Messrs. F. B. Feetham and Scott Rex | corporation, that said corporation then had for respondent.

In other words, the measure of damages for deceit where the contract is affirmed is precisely the same as for a breach of warranty in a contract of sale. Respondent argues that the rule adopted and applied in that case is not a universal rule of general application, but is applicable only where the circumstances are like those in that case. Counsel cites § 4997, Rev. Codes: "For the breach of an obligation not arising from contract, the measure of damages, except when otherwise expressly provided by this Code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not." And § 3941, Rev. Codes 1899: "One who wilfully deceives another with intent to induce him to alter his position to his injury or risk is liable for any damage which he thereby suffers." He further cites § 3942, Rev. Codes 1899, defining actionable deceit, and § 3848, Rev. Codes 1899, defining actual fraud, and calls attention to the fact that actionable deceit and actual fraud are defined by the statute in the same language. From these provisions of the Code the conclusion is deduced that in all cases of actual fraud the defrauded party can waive rescission and recover damages, and that such damages are to be measured by the difference in value between what he received and what he parted with, regardless of the nature of the false representations. According to respondent's theory, it matters not whether the representations were such as to affect the value of the subject-matter of the contract, or not. If they come within the general definition of actual fraud, and the contract was induced thereby, the victim of the deceit can recover damages measured by the rule he has stated.

er the enterprise would be a profitable one or not. In other words, it was a purely speculative venture. It was undisputed that the plaintiff knew it to be such when he bought the stock, and that one of the principal inducements for him to buy the stock was the hope of great and sudden wealth, which the investment promised to yield if the enterprise should prove to be a profitable speculation. It appears from the record of the evidence admitted and excluded, and the instructions of the court, that in determining the value of the stock the jury were permitted to take into consideration only the actual net value of the tangible assets of the corporation. It is apparent that, if the respondent's theory of this case shall prevail, the result will be that respondent will have all the advantages of the speculative features of the enterprise, without assuming all the risk of such a speculation. His position is precisely the same as if he were to claim a right to share in the distribution of prizes at a lottery without paying for the chance. It is no answer to this proposition to say that respondent would not have engaged in the enterprise if he had not been deceived by the appellants. The unanswerable objection to that argument is that respondent voluntarily chose to adhere to the bargain, and retain all the benefits and advantages of the speculation, after he knew he had been deceived. He thereby forever estopped himself to claim any compensation for loss resulting from the making of the trade. It was an affirmance of the contract. Whether the bargain was good or bad, he must abide by it and take the consequences of his speculation. He cannot affirm the contract to the extent of the actual, present value of the tangible property received, and The provisions of the Civil Code cited by repudiate the speculative feature of it. Up- counsel are merely declaratory of well-estabon the discovery of the deceit he had his lished common-law principles. Deceit is acelection to rescind or affirm, but he could tual fraud, and where the apparent consent not rescind in part and affirm the remain- of one party to a contract has been induced der. An affirmance in part validated the by the actual fraud of the other the contract entire contract. Rev. Codes 1899, § 3934; is voidable. It is voidable not because of Grannis v. Hooker, 31 Wis. 474. Having any supposed pecuniary damage done to the thus validated the contract, the only rem- defrauded party, but because the consent of edy left to the respondent was to seek comthe latter was not free. Rev. Codes 1899, pensation in damages for the loss resulting §§ 3836, 3841-3844. And fraud, actual er from the falsity of the representations up-constructive, renders a contract voidable for on the faith of which he made the trade. The rule by which such damages are to be measured, where no special or exemplary damages are claimed, was announced by this court in Fargo Gas & Coke Co. v. Fargo Gas & Electric Co. 4 N. D. 219, 37 L. R. A. 593, 59 N. W. 1066, to be the difference between what the property received would have been worth if as represented, and what it was actually worth at the time of the sale.

the same reason that mistake, undue influ. ence, duress, etc., have the same effect. Sections 3941, 3942, Rev. Codes 1899, merely declare that actual fraud is a tort for which the guilty party is liable to the injured party if any damage has been suffered by the latter. In other words, actual fraud, with damage, is a good cause of action, and constitutes actionable deceit. These statutory declarations of general principles throw no light

on the precise question in this case. It is conceded that a person guilty of deceit is liable for all damages proximately resulting from the wrong. The question to be determined is, What loss, if any, has the plaintiff suffered as the proximate result of the false representations? Respondent asserts that he was inveigled into the speculation by the deceit of the appellants, and therefore the false representations are the proximate cause of the loss he has suffered. The argument is more plausible than sound. While it is true that he was inveigled into the speculation under a false impression of the facts, it is also conceded that he voluntarily elected to retain his interest in the enterprise after he was aware of the defendants' misrepresentations, and notwith standing that he could have escaped all the consequences of a bad speculation by withdrawing from it by rescission. It is therefore clear that that part of the loss which would have resulted from the making of such a trade on the same terms without deceit is due to plaintiff's own folly, and is not properly chargeable to the false rep. resentation.

on "boom" prices of land then prevailing. The defendant, among other things, claimed that the plaintiff had been guilty of deceit in the sale by falsely representing that the land was even, level, and suitable for building purposes, and required no grading. Justice Bronson, in stating the measure of damages to be applied in that case, used this language: "As the land, whether the representations were true or false, was in reality worth only a small part of the price which the defendant agreed to pay, there may be some difficulty in answering the question.

We must not go back to the date of the contract for the price, and then come down to the present day for the actual value of the land, and charge the plaintiff with the difference. The defendant must bear the consequences of the prevailing delusion about prices and new towns under which the purchase was made. On the other hand, the plaintiff cannot say that his fraud has worked no injury, because everybody has now found out that the land never was worth anything for the purpose of building a town upon it. The cause must, as

far as practicable, be tried just as it would An instructive case on this subject is have been tried the day after the contract that of Page v. Parker, 43 N. H. 363, 80 Am. was made, if the question had arisen at that Dec. 172. The plaintiff had been induced by time. The jury must assume, what the false representations to purchase an inter- parties then believed, that the land was valest in a marble quarry, and pay therefor a uable as the site for a town, and then insum much greater than its actual value. quire how much less the land was worth for The defendants had made many representa- building purposes, taking the surface as it tions. Some were false, some true, and actually existed, than it would have been others immaterial. The plaintiff sued to re- worth for those purposes had the plaintiff's cover damages for deceit. The court held representation concerning the surface been that the measure of damages in such cases true." We believe these cases are sound is the difference between the value of the and in accord with the overwhelming weight property as it actually was, and its value of authority. They illustrate the applicaas it would have been if it were such as it tion of the rule announced by this court was represented to be in those particulars in Fargo Gas & Coke Co. v. Fargo Gas & in relation to which the false and fraudu- Electric Co. 4 N. D. 219, 37 L. R. A. 593, 59 lent representations were made. The quali- N. W. 1066, in cases where the circumfying clause which we have italicized was stances were analogous to those presented said to be advisable in order to make it by the case at bar. We can conceive of no clear to the jury that the damages must be reason why the circumstances of this case confined to such items of loss as were proxi- should call for the application of different mately caused by the representations which principles in determining the rights and liawere false and material. To illustrate: If bilities of the parties than are applied in there were ten material representations, other cases of deceit. There are cases and only one was false, the plaintiff was en- which seem to make such a distinction. titled to compensation only to the extent Amongst them may be mentioned Crater v. that the value of the quarry was diminished Binninger, 33 N. J. L. 513, 97 Am. Dec. 737; by the nonexistence of the one fact which Smith v. Bolles, 132 U. S. 125, 33 L. ed. was falsely represented to exist. In Van 279, 10 Sup. Ct. Rep. 39; Sigafus v. Porter, Epps v. Harrison, 5 Hill, 63, 40 Am. Dec. 179 U. S. 116, 45 L. ed. 113, 21 Sup. Ct. Rep. 314, a good illustration of the same proposi- 34; Reynolds v. Franklin, 44 Minn. 30, 20 tion appears. The defendant had given his Am. St. Rep. 540, 46 N. W. 139; High v. bond for an interest in certain land, which Berret, 148 Pa. 261, 23 Atl. 1004. These was supposed to be very valuable as a town cases seem to hold that in such cases as site. The price paid for the land was far in this the measure of damages is that adoptexcess of its real value, having been based up-ed by the trial court, the difference in val

Bolles, 132 U. S. 125, 33 L. ed. 279, 10 Sup. Ct. Rep. 39, the opinion of Chief Justice Beasley in Crater v. Binninger is cited as authority. As an additional reason for adopting that rule, Chief Justice Fuller said that the defendant should not be held liable for "the expected fruits of an unrealized speculation." If it were true that the other rule imposed such liability, it is obvious that the argument of the chief justice would be fatal to the universal rule prevailing in case of breach of warranty. In cases of deceit or for breach of warranty, as well as in all other actions in tort or on contract for the recovery of damages, conjecture or speculation as a basis for estimating damages are excluded, for reasons familiar to the profession; and consequently the prevailing rule in breach of warranty and deceit does not in fact give the injured party "the expected fruits of an unrealized speculation." The decision in Smith v. Bolles was followed and approved in Sigafus v. Porter, 179 U. S. 116, 45 L. ed. 113, 21 Sup. Ct. Rep. 34. The same doctrine seems to have been given root in England by the case of Peek v. Derry, L. R. 37 Ch. Div. 541, decided in 1887. That case was reversed by the House of Lords (L. R. 14 App. Cas. 357) on the ground that the facts did not constitute actionable deceit, and hence there was no occasion to express any opinion as to the propriety of the measure of damages adopted in the lower court. The American cases which have adopted the rule advocated by Chief Justice Beasley in Crater v. Binninger, 33 N. J. L. 513, 97 Am. Dec. 737, seem to have been based upon the authority of Crater v. Binninger, Smith v. Bolles, 132 U. S. 125, 33 L. ed. 279, 10 Sup. Ct. Rep. 39, and Peek v. Derry, L. R. 37 Ch. Div. 541. The weight of authority as well as the better reason is against the rule supported by these cases. See cases cited in Fargo Gas & Coke Co. v. Fargo Gas & Electric Co. 4 N. D. 219, 37 L. R. A. 593, 59 N. W. 1066; 4 Sutherland, Damages, 3d ed. p. 3401, note 1.

ue between what is parted with and what is | the two opinions received the sanction of received. These cases seem to proceed upon the majority of the court. In Smith v. the theory advocated by the respondent in this case, that the entire loss resulting from a contract induced by false representation is proximately caused by the deceit, because the contract would not have been made if deceit had not been practised. For the reasons hereinbefore stated, that theory is, in our opinion, erroneous. The first case in this country which we can find in which such a theory is advanced is that of Crater v. Binninger, 33 N. J. L. 513, 97 Am. Dec. 737, where Chief Justice Beasley confidently asserts that the rule is well established. The chancellor, however, wrote a separate opinion in that case, from which it appears that he differed from the chief justice as to the ordinary rule of damages in cases of deceit. The chancellor proceeds to show that the ordinary measure of compensation for deceit is the same as for breach of warranty, but concludes his opinion with the following remarkable proposition: "In this case Crater was willing to go in with Binninger at the cost price. Had Binninger told him truly that the cost price was $18,000, he would, no doubt, have been will ing to go in at that price, and would have paid at that rate, and, if any subsequent loss was sustained, would have had no claim against Binninger; and the true measure of damages appears to me to be the excess which he was induced to pay by the false and fraudulent representation of Binninger. If that was the difference be tween $18,000 and $28,000, the one eighth would be $1,250, which, with the interest, would be the real damage. And the plain. tiff below would be entitled to recover these damages, although he had made double the amount out of the enterprise as clear profit. If, however, the jury would believe that Crater, if he had been told the real price, would not have entered into the transaction at that price, but would have taken a share in the lands only at the higher price, then his embarking in the transaction at all was the result of the fraud of Binninger, and the rule of the judge at the trial was the correct one; but it should have been so stated to the jury." If we understand the chancellor's language correctly, it was his opinion that in such a case the jury should be left to speculate as to the probable course of conduct which the injured party would or would not have pursued under one or the other supposed state of facts, and the measure of compensation would depend upon what the jury conjectured the plaintiff would have done if he had known the truth. As both opinions were for reversal of the trial court, it is impossible to tell which of

It is plain to be seen that the rule advocated in the cases mentioned in some instances deprives the plaintiff of full compensation for the loss of what his bargain entitled him to, and in others imposes upon the defendant liability for losses not attributable to his fault. That rule sets up an arbitrary measure of damages, which violates that cardinal principle of the law of torts that the party at fault shall be held liable only for just compensation for the detriment proximately caused by his wrongful act. That principle is expressed in our

Civil Code by § 5014, Rev. Codes 1899, as Cooper, 8 Allen, 334; and other cases cited follows: "Notwithstanding the provisions in notes 4 and 5, p. 492, Bigelow, Fr. of this chapter, no person can recover a To avoid any misapprehension from the greater amount in damages for the breach of an obligation [contract of tort] than he could have gained by the full performance thereof on both sides except in the cases specified in the subdivisions on exemplary damages and penal damages and in §§ 4996, 5003, and 5004." (Breach of promise to marry, seduction, and wilful or grossly negligent injury to domestic animals.)

We can see no difficulty in applying to the facts of this case the same rule which was

applied in Fargo Gas & Coke Co. v. Fargo Gas & Electric Co. 4 N. D. 219, 37 L. R. A. 593, 59 N. W. 1066. Compare what has been received with what would have been received if the facts had been as they were

represented to be, or, if the deceit affected the amount of money or property parted with, compare the value of that property with what should have been given if there had been no deceit. The difference is the measure of compensation for plaintiff's loss if there are no penal or exemplary damages. It is apparent that the speculative feature of the transaction is common to both terms of the equation, and is therefore eliminated from the problem.

use of the term "fiduciary relation" in speaking of the special circumstances under which a misrepresentation as to cost or value may constitute deceit, we will say that we do not use that term in its technical sense. We apply it to any situation where trust and confidence are reposed by one party in another under such circumstances as to impose on the person trusted the obligation to act in good faith.

It has been said that the courts of Mas

sachusetts and Maine have held that a misrepresentation as to cost is not material. and that those courts are at variance with the courts of New York and others. Bigelow, Fr. p. 492. This loose expression has led to the erroneous idea that some courts that a mere misrepresentation of cost may especially those of New York-have held constitute actionable deceit. The language of Justice Bronson in Van Epps v. Harrison, 5 Hill, 63, 40 Am. Dec. 314, seems to give color to this idea. The learned justice seems to have entirely overlooked in that case the fact that the plaintiff had either expressly or impliedly agreed that the defendant and the other persons who contributed to the purchase price were to be let It follows from what has been said that in "on the ground floor" in the speculation, the findings of the special verdict are insuffion equal terms with the plaintiff, and were cient to support the judgment. It is appar- therefore entitled, under the contract, to reent that the representation as to what oth-ceive their respective shares of the land on ers paid for the stock did not affect its valIt has not been found that there were any fiduciary relations existing between the parties, or that there were any other facts or circumstances giving rise to an implied agreement that the price paid by the vendor or others should be the price to the plaintiff. It is not found or admitted that there was any express contract to that effect. In the absence of special circumstances of that na

ue.

ture, a mere false statement as to the price paid by the vendor or others is not actionable deceit. Hauk v. Brownell, 120 Ill. 161. 11 N. E. 416; Teachout v. Van Hoesen, 76

Iowa, 113, 1 L. R. A. 664, 14 Am. St. Rep. 206, 40 N. W. 96; Kilgore v. Bruce, 166 Mass. 136, 44 N. E. 108; Davenport v. Bu chanan, 6 S. D. 376, 61 N. W. 47; Coulter v. Clark, 66 N. E. 739; Sandford v. Handy, 23 Wend. 260; Smith v. Countryman, 30 N. Y. 655; Ellis v. Andrews, 56 N. Y. 83, 15 Am. Rep. 379; Fairchild v. McMahon, 139 N. Y. 290, 36 Am. St. Rep. 701, 34 N. E. 779; Miller v. Barber, 66 N. Y. 558; Hubbell v. Meigs, 50 N. Y. 480; Medbury v. Watson, 6 Met. 246, 39 Am. Dec. 726; Hemmer v.

the basis of the price paid by the plaintiff. In other words, the terms of the contract itself made the price paid by the vendor a material fact, and hence the misrepresentation as to the price paid was clearly actionable deceit. It was doubtless for this reason that the majority of the court overruled Justice Bronson. Analysis of the other cases in New York and elsewhere, we think, will disclose that there is in fact no real

difference of opinion as to when a misrepresentation as to the price paid by the vendor or others will or will not constitute actionable deceit. However inaccurately the idea may be expressed, the rule as exemplified by all the cases seems to be fairly uniform that a mere representation as to the price paid by the vendor or others is not actionable in the absence of special circumstances such as those we have mentioned. The finding that Wright wilfully misrepresented the amount of funds in the treasury convicted the defendant Wright of actionable deceit, but there was no finding or admission in the pleadings or evidence from which it can be ascertained how much he falsely exaggerated the assets in this respect. There are