Smith v. Badlam
| Decision Date | 07 October 1941 |
| Parties | ROBERT D. SMITH v. GEORGE E. L. BADLAM |
| Court | Vermont Supreme Court |
May Term, 1941
Fraud and Deceit.---1. Scienter Implies Knowledge.---2. Knowledge of Falsity of Representations.---3. Belief Represented as Knowledge.---4. Implication of Scienter.---5. Misrepresenta- tion Must be Known to be False.---6. No Presumption of Falsity.---7. Knowledge Represented as Fact.---8. Declaratory Misrepresentation Not Necessarily Knowledge.---9. Agent Quoting Principal.---10. Agent Repeating Principal's Statement.---11. Agent's Liability for Principal's Misrepresentation.
1. Scienter implies knowledge.
2. In an action for fraud and deceit in inducing a party to purchase property, it is not necessary to prove that the party charged with fraud had actual knowledge of the falsity of his representations.
3. Haphazard falsehood and intentional passing off belief for knowledge are of the same quality as conscious misstatement of facts and furnish the element of knowledge required to make the false representation fraudulent.
4. Scienter may be implied where one makes a statement as of his own knowledge, when, in fact, he knows nothing about it.
5. No misrepresentation is fraudulent at law unless it is made with actual knowledge of its falsity or under such circumstances that the law must necessarily impute such knowledge to the party at the time he makes it.
6. The law raises no presumption of knowledge from the mere fact that a representation is false.
7. In an action for fraud and deceit a misrepresentation understood and intended to be understood as statement upon knowledge is precisely the same as if distinctly and in terms professed to be made with knowledge as to fact.
8. The fact that a misrepresentation alleged to be fraudulent is in declaratory form does not, of itself, necessarily imply that the representation is made by the defendant "as of his own knowledge."
9. When a defendant in a fraud and deceit action represents a known principal, it can not reasonably be inferred from a declaratory statement by the agent obtained from the principal and later confirmed by him that the plaintiff understood the defendant made statements as of his own knowledge or was intended so to understand.
10. An agent is not liable because of misrepresentations derived from his principal repeated by him without knowledge of their falsity, Restatement of Agency, Sec. 348.
11. In an action against an agent claiming fraud and deceit by fraudulent misrepresentation of the number of trees in an apple orchard where the agent did not represent the misrepresentation as his own and the plaintiff did not understand the representa-
tion as being that of the agent and the defendant did not know that the representation was false and the facts given were derived from and confirmed by the principal, the agent is not liable.
ACTION OF FRAUD AND DECEIT in the sale of an apple orchard. Trial by jury, September Term, 1940, Rutland County Court, Cushing J., presiding. See a similar case, 111 Vt. 328, 16 A.2d 182. Verdict and judgment for plaintiff. The opinion states the case.
Judgment reversed, and judgment for the defendant to recover his costs.
Jones & Jones (Phillip B. Billings of counsel) for defendant.
Asa S. Bloomer for plaintiff.
Present MOULTON, C. J., SHERBURNE, BUTTLES and STURTEVANT, JJ.
This is an action of fraud and deceit, in which it is alleged that the plaintiff was induced to buy an apple orchard by the false and fraudulent representation of the defendant that the orchard contained 3500 trees, whereas it only contained 2500 trees, as the defendant knew or ought to have known. Verdict and judgment were for the plaintiff, to which the defendant excepted.
At the close of all the evidence the defendant moved for a directed verdict upon the ground that there was no evidence tending to show scienter. To the overruling of his motion the defendant excepted.
Scienter implies knowledge, but in an action of this kind it is not necessary to prove that the party charged with fraud had actual knowledge of the falsity of his representations. Haphazard falsehood and intentional passing off belief for knowledge are of the same quality as conscious misstatement of facts and furnish the element of knowledge required to make the false representation fraudulent. Stevens v. Blood, 90 Vt. 81, 83, 96 A. 697; Slack v. Bragg, 83 Vt. 404, 76 A. 148; Hunt v. Lewis, 87 Vt. 528, 90 A. 578, Ann. Cas. 1916C, 170. Scienter may be implied where one makes a statement as of his own knowledge, when, in fact, he knows nothing about it. Niles v. Danforth et al., 97 Vt. 88, 94, 122 A. 498; McAllister v. Benjamin, 96 Vt. 475, 486, 121 A. 263; Cabot v. Christie, 42 Vt. 121, 126, 1 Am. Rep. 313. As said in Cabot v. Christie, supra, and quoted in McAllister v. Benjamin, supra, and in Fitzgerald v. Metropolitan Life Ins. Co., 90 Vt. 291, 303, 98 A. 498, 504: "A representation of a fact, as of a party's own knowledge, if it prove false, is, unless explained, inferred to be wilfully false and made with an intent to deceive, at least in respect to the knowledge which is professed." But no misrepresentation is fraudulent at law, unless it is made with actual knowledge of its falsity or under such circumstances that the law must necessarily impute such knowledge to the party at the time he makes it, and the law raises no presumption of knowledge from the mere fact that the representation was false. Newman v. Kendall, 103 Vt. 421, 423, 424, 154 A. 662; Caldbeck v. Simanton, 82 Vt. 69, 77, 71 A. 881, 20 L.R.A. (N.S.) 844.
No question is made but that the defendant's representation as to the number of apple trees was false, and that it induced the plaintiff to purchase the orchard. This case turns upon whether the defendant made an absolute representation as to the number of trees, which was understood and intended to be understood as a statement upon knowledge, for, if he did, it is precisely the same as if he had distinctly and in...
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