plies to one who lends money to a corporation on the strength of false representations concerning its solvency made by the president and secretary of the company.713 So, inquiring of the sheriff, and relying on the information he gives, as to the nature of the liens and levies of executions in his hands on property offered for sale in his presence, is exercising reasonable caution and diligence, as this is a matter peculiarly within his knowledge.714 And a party making a contract has a right to rely on a statement made by the other party, as to a matter within the latter's knowledge, when the only other information obtainable would be a statement of a third person.'

715

or

In the next place, one may rely implicitly on representations made to him where it is impossible to make an independent investigation, or where they relate to matters which are not open to inspection or examination,718 where the defrauded party would not have been able to discover the falsity of the representations by any investigation which it was in his power to make,717 or where the truth of the matter could not be ascertained without an unreasonable amount of trouble and expense.718 Thus, for example, false representations as to mining property will give a right of rescission where it was physically impossible to make any examination of the property because the mine was filled with water.719 And the same principle applies where real property, the subject of a sale, is overgrown with brush and the survey stakes destroyed,720 or is covered with snow, so that the purchaser cannot examine the land to determine its character and quality.721 Again, where

713 Daniel v. Glidden, 38 Wash. 556, 80 Pac. 811.

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

715 Old Colony Trust Co. v. Dubuque Light & Traction Co. (C. C.) 89 Fed. 794.

716 Kathan v. Comstock, 140 Wis. 427, 122 N. W. 1044, 28 L. R. A. (N. S.) 201; Graybill v. Drennen, 150 Ala. 227, 43 South. 568. 717 Dow v. Swain, 125 Cal. 674, 58 Pac. 271.

718 Borde v. Kingsley, 76 Wash. 613, 136 Pac. 1172.

And see

Becker v. Clark, 83 Wash. 37, 145 Pac. 65.

719 Arbuckle v. Biederman, 94 Ind. 168.

720 Lawson v. Vernon, 38 Wash. 422, 80 Pac. 559, 107 Am. St. Rep.

721 Knapp v. Schemmel (Iowa) 124 N. W. 309.

one of the parties to a written contract is blind, he may rescind if its contents were misrepresented to him by the other party.722 So, a buyer of corporate stock may rely on the seller's statement as to the amount of the indebtedness of the corporation where, at the same time, he is told that there are no books of account which would show such indebtedness.728 Again, the failure to test the accuracy of representations inducing a contract may be excused, and relief may be given on account of their falsity, where the defrauded party had not the ability to investigate their truth, because such investigation would require special knowledge, skill, or experience, which he did not possess.724 Thus, where one purchasing an interest in a business was a stranger in the locality and had no adequate means of ascertaining the truth or falsity of statements made by the seller as to the character, volume, and value of the business, he cannot be charged with negligence precluding relief because he failed to investigate their accuracy.725 So, where the buyer of a stock of jewelry was a grocer and unfamiliar with the jewelry business or the quality or value of the jewelry purchased, and relied expressly on the seller's knowledge and the representations which he made, it was held that the rule of caveat emptor would not apply.720 And a similar decision was made in the case of a purchaser of desert land who, having no knowledge on the subject of irrigation, relied on the seller's representations as to the amount of water that would be necessary for the irrigation of the land.727

In the next place, a purchaser is excused from the necessity of making an investigation, and may rely on representations made to him, where the property which is the sub

722 Muller v. Rosenblath, 157 App. Div. 513, 142 N. Y. Supp. 602. And see, supra, § 57.

723 Davis v. Butler, 154 Cal. 623, 98 Pac. 1047.

724 Sanford & Brooks Co. v. Columbia Dredging Co., 177 Fed. 878, 101 C. C. A. 92; Howell v. Wyatt, 168 Ill. App. 651; Hines v. Royce, 127 Mo. App. 718, 106 S. W. 1091; Becker v. Sunnyside Land & Inv. Co., 76 Wash. 685, 136 Pac. 1147.

725 Mayberry v. Rogers, 81 Ill. App. 581.

726 Lyon v. Lindblad, 145 Mich. 588, 108 N. W. 969. 727 Watson v. Molden, 10 Idaho, 570, 79 Pac. 503.

ject of the bargain is at a distant place, so that it cannot readily be examined, and to visit the scene and inspect it would involve unreasonable expense and trouble.728 Thus, where defendants, in order to induce plaintiff to purchase an interest in a salmon packing outfit, represented that the property consisted of a store building and site located in a place remote from that where the bargain was made, and practically inaccessible to the plaintiff at the time, and defendants knew that plaintiff had no knowledge concerning such store building and site, except from their own representations, it was held that plaintiff was not bound to exercise diligence to ascertain whether the representations were true or false, but was entitled to rely on their being true, and to recover damages for their falsity.729 And again, a party making a contract to dredge a harbor, and being at some distance from the harbor at the time, is entitled to rely on the representations of the other party, who has done a portion of the work and had access to the chart showing soundings, as to the thickness of the rock to be removed, and is not required to investigate the facts himself.730 On the same principle, where the subject of sale is land which lies in a foreign country or in a state other than that in which the purchaser resides, he is under no obligation to visit the premises (or send an agent) in order to examine into its character, quality, situation, etc., but may rely on what the vendor tells him as to these matters, and if the vendor's representations were false and fraudulent, the purchaser may have appropriate relief, notwithstanding his failure to investigate. And this rule.

728 Wakefield v. Coleman, 159 Iowa, 241, 140 N. W. 386; Bishop v. Seal, 87 Mo. App. 256; Lindsay v. Davidson, 57 Wash. 517, 107 Pac. 514; Wooddy v. Benton Water Co., 54 Wash. 124, 102 Pac. 1054, 132 Am. St. Rep. 1102; Godfrey v. Olson, 68 Wash. 59, 122 Pac. 1014; Robertson v. Frey, 72 Or. 599, 144 Pac. 128; Christensen v. Koch, 85 Wash. 472, 148 Pac. 585; Rogers v. Rosenfeld, 158 Wis. 285, 149 N. W. 33.

729 Martin v. Burford, 181 Fed. 922, 104 C. C. A. 360.

730 Hingston v. L. P. & J. A. Smith Co., 114 Fed. 294, 52 C. C. A. 206.

731 Lester v. Mahan, 25 Ala. 445, 60 Am. Dec. 530; Crandall v. Parks, 152 Cal. 772, 93 Pac. 1018; Sherwood v. Salmon, 5 Day (Conn.) 439, 5 Am. Dec. 167; Byers v. McNeil (Iowa) 76 N. W. 685;

applies even though the vendor tells the purchaser that he himself has never seen the property, if he still makes positive representations concerning its condition and character.732 So, in an action for damages for failure to deliver a mortgage as agreed, which mortgage was stated by the defendant to cover certain described land in another state, which representations were false, the plaintiff is entitled to rely wholly on such representations, without consulting the public records of such other state.788 And a purchaser of stock of a corporation, whose principal office is in a distant state, and whose property is at a distance, may rely on the representations of the seller as to the business and assets of the corporation, and, in case of misrepresentations, may rescind the purchase and recover the price paid.734

It is also considered that a person relying on representations made to him, and failing to take steps to ascertain their truth or falsity, is not chargeable with such negligence as should preclude relief where the truth of the matter could only be discovered by a test or trial of the subject-matter. For instance, where the vendor of a tannery falsely represented that the water power connected therewith was sufficient to work it continuously throughout the year, and thereupon the purchaser made extensive repairs, and, on the water failing, abandoned the property and notified the vendor, who took possession and had the benefit of the repairs made, it was held that the purchaser could recover for the cost of the repairs.735 So a buyer of letters. patent for the manufacture of harness buckles may rely on the seller's statement as to the cost of manufacturing the

Scott v. Burnight, 131 Iowa, 507, 107 N. W. 422; Hansen v. Kline, 136 Iowa, 101, 113 N. W. 504; Mountain v. Day, 91 Minn. 249, 97 N. W. 883; Clinkenbeard v. Weatherman, 157 Mo. 105, 57 S. W. 757; Adams v. Barber, 157 Mo. App. 370, 139 S. W. 489; Ross v. Sumner, 57 Neb. 588, 78 N. W. 264; Fishback v. Miller, 15 Nev. 428; Heyrock v. Surerus, 9 N. D. 28, 81 N. W. 36; Linhart v. Foreman's Adm'rs, 77 Va. 540; Stack v. Nolte, 29 Wash. 188, 69 Pac. 753. 732 Savage v. Stevens, 126 Mass. 207.

733 Wilson v. Clark, 63 Wash. 136, 114 Pac. 916.

734 McFeron v. Shoemaker, 73 Wash. 450, 131 Pac. 1126.

735 Farris v. Ware, 60 Me. 482; H. W. Abts Co. v. Cunningham, 95 Neb. 836, 146 N. W. 1036. And see Harlow v. Perry, 113 Me. 239, 93 Atl. 544.

BLACK RESC.-22

buckle, where it is a novel mechanical device and has no established market price.786 And the same rule was applied in the case of a sale of a type-setting machine, the defects in which would not have become obvious to the purchaser by the reasonable use of his opportunity to examine the machine.737

Again, a contract procured by means of false representations may be avoided, though the means of obtaining information were fully open to the party deceived, where, from the circumstances, he was induced to rely upon the information and representations of the other party.738 This rule applies, for instance, where a purchaser makes inquiries as to the reputation and standing of the vendor, and, finding it to be good, relies on the representations made to him by the vendor,739 or where one party exhibits to the other letters or testimonials tending to create a favorable impression or to confirm his statements,740 or refers him to third parties, from whom, on their being questioned, encouraging or confirmatory statements are obtained.741 And for even stronger reasons, if one of the parties to a contract expressly tells the other that he is unacquainted with the subject-matter and intends to rely entirely on what such other tells him in regard to it, he may have relief on discovering that the representations made to him were false and fraudulent, even though he could have discovered their falsity by having recourse to means of information which were fully open to him."

742

736 Braley v. Powers, 92 Me. 203, 42 Atl. 362.

737 Walker, Evans & Cogswell Co. v. Ayer, 80 S. C. 292, 61 S. E. 557.

738 Cross v. Herr, 96 Ind. 96;

Matlock v. Todd, 19 Ind. 130. 739 Stony Creek Woolen Co. v. Smalley, 111 Mich. 321, 69 N. W. 722.

740 Stoll v. Wellborn (N. J. Ch.) 56 Atl. 894.

741 Boddy v. Henry, 126 Iowa, 31, 101 N. W. 447; American Nat. Bank v. Hammond, 25 Colo. 367, 55 Pac. 1090.

742 Altgelt v. Mernitz, 37 Tex. Civ. App. 397, 83 S. W. 891; Ross v. Bolte, 165 Iowa, 499, 146 N. W. 31; Ohlwine v. Pfaffman, 52 Ind. App. 357, 100 N. E. 777; Greene v. Curtis Automobile Co., 144 Wis. 493, 129 N. W. 410; Watson v. Molden, 10 Idaho, 570, 79 Pac. 503; Grant v. Ledwidge, 109 Ark. 297, 160 S. W. 200.