Snyder v. Stemmons

NISON, P. J. (after stating the facts.) — At the threshhold of the investigation of this case we are to recognize that the case, though an action at law for fraud and deceit, was by consent of parties tried by the court without a jury. In such case, it being an action at law, the findings of fact are as conclusive on appeal as would be the verdict of a jury. [Baumhoff v. St. Louis & K. R. Co., 171 Mo. 120, 71 S. W. 156.] Appellant complains of the declaration of law given by the court for the reason “that it omitted the proposition that the representation-must be made in utter disregard of its truth or falsity and that the defendant must he conscious of the fact that he had no such knowledge.” That this is an essential element of fraud in cases where the vendee is allowed to recover for representations made by the vendor which are false and made in utter disregard of the truth without any knowledge whatever. It must be remembered that fraud and deceit are charged in the petition in this case and constitute the — 163 — gravamen of the action. Before fraud or deceit can he established in any ease and made a ground of recovery, we must have discovered a guilty scienter. [Lovelace v. Suter, 93 Mo. App. l. c. 440, 67 S. W. 737.] True, this may be either actual or constructive. Fraud from any viewpoint implies the doing of wrong willfully. [People’s National Bank v. Central Trust Co., 179 Mo. l. c. 662, 78 S. W. 618.] “An innocent misrepresentation made through mistake without knowledge of its falsity, and with no intention to deceive, cannot justify a personal action for damages.” [Walker v. Martin, 8 Mo. App. 560; Dulaney v. Rogers, 64 Mo. 201; Dunn v. Oldham, Adm’r, 63 Mo. 181; Hartford Ins. Co. v. Matthews, 102 Mass. 221; Cabot v. Christie, 42 Vt. 121; Marsh v. Foster, 40 N. Y. 569; Redpath v. Lawrence, 42 Mo. App. l. c. 110.] In the ease of Dulaney v. Rogers, 64 Mo. 201, our Supreme Court said: “It seems to be established that an action based upon the deceit or fraudulent representations of another, cannot be maintained in the ato sence of proof that the party making them believed, or had good reason to believe at the time he made them, that they were false, or that he assumed or intended to convey the impression that he had actual knowledge of their truth, though conscious that he had no such knowledge. When the above facts are proven the scienter necessary to maintain an action for deceit, founded on fraudulent representations, is established.” In the case of People’s National Bank v. Central Trust Co., supra, the court, referring to the case of Buford v. Caldwell, 3 Mo. 477, said: “What is said in that case cannot be construed to mean any more than that if the .facts are of such a nature as that a man is presumed to have personal knowledge of them and is presumed to know that the person with whom he is dealing relies on him for information he is as guilty if he makes a false representation concerning the mat — 164 — ter, when he is conscious that he knows nothing about it, as he would be if he should state what he knows to be untrue.” In the ease of Koontz v. Kaufman, 31 Mo. App. 397, the language of Napton, J., in Dulaney v. Rogers, is quoted, i. e., that the plaintiff must prove that the defendant ‘ ‘ assumed or intended to convey the impression that he had actual knowledge of their truth, though conscious that he had no such knowledge, ’ ’ and the court said: “So the instruction approved by the court contained the essential requirement.” Then the following language of Norton, J., in Walsh v. Morse, 80 Mo. l. c. 573, is quoted: “The generally received doctrine now is that, in order to support a personal action for fraudulent representations, it is not sufficient to show that a party made statements which he did not know to be true, and which were in fact false. There must be fraud as distinguished from mere mistake. It is not, however, always absolutely necessary that an actual falsehood should be uttered to render a party liable in an action for deceit; if he states material facts as of his own knowledge, and not as a mere matter of opinion, or a general assertion about a matter of which he has no knowledge whatever, this distinct, willful statement, in ignorance of the truth, is the same as a known falsehood, and will constitute a scienter.” After this quotation, the court says: “In this it is to be observed that the assertion of a fact as of his own knowledge is qualified by the words ‘in ignorance of the truth.’ This was necessarily so to make it harmonize with the holding of Napton, J., supra.” Then follows this important passage: “Applying these rulings to the instructions under review, it will be found that while they were framed with some regard to the rule, yet they are so artfully (not in the invidious sense) drawn, as to not unreasonably warrant the jury in making the inference that if defendants stated that they owned the property, as of their own knowledge, and that state — 165 — ment turned out to be untrue, the scienter was proved without more. They do not contain the essential words, or the equivalent, ‘though conscious that they had no such knowledge,’ or that they were aware of the fact ‘that they did not know,’ or that it was ‘known to be false,’ and the like. The fraudulent intent being the gist of the action, the defendants were entitled to have this issue of fact distinctly and sharply submitted to the jury, in such perspicuous language as to leave no just grounds for their minds being misled.” [Koontz v. Kaufman, 31 Mo. App. l. c. 419-420.] The following appears in the case of Dunn v. White, 63 Mo. 181: “It is not, however, absolutely necessary that an actual falsehood should be uttered to render a party liable in an action for deceit, if he states material facts as of his own knowledge, and not as a mere matter of opinion or general assertion, about a matter of which he has no knowledge whatever, this distinct, willful statement in ignorance of the truth, is the same as the statement of a known falsehood, and will constitute a scienter.” Later on, in the same opinion: “A statement of material facts by one as of his-own knowledge, not merely as an opinion or general assertion about a matter of which he knew nothing whatever, a willful statement in ignorance of the truth, is the same as a statement of a known falsehood and will constitute a scienter.” In the case of Lovelace v. Suter, supra, we find this language: “The consciously false assertion of knowledge which is likely and intended to induce the person adidresed to part with his money or property on the belief that the speaker knows the truth whereof he speaks, establishes the scienter as thoroughly as the false assertion that some fact exists which is known not to exist.” Again in the case of Western Cattle & B. Co. v. Gates, 190 Mo. l. c. 405, 89 S. W. 382: “One who makes representations which he does not know to be true, and — 166 — conscious of the fact' that he has no knowledge on the subject, to another whom he knows has no knowledge as to the truth or falsity of the representation, is as much guilty of fraud as if he had actual knowledge of the falsity of the statement, and if the party to whom the representation .is made relies upon it, and is injured thereby, he is entitled to recover from the party making the representation.” The Supreme Court holds that the plaintiff’s instructions embodied the law, and the second of these told the jury that defendant was liable if he made- the representations without knowing whether they were true or false, though conscious that he had no such knowledge, but intending to convey the impression that he had such knowledge. We find the law stated as follows in 20 Cyc. 24-27: “It is well settled that to support an action of deceit based on a false representation, a scienter must be proved; that is, the representation must either (1) be false of the knowledge of the party who makes it, or (2) must be made as a positive assertion calculated to convey the impression that he has actual knowledge of its truth when in fact he is conscious that he has no such knowledge. It is generally held too that if the speaker honestly believes his representation to be true, he is not liable, an honest mistake or error in judgment being regarded as insufficient grounds on which to base a charge of fraud.” (Citing Lovelace v. Suter, supra, and other eases.) ‘ ‘But the speaker’s belief will not in all cases protect him from liability in an action for deceit, as when he makes the statement recklessly.” “It is not always necessary that the speaker should actually know that his representation is false. If the statement is of a matter susceptible of accurate knowledge and he makes it recklessly, without any knowledge of its truth or falsity, and in the form of a positive assertion calculated to convey the impression that he knows it to be true, the representation is equally fraudulent. The rule just stated applies, although the speak — 167 — er honestly believes that the fact which he represents as existing actually does exist.” A footnote, referring to what is said above in the sentence just preceding the last sentence quoted, appears on page twenty-seven, as follows: “This rule is based iipon the principle that the speaker is conscious either that he knows or that he does not know the truth of what he states, and that when, conscious of his ignorance, he assumes to have knowledge, he acts in bad faith and must be held to warrant the truth of his assertion, and so is liable in an action for deceit.” It is clear that the declaration of law given by the court was erroneous for the reason that it did not recognize the essential distinction between actionable fraud and a mistake. This declaration of law was based upon the finding of the following facts: “That if the defendant’s agent, Cobb, represented to plaintiff that defendant was the owner of lot fifty-five in Santa Pe Place, an addition to Kansas City, and pointed out lot fifty-two in said addition as lot fifty-five and represented to plaintiff that said lot fifty-two so pointed out was the property of the defendant . . . and that said representation was made by defendant through his agent recklessly without any knowledge on the part of defendant or. his said agent as to whether or not said lot fifty-two so pointed out by said agent was in fact lot fifty-five and whs owned by defendant,” etc. This declaration of law is defective in that it fails to detail a further fact, namely, that the defendant knew such fact of ownership to exist and so stated in positive terms and as of his own knowledge, because the fraud in such a case (involving statements “recklessly made”) consists in passing off one’s opinion or belief in the guise of positive knowledge. If the defendant had affirmed positive knowledge of his ownership when he had no positive knowledge, and the purchaser had relied upon the assertion, then responsibility would have been visited upon him because in such case he — 168 — would have been conscious that he was ignorant concerning the subject-matter of which he spoke, yet falsely asserting that it was within his own personal knowledge. [Riley v. Bell, 120 Iowa 618, 95 N. W. 170.] ‘ ‘ This rule is not an exception to, but an application of, the principle that actual fraud must be shown to sustain an action of deceit; and it is not in conflict with the rule requiring a scienter. [20 Cyc. 29n.] To uphold this judgment on the findings of facts would be to abolish well-established legal definitions of fraud and deceit and their constituent elements and obliterate the distinction between representations consciously or knowingly false and those not so made. It is apparent that plaintiff was injured and is entitled to reparation for whatever losses he sustained, but courts cannot, in order to meet hard cases, allow well-grounded principles to be uprooted and overthrown. The answer in this case does not set up any claim of appellant to lot fifty-five, but is a general denial. Hence, under the view we have taken and the conclusions reached as to the law, the question as to the proper measure of damages in this case is not now presented for our consideration. In the event of another trial, the pleadings could be amended and another state of facts developed in which case any discussion of the measure of damages at this time would be premature. Prom what ha,s been said, it is apparent that the judgment should be reversed and the cause remanded, and it is so ordered. Cox, J., concurs; Gray, J., having Leen of counsel, not sitting.