144, 145 transferee, material to question of registration of transfer induced by misrepresentation, 260, 261 , of director, person oqcupying, is a director for the purposes of statutory prospectus law, by whatever name his office is called, 316, 317 POSITIVE, means, employment of, to cover up defect, defeats plea of agreement to take with all faults, etc., 209, 210 " fraud " ; an objectionable expression, 389, 390 POSSESSION, chose in. See Chose in Possession physical resumption of, instead of obtaining the judgment of the Court in rescission, 262, 263 PRACTICAL JOKE, misrepresentation by way of, deemed fraudulent, 109, 110 | physical and personal injury occasioned by, is actionable damage, 151, 152 PRACTICE, where evidence of, admissible to ascertain meaning of representation, 101 the Uke, for the purpose of determining the question of who is the representee, 178, 183, 184 judicial disapproval of mercantile practices, where dishonest, 406 — 408 (in technical sense). See Peocedtjke PRECISE. See Exact PREMISES. See Land PREPARATION, of prospectus, liability of persons for taking part in, to statutory action for untrue statements, 320, 321 PREPARED, statement that representor is, to pay or hand over moneys, is representation, 35—37 PRESENT, intention, opinion, etc., what statements may be construed as representa- tions of, 1, 2, 32—53 value, in estimating damages, 219, 220 [52 ] Index. presumption, irrebuttable, of intention to defraud from the act of making fraudulent representation, HO in oases of a double grant, that King has been deceived, 359 of fact, against representor, in case of designedly ambiguous or ambidextrous statements, 82 — 84 of intention to induce, from the fact of inducement, if the representation was of a nature to induce, 121 possible inference of fact, in extreme oases, but not legal presumption, of inducement from materiahty, 8, 142, 143 of intent to cause damage, from fact that damage naturally resulted, 152 — 1 54 no presumption of fraud from mere negUgence, 115 — 117 every, against wrongdoer, -^vherc difficulty owing to representor, in calculating damages, 224 in oases of pleas of affirmation, acquiescence, waiver. See Affiemation, Waiver. Delay in prospectus cases. See Prospectus PRETENCES, false. See False Pretences PRICE. intention to pay, impHed representation of, 65 representation as to ownership of horse, picture, etc., for purpose of obtaining higher, 136, 139 market, when relevant and when not, in assessment of damages, 220 employment of puffers, f(3r purpose of enhancing, 340, 341 " reserved," rules as to, in auction sales, 340, 341, 344, 345 " rigging market," and spreading false ramours, for purpose of inflating, 178, 183, 184 abatement of, stipulation for, in contract of sale, in lien of rescission, 265 when abatement of, is made a condition of granting specific performance, 297, 298 PRIMARY, sense of words, deemed primd facie the correct sense, for purposes of issue of falsity, 79 the like, for purposes of issues of inducement and materiality, 133 PRINCIPAL. -See Agent PRIVATE, purposes, misrepresentation by agent for his own, or another's, 171 PRIVILEGE. See. Crown PROBABLE, natural and, result. See Natural PROCEDURE, 1. Rules of pleading. See Pleading 2. Rules as to costs. See Costs 3. Other rules of practice, 373—376 joinder of plaintiffs — where numerous parties affected by same mis- representation, a test action may be brought, but not a representative suit, 373, 374 several defendants may be sued in respect of several causes of action, if arising out of the same transaction, or series of transactions, — combination of different remedies, if only one ground of complaint (e.r/. issue of prospectus), .374, 375 place and mode of trial — right to jury — issues — transfer, 375 [53 ]' Index. VROC^EDV'R'E— continued. 4. Generally, in actions for damages. See Deceit (Action of) prooeedings for rescission. See Rescission defence founded on misrepresentation. See Defence statutory proceedings. See Judgment, Crown, Patent, Teadbmaek PROFESSION, of parties, to be considered in determining question of materiality, 144, 145 expert, giving authority to his statements, for purposes of enactment as to untrue statements in prospectus, 329 — 331 PROFIT, loss of prospective, when not recoverable, in action of deceit, 221, 222 PROMISE, when statement may be regarded as a representation, as well as promise, and when only as promise, 1, 32 — 41 " making good " oases, so-called, often only cases of breach of, 192 — 194 misrepresentation of authority treated as breach of implied, 194, 195 PROMOTER, knowledge of practices of, in relation to materiality, 144, 145 who is, at common law, 318 — 320 by statute, 320—322 at what date promotership must have existed, 319, 320 PROMPTITUDE, in exercising election, no duty of the representor, but advisable in repre- sentee's own interests, 208, 209, 282—286 but in cases where shareholder complains of misrepresentation of the objects of the company, or other matters disclosed in memorandum or articles of association, there is duty of, 274, 275 A\here instrument void, or contract put an end to, representee is neither bound nor concerned to exercise, 299 PROOF, burden of. See Burden of Allegation and Proof in technical sense, when admissible i5n insolvency of representor, 285, 289 PROPERTY, real. See Land personal. See Article in action. See Chose in Action in possession. See Chose in Possession where property passes, and Avhere no property passes, according to the character of the representation. See Void, Voidable value of, how assessed, in estimating damages. See Damages principles of restitution of, in cases of rescission. See Rescission kind of, important in relation to issue of materiality, 144, 145 PROPRIETORSHIP. See Ownership PROSPECTIVE, profits on contract misrepresented to have been made, loss of, not recoverable as damages for misrepresentation, 221, 222 PROSPECTUS, exaggeration in, to be expected in a certain degree, 60, 61 ambiguity and ambidexterity in, 81, 82, 84 .omissions of facts and contracts from, 87, 88 [54] Index. TROSPECTUS— cott/('»?(ef7. to bo construoil as a whole, and in connection Nvith incorporated or relative documents, witli a view to issue of falsity, 98, 99 the like, with a view to the issue of inducement, 130 questions as to the class to which prospectus is addressed, 180, 181 statutory provisions in respect of misrepresentation in, 306 — 308 history of, 306, 307, 401, 402 to what representations tlie enactment applies, 307, 308 what is a prospectus, 308 — 310 includes any written invitation to public to subscribe for or purchase shares, debentures, or debenture stock, 308, 309 company defined, 308 provisions as to prospectus addressed to existing shareholders, 309 when several prospectuses, which is " the prospectus," 300, 310 reports or memoranda incorporated with, 310 who may sue m the statutory action, 310, 311 who primd facie liable therein, 311 — 322 1. persons who authorized issue of prospectus, 311, 312 2. director in fact at date of issue of prospectus — special provisions in case of existing company issuing further capital, 313, 314 3. persons named with authority as actual or intending directors — burden of proof — defendant may escape on proof of ^^■ithdrawal of authoritv and reasonable public notice, deiinition of '"director," 314^317 4. promoter who took part in preparation of prospectus — burden of proof — question, of fact — merely professional agent not a promoter, 317—321 aVeqanda el prohanda in the statutory action — fraud need not be alleged or proved, in the first instance, otherwise substantially the same as in actions of deceit, subject to a question as to meaning of " on the faith of the prospectus," 323^326 statutory affirmative pleas to the action ; belief in truth of statement, and on reasonable grounds ; shifting of burden of proof ; in ease of derivative statements, that report, valuation, or other statement made on authority of expert, unless not competent to make it, or of public official document or statement, 326 — 333 whether possible to waive rights under the enactment, 333 remedy in respect of statutory action is " compensation," which is equivalent to non-statutory damages, 334 statutory procedure — joinder with other causes of action against several defendants — period of limitation — test action — death, insolvency, etc., 334—338 statutory rules as to indemnity and contribution, 330 — 338 PDBIJC (THE), member of, or of class of, may be a representee, 176 — 178 rules as to question whether anj' inducement to, or not, 124, 125 what class of the public was intended to be addressed or in- fluenced, 180, 181 offer of shares or debentures to, 308 — 310 defence to action, where plaintiff suing in respect of contract or acts in- volving fraud on, 363 — 365 employment by vendor of puffers at auction sales, is fraud on, 340, 341 PUBLIC AGENT, position of, as regards misrepresentation, 170 PUBLIC AUTHORITY, deception of, 357—361 PUBLIC FUNDS, misrepresentations, by spread of false rumours, for purpose of affecting price of, 181, 182 [ 55 ] Index, public notice, by company, of insolvency, 279 director of witlidrawal, in statutory actions on prospectuses, 315, 316 " PUBLIC OFFICIAL DOCUMENT OR STATEMENT," rules as to, in statutory actions on prospectuses, 331, 332 PUBLIC POLICY, agreement not to impeach contract for fraud is against, 210 is ground for allowing a, defence to actions on contracts involving fraud on public, though, not on the defendant, 363 — 366 PUF.FING, PUFFER, when puffing is, and is not, a representation, 2, 60 — 62 employment by vendor of puffer at auction sales, 338 — 345 PURCHASE, PURCHASER, of land. See Land goods. See Article chose in action. See Chose in Action chose in possession. See Chose in Possession to what relief and in respect of what respective misrepresentations, purchaser is entitled. See Deceit (Action of). Rescission, and DErENCE of shares, etc., on faith of prospectus. See Prospectus property at auction sale, where, puffers employed by vendor, 338 — 345 where no duty on purchaser to disclose facts sho^ving that property (e.f/. land, or picture) has higher value than to his knowledge the vendor supposes it to have, 93^98 materiality of question whether class of public addressed by representor is class of purchasers in market, or allottees, and whether for speculation, investment, or underwriting, 180, 181 PURPORT, (in sense of meaning). See Meaning (in sense of contents or effect) of document, misrepresentation of, render.^ contract voidable, 238, 239 PURPOSE, (in sense of motive). See Motive (in sense of effect) of document. See Pukpoet (in sense of nature) of instrument, misrepresentation of. renders it void, 236—238, 393—395 (in sense of end, or object), representations as to object of issue of capital, 35, 199 misrepresentations of agent for private, 171 shareholder has imputed notice of purposes of company from memo- randum of association, 274, 275 PUSHING, when representation, and when not, 2, 60 — 62 QUALIFICATIONS, omissions of, when misrepresentation, 80 — 98, 110 — 114 QUALITY, physical, of thing, representations as to, 1, 31, 32 alteration in physical, commercial, or legal, of quahty of property the subject of the contract sought to be avoided, is a bar to rescission, 272, 273 where property is in its essential nature and quality different from that represented, plea of agitement to waive rescission is defeated, 266, 296, 297 [ 56 ] Index. QUALITY— continued. plea of completely executed agreement also defeated by proof of the above, 242, 243 misrepresentation of quality and character of instrument renders it void, 236—238, 303, 304 QUANTITY, QUANTI WCATION, errors as to, in condition of sale providing for waiver of right to rescission, 206 rules as to quantification of damages. See Damages QUE.STIONS OP LAAV AND FACT, in determining falsity or truth, 73 as to issue of fraud or innocence, 102 meauing of representation, 100, 101 inducement and materiality, 7, 8. 141 — 143 who is deemed a representor, 172, 173 a representee, 178 alteration of position, 149 damage, 157 in actions of deceit, 14, 15, 225, 266 proceedings for rescission, 22, 23, 287 defence on ground of misrepresentation, 290 relation to plea under Lord Tenterden's Act, 210 as to promotership, in statutory action for misstatements in prospectuses, 319, 320 in proceedings to set aside judgments, 353 — 356 QUIESCENCE, in allowing something to be represented without contradiction, when a mis- representation, 91, 92 when amounting to acquiescence, 285 QUOTATION, official, on Stock Exchange, misrepresentation for purposes of obtaining, 183, 184 RATIFICATION, by principal, of agent's representation, 159, 160, 162, 171 the like, in prospectus cases, 311, 312 RATIONAL. See Reasonable READINESS, of representor, to do some act, statement of, when a representation, 1, 32, 37 the like, as to a third person's, 46, 47 to make complete restitution, when no effective correction of misrepresenta- tion without, 209 unless such readiness expressed, representee is entitled to go on making payments under the contract, thereby increasing the damages, 221 REAL. See Actual REAL PROPERTY. See Land REASONABLE, grounds of belief, not necessary to constitute innocence in misrepresentation, 6, 11.5—118,— but are necessary to establish statutory defence in all actions for untrue statements in prospectus, 326 — 329 B.M, [ 57 ] 2 k Index. REASONABLE— con^Mwiec;. " public notice," what is " reasonable," within the meaning of the above enactment, 315, 316 RECAPTURE, of property, without obtaining order for rescission, 262, 263 RECKLESS, indifference as to truth or falsity, renders misrepresentation fraudulent, 104, 107 RECOGNITION, ■when defendant to action on contract must allege absence of, 299, 300, 373 RECOLLECTION, failure of, misrepresentation owing to, when actionable, 118, 119 RECONVEYANCE, of property, when impossible, bar to rescission, 245, 246 not ordered, where contract completely executed, unless fraud, or total difference in character of property, 242, 243 by representee, as part of the directions given on action for rescission, 250 RECTIFICATION OE REGISTER. See Register REDUCTION, of damages, 221 as Scotch term for rescission, 438 referenc:e, documents or statements connected with one another by, to be construed together, for purpose of determining falsity, 75, 98, 99 the like, for the purpose of determining issue of inducement, 7, 130 — 132 the above rule, in its application to prospectus cases, 310 (in sense of arbitration). See Aebitbation REFUSAL, to give warranty, equivalent to agreement to take with all faults, etc., and subject to be defeated by same means, 200, 207. And see Waivbe REGISTER, of members of company ; rectification of, on ground of misrepresentation whereby representee induced to become a member ; jurisdiction to order, as part of relief in action for rescission, 249 statutory jurisdiction to rectify register of members on application by motion or summons (preferably motion) to the Court — discretion to order action instead — order may fix a date from which it is to operate — may be retrospective and made, in special circumstances, ex parte — notice to the registrar — damages given by statute mean only repayment of moneys paid, and interest — rules as to costs, 254 — 258 courts having jurisdiction for the above purpose, 367 above relief may be given in the -winding up, whether as auxihary to, or independently of, varying list of contributories, 260 of transfers, when entry in, procured by fraud, 260, 261 trademarks, when entry in, expunged from, on the Hke ground, 358 newspapers, false entries in, prohibited by statute, 346 REGISTRAR, of joint stock companies, when notice to be given to, of rectification of the register of members, 257 in bankruptcy, deception of, ground for avoiding orders in bankruptcy, 351 of trademarks, when duty of, to apply to expunge from register a mark which is oalcvilated to deceive, 358 [58 ] Index. registratiox, of trademark, no implied representation of, nicrolv by using word " trade- mark." 68 transfer of shares, procured by misrepresentation, may be ground of reetifieation of register, or variation of list of contributories, 260, 261 resolutions in bankruptcy, set aside on ground of fraud, 351 EELATIOX, between several documents, or statements, making up a complex repre- sentation. See Complex, and Connected causal. See Cause back, in time, of order of liquidation to date of commencement thereof, 280 for rescission to date of commencement of action, 245. 280 of subject, Attorney-General may apply to revoke charter, patent, or other CrOA\Ti grant, on, 358 RELEASE, as a defence to an action for misrepresentation, 200 when misrepresentation may be set up in reply to an affirmative case of, 295 RELEVANT. See Materiality, and Burden of Allegation and Pkooit RELIEF A>;D REMEDY, 1. available to the representee in — actions of deceit, 13, 14. 218—225 proceedings for rescission, 18 — 21, 245 — 263 defence to action on contract jorocured by misrepresentation, 24 — 2C, 294—305 by statute, in case of untrue statements in prospectus, 334 cases of sale by auction, 340 — 345 2. available to a party aggrieved by misrepresentation to persons other than himself in — actions and proceedings to set aside English judgments, or defences to actions thereon, 350 — 353 defences to foreign judgments, 355, 356 proceedings to set aside, or defences to actions based on, chaitei-s, grants, patents, trademarks, etc., 357 — 360 RELIANCE, on representation, generally. See Inducement statements in prospectus. See PEOSPEf'TUS REMOTE, when damage is considered " too," 154—157 REMOVAL, of name from register of members of company, 254 — 258 list of contributories, 258 — 261 mark from register of trademarks, 358 RENUNCIATION, of right, may be alteration of position, 148 REPAYMENT, by way of restitution, in action for rescission, 250 damages mean only, in orders for rectification of the register, 257 subject of action for money had and received, when representee has nothing to restore, 252—254 REPEAL, of charter, or grant, on the ground of deception of, or misrepresentation to Crown or State, 358, 359 [59 ] Index, repetition, of statements or documents, put merely as information, or second-hand, is only representation in u, limited sense, but if put as original facts and documents, is representation in every sense, 51, 52 Scottish action for, is the equivalent of the English action for money had and received, 438 REPLY, misrepresentation set up in reply to affirmative plea of release, 295 in technical sense. See Pleading sense of answer- to a question. See Answer REPORT, statement of contents or effect of, if a fair version or abstract, is not action- able ; if garbled or unfair, it is, 51 suppressing, wholly or in part, may render other statements false, 86. 89 meaning of statement in prospectus that a report had been made " for the directors " ; materiahty of such statement, 138 incorporated with prospectus, is a statutory prospectus, or part thereof, 310 effect of, as a pubMo official document or statement, for the purpose of the statutory action for untrue statements in prospectus, 331, 332 REPOSITORY, sending diseased horse to, if it would be illegal to do so, but not otherwise, is implied representation that horse is sound, 77, 78 REPRESENTATION, distinction between, and a promise, 27 estoppel, 28 means a statement made by one person (the representor) to another (the representee) as to an existing fact or thing, or the quaMties or condition thereof, or a past event, by way of affirmation, denial, description, or otherwise, 1, 31, 32 in what sense, and to what extent the following statements, are, or are not, representations — as to the representor's o^vn intention, readiness, willingness, or capacity, to do something in futuro, when representations of existing inten- tion or other state of mind, and when nothing beyond promises, 1, 32—45 a third person's intention, etc., when representations of the like existing state of mind, and when guarantees, 46, 47 the future, of other kinds, 47, 48 the representor's own opinion, belief, or information, 2, 48 — 53 a third person's opinion, etc., 51 opinion, etc., stated as fact, 51, 52 fact, stated as opinion, etc., 52, 53 mixed law and fact, 2, 53 — 55 law, separately from the facts, 56, 57 existence and contents of documents, 57 — 60 by way of exaggeration, puffery, or vaunting, 2, 60 — 62 how made — by express permanent signs, 3, 63, 64, — which include plans, photographs, pictures, etc., 64 transitory signs, 3, 64, 65, — which include gestures, as well as speech, 64, 65 imphcation, 3, 65 — 71, — from other express statements, 64 acts and conduct, 64 — 71. And see Acts and Condtjct omissions, silence, and inaction, when, 84 — 98. And see Meaning [60 ] Index. KEPREyKXTATlON— co»/m»oi'. continuing. iScc CioNTiNuiNG Kepresentation parties to. ^Ve 1?bpresentor and Representee ^^'hen a misrepresentation. See Misrepresentation when fraudulent. See Fraud equivalent to " statement " the subject of the statutory action fur untrue statements in prospectuses, 322 REPRESENTATIVE, legal. See Parties suit. See Procedure REPRESENTEE, means any person to whom the representation was actually and personally, and any person to whom in contemplation of law, it was made, 9, 173, 174 includes the principal or partner of the person to whom the representation was made, 174 question of intention, whether each of such persons, or only one of them, and which, is to be deemed a representee, 174, 175 also comprises any individual person to whom the representor actually or presumptively intended the representation to be " passed on," such intention being inferred from express instructions or knowledge that it win be, or is in course of being, transmitted, 9, 175, 176 also comprises a member of the public, or a class, which the representation is addressed to, or is intended to reach and influence, as soon as that member acts upon it, 176, 177 illustrations of statements addressed to the pubhc : prospectus, circular, report, advertisement, negotiable instrument, time-table (in the case of a railway company), and imphed representations to pubMc or class (by negligence) of safety of place, structure, or article, or of reality of prices (by rigging the market), 177, 178 questions of law and fact as to who is a, 178 when evidence admissible in relation to this issue {e.g. of bank practice to obtain information and pass it on to its customers, Stock Exchange practices and rules, etc.), 178 burden of allegation and proof is on the representee, 179 — 181 there must be evidence that the alleged representee was at least one of a class of persons whom the representor in fact contemplated, or ought to have contemplated, as likely to be influenced or affected by the representa- tion, 180, 181 illustrations : function of prospectus to induce applicants, as a rule, but may be shown to have been intended to induce purchasers in the market also, false rumours to affect prices of pubhc funds, representations to Committee of Stock Exchange, etc., 180 — 184 REPRESENTOR, means the person who actually and personally made the representation, and any person who is in contemplation of law deemed to have made it, 8, principal or firm responsible for act of representation by agent or partner, 159, 160 company is representor, in virtue of representations of agents having authority in that behalf ; enumeration of classes of agents of company deemed to have implied authority, 159, 160 in cases of innocent misrepresentation, either the agent, or the principal, may be the representor, but not both, 160 ultimate principal, when a representor, and when not, in respect of the representation of a sub-agent, 9, 161 agent does not render his co-agent, as such, a representor, 9, 161 [ 61 1 Index. RE FUES^NTOR—ccmtinued. in cases of fraudulent representation, principal and agent regarded as one, and both are representors, and it is immaterial which of them did the act, and which had the fraudulent knowledge or intention, 162, 163, 164, 165 misrepresentation, whether innocent or fraudulent, can be adopted or ratified, and person so adopting or ratifying is representor, 162, 171 fraud of agent properly pleaded as that of principal, 164 tlieory that principal only Kable to extent of benefit received, is erroneous ; it is sufficient that the representation be made for the intended benefit of principal, whether benefit in fact resulted or not, 165, 166 corporation liable for fraud of agent, as well as natural person, and to the same extent, 9, 167—169 the same, of quasi-corporate associations or bodies of persons, 169, 170 how far corporation sole (Crown), or pubhc agents, can be representors,, 170 authority implied from course of employment, business, etc. ; " class of acts " ; burden on representee to prove nature of employment, etc., 170, 171 impHcation rebutted by proof that agent made the representation for his own, or a third person's private ends ; probably burden on representor to prove this, 170, 171, 216, 217 where misrepresentation innocent, persons making are jointly responsible, with right of contribution and indemnity, 171, 172 fraudulent, all oonoemed are joint and several representors, with no right of contribution or in- demnity, 172 burden of proof, 172 questions of law and fact, 172, 1 73 where evidence necessary as to impUed authority, 172, 173 REPROBATE. See Appeobate REPUDIATION, of contract sought to be avoided, representee has right of, 230 in action for rescission, not necessary for representee to allege previous notice of, the writ itself being such notice, 244, 245 in defence to action on contract, representee must allege and prove previous, and notice thereof, 299, 300, 373,— unless he can show that the contract was not merely voidable, but void, or has been put an end to, 304 where company in liquidation, shareholder must not only have given notice of, but must have taken steps to make repudiation effective, before the commencement of the winding up, 279 — 282 must be prompt, in ease of shareholders complaining of misrepresentation of the objects of the company or other matters disclosed in memorandum of association, 274, 275 BES IPSA LOQUITUR, applied to cases of ambiguity and fraud, 70, 71 in certain cases, tends to support plea of representor's knowledge of the truth, 203, 204 where doctrine of, is inadmissible, in cases of " passing off," 140, 361, 362 RESCISSION, (A) Nature and hmits of right to, 16, 230—240 fraud or innocence immaterial to, 231 — 233 consequences of unnecessarv allegations of fraud in proceedings for, 232 representees not entitled to fall back on case of negligence, having failed to prove fraud, 232, 233 [62 ] Index. KESGlSSION—conliiiuea. (A) Nature and limits of right to— continued. immaterial whether contract, if adhered to, would have injured or benefited the representee, 233, 234 representee's right to, is right of election only, and the contract in question is, except in certain cases, valid until rescinded, and not void ah initio, 230 — 240. See, Election, Void, Void^\ble (B) Constituent elements of cause of action for, 17, 18, 240 — 245 burden on representee of alleging and proving all mallei's essential to action of deceit — see Deceit (Action of) — except fraud and damage, 240 contract sought to be rescinded must be subsisting, and binding, and not iinconcluded, or put an end to, or void, 240, 241 such contract must also be executorj% and not completed or fully executed on both sides, with iAVO exceptions, 242 first of above exceptions is fraud. 242 second of above exceptions is total difference in nature and essence between that which was contracted for and that which was dehvered, 242, 243 last exception does not apply where compensation has been agreed to be substituted for rescission, 243 contract which is also something more, and involves statvis (e.cj. marriage) is not subject of, though, if misrepresentation was a* to person contracting, or nature of ceremony, marriage is subject of decree of nuUity ; same rule applies to marriage settlement, 244 probably no onus on representee to allege previous notice of repudia- tion, but on representor to prove affirmation, 244, 245 (C) Nature of remedies and relief, 18—21, 245—263 involves mutual restitution in s^jecie, and restoration of status quo, 245 order for rescission, when made, relates back to date of contract, 245, 246 rescission, if ordered, must be in toio, except in case of severable cove- nants, or parties, or characters, in which cases it may be partial, 246 classes of remedies and nature of relief obtainable therein respectively : — ■ (i) action for rescission, 18—20, 247—252 illustrations of classes of contracts and transactions subject of, 247, 248 prefatory declaration of court that contract is avoided, 248, 249 order for rescission of all documents and instruments, and (where necessary) rectification of any register, etc., 249 where instrument may be ordered to be physically surrendered for destruction or cancellation, 249, 250 specific restitution — reconveyance, re-transfer, repayment, on both sides ; indemnity against obhgations under the contract, not being mere damages ; accounts, inquiries, 250, 251 interest, when, 250 injunctions, interlocutory or final, when, against calls, forfeiture of shares, etc., 251, 252 (ii) action for money had and received, 20, 252 — 254 lies where only unilateral rehef by payment is sought, and where representee has nothing to restore, 252 illustrations : recovery of premiums, deposits, allotment moneys, etc., 253 converse cases of trover, 254 (iii) in case of companies, statutory proceedings for rectification of the register, 254 — 258. See Register (iv) statutory proceedings, in the winding up of a company, for variation of the list of contributories, 258 — 261. See Liqfidation [ 63 ] Index. RESCISSION— cmtinued. (C) Nature of remedies and relief — continued. (v) discharge of representee from his bargain, in ease of sales by order of the court, on application to the court in the pending cause or matter ; same principles apphed as in actions for rescission, 261, 262 (vi) physical resumption or recapture of property parted with under contract voidable for misrepresentation, subject to satisfaction of rights (if any) of innocent third parties, 262, 263 (D) Special affirmative pleas to proceedings for, 21, 22, 264 — 287 burden of estabhshing each of such pleas is, in the first instance on the representor, but in certain cases maybe shifted in the course of the pro- ceedings, 264 such pleas are : — (i) representor's knowledge of the truth. See Knowlbdgb (ii) agreement by representor to waive inquiry, dispense with informa- tion, take with all faults and risks, etc. See Waives, (iii) agreement by representee to waive right to rescission, and to accept compensation as a substitute, in case of errors, omissions, or mis- description in particulars or conditions of sale, 266 — 268 above plea defeated by proof of fraud, or difference in nature and substance between property contracted for and property dehvered, 265, 266 oases of condition i\'aiving both rescission and compensation, 267, 268 (iv) representor's election to affirm the contract, 268 — 271 unequivocal election with complete knowledge must be shown, 269 illustrations of affirmation by acts and conduct, 270, 271 (v) where the circumstances have become such as to render rescission unjust either to the representor or to innocent third parties, 271—275 the nature, quality, substance, or status of subject-matter of contract has been altered, not merely deteriorated, 272, 273 third parties have iond fide acquired rights for value on the faith of the subsistence and validity of thcoontract, 274, 275 (vi) liquidation of the company, in cases of contracts to take shares. See Liquidation (vii) delay, laches, and acquiescence ; may furnish evidence of, or give scope for other pleas, but not per se amounting thereto, 282 — 286 (E) Questions of law and fact, 287 (P) Parties to proceedings for, 287—293. See Paeties RESERVATION, " mental," "SS, 410—415 RESERVE, RESERVED, rules as to auction sales " without reserve," or at reserved price, or with expressly reserved right to bid, etc., 340 — 345 RESPONSIBILITY. See Liability RESTORATION, RESTITUTION, specific and mutual, a condition of rescission, 245, 246. And see Rescission RESULT, natural and probable. See Natural actually intended. See Intention inference of intention from. See Presumption RESUMPTION, physical, of property parted with under contract voidable for misrepresenta- tion, 262, 263 [ 64 ] Index. PvETlUENCE. See Silence KEXIKEMENT, of directors, effect of, on ropiesontatioiis coiiccniuig personnel of diroctorato in prospectus, 77, 78 KETKANSFER, mutual, a condition of relief by way of rescission, 250 KEVIEW, biU of, 353 REVOCATION, of continuing representation, right of, 76 — 78 duty of, in certain circumstances, 110 — 114 of no effect after representee has altered his position, unless complete restitution, or offer thereof, 209, 221 charter, patent, etc., on ground of misrepresentation to the State, 357 — 359 election, when once exercised, is impossible, 236 " RIGGING THE MARKET," 67, 178 RIGHT, assertion of statutory, may be a representation, 68 of representee, in respect of misrepresentation, to relief and remedies of various kinds. See Relief and Remedy innocent third persons, how protected, in oases of rescission. See Third Person if expressly reserved, but not otherwise, of vendor, to employ one puffer to bid at auction sale, 344, 345 RISK, agreement to take at every, when a defence to proceedings for misrepresenta- tion, 206, 207 not, where fraud of representor, 209, 210 of delay, in rescission oases, 282 — 286 mere fact that one of the parties to a contract has been at, is no proof of complete execution of contract on both sides, 242 ROMx^N LAW, of Dolus and misrepresentation, 422 — 436 RUMOURS, spreading false, to affect price of pubhc funds, 177, 178, 181, 182 SAFETY, of places, articles, investments, etc., representations as to, 150 — 152, 199 SALE, statement of intention to stop, may be a representation, 35 of land. See Land goods. See Article bill of. See Moneylender And, generally, see Property " SALTING/' mines, 66 invoices, 407 SCIENTER, plea of, is sufficient, without use of the word " fraud," 370 significance of the above, in relation to terminology, 395 [ 65 ] Index. SCIRE FACIAS, writ of, in case of companies, before the introduction of limited liability, 277, 278 for purposes of revoking charters or other Crown grants, 358 SCOPE, of authority, employment, etc. See Authority SECRET, meaning of representation, 83 keeping documents or facts, 84 — 98 employment of bidders by vendor at auction sales, 339 — 345 commissions, 407, 408 intention or meaning in ethics, 410 — 415 SECURITY, in sense of safety. See Safety investment. See Shares, Shareholder negotiable. See Negotiable Instrument where, in proceedings for rescission, a deed may be allowed to stand as, though rescinded as conveyance, 246 SELF-DECEIT, where duty to prevent, or remove, 93 — 98 no such duty : hand decipitur qui scit se decipi, 126 — 128 SELLER, of property, misrepresentation by, or to. See Land, Article, Property, PaROHASER SENSE, of words used in representation. See Meaning objects of. See Objects or Sense SENTENCE, of ecclesiastical court, may be set aside for fraud practised on the Court, 350, 351 SEPARATE, SEVERABLE, SEVERAL, a representation is a statement between two persons, separate and distinct, in substance as well as in form, 30, 31 statements of law and fact, separately, when representations, 51 when severable, a particular statement or document out of those making up a complex representation, may be considered separately, for purposes of the question of falsity, otherwise not, 4, 5, 98, 99 the like, for purposes of the question of inducement, 7, 130 — 132 several, as well as joint, liability of representors in case of fraudulent mis- representation, 172 rescission may be ordered of one of the covenants of a deed, or in one of its characters, or against one of the parties, if separate or several, 246 the hke, in oases of setting aside a judgment for misrepresentation to the court, 342 knowledge of the truth of a separate and distinct statement, where repre- sentation complex, does not bar representee's right to rehef in respect of other statements, 271 rules of procedure, where several parties or causes of action, 373 — 376. And see Procedure SERVANT, authority of. See Authority answering questions as to character of, 129 statutois prohibiting misrepresentations as to character of, 346 [66] Index. yET ASIDE, right to, in case of contract and transactions. See IIbsoission judgments, grants fi'om Crown, patents, etc. See Judgment, Cbown, Pate .nit, Teademakk SETTLEMENT, SETTLING, marriage settlement cannot be set aside fur any misrepresentation which would not justify the nullifying of the marriage itselfj 244 contracts to settle on marriage are subjects of most of the so-called " making good " cases, 42^5, 192—194 settling list of contributories, 275 — 282 SEVERABLE, SEVERAL. See Separate SHARES (IXCLUDIXG DEBEXTURES, Etc.); SHAliEHOLDER, instance of representation, imphed from acts and conduct, that shares aie fully paid, 68 representations as to objects of contemplated issue of shares, 35, 199 alteration of status of, a bar to rescission, 273, 274 allottee, allotment of. See Allottee, Allotment when shareholder is representee, in character of allottee, and when in oharaotcr of purchaser in market, 177, 178, 180, 181 induced as investor, arid when as underwriter, 144, 145 notice of matters disclosed in memorandum of association imputed to share- holders, 274, 275 shareholder cannot sue company for damages until he has ceased to be, 228, 229 shareholder's remedies are : — 1. action against company for rescission, 247 — 252 2. statutory procedure for rcctificaticm of the register, or, if company in liquidation, variation of list of contributories, 254 — 2(jl 3. action of deceit against directors or others issuing the prospectus, 196—198 4. statutory action for compensation. 306 — 308 5. defence to action for calls, 294 — 296 liquidation of company, prima facie defeats shareholder's rights, 275 — 282 shareholder defending action for calls on the ground of misrepresentation must allege and prove previous repudiation and non-recognition of right or UabiUty, 299, 300, 373 test action, where several shareholders claim to have been deeeived by the same prospectus, 373, 374 SHERIFF'S JURY, assessment of damages by, 225 SHOCK, physical, caused by misrepresentation, may be the subject of an action for damages, 150, 151 SIGNATURE, personal, required by Lord Tenterden's Act, in cases of representations as to credit, 215 where mind of representee did not accompany his, of instrument, instrument is void, 237. 238 SIGNS, SYMBOLS, representation by means of permanent, 64 transitory, 04, 65 SILENCE, SILENT, silent anting of lie, 64, 05 [67 ] Index. SILENCE, SILENT— conJijiMerf. when respectively there is a dnty on the representor to break silence, or a right to preserve it, 80—98, 110 — 114 objects which are " silent assertors " of lie, 80 rights and duties in relation to, as expounded in ethical casuistry, 410 — 413 SINGLE. See Sepabate and Sole SKILL, belief arismg from want of, not fraudulent, 115 — 117 SOCIAL, advantages, not per se, actionable damage, 149 duties and customs, in regard to misrepresentation, how far adopted, and how far rejected, by Enghsh law, 403—^08 SOLE, not necessary for representee to prove that the representation complained of was the sole inducement, 129, 130 corporation sole, position of, in respect of misrepresentation by agents, 170 SPECIAL CIRCUMSTANCES. See Ciecumstances SPECIFIC, person, intended to be influenced by representation made to a third person, when a representee, 9, 175, 176 defect, fraud as to, 209, 210 performance, misrepresentation as a defence to action for, 297 — 299 restitution, on both sides, a condition of relief by way of rescission, 250 — 252 third person, plaintiff guilty of fraud on, though not of fraud on defendant, debarred of remedy, on grounds of pubhc policy, 363, 364 SPECULATORS, representations addressed to the class of, 144, 145, 177, 178, 180, 181 " STANDING BY," effect of, 91, 92, 303—305. Awl see Estoppel STANNARIES, jurisdiction of county courts in case of mines within the, subject to con- current jurisdiction of High Court, 256, 357 STATE (THE), grants from, procured by deception of, how dealt with, 357 — 361 STATE (IN SENSE OF CONDITION). See Condition STATEMENT, in sense of representation at common law. See Rbpbbsentation "untrue," within the meaning of the statutory provisions relating to pro- spectus. See Peospecttjs STATEMENT OF CLAIM. See Pleading STATUS, personal, misrepresentations as to (marriage, infancy, etc.), 139 — 141 of thing (r.ri. share), alteration of, may be a bar to rescission, 273, 274 contracts of marriage involve questions of, and therefore caimot be annulled, except for misrepresentations which resulted in absence of consent, and not merely a fraudulently induced consent, 273, 274 quo, restoration of, the object of aU proceedings for rescission, or analogous rehef, 245, 246 STATUTE, STATUTORY, statements as to existence or provisions of statutes may be representations, 58 statutory fictions of " fraud," 392, 393 [68 ] Index. STATUTE, SrATXJTOUY— continued. pai'tioLilar statutes and enactments : — ■ plea under Lord Tenterden's Act to action of deceit, 212 — 216 provisions as to rectification of register and variation of list of oon- tributories> 254—261 the Vendor and Purchaser Act, 1874, as to sales of land, 368 statutes as to employment of puffers at sales by auction, 340 — 345 as to untrue statements in prospectuses, 306 — 339 providing for limitation of actions, 200, 264, 335 as to revocation of patents, and expunging entries of trademarks, etc., on the ground of fraud, 358 — 362 enactments declaratory of the common law, 345 provisions relating to non-disclosure, 346 statutes creating criminal offences in nature of misrepresentation, 346 certain special and local enactments relating to misrepresentation, 347, 348 STAY OF PROCEEDINGS, in arbitration, when refused, on ground of charges of fraud, and when not. See Aebitbation" STIPULATION. See Condition STOCK EXCHANGE, evidence as to practices and rules of, when necessary or admissible, 178 misrepresentations to Committee of, as to amount of capital subsciibed, to obtain official quotation, 183, 184 proved familiarity of party with practices of, may be of importance on the questions of inducement and materiality, 144, 145 STOIC, doctrines as to duty of disclosure, as adopted in Roman law, 422, 423, — and in English law, 434, 435 STOPPING PAYMENT, with public notice, when equivalent to actual liquidation, for the purpose of barring the representee's title to rescission, and when not, 279 SUBAGENT, when representation of, may render his ultimate principal responsible, 9, 161 SUBJECT-MATTER, of contract, when alteratitm in, is, and when it is not, bar to rescission, 272, 273 misrepresentation of character and nature of, defeats plea of agreement to waive right to rescission, 242, 243, — and also a plea that the contract has been completely executed, 266 SUBSCRIPTION FOR SHARES, induced by miisrepresentation. See Company, Shares, Prospectus SUBSEQUENT EVENTS. See Supervening Events SUBSTANCE, , , . ^ ^ ^ . . ,,,.,. of statement to be considered, with a view to determining whether it is a representation or a promise, 39 — 41 the like, with a view to determining whether a representation is true or false, 73—76 in sense of nature or character. See Character [69] Index. SUE, SUET). See Paeties,. and Pboceduke SUMMARY (NOUN), of facts, when a misrepresentation, and when not, 86 sqq. documents or statements refen-ed to in or inoorporated with prospectus 331, 332 SUMMARY (ADJECTIVE), procedure, provided by statute or statutory rules, in case of — rectifying register, and varying list of contributories, 254 — 261 sales of land, 368 setting aside judgments, 353 patents and trademarks, 358 — 362 SUPERVENING EVENTS, in case of continuing representation, effect of, on question of falsity, 76 — 78 in relation to issue of fraud, 110—114 SUPPRESSION. See f'oNCEALMENT SUSPICION, mere, is not knowledge of truth, 201 — 203 no affirmation, if representee had only, of the true facts, 269 TACIT. See Silence TANGIBLE, detriment necessary to constitute alteration of position, and damage, 146 — 152 TECHNICAL, moaning, when put upon representation for the purpose of the issue of falsity, 79, 80,— and when for tlie purpose of the issue of inducement, 1 35 " fraud " : criticism of the expression, 389, 390 TELEGRAM, effect of addition of words " bj' telegram" to description of goods as "in perfect condition," 81 continuous fraud, by means of a bogus telegram sent to the press, to strengtlicn the effect of a prospectus, 132 TEMPORAL, detriment, alteration of position and damage includes only cases of, 146 — 152 TENANCY, TENANT, materiality of representations as to, 130 TENDENCY, to induce, is materiality, 133, 134 of representation to produce damage, representee must prove, or else that representation was actually intended to do so in the particular case, 152—157 TENTERDEN (LORD)'S ACT, 212—216 TERM, in sense of condition or stipulation. See Contract and Condition juridical expression used in the law of misrepresentation. See Terminology [70 ] Index, terminology, observations on, and ciiticism, of the following : — the distinction between " nmial " and " legal " fraud, and similar distinctions, 388—400 " true " and " false," 398, 399 caveat emptor, 95 " reckless indifference," 104, 107 negligence as " evidence of fraud," 115 — 117 "proximate," ''remote," "direct," etc., 154 — 157 expressions used in Lord Tenterde.n's Act, 212, 213 the use of " void," when " voidable " only is meant, 234, 235 " void," as applied to a case of no contract at aD, as «ell as to a case of a contract void for illegality, etc., 236 " promoter," 318—320 expressions used in the statutory provisions relating to prospectuses, 306—339 TEST AC'TIOX. in case of several representees deceived by the same misrepresentation, 373, 374 THEOLOGICAL, ethics as to misrepresentation, compared with the rules of English juris- prudence, 408—421 THIRD PERfSON, statement of intention of, A\-hen a representation, 40, 47 opinion or belief of, when a rejjiesentation, 51 i-epresentation of representor's connection with, or independence of, may be material, 138, 139 representations as to credit of, ^^'ithin the meaning of Lord Tenterden's Act 212—216 contract with, or payment or liability to, or transaction with, is alteration of position, 147, 148 adopting the misrepresentation of a, by silence, 91 immaterial to question of fraud, that misrepresentation ^I'as intended to benefit a, 108 no difference in rules as to causation of damage, when representee was the person directly addressed, or a third person to whom it was intended to be transmitted, 155, 156 to whom representation is "passed on," whether a per.vjiia desir/naki, or a member of the public or a class addressed, is a representee, 9. 175 — 184 where rescission would be unjust to an innocent, who had acquired riglits for value, it will be refused, 274 — 275 on the above theory, the -winding up of a company is a bar to rescission or analogous relief, 276 — 279 judgments will not be set aside to the prejudice of an innocent, 355 rights of innocent, must be respected in case of physical resumption of property parted with under contract voidable for misrepresentation, 262, 263 intervention of unauthorized, as puffer, does not vitiate auction sale, 340 a!3 assignee, rights of. See Parties TIME, representation must be as to a fact or thing existing at the time, or a past event, 1 statements as to the future, when representations, and when not, 32 — 47 date at which falsity must have existed, is the date when the representee altered his position on the faith of the representation, 76 — 78 [71 ] Index. TIME— continued. it is sufBcient and necessary to show that the representor had no belief in the truth of his representation at the date when the representee acted on the faith thereof, in order to prove fraud, 110 — 114 statutory periods of Umitation, 200, 264, 335 delay, for however long a time, if within statutorj' period of hmitation, does not affect the representee's rights, but may furnish evidence of, or give scope for, the raising of various affirmative pleas, 208, 209, 282 — 286. And see Delay shareholder who complains of misstatement of the objects of the company, must come for rehef within the shortest possible time, 274. 275 a representee has a better equity who asks for rescission promptly, than one who waits to be attacked, 299 lapse of time, and complete execution of contract on both sides, is no bar to rescission of contract induced by fraud, 242, — nor in case of essential difference between that which the representor contracted to convey or deliver, and that which he in fact conveyed or deUvered, 242—244 in estimating damages, value of property acquired by representee under the contract is taken to be its value at the time of acquisition in the real circumstances of the case then existing, as disclosed at the trial, 219 — 221 relation back, in time, of Avinding-up order of company to date of commence- ment of liquidation, 280 when order for rescission made, it renders contract void as from the date of such contract, 245, 280 TIME-TABLE, railway, case of misrepresentation by error in {Denton v. G. N. Railivay Co.), is striking illustration of following points — misrepresentation of intention, 42 by failure to correct, 113 right of member of pubho to sue, 178 liabihty of corporation for act and fraud of agent, 163, 167 " legal fraud," where no moral, 109 absurdity of the view that there is no real distinction between the two expressions, 389 TITLE, agreement to take with all defects in , is a valid answer prima facie to claim to rescind, 206, 207,— but may be defeated by proof of fraud, 209, 210 questions of, may be decided under the Vendor and Purchaser Act, 1874, but not (except indirectly) any question affecting validity of the contract on ground of misrepresentation, 368 nemo dat quod non habet, appHed to title of assignee under contract voidable for misrepresentation. See Chose in Action, Chose in Posses- sion, and Negotiable Instrument TITLE-DEEDS, production of, to representee, when an imphed representation, 70 person who is induced by misrepresentation to execute, or assign, knowing that he is thereby conveying, or doing something with his property, cannot claim that the instrument is void, or more than voidable, 239 TORT, fraudulent misrepresentation does not differ from any other, as regards the Uability of a principal for the tort of his agent, 163 affirmative pleas to any tort are available to defendant in action of deceit, as well as the pleas special to that form of action, 200 [72 ] Index. lORT—conliiiueiL rules as to parties to action of deceit, and transmission of interest by opera- tion of law, or by assignment, are same as in any other action of tort, 15, 22(5—228. And see Parties TORTFEASOR. See AVbongdoer TRADE, engaging in, by infant, not an implied representation that he is of full age, 68 meaning of, in Lord Tenterden's Act, 215 when secondary trade meaning may be put upon words used in representa- tion, 79, 80 of parties, important in considering question of materiahty, 144, 145 rights of person engaged in, against competitor who obtains patent, or registration of trademark, by fraudulent misrepresentation to pubHc authorities, 357 — 361 rights of such person, against rival in trade who " passes off " goods on the pubhc, 361, 384. 385 practices and devices in, when implied misrepresentations. See Acts and Conduct customs of, how far incorporated in, and how far rejected by English juris- prudence, 406 — 408 TRADE UXIOK, made by a disgraceful statute immune from actions of tort, including deceit, 170 TRADEMARK, user of, not an implied representation that it is registered, 68 statutory provisions as to, when registration procured by fraud, 357 — 360 TRANSACTION, entering into, with repi'esentor, or with third person, whether bilateral, or unilateral {e.g. gift, consent, Hcense, renunciation), is alteration of position, 148 nature of, important to question of materiahty, 144, 145 may be set aside, when not amounting to contract, on same grounds and principles as contract. See Contract, and Rescission entering into, is an imphed representation of existence of conditions which render it la^\'ful, 67, 68, — and that it is of a normal type, 92 actions may be brought by or against several persons, for separate remedies, if arising out of same transaction, or series of transactions, 374, 375 And see, generally, Acts and Conduct TRANSFER, of property, what representations are implied from, 65 by assignment of property or rights under contract voidable for misrepresenta- tion, respective rights of assignor and representee. See Parties of shares, registration of, procured by misrepresentation to directors. See Liquidation action, where fraud charged. See Procedure TRANSITORY, signs, representation by, 64, 65 TRANSLATION, designedly false, of document, a fraudulent misrepresentation, 59 TRANSMISSION, of representation, by " passing on," 9, 175 — 184 rights and interests of representor and representee by operation of lav, or by contract. See Parties B.M. [ 73 ] 2 L Index. TRAVELLING PUBLIC:, representations to, 178. And see Time-table TRIAL. See Jtjkisdictiox, and Peocbduee TRICK, use of, to conceal defect, defeats the plea of agreement to take with all faults, 209, 210 larceny by, 240 of trade. See Tkade TRIFLING, TRIVIAL, inaccuracies in representation, do not render it false, if substance true, 74, 75 errors in description of property, are the proper subject of a condition in contract of sale to waive rescission, but not errors in substance, or where fraud is shown, 265, 266. And see Errok TRUE, TRUTH, " truth " means truth as between men, in the law of misrepresentation, 30, 31 absolute, and objective, not contingent, or subjective, truth, for the purpose of the law of misrepresentation, 73 what is in substantial accordance with the facts, whether UteraUy so, or not, in immaterial details, is deemed " true," 74, 75 in cases of continuing representation, what was false may become true, or what was true may become false, before the representation is acted on, 78 cases of lying by the truth, 80 existence of actual and honest belief in truth of representation is iimocence. See Inkooence absence of such belief is fraud. See Featjd representee's knowledge of, is a defence to proceedings for misrepresentation, 200 — 205. And see Knowledge agreement to waive inquiry into the truth, is also a defence, 205 — 210 question discussed whether representee, in order to show inducement and damages, must establish that knowledge of the truth would have had a certain, or only a possible, deterrent effect upon his mind, 129, 130, 324 — 326 where no duty to tell the truth, or a duty the other way, no inducement, 122, 128, 129 criticism of the terms " true " and "false," in the law of misrepresentation, 398 UNAMBIGUOUS, falsity must be proved by the representee. 80 — 82, — unless representor designedly made an ambidextrous representation, in which case burden is on him to show unambiguous truth, 82 — 84 where continuing representation discovered to have been false, or becomes so to his knowledge, by reason of supervening events, it is the duty of the representor to correct or revoke it by an unambiguous statement ; other- wise it is deemed false, 76 — 78, — and probably fraudulent also, 110 — 114 if correction not made until after the representation has been acted upon, it is ineffectual, unless accompanied by complete restitution, or bond fde offer thereof, 209, 221 UNCONSCIOUS, " fraud " : expression criticized, 389, 390 UNDERTAKING, in sense of business or adventure. See Business, and Company promise, misrepresentation of authority regarded as breach of, 194, 195 [74] Index, underwriter, of shares, material whether representee applies for as, or as investor, 145 policy of marine insurance, misrepresentation made to one, enures for benefit of those who underwrite after him, 175 statutory provisions as to rights and liabilities of underwriters of marine policies, in regard to misrepresentation. See references to the Marine Insurance Act, 1906, in Table ov Statutes, at p. xl. UNEQUIVOCAL. See Unambiguous UNILATERAL, transactions may be set aside for misrepresentation, 148 UNINCORPORATED BODY OP PERSONS, who liable for misrepresentation, 169, 170 UNION, trade, not hable in action of deceit, 170 UNITY, of principal and agent. See Aqbnt UNJUST, ^ee Injustice UNLAWFUL, when entering into a transaction is an implied representation that no con- ditions exist which would render it, 67, 68 UNLIQUIDATED, damages. See Damages UNREASONABLE, belief, or grounds of beUef. See Reasonable UNSIGNED, representations as to credit of third person (sc. not personally signed) are the subject of plea under Lord Tenterden's Act, 215 UNSUBSTANTIAL. See Substance, and Trifling UNTRUE, UNTRUTH, at common law. See Falsity by statute, in the case of prospectuses, 322 UNUSUAL. See Abnormal USAGE. See Custom USE, USER, statement as to intended, of premises, in what sense a representation, 35 of invention, in fraud of true inventor, during period of provisional pro- tection, made by statute ineffectual to prejudice inventor's interests, 359 USUAL. See Normal VALID, contract induced by misrepresentation is, until avoided, 234, 235. And see Void, and Voidable VALUATION, statement of representor's own, is a representation, 49 a third person's, is a representation, 51 statutory provisions as to, in prospectus cases, 331 VALUE, how ascertained, of property acquired by representee, in estimating damages, 219—221 rights of assignee who tiikes without, how affected, 290—293, 302 — 305 [ 75 ] Index. VALUER, statutory provisions as to, in prospectus cases, 331, 332 VARYING LIST OF CONTRIBUTORIES, in case ol: contract to take shares induced by misrepresentation, 258 — 260 VAUNTING, when a representation, and when not, 2, 60 — 62 " VENDIBLE COMMODITY," misrepresentations to pubhc, affecting price of, 181, 182 VENDOR. See Land, Article, Pubchasbk, Property VENDOR AND PURCHASER ACT, 1874, questions as to vaUdity of contract not Avithin provisions of, but indirect relief may be given by way of declaration of absence of title to property acquired by misrepresentation, 368 VERBAL. See Oral VERDICT. See Procedure VERSION, of facts, when a misrepresentation, and when not, 86 sqq. documents and statements referred to, or incorporated witli, prospectus, 331, 332 VITIATE, fraud vitiates aU transactions of whatever degree or solemnity, 350 And see, generally. Rescission VOID, instrument or contract is rendered void, and not merely voidable, where representee was induced to execute it by misrepresentation of its nature, quality, character, description, or class, (misdescription, misreading, or mistranslation), whether for purposes of active proceedings for rescission, or defence to action on the contract, 237, 238, 303, 304 contract rendered void, where representee induced to enter into it by mis- representation of the identity or persona of the other party to it, whether the personation was by statement, or by acts and conduct ; such cases are analogous to larceny by a trick, and no property passes ; rule applied both to proceedings for rescission, and to defence to action on contract, 240, 304 representee may by negligent acts and conduct estop hinself from setting up that the contract is void, but such neghgence is irrelevant to the question whether it is void or not, 304, 305 where contract is void for illegahty, 242 criticism of terminology, 236 certain waiver clauses in prospectus are void by statute, 333 VOIDABLE, where representee induced to execute a contract by misrepresentation other than that above described (see Void), the contract is thereby rendered, not void ah initio, but voidable only, 234 — 236 such contract is valid until disaffirmed; "void" used in some of the old cases where " voidable " only was meant, 234, 235 voidable at the option of the representee only, who may elect whether to affirm or avoid, 235, 236 representee need not exercise such election at all, but if he does, it is irre- vocable, 236 misrepresentations of the terms, conditions, object, legal effect, or ' ' contents " (in this sense) of an instrument, render it voidable only. 238, 239 [ 76 ] Index. YOIBABL'E— continued. a representee who, in executing an instrument, knows that he is thereby conveying, or doing something with his property, cannot claim that it was rendered void, 239 VOLUNTARY, VOLUKTEER, transmission of rights and interests by the voluntary act of the parties. See Pasties assignee of property or rights under a contract, who is a volunteer, takes subject to equities, including equity to rescind, 290 — 293, 302—305 voluntary hquidation of company is a prima facie bar to rescission, as well as compulsory hquidation. See Liqxtidation WAIVER, as an affirmative plea to proceedings for misrepresentation, 205 — 210 distinction between this plea, and a plea of knowledge, 205, 206 agreements to waive inquiry, or dispense with information or disclosure, or not to rely on representation, may be express or impHed from acts and conduct, 206 instances of express agreements to waive are contracts or stipulations to take property at all risks of errors in particulars of sale, or with all faults, or to accept an express refusal to warrant, or to assume correctness of statements as to title, or of plans and measurements, or to waive dis- closure in prospectus, 206, 207 waiver claims in prospectuses as to certain specified matters are now rendered invalid by statute, 333 condition in contract to waive right to impeach it for misrepresentation other than fraudulent, is vahd, 207, — but condition or stipulation to waive right to impeach the contract for fraud is void, on grounds of pubhc policy, 210 an undertaking not to apply to set aside award of arbitrator on the suggestion of fraud is vahd, 210 agreement to waive all rights in respect of misrepresentation is scarcely ever implied from acts and conduct, except in cases of compromise, and particularly family arrangements, 207 still greater difficulty in implying such an agreement from mere inaction, 208, 209 plea of waiver may be defeated by proof, burden of which is on representee, of fraud on the part of the representor, 209, 210 such fraud may consist in use of positive means or devices to cover up any fault or defect, 209, 210,— or in a fraudulent statement added to an express refusal to warrant, such as " I know of no defect," which statement must be as clearly and unequivocally made as the refusal, 209, 210, — or in knowledge of the inaccuracy of the plans, measurements, or records which the representee has been required to accept as accurate, 209, 210 as to agreements to waive the remedy by way of rescission only, and not all rights to set up misrepresentation, see Rescission (265 — 268) AVARRANTY, expression of willingness to give, is not necessarily deemed a guarantee within the Statute of Frauds, 47 renders all questions of inducement and materiahty irrelevant, 120 where representee is content with representor's express refusal to give, he is deemed not to have relied on any representation, except where the representor has added a fraudulent misstatement of ignorance of any defect, 206, 207, 209, 210 [77 ] Index. WEIGHTS AND MEASURES, statutory provisions as to false, 346 WHOLE. See Entirety WIDOW, misrepresenting herself to be a, feme sole, 139, 140 WIFE. See Maeriage WILL, how dealt with when procured by fraud, and by what court, 361 — 354 WILLINGNESS, statement as to, of representor, may be a representation, 1, 32 — 45 the like, as to statement of a third person's, 46, 47 WINDING UP. See Liquidation WITHDRAWAL. See Revocation "WITHOUT RESERVE," when property sold at auction, secret employment of puffer by vendor is fraud, 340, 341 WITNESS. See Evidence WORDS, construction of, in representations. See Meaning technical, in the law of misrepresentation. See Terminology WRIT, of ad quod damnum, 359 deceit, history of ancient, 382, 383 inquiry, 225 scire facias, in oases of companies, before the limited liability and winding up statutes, 277, 278 to revoke Crown grants, 358 summons, in action for rescission, is a sufficient exercise of election to avoid contract, 244, 245 WRITING, representations as to credit of third person required by statute to be in, 212—216 Atid see, generally, Document. WRONGDOER, every presumption made against, for purpose of ascertaining the intended meaning of a designedly ambidextrous representation, 83, 84 the Hke, for the purpose of the issue of inducement, 204, 205 in case of any difficulty in assessing the damages which is attribu- table to his fraud or neghgence, 224 where more than one, all are jointly and severally hable at common law, 172 modification of this rrde in the case of a statutory ^\Tongdoer by reason of untrae statements in a prospectus, 336 — 338 YIELD, of property or business, misrepresentations as to, 199 pniNTJiD BY WILLIAM CLOWES AND SONS, LIMITED, LONDON AND BECOLES.