Bench v. Sheldon

By the Court, Johnson, J. Was the defendant, Isaac Sheldon, when he went to the plaintiff to purchase the sheep in question, guilty of a fraud which the law notices, and gives a right of action to redress, in withholding the fact within his knowledge, that the sheep had been found 1 That he was under a strong moral obligation to make the disclosure, none will deny, but the legal duty is not so clear. It was a gross moral wrong and fraud in him to withhold the information, and take advantage of the plaintiff’s ignorance. The rule in regard to the duty of disclosure, on the part of persons dealing with each other, seems to be substantially the same both in law and equity. The rule originally laid down by Chancellor Kent, (2 Kent's Com. 482,) was, that "each party is bound to communicate to the other his knowledge of material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation.” The learned commentator, in a note to the text, subsequently qualified the rule, so as to confine the obligation to disclose material facts, to a party “ under some special obligation, by confidence reposed, or otherwise to communicate them truly and fairly.” The rule as thus qualified is, I apprehend, the true rule, and extends the obligation as far as it can be safely or conveniently enforced, in the ordinary dealings between [73] men. (Story’s Eq. §§ 147, 148, 207. Laidlaw v. Organ, 2 Wheat. 178. Fox v. Mackreth, 2 Bro. Ch. Rep. 420.) In the case of the sale of property, the law presumes that the purchaser reposes confidence in the vendor, as to all such defects as are not within the reach of ordinary observation, and therefore it imposes the duty upon the vendor to disclose fully and fairly his knowledge of all such defects. But in ordinary cases, the vendor reposes no such confidence in the purchaser. The former does not look to the latter for information in regard to the qualities or condition of the thing sold, and is not deceived or misled by any information the latter may have in regard to it. And hence it has been held, that a purchaser may use any information he may have in regard to property, for his own advantage, without disclosing it, providing he does nothing to mislead or deceive. It is obvious, in the present case, that the defendant, Isaac Sheldon, was under no special obligation to the plaintiff. The plaintiff reposed no confidence in him by reason of any legal relation existing between them. Had the plaintiff employed the defendant to find his sheep, then the law would have imposed the duty of disclosing the fact of their having been found. So, had the defendant taken up the sheep himself, he would have been agent or bailee of the plaintiff, and therefore under special obligation to communicate this material fact. But the defendant was a mere stranger, who had obtained the information casually, from a source equally open to the plaintiff, and was therefore under none other than a strong moral and Christian obligation to disclose. I am unable to distinguish this case in principle, so far as the duty of disclosure is involved, from the purchase of the farm with the mine upon it; the existence of the mine being known to the vendee but not to the vendor, as put in the case of Fox v. Mackreth, or the case of Laidlaw v. Organ, before cited. I have considered the case thus far upon the question of the duty of the purchaser to disclose, merely; and am clearly of opinion that upon that ground the defendants are not liable. But there is another feature in the case which, in my judgment, [74] stamps the character of fraud in a legal sense upon the transaction on the part of the purchaser, in characters too plain to he mistaken or evaded, s’:While a party in whom no trust or confidence is reposed, and between whom and the other party no legal relation in regard to the subject of the purchase exists, need not disclose material facts within his knowledge, which he knows such other party to be ignorant of, he must do nothing whatever to deceive or mislead; or he will not be protected. In Turner v. Harvey, (Jacob’s Rep. 178,) Lord Eldon said, “ As in the case that has been mentioned, if an estate is offered for salo, and I treat for it, knowing that there is a mine under it, and the other party makes no inquiry, I am not bound to give him any information of it. He acts for himself and exercises his own sense and knowledge. But a very little is sufficient to affect the application of the principle. If a single word is dropped which tends to mislead the vendor, the principle will not be allowed to operate.” In Laidlaw v. Organ, Chief Justice Marshall said, “ Each party must take care not to say or do any thing tending to impose upon the other.” In the latter case, although the court held that the purchaser was not bound to disclose the intelligence he was in possession of, they yet granted a new trial, because the judge refused to submit the question to the jury to find whether any imposition was practiced by the vendee upon the vendor. Here the defendant, who negotiated the purchase, after ascertaining that the plaintiff had not been able to find his sheep, told him that he did not believe he ever would find them. The object of this was clearly to discourage the plaintiff from making further search or inquiry for his property; to induce him to sell it, as property which might never be discovered, for a mere nominal price, and .to create the impression in the plaintiff’s mind that he, the purchaser, did not know where the- sheep were, or that any one had taken them up. It was equivalent to saying, I have not found them, and do not know of any one who has, and am of opinion that you will not be able to find them. The fact of their having been found, was a material circiun [75] Stance affecting the price; and the attempt to mislead and create a false impression in regard to the situation of the property, was a fraud of which the law justly takes cognizance. The evidence was sufficient to authorize the jury to find that something was said or done by the vendee to mislead and create a false impression in the mind of the vendor. The jury doubtless found also that the defendants were acting in concert, throughout, in the matter, as they well might, from the evidence before them. One f eason assigned by the county judge for reversing the judgment of the justice was, that the verdict was for too much. The value of the wool was clearly proved, and the only evidence in regard to the value of the sheep was that one of the defendants had been offered $2 for one of the lambs, and refused to sell it at that price. There were twelve old sheep and nine lambs. Waiving the question as to the right of the jury to give exemplary damages in such a case, it was the duty of the jury to determine the value, from all the evidence before them. And I see nothing in the evidence to warrant the county judge in deciding, as he does, that the sheep were not worth half the sum found by the jury, or that the value placed upon them was too high. Whether the jury or the judge understood the value better, this court cannot determine. It is enough that there is nothing in the evidence to show that it was too high. It was the province of the jury to determine how much the sheep were worth, and the county court had no right "to assume a fact not proved, to overturn the verdict. And besides, if the jury, in any case, may give exemplary damages to punish a party for bad faith and unneighborly conduct in his dealings, such corrective would not be misapplied in a case like this. But I do not intend to place the decision on this ground, or to discuss the question of the right to give exemplary damages in a case like this. [Monroe General Term, September 6, 1852. Selden, T. R. Strong and Johnson, Justices.] The judgment of the county court must therefore be reversed, and that of the justice affirmed.