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titled to rely upon the statement, at least for a reasonable time.93 And there seems force in the statement in a New York decision, that if the statement originally was made falsely and fraudulently, the fraudulent person "cannot be heard to say that its mischievous force was operative longer than was expected."

§ 1520. Representations of solvency.

A common form of fraud upon the seller is a misrepresentation of the buyer's solvency or ability to pay for the goods, by which the seller is induced to give credit to the buyer. Such representations if going beyond an expression of opinion are obviously fraudulent. There can be no doubt that any mis

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Chickering & Co. the subscribers to Dun & Co.'s reports would naturally and would have a right to suppose he was doing business not only for himself but for Mr. Monnette and Mr. Hull, and that credit extended to the firm would be in the belief that it was extended to a responsible firm. To do business under such circumstances in the name of a responsible firm, for his own use, when he was hopelessly insolvent, was a fraud upon those with whom he did business, and to allow such a transaction to stand would not be very creditable to the courts. . . . This was not a case of simply remaining silent when one was under no obligation to speak. The defendant knew, as already stated, that the firm of Frank Chickering & Co., listed at Grand Rapids, was represented by a great mercantile agency as responsible and entitled to credit, and that this representation would naturally be relied upon when an order was sent in the name of that firm. Under such circumstances, it was his duty to speak when he came to deal with a person who was a stranger to him and who, by the usual and known methods among business men, would be likely to consult the representation as contained

in the mercantile reports." It may be added that the use of the name Frank Chickering & Co. was a misrepresentation. It is submitted that it will always be a misrepresentation for a buyer to use language in a sense, which though literally accurate, he knows will be misinterpreted by the seller.

93 Statements made a year before the sale were held not necessarily too remote in Lowdon v. Fisk (Tex. Civ. App.), 27 S. W. 180. So in Cox Shoe Co. v. Adams, 105 Iowa, 402, 415, 75 N. W. 316, where reports were made "nearly a year" before the purchase. The question was held to be one of fact to the jury whether a statement made two months before should have been acted upon by the seller without inquiry. Richardson Dry Goods Co. v. Goodkind, 22 Mont. 462, 56 Pac. 1079. See also Treadwell v. State, 99 Ga. 779, 27 S. E. 785. In Sharpless v. Gummey, 166 Pa. St. 199, 30 Atl. 1127, two and a half years was held too great a lapse of time for the seller to be justified in relying on a statement.

94 Bradley v. Seaboard Nat. Bank, 167 N. Y. 427, 60 N. E. 771. See also Brown v. Lobdell, 51 Ill. App. 574.

95 In re Marengo Mercantile Co.,

statement of fact of this kind made with knowledge of its falsity and operating as an inducement to the sale is ground either for avoiding the sale or for an action of deceit. Statements are sometimes made, however, which are merely matters of opinion, not statements of fact, and, therefore, not within the rule just stated.96 This is especially likely to be true of misrepresentations made, not by the buyer himself, but by third persons,

§ 1521. Intention not to pay for the goods.

The law is well settled that where the buyer at the time of the purchase is insolvent and intends not to pay for the goods, it is a fraud which will render the purchaser's title voidable.97

199 Fed. 474; Fay v. Hill, 249 Fed. 415, 161 C. C. A. 389; McKenzie v. Weineman, 116 Ala. 194, 22 So. 508; Bugg v. Wertheimer-Schwartz Shoe Co., 64 Ark. 12, 40 S. W. 134; Bell v. Kaufman, 9 Colo. App. 259, 47 Pac. 1035; Judd v. Weber, 55 Conn. 267, 11 Atl. 40; Dinkler v. Potts, 90 Ga. 103, 15 S. E. 690; Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316; Clark v. Munroe Co., 127 Mich. 300, 86 N. W. 816; McKinney v. Bank, 36 Neb. 629, 54 N. W. 963; Boyd v. Shiffer, 156 Pa. St. 100, 27 Atl. 60; Cincinnati Cooperage Co. v. Gaul, 170 Pa. St. 545, 32 Atl. 1093; Fitchard v. Doheny, 93 App. Div. 9, 86 N. Y. S. 964; Richardson v. Vick, 125 Tenn. 532, 145 S. W. 174; Wertheimer-Swartz Shoe Co. v. Faris (Tenn. Ch. App.), 46 S. W. 336. Nor is it the less fraudulent because the buyer intended to pay. Atlas Shoe Co. v. Bechard, 102 Me. 197, 66 Atl. 390, 10 L. R. A. (N. S.) 679.

*See supra, § 1491.

* Ferguson v. Carrington, 9 B. & C. 59; Load v. Green, 15 M. & W. 216; Clough v. London, etc., Ry. Co., L. R. 7 Ex. 26; Ex parte Whittaker, 10 Ch. 446, 449; Donaldson v. Farwell, 93 U. S. 631, 23 L. Ed. 993; Parker . Byrnes, 1 Low. 539; In re Spann, 183 Fed. 819; In re Marks, 218 Fed.

453, 134 C. C. A. 253; In re HunterRand Co., 241 Fed. 175; In re Collins, 242 Fed. 975; Jones v. H. M. Hobbie Grocery Co., 246 Fed. 431, 158 C. C. A. 495; Loeb v. Flash, 65 Ala. 526; Spira v. Hornthall, 77 Ala. 137; Robinson v. Levi, 81 Ala. 134, 1 So. 554; Taylor v. Mississippi Mills, 47 Ark. 247, 1 S. W. 283; Bugg v. WertheimerSchwartz Shoe Co., 64 Ark. 12, 40 S. W. 134; Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121; Morrison v. Shuster, 1 Mackey (D. C.), 190; Johnson v. O'Donnell, 75 Ga. 453; Seisel v. Wells, 99 Ga. 159, 25 S. E. 266; Farwell v. Hanchett, 120 Ill. 573, 11 N. E. 875; Wabash, St. L. & P. R. Co. v. Shryock, 9 Ill. App. 323; Brower v. Goodyer, 88 Ind. 572; Waterbury v. Miller, 13 Ind. App. 197, 41 N. E. 383; Oswego Starch Factory v. Lendrum, 57 Iowa, 573, 10 N. W. 900, 42 Am. Rep. 53; Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316; J. J. Smith Lumber Co. v. Scott County Garbage &c. Co., 149 Ia. 272, 128 N. W. 389, 30 L. R. A. (N. S.) 1184; Reager v. Kendall, 19 Ky. L. Rep. 27, 39 S. W. 257; Kirkpatrick's Exec. v. E. Rehkoph Saddlery Co., 144 Ky. 129, 137 S. W. 862; Burrill v. Stevens, 73 Me. 395, 40 Am. Rep. 366; Atlas Shoe Co. v. Bechard, 102 Me. 197, 66 Atl. 390, 10 L. R. A. (N.

with ... sound policy or the principles of business honesty").

In Pennsylvania, however, it is essential that some positive representation be made or some trick, artifice, or conduct which involves a false representation be added. Secret intention not to pay is there insufficient.98 It may be urged that a mere in, tention does not amount to a representation of an existing fact by the buyer and that if a court gives relief to the buyer the only ground can be that circumstances exist though the seller has no knowledge of them which render the transaction unfair. The answer to this, however, is that the purchase of goods implies a promise to pay for them even if there is no express promise; and a promise to pay, whether express or implied, involves a representation that the buyer intends to keep his promise. Accordingly, not only is the bargain voidable, but it has been held the seller may maintain an action of deceit.99 This, S.) 245; Powell v. Bradlee, 9 G. & J. 220; Dow v. Sanborn, 3 Allen, 181; Watson v. Silsby, 166 Mass. 57, 43 N. E. 1117; Ayers v. Farwell, 196 Mass. 349, 82 N. E. 35; Phinney v. Friedman, 224 Mass. 531, 113 N. E. 285; Shipman v. Seymour, 40 Mich. 274; Ross v. Miner, 67 Mich. 410, 35 N. W. 60; Frisbee v. Chickering, 115 Mich. 185, 73 N. W. 112; Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; Fox v. Webster, 46 Mo. 181; Stewart v. Emerson, 52 N. H. 301; Hall v. Naylor, 18 N. Y. 588, 75 Am. Dec. 269; Hennequin v. Naylor, 24 N. Y. 139; Whitten v. Fitzwater, 129 N. Y. 626, 29 N. E. 298; Ash v. Putnam, 1 Hill, 302; Cary v. Hotailing, 1 Hill, 311, 37 Am. Dec. 233; Durrell v. Haley, 1 Paige, 492, 19 Am. Dec. 444; Des Farges v. Pugh, 93 N. C. 31, 53 Am. Rep. 446; Richardson v. Vick, 125 Tenn. 532, 145 S. W. 174; Davis v. McWhirter, 40 U. C. Q. B. 598.

98 Smith v. Smith, 21 Pa. St. 367, 60 Am. Dec. 51; Rodman v. Thalheimer, 75 Pa. St. 232; Bughman v. Bank, 159 Pa. St. 94, 28 Atl. 209 (in this case Mitchell, C. J., though regarding the Pennsylvania rule as established, and, therefore, following it, said that it ". 'was not in harmony

"Edgington v. Fitzmaurice, 29 Ch. D. 459; Swift v. Rounds, 19 R. I. 527, 35 Atl. 45, 33 L. R. A. 561, 61 Am. St. Rep. 791. But see Dawe v. Morris, 149 Mass. 188, 192, 21 N. E. 313, 4 L. R. A. 158, 14 Am. St. Rep. 404, where Devens, J., said: "The plaintiff further contends that, as where goods have been obtained under the form of a purchase, with the intent not to pay for them, the seller may, on discovery of this, rescind the contract and repossess himself of the goods as against the purchaser, or any one obtaining the goods from him with notice or without consideration, an action of tort should be maintained on an unfulfilled promise which at the time of making the promisor intended not to perform, by reason of which nonperformance the plaintiff has suffered injury in having been induced to enter into a contract which depended for its successful and profitable performance upon the performance by the defendant of his promise. Assuming that the plaintiff's declaration enables him to raise this question, which may be doubted . . . there is an obvious

however, is not universally admitted. If the reasoning is sound it would follow that it is immaterial whether the buyer is insolvent or not; the intention not to pay would be the only material circumstance. This result seems correct and would doubtless generally be reached, but not perhaps everywhere.2 It would also logically follow that in any case where a promise was made with a preconceived intention not to perform it, the promisor would be guilty of a fraudulent misrepresentation of fact. Many courts certainly would not be prepared to go to this length. If it cannot be said that making a promise with intent not to perform it involves a misrepresentation of fact, the seller's right to rescind must be based on the ground that the circumstances of the case of which the seller was ignorant, and which the buyer, knowing their materiality, failed to disclose, render the transaction fraudulent and make it equitable to avoid it. If this be accepted as the true ground, it would seem to follow that hopeless insolvency on the part of the buyer, not disclosed to the seller, ought of itself to afford ground for rescinding a sale; and though it is generally held that mere nondisclosure of insolvency will not suffice to avoid a sale, where

difference between the case where a contract is rescinded, and thus ceases to exist, and one in which the injury results from the nonperformance of that which it is the duty of the defendant to perform, and where there is no other wrong than such nonperformance. To term this a 'tort' would be to confound a cause of action in contract with one in tort, and would violate the policy of the Statute of Frauds by relieving a party from the necessity of observing those statutory formalities which are necessary to the validity of certain executory contracts."

1See Pollock, Torts (2d ed.), p. 252, and note (m). Also extract from Dawe v. Morris in the preceding note, and Kitson v. Farwell, 132 Ill. 327, 23 N. E. 1024; Donovan v. Clifford, 225 Mass. 435, 114 N. E. 681. In Commonwealth v. Althause, 207 Mass. 32, 93 N. E. 202, 31 L. R. A. (N. S.)

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999, it was held that no prosecution for obtaining property by false pretences could be maintained.

2 La Grand v. Eufaula Nat. Bank, 81 Ala. 123, 1 So. 160 (but see Maxwell v. Brown Shoe Co., 114 Ala. 304, 21 So. 1009). Insolvency was not mentioned as requisite in Donovan v. Clifford, 225 Mass. 435, 114 N. E. 681; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 6 L. R. A. (N. S.) 556. In Ditton v. Purcell, 21 N. Dak. 648, 132 N. W. 347, 36 L. R. A. (N. S.) 149, it was held that the giving of a check in payment of the price of personal property with intent, after obtaining possession, to set off note of the seller barred by bankruptcy or obtain a discount from the purchase price in settlement, was a fraud on the seller, for which he might rescind, and recover the property.

See supra, § 1495.

Ex parte Whittaker, L. R. 10 Ch.

the buyer knows that his financial condition is such that it will be impossible for him to pay, the inference is strong that he did not intend to pay.5

§ 1522. Fraud on a buyer.

Fraud upon a buyer will generally consist of some misrepresentation in regard to the character of the property or in regard to the title, quantity, or value. Misrepresentations as to quantity and value have already been sufficiently discussed." Representations in regard to the character of the goods have also been considered both in connection with the law of warranty and in connection with fraudulent representations by the seller. A representation in regard to goods will frequently

7

App. 446; Carnahan v. Bailey, 28 Fed. 519; Gavin v. Armistead, 57 Ark. 574, 22 S. W. 431; Bell v. Ellis, 33 Cal. 620; Burchinell v. Hirsh, 5 Colo. App. 500, 39 Pac. 352; Mears v. Waples, 3 Houst. 581; Fulton v. Gibian, 98 Ga. 224, 25 S. E. 431; Kitson v. Farwell, 132 Ill. 327, 23 N. E. 1024; Reticker v. Katzenstein, 26 Ill. App. 33; Hacker v. Munroe, 56 Ill. App. 532; Thompson v. Peck, 115 Ind. 512, 18 N. E. 16, 1 L. R. A. 201; West v. Graff, 23 Ind. App. 410, 55 N. E. 506; Houghtaling v. Hills, 59 Iowa, 287, 13 N. W. 305; Reid v. Cowduroy, 79 Iowa, 169, 44 N. W. 351; Franklin Sugar Ref. Co. v. Collier, 89 Iowa, 69, 56 N. W. 279; Blaul v. Wandel, 137 Ia. 301, 114 N. W. 899; J. J. Smith Lumber Co. v. Scott County Garbage &c. Co., 149 Ia. 272, 128 N. W. 389, 30 L. R. A. (N. S.) 1184; Kelsey v. Harrison, 29 Kans. 143; Cross v. Peters, 1 Greenl. 376, 10 Am. Dec. 78; Edelhoff v. Horner-Miller Mfg. Co., 86 Md. 595, 613, 39 Atl. 314; Watson v. Silsby, 166 Mass. 57, 43 N. E. 1117; Phinney v. Friedman, 224 Mass. 531, 113 N. E. 285; Zucker v. Karpeles, 88 Mich. 413, 50 N. W. 373; Reeder Bros. Shoe Co. v. Prylinski, 102 Mich. 468, 60 N. W. 969; Illinois Leather Co. v. Flynn, 108 Mich. 91, 65 N. W. 519;

Sprague, Warner & Co. v. Kempe, 74 Minn. 465, 77 N. W. 412; Manheimer v. Harrington, 20 Mo. App. 297; Stein v. Hill, 100 Mo. App. 38, 71 S. W. 1107; Nichols v. Pinner, 18 N. Y. 295; Nichols v. Michael, 23 N. Y. 264, 80 Am. Dec. 259; Wright v. Brown, 67 N. Y. 1; Hotchkin v. Third Nat. Bank, 127 N. Y. 329, 27 N. E. 1050; Wheeler & Wilson Mfg. Co. v. Keeler, 65 Hun, 508; Des Farges v. Pugh, 93 N. C. 31, 53 Am. Rep. 446; Rodman v. Thalheimer, 75 Pa. St. 232; Dalton v. Thurston, 15 R. I. 418, 7 Atl. 112, 2 Am. St. Rep. 905; Hallacher v. Henlein (Tenn. Ch. App.), 39 S. W. 869; Redington v. Roberts, 25 Vt. 686; Garbutt v. Bank, 22 Wis. 384; Consolidated Milling Co. v. Fogo, 104 Wis. 92, 80 N. W. 103; Hart v. Moulton, 104 Wis. 349, 80 N W. 599.

'In Gillespie v. Piles, 178 Fed. 886, 102 C. C. A. 120, 44 L. R. A. (N. S.) 1, it was said that his intention would be "conclusively presumed." See also In re Hunter Rand Co., 241 Fed. 175, 183; Maxwell v. Brown Shoe Co., 114 Ala. 304, 21 So. 1009; Johnson v. Monell, * 41 N. Y. (2 Keyes) 655. Supra, § 1492.

7 Supra, §§ 968 et seq.

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