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.
There are, however, many cases, some of them decided recently, in which the courts hold that where the facts are equally accessible to both parties, public policy demands that the law should require persons to whom representations are made to use all reasonable means for determining their truth, and that failure to investigate may amount to inexcusable negligence and may preclude the negligent party from obtaining relief.1 A comparison and analysis of the two apparently conflicting lines of cases shows that there is little conflict in the actual decisions, though there is absolute conflict in the dicta. In many of the cases the real holding was that the parties had not equal means of knowledge.2 Discussion of what would have been the result had they had equal means of information is therefore in the nature of an obiter. In others, the statement was rather in the nature of an opinion, for instance, as to the value of property,3 or of the legal effect of transactions known to both parties, as where a husband claimed that all property acquired under circumstances known to his wife was his sole property,4 or where A claimed that B's mortgage had been foreclosed, though the receipt which B had was a notice of facts which showed that no valid decree could have been taken;5 where the means of knowledge possessed by the party defrauded is important only as showing that the statement was an opinion, and not a fact.6 Many of the cases are really decided on other grounds, such as absence of knowledge of falsity, ratification, and the like. In other cases the very transaction brought such facts to the notice of the party alleging fraud as advised him of the falsity of the representations,7 such as the quality of the soil, the timber or the existence of springs,8 or the nature of a channel to be dredged.9 If one of the parties to v. Newlands, 11 Wash. 212, 39 Ac. 366; Griffith v. Strand, 19 Wash. 686, 54 Ac. 613; Hulet v. Achey, 39 Wash. 91, 80 Ac. 1105.
1 United States. Slaughter v. Gerson, 80 U. S. (13 Wall) 379, 20 L. ed. 627; Andrus v. Refining Co., 130 U. S. 643, 32 L. ed. 1051; Farrar v. Churchill, 135 U. S. 600, 34 L. ed. 246; The Mattano, 52 Fed. 876; Mather v. Barnes, 146 Fed. 1000; Dalhoff Constr. Co. v. Block, 157 Fed. 227, 85 C. C. A. 25, 17 L. R. A. (N.S.) 419; King v. Lamborn, 186 Fed. 21, 108 C. C. A. 123.
Arizona. Bianconi v. Smith, (Ariz), 28 Ac. 880.
Arkansas. Hamilton v. Ford, 46 Ark. 245; Fitzhugh v. Davis, 46 Ark. 337; Matlock v. Reppy, 47 Ark. 148, 14 S. W. 546; Delaney v. Jackson, 95 Ark. 131 [sub nomine, Delaney v. Johnson, 128 S. W. 859]; Hunt v. Davis, 98 Ark. 44, 135 S. W. 458.
California. San Jose Commissioners v. Younger, 29 Cal. 172; Champion v. Woods, 79 Cal. 17, 12 Am. St. Rep. 126, 21 Ac. 534; Toner v. Meussdorffer, 123 Cal. 462, 56 Ac. 39.
Georgia. Chicago, etc., Co. v. Sum-merour, 101 Ga. 820, 29 S. E. 291; Brannen v. Brannen, 135 Ga. 590, 69 S. E. 1079.
Idaho. Brown v. Bledsoe, 1 Ida. 746.
Illinois. Douglass v. Littler, 58 111. 342; Schwacker v. Riddle, 99 111. 343; Moore v. Recek, 163 111. 17, 44 N. E. 868; Jones v. Foster, 175 111. 459, 51 N. E. 862.
Indiana. Wright v. Gully, 28 Ind. 475.
Iowa. McGibbons v. Wilder, 78 la.
531, 43 N. W. 520; Brown v. Zachary, 102 la. 433, 71 N. W. 413.
Kentucky. Clarke v. Tanner, 100 Ky. 275, 38 S. W. 11.
Maine. Pratt v. Philbrook, 33 Me. 17.
Maryland. Spitze v. Ry. Co., 75 Md. 162, 32 Am. St. Rep. 378, 23 Atl. 307; Weaver v. Shriver, 79 Md. 530, 30 Atl. 189.
Massachusetts. Salem India Rubber Co. v. Adams, 40 Mass. (23 Pick.) 256; Brown v. Leach, 107 Mass. 364.
Michigan. McEacheran v. Western, etc., Co., 97 Mich. 479, 56 N. W. 860.
Minnesota. Minneapolis, etc., Ry. Co. v. Chisholm, 55 Minn. 374, 57 N. W. 63.
Missouri. Wade v. Ringo, 122 Mo. 322, 25 S. W. 901; Lewis v. Land Co., 124 Mo. 672, 28 S. W. 324.
New Hampshire. Leavitt v. Fletcher, 60 N. H. 182.
New York. Long v. Warren, 68 N. Y. 426.
North Carolina. Leonard v. Southern Power Co., 155 N. Car. 10, 70 S. E. 1061.
Oregon. Finlayson v. Finlayson, 17 Or. 347, 11 Am. St. Rep. 836, 21 Ac. 57.
Pennsylvania. Grauel v. Wolf, 185 Pa. St. 83, 39 Atl. 819.
Utah. Short v. Pierce, 11 Utah 29, 39 Ac. 474.
Virginia. Lake v. Tyree, 90 Va. 719, 19 S. E. 787.
Washington. Washington, etc., Co.
Wisconsin. Mamlock v. Fairbanks, 46 Wis. 415, 32 Am. Rep. 716, 1 N. W. 167; Parr v. Peterson, 91 Wis. 182, 64 N. W. 863.
"When the means of knowledge are open and at hand or furnished to the purchaser or his agent and no effort is made to prevent the party from using them, and especially where the purchaser undertakes examination for himself, he will not be heard to say that he has been deceived to his injury by the misrepresentations of the vendor." Shappirio v. Goldberg, 192 U. S. 232, 48 L. ed. 419 [citing, Slaughter v. Gerson, 80 U. S. (13 Wall.) 379, 20 L. ed. 627; Southern Development Co. v. Silva, 125 U. S. 247, 31 L. ed. 678; Farrar v. Churchill, 135 U. S. 609, 34 L. ed. 246; Farnsworth v. Duffner, 142 U. S. 43, 35 L. ed. 931].
2 See Sec. 328.
3 Illinois. Moore v. Recek, 163 111. 17. 44 N. E. 868; Van Velsor v. Seeber-ger, 35 111. App. 598; Wightman v. Tucker, 50 111. App. 75.
Iowa. Brown v. Zachary, 102 la. 433, 71 N. W. 413.
Oklahoma. Long v. Kendall, 17 Okla. 70, 87 Ac. 670.
Virginia. Lake v. Tyree, 90 Va. 719, 19 S. E. 787.
Wisconsin. Farr v. Peterson, 91 Wis. 182, 64 N. W. 863.
4 Champion v. Woods, 79 Cal. 17, 12 Am. St. Rep. 126, 21 Ac. 534.
5 Jones v. Foster, 175 111. 459, 51 N. E. 862.
6 Tindall v. Harkinson, 19 Ga. 448; Moore v. Recek, 163 111. 17, 44 N.,E. 868; Rockafellow v. Baker, 41 Pa. St 319, 80 Am. Dec. 624.
7 McGar v. Williams, 26 Ala. 469, 62 Am. Dec. 739; Kaiser v. Nummerdor, 120 Wis. 234, 97 N. W. 932.
8 Stone v. Moore, 75 Ga. 565.
9 Rowland Lumber Co. v. Ross, 100 Va. 275, 40 S. E. 922.
a contract for the exchange of land agrees to examine the land which he is to receive in exchange, and makes such examination, it is said that the representations made by the owner of such land with reference thereto, will not amount to fraud unless a full examination was prevented.10 After eliminating all these cases, however, a number are left where representations which otherwise would be fraud, are held not to be so because the party deceived had the means of determining the facts but negligently omitted to use them.11 This rule has been applied to false statements as to price paid for stock;12 as to the amount of sales and profits of a business made to one familiar with the business, who has examined it carefully and who refused an opportunity to examine the books;13 false statements as to the quality of the property and the value of the business which was offered for sale if the vendee could readily have learned the truth by inspection;14 as to land titles;15 or that there has been no trouble over a right of way,16 in each of which cases relief has been refused on the ground of the negligence of the defrauded party. If an order for a certain number of steel bars of certain dimensions at a certain price per pound is entered into in reliance on the false statement of the vendor as to the weight of such bars, the purchaser can not avoid such contract if he is acquainted with the steel business, and if he can easily ascertain for himself what the weight of such bars and the cost thereof would be.17 Almost all the decisions, as distinguished from the reasons given in the opinions of the courts, may be harmonized by stating the rule in this form. A person is charged with notice of facts actually brought to his attention in the transaction, though he may fail to grasp their full import and all the consequences that flow from them. On mere opinions he has in ordinary cases no right to rely, but he must investigate for himself. But if facts are stated positively, he is not bound to make further investigation though he must avail himself of the knowledge actually brought to his notice with whatever is implied therefrom.17 Where fraud is invoked to avoid contract liability the weight of authority is that while the defrauded party must make use of his senses and his reason, and must take cognizance of what is actually brought to his notice, he need not make further investigation. The greater number of cases in which investigation has been held necessary are those in which the fraud has been used as the basis of the action of deceit.
10 Munkres v. McCaskill, 64 Kan. 516, 68 Ac. 42.
11 Osborne v. Ry., 71 Neb. 180, 98 N. W. 685.
12 Weaver v. Shriver, 79 Md. 530, 30 Atl. 189.
13 Grauel v. Wolfe, 185 Pa. St. 83, 39 Atl. 819.
14 Jones v. Reynolds, 45 Wash. 371, 88 Ac. 577.
15 Bianconi v. Smith (Ariz.), 28 Ac. 880.
16 Palmer v. Bell, 85 Me. 352, 27 Atl. 250.
17 Dalhoff Conatr. Co. v. Block, 157 Fed. 227, 85 C. C. A. 25, 17 L. R. A. (N.S) 419.
18 Perry v. Rogers, 62 Neb. 898, 87 N. W. 1063.