MISREPRESENTATIONS. CORNFOOT v. FOWKE. IN 1789, the Court of King's Bench decided that an action on the case in the nature of deceit would lie against a person who had made a false representation with intent to defraud the plaintiff, and whereby he had suffered damage. Pasley v. Freeman.1 In 1801, the same court decided that an action would not lie upon similar false representations, if they were made bona fide, with a belief in their truth. Haycraft v. Creasy.2 Mr. Justice Grose dissented in the first case, and Lord Kenyon in the last; but the cases, except for a short period in the same court which decided them, when Haycraft v. Creasy was not followed, have been received as the settled law, with singular unanimity on both sides of the Atlantic, and are now almost universally recognized as the leading authorities on the subject. Foster v. Charles, Polhill v. Walter, Wilde v. Gibson,5 Russell v. Clark, Lord v. Goddard, Young v. Covell,8 Tryon v. Whitmarsh.9 These authorities established the principle, that while a fraudulent intent was essential to the action, yet the fact that the party making the representation knew it was untrue, was proof of fraud. "A recommendation known at the time to be untrue," says Chief Justice Marshall, in Russell v. Clark, "would be deemed fraudulent;" but "where the communication is honestly made, and the party making it has no interest in the transaction, he has never been declared to be responsible for its actual verity." Such was the state of the law when the famous case of Cornfoot v. Fowke,10 arose in the Court of Exchequer. No modern case has been so severely criticised. Lord Chief Baron Abinger dissented at the time; Lord Denman and the Queen's Bench denied the cor 13 T. R. 51; s.c. 1 Smith's L. C. (6th Amer. ed.) 157. 7 13 How. 198. 10 6 M. & W. 358. 8 8 Johns. 23. 43 B. & Ad. 122. rectness of the decision almost immediately after; and the case has been questioned by such high authorities in the law as John William Smith,1 Chancellor Kent,2 Lord Campbell, and Lord St. Leonards.1 The case was decided in 1840. It was an action of assumpsit upon a written agreement to take a ready-furnished house. Plea, that the plaintiff caused and procured the defendant to enter into the agreement by means of fraud, covin, and misrepresentation of the plaintiff and others in collusion with him. At the trial before Lord Abinger, it appeared that the defendant applied to Clarke, a house agent, for a house, and this one was shown to him. The defendant asked Clarke if there was "any thing objectionable about the house;" to which Clarke answered, "Nothing whatever," and the agreement in suit was signed. It afterwards turned out that the adjoining house was a brothel of the worst description, in consequence of which people were leaving the neighborhood, and for this reason the defendant refused to fulfil the agreement. It further appeared that at the time of the agreement, the plaintiff knew of the fact of the brothel, but his agent did not. The learned Chief Baron left it to the jury to say whether the nuisance formed a solid objection to the house; and instructed them that if so, and if, when the defendant used the expression" about the house," Clarke could not have understood. him in any other sense than "to the house," they must find a verdict for the defendant. He further instructed them, that although an agent could not bind his principal beyond the scope of his authority, it did not follow that the principal could enforce a contract procured by the false representations of his agent, and that the representations of the agent must have the same effect as if made by the plaintiff himself. The jury answered both questions in favor of the defendant, and found a verdict for him accordingly. This verdict was set aside after elaborate argument in bank, by the judgments of Barons Parke (Lord Wensleydale), Alderson, and Rolfe (Lord Cranworth), against the dissenting judgment of the Lord Chief Baron. Rolfe, B., put his decision on the power of the agent "to affect 1 Smith's Merc. Law (5th ed.), 166, 167. 38 El. & Bl. 270, 271. 2 2 Kent, Com. (6th ed.) 621, note. 42 Macq. 145, 146. his principal by a representation collateral to the contract. To do this," said he, "it is essential" "to bring home fraud to the principal.""All the facts are consistent with the hypothesis that the plaintiff innocently gave no directions whatever on the subject, supposing that the intended tenant would make the necessary inquiries for himself." He cited Sir Vicary Gibbs's judgment in Pickering v. Dowson.1 Alderson, B., said, "The parties have entered into an agreement which is in writing, and to the terms of which nothing can be added, and from which nothing can be subtracted;" and fraud must be proved to avoid the contract. "Here the representation, though false, was believed by the agent to be true. He therefore, if the case stopped here, has been guilty of no fraud;" and upon the question of whether the knowledge of the principal made the representation fraudulent, he said, "I think it impossible to sustain a charge of fraud when neither principal nor agent has committed any: the principal, because though he knew the fact was not cognizant of the misrepresentation being made, nor even directed the agent to make it; and the agent, because though he made a misrepresentation, yet he did not know it to be one at the time he made it, but gave his answer bona fide." Parke, B., said, "It is not enough to support the plea that the representation is untrue; it must be proved to have been fraudu lently made. As this representation is not embodied in the contract itself, the contract cannot be affected unless it be a fraudulent representation, and that is the principle on which the plea is founded."" Each person is innocent because the plaintiff makes no false representation, and the agent, though he makes one, does not know it to be false; and it seems to me to be an untenable proposition, that if each be innocent the act of either or both can be a fraud. No case could be found in which such a principle was laid down as was admitted in the course of the argument." If the plaintiff intentionally employed an ignorant agent, it would be fraud. In the view which this learned judge took, he did not consider it necessary to enter into the question of the powers of the agent. Lord Abinger, C.B., cited cases to show that concealment of the truth and assertion of a fact about which the party knew nothing, 1 4 Taunt. 779, 786. was fraud.1 He likewise quoted from his favorite Cicero De Officiis, to show that it was the duty of the principal to disclose the existence of the nuisance to his agent; and strongly contended that the fraud which would avoid a contract was legal fraud and not moral fraud. "It is not," said he, "correct to suppose that the legal definition of fraud and covin necessarily includes any degree of moral turpitude."-"The warranty of a fact which does not exist, or the representation of a material fact contrary to the truth, are both said in the language of the law to be fraudulent, although the party making them suppose them to be correct." There was not an entire absence of moral turpitude in the agent, even upon the presumption that he was wholly ignorant of the matter. "Nothing can be more plain than that the principal, though not bound by the representation of his agent, cannot take advantage of a contract made under the false representation of an agent, whether that agent was authorized by him or not to make such representation." It does not follow because the plaintiff was not bound by the representation of the agent, even if made without authority, that "he is therefore entitled to bind another man to a contract obtained by the false representation of that agent. It is one thing to say that he may avoid a contract, if his agent, without his authority has inserted a warranty in the contract; and another to say that he may enforce a contract obtained by means of a false representation made by his agent because the agent had no authority." In respect to Lord Abinger's judgment, we think we are justified in saying that it is hardly worthy of that very eminent person. His lordship's comments upon the obligation which the plaintiff was under to disclose the existence of the nuisance, and upon what degree of deception would constitute fraud, were entirely irrelevant. They were very proper elements to be considered by the jury in deciding whether there had not been a fraudulent concealment of the truth; but, under the instructions at Nisi Prius, the question of fraud or bad faith was not submitted to the jury, and, as the case presented itself to the court, it was not open for decision. Positive, too, as the learned judge was in respect to what constitutes legal fraud, he cited no authorities which at all sustain his position. One other remark should be made about this case, and that is 1 1 W. Bl. 463; Cowp. 785. that there is a very general impression that it was decided on a question of pleading. This is favored by the form of the marginal note, and, probably, misled by this, Lord Cranworth, in National Exchange Company v. Drew, stated the fact to be so. Mr. Justice Willes, too, in Barwick v. English Joint Stock Bank,2 said, "I should be sorry to have it supposed that Cornfoot v. Fowke turned upon any thing but a point of pleading." Now none of the learned judges, except Baron Parke, made the slightest allusion to the pleadings, and his remark concerning the plea cannot bear the construction which the learned reporters and others seem to have put upon it. In cases of insurance, where a misrepresentation, although made in entire good faith, will avoid the policy, it is perfectly well settled that a plea alleging false and fraudulent representations is supported by evidence showing false representations, not fraudulent. Anderson v. Thornton, Lewis v. Eagle Insurance Company. Baron Parke, in delivering the judgment of the court in the first-named case, said, "It is well established, that if, after striking out allegations in a plea, that which is the material part be left, the plea is good, and the defendant sustains it by proving that part." When this learned judge therefore said in Cornfoot v. Fowke, that the evidence did not support the plea, he was criticising the evidence and not the pleadings. In Fuller v. Wilson, which arose in the Court of Queen's Bench, in 1842, the Court denied the correctness of the decision of Cornfoot v. Fowke. The case was an action in the nature of deceit for a false representation, and the question was whether it was necessary to prove moral fraud. The judges held not, and Lord Denman, who delivered their unanimous judgment, after intimating an opinion that upon the facts in Cornfoot v. Fowke, moral fraud might have been inferred, said that "whether there was moral fraud or not, if the purchaser was actually deceived in his bargain, the law will relieve him from it. We think the prin cipal and his agent are for this purpose completely identified, and that the question is not what was passing in the mind of either, but whether the purchaser was in fact deceived by them or either of them." 6 1 2 Macq. 103. 4 10 Gray, 513, 514. 2 Law Rep. 2 Ex. 262. 38 Exch. 427, 428. 6 This judgment was reversed in the Exchequer Chamber upon another point. Wilson v. Fuller, 3 Q. B. 1009. |