Sec 240

Falsity is shown by proving a contradictory opposite, or by establishing a series of conditions inconsistent with the statement alleged to be false, approximating as nearly as possible to an exhaustive exclusion. Thus, in order to prove that a particular bank-note is bad, it is enough to show that the bank issuing it is broken; it is not necessary to show that none of the stockholders of the bank, and none of its officers, could on any future contingency be made liable.3 Knowledge of the falsity, also, on the part of the party taking advantage of it, must be shown in order to sustain an action for deceit.4 But guilty knowledge in this, as in all other cases where scienter is to be proved, is to be inferred from all the circumstances of the case.5

Sec 241

A party who recklessly states an untruth which he has no probable grounds for believing, and thereby deceives another, is responsible for the deceit, although he had no actual knowledge at the time of the falsity of the statement.6 Hence, if the directors of a bank " put forth in their reports statements of importance And so of falsity.

Reckless misstatement imposes responsibility in regard to the affairs of the bank, false in themselves, and which they did not believe, or had no reasonable ground to believe to be true, that would be a misrepresentation and deceit."1 And. it has been ruled by Lord Cairns, that parties who recklessly make statements of facts, concerning which they are ignorant, and thereby obtain the confidence of others, are as responsible as they would be if they asserted that which they knew to be untrue.2 And a statement made "with a reckless ignorance whether it was true or untrue," to adopt the words of Williams, J.,3 exposes the party making it to an action for deceit. We may, therefore, hold that when a party recklessly makes statements he does not know to be true, knowledge of their non-truth is to be regarded as notice of their falsity.4 " The principle applies not merely to cases where the statements were known to be false by those who made them, but to cases where statements false in fact were made by persons who believed them to be true, if in the due discharge of their duty they ought to have known, or if they had formerly known and ought to have remembered, the fact which negatived the representation made."5 Hence, a rash statement by a party, who once knew the contrary, is a false representation on which he is liable, although at the time of making it he had forgotten it was untrue.1 "The affirmation," says Judge Story,2 "of what one does not know or believe to be true, is equally, in morals and law, as unjustifiable as the affirmation of what is known to be positively false."3 Hence, the honesty of a misrepresentation, though it may be (there being no recklessness) a defence to an action for deceit, is no defence to a proceeding for rescission.4 - As we have already seen,5 it is not necessary, in order to rescind a contract, to prove that the person who obtained it by material false representation knew at the time the representation was made that it was false, or even made it recklessly and without care.6

1 Shoemaker v. Kunkle, 5 Watts, 107; Bear's Est., 60 Penn. St. 430; Com. v. R. R., 74 Penn. St. 94.

2 Grove v. Hodges, 55 Penn. St. 504; Creveling v. Fritts, 34 N. J. Eq. 134.

3 R. v. Spencer, 3 C. & P. 420; R. v. Evans, Bell C. C. 187; 8 Cox C. C. 257; R. v. Burnsides, Bell C. C. 282; 8 Cox C. C. 370; R. v. Byrne, 10 Cox C. C. 369; Com. v. Stone, 4 Met. 43.

4 Evans v. Collins, 5 Q. B. 805; Ormrod v. Huth, 14 M. & W. 651; Weir v. Bell, L. R. 3 Ex. D. 243; Dickson v. Tel. Co., L. R. 3 C. P. D. 1; R. v. Philpotts, 1 C. & K. 112; R. v. Henderson, 2 Mood. C. C. 192; State v. Blauvelt, 38 N. J. L. 306; Merwin v. Arbuckle, 81 111. 501.

5 Wh. on Ev. sec 30. As to presumption of knowledge, see Marsh v. Falker,.

40 N. Y. 562. That it is a fraud to aver that a party owns property to a specified amount, suppressing the fact that it is encumbered, see Corbett v. Brown, 8 Bing. 33; 1 Moore & S. 85; see notes to Chandeler v. Lopus, 1 Smith's L. C. 7th Am. ed. 299 et seq.

6 Anson on Cont. 131; Bispham's Eq. sec 214; Leake on Cont. 188; Moens v. Hayworth, 10 M. & W. 147; Pulsford v. Richards, 17 Beav. 87; Hine v. Campion, L. R. 7 C. D. 344; R. v. Edward, 3 Russ. on Cr. 1; R. v. Petrie, 1 Leach, 329; R. v. Schlesinger, 10 Q. B. 670; Smith v. Richards, 13 Pet. 26; Bennett v. Judson, 21 N. Y. 238; Marsh v. Falker, 40 N. Y. 562; Hunt v. Moore, 2 Barr, 105; Allen v. Hart, 72 111. 104; Converse v. Blumrich, 14 Mich. 109.

1 Lord Chelmsford, in Western Bank of Scotland v. Addie, L. R. 1 Sc. & D. 145.

2 Leake, 2d ed. 371; Reese River Mining Co. 0. Smith, L. R. 4 H. L. 64; see Smith v. Richards, 13 Pet. 26.

3 Behn v. Burgess, 3 B. & S. 751.

4 Wright v. Snowe, 2 De G. & S. 321; Taylor v. Ashton, 11 M. & W. 401; R. v. Petrie, 1 Leach, 327; Hine v. Campion, L. R. 7 Ch. D. 344; Evans v. Edmunds, 3 C. B. 777; Reese River Mining Co. v. Smith, L. R. 4 H. L. 79; Beatty v. Ebney. L. R. 7 H. L. 102; Mason v. Crosby, 1 Wood. & M. 352; Smith v. Richards, 13 Pet. 26; Cabot v. Christie, 42 Vt. 121; Hazard v. Irwin, 18 Pick. 95; Lobdell v. Baker, 1 Met. 193; Fisher v. Mellen, 103 Mass. 503; Litchfield v. Hutchinson, 117 Mass. 95; Bennett v. Judson, 21 N. Y.

138; Indian. R. R. v. Tyng, 63 N. Y. 653; Sharp v. Mayor, 40 Barb. 256; Taymon v. Mitchell, 1 Md. Ch. 498; Stone v. Covell, 29 Mich. 359; Beebe v. Knapp, 28 Mich. 53; Wilcox v. University, 32 Iowa, 367; Frewzel v. Miller, 37 Ind. 1; Miner v. Medbury, 6 Wis. 295; Turnbull v. Gadsden, 2 Strob. Eq. 14; Reese v. Wyman, 9 Ga. 439; Elder v. Allison, 45 Ga. 13; Read v. Walker, 18 Ala. 323; Thompson v. Lea, 31 Ala. 292; Glasscock v. Miner, 11 Mo. 655; York v. Gregg, 9 Tex. 85; Graves v. Bank, 10 Bush, 23; Bank-head v. Alloway, 6 Cold. 56; though see Merwin v. Arbuckle, 81 111. 501; Wilcox v. University, 32 Iowa, 367, cited in Aldrich's Notes to Anson, 150; Cotzhausen v. Simon, 47 Wis. 103.