Chapter VIII.: Wrongs of Fraud and Malice, I.—: Deceit.

Nature of the wrong. In the foregoing chapters we dealt with wrongs affecting the so-called primary rights to security for a man’s person, to the enjoyment of the society and obedience of his family, and to his reputation and good name. In these cases, exceptional conditions excepted, the knowledge or state of mind of the person violating the right is not material for determining his legal responsibility. This is so even in the law of defamation, as we have just seen, the artificial use of the word “malice” notwithstanding. We now come to a kind of wrongs in which either a positive wrongful intention, or such ignorance or indifference as amounts to guilty recklessness (in Roman terms either dolus or culpa lata) is a necessary element; so that liability is founded not in an absolute right of the plaintiff, but in the unrighteousness of the defendant.

Concurrent jurisdiction of common law and equity. The wrong called Deceit consists in leading a man into damage by wilfully or recklessly causing him to believe and act on a falsehood. It is a cause of action by the common law (the action being an action on the case founded on the ancient writ of deceit, which had a much narrower scope): and it has likewise been dealt with by courts of equity under the general jurisdiction of the Chancery in matters of fraud. The principles worked out in the two jurisdictions are believed to be identical, though there may be a theoretical difference as to the character of the remedy, which in the Court of Chancery did not purport to be damages but restitution. Since 1875, therefore, we have in this case a real and perfect fusion of rules of common law and equity which formerly were distinct, though parallel and similar.

Difficulties of the subject: complication with contract. The subject has been one of considerable difficulty for several reasons.

First, the law of tort is here much complicated with the law of contract. A false statement may be the inducement to a contract, or may be part of a contract, and in these capacities may give rise to a claim for the rescission of the contract obtained by its means, or for compensation for breach of the contract or of a collateral warranty. A false statement unconnected with any contract may likewise create, by way of estoppel, an obligation analogous to contract. And a statement capable of being regarded in one or more of these ways may at the same time afford a cause of action in tort for deceit. “If, when a man thinks it highly probable that a thing exists, he chooses to say he knows the thing exists, that is really asserting what is false: it is positive fraud. That has been repeatedly laid down. . . . If you choose to say, and say without inquiry, ‘I warrant that,’ that is a contract. If you say, ‘I know it,’ and if you say that in order to save the trouble of inquiry, that is a false representation—you are saying what is false to induce them to act upon it”.

The grounds and results of these forms of liability are largely similar, but cannot be assumed to be identical. The authorities establishing what is a cause of action for deceit are to a large extent convertible with those which define the right to rescind a contract for fraud or misrepresentation, and the two classes of cases used to be cited without any express discrimination. We shall see however that discrimination is needful.

Questions of fraudulent intent. Secondly, there are difficulties as to the amount of actual fraudulent intention that must be proved against a defendant. A man may be, to all practical intents, deceived and led into loss by relying on words or conduct of another which did not proceed from any set purpose to deceive, but perhaps from an unfounded expectation that what he stated or suggested would be justified by the event. In such a case it seems hard that the party misled should not have a remedy, and yet there is something harsh in saying that the other is guilty of fraud or deceit. An over-sanguine and careless man may do as much harm as a deliberately fraudulent one, but the moral blame is not equal. Again, the jurisdiction of courts of equity in these matters has always been said to be founded on fraud. Equity judges, therefore, were unable to frame a terminology which should clearly distinguish fraud from culpable misrepresentation not amounting to fraud, but having similar consequences in law: and on the contrary they were driven, in order to maintain and extend a righteous and beneficial jurisdiction, to such vague and confusing phrases as “constructive fraud,” or “conduct fraudulent in the eyes of this Court.” Thus they obtained in a cumbrous fashion the results of the bolder Roman maxim culpa lata dolo acquiparatur. The results were good, but, being so obtained, entailed the cost of much laxity in terms and some laxity of thought. Of late years there has been a reaction against this habit, wholesome in the main, but not free from some danger of excess. “Legal fraud” is an objectionable term, but it does not follow that it has no real meaning. One might as well say that the “common counts” for money had and received, and the like, which before the Judicature Acts were annexed to most declarations in contract, disclosed no real cause of action, because the “contract implied in law” which they supposed was not founded on any actual request or promise.

Fraud of agents. Thirdly, special difficulties of the same kind have arisen with regard to false statements made by an agent in the course of his business and for his principal’s purposes, but without express authority to make such statements. Under these conditions it has been thought harsh to hold the principal answerable; and there is a further aggravation of difficulty in that class of cases (perhaps the most important) where the principal is a corporation, for a corporation has been supposed not to be capable of a fraudulent intention. We have already touched on this point; and the other difficulties appear to have been surmounted, or to be in the way of being surmounted, by our modern authorities.

General conditions of the right of action. Having indicated the kind of problems to be met with, we proceed to the substance of the law.

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:

There is no cause of action without both fraud and actual damage, or the damage is the gist of the action.

And according to the general principles of civil liability, the damage must be the natural and probable consequence of the plaintiff’s action on the faith of the defendant’s statement.

Of these heads in order.

Falsehood in fact. (a) A statement can be untrue in fact only if it purports to state matter of fact. A promise is distinct from a statement of fact, and breach of contract, whether from want of power or of will to perform one’s promise, is a different thing from deceit. Again a mere statement of opinion or inference, the facts on which it purports to be founded being notorious or equally known to both parties, is different from a statement importing that certain matters of fact are within the particular knowledge of the speaker. A man cannot hold me to account because he has lost money by following me in an opinion which turned out to be erroneous. In particular cases, however, it may be hard to draw the line between a mere expression of opinion and an assertion of specific fact. And a man’s intention or purpose at a given time is in itself a matter of fact, and capable (though the proof be seldom easy) of being found as a fact. “The state of a man’s mind is as much a fact as the state of his digestion”. It is settled that the vendor of goods can rescind the contract on the ground of fraud if he discovers within due time that the buyer intended not to pay the price.

When a prospectus is issued to shareholders in a company or the like to invite subscriptions to a loan, a statement of the purposes for which the money is wanted—in other words, of the borrower’s intention as to its application—is a material statement of fact, and if untrue may be ground for an action of deceit. The same principle would seem to apply to a man’s statement of the reasons for his conduct, if intended or calculated to influence the conduct of those with whom he is dealing; as if an agent employed to buy falsely names, not merely as the highest price he is willing to give, but as the actual limit of his authority, a sum lower than that which he is really empowered to deal for.

Misrepresentations of law. A representation concerning a man’s private rights, though it may involve matters of law, is as a whole deemed to be a statement of fact. Where officers of a company incorporated by a private Act of Parliament accept a bill in the name of the company, this is a representation that they have power so to do under the Act of Parliament, and the existence of non-existence of such power is a matter of fact. “Suppose I were to say I have a private Act of Parliament which gives me power to do so and so. Is not that an assertion that I have such an Act of Parliament? It appears to me to be as much a representation of a matter of fact as if I had said I have a particular bound copy of Johnson’s Dictionary”. A statement about the existence or actual text of a public Act of Parliament, or a reported decision, would seem to be no less a statement of fact. With regard to statements of matters of general law made only by implication, or statements of pure propositions of the law, the rule may perhaps be this, that in dealings between parties who have equal means of ascertaining the law, the one will not be presumed to rely upon a statement of matter of law made by the other. It has never been decided whether proof of such reliance is admissible; it is submitted that if the case arose it could be received, though with caution. Of course a man will not in any event be liable to an action of deceit for misleading another by a statement of law, however erroneous, which at the time he really believed to be correct. That case would fall into the general category of honest though mistaken expressions of opinion. If there be any ground of liability, it is not fraud but negligence, and it must be shown that the duty of giving competent advice had been assumed or accepted.

Falsehood by garbled statements. It remains to be noted that a statement of which every part is literally true may be false as a whole, if by reason of the omission of material facts it is as a whole calculated to mislead a person ignorant of those facts into an inference contrary to the truth. “A suppression of the truth may amount to a suggestion of falsehood”.

Knowledge or belief of defendant. (b) As to the knowledge and belief of the person making the statement.

He may believe it to be true. In that case he incurs no liability, nor is he bound to show that his belief was founded on such grounds as would produce the same belief in a prudent and competent man, except so far as the absence of reasonable cause may tend to the inference that there was not any real belief. An honest though dull man cannot be held guilty of fraud any more than of “express malice,” although there is a point beyond which courts will not believe in honest stupidity. “If an untrue statement is made,” said Lord Chelmsford, “founded upon a belief which is destitute of all reasonable grounds, or which the least inquiry would immediately correct, I do not see that it is not fairly and correctly characterized as misrepresentation and deceit”; Lord Cranworth preferred to say that such circumstances might be strong evidence, but only evidence, that the statement was not really believed to be true, and any liability of the parties “would be the consequence not of their having stated as true what they had not reasonable ground to believe to be true, but of their having stated as true what they did not believe to be true”. Lord Cranworth’s opinion has been declared by the House of Lords, reversing the judgment of the Court of Appeal, to be the correct one. “The ground upon which an alleged belief was founded” is allowed to be “a most important test of its reality”; but if it can be found as a fact that a belief was really and honestly held, whether on reasonable grounds or not, a statement embodying that belief cannot render its maker liable in an action for deceit, however grossly negligent it may be, and however mischievous in its results.

I have given reasons elsewhere for thinking this decision of the House of Lords an unfortunate one. It would be out of place to repeat those reasons here. But it may be pointed out that the reversed opinion of the Court of Appeal coincides with that which has for many years prevailed in the leading American Courts, and has lately been thus expressed in Massachusetts:—

“It is well settled in this Commonwealth that the charge of fraudulent intent, in an action for deceit, may be maintained by proof of a statement made, as of the party’s own knowledge, which is false, provided the thing stated is not merely a matter of opinion, estimate, or judgment, but is susceptible of actual knowledge; and in such case it is not necessary to make any further proof of an actual intent to deceive. The fraud consists in stating that the party knows the thing to exist, when he does not know it to exist; and if he does not know it to exist, he must ordinarily be deemed to know that he does not”.

And so, still more lately, the Supreme Court of the United States not only said that “a person who makes representations of material facts, assuming or intending to convey the impression that he has adequate knowledge of the existence of such facts, when he is conscious that he has no such knowledge,” is answerable as if he actually knew them to be false—which is admitted everywhere—but went on to say that a vendor or lessor may be held guilty of deceit by reason of material untrue representations “in respect to his own business or property, the truth of which representations the vendor or lessor is bound and must be presumed to know”. This appears to be precisely the step which in this country the Court of Appeal was prepared, but the House of Lords refused, to take.

In England, on the contrary, “negligence, however great, does not of itself constitute fraud,” nor, it seems, even cast upon the defendant the burden of proving actual belief in the truth of the matter stated. Even the grossest carelessness, in the absence of contract, will not make a man liable for a false statement without a specific finding of fact that he knew the statement to be false or was recklessly ignorant whether it was true or false.

Perhaps it would have been better on principle to hold the duty in these cases to be quasi ex contractu, and evade the barren controversy about “legal fraud.” One who makes a statement as of fact to another, intending him to act thereon, might well be held to request him to act upon it; and it might also have been held to be an implied term or warranty in every such request that the party making it has some reasonable ground for believing what he affirms; not necessarily sufficient ground, but such as might then and there have seemed sufficient to a man of ordinary understanding. This would not have been more artificial than holding, as the Exchequer Chamber was once prepared to hold, that the highest bona fide bidder at an auction, advertised to be without reserve, can sue the auctioneer as on a contract that the sale is really without reserve, or that he has authority to sell without reserve.

And such a development would have been quite parallel to others which have taken place in the modern history of the law. No one now regards an express warranty on a sale otherwise than as a matter of contract; yet until the latter part of the eighteenth century the common practice was to declare on such warranties in tort. But it seems now too late, at all events in this country, to follow such a line of speculation.

It has been suggested that it would be highly inconvenient to admit “inquiry into the reasonableness of a belief admitted to be honestly entertained”. I cannot see that the inquiry is more difficult or inconvenient than that which constantly takes place in questions of negligence, or that it is so difficult as those which are necessary in cases of malicious prosecution and abuse of privileged communications. Besides, we do not admit beliefs to be honest first and ask whether they were reasonable afterwards.

Representations subsequently discovered to be untrue. If, having honestly made a representation, a man discovers that it is not true before the other party has acted upon it, what is his position? It seems on principle that, as the offer of a contract is deemed to continue till revocation or acceptance, here the representation must be taken to be continuously made until it is acted upon, so that from the moment the party making it discovers that it is false and, having the means of communicating the truth to the other party, omits to do so, he is in point of law making a false representation with knowledge of its untruth. And such has been declared to be the rule of the Court of Chancery for the purpose of setting aside a deed. “The case is not at all varied by the circumstance that the untrue representation, or any of the untrue representations, may in the first instance have been the result of innocent error. If, after the error has been discovered, the party who has innocently made the incorrect representation suffers the other party to continue in error and act on the belief that no mistake has been made; this from the time of the discovery becomes, in the contemplation of this Court, a fraudulent misrepresentation, even though it was not so originally”. We do not know of any authority against this being the true doctrine of common law as well as of equity, or as applicable to an action for deceit as to the setting aside of a contract or conveyance. Analogy seems in its favour. Since the Judicature Acts, however, it is sufficient for English purposes to accept the doctrine from equity. The same rule holds if the representation was true when first made, but ceases to be true by reason of some event within the knowledge of the party making it and not within the knowledge of the party to whom it is made.

Assertions made in reckless ignorance. On the other hand if a man states as fact what he does not believe to be fact, he speaks at his peril; and this whether he knows the contrary to be true or has no knowledge of the matter at all, for the pretence of having certain information which he has not is itself a deceit. “He takes upon himself to warrant his own belief of the truth of that which he so asserts”. “If persons take upon themselves to make assertions as to which they are ignorant whether they are true or untrue, they must, in a civil point of view, be held as responsible as if they had asserted that which they knew to be untrue”. These dicta, one of an eminent common law judge, the other of an eminent chancellor, are now both classical; their direct application was to the repudiation of contracts obtained by fraud or misrepresentation, but they state a principle which is well understood to include liability in an action for deceit. The ignorance referred to is conscious ignorance, the state of mind of a man who asserts his belief in a fact “when he is conscious that he knows not whether it be true or false, and when he has therefore no such belief”.

Breach of a special duty to give correct information. With regard to transactions in which a more or less stringent duty of giving full and correct information (not merely of abstaining from falsehood or concealment equivalent to falsehood) is imposed on one of the parties, it may be doubted whether an obligation of this kind annexed by law to particular classes of contracts can ever be treated as independent of contract. If a misrepresentation by a vendor of real property, for example, is wilfully or recklessly false, it comes within the general description of deceit. But there are errors of mere inadvertence which constantly suffice to avoid contracts of these kinds, and in such cases I do not think an action for deceit (or the analogous suit in equity) is known to have been maintained. Since Derry v. Peek it seems clear that it could not be. As regards these kinds of contracts, therefore—but, it is submitted, these only—the right of action for misrepresentation as a wrong is not co-extensive with the right of rescission. In some cases compensation may be recovered as an exclusive or alternative remedy, but on different grounds, and subject to the special character and terms of the contract.

Estoppel. Burrowes v. Lock: former supposed rule of equity. In the absence of a positive duty to give correct information or full and correct answers to inquiry, and in the absence of fraud, there is still a limited class of cases in which a man may be held to make good his statement on the ground of estoppel. Until quite lately it was supposed to be a distinct rule of equity that a man who has misrepresented, in a matter of business, facts which were specially within his knowledge, cannot be heard to say that at the time of making his statement he forgot those facts. But since Derry v. Peek this is not the rule of English courts. There is no general duty to use care, much or little, in making statements of fact on which other persons are likely to act. If there is no contract and no breach of specific duty, nothing short of fraud or estoppel will suffice. And we have to remember that estoppel does not give a cause of action but only supplies a kind of artificial evidence. One of the cases hitherto relied on for the supposed rule can be supported on the ground of estoppel, but on that ground only; a later and apparently not less considered and authoritative one cannot be supported at all.

In short the decision of the House of Lords in Derry v. Peek is that even the grossest carelessness in stating material facts is not equivalent to fraud; and the substance of the decision is not altered by the results turning out to be of wider scope, and to have more effect on other doctrines supposed to be settled, than at the time was apprehended by a tribunal of whose acting members not one had any working acquaintance with courts of equity.

The effects of Derry v. Peek, as regards the particular class of company cases to which the decision immediately applied, have been neutralized by the Directors’ Liability Act, 1890. As this Act “is framed to meet a particular grievance, and does not replace an unsound doctrine which leads to unfortunate results by a sounder principle which would avoid them”, we have no occasion to do more than mention its existence.

Intention of the statement. (c) It is not a necessary condition of liability that the misrepresentation complained of should have been made directly to the plaintiff, or that the defendant should have intended or desired any harm to come to him. It is enough that the representation was intended for him to act upon, and that he has acted in the manner contemplated, and suffered damage which was a natural and probable consequence. If the seller of a gun asserts that it is the work of a well-known maker and safe to use, that as between him and the buyer, is a warranty, and the buyer has a complete remedy in contract if the assertion is found untrue; and this will generally be his better remedy, as he need not then allege or prove anything about the defendant’s knowledge; but he may none the less treat the warranty, if it be fraudulent, as a substantive ground of action in tort. If the buyer wants the gun not for his own use, but for the use of a son to whom he means to give it, and the seller knows this, the seller’s assertion is a representation on which he intends or expects the buyer’s son to act. And if the seller has wilfully or recklessly asserted that which is false, and the gun, being in fact of inferior and unsafe manufacture, bursts in the hands of the purchaser’s son and wounds him, the seller is liable to that son, not on his warranty (for there is no contract between them, and no consideration for any), but for a deceit. He meant no other wrong than obtaining a better price than the gun was worth; probably he hoped it would be good enough not to burst, though not so good as he said it was; but he has put another in danger of life and limb by his falsehood, and he must abide the risk. We have to follow the authorities yet farther.

Representations to a class of persons: Polhill v. Walter. A statement circulated or published in order to be acted on by a certain class of persons, or at the pleasure of any one to whose hands it may come, is deemed to be made to that person who acts upon it, though he may be wholly unknown to the issuer of the statement. A bill is presented for acceptance at a merchant’s office. He is not there, but a friend, not his partner or agent, who does his own business at the same place, is on the spot, and, assuming without inquiry that the bill is drawn and presented in the regular course of business, takes upon himself to accept the bill as agent for the drawee. Thereby he represents to every one who may become a holder of the bill in due course that he has authority to accept; and if he has in fact no authority, and his acceptance is not ratified by the nominal principal, he is liable to an action for deceit, though he may have thought his conduct was for the benefit of all parties, and expected that the acceptance would be ratified.

Denton v. G. N. R. Co. Again the current time-table of a railway company is a representation to persons meaning to travel by the company’s trains that the company will use reasonable diligence to despatch trains at or about the stated times for the stated places. If a train which has been taken off is announced as still running, this is a false representation, and (belief in its truth on the part of the company’s servants being out of the question) a person who by relying on it has missed an appointment and incurred loss may have an action for deceit against the company. Here there is no fraudulent intention. The default is really a negligent omission; a page of the tables should have been cancelled, or an erratum-slip added. And the negligence could hardly be called gross, but for the manifest importance to the public of accuracy in these announcements.

Peek v. Gurney. Again the prospectus of a new company, so far forth as it alleges matters of fact concerning the position and prospects of the undertaking, is a representation addressed to all persons who may apply for shares in the company; but it is not deemed to be addressed to persons who after the establishment of the company become purchasers of shares at one or more removes from the original holders, for the office of the prospectus is exhausted when once the shares are allotted. As regards those to whom it is addressed, it matters not whether the promoters wilfully use misleading language or not, or do or do not expect that the undertaking will ultimately be successful. The material question is, “Was there or was there not misrepresentation in point of fact?”. Innocent or benevolent motives do not justify an unlawful intention in law, though they are too often allowed to do so in popular morality.

Reliance on the representation. (d) As to the plaintiff’s action on the faith of the defendant’s representation.

A. by words or acts represents to B. that a certain state of things exists, in order to induce B. to act in a certain way. The simplest case is where B., relying wholly on A.’s statement, and having no other source of information, acts in the manner contemplated. This needs no further comment. The case of B. disbelieving and rejecting A.’s assertion is equally simple.

Another case is that A.’s representation is never communicated to B. Here, though A. may have intended to deceive B., it is plain that he has not deceived him; and an unsuccessful attempt to deceive, however unrighteous it may be, does not cause damage, and is not an actionable wrong. A fraudulent seller of defective goods who patches up a flaw for the purpose of deceiving an inspection cannot be said to have thereby deceived a buyer who omits to make any inspection at all. We should say this was an obvious proposition, if it had not been judicially doubted. The buyer may be protected by a condition or warranty, express or implied by law from the nature of the particular transaction; but he cannot complain of a merely potential fraud directed against precautions which he did not use. A false witness who is in readiness but is not called is a bad man, but he does not commit perjury.

Means of knowledge immaterial without actual independent inquiry. Yet another case is that the plaintiff has at hand the means of testing the defendant’s statement, indicated by the defendant himself, or otherwise within the plaintiff’s power, and either does not use them or uses them in a partial and imperfect manner. Here it seems plausible at first sight to contend that a man who does not use obvious means of verifying the representations made to him does not deserve to be compensated for any loss he may incur by relying on them without inquiry. But the ground of this kind of redress is not the merit of the plaintiff, but the demerit of the defendant: and it is now settled law that one who chooses to make positive assertions without warrant shall not excuse himself by saying that the other party need not have relied upon them. He must show that his representation was not in fact relied upon. In the same spirit it is now understood (as we shall see in due place) that the defence of contributory negligence does not mean that the plaintiff is to be punished for his want of caution, but that an act or default of his own, and not the negligence of the defendant, was the proximate cause of his damage. If the seller of a business fraudulently overstates the amount of the business and returns, and thereby obtains an excessive price, he is liable to an action for deceit at the suit of the buyer, although the books were accessible to the buyer before the sale was concluded.

Perfunctory inquiry will not do. And the same principle applies as long as the party substantially puts his trust in the representation made to him, even if he does use some observation of his own.

A cursory view of a house asserted by the vendor to be in good repair does not preclude the purchaser from complaining of substantial defects in repair which he afterwards discovers. “The purchaser is induced to make a less accurate examination by the representation, which he had a right to believe”. The buyer of a business is not deprived of redress for misrepresentation of the amount of profits, because he has seen or held in his hand a bundle of papers alleged to contain the entries showing those profits. An original shareholder in a company who was induced to apply for his shares by exaggerated and untrue statements in the prospectus is not less entitled to relief because facts negativing those statements are disclosed by documents referred to in the prospectus, which he might have seen by applying at the company’s office.

In short, nothing will excuse a culpable misrepresentation short of proof that it was not relied on, either because the other party knew the truth, or because he relied wholly on his own investigation, or because the alleged fact did not influence his action at all. And the burden of this proof is on the person who has been proved guilty of material misrepresentation. He may prove any of these things if he can. It is not an absolute proposition of law that one who, having a certain allegation before him, acts as belief in that allegation would naturally induce a man to act, is deemed to have acted on the faith of that allegation. It is an inference of fact, and may be excluded by contrary proof. But the inference is often irresistible.

Ambiguous statements. Difficulties may arise on the construction of the statement alleged to be deceitful. Of course a man is responsible for the obvious meaning of his assertions but where the meaning is obscure, it is for the party complaining to show that he relied upon the words in a sense in which they were false and misleading, and of which they were fairly capable. As most persons take the first construction of obscure words which happens to strike them for the obviously right and only reasonable construction, there must always be room for perplexity in questions of this kind. Even judicial minds will differ widely upon such points, after full discussion and consideration of the various constructions proposed.

Lord Tenterden’s Act. (e) It has already been observed in general that a false representation may at the same time be a promise or term of a contract. In particular it may be such as to amount to, or to be in the nature of, a guaranty. Now by the Statute of Frauds a guaranty cannot be sued on as a promise unless it is in writing and signed by the party to be charged or his agent. If an oral guaranty could be sued on in tort by treating it as a fraudulent affirmation instead of a promise, the statute might be largely evaded. Such actions, in fact, were a novelty a century and a quarter after the statute had been passed, much less were they foreseen at the time. It was pointed out, after the modern action for deceit was established, that the jurisdiction thus created was of dangerous latitude; and, at a time when the parties could not be witnesses in a court of common law, the objection had much force. By Lord Tenterden’s Act, as it is commonly called, the following provision was made:—

“No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person, to the intent or purpose that such other person may obtain credit, money, or goods upon, unless such representation or assurance be made in writing, signed by the party to be charged therewith.”

This is something more stringent than the Statute of Frauds, for nothing is said, as in that statute, about the signature of a person “thereunto lawfully authorized,” and it has been decided that signature by an agent will not do. Some doubt exists whether the word “ability” does or does not extend the enactment to cases where the representation is not in the nature of a guaranty at all, but an affirmation about some specific circumstance in a person’s affairs. The better opinion seems to be that only statements really going to an assurance of personal credit are within the statute. Such a statement is not the less within it, however, because it includes the allegation of a specific collateral circumstance as a reason.

Quaere as to the law under the Judicature Acts. A more serious doubt is whether the enactment be now practically operative in England. The word “action” of course did not include a suit in equity at the date of the Act, and the High Court has succeeded to all (and in some points more than all) the equitable jurisdiction and powers of the Court of Chancery. But that Court would not in a case of fraud, however undoubted its jurisdiction, act on the plaintiff’s oath against the defendant’s, without the corroboration of documents or other material facts; and it would seem that in every case of this kind where the Court of Chancery had concurrent jurisdiction with the courts of common law (and it is difficult to assign any where it had not), Lord Tenterden’s Act is now superseded by this rule of evidence or judicial prudence.

Misrepresentations made by agents. There still remain the questions which arise in the case of a false representation made by an agent on account of his principal. Bearing in mind that reckless ignorance is equivalent to guilty knowledge, we may state the alternatives to be considered as follows:—

The principal knows the representation to be false and authorizes the making of it. Here the principal is clearly liable; the agent is or is not liable according as he does not or does himself believe the representation to be true.

The principal knows the contrary of the representation to be true, and it is made by the agent in the general course of his employment but without specific authority.

Here, if the agent does not believe his representation to be true, he commits a fraud in the course of his employment and for the principal’s purposes, and, according to the general rule of liability for the acts and defaults of an agent, the principal is liable.

If the agent does believe the representation to be true, there is a difficulty; for the agent has not done any wrong and the principal has not authorized any. Yet the other party’s damage is the same. That he may rescind the contract, if he has been misled into a contract, may now be taken as settled law. But what if there was not any contract, or rescission has become impossible? Has he a distinct ground of action, and if so, how? Shall we say that the agent had apparent authority to pledge the belief of his principal, and therefore the principal is liable? in other words, that the principal holds out the agent as having not only authority but sufficient information to enable third persons to deal with the agent as they would with the principal? Or shall we say, less artificially, that it is gross negligence to withhold from the agent information so material that for want of it he is likely to mislead third persons dealing with the principal through him, and such negligence is justly deemed equivalent to fraud? Such a thing may certainly be done with fraudulent purpose, in the hope that the agent will, by a statement imperfect or erroneous in that very particular, though not so to his knowledge, deceive the other party. Now this would beyond question be actual fraud in the principal, with the ordinary consequences. If the same thing happens by inadvertence, it seems inconvenient to treat such inadvertence as venial, or exempt it from the like consequences. We think, therefore, that an action lies against the principal; whether properly to be described, under common law forms of pleading, as an action for deceit, or as an analogous but special action on the case, there is no occasion to consider.

On the other hand an honest and prudent agent may say, “To the best of my own belief such and such is the case,” adding in express terms or by other clear indication—“but I have no information from my principal.” Here there is no ground for complaint, the other party being fairly put on inquiry.

Liability of corporations herein. If the principal does not expressly authorize the representation, and does not know the contrary to be true, but the agent does, the representation being in a matter within the general scope of his authority, the principal is liable as he would be for any other wrongful act of an agent about his business. And as this liability is not founded on any personal default in the principal, it equally holds when the principal is a corporation. It has been suggested, but never decided, that it is limited to the amount by which the principal has profited through the agent’s fraud. The Judicial Committee have held a principal liable who got no profit at all.

But it seems to be still arguable that the proposed limitation holds in the case of the defendant being a corporation, though it has been disregarded in at least one comparatively early decision of an English superior court, the bearing of which on this point has apparently been overlooked. Ulpian, on the other hand, may be cited in its favour.

Reason of an apparently hard law. The hardest case that can be put for the principal, and by no means an impossible one, is that the principal authorizes a specific statement which he believes to be true, and which at the time of giving the authority is true; before the agent has executed his authority the facts are materially changed to the knowledge of the agent, but unknown to the principal; the agent conceals this from the principal, and makes the statement as originally authorized. But the case is no harder than that of a manufacturer or carrier who finds himself exposed to heavy damages at the suit of an utter stranger by reason of the negligence of a servant, although he has used all diligence in choosing his servants and providing for the careful direction of their work. The necessary and sufficient condition of the master’s responsibility is that the act or default of the servant or agent belonged to the class of acts which he was put in the master’s place to do, and was committed for the master’s purposes. And “no sensible distinction can be drawn between the case of fraud and the case of any other wrong.” The authority of Barwick v. English Joint Stock Bank is believed, notwithstanding the doubts still sometimes expressed, to be conclusive.