Hedden v. Griffin

Morton, C. J. In order to maintain an action of tort for deceit, it is necessary for the plaintiff to show that the false representations alleged in his declaration are representations of material facts calculated to deceive him and induce him to act. Representations as to matters which are merely collateral, and do not constitute essential elements of the contract into which the plaintiff is induced to enter, are not sufficient. It was held in the case of Penn Ins. Co. v. Crane, 134 Mass. 56, that representations like those alleged in the declaration in the case at bar are material in their nature; and that the party insured, having been induced by them to enter into the contract of insurance, had the right to cancel his policy, and was not liable to the company upon his promissory note given for the premium. That case decisively shows that the plaintiff in the case at bar is entitled to maintain his action. The principal question in the case is as to the measure of the damages which the plaintiff is entitled to recover. It appeared at the trial that the plaintiff was induced by the false representations of the defendant, who was the general agent of the New York Life Insurance Company of New York, to take a fifteen years’ endowment policy for $10,000 in said company, and to pay the first premium thereon; that, before the second premium became due, he discovered the fraud, and notified the defendant of his intention to cancel the policy, and demanded the amount of the premium he had paid. It also appeared that the said company was solvent; that the policy, until cancelled, was a good policy; and that the premium was a fair premium for such a policy. The defendant contended that, upon these facts, the plaintiff could recover no damages, or at most only nominal damages, contending that the “ measure of damages is the difference in money value between what he got and what he would have got had the representations been time.” If the plaintiff had elected to retain his policy, this rule of damages would be correct. Morse v. Hutchins, 102 Mass. 439. But, upon discovering the fraud, the plaintiff had his election of — 232 — two remedies. He could retain his policy, or he could cancel and repudiate it and have resort to the defendant for the fraud practised upon him. This right of rescinding his contract is important to the plaintiff, as his contract was an executory one extending over fifteen years, and its value depended, not merely on the present condition of the company, but largely upon its future management. The defendant cannot control this election. The plaintiff had the right to, and did, elect to cancel the policy ; his notice to the defendant, the agent of the company, was a cancellation; he could not thereafter maintain an action against the company; and he had in his hands no property of value to be returned. We are of opinion that, under these circumstances, he has a right to recover damages of the defendant to an amount which will put him in the same position as if the fraud had not been practised on him. As a consequence of the fraud, he has paid out a sum of money as a premium for which he has got nothing. We think he is entitled to recover it of the defendant. The contention of the defendant, that the cancellation of the policy was the cause of the loss of the premium paid, seems to us to be a refinement which leads to unjust results. The fraud of the defendant was the cause both of the payment by the plaintiff and of the cancellation. If he had not cancelled the policy, he would perhaps not have lost the premium he had paid, but the exercise of this incidental right of cancellation cannot in any legal sense be said to be the cause of his loss. To hold as the defendant claims, would be to deprive the plaintiff of his right of election for the benefit of the defendant. We are therefore of opinion that the instructions given at the trial were sufficiently favorable to the defendant. Exceptions overruled.