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

in its treasury a large amount of money

available for the development of the mine Engerud, J., delivered the opinion of said corporation? Answer. Yes." In of the court:

response to question 10 the jury found that This is an appeal from a judgment for Bates did not make the representation emplaintiff in an action to recover damages bodied in question 9. In response to other for alleged deceit in the exchange of proper- questions the jury found that the reprety. The case was submitted to the jury sentations found to have been made were for a special verdict, upon which judgment known by the persons making them to be was ordered and entered against these ap- false, and that plaintiff relied thereon, and pellants. A motion for new trial was made, was induced thereby to purchase the stock. based in part upon a statement of the case The only finding as to damage was the specifying as grounds for a new trial nu following: "What detriment did the plainmerous errors of law, and the insufficiency tiff suffer by reason of purchasing such of the evidence to justify some of the find- stock? Answer. $9,995.75.” The form of ings of the jury, and the insufficiency of the this question indicates the erroneous theory verdict to support the judgment. The mo- upon which the case was submitted to the tion for a new trial was denied. This ap- jury. Bearing in mind that the plaintiff peal is from the judgment.

had voluntarily affirmed the trade after The appellants contend that the facts knowledge of the alleged deceit, it will be found by the jury are insufficient to sustain seen that the jury were asked to award the the judgment, and we think the point is plaintiff compensation, not solely for the well taken. The facts upon which plaintiff deceit, but also for the plaintiff's own folly must base his right to recover are those es- in adhering to a bad bargain. The jury tablished by the admissions in the pleadings were instructed that the measure of damand by the special verdict. So far as ma- ages was the difference between the actual terial on this appeal, the pleadings disclose value of the stock purchased and the value substantially the following facts: On or of the property given in exchange. It was about December 28, 1901, respondent pur undisputed that the real property traded for chased and received from the appellants 750 the stock was worth $15,000. The method shares of stock in a coal-mining corporation by which the jury were instructed to arrive in which the appellants were stockholders. at the answer to the question as to damages The par value of the stock was $100 per is shown by the following instruction: “The share, but it was sold to the respondent proof shows that at this time [December at a valuation of $20 per share, or $15,000; 28, 1901] there were 9,100 shares of the and in exchange for said stock he sold and capital stock of this corporation outstanding, conveyed to the appellants a lot and busi- and each of such shares was therefore worth ness block owned by him, worth, exclusive and of the value of the 1-9100 part of the of encumbrances, $15,000. The respondent entire assets of the corporation. Having, did not avail himself of the right to re- then, first determined the actual market scind the transaction when he discovered value of the entire assets and business of the alleged fraud on the part of appellant. said company at the time, you will divide He retains the stock, and has affirmed the such value by 9,100, the number of shares contract. He seeks to recover compensa- of stock then outstanding. This will give tion for the loss which he avers he has the actual value of each of such shares of suffered by reason of the falsity of the rep- stock at that time. Plaintiff purchased resentations of the appellants.

750 shares of such stock, at the price of $20 All that the jury found touching misrep- per share. If you find that said stock at resentation by these appellants appears in said time was worth less than $20 per share, the following questions and answers of the then the difference between what you find special verdict: “Question 5. Did the de. to be the actual value of each share and $20 fendant Wright represent to plaintiff, with will be the damage that plaintiff sustained intent to induce him to purchase said stock, on each share, and 750 times this will be that defendants Pringle and Bates, or ei- the total sum at which you will assess ther of them, had purchased stock of said plaintiff's damages in answer to the above corporation at the price of $20 per share, question.” These instructions were exceptfor which they had paid the sum of $20,000 ? ed to by the defendants, and are assigned Answer. Yes.” In answer to question 6 as error. the jury found that Bates made the same The business of this corporation was in representation set forth in question 5. an undeveloped state. It owned a large "Question 9. Did the defendant Wright quantity of land in the lignite coal belt, and represent to plaintiff, with intent to in that land was the principal part of its tanduce him to purchase such stock of said 'gible assets. It was unknown as yet wheth

er the enterprise would be a profitable one | In other words, the measure of damages for or not. In other words, it was a purely deceit where the contract is affirmed is prespeculative venture. It was undisputed cisely the same as for a breach of warranty that the plaintiff knew it to be such when in a contract of sale. Respondent argues that he bought the stock, and that one of the the rule adopted and applied in that case is principal inducements for him to buy the not a universal rule of general application, stock was the hope of great and sudden but is applicable only where the circuniwealth, which the investment promised to stances are like those in that case. Counsel yield if the enterprise should prove to be cites $ 4997, Rev. Codes: "For the breach of a profitable speculation. It appears from an obligation not arising from contract, the the record of the evidence admitted and measure of damages, except when otherwise excluded, and the instructions of the court, expressly provided by this Code, is the that in determining the value of the stock amount which will compensate for all the the jury were permitted to take into consid- detriment proximately caused thereby, eration only the actual net value of the tan- whether it could have been anticipated or gible assets of the corporation. It is ap- not.” And § 3941, Rev. Codes 1899: “One parent that, if the respondent's theory of who wilfully deceives another with intent to this case shall prevail, the result will be induce him to alter his position to his injury that respondent will have all the advan or risk is liable for any damage which he tages of the speculative features of the thereby suffers.” He further cites § 3942, enterprise, without assuming all the risk of Rev. Codes 1899, defining actionable deceit, such a speculation. His position is pre. and § 3848, Rev. Codes 1899, defining actual cisely the same as if he were to claim a fraud, and calls attention to the fact that right to share in the distribution of prizes actionable deceit and actual fraud are deat a lottery without paying for the chance. fined by the statute in the same language. It is no answer to this proposition to say From these provisions of the Code the conthat respondent would not have engaged in clusion is deduced that in all cases of acthe enterprise if he had not been deceived tual fraud the defrauded party can waive by the appellants. The unanswerable ob- rescission and recover damages, and that jection to that argument is that respondent such damages are to be measured by the difvoluntarily chose to adhere to the bargain, ference in value between what he received and retain all the benefits and advantages and what he parted with, regardless of the of the speculation, after he knew he had nature of the false representations. Acbeen deceived. He thereby forever estopped cording to respondent's theory, it matters himself to claim any compensation for not whether the representations were such loss resulting from the making of the trade. as to affect the value of the subject-matter It

affirmance of the contract. of the contract, or not. If they come withWhether the bargain was good or bad, he in the general definition of actual fraud, must abide by it and take the consequences and the contract was induced thereby, the of his speculation. He cannot affirm the victim of the deceit can recover damages contract to the extent of the actual, present measured by the rule he has stated. 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 com

the 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 same reason that mistake, undue influ. The rule by which such damages are to be ence, duress, etc., have the same effect. Secmeasured, where no special or exemplary tions 3941, 3942, Rev. Codes 1899, merely dedamages are claimed, was announced by this clare that actual fraud is a tort for which court in Fargo Gas & Coke Co. v. Fargo the guilty party is liable to the injured party Gas & Electric Co. 4 N. D. 219, 37 L. R. A. if any damage has been suffered by the lat. 593, 59 N. W. 1066, to be the difference be. ter. In other words, actual fraud, with damtween what the property received would age, is a good cause of action, and constitutes have been worth if as represented, and what actionable deceit. These statutory declarait was actually worth at the time of the sale. I tions of general principles throw no liglit




on the precise question in this case. It is on "boom" prices of land then prevailing. conceded that a person guilty of deceit is The defendant, among other things, claimed liable for all damages proximately result that the plaintiff had been guilty of deceit ing from the wrong. The question to be de- in the sale by falsely representing that the termined is, What loss, if any, has the plain- land was even, level, and suitable for buildi. tiff suffered as the proximate result of the ing purposes, and required no grading. Jusfalse representations? Respondent asserts tice Bronson, in stating the measure of damthat he was inveigled into the speculation liy ages to be applied in that case, used this lanthe deceit of the appellants, and therefore guage: “As the land, whether the reprethe false representations are the proximate sentations were true or false, was in reality cause of the loss he has suffered. The ar- worth only a small part of the price which gument is more plausible than sound. the defendant agreed to pay, there may be While it is true that he was inveigled into some difficulty in answering the question. the speculation under a false impression of . : • We must not go back to the date the facts, it is also conceded that he volun- of the contract for the price, and then come tarily elected to retain his interest in the en- down to the present day for the actual valterprise after he was aware of the defen- ue of the land, and charge the plaintiff with dants' misrepresentations, and notwith the difference. The defendant must bear the standing that he could have escaped all consequences of the prevailing delusion the consequences of a bad speculation by about prices and new towns under which withdrawing from it by rescission. It is the purchase was made. On the other hand, therefore clear that that part of the loss the plaintiff cannot say that his fraud has which would have resulted from the making worked no injury, because everybody has of such a trade on the same terms without now found out that the land never deceit is due to plaintiff's own folly, and worth anything for the purpose of building is not properly chargeable to the false rep. a town upon it.

The cause must, as resentation.

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 and only one was false, the plaintiff was en which seem to make such a distinction. titled to compensation only to the extent Anjongst 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 towi cases seem to hold that 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.



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 Bolles, 132 U. S. 125, 33 L. ed. 279, 10 Sup. this case,—that the entire loss resulting Ct. Rep. 39, the opinion of Chief Justice from a contract induced by false representa- Beasley in Crater v. Binninger is cited as tion is proximately caused by the deceit, be authority. As an additional

for cause the contract would not have been adopting that rule, Chief Justice Fuller said made if deceit had not been practised. For that the defendant should not be held liable the reasons hereinbefore stated, that theory for “the expected fruits of an unrealized specis, in our opinion, erroneous. The first ulation.” If it were true that the other case in this country which we can find in rule imposed such liability, it is obvious which such a theory is advanced is that of that the argument of the chief justice would Crater v. Binninger, 33 N. J. L. 513, 97 Am. bc fatal to the universal rule prevailing in Dec. 737, where Chief Justice Beasley confi- case of breach of warranty. In cases of dedently asserts that the rule is well estab- ceit or for breach of warranty, as well as lished. The chancellor, however, wrote a in all other actions in tort or on contract separate opinion in that case, from which it for the recovery of damages, conjecture or appears that he differed from the chief jus- speculation as a basis for estimating damtice as to the ordinary rule of damages in ages are excluded, for reasons familiar to cases of deceit. The chancellor proceeds to the profession; and consequently the preshow that the ordinary measure of compen- vailing rule in breach of warranty and de. sation for deceit is the same as for breach ceit does not in fact give the injured party of warranty, but concludes his opinion with the expected fruits of an unrealized specuthe following remarkable proposition: “In lation.” The decision in Smith v. Bolles this case Crater was willing to go in with was followed and approved in Sigafus v. Binninger at the cost price. Had Binninger Porter, 179 U. S. 116, 45 L. ed. 113, 21 told him truly that the cost price was Sup. Ct. Rep. 34. The same doctrine seems $18,000, he would, no doubt, have been will. to have been given root in England by the ing to go in at that price, and would have case of Peek v. Derry, L. R. 37 Ch. Div. 541, paid at that rate, and, if any subsequent decided in 1887. That case was reversed by loss was sustained, would have had no the House of Lords (L. R. 14 App. Cas. 357) claim against Binninger; and the true on the ground that the facts did not conmeasure of damages appears to me to be stitute actionable deceit, and hence there the excess which he was induced to pay by was no occasion to express any opinion as the false and fraudulent representation of to the propriety of the measure of damBinninger. If that was the difference be. ages adopted in the lower court. The Amertween $18,000 and $28,000, the one eighth ican cases which have adopted the rule adwould be $1,250, which, with the interest, vocated by Chief Justice Beasley in Crater would be the real damage. And the plain. v. Binninger, 33 N. J. L. 513, 97 Am. Dec. tiff below would be entitled to recover these 737, seem to have been based upon the audamages, although he had made double the thority of Crater v. Binninger, Smith v. amount out of the enterprise as clear profit. Bolles, 132 U. S. 125, 33 L. ed. 279, 10 Sup. If, however, the jury would believe that Ct. Rep. 39, and Peek v. Derry, L. R. 37 Crater, if he had been told the real price, Ch. Div. 541. The weight of authority as would not have entered into the transaction well as the better reason is against the rule at that price, but would have taken a share supported by these cases. See cases cited in in the lands only at the higher price, then Fargo Gas & Coke Co. v. Fargo Gas & Elechis embarking in the transaction at all was tric Co. 4 N. D. 219, 37 L. R. A. 593, 59 N. the result of the fraud of Binninger, and W. 1066; 4 Sutherland, Damages, 3d ed. p. the rule of the judge at the trial was the 3401, note 1. correct one; but it should have been so stat- It is plain to be seen that the rule advoed to the jury.” If we understand the cated in the cases mentioned in some inchancellor's language correctly, it was his stances deprives the plaintiff of full compenopinion that in such a case the jury should sation for the loss of what his bargain enbe left to speculate as to the probable course titled him to, and in others imposes upon of conduct which the injured party would the defendant liability for losses not attribor would not have pursued under one or utable to his fault. That rule sets up an the other supposed state of facts, and the arbitrary measure of damages, which viomeasure of compensation would depend up- lates that cardinal principle of the law of on what the jury conjectured the plaintiff torts that the party at fault shall be held would have done if he had known the truth. liable only for just compensation for the As both opinions were for reversal of the detriment proximately caused by his wrongtrial court, it is impossible to tell which of /ful act. That principle is expressed in our

recover a

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

To avoid any misapprehension from the greater amount in damages for the breach use of the term “fiduciary relation" in speakof an obligation (contract of tort] than he ing of the special circumstances under could have gained by the full performance which a misrepresentation as to cost or valthereof on both sides except in the cases ue ray constitute deceit, we will say that specified in the subdivisions on exemplary we do not use that term in its technical damages and penal damages and in $$ 4996, sense. We apply it to any situation where 5003, and 5004." (Breach of promise to trust and confidence are reposed by one parmarry, seduction, and wilful or grossly neg. ty in another under such circumstances as ligent injury to domestic animals.)

to impose on the person trusted the obligaWe can see no difficulty in applying to the tion to act in good faith. facts of this case the same rule which was

It has been said that the courts of Masapplied in Fargo Gas & Coke Co. v. Fargo sachusetts and Maine bave held that a misGas & Electric Co. 4 N. D. 219, 37 L. R. A. representation as to cost is not material, 593, 59 N. W. 1066. Compare what has and that those courts are at variance with been received with what would have been the courts of New York and others. Bigereceived if the facts had been as they were

low, Fr. p. 492. This loose expression has represented to be, or, if the deceit affected led to the erroneous idea that some courtsthe amount of money or property parted especially those of New York-have held with, compare the value of that property constitute actionable deceit. The language

that a mere misrepresentation of cost may with what should have been given if there of Justice Bronson in Van Epps v. Harrison, had been no deceit. The difference is the 5 Hill, 63, 40 Am. Dec. 314, seems to give measure of compensation for plaintiff's loss color to this idea. The learned justice if there are no penal or exemplary damages. seems to have entirely overlooked in that It is apparent that the speculative feature case the fact that the plaintiff had either of the transaction is common to both term expressly or impliedly agreed that the deof the equation, and is therefore eliminated fendant and the other persons who contribfrom the problem.

uted 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 insuffi- on 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 val- the basis of the price paid by the plaintiff.

It has not been found that there were In other words, the terms of the contract itany fiduciary relations existing between the self made the price paid by the vendor a parties, or that there were any other facts material fact, and hence the misrepresentaor circumstances giving rise to an implied tion as to the price paid was clearly actionagreement that the price paid by the vendur able deceit. It was doubtless for this reaor others should be the price to the plaintif. son that the majority of the court overruled It is not found or admitted that there was Justice Bronson. Analysis of the other any express contract to that effect. In the cases in New York and elsewhere, we think,

will disclose that there is in fact no real absence of special circumstances of that nature, a mere false statenient as to the price difference of opinion as to when a misreprepaid by the vendor or others is not action- sentation as to the price paid by the vendor able deceit. Hauk v. Brownell, 120 111. 161. or others will or will not constitute action11 N. E. 416; Teachout v. Van Hoesen, 76 able deceit. However inaccurately the idea Iowa, 113, 1 L. R. A. 664, 14 Am. St. Rep. may be expressed, the rule as exemplified 206, 40 N. W. 96; Kilgore v. Bruce, 166 by all the cases seems to be fairly uniform

that a mere representation as to the price Mass. 136, 44 N. E. 108; Davenport v. Bu- paid by the vendor or others is not actionchanan, 6 S. D. 376, 61 N. W. 47; Coulter able in the absence of special circumstances v. ('lark, 66 N. E. 739; Sandford v. Handy, such as those we have mentioned. The find23 Wend. 260; Smith v. Countryman, 30 N. ing that Wright wilfully misrepresented the Y. 655; Ellis v. Andrews, 56 N. Y. 83, 15 amount of funds in the treasury convicted Am. Rep. 379; Fairchild v. McMahon, 139 the defendant Wright of actionable deceit, N. Y. 290, 36 Am. St. Rep. 701, 34 N. E. but there was no finding or admission in the 779; Miller v. Barber, 66 N. Y. 558; Hubbell pleadings or evidence from which it can be v. Meigs, 50 N. Y. 480; Medbury v. Watson, ascertained how much he falsely exaggerat6 Met. 246, 39 Am. Dec. 726; Hemmer vi ed the assets in this respect. There are


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