Another exception is in the case of contracts with the promoters of a corporation for the purchase of shares. It is said in an English case: "Those who issue a prospectus holding out to the public the great advantages which will accrue to persons who will take shares in a proposed undertaking, and inviting them to take shares on the faith of the representations therein contained, are bound to state everything with strict and scrupulous accuracy, and not only to abstain from stating as fact that which is not so, but to omit no one fact within their knowledge, the existence of which might in any degree affect the nature, extent, or quality of the privileges and advantages which the prospectus holds out as inducements to take shares." 81 As said in a New York case, the promoters of a corporation occupy before its organization a position of trust and confidence towards those whom they seek to induce to invest in the enterprise.82
76 2 Add. Cont. § 538; 1 Sugd. Vend. 8.
77 Livingston v. Iron Co., 2 Paige, Ch. (N. T.) 392; Williams v. Spurr, 24 Mich. 335. See "Vendor and Purchaser," Dec. Dig. (Key-No.) § S3; Cent. Dig. §§ 8S-G6.
78 Note 93, infra.
79 Flight v. Booth, 1 Bing. N. C. 370; Jones v. Edney, 3 Camp. 285; In re Fawcett & Holmes, 42 Ch. Div. 156; Rayner v. Wilson, 43 Md. 440; McKin-non v. Vollmar, 75 Wis. 82, 43 N. W. 800, 6 L. R. A. 121, 17 Am. St. Rep. 178; Munroe v. Pritchett, 16 Ala. 785, 50 Am. Dec. 203; Rimer v. Dugan, 39 Miss. 477, 77 Am. Dec. 687; Tyson v. Passmore, 2 Pa. 122, 44 Am. Dec. 181; Keating v. Price, 58 Md. 532, at page 536; Gunby v. Sluter, 44 Md. 237; Foley v. Crow, 37 Md. 51; Mitchell v. McDougall, 62 I11. 498; Baughman v. Gould, 45 Mich. 481, 8 N. W. 73; Smith v. Richards, 13 Pet. 26, 10 L. Ed. 42; Mulvey v. King, 39 Ohio St. 491. See "Vendor and Purchaser," Dec. Dig. (Key-No.) §§ 83-38; Cent. Dig. §§ 8S-66.
so Price v. McCauley, 19 Eng. Law & Eq. 162; O'Rourk v. Percival, 2 Ball & B. 58; Brooks v. Hamilton, 15 Minn. 26 (Gil. 10); Mohler v. Carder, 73 Iowa, 582, 35 N. W. 647; Watson v. Baker, 71 Tex. 739, 9 S. W. 867. See "Specific Performance" Dec. Dig. (Key-No.) § 53; Cent. Dig. §§ 160-171 1/2.
All contracts, whatever may be the subject-matter, are uberrimę fidei, where the parties occupy a confidential relation towards each other, as in the case of contracts between an attorney and his client, a principal and his agent, a trustee and his cestui que trust, a guardian and his ward, a parent and his child, etc. The parties in such a case do not stand on equal ground; one of them reposes confidence in the other, and the latter, in dealing with the former, is held to the utmost good faith, and can gain no advantage by his dealings. Any misrepresentation or nondisclosure of material facts will vitiate a contract between them.83 All the exceptions to the rule that innocent misrepresentation does not avoid a contract are based on the fact that a relation of confidence exists between the parties.84