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.
Fraud is not committed by one who innocently makes a false statement if he makes it not as of his own knowledge, but on authority which he then discloses.1 If, however, he knows the statement to be false, his stating it on the authority of others does not prevent it from constituting fraud.2 Whatever may be its effect as a misrepresentation,3 a false statement made on reasonable ground of belief is not fraud if made innocently, at least if the party making it does not make it as of his personal knowledge.4 Thus misstatement of ownership in v. Barnes, 64 Fed. 80; Stevenson v. Marble, 84 Fed. 23; Patton v. Glatz, 87 Fed. 283; Wright v. Phipps, 90 Fed. 556.
6 Gordon v. Irvine, 105 Ga. 144, 31 S. E. 151; French v. Vining, 102 Mass. 132, 3 Am. Rep. 440.
7 Olcott v. Bolton, 50 Neb. 770, 70 N. W. 366.
8 Warfield v. Clark, US la. 60, 91 N. W. 833.
9 Griswold v. Gebbie, 126 Pa. St. 353, 12 Am. St. Rep. 878, 17 Atl. 673.
1 United States. Union Ac. Ry. Co. v. Barnes, 64 Fed. 80; Stevenson v. Marble, 84 Fed. 23.
Kansas. Stevens v. Allen, 51 Kan. 144, 32 Ac. 922.
Massachusetts. Hillyer v. Dickinson, 154 Mass. 502, 28 N. E. 905.
Missouri. Hume v. Brelsford, 51 Mo. App. 651.
Nebraska. Moore v. Scott, 47 Neb. 346, 66 N. W. 441.
Ohio. Crist v. Dice, 18 O. S. 536.
Washington. English v. Grinstead, 12 Wash. 670, 42 Ac. 121.
2 Hanscom v. DruHard, 79 Cal. 234, 21 Ac. 736; Savage v. Stevens, 126 Mass. 207; Foley v. Holtry, 43 Neb. 133, 61 N. W. 120.
3 See Sec. 372 et seq.
4 United States. Union Ac. Ry. Co.
Alabama. Jones v. Ross, 98 Ala. 448, 13 So. 319.
California. Toner v. Meussdorffer, 123 Cal. 462, 56 Ac. 39.
Connecticut. Elwell v. Russell, 71 Conn. 462, 42 Atl. 862.
Delaware. Journal Printing Co. v. Maxwell, 1 Penn. (Del.) 511, 43 Atl. 615.
Iowa. Scroggin v. Wood, 87 la. 497, 54 N. W. 437.
Kansas. Farmers', etc, Association v. Scott, 53 Kan. 534, 36 Ac. 978; Kansas Refrigerator Co. v. Pert, 3 Kan. App. 364, 42 Ac. 943.
Massachusetts. Nash v. Trust Co., 163 Mass. 574, 47 Am. St. Rep. 489, 28 L. R. A. 753, 40 N. E. 1039; same case, 159 Mass. 437, 34 N. E. 625.
Missouri. People's National Bank v. Trust Co., 179 Mo. 648, 78 S. W. 618.
New York. Kountze v. Kennedy, 147 N. Y. 124, 49 Am. St. Rep. 651, 29 L. R. A. 360, 41 N. E. 414.
North Carolina. Gatlin v. Harrell, 108 N. Car. 485, 13 S. E. 190.
land in good faith is not fraud,5 such as a representation as to the title to land made in honest reliance on the certificate of the town clerk and the adviae of counsel;6 nor is it fraud to omit from a list of debts a claim in litigation on advice of counsel that such claim is unenforceable.7 Rescission has been refused for a false statement made innocently, not of the knowledge of the party making it, but on information which he discloses.8 Thus rescission is refused for a false statement as to earnings of another company, with which consolidation of the company whose stock is for sale is expected, made in good faith and based on data furnished by such company accessible to both parties and believed to be true.9 Such a statement by a party as to his own age is necessarily based on hearsay evidence; such a statement can not be said to be wilfully false as a matter of law, even if it is untrue in point of fact.10