Emery v. Third National Bank of Pittsburgh

• Decision Date: 09 April 1934
• Docket Number: 89
• Citation: Emery v. Third National Bank of Pittsburgh, 314 Pa. 544, 171 A. 881 (Pa. 1934)
• Parties: Emery v. Third National Bank of Pittsburgh, Appellant
• Court: Pennsylvania Supreme Court

171 A. 881

314 Pa. 544

Emery v. Third National Bank of Pittsburgh, Appellant

No. 89

Supreme Court of Pennsylvania

April 9, 1934

Argued March 23, 1934

Appeal, No. 89-1934, by defendant, from judgment of C.P Allegheny Co., Oct. T., 1927, No. 1530, in case of Robert Emery v. The Third National Bank of Pittsburgh, in hands of Arthur R. Atwood, receiver.Judgment affirmed.

Trespass for deceit.Before SMITH, J.

The opinion of the Supreme Court states the facts.

Verdict and judgment for plaintiff.Defendant appealed.

Error assigned, inter alia, was refusal of judgment n.o.v., quoting record.

The judgment is affirmed.

Lawrence D. Blair, with him Moorhead & Knox, for appellant.

Oliver K. Eaton, with him J. R. Sheppard, for appellee.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.

OPINION

MR. JUSTICE MAXEY:

Plaintiff has recovered three successive verdicts in this case.The verdict in the first trial was set aside and a new trial granted.Judgment on a verdict was entered in the second trial, and an appeal was taken to this court.We ordered a new trial.At the third trial the plaintiff secured a verdict in the sum of $11,587.90.The defendant made motions for judgment n.o.v. and for a new trial.These were refused, and defendant has appealed.

When this case was previously before us(see308 Pa. 504, 162 A. 281), we held that it was a case for the jury on the question: Was the value of the assets of the Highland Coffee Company misrepresented by the defendant and did plaintiff rely on these misrepresentations?We there held that "a bare suspicion or an opportunity to learn the truth through the exercise of reasonable diligence does not constitute knowledge of fraud sufficient to prevent recovery."We also said that "the jury had a right to consider the respective situations of the parties to this transaction.The plaintiff was a mechanical engineer.The defendant was represented by its president, and when the bank president made a statement about the assets of the coffee company, which the bank had long controlled, the plaintiff had a right to assume that this bank president knew the exact facts as to the financial condition of the company and would disclose them."Appellant cites Mahaffey v. Ferguson,156 Pa. 156, 27 A. 21, which was a case involving the sale of a tract of timber land.In that casethis court said (page 168): "If before the completion of the sale they[appellee's agents] were advised as to the tricky character of appellant's agent, and with their suspicions thus aroused they chose not to investigate fully, it was their fault.The repeated examinations, the employment of experts, the suspicions, the refusal to complete the sale, because of the lines, show clearly there was no warranty made or intended, and that the parties dealt with each other with their eyes open, and at arms length, and representations made under these circumstances did not constitute a warranty."In the case before usthe appellee had no advice "as to the tricky character of appellant's agent."The appellee had no "suspicions aroused."He did not deal with the defendant"with his eyes open, and at arms length."Appellant attempts to distinguish the case of Bower v. Fenn et ux.,90 Pa. 359, cited by us in the former opinion, from the case now before us on the ground that there "the plaintiff, who was the seller, had, in addition to falsely representing the value of the drug store, persuaded defendants not to make their own investigation on the ground that it would disturb his clerks and take too much time."There is nothing in that case to show that defendant was prevented from making an examination of the drug store before purchasing it; it was open for any investigation he might insist upon making.This court said in that case: "Fenn [the buyer] relied upon the statements concerning the value of the property, made by Bower [the seller], and, consequently, he dealt upon the faith of those representations. . . .If Bower chose to permit Benn to contract with him, on the faith of his statements of value, he was bound not merely to believe, but to know, that they were true.This very point is ruled in the case of Fisher v. Worrall, 5 W. & S. 478."

This principle is laid down in 26 C.J., section 59, page 1142: "It is held by the weight of authority that ordinarily representations are not actionable unless the hearer was justified in relying thereon in the exercise of common prudence and diligence.But the respective character, intelligence, experience, age, and mental and physical condition of the parties are considerations which may vary this rule or render it of small importance, and the rule has been judicially stated in a form recognizing its limitations."

In 12 R.C.L., section 113, page 359, is stated this principle "In addition to actual reliance, a party asserting fraud of a false representation must have had the right to rely thereon; wherefore the representation must have been made to him either directly or indirectly, and must have been of such a nature that it was reasonably calculated to deceive him, and to induce him to do that which otherwise he would not have done.The rule of law is one of policy.Is it better to encourage negligence in the foolish, or fraud in the deceitful?Either course has obvious dangers.But judicial experience exemplifies that the former is the less objectionable, and hampers less the administration of pure justice.The law is not designed to protect...