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CHAPTER VIII.: WRONGS OF FRAUD AND MALICE. - Sir Frederick Pollock, The Law of Torts: A Treatise on the Principles of Obligations arising from Civil Wrongs in the Common Law (4th ed.) 
The Law of Torts: A Treatise on the Principles of Obligations arising from Civil Wrongs in the Common Law: to which is added the Draft of a Code of Civil Wrongs prepared for the Government of India, Fourth Edition (London: Stevens and Sons, 1895).
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WRONGS OF FRAUD AND MALICE.
Nature of the wrong.In the foregoing chapters we dealt with wrongs affecting the so-called primary rights to security for a man’s person, to the enjoyment of the society and obedience of his family, and to his reputation and good name. In these cases, exceptional conditions excepted, the knowledge or state of mind of the person violating the right is not material for determining his legal responsibility. This is so even in the law of defamation, as we have just seen, the artificial use of the word “malice” notwithstanding. We now come to a kind of wrongs in which either a positive wrongful intention, or such ignorance or indifference as amounts to guilty recklessness (in Roman terms either dolus or culpa lata) is a necessary element; so that liability is founded not in an absolute right of the plaintiff, but in the unrighteousness of the defendant.
Concurrent jurisdiction of common law and equity. The wrong called Deceit consists in leading a man into damage by wilfully or recklessly causing him to believe and act on a falsehood. It is a cause of action by the common law (the action being an action on the case founded on the ancient writ of deceit(a) , which had a much narrower scope): and it has likewise been dealt with by courts of equity under the general jurisdiction of the Chancery in matters of fraud. The principles worked out in the two jurisdictions are believed to be identical(b) , though there may be a theoretical difference as to the character of the remedy, which in the Court of Chancery did not purport to be damages but restitution(c) . Since 1875, therefore, we have in this case a real and perfect fusion of rules of common law and equity which formerly were distinct, though parallel and similar.
Difficulties of the subject: complication with contract. The subject has been one of considerable difficulty for several reasons.
First, the law of tort is here much complicated with the law of contract. A false statement may be the inducement to a contract, or may be part of a contract, and in these capacities may give rise to a claim for the rescission of the contract obtained by its means, or for compensation for breach of the contract or of a collateral warranty. A false statement unconnected with any contract may likewise create, by way of estoppel, an obligation analogous to contract. And a statement capable of being regarded in one or more of these ways may at the same time afford a cause of action in tort for deceit. “If, when a man thinks it highly probable that a thing exists, he chooses to say he knows the thing exists, that is really asserting what is false: it is positive fraud. That has been repeatedly laid down. . . . If you choose to say, and say without inquiry, ‘I warrant that,’ that is a contract. If you say, ‘I know it,’ and if you say that in order to save the trouble of inquiry, that is a false representation—you are saying what is false to induce them to act upon it”(d) .
The grounds and results of these forms of liability are largely similar, but cannot be assumed to be identical. The authorities establishing what is a cause of action for deceit are to a large extent convertible with those which define the right to rescind a contract for fraud or misrepresentation, and the two classes of cases used to be cited without any express discrimination. We shall see however that discrimination is needful.
Questions of fraudulent intent. Secondly, there are difficulties as to the amount of actual fraudulent intention that must be proved against a defendant. A man may be, to all practical intents, deceived and led into loss by relying on words or conduct of another which did not proceed from any set purpose to deceive, but perhaps from an unfounded expectation that what he stated or suggested would be justified by the event. In such a case it seems hard that the party misled should not have a remedy, and yet there is something harsh in saying that the other is guilty of fraud or deceit. An over-sanguine and careless man may do as much harm as a deliberately fraudulent one, but the moral blame is not equal. Again, the jurisdiction of courts of equity in these matters has always been said to be founded on fraud. Equity judges, therefore, were unable to frame a terminology which should clearly distinguish fraud from culpable misrepresentation not amounting to fraud, but having similar consequences in law: and on the contrary they were driven, in order to maintain and extend a righteous and beneficial jurisdiction, to such vague and confusing phrases as “constructive fraud,” or “conduct fraudulent in the eyes of this Court.” Thus they obtained in a cumbrous fashion the results of the bolder Roman maxim culpa lata dolo acquiparatur. The results were good, but, being so obtained, entailed the cost of much laxity in terms and some laxity of thought. Of late years there has been a reaction against this habit, wholesome in the main, but not free from some danger of excess. “Legal fraud” is an objectionable term, but it does not follow that it has no real meaning(e) . One might as well say that the “common counts” for money had and received, and the like, which before the Judicature Acts were annexed to most declarations in contract, disclosed no real cause of action, because the “contract implied in law” which they supposed was not founded on any actual request or promise.
Fraud of agents. Thirdly, special difficulties of the same kind have arisen with regard to false statements made by an agent in the course of his business and for his principal’s purposes, but without express authority to make such statements. Under these conditions it has been thought harsh to hold the principal answerable; and there is a further aggravation of difficulty in that class of cases (perhaps the most important) where the principal is a corporation, for a corporation has been supposed not to be capable of a fraudulent intention. We have already touched on this point(f) ; and the other difficulties appear to have been surmounted, or to be in the way of being surmounted, by our modern authorities.
General conditions of the right of action. Having indicated the kind of problems to be met with, we proceed to the substance of the law.
To create a right of action for deceit there must be a statement made by the defendant, or for which he is answerable as principal, and with regard to that statement all the following conditions must concur:
And according to the general principles of civil liability, the damage must be the natural and probable consequence of the plaintiff’s action on the faith of the defendant’s statement.
Of these heads in order.
Falsehood in fact. (a) A statement can be untrue in fact only if it purports to state matter of fact. A promise is distinct from a statement of fact, and breach of contract, whether from want of power or of will to perform one’s promise, is a different thing from deceit. Again a mere statement of opinion or inference, the facts on which it purports to be founded being notorious or equally known to both parties, is different from a statement importing that certain matters of fact are within the particular knowledge of the speaker. A man cannot hold me to account because he has lost money by following me in an opinion which turned out to be erroneous. In particular cases, however, it may be hard to draw the line between a mere expression of opinion and an assertion of specific fact(l) . And a man’s intention or purpose at a given time is in itself a matter of fact, and capable (though the proof be seldom easy) of being found as a fact. “The state of a man’s mind is as much a fact as the state of his digestion”(m) . It is settled that the vendor of goods can rescind the contract on the ground of fraud if he discovers within due time that the buyer intended not to pay the price(n) .
When a prospectus is issued to shareholders in a company or the like to invite subscriptions to a loan, a statement of the purposes for which the money is wanted—in other words, of the borrower’s intention as to its application—is a material statement of fact, and if untrue may be ground for an action of deceit(n) . The same principle would seem to apply to a man’s statement of the reasons for his conduct, if intended or calculated to influence the conduct of those with whom he is dealing(o) ; as if an agent employed to buy falsely names, not merely as the highest price he is willing to give, but as the actual limit of his authority, a sum lower than that which he is really empowered to deal for.
Misrepresentations of law. A representation concerning a man’s private rights, though it may involve matters of law, is as a whole deemed to be a statement of fact. Where officers of a company incorporated by a private Act of Parliament accept a bill in the name of the company, this is a representation that they have power so to do under the Act of Parliament, and the existence of non-existence of such power is a matter of fact. “Suppose I were to say I have a private Act of Parliament which gives me power to do so and so. Is not that an assertion that I have such an Act of Parliament? It appears to me to be as much a representation of a matter of fact as if I had said I have a particular bound copy of Johnson’s Dictionary”(p) . A statement about the existence or actual text of a public Act of Parliament, or a reported decision, would seem to be no less a statement of fact. With regard to statements of matters of general law made only by implication, or statements of pure propositions of the law, the rule may perhaps be this, that in dealings between parties who have equal means of ascertaining the law, the one will not be presumed to rely upon a statement of matter of law made by the other(q) . It has never been decided whether proof of such reliance is admissible; it is submitted that if the case arose it could be received, though with caution. Of course a man will not in any event be liable to an action of deceit for misleading another by a statement of law, however erroneous, which at the time he really believed to be correct. That case would fall into the general category of honest though mistaken expressions of opinion. If there be any ground of liability, it is not fraud but negligence, and it must be shown that the duty of giving competent advice had been assumed or accepted.
Falsehood by garbled statements. It remains to be noted that a statement of which every part is literally true may be false as a whole, if by reason of the omission of material facts it is as a whole calculated to mislead a person ignorant of those facts into an inference contrary to the truth(r) . “A suppression of the truth may amount to a suggestion of falsehood”(s) .
Knowledge or belief of defendant. (b) As to the knowledge and belief of the person making the statement.
He may believe it to be true(t) . In that case he incurs no liability, nor is he bound to show that his belief was founded on such grounds as would produce the same belief in a prudent and competent man(u) , except so far as the absence of reasonable cause may tend to the inference that there was not any real belief. An honest though dull man cannot be held guilty of fraud any more than of “express malice,” although there is a point beyond which courts will not believe in honest stupidity. “If an untrue statement is made,” said Lord Chelmsford, “founded upon a belief which is destitute of all reasonable grounds, or which the least inquiry would immediately correct, I do not see that it is not fairly and correctly characterized as misrepresentation and deceit”(x) ; Lord Cranworth preferred to say that such circumstances might be strong evidence, but only evidence, that the statement was not really believed to be true, and any liability of the parties “would be the consequence not of their having stated as true what they had not reasonable ground to believe to be true, but of their having stated as true what they did not believe to be true”(y) . Lord Cranworth’s opinion has been declared by the House of Lords(z) , reversing the judgment of the Court of Appeal(a) , to be the correct one. “The ground upon which an alleged belief was founded” is allowed to be “a most important test of its reality”(b) ; but if it can be found as a fact that a belief was really and honestly held, whether on reasonable grounds or not, a statement embodying that belief cannot render its maker liable in an action for deceit(c) , however grossly negligent it may be, and however mischievous in its results(d) .
I have given reasons elsewhere(e) for thinking this decision of the House of Lords an unfortunate one. It would be out of place to repeat those reasons here. But it may be pointed out that the reversed opinion of the Court of Appeal coincides with that which has for many years prevailed in the leading American Courts(f) , and has lately been thus expressed in Massachusetts:—
“It is well settled in this Commonwealth that the charge of fraudulent intent, in an action for deceit, may be maintained by proof of a statement made, as of the party’s own knowledge, which is false, provided the thing stated is not merely a matter of opinion, estimate, or judgment, but is susceptible of actual knowledge; and in such case it is not necessary to make any further proof of an actual intent to deceive. The fraud consists in stating that the party knows the thing to exist, when he does not know it to exist; and if he does not know it to exist, he must ordinarily be deemed to know that he does not”(g) .
And so, still more lately, the Supreme Court of the United States not only said that “a person who makes representations of material facts, assuming or intending to convey the impression that he has adequate knowledge of the existence of such facts, when he is conscious that he has no such knowledge,” is answerable as if he actually knew them to be false—which is admitted everywhere—but went on to say that a vendor or lessor may be held guilty of deceit by reason of material untrue representations “in respect to his own business or property, the truth of which representations the vendor or lessor is bound and must be presumed to know”(h) . This appears to be precisely the step which in this country the Court of Appeal was prepared, but the House of Lords refused, to take.
In England, on the contrary, “negligence, however great, does not of itself constitute fraud,”(i) nor, it seems, even cast upon the defendant the burden of proving actual belief in the truth of the matter stated(i) . Even the grossest carelessness, in the absence of contract, will not make a man liable for a false statement without a specific finding of fact that he knew the statement to be false or was recklessly ignorant whether it was true or false(k) .
Perhaps it would have been better on principle to hold the duty in these cases to be quasi ex contractu, and evade the barren controversy about “legal fraud.” One who makes a statement as of fact to another, intending him to act thereon, might well be held to request him to act upon it; and it might also have been held to be an implied term or warranty in every such request that the party making it has some reasonable ground for believing what he affirms; not necessarily sufficient ground, but such as might then and there have seemed sufficient to a man of ordinary understanding. This would not have been more artificial than holding, as the Exchequer Chamber was once prepared to hold, that the highest bona fide bidder at an auction, advertised to be without reserve, can sue the auctioneer as on a contract that the sale is really without reserve, or that he has authority to sell without reserve(l) .
And such a development would have been quite parallel to others which have taken place in the modern history of the law. No one now regards an express warranty on a sale otherwise than as a matter of contract; yet until the latter part of the eighteenth century the common practice was to declare on such warranties in tort(m) . But it seems now too late, at all events in this country, to follow such a line of speculation.
It has been suggested that it would be highly inconvenient to admit “inquiry into the reasonableness of a belief admitted to be honestly entertained”(n) . I cannot see that the inquiry is more difficult or inconvenient than that which constantly takes place in questions of negligence, or that it is so difficult as those which are necessary in cases of malicious prosecution and abuse of privileged communications. Besides, we do not admit beliefs to be honest first and ask whether they were reasonable afterwards.
Representations subsequently discovered to be untrue. If, having honestly made a representation, a man discovers that it is not true before the other party has acted upon it, what is his position? It seems on principle that, as the offer of a contract is deemed to continue till revocation or acceptance, here the representation must be taken to be continuously made until it is acted upon, so that from the moment the party making it discovers that it is false and, having the means of communicating the truth to the other party, omits to do so, he is in point of law making a false representation with knowledge of its untruth. And such has been declared to be the rule of the Court of Chancery for the purpose of setting aside a deed. “The case is not at all varied by the circumstance that the untrue representation, or any of the untrue representations, may in the first instance have been the result of innocent error. If, after the error has been discovered, the party who has innocently made the incorrect representation suffers the other party to continue in error and act on the belief that no mistake has been made; this from the time of the discovery becomes, in the contemplation of this Court, a fraudulent misrepresentation, even though it was not so originally”(o) . We do not know of any authority against this being the true doctrine of common law as well as of equity, or as applicable to an action for deceit as to the setting aside of a contract or conveyance. Analogy seems in its favour(p) . Since the Judicature Acts, however, it is sufficient for English purposes to accept the doctrine from equity. The same rule holds if the representation was true when first made, but ceases to be true by reason of some event within the knowledge of the party making it and not within the knowledge of the party to whom it is made(q) .
Assertions made in reckless ignorance. On the other hand if a man states as fact what he does not believe to be fact, he speaks at his peril; and this whether he knows the contrary to be true or has no knowledge of the matter at all, for the pretence of having certain information which he has not is itself a deceit. “He takes upon himself to warrant his own belief of the truth of that which he so asserts”(r) . “If persons take upon themselves to make assertions as to which they are ignorant whether they are true or untrue, they must, in a civil point of view, be held as responsible as if they had asserted that which they knew to be untrue”(s) . These dicta, one of an eminent common law judge, the other of an eminent chancellor, are now both classical; their direct application was to the repudiation of contracts obtained by fraud or misrepresentation, but they state a principle which is well understood to include liability in an action for deceit(t) . The ignorance referred to is conscious ignorance, the state of mind of a man who asserts his belief in a fact “when he is conscious that he knows not whether it be true or false, and when he has therefore no such belief”(u) .
Breach of a special duty to give correct information. With regard to transactions in which a more or less stringent duty of giving full and correct information (not merely of abstaining from falsehood or concealment equivalent to falsehood) is imposed on one of the parties, it may be doubted whether an obligation of this kind annexed by law to particular classes of contracts can ever be treated as independent of contract. If a misrepresentation by a vendor of real property, for example, is wilfully or recklessly false, it comes within the general description of deceit. But there are errors of mere inadvertence which constantly suffice to avoid contracts of these kinds, and in such cases I do not think an action for deceit (or the analogous suit in equity) is known to have been maintained. Since Derry v. Peek it seems clear that it could not be. As regards these kinds of contracts, therefore—but, it is submitted, these only—the right of action for misrepresentation as a wrong is not co-extensive with the right of rescission. In some cases compensation may be recovered as an exclusive or alternative remedy, but on different grounds, and subject to the special character and terms of the contract.
Estoppel. Burrowes v. Lock: former supposed rule of equity. In the absence of a positive duty to give correct information or full and correct answers to inquiry, and in the absence of fraud, there is still a limited class of cases in which a man may be held to make good his statement on the ground of estoppel. Until quite lately it was supposed to be a distinct rule of equity that a man who has misrepresented, in a matter of business, facts which were specially within his knowledge, cannot be heard to say that at the time of making his statement he forgot those facts. But since Derry v. Peek(x) this is not the rule of English courts. There is no general duty to use care, much or little, in making statements of fact on which other persons are likely to act(y) . If there is no contract and no breach of specific duty, nothing short of fraud or estoppel will suffice. And we have to remember that estoppel does not give a cause of action but only supplies a kind of artificial evidence(z) . One of the cases hitherto relied on for the supposed rule(a) can be supported on the ground of estoppel, but on that ground only; a later and apparently not less considered and authoritative one(b) cannot be supported at all.
In short the decision of the House of Lords in Derry v. Peek is that even the grossest carelessness in stating material facts is not equivalent to fraud; and the substance of the decision is not altered by the results turning out to be of wider scope, and to have more effect on other doctrines supposed to be settled, than at the time was apprehended by a tribunal of whose acting members not one had any working acquaintance with courts of equity.
The effects of Derry v. Peek, as regards the particular class of company cases to which the decision immediately applied, have been neutralized by the Directors’ Liability Act, 1890(c) . As this Act “is framed to meet a particular grievance, and does not replace an unsound doctrine which leads to unfortunate results by a sounder principle which would avoid them”(d) , we have no occasion to do more than mention its existence.
Intention of the statement. (c) It is not a necessary condition of liability that the misrepresentation complained of should have been made directly to the plaintiff, or that the defendant should have intended or desired any harm to come to him. It is enough that the representation was intended for him to act upon, and that he has acted in the manner contemplated, and suffered damage which was a natural and probable consequence. If the seller of a gun asserts that it is the work of a well-known maker and safe to use, that as between him and the buyer, is a warranty, and the buyer has a complete remedy in contract if the assertion is found untrue; and this will generally be his better remedy, as he need not then allege or prove anything about the defendant’s knowledge; but he may none the less treat the warranty, if it be fraudulent, as a substantive ground of action in tort. If the buyer wants the gun not for his own use, but for the use of a son to whom he means to give it, and the seller knows this, the seller’s assertion is a representation on which he intends or expects the buyer’s son to act. And if the seller has wilfully or recklessly asserted that which is false, and the gun, being in fact of inferior and unsafe manufacture, bursts in the hands of the purchaser’s son and wounds him, the seller is liable to that son, not on his warranty (for there is no contract between them, and no consideration for any), but for a deceit(e) . He meant no other wrong than obtaining a better price than the gun was worth; probably he hoped it would be good enough not to burst, though not so good as he said it was; but he has put another in danger of life and limb by his falsehood, and he must abide the risk. We have to follow the authorities yet farther.
Representations to a class of persons: Polhill v. Walter. A statement circulated or published in order to be acted on by a certain class of persons, or at the pleasure of any one to whose hands it may come, is deemed to be made to that person who acts upon it, though he may be wholly unknown to the issuer of the statement. A bill is presented for acceptance at a merchant’s office. He is not there, but a friend, not his partner or agent, who does his own business at the same place, is on the spot, and, assuming without inquiry that the bill is drawn and presented in the regular course of business, takes upon himself to accept the bill as agent for the drawee. Thereby he represents to every one who may become a holder of the bill in due course that he has authority to accept; and if he has in fact no authority, and his acceptance is not ratified by the nominal principal, he is liable to an action for deceit, though he may have thought his conduct was for the benefit of all parties, and expected that the acceptance would be ratified(f) .
Denton v. G. N. R. Co. Again the current time-table of a railway company is a representation to persons meaning to travel by the company’s trains that the company will use reasonable diligence to despatch trains at or about the stated times for the stated places. If a train which has been taken off is announced as still running, this is a false representation, and (belief in its truth on the part of the company’s servants being out of the question) a person who by relying on it has missed an appointment and incurred loss may have an action for deceit against the company(g) . Here there is no fraudulent intention. The default is really a negligent omission; a page of the tables should have been cancelled, or an erratum-slip added. And the negligence could hardly be called gross, but for the manifest importance to the public of accuracy in these announcements.
Peek v. Gurney. Again the prospectus of a new company, so far forth as it alleges matters of fact concerning the position and prospects of the undertaking, is a representation addressed to all persons who may apply for shares in the company; but it is not deemed to be addressed to persons who after the establishment of the company become purchasers of shares at one or more removes from the original holders(h) , for the office of the prospectus is exhausted when once the shares are allotted. As regards those to whom it is addressed, it matters not whether the promoters wilfully use misleading language or not, or do or do not expect that the undertaking will ultimately be successful. The material question is, “Was there or was there not misrepresentation in point of fact?”(i) . Innocent or benevolent motives do not justify an unlawful intention in law, though they are too often allowed to do so in popular morality.
Reliance on the representation. (d) As to the plaintiff’s action on the faith of the defendant’s representation.
A. by words or acts represents to B. that a certain state of things exists, in order to induce B. to act in a certain way. The simplest case is where B., relying wholly on A.’s statement, and having no other source of information, acts in the manner contemplated. This needs no further comment. The case of B. disbelieving and rejecting A.’s assertion is equally simple.
Another case is that A.’s representation is never communicated to B. Here, though A. may have intended to deceive B., it is plain that he has not deceived him; and an unsuccessful attempt to deceive, however unrighteous it may be, does not cause damage, and is not an actionable wrong. A fraudulent seller of defective goods who patches up a flaw for the purpose of deceiving an inspection cannot be said to have thereby deceived a buyer who omits to make any inspection at all. We should say this was an obvious proposition, if it had not been judicially doubted(k) . The buyer may be protected by a condition or warranty, express or implied by law from the nature of the particular transaction; but he cannot complain of a merely potential fraud directed against precautions which he did not use. A false witness who is in readiness but is not called is a bad man, but he does not commit perjury.
Means of knowledge immaterial without actual independent inquiry. Yet another case is that the plaintiff has at hand the means of testing the defendant’s statement, indicated by the defendant himself, or otherwise within the plaintiff’s power, and either does not use them or uses them in a partial and imperfect manner. Here it seems plausible at first sight to contend that a man who does not use obvious means of verifying the representations made to him does not deserve to be compensated for any loss he may incur by relying on them without inquiry. But the ground of this kind of redress is not the merit of the plaintiff, but the demerit of the defendant: and it is now settled law that one who chooses to make positive assertions without warrant shall not excuse himself by saying that the other party need not have relied upon them. He must show that his representation was not in fact relied upon. In the same spirit it is now understood (as we shall see in due place) that the defence of contributory negligence does not mean that the plaintiff is to be punished for his want of caution, but that an act or default of his own, and not the negligence of the defendant, was the proximate cause of his damage. If the seller of a business fraudulently overstates the amount of the business and returns, and thereby obtains an excessive price, he is liable to an action for deceit at the suit of the buyer, although the books were accessible to the buyer before the sale was concluded(l) .
Perfunctory inquiry will not do. And the same principle applies as long as the party substantially puts his trust in the representation made to him, even if he does use some observation of his own.
A cursory view of a house asserted by the vendor to be in good repair does not preclude the purchaser from complaining of substantial defects in repair which he afterwards discovers. “The purchaser is induced to make a less accurate examination by the representation, which he had a right to believe”(m) . The buyer of a business is not deprived of redress for misrepresentation of the amount of profits, because he has seen or held in his hand a bundle of papers alleged to contain the entries showing those profits(n) . An original shareholder in a company who was induced to apply for his shares by exaggerated and untrue statements in the prospectus is not less entitled to relief because facts negativing those statements are disclosed by documents referred to in the prospectus, which he might have seen by applying at the company’s office(o) .
In short, nothing will excuse a culpable misrepresentation short of proof that it was not relied on, either because the other party knew the truth, or because he relied wholly on his own investigation, or because the alleged fact did not influence his action at all. And the burden of this proof is on the person who has been proved guilty of material misrepresentation(p) . He may prove any of these things if he can. It is not an absolute proposition of law that one who, having a certain allegation before him, acts as belief in that allegation would naturally induce a man to act, is deemed to have acted on the faith of that allegation. It is an inference of fact, and may be excluded by contrary proof. But the inference is often irresistible(q) .
Ambiguous statements. Difficulties may arise on the construction of the statement alleged to be deceitful. Of course a man is responsible for the obvious meaning of his assertions but where the meaning is obscure, it is for the party complaining to show that he relied upon the words in a sense in which they were false and misleading, and of which they were fairly capable(r) . As most persons take the first construction of obscure words which happens to strike them for the obviously right and only reasonable construction, there must always be room for perplexity in questions of this kind. Even judicial minds will differ widely upon such points, after full discussion and consideration of the various constructions proposed(s) .
Lord Tenterden’s Act. (e) It has already been observed in general that a false representation may at the same time be a promise or term of a contract. In particular it may be such as to amount to, or to be in the nature of, a guaranty. Now by the Statute of Frauds a guaranty cannot be sued on as a promise unless it is in writing and signed by the party to be charged or his agent. If an oral guaranty could be sued on in tort by treating it as a fraudulent affirmation instead of a promise, the statute might be largely evaded. Such actions, in fact, were a novelty a century and a quarter after the statute had been passed(t) , much less were they foreseen at the time. It was pointed out, after the modern action for deceit was established, that the jurisdiction thus created was of dangerous latitude(u) ; and, at a time when the parties could not be witnesses in a court of common law, the objection had much force. By Lord Tenterden’s Act, as it is commonly called(x) , the following provision was made:—
“No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person, to the intent or purpose that such other person may obtain credit, money, or goods upon(y) , unless such representation or assurance be made in writing, signed by the party to be charged therewith.”
This is something more stringent than the Statute of Frauds, for nothing is said, as in that statute, about the signature of a person “thereunto lawfully authorized,” and it has been decided that signature by an agent will not do(z) . Some doubt exists whether the word “ability” does or does not extend the enactment to cases where the representation is not in the nature of a guaranty at all, but an affirmation about some specific circumstance in a person’s affairs. The better opinion seems to be that only statements really going to an assurance of personal credit are within the statute(a) . Such a statement is not the less within it, however, because it includes the allegation of a specific collateral circumstance as a reason(b) .
Quaere as to the law under the Judicature Acts. A more serious doubt is whether the enactment be now practically operative in England. The word “action” of course did not include a suit in equity at the date of the Act, and the High Court has succeeded to all (and in some points more than all) the equitable jurisdiction and powers of the Court of Chancery. But that Court would not in a case of fraud, however undoubted its jurisdiction, act on the plaintiff’s oath against the defendant’s, without the corroboration of documents or other material facts; and it would seem that in every case of this kind where the Court of Chancery had concurrent jurisdiction with the courts of common law (and it is difficult to assign any where it had not), Lord Tenterden’s Act is now superseded by this rule of evidence or judicial prudence.
Misrepresentations made by agents. There still remain the questions which arise in the case of a false representation made by an agent on account of his principal. Bearing in mind that reckless ignorance is equivalent to guilty knowledge, we may state the alternatives to be considered as follows:—
The principal knows the representation to be false and authorizes the making of it. Here the principal is clearly liable; the agent is or is not liable according as he does not or does himself believe the representation to be true.
The principal knows the contrary of the representation to be true, and it is made by the agent in the general course of his employment but without specific authority.
Here, if the agent does not believe his representation to be true, he commits a fraud in the course of his employment and for the principal’s purposes, and, according to the general rule of liability for the acts and defaults of an agent, the principal is liable(c) .
If the agent does believe the representation to be true, there is a difficulty; for the agent has not done any wrong and the principal has not authorized any. Yet the other party’s damage is the same. That he may rescind the contract, if he has been misled into a contract, may now be taken as settled law(d) . But what if there was not any contract, or rescission has become impossible? Has he a distinct ground of action, and if so, how? Shall we say that the agent had apparent authority to pledge the belief of his principal, and therefore the principal is liable? in other words, that the principal holds out the agent as having not only authority but sufficient information to enable third persons to deal with the agent as they would with the principal? Or shall we say, less artificially, that it is gross negligence to withhold from the agent information so material that for want of it he is likely to mislead third persons dealing with the principal through him, and such negligence is justly deemed equivalent to fraud? Such a thing may certainly be done with fraudulent purpose, in the hope that the agent will, by a statement imperfect or erroneous in that very particular, though not so to his knowledge, deceive the other party. Now this would beyond question be actual fraud in the principal, with the ordinary consequences(e) . If the same thing happens by inadvertence, it seems inconvenient to treat such inadvertence as venial, or exempt it from the like consequences. We think, therefore, that an action lies against the principal; whether properly to be described, under common law forms of pleading, as an action for deceit, or as an analogous but special action on the case, there is no occasion to consider(f) .
On the other hand an honest and prudent agent may say, “To the best of my own belief such and such is the case,” adding in express terms or by other clear indication—“but I have no information from my principal.” Here there is no ground for complaint, the other party being fairly put on inquiry.
Liability of corporations herein. If the principal does not expressly authorize the representation, and does not know the contrary to be true, but the agent does, the representation being in a matter within the general scope of his authority, the principal is liable as he would be for any other wrongful act of an agent about his business. And as this liability is not founded on any personal default in the principal, it equally holds when the principal is a corporation(g) . It has been suggested, but never decided, that it is limited to the amount by which the principal has profited through the agent’s fraud. The Judicial Committee have held a principal liable who got no profit at all(h) .
But it seems to be still arguable that the proposed limitation holds in the case of the defendant being a corporation(i) , though it has been disregarded in at least one comparatively early decision of an English superior court, the bearing of which on this point has apparently been overlooked(k) . Ulpian, on the other hand, may be cited in its favour(l) .
Reason of an apparently hard law. The hardest case that can be put for the principal, and by no means an impossible one, is that the principal authorizes a specific statement which he believes to be true, and which at the time of giving the authority is true; before the agent has executed his authority the facts are materially changed to the knowledge of the agent, but unknown to the principal; the agent conceals this from the principal, and makes the statement as originally authorized. But the case is no harder than that of a manufacturer or carrier who finds himself exposed to heavy damages at the suit of an utter stranger by reason of the negligence of a servant, although he has used all diligence in choosing his servants and providing for the careful direction of their work. The necessary and sufficient condition of the master’s responsibility is that the act or default of the servant or agent belonged to the class of acts which he was put in the master’s place to do, and was committed for the master’s purposes. And “no sensible distinction can be drawn between the case of fraud and the case of any other wrong.” The authority of Barwick v. English Joint Stock Bank(m) is believed, notwithstanding the doubts still sometimes expressed, to be conclusive.
Slander of Title.
Slander of title. The wrong called Slander of Title is in truth a special variety of deceit, which differs from the ordinary type in that third persons, not the plaintiff himself, are induced by the defendant’s falsehood to act in a manner causing damage to the plaintiff. Notwithstanding the current name, an action for this cause is not like an action for ordinary defamation; it is “an action on the case for special damage sustained by reason of the speaking or publication of the slander of the plaintiff’s title”(n) . Also the wrong is a malicious one in the only proper sense of the word, that is, absence of good faith is an essential condition of liability(o) ; or actual malice, no less than special damage, is of the gist of the action. The special damage required to support this kind of action is actual damage, not necessarily damage proved with certainty in every particular. Such damage as is the natural consequence of the false statement may be special enough though the connexion may be not specifically proved(p) .
Recent extensions of the principle. This kind of action is not frequent. Formerly it appears to have been applied only to statements in disparagement of the plaintiff’s title to real property. It is now understood that the same reason applies to the protection of title to chattels, and of exclusive interests analogous to property, though not property in the strict sense, like patent rights and copyright. But an assertion of title made by way of self-defence or warning in any of these matters is not actionable, though the claim be mistaken, if it is made in good faith(q) . In America the law has been extended to the protection of inchoate interests under an agreement. If A. has agreed to sell certain chattels to B., and C. by sending to A. a false telegram in the name of B., or by other wilfully false representation, induces A. to believe that B. does not want the goods, and to sell to C. instead, B. has an action against C. for the resulting loss to him, and it is held to make no difference that the original agreement was not enforceable for want of satisfying the Statute of Frauds(r) .
A disparaging statement concerning a man’s title to use an invention, design, or trade name, or his conduct in the matter of a contract, may amount to a libel or slander on him in the way of his business: in other words the special wrong of slander of title may be included in defamation, but it is evidently better for the plaintiff to rely on the general law of defamation if he can, as thus he escapes the troublesome burden of proving malice(s) . Again an action in the nature of slander of title lies for damage caused by wilfully false statements tending to damage the plaintiff’s business, such as that he has ceased to carry it on; and it is immaterial whether the statements are or are not injurious to the plaintiff’s personal character(t) . In short, “that an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law”(u) .
It has been held in Massachusetts that if A. has exclusive privileges under a contract with B., and X. by purposely misleading statements or signs induces the public to believe that X. has the same rights, and thereby diverts custom from A., X. is liable to an action at the suit of A.(v) . In that case the defendants, who were coach owners, used the name of a hotel on their coaches and the drivers’ caps, so as to suggest that they were authorized and employed by the hotel-keeper to ply between the hotel and the railway station; and there was some evidence of express statements by the defendants’ servants that their coach was “the regular coach.” The plaintiffs were the coach owners in fact authorized and employed by the hotel. The Court said that the defendants were free to compete with the plaintiffs for the carriage of passengers and goods to that hotel, and to advertise their intention of so doing in any honest way; but they must not falsely hold themselves out as having the patronage of the hotel, and there was evidence on which a jury might well find such holding out as a fact. The case forms, by the nature of its facts, a somewhat curious link between the general law of false representation and the special rules as to the infringement of rights to a trade mark or trade name(w) . No English case much like it has been met with: its peculiarity is that no title to any property or to a defined legal right was in question. The hotel-keeper could not give a monopoly, but only a sort of preferential comity. But this is practically a valuable privilege in the nature of goodwill, and equally capable of being legally recognized and protected against fraudulent infringement. Goodwill in the accustomed sense does not need the same kind of protection, since it exists by virtue of some express contract which affords a more convenient remedy. Some years ago an attempt was made, by way of analogy to slander of title, to set up an exclusive right to the name of a house on behalf of the owner as against an adjacent owner. Such a right is not known to the law(x) .
Trade marks and trade names. The protection of trade marks and trade names was originally undertaken by the courts on the ground of preventing fraud(y) . But the right to a trade mark, after being more and more assimilated to proprietary rights(z) , has become a statutory franchise analogous to patent rights and copyright(a) ; and in the case of a trade name, although the use of a similar name cannot be complained of unless it is shown to have a tendency to deceive customers, yet the tendency is enough; the plaintiff is not bound to prove any fraudulent intention or even negligence against the defendant(b) . The wrong to be redressed is conceived no longer as a species of fraud, but as being to an incorporeal franchise what trespass is to the possession, or right to possession, of the corporeal subjects of property. We therefore do not pursue the topic here.
Malicious Prosecution and Abuse of Process.
Malicious prosecution. We have here one of the few cases in which proof of evil motive is required to complete an actionable wrong. “In an action for malicious prosecution the plaintiff has to prove, first, that he was innocent and that his innocence was pronounced by the tribunal before which the accusation was made; secondly, that there was a want of reasonable and probable cause for the prosecution, or, as it may be otherwise stated, that the circumstances of the case were such as to be in the eyes of the judge inconsistent with the existence of reasonable and probable cause(c) ; and, lastly, that the proceedings of which he complains were initiated in a malicious spirit, that is, from an indirect and improper motive, and not in furtherance of justice”(d) . And the plaintiff’s case fails if his proof fails at any one of these points. So the law has been defined by the Court of Appeal and approved by the House of Lords. It seems needless for the purposes of this work to add illustrations from earlier authorities.
It is no excuse for the defendant that he instituted the prosecution under the order of a Court, if the Court was moved by the defendant’s false evidence (though not at his request) to give that order, and if the proceedings in the prosecution involved the repetition of the same falsehood. For otherwise the defendant would be allowed to take advantage of his own fraud upon the Court which ordered the prosecution(e) .
As in the case of deceit, and for similar reasons, it has been doubted whether an action for malicious prosecution will lie against a corporation. It seems, on principle, that such an action will lie if the wrongful act was done by a servant of the corporation in the course of his employment and in the company’s supposed interest, and it has been so held(f) ; but there are dicta to the contrary(g) , and in particular a recent emphatic opinion of Lord Bramwell’s(h) , which, however, as pointed out by some of his colleagues at the time(i) , was extra-judicial.
Malicious civil proceedings. Generally speaking, it is not an actionable wrong to institute civil proceedings without reasonable and probable cause, even if malice be proved. For in contemplation of law the defendant who is unreasonably sued is sufficiently indemnified by a judgment in his favour which gives him his costs against the plaintiff(k) . And special damage beyond the expense to which he has been put cannot well be so connected with the suit as a natural and probable consequence that the unrighteous plaintiff, on the ordinary principles of liability for indirect consequences, will be answerable for them(l) . “In the present day, and according to our present law, the bringing of an ordinary action, however maliciously, and however great the want of reasonable and probable cause, will not support a subsequent action for malicious prosecution”(m) .
But there are proceedings which, though civil, are not ordinary actions, and fall within the reason of the law which allows an action to lie for the malicious prosecution of a criminal charge. That reason is that prosecution on a charge “involving either scandal to reputation, or the possible loss of liberty to the person”(n) , necessarily and manifestly imports damage. Now the commencement of proceedings in bankruptcy against a trader, or the analogous process of a petition to wind up a company, is in itself a blow struck at the credit of the person or company whose affairs are thus brought in question. Therefore such a proceeding, if instituted without reasonable and probable cause and with malice, is an actionable wrong(o) . Other similar exceptional cases were possible so long as there were forms of civil process commencing with personal attachment; but such procedure has not now any place in our system; and the rule that in an ordinary way a fresh action does not lie for suing a civil action without cause has been settled and accepted for a much longer time(p) . In common law jurisdictions where a suit can be commenced by arrest of the defendant or attachment of his property, the old authorities and distinctions may still be material(q) . The principles are the same as in actions for malicious prosecution, mutatis mutandis: thus an action for maliciously procuring the plaintiff to be adjudicated a bankrupt will not lie unless and until the adjudication has been set aside(r) .
Probably an action will lie for bringing and prosecuting an action in the name of a third person maliciously (which must mean from ill-will to the defendant in the action, and without an honest belief that the proceedings are or will be authorized by the nominal plaintiff), and without reasonable or probable cause, whereby the party against whom that action is brought sustains damage; but certainly such an action does not lie without actual damage(s) .
The explanation of malice as “improper and indirect motive” appears to have been introduced by the judges of the King’s Bench between sixty and seventy years ago. But “motive” is perhaps not a much clearer term. “A wish to injure the party rather than to vindicate the law” would be more intelligible(ss) .
Other Malicious Wrongs.
Conspiracy. The modern action for malicious prosecution has taken the place of the old writ of conspiracy and the action on the case grounded thereon(t) , out of which it seems to have developed. Whether conspiracy is known to the law as a substantive wrong, or in other words whether two or more persons can ever be joint wrong-doers, and liable to an action as such, by doing in execution of a previous agreement something it would not have been unlawful for them to do without such agreement, is a question of mixed history and speculation not wholly free from doubt. It seems however to be now settled for practical purposes that the conspiracy or “confederation” is only matter of inducement or evidence(u) . “As a rule it is the damage wrongfully done, and not the conspiracy, that is the gist of actions on the case for conspiracy”(x) . “In all such cases it will be found that there existed either an ultimate object of malice or wrong, or wrongful means of execution involving elements of injury to the public, or at least negativing the pursuit of a lawful object”(y) . Either the wrongful acts by which the plaintiff has suffered were such as one person could not commit alone(z) , say a riot, or they were wrongful because malicious, and the malice is proved by showing that they were done in execution of a concerted design. In the singular case of Gregory v. Duke of Brunsicick(a) the action was in effect for hissing the plaintiff off the stage of a theatre in pursuance of a malicious conspiracy between the defendants. The Court were of opinion that in point of law the conspiracy was material only as evidence of malice, but that in point of fact there was no other such evidence, and therefore the jury were rightly directed that without proof of it the plaintiff’s case must fail.
“It may be true, in point of law, that, on the declaration as framed, one defendant might be convicted though the other were acquitted; but whether, as a matter of fact, the plaintiff could entitle himself to a verdict against one alone, is a very different question. It is to be borne in mind that the act of hissing in a public theatre is, prima facie, a lawful act; and even if it should be conceded that such an act, though done without concert with others, if done from a malicious motive, might furnish a ground of action, yet it would be very difficult to infer such a motive from the insulated acts of one person unconnected with others. Whether, on the facts capable of proof, such a case of malice could be made out against one of the defendants, as, apart from any combination between the two, would warrant the expectation of a verdict against the one alone, was for the consideration of the plaintiff’s counsel; and, when he thought proper to rest his case wholly on proof of conspiracy, we think the judge was well warranted in treating the case as one in which, unless the conspiracy were established, there was no ground for saying that the plaintiff was entitled to a verdict; and it would have been unfair towards the defendants to submit it to the jury as a case against one of the defendants to the exclusion of the other, when the attention of their counsel had never been called to that view of the case, nor had any opportunity [been ?] given them to advert to or to answer it. The case proved was, in fact, a case of conspiracy, or it was no case at all on which the jury could properly find a verdict for the plaintiff”(b) .
Soon after this case was dealt with by the Court of Common Pleas in England, the Supreme Court of New York laid it down (not without examination of the earlier authorities) that conspiracy is not in itself a cause of action(c) .
In 1889 the question was raised in a curious and important case in this country. The material facts may, perhaps, be fairly summarized, for the present purpose, as follows:—A., B., and C. were the only persons engaged in a certain foreign trade, and desired to keep the trade in their own hands. Q. threatened, and in fact commenced, to compete with them. A., B., and C. thereupon agreed to offer specially favourable terms to all customers who would agree to deal with themselves to the exclusion of Q. and all other competitors outside the combination. This action had the effect of driving Q. out of the market in question, as it was intended to do. It was held by the majority of the Court of Appeal, and unanimously by the House of Lords, that A., B., and C. had done nothing which would have been unlawful if done by a single trader in his own sole interest, and that their action did not become unlawful by reason of being undertaken in concert by several persons for a common interest. The agreement was in restraint of trade, and could not have been enforced by any of the parties if the others had refused to execute it, but that did not make it punishable or wrongful(d) .
It is possible, however, that an agreement of this kind might in some cases be held to amount to an indictable conspiracy on the ground of obvious and excessive public inconvenience(e) . At the same time, even if this be admitted, it would not be easy for a court to say beforehand how far any particular trade combination was likely to have permanently mischievous results(f) .
Relation of conspiracy to lawful acts or forbearances of third persons. It would seem to follow from the principles of the modern cases that it cannot be an actionable conspiracy for two or more persons, by lawful means, to induce another or others to do what they are by law free to do or to abstain from doing what they are not bound by law to do. Yet the Court of Appeal has held that procuring persons—not to break a contract, but—not to renew expiring contracts or make a fresh contract, may be actionable if done “maliciously,” without any allegation that intimidation or other unlawful means were used(g) . It is submitted that not even the authority of the Court of Appeal will make this decision correct, and that it is not really consistent with the decision of the House of Lords in the Mogul Company’s case.
Malicious interference with one’s occupation, contract, or franchise. There may be other malicious injuries not capable of more specific definition “where a violent or malicious act is done to a man’s occupation, profession, or way of getting a livelihood”; as where the plaintiff is owner of a decoy for catching wild fowl, and the defendant, without entering on the plaintiff’s land, wilfully fires off guns near to the decoy, and frightens wild fowl away from it(h) . Not many examples of the kind are to be found, and this is natural; for they have to be sought in a kind of obscure middle region where the acts complained of are neither wrongful in themselves as amounting to trespass against the plaintiff or some third person(i) , nuisance(k) , or breach of an absolute specific duty, nor yet exempt from search into their motives as being done in the exercise of common right in the pursuit of a man’s lawful occupation or the ordinary use of his property(l) . Mere competition carried on for the purpose of gain, not out of actual malice, and not by unlawful means, such as molestation or intimidation, is not actionable, even though it be intended to drive a rival trader out of the field, and produce that result(m) . “The policy of our law, as at present declared by the legislature, is against all fetters on combination and competition unaccompanied by violence or fraud or other like injurious acts”(n) . Beyond generally forbidding the use of means unlawful in themselves, the law does not impose any restriction upon competition by one trader with another with the sole view of benefiting himself. A different question would arise if there were evidence of an intention on the defendant’s part to injure the plaintiff without benefiting himself. “Thus, if several persons agree not to deal at all with a particular individual, as this could not, under ordinary circumstances, benefit the persons so agreeing”(o) . Driving a public performer off the stage by marks of disapprobation which proceed not from an honest opinion of the demerits of his performance or person, but from private enmity, is, as we have just seen, a possible but doubtful instance of this sort of wrong(p) . Holt put the case of a schoolmaster frightening away children from attendance at a rival school(q) . It is really on the same principle that an action has been held to lie for maliciously (that is, with the design of injuring the plaintiff or gaining some advantage at his expense) procuring a third person to break his contract with the plaintiff, and thereby causing damage to the plaintiff(r) . The precise extent and bearing of the doctrine are discussed in the final chapter of this book with reference to the difficulties that have been felt about it, and expressed in dissenting judgments and elsewhere. Those difficulties (I submit and shall in that place endeavour to prove) either disappear or are greatly reduced when the cause of action is considered as belonging to the class in which malice, in the sense of actual ill-will, is a necessary element.
Generally speaking, every wilful interference with the exercise of a franchise is actionable without regard to the defendant’s act being done in good faith, by reason of a mistaken notion of duty or claim of right, or being consciously wrongful. “If a man hath a franchise and is hindered in the enjoyment thereof, an action doth lie, which is an action upon the case”(s) . But persons may as public officers be in a quasi-judicial position in which they will not be liable for an honest though mistaken exercise of discretion in rejecting a vote or the like, but will be liable for a wilful and conscious, and in that sense malicious, denial of right(t) . In such cases the wrong, if any, belongs to the class we have just been considering.
Maintenance. The wrong of maintenance, or aiding a party in litigation without either interest in the suit, or lawful cause of kindred, affection, or charity for aiding him, is akin to malicious prosecution and other abuses of legal process; but the ground of it is not so much an independent wrong as particular damage resulting from “a wrong founded upon a prohibition by statute”—a series of early statutes said to be in affirmation of the common law—“which makes it a criminal act and a misdemeanor”(u) . Hence it seems that a corporation cannot be guilty of maintenance(u) . Actions for maintenance are in modern times rare though possible(x) ; and the decision of the Court of Appeal that mere charity, with or without reasonable ground, is an excuse for maintaining the suit of a stranger(y) , does not tend to encourage them.
[(a) ]F. N. B. 95 E. sqq.
[(b) ]See per Lord Chelmsford, L. R. 6 H. L. at p. 390.
[(c) ]See pp. 179, 180, above.
[(d) ]Lord Blackburn, Brownlie v. Campbell (1880) 5 App. Ca. (Sc.) at p. 953.
[(e) ]See per Lord Bramwell, Weir v. Bell, 3 Ex. D. at p. 243; Derry v. Peek, 14 App. Ca. at p. 346.
[(f) ]Pp. 78, 79, above. The difficulties may be said to have culminated in Udell v. Atherton (1861) 7 H. & N. 172, 30 L. J. Ex. 337, where the Court was equally divided.
[(g) ]Lord Herschell, Derry v. Peek (1889) 14 App. Ca. at p. 371.
[(h) ]See Polhill v. Walter (1832) 3 B. & Ad. 114, 123.
[(i) ]Cp. for the general rules Lord Hatherley (Page Wood V.-C.), Barry v. Croskey (1861) 2 J. & H. at pp. 22-3, approved by Lord Cairns in Peek v. Gurney, L. R. 6 H. L. at p. 413; Bowen L. J., Edgington v. Fitzmaurice (1885) 29 Ch. Div. at pp. 481-2; and Lindley L. J., Smith v. Chadwick (1882) 20 Ch. Div. at p. 75.
[(j) ]Derry v. Peek (1889) 14 App. Ca. 337, 374, 58 L. J. Ch. 864.
[(k) ]Lord Blackburn, Smith v. Chadwick (1884) 9 App. Ca. at p. 196.
[(l) ]Compare Pasley v. Freeman (1789), 3 T. R. 51, 1 R. R. 634, with Haycraft v. Creasy (1801) 2 East 92, 6 R. R. 380, where Lord Kenyon’s dissenting judgment may be more acceptable to the latter-day reader than those of the majority.
[(m) ]Bowen L. J., 29 Ch. Div. 483.
[(n) ]Clough v. L. and N. W. R. Co. (1871) Ex. Ch. L. R. 7 Ex. 26, 41 L. J. Ex. 17; cp. per Mellish L. J., Ex parte Whittaker (1875) 10 Ch. at p. 449. Whether in such case an action of deceit would lie is a merely speculative question, as if rescission is impracticable, and if the fraudulent buyer is worth suing, the obviously better course is to sue on the contract for the price. See however Williamson v. Allison (1802) 2 East 446.
[(n) ]Edgington v. Fitzmaurice (1884) 29 Ch. Div. 459, 55 L. J. Ch. 650.
[(o) ]It is submitted that the contrary opinion given in Vernon v. Keys (1810) Ex. Ch. 4 Taunt. 488, 11 R. R. 499, can no longer be considered law: see 11 R. R. Preface, vi. and Mr. Campbell’s note at p. 505.
[(p) ]West London Commercial Bank v. Kitson (1884) 13 Q. B. Div. 360, per Bowen L.J. at p. 363, 53 L. J. Q. B. 345. Cp. Firbank’s Executors v. Humphreys (1886) 18 Q. B. Div. 54, 56 L. J. Q. B. 57 (directors’ assertion of subsisting authority to issue debentures).
[(q) ]This appears to be the real ground of Rashdall v. Ford (1866) 2 Eq. 750, 35 L. J. Ch. 769.
[(r) ]“There must, in my opinion, be some active misstatement of fact, or at all events such a partial and fragmentary statement of fact as that the withholding of that which is not stated makes that which is stated absolutely false:” Lord Cairns, L. R. 6 H. L. 403.
[(s) ]Stewart v. Wyoming Ranche Co. (1888) 128 U. S. 383, 388.
[(t) ]Collins v. Evans (1844) Ex. Ch. 5 Q. B. 820, 13 L. J. Q. B. 180. Good and probable reason as well as good faith was pleaded and proved.
[(u) ]Taylor v. Ashton (1843) 11 M. & W. 401, 12 L. J. Ex. 363, but the actual decision is not consistent with the doctrine of the modern cases on the duty of directors of companies. See per Lord Herschell, 14 App. Ca. at p. 375.
[(x) ]Western Bank of Scotland v. Addie (1867) L. R. 1 Sc. at p. 162.
[(y) ]Ib. at p. 168.
[(z) ]Derry v. Peek (1889) 14 App. Ca. 337, 58 L. J. Ch. 864.
[(a) ]Peek v. Derry (1887) 37 Ch. Div. 541, 57 L. J. Ch. 347.
[(b) ]Lord Herschell, 14 App. Ca. at p. 375.
[(c) ]Acc. Glasier v. Rolls (1889) 42 Ch. Div. 436, 58 L. J. Ch. 820; Low v. Bouverie, ’91, 3 Ch. 82, 60 L. J. Ch. 594, C. A.
[(d) ]Le Lievre v. Gould, ’93, 1 Q. B. 491, 62 L. J. Q. B. 353, 4 R. 274, C. A. (untrue certificate negligently given by a builder who owed no special duty to the plaintiff).
[(e) ]L. Q. R. v. 410; for a different view, see Sir William Anson, ib. vi. 72.
[(f) ]Cooley on Torts, 501. The tendency appears as early as 1842, Stone v. Denny, 4 Met. (Mass.) 151, 158.
[(g) ]Chatham Furnace Co. v. Moffatt (1888) 147 Mass. 403.
[(h) ]Lehigh Zinc and Iron Co. v. Bamford (1893) 150 U. S. 665, 673.
[(i) ]’93, 1 Q. B. at p. 498, per Lord Esher.
[(k) ]See judgments of Lindley and Bowen L.JJ., in Angus v. Clifford, ’91, 2 Ch. 449.
[(l) ]Warlow v. Harrison (1859) 1 E. & E. 309, 29 L. J. Q. B. 14.
[(m) ]Williamson v. Allison (1802) 2 East 446, 451. We need not remind the learned reader that the action of assumpsit itself was originally an action on the case for deceit in breaking a promise to the promisee’s damage: J. B. Ames in Harvard Law Rev. ii. 1, 53.
[(n) ]Sir W. Anson, L. Q. R. vi. 74.
[(o) ]Reynell v. Sprye (1852) 1 D. M. G. 660, 709, Lord Cranworth: cp. Jessel M.R., Redgrave v. Hurd (1881) 20 Ch. Div. 12, 13, 51 L. J. Ch. 113.
[(p) ]Compare the doctrine of continuous taking in trespass de bonis asportatis, which is carried out to graver consequences in the criminal law. Jessel M. R. assumed the common law rule to be in some way narrower than that of equity (20 Ch. Div. 13), but this was an extra-judicial dictum; and see per Bowen L.J., 34 Ch. Div. at p. 594, declining to accept it.
[(q) ]Traill v. Baring (1864) 4 D. J. S. 318; the difficulty of making out how there was any representation of fact in that case as distinguished from a promise or condition of a contract is not material to the present purpose.
[(r) ]Maule J., Evans v. Edmonds (1853) 13 C. B. 777, 786, 22 L. J. C. P. 211.
[(s) ]Lord Cairns, Reese River Silver Mining Co. v. Smith (1869) L. R. 4 H. L. 64, 79, 39 L. J. Ch. 849. See per Sir J. Hannen in Peek v. Derry, 37 Ch. Div. at p. 581. Even Lord Bramwell allows Lord Cairns’s dictum (14 App. Ca. at p. 351).
[(t) ]Taylor v. Ashton (1843) 11 M. & W. 401, 12 L. J. Ex. 363; Edgington v. Fitzmaurice (1885) 29 Ch. Div. 459, 479, 481, 55 L. J. Ch. 650; cp. Smith v. Chadwick (1884) 9 App. Ca. at p. 190, per Lord Selborne.
[(u) ]Lord Herschell, Derry v. Peek, 14 App. Ca. at p. 371.
[(x) ]14 App. Ca. 337, 58 L. J. Ch. 864.
[(y) ]Angus v. Clifford, ’91, 2 Ch. 449, 60 L. J. Ch. 443, C. A., Le Lievre v. Gould, ’93, 1 Q. B. 491, 62 L. J. Q. B. 353, 4 R. 274, C. A.
[(z) ]Low v. Bouverie, ’91, 3 Ch. 82, 60 L. J. Ch. 594, C. A., see per Bowen L. J. ’91, 3 Ch. at p. 105.
[(a) ]Burrowes v. Lock (1805) 10 Ves. 470, 8 R. R. 33, 856, see per Lindley L. J., ’91, 3 Ch. at p. 101.
[(b) ]Slim v. Croucher (1860) 1 D. F. J. 518; Low v. Bouverie, above, per Lindley L. J. ’91, 3 Ch. at p. 102.
[(c) ]53 & 54 Vict. c. 64. See thereon the Supplement to Lindley on Companies, published in 1891.
[(d) ]Op. cit. 2.
[(e) ]Langridge v. Levy (1837) 2 M. & W. 519: affirmed (very briefly) in Ex. Ch. 4 M. & W. 338.
[(f) ]Polhill v. Walter (1832) 3 B. & Ad. 114. The more recent doctrine of implied warranty was then unknown.
[(g) ]So held unanimously in Denton v. G. N. R. Co. (1856) 5 E. & B. 860, 25 L. J. Q. B. 129. Lord Campbell C. J., and Wightman J., held (dubit. Crompton J.) that there was also a cause of action in contract. The difficulty often felt about maintaining an action for deceit against a corporation does not seem to have occurred to any member of the Court. It is of course open to argument that as to the cause of action in tort this case is overruled by Derry v. Peek, 14 App. Ca. 337, 58 L. J. Ch. 864; and now Low v. Bouverie, ’91, 3 Ch. 82, 60 L. J. Ch. 594, seems to point in the same direction. A man who puts forth by inadvertence a statement contrary to facts which he knows is hardly fraudulent in the sense of those decisions. It would be fraud if he persisted in the statement after having his attention called to it.
[(h) ]Peek v. Gurney (1873) L. R. 6 H. L. 377, 400, 411, 43 L. J. Ch. 19.
[(i) ]Lord Cairns, L. R. 6 H. L. at p. 409. Cp. per Lord Blackburn, Smith v. Chadwick, 9 App. Ca. at p. 201; Lord Herschell, Derry v. Peek, 14 App. Ca. at pp. 365, 371.
[(k) ]Horsfall v. Thomas (1862) 1 H. & C. 90, 31 L. J. Ex. 322, a case of contract, so that a fortiori an action for deceit would not lie; dissented from by Cockburn C. J., L. R. 6 Q. B. at p. 605. The case was a peculiar one, but could not have been otherwise decided.
[(l) ]Dobell v. Stevens (1825) 3 B. & C. 623.
[(m) ]Dyer v. Hargrave (1805) 10 Ves. at p. 510, 8 R. R. 39 (cross suits for specific performance and compensation).
[(n) ]Redgrave v. Hurd (1881) 20 Ch. Div. 1, 51 L. J. Ch. 113 (action for specific performance, counterclaim for rescission and damages).
[(o) ]Central R. Co. of Venezuela v. Kisch (1867) L. R. 2 H. L. 99, 120, 36 L. J. Ch. 849, per Lord Chelmsford. A case of this kind alone would not prove the rule as a general one, promoters of a company being under a special duty of full disclosure.
[(p) ]See especially per Jessel M. R., 20 Ch. Div. 21.
[(q) ]See per Lord Blackburn, Smith v. Chadwick, 9 App. Ca. at p. 196.
[(r) ]Smith v. Chadwick (1884) 9 App. Ca. 187, 53 L. J. Ch. 873, especially Lord Blackburn’s opinion.
[(s) ]In the case last cited (1881-2) (Fry J., and C. A. 20 Ch. Div. 27), Fry J. and Lord Bramwell decidedly adopted one construction of a particular statement; Lindley L. J. the same, though less decidedly, and Cotton L. J. another, while Jessel M. R., Lord Selborne, Lord Blackburn, and Lord Watson thought it ambiguous.
[(t) ]See the dissenting judgment of Grose J. in Pasley v. Freeman (1789) 3 T. R. 51, 1 R. R. 634, 636, and 2 Sm. L. C.
[(u) ]By Lord Eldon in Evans v. Bicknell (1801) 6 Ves. 174, 182, 186, 5 R. R. 245, 251, 255.
[(x) ]9 Geo. IV. c. 14, s. 6.
[(y) ]Sic. It is believed that the word “credit” was accidentally transposed, so that the true reading would be “obtain money or goods upon credit:” see Lyde v. Barnard (1836) 1 M. & W. 101, per Parke B. Other conjectural emendations are suggested in his judgment and that of Lord Abinger.
[(z) ]Swift v. Jewsbury (1874) Ex. Ch. L. R. 9 Q. B. 301, 43 L. J. Q. B. 56.
[(a) ]Parke and Alderson BB. in Lyde v. Barnard (1836) note (y): contra Lord Abinger C. B. and Gurney B. And see Bishop v. Balkis Consolidated Co. (1890) 25 Q. B. Div. 512, 59 L. J. Q. B. 565.
[(b) ]Swann v. Phillips (1838) 8 A. & E. 457.
[(c) ]Parke B., 6 M. & W. 373.
[(d) ]See Principles of Contract, 6th ed. 552. In Cornfoot v. Fowke, 6 M. & W. 358, it is difficult to suppose that as a matter of fact the agent’s assertion can have been otherwise than reckless: what was actually decided was that it was misdirection to tell the jury without qualification “that the representation made by the agent must have the same effect as if made by the plaintiff himself:” the defendant’s plea averring fraud without qualification.
[(e) ]Admitted by all the Barons in Cornfoot v. Fowke; Parke, 6 M. & W. at pp. 362, 374, Rolfe at p. 370, Alderson at p. 372. The broader view of Lord Abinger’s dissenting judgment of course includes this.
[(f) ]The decision of the House of Lords in Derry v. Peek (1889) 14 App. Ca. 337, 58 L. J. Ch. 864, tends however to make this opinion less probable.
[(g) ]Barwick v. English Joint Stock Bank (1867) Ex. Ch. L. R. 2 Ex. 259, 36 L. J. Ex. 147; Mackay v. Commercial Bank of New Brunswick (1874) L. R. 5 P. C. 394, 43 L. J. P. C. 31; Swire v. Francis (1877) 3 App. Ca. 106, 47 L. J. P. C. 18 (J. C.); Houldsworth v. City of Glasgow Bank (1880) Sc. 5 App. Ca. 317. See pp. 85, 86, above.
[(h) ]Swire v. Francis, last note.
[(i) ]Lord Cranworth in Western Bank of Scotland v. Addie (1867) L. R. 1 Sc. & D. at pp. 166, 167. Lord Chelmsford’s language is much more guarded.
[(k) ]Denton v. G. N. R. Co. (1856) p. 273, above. No case could be stronger, for (1) the defendant was a corporation; (2) there was no active or intentional falsehood, but the mere negligent continuance of an announcement no longer true; (3) the corporation derived no profit. The point, however, was not discussed.
[(l) ]D. 4. 3, de dolo malo, 15 § 1. Sed an in municipes de dolo detur actio, dubitatur. Et puto ex suo quidem dolo non posse dari, quid enim municipes dolo facere possunt? Sed si quid ad eos pervenit ex dolo eorum qui res eorum administrant, puto dandam. The Roman lawyers adhered more closely to the original conception of moral fraud as the ground of action than our courts have done. The actio de dolo was famosa, and was never an alternative remedy, but lay only when there was no other (si de his rebus alia actio non erit), D. h. t. 1.
[(m) ]L. R. 2 Ex. 259, 265.
[(n) ]Tindal C. J., Malachy v. Soper (1836) 3 Bing. N. C. 371; Bigelow L. C. 42, 52.
[(o) ]Halsey v. Brotherhood (1881) 19 Ch. Div. 386, 51 L. J. Ch. 233, confirming previous authorities. As to the particular subject-matter in that case, see the Patents, Designs and Trade Marks Act, 1883, s. 32, which gives a statutory cause of action; Skinner & Co. v. Shew & Co., ’93, 1 Ch. 413, 62 L. J. Ch. 196, 2 R. 179, C. A.
[(p) ]Ratcliffe v. Evans, ’92, 2 Q. B. 524, 61 L. J. Q. B. 535, C. A.
[(q) ]Wren v. Weild (1869) L. R. 4 Q. B. 730, 38 L. J. Q. B. 327; Halsey v. Brotherhood, note (o) last page (patent; in Wren v. Weild the action is said to be of a new kind, but sustainable with proof of malice); Steward v. Young (1870) L. R. 5 C. P. 122, 39 L. J. C. P. 85 (title to goods); Dicks v. Brooks (1880) 15 Ch. D. 22, 49 L. J. Ch. 812 (copyright in design), see 19 Ch. D. 391.
[(r) ]Benton v. Pratt (1829) 2 Wend. 385; Rice v. Manley (1876) 66 N. Y. (21 Sickels) 82.
[(s) ]See Thorley’s Cattle Food Co. v. Massam (1879) 14 Ch. Div. 763; Dicks v. Brooks, last note but one.
[(t) ]Ratcliffe v. Evans, ’92, 2 Q. B. 524, 61 L. J. Q. B. 535, C. A.
[(u) ]Ibid. ’92, 2 Q. B. at p. 527, per Cur.
[(v) ]Marsh v. Billings (1851) 7 Cush. 322, and Bigelow L. C. 59.
[(w) ]The instructions given at the trial (Bigelow L. C. at p. 63) were held to have drawn too sharp a distinction, and to have laid down too narrow a measure of damages, and a new trial was ordered. It was also said that actual damage need not be proved, sed qu.
[(x) ]Day v. Brownrigg (1878) (reversing Malins V.-C.) 10 Ch. Div. 294, 48 L. J. Ch. 173.
[(y) ]See per Lord Blackburn, 8 App. Ca. at p. 29; Lord Westbury, L. R. 5 H. L. at p. 522; Mellish L. J., 2 Ch. D. at p. 453.
[(z) ]Singer Manufacturing Co. v. Wilson (1876) 2 Ch. D. 434, per Jessel M. R. at pp. 441-2; James L. J. at p. 451; Mellish L. J. at p. 454.
[(a) ]Patents, Designs, and Trade Marks Act, 1883, 46 & 47 Vict. c. 57.
[(b) ]Hendriks v. Montagu (1881) 17 Ch. Div. 638, 50 L. J. Ch. 456; Singer Manufacturing Co. v. Loog (1882) 8 App. Ca. 15.
[(c) ]The facts have to be found by the jury, but the inference that on those facts there was or was not reasonable and probable cause is not for the jury but for the Court: cp. the authorities on false imprisonment, pp. 202—208, above.
[(d) ]Bowen L. J., Abrath v. N. E. R. Co. (1883) 11 Q. B. Div. 440, 455, 52 L. J. Q. B. 620: the decision of the Court of Appeal was affirmed in H. L. (1886) 11 App. Ca. 247, 55 L. J. Q. B. 457. A plaintiff who, being indicted on the prosecution complained of, has been found not guilty on a defect in the indictment (not now a probable event) is sufficiently innocent for this purpose: Wicks v. Fentham (1791) 4 T. R. 247, 2 R. R. 374.
[(e) ]Fitzjohn v. Mackinder (Ex. Ch. 1861) 9 C. B. N. S. 505, 30 L. J. C. P. 257 (diss. Blackburn and Wightman JJ.).
[(f) ]Edwards v. Midland Rail. Co. (1880) 6 Q. B. D. 287, 50 L. J. Q. B. 281, Fry J.
[(g) ]See the judgment in the case last cited.
[(h) ]11 App. Ca. at p. 250.
[(i) ]Lord Fitzgerald, 11 App. Ca. at p. 244; Lord Selborne at p. 256.
[(k) ]It is common knowledge that the costs allowed in an action are hardly ever a real indemnity. The true reason is that litigation must end somewhere. If A. may sue B. for bringing a vexatious action, then, if A. fails to persuade the Court that B.’s original suit was vexatious, B. may again sue A. for bringing this latter action, and so ad infinitum.
[(l) ]See the full exposition in the Court of Appeal in Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q. B. Div. 674, 52 L. J. Q. B. 488, especially the judgment of Bowen L. J.
[(m) ]Bowen L. J., 11 Q. B. D. at p. 690. There has been a contrary decision in Vermont: Closson v. Staples (1869) 42 Vt. 209; 1 Am. Rep. 316. We do not think it is generally accepted in other jurisdictions; it is certainly in accordance with the opinion expressed by Butler in his notes to Co. Lit. 161 a, but Butler does not attend to the distinction by which the authorities he relies on are explained.
[(n) ]11 Q. B. Div. 691.
[(o) ]Quartz Hill Gold Mining Co. v. Eyre (1883) note (l). The contrary opinions expressed in Johnson v. Emerson (1871) L. R. 6 Ex. 329, 40 L. J. Ex. 201, with reference to proceedings under the Bankruptcy Act of 1869, are disapproved: under the old bankruptcy law it was well settled that an action might be brought for malicious proceedings.
[(p) ]Savile or Savill v. Roberts (1698) 1 Ld. Raym. 374, 379; 12 Mod. 208, 210, and also in 5 Mod., Salkeld, and Carthew.
[(q) ]See Cooley on Torts, 187. As to British India, see Raj Chunder Roy v. Shama Soondari Debi, I. L. R. 4 Cal. 583.
[(r) ]Metropolitan Bank v. Pooley (1885) 10 App. Ca. 210, 54 L. J. Q. B. 449.
[(s) ]Cotterell v. Jones (1851) 11 C. B. 713, 21 L. J. C. P. 2.
[(ss) ]Stephen (Sir Herbert) on Malicious Prosecution, 36-39, see especially at p. 37.
[(t) ]F. N. B. 114 D. sqq.
[(u) ]Mogul Steamship Company v. M‘Gregor, ’92, A. C. 25, in H. L.
[(x) ]Bowen L. J. in S. C. in C. A. (1889) 23 Q. B. Div. at p. 616.
[(y) ]Lord Field, ’92, A. C. at p. 52.
[(z) ]“There are some forms of injury which can only be effected by the combination of many [persons]”: Lord Hannen, ’92, A. C. at p. 60.
[(a) ]6 Man. & Gr. 205, 953 (1844). The defendants justified in a plea which has the merit of being amusing.
[(b) ]Per Coltman J., 6 Man. & Gr. at p. 959.
[(c) ]Hutchins v. Hutchins (1845) 7 Hill 104, and Bigelow L. C. 207. See Mr. Bigelow’s note thereon.
[(d) ]Mogul Steamship Company v. McGregor (1889) 23 Q. B. Div. 598, 58 L. J. Q. B. 465 (diss. Lord Esher M. R.); in H. L. ’92, A. C. 25, 61 L. J. Q. B. 295. Lord Esher was apparently prepared to hold that whenever A. and B. make an agreement which, as between themselves, is void as in restraint of trade, and C. suffers damage as a proximate consequence, A. and B. are wrongdoers as against C. This is clearly negatived by the decision of the House of Lords, see the opinions of Lord Halsbury L. C., Lord Watson, Lord Bramwell and Lord Hannen.
[(e) ]Bowen L. J., 23 Q. B. Div. at p. 618.
[(f) ]Fry L. J., 23 Q. B. Div. at p. 628.
[(g) ]Temperton v. Russell, ’93, 1 Q. B. 715, 4 R. 376, 62 L. J. Q. B. 412.
[(h) ]Carrington v. Taylor (1809) 11 East 571, 11 R. R. 270, following Keeble v. Hickeringill (1705) 11 East 573 in notis, 11 R. R. 273 n, where see Holt’s judgment. And see Lord Field’s opinion in Mogul Steamship Company v. McGregor, ’92, A. C. 25, 51, 61 L. J. Q. B. 295.
[(i) ]Tarleton v. McGawley, 1 Peake 270, 3 R. R. vi. 689: the defendant’s act in firing at negroes to prevent them from trading with the plaintiff’s ship was of course unlawful per se.
[(k) ]Cp. Ibbotson v. Peat (1865) 3 H. & C. 644, 34 L. J. Ex. 118.
[(l) ]See p. 135, above.
[(m) ]Mogul Steamship Company v. McGregor, note (d).
[(n) ]Fry L. J., 23 Q. B. Div. at p. 628.
[(o) ]Lord Hannen in Mogul Steamship Company v. McGregor, ’92, A. C. at p. 60.
[(p) ]Gregory v. Duke of Brunswick, supra, p. 292.
[(q) ]Keeble v. Hickeringill, note (h) last page.
[(r) ]Lumley v. Gye (1853) 2 E. & B. 216, 22 L. J. Q. B. 463; Bowen v. Hall (1881) 6 Q. B. Div. 333, 50 L. J. Q. B. 305.
[(s) ]Holt C. J. in Ashby v. White at p. 13 of the special report first printed in 1837. The action was on the case merely because trespass would not lie for the infringement of an incorporeal right of that kind. The right to petition Parliament is not a franchise in the sense that any elector can compel his representative in the House of Commons to present a particular petition: Chaffers v. Goldsmid, ’94, 1 Q. B. 186, 10 R. Feb. 219.
[(t) ]Tozer v. Child (1857) Ex. Ch. 7 E. & B. 377, 26 L. J. Q. B. 151.
[(u) ]Lord Selborne, Metrop. Bank v. Pooley (1885) 10 App. Ca. 210, 218, 54 L. J. Q. B. 449.
[(x) ]Bradlaugh v. Newdegate (1883) 11 Q. B. D. 1, 52 L. J. Q. B. 454. As to what will amount to a common interest in a suit so as to justify maintenance, Alabaster v. Harness, ’94, 2 Q. B. 897.
[(y) ]Harris v. Brisco (1886) 17 Q. B. Div. 504, 55 L. J. Q. B. 423.