This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
24 Kiler v. Wohletz, 79 Kan. 716, L. R. A. 1915B, 11, 101 Ac. 474.
25 Aorora Land Co. v. Keevan, 67 Wash. 305. 121 Ac. 469.
26 Storthz v. Arnold, 74 Ark. 68, 84 S. W. 1036.
27 Simpson v. Crane, 149 Mich. 352, 110 N. W. 1081.
• in law be justified in relying thereon and may hold the party making such statements liable for fraud.28 Thus where A represented to a woman that he was unmarried, and though others informed her that he was married, she believed A, she can hold A for such fraud;29 and so where A sells B stock representing that he is only a stockholder and not a promoter, though B has heard rumors that A had a greater interest than he admitted.30 If the false statements of a physician induce the patient to give a release, it is not necessary that the patient should have been absolutely free from doubt as to the accuracy of such statements.31
Knowledge of the falsity of one representation is not notice of the falsity of another.32 So notice of the facts to one not an authorized agent of the adversary party does not prevent a positive false statement as to the title to realty from amounting to fraud, such notice not being communicated to such adversary party.33 A declaration by A at the outset of negotiations of his ignorance of a certain fact does not prevent a subsequent positive false statement as to such fact from amounting to fraud.34
Whether a fraudulent representation as to title to land can be said to be relied on where a deed is taken with covenants of warranty is a question on which the courts are divided. A majority hold that such representations are not merged in the warranty, but may be fraud; 35 a minority holding that they are merged.36 A provision in a contract that it is subject to an investigation by the purchaser of the land purchased does not prevent false representations from amounting to fraud.37
28 Moncrief v. Wilkinson, 93 Ala. 373, 9 So. 159; Morrill v. Palmer, 68 Vt. 1, 33 L. R. A. 411, 33 Atl. 829; Virginia Land Co. v. Haupt, 90 Va. 533, 44 Am. St. Rep. 939, 19 S. E. 168; Sherman v. Parker (Wash.), 177 Ac. 665.
29 Morrill v. Palmer, 68 Vt. 1, 33 L. R. A. 411, 33 Atl. 829.
30 Virginia Land Co. v. Haupt, 90 Va. 533, 44 Am. St. Rep. 939, 19 S. E. 168.
31 Viallet v. Consolidated Ry. & Power Co., 30 Utah 260, 84 Ac. 496.
32 Montgomery v. McLaury, 143 Cal. 83, 76 Ac. 964; Pursel v. Teller, 10
Colo. App. 488, 51 Ac. 436. See however: Crocker v. Boyd, 88 Wash. 685, 153 Ac. 1076.
33 Pennoyer v. Willis, 26 Or. 1, 46 Am. St. Rep. 594, 36 Ac. 568.
34 Irvine v. Grady, 85 Tex. 120, 19 S. W. 1028. (As to the number of cattle sold.)
35 Kimball v. Saguin, 86 la. 186, 53 N. W. 116; Breeding v. Flannery (Ky.), 14 S. W. 907.
36 Andrws v. Refining Co., 130 U. S. 643, 32 L. ed. 1054; Wright v. Phipps, 90 Fed. 536; Whitney v. Allaire, 1 N. Y. 313.
37 Clark v. Harmer, 9 D. C. App. 1.
In the greater number of cases the same result is reached by the application of either test, since there is, as a rule, nothing to show that the party to whom the false representations were made was not a reasonably prudent man; and accordingly it will be presumed that he was a reasonably prudent man.10 If the evidence shows that the party to whom false representations were made was not a reasonably prudent man, as where such person was inexperienced,11 mentally infirm,12 excessively credulous, or where it is shown that he reposes special trust and confidence in the person by whom such false representations were made,13 there is a strong tendency to test the existence of fraud by the effect of the false representations upon the mind to whom they were made, and to ignore the question of their effect upon the mind of a reasonably prudent man. As far as these theories are entering the law, the practical result is that law is adopting the equity theory of constructive fraud,14 and of undue influence;15 and, if it has not always done so, it is tending more and more to take the actual effect upon the mind of the specific individual as the test.
6 Ignorance which exceeds that of the ordinary man is called "self-deception." Jordan v. Pickett. 78 Ala. 331.
7 Mead v. Bunn, 32 N. Y. 275.
"The defendant has no right to say that plaintiff was wrong in giving him credit for the truth of what he said." Barley v. Walford, 9 Q. B. Rep. (Ad. & El. N. S.) 197 (209).
8 See cases cited in notes 1 and 2, this section.
9 See Sec. 321.
10 "False representations may be made of such a character that no person of ordinary intelligence could be misled thereby, and that could have had no influence whatever in inducing the other party to enter into the agreement. What might be considered sufficiently material to induce one person to act, might have but little or no influence upon another, so that no definite rule can be laid down. In each case the court or jury must be satisfied that the representations if made were untrue, and as applied to the transaction, were material - of that character that a person of ordinary intelligence and possessing ordinary business qualifications would be likely to rely thereon and be misled thereby. If the person to whom the representations were made was below this standard, which the law presumes all to possess, such facts should be shown, where less material representations were relied upon." Hall v. Johnson, 41 Mich. 286, 2 N. W. 55.