Opinions and predictions are not fraud even if stated by one who himself does not believe them to be true.
It is well established that the statement of an opinion or the making of a prediction cannot be fraud. The reason is clear. First, because if a statement is uttered as an opinion we know that an opinion is a mere matter of personal judgment; and second, we must look for extravagances of language from any person who is seeking to drive a bargain. Parties will "puff their wares" and indulge in "dealer's talk,"51 and the principle extends not only to sales but to all contracts.
50. 242 Fed. 399.
51. Deming v. Darling, 148 Mass. 504.
Example 33- Townsend bought a cash register upon the statement that its use would save the expense of a bookkeeper and half of a clerk's time. Held a mere opinion and defendant not guilty of fraud.52
"The reason of this rule is that while the person to whom the representations were made has a right to rely upon them, he is assumed to be equally able from his own opinion to come to as correct a decision as the other party, and therefore cannot claim to be misled by such opinion." 53
According to this rule a statement as to value is generally regarded as not actionable for value is a mere matter of opinion. "Purchasers are presumed to know that the vendor will, if asked as to value, place it as high as he thinks the property will bear, and, on the other hand, the vendor knows that the purchaser will endeavor to convince him that the property is worth considerably less. ' "It is naught, it is naught," saith the buyer, but when he has gone his way, he boasteth.' " 53a But, statements as to value may be made as statements of fact, as where they purport to be so made and the party making them has superior means of knowledge.54
If a person conceals facts for the purpose of preventing them from being discovered by the other party to the prospective contract, this is fraud which renders the contract voidable.
We will see that mere silence as a general rule (with notable exceptions) is not fraud. But if one covers up
52. Nat. Cash Reg. Co. v. Townsend, 137 N. C. 652.
53. Brady v. Cole, 164 111. 116.
53a. Morgan v. Hodge, 145 Wis. 143, 129 N. W. 1083.
facts of a material nature to prevent the other party from discovering them, this is fraud.
54. Biewer v. Mueller, 254 111. 315.
Example 34. A sues T for damages for fraud and deceit in inducing him to purchase interests in a mining lease. T, upon becoming the owner of the lease, looked about for a purchaser and in order to make the proposition attractive, concealed former mining operations showing that the place had been long since abandoned for mining purposes. To this end, he built a new shaft which led into the old mines, but this was concealed by boards across its bottom, covered by dirt. He represented to A that the shaft was in virgin territory, of great richness and therefore would require years to exhaust. The ground over the abandoned areas was sunken because of withdrawal of supports. This he represented to be a blow-out. A was without practical knowledge of mining. Upon T's representations and after inspecting the mine, he purchased the lease from T. Held, that he could recover.55
Throwing one off his guard by artifice so that he will not discover the facts is fraud, as where his attention is distracted, evasive answers to his questions are given, or he is otherwise kept in ignorance by the other's conduct.
Mere non-disclosure or silence is not fraud; with exceptions as later noted.
Suppose that one, being about to contract with another, merely keeps silent as to a point upon which he knows that the other is, without any action on his part, uninformed or misinformed - is it his duty to speak and cor55- Tooker v. Alston, 159 Fed. 599, 16 L. R. A. N. S. 818.
rect the misimpression ? We have previously noted that if he is aware of a mistake as to a material term of the contract, his taking advantage of that mistake prevents the minds of the parties agreeing upon the terms, as where one intends to offer to sell at one figure, but really proposes another which the other party purports to accept, knowing of the error. In that case there is no contract at all. But now we have that class of cases in which the terms are agreed upon, the identity of the subject matter is not in question, but there is some material element of fact that one of the parties to the other's knowledge, is uninformed or misinformed about. Must he inform him? The general rule is that, the parties dealing at arm's length, information is not essential.
Example 35. A gave B an option to purchase real estate for a certain price. B knew of the fact that a manufacturing plant was going to be established nearby which would make the land much more valuable. A did not know this. B's failure to disclose does not affect the contract.56
Parties must be on their own lookout; if we attempted to apply a test to cases of this sort, it would in the nature of things be indecisive.
If one party has information as to material facts, which are, as he knows, practically non-accessible to the other by the exercise of all diligence one may reasonably expect of such other, the non-disclosure is fraud.
A duty may be upon one to speak by reason of the peculiarity of the facts making the ascertainment of the facts not discoverable by the other upon the exercise of reasonable diligence. This is well illustrated by the "texas fever" case, as follows:
56. Guaranty Co. v. Liebold, 207 Pa. 399.
Example 36. A has cattle which he knows to be afflicted with "texas fever," a disease not apparent upon any examination one could be expected to make upon buying cattle on the market. He sells them to B for a sound price, B examining them and not discovering the disease. This is fraud and B may on account thereof rescind the contract or have damages.57