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.
Matters of opinion can not be the basis of false statements in actual fraud. Between persons occupying relations of trust and confidence, a false statement as to matters of opinion may constitute constructive fraud.1 Thus as between principal and agent,2 or partners,3 or a promoter of a corporation and a stockholder,4 or a president of a corporation and a stockholder,5 or a director of a corporation and a stockholder,6 with reference to corporation matters, constructive fraud may exist through a false statement of what is strictly a matter of opinion. Where no technical relations of trust and confidence exist, but trust and confidence are actually reposed, a false statement of an opinion may amount to constructive fraud.7 Accordingly, if the parties are not on an equality, as where the opinion relied on is that of an expert,8 such as a physician,9 or a civil engineers10 or an architect,11 such opinion can be fraud. So a statement of opinion by one who knows that the party to whom it is made has not the means of determining the question, but must and does rely on the opinion thus expressed, can be fraud.12 The statement of an architect to his client as to the cost of a building is a statement upon which the client may rely, and amounts to fraud if it is materially untrue.13 So the expression of an opinion or a statement of the value of property made to one who has not the means of ascertaining the facts, and is known to rely on such statement of value is fraud.14 So if the party to whom such statements are made is mentally deficient, though not insane or idiotic,
7Witham v. Walsh, 156 Mich. 582, 121 N. W. 309.
8Rogers v. Brightman, 189 Ala. 228, 66 So. 71.
9Rivers v. Lockwood, 239 Fed. 380. 10 Rivers v. Lockwood, 239 Fed. 380.
1Colorado. Baum v. Holton, 4 Colo. App. 406, 36 Pac. 154.
Illinois. Hauk v. Brownell, 120 111. 161, 11 N. E. 416.
Indiana. Hulett v. Kennedy, 4 Ind. App. 33, 30 N. E. 310.
Maine. Lane v. Harmony, 112 Me, 25, 90 Atl. 546.
Ohio. Smith v. Patterson, 33 O. S. 70.
Rhode Island. Fisher v. Budlong, 10 R. I. 525.
West Virginia. Poole v. Camden, 79 W. Va. 310, L. R. A. 1917E, 988, 92 S. E. 454.
2United States. Merritt v. Wassen-ich, 49 Fed. 785.
. Massachusetts. Cheney v. Gleason, 125 Mass. 166; Barnard v. Coffin, 138 Mass. 37.
Minnesota. Lofgren v. Peterson, 54 Minn. 343, 56 N. W. 44.
Oregon. Shute v. Johnson, 25 Or. 59, 34 Pac. 965.
Texas. Boyd v. Jacobs, 6 Tex. Civ. App. 442, 25 S. W. 681.
3Davenport v. Buchanan, 6 S. D. 376, 61 N. W. 47.
4Teachout v. Van Hoesen, 76 la. 113, 14 Am. St. Rep. 206, 1 L. R. A. 66, 40 N. W. 96.
5Fisher v. Budlong, 10 R. I. 525. (Where the president made fraudulent representations as to the value of stock to a stockholder to get him to sell to another, who was in fact buying for the president.)
6 Poole v. Camden, 79 W. Va. 310, L.
R. A. 1917E, 988, 92 S. E. 454.
7White v. Sutherland, 64 111. 181; Nolte v. Reichelm, 96 111. 425; McCor-mick v. Malin, 5 Blackf. (Ind.) 509; Nichols v. Colgan, 130 Ind. 341, 30 N. E. 301; Wells v. McGeoch, 71 Wis. 196, 35 N. W. 769.
8Michigan. French v. Ryan, 104 Mich. 625, 62 N. W. 1016. (As to possible earnings.)
Minnesota. Vilett v. Moler, 82 Minn. 12, 84 N. W. 452. (Statement by a manager of a barbers1 college that the trade can be learned in eight weeks.)
New Jersey. Conlan v. Roemer, 52 N. J. L. 53, 18 Atl. 858.
New York. Hickey v. Morrell, 102 N. Y. 454, 55 Am. Rep. 824, 7 N. E. 321.
Utah. Hirschberg Optical Co. v. Pal-ton, etc., Co., 7 Utah 433, 27 Pac. 83. "If the party expressing the opinion possesses superior knowledge, such as would reasonably justify the conclusion that his opinion carries with it the implied assertion that he knows the facts which justify it, his statement is actionable if he knows that he does not honestly entertain the opinion because it is contrary to the facts. Edward Barron Estate Co. v. Woodruff, 163 Cal. 561, 126 Pac. 351, 42 L. R. A. (N.S.) 125." Como Orchard Land Co. v. Markham, 54 Mont. 438, 171 Pac. 274.
9Hedin v. Surgical Institute, 62 Minn. 146, 54 Am. St. Rep. 628, 35 L. R. A. 417, 64 N. W. 158. (That a certain person can be cured.) Oestreich v. Chicago, St. Paul, Minneapolis & Omaha Ry. Co., 140 Minn. 280, 167 N. W. 1032.
10Louisville, etc., Ry. Co. v. Stone Co., 141 Ind. 251, 39 N. E. 703. (That a track can not be laid to a given road.)
11Lane v. Harmony, 112 Me. 25, 90 Atl. 546.
12Hirschberg Optical Co. v. Dalton, etc., Co., 7 Utah 433, 27 Pac. 83.
13Lane v. Harmony, 112 Me. 25, 90 Atl. 546.
Alabama. Montgomery So. Ry. Co. v. Matthews, 77 Ala. 357, 54 Am. Rep. 60.
California. Loaiza v. Superior Court, 85 Cal. 11, 20 Am. St. Rep. 197, 9 L. R. A. 37, 24 Pac. 707.
a statement of opinion may be constructive fraud.15 Where a party making a false statement as to a matter of opinion actively interferes to prevent the other party from making an investigation,16 as where he bribes "the agents of the adversary party on whose expert knowledge and opinion such adversary party relies entirely,17 such expression of opinion may amount to fraud.18