Lamm v. Port Deposit Homestead Ass'n , 49 Md. 233 ( 1878 )

Stewart, J.,

delivered the opinion of the Court.

The appellant alleges as the ground of his complaint, that the agent of the appellee, at a public sale of the house and lot, made by the said agent, on account of the default of payment of a mortgage thereon, held by the appellee, represented, upon enquiry being made of him, by the appellant, that possession of the property would be given to the purchaser, within three months from the day of sale.

That confiding in this representation, he was induced to bid for the property, and became the purchaser thereof.

Possession not having been given him according to the representation, and having lost the rents thereof in the meantime, and incurred expense in obtaining possession, this action was brought to recover damages for the same.

At the trial the appellee asked to have the jury instructed substantially, that such representation was not binding on it, and the appellant could not recover thereon.

1st. Because the agreement was not reduced to writing and signed by the defendant or its duly constituted attorney.

2nd. Because there is no evidence that the agent was authorized by the appellee to make such contract.

The Circuit Court granted this prayer, and the question is, was any error committed thereby ?

The fourth section of the Statute of Frauds refers by its terms and meaning to contracts for the sale of lands, &c., or any interest in or concerning them, and not to collateral or independent undertakings outside of such contracts, and does not apply to the representation, if any, made at the sale in question.

It was but the assertion of the agent at the time of the contract for the sale of the land, in relation to a different proposition, and formed no integral part of said contract, and its non-performance would not necessarily break up the contract for the sale of the land, unless it might so operate by reason of any fraud connected with the sale, which would stand on different ground.

If the representation were made fraudulently to induce the purchaser to bid for the propertjr, and he was induced thereby to.buy the same and sustained damage, he would be entitled to recover for the tort, fraud or' deceit. Besides, the fraud would constitute ground for the Court of equity to refuse to ratify the sale.

The agent, and principal if it authorized the representation to be made, would both be answerable.

The cases of Lamborn vs. Watson, 6 H. & J., 252, and Duvall vs. Peach, 1 Gill, 172, relied upon by the appellee, recognize this distinction. See also Benjamin on Sales, 419.

Although the representation might be false in fact, if innocently made by the agent, believing in the truth of what he asserted, it would afford no ground of action.

To constitute the fraud and deceit, the representation must be false and knowingly made.

The concurrence and fraudulent intent and false representation, and damage resulting therefrom, constitute the ground of action. Benjamin on Sales, 338.

What constitutes fraud cannot be precisely defined. Every kind of artifice employed by one person to deceive another, if he is deceived thereby, however false and dishonest, and made to deceive, will not constitute a fraud, supporting the right of action, if the other party knows they are false, discovers them and is aware of the truth.

In such case the other party is not deceived hy them, and if he makes his contract notwithstanding, he has no right to rescind it on that account, and cannot recover in an action for tort or in the nature of deceit. See Benjamin on Sales, 314, 315.

The responsibility of the appellee as a corporation for the acts of its agent, is just the same as that of any other person.

Natural persons are liable for the wrongful acts and neglects of their servants or agents, done in the course of their employment, and private corporations upon the same grounds of public policy are amenable to the same extent.

The person, natural or artificial, in such case is liable, whether the act of the agent enures to his or its benefit or not, because an innocent person has been deceived, and damaged hy confiding in the agent, accredited hy the principal as worthy of trust in that particular business, whether the principal intended to authorize the acts or not, or forbade them, or disapproved of them, is immaterial.

The rule respondeat superior founded on principles of public policy governs in such case, because when one of two innocent persons must suffer by the hand of another, he who enabled him to commit the same, by giving him the credit, must he the sufferer.

But the agent's authority must be measured by the extent of his employment, and the principal is liable to third persons in a civil suit, for the frauds, deceits, concealments, misrepresentations, torts, negligences and omissions of duty of his agent, in the course of his employment.

These principles are fully established, and are clearly and distinctly stated in the case of Tome vs. Parkersburg Branch R. R. Co., 39 Md., 44.

(Decided 27th June, 1878.)

The rule of caveat emptor applying to sales made by trustees, Anderson vs. Foulke, 2 H. & G., 346, and Neel vs. Hughes, 10 G. & J., 7, does not shield a party rendering himself liable to an action for fraud and deceit, perpetrated at a sale thus made.

But here the sale was made to foreclose a mortgage, which contained a power of sale in case of default.

Although Jones was not mentioned in the mortgage as the attorney to make the sale, hut was acting under the appointment of the appellee, his powers in making the sale must he found in the mortgage authorizing the sale._

That marks out and distinctly furnishes the authority, when he is duly appointed by the mortgagee. Any sale made by him is subject to the ratification of the Court, and if any fraudulent or improper representations are made by the attorney or trustee, they would afford ground for refusal to ratify the sale.

So far as the appellee is concerned, and his power as its agent, he must he treated as confined to the line of duty, prescribed by the mortgage, and the law applicable to any sale made by him.

No power was conferred upon him to make such representations as alleged.

If made, they were outside of the scope of his employment, and the appellee is not hound thereby.

It follows that although the first reason given for the granting of the prayer, is not tenable, the appellant incurred no injury thereby, as the appellee was not bound by the representations of the agent if made as alleged.

Judgment affirmed.