Judd v. Blake

The opinion of the court was delivered by Royce, J. The only question which the counsel have discussed in this case relates to the validity of the settlement, which took place between the plaintiff and the defendant, McIntyre, at the date of the plaintiffs receipt in full. I shall therefore only inquire whether that settlement ought legally to conclude the plaintiff. That kind of fraud in dealing, by which one party to a contract is enabled to circumvent and cheat the other, usually consists in the assertion of falsehood, or the suppression of truth. But as McIntyre said nothing in the course of the settlement, respecting the auditor’s decision, the case must turn upon the fact that he omitted to disclose his knowledge [413] upon that subject. The moral law most certainly imposes the obligation of a mutual and frank communication between parties when contracting with each other. By that code neither party is at liberty to withhold any material fact, which he supposes the other to be ignorant. But the common law, as practically expounded and enforced, does not always enjoin so high a rule of moral duty, except in cases where some relation of special trust or confidence subsists between the parties. In this respect it not only falls below the perfect standard of Christianity, but sometimes fails to exemplify the utmost morality of the civil law. It generally supposes that each party will exert that attention to the matter and terms of the contract, and use that diligence in seeking information on the subject, which a natural regard to his own interest might be expected to induce. And by prohibiting whatever would ordinarily cause deception and injury under such circumstances, it professes, as Chancellor Kent remarks, to ‘ reconcile the claims ■ of convenience with the duties of good faith.’ I shall not undertake to review the numerous authorities which tend to illustrate these positions, but merely observe, with the same eminent jurist, in his note to 2 Kent’s Com. '482, that upon the duty of mutual disclosure they appear to result in the following proposition ; — ‘ that the party in possession of the ‘ facts must be under some special obligation, by confidence ‘ reposed, or otherwise, to communicate them truly and fair- ‘ ly.’ Now there is no reason to suppose any such peculiar obligation between these litigant parlies, nor did McIntyre avail himself of his information to draw the plaintiff into the settlement. It was sought and proposed by the plaintiff himself. And it seems that he withheld his own suspicions as to the result of the audit, with a view, no doubt, to succeed the better in negotiating for a compromise. The settlement was probably the result of a studious silence on both sides in reference to the audit, each party intending to profit by his silence. And, although the plaintiff acted in ignorance of a fact which was doubtless of some importance, yet, as he took his own time for proposing the settlement, it was an ignorance which can hardly be excused; nor do we perceive that the defendant, McIntyre, without solicitation or inquiry, was legally bound to dispel it. Judgment affirmed.