§ 620. 1st. Fraud has been defined to be "every kind of artifice employed by one person for the purpose of deceiving another," and this is sufficiently descriptive of fraud.1 The courts, however, have strenuously refused to attach any exact definition to the term, or to lay down any except general rules in respect to it. For fraud is as difficult to define as it is easy to perceive; and any positive definition or rigid rule would be easily evaded by craft, so as to place cases manifestly fraudulent beyond its exact limits. Through this wise abstinence, therefore, fraud remains undefined and unlimited by any forms, but is to be inferred from the special circumstances of every case. Wherever it occurs, it vitiates the transaction tainted by it, both in law and equity. No agreement, although it be apparently fair, and in compliance with the formalities of law, can be enforced, if it be essentially unfair and fraudulent. For a contract to be binding, must be not only within the letter, but also within the spirit of law. And unless it be made in good faith, and free from the stain of fraud and imposition, it will be spurned from the threshold of every legal tribunal.2 But a contract voidable for fraud, and not void, remains valid until rescinded.3
1 The following definitions of fraud were given in the Roman law: '* Do-lum malum Servius quidem ita definit, machinationem quandam alterius decipiendi causa, cum aliud simulatur, et aliud agitur. Labeo autem posse [et] sine simulatione id agi, ut quis circumveniatur: posse et sine dolo malo, aliud agi, aliud simulari; sicuti faciunt, qui per ejusmodi dissimulationem deserviant, et tuentur vel sua vel aliena. Itaque ipse sic definiit, dolum malum esse omnem calliditatem, fallaciam, machinationem ad circumveni-endum, fallendum, decipiendum alterum adhibitam. Labeonis definitio vera est." Dig. Lib. 4, tit. 3,1. 1, § 2.
* See Fermor's Case, 3 Co. 77; Bright v. Eynon, 1 Burr. 390; Foxcraft v. Devonshire, 1 W. Bl. 193. and cases there cited; Ludlow v. Gill, 1 Chip. 49; Duncan v. M'Cullough, 4 S. & R. 483; Dingley v. Robinson, 5 Greenl. 127; Ferguson v. Carrington, 9 B. & C. 59.
* Reese River Silver Mining Co. v. Smith, Law R. 4 H. L. 64 (1869).
§ 621. It is not necessary that the fraud should arise from either party personally. The fraud of an authorized agent will invalidate a contract entered into by him in behalf of his principal. Thus, where an agent sold a picture belonging to his principal, and knowingly permitted the vendee to be deceived in relation to a fact which would have materially influenced his judgment, the contract was held to be void as against the purchaser.1 And where an agent has made a contract with a third person, although he have transcended the real limits of his authority, yet if the principal ratify it, and make the contract his own by availing himself thereof, he is liable in like manner as if he had personally made the contract. If, therefore, the agent have made misrepresentations, the principal is bound thereby; for the latter cannot ratify the contract, and avoid the responsibility of the representations which formed its basis, but he must avoid or ratify the contract in toto?
1 Doe v. Martin, 4 T. R. 39; Fitzherbert v. Mather, 1 T. R. 12; Hill v. Gray, 1 Stark. 434; Cornfoot v. Fowke, 6 M. & W. 358. See Fox v. Mackreth, 2 Bro. C. C. 420. In Cornfoot v. Fowke, supra, the plea was that the defendant had been induced to enter into the agreement sued on, by the fraud and covin of the plaintiff. The evidence proved nothing to support that plea; for the plaintiff had merely put the house into the hands of an agent to be let at a stipulated rent; he had neither himself stated, nor authorized the agent to state, any thing false or deceptive. It did not appear that the employer had not told the agent and desired him to apprise the purchaser. It was the over-zeal of the agent for which the principal was not to suffer. The court held that the plea was not made out by evidence which merely showed the agent to have stated what he believed to be true; viz., that there was no objection attaching to the house. But if the defence had rested, not on the allegation of fraud, but simply upon the ground of misrepresentation, or concealment on the part of the principal, the decision might have been different. See the interesting case of The National Exchange Co. v. Drew, 2 Macq. 145 (1855).
2 See Fitzsimmons v. Joslin, 21 Vt. 129; National Exchange Co. v. Drew, 2 Macq. 103; 32 Eng. Law & Eq. 1; Hough v. Richardson, 3 Story, 689. In this case, Mr. Justice Story said: "The sale, then, being made by Moulton, not as himself the owner, which he was not, but as the agent of the owners, it follows, that they are bound by his representations made at determination to the other party, within reasonable time after his discovery of the fraud.1 And if, with knowledge of the fraud, he acquiesce in the contract expressly; or bring an action on the contract;2 or do any act importing an intention to stand by it; or remain silent under circumstances which plainly indicate a continuing assent thereto, - he cannot afterwards avoid it; for, practically, no man is injured, if he know of the deceit which is practised, and consent to it, since the deceit becomes then an agreed fact of the case.8 If, therefore, he make a compromise of the whole matter, or release the other party from liability, or expressly waive all right to proceed against him, he is bound thereby as by a new agreement.4 So, also, if he treat the subject-matter as his own, as by selling or leasing, he cannot avoid the contract on the ground of fraud, even although he should afterwards discover some new incident to the same fraud, making it more to his injury than he supposed.5 So, also, if, when a contract is made for work to be done at a stipulated price, and it is discovered, before the work is commenced, that there has been such a misrepresentation as to its value as to afford to the party engaging a ground to repudiate the contract, yet if he do not complain, but prosecute the work, he can demand no more than the contract price.6 But so long as he remains in ignorance that he has been defrauded, his conduct will not be considered as importing such an acquiescence therein as to deprive him of taking advantage of the fraud within reasonable time after his actual discovery thereof.7 Nor does it matter, as to his right of redence in rebutter of fraud, or greatly to change the circumstances of the case.1 But if, in addition to the lapse of time, the party claiming to recover had the means of knowledge, he must plainly show that he has not been guilty of laches, or he cannot recover.2 It is not, however, considered as laches in a party not to proceed immediately to verify representations, on the basis of which he makes a contract, but he will be allowed reasonable time to do so.8 But where a man is guilty of gross laches, in not employing means of knowledge within his reach, and proceeds to treat the subject-matter as his own, and to sell it, or use it, for his advantage and to its injury, he could not claim to set his contract aside, even in equity, on the ground of fraud. A fortiori, if a man be cognizant of all the circumstances, and do not complain, but deal with the other party as if he had no case against him, he would, as has been said, "build up, from day to day, a wall of protection for such opponent, which will probably defeat any attack on him." 4 And it has been held that executed contracts tainted with fraud are also binding.5