The second qualifying principle suggested is that no liability should exist if there was reasonable ground for believing that the statements made were true. This amounts in effect to denying liability except for statements, made negligently, though it is not, in terms at least, an adoption of the action on the case for negligence for carelessly spoken words. A court might indeed adopt this qualifying principle without holding doctrines of contributory negligence applicable. The statutes of California and other States45 excuse a defendant from liability if he had reasonable ground for believing his statement to be true. A similar doctrine seems to exist in North Carolina.46 It is certainly by no means clear that the courts of these States would put the whole subject on the footing of a duty to use reasonable care in regard to spoken or written words.
It has been ably urged, however, that, subject to appropriate limitations, an action on the case for negligence is properly applicable to misrepresentations made carelessly but not dishonestly.47 Doubtless under any theory of liability which excludes dishonesty as a necessary element of the cause of action it will generally be found that a defendant who is held liable has been guilty of culpable negligence. But there are objections to throwing the whole matter into the law of negligence, and treating spoken words in the same way that acts are treated. In the first place, the law of liability for false representations has grown up on other lines than the law of negligence. There is a violation of historical continuity in forcing the two together. This should not be an insuperable obstacle if logic and practical convenience demanded the joinder, but this does not seem true. Neither the law of warranty nor that of estoppel is based on negligence, so that no general consistency of the law governing misrepresentation would be attained. Furthermore, if negligence is to be the basis of liability for words regarded from the standpoint of misrepresentation, the same test should logically be applied to defamatory words; but the whole law of defamation is inconsistent with any application of the law of negligence to either spoken or written words, for the law governing defamation "is not a law requiring care and caution in greater or less degree, but a law of absolute responsibility qualified by absolute exceptions." 48 It is also an objection that if an action for negligent misrepresentation as such were permitted, it would be necessary to limit somewhat arbitrarily the scope of the action; for it is probably true, as has often been said, that to hold every man liable for the consequences of words carelessly spoken would be to impose a degree of liability beyond what is reasonable. Again, the doctrine of contributory negligence would be troublesome to apply.49 Is it contributory negligence for a man to rely on what he is told by a person in a position to know, and to fail to make an investigation for himself? Though many decisions require that a plaintiff should not have been too foolish in believing what no reasonable man in his position should believe, it is going too far, both in reason and on the authorities, to say that a plaintiff, unless his conduct was not wholly irrational, should lose his rights because he failed to make independent investigation and believed what he was told. It should not lie in the mouth of the man who induced his reliance to assert that the reliance was negligent.50
44 14 App. Gas. 337.
45 Supra, n. 40.
46 See North Carolina decisions cited inn. 40.
47 Judge Jeremiah Smith, 14 Harv.
L. Rev. 184, cited and followed in Cunningham v. C. R. Pease Co., 74 N. H. 435, 69 Ail. 120, 20 L. R. A. (N. S.) 236, and in Conway Nat. Bank v. Pease, 76 N. H. 319, 82 Atl. 1068.
48 Pollock, Tom, 8th ed. 563, n. (x). See also Peck v. Tribune Co., 214 U. S. 185, 53 L. Ed. 960, 29 Sup. Ct. 554.
49 It was applied, however, in Conway Nat. Bank v. Pease, 76 N. H. 319, 82 Atl. 1068. The person deceived must have acted like "a reasonably prudent
50 Goodale v. Middaugh, 8 Colo. App. 223, 231, 46 Pao.ll; Morrow v. Bone-brake, 84 Kan. 724, 115 Pac. 585, 34 L. R. A. (N. 8.) 1147; Gemer p. Mother, 58 Neb. 135, 78 N. W. 384; Bower v. Fenn, 90 Pa. 369,36 Am. Rep.' 662; Krause v. Bueacker, 10S Wis. 360, 81 N. W. 406.
If a man makes a statement in regard to a matter upon which his hearer may reasonably suppose he has the means of information, and that he is speaking with full knowledge, and the statement is made as part of a business transaction, or to induce action from which the speaker expects to gain an advantage, he should be held liable for the consequences of reliance upon his misstatement. Such a principle most nearly harmonizes the law of misrepresentation in its various aspects.
To avoid misapprehension it should be added that where because of a contract of employment a person is under a duty to speak, as by making a report or giving an opinion as an expert, the law of negligence governs his liability. "As a consequence of his contract of employment the law throws the risk of his statements upon him at an earlier point than it would do otherwise. But for the contract he would not be liable for statements unless fraudulent, or for advice unless dishonest." 51
There seems no reason whatever for not holding a defendant for the natural consequences of his actions when the question involved relates to tort as well as when it relates to contract. In the formation of contracts the parties are rightly held to the natural consequences of what they say. The idea that conscious dishonesty is necessary in an action of tort has perhaps been due to the use of such words as "fraud" and "deceit," which ordinarily connote dishonesty."
51 Corey v. Eastman, 166 Mass. 279, 287,44 N. E. 217, 55 Am. St. Rep. 401, per Holmes, J.
52 The idea that a consciously dishonest state of mind is essential for an action of tort for deceit leads to other consequences than decisions that the statement made by the defendant must be known by him to be false. For instance, if the defendant makes a statement which is false if his words are given the natural meaning which his hearer would give them, but which are true if taken in some unnatural sense which he himself put on them, no liability is imposed on the defendant, even though he knew that the facts did not accord with the natural meaning of his words, provided that natural meaning did not occur to him. Both in England and in Massachusetts it has been held that under these circumstances a defendant is not liable. Deny v. Peek, 14 App. Cas. 337; Angus v. Clifford,  2 Ch. 449 (Ct. App.); Nash v. Minnesota Title & Trust Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. Rep. 489.
In the Massachusetts decision the dissenting opinion of Holmes, J., in which Field, C. J., concurred, is a very effective argument against the view of the majority of the court. It seems odd that in Massachusetts, where it has been held since, as well as before, the decision in question, that a man is liable, who positively but erroneously asserts as facts matters about which is absurd, and all members of the court lay stress on the point that the defendants did not regard the misrepresentation of fact as "important." If conscious dishonesty on the part of the defendant is a necessary element of tort for misrepresentation these decisions are right, but they represent a distinctly lower standard of morality and justice than the contrary decisions.56 Moreover, the standard which they adopt is very difficult to apply. A defendant who is charged with false representations, and who can escape by making out that his intentions were honest though his words naturally understood were false, will rarely fail to testify to his own honesty of intention. The issue thus raised of the defendant's state of mind is difficult to try, and attempts at its decision are quite as likely to promote perjury as justice.