often called a doctrine of courts of equity as distinguished from courts of law, and doubtless in its origin it was such; but, at the present time, it is rather a distinction between a right of rescission on the one hand whether that right is asserted in a court of equity, in a court of law, or without the aid of a court, and an action for damages on the other hand. It is, however, a modern doctrine, and though its justice and the weight of authority already in its favor make it clear that it will prevail, there is no little authority for the statement that a right of rescission cannot be established because of misrepresentation, if the misrepresentation though false was made with belief on reasonable grounds in its truth.89 It is to be remembered also

that rescission presupposes a restoration of the status quo, and this may be impossible, e. g., where after the death of one whose life was insured, the insurer discovers innocent misrepresentations made by the insured in procuring the policy.90

In England the right of rescission for innocent misrepresentation is limited where a contract has been executed on both sides. It is said by a learned English writer,1 that rescission is allowed in such cases only where there has been fraud or "essential error." 92 No such limitation seems imposed by the American decisions, and clearly if the parties can be put in statu quo, there is no sound reason for refusing relief merely because the transaction has been executed.

93

§ 1501. Liability in damages for honest misrepresentation. Though the right to rescind for honest misrepresentation seems in a fair way to be generally accepted, other effects of such misrepresentation are not so easily dealt with. It is comPoppleton v. Bryan, 36 Or. 69, 58 Pac. 767; Franz v. Hansen, 36 Dom. L. R. 349.

90 Such misrepresentations of health were held no defence to the insurer in Moulor v. American Life Ins. Co., 111 U. S. 335, 28 L. Ed. 447, 4 Sup. Ct. 466; Grattan v. Metropolitan Ins. Co., 92 N. Y. 274, 44 Am. Rep. 372; Ferguson v. Massachusetts, etc., Ins. Co., 102 N. Y. 647; Suravitz v. Prudential Ins. Co., 244 Pa. 582, 91 Atl. 495, L. R. A. 1915 A. 373; Oplinger v. New York L. Ins. Co., 253 Pa. 328, 98 Atl. 568. There is here also another reason for denying rescission. Representations of health must be understood as limited to the speaker's knowledge. Beyond that he can only give an opinion.

91 Bower on Actionable Misrepresentation, §§ 262, 264.

92 In support of the denial of rescission except under these circumstances, Bower cites Atwood v. Small, 6 Cl. & Fin. 232; Wilde v. Gibson, 1 H. L. Cas. 605; Brownlie v. Campbell, 5 App. Cas. 925; Soper v. Arnold, 37

C. D. 96, affd. 14 App. Cas. 429; May v. Platt, [1900] 1 Ch. 616; Debenham v. Sawbridge, [1901] 2 Ch. 98; Re Metal Constituents, Ltd., [1902] 1 Ch. 707, 709; Seddon v. North Eastern Salt Co., [1905] 1 Ch. 326; Milch v. Coburn, [1910] 27 T. L. Rep. 170, and Angel v. Jay, [1911] 1 K. B. 666. The right of rescission even of wholly executed contracts, is well recognized where there is actual fraud. See, e. g., Charter v. Trevelyan, 11 Cl. & Fin. 714. The exception in regard to essential error, Bower states, is not so well recognized, but see Brownlie v. Campbell, 5 A. C. 925, 937; Debenham v. Sawbridge, [1901] 2 Ch. 98. It should be observed that even apart from any misrepresentation, the mutual mistake of the parties should afford ground for relief where there is a mistake as to a vital matter.

93 See, e. g., Bloomquist v. Farson, 222 N. Y. 375, 118 N. E. 855; Canadian Agency v. Assets Realization Co., 165 N. Y. App. Div. 96, 150 N. Y. S. 758, and see American decisions cited supra, note 87.

mon enough in our law to find that several parts of it which have grown up with little regard to each other have nevertheless logical and intimate connection, and that the doctrines laid down in one set of cases are hardly reconcilable with those established in others.

It is impossible that such a situation can be allowed to exist permanently. Some method of harmonizing the different doctrines must be worked out. The simplified forms of pleading which have almost everywhere superseded the earlier forms which were based on sharp distinctions between the various actions known to the common law, make it even more essential to establish harmony than it was when forms of action were clearly distinguished. Then it was possible as a practical matter to lay down a rule as to one action not wholly consistent with the rule established in regard to another. Then, in the language of an acute writer, "Each category was self-sustaining, its existence was its justification." 94 But when the question presented by pleadings is reduced simply to an inquiry whether on a given state of facts a plaintiff is entitled to any relief, it is no longer possible to keep contradictory rules apart.

The law governing misrepresentation furnishes a striking instance of the truth of what has been said. Misrepresentation will call up to a lawyer's mind, primarily, the action on the case for deceit, and the requirements of a proper declaration in that action. But misrepresentation is legally important in other aspects, and some of them may profitably be compared with the rules established or in dispute in the action for deceit; and their connection is so close with the subject of contracts that many rights classed as contractual cannot otherwise be understood thoroughly.

§ 1502. Early history of deceit.

The word "deceit" in the old writ of deceit, and in the action on the case for damages for deceit, based on the earlier writ, seems to have carried to the minds of early lawyers no more definite meaning than the word "fraud" carries to the minds of modern lawyers. The typical cases relate to simulation of the

94 Francis H. Bohlen, 59 Am. L. Reg. 298, 315.

defrauded plaintiff by bringing an action or suffering a recovery, or entering into a bond or recognizance in his name.95

An examination of the numerous cases cited in the earlier abridgments under the heading of "Deceit" will convince any one how little the subject, as understood by the early lawyers, had to do with the action for deceit as now understood.

Some cases, however, were included under this heading which ultimately formed the basis of the modern law. These were cases of deceit in the sale of goods by means of a false warranty; and there are also some expressions in the later year books in regard to deceit by false promises, from which the law of special assumpsit was afterwards developed.96

But there was no recognition until the case of Pasley v. Freeman 97 of any general doctrine that statements false and known to be such by the speaker made to induce action by another were ground of liability. The contrary, indeed, is directly stated in the well-known case of Chandelor v. Lopus,98 a century and a half earlier. And where, as in a leading case like Pasley v. Freeman, a learned judge dissents, it not infrequently happens, as in that case, that the dissenter expresses the early law, and objects to make any advance from it.

Since the decision of Pasley v. Freeman it has not been doubted that one who makes a statement of fact which he

95 "Besides the special action on the case, there is also a peculiar remedy, entitled an action of deceit, (F. N. B. 95) to give damages in some particular cases of fraud, and principally where one man does anything in the name of another, by which he is deceived or injured; (Law of nisi prius, 30) as if one brings an action in another's name, and then suffers a nonsuit, whereby the plaintiff becomes liable to costs; or where one obtains or suffers a fraudulent recovery of lands, tenements, or chattels, to the prejudice of him that hath right. As when by collusion the attorney of the tenant makes default in a real action, or where the sheriff returns that the tenant was summoned when he was not so, and in either case he loses the land, the writ of deceit lies

against the demandant, and also the attorney or the sheriff and his officers; to annul the former proceedings, and recover back the land. (Booth, Real Actions, 251; Rast. Entr. 221, 222.)” 3 Bl. Comm. 165.

Ames, History of Assumpsit, 2 Harv. L. Rev. 1, 8 et seq. 97 3 T. R. 51 (1789).

98 Cro. Jac. 4. This case is chiefly familiar in the law of warranty. But the court not only held that the defendant would not be liable for selling the stone in question affirming it to be a bezoar stone, unless he warranted it to be such, but further said: "and although he knew it to be no bezoar stone, it is not material." But see comment upon this sentence in 14 App. Cas. 357.

knows to be false for the purpose, or apparent purpose, of inducing another to act, is liable for the damage caused by the action which be induced.

§ 1503. Warranty of title.

The early authorities on the law of warranty which furnished the foundation for the decision of Pasley v. Freeman have also been the basis for the subsequent development of the law of warranty, and in this subsequent development the necessity of expressly warranting a statement to be true in order to make out an actionable case has been gradually done away with. This process was first completed in regard to warranty of title. In Dale's Case,"9 decided in 1585, the plaintiff sued on the ground that the defendant had sold as his own certain goods to the plaintiff which in fact belonged to another. Two judges held that the action did not lie because scienter was not alleged, but added, "if he had affirmed that they were his own goods then the action would lie." It may be inferred, therefore, that these judges were of opinion that either scienter without affirmation by the defendant, or affirmation without scienter, was enough. The third judge (Anderson), however, thought the action should lie. "For it shall be intended that he that sold had knowledge whether they were his own goods or not."

Anderson, J., was apparently prepared to adopt the modern doctrine of implied warranty of title, reasoning that the mere sale of the goods necessarily inolved an affirmation. In another decision in the following reign 1 it was held that a seller out of possession who made no affirmation of title was not liable to one who bought from him though it turned out the seller had no title. Another case in the same reign 2 still leaves it uncertain whether the court regarded scienter as necessary. Apparently scienter was not alleged, but on motion to arrest judgment for the plaintiff the court seems to have assumed the fact saying, "the sale of goods which were not his own, but affirming them to be his goods, knowing them to be a stranger's, is the offense and cause of action," and the motion was denied. In 1689, however, Lord Holt decided that one who sold oxen in his pos"Cro. Eliz. 44. ? Furnis v. Leicester, Cro. Jac.