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§ 119. Effect of Fiduciary Relations Between the Parties. When one of the parties to a contract occupies a relation of trust and confidence towards the other, such as that of a trustee, guardian, agent, attorney, partner, etc., he is charged with the duty of exact truthfulness and of making full disclosure of all pertinent facts within his knowledge, in order that the contract may be a valid one, and any concealment or misrepresentation of a material matter on his part amounts to a fraud sufficient to entitle the injured party to relief; and the latter is entitled to rely implicitly on representations made to him, and is not chargeable with negligence because he fails to investigate or inquire into the matter for himself.743 The relation of attorney and client, for instance, is a trust relation within the meaning of this rule; and where an attorney leased premises to his client, representing to him that the premises could be used as a meat market, whereas such use was prohibited by a city ordinance, it was held ground for rescinding the lease.744 So, where a decree of partition was obtained in violation of the rights of one of the heirs, an infant, and the person benefiting thereby induced such heir, on reaching her majority, to execute a deed in conformity with the partition, representing to her that the execution of the deed was necessary and had been ordered by the court, the grantor being in ignorance of her legal rights, and it further appeared in the case that the relation of brother and sister existed between the parties, and that the grantor (the sister) was much under the influence of the grantee and reposed great confidence in him, it was held that the deed should be set aside as fraudulent.745 The rule also extends to cases where the contracting parties are joint owners, joint purchasers, tenants in common, or members of a syndicate.746 And it

743 Robinson v. Sharp, 201 Ill. 86, 66 N. E. 299; Stafford v. Maus, 38 Iowa, 133; Vance v. Supreme Lodge of Fraternal Brotherhood, 15 Cal. App. 178, 114 Pac. 83. And see, supra, §§ 40 et seq.

744 Altgelt v. Gerbic (Tex. Civ. App.) 149 S. W. 233. 745 Long v. Mulford, 17 Ohio St. 485, 93 Am. Dec. 638.

746 Fisher v. Radford, 153 Mich, 385, 117 N. W. 66; McMullen v. Harris, 165 Iowa, 703, 147 N. W. 164; Kroll v. Coach, 45 Or. 459, 78 Pac. 397, 80 Pac. 900; Spence v. Denton, 74 Ga. 395. And see, supra, § 44.

has also been held that where men deal as friends, and one accepts as true false representations made by the other, which, but for the relation of friendship, would have put him on inquiry, the law will protect him in his trust.747 Generally, however, the law requires some relation of technical trust in order to apply this rule. Certainly it cannot be invoked where the parties deal on equal terms and at arms' length. Thus where, on an exchange of lands, one party told the other all he knew of certain lands to which he held a deed and which were included in the trade, and told him that he had never seen the lands and had no better means of knowledge as to their condition and situation than he gave to the plaintiff, it was held that there was no such basis of trust and confidence created as would authorize the setting aside of the agreement for fraud, there being in fact no such lands in existence.748 And it has been remarked that a party negotiating for a compromise or settlement has no right to overlook the hostile position of the attorney for the other party or to expect advice from him.749

§ 120. One Party Possessing Special, Expert, or Technical Knowledge.-The rule imposing on one to whom representations are made the duty of ascertaining their truth by reasonable inquiry has no application to cases where the party making the representations is, or may be assumed to be, familiar with the subject-matter through the possession of that technical training or skill, experience, or expert knowledge which the subject demands and which the other party does not possess; because in this case they do not deal on equal terms, but the fact lies peculiarly within the knowledge of the one party, and the other is unable to verify the statements made to him.750 Or conversely, the party

747 Gray v. Reeves, 69 Wash. 374, 125 Pac. 162. And see Hall v. Thompson, 1 Smedes & M. (Miss.) 443.

748 Carwell v. Dennis, 101 Ark. 603, 143 S. W. 135. And see Bosley v. Monahan, 137 Iowa, 650, 112 N. W. 1102.

749 Lewless v. Detroit, G. H. & M. Ry. Co., 65 Mich. 292, 32 N. W. 790.

750 Mulholland v. Washington Match Co., 35 Wash. 315, 77 Pac. 497; Kost v. Bender, 25 Mich. 515; Board of Water Com'rs of New London v. Robbins & Potter, 82 Conn. 623, 74 Atl. 938; Stewart v.

defrauded may show that he was ignorant, by reason of his calling, character, and associations, of the matter to which the contract related.751 In an instructive case of this character, it appeared that a person claiming to be a physician told a rustic, who was entirely inexperienced in the symptoms and effects of diseases, that her nephew was suffering from a valvular disease of the heart which was liable to terminate his life at any time, and that he could cure it, and demanded a sum of money for effecting such cure. All this being false, it was held that the pretended physician was guilty of an attempt to obtain money by false pretenses.752 Again, a complaint is good on demurrer which alleges that a banker, expert in making computations, in settling a complicated account with one who was incapable of making such computations for himself, falsely and fraudulently made out an indebtedness to himself of a much larger sum than was really due, and thereby obtained payment of the larger sum, knowing that the other relied upon his computation.758 And the same rule was applied in a case where the seller was an oil land promoter, and had been engaged in the oil land business for a long time, while the purchaser was entirely without knowledge of the subject. So again, "a jeweler or a diamond merchant, who deals in diamonds and precious stones, has better means of knowing the nature and quality of the stones he sells than an unskilled stranger who comes to his shop to buy them. If, therefore, he represents a glittering stone to be a diamond, he impliedly warrants his knowledge of the truth of his representation. His statement amounts to a warranty of the fact to a purchaser, and the jeweler is responsible if the stone turns out to be only a piece of crystal, whether he knew the representation to be true or false." 755 There is

754

Salisbury Realty & Ins. Co., 159 N. C. 230, 74 S. E. 736; Lane v. Town of Harmony, 112 Me. 25, 90 Atl. 546, Ann. Cas. 1915C, 874.

751 Albright v. Corley, 40 Tex. 105; Muck v. Hayden, 173 Mo. App. 27, 155 S. W. 889; Couch v. O'Brien, 41 Okl. 76, 136 Pac. 1088. 752 People v. Arberry, 13 Cal. App. 749, 114 Pac. 411.

753 Worley v. Moore, 77 Ind. 567.

754 Brandt v. Krogh, 14 Cal. App. 39, 111 Pac. 275.

755 2 Add. Torts (Wood's edn.) § 1184. And see Picard v. McCormick, 11 Mich. 68.

also a special rule where the vendor of an article is also the manufacturer of it. "The manufacturer of an article has superior means of information as to the nature and quality of the article he makes than a stranger not engaged in the manufacture. If, therefore, he represents the article he makes to be of some superior or peculiar quality, or to be fit for some particular purpose, in order to recommend it to a purchaser, his representation amounts to a warranty of the fact," 756 and the purchaser, making his purchase on the strength of such representations, and finding himself deceived and misled, may repudiate the sale, although he made no special effort to determine the truth in advance.757

§ 121. Party Relying on His Own Investigation.— Where false and fraudulent representations are made concerning the subject-matter of a contract, but the person to whom they are made, before closing the contract (or before the time for payment arrives) inspects and examines the subject of the contract, or conducts an independent investigation into the matters covered by the representations, which is sufficient to inform him of the truth, and which is not interfered with or rendered nugatory by any act of the other party, it is presumed that he places his reliance on the information acquired by such investigation and on his own judgment based on such facts, and not on the representations made to him, and therefore he cannot have relief because his bargain proves unsatisfactory to him.758 Thus,

756 2 Add. Torts (Wood's edn.) § 1191.

757 Jones v. Bright, 3 Moore & P. 174; mobile Co., 177 Fed. 863, 101 C. C. A. 77; Iowa, 308, 85 N. W. 28.

Joslyn v. Cadillac Auto-
Watson v. Brown, 113

758 Curran v. Smith, 149 Fed. 945, 81 C. C. A. 537; Mather v. Barnes (C. C.) 146 Fed. 1000; Pittsburg Life & Trust Co. v. Northern Cent. Life Ins. Co. (C. C.) 140 Fed. 888; Smith & Benham v. Curran & Hussey (C. C.) 138 Fed. 150; Brown v. Smith (C. C.) 109 Fed. 26; Graybill v. Drennen, 150 Ala. 227, 43 South. 568; Dooley v. Burlington, Gold Min. Co., 12 Ariz. 332, 100 Pac. 797; Delolme v. State Sav. Bank, 113 Ark. 599, 169 S. W. 229; Wright v. Boltz, 87 Ark. 567, 113 S. W. 201; Williams v. Mitchell, 87 Cal. 532, 26 Pac. 632; Gratz v. Schuler, 25 Cal. App. 117, 142 Pac. 899; Stephens v. Orman, 10 Fla. 9; Hirschman v. O'Hara & Russell Co., 59 Fla. 517, 51 South. 550; Hess v. Young, 59 Ind. 379; Hayslip v. Fields, 142 Ga. 49, 82 S. E. 441; Kline v. Kennedy, 150 Ky. 729, 150 S. W. 998;

false representations on the sale or lease of a mining property, with regard to its value, the amount of ore in sight, its richness, or similar matters, afford no ground for rescission where the purchaser or lessee, instead of relying on what was told him, visited the mine for the purpose of informing himself and exercising his own judgment, or took possession of the property and worked it for a sufficient time to form a correct opinion for himself.75 So, where the purchaser of a brokerage business examined the vendor's books. before closing the trade, to see what the business was worth, he cannot defend against his note for the purchase price on the ground that the plaintiff overstated the value of the business in conversation with him.760 And for the same reason, "representations and assertions of title by a vendor of real property, where the title deeds are submitted to the inspection of the purchaser, who exercises his own or such other judgment as he confides in on the goodness of the title, amount only to expressions of opinion and belief, and cannot be treated as a warranty." "761 Again, mis

Sohan v. Gibson, 118 Ky. 403, 80 S. W. 1173; Frank v. Lacey, 3 Ky. Law Rep. 335; Ross v. Bolte, 165 Iowa, 499, 146 N. W. 31; Bowen v. Walton, 142 Ky. 509, 134 S. W. 885; Latrobe v. Dietrich, 114 Md. 8, 78 Atl. 983; Allison v. Ward, 63 Mich. 128, 29 N. W. 528; Redfield v. Engel, 171 Mich. 207, 137 N. W. 60; Meland v. Youngberg, 124 Minn. 446, 145 N. W. 167, Ann. Cas. 1915B, 775; Younger v. Hoge, 211 Mo. 444, 111 S. W. 20, 18 L. R. A. (N. S.) 94; Grinrod v. Anglo-American Bond Co., 34 Mont. 169, 85 Pac. 891; T. C. Power & Bro. v. Turner, 37 Mont. 521, 97 Pac. 950; Bliven v. Robinson, 83 Hun, 208, 31 N. Y. Supp. 662; Gisel v. City of Buffalo, 15 N. Y. St. Rep. 561; Gordon v. Manhattan Desk Co. (Sup.) 123 N. Y. Supp. 57; Scott v. Walton, 32 Or. 460, 52 Pac. 180; Kreamer v. Smith, 187 Pa. 209, 41 Atl. 43; Cole v. Carter, 22 Tex. Civ. App. 457, 54 S. W. 914; Peck v. Morgan (Tex. Civ. App.) 156 S. W. 917; Luckenbach v. Thomas (Tex. Civ. App.) 166 S. W. 99; Zavala Land & Water Co. v. Tolbert (Tex. Civ. App.) 165 S. W. 28; Hulet v. Achey, 39 Wash. 91, 80 Pac. 1105; Harris v. Stewart, 72 Wash. 661, 131 Pac. 212; Ludington v. Renick, 7 W. Va. 273. Compare Tooker v. Alston, 159 Fed. 599, 86 C. C. A. 425, 16 L. R. A. (N. S.) 818; Hennessey v. Damourette, 15 Colo. App. 354, 62 Pac. 229.

759 Winter v. Bostwick (C. C.) 172 Fed. 285; Irby v. Tilsley, 41 Wash. 211, 83 Pac. 97; Weist v. Grant, 71 Pa. 95; Pike v. Vigers, 2 Dru. & Wal. 1; Whiting v. Hill, 23 Mich. 399. Compare Perkins v. Rice, Litt. Sel. Cas. (Ky.) 218, 12 Am. Dec. 298.

760 Stocks v. Scott, 89 Ill. App. 615.

761 2 Add. Torts (Wood's edn.) § 1189. See Lee v. Haile, 51 Tex.

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