Stone v. Doctor's Lake Milling Co

• Decision Date: 17 November 1926
• Docket Number: (No. 254.)
• Citation: 135 S.E. 449
• Parties: STONE v. DOCTOR'S LAKE MILLING CO. et al.
• Court: North Carolina Supreme Court

135 S.E. 449

(192 N.C. 588)

STONE

v.DOCTOR'S LAKE MILLING CO. et al.

(No. 254.)

Supreme Court of North Carolina.

Nov. 17, 1926.

Appeal from Superior Court, Wake County; Barnhill, Judge.

Action by J. E. Stone against the Doctor's Lake Milling Company and another. Judgment of nonsuit, and plaintiff appeals. Affirmed.

Manning & Manning, of Raleigh, for appellant.

K. N. Simms, Douglass & Douglass, and J. W. Bailey, all of Raleigh, for appellees.

STACY, C J. The following appears in the statement of case on appeal:

"Plaintiff having announced before the introduction of evidence that the cause of action was based on tort for damages for false and fraudulent representations, and the court being of the opinion that upon such cause of action and evidence offered the plaintiff is not entitled to recover, allowed the motion of the defendant for judgment as of nonsuit."

We cannot hold this ruling to be erroneous, as no action for the tort of deceit is set out in the complaint. It is not alleged that the false representations, upon which plaintiff says he relied to his injury, were made with knowledge of their falsity or with reckless disregard of their truth or falsity, nor is it alleged that such false representations were made with intent to deceive the plaintiff.

The general conditions under which factual misrepresentations may be made the basis of an action for deceit are stated in Pollock on Torts (12th Ed.) 283, as follows:

"To create a right of action for deceit there must be a statement made by the defendant, or for which he is answerable as principal, and with regard to that statement all the following conditions must concur:

"(a) It is untrue in fact.

"(b) The person making the statement, or the person responsible for it, either knows it to be untrue, or is culpably ignorant (that is, recklessly and consciously ignorant) whether it be true or not.

"(c) It is made to the intent that the plaintiff shall act upon it, or in a manner apparently fitted to induce him to act upon it.

"(d) The plaintiff does act in reliance on the statement in the manner contemplated or manifestly probable, and thereby suffers damage."

This formula has been approved by us in a number of decisions. Corley v. Griggs, 192 N. C. 171, 134 S. E. 406; Simpson v. Tobacco Growers, 190 N. C. 603, 130 S. E. 507; Hollingsworth v. Supreme Council, 175 N. C. 635, 96 S. E. 81, Ann. Cas. 1918E, 401; Whitehurst v. Ins. Co., 149 N. C. 273, 62 S. E. 1067. Speaking to the subject in Tarault v. Seip, 158 N. C. 363, 74 S. E. 3, Brown, J., said:

"An essential element of actionable fraud is the scienter or knowledge of the wrong on the part of the vendor. Where the representation is made as a part of the warranty, the vendor is held liable for his statement, whether he knew it to be true or not; but, where the action is for fraud, the burden is upon the party setting it up to prove the scienter. This distinction is well made by Chief Justice Pearson in Etheridge v. Palin, [72] N. C. 216, and is well supported by numerous authorities in this and other states. This court said, in Tilghman v. West, 43 N. C. 183: 'Nor can fraud exist where the intent to deceive does not exist, for it is emphatically the action of the mind that gives it existence.' And in Hamrick v. Hogg, 12 N. O. 350, Judge Henderson says: 'It is not sufficient that the representation be false in point of fact; the defendant must be guilty of a moral falsehood. The party making a representation must know or believe it to be false, or, what is the same thing, have no reason to believe it to be untrue.' The action for fraud and deceit rests in the intention with which the representation is made, and not upon the representations alone."

To like effect is the language of Varser, J., in Colt v. Kimball, 190 N. C. 169, 129 S. EL 406:

"It is accepted in this jurisdiction that the facts relied upon to constitute fraud, as well as the fraudulent intent, must be clearly alleged [citing authorities]. Fraud must be charged positively, and not by implication. * * * Fraud must be charged so that all its necessary elements appear affirmatively" [citing authorities for the position].

Our decisions are to the effect that "where it is sought to base one's relief on the ground of fraud, the allegations of fact must...