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.
The general rule is that no relief can be given for innocent misrepresentation of law.1 Thus when A sold to B certain municipal bonds, representing that they were valid, the material facts being known to both parties, no relief was given on the ground that it was an erroneous legal opinion.2 So a misrepresentation that corporate stock was nonassessable beyond a certain per cent. of its face value, all the facts being known, was not ground for rescinding a sale thereof.3 So a misrepresentation as to the legal liability on a contract of indorsement made after the note had been delivered to the payee, who did not indorse it over, does not avoid a subsequent indorsement on a new note, extending the time of payment.4 So in insurance, to avoid the policy the misrepresentation must be one of fact as distinguished from one of law. Thus, where the agent knows all the facts as to the title of the insured, and the insured, believing that he owns the property in fee represents that he is the sole owner, the policy is valid, though the courts afterward decide that the insured's interest in three-fourths of the property was a life interest only.5 A representation by B's agent to A, to the effect that C's assignment to X of C's claim against A is not valid as against A, because A did not accept it formally, has been held to be a mistake of fact. Such mistake did not preclude A from suing B on B's contract to indemnify A against liability to X in case A, after paying such debt to B, was obliged to pay it to X.8 An innocent misstatement by one who is selling his supposed rights under a copyrighted plan for establishing mutual burial associations, is not ground for avoiding the contract, especially if the adversary parties have ample time in which to ascertain their rights.7
1United States. Upton v. Tribil-cock, 91 U. S. 45, 23 L. ed. 203; Burk v. Johnson, 146 Fed. 209, 76 C. G. A. 567.
Illinois. Hooker v. Midland Steel Co., 215 111. 444, 106 Am. St. Rep. 170, 74 N. E. 445.
Kentucky. Kenton Ins. Co. v. Wig-ginton, 89 Ky. 330, 7 L. R. A. 81, 12 S. W. 668.
Oklahoma. Northwest Thresher Co. v. McNinch, 42 Okla. 155, 140 Pac. 1170.
Pennsylvania. Frankfort Marine Accident & Plate Glass Ins. Co. v. Witty, 208 Pa. St. 569, 57 Atl. 990.
Tennessee. Ruohs v. Bank, 94 Tenn. 57, 28 S. W. 303.
2Otis v. Cullum, 92 U. S. 447, 23 L. ed. 496; Ruohs v. Bank, 94 Tenn. 57, 28 S. W. 303.
3 Upton v. Tribilcock, 91 U. S. 45, 23 L. ed. 203. .
4 German Savings Bank Co. v. Gen-eser, 116 la. 119, 89 N. E. 201.
5 Kenton Ins. Co. v. Wigginton, 89 Ky. 330, 7 L. R. A. 81, 12 S. W. 668.
6 Montgomery Door & Sash Co. v. Lumber Co., 206 Moss. 144, 92 N. E. 71. (Additional representations as to C's insolvency at the time of the original transaction between A and C, giving A a right to avoid it, were also made.)
7 Burk v. Johnson, 146 Fed. 209, 76 C. C. A. 567.
In some cases equity has relieved against a misrepresentation of law." Thus where A gave his daughter B a lease for her life of a house, and after A's death, intestate, the other heirs in good faith represented to B that her lease was invalid and thereby induced her to surrender her share of A's estate in return for a lease from such other heirs of the same house, misrepresentation was held to avoid B's release of her share of A's estate.8