Sec. 320. Proof Of Fraud At Law And In Equity

The question may arise as to whether the fraud requisite as a basis for rescinding a contract in equity is of the same nature as that demanded in a court of law in an action for damages for deceit. "In equity, the right to relief is derived from the suppression or misrepresentation of a material fact, though there be no intent to defraud. This view has been applied to innocent misrepresentations in a prospectus, providing that they were of the essence of the contract. This doctrine is, substantially, grounded in fraud, since the misrepresentation operates as a surprise and imposition upon the opposite party to the contract. It is inequitable and unconscientious for a party to insist on holding the benefit of a contract which he has obtained through misrepresentations, however innocently made."41

37 Butler v. Duke, 39 Misc. 243 (N. Y. 1902).

38 Brackett v. Griswold, 112 N. Y. 466, 467 (1889); and see Hansen v. Kline, 113 N. W. 508 (Iowa 1907).

39 On the general subject of conspiracy, see Place v. Minster, 65 N. Y. 95 (1875).

40 N. Y. Guar. & Ind. Co. v. Gleason, 78 N. Y. 508 (1879) ; Page v. Parker, 43 N. H. 363 (1861) ; Wiggins v, Leonard, 9 Iowa 197 (1859).

In Jackson v. King, 4 Cow. 220 (N. Y. 1825), it was suggested that courts of law have not, in all cases of fraud, concurrent jurisdiction with equity, and that the distinction between legal and equitable jurisdiction upon fraud is that at law it must be proved, not presumed as it may be in equity from the nature of the transaction and the situation of the parties.42

41 Hammond v. Pennock, 61 N. Y. 152 (1874).

42 See also Squiers v. Thompson, 73 App. Div. 552 (N. Y. 1902); Lyon v. James, 97 App. Dly. 385 (N. Y. 1904) ; Bell v. James, 128 App. Div. 241 (N. Y. 1908) ; Johnson v. Sheridan Lumber Co., 93 Pac. 473 (Ore. 1908).