§ 643. The general rule, both of law and equity, in respect to concealment, is, that mere silence, with regard to a material fact, which there is no legal obligation to divulge, will not avoid a contract, although it operate as an injury to the party from whom it is concealed.5 Thus, if A. knowing that there is a mine in the land of B., of which B. is ignorant, should contract to purchase the land without divulging the fact, it would be a valid contract, although the land was sold at a price which it would be worth without the mine; because A. is under no legal obligation, by the nature of the contract, to give any information thereof.1 Nor does the passive acquiescence of the seller in the self-deception of the buyer entitle the latter to avoid the contract.2 But this principle only applies to cases where the vendee is deceived by the silence of the vendor; for if a single word be spoken which tends to mislead him, the contract will be set aside for fraud.3 If, therefore, in the foregoing illustration, B. had suspected that there was a mine in the land, and had inquired of A. whether he knew of any peculiarity about the land which gave it a greater value than it apparently had, and he had misled him, a court of equity would set aside the contract.4

1 Lickbarrow v. Mason, 2 T. R. 70; 8. c. 6 East, 20; Goodman v. Eastman, 4 N. H. 455; Root v. French, 13 Wend. 572; Lane v. Borland, 14 Me. 77.

2 Parsons v. Hughes, 9 Paige, 591; Vigers p. Pike, 8 CI. & Finn. 562, 630.

3 Clough v. London & N. W. Railway Co., 25 Law Times (n. s.), 708 (1871).

4 In Smith v. Hughes, Law R. 6 Q. B. 604 (1871), these sections are quoted with approbation by Cockburn, C. J., although attributed to " Mr. Justice Story."

5 See Irvine v. Kirkpatrick, 7 Bell, App. 186; 3 Eng. Law & Eq. 17; Otis v. Raymond, 3 Conn. 413; Van Arsdale v. Howard, 5 Ala. 596.

§ 644. The law never undertakes to refine upon nice ethical distinctions; and although it lends no countenance to injustice, and will not support immorality, yet it often stops short of enforcing a merely honorary obligation. Questions of law must be determined upon general principles, which, although they reach the aggregate of cases, may often fail to extract the sting of injustice and immorality from the individual case. Thus, it is the general policy of the law, in order to induce vigilance and caution, and thereby to prevent those opportunities of deceit which lead to litigation, to throw upon every man the responsibilities of 'his own contracts, and to burden him with the consequences of his careless mistakes. But this general rule, though founded in true policy, often affords occasions for that very deceit which it is one of the main objects of the rule to prevent. Thus, although a vendor is bound to employ no artifice or disguise for the purpose of concealing defects in the article sold, since that would amount to a positive fraud on the vendee; yet, under the general doctrine of caveat emptor, he is not, ordinarily, bound to disclose every defect of which he may be cognizant, although his silence may operate virtu-

1 Fox v. Mackreth 2 bro. C.C.420; Turner v. Harvey jacob, 178; Harris v. Tyson,24 penn. st 347.

2 Smith v Hughes Law R. 6 Q B.597 Horsfallw. Thomas, 1 H. & G. 90. See Raffles v. Wichelhaus,,.2_H. & C.906; Scott v. Littledale, 8 El. &.B. 815.

3 Pidcock v. Bishop, 3 B & C 605, Baglehole v. Walters, 3 Camp 154.. See Bench v. Sheldon, 14 Barb. 66; Kintzing v. McElrath, 5 Barr, 467; Pearce v. Blackwell, 12 Ired. 49; Wood v. Ashe, 3 Strobh. 64; Ferebee v. Gordon, 13 Ired. 350.

4 Ibid.; Livingston v. Peru Iron Co., 2 Paige, 390. vol. I. 39 ally to deceive the vendee. It is evident, however, that without some such general rule, the facilities of sales would be greatly impeded, and there would be no security to the vendor.1

§ 645. But an improper concealment or suppression of a material fact, which the party concealing is legally bound to disclose, and of which the other party has a legal right to insist that he shall be informed, is fraudulent, and will invalidate a contract.2 Thus, for instance, in cases of insurance, the party insuring being under an obligation to acquaint the underwriter with all facts and circumstances affecting the risk which are peculiarly within his knowledge, or which are not matters of general information, the concealment of any such fact or circumstance which a true answer to even a general question would have elicited will be fatal to the contract of insurance.3 So, also, in sales by auction, by which goods are offered to the public under the profession that the highest bidder shall take them, the secret employment of by-bidders and puffers, by which the price is enhanced by pretended competition and fictitious bids, is a fraud, if it operate to deceive the buyer injuriously.4 So, also, if facts, which materially affect the nature or extent of a surety's liability, and tend to increase his risk, be concealed, or if he be suffered to make the agreement while he is deceived, the concealment is a fraud, which vitiates the contract.5

1 1 Story, Eq. Jur. § 201; 2 Kent, Comm. 483, 484, 4th ed.; Wilkinson on Shipping, ch. 4, p. 89 to 103.

2 1 Story, Eq. Jur. § 204, 205, 206; 2 Kent, Comm. 481; Pidcock v. Bishop, 3 B. & C. 605; Foxv. Mackreth, 2 Bro. C. C. 420; Turner v. Harvey, Jacob, 178; Farnam v. Brooks, 9 Pick. 234; Harrower v. Hutchinson, Law R. 5 Q. B. 584 (1870); Proudfoot v. Montefiore, Law R. 2 Q. B. 511 (1867); Bates v. Hewitt, ib. 595. A prior promise by the plaintiff to marry another does not avoid a promise to marry the plaintiff, if it was not fraudulently withheld from the defendant. Beachey v. Brown, El. B. & E. 796 (1860).

3 Marshall on Ins. B. 1, ch. 10, § 2; Lindenau v. Desborough, 8 B. & C. 586, 592; Elton v. Larkins, 5 C. & P. 90; Vose v. Eagle Life Ins. Co., 6 Gray, 42. If the concealment is of an immaterial fact, it will not avoid the contract unless there was a warranty. Ionides v. Pacific Ins. Co., Law R. 6 Q. B. 674 (1871); Miles v. Connecticut Life Ins. Co., 3 Gray, 580; Kennedy*?. Panama, etc, Mail Co., Law R. 2 Q. B. 580 (1867); 8. c. 8 B. & 6. 571.