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.
If a partial investigation is made which from its nature can not and does not disclose the falsity of the statements made, and the original statement is relied on, as not being contradicted by such investigation, the weight of modern authority is that fraud can exist.1 Thus a statement that a lot is on a certain unopened street,2 or that the dimensions of the tract are of a certain length,3 or that the tract is of a certain area,4 or that a certain fence is the boundary,5 or that a certain well never went dry,6 or that a machine could perform certain work,7 may be fraud, though actual view of the premises in question was had, but did not reveal the falsity of the statement. An inquiry as to vendee's solvency made of persons who obtain their knowledge solely from vendee,8 is not such independent investigation as to prevent a false statement as to solvency from being fraud. So misrepresentation and the use of unfamiliar technical words may be fraud leading the purchaser to believe that he is to get an "artist-proof edition" even if he sees samples;9 or a false statement by A that a judgment against B has been assigned to him, though B examines the record and no assignment appears there.10 A buyer may rely upon the representations of the seller of an article; and yet, at the same time, make a careful examination thereof.11 If the owner of a diamond represents to the purchaser that it is a certain grade and quality, and the purchaser relies upon such representations, the fact that the purchaser made a careful examination of the diamond does not show that the purchaser did not rely upon such representations and was not deceived thereby, if the purchaser did not possess expert knowledge sufficient to determine the quality of such diamond.12
1 United States. Stewart v. Ranche Co., 128 U. S. 383, 32 L. ed. 439.
California. Kelley v. Owens (Cal.), 30 Ac. 596; same case, 31 Ac. 14.
Colorado. Hennessy v. Damourette, 15 Colo. App. 354, 62 Ac. 229.
Iowa. Watson v. Brown, 113 la. 308, 85 N. W. 28.
Kansas. Speed v. Hollingsworth, 54 Kan. 436, 38 Ac. 496; Morrow v. Bone-brake, 84 Kan. 724, 34 L. R. A. (N&) 1147, 115 Ac. 585.
Massachusetts. Roberts v. French, 153 Mass. 60, 25 Am. St. Rep. 611, 26 N. E. 416; Bums v. Dockray, 156» MasB. 135, 30 N. E. 551.
Nebraska. Foley v. Holtry, 43 Neb. 133, 61 N. W. 120.
New York. Schumaker v. Mather, 133 N. Y. 590, 30 N. E. 755.
Pennsylvania. Boyd v. Sniffer, 156 Pa. St. 100, 27 Atl. 60.
Texas. Farmer v. Randel (Tex. Civ. App.), 28 S. W. 384; Herring v. Mason, 17 Tex. Civ. App. 559, 43 S. W. 797.
Virginia. Land Co. v. Haupt, 90 Va. 533, 44 Am. St. Rep. 939, 19 S. E. 168.
Washington. Tacoma v. Water Co. 17 Wash. 458, 50 Ac. 55 [reversing on rehearing, 16 Wash. 288, 47 Ac. 738].
Wisconsin. Castenholz v. Heller, 82 Wis. 30, 51 N. W. 432; Porter v. Beat-tie, 88 Wis. 22, 59 N. W. 499.
"While it is always wise for the purchaser to be on the alert against deception, the law still permits him to confide in the statements of the seller; and it makes no difference in the rule if the purchaser makes some investigation for himself where the truth or falsity of the representations are not readily discoverable by him. Porter v. Beattie, 88 Wis. 22, 59 N. W. 499"; Beetle v. Anderson, 98 Wis. 5, 73 N. W. 560.
2 Hoock v. Bowman, 42 Neb. 80, 47 Am. St. Rep. 691, 60 N. W. 389.
3 Roberts v. French, 153 Mass. 60,
25 Am. St. Rep. 611, 10 L. R. A. 656,
26 N. E. 416.
4 Speed v. Hollings worth, 54 Kan. 436, 38 Ac. 496; Porter v. Beattie, 88 Wis. 22, 59 N. W. 499.
Contra, where the alleged discrepancy was apparently so gross that the view of the premises which grantee had must have disclosed it. It was claimed that grantor said that only a small corner, about an acre, was cut off by a railroad, while a great deal more was in fact so cut off. Armstrong v. Breen, 101 la. 9, 69 N. W. 1125.
5 Castenholz v. Heller, 82 Wis. 30, 51 N. W. 432.
Or that a certain road is the boundary. Rasmussen v. Reedy, 14 S. D. 15, 84 N. W. 205.
6 Herring v. Mason, 17 Tex. Civ. App. 559, 43 S. W. 797 (the well not being dry when inspected).
7 Watson v. Brown, 113 la. 308, 85 N. W. 28 (the party inspecting it not being familiar with machinery).