Sec 1045

The party who is thus disappointed by the negligence of another is entitled, in the first place, to recover expenses which he has been put to in order to perfect the transaction which turns out to be invalid. Under this head Ihering1 enumerates the expenses of executing a deed, the charges of packing and of freight, as well as all other expenses which a party has incurred in the reception or the transmission of property the sale of which is declared void. As by our own common law money paid on an inoperative or void contract can be recovered back, there is no reason why expenses of this kind, incurred on the faith of a contract declared to be void, should not be with us recovered from the party by whose negligeut encouragement they were induced.2 The principle is very simple. I am led by A.'s promise to make certain outlays. These can be regarded as made at A.'s request, and on an implied promise of repayment. They can, therefore, be recovered back on the transaction falling through.3

Sec 1046

Suppose, however, that the promisee in a bargain, which turns out to be void, loses, in consequence of his dependence on the action of the promisor, some definite gain; can he recover for this loss from the promisor? A vendor, for instance, negligently misstates property he undertakes to sell, and afterwards, on the ground that the parties did not agree as to one and the same thing, the contract is rescinded; can the vendee recover from the vendor damages sustained by the vendee from the vendor's negligence? So far as our own distinctive practice is concerned, it is, in the first place, to be inquired whether a vendor may not, by his negligence, estop himself from claiming a rescission. If, by his negligence, he induced the purchaser to make the purchase, then the vendor may be equitably estopped from contesting the title so obtained.1 It is to be observed, in the second place, that a party claiming to rescind on ground of error must do equity before he can obtain a decree of rescission, and this condition would impose on the party seeking rescission the duty of compensating the other party for any loss the latter may have been subjected to by the negotiation.2 Supposing, however, no estoppel is set up, and supposing the question not to come up on proceedings in equity brought by one of the parties to rescind the contract, it is difficult to escape the conclusion that the rule thus recognized in equity would be held good in law, and that a party who had suffered damage by being led by another into a void contractual relation would be held entitled to recover from such other person compensation for the damage so sustained. An auctioneer, for instance, undertakes to sell to the highest bidder, and, according to the rule heretofore expressed, is liable to such highest bidder in case the sale miscarries.3 Would this liability, so far as concerns the purchaser's right to recover for costs and expenses to which he had been thereby subject, cease because the sale was set aside at the vendor's application for misdescription ? An insurer issues a policy which, through his own fault, or through accident, contains an essential misdescription. Would it not be required, as a condition precedent to rescission on his application, that he should save the other party harmless?4 and if this duty would be imposed on him in one procedure, would it not be imposed on him in all other lines of procedure in which the question might occur? A solicitor undertakes to see that a particular title is good; would it be pretended that, because the contract between the solicitor and the client was inoperative for some technical defect, the solicitor was not liable to his client for negligence?5 Is it agreed that actions for negligence will lie on mandates on which, for want of consideration, no contractual suit would lie.6 Even supposing that we should reject the Roman rule that a party negligently leading another to enter into a contract that turns out to be void is liable in damages to such other person, we reach a substantially similar result by falling back on the English common law rule that a party who negligently makes an erroneous assertion is liable for the consequences.1 On this reasoning it has been held that in an action against a telegraph company for delivering a message that was never sent, it is not necessary to allege that the implied statement that the message was given to the defendants to forward was false to their own knowledge.2 Another illustration may be found in cases in which it is held that a party who, no matter how honestly, obtains credit on the false statement that he is agent for another, is liable to a suit to repay any damages incurred by a party to whom he makes such statement and who acts on it.3 The same principle, also, is illustrated by the familiar rule that money paid on void securities may be recovered back.4 Supposing there was an agreement for the sale of such securities, the agreement would not coustitute a contract, as there would be an essential error as to the existence of the thing contracted for. Yet in such cases an action on an implied contract can be maintained against the vendor for money had and received; or an action for deceit or negligence, as the case may be, may be maintained against him for his misstatement of the value of the securities. If the misstatement was malicious, then the action must be for deceit; if it was negligent, then the action must be for negligence.5

Party may recover back expenses on void contract.

Party injured by void contract may obtain damages.

1 Op. cit. 344.

2 See supra, sec 742.

3 Supra, sec 742-7 et seq.

1 See supra, sec 202 a.

2 Supra, sec 207, 285.

3 Supra, sec 25 b, 255, 267. 4 Supra, sec 285.

5 Ireson V. Pearman, 3 B. & C. 799; Watts V. Porter, 3 E. & B. 743.

6 See Wh. on Neg. sec 435 et seq.

1 Supra, sec 241. It is true that this is sometimes put on the ground of legal fraud. "If a man," says Lord Ken-yon, "affirms that to be true within his own knowledge which he does not know to be true, this falls within the definition of legal fraud." Haycraft V. Creasy, 2 East, 103; S. P. Marsh V. Falker, 40 N. Y. 562. But a suit for negligence can be sustained in all cases of injury by negligent misstatements, which, if intentional, would form the basis of an action for deceit; supra, sec 214.

2 May V. Union Telegraph Co., 112 Mass. 90.

3 Bigelow on Fraud, 58, citing Collen V. Wright, 8 E. & B. 647; Cherry V. Bank, L. R. 3 P. C. 24; Godwin V. Francis, L. R. 5 C. P. 295; Richardson V. Williamson, L. R. 6 Q. B. 276; Bart-lett V. Tucker, 104 Mass. 336; White V. Madison, 26 N. Y. 117, and other cases.

4 Supra, sec 744.

5 So far as concerns the question of causal relationship, McMahon V. Field, L. R. 7 Q. B. D. 591, may be cited as sustaining the rule stated in the text. In that case the plaintiff supposed he had hired certain stables of the defend-.