thereof is to constitute such agency the agent of the merchant for the purpose of communicating information as to his financial condition to those with whom he deals. In other words, the merchant who furnishes the information to the agency occupies precisely the same position in law toward anyone who is deceived thereby into giving him credit, as though he had made the communication to such customer direct.123 He is presumed to furnish such information for the sole purpose of enabling such agency to communicate the same to persons who may desire such information for the purpose of determining whether or not credit can be extended to him and to what extent.124 Upon these basic principles, viz., taking notice of their customary functions, and the fact that one furnishing information to them with expectation that others will use it and rely upon it, the rule consequently obtains that one who makes false and fraudulent statements to a commercial agency as to his credit and financial standing, intending them to be published to the business community and taken as true, and another merchant acts upon such information exercising ordinary prudence, and makes sales to such person to his loss and damage, it is fraud for which the law affords a remedy at the election of the person injured, either by an action in deceit, or by rescinding the sale and recovering back the property.125 If the state

123 Holmes v. Harrington, 40 Mo. App. 661; Wilmot v. Lyon, 11 Ohio C. C. 238.

124 Eaton, Cole etc. Co. v. Avery, 83 N. Y. 31, 38 Am. Rep. 389; Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316; Moyer v. Lederer, 50 Ill. App. 94.

125 Colorado: Burchinell v. Hirsh, 5 Colo. App. 500, 39 Pac. 352 (replevin).

Connecticut: Soper Lumber Co. v. Haldsted etc. Co., 73 Conn. 547, 48 Atl. 425 (replevin).

Illinois: Moyer v. Lederer, 50 Ill. App. 94 (replevin).

Indiana: Furry v. O'Connor, 1 Ind. App. 573, 28 N. E. 103 (on account).

Iowa: Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316.

ment made by the merchant be true at the time it is furnished, but afterward becomes unreliable by reason of a change in his financial condition, and he is unaware of his insolvency when he makes a purchase, there is then no false representation.126 Nor is it fraudulent where the mercantile agency reports to the proposed seller its own conclusions as to the financial condition of the merchant, although based upon the report made to it by such merchant.127 A more difficult question arises in tracing the reliance upon mercantile agency reports extending credit to the merchant, to a time near enough to the time when statements are made by the merchant to the agency, so that it can be construed as having the effect of a false representation, as of the time when the sale is made. Time is rather of the essence of the wrong, the courts placing a limitation upon the time within which a seller may rely upon the report after it is made by the merchant to the agency, some holdings being to the effect that they cannot be relied upon when made more than two years, 128 or six months,129 prior to the purchase. On the other hand, other decisions are to the effect that such statements are continuing in

Michigan: Genesee Savings Bank v. Michigan Barge Co., 52 Mich. 164, 438, 17 N. W. 790, 18 N. W. 206 (attachment of property); Cortland Mfg. Co. v. Platt, 83 Mich. 419, 47 N. W. 330 (replevin). Mississippi: Hiller v. Ellis, 72 Miss. 701, 18 South. 95. Missouri: Holmes v. Harrington, 20 Mo. App. 661.

Montana: Farwell Co. v. Boyce, 17 Mont. 83, 42 Pac. 98 (replevin). New York: Tindle v. Birkett, 171 N. Y. 520, 89 Am. St. Rep. 822, 64 N. E. 210 (deceit); Eaton etc. Co. v. Avery, 83 N. Y. 31, 38 Am. Rep. 389; Bliss v. Sickles, 142 N. Y. 647, 36 N. E. 1064.

Ohio: Wilmot v. Lyon, 11 Ohio C. C. 238 (replevin).

Texas: Aultman, Miller & Co. v. Carr, 16 Tex. Civ. App. 430, 42 S. W. 614; Gainsville Nat. Bank v. Bomberger, 77 Tex. 48, 19 Am. St. Rep. 738, 13 S. W. 959.

126 Reid-Murdoch Co. v. Kempe, 74 Minn. 474, 77 N. W. 413. 127 Poska v. Stearns, 56 Neb. 541, 76 N. W. 1078, 71 Am. St. Rep. 688.

128 Sharpless v. Gummey, 166 Pa. St. 199, 30 Atl. 1127.

129 Macullar v. McKinley, 99 N. Y. 353, 2 N. E. 9.

their nature, vendors having the right to rely upon them within four months after they are made,130 or five months,181 or within six months,182 or eight months,133 or even within a year.

134

§ 738. Deception as to Title in Sale of Real Estate.Upon the topic of this section we do not find unanimity of judicial opinion. By far the greater number of decisions consider a false representation as to title in sales of real estate actionable, notwithstanding the state of the title appears of record affording the purchaser an opportunity to examine for himself the validity of the title, it being considered that the maxim of caveat emptor does not apply because the purchaser has a right to rely upon the representation of the owner upon the status of his own property and truly represents it. An examination of some of the decisions discloses that the feature of the wrongful act is in the assumption of personal knowledge and of knowingly making a false representation. In the language of one court: "A fraudulent representation by one who assumes to have personal knowledge to a purchaser of real estate that there is no encumbrance thereon, and upon which representation the purchaser relies and acts, to his injury, will sustain an action for the tort, although the purchaser might have discovered the fraud by searching the records."135

130 Humphrey v. Smith, 7 App. Div. 442, 39 N. Y. Supp. 1055. 131 Naugatuck Cutlery Co. v. Babcock, 22 Hun, 481. 132 Lowdon v. Fisk, 27 S. W. 180; Mooney v. Davis, 75 Mich. 18, 13 Am. St. Rep. 425, 42 N. W. 802.

133 Bliss v. Sickles, 66 Hun, 633, 21 N. Y. Supp. 273.

134 Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316.

135 Carpenter v. Wright, 52 Kan. 221, 34 Pac. 798; David v. Park, 103 Mass. 501; Babcock v. Case, 61 Pa. St. 427, 100 Am. Dec. 654. "Though the title . . . appears upon, and may be ascertained from an examination of, the public records of the county, an action may be maintained against one who knowingly misrepresents the condition of such title," etc.: Hunt v. Barker, 22 R. I. 18, 84 Am. St. Rep. 812, 46 Atl. 46. No defense that deeds are recorded, and

It is a reasonable and just rule to hold the one making such representations responsible where they are of such character as to throw the purchaser off his guard, and he is thereby induced not to search the records.1 The searching of the records according to some authority is sometimes to be regarded as the ordinary degree of precaution which persons must take before concluding a purchase of land. 137

The prudent and business like way in sales of real estate is for the purchaser to require an abstract of title showing the condition of the title, in which case the abstract is the representation.

§ 739. Fraud in Sales of Personalty. It is a wellsettled rule of law that a purchase of goods by one with an actual intent not to pay for them constitutes a fraud.188 If the purchaser intends to pay, and has reasonable expectations of being able to do so, it is no wrong, even though he is aware of his insolvency and does not disclose it to the vendor.139 And again, the intention of a purchaser not to pay may be inferred from the circumstances, as where the purchaser is so that with proper diligence the defect could have been discovered: Young v. Hopkins, 6 T. B. Mon. 19; Ward v. Wiman, 17 Wend. 193. Purchaser not bound to investigate the vendor's title, but has the right to rely upon his representations: Tyner v. Cotter, 67 Wis. 482, 30 N. W. 782 Maxim caveat emptor does not apply: Kiefer v. Rogers, 19 Minn. 32, Negligence cannot be imputed to purchaser for not consulting record: Porter v. Fletcher, 25 Minn. 493. By one professing to have knowledge: Bristol v. Braidwood, 28 Mich. 191. False representations as to title give rise to an action for deceit: Lamm v. Port Deposit Homestead etc., 49 Md. 233, 33 Am. Rep. 246.

136 Watson v. Atwood, 25 Conn. 313; Bailey v. Smock, 61 Mo. 213.

137 Eames v. Fordham, 37 Ill. 260.

138 People v. Healy, 128 Ill. 9, 15 Am. St. Rep. 90, 20 N. E. 692; Talcott v. Henderson, 31 Ohio St. 162, 27 Am. Rep. 501; Miller v. White, 46 W. Va. 67 76 Am. St. Rep. 791, 33 S. E. 332.

139 Talcott v. Henderson, supra.

hopelessly insolvent that a reasonably prudent business man cannot hope or expect to be able to pay. It is not necessary in such case that there be any affirmative representation, the law imputing to the purchaser an intention not to pay, his act of purchase under such cir cumstances being a fraud.140 So far the statements made relate to fraudulent concealment. Of course it is clear that a false representation in fact as to solvency constitutes a fraud.141 A recent opinion well states the rule governing this matter.

"A sale of property procured by false representation and a purchase with an existing intent on the part of the purchaser not to pay for the property are distinct actionable wrongs. The former is complete without the existence of an intent not to pay for the property, and the latter incomplete, though there is no false representation to induce the sale. In the case of the latter wrong, false representations and undisclosed insolvency are not necessary elements, but are evidentiary facts tending to establish the intent not to pay though the latter of itself is not sufficient to establish such fact." 142

§ 740. Fraud in Sales of Personalty -Purchase With No Intention to Pay-Remedy.-The subject of this section as a branch of fraud is a species of fraudulent conduct sometimes considered as coming within the purview of fraudulent promises. It is said that in the act

140 Wollner v. Lehman etc. Co., 85 Ala. 274, 4 South. 643; Spira v. Hornthall, 77 Ala. 143; Miller v. White, 46 W. Va. 67, 76 Am. St. Rep. 791, 33 S. E. 332; Taylor v Mississippi Mills, 47 Ark. 247, 1 S. W. 283; Johnson & Co. v. O'Donnell, 75 Ga. 453; People v. Healy, 128 Ill. 9, 15 Am. St. Rep. 90, 20 N. E. 692; Brower v. Goodyer, 88 Ind. 572; Oswego Starch Factory v. Landrum, 57 Iowa, 573, 583, 42 Am. Rep. 53, 10 N. E. 900.

141 Reid M. & F. v. Cowduroy, 79 Iowa, 169, 18 Am. St. Rep. 359, and note, 44 N. W. 351.

142 Hart v. Moulton, 104 Wis. 349, 76 Am. St. Rep. 881, 80 N. W. 599.