Brown v. Underwriters at Lloyd's , 53 Wash. 2d 142 ( 1958 )

Rosellini, J.

(dissenting)—By 1891 the doctrine that false statements, although innocently made, constitute fraudulent acts and are actionable, was so well engrained in our jurisprudence that this court, in Hanson v. Tompkins, 2 Wash. 508, 27 Pac. 73, remarked: “In fact this view of the law is so well established that we think it not necessary to comment further upon it.”.

The law imputes a fraudulent intent to one who makes, as of his own knowledge, a representation of a material fact, the truth or falsity of which is not known to him.

In Jacquot v. Farmers Straw Gas Producer Co., 140 Wash. 482, 249 Pac. 984, the court said:

“We have held the rule to be that if a person states as true material facts- susceptible of knowledge to one who relies and acts thereon to his injury, he cannot deféat recovery by showing that he did not know his representations were false, or that he believed them to be true.” [Citing cases.]

Quoting from Grant v. Huschke, 74 Wash. 257, 133 Pac. 447, the court further stated:

“The appellant contends that there was no evidence that he knew that his representations were false, that such knowledge is an essential element in the establishment of actionable fraud, and that, in the absence of proof of such knowledge, the admission of evidence as to his representations was error. It is usually held that representations to be actionable must be made scienter, but it does not follow that actual knowledge of the true facts or of the falsity of the representations must be shown. Representations, as of his own knowledge, of material and inducing facts susceptible of knowledge, made by a vendor in ignorance of the facts, but with the knowledge that the vendee is relying upon the representations as true and under circumstances reasonably excusing the vendee from investigating for himself, are actionable on the part of a vendee so relying to his injury. In such a case, the fraud of the vendor consists in representing as true, with knowledge that it is being relied upon as true, that which he did not know to be true. This rule is supported by the trend of modern authority, and has been consistently adhered to by this court.”

The doctrine has been consistently applied in the field of real estate transactions. Marr v. Cook, 51 Wn. (2d) 338, 318 P. (2d) 613.

The appellant’s theory is that representations made without actual knowledge of their falsity but in ignorance of their truth are merely negligent and involve no deceit and that, since the policy was issued to protect him from liability for negligence, the exclusion was not intended to apply to this type of fraud. Whether the degree of deceit involved in an implicit representation that one has knowledge of certain facts is as great as that involved in a direct falsification of the known facts is a philosophical question beyond the province of this court. But I think it cannot be doubted that there is an element of deceit involved. This brings fraud based upon such misrepresentations within the import of the clause which excludes liability incurred by reason of any dishonest act or fraudulent act.

Words used in an insurance contract, as in any other contract, are to be taken in their common and ordinary meaning unless a contrary intent appears from the context or the surrounding circumstances. Christensen v. Sterling Ins. Co., 46 Wn. (2d) 713, 284 P. (2d) 287. While an ambiguity in a policy should be construed in favor of the insured, there is no room for construction where the language is clear. Lawrence v. Northwest Cas. Co., 50 Wn. (2d) 282, 311 P. (2d) 670. To accept the contention of the appellant would be to place a limitation on the term “fraudulent act” unwarranted in law or by the terms of the contract.

I would affirm the judgment.

Mallery and Donworth, JJ., concur with Rosellinx, J.