464

every opportunity to determine its condition and capacity before completing the purchase. In an action to recover the price, it was held that he was not entitled to set off damages arising from the alleged false representations, as the rule of caveat emptor applied. And a similar decision was made in a case where the complainant sued for the rescission of a contract by which he had purchased a herd of cows, and alleged that they were infected with tuberculosis, but it appeared that there was no warranty of their soundness, and that the complainant was an experienced man in the dairy business and competent to judge of the condition of the cattle, and that he had full opportunity to inspect and examine them, and could have had tests made if he judged it necessary.465

§ 62. Concealment Coupled with Efforts to Prevent Discovery. Even in those cases where one of the parties to a contract is legally justified in keeping silence in regard to damaging or discouraging facts within his knowledge, being under no duty to make a disclosure of them, still the other party must be allowed a fair opportunity to find out the truth for himself. Thus, while the seller of property may not be required to volunteer information concerning faults or drawbacks which are known to him, and which the buyer could and should discover by his own examination, and though the seller makes no representations whatever, true or false, yet if he employs any device, trick, or artifice to prevent the buyer from making such inspection or examination, or to render the inspection illusory, or to distract the buyer's attention from the real facts, his concealment becomes fraudulent, and will justify a rescission of the contract.466 Thus, in an English case, the seller of

464 Williamson v. Holt, 147 N. C. 515, 61 S. E. 384, 17 L. R. A. (N. S.) 240.

465 Dorsey v. Watkins (C. C.) 151 Fed. 340.

466 Files v. Rankin, 153 Fed. 537, 82 C. C. A. 491; New York Life Ins. Co. v. McMaster, 87 Fed. 63, 30 C. C. A. 532; Tooker v. Alston, 159 Fed. 599, 86 C. C. A. 425; Mather v. Barnes (C. C.) 146 Fed. 1000; Roseman v. Canovan, 43 Cal. 110; Matthews v. Bliss, 22 Pick. (Mass.) 48; Webster v. Bailey, 31 Mich. 36; Starkweather v. Benjamin, 32 Mich. 305; May v. Loomis, 140 N. C. 350, 52 S. E. 728; Crompton v. Beedle, 83 Vt. 287, 75 Atl. 331, 30 L. R. A. (N. S.) 748,

a house, being aware of a defect in the main wall, plastered it up and covered it over with paper, so that the defect was not visible, and it was held that as he had not only concealed the fault, but done what he could to prevent its discovery, he was liable to the purchaser in an action for deceit. 467 A similar case, resulting in a like decision, was one in which the manufacturer of an implement having a wooden tongue constructed the latter of cross-grained wood, with a knot in it and a knothole, and plugged up the hole and by means of paint and putty concealed the defects.468 In another case, defendant connected the sewer from his building with a pit in the rear thereof, and, having covered the pit with clay, built a residence over it, which he sold to the plaintiff, saying nothing about the pit or the sewer pipe. The pit was then nearly full of sewage, and the residence was uninhabitable because of the odor from it. It was held that the defendant was liable in damages to the plaintiff.69 And a similar rule was applied in a case involving a settlement of the affairs of a partnership, where the plaintiff was offered a sum in discharge of his interest in the firm, and, to induce him to accept it, the defendants, his partners, pretended to submit the books and papers of the firm for his examination, but in reality kept back some of them and for the others substituted fictitious books and accounts.470

§ 63. Concealment Coupled with False Representations. Although the circumstances of a particular case may be such that one of the parties is warranted in keeping silence concerning a material fact within his knowledge and

Ann. Cas. 1912A, 399. But the concealment and the efforts to prevent discovery must have preceded the actual making of the contract. What is done afterwards, in the way of trying to prevent the purchaser from finding out that he has been defrauded, does not warrant the rescission of the sale. Sieveking v. Litzler, 31 Ind. 13. 467 Pickering v. Dowson, 4 Taunt. 785.

468 Kuelling v. Roderick Lean Mfg. Co., 183 N. Y. 78, 75 N. E. 1098, 2 L. R. A. (N. S.) 303, 111 Am. St. Rep. 691, 5 Ann. Cas. 124.

469 Weikel v. Sterns, 142 Ky. 513, 134 S. W. 908, 34 L. R. A. (N. S.) 1035.

470 Richards v. Farmers' & Merchants' Bank, 7 Cal. App. 387, 94 Pac. 393.

471

which is unknown to the other party, yet if his concealment of it is accompanied by any false representations on his part, intended to deceive or mislead, it becomes fraudulent and furnishes ground for rescission or for relief in equity.*71 In the case which is usually cited as a typical example of this rule, it appeared that the owner of a flock of sheep had lost them and had practically given up the hope of recovering them. For this reason he sold them for a mere trifle to a person who made an offer. As a matter of fact, the sheep had already been found and had been advertised by the finder. The seller did not know this, but the buyer did. It was considered that this alone would not justify the rescission of the sale. But the buyer, in the course of the negotiation, had made the mistake of saying that he did not suppose the sheep would ever be found; and it was held that this was such a false statement, though a mere expression of opinion, as amounted to fraud, and would entitle the seller to recover his property.472 For the same reason, it was held to be an actionable fraud where one made a written representation that his son was entitled to credit, concealing the fact that the son was a minor.473 And while mere silence on the part of a sheriff as to the existence in his hands of a prior lien on property sold in his presence will not subject him to an action for deceit, yet if he does or says anything intended or calculated to mislead a purchaser in this respect, he is liable. And it is an impor

tant part of this rule that if a person who is entitled to keep silent in regard to the subject of the contract volunteers any information at all, which may influence the decision of the other party, he is bound to disclose the whole truth, and a partial statement is a fraudulent concealment, though it may be true in itself, if it gives a false color to the whole, or if it purports to be the entire truth and yet involves the suppression of a material part.475

471 Craig v. Hamilton, 118 Ind. 565, 21 N. E. 315; Garrett v. Slavens, 129 Iowa, 107, 105 N. W. 369.

472 Bench V. Sheldon, 14 Barb. (N. Y.) 66.

473 Kidney v. Stoddard, 7 Metc. (Mass.) 252.

474 Wicker v. Worthy, 51 N. C. 500.

475 Gidney v. Chappell, 26 Okl. 737, 110 Pac. 1099.

§ 64. Concealment of Latent Defects.-A patent defect is one which is discoverable by mere inspection by a person of ordinary intelligence. A latent defect is one which is not discoverable at all, until its destructive effects become apparent, or which is not discoverable except by a test or by an inspection requiring technical knowledge or acquired skill to make it instructive. Ordinarily the buyer of personal property must take his chance of patent defects. It is his duty to inspect and examine the property for himself, and he is chargeable with knowledge of such facts as his inspection would disclose to him. But for the seller of property to conceal a latent defect, that is, merely to fail in his duty to state or describe it, when he is aware of its existence and knows that the buyer is ignorant of it and cannot see it, is fraudulent and warrants the rescission of the contract.476 This is a case to which the rule of caveat emptor does not apply. "If the vendor is cognizant of any serious secret defect materially deteriorating the value of the goods in the market, and nevertheless offers them for sale at the ordinary market price, and knows that the purchaser is deceived by the appearance of the goods at the time of the sale, and is laboring under a gross delusion respecting them, and the vendor takes no trouble to rectify the mistake and disclose the real facts to the purchaser, he is responsible in damages for willful deceit." 477 Again, while it is true that the buyer is required to use his sight and intelligence for the discovery of patent defects, yet a defect is not patent in this sense, but is rather latent, if, the physical conditions being obvious, it still requires some special knowledge or skill to determine whether those conditions constitute or indicate a defect. Thus, the inferior quality of a given article may be apparent to the most casual glance of a person skilled in the production or use of

476 Boyer v. State, 169 Ind. 691, 83 N. E. 350; Burnett v. Hensley, 118 Iowa, 575, 92 N. W. 678; Downing v. Dearborn, 77 Me. 457, 1 Atl. 407; Cecil v. Tutt, 32 Mo. 463; Stratton v. Dudding, 164 Mo. App. 22, 147 S. W. 516; Adkins v. Stewart, 159 Ky. 218, 166 S. W. 984; Morbrose Inv. Co. v. Flick, 187 Mo. App. 528, 174 S. W. 189. Compare Dayton v. Kidder, 105 Ill. App. 107; Frenzel v. Miller, 37 Ind. 1, 10 Am. Rep. 62; Jones v. Just, L. R. 3 Q. B. 197. 477 2 Add. Torts (Wood's edn.) § 1205.

articles of that kind, whereas an unskilled person will see the same physical details, but will draw no conclusion from them. In such circumstances, as between a seller aware of the defect and a purchaser who is ignorant of it, it is a fraud for the former to conceal it.478

481

479

But it is necessary to bring this rule into play that the fault or defect should have existed at the time of the sale," and further, that the seller should have known of its existence at that time. 480 As will be shown in another place, there are special rules governing sales by manufacturers of their own products, and sales of articles ordered for a special use or purpose." But ordinarily, one who sells a finished product made or put together by himself, but made out of material which he bought and did not produce, is not responsible for the effects of latent defects in such material which he had not discovered for himself, as, for example, where he uses iron or steel in fashioning his goods, which he supposes to be of good quality, but which contains hidden flaws or imperfections.482 Neither is the seller responsible as for fraud if he frankly tells the purchaser all that he himself knows about the hidden defect, or if he admits that the article is damaged or imperfect, and thereby puts the purchaser upon inquiry to ascertain its real and actual condition.488 And again, notwithstanding the existence of a latent defect, the purchaser must abide by his bargain if he possesses the requisite technical knowledge or skill to detect it and makes his investigation and relies on his own judgment.484

478 Pinney v. Andrus, 41 Vt. 631; Thompson v. Botts, 8 Mo. 710; Puls v. Hornbeck, 24 Okl. 288, 103 Pac. 665, 29 L. R. A. (N. S.) 202, 138 Am. St. Rep. 883.

479 Nelson v. Lillard, 16 La. 336.

480 Puls v. Hornbeck, 24 Okl. 288, 103 Pac. 665, 29 L. R. A. (N. S.) 202, 138 Am. St. Rep. 883.

481 Infra, §§ 120, 189.

482 Bragg v. Morrill, 49 Vt. 45, 24 Am. Rep. 102; Hoe v. Sanborn, 21 N. Y. 552, 78 Am. Dec. 163; Cogel v. Kniseley, 89 Ill. 598. See Randall v. Newson, L. R. 2 Q. B. Div. 102.

483 Grojean v. Darby, 135 Mo. App. 586, 116 S. W. 1062; Overhulser v. Peacock, 148 Mo. App. 504, 128 S. W. 526.

484 Dorsey v. Watkins (C. C.) 151 Fed. 340; Quis v. Halloran, 74 App. Div. 621, 77 N. Y. Supp. 196.