If the party to a transaction takes advantage of a fraudulent statement made by a third person, knowing of such fraud, such transaction may be avoided, although no relation of agency exists.1 If X has made a fraudulent statement to A, and B, knowing of such fraudulent statement, induces A to convey realty to B, A may have such conveyance set aside upon discovering such fraud.2 If X makes fraudulent statements to B to induce B to convey realty to A and A knows of such false statements and takes advantage thereof, A is guilty of fraud, for which B may avoid the transaction.3 If X's fraudulent statement induces B to make a payment to A, to which A is not entitled, B may recover such payment.4 A's conduct in failing to deny X's statement when it is made in the presence of A and B is such a taking advantage thereof as enables B to avoid the transaction.5 If X and B are acting in collusion, A clearly has a right to avoid his contract with B for X's fraud.6