has the intention of breaking it when made, the agreement is not thereby vitiated and the contract is not the less binding; if the intention is carried into effect, there is a breach of contract attended with the usual liability for a breach (a). Although representations of mere intention made at the time of the agreement for the purpose of inducing it are immaterial to the validity of the agreement in law, they are, in general, held binding in equity; and the Court will, according to the circumstances, refuse specific performance of the agreement or rescind it, if the expectations raised by such representations are not satisfied (b). rated com. Exaggerated commendations of the subject of the agree- Exagge ment of a general character, and not embodying specific re- menda presentations of fact, are not, in general, sufficient ground tions. for avoiding the effect of the agreement. Thus, a representation made upon the sale of an advowson that "a voidance was likely to occur soon ;"(e) and a representation upon the sale of land that it was 66 uncommonly rich water meadow;" () although they were found to be exaggerated representations, were held not to be sufficient ground for refusing specific performance of the contracts induced by them. But where upon a sale of growing timber the trees were represented as of an average size of fifty feet, which in fact averaged only thirty-five, specific performance was refused (e). A prospectus of a mine containing statements respecting the general appearance and promise of the mine, expressed in glowing and exaggerated colours, was held in equity not to be a sufficient ground of fraud (ƒ). Fraud may be effected by an active concealment of a fact (a) Hemingway v. Hamilton, 4 M. & W. 115. (b) Beaumont v. Dukes, 1 Jac. 422; Myers v. Watson, 1 Sim. N. S. 523; Feacock v. Penson, 11 Beav. 355; Traill v. Baring, 33 L. J. C. 521. (c) Trower v. Newcombe, 3 Mer. 704. (d) Scott v. Hanson, 1 Sim. 13. 298. (f) Jennings v. Broughton, 17 Beav. 231; 5 De G. M. & G. 126; and see Kisch v. Central Ry. Co. of Venezuela, Conceal ment of fact. Concealment of fact material to be known by the other party, without any express representation respecting it. As, where a person sold a vessel with all faults, and before the sale took her from the ways on which she lay, and kept her afloat in a dock, in order to prevent an examination of her bottom which he knew to be unsound, the purchaser was held entitled to avoid the contract on the ground of fraud (a). So, where a person sold a log of mahogany, having turned it so as to conceal a hole in the underneath side (b). As to the effect of mere silence without active concealment, Lord Mansfield laid down the following as the governing principles applicable to all contracts and dealings: "Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact and believing the contrary. But either party may be innocently silent as to grounds open to both to exercise their judgment upon. Aliud est celare; aliud, tacere: neque enim id est celare quicquid reticeas; sed cum quod tu scias, id ignorare emolumenti tui causâ velis eos, quorum intersit id scire.' This definition of concealment, restrained to the efficient motives and precise subject of any contract, will generally hold to make it void, in favour of the party misled by his ignorance of the thing concealed ”(c). The defendant bought a picture of the plaintiff under a delusion as to the ownership of it, and the agent of the plaintiff employed to sell the picture was aware of the delusion of the defendant and took advantage of it in effecting the sale; Lord Ellenborough held that the defendant might avoid the contract on the ground of fraud (d). A debtor compounded with his creditor, knowing that the latter was under a false impression as to the value of his estate; Tindal, C.J., held that the creditor might avoid the composition and recover his debt in full (e). The defendant (a) Schneider v. Heath, 3 Camp. 506. (b) See Udell v. Atherton, 7 H. N. 172; 30 L. J. Ex. 337. (c) Carter v. Boehm, 3 Burr. 1905; 1 Smith's L. C. 5th ed. 472; see Cicero de Off. lib. iii, cap. xiii, cited more fully by Lord Abinger in Cornfoot v. Fowke, 6 M. & W. 358, 380. (d) Hill v. Gray, 1 Stark. 434; explained in Keates v. Earl Cadogan, 10 C. B. 591, 600. (e) Vine v. Mitchell, 1 Moo. & Rob. 337. ment of fact purchased a policy of insurance from the plaintiff, having Concealascertained that the person whose life was insured was dangerously ill, and without communicating that fact to the plaintiff, who was not aware of it; Rolfe, B., held that the plaintiff might avoid the sale and recover the policy (a). The interest of a husband in reversionary property of his wife, which from its nature was subject to the contingency of the wife surviving her husband before a reduction into possession and also to the claim of the wife for a settlement, was offered for sale, and the purchaser knowing the fact of the wife's death, obtained a purchase of the property from the vendors, who were ignorant of the death; the Court of Chancery set aside the sale (b). So, where a lessee for lives obtained an agreement for a renewal of his lease, knowing but suppressing the fact that the surviving life for which he held was in extremis, a Court of Equity refused to grant specific performance of the agreement (c). Where an alleged interest in certain property was sold by auction, and the vendor knew at the time of the sale that the interest sold was of no value, though he made no representation of the value, the purchaser having no means of ascertaining whether it was of any value or not, the sale was set aside in equity (d). Upon the treaty of a sale of marsh land the vendor industriously concealed the circumstance that it required a large annual outlay for the repair of a river wall; specific performance was refused against the purchaser (e). The defendant sold and conveyed an estate to the plaintiff, knowing at the time but concealing the fact that part of the land was an encroachment upon a common to which he had no title, the Court set aside the sale as having been effected by fraud (ƒ). Upon this principle it seems that a person knowingly Selling selling a chattel with a latent defect, without disclosing it chattel with to the buyer, is guilty of a fraud, which would entitle the buyer to avoid the sale (y). But he may expressly stipulate latent defect Selling chattel with patent defect. Fraudulent intention. that the buyer is to take the chattel with all faults; it is then immaterial how many faults exist within the knowledge of the seller, unless he uses some artifice to disguise them, and to prevent their being discovered by the buyer (a). If a person sells a chattel with a patent defect in it, and the buyer has an opportunity of inspecting it, the seller does not commit a fraud by not pointing out the defect (b). So, the owner of a house which is out of repair is not bound to inform a proposed tenant of the state of repair which the tenant can examine into himself; and if the owner lets the house, knowing it to be unfit for habitation by reason of its ruinous state, without communicating that fact to the tenant, the latter is not, therefore, entitled to avoid the letting on the ground of fraud (c). On the occasion of a sale it is not, in general, the duty of the purchaser to inform the vendor of the circumstances he may be acquainted with, which may make it desirable for him to purchase the property (d). Accordingly, where a first mortgagee with a power of sale, having made an advantageous contract for the sale of the mortgaged property, purchased the interest of a second mortgagee, who supposed the property was insufficient for both mortgages, without informing him of his contract, the transaction was held valid, and the first mortgagee was held entitled to retain the whole of the proceeds of the sale (e). An intention to deceive is a necessary ingredient of fraud; and when a person makes a false statement to another for the purpose of inducing the other to act upon it, the intention to deceive depends upon his knowledge or belief respecting the falsehood of the statement. If he knows the statement to be false, or if he does not believe it to be true, the law imputes to him a fraudulent intention (ƒ). (a) Baglehole v. Walters, 3 Camp. 154; Schneider v. Heath, 3 Camp. 506; and see Taylor v. Ballen, 5 Ex. 779. (b) Horsfall v. Thomas, 1 H. & C. 90; 31 L. J. Ex. 322. (c) Keates v. Earl Cadogan, 10 C. B. 591. (d) See per Lord Thurlow, L. C., Fox v. Mackreth, 2 Bro. C. C. 400, 420; Dolman v. Nokes, 22 Beav. 402; Tate v. Williamson, L. R. 1 Eq. 528. (e) Dolman v. Nokes, supra. (f) Foster v. Charles, 6 Bing. 396; 7 Bing. 105; Polhill v. Walter, 3 B. & Ad. 114. intention. Formerly the opinion prevailed with some judges that if a Fraudulent person induced another to act by a false statement, he was equally responsible for the falsehood of the statement whether he believed it to be true or not; and if he made the statement with a belief in its truth, he was described as committing "legal without moral fraud," which they held sufficient to vitiate an agreement, or to give a cause of action for the damages caused by it. But it has been decided that this opinion is erroneous, and that a fraudulent intention, as above described, is essential in order to constitute such fraud as is recognised in law (a). The phrase "legal without moral fraud" is still sometimes used to express the case of a person acting in such a manner and under such circumstances that a fraudulent intention is imputed to him, although he was not in fact instigated by a morally bad motive: for instance, where the defendant had accepted a bill of exchange in the name of the drawee, purporting to do so by procuration, knowing that in fact he had no such authority, but fully believing that the acceptance would be sanctioned and the bill paid by the drawee, and the drawee repudiated the acceptance, the jury negatived a fraudulent intention in fact; but the Court held that the defendant had committed a fraud in law, by making a representation which he knew to be untrue, and which he intended others to act upon (b). The fraudulent intention does not necessarily include an intention to benefit the party making the representation, or an intention to injure the party to whom the representation is made (c). If a person makes a statement of fact, in the belief that it is true, though it is not true in point of fact, there is no fraudulent intention (d). And a fraudulent intention can (a) See Cornfoot v. Fowke, 6 M. & W. 358; Evans v. Collins, 5 Q. B. 804; and the notes to Pusley v. Freeman, 2 Smith's L. C. 5th ed. 68. (b) Polhill v. Walter, 3 B. & Ad. 114; per Parke, B., Murray v. Mann, 2 Ex. 538, 541. (c) Foster v. Charles, 6 Bing. 396; 7 Bing. 105; per Lord Campbell, Wilde v. Gibson, 1 H. L. C. 605, 633. (d) Ormrod v. Huth, 14 M. & W. 651, 664; Hayeraft v. Creasy, 2 East, 92; Rawlings v. Bell, 1 C. B. 951, 959; Cornfoot v. Fowke, 6 M. & W. 358; Early v. Garrett, 9 B. & C. 928; Shrewsbury v. Blount, 2 M. & G. 475; Evans v. Collins, 5 Q. B. 804. |