Fausett & Co. v. Bullard, 4-9153

• Decision Date: 24 April 1950
• Docket Number: No. 4-9153,4-9153
• Citation: 229 S.W.2d 490,217 Ark. 176
• Court: Arkansas Supreme Court
• Parties: FAUSETT & CO., Inc. v. BULLARD et ux.

Page 490

229 S.W.2d 490

217 Ark. 176

FAUSETT & CO., Inc. v. BULLARD et ux.

No. 4-9153.

Supreme Court of Arkansas.

April 24, 1950.

Rehearing Denied May 29, 1950.

Moore, Burrow, Chowning & Mitchell, Little Rock, for appellant.

Owens, Ehrman & McHaney and John M. Lofton, Jr., Little Rock, for appellees.

GEORGE ROSE SMITH, Justice.

The appellees, W. T. and Allene Bullard, brought this suit to recover damages resulting from misrepresentations made by the appellant's agents in connection with the sale of a dwelling house in Little Rock. This appeal is from a judgment entered upon a verdict for $4,463.

The appellant is a corporation engaged in buying and selling real estate. In April of 1948 it owned the house in question and advertised it for sale. For several months the house had been occupied by E. L. Fausett, president of the company. The appellees saw the advertisement and began negotiations that led to their purchasing the property on April 26, for $16,500. Bullard testified that twice during the negotiations he inquired about conditions underneath the house, as the front of the house was so low that the floor was almost even with the yard. On both occasions Fausett replied that his crew had been under the house doing some work and it was in excellent condition. Mrs. Bullard corroborated her husband's testimony as to one of these occasions, while Fausett denied having made the statements attributed to him.

After the Bullards took possession they found that the floors vibrated noticeably. In July, Bullard crawled under the house and found a state of serious deterioration and disrepair. These conditions need not be described, as the amount of the verdict is not questioned.

Appellant's principal contention is that it was entitled to a directed verdict. It is insisted that the theory by which the case was allowed to go to the jury is erroneous in two respects.

First, the appellant contends that the proof does not show that Fausett knew his statements about the house to be untrue. It is argued that since the representations were made in apparent good faith there can be no liability in an action at law for deceit.

There was certainly a time in the early development of the common law when the plaintiff in an action of this kind had to prove a conscious and deliberate intention to deceive on the part of the defendant. But since those early decisions it has long been settled that representations are considered to be fraudulent if made by one who 'either knows them to be false or else, not knowing asserts them to be true.' Hunt v. Davis, 98 Ark. 44, 135 S.W. 458, 459; Brown v. Le May, 101 Ark. 95, 141 S.W. 759; Whaley v. Niven, 175 Ark. 839, 1 S.W.2d 3. The best statement of the reasons underlying the stricter rule has been made by Williston: 'The inherent justice of the severer rule of liability which in some cases at least holds a speaker liable for damages for false representations, though his intentions were innocent and his statements honestly intended, is equally clear. However honest his state of mind, he has induced another to act, and damage has been thereby caused. If it be added that the plaintiff had good reason to attribute to the defendant accurate knowledge of what he was talking about, and the statement related to a matter of business in regard to which action was to be expected, every moral reason exists for holding the defendant liable.' Williston on Contracts (Rev. Ed.), § 1510.

Second, it is earnestly urged that the appellees were not entitled to rely on Fausett's statements, not only...