Same - Credulity And Negligence Of Party Defrauded

It would seem upon principle that a person cannot avoid the effect of his fraudulent misrepresentation on the ground of the credulity of the injured party or of his negligence in failing to ascertain the facts, and many cases so hold.35 Thus it is very generally held that a man may act upon a representation of fact, although means of obtaining knowledge are at hand and open to him.36 "Every contracting party has an absolute right to rely on the express statement of an existing fact, the truth of which is known to the opposite party and unknown to him, as the basis of a mutual engagement, and he is under no obligation to investigate and verify statements, to the truth of which the other party to the contract has deliberately pledged his faith." 37 On the other hand, by many courts it is laid down in broad terms that if the means of knowledge are at hand and equally available to both parties, and the subject of the contract is open to the inspection of both, the party to whom the representation is made will not be heard to say that he has been deceived thereby, if he has not availed himself of such means of knowledge.38 This conflict of authority is illustrated by the opposite decisions which have been reached in cases involving the liability of a person who has been fraudulently induced to execute an instrument upon misrepresentation of the other party as to its character or terms. Doubtless a person who fails to read an instrument before signing it is wanting in ordinary prudence, but it has been held by many courts that he is not precluded thereby from asserting the invalidity of the contract as against the party who has thus procured the execution by fraud." By other courts it has been held that the party so signing is precluded by his negligence from asserting the invalidity of the contract.40

Am. St Rep. 206; Hauk v. Brownell, 120 I11. 161, 11 N. E. 416; Jackson v. Collins, 39 Mich. 557; Paetz v. Stoppleman, 75 Wis. 510, 44 N. W. 834; Chrysler v. Canaday, 90 N. Y. 272, 43 Am. Eep. 166; Stoney Creek Woolen Co. v. Smalley, I11 Mich. 321, 69 N. W. 722; Horton v. Lee, 106 Wis. 439, 82 N. W. 360. See "Sales," Dec. Dig. (Key-No.) § 38; Cent. Dig. §§ 65S5.

34 Hedin v. Institute, 62 Minn. 146, 64 N. W. 158, 35 L. R. A- 417, 54 Am. St. Rep. 628; Hicks v. Stevens, 121 I11. 186, 11 N. E. 241; Robbins v. Barton, 50 Kan. 120, 31 Pac. 686; Vilett v. Moler, 82 Minn. 12, 84 N. W. 452. See "Sales," Dec. Dig. (Key-No.) § 38; Cent. Dig. §§ 65-85.

35 Redgrave v. Hurd, 20 Ch. Div. 1; Jackson v. Collins, 39 Mich. 557; Kendall v. Wilson, 41 Vt. 567; Chamberlin v. Fuller, 59 Vt. 247, 9 Atl. 832; Lin-ington v. Strong, 107 I11. 295; Cottrill v. Krum, 100 Mo. 397, 13 S. W. 753, 18 Am. St Rep. 549; Warder, Bushnell & Glessner Co. v. Whitish, 77 Wis. 430, 46 N. W. 540; Sutton v. Morgan, 158 Pa. 204, 27 Atl. 894, 38 Am. St. Rep. 841; McGibbons v. Wilder, 78 Iowa, 531, 43 N. W. 520; Erickson v. Fisher, 51 Minn. 300, 53 N. W. 638; Blacknall v. Rowland, 108 N. C. 554, 13 S. E. 191; Fargo Gas & Coke Co. v. Electric Co., 4 N. D. 219, 59 N. W. 1006, 37 L. R. A. 593; Speed v. Hollingsworth, 54 Kan. 436, 38 Pac. 496; Wilson v. Carpenter's Adm'r, 91 Va. 183, 21 S. E. 243, 50 Am. St Rep. 824; Strand v. Griffith, 97 Fed. 854, 38 C. C. A. 444; Leonard v. Southern Power Co., 155 N. C. 10, 70 S. E. 1061; Central Ry. Co. of Venezuela v. Kisch, L. R. 2 H. L. 99, 120; Crompton v. Beedle, 83 Vt 287, 75 Atl. 331, 30 L. R. A. (N. S.) 748, Ann. Cas. 1912A, 399 (where it is said, per Haselton, J.: "Any different doctrine, carried to its logical conclusion, would facilitate transactions in gold bricks, salted mines, bogus diamonds as real, fac similes as originals, and would permit a variety of things destructive of commercial integrity"). See "Contracts" Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430.

36 Gammill v. Johnson, 47 Ark. 335, 1 S. W. 610; Redding v. Wright. 49 Minn. 322, 51 N. W. 1056; Hanscom v. Drullard, 79 Cal. 234, 21 Pac. 730; Clark v. Ralls (Iowa) 24 N. W. 567; Ledbetter v. Davis, 121 Ind. 119, 22 N. E. 744; Rohrof v. Schulte, 154 Ind. 183, 55 N. E. 427; Carpenter v. Wright, 52 Kan. 221, 34 Pac. 798; Wheeler v. Baars, 33 Fla. 696, 15 South. 584; Lovejoy v. Isbell, 73 Conn. 368, 47 Atl. 682. Negligence is, of course, no defense, in the case of negotiable paper, against innocent purchasers. Ante, p. 247. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430; "Fraud," Dec. Dig. (Key-No.) §§ 22, 23; Cent. Dig. §§ 19-23.

37 Mead v. Bunn, 32 N. Y. 275. But see Long v. Warren, 68 N. Y. 426; Schumaker v. Mather, 133 N. Y. 590, 30 N. E. 755, 757. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430.

38 Slaughter's Adm'r v. Gerson, 13 Wall. 379, 20 L. Ed. 627; Salem India-Rubber Co. v. Adams, 23 Pick. (Mass.) 256, 265; Poland v. Brownell, 131 Mass. 138, 41 Am. Rep. 215; Brady v. Finn, 162 Mass. 260, 38 N. E. 506; Palmer v. Bell, 85 Me. 352, 27 Atl. 250, 251; Schumaker v. Mather, 133 N. Y. 590, 30 N. E. 755, 757; Washington Cent. Imp. Co. v. Newlands, 11 Wash. 212, 39 Pac. 366; South Milwaukee Boulevard Heights Co. v. Harte, 95 Wis. 592, 70 N. W. 821. See, also, Hingston v. L. P. & J. A. Smith Co., 114 Fed. 294, 52 C. C. A. 206.

"The requirement, as it has been worked out, does not call for more than reasonable diligence (Hoist v. Stewart, 161 Mass. 516, 522, 37 N. E. 755, 42 Am. St Rep. 442; Brown v. Leach, 107 Mass. 364, 368; Nowlan v. Cuin, 3 Allen [Mass.] 261, 264); and distance or other slight circumstances have been held sufficient to warrant leaving the question to the jury (Hoist v. Stewart, 161 Mass. 516, 522, 523, 37 N. E. 755, 42 Am. St. Rep. 442). See Burns v. Lane, 138 Mass. 350, 355, 356; Whiteside v. Brawley, 152 Mass. 133, 24 N. E. 1088. The matter may have been confused a little by not distinguishing between sellers' talk as to the value and the like, where the rule is absolute in ordinary cases that the buyer must look out for himself, and representation of facts concerning which even sellers may be held liable for fraud, and as to which the buyers may be warranted in relying wholly on the seller's word. The notion that the buyer must look out for himself sometimes has been pressed a little too strongly into the latter class of cases." Per Holmes, J., in Whiting v. Price, 172 Mass. 240, 51 N. E. 1084, 70 Am. St. Rep. 262. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430; "Fraud," Dec. Dig. (Key-No.) §§ 22, 28; Cent. Dig. §§ 19-23.