Smith v. Kingman & Company
| Decision Date | 13 December 1897 |
| Docket Number | 10,748--(167) |
| Citation | 73 N.W. 253,70 Minn. 453 |
| Parties | ERNEST F. SMITH and Another v. KINGMAN & COMPANY |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county against defendant corporation to recover $ 300 over-payment to it upon the purchase of 200 bicycles, and the further sum of $ 1,500 for defendant's misrepresentations and failure to perform its agreements to protect plaintiffs from competition in the sale of said wheels. A trial resulted in a verdict in favor of plaintiffs for the sum of $ 2,154.20.
From an order, Jamison, J., granting a motion for a new trial unless plaintiffs should consent to a reduction of the verdict to $ 1,500, which consent was duly given, defendant appealed. Affirmed.
This disposes of all the questions raised having any merit and the order appealed from is affirmed.
C. J Traxler and Rome G. Brown, for appellant.
The essential elements for an action of deceit are as follows: 1. Material false representations must have been made. 2. They must have been made with a knowledge that they were false. Proof of material unqualified statements may be evidence to cover an allegation of knowledge. 3. They must have been made for the purpose and with the intent to induce the other party to do something which he would not otherwise have done. 4. The party to whom they are made must have believed them to be true and must have relied upon them, and so relying must have been induced by means of the misrepresentations to do something which he could not otherwise have done. 5. The representations must have been false. 6. The party complaining must have been damaged. Cooley, Torts, 556 (475) 2 Boone, Code Pl. 170; also Minnesota cases cited below.
All of these elements are included in the definition of fraud which is given by this court. Busterud v. Farrington, 36 Minn. 320. The case cited and other Minnesota cases hold that one of the essential elements of an action for deceit is the intent to deceive. That has been considered an essential element of the allegations of the complaint. Merriam v Pine, 23 Minn. 314; Bullitt v. Farrar, 42 Minn 8; Busterud v. Farrington, supra; Haven v. Neal, 43 Minn. 315; Penney v. Haugan, 61 Minn. 279. Not one of these cases holds that the fact of intent is not a material element to constitute deceit; nor is there one which holds it is not necessary to allege this fact of intent. This court has repeatedly held in cases charging unlawful preferences which are based on the ground of fraud, that the complaint must show all the essential elements of fraud including intent as expressly set forth in the statute.
In the case of a warranty no scienter need be alleged or proven, and no intent to deceive need be alleged or proven. The party complained of makes a statement. The statement becomes a part of the contract. It is a warranty. It makes no difference whether or not its falsity be known to the person making it. It makes no difference whether or not there was an intent to mislead. But as distinguished from actions on warranty, in order to make out a case of deceit, it is necessary to allege in the complaint expressly both the fact that the person knew the statement to be false, and also that he intended thereby to deceive and to induce the other party to act. Furthermore there is no allegation that the defendant knew the statement to be false. This is an essential element as shown in the above cases. It is true that such an allegation may be proven by showing unqualified statements made as of the defendant's own knowledge; but there should be an allegation to cover this element of the charge of fraud. That allegation must be either: (1) That the defendant knew the statement to be false; or, (2) that he made the statement unqualifiedly as of his own knowledge. It is not sufficient to state facts from which other essential facts may be inferred, sufficient to constitute a cause of action. The presumption of law is in favor of fair dealing and the pleader can secure no advantage by intendment. Facts sufficient to state a cause of action must be stated. Knowledge of the falsity of the representations on the part of the persons making them, and the intent to deceive, are essential to constitute a cause of action for deceit, and must be found as facts by the court or jury, in determining the issue. Humphrey v. Merriam, 32 Minn. 197. In a case for fraud and deceit, scienter must be both averred and proved. Pettigrew v. Chellis, 41 N.H. 95. The true principle as established by the cases is that "a representation, false in fact, gives no right to action, if innocently made by a party who believes the truth of what he asserts; and that in order to constitute fraud there must be a false representation knowingly made, i. e., a concurrence of fraudulent intent and false representations, and this principle applies as well to the pleading as to the proof. If the complaint does not allege knowledge of the falsity and an intent to deceive, it does not state a cause of action. Benjamin, Sales, § 454; Da Lee v. Blackburn, 11 Kan. 190; Salem v. Amams, 23 Pick. 256; Pettigrew v. Chellis, supra; Lord v. Goddard, 13 How. 198; Dilworth v. Bradner, 85 Pa. St. 238. Fraudulent intent is one of the facts which constitute actual fraud and must be averred. Woodroof v. Howes, 88 Cal. 184; Hardy v. Brier, 91 Ind. 91; Feeney v. Howard, 79 Cal. 525; Bartholomew v. Bentley, 15 Ohio 660. As it is elementary that fraud cannot be presumed, but must be proved, it follows as a logical conclusion that, in the matter of pleading, facts sufficient to constitute a fraud must be alleged in order to admit of the proof, and further that as false representations honestly made do not amount to fraud, the bare allegation of a false representation, without the additional allegation that it was known to be false by the person making it, at the time it was made, and was made with intent to deceive, is not a sufficient allegation to admit of proof of fraud. Kelley v. Wallace, 14 Minn. 173 (236); People v. Healy, 128 Ill. 9; Jasper v. Hamilton, 3 Dana (Ky.) 280. It is true that proof that a statement is made dishonestly, with a reckless disregard of whether it is true or false, is equivalent to proof of a known false statement, and is taken in lieu of proof of knowledge. There must be an allegation of the concurrence of fraudulent intent and false representation. Bullitt v. Farrar, supra; Merriam v. Pine, supra; Da Lee v. Blackburn, supra. Humphrey v. Merriam is not modified by Bullitt v. Farrar, supra. The court has laid down the rule as to the proof of intent to deceive in this case of Humphrey v. Merriam with great exactness.
Where the parties meet upon equal ground, as did the parties in the case at bar, and there being no special confidence or relation or influence, and each relying upon his own judgment, the vendor cannot be held responsible for a statement of an opinion, even if false and made with intent to deceive. 1 Story, Eq. Jur. §§ 197-201; Benjamin, Sales, § 460; Howell v. Biddlecom, 62 Barb. 131; Cooper v. Lovering, 106 Mass. 77-79.
Respondents must show not only that the representations were false, but that they were known to be false, at the time they were made; and that they were made to deceive and respondents acted on them as true. It must be averred and proved that the person who made the representations did not believe them to be true. Page v. Parker, 40 N.H. 47, 71; Hicks v. Stevens, 121 Ill. 186, 196; Conant v. National, 121 Ind. 323.
The plaintiffs were given every opportunity for inspection of the quality and structure of the wheels. They bought by sample a lot of wheels which were as yet unmanufactured. The wheels so bought and received by them were in every respect like the samples. Manning v. Albee, 11 Allen, 520; Medbury v. Watson, 6 Metc. (Mass.) 246, 260; Veasey v. Doton, 3 Allen, 381; Hemmer v. Cooper, 8 Allen, 334; Cooper v. Lovering, 106 Mass. 79; Mervin v. Arbuckle, 81 Ill. 501; Smith v. Hughes, L. R. 6 Q. B. 597; Laidlaw v. Organ, 2 Wheat. 178; Peoples v. Bogart, 81 N.Y. 101; Kintzing v. McElrath, 5 Pa. St. 467; Cogel v. Kniseley, 89 Ill. 598.
The representations must have been such as were likely to impose upon a man of ordinary prudence and caution, and to throw him off his guard, where he might properly and judiciously be expected to rely upon them and not upon his own sagacity or means of observation or investigation. Ide v. Gray, 11 Vt. 615; Tryon v. Whitmarsh, 1 Metc. (Mass.) 1; Emerson v. Brigham, 10 Mass. 197; Page v. Parker, supra. Having had a full and fair opportunity to inspect the goods, the purchaser, if he is unwilling to deal on the terms of the rule caveat emptor, must protect himself against his own want of skill or care, by requiring of the seller a warranty of any matters, the risk of which he is unwilling to assume. Benjamin, Sales, § 430; Veasey v. Doton, supra; Morrison v. Koch, 32 Wis. 254-261; 1 Story, Eq. Jur. §§ 200, 201.
In cases of deceit the proper measure is the "difference between the value of what he was induced to part with and the value he got." Stickney v. Jordan, 47 Minn. 262; Reynolds v. Franklin, 44 Minn. 30; Redding v. Godwin, 44 Minn. 355.
Douglas A. Fiske, for respondents.
If counsel desired to raise the question that the complaint was not sufficient to allow any evidence as in deceit, they should have so stated. Schwartz v. Germania, 21 Minn. 215; Thoreson v. Minneapolis, 29 Minn. 341; Isaacson v. Minneapolis, 27 Minn. 463; Mousseau v. Mousseau, 42 Minn. 212; Hooper v. Chicago, 37 Minn. 52; Merriam v. Pine, 23 Minn. 314; Thompson v. Ellenz, 58 Minn. 301; Cronfeldt v. Arrol, 50 Minn. 327; Russell v. Davis, 51 Minn. 482; King v. Nichols, 53 Minn. 453; Anchor v. Kirkpatrick, 59 Minn. 378; Vaughan v. McCarthy, 63 Minn. 221.
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