Paris v. Smith

MANTON, Circuit Judge (after stating the facts as above). The District Judge submitted this testimony to the jury, and permitted them-to determine as a question of fact whether the defendants in error had sustained the burden of establishing their action for fraud and deceit. He instructed the jury that it must be established by a fair preponderance of proof that the plaintiff in error represented to the defendants in error that he was selling pure olive oil, and that in point of fact, the oil so sold was not pure; that these representations so made were relied upon, and that the plaintiff in error, at the time, knew the representations made to be false. The court sharply called to the attention of the jury the necessity of proof that the representations were known to the plaintiff in error to be false when made, and that such false representations were relied upon by the defendants in error in making the purchase. The measure of damages was the difference [67] between the price agreed to be paid for pure olive oil and the market value of the oil which was sold, which is cotton seed oil. Evidence as to this the court submitted to the' jury. We cannot interfere with the finding of the jury on the questions of fact thus submitted. The plaintiff in error assigns as error the insufficiency of the complaint to state a good and sufficient cause of action in fraud and deceit. The complaint sufficiently states the jurisdictional facts, the making of the contract, and the promise of payment. It sets forth the representations made, which proved to be false, the fact that the oil so shipped “was not as represented and warranted as aforesaid, and was libeled by the officials of the Department of Agriculture at Los Angeles, because it was not as represented and warranted by the defendant, and not as described by the defendant in the bill of lading aforesaid,” and further that on the 21st of June, 1918, the plaintiff in error unlawfully and fraudulently delivered to the Irving National Bank, the agent of the defendants in error, a bill of lading covering a shipment represented and warranted to be pure olivé oil. It is further alleged that the plaintiff in error unlawfully and fraudulently obtained from the defendants in error the moneys so paid. The complaint is sufficient, although it does not allege scienter on the part of the plaintiff in error. It does describe the alleged representations and concealments of the plaintiffs in error as falsely and fraudulently made. A pleading in this form is sufficient in the state courts. Thomas v. Beebe, 25 N. Y. 244; Dudley v. Scranton, 57 N. Y. 424; Carr v. Sanger, 138 App. Div. 32, 122 N. Y. Supp. 593. Agreement to enter into a contract relation implies that the parties will deal with each other in good faith. This is essential to the meeting of the minds. If one of the parties fails to act in good faith, and in fact deceives the other, it is an actionable fraud, and breaches the implied obligation he is under, and he must respond in damages. The aggrieved party may have the remedy to rescind the contract; but he may, at his option, affirm the contract and bring an action for damage, recovering such amount as he may prove. A complaint that, as here, seis forth false representations made to the defendants in error, upon which they relied, and with the result that they parted with their money to their damage, sufficiently sets forth an action for deceit. Any damages that necessarily and naturally flow from such a contractual relation may he proved without pleading special facts showing the damage. Colrick v. Swinburne, 105 N. Y. 503, 12 N. E. 427. We think the complaint sufficiently sets forth a cause of action, as claimed. The proofs here required the submission to the jury of the question of damages; that is, the loss sustained, due to the difference between the contract price and the market price of the compound which was actually sold. This compound was called cotton seed oil by counsel in his questions. Cotton seed oil was the standard used in determining the market value, so as to determine the loss. But since the term seems to have been descriptive of what was sold defendants in error, we think no error was committed in its use, and therefore the evidence as to damage was sufficiently established. Finding no error in the result below, the judgment is affirmed.