American Fine Art Co. v. Reeves Pulley Co.

BAKER, Circuit Judge, after stating the facts as above, delivered the opinion of the court. Undoubtedly the general rule is that in signing a contract one party may not blindly rely on the representations of the other. The point to emphasize, however, is that the rule was not adopted to advantage the trickster, but to reprove the victim’s negligent failure to use the means at command to protect himself. No contract that has been procured by fraud should be enforced; and, if relief is denied, it is not on the bare fact that the signer has failed to use his opportunities to read and study and understand the contract for himself, but because his failure to discover the fraud that was being practiced upon him was negligent. The first inquiry here is whether plaintiff practiced a fraud upon defendant. Smith learned from Reeves that defendant stood in no present need of stationery, but would soon be sending out 10,000 booklets and 100 hangers, as was its custom to do annually. He proposed to design and procure the registration of a trade-mark for defendant without expense except the government fee, and, in response to a question how that would benefit plaintiff, replied that plaintiff would hope thereby to secure defendant’s general line of printing. So Reeves, after approving the design for a trade-mark, agreed to sign a contract whereby his company would be bound for the government fee and no more, and plaintiff would furnish supplies as thereafter ordered at prices then fixed. But plaintiff seeks to hold a contract for the immediate delivery of $15,000 worth of supplies, including, among other items, enough booklets to meet defendant’s need for 50 years and hangers for 100 years. If a fair and honest dealer, knowing the requirements of defendant’s business, had received by mail an order for such grossly disproportionate quantities, he would not have filled it without inquiry. To take deliberately such an order from one who is known to he unaware is the rankest fraud. Of this, plaintiff does not make much question, but relies upon the contention that Reeves’s failure to read the paper was inexcusable. During a month’s business intercourse Smith added a social call. He aimed to win Reeves’s confidence and succeeded. There resulted no relation, such as exists between attorney and client and the like, to justify, of itself, Reeves’s failure to read and understand what he, was signing. But the confidence which rightly exists between honest business men was designedly inspired by Smith as one step towards enabling him to perpetrate successfully what plaintiff calls a cheap trick that should have fooled no one, but which in fact deprived Reeves of the opportunity of realizing the true nature of the paper he signed. The next step, after Smith and Reeves had reached an agreement, was for Smith to volunteer to retire and prepare an instrument that should express their understanding. Reeves, of course, was busy with the various duties of his position. Smith had nothing to do but to consult Reeves’s convenience and save him time. What was more natural than that Smith should go off, and come back in a da°y or two with the paper already drawn up ? Then consider the form of the instrument. Tf the quantities were omitted, the proposition would read in exact accordance with Reeves’s [812] ■understanding — it would simply be an authorization to secure a trademark, and a list of prices at which goods might be ordered in the future. ■ And more than a casual glance would be needed to impress one to whom the paper was handed that the presence of 500 M and 10 M qq.uld. transform, a power of attorney and a price list into a purchase of $15,000 worth of supplies. ‘ .,, When Smith returned, he was in a great hurry. His train would be ■due in a few minutes. Before the train would leave, there was only time for one person to read over the paper in full. Smith had the docu.prent in. his hand'and started to read it aloud. Of course, it'was •Reeves’s.duty:to use his sense of hearing to find out whether the instrument as drawn truly expressed 'the contract made in their oral negotiations. ■ 'But it illy becomes plaintiff to insist that he was bound .at his peril-to stop the reading and take the paper out of the hands of .the apparently honest and gentlemanly agent. As Smith read it, the cqntract was all right. He was then snapping his watch, and did not have a moment to-lose. There was no time left for Reeves to read it fully. A hurried glance over it failed to reveal the catch. And now plaintiff seeks.to gather the fruits of the cheap trick on the ground that. Reeves either should have been guilty of the discourtesy of compelling an honest business man to miss his train, or should have discovered that the man who had won his confidence was a scoundrel. Plaintiff admits that if Smith, by prestidigitation in the shuffling of papers, had. got Reeves’s signature to a contract different from one he.intended to sign, defendant would be entitled to relief. But we think the .tricks that excuse should not be limited to feats of legerdemain. ’ The judgment is affirmed.