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 the parties are in fiduciary relations in which actual trust and confidence is reposed,1 such as attorney and client,2 step-mother and step-son,3 or persons about to inter-marry,4 so that one of them has a right to rely on the opinion of the other, a misrepresentation of law may amount to fraud. Thus where attorneys represented to their client that their fees must by law be secured in advance, and thus induce him to give a note and mortgage, and afterwards they foreclosed the mortgage and bought in the property without rendering the services, rescission was allowed.5 A representation made to an administrator who has promised expressly to look after the interests of a beneficiary, to the effect that her interest in such estate is subject to a life estate of the widow, amounts to fraud.6 If trust and confidence are actually reposed, a misrepresentation of law may amount to fraud even if the relations between the parties are not such as to imply trust and confidence.7 A representation to a widow that she can not collect insurance on her husband's life unless she gives her note for his debt may amount to undue influence.8 A representation made to a widow by the executors of her husband's will that she has no dower rights and is dependent on the bounty of the heirs for anything in excess of the provisions of the will, is fraud where such executors knew that the widow relied on their advice, and that her husband when living had told her so to rely.9 If, on the other hand, trust and confidence are not reposed, the mere fact of a relationship in which trust and confidence normally exist does not of itself make a representation of law operate as fraud.10 Thus where divorce proceedings are pending,
1 Schneider v. Schneider, 125 la. 1, 98 N. W. 150.
2 Allen v. Frawley, 106 Wis. 638, 82 N. W. 593.
3 West v. West, 9 Tex. Civ. App. 475, 29 S. W. 242.
5 Allen v. Frawley, 106 Wis. 638, 82 N. W. 593.
6 Schneider v. Schneider, 125 la. 1, 98 N. W. 159.
7 Peter v. Wright, 6 Ind. 183; Sykes v. Moore, 115 Miss. 508, 76 So. 538; Wilson v. Ott, 173 Pa. St. 253, 51 Am.
St. Rep. 767, 34 Atl. 23; Ludington v. Patton, 111 Wis. 208, 86 N. W. 571. A contract was set aside because one party thereto "placed a known trust and confidence in her advisers in a mixed question of law and fact," as to her title to realty, and they misled her. Peter v. Wright, 6 Ind. 183, 188.
8Sykes v. Moore, 115 Miss. 508, 76 So. 538.
9 Ludington v. Patton, 111 Wis. 208, 86 N. W. 571. See for somewhat similar facts of a fraudulent misrepresentation of law made by an executor to a devisee who was his sister-in-law. Rchuttler v. Brandfass, 41 W. Va. 201, 23 S. E. 808.
10 Champion v. Woods, 79 Cal. 17, 12 Am. St. Rep. 126, 21 Pac. 534.
and the wife is represented by an attorney, her husband's representation that all the property in dispute was his sole property and none of it community property, is not fraud, though false, where the facts were known to her.11