Wheelwright v. Vanderbilt ( 1914 )

Mr. Justice Bean

delivered the opinion of the court.

It is not contended by plaintiff, as we understand the argument, that the defendant intended to induce the plaintiff to investigate the affairs of the lumber company or take any action on account of the statements made by defendant. Counsel for plaintiff suggest that the case is without precedent. The following authorities are somewhat in point:

1. To constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew it was false, or made it recklessly without any knowledge of its truth, and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. Each of these facts must be proved with reasonable certainty, and all of them must be found to exist. The absence of any one of them is fatal to recovery: 20 Cyc. 13. Where a party complains of false representations, whereby he was caused to suffer damage in a transaction with some third person, it devolves upon him to show expressly that the alleged wrongdoer intended, or, what is the same thing, that he may reasonably be supposed under the circumstances to have intended, that the plaintiff should act upon the misrepresentations; and it is not enough to prove that the same were made with knowledge of their falsity: 1 Bigelow, Fraud, p. 536.

2. The misrepresentations must have been such as would have deceived a person of ordinary prudence. In other words, it must appear that plaintiff reasonably believed them to be true: Southern Development Co. v. Silva, 125 U. S. 247 ( 31 L. Ed. 678, 8 Sup. Ct. Rep. 881); Dunning v. Cresson, 6 Or. 241, 242.

3. No contractual relation existed between tbe defendant and the plaintiff. Tbe former occupied no fiduciary relation to tbe latter. They were not associates nor fellow stockholders in either company, nor acquaintances up to tbe time tbe statements were made. When plaintiff made tbe inquiry of tbe defendant, be bad been informed by bis business associates in tbe lumber company as to tbe amount received for tbe land. So far as plaintiff is concerned, there is nothing in tbe complaint that indicates that tbe defendant did anything more than to boast of tbe high price paid for tbe realty or to puff tbe price of tbe land."-' It cannot be said that, under tbe circumstances, tbe plaintiff, as a reasonably prudent man, was justified in believing tbe statements of tbe defendant, who was a stranger, and disregarding tbe information be had already obtained. His conduct in making tbe investigation in which tbe expense was incurred which be seeks to recover is inconsistent with tbe idea that he believed tbe defendant’s statements. Tbe defendant certainly could not have anticipated that tbe plaintiff would have taken such action in reliance upon bis statements. An action cannot be based upon tbe telling of a naked lie: 2 Addison, Torts, 772.

In Enfield v. Colburn, 63 N. H. 218, where tbe defendant made a claim upon tbe town for damages to bis horses, tbe officials investigated. tbe claim and found it to be false. Action was brought to recover tbe expense. Mr. Justice Carpenter, at page 219 of tbe opinion, said:

“ A mere naked lie — a falsehood — though told -with tbe intent to deceive, upon which nobody acts, and by which nobody is deceived, is not actionable. Tbe declaration alleges, in substance, that tbe defendant falsely and fraudulently represented that be bad a valid claim against tbe plaintiffs for damages, that tbe plaintiffs relied upon tbe representations, and that they investigated them at a large expense, and found them to he false. One or the other of the last two allegations is as untruthful as the representations are claimed to be; both cannot be true. If the plaintiffs relied upon the representations, they did not investigate them. If they investigated them, they did not rely upon them.”

In Jex v. Straus, 122 N. Y. 293, 301 (25 N. E. 478, 480), the court says:

“The law requires that the injury must proceed so directly from the wrongful act that, according to common experience and the usual course of events, it might, under the particular circumstances, have reasonably been expected.”

In Hemmer v. Cooper, 8 Allen (Mass.), 334, the court says:

“The representations of a vendor of real estate, to the vendee, as to the price which he paid for it, are to be regarded in the same light as representations respecting its value. A purchaser ought not to rely upon them; for it is settled that, even when they are false and uttered with a view to deceive, they furnish no ground of action.”

In Bispham’s Equity (4 ed.), Section 215, page 272, the rule is stated as follows:

“The third requisite necessary to render a misrepresentation fraudulent is that it must be reasonably relied on by the other party, and this obviously includes two subdivisions: First, the party must have a right as a reasonable being to rely upon the representations; and, secondly, he must, in point of fact, so rely upon it. * * If the party to whom the representation is made resorts to inquiries on his own account, and shows by his conduct that he relies upon them, he cannot complain of a misrepresentation. A fortiori, if he was actually aware of the true state of the case; for then he was not deceived. And a man is bound to make use of the means of information.”

The action taken by the plaintiff in investigating the truth of the statements alleged to have been made by tbe defendant shows that he did not rely upon such representations. If he had been willing to rely thereon, it would have been unnecessary for him to have made the investigation. It would have been only reasonable for him to have stated to his business associates the information that he had received from defendant before making a formal investigation of the affairs of the company. There is no pretense that the defendant made the representations with the intention that they should be acted upon by the plaintiff. The complaint discloses that plaintiff did not rely upon the representations; hence there are at least two necessary facts wanting in order for plaintiff to maintain the action.

The judgment of the lower court sustaining the demurrer was correct, and it is affirmed. Affirmed.

Mr. Chief Justice McBride, Mr. Justice Eakin and Mr. Justice McNary concur.