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v. Peek was an action for deceit and in the case at bar the action was contractual. But Lord Halsbury hardly asserted that the contract in such a case is other than a fiction of law imposed upon the agent because of his misrepresentation. 22

Here again is a case where honest misrepresentation will render a person liable. In one respect, moreover, the doctrine in regard to an agent's warranty has been advanced by the late decision of the House of Lords beyond the analogy of warranty in the law of sales, and beyond the previous authority of Collen v. Wright.23 The defendant in Starkey v. Bank of England 24 did not purport to enter into a contract on behalf of his principal with the injured plaintiff. The defendant was a stockbroker, and, as such, presented to the Bank of England, in good faith, at the request of a customer, a power of attorney purporting to be signed by the owner of certain consols, and thereby induced the bank to transfer the consols to a third person. In fact, one of the signatures on the power of attorney was forged.

§ 1508. Estoppel in pais.

Another doctrine which must be considered in this connection is that of estoppel in pais. This doctrine, as now understood, precludes one who has made positive statements of fact to another, in reliance upon which the latter has acted, from denying their truth in any controversy between these two parties. That the misstatement shall have been either wilful or negligent is immaterial.25 The effect of Derry v. Peek 26 on the doctrine

22 "That which does enforce the liability is this-that under the circumstances of this document being presented to the bank for the purpose of being acted upon, and being acted upon on the representation that the agent had the authority of the principal, which he had not, that does import an obligation-the contract being for good consideration-an undertaking on the part of the agent that the thing which he represented to be genuine was genuine. That contains every element of warranty." [1903] A. C. 114, 118. This decision is interesting to compare with Heilbut v. Buckleton, [1913] A. C. 30, where the court held that a repre

sentation by a seller in regard to the
character of personal property sold did
not make him liable as a warrantor,
since he did not in terms promise.
In other words, the doctrine that the
representation express or implied of an
agent that he has authority to act
amounts to a warranty is accepted
by the House of Lords, but the much
older and more firmly established doc-
trine that a representation by a seller
inducing the sale of goods amounts to a
warranty is now denied.

23 7 E. & B. 301, 8 E. & B. 647.
24 [1903] A. C. 114.
25 See supra, § 692.
26 14 App. Cas. 337.

of estoppel was pressed upon the English Court of Appeal soon after the decision of that case, but it was emphatically stated that the decision had no effect upon the doctrine of estoppel as previously understood. 27 Lindley, J., explained the matter thus: "Estoppel is not a cause of action-it is a rule of evidence which precludes a person from denying the truth of some statement previously made by him." 28 And in the same case Bowen, L. J., repeats this formula in substance: "Estoppel is only a rule of evidence; you cannot found an action upon estoppel." 29

It is amusing to reflect on the ease with which Lord Bowen would have disposed of such a fiction if the harmonizing of decisions had required instead of forbidding him to do so. Estoppel is a rule of evidence in the same way that conclusive presumptions are rules of evidence. An estoppel, like a conclusive presumption, is a rule of substantive law masquerading as a rule of evidence. To speak of conclusive evidence of something admittedly false may be a useful formula, but it disguises the truth. An estoppel is in effect a conclusive admission of the truth of a non-existent fact. This supposed fact may be essential either for a cause of action, for a defense, or for a replication. As the fact is non-existent it is obvious that the admisssion and nothing else supplies the requirement which otherwise would be lacking. If the admitted non-existent fact alone creates a cause of action, defense, or replication, the admission or estoppel is the sole foundation, if other facts are needed in conjunction a partial foundation, of the cause of action, defense, or replication.

An estoppel then may be, and frequently is, either the sole or the main foundation of a cause of action. When a warehouseman states to an intending purchaser in answer to an inquiry that the seller has a certain quantity of goods stored in the warehouse, and relying on that statement the purchaser completes the bargain, the warehouseman is estopped to deny the truth of his statement.30 The only essential facts of the purchaser's 29 Low v. Bouverie, [1891] 3 Ch. 82, 105.

27 Tomkinson v. Balkis Consolidated Co., [1891] 2 Q. B. 614; Low v. Bouverie, [1891] 3 Ch. 82.

28 Low v. Bouverie, [1891] 3 Ch. 82,

101.

30 Gillett v. Hill, 2 Cr. & M. 530. See also Knights v. Wiffen, L. R. 5 Q. B. 660, and cases cited in Williston, Sales, § 418, note 46.

case when he sues the warehouseman are the misrepresentation, his own reliance upon it, and perhaps a demand and refusal; and the allegation of these facts constitutes a perfect cause of action, wherever reformed pleading has reached such a state that nothing further is required of the plaintiff than to state the material facts upon which his claim is founded. Nor is it material that the warehouseman was neither fraudulent nor negligent.31 His statement relates to a matter about which he must have accurate knowledge at his peril, or refrain from talking about it. So where a bailee issues a receipt for goods never received, and a purchaser relies upon the statement in the receipt that goods have been received. 32 Or where a bailee fails to take up a receipt or bill of lading which mercantile usage requires him to take up when the goods behind the document are delivered, and in consequence a purchaser of the outstanding document is deceived by the representation which it contains that the bailee still holds the goods described, and is induced to buy the document or to advance money on the faith of it.33 Or where a corporation issues a certificate of stock to one who is not a shareholder, and a subsequent purchaser, relying upon the misrepresentation of the certificate, buys it.34 Or where a trustee, applied to for information as to the property of his cestui que trust by one proposing to lend money to the latter, gives misinformation, reliance upon which causes damage to the lender.35 In all these cases, and their number might easily be increased, a cause of action exists because of damaging misrepresentation, certainly without regard to any fraudulent intent, and probably without regard to any other negligence than

It may seem difficult to suppose that such a situation can arise without negligence, but the English decisions seem to show the possibility, holding, as they do, that the warehouseman is estopped by such a representation when the only lack of accuracy in it is the omission to state that the seller has mingled in a mass a quantity of goods larger than that which the buyer proposes to purchase.

"Williston, Sales, § 419.

" Id.

34 Tomkinson v. Balkis Consolidated Co., [1891] 2 Q. B. 614; In re Ottos Kopje Diamond Mines, [1893] 1 Ch. 618.

35 Burrowes v. Lock, 10 Ves. 470; Brownlie v. Campbell, 5 App. Cas. 925, 953. In Low v. Bouverie, [1891] 3 Ch. 82, the Court of Appeal did not dispute the correctness of this doctrine, but construed the representation made by the trustee as amounting to no more than a statement of the trustee's belief, not a positive assertion of fact.

necessarily exists when a person whose position qualifies him to have accurate knowledge about a matter makes a misstatement in regard to it.

It is difficult to see how the law of estoppel and the doctrine of Derry v. Peek 36 can be kept permanently in separate compartments when law and equity are fused and pleading reduced to a mere statement of the facts of the case. An inquiry which may be made in this connection is what would have been the result of an action against the defendants in Derry v. Peek for failing to utilize as directors, on behalf of the corporation whose shares the plaintiff had bought, the right to use steam as a motive power for its cars. It may be assumed that the value of the property would have been enhanced by the use of such motive power and that the directors, therefore, would have been liable if they had failed to make use of it, had they been legally authorized to do so. Could the defendants, who as directors issued a prospectus stating that they had such power, be heard to deny, subsequently, that their statement was correct? Would they not be estopped? If so, then allegations by the plaintiff of the defendants' statement, whether accurate or not, and whether made in good faith or not, and of his own reliance upon it, would be sufficient basis for a judgment in his favor.

§ 1509. Actions for damages for misrepresentation.

Even in actions in form claiming damages for deceit there is much authority to support the proposition that a defendant may be liable for honestly misrepresenting facts in regard to which he might reasonably be supposed to be peculiarly well informed. In Cooley on Torts it is laid down that a person is liable for deceit when he "supposed his representations to be true, but had no reason for any such belief, and nevertheless made them positively as of known facts, and induced the other to act upon them." 37 This statement is supported by many

authorities.

In 1827 Chief Justice Best, in referring to the basis of liability on a warranty by false affirmation, said: "He who affirms either what he does not know to be true, or knows to be false, to another's 36 14 App. Cas. 337. 37 Vol. 2 (3d ed.), 956.

prejudice and his own gain, is both in morality and law guilty of falsehood, and must answer in damages." 38

Doubtless it is clear enough to-day that the law of England sanctions no such broad rule, but it is equally clear that Amercan courts which should refuse to follow the decision of the House of Lords in Derry v. Peek 39 would have good old English authority behind them. It is impossible here to examine the decisions in detail. They cannot be wholly harmonized. The weight of authority would deny recovery unless the defendant's statement was made either with knowledge that it was false or at least without reasonable grounds for believing it to be true; but in judicial statements there is often a blurring of the distinction between reckless or careless honesty and conscious dishonesty. 39 Many decisions, however, clearly hold a defendant liable irrespective of good or bad faith, for making a positive false statement as to a matter of which he had, or asserted that he had, special means of knowledge. 40

* Adamson v. Jarvis, 4 Bing. 66. In this case the defendant, who had delivered goods to the plaintiff for the latter to sell as auctioneer, was held liable for his, the defendant's, statement that he was entitled to dispose of them.

In the second edition of Saunders on Pleading and Evidence, at page 60 it is said that "in an action for falsely representing a third person fit to be trusted, a scienter must be alleged and proved; though indeed the word 'fraudulently' might be a sufficient allegation in this respect, especially after verdict, Willes, 584. But in an action on the case for fraud, or on misrepresentation of any kind, an express warranty or scienter need not be alleged, nor proved if alleged."

14 App. Cas. 337.

*In the following cases some scienter was held necessary: Kimber v. Young, 137 Fed. 744, 70 C. C. A. 178; Boddy . Henry, 113 Iowa, 462, 85 N. W. 771, 53 L. R. A. 769; Taylor v. Mullins, 151 Ky. 597, 152 S. W. 774; Boulden v. Stilwell, 100 Md. 543, 60

Atl. 609, 1 L. R. A. (N. S.) 258; Reynolds v. Evans, 123 Md. 365, 91 Atl. 564; Nash v. Minnesota Title Ins. Co., 163 Mass. 574, 40 N. E. 1039, 28 L. R. A. 753, 47 Am. St. Rep. 489; Wann v. Northwestern Trust Co., 120 Minn. 493, 139 N. W. 1061; Ray County Sav. Bank v. Hutton, 224 Mo. 43, 123 S. W. 47; Page v. Parker, 40 N. H. 47. But see s. c., 43 N. H. 363, 80 Am. Dec. 172; Cowley v. Smyth, 46 N. J. L. 380, 50 Am. Rep. 432; Bingham v. Fish, 86 N. J. L. 316, 90 Atl. 1106; Chester v. Comstock, 40 N. Y. 575; Kountze v. Kennedy, 147 N. Y. 124, 41 N. E. 414, 29 L. R. A. 360, 49 Am. St. Rep. 651; Citizens' State Bank v. Cressler (Okl.), 170 Pac. 230; Bailey v. Frazier, 62 Oreg. 142, 124 Pac. 643; Erie Iron Works v. Barber, 106 Pa. St. 125, 51 Am. Rep. 508; Lamberton v. Dunham, 165 Pa. St. 129, 30 Atl. 716.

40 Lehigh Zinc & Iron Co. v. Bamford, 150 U. S. 665, 673, 37 L. Ed. 1215; Hindman v. First Nat. Bank, 112 Fed. 931, 50 C. C. A. 623; Munroe v. Pritchett, 16 Ala. 785, 50 Am. Dec. 203; Jordan v. Pickett, 78 Ala. 331; Prest

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