UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY ' ? °8-20q cur. EEC'S- KERR ON FRAUD AND MISTAKE INCLUDING THE LAW RELATING TO MISREPRESENTATION GENERALLY, UNDUE INFLUENCE, FIDUCIARY RELATIONS, CONSTRUCTIVE NOTICE, SPECIFIC PERFORMANCE, dc. \ FIFTH EDITION BY SYDNEY EDWARD WILLIAMS, OF LINCOLN'S INN, BARRISTER-AT-LAW. Editor of " Coote on Mortgages," " DanielVs Chancery Practice," " Godefroi on Trusts," &c. LONDON : 8WEET & MAXWELL, Limited, :\ CHANCERY I. AMI. TORONTO, CANADA : i hi; CABSWELL COMPANY, Ltd., 145-149 Adklaidk Stkkkt Wist. S\ DNBY, N 8 w LAW BOOKCO.ofAUSTRALAS] Vi.i' .".l 53 Elizabeth Btreet. L920. f PRINTED BY THE EASTERN PRESS, LIMITED, LONDON AND READING. ** 2 A ^ PREFACE. The present edition of this work has been brought down to November, 1919, and includes not only the . English and Irish cases down to that date, but also the cases bearing on the subject decided by the Courts of India, Canada, Australia and New Zealand. Since the publication of the last edition many important alterations have taken place both in the law of Fraud and the law of Mistake, necessitating a thorough revision of the whole work. A large amount of new matter has been introduced, but it has been found possible to bring the book up to date without sub- stantially increasing its dimensions. An enlarged Index will, it is hoped, add to the usefulness of the present edition. S. E. W. Lincoln's Inn, November, 1919. CONTENTS. TAUT I— FRAUD. CHAPTEK I. PAGE General considerations ... 1 CHAPTER II. Misrepresentation and concealment ... ... ... 19 CHAPTER III. Presumptive or constructive fraud ... ... ... 1-19 212 212 265 303 309 CHAPTER IV. Fraud upon third parties ... Section 1. -Fraud upon Creditors Section 2. — Constructive Notice Section 3. — Fraud relating to Marriage Section 4. — Fraud in Respect of Sales by Auction CHAPTER V. Miscellaneous frauds 312 Section 1.— Fraud in Wills 312 Section 2. — Fraud upon Powers 320 Section 3. — Frauds relating to Deeds and other Instruments ... ... ... ... '"'-' ; 1 Section 4. Fraud by and upon Companies ... 335 Section 5. Fraud on Hie Stock Exchange ... ... •" Section 6.— Fraud in Arbitrations ... ... ... 34] Section 7.— Fraud in Judgments ... ... ... 344 VI CONTENTS. CHAPTER VI. HOW THE RIGHT TO IMPEACH A TRANSACTION ON THE GROUND OF FRAUD MAY BE LOST Section 1. — Confirmation Section 2. — Release ... Section 3. — Acquiescence Section 4. — Delay and Lapse of Time Section 5. — Purchase for Value without Notice PAGE 348 348 350 351 357 370 CHAPTER VII. Remedies ... ... ... ... ... ... ••• 386 Section 1. — Rescission, and other Remedies of a like Character ... ... ... ... 386 Section 2. — Action of Deceit — Damages ... ... 420 Section 3. — Injunction — Receiver — Summons ... 434 Section 4. — Defence to Specific Performance . . . 436 Pleading CHAPTER VIII. 448 Parties CHAPTER IX. 458 Proof CHAPTER X. 474 Costs CHAPTER XL 488 PART IL— MISTAKE. CHAPTER I. 493 TABLE OF CASES. PAGE Aaroxs Reefs v. Twiss, 45. 88, 92, 354. 362, 401. 406, 423. 430, 452, 454, 476, 478 Aas v. Benham 180 Abbott v. Sworder 78, 195, 440 Abbotts v. Barry 411 Abdool Hoosein Abadin v. Tur- ner 448 Aberaman Iron Works v. Wickens, 50, 117, 120, 394 Aberdeen Rly. Co. v. Blaikie, 155, 161, 164 Abouloff v. Oppenheiraer 346, 569 Abrahams v. Dimniock 208 Acraman v. Corbett 216, 220, 227, 238 Adam v. Newbiggin 115, 388, 408 v. Thrift 88 Adames p. Hallett 221 Adams v. Great Northern of Scot- land Rly. Co 570 v. Sworder 161, 162, 175, 395, 465 Addis v. Campbell 353, 367 Addlestone v. Linoleum Co 404 Adsetts v. Hives 143 Affleck v. Affleck 562 Agassiz v. Squiif 328 Agra Bank v. Barry 140, 282, 288, 301. 302 Ahearne p. Hogan 199 Aiken ». Short 552 Ains worth, Re 501 V. Wilding 568 Ajello v. Worsley 07, OH, 435, 460 Aldborough v. Try.- 134, 230, 392 Alder v. Boyle 522 Aldritt v. Maconchy 141, 151, 207, 370 Alexander, Re 524, 528 v. Automatic Co 166, 459 - v. Crosbie 531, 532 Alexandra Oil Co. d. Cork 220 Aleyn p. Belcher 320, 330 Allcard v. Skinner 1 19, L56, L57, L94, L99, 201, 348, 350, 359, 367, 184 Allen p. Anthony 277 - v. Bonnetl 200 217. 250 v. Davia L99 PAGE Allen p. Kiii-ln 265. 373. 376, 381, 489 - o. M'Pherson 318, 320. 419 p. Richardson 556 - v. Seckham 271, 277, 286 Allfrey p. Allfrey 16, L56, 171. 189, 366, 367, 482, 555 Allison o. Clayhills 156, 174 Allsop, Re ... 502, 558 Alms Corn Charity 293 Alton v. Harrison 218, 241, 242 Alvanley v. Kinnaird 511 Alven 0. Bond 171 Ambrose Lake Co., Re 396 Anderson v. Elsworth 200, 484 ■ v. Fitzgerald 42, 43 v. Pacific Co 51. 103 Andrew v. Aitken 519. 520 v. Wrigley 375 Andrews v. Mockford ... 414, 415. 162 v. Ramsay 184 Angel v. Jay 407. 556 Angus v. Clifford 3. 19, 21, 23, 28, 30, 44, 90. 421—423, 132, 453. 471 Anon 119, 271) Archbold p. Howth 7:> p. Scully L26, 354 Archer p. Hudson 188 v. Stone L0L 51 1 Archer's Case L65 Ardglasse p. Pitl 157. 203 Arkwright v. Newbold 63, 64, 71. 91, 12:;. 431, 175, 176 Armstrong p. Armstronj L51, I'M, 209 „. Jackson L6, 367, 388, 108 - v. Lynn 271 p. Milburn 367 Arnison v. Smith 28, 29, 31, It. 16, 18, '',7. 70, 90, 351, 421, 123, 121. 130, on. 152, 17(0 478 A Id p. Arnold L18, 111 Ml p. Cheque Bank L34, L37, 1 45 I 17 p. Hardwicl 32(0 829 Arundel p. Trevillian 806 Arundell p. Phippa 228 \ Mi ij < la ' 368 Asians) p. Mill 527. 644 Vlll. TABLE OF CASES. PAGK Ashwell v. Lonii 313 Asiatic Banking Co., Ex p 382 Askham v. Barker 820 Aspland v. Watte 349 Assets Co. v. Mere Roihi 303 Athenaeum Sue. v. Pooley 349, 382 Atkinson, Re 265 v. Macreth 299 v. Smith 236, 237 Attenborough v. St. Katherine's Dock 86 Atter v. Atkinson 313 Atterbury v. Wallis 293, 294—296, 299 Att.-Gen. v. Backhouse 281 v. Biphosphated Guano Co. 269, 281, 286. 456 - v. Clarendon 163, 171 - v. Corp. of Cashel 171 v. Cradock 469 v. Craven 394 — v. Flint 272 v. Grote 576 - v. Magdalen Coll 393 - v. Odell 303 v. Pargeter 281 - v. Ray 33, 43, 541 v. Stephens 276 v. Tomline 368 Attwood v. 503, 545 v. Small 42. 48. 362 Austin v. Chambers 162, 163 v. Tawney 294 Australasia, Bank of, v. Nias ... 346 Australia, Chartered Bank of, v. Lempriere 475, 562, 564 Ayerst v. Jenkins 223 Avles v. Cox 442—144 Aylesford v. Morris 204, 205, 392, 482, 490 Ayliffe v. Murray 155, 159, 160 Aylmer, Re 262 Aylward v. Kearney 188, 201, 353 Ayrey v. British Legal &c 105 Azemar v. Casella 41, 113 Babcock v. Lawson 134, 136 Bage Ex p 163 Baglehole v. Walters 72. 77 Bagnall v. Carlton 154. 162, 169, 352, 361, 397. 470 Bagot r. Chapman 14 Bagueley v. Hawley 82 Bahia Ely. Co., Re 136, 433 Bailey v. Barnes 267. 269. 270. 271. 281, 370. 371, 373. 375 - v. Piper 513 v. Richardson 276 Baillie's Case 514 PAGE Bain v. Fothergill 425, 560 Bainbrigge v. Browne 156. 190, 349, 481, 482, 484 v. Moss 283 Baker v. Batt 312 - v. Bradley 190, 191, 192, 353, 392 v. Carter 161 v. Cartwright 69 v. Courage 555, 558 v. Monk 196 v. Paine 522 v. Read 361, 364 v. Wadsworth 345, 419 Baldwyn v. Smith 150 Balkis Consolidated Co. v. Tom- kinson ' '. 123, 136 Ball v. Mannin 151 v. Stone 528 Banbury v. Bank of Montreal 97, 426, 480 Bank of Australasia r. Nias 346 Banfather's Claim 135, 289, 297 Bank of Africa v. Cohen 201 Bank of England v. Cutler Ill Bank of Ireland v. Evans' Charities 145, 147 v. M'Manamy 14 Bank of Scotland v. Dominion Bank 57s Bannerman v. White 42, 43 Barber v. Mackrell 395 Barclay, Re 398, 457 Barker v. Harrison 181 v. Janson 542 Barling v. Bishopp 219, 239 Barnard v. Faber 41, 107 v. Wallis 128 Barnes r. Youngs 343 Barnesley v. Powell 333 Barnett, Re 565 v. S. London Tramway 97 Barnhart v. Greenshields 266, 277—279 Barr v. Gibson 83, 542 Barrack v. M'Culloch 221 Barrett v. Hartley 159 v. Wells 304 Barrett's Case 45 Barron v. Kelly 403 v. Willis 156, 157, 158. 173, 178, 179. 193, 201, 349, 350 Barrow v. Barrow 531, 537 v. Greenough 332 r. Isaacs 505, 506 Barrow's Case 375 Barry v. Butlin 313, 317, 320 - V. Croskey 67, 339, 432, 460, 461 Bartlett v. Salmon 291, 489 v. Wells 152 TA1SLK OF CAS - IX. PAG1 Barton p. Vanheythuysen ... 212, 219 Bartram & Sons p. Lloyd 184, 10] Barwell r. Barwell 364 Barwick p. English J. S. Bank 95, 427—429 Baskcomb v. Beekwith 439. 520 Bassett's Estate. Re 573 Bate p. Bank of England 200 — — p. Hooper 499 Bateman v. Boynton 560 p. Ramsay 464 Bates P. Graves 392 r. Hewitt 103 v. Johnson 370. 375. 376, 384 Bath ami Montague's Case 6 I '.at t en-Pool e v. Kennedy 502 Battison p. Hobson 303, 385 Batty v. Chester 466 Baty v. Keswick 93 Baudains d. Richardson 317 Bawden p. London, >v.c. Ins. Co. 105 Baxendale p. Bennett 15. 1".7. 146 p . Scale 120. 543. 517 Baxter, Ex p 522 Bayley-Worthington and Cohen. Re 501, 521 Baylis p. Bishop of London 554 Baynard p. Woolley 167 Bay spool r. Collins 231, 236 Beaden p. King 1<>3. 171 Beadles v. Burch 469 Beale v. Kyte 527. 539 Beanland p. Bradley 200 Beattie p. Ebury 60 Beauchamp p. Winn 352, 362, 366, 494, 196, 497, 560 Beaufort v. Neeld 506 - v. Patrick 126, L28, L30 Beaumont p. Bramley 529, 532 V. Dukes 139 Beavan v. M'Donnell L50 Beck v. Kantorowicz 182 Beckett v. Cordlej 127. 283 Beckford p. Wade 358, 360, Beckley r. Newland 308 Beddoes v. Pugh 324 Bedford v. Bagshaw 338 "Bedouin," The L04 Beere p. Hoffmeister 323 Begbie p. Phosphati Co 163 Behn p. Bun 10, 42, HO Belhavi n Case 503 Bell p. < larke 304 V. (laid I IK i 505 p. Howard 200 — p. Marsh L21, L23, L46 v. Simpson 245 Bellaire i , Tucker 51, 52, 54 PAGE Bellamy p. Debenham -il- p. Sal. me 17. L8, L92, 367, 392, 158, 171 Benham p. United Guarantee Ass. I 41 Beningfield P. Baxter Bennett, Ex. p 160 -162, 171. 397 p. Colley p. Stone 5-J1 p. Wade 151 Benson p. Heathorn 155, L63, 182 Bentinck p. Fenn Bentley p. Black 457 - v. Craven 181, 186 p. Mackay 192. 203, 521, 522. 529, 532, ' p. Vilmont 11 Benyon p. Nettlefold 466, 185 Berdoe r. Dawson L57, 190, Berrisford p. Milward 127 Berry p. Armitstead 169 Berwick p. Murray 268 & Co. r. Price... 140, 144, 292, i Besley v. Besley 81, 544 Bessey p. Windham Betjemann p. Betjemann 17. 299, 367, 150 Betts p. Doughty 178 Bevan p. Habgood 172 v. Webb 160 Bevfus and Masters, Re 117. 119, 441. 143, 115. 551 Benyon p. Cooke 204, 188 Bickerton p. Burrell 101 Biggar p. Ruck Life Ass. Co. 103, !"■' Bignell, Re I" Bilbie p. Lumley 199 Billage p. Southee 199, 392, 182 Bills p. Smith 254, 255 Bingham p. Bingham 497 Birch v. Birch :: '" v. Blagrave 164 Bircball Re HI Bird p. Fox 2^ Bird's Trust 523, 524, ^27. 540 Birkbeck Bldg. Soc., Re 501 Birlej p. Birley 325, 326 Biri p. Burl l v| Bishop p. Balkis Co. ... 12::. 121. v. Jersey Bisho] Casi Bi . Re 160, 172. L87, 202 Bittlestone p. Cooke 245 Blackburn, Ex p. ... 252, 254, 25*;. 257 p. Ha lam 103 p. Smith p. Vigors 103 — I . Be 258 126 X. TABLE OF CASES. PAGE Blackburn Soc. v. Brooks 449 Blackie v. Clarke 560 Blacklock v. Dobie 259 Blackpool Motor Car Co 258 Blagrave v. Routh 176 Blaiberg v. Keeves 44, 66, 79, 117, 443, 481, 519 Blair v. Bromley 16, 93, 471, 472, 474 Open Hearth Co., Re 89 Blake v. Albion Life Ass. Soc. 96, 480 v. Mowatt 73, 391 Blake's Case 91 Bland, Ex p 244 Blenkhorn v. Penrose 66 Blenkinsopp v. Blenkinsopp ... 346, 347 Blennerhassett v. Day ... 171, 342, 366 Blest v. Brown .' 108 Blood v. Keller 130 Bloomenhtal v. Ford 123 Bloomer v. Spittle ... 522, 531, 532, 539 Bloye's Trust 175 Boaler v. Power 419 Boddington Re 575 Bodega Co., Re 552, 553 Bold v. Hutchinson ... 56, 59, 533, 534 Boldero v. London Discount Co. 260 Boles and British Land Co., Re 162, 163 Bolland, Ex p 235, 252, 254 Ex p 257 Bonhote v. Henderson 210, 486, 531, 532, 539 Bonnard v. Dott 207, 208 Booty v. Groom 573 Borell v. Dann 291, 378, 446 Bos v. Helsham 557 Boston Fishing Co. v. Ansell ... 164 Bott v. Smith 214, 222, 232 Boulter, Re 532, 540 Boulton v. Jones 101, 514 Bourne v. Swan & Edgar 435, 450, 477 Boursot v. Savage 14, 266, 281, 292, 293, 296 Bo wen v. Evans 9, 16, 370, 378, 451, 477 v. Kirw y an 198 Bowes v. Foster ... 214, 463, 464, 485 Bowles v. Stuart 333, 469 Boyd v. Dickson 64 Boyes v. Carritt 179 Boyse v. Bussborough 194, 312. 314, 317, 319 Bozon v. Williams 144, 282 Brackenbury v. Brackenbury 463, 464 Braddick v. Mattock ' 567 Bradford v. Bomney 529, 530 Bradley v. Riches 144, 282, 292, 293, 296, 301, 302, 379, 380 PAGE Brake, Re 573, 576 Brandling v. Plummer 65 Brandlyn v. Ord 375 Bray v. Briggs 509 v. Ford 155, 159 Brazalian Bubber Plantations, Re 34, 87 Breadalbane v. Chandos 529 Brenchley v. Higgins 195, 196, 197, 204, 205, 206, 207 Brennan v. Bolton 131 Brett, Ex p 86 - v. Clowser 62, 556 Brewer v. Brown 65, 118, 440, 444, 508 - and Hankins, Re 118 Bridgman v. Green 198 Briggs Ex p 288, 354, 402 v. Jones 141 Bright v. Legerton 352, 358, 365 Bright 's Trust 284, 285, 288 Brinsmead & Sons 337 Brisbane v. Dacres 499 Brisco v. Baillie Hamilton ... 320, 571 Britain v. Rossitter 130 British Equitable Ins. Co. v. G. W. Rly 31, 106 British Gold Fields, &c 412 British Homes, &c. v. Paterson 101, 472 British Mutual Banking Co. v. Charnwood Forest, &c. ... 94, 96, 427 British Workman's and General Ass. Co. v. Cunliffe 61, 106 Broad v. Munton 65, 66, 412, 521 Broadbent v. Barlow 269 Brocket, Re 547, 576 Brocklesby v. Temperance Bid. Soc. ..." 13, 133, 134, 140 Brockwell's Case 414 Brook v. Hook 348 Brooke v. Gaily 200 v. Mostyn 110, 111, 419, 503 v. Rounthwaite 48, 119, 438, 440, 443 Brookes v. Hansen 89 Brooking v. Maudslay 392 Brooksbank v. Smith 358 Broome v. Speak 91, 92 Broughton v. Broughton 159 v. Hutt 129, 497 Broun v. Kennedy 179, 538 Brown v. Savage 301 v. Thorpe 128 and Gregory, Re 383 Browne v. M'Clintock 366 Browning v. Budd 312, 318 Brownlie v. Campbell 8, 28. 31, 34, 37, 40, 62, 74, 76, 79, 124, 267, 407, 408, 423, 476, 556 TABLE OF CASES. XI. PAGE Bruce v. Bruce 563, 565 Bruty v. Edmundson 492 Brydges v. Branfill 458. 171 Buckell v. Blenkhorn 332 Buckinghamshire r. Drury 152 Budd's Case 336 Bufe r. Turner 107 Buff Pressed Brick Co. P. Ford ... Ill Bulkley v. Wilford 332 Bulli Mining Co. p. Osborne 16, 358, t33, 155 Bullivant v. Att.-Gen. For Victoria 448, 450, 487 Bullock v. Dowries 352, 503 Buhner v. Hunter 235, 246 Burchell p. Clark 523. 526 Burdick v. Garrick 365 Burgess"s Case 354, 389 Burgis v. Constantine 98, 134, 145 Burkinshaw v. Nicholls 122 Burland v. Earle 165, 396 Burnell v. Brown 80 Burnes v. Pennell 9, 45, 66, 67, 97 Burrell, Ex p 58 Burrow v. Scammell 509, 512, 551 Burrowes v. Lock 35, 36 Burrows v. Rhodes 465, 467 „. Walls 353, 357 Burst-all v. Bevfus 470, 492 Burton, Ex p 244, 246, 247 v. Knight 341 v. Wookey 186 Bushel] v. Bushell 301 Butcher v. Jackson 322 p. Stead 252, 256 Butler v. Fairclough 303, 477. 496 V. Miller 195 Butterfield p. Heath 227 Bwlch-y-Plym Co. v. Bayne- 406, 154 I'.vru p. Godfrey 333 ' VBALLEBO v. Henty 278, 437, 475 ' acketi V. Keswick 93, 431 Cadogan v. Kennett 212, 222, 232, 238 Caird p. Moss 528 1 .urncross v. Lorimer 124, 354 Calcraft p. Roebuck 342 Callisher v. Bischoffshcim 503 Calthorpe v. Trechman 93 Calverley p: Williams 533 Camberwell Bldg. Boc. p. Hollo- way Ill Cameron p. Wells 224 Campbell p. Fleming t (, l . 403 French 578 - v. Hooper L50 o. [nglebj 223, 506 v. Leach : <<'>'-'> PAGE Campbell v. Walker 163 Canadian Bank d. Wait I"" 1 Cane v. Allen 177. 182 Canham v. Barry Cann v. Cann 195 v. Willson 25 Capell v. Winter 143, 17';. i»i;«i. :iso. 3s-j Capon's Trust 331 Carew's Estate 299. 300, 309 Carey v. Barrett 262 v . Carej L88 Cargill v. Bower 44, 99, 430, 154 Carington v. Wycombe Rly. Co. 347 Carlill r. Carbolic Smoke Ball Co. 460 Carling's Case 165 Carling 0. London iS: Leeds Bank 15'2 Carlisle Bank v. Thompson 374 Carlisle Banking Co. v. Bragg 14, 146, 147 Carlish v. Salt 77, 116 Carpmael p. Powis 118, 506, 538, 542 Carr v. L. & N. W. Rly. 121, 124, 133. 146 Carriage Co-operative Ass 165 Carringtons v. Smith 207 Carrique v. Catts 403 405 Carritt v. Real Advance Co 144 Carter v. Boehm 102, 103 v. Carter 374, 563, 564 v. Hind 225 v. Palmer 158, 177, 179, 182, 183, 190, 392 ami Kemlerdine, Re 10, 17, 214, 241, 385 Cartledge, Re 572 Carver p. Richards 329 < ;u\ p. Cary 188 Case p. .lames 143, 380 Cash v. Cash 135 Cassels p. Stewart 185, 187 Caswell p. Coare i' 1 "' Cato v. Thompson 64, 143, 111. IT Caton v. Caton L32 Cavander p. Bulteel 115. 276, 277 Cave v. Cave 293, 297, 379. 382 Cawlej a Co 335 Caxton Union p. Lew 109 Cecil p. Butcher 162, 463, 164 Central Railway of Venezuela p. Kisch 54, 68, 90, 353 Chadwick v. Manning 56, 71 0. Turner 3(11. 302 Chalmer p. Bradley 162. Chamberlaine p. Agar 332 - v. ( Ihamberla me 382 Chambers p. Minchin 57:'. Champion P. Rigbj 367 cl ter p. Bopkina U, 88, 513 Xll. TABLE OF CASES. PAGE Chaplin, Ex p 216, 222 ■ v. Brammall 156, 201 Chapman v. Bradley 223 v. Gibson 562 o. Michaelson 208, 393, 402, 403, 488 o. Speller 82 Chappell v. Gregory 447 Chaproniere v. Lambert 131, 132 Charlesworth v. Jennings 119 Charter v. Charter 573, 576, 577 ■ ». Trevelyan 181, 182, 354. 357. 366, 367 Chartered Bank of Australia v. Lempriere 475, 562, 564 Cheese v. Keen 179, 364. 409, 556 Cheslyn v. Dalby 176 Chessum v. Gordon 345 Chester v. Keirl 573, 576 v. Powell 81 Chesterfield v. Jannsen 204 Chetham v. Hoare 366 Chetwynd v. Morgan 562, 563 Childers v. Childers 463 Cholmondeley v. Clinton 358, 365, 558 Chris fcineville Rubber Co., Re 69, 74, 363, 452 Chymoweth's Case 336, 356, 357 Citizens Life Ass. Co. v. Brown 96. 98, 185, 428 Clanricarde v. Henning 364, 365, 369, 489 Clare v. Lamb 541. 556, 557 Clare Hall v. Harding 126, 128 Clark v. Burgh 536 „. Clark 172 v. Girdwood 416, 469. 470, 486, 492 v. Loftus 483 v. Malpas 196. 393. 458 Clarke v. Bickers 536 o. Cobley 152, 153 v. Dickson 64. 387, 402. 403, 405, 559 e . Grant 526 v. Hart 369 e. Mackintosh 438 v. Palmer 140, 142 v. Parker 308 „. Wright 224 Clarkson V. Hanway 198 Clavering v. Thomas 126 Clayton v. Leach 81, 544, 557 v . Wilton 224 Cleather v. Twisden 472 Clegg v. Edmondson 187, 355. 359. 361, 364, 368, 369, 489 Clements v. Hall 355, 362 v. Welles 273, 290, 377 PAGE Clermont V. Tasburgh 438 Clifford v. Turrell 198, 199 Clifton v. Cockburn 495. 560 Clinan v. Cooke 526 Clinch v. Financial Corp 491 Clint, Re 235 Cloak v. Hammond 577 Clough v. L. N. W. Rly 11, 362. 386, 387, 388, 401, 403, 407, 450 Cloutte v. Storey 350 Clowes v. Higginson 527, 547 Clydesdale Bank v. Paton 56. 57, 59. 426, 14b Coaks v. Boswell 55. 71. 74. 78. 111. 163, 175. 364. 411, 412 Coalport China Co 336 Cobbett v. Brock 199, 285 Cochrane v. Willis 505. 541, 543 Cock v. Richards 308 Cockburn v. Edwards 175 Cockroft v. Sutcliffe 324 Cockell ;;. Taylor 195 Cockerell. Ex p 346 V. Cholmeley 349 Cocking v. Pratt 495, 497. 505 Cocks v. Masterman 553 Codrington v. Lindsay 223 Cogan v. Duffield ....' 417, 527, 534 Cohen. Ex parte 248 Cohen, Re 330 Colby v. Gadsden 52 Colclough v. Bolger '. 418 Cole v. Gibson 200. 307 v. Langford 345, 418 Coleman v. London County. &c. Bank 142, 377 Coleman v. Mellersh 179, 555 v. Riches 93 Colemere, Re 245. 246 Coles v. Hulme 522, 523 v. Trecothick 160, 195 Collen v. Wright 39 Collett v. Morrison 528, 529 Collier v. Jenkins 443 Collins v. Blantern 485 j,. Cave 432 v. Evans 67, 111 v. Hare 201 Collinson v. Jeffery 569 Colombine v. Penhall 235, 246 Colonial Bank v. Bank, of Nova Scotia 552 Colonial Bank of Australasia v. Marshall 138 ■ Colpoys v. Colpoys 576 Colyer v. Clay 505. 542 r. Finch 139. 140. 270 TABLE OF CASES. Xlll. l'AGE Compania Xaviera Vascongada p. Churchill 7. 41 Components Tube Co. r. Naylor 74. 401. 123 Condogeanis r. Guardian Ass. Co. 107 Connecticut Ins. Co. p. Kavanagh 41* Connor v. Potts 117. 444 Continental Caoutchouc Co. v. Kleintwort 552 Cook p. Fearn 532 Cooke v. Laiuotte ...197, 200, 482, 184 v. Smith. Sei Smith V. Cooke. Coomer v. Bromley 472 Cooper, Ex p 245. 249 v. Cooper 321. 321 v. Joel 393 p. Martin 564 v. Phibbs 494. 496, 497. 541 v. Vesey ... 13, 14. 14G. 374. 383 Copis o. MMdleton 212. 222. 235, 237 Copp v. Lynch 173 Coppinger v. Norton 457 Corbett v. Brown 47 Cooper, In the good- of 571 Corlett p. Radcliffe 222. 239 Corley v. Stafford 179, 416 Cormick v. Trapaud 237 Corcoran v. Wade 500 Cornell t>. Hay 93 Cornfoot v. Fowke 40. 95 Cornish v. Clark 240 Cory p. Eyre 142. 265, 282 v. Gertcken 152 v. Patton 104 Costa Rica Rly. v. Forwood L65 Costello's Case 336 Cothay v. Sydenham 283 Cottam o. Eastern Counties Rly. 145, 481 Cottle v. Fripp 225 Coulson v. Allison 200, 202, 223 Cousins, Re 293, 294 Coutts v. Acworth 200 Couturier v. Hastie 541 Coventry's Case 337 Coward v. Hughes 498, 552 Cowen v. Truefitt 548 Cowper p. Cowper 333 Cos p. Bruton 195 v. Coventon 285, 288, 143 v. Middleton 50, 287, 137 v. Pn i m:-. ' Cox's Case 337 I racknal] p. Janson 221, 230 Craig p. Phillips 471 Craster p. Thomas 120 . Crawshay 320, 329 PAGE Cripps r. Jee 186 Croft p. Graham 392 Crofton v. Ormsby 277 Crofts p. Middleton 227 Croker P. Martin 214 -kill v. Bower 159 Cross, Re - '•■ Sprigg 56 Crossley v. Elworthy 220. 181 Cuenod v. Leslie 154 Cullen v. O'Meara v. Thompson's Trustees ... 469 Cundy v. Lindsay 514 Cunnington p. G. N. Ry 9 Currie v. Goold ." 199 Curson v. Belworthy 197 Custance p. Cunningham 201 Cathbert r. Robarts 94. 1 10 Cutts P. Salmon 174 LUcre v. Gorges 559 D'Albiac v. D'Albiac 159. 304 Dallas, Re 148. 301 Dally v. Wonham 393 Dauby p. Coutts 407. 469, 470 Daniel r. Sinclair ... 495. 502, 552. 555 Daniels v. Davison 277. 278 Dann, Ex p 246, 248 V. Spurrier 128 Darby, Re L70 Darlington v. Hamilton 281, 291 v. Pulteney 567 Darvill v. Terry 234. 237 Dashwood v. Jermyn 60 Daubeny v. Cockburn 329 Dauglish v. Tennant 202 Davenport v. Bishop 223 Davey p. Durrani 393 David and Adlard, Re 168, 243 Davies v. Davies 75, 127, 128, L88, 184 o. pitton 526 - v. London \ Prov. ln^. Co. 30, 103, 107. 109, 194. 201. if,:,. n;r. p . Marshall L30 - v. N;it ional [ns. Co LI i:; v. Otty 189 V. Scar L26, 2*7 r. Thomas ... 272. 273, 376, :17s Davis r. Abraham 179 v. Hutchings 268, 270, 272. 280, 284, 299 v. Morier 495. 502 p. National Ins LOS v. Dphill 325. 327 r. \\ hitehead 586 and Cavej 275 XIV. TABLE OF CASES. PAGE Davoren v. Wootton 468 Davy v. Garrett 448, 449, 450 Dawes v. Harness 454 Dawkins v. Penrhyn 455 Dawson v. Collis 410 v. Massey 188 - v. Prince 288 Day v. Singleton 425, 561 Dean v. Macdowell 186 Deane, Re 330 Dearie v. Hall 148 Debenham v. Ox 307, 490 - v. Sawbridge 408, 412, 445, 497, 544, 556, 557 Debtor, Re 207 De Bussche v. Alt 8, 181, 182, 351, 352, 355 De Cordova v. De Cordova ... 110, 171 De Hahn v. Hartley 7 De Hoghton v. De Hoghton 323 Delany v. Keogh 19, 62, 421 De Lassalle v. Guildford 7, 41, 42, 43, 52, 77, 81, 82, 408, 412, 427, 556 De la Toucbe, Re 524, 527, 532 Del Mare v. Bobello 574, 578 Delves v. Delves 311 De Mestre v. West 224 De Montmorency v. Devereux 349, 485 Denham & Co 300 Denn v. Wilford 525 Denne v. Light 67 Denny v. Hancock 438, 520 Dent v. Bennett 199 v. Clayton 524 Denton v. Donner 171, 196, 485 v. Macneil 54 Denys v. Shuckburgh 495, 558 De Bosaz, Re 575, 576 Derry v. Peek 6, 10, 19, 86, 90, 420, 422 Devala Co 97 Devaynes v. Noble 504 De Witte v. Addison 156, 157, 189, 191 Dibbs v. Green 502 Dicconson v. Talbot 46, 172 Dickinson v. Barrow 131 Dickson v. Eeuter 39, 506 Dimmock v. Hallett 45, 51. 52, 53, 64, 310, 444 Dimsdale v. Dimsdale 191 Dinn v. Blake 570 Discoverers Finance Corp 336 Dixon v. Brown 501 v. Evans 504 - v. Kennaway 123, 136 v. Olrnius 318 v. Muckleston 133, 142, 270, 289 v. Winch 292, 295, 297, 298 PAGE Dixons v. Monkland Canal 499 Dobell v. Stevens 50, 53, 72, 426, 486 Dodds v. Hills 285, 375 Doe v. Ball 243 ■ v. Crago 542 v. Godwin 525 - v. James 235, 236 v. Lloyd 122 v. Koberts ... 344, 462, 463, 576 v. Eolfe 229 v. Webber 236 Dolman v. Nokes 71 Donaldson v. Bamber 573, 577 v. Gillot 145, 333 Donovan v. Fricker 394, 395 Door v. Geary 574 Dougan v. Macpherson 161 Douglas v. Baynes 440, 533, 546, 547 v. Culverwell 201 Dovey v. Cory 3, 34, 99, 145, 270, 430 v. Morgan 258 Dowell v. Dew 131, 563 Dowle v. Saunders 143, 481 Downes v. Grazebrook ... 160, 161, 162 Drake v. Drake 573, 576 Drewe v. Corp 117, 443 Drewry v. Barnes 499, 506 Drincqbier v. Wood 459 Druiff v. Parker 527, 535 Drummond v. Van Ingen 84, 85 Dryden v. Frost 266, 293 Drysdale v. Mace 50, 62, 440 Duckett v. Gover 459 Duggan v. Duggan 321, 328 Duncan, Re 468 Duncannon v. Haywood 3 Dunkley, Re 385 Dunn, Re 492 Dunne v. English 182, 483 Duranty's Case 414, 415, 425 Durham v. Legard 117, 444 Durnell v. Corfield 313, 314 Durrant v. Ecclesiastical Com- missioners 553, 558 Dyas v. Stafford 508 Dyer v. Hargrave 438, 442, 444 Dykes v. Blake 51, 118 Eaglesfield v. Londonderry 44, 48, "51, 62, 430 Earle v. Kingscote 154 East and West India Docks v. Kirk 571 East India Co. v. Donald 486, 505, 517 Eastgate, Re ... 58, 86, 386, 401, 409 Eastwood v. McNab 500 Eaton v. Bennett 530 TABLE OF CASES. XV PAGE Ebbetts p. Conquest 280, 5 Ede r. Enowles 219 Eden v. Eidsdale Lamp Co. ...164, L65 Edgington p. Fitsmaurice 45. 46, 47. 51. 57. 07. 90, 124 Edinbro' Breweries p. Mollison 415. 471 Edinburgh Life Ass. v. Y 480 Edmunds r. Edmunds -210. 218, 221, 233. 231 Edwards p. Glynn - p. M'Cleay 77. 80, 394 - — v. Meyrick ... 149. 156, 175, 176 p. Wickwar 72 v. Williams 177 Eicholz v. Bannister 82 Ellesmere Brewery v. Cooper 108 Elliott v. Ince 150 Ellis. Ex p 222 D. Ellis 419 r. Hills 527. 530 Else v. Else 64. 412 Elsey v. Cox 490 Elwes v. Elwes 537 Emeris r. Woodward 110 Emma Silver Mining Co. v. Grant 65, 156, 157, 397 v. Grant 157 v. Lewis 169. 397 Emmerton v. Mathews 78, 83 Empson's Case 535 England v. Curling 186 Englefield Colliery Co 166 English and Scottish, &c. v. Brnn- ton 270, 273, 285, 287 Erlanger v. New Sombrero Co. 167. 168, 169, 360, 364, 366, 368, 387 Ernest v. Vivian ... 361, 362, 368, 369 Erskine v. Sachs 171. 338 Esdaile v. La Nauze 14, 374 Espey v. Lake 157, 188, 189, 203 Espin v. Pemberton 267, 288, 292, 294, 297 European Bank 300 Evans v. Bicknell ... 133, 139, 335, 486 v. Carrington 334 v. Chapman 493 v. Llewellyn 6. 200 Everitt v. Everitt 189, 490, 539 Exton v. Scott 220, 221 Eyre, Ex p 231, 233, 263, 472 v. Hughes L75 v. M'Dowell 301 Faithful v. Ewen Falek r. Williams 523, 629 Falcke v. Gray L95, 446 PA Falkingham p. Victorian Ely. Commissioners Fane p. Fane 110. m, 191, 192. Farmer r. Farmer p. Martin 320, 329 Farnell. Re 564 Farquharson c. King 11, 13. 15. 97, 122. 12U. 128, L33, 131. L37 Farr p. Sheriffe 536 Farrant p. Blanchfonl ... 191, 354. 357 Farrar p. Farrars, Lim 175. 183 Farrelly v. Corrigan 32(1, 571 Farrer v. St. Katlierine's Coll. 572,573 Farrow r. Rees 284 Fawcett v. Johnson 431 v. Whitehouse L85 and Holmes, Re 120 Fawkes v. Att.-Gen 374 Fay u. Smillie 99. 131 Fearon v. Aylesford 33} v. Desbrisay 322 Felgate's Case 411 Fellowes v. Gwvdyr 56, 101, 440 Fenton v. Browne 490 Fenwick, Stobart & Co., Be .... 300 Feret v. Hill 56. 57. 58 Ferguson v. Carrington 453, !•">! Ferrars v. Cherry 272. 376 Ferres v. Ferres 200 Field v. Field 1 II Fielden r. Slater 27-". Fife v. Clayton 526 Filmer v. Gott 198, 186 Firbank's Executors r. Humphreys 61 Fisher, Ex p 246 250 — — v. Liverpool Ins. Co 1"4 Fitch o. Jones 523 Fitzgerald v. Fitzgerald 523. 528 Fleming v. Loe 394, 411, 412. U5 Fletcher v. Krehl 69 Flight v. Barton 63, 80, 29] v. Booth 44, 63, 80. 116, 118, 274, 143 Flint p. Woodin 51, 62, 72, 310 Flood p. Pritchard 276 Flower p. Lloyd 345 Foley, Ex P 251 Forbes p. Knss L59 Ford v. Olden 202 v. Stier 309 Forder, /■> p I" 1 Forester p. Read 49] Forteblow v. Shirley iS " Fobs p. Harbottle 469 I oster p. Charles 29 r. Mackinnon 12. 1"). 117 — and Lister 226 Fowkes p. Manchester, iV>- LOS XVI. TAJiLE OF CASES. PAGE Fowler v. Fowler 529, 530, 532 v. Scottish Equitable Life Ins. Soc 530, 533 Fox v. Macreth 71, 161 Foxley, Ex p 246 Frail v. Ellis 280, 299 Frankenburg v. Gi'eat Horseless Carriage Co 459 Franks v. Bollans 364 Fraser v. Levy 245 v. Thompson 222, 235 Freeman v. Bank of Montreal ... 152 Vm Cooke 121, 124, 514 v. Jeffryes 552, 555, 559 v. Pope 214, 216, 219, 233, 237, 238, 478 French v. French 213, 214, 221 Frost v. Aylesbury Dairy Co. ... 85 Fry v. Lane 193, 196, 197, 205, 482, 488 v. Smellie 134, 270 Fuller v. Abrahams 311 v. Glynn, Mills, Currie & Co 98, 134, 148 Fullwood v. Fullwood 358 Fulton v. Andrew 314, 483, 484 Fung Ping Shan v. Tong Shun 334 Fyler v. Fyler 491 Gadd v. Provincial Union Bank 208 Gage, Be 329 Gale v. Gale 224 v. Lindo 304, 415 Gallard, Re 171, 360, 387, 397, 403, 407 Galton v. Emuss 309 Games, Ex p. 242, 243, 247, 250, 258 Gandv v. Macaulay 351, 361, 498, 540, 555 Garland v. Beverley 273 Garrard v. Frankel 518, 521, 531, 560 v. Grinling 510 v. Lewis 137 Garth v. Cotton 212 v. Townsend 563 (iartside v. Gartside 342 Garvey v. M'Minn 200 Gas Light Co. v. Terrell 257 Gascoigne v. Gascoigne 463 Gaw v. British Law Fire Ins. Co. 343 Gedge v. Boyal Exchange Ass. Co 152, 462 Geipel v. Peach 459, 468 General Steam Navigation Co. v. Holt 268, 270 Gerson v. Simpson 467 Gething v. Keighley 409, 555 Gibbs v. Guild 358, 451, 455 PAGE Gibson v. D'Este 118, 393, 398 v. Ingo 284 - v. Jeyes 156, 174, 177 v. Eussell 198, 199 v. Spurrier 80 Gilbert v. Lewis 449 Gilbert's Case 166 Giles v. Giles 572, 574, 575 Gillespie, Re 225 Gillett v. Gane 573 v. Peppercorne 181 Gilliat v. Gilliat 311 Glasier v. Bolls 90, 424, 474, 475 476 Glassington v. Thwaites 186 Glegg v. Bromley ... 213, 218, 222, 234 Glubb, Re ... Ill, 113, 211, 520, 539 Gluckstein v. Barnes 63, 64, 65, 165, 166. 170, 395 Glynn v. Bank of England 476 Goblett v. Beechey 577 Godard v. Gray 569 Goddard v. Carlisle 178 - v. Jeffreys 437, 439, 509 Godfrey v. Poole 214, 259 Golden v. Gillam 218, 222, 232, 233, 236, 237, 240 Goldrei & Co. v. Sinclair ... 454, 469 Goldsmith v. Bruning 307 Goldstein v. Salvation Army Ass. Soc 106 Gompertz v. Bartlett 113 Gonville v. Patent Caramel Co. 239 Goodricke v. Taylor 217 Goram v. Sweeting 40 Gordon v. Gordon 110, 503, 545 v. Street 47, 514 Gore v. Gibson 151 v. Stacpoole 378 Gover's Case 91, 92, 167, 430 Govett v. Richmond 127 Gov & Co., Re 383 Graham v. Chapman 250 Grant v. Gold Exploration, &c. 180, 184 ■ v. Grant 577 v. Munt 77, 442 Gray v. Fowler 402 Great Berlin Steamboat Co. ... 466, 467 Great Luxemburg Ely. v. Magnay 17. 164, 395 Great Western PJy. v. Cripps ... 502 Green, Ex p 258 v. Fletcher 295 v . Gosden 47, 70 v. Nixon 2 Greenfield v. Bates 179 v. Edwards 68, 108, 135 TABLE OF CASES. XY11. PAGE Greenhalgh v. Brindley 41. 45. 69, 73, 110, 286, 436, 439, 441, 550 Greenlaw v. King 171 Greenslade v. Dare 270 Greenwood v. Greenwood 110 V. Greenwood 524, 572 r. Leather Shod Co. ... 87, 88, 93 Greer, Re 140, 301, 302 Gregory v. Gregory 162, 353, 361, 364, 367 y. Wilson 506 Gregson v. Armstrong 341, 342 Gresham Life Ass. v. Crowther 123, 301 Gresley v. Mousley 174, 358, 359, 361, 364, 367, 458, 467 Greswolde-Williaais v. Barneby 43, 81, 82, 408, 412 Greville v. Tylee 312, 313, 317 Griffin, Re 486 Griffith, Ex p 252, 255—257 v. Blake 569 v. Owen 160 Griffith-Boscawen v. Scott 565 Griffiths v. Jones 509, 512 v. Bobins 199, 200 Grigby v. Cox 201 Grosvenor v. Green 274 v. Sherratt 200, 355, 367 Grosvenor Hotel v. Kainilton 7 G rover v. Hugell 161, 171 Groves v. Groves 463, 464 Grylls, Ex p 162 Guardhouse v. Blackburn 313 dubbins v. Creed 202 Guest v. Srhythe 172 Gurney v. Womersley 113 Guy v. Pearkes 220 11 m .i.n i,i; and Lipski 80, 275, 443 Haliesy v. Guiry 172 Haigh v. Haigh 342 Halbot v. Lens 39, 40 Hale o. Allnutt 235 - v. Saloon Omnibus Co. 234. 237 Halifax Banking Co. p. Gledhill is, 213, 222, 384 I'uion v. Wheelwright 137 Halkett o. Dudley 386, 139 Hall, Ex p 256 , Re 50] — v. Conder 82 - v. Ewin 266 v. Hall 316 v. Hall 209, 210, 1 84 V. Pottl i Hall & Co., Be 288 Hall-Dare p. Hall-Dare 529 KM . PAGE Halliday, Ex p 253 p. Southland Co 552 Hallmark's Case 300 Hallows v. Fernie 44, 54, 459, 475, 489 Hambro v. Burnand 94, 96, 407, . 427, 428 Hambrough v. Mutual Ins. Co. 43, 105 Hamilton r. Ball 462 v. Kirwan 477 r. Eloyse ^T^ v. Watson 108 v. Wright 159, 161 Ha mlvn v. Houston 98, 187 Hammersley v. De Biel 59, 132 Hampden v. Hampden 333 Hampshire Land Co 300 Hance v. Harding 225 Hanley v. Pearson 532, 534 Hansen v. Franz 557 Harbidge v. Wogan 537 Harbord v. Monk 450 Harding v. Wickham 342 Hardingham v. Nicholls 378, 156 Hardmon v. Booth 514 Hare & O'More, Re 437, 445, 447, 509, 510, 515. 519, 524, 529, 547, 551, 524 Hargreave r. Everard 202 Harman v. Richards 222, 225, 229, 232 Harper v. Vigers 101 Harpham v. Shacklock 372, 375 Harris. Ex p 246 — — v. Kemble 67, 436, 438 v. Pepperell 518, 531 v. Rickett 246 v. Tubb 228, 229 Harrison. Be 577 o. Guest 193, 195, 196, 197, 199, 269, 451 Harrod v. Harrod 151 Harryman v. Collins 281 Harse v. Pearl Life Ass. Co. 61, 106, 463, 198 Harston r. Tenison 365 Hart v. Hart 498 r. Swaine 114, 117, 412 Harter o. Harter -"'72 Earvey v. Cooke L10, „. Mount 200 - v. Shelton 852, 348 Haslock r. PergUBon b s( i Hatch, Re 501 r. Hatch L88, 861 Hauxwell, Ex p 217. 248 Eaven Gold Mining Co 837 Eawker, Ex p 220, 244 Eaj I o e L64, L66, L80, L82 Eaycrafl i Cn ■< j 51, Lll I, XV111. TABLE OF CASES. PAGE Haygarth v. Wearing ... 55, 195, 542 Haywood ?;..Cope 195, 446 Head v. Godlee 192 „. Tattersall 42 Heane V. Rogers 72 Heap v. Tonge 224, 237 Heath v. Crealock 371, 383, 384 Heatley v. Newton 310, 470 Heaven v. Pender 25 Heffer v. Martyn 309 Heilbuth v. Hickson 85 Hemingwav v. Hamilton 56 Hemraings v. Sceptre Life Ass. 43, 105, 350, 403 Henderson v. Comptoir d'Escompte 269 v. Folkstone Waterworks ... 501 v. Lacon 33, 90, 96 Hengler, Re 436 Henley v. Stone 462 Henry v. Armstrong 209, 210, 484, 539 Henshall v. Fereday 210 Henty v. Wrey 321, 322 Herdman, Re 565 v. Wheeler 337 Hereford Waggon Co 170 Hermann v. Charlesworth 306, 307. 463, 466 Herring v. Bischoffshehn 449 Hervey v. Hervey 562 v. Smith 277 Hesse v. Briant 175. 183 v. Stevenson 525 Hewison v. Negus 227 Hewitt v. Loosemore 140, 267, 288. 295 Hewson v. Shelley 420 Hey wood v. Mallalieu 521 Hitchens v. Congreve 185 Hickes v. Cooke 358, 361 Hickley v. Hickley 172 Hickman v. Berens 544. 568 Hicks v. Morant 365 Hickson V. Lombard 451 Higgins and Percival 436 ' v. Hill 308 Higginson v. Clowes 547 v. Kelly 264 Higinbotham v. Holme 264 Hiles v. Moore 179 Hill, Ex p 252 v. Buckley 50 — v. Gray 56. 72. 75 v. Perrott 411 Hilliard v. Eiffe 451. 475, 491 v. Fulford 500 Hillman, Ex V 229 Hills v. Rowland 537 Hinchinbrooke v. Seymour 321 Hine v. Campion - 480 PAGE Hiorns v. Holtom 371 Hipkins v. Amery 279 Hippisley v. Knee 184 Hirschfield v. L. B. & S. C. Ely. 62 Hirst v. West Riding Co. 97, 426, 429 Hirth, Re 168, 218, 243, 251 Hitchcock v. Giddings 541, 543 v . Sykes 180 Hitchin v. Groom 522 Hoare v. Bremridge 392 Hobbs v. Norton 415 Hobday v. Peters 179, 182, 185 Hoblvn v. Hoblvn 110, 153, 156, 191, 192, 196, 545 Hoch v. Boor 344 Hodges v. Horsfall 548 Hodgkin, Ex p 255 Hoffe, Re 540 Hogan v. Healev 412, 430 Hoghton v. Hoghton 191, 192, 393, 484 Holbird v. Anderson 234 Holderness v. Rankin 452 Holgate v. Shutt 409 Holland. Re 59. 123, 132, 215, 220, 225, 241, 264. 330 r. Russell 554 Hollins v. Fowler 11 Holliwell v. Seacombe 560 Holloway v. Millard 218, 219 Holman v. Loynes 176. 177, 178, 183 Holme "s Estate 178, 483 Holmes v. distance 572, 573, 574 - v. Howes 199 i'. Jones 433 - r. Pennev 214, 231—236 v. Poweli 275, 276 Honner v. Morton 353 Honywood. Re 571 Hood r. Oglander 509 Hood of Avalon (Lady) v. Mac- kinnon 505. 524, 531, 532, 540 Hoole v. Speak 93 Hooper v. Guimn 127 Hope v. Liddell 273 p . Walter 444 Hopgood v. Ernest 297,299 Hopkins v. Hemswortli 383 v. Hopkins 201 V. Tanqueray 41. 42 Hore v. Becher 505 Home, Re 501, 502 Horrocks v. Rigby 513 Horsfall v. Thomas 68, 77 Hosegood v. Bull 460 Hotson v. Browne 486 Houldsworth v. Citv of Glasgow- Bank 11. 96. 99. 355. 387. 392. 403. 404. 407. 411. 427, 428 TABLE OF CASES. XIX. PAGE Hovenden v. Annesley 358, 364 p. Millhoff 184 How v. Weldon 200, 378 Howatson v. Webb 11. 387 Howe p. Hall 133 Howell v. George 509 Howes o. Bishop 201 Howkins v. Jackson 541 Howland p. Xorris 442 Howley v. Cooke 207 Huddersfiekl Banking Co. p. Lister 544, 568 Hudson v. Beauchamp 200 Hughes, Ex p 244 v. Garner 370, 451 v. Garth 456 v. Jones 442 v. Liverpool Friendly Soc. 61, 106 v. Seanor 539 Huguenin v. Baseley 193, 199 Huish's Charity, Re 323 Hulkes, Re 356, 357, 499, 501, 506, 559 Hulton v. Hulton 154, 388 Hume v. Pocoek 52 Humphrey v. Olver 321, 478, 481 Humphreys v. Green 132 Humphries v. Home 532 Hunsden v. Cheyney 127 Hunt, Re 577, 578 — v. Elmes 140, 289, 290 - v. Hunt 501, 569 - r. Luck 267, 268, 276, 277, 278 v. Matthews 333 Hunter v. Atkins 185 v. Walters 13, 135, 269, 281, 372 Hutchinson v. Morley 53 Hutton v. Cruttwell 246, 247 ■ v. Rossiter 34 Hyde v. Buhner 432, 453 v. Warden 275 Hylton v. Hylton 188, 189 [deal Bedding Co. v. Holland 221, 392, 190 Imperial Life Ass. v. Laliberte L8 Imperial Loan Co. v. Stone 150 Imperial Mercantile Credit Ass. v. Coleman If J. L65, 472 [mray p. Oakshi tte 273, 280 i mi's Case 534 [ngham, Re Ml. • i [ngram p. Thorp 51, 53, 415, 468 fnman P. Iinmm L58 limes p. Bayer . r >'i'-i limes & Co., Re L65 [onides p. Pacific In-. Co 48, 54fi p. Pendi i L03 PAGE Ireland, Bank of, r. Evans ... 145, 147 Irnham p. Child 538 Irvine p. Kirkpatrick 48, 68, 70 Irving p. Motley 403 Isaacs r. Towel] 401, 445 Isherwood, Ex p 263 Ives r. Dodgson 574 v. Medcalfe 342 Izard, Ex p 246. 249 Jackman v. Mitchell 392. 490 Jackson, Ex p 263 p. Innes 536 v. Jackson 320 — v. Price 208 - v. Rowu ... 269, 284, 290, 376, 456 p. Turquand 52 Jackson and Bassford, Re 247, 248, 257 Jackson and Haden, Re 118, 442, 111, 445 Jackson and Woodburn, Re 436 Jacobs p. Revell 44. L20 v. Richards 150 - v. Scott 84 Jamaica v. Lascelles 248, 250 James, Ex p 159—162, 171 - v. Ex p 501 - v. Coucbman 209, 210 - v. Kerr 197, 205 — - v. Litchfield 278 - v. Smith 181, 398, t56 Jameson, Re 573 Janes p. Whitbread 260 Jared p. Clements 377 Jarratt v. Aldam 350, 351 Jay, Ex p 264 Jefferys ». Fairs 512 v. Jefferys 225 Jegon v. Vivian 433, 561 Jenkins v. Jones 376, 377 - v. Morris 151 .lenkyn p. Vaughan 219, 220 Jenner r. Jenner 190, L91, 192, 525 Jennings p. Broughton L8, 11. L s . 51, 52, 355, 362, 17 1 Joel p. Law Union, &c L05 John r. Dodwel] L6, 203. 366 Johns p. James 261 Johnson, Be 436 - v. Barnes 449, 478 r. Bragge 457. 532, 584, 561, r,t\-2 v. P< semayer 177. 254 p. L-egard 224 p. Raylton ;"'l". p. Rex 17.". r. Small 139 6* XX. TABLE OF CASES. PAGE Johnston v. Johnston 334 v. Eenton 145, 374, 489 Jones v. Bennett 343 v. Bright 83 „. Bygott 230, 297 v. Clifford 497, 541 o. Qodrich 313, 317, 319 „. Gordon 262, 267, 268 v. Harber 246 v. Just 82,84 v. Kearney 153 v. Martin 304, 305 v. Merionethshire Bldg. Soc. 195 V. Padgett 83 v. Powles 14, 374, 376 v. Price 174 v. Provincial Ins. Co. 104, 106, 107 v. Rimmer 48, 63, 117, 269 v. Roberts 176, 273, 288, 521 t\ Smith 268—272, 275, 283, 284. 285, 288 v . Stanley 378 v. Thomas 176 „. Williams 268, 273, 288 Jones' Estate, Re 554 Settlement, Re 330 Jorden v. Money 56 Joyce v. Hutton 228 Jovnes v. Statham 510, 526 Judd v. Green 206, 230 Jukes, Re 243, 251, 385 Jury o. Stoker 431 Kain v. Old 40 Karberg's Case 90, 91, 363, 400. 412, 414, 425, 433 Karumaratne v. Ferdinandus 320, 571 Keat v. Allen 307 Keate v. Phillips 382 Keates v. Cadogan 75, 81 Keech v. Sandford 159 Kelly, Ex p 258 v. Enderton 69,181 . v . Solari 505, 553, 555 Kelsall v. Bennett 456 Kelson v. Kelson 230 Kemp v. Rose 342 Kemp Welch v. Kemp Welch ... 345 Kempson v. Ashbee 189, 349, 350, 361, 367 Kendal v. Wood 552 Kendall v. Hamilton 535 Kennard v. Kennard 564, 565 Kennedy v. Daly 376 v. Green 269, 279, 295, 299 v. Panama Co. 112, 113, 115, 408, 507, 519 PAGE Kennell v. Abbott 575 Kenney v. Browne 129, 285 Kensington v. Bouverie 395 Kent v. Freehold Land Co. 56, 90 362, 389, 400, 405 v. Riley 217 Kent County Gas Co 91 Keogh v. Dalgety 180 Kepitigalla Rubber Estates v. National Bank of India 129 Ker v. Dungannon 281 Kerrison v. Glyn 554 Kettlewell v. Refuge Ass. Co. 57, 59, 61, 96, 106, 132, 407, 411, 427, 428 v . Watson 268, 291, 294, 295, 297, 299, 301, 302, 376 Kevan, Ex p 253, 254, 256, 257 v. Crawford 235 Kidney v. Coussmaker 579 Killick v. Gray 531, 563 Kilner, Ex p 247, 248 Kimber v. Barber 101, 181, 395 King, Ex p. ... 243, 244, 247, 249, 250 v. Anderson 482 v. King-Harman 534 v. Smith 14, 122, 135, 372 v. Stewart 554 v . Wilson 50, 442 King's Case 401 Kintrea, Ex p 336, 400, 462 Kirk v. Unwin 524 Kirkwood v. Thompson 171 Kirwan, Re 321, 565 „. Cullen 199 Kisch v. Central Venezuela Co. 46, 50, 51, 54, 68, 90, 353 Kitchin v. Hawkins 500 Kleintwort v. Dunlop 552, 554 Knight v. Bowyer 268, 276. 277, 279, 358, 365 v. Marjoribanks 70, 160, 161, 162, 171 v. Simmonds 266 Knights v. Whiffen 121 Knowles v. Morgan 321. 325 Knox v. Gye 187, 358 v. Hayman 91 Lacey, Ex p 159-162, 397 Lachlan v. Reynolds 411, 444 Lady Forest Gold Mine 166, 167, 168, 169, 396 Ladywell Co. v. Brookes 167, 396 Lagunas Nitrate Co. v. Lagunas Svn. 34. 69, 87. 116, 167, 168, 170, 386, 387, 391, 396, 472 Laidlaw v. Organ 74 TABLE OF CASES. XXI. PAGE Laing v. Fidgeon 84 Laird v. Birkenhead Rlv. 126, 130, 131 i ake, Re 253. 254, 258 Laraare r. Dixon 440 Lamb v. Bruce 523 v. Evans 186 o. Johnson 431. 474 Lambert v. Still 179 Lamlee v. Hanman 304 Lane v. Page 320, 330 Lane-Fox, Re 214. 215, 216, 219, 220, 489 Langridge v. Levy 460 Lansdowne v. Lansdowne 497 Larking, Ex p 154, 159, 164, 166 Law, Re 70, 86, 187, 403 v. Law 306, 308, 465 Lawless v. Mansfield 173, 176 Lawrence v. Norreys ... 368, 448, 455 Lawrence's Case 362 Lawrenson v. Butler 562 Lawton v. Campion 503, 544 Lazarus v. Morrison 28 V. Smith 208 Leach v. Mullett 118 Leask v. Scott 100 Lee v. Angas 12 v. Clutton 302 v. Fernie 326 v. Jones 62. 108, 109 v. Matthews 228 V. Rayson 44, 120, 444 Leeds and Hanley Theatres 167, 168, 169, 396 Leeds v. Amherst 126, 352, 353, 358, 367 Leeds Estate Co. v. Shepherd ... 171 Lees v. Nuttall 181 Legge v. Croker 556 Leifchild's Case 198, 453 Leigh v. Brooks 344 v. Lloyd 266 Leitch v. Abbott 449 Le Lievre v. Gould 6, 7, 25, 26, 30 Lempriere v. Lange 152 Le Neve v. Le Neve 293, 301 Lenzberg's Policy 262 Leslie v. Baillie 493 v. Shiell 152 - v . Tompson 447 , 511 Lester v. Garland 264 Leuty v. Hillas 506, 527 Levine v. Greenwood 207 Levy r. Creightoc 230 „. Stogden 362 Lewie v. Clay Li. 15. LS8 v. Hillman 161, 175. II v. Jones 6(1 PAGE Levi a ml and Taylor 80 o. Illingworth 51, 54", 440 Liebman v. Harcourt 356 Life Ass. of Scotland v. Siddal 352, 353, 357. Liggins v. Inge 130 Liles v. Terry 156, 178 Lincoln v. Wright 131 Lindenau v. Desborough 102, 104, 107 Lindlar's Case 335, 336 Lindsay r. Gibbs 125 Lindsey Petroleum Co. v. Hind 56, 100, 167, 359, 364, 392, 393, 455, 476 Lishman r. Northern Maritime Ass. Co 104 Lister v. Hodgson 208, 538, 539 Lister & Co. v. Stubbs 399 Litchfield v. Drefus 207 Livesey v. Livesey 502 Lloyd v. Attwood 221, 222, 294, 352 v. Clark 199 v. Grace Smith & Co. 94, 427, 429 Lloyd's Bank v. Bullock 134, 135, 140, 143. 176, 285, 380, 381 - v. Cooke ... 134, 137, 140 v. Jones 140, 142, 279, 291 v. Pearson 148, 301 Load v. Green 11, 58, 86, 386, 409 Lodge v. National Union 208, 392 Lomax v. Buxton 211, 216, 247 London Ass. v. Mansel ... 43, 68, 105 Bank of. v. Tyrrell 395 - Bombay Bank, Re 337 Corporation and Tubbs 521 - County Council v. Dundas 317 Electrobus Co., Re 400 Founders Ass. v. Clarke ... 86 General Omnibus Co. v. Hol- lo way 108 - General Omnibus Co. v. Lavell 477 Joint Stock Bank v. Mac- millan 138 - Joint Stock Hank v. Sim- mons 98, 125, 148 — — and County Hank r . Rat- cliffe ' 286 and Hull Soap Works 337 - — and Provincial Ins. r . ^i^ mour 392 - anil River Plate Hank r. Bank of Liverpool 553 Mini Bouth W • Hani, r . \\ I lit - worth 131, L87 and S. W. lily. r. Blaci more 351 Lone o. Donecan 209 XX11. TABLE OF CASES. PAGE Longford v. Purdon 319, 320 Longman v. Bath Electric Tram- ways 59, 121, 123, 146 Longmate v. Ledger 151, 201, 393, 458 Loughman v. Barry 47 Lovell v. Hicks 355, 392 Lovesy v. Smith 417 Low v. Bouverie ... 7, 35, 40, 123, 301 Lowndes v. Lane 62 Lowther v. Carlton 376 Lucas v. Worswick 505 Lucy, Ex p 503 Luddy's Trustee v. Peard 162, 174. 177, 485 Lumley v. Ravenscroft 551 Lund's Case 336 Luttrell v. Olmius 331 Lyddon v. Moss 359 Lydney Co. v. Bird 397 Lynde v. Anglo-Italian Co. 90 Lyon v. Home 193, 199, 349, 490 Lysney v. Selby 48, 50, 53, 77 Macarthy v. Decaix Macbride v. Lindsay McCallum, Re 16, '367, 368, 385, McClatchie v. Haslam McConnel v. Wright 32, 87, M'Cormack v. M'Cormack M'Cormick v. Grogan 318, 333, 418, M'Culloch v. Gregory 64, 288, 398, M'Dermott v. Boyd M'Diarmid v. M'Diarmid Macdonald v. Law Union Ins. Co 43, MacDougal v. Gardiner Macgowan v. Dyer Mclntyre v. Swyny Mackay v. Commercial Bank, etc. 94, 427, 428, v. Douglas 220, McKay's Case 165, M'lvechnnie v. Vaughan M'Kensie v. British Linen Co. 75, v. Childers M'Kenzie v. Coulson ... 522, 529, v. Hesketh M'Keogh v. M'Keogh McKeown v. Boudard Mackie v. Herberton Mackintosh v. Pogose 241, McLaren v. McMillan McLernon v. Connor Maclcay v. Tait 87, 92, 93, M'Mackin ;;. Hibernian Bank ... 495 420 455 195 431 540 477 412 262 201 105 459 427 61 453 481 180 573 125 266 530 551 306 69 224 264 462 58 452 200 PAGE Macmahon v. M'Elroy 451 McManus v. Cooke 130 M'Neill v. Cahill 197, 304 v. Millen 93 McNeill's Case 363 McPherson v. Watt 172, 174, 175, 181 M' Queen v. Farquhar 285, 376 Maddeford v. Austwick 187 Maddever, Re 358 Maddison v. Alderson 59, 124, 130, 131, 132 Madeley v. Booth 117, 444 Magee v. Lavell 548 Maitland v. Backhouse 188, 268 v. Irving 188 Mair v. Rio Grande Rubber Es- tates 34, 96, 97, 99, 427, 429 Maiden v. Menill 544, 560 Malet, Re 540 Malins v. Freeman 509 Mallalieu v. Hodgson 485 Manby v. Bewicks 151 Manchester Ship Canal Co. v. Manchester Racecourse Co. ... 266 Mangles v. Dixon 126, 127, 382 - v. Grand Dock Co 347 Mann v. Edinburgh Trams 350 Manners v. Mew 140, 144, 282, 288, 384 Manningford v. Toleman 382 Manser v. Back 510, 512, 526, 546, 547 Marker v. Marker 128 Marlow v. Orgilll 237 Marnham v. Weaver 30, 70, 73, 76, 371, 469 Marriott v. Reid 129 Marsden's Trust 321, 325, 326, 327, 478 Marsh v. Joseph 97 and Granville, Re 229 Marshall v. Berridge 548 v. James 569 Martin v. Cotter 274 v. Morgan 72 v. Pycroft 446, 447, 526 Martinez v. Cooper 139, 140 Martinson v. Clowes ... 171, 172, 173 Maskell v. Horner 500 Maskelyne v. Smith 234, 242, 259, 260 Mason v. Armitage 511 v. Harris 459 Masonic Co. v. Sharpe 468 Massey's Case 401 Master's Case 336 Matear v. Lyne 528 Mathias v. Yetts 470 Matthew v. Brise 188 Matthews r. Baxter 151 Maturin v. Tredennick 390. 391 TABLE OF CASES. XX111. PAGE Mauleverer r. Hawxby 523 Maundrell v. Maundrell 370 Maunsell r. Hedges White 56, 59, 60. 67 v. Maunsell 418. 484 Maxfield v. Burton 279, 291, 376 May v. Chapman 389 v. Piatt 407, 447. 508. 518, 526, 530, 531, 560 Maynard v. Eaton l l!! Mayo, Re 57:!. 576 Meadows r. Grand Junction Waterworks 499 Medical Battery Co 337 Meeking v. Meeking 529 Melbourne Banking Co. v. Broug- ham 171 Mellor v. Daintree 57-2 Meluish v. Milton 419 Mendes r. Guedalla 145 Mercantile Steamship Co. v. Tyser 103 Mercer. Ex p 216,' 239, 478 Merino v. Mutual Reserve, etc. ... 106 Merry v. Pownall 264, 490 Mersey Steel Co. v. Naylor 405 Mertins v. Jolliffe 376 Messina v. Petrocochino 346, 569 Metal Constituents, Re 414 Metcalfe, Re 199 Metcalfe's Case 165 Metropolitan Bank v. Heiron ... 365 Meyer, In the goods of 578 Middleton v. Middleton 331, 567 „. Pollock 222, 242 v. Sherburne 194, 199 Midland Discount Co. v. Mac- donald 207 Midland Ely. Co. v. Johnson ... 495 Mildmay r. Hungerford 498 Miles v. Langley 278 v. New Zealand Co 503, 545 Mill v. Hill 394 Miller v. Cook 485 - v. Sharp 131, 133 Mills v. Haywood 362 Millward v. Littlewood 403, 404 Milner, Ex p 262 Mitcalfe's Case L65 Mitchell r. Homfraj 158, 199, 350, 351 - v. Steward 284 v. Thomas 313, 314 Mody v. Gregson 84, 85 Moene o. Heyworth 34, 64 Mogridge r. Clapp 281 Mold r. Wheatcroft L26 Molonj p. Kernan 157. 156 Molton r. Camroux L50, 151 Molyneux v. Fletcher 328 v. Hawtrey 63, 74, 80, 275 Moncur v. Ideal Co Monro v. Bognor - ; 1 0. Taylor :>27 Montefiore v. Browne 270, -J7-_ Montesquieu v. Sandys 177. 151 Montgomerie Co. v. Blyth 299 Moodie v. Reid 562 M 1\ d. Cox L8, 78, 171. 184, 294, 1"! Moor v. Rycault 228 Moore. Ex p 171 — — v. Fulham Vestry 552 — v. Kelly 265 v. Knight 101, 472 V. Prance 171. 182, 184 v. Scott 391 Moreland v. Richardson 278 Morewood r. South Yorks Railway ■2'^' Morgan, Ex p 171, 397 v. Minett 178 - v. Russell Morgan. Re 284 Morison v. London County and Westminster Bank 138 Morland, Ex p 163 D . Cook 286 Morley v. Attenborough s _' v. Clavering 275, 291 v. Lougnan 15, 157, 193, 199, 203 v. Rennoldson 579 Morrell v. Morrell 572 Morris v. Clarkson 304 Morrison c. Thompson l& v. Dniversal Ins. Ass. 402, 403. 106 Morse r. Royal 160, 162, 349 Mortimer r. Capper 543 v. Shortall 530—532 Mortlock v. Buller 511, 551 MoscIcn r. Simpson .-, 341 Moss r. Bainbrigge 177 — v. Mersey Docks Co 554 Mostyn v. Wesl Mostyn Co 78 Motteaux v. London Ass. Co. ■•■ Mouatt, Re 399, 136 Mountain v. Bennet 3] I Mowatt r. Blake 474 Moxon v. Payne 110, 155, 349, 350, 171. 175, 185 Mulhalli n r. Maium 188, 393 Mullens r. Miller ... 95, 138, 140, in Mullet! r. Mason 7, 432 Mullina o. Guilfoyle 221, 235 Mumford v. Stohwasaer 265 Munns r. Bum 16 Mnrphs, Re 57' r. Abraham 218 XXIV. TABLE OF CASES. PAGE Murray, Re 406 v. Mann 7, 411, 476 v. Palmer 366 v. Parker 527, 532 Musahar Sahu v. Hakim Lai .... 242 Mycock v. Beatson 400 Myers v. Watson 439, 446 Nagle v. Baylor 151 Nanney v. Williams 332 Nantyglo Ironworks Co. v. Grave 165 Nash v. De Freville 137 v. Dix 101, 514 v. Neazor 347 Nation's Case 336 National Bank of W T ales, Re. See Dovey v. Cory. Exchange Co. v. Drew 67 Phonograph Co. v. Edison- Bell Co 436 Provincial Bank v. Jackson 14, 142 Trustees, &c. v. General Finance Agency 501 Naylor v. Winch ... 495, 503, 545 Neale v. Day 214, 237 Nedby v. Nedby 201 Neesom v. Clarkson 272, 367, 394, 395 Nelson v. Stocker 48, 152 Nelthorpe v. Holgate 100, 278 Nene Valley v. Dunkley 438 Nesbitt v. Berridge 179 v. Tredennick 172, 202 Nevill v. Snelling 206, 488 Neville v. Wilkinson 304, 415 New Brunswick Rlv. v. Cony- beare 45, 52, 62, 93—97 v. Muggeridge ... 438 New Sombrero Co. v. Erlanger 169, 269, 396, 410. 467, 472 New's Trustee* v. Hunting 261 Newall v. Tomlinson 554 Newbiggin v. Adam 115, 388, 392, 400, 413 Newburgh v. Newburgh 577 Newman v. Newman 373 v. Piercv 573 Newport Dry Dock Co. v. Paynter 450 Newton v. Birmingham S. A. Co. 171 v. Newton 384 Nicholls v. Leeson 499 Nicholson v. Hooper 127. 128 v. Mansfield 338 v. Peterson 68 Nickels V. Hancock 343 Nicol v. Vaughan 185 Nicol's Case 45, 46, 94, 97, 377, 414, 478 PAGE Nicoll v. Chambers 120 Niell v. Morley 150 Nisbet and Potts 272, 280, 456 Nitedals, &c. v. Bruster 184 Nixon v. Fetzer 335 v. Lowndes 345 Nocton v. Ashburton 5, 35. 38, 173, 320, 416, 451, 457 Norcutt. ». Dodd 221 Norfolk v. Worthy 117 North o. Percival 117, 120, 552 North British Ins. Co. v. Lloyd ... 107 Northern Counties, kc. v. Whipp 6, 134, 139, 145, 147, 283 North-Eastern Ely. v. Hastings 537, 559 Norton, Ex p 256 Norway v. Rowe 355, 369 Nottidge v. Prince 199 Nottingham Building Soc. v. Thur- stan 152, 392 Nottingham Patent Brick Co. v. Butler 521 Nunn v. Fabian 126, 131, 133 Nunn's Trust, Re 573 Nutt v. Easton 172, 361 Oakes v. Turquand 10, 68, 95. 96. 363, 411 O'Brien v. Killeen 569 v. Lewis 178 O'Connor v. Foley 196, 203 Ochsenbein r. Papelier 346 Oelkers v. Ellis 16, 367, 424. 475 Ogilvie v. Currie 363 v. Jeaffreson 374, 376, 393 v. Littleboy 211. 484, 539 O "Grady v. Toronto City 499, 502 Okill v. Whittaker 543 Oliphant, Re 329 Oliver, Ex p 262 v . Court 359 v. Hinton 140, 141. 288. 289, 376 Olley v. Fisher 526, 527 Ollivant v. Bayley 83, 513 Olliver v. King 125, 127, 213 Omnium Electric Palaces v. Baines 167, 168 Onions v. Tyrer 578 Onward Bldg. Soc. v. Smithson 8, 14, 62. 123. 371, 456, 457 Opera, Ltd., Re 501 Ormes v. Beadel 333, 343. 352 Ormrod v. Huth HI O'Rorke r. Bolingbroke 204. 206, 482 Ortigosa v. Brown 145, 371 Osborne v. Williams 308, 464 TABLE OF CASES. XXV. PAGE Osgood r. Sunderland 367 Osmond v. Fitzroy 200 Other r. Ivision 536 Ottos Kopje Diamond Mines, Re 433 Owen r. Body 259 v. Homan 108, 109, 479 Oxford Benefit Bldg. Soc., Re ... 460 Oxwith v. Plummer 279 Pacaya Rubber Co., fie 34 Page r. Clark 47 o. Home 199 p. Midland Kiy. Co 408 Paget v. The King 552 v. Marshall 530, 531 Paine v. Hall 318, 333 Painter v. Newby 447 Palmer and Hosken, Re 571 v. Johnson 557 v. Locke 323, 324 v. Neave 304 v. Wheeler 324 Palmer's Co., Re 383 Panama, &c, Telegraph Co. v. India Rubber Co 184, 409, 410 Pares v. Pares 477 Parfitt v. Jepson 309, 311 v. Lawless 315, 317, 319, 477, 478 Parker v. Bloxam 366 c. Carter 378 v . M'Kenna 180, 181, 182, 183, 491 v. Palmer 85 v. Taswell 536 v . Wachner 480 v . Whyte 273, 290, 376 Parkinson v. Hanbury 161, 395 v. Lee 81, 83 Parnell v. Stedman 223, 235, 237 Parr p. Eliason 230 Parry, Re 220, 225, 241 Part v. Bond 207 Paske p. Ollat 313, 317 Pasley v. Freeman 3, 41, 53, 425 Patch P. Ward 344. 119 Patman r. Harland 272, 273, 274. 279, 284, 285, 287, 290 Pattle v. Hornihrook 199, 464, 486, 521 Paul v. Paul 210 Pawle's Case 354, 368 Payne, Ex p 243, 249 Payne's Case 336 Pearce p. Bulteel 280, 289 Pearl Life Ass. ('<>. p. Johnson ... LOS Pearson, Ex p 253 Re 220, 264 v. Benson 177 PAGE Pearson & Son r. Dublin Corp. 16, 17, 48, 50, 67, 95, 341, 515 Pearson's Case 165 Peek r. Gurney 10. 29, 35, 4">. 63. 64. 08, 75, 339, 360, 362. U5, 422, 430, 432, 460, 461. 168, 473 Peel's Case 288 Pennell v. Reynolds 245 Pennington, Re 235, 246 Penny p. Watts 284 Percival V. Wright 166 Perfect v. Lane 51 Perham v. Kempster 280, 356. 371, 372 Perkins, Re 329 Perrott v. Perrott 579 Perry v. Holl 285, 294, 299 Perrv-Herrick v. At wood 133, 140, 236. 270 Persse v. Persse 545 Peto v. Hammond 273, 280, 377 Petre v. Espinasse 213 Petts, Re 574 Peyton v. Bladwell 304, 307 Phelps v. White 445 Phillips, Ex p 262 Re, 301 v. Brooks 11 v. Chamberlaine 572 v. Foxhall 109 v. Homfrav ... 76, 433, 437, 468 V. Mailings 208, 209, 483 v. Phillips 379, 383 v. 159. 160 - v. Probyn 223, 166 Phillipson r. Kerry 539 Philps V. Hornstedt ... 249, 250. j:.| Phipps c. Lovegrove 382 Phosphate Sewage Co. v. Hart- mont ... 390. 396, 469, 470, 172, Is'.) Pickard v. Sears L20, 121 Pickering V. Pickering 110, 171. 503, 545 Pickett v. hii^mi :i:! "> Pickles v. Pickles 177. 17* Pickstock r. Lyster 259 Pidcock v. Hishoj> L08 Piggott v. Stratton ... 46, 57, 122. 135 Pilcher o. Rawlins 370, 371, 374 Pillgrem v. Pillgrem 284 Pilling v. Armitage L28, LSI, 186 I'll,, Mire r. Hood 72. 342 Finer c. Beattie L78 Pisani v. Att.-Gen 171. L76 Platamone p. Staple 468 Player, Re 2m Plewa o. Middleton 842 Plimmer v. Wellington 126. rj7, L2fi Plnmer p. Q regoi \ 171 , 172 XXVI. TABLE OF CASES. PAGE Plummer, Re 240 Podmore v. Gunning 332 Polhill v. Walter 29, 67 Poncione v. Higgins 207 Pope v. Garland 50, 63, 274, 291 v. Wray 555 Popham v. Brooke 71 Porter v. Moore 124 Portman v. Mill 119, 442 Post v. Marsh 447 Postlethwaite, Re 162, 183, 357, 365 Potts v. Surr 190, 191, 192, 349 Poulson v. Wellington 564 Powell v. Browne 122, 176, 282 v. Evan Jones & Co. 100, 182, 184, 399, 418 — v. London & Prov. Bank 144, 146, 375 v . Powell 157, 178, 188, 190, 484, 485 v. Smith 497, 498, 510 Prees v. Coke 173, 195, 196, 481, 497, 498 Prendergast v. Turton 355, 369 Preston v. Luck 495 Preston Banking Co. v. Allsup 345, 568 Price v. Berrington 150 v. Jenkins 228, 236 v. Ley 533 v. Macaulay 34, 437, 442 v. North 117 v. Price 201 Prideaux v. Lonsdale ... 171. 189, 201 Priest v. Last 85 Pritchard v. Merchants' Life Ins. 105, 541 Pritt v. Clay 542, 545, 555 Pritty v. Child 9, 35, 51 Proctor v. Bennis 129 v. Gregg 209 v. Robinson 173, 201 Prosser v. Eice 266 Proudfoot v. Montefiore 103 Prvor v. Pryor 326 Puckett and Smith 44, 63, 80, 118, 443, 550 Pulsford v. Richards 34, 44, 68, 117, 414, 415, 425, 442 Purcell v. Macnamara 393 Pusey v. Desbouverie 495, 498 R. v. Aspinall 340 — v. Blenkinsop 502 — v. Hopkins 239, 347 — v. Sadlers' Co 344, 387 — v. Tewkesbury 494 Rae v. Joyce 207 PAGE Raffles v. Wickelhaus 549 Rake v. Hooper 210, 484, 486, 524; 529, 538 Ramsay, Re 253, 480 Ramsbottom v. Gosden 526 v. Parker 194, 197 Ramsden v. Dyson 98, 126, 128 v. Hylton 225, 228, 498 Rancliffe v. Parkins 283, 358 Randall v. Errington 160, 161, 352, 397 v. Newson 83 Ranking v. Barnes 326, 327, 329 Rannie v. Ogg 333 Rashdall v. Ford 60, 61 Ratcliffe v. Barnard 140, 282, 288, 289 Rawlins v. Wickham 10, 34, 46, 50, 114, 291, 386, 412, 413, 437. 441, 463, 467. 491 Rawlinson v. Scholes 486 Rawstone v. Parr 536 Rayment, Re 243 Rayne v. Baker 378 Reade, Re 571 Reader, Ex p 257 Reddaway v. Banhain 435 Redfern v. Bryning 524, 572 Redgrave v. Hurd 28, 30, 31, 49. 50, 76, 114. 269, 283, 287, 288, 291, 360, 366, 407, 423, 424, 429, 448, 449, 451, 455, 475, 476, 479, 489, 497, 507, 520 Reech v. Kennigate 332 Reed, Ex p 249 Re 409 v. Norris 182 Rees v. De Bernardy 205 Reese River Co. v. Atwell ... 219, 239 v. Smith ... 10, 28, 115, 390 Reeve v. Berridge 275, 441 Reid v. Reid 320, 324 v. Shergold 566 v. Silberberg 101 Reis, Re 232, 235, 240 Revert v. Harvey 188, 189 Rex v. Kingston 344 Reynell v. Sprve, 15, 30. 46, 50, 464, 485, 495, 503 Rhoades, Re 501 Rhodes v. Bate 109, 156, 157, 158, 174, 177, 181, 183, 188, 190, 193. 194, 196, 200, 463, 491 v . Cooke 285 v. Moules 472 Rica Gold Washing Co., Re 449 Rice v. Rice 143, 144, 266, 380, 381 Richards, Re 148, 383 v. French 194, 200 TABLE OF CASES. XXV11. PAGE Richardson r. Hatrick 3 v. Silvester 460 v. Smallwood 219 Riches V. Evans 259 Rickards r. Att.-Gen '21-2 Ricketta v. Turquand 577 Ridgway v. Gray 119 v. Newstead 3G1. 369 v. Sneyd 543 Riding r. Hawkins 457 Ridler d. Ridler 216, 217. 229 Rimmer v. Webster 15, 122. 133, 134, 140. 236. 428 Rishton o. Cobb 574 Rivaz v. Gerussi 43, 103 Roach v. Trood 327 Robarts o. Tucker 137 Roberts. Re 110, 503, 546 v. Croft 142, 289, 290 v. Roberts 463 r. Tunstall 349, 353, 359, 364, 367 r . Williams 235. Wil Robertson ». Belson 115 v. Norris 331 Robinson, Re 501, 558 „. Abbott 353 v. Briggs 280, 293, 376 v. Dickenson 541 u. Fenner 346, 569 v. M'Donnell 213 v. Musgrove 118 v. Pett 154, 155, 159 v. Ridley 398 V. Trevor 301 v. Vernon 486 O. Wall 310 Robson v. Flight 353, 377 Roche v. O'Brien 307, 353 Rochefoucauld v. Boustead ... 364, 365 Rock Portland Cement Co. v. Wilson 561 Roddy v. Williams 292 Rogers v. Hadlev 186 - v. Ingram 494,496, 499, 5U< I, 501, 506, 558 Rolfe r. Gregory 16, 157, 366, :S67. lis Holland v. Hart 291. 296 Rooke v. Kensington 525, 529, 530 l.v ,|.. r. Harrison L26, L48, 379 - . Snelliii" 446 Rosen v. Lindsay 132 Rosher v. Williams 236, 237 Ross v. E tatee Co. 33, 51, 55, 56, 64, 90, 390, WO Rothschild v. Brookman : ' : ' K Routledge v. Dorrill 325 Rowland v. Chapman 407, 109 Rowley r. Rowley 320, 829 PAGE Royal Bristol Bldg & D. Bomash 561 Ruben v. Great Fingall Consoli- dated 94, 98, 123, 134, 136, L47 Rudd v. Lascelles ... 443, 444, 511, 551 Rule r. Jewell 362 Russell, Ex p 220 o. Austwick 185 v. Harris 344 v. Jackson 318. 332, 18] o. Russell 343 Rutherford r. Acton Adams ... 107, 142 Sachs v. Speilman 449, Sacker v. Rajozine Sadler v. Evans Saffron Walden Bldg. Soc. r. Rayner 62, Salaman B. Warner Salford r. Lever Salmt.ii o. Cutts 349, Salomon v. Salomon 169, Salt v. Pym Saltern v. Melhuish Saltmarsh v. Barrett Salton o. Now Beeston Co Salvesen v. Rederi Aitiebolaget, &c 39, 40, Samuel v. Now bold 183, Sanbach and Edmondson, Re 66, 79, Sanderson r. Walker 161, Sanford v. Raikes Sarson V. Roberts Saunders v. Dehew 265, 370, v. Shafto 326, Savage v. Poster 127, Savery v. King 174, 190, 192, 349, 352, 366, Savigny's Case Saxon Life Ass. Soc, Re 498, Say v. Barwick Sa\ I Solo's Case Sayer v. Saver 561, 562, Savers r. Collyer Scarf o. Jflrdine Scheuerman v. Scheuerman Schloss v. Stiebel Schmidi v. < rreenwood Schneider r. Beath 72. 77 Scholefield v. I iocItw I i Templer 16, 119, Scholes o. Brook Scholfield o. Londesborough Schott, Re Scott and Alvarez | I ll< iWII r. Couleon 81, 71, 76. 520, Ml. 171 344 554 295 339 l-i 353 150 573 199 39 433 207 136 102 577 81 373 330 1 52 392 :n7 560 349 52 1 568 266 8 162 575 112 . 78 523 197 25 i II 571 t\c, 84] ii XXV111. TABLE OF CASES. PAGE Scott v. Dixon 461 v. Dunbar 182, 266 v. Hanson 52, 439, 442 v. Littledale 514, 549 v. Scott 304, 309, 545 v. Sebright 309 Fell & Co. v. Lloyd 69 Scottish Petroleum Co. 30, 91, 354, 362, 364, 389, 405 Scroggs v. Scroggs 328 Seagram v. Tuck 171 Seagrave v. Kirwan 332 Seaman v. Vawdrey 80 Seaton v. Heath 102 Seddon v. Connell 469 j,. North Eastern Salt Co. 73. 86, 362, 401, 403, 408 Segrave v. Kirwan 179, 332 Selby v. Jackson 150 Seligmann v. Young 449 Sells v. Sells 498, 499, 529 Selsey v. Ehodes 354, 361 Selway v. Fogg 454 Selwood v. Mildmay 574, 577, 578 Selwyn v. Garfit 281, 376 Sercombe v. Saunders 200 Seymour v. Lucas 263 Shackleton v. Sutcliffe 118 Shannon v. Bradstreet 126, 356, 561, 563. 566 Sharland, Re 565 Sharp, Re 573 v. Cosserat 264 v. Jackson 252, 258 v. Leach 200. 367, 398, 484 v. Taylor 467 Bros. v. Chant 499 Sharpe v. Foy 127, 298 Sharpies v. Adams 372 Shaw v. Bunny 171 v. Holland 165, 431, 432, 434 v. Jeffery 18 Sheard v. Venables 440 Shearman, Ex p 354, 402 Shears v. Goddard 243 Sneddon v. Patrick 344 Sheen, Ex p 249 Sheffield Corp. v. Barclay 123, 136, 413 Nickel Co. v. Unwin 17 Shepheard v. Bray 88, 467 v. Broome 91, 92, 93 Shepherd v. Croft 116, 118 v. Pybus 84 p. Kain 79 Sheppard v. Oxenford 467 Sherwood v. Bobins 119 Ship v. Crosskill 32 PAGE Shirley v. Davis 512 v. Stratton 445 Shropshire Union, &c. Co. v. Beg. 142, 143, 144, 145, 380 Shurmur v. Sedgwick 229 Sibbering v. Balcarres 358 Sibley v. Grosvenor 469 Sidney v. Banger 397 Silkstone Coal Co. v. Edey 396 Sillem v. Thornton 107 Simm v. Anglo- Amer. Telegraph Co 136 Simmonds, Ex p 501 Simpson, Re 565 c.Howden 347 v. Malherbe 492 v. Vaughan 536 Sims, Re 214, 241 Singer Co. v. Wilson 450 Sismey v. Eley 466 Skarf v. Soulby 216 Skinner, Ex p 163 Skottowe v. Williams 352, 356, 358, 370, 459 Skyring v. Greenwood 502 Slack v. Hancock 268 Slater v. Burnley 552 Slater's Case 335 Slater's Trust 204 Slator v. Nolan 174, 198, 199, 200, 485 Sleech's Case. See Devaynes v. Noble. Slim v. Croucher 6, 35 — 39 Slobodinsky, Re 168, 239, 244, 245, 385 Sluysken v. Hunter 334 Small v. Attwood 45, 355, 399 v. Currie 108 v. Hedgely 264 Smee v. Smee 312 Smethurst v. Hastings 354. 362 Si.ii.lt v. Tiden 549 Smith v. Adkins 564 v. Anderson 164 v. Ashton 566 v. Bank of Scotland 75. 108 v. Bruning 307 v. Capron 275 o. Chadwick 4, 18, 28, 29, . 30, 44, 63, 67, 420—425, 452, 474, 475, 479 „. Cooke 261 v. Crabtree 572 v. Evans 136 v. Harrison • 77 - v. Hayes 455 v. Hughes 75, 77, 85, 514— 518, 548, 549, 550 v. Hurst 220,259,261 v. Illiffe 417, 486, 528, 534 TABLE OF CASES. XXIX. PAGE Smith v. Jeffryes 548 v. Kay 3. 15. 45, 46, 67, 156, 193, 200, 474, 482 v. Land Corporation 52, 53 v. Maitland 574 v. Pilgrim 253, 256 v. Prosser 94. 96, 137 v. Tatton 231,233 v. Wheatcroft 514, 526 v. Whitmore 341, 343 Smith's Case 33. 44, 49 Smithson v. Powell 119 Smout v. Ilbery 39 Smythe v. Mills 58 Soar v. Ashwell 360, 364 Societe Anonyine, &c. v. Panhard 337 Societe Generale v. Tramways Union 300 Solomon v. Honywood 78 Somersetshire Canal Co. v. Har- court 126 Somes, Re 330 Soper v. Arnold 81, 407, 544 South London Fishmarket Co. 335, 336 South of England Natural Gas Co., Re 89, 430 Spaceman's Case 352, 353, 367 Spaight, v. Cowne 108, 293, 377 Spain (Queen of) v. Parr 182 Spencer v. Clarke 418 v . Slater 259 v. Topham 174 Spettigue v. Carpenter 342 Spicer v. Martin 122 Spirett v. Willows 219 Spokes v. Grosvenor Hotel 459 Spread v. Morgan 578 Spring v. Pride 163 Spunner v. Walsh 274 Squire v. Campbell 526 St. Aubyn v. Smart 171 St. John v. St. John 465 Stacey v. Elph 172 Stafford v. Stafford 499 Staffordshire Financial Co. v. Hill 480 Staines v. Parker 349 Stainton v. Carron 545 Stamford. Re 502 v. Dawson 398 Standen v. Standee 574 Stanhope's Case 300, 352. 867 Stannard v. Harrison 346 Stanton v. Tattersall L18, 489 Staple Merchant Co. V. Hank of England L45 Stapylton ». Scotl 611, 641 v. Stapylton 608 PAGE Starkey v. Bank of England 39 Stead, Be 319 Stenotyper, Lim., Re 253. 257 Stephens v. Australasian Ins. Co. 5 „. olive 218 V. Ycnables 52 Stepney v. Biddulpb 394 Sterry v. Combs 127 Stevens V. Mid Hants Rly 127 Stevenson D. Xewnbam 389 Stewart v. Alliston 117, 438—443 v. Kennedy 116, 408. 495, 498, 506, 507. 520 v . Stewart 110, 503, 545 Stewart's Case 288, 299, 300, 352 Stikeman v. Dawson 71, 152, 477, 478 Stileman v. Ashdown ... 218, 219, 225 Stocken v. Stocken 304 Stocks v. Wilson 152 Stockton Iron Furnace. Co 263 Stoddart v. Union Trust 383, 403, 404, 455 Stokes v. Cox 107 Stokoe v. Cowan 221, 235 Stone v. City and County Bank ... 389 v. Godfrey 354, 494, 496, 506, 558 v. Yeovil Corporation 526 Stoney Point Co. v. Barry 180 Storey v. Waddle 540 Strachan v. Barton 254, 258 Strathmore v. Bowes 305 Stray v. Russell 86 Street v. Blay 7, 410, 411 Stribley v. Imperial Ins. Co 103 Strickland v. Turner ... 505, 541, 559 Stringer and Riley, Re 571 Strome v. Craig 52 Strong r. Strong 222. 235 Stroughill v. Anstey 280 Stnitt v. Smith I"' :; Stubbins, Ex p 251, 258 Stubbs r. Slater 180, 182, 184, 338, 183 Stucley v. Baily 7. II Stump v. Gaby 349, 350 Sturge r. Sturge 200, 195, 197 Sturgis v. Morse 366 Sullivan v. Mitcalfe 91 Sumner V. Powell 53"> Surplice v. Farnsworth 81 Sutherland v. Beathcote 637 Sutton v. Temple 518 Bwaisland r. Dearslej ... 140, 508, 547 Swan V. N. B. Australasian Co. 84, 96, NT. 121. L88, I 16 Swift r. JewBbury 96, 97, 126 v. Kell.N 809 t\ Winterbotham 460, 161 Swire v. Francis 96, 428, 422 XXX. TABLE OF CASES. .Sykes v. Beadon Symonds v. City Bank PAGE 467 419 'Tabor v. Cunningham 192 Tackey v. McBain 28 Tadcaster Brewery v. Wilson ... 362 Talbot v. Von Boris 482 Tamplin v. James 508, 509, 561 Tancred v. Steel Co 120 Tankard, Re 240 Tapster v. Ward 501 Tarback v. Marburv 218, 220 Tarleton v. Liddell 213, 214, 238 Tate v. Hyslop 104 v. Williamson 55, 155 — 158, 179, 192, 196, 200 Tatton v. Wade 426 Taylor, Ex p 152 Ex p 252 v. Baker 284 v. Blakelock 372, 456 v. Bowers 466 v. Bullen 41, 79 v. Chester 462 v. Chichester Ely. Co 347 v. Coenen 214, 216 v. Johnstone 153, 196 v. Jones 222 v. London and County Bank- ing Co. 141, 144, 265, 279, 299. 301, 370, 372, 373, 376, 379, 380 v. Obee 193 v. Eichardson 574, 577 v. Eussell 142, 371 v. Salmon 181 v. Stibbert 265, 266 Teasdale v. Braithwaite 227 v. Teasdale 127 Teed v. Beere 365 Tempest, Ex p 254, 256 Tennant v. Trenchard 163 Tennent v. Glasgow Bank ... 354, 390 Terry v. Wacher 200 and White. Re 120 Tetlev, Re 222, 231, 238, 241, 451, 489 Tharp v. Tharp 318, 332 Theatre Amusement Co. v. Stone 164 Thellusson, Re 501 Thorn v. Bigland 28, 111, 449 Thomas v. Atherton 491 v. Powell 412, 506 Thompson v. Cartwright 297 v. Harrison 471 v. Hickman ... 526, 527, 528, 537 v . Webster 214—216, 219, 222, 231, 234, 236 v . Whitmore 530, 538 PAGE Thomson v. Clanmorris 87 v. Eastwood 160, 351, 359, 475, 477 v. Judge 178 Thomson "s Case 405 Thornber v. Sheard 191, 285 Thomdike v. Hunt 372 Thorne v. Heard 366, 403 Thornewell v. Johnson 274 Thornton v. Kempster 548 Thoroughgood's Case 12 Thorpe v. Holdsworth 380, 384 u. Jackson 535 Tlmrstan v. Nottingham Bldg. Soc 152, 153, 392 Tildesley v. Lodge 375, 378 Tilley v. Bowman 58, 389 Toft v. Stephenson 365 Tofts v. Pearl Life Ass. Co 106 Toker v. Toker 196, 200, 480, 484, 489 Toilet v. Toilet 562, 564, 566, 567 Tomkins v. Saffery 253—255, 257 Tomkinson v. Balkis 3, 123 Tomlin v. Underhay 569 Tomlin's Case 354, 402 Tonison v. Judge 178 'Tonkin v. Hughes 175 Topham, Ex p 252—254, 256 v. Portland 15, 325, 327— 329, 481, 482 Torrance v. Bolton 44, 63, 117, 481, 518 Torre v. Torre 528 Toulmin v. Steere 292, 378 Tourville v. Naish 456 Towle v. National Guardian Ins. 107 Townend v. Toker 217, 230, 236 Townsend v. Crowdy 553 v , Westacott 214, 217 Townshend v. Stangroom ... 537, 538 Traill v. Baring 30, 31, 46, 47 Trainor v. Phoenix Fire Ass. Co. 343 Travers v. Blundell 573 Trevelyan v. Charter 393, 399 Tribe v. Tribe 314 Trigge v. Lavellee 503, 506, 544, 545 Trimble v. Goldberg 185, 187 Trowell v. Shenton 225 Trower v. Newcome 52, 54 Tuck v. Southern Counties Bank 457 Tucker v. Bennett 156, 210, 417, 528, 532, 534. 539 v. Phipps 333 Tulk v. Moxhay 266 Tullis v. Jacson 341 Turnbull v. Duval 201 v. Hayes ^65 TABLE OF CASES. XXXI PAGE Turner. Re 325. 32(5, 327 d. Collins 190, 208, 351. 354, 359, 483, 538 v. Green ... 69, 73. 110. Ill, HI v. Harvey 71 v. Hill ' 471 v. Smith 13, 142, 111. 298 v. Turner 351, 544 and Skelton, Re 557 Turquand r. Marshall 4(50 v. Eicketts 577 Turton v. Benson 304, 382 Twining v. Morrice 311 Twvcross v. Grant 91, 92. 170. 431, 468 Twyne's Case 222, 232, 235 Tyler, Re 501 — — r. Yates 204, 392. 49] Tvrell. Re 556 Tyrrell v. Bank of London 173. 175, 180, 181, 393, 395 0. Painton 312 Udell v. Atherton ... 72. 93, 94. 95, 427 Ulrich v. Litchfield 578 Ungley v. Ungley 130, 132 Union Bank of Munster 310, 437 United Shoe Co. v. Brunet 10, 17, 387, 401 Unity Bank, Ex p 152 Uppington v. Bullen 174, 176, 198, 199 Upton v. Vanner 127 Urmston v. Pate 506 Urquhart v. Macpherson 17 Yadala v. Lawes 346 Van o. Corpe 63, 274 Vandeleur v. Blagrave 134, 136 Vane o. Vane 16, 292, 366, 377 Van Praagh v. Everidge 508, 509, 517 Vatcher v. Paull 320, 330, 357 Vautin, Re 253 Vauxhall Bridge Co. v.. Spencer 306, 347 Venezuela, Central Ely. of, v. Kisch 54, 68, 90, 353 Vernede v. Weber 41 Vernon v. Keys 47, 55. 56 v. Vernon Vezej /'. Rashleigh 522, 532 \'i;.mi r. Cooper 329 Vickers v. Bell 200 v. Hertz L34 Vickery V. Taylor 339 Viditz v. O'Hagan 534 Vigere v. Pike 18, 354, W2 Viney, Ex p 255 PAGl Voisey, Ex p 263 Vorlej r. Cooke 12, 13 Waddell d. Blockey Wainwrighfr, Ex p v. Miller Wake v. Harrop 527, - — - v. Wake Wakefield v. Gibbon Waldron v. Sloper 133, Waldy v. Gray 297, Walfi.nl v. Adie Walker. Re Re v. Armstrong V. Burrows v. Lii.mn 1 in. 141, 142. 271). 291, 372, .177, 380, V. Smith 178, 317. - v. Symonds 62, 110, and Oakshott, Re Wall v. Cockerel] 349. 352, v. Stubbs 53, Wallingford v. Mutual Soc Wallis and Barnard. Re v. Bussell 84 W'allwvnn v. Lee Walsham v. Stainton 16, 452, 467, Walsh, Re 529, 530, Walter p. Ashton Walters V. Morgan 71, 73, 437. 447. 479, Ward v. Dean V. Duncouibe 148, o. Hobbs 77, 78 v. Shallet r. Sharj) „. Wallis 517, Warde v. Dickson Warden v. Jones 132, 221, Ware v. Egmonl ... 269, 270, 271, v. Gardner Warner o. Jacob 1~2. Warn n. Be 253, Wasatch Co. v. Cresoenl Co Wasdale, Re Wason v. Waiving 288, Watson r. Ma, ton 137, 194, 510, v. Rodwell 17:,. 179. Watt r. Grove L98, L99, 393, Hfl W.tis r. Bucknal] 92 Waugb r. |{iisscll Wauton /'. Coppard \\'a\ r . II. am Way's TrU8< Webb, Re '•• l { .V"!. , 134 171 329 537 578 237 143 377 362 150 565 528 219 381 483 357 436 353 145 448 436 , 85 374 471 566 135 190 536 301 . 79 228 179 552 326 225 285 219 33] 258 6 30] 555 517 |H9 18] 93 528 188 221 179 "i77 XXX11. TABLE OF CASES. PAGE Webster v. Cecil 509 W.dderburn v. W 171, 349, 365 Weekes' Settlement, Re 562, 567 Weir v. Bell ... 4, 95, 96, 100, 429, 469 v. Van Tromp 538 Weise v. Wardle 473 Wellesley v. Mornington 321 Wells v. Allott 208 v. Joyce 207 v. Smith 292 Welman v. Welman 227, 527, 532 Wensley, Ex p 244, 245 Wentworth v. Lloyd 361 West, Re 499 v. Jones 121, 135 v. Kay 332 v. Reid ... 268, 269, 270, 272, 285 West Devon Consols Mine, Re 545 West London Commercial Bank v. Kitson 61 Westby v. Westby 545 Western Bank of Scotland v. Addie 10, 32, 37, 67, 95, 97, 99, 427 Weston's Case 164 Wethered v. Wethered 308 Whaley Bridge v. Green 167 Whalley v. Whalley 198, 358, 359, 366 v, 355 Wheatley v. Wheatley 168 Wheeler v. Palmer 324 Wheelton v. Hardisty 43, 93, 105 Whelan v. Palmer 326 „. Whelan 200 Whichcote v. Lawrence 162 Whitbread v. Smith 225 White and Smith 65, 274, 275, 519 , Re 159 v. Garden 58, 389 v. Hay men 92 v . Wakefield 278 „. Wakley 126, 130 v . White' 527, 540 Whitechurch v. Cavanagh ... 123, 124 Whitehorn v. Davison 11, 481 Whiteley, Re 341 v. Delaney 519, 527 Whiteley 's Case 354, 390, 405 Whitmore v. Mason 264 Whitworth, Re 487 Whittaker, Ex p 58, 66, 86 Re 221 Whittington v. Seale-Hayne 413 Widgery v. Tepper 174 Wilbraham v. Livesey 277 Wilde v. Gibson 19, 29, 62, 71, 267, 407, 437. 451, 453, 475 Wilding v. Sanderson 498, 568 PAGE Wilkinson, Ex p 248 v. Fowkes 392, 398 v. Nelson 563 Wilkinson's Case 300 WUlan v. Willan 198, 200 Williams' Case 336 Williams v. Bayley 193, 194, 201 v. Evans 131 v. Llewellyn 450 ■ v. Mason 426 v. Quebrada Co 487 v. Scott 161, 183 „. Williams 191 v . 273, 284, 287, 288, 462, 470 v. 545 Williams' Settled Estates, Re ... 502 Williamson v. Barbour 299, 555 v. Gihon 307 v. Hine 185 Willis v. Howe 366 v. 368, 448 Willoughby v. Willoughby ... 370, 375 Willmott v. Barber 126, 129, 130, 507, 511 Wills v. Stradling 131 Wilmot v. London Co 257 Wilson v. Finch Hatton 81 v. Hart 269, 274, 284 v. Piggott 564 v. Short 50, 287, 392 v. Wilson ... 494, 496, 523, 524 Winch v. Winchester 119, 446 Wingrove v. Wingrove 317 Winstanley, Re ,248 Wintour v. Clifton 578 Withington v. Tate 136 Wolfe v. Lowther 207 Wollaston v. Tribe 200, 210, 223, 224, 362, 483 Wolterbeck v. Barrow 540 Wolverton Mortgaged Estates, Re 577 Wood, Re 243, 244, 251 v. Abrey 195, 200 v. Dixie 234 v. Downes 177, 349 v. Leadbitter 130 v. Scarth 511, 512, 537 Woodhouse v. Shepley 308 Woolf v. Woolf 152, 488 Woollam v. Hearn 526 Worcester Corn Exchange Co., In re 300 Worrall v. Jacob 538 Worsley v. De Mattos 222, 232 Worth's Case 414 Worthington v. Abbott 264 v. Morgan 140 TABLE OF CASES. XXX111. PAGE Wray v. Wray 557 Wright, Re 250 v. Carter 157, 174, 177, 178. 390, 484 v. Goff 531 v. Proud 171. 178, 199 v. Snowe 141 - v. Yanderplank 190, 347, 351, 353, 359, 361, 307 Wright's Case 403, 406 Wyatt v. Palmer 345 Wycherley v. Wyeherley 192, 203 PAGE Wycombe Ely. Co. v. Donnington Hospital 51D Wyld, K.r p 343 Wyllie o. Pollen 292, 295 Wythes v. Lahouchere ... 107, L08, 294 Yongk v. Toynbee 39 Yorke V. Yorkshire Ins. Co. ... 105, 1<»', Young v. Fletcher 244 v. Grote 138 v. McMillan 53. 56 v. Peachey 335 - o. Waud " 243, --Ml TABLE OF STATUTES. PAGE 50 Edw. 3, c. 6 (Fraudulent Assurances 212 3 Hen. 7. c. 4 (Fraudulent Deeds) 212 13 Eliz. c. 5 (Frauds on Creditors) 212 et seq. 27 Eliz. c. 4 (Frauds on Purchasers) 265 29 Eliz. c. 5 (13 Eliz. c. 5 perpetuated) 212 21 Jac. I.e. 16 (Limitation Act, 1623) 358 29 Car. 2, c. 3 (Statute of Frauds. 1677) 132 4 Geo. 4. c. 76 (Marriage Act) 308 9 Geo. 4. c. 14 (Lord Tenterden's Act) 96, 526 11 Geo. 4 and 1 Will. 4. c. 46 (Illusory Appointments) 331 c. 47 (Debt Eecovery Act, 1830) 264 3 & 4 Will. 4, c. 27 (Limitation of Actions) 16, 17, 368, 385 1 Vict. c. 110 (Judgments) 221 22 & 23 Vict. c. 35 (Appointments) 565 23 & 24 Vict. C. 127 (Solicitors Act. I860) 384 25 A 26 Vict. c. 89 (Companies Act, L862) : 257 30 & 31 Vict. c. 48 (Sale of Land by Auction Act) 310 c. 131 (Companies Act, L867) 91, 468 31 & 32 Vict. c. 4 (Sale of Reversions Act) ; 204 32 & 33 Vict. c. 62 (Debtors Act. L869) 86 37 v\; 38 Vict. c. 37 (Appointments) 331 c. 57 (Eeal Property Limitation Act, 1874) L6, 358 c. 68 (Infants Relief Act, 1874) 151 c. 7.s (Vendor and Purchaser Act, 1871) 279, 136 38 >v 39 Vict. c. *7 (Land Transfer Act, 1875) 303 41 & 42 Vict. c. 3] (Bills of Sale Acts 211 44 & 45 Vict. c. 41 (Conveyancing Act, 1881) 17f>. 378 15 & If, Vict. c. 39 (Conveyancing Act. 1882) 267, 298 c. 75 (Married Women's Property Act, L882) L53, 227. 305 16 -v 17 Vict. c. 52 Bankruptcy Act, L883)— 3. 1 250 s. 30 16, 268 s. 12 268 17 22U. 240 i. 18 251, 257 s. M) 884 17 & 18 Vict. c. 54 'Turks Registry Act, L884) 802, 886 51 & 52 Vict, c 59 (Trustee Act, L888) L6, 866 52 & 53 Vict. c. 49 (Arbitration Act, L889) 841, 570, 57!! e. 63 (Interpretation Act, L889) Q] 53 a 54 Vict. c. 39 (Partnership Act, L890) L01, L85 L87 e. 64 (Directors' Liability Act, L890) 20, 87 c. 69 (Settled Land Act, L890) 172 XXXVI. TABLE OF STATUTES. PAGE 56 & 57 Vict. c. 21 . (Voluntary Conveyances) 265 c. 61 (Public Authorities) 16 c. 71 (Sale of Goods Act, 1893)— s. 11 41 s. 12 82 s. 14 79, 84 s. 15 84, 85 s. 24 11 s. 58 310 60 & 61 Vict. c. 65 (Land Transfer Act, 1897) 303, 458 63 & 64 Vict. c. 48 (Companies Act, 1900) 20, 88 c. 51 (Money-lenders Act, 1900) 183, 207 8 Edw. 7, c. 69 (Companies Consolidation Act, 1908)— b. 32 462 s . 81 20, 88, 91, 300 s. 84 20. 87, 459, 468 s. 210 257 9 Edw. 7, c. 49 (Assurance Companies Act, 1909) 106 4 & 5 Geo. 5, c. 47 (Deeds of Arrangement Act, 1914) 259 c. 59 (Bankruptcy Act. 1914)— s. 1 250 s. 28 :• 16, 263 s. 35 263 s. 42 240 s. 44 251 s. 45 384 A TREATISE ON THE LAW OF FRAUD AND MISTAKE. PART I.— FRAUD. CHAPTER I. GENERAL CONSIDERATIONS. Fraud and mistake as grounds of relief are alike founded What is on ignorance. There can be no mistake where there is no ignorance; there can be no fraud where there is no mistake. It is not easy to give a definition of what constitutes fraud in the extensive signification in which that term is understood by civil Courts of Justice. The Courts have always avoided hampering themselves by defining or laying down as a general proposition what shall be held to constitute fraud. Fraud is infinite in variety (a). The fertility of man's invention in devising new schemes of fraud is so great, that the Courts have always declined to define it, or to define undue influence, which is one of its many varieties, reserving to themselves the liberty to deal with it under whatever form it may present itself (b). Fraud, in the contemplation of a Civil Court of Justice, may be said to include properly all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed, and arc injurious to another, or by which an undue or unconscientious advantage is taken of another (c). All surprise, trick, cunning, dis- sembling and other unfair way that is used to cheat any one (a) Reddaway v. Banham, 18%, A. ('. p. '221; 65 L. J. Q. B. 381. (6) Allcard v. Skinner, 36 C. D. p. 183; 56 L. J. Ch. L052. (c) Story, Eq. Jur. 187. K.F. 1 FRAUD. is considered as fraud (d). Fraud in all cases implies a wilful act on the part of any one, whereby another is sought to be deprived, by illegal or inequitable means, of what he is entitled to (e). The Roman jurisconsults attempted definitions of fraud, two of which are here given; " Doluni malum Servius quideni ita definit, machinationem quandam alterius decipiendi causa, cum aliud simulatur et aliud agitur. Labeo autem posse el sine simulatione id agi ut quis circumveniatur ; posse et sine dolo malo aliud agi, aliud simulari ; sicuti f aciunt qui per ejusmodi dissimulationem deserviant et tuentur vel sua vel aliena; itaque, ipse sic definit, doluni malum esse omnem calliditatem, fallaciam, machinationem ad circumvenien- dum, fallendum, decipiendum alterum adhibitum. Labeonis definitio vera est " (/). The civil code of France, without giving a definition, provides in Art. 1116 : " Fraud is a ground for avoiding a contract where the devices (let manoeuvres) practised by one of the parties are such as to make it evident that without these devices the other parties would not have contracted. It is not presumed and ought to be proved." Art. 1.117 provides: " La convention contractee par erreur, violence ou dol n'est point nulle de plein droit; elle donne seulement lieu a une action en nullite ou en rescision." A distinguished American writer has given the following definition : " Fraud consists on the one hand (1) in one man's endeavouring by deception to alter another man's general rights; or (2) in one man's endeavouring by circumvention to alter the general rights of another; or on the other hand (3) in one man's endeavouring by deception to alter another man's particular rights; or (4) in one man's endeavouring by circumvention to alter the particular rights of another. And this may be compressed into the following : Fraud consists in the endeavour to alter rights by deception touching motives, or by circumvention not touching motives" (g). (d) Finch, 439. (e) Green v. Nixon, 23 Beav. 535: 27 L. J. Ch. 819; 113 R. R. 253. (/) Dig. lib. iv., tit. 3, leg. 1. (g) Bigelow on Fraud, p. 5. FRAUD. However difficult it may be to define what fraud is in all Elements of cases, if is easy to point out some of the elements which must necessarily exist before a party can be said to have been defrauded. In the first place, it is essential that the means used should be successful in deceiving. However false and dishonest the artifices or contrivances may be by which one man may attempt to induce another to contract, they do not constitute a fraud if that other knows the truth and sec- through the artifices or devices. Hand enim decipitur <[iii scit se decipi. Xext, there can be no fraud without an intention to deceive, though the motive is immaterial (h). This at least is true as regards an action of deceit which can only be supported by a fraudulent as distinguished from a negligent misrepresenta- tion (?'). An honest blunder in the use of language is not dishonest and unless there is a duty to be careful it is not actionable (j). But a statement recklessly made by a person under a duty to be reasonably careful in what he says and intended to be acted on will give rise to an action for damages (/«•). There are, however, many cases, as we shall presently see, where relief is granted on the ground of fraud or misrepresentation, though there is no moral culpability nm any intention to deceive. Lastly, there must be damage to the party deceived, even where there is a wilful false representation, before a cause of action can arise. Fraud without damage or damage without fraud gives no cause of action (I). But fraud gives a cause oJ action if it leads to any sort of damage (///). It is important to bear in mind that an action of deceil I/O Deny v. Peek, 14 App. Ca. 359, 374; 58 I.. .1. Ch. 864. (t) Angus v. Clifford, 1891, 2 Ch. 449; on I.. J. Ch. 14:5; Tomkinson v. Ball Consolidated Co., 1891, 2 Q. B. 614; 60 D.J. Q. B. 558; and see Dovey v. Cory, L901, A. C. 477; 70 L. J. Ch. 753. (/) Nocton v. Ashburton, L914, A. ('. at 949; 83 I.. .1. Ch. at 791. Pritty v. Child, 71 L. -I. K. B. 512. {I) 3 Bulst. '.).-,, perCroke, J.; Pasley v. Freeman, :s '1'. R. 51, per Hull,,. ,l. ; I I;. R. 634; Derry v. Peek, 14 A.pp. ('a. p. 343; 58 D. J. Ch. 864 ; Richard v. Hatrick, 28 N. Z. L. R. 170; Duncannon v. Haywood, 6 Taa. L. R. I II C. L. R. 540 (w) Smith v. Kay, 7 H. L. C. p. 775. per Lord WenBleydale, 80 L. J. Ch. 35; 115 R. R. 367. 4 FRAUD. differs essentially from one brought to obtain rescission of a contract on the ground of misrepresentation of a material fact. The principles which govern the two actions differ widely. Where rescission is claimed, it is only necessary to prove that there was misrepresentation; then, however honestly it may have been made, however free from blame the person who made it, the contract, having been obtained by misrepresenta- tion, cannot stand. In an action of deceit, on the contrary, it is not enough to establish misrepresentation alone, for without proof of fraud no action of deceit is maintainable (n). "Legal Fraud vitiates everything, even judgments and orders of the Court. It would be idle, therefore, to attempt to enumerate all the cases in which it is a ground for relief. It should, however, be noted that fraud as a ground for relief is not necessarily moral fraud, and often falls far short of the moral obliquity which constitutes fraud in a popular sense. The expression " legal fraud ' has often been taken exception to, and it has been said to be meaningless and undistinguishable from moral fraud or fraud in fact. Nevertheless, the expression has an intelligible meaning, is convenient in practice and is well understood (o). Numberless decisions go to prove what is indeed sufficiently obvious, that there is "legal " or, as it is perhaps better termed, "civil' fraud, which is a ground for relief even where there is no moral blame or actual fraud. This is especially noticeable in many cases of rescission of contract fraud upon powers and constructive fraud. The expression "legal fraud" has been generally taken exception to in actions of deceit, the reason no doubt being that as in such actions a fraudulent intention is essential, the difference between a fraudulent intention to deceive and the motive of the deception was lost sight, of; but even here the distinction between legal and moral fraud seems to exist, for a false statement, though made with a good motive, may be a legal fraud (p), whereas it could hardly be regarded as a moral fraud. (n) Derry v. Peek, 14 App. Ca. 359, 362; 58 L. J. Ch. 864. (o) Weir v. Bell, 3 Ex. D. 238; 47 L. J. Ex. 704. (p) Smith v. Chadwick, 9 App. Ca. p. 201; 53 L. J. Ch. 873. FEAUD. "Legal fraud," therefore, may be said to mean fraud which is a ground for relief in law, and which, though it may not amount to actual fraud, has similar consequences. On the other hand, moral fraud is not necessarily legal fraud, for moral fraud, however gross, is not fraud in law unless it induces damage. The expression, therefore, is useful as marking a distinction which is real. In the same way, the expression "constructive fraud," though little more than a no men collect i ru m, is useful as pointing to a class of cases in which, though there may be no actual fraud, the same consequences follow. Nothing short of a fraudulent intention in the strict sense will suffice for an action of deceit, and in this strict sense it is quite natural to say that there is no such thing as legal as distinguished from moral fraud. But when fraud is referred to in the wider sense used in Chancery' it is a mistake to suppose that an actual intention to cheat must always be proved. A man may misconceive the extent of the obligation which a Court of Equity imposes upon him. His fault is that he has violated, however innocently because of his ignorance, an obligation which he must be taken to have known, and his conduct has in that sense always been called fraudulent even in such a case as a technical fraud on a power. It was thus that the expression "constructive fraud' came into existence (7). The term "surprise" may here be referred to. Surprise, Surprise. though a very old head of equity, is not a separate ground for relief, and has no technical signification. As a ground of relief it seems to fall either within mistake or undue advantage. The situation may not be due to fraud, but to take advantage of it may lie considered constructive fraud. Mere surprise — that is, surprise arising from rash and indiscreet action or want of mature deliberation is no ground for relief. It is not of itself a sufficient cause for setting {q\ Norton v. Ashburton, L914, A. C. ;>t p. 964. b FRAUD. aside a transaction, apart from fundamental error or unconscionable advantage (r). Mistake. The distinction between fraud and mistake may seem perfectly obvious, but it is far from being so. Indeed, it is often difficult to say upon admitted facts whether the error which is complained of was occasioned by intentional fraud or by mere inadvertence or mistake (.s). The much-discussed case of Slim v. Croucher is excellent proof of this, for though that case is now considered as a case of pure mistake, it is still a debatable point whether it was not a case of fraud (t). Mistake may be defined as ignorance not caused by the act of the other party. Misrepresentation is ignorance caused by the act of the other party without wrongful intention. Fraud is ignorance caused by the other party with wrongful intention (u). Negligence. The distinction between fraud and negligence is still less clearly defined. Indeed, most of the difficulty that has arisen with regard to fraudulent representation is due, as Bowen, L. J., points out in Le Lievre v. Gould (w), to a confusion of fraud and negligence. Lord Eldon speaks of " that gross negligence that amounts to evidence of fraud ' or of a fraudulent intention (x). This statement, said Fry, L. J., is " certainly embarrassing, for negligence is the not doing of something from carelessness and want of thought or attention, whereas a fraudulent intention is a design to commit some fraud and leads men to do or omit doing a thing not carelessly but for a purpose ' (y). There is, however, no real discrepancy between these two statements. Fry, L. J., defines what is a fraudulent intention; Lord Eldon merely states what may be evidence of a fraudulent intention. Negligence is not fraud, but negligence may be evidence of fraud (z) if it is " so gross as to be incompatible with the (r) Earl of Bath and Montague's Case, 3 Ch. Ca. 55; Evans v. Llewellyn, 1 Cox, 333; 1 E. E. 49; cf. Story, 134, 251. (s) Wasatch Mining Co. v. Crescent Mining Co., 148 U. S. 293, 298. (t) See post, p. 36. (u) Pollock on Contracts. 439. (w) Post, p. 26. (x) 6 Ves. pp. 189, 190. (y) Northern Counties, dc. v. Whipp, 26 C. D. p. 489 ; 53 L. J. Ch. 629. (z) Berry v. Peek, 14 App. Ca. p. 375 ; 58 L. J. Ch. 864. FRAFD. idea of honesty " (a). And on this ground it may be thought that Slim v. ('voucher was rightly decided, for the reasons given in a subsequent chapter (6). The line between fraud and warranty is often very narrow. Warranty, and the same observation is true of the line between warranty and estoppel. Narrow, however, as the line often is, the three words denote fundamentally different legal conceptions which must not be confounded (c). How fine the distinction some- times is between contract, warranty, and estoppel is shown by Grosvenor Hotel v. Hamilton (d). There is a material distinction between a warranty and a representation. A representation may be substantially answered, but a warranty must be strictly complied with (e). The test by which a warranty is distinguished from a repre- sentation is this: Would a' reasonable man have understood the defendant to intend his representation for an undertaking or warranty? Was he asserting a fact, or merely stating an opinion? (/). A breach of warranty does not entitle the plaintiff to avoid the contract ; he must sue upon the breach of warranty, but a misrepresentation may entitle the plaintiff to avoid the contract (g). A defendant is liable for the consequences of a fraudulent warranty (It). The subject of estoppel will be dealt with in a subsequent Estoppel. chapter (i); but it may here be stated thai the line is often very fine between fraud and estoppel, as is shown by the case of Low v. Bouverie (/) and the cases there cited, and it is not always easy to distinguish the two, notwithstanding that estoppel is only a rule of evidence, and an action cannot, as in ia) Le Lievre v. Gould, 1893. 1 Q. B., p. 500; 62 L. J. Q. B. 353. (b) Post, p. 30. (c) Low v. Bouverie, 1891, 3 Ch. p. 102; 60 L. J. Oh. 594. (d) L894, 2 Q. B. 83. (e) De Hahn v. Hartley, 1 T. R. 345; 1 E. R. 22} : Campania Naviera Vas- eongada v. Churchill. L906, 1 K. B. 237; 75 L. J. K. B. 94. If) Stucley v. Bailey, 1H.&C. 405; 31 L. J. Ex. 183; 130 R. R. 588; De Lassalle v. Guildford. 1901. 2 K. B. 215; 70 L. J. K. B. 583. ig) Murray v. Mann, 2 Ex. 538; 17 I,. .1 . Ex 256; 76 R. R. 686; Street v. Blay, -A B. & Ad. 456; 36 B. R. 626. i/o Mullett v. Mason, L. R. 1 C. P. 500: 35 L. J. C. P. 209. HI Post. Chap. 1 I. /. 1891, 3 Ch. 82 ; CO L. J. Ch. 594. 8 FRAUD. the case of fraud, be founded upon it (I). Fraud or bad faith is not essential to estoppel. It has, however, been said that fraud is a necessary ingredient in misrepresentation by passivity, that is, in cases of standing by (ra). But this seenis doubtful, for in De Bussche v. Alt (n) the Court of Appeal held- that " holding outj or lying by or acquiescence cannot, unless fraud be proved, be a ground for an action of deceit, but may work an estoppel." It may here be observed that fraud, contract, and estoppel are not mutually exclusive, and that one and the same state- ment may be a fraud, a breach of contract, and operate by way of estoppel (o). You cannot, however, rely on estoppel and also on the real facts (/>), and qucere whether a person estopped can plead fraud by a third person (q). Doctrine of We have now to consider whether there is any right to " making re- --it t it • n presentations relief outside these three grounds — whether, in short, there is a right to relief on the ground of mere representation not amounting to any of these three grounds. There are certainly many cases which seem to support the idea that under certain conditions such a representation may still be binding on the person making it (/■). But it is said that " when these three effects are duly considered it appears that there is no other way in which it can be binding" (.v). The "making representa- tions good " is, it is said, an exploded doctrine, and " probably it will not be heard of again ''' (f). The deliberate opinion of so high an authority must of course carry great weight, but the question can hardly be considered as finally settled until the House of Lords expressly so decides. It may well be thought that the principle of making good a representation, and an obligation to take reasonable care in making repre- sentations to be acted on by others, is too sound and salutary a principle to be exploded by inference. The fact that some (I) Ibid. (m) Ewart on Estoppel, p. 92. (n) 8 C. D. 286; 47 L. J. Ch. 386. (o) Brownlie v. Campbell, 5 App. Ca., p. 953. (p) Scarf v. Jardine, 7 App. Ca. 345, per Selbourne, L. C. ; 51 L. J. Q. B. 612. (q) Onward Bldg. Soc. v. Smithson, 1893, 1 Ch. 1; 62 L. J. Ch. 138. (r) Post, Chap. VII., s. 1. (s) Pollock on Contracts (8th ed.), p. 558. ({) Ibid. (6th ed.), p. 719. FRAUD. 1) of the cases on which the principle was supposed to rest were cases of contract does not necessarily or finally dispose of the doctrine. The dicta of Brett, M.R. (u), in favour of the principle are alone sufficient to make us hesitate to disc aid it. Further, it has recently been held that a statement recklessly made and intended to be acted on by a person under a duty not to be reckless is a ground for an action of tort for breach of the duty (,;•). Civil Courts of Justice do not affect to consider fraud in the Fraud not . ... , ,, . • i / \ punishable as light of a crime ; it is not their province to punish (if) ; nor a crime. have they any censorial authority (z) ; they interfere in cases of fraud from a civil and not from a criminal point of view. Civil Courts of Justiee have an original, independent, and Jurisdiction • t ..,.. ,. . -xj>i over everv inherent jurisdiction to relieve against every species of fraud species of not being fraud of a penal nature. Every transfer or convey- f |.^" d l*™^ ance of property, by what means soever it be done, is vitiated penal nature. by fraud. Deeds, obligations, contracts, awards, judgments, or decrees may be the instruments to which parties may resort to cover fraud, and through which they may obtain the most unrighteous advantages, but none of such devices or instru- ments will be permitted by a Court of equity to obstruct the requisitions of justice. If a case of fraud be established, the Court will set aside all transactions founded upon it by whatever machinery they may have been affected, and notwithstanding any contrivance by which it may have been attempted to protect them (a). The distinction between legal or equitable and criminal Distinction t , . between legal jurisdiction in matters of fraud is well laid down in Burins v. am i criminal Pennell (b). It is the superadded guilty intention which gives the criminal jurisdiction. A man may not have intended to deceive, and may have believed that he did not, when he was really suppressing the truth and suggesting what was false. If so, he is not liable to an indictment in a criminal court; but in a civil proceeding it is different. If a man makes a misrepresentation in point of fact, whether by suppressing (u) Cunnington v. Great Northern lily. Co., 49 L. 'J'. 893, 894. (x) Pritty v. Child, 71 I,. J. K. B. 512. {y) See 2 Atk. IS (z) Bee 2 V. & B. 298. (a) Bowen v. Evans, 2 H. Ii. C. 281; 81 K. R. L86. (b) 2 H. L. C. 497; 81 li. R. 244. 10 FEAUD. Contract induced by fraud. Voidable not void. the truth or suggesting what is false, however innocent his motive may have been, he is equally responsible in a civil proceeding as if he had while committing these acts done so with a view to injure others or to benefit himself (c). It matters not that there was no intention to cheat or injure the person to whom the statement was made (d). If the subject-matter of the transaction be a contract, no man is bound by a bargain into which he has been induced by fraud to enter, because assent is necessary to a valid contract, and there is no real assent when fraud and deception have been used as instruments to control the will and influence the assent. But a contract or other transaction induced or tainted by fraud is not void, but only voidable at the election of the party defrauded (e). Until it is avoided, the transaction is valid, so that third parties without notice of the fraud may in the meantime acquire rights and interests in the matter which they may enforce against the party defrauded (/). " The fact that the contract has been induced by fraud does not make the contract void or prevent the property passing, but merely gives the party defrauded a right on discovering the fraud to elect whether he shall continue to treat the contract as binding or disaffirm the contract and resume the property. If it can be shown that the party defrauded has at any time after knowledge of the fraud either by express words or by unequivocal acts affirmed the contract, his election is determined for ever. The party defrauded may keep the question open so long as he does nothing to affirm the contract. The question always is, has the person on whom the fraud has been practised, having notice of the fraud, elected not to avoid the contract ? or, has he elected to (c) Peek v. Gurney, L. R. 6 H. L. 409; per Lord Cairns; 13 Eq. 113, per Lord Komilly. (d) Derry v. Peek, 14 A. C. p. 374; 58 L. J. Ch. 864. (e) Rawlins v. Wickham, 3 D. & J. 322; 28 L. J. Ch. 188, 121; R. R. 134; Western Bank of Scotland v. Addie, L. R. 1 H. L. Sc. 156. (/) Oakes v. Turquand , L. R. 2 H. L. p. 375; 36 L. J. Ch. 949; Reese River Silver Mining Co. v. Smith, L. R, 4 H. L. 64; 39 L. J. Ch. 849; Carter and Kenderdine, 1897, 1 Ch. 776; 66 L. J. Ch. 408; United Shoe Co. v. Brunet, 1909, A. C. 330; 78 L. J. P. C. 101. FRAUD. 11 avoid it? or, has he made no election? As long- as he has made no election he retains the right to determine it either way, subject to this — that if in the interval whilst he is deliberating, an innocent third party has acquired an interest in the property, or if in consequence of his delay the position even of the wrong-doer is affected, he will lose his right to rescind " (g). Where a sale of goods is obtained by fraud the property in Goods the goods is transferred by the contract (//) subject to be larceny or It revested in the seller on his exercising his option to rescind v?S F*j? .-. , when he discovers the fraud. But as between the seller and fromgoods obtained by buyer a purchaser in good faith from the fraudulent buyer fraud. acquires an indefeasible title (z), unless the seller, on whom the onus lies, proves that the purchaser' took with notice of the fraud or otherwise than in good faith (j). There is, however, a distinction between possession obtained under a contract of sale voidable for fraud and possession obtained by a trick amounting to larceny. In the former case the fraudulent buyer can, as we have seen, give a good title to a bona fide purchaser. In the latter case he cannot unless the purchaser buys in market overt (k). Where, however, goods have been stolen and the offender is prosecuted to conviction, the property in the goods revests, notwithstanding any intermediate dealing with them, whether in market overt or otherwise (1). But where goods have been obtained by fraud not amounting to larceny, the property does not revest on conviction of the offender (m). A distinction must be taken between cases where a man Instruments executes an instrument with the mind and intention to througha execute it, though his assent may have been obtained by j?? < «L^f 1 j fl i ied fraud, and cases where a man is by fraudulent contrivances from instru- ments exe- induced to put his hand and seal to an instrument which he outed through fraud. (g) Clough v. L. & N. W. lily., L. H. 7 Ex. 34; 11 l>. J. Ex. 17: and ee Oakes v. Turquaud, supra; Houldsworth v. City of Glasgov Bank, 5 A.pp. Ca. 317. (h) Load v. Green, 15 M. >v W. 216; 15 L. J, Ex. L13; 7! K. R. 627. (i) Sale of Goods Act, L893, s. 24; Phillips v. Brooks, L919, 2 K. B. 248. (?) Whitehorn v. Davison, L911, 1 K. B. 463; 80 L. J. K. I'.. 425. (ft) See L907, 2 K. B. at p. 70; and aee Farquharson v. King, L902, A. C. 825; 71 L. J. K. B. 667, i/) Sale of Goods Act, 1893, s. 24. (m) Ibid 12 FEAUD. never intended and had no mind to execute. In the former case the document is said to be voidable only, and its creator must suffer; in the latter the document is void, and the loss falls on the innocent transferee (w). In Thorough- good's Case (o) it was held that if an illiterate man have a deed falsely read over to him, and he then seals and delivers the deed, the deed was nevertheless not his deed. The doctrine is not, however, confined to the condition of an illiterate grantor (p). The position that if a grantor or covenantor be misled as to the actual contents of the deed, the deed does not bind him, is supported by many authorities (q). In Vorley v. Cooke (r) Stuart, V.-C, said that if a man having no mind or intention to execute a particular instrument does what he does with the mind and intention to execute a deed of a different kind and for a different purpose from that which by fraud and deceit was substituted, the deed is not voidable but void, and no estate passes at least as between the parties to the instrument and parties taking with notice. When, accordingly, a man executed a deed which was falsely and fraudulently represented as being a covenant to produce, when, in fact, it was a mortgage, the deed was held void as being a cheat and a trick (s). So also in Foster v. M'Kinnon (t), where the defendant's signature to a document was obtained upon a fraudulent representation that it was a guarantee, and the defendant signed it without knowing that it was a bill, and under the belief that it was a guarantee, it was held that he (n) The true principle, however, seems to be, not whether a person is literate or illiterate, nor whether the deed is void or voidable, nor under what conditions the document was executed, but whether the person who executed it is estopped from denying its validity. No document obtained by misrepresentation is bind- ing on the person deceived, its character does not change, into whosesoever hands it may come ; but as against persons who have been led by the document to change their position, the person deceived ought to be estopped from denying its validity : see Ewart on Estoppel, pp. 104, 434; cf. French Code, Art. 1117, ante, p. 2. (o) 2 Co. Rep. 9 b. (p) Keilw. 70 PI. 6; see post, p. 14. (q) See Com. Dig. Fait B. 2 ; 1 Cr. & J. 312; see Foster v. M'Kinnon, L. R. 3C. P. 711; 38 L. J. C. P. 310. (r) 1 Giff. 234; 27 L. J. Ch. 185; 114 E. R. 413 (s) Ibid; Lee v. Angas, 15 W. R. 119. (t) L. R. 4 C. P. 711; 38 L. J. C. P. 310. FRAUD. 13 was not liable, if he was not guilty of negligence, on the ground that he never intended to sign, and therefore in contemplation of law never did sign, the document to which his name was appended. So where a person is induced to sign a promissory note by a fraudulent representation that he is witnessing a deed, and there is no negligence on his part, he is not estopped from setting up the true facts as a defence to an action on the note (u). In Hunter v. Walters (./•), where a mortgagee executed the deed without reading it, believing the solicitor's assertion that it was only a transfer of the mortgagor's interest, and a mere form as far as concerned himself, it was held that the conveyance was not void, and that the mortgagee having confided in his solicitor to the extent of executing the conveyance without reading it, he must suffer for his agent's fraud, and not the stranger who dealt with the agent, upon the common rule of equity that the principal who trusts his agent is the party to suffer for the agent's fraud, and not the stranger who deals with the agent (y). Lord Justice James, without disputing the correctness of the equitable relief given in Vorley v. Cooke, declined to support the dictum that the facts in that case would have sustained at law a plea non est factum. Lord Justice Mellish, speaking of the argument that a deed procured by false representation of the contents of the deed is at law necessarily void ah initio, , said : " It is a doubtful question whether if there be a false representation respecting the contents of a deed, a person who is an educated person, and who might by very simple means have satisfied himself as to what the contents of the deed really were, may not by executing it negligently be estopped as between himself and a person who innocently acts upon the faith of the deed being valid, and who accepts an estate under it " (z). The question, it seems, should be answered in (u) Lewis v. Clay, 07 h. J. Q. B. 224. (*) 7 Ch. 75; II I- .1 Ch. IT;".. (y) See Brocklesby v. Temperance Bldg. Soc., 1895, A. C. 17.'!; 64 l>. .1 Ch. 433; cf. Farquharson v. King, 1902, A. C. 825; 71 !,. .1. K. B. 667 j an, I Turnei v. Smith, 1901, 1 Ch. 213; 70 L. J. Ch. 144. (z) See Cooper v. Vesey, 20 C. D. 029; 51 L. J. Ch, 862; LfltOM V. Clay, 87 L. J. Q. B. 224. 14 FRAUD. the affirmative (a). This at least is clear, that if a man knows that the deed is one purporting to deal with his property and he executes it, it is not sufficient for him in order to support a plea of non est factum to show that a misrepresentation was made to him as to the contents of the deed (b). To support such a plea the deed must be of a totally different character from what it was represented to be (c). The principle is not confined to the blind and illiterate. The test is whether the person has attached his signature with the intention that that which preceded his signature should be taken to be his act and deed. But he may have been content to make it his act and deed whatever it contained. If on the other hand he is misled as to the contents then his mind does not go with his pen and it is not his deed (d). It seems also that if a person sign a document by mistake and without negligence he is not bound by it although his signature was not obtained by fraud (e). It seems that a deed cannot be valid as a mortgage and void on the plea of non est factum as to the personal covenants for payment (/). Similar considerations attach to the case of forged instruments. No estate can pass under a forged instrument (g), but in special cases an innocent party whose title to property is derived under a forged instrument may, as against the party on whom the forgery has been practised, have a better equity to the retention of the property (h). Which of two ^" ne q ues ti° n i 11 all this class of cases seems tc be : Was the person upon whom the fraud was practised guilty of innocent persons to suffer 9 (a) King v. Smith, 1900, 2 Ch. 425; 69 L. J. Ch. 598; Howatson v, Webb, infra; Ewart on Estoppel, 434: but see National Prov. Bank v. Jackson, 33 C. D. 1; Onward Bldg. Soc. v. Smithson, 1893, 1 Ch. 13, 14; 62 L. J. Ch. 138. (b) Howatson v. Webb, 1908, 1 Ch. 1 ; 77 L. J. Ch. 32. (c) Ibid; Bagot v. Chapman, 1907, 2 Ch. 222; 76 L. J. Ch. 523. id) Carlisle Banking Co. v. Bragg, 1911, 1 K. B. 489; 80 L. J. K. B. 472. (e) Bank of Ireland v. M'Manaimj. 1916, 2 Ir. E. 161. (/) Howatson v. Webb, 1908, 1 Ch. 1. (g) Esdaile v. he Nauze, 1 Y. & C. 394; 4 L. J. Ex. 46; Boursot v. Savage, 2 Eq. 134 ; 35 L. J. Ch. 627 ; Cooper v. Vesey, 20 C. D. 629 ; 51 L. J. Ch. 862. (In Jones v. Powles. 3 M. & K. 581; 3 L. J. Ch. 210: 41 R. B. 137. FRAUD. 15 negligence (i), and negligence which was the proximate or effective cause of the fraud'? (j) The rule that whenever one of two innocent persons must suffer by the act of a third person, he who has enabled the third person to occasion the loss must sustain it, requires some qualification, hut what the qualification is or ought to be is still somewhat uncertain. Vaughan Williams, L. J., thought that one ought never to >ay that a person has enabled the third person to occasion the loss or commit the fraud unless the act was one which he intended to be acted upon by somebody (A*). Lord Halsburv thought that the person who enabled the third person to occasion the loss must be guilty of some indiscretion (/j. Stirling, L. J., thought that there must be neglect of some duty owing from him to the other innocent party (m). Farwell, J., also took that view (n), and Lord' Lindlev thought that the innocent part}- to suffer must have done something which in fact misled the other (o). This last view- seems to be the correct one. At all events, the doctrine has never been applied where nothing has been done by one of the innocent parties which has in fact misled the other (/;). If a transaction has been originally founded on fraud, the Original \ • • i • •,, ,. • -i. i i .i continues to original vice will continue to taint it, however long the taint a negotiation rnav continue, or into whatever ramifications it transaction ^ . founded on may extend (q). Xot only is the person who has committed fraud. the fraud precluded from deriving any benefit under it, but an innocent person is so likewise, unless there has been some consideration moving from himself (/•). In equity no length of time will run to protect or screen \,, length of time will (t) Foster v. M'Kinnon, 1 0. P. 711; 38 L. J. C. P. 310; Lewis v. Clay, l )rotect fnu " i 67 L. J. Q. B. 224. (j) Baxendale v. Bennett, 3 Q. B. D. 525; per Bramwell, L.J. : 17 I,. .1. y. B. 624. [k) Farquharson v. King d Co., 1901, 2 K. B. 697, 708, 713. [I) Farquharson v. King, L902, A. C. a< p. 332; 71 L. J. K. B. 667. (m) 1901, 2 K. B. at p. 720. In) Rimmer v. Webster, 1902, 2 Ch. 1(33; 71 L. J. Ch. 561. I 1902, A. C. at p. 342. (p) Ibid.; but ace 1907, 'J K. B. i (g) Heynell v. Sprye, 1 D. M. & G. 660, 697 ; 21 I.. J. Ch. 633; 91 R. K. 228; Smith v. Kay, s II. L. C. 760,775; 30 L.J. Ch. 35; L16 R. R. 367. (r) Scholefield v. Templer, Johns. L65; I D. & J. 129; L24 R. R. 824; Topham v. Dukaoj Portland, 1 I). J. & S. 569, per Turner, L. J.; L87 R. R. 801; 32 L. J. Ch. f,<><\: Morley v. Loughnan, L898, I Ch. p, 757; 62 L. J. Ch.*51fi 16 FEAl'D. fraud (s). The right of the party defrauded to have the transaction set aside is not affected by lapse of time, so long as he remains, without any fault of his own, in ignorance of the fraud which has been committed (t). So, too, the remedy for a fraudulent breach of trust is not barred by the Trustee Act, 1888, s. 8; nor will a fraudulent trustee be released therefrom even by obtaining his discharge under the Bankruptcy Act, 1914, s. 28 (u). So, too, the Public Authorities Protection Act, 1893, which limits the time within which an action can be brought against a public body, does not apply where the cause of action alleged is a fraud which induced the contract (w). Concealed The subject of concealed fraud will be dealt with in a fraud. subsequent chapter; but it may here be stated that when once fraud is established the rights of the party defrauded are not affected by the Statute of Limitations so long as he remains in ignorance of the fraud (.*■) and it is not necessary for him to prove that the wrongdoer actively concealed the fraud, it is sufficient if the fraud had not in fact been discovered (y). But if he delays his claim for recession for six years after the discovery of the fraud the Court will refuse to grant relief (~). Moreover the discovery of concealed fraud only gives a new cause of action when the fraud is the fraud of the defendant himself or of some one for whom he is directly responsible (a). The concealed fraud which by the Real Property Limitation Act, 1833, s. 26, will prevent time running against the true owner of real estate must be the fraud of the person who sets up the statute, or of some one through whom he claims (b). (s) Alljrey v. Allfrey. 1 Mac. & G. 99; 84 E. B. 15 ; Bowen v. Evans, 2 H. L. C. 257 ; 81 E. E. 136 ; Walsham v. Stainton, 1 D. J. & S. 678 ; 137 E. B. 342. (t) Blair v. Bromley, 2 Ph. 361; 16 L. J. Ch. 495; Rolfe v. Gregory, 4 D. J. & S. 579; 146 E. E. 463; 34 L. J. Ch. 274 ; Vane v. Vane, 8 Ch. 383; 42 L. J. Ch. 299; but see Re McCullum, infra. (u) Munns v. Bum, 35 C. D. 266. (w) Pearson v. Dublin Corporation, 1907, A. C. 351; 77 L. J. P. C. 1. (sc) Oelkers v. Ellu, 1914. 2 K. B. 139; 83 L. J. K. B. 658. (y) Ibid. ; Bulli Coal Mining Co. v. Osborne, 1899, A. C. 351, 363; 68 L. J. P. C. 52. (z) Armstrong v. Jackson, 1917, 2 K. B. 822 ; 86 L. J. K. B. 1375. (o) John v. Dodwell, 1918, A. C. 563; 87 L. J. P. C. 92. (b) Re McCallum, 1901, 1 Ch. 143; 70 L. J. Ch. 206; but see judgment of Eigby, L. J., dissentiente. FRAUD. 17 The qualification with regard to due diligence incorporated in Section 26 should perhaps be confined to land. At all events, it does not seem to apply to all cases, as, for instance, to partnership accounts (c). An express stipulation that fraud shall not vitiate a Contracting contract is bad in law. A contract whereby a person saves himself from false representation and the other party is nol to have a remedy for fraud is illegal. Accordingly, a clause in a contract by which an employer disclaims responsibility for the accuracy of the statements in the contract, and as to which the other party is to satisfy himself, does not exempt the employer from liability for statements fraudulently made by himself or his agents ( consider every part of the transaction affected by objections which, in fact, apply only to particular portions of it (//). If, (c) lietjemann v. B., 1895, 2 Ch. 474; 04 L. J. Cli. 641. (d) Pearson v. Dublin Corporation, 1907, A. C. 351; 77 L. J. P. ('. 1. r , , Lord Atkinson. (e) Great Luxemburg Rly, Co. v. Mutjnan. - J"i \'«a\. 591; 119 It, R 555; Urquhart v. Maepherson, 3 App. Ca. 831; Sheffield Nickel Co. v. Untoin, 2 Q. B. D. 223; 40 L. J. Q. B. 299. (f) Bellamy v. Sabine, infra; Carter and Render dine, L897, I Ch. 776; 66 L. J. Ch. 408; United Shoe Co. v. Brunet, L909, A. C. 880; 7k |.. .1. p. c. |n| (a) Bellamy v. Sabine, 2 Ph. p. 488; 17 L. J. Ch. L05; 78 U. R. L82. K.F. 2 18 FRAUD. Duty of the Court in dealing with cases of alleged fraud for instance, a man brings about an arrangement between father and son, in order that he might afterwards deal with the son, the motive might be most improper, but the arrangement between father and son must be judged of upon its own merits (/i). It has been said that an instrument which has been entered into between parties for a purpose which may be considered fraudulent as against a third party is not necessarily invalid as between themselves (?'). This at least may be so where one of the parties is a bona fide purchaser (A*). Fraud by a third party, even when it produces on the mind of one of the contracting parties a mistake as to the nature of the contract, cannot be invoked by that party to set aside the contract. He has no remedy except against the author of the fraud for damages (/■). Although it is the undoubted duty of the Court to relieve persons who have been deceived by the fraud of others, it is equally the duty of the Court to " be careful that in its anxiety to correct frauds it does not enable persons who have joined with others in speculations, to convert their speculations into certainties at the expense of those with whom they have joined" (m). The Court will not refuse relief to a party guilty of fraud unless the fraud has an immediate and necessary relation to the equity sued for (n). (h) Ibid. (i) Shaw v. Jeffery, 13 Moo. P. C. 432; 132 R. E. 129. (k) Halifax Co. v. Gledhill, 1891, 1 Ch. 31; 60 L. J. Ch. 181. (1) Imperial Life Ass. v. Laliberte, 29 Que. S. C. 183. (m) Jennings v. Broughton, 5 D. M. & G. 126; 140, per Turner, L. J.; 23 L. J. Ch. 999; 104 R. R. 58; Smith v. Chadwick, 20 Ch. D. 67, per Jessel, M. R. ; 53 L. J. Ch. 873. (n) Moody v. Cox, 1917, 2 Ch. 71 ; 86 L. J. Ch. 424. ( io ) CHAPTEE II. MISREPRESENTATION* — CONCEALMENT. The largest, class of cases in which Courts of Justice are Misrepresen- called upon to give relief against fraud, is where there has been a misrepresentation. Misrepresentation may be either innocent or fraudulent. If innocent, it may be a ground for recession of a transaction or a good defence to an action for specific performance. But a misrepresentation in order to support an action of deceit for damages must be fraudulent (a), or rather a falsehood (6). A fraudulent misrepresentation, or as it is better called Deceit, deceit, consists in leading a man into damage by wilfully or recklessly (bb) causing him to believe and act on a falsehood. A representation in order to be fraudulent must be one (1) which is untrue in fact; (2) which defendant knows to be untrue or is indifferent as to its truth ; (3) which was intended or calculated to induce the plaintiff to act upon it; and (4) which the plaintiff acts upon and suffers damage. It is not, however, necessary that a misrepresentation to sustain an action of deceit should be made in express terms; it is sufficient if the words used are intended to convey a false inference (c). The whole subject of fraudulent misrepresentation has, Derry r. however, been thrown into confusion by the decision in Derry v. Peek (d), or rather by the supposed effects of that decision — a decision which has given rise to an extraordinary amount of doubt, difficulty, discussion, and vigorous dissent. We may like it or not, but English Courts must now decline to recognize a positive duty of using any, even the lowest, (a) Annus v. Clifford, 1891, 2 Ch. 449; 60 L. J. Oh. 443. (b) Wilde v. Gibson, 1 H. L. C. p. r>33 ; 73 B. R. 191. (bb) De Vail v. Gorman, 58 Can. S. C. R. 259. (c) Delany v. Keogh, 1905, 2 Ir. li. 2f>7. (d) 14 App. Ca. 337; 58 L. J. Ch. 804. 20 MISREPRESENTATION. degree of diligence in making allegations about supposed matters of fact (e). The effect of the decision as regards the particular class of company cases to which the decision is immediately applicable, has been neutralized by the Directors' Liability Act, 1890, and the Companies Act, 1900, which are now embodied in the Companies Consolidation Act, 1908, ss. 81, 84. These Acts, however, are framed merely " to meet a particular grievance, and do not replace an unsound doctrine, which leads to unfortunate results, by a sounder principle which would avoid them ' (/). They provide a partial remedy for the mischievous consequences of Derry v. Peek (g). If, however, the principle laid down in Slim v. Croucher is that contended for in a later page (h), the mischievous consequences of Derry v. Peek would disappear, or at least be greatly lessened. The facts in Derry v. Peek (i) were very simple. The defendants were directors of a tramway company, and issued a prospectus in which they stated that " the company has the right to use steam or mechanical motive power instead of horses." As a matter of fact the incorporating Act only provided that such power might be used with the consent of the Board of Trade. On the faith of the prospectus the plaintiff took shares in the company, the Board of Trade subsequently refusing to consent to the use of steam power, and the company being wound up, but possibly not in consequence of that refusal. Stirling, J., dismissed the action, saying 'their grounds were not so unreasonable as to justify me in charging them with being guilty of fraud." The Court of Appeal reversed this decision on the ground that the statement was made recklessly and without reasonable grounds. The House of Lords reversed the judgment of the Court of Appeal, holding on the facts that the defendants did not knowingly make a false statement. That was really all that the case decided. But the lengthy ■ judgment delivered by Lord Herschell, which, in fact, did little more than affirm the never-disputed (e) Pollock, Fraud in B. India, p. 93. (/) Lindley on Companies (Ed. 5), Supp. 2. (g) See Pollock on Contracts, p. 558, n. (h) Post, p. 38. (t) 14 App. Ca. 337 ; 58 L. J. Ch. 864. MISREPRESENTATION". 21 principle that an action of deceit can only be supported by fraud, has given rise quite needlessly to endless doubts and difficulty. Lord Herschell did not lay down the proposition that want of reasonable ground for belief is not fraud, but is only evidence of fraud. The Court of Appeal thought, perhaps more reasonably, that a statement made without an\ reasonable ground for believing it must be taken to be fraudu- lent. The difference between the two is, however, not very great, and is simply a question of degree. The Court of Appeal thought the want of a reasonable ground for belief was conclusive; the House of Lords thought it was an important element to be taken into consideration. In many cases, if not in most, whichever principle is applied, the practical result would be the same. The difficulties to which the decision in Deny v. Peek have given rise are due not so much to the decision itself as t»> the supposed effects of that decision — effects which we have alsewhere (j) endeavoured to show are more imaginary than real. Further, some of the subsequent cases in which t he decision has been considered and explained tend rather to increase than diminish the difficulties. Instead of applying the simple and practical principle that a statement made without reasonable ground for believing it to be true musl be taken to be fraudulent, we have now to go through a psychological process, to dive into the recesses of a man's mind and say whether he was dishonest, before we can sav that his statement is fraudulent. An action of deceit can only be maintained against a person with "a wicked mind."' This is one of the supposed results of Deny v. Peek, but it is scarcely a natural or inevitable result of that decision. \i i> one thing to say that there must be fraud in order to found an action of deceit; it is another and quite different thing to say that to support such an action you must prove that the defendant had " a wicked mind " (k). In A?igus v. Clifford (/) Lindley, L.J., said : " Speaking broadly of Derry v. Peek, I take it that it has settled once lor (j) Post, p. 35. (ft) Post, p. 80. (I, 1891, -2, Ch. p. 468; 80 L. J. Ch. 148. 22 MISREPRESENTATION. all the controversy which was well known to have given rise to very considerable difference of opinion as to whether an action for negligent misrepresentation as distinguished from fraudulent misrepresentation could be maintained. There was considerable authority to the effect that it could, and there was considerable authority to the effect that it could not; and as I understand Derry v. Peek, it settles that question in this way — that an action for a negligent as distinguished from a fraudulent misrepresentation in a company's prospectus cannot be supported." Farther on (p. 466) he added : " When you read the whole of that part of the judgment (of Lord Herschell, at p. 374), you must take the observations as to what is said about proof of fraud as subject to this, that the matter to be inquired into is fraud for negligent misrepresentation as distinguished from fraudulent misrepresentation could be maintained. There was considerable authority to the effect that it could, and there was considerable authoritv to the effect that it could not; and as I understand Derry v. Peek, it settles that question in this way — that an action for a negligent as distinguished from a fraudulent misrepresentation in a company's prospectus cannot be supported." Farther on (p. 466) he added : " When you read the whole of that part of the judgment (of Lord Herschell, at p. 374), you must take the observations as to what is said about proof of fraud as subject to this, that the matter to be inquired into is fraud or carelessness. If it is fraud, it is actionable; if it is not fraud but merely carelessness, it is not. The passages about knowledge — knowingly making it, and making a statement without believing its truth — are based upon the supposition that the matter was really before the mind of the person making the statement, and if the evidence is that he never reallv intended to mislead, that he did not see the effect or dream that the effect of what he was saying could mislead, and that that particular part of what he was saying was not present to his mind at all, that, I should say, was proof of carelessness rather than of fraud." Again (p. 469): " After Berry v. Peek an action of this kind cannot be MISREPRESENTATION'. 23 supported without proof of fraud, an intention to deceive, and it is not sufficient that there is a blundering carelessness, however gross, unless there is wilful recklessness, by which I mean wilfully shutting one's eyes, which is, of course, fraud." In the same case (m) Bowen, L. J., said : ' It always has been the law that a man must have a belief, because, as Lord Bramwell points out in the case of Smith v. Chadwich and Lord Herschell in Deny v. Peek, a man who affirms that he knows a thing affirms implicitly that he believes it, and if he does not believe it, that affirmation is false. It is not the less false because the affirmation he makes is an affirma- tion about the state of his own mind. A man may tell a lie about the state of his own mind, just as much as he can tell a lie about the state of the weather or the state of his own digestion. It makes, to be sure, the inquiry a difficult and complicated one, and probably an obscure one, as to what the state of his mind may have been : but once arrive at the inference of fact that the state of his mind was, to his own knowledge, not that which he describes it as being, then he has told a lie just as if he made an intentional misstatement of something outside his own mind and visible to the eyes of all men. A great deal of the argument which has been addressed to the Court arises, as it seems to me, under cover of the fallacious use, first of all, of the principle that you cannot look into a man's mind. It is said that you cannot do that: therefore what follows? It is said that you are to have fixed rules to tell you that he must have meant something one way or the other when certain exterior phenomena arise. The answer is thai there is no such thing as an absolute criterion which gives you a certain index to a man's mind. There is nothing outside his mind which is an absolute indication of what is going on inside. So far from saying that you cannot look into a man's mind, you must look into it if you are going to find fraud against him; and unless you think you see what must have been in his mind, you cannot find him guilty of fraud. It seems to (m) Angus v. Clifford, 18U1, 2 Ch. p. 470; W I.. .1. Cli. 443. 24 MISREPRESENTATION. me that a second cause from which a fallacious view arises is from the use of the word 'reckless.' Now what is the old common law direction to juries? ... it was this, did he know the statement was false, or if not did he make it without knowing whether it was false and without caring? Not caring, in that context, did not mean not taking care : it mean indifference to the truth, the moral obliquity which consists in a wilful disregard of the importance of truth, and unless you keep it clear that that is the true meaning of the term, you are constantly in danger of confusing the evidence from which the inference of dishonesty in the mind may be drawn — evidence which consists in a great many cases of gross want of caution — with the inference of fraud or of dishonesty itself, which has to be drawn after you have weighed all the evidence." " Now whether you take the inquiry in the one order or in the other, whether you regard it from the point of view that a man is bound to have some honest belief in a state- ment if he makes it, or whether you treat the matter in the inverse order, with regard to the necessity of finding at least some recklessness to truth — that is to say, some indifference to truth which amounts to dishonesty — in either view the result is the same. A man ought to have a belief that what he is saying is true ; but a man may believe what he is saying — the expression which he uses — to be true, because he is honestly using the words in a sense of his own, which, however inappropriate, however stupid, however grossly careless, if you will, is the special sense in which he means to use the words, without any consciousness being present to his mind that they would convey to other reason- able persons a different sense from that in which he is using them — a man may believe a statement in that sense of his own, and }^et the use of the language may be wholly improper, that is to say, in respect of want of caution in the use of it. It does not follow because a man uses language that he is conscious of the way in which it will be understood by those who read it. Unless he is conscious that it will be understood in a different manner from that in which he is MISREPRESENTATION. 25 honestly though blunderingly using it, he is not fraudulent, he is not dishonest. An honest blunder in the use of language is not dishonest. What is honest is not dishonest. Lord Blackburn in Smith v. Chadwick points that out. The Lord Chancellor in Arnison v. Smith points it out. The Lord Chancellor points it out again in Derry v. Perl, as well as Lord Herschell, Lord Brain well and Lord "Watson, who agree with him." In Le Lievre v. Gould (n) Esher, M. R., said: "The question of liability for negligence cannot arise at all until it is established that the man who has been negligent owed some duty to the person who seeks to make him liable for his negligence. What duty is there when there is no relation between the parties by contract ? A man is entitled to be negligent as he pleases towards the whole world if he owes no duty to them. The case of Heaven v. Pender (o) has no bearing upon the present question. That case established that under certain circumstances one man may owe a duty to another, even though there is no contract between them. If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may cause a personal injury to that other or may injure his property. That is the effect of the decision in Heaven v. Pender, but it has no application to the present case. This was pointed out by Homer, J., in Scholes v. Brook (p), though it was hardly necessary to do so. No doubt if Conn v. Willson (rj) stood as good law it would cover the present case. But I do not hesitate to say that Cann v. Willson is not now law. Chitty, J., in deciding that case acted upon an erroneous proposition <>t law, which has been since overruled by the House of Lords in Derry v. Peek (/•), when they restated the old law that in the absence of contract an action for negligence cannot be maintained where there is no fraud. If that were not so, then in a case in which an action is brought against directors of a company for misrepresentations contained in a prospectus (n) 1893, 1 Q. B. p. 497; 62 L. J. Q. B, 853. (o) 11 Q. B. D. 503; 52 L. J. y. 15. 702. (p) 68 I.. T. 887. (g) 39 C. D. 39; 57 L. J. Ch. 1084. (r) 14 App. Ca. 887; . r „s L. J. el,. 864. 26 MISREPRESENTATION. it would never be necessary to prove that they had been guilty of fraud. But that was never so held, and there is a long list of cases which show that in such an action it is essential for the plaintiff to prove fraud. The Court of Appeal by their decision in Peek v. Derry appeared to have over- thrown all those cases. They seem to have thought that there was a distinction between fraud in the Court of equity and fraud in common law. There is no such distinction. A charge of fraud is such a terrible thing to bring against a man that it cannot be maintained in any Court unless it is shown that he had a wicked mind. That is the effect of Derry v. Peek (s). What is meant by a wicked mind? If a man tells a wilful falsehood with the intention that it shall be acted upon by the person to whom he tells it, his mind is plainly wicked, and he must be said to be acting fraudulently. Again, a man must also be said to have a fraudulent mind if he reck- lessly makes a statement intending it to be acted upon and not caring whether it be true or false. I do not hesitate to say that a man who thus acts must have a wicked mind. But negligence, however great, does not of itself constitute fraud." In the same case (t) Bowen, L. J., said: " There must be fraud in order to found an action of fraud. There are two reasons why there has been some confusion in the minds of some people with regard to that almost elementary proposition. The first is the fact that equity judges had to decide questions of law and fact together. An equity judge, when he had to deal with a question of fraud, discussed his reasons for coming to the conclusion that there had been fraud, and it very often happened that an equity judge decided that there was fraud in a case in which gross negligence had been proved. If the case had been tried with a jury, the judge would have pointed out to them that gross negligence might amount to evidence of fraud if it were so gross as to be incompatible with the idea of honesty, but that even gross negligence in the absence of dishonesty did not of itself amount to fraud. Cases of (s) 14 App. Ca. 337; 58 L. J. Ch. 864. (t) he Lievre v. Gould, 1893, 1 Q. B. p. 500; 62 L. J. Q. B. 353. MISREPEESKXTATIOX. J 7 gross negligence in which the Chancery judges decided th;ii there had been fraud were piled up one upon another, until at last a notion came to be entertained that it was sufficient to prove gross negligence in order to establish fraud. That is not so. In all those cases fraud and dishonesty were the proper ratio decidendi, and gross negligence was only one of the elements which the judge had to consider in making up his mind whether the defendant's conduct had been dishonest. There was, as it seems to me, also a misapprehension on the part of those not conversant with nisi prius actions at common law with regard to the direction which was given to the jury. The direction always given was this: the jury were told before they found a verdict against a man charged with fraudulent misrepresentation they must be satisfied either that he had stated what was untrue, knowing that it was untrue and intending that the untruth should be acted upon, in which case — a wilful lie being a wicked thing — he was necessarily dishonest ; or, at any rate, they must be satisfied that, if he did not know that the statement was untrue, he made it deliberately intending that it should be acted upon, and not knowing and not caring whether it was true or false. If a man makes a wilful statement, intending it to be acted upon, and he is reckless whether it is true or false, he has a wicked mind; but his mind is wicked not because he is negligent, but because he is dishonest in not daring about the truth of his statement. In the first case it is the knowledge of the falsehood, in the second it is the wicked indifference, which constitutes the fraud. There seems to have been some sort of an idea thai when a jury was asked the second question, the expression 'not caring' had something to do with his not taking care. Bui that expression did not mean not taking care to find out whether the statement was line or false; it meant not caring in the man's own heart and conscience whether it was true or false — and that would be wicked indifference and recklessness." If a man asserts that to he true within his own knowledge which he does not know to be true, or makes an assertion <>l fact as to which he is ignorani whether such assertion is tine intent. 28 MISREPRESENTATION. or untrue, and it is, in fact, untrue, he is, in a civil point of view, as responsible as if he had asserted that which he knew to be untrue (u). This must mean that the persons referred to were conscious when making the assertion that they were ignorant whether it was true or untrue. For, if not, it might be said of any one who innocently makes a false statement. He must be ignorant that it is untrue, for otherwise he would not make it innocently; he must be ignorant that it is true, for by the hypothesis it is false (z). There is indeed fraud if, when a man thinks it highly probable a thing exists, he chooses to say that the thing exists, if it does not in fact exist (y). Fraudulent An intention to deceive being a necessary element or ingredient of fraud, a false representation does not amount to a fraud at law, unless it be made with a fraudulent intent (z). There is a fraudulent intent if a man, with the view of misleading another into a course of action which may be injurious to him, make a representation which he knows to be false, or which he does not believe to be true (a). And the law justly imputes to every man an intention to produce those consequences which are the natural results of his acts (b). There must be an intention to deceive; it is not enough that there is a blundering carelessness, however gross, unless there is wilful recklessness, by which is meant wilfulty shutting one's eyes, whicb is of course fraud (c). There is fraud in law if a man makes a representation which he knows to be false, or does not honestly believe to be true, and makes it with the view to induce another to act on the faith of it, who does so accordingly, and by so doing sustains damage, although he may have had no dishonest purpose in making («) Reese River Minhxg Co. v. Smith, L. R. 4 H. L. 79: per Lord Cairns ; 39 L. J. Ch. 849 ; Redgrave v. Hurd, 20 C. D. 13, per Jessel, M. R. ; 51 L. J. Ch. 113; Lazarus v. Morrison, 8 N. Z. Gaz. L. R. 717. (x) Berry v. Peek, 14 App. Ca. p. 371 ; 58 L. J. Ch. 864. (y) Broicnlie V. Campbell, 5 App. Ca. 953, per Lord Blackburn. (z) Tackey v. McBain, 1912, A. C. 186; 81 L. J. P. C. 130. (a) Thorn v. Bigland, 8 Ex. 725; 22 L. J. Ex. 243; 91 R. R. 730; Arnison v. Smith, 41 C. D. 348. (b) Smith v. Chadwick, 9 App. Ca. 190, per Lord Selborne : 53 L. J. Ch. 873. (c) Angus v. Clifford, 1891, 2 Ch. p. 469, per Lindley, L. J. ; 60 L. J. Ch. 443. MISREPRESENTATION. 29 the representation. It is immaterial that there may have been no intention on his part to benefit himself or to injure the person to whom the representation was made. It is enough that it be made wilfully and with the view to induce another to act upon it, who does so accordingly to his prejudice. The law imputes to him a fraudulent intent, although he may not have been in fact instigated by a morally bad motive. An intention to deceive, or a fraudulent intent in the legal acceptation of the term, depends upon the knowledge or belief respecting the falsehood of the statement, and not upon the actual dishonesty of purpose in making the statement (d). Where, for instance, the defendant had accepted a bill of exchange in the name of the drawee, pur- porting to do so by procuration, knowing that in fact he had no such authority, but fully believing that the acceptance would be sanctioned and the bill paid by the drawee, and the drawee repudiated the acceptance, it was held, though the jury negatived a fraudulent intention in fact, that the defendant had committed a fraud in law by making a representation which he knew to be untrue, and which he intended others to act upon (e). The motive as distinguished from the intention is immaterial. Motive. Although there might be no intention on the part of the defendant to obtain an advantage for himself, it would still be a fraud, for which he was responsible in law, if he made representations productive of loss to another, knowing such representations to be false. It is a fraud in law if a party makes representations which he knows to be false and injury ensues, although the motive from which the representations proceeded may not have been bad (/). " The motive of the person saying that which he knows not to be true to another with the intention to lead him to act on the faith of tin- (d) Foster v. Charles, infra; Wilde v. Gibson, 1 H. L. C. 688, /« r Lord Campbell; 73 R. E. 191; Smith v. Chadwick, 9 App. Ca. p. 201 ]) 68 L. J. Oh. 873; Arnison v. Smith, 41 C. I). 371. (e) Polhill v. Walters, 8 B. & Ad. 111 ; 37 K. R. 344. (f) Foster v. Charles, 7 Bing. 105; 9 L. J. C. P. 32; 81 R. R. 458; Peek v. Gurney, 13 Eq. 110; 43 L, J. Ch. 19; Derry v. Peek, 14 App. Ob. p. 874 ; 58 L. J. Ch. 804. 30 MISREPRESENTATION. statement is immaterial. The defendants might honestly believe that the shares were a capital investment, and that they were doing the plaintiff a kindness by tricking him into buying them " (g). It is not, however, always easy or possible to separate motive and intention, and where this is so, it would seem that dis- honesty or a " wicked mind " is essential in order to constitute fraud (h). Duty to dis- Though a party making a representation may at the time truth Vn believe it to be true, and have made it innocently, yet if after discovery that discovering that it was untrue he suffers the other party to a representa- ° tion was false, continue in error and to act on the belief that no mistake has been made, this from the time of the discovery becomes in the contemplation of a Court of equity a fraudulent misrepresenta- tion, even though not so originally (i). If, moreover, a man makes a representation by which he induces another to take a particular course, and the circumstances are afterwards altered to the knowledge of the party who made the representation, but not to the knowledge of the party to whom the representa- tion was made, and are so altered that the alteration may affect the course of conduct which may be pursued by the party to whom the representation was made, it is the duty of the party who has made the representation to communicate to the party to whom he made it the alteration of those circum- stances. The party to whom the representation has been made will be entitled to rescind, or, if the truth is disclosed before completion, to avoid his contract (A*). Thus where a man, for the purpose of insuring his life, signed a declaration that he was in good health, but before the policy was com- pleted he consulted a physician, who told him that he was in (g) Smith v. Ghadwick, 9 App. Ca. 201, per Lord Blackburn ; 53 L. J. Ch. 873 ; Berry v. Peek, 14 App. Ca. 365; 58 L. J. Ch. 864. (h) Angus v. Clifford, ante, p. 23; Le Lievre v. Gould, ante, p. 26. (t) Reynell v. Sprye, 1 D. M. & G. 660, 709; 21 L. J. Ch. 633; 91 E. E. 228; Davies v. London d Provincial Ins. Co., 8 C. D. 474; 47 L. J. Ch. 511; Redgrave v. Hurd, 20 C. D. 1 ; 51 L. J. Ch. 113. See Marnham v. Weaver, 80 L. T. 412. (k) Traill v. Baring, 4 D. J. & S. 329; 33 L. J. Ch. 521; 146 E. E. 334; Davies v. London and Provinical Ins. Co., supra; Re Scottish Petroleum Co., 23 C. D. 413, 438. MISREPRESENTATION". 3] a dangerous state of health: it was held that the non-eorn- munication to the company of his change in health was fraudulent, and vitiated the policy (/). So also where an insurance company proposed to another office a re-insurance on a life, representing, as was then the fact, that they retained a large portion of the risk, hut before the re-insurance was carried into effect they got rid of the whole of the risk on the life by re-insurance with a third office without communicating that fact to the other office, it was held that the insurance was obtained by fraud, and must be cancelled (m). "When a representation has been made in the bond fide belief that it is true, and the party who has made it afterwards finds out that it is untrue, he can no longer honestly keep silence on the subject, thereby allowing the other person to go on upon a statement which was honestly made at the time, but which he has not retracted when he has become aware that it can be no longer persevered in; that would be fraud (n). A man is not allowed to get a benefit from a statement which ho now admits to be false. You have moral fraud where a man, having obtained a beneficial contract by a statement which he now knows to be false, insists upon keeping that contract. To do so is a moral delinquency; no man ought to seek to take advantage of his own false statements (o). The truth must be brought clearly home to the deceived. In Arnison v. Smith (p) it was held that directors were bound to bring their contradiction of the misrepresentation before the stock-holders in the most distinct terms, and that it was not enough to send round a circular with a statement of the truth but without any direct reference to the misrepresentation. On the other hand, a representation that was false at the time it was made may, by a change of circumstances, become a true representation at the time it is acted on. So where a company issued a prospectus, representing that more than (1) British Equitable Ins. Co. v. Great Western Bly. Co., 38 L. J. Ch. 814. See Scott v. Coulson, 1903, 2 Ch. 249; 72 L. J. Ch. 600. (m) Traill v. Baring', 4 D. J. & S. 318; 33 L. J. Ch. 521. (n) Brownlie v. Campbell, 5 App. Ca. 950, per Lord Blackburn. (o) Redgrave v. Hurd, 20 C. D. 12, per JeBsil. M B ; I L. J. Ch. 118. (p) 41 C. D. 348, C. A. 32 MISREPRESENTATION. half the capital had been subscribed, whereby a man was induced to apply for shares, and the representation was not true at the time when the prospectus was issued, but it had become true at the time of his application; it was held that there was no misrepresentation entitling him to relief (q). 'In my opinion," said Lord Herschell, "making a false Eeasonable statement through want of care falls far short of and is a very believing a different thing from fraud, and the same may be said of a to^eTruet ' ' ^ se representation honestly believed though on insufficient grounds. At the same time I desire to say distinctly that when a false statement has been made, the question whether there were reasonable grounds for believing it, and what were the means of knowledge in the possession of the person making it, are most weighty matters for consideration. The ground upon which an alleged belief was founded is a most important test of its reality. I can conceive many cases where the fact that an alleged belief was destitute of all reasonable foundation would suffice of itself to convince the Court that it was not really entertained, and that the representation was a fraudulent one. So, too, although means of knowledge are, as was pointed out by Lord Blackburn in Brownlie v. Camjibell, a very different thing from knowledge, if I thought that a person making a false statement had shut his eyes to the facts, or pur- posely abstained from inquiring into them, I should hold that honest belief was absent, and that he was just as fraudulent as if he had knowingly stated that which was false " (r). The alleged bond fide belief in an untrue statement can be tested only by considering the grounds of such belief, and if an untrue statement is made founded upon a belief destitute of all reasonable grounds, or which the least inquiry would immediately correct, that is evidence of fraud (s). ' There may be such an absence of reasonable ground for his belief as, in (q) Ship v. Crosskill, 10 Eq. 73; 39 L. J. Ch. 550; but see McConnel v. Wright, 1903, 1 Ch. 546; 72 L. J. Ch. 347. (r) Berry v. Peek, 14 App. Ca. p. 375, per Lord Herschell; 58 L. J. Ch. 864. (s) Western Bank of Scotland v. Addie, L. E. 1 H. L. Sc. 162 ; Berry v. Peek, 14 App. Ca. p. 369 ; 58 L. J. Ch. 864. MIS REPEESEXTATIOX. 33 spite of his assertion, to cany conviction to the mind that he had not really the belief which he alleges " (f). A man must examine into the truth of representations Reports of made to him by others, before putting them forward as true, others - or as of his own knowledge. He cannot be allowed to escape from the effect of positive representations of matters of fact upon the ground that he relied upon representations made to him by an agent employed by him for the purpose of getting information for him. If a man makes a representation in such a manner as to import a knowledge of the facts to which the representation refers, and the representation is not materially qualified by a reference to any other person as the source of information, he cannot be heard to say, on a claim for the rescission of the transaction, if the representation proves to be untrue, that he made the representation on the authority of his agent, and honestly believed it to be true. If a companj- give credit to, and assume as true, the reports which are made to them by their agents, and represent as facts the matters stated in those reports, and persons are induced to enter into contracts on the foundations of the assumption of the representations which have been made to them, they cannot be heard to say, on a claim for a rescission of the transaction, if the representations prove to be untrue, that they honestly believe them to be true. If the company, instead of stating a thing as a fact, state merely that they have received reports from their agents, and that they have reason to believe the reports to be true, the case may be different (u). Where a prospectus is issued on the faith of statements of fact expressly based on the report of an expert, the accural \ of the statements is primd facie the basis of the contract. If the company does not intend to contract on that basis, it must dissociate itself from the report, otherwise any material inaccuracy in the statements, though based on the report, (t) Derry v. Peek, 14 App. Ca. p. 869; 5s I;. J. Ch. 864. (u) Smith's Case, Re Reese River Silver Mining ''"., 2 Oh. 604, 611, 615; 36 L. J. Ch. 618; Ross v. Estates Investment Co., •'( Bq. L88; 8 Ch. 683; 37 L. J. Ch. 873; Henderson v. Lacou, 5 Eq. 261; Att.-Oen. v Roy, 9 Oh. I 1 43 L. J. Ch. 478. K.F. 3 34 MISREPRESENTATION. Misrepresen- tation by a man upon will be a ground for rescission. In such a case calculations of future profits based on a report may be a material mis- representation (w). The same principles apply to a report made by a director of the company (,?). But though it is immaterial in an action for rescission that a director may have believed statements made by his agents, yet where the action is for damages the case is different, and the belief may be material. If directors act within their powers, if they act with such care as is reasonably to be expected from them having regard to their knowledge and experience, and if they act honestly for the benefit of the company, they discharge their duty (y). The fact that if a director had made inquiries he might have discovered that he was being deceived is not in itself sufficient to prove that he did not act with reasonable care (z). It was formerly held that a misrepresentation was a fraud at law, although made innocently, and with an honest belief whom a duty j n j{ s truth, if made by a man who ou^ht in the due discharge is cast to J c & know the of his duty to have known the truth, or who formerly knew, truth. i-i , and ought to have remembered, the tact which negatives the representation, and lie made under such circumstances or in such a way as to induce a reasonable man to believe that it was true, and was meant to be acted on, and had been acted on by him accordingly to his prejudice. If a duty was cast upon a man to know the truth, and he made a misrepre- sentation in such a way as to induce a reasonable man to believe that it was true, and was meant to be acted on, he could not be heard to say that he made it through mistake, or ignorance, or forgetfulness (a). Where accordingly the trustee of a fund represented to a proposed assignee that the assignor (w) Re Pacaya Rubber Co., 1914, 1 Ch. 54'2 ; 83 L. J. Ch. 432; but see and cf. Re Brazilian Rubber Plantations, 1911, 1 Ch. 425; 80 L. J. Ch. 221. (x) Mair v. Rio Grande Rubber Estates, 1913, A. C. 853; 83 L. J. P. C. 35. (y) Lagunas Co. v. Lagunas Syn., 1899, 2 Ch. 392; 68 L. J. Ch. 699. (z) Dovey v. Cory, 1901, A. C. 477 ; 70 L. J. Ch. 753. (a) Moens v. Heyworth, 10 M. & W. 147; 62 E. E. 554; Pulsford v. Richards, 17 Beav. 95 ; 22 L. J. Ch. 559; Price v. Macaulay, 2 D. M. & G. 345 : 95 E. E. 129 ; Hutton v. Rossiter, 7 D. M. & G. 9 24 L. J. Ch. 106 ; 109 E. E. 1 ; Rawlins v. Wickham, 3 D. & J. 304; 28 L. J. Ch. 188;121 E. E. 134; Swan V. North British Australasian Co., 2 H. & C. 183; 31 L. J. Ex. 425; 133 E, E. 639; Brownlie v. Campbell, 5 App. Ca. 936. MISREPRESENTATION. 35 was entitled to the fund and could make the assignment, forgetting that there was a prior incumbrance upon it, of which he had received notice, he was held bound to make good the representation (h). So also where a man wrote a letter stating that he was willing to grant a lease, knowing that it was to be shown to a person proposing to lend money to the lessee upon the security of the lease, and it appeared that he had before granted a concurrent lease of the same property which he alleged that he had forgotten, he was held responsible for his statement and for the repayment of the loan made on the faith of it (c). All this, however, is supposed to have been altered by Deny v. Peek, and is said to be no longer law (d). Burrowes v. Loch, it is said, can now only be supported on the ground of estoppel, and Slim v. Croucher cannot be supported on the ground either of warranty or of estoppel, and is therefore inconsistent with and overruled by Derry v. Peel-. The result is that a person may make a serious representation which he knew or ought to have known was false to a person to whom be owed a duty, and escape liability by simply saving that he forgot. This "unsound" principle and unfortunate effod of Deny v. Peek is so opposed to equity and common sense that it ought not to be adopted, unless it is clear that the House of Lords intended to overrule the cases in question, or unless thai is the necessary and inevitable consequence of their decision. Let us see how far this is so. In the first place, was there any intention to overrule the cases in question ? There i-. so far as we are aware, nowhere to be found any indication thai the House of Lords ever had any such intention. On the contrary, Slim v. Croucher and similar cases have been several times referred to as belonging to a differenl category, bul not as being bad law. In Peek v. Gum,,, (,,, Brownlie v. (In Burrowes v. Lock, 10 Ves. 470; 8 R. R. 856. (c) Slim v. Croucher, 1 D. F. & J. 518; •!'.) \,. J. Ch. 278; L25 It. K. 529, (d) Low v. Bouverie, 1891, :s Ch. 82; 60 I,. .1. Oh. 594 ; Noeton v. Aahburton, /"' ■■'■ P- :> i but see Pritty v. Child, 71 I,. .). K. B. 512, where a ra ite ""• nt was held to to an action of tort; Bee ante, pp. '.). L9. (e) L. R. 6 H. L. p. 890; 18 L. J. Ch. L9. 36 MISREPRESENTATION. Campbell (/), and Derry v. Peek (g), they are referred to some- times with approval, and always without disapproval. It may, therefore, we think, be taken that there was no such intention. Now let us see whether Slim v. Croucher and similar cases are overruled as a necessary consequence of the decision in Derry v. Peek. It has, we think, been too readily assumed that Slim v. Croucher cannot be supported on the ground of fraud. It is true that in that case Lord Campbell said there was no " moral fraud," but this may be taken to mean nothing more than that there was no direct evidence of fraud. Gross negligence there was, and gross negligence, as we have seen, may amount to fraud; and that, it may well be, was the ground of the decision. In fact, Lord Campbell's explanation of what is a false statement seems almost conclusive on the point. Referring to Lord Eldon's remark that a person must make a representation good, " if he knows it to be false," he explains those words to mean, " if he makes a representation as to what he ought to have known and did at one time know, although he alleges that at the particular moment that he made the representation he had forgotten it" (li). Further, Lord Campbell cites with approval the following passage from the judgment in Burrowes v. Lock : — " What can the plaintiff do to make out a case of this kind but show (1) that the fact as represented is false; (2) that the person making the repre- sentation had a knowledge of a fact contrary to it? The plaintiff cannot dive into the recesses of his heart so as to know whether he did or did not recollect the fact, and it is no excuse to say he did not recollect it '' (i). As was quaintly said by Brian, C.J., ages ago, " the thought of a man is not triable, for the devil has not knowledge of men's thoughts " (j). Again, the remark of Knight-Bruce, L. J., that " a country whose administration of justice did not afford redress in a case (/) 5 App. Ca. 935. (g) 14 App. Ca. p. 360; 48 L. J. Ch. 864. (h) 1 D. F. & J. p. 525. (i) 10 Ves. p. 475. This is almost identical with the dictum in Derry v. Peek, p. 369, that there may be such an absence of reasonable ground for belief as, in spite of his assertion, to carry conviction to the mind that he had not really the belief which he alleges. (;') See 1901, A. C. at p. 247. MISREPRESENTATION. 37 of this description would not be in a state of civilization," could hardly be applicable to anything short of fraud. Again, Lord Selborne (k), referring to Slim v. Croucher, said, " There the whole value of the intended security depended upon the answer to the question to be given by a person within whose knowledge the fact ought to have been, and in point of fact at one time or another necessarily was. If his memory had failed, still it was the case of a person who once had certain knowledge of the fact and who could have no right to assert one way or the other a fact as of his own knowledge upon such a subject unless he possessed that knowledge; and if he did assert it he was bound to make the assertion good. The mere fact of forget fulness bv a man who has known a certain fact, who is asked whether that fact has happened or not, and says positively that it did or did not, cannot possibly be an excuse; because if he had spoken the simple truth he would have said, ' I do not recollect whether it is so or not.' If the fact be that he does not recollect, then by saying that the fact was so or by saying that the fact was not so, he takes upon himself the responsibility of a positive statement upon the faith of which he knows that the other man is going to deal for valuable consideration." Lastly, Lord Chelmsford in Western Ban I- of Scotland v. Addie (/), said, "The alleged bond fide belief in an untrue statement can be tested only by considering the grounds of such belief, and if an untrue statement is made, founded upon a belief destitute of all reasonable grounds, or which the least inquiry would imme- diately correct, it may fairly be characterized as misrepre- sentation and deceit." That is directly applicable to Slim v. Croucher, and if we substitute the words "may be evidence of " for the words " may fairly be characterized as ' it is also perfectly consistent with Berry v. Peek. Indeed, accord- ing to Lord Herschell himself (m), the only way to test beliei is to " apply the standard of conduct which our own experience of the ways of men has enabled us to form, by asking ourselves whether a reasonable man would be likely under the circum- i/.i Brownlie v. Campbell, 5 App. Ca. p. 986. CI) L. B. 1 H. L. Be. 145. (m) Deny v. Peek, it A.pp. Ca. p. 880 38 MISREPRESENTATION. stances so to believe." Surely this is the same thing as asking whether a reasonable man ought to have so believed. The true and only sound principle to be derived from the cases represented by Slim, v. C voucher is this : that a repre- sentation is fraudulent not only when the person making it knows it to be false, but also when, as Jessel, M. R., pointed out (n), he ought to have known, or must be taken to have known, that it was false. This is a sound and intelligible principle, and is, moreover, not inconsistent with Derry v. Peek. A false statement which a person ought to have known was false, and which he must therefore be taken to have known was false, cannot be said to be honestly believed in. " A false statement," said Lord Herschell (o), " made through carelessness and without reasonable ground for believing it to be true, may be evidence of fraud." " The test is," said his Lordship (p), " whether a reasonable man would be likely, under the circumstances, so to believe." Applying this test to Slim v. Croucher, is it possible to conceive that any reasonable man could forget that he had granted a lease, especially when asked to grant another lease of the same property, and knowing that money was going to be lent on the security of the second lease? If the true principle to be deduced from Slim v. Croucher and that class of cases is as we have suggested it to be, then it would seem to cover and harmonize most if not all of the cases, it would remove most if not all of the difficulties, and avoid those psychological questions as to the state of a man's mind which cause so much confusion. Noctonv. Since the above lines were written the case of Nocton x. Ashburton (q) has been decided in which some interesting observations were made by Lord Haldane on Derry v. Peek, though they do not in any way meet the objections above stated as to the supposed effects of the judgments in the latter case. He says, " There appears to be an impression that the necessity which recent authorities have established of proving moral fraud in order to succeed in an action of deceit has narrowed the scope of this remedy." That, however, is not (n) 20 C. D. 27, 44, 67. (o) Derry v. Peek, 14 App. Ca. 337. (p) Ibid. p. 380. (q) 1914, A. C. 932. MISREPRESENTATION. 39 the question. The question is not whether Derry v. Peek has narrowed the scope of an action for deceit, but whether it has narrowed the remedy for fraud generally. No one doubts that a mens tea is essential in an action of deceit. But what many people do doubt is the soundness of the view which can find nothing fraudulent in such cases as Slim v. Croucher. There is nothing in Nocton v. Ashburton to remove that doubt, and the law remains in the same unsatisfactory state as it did before. The rule established in ( 'alien v. Wright (r), as stated by MkrepteMn- u v ' J tation of the Lord Chancellor in Salvesen v. Rederi Aktiebolaget authority. Nordstjernan (s), is that a person who induces another to contract with him as the agent of a third party by an unqualified assertion of his being authorized to act as such agent is answerable to the person who so contracts for any damage which he may sustain by reason of the assertion of authority being untrue. The rule is not an exception to the rule that an innocent representation gives rise to no cause of action. It is a separate and independent rule of law, and as such it is not confined to the bare case where the transaction is simply one of contract, but it extends to every transaction of business into which a third party is induced to enter by a representation that the person with whom he is doing business has the authority of some other person (t). It is immaterial whether the supposed agent knew of the defect of his authority or not (u). The proposition in Smout v. II bevy that there must be some wrong or omission on the part of the agent in order to make him personally liable must be taken to be over- ruled (#). The question is not as to his honesty or bond fides\ his liability arises from an implied undertaking that the authority which he professes to have does in fact exist (//). (r) 8E. & B. 647; 27 L. J. Q. B. 215; 110 R. R. 611. (s) 1905, A. C. 302, 309; 74 L. J. P. C. 96. (t) Starlcey v. Bank of England. 1903, A. C. 114, 118; 72 L. .1. Ch. 402; approving Dickson v. Heuter's Telegram Co.. :\ ('. P. 1» L, 7; 1< !<■ ■' • C. P. 1. (u) See Dickson v. Renter's Telegram Co., supra. (x) Halbot v. Lens, L901, 1 Ch. 844; 70 I- •) . Oh. L25. (y) Yongev. Toynbee, L910, 1 K. B. 216, 226; 79 Li. J. K. B. 208; overruling Salton v. New Beeston Co., I'M), 1 Ch. 48; 69 I-. J. Ch. 'J<». 40 MISREPRESENTATION. The rule only applies where the existence of the authority is relied upon, and therefore does not apply if the person purporting to act as agent expressly disclaims any present authority (z). The rule does not apply to every case where a person misrepresents a fact relating to a third person, but only where he represents that he is clothed with an authority or fills a particular character (a). Distinction The line between fraud and warranty is often very narrow, warranty and an( l the same observation is true of the line between warranty a, representa- an( j estoppel. Narrow, however, as the line often is, the three words denote fundamentally different legal conceptions which must not be confounded (b). ' If you choose to say, and say without inquiry, ' I warrant that,' that is a contract. If you say, ' I know it,' and if you say that in order to save the trouble of inquiring, that is a false representation — you are saying what is false to induce them to act upon it " (c). A representation is a statement or assertion made by one party to the other before or at the time of the contract of some matter or circumstance relating to it (d). A representa- tion is not a part of the written instrument, but is collateral to it, and entirely independent of it (e). The insertion of the representation in the instrument does not alter its nature. Though a representation is sometimes contained in a written instrument, it is not an integral part of the contract, and consequently the contract is not broken, though the repre- sentation proves to be untrue (/). In order that a statement or representation may amount to a warranty, it must appear that it was intended to form a substantive part of the con- tract (g). A warranty is an express or implied statement of something which the party making it undertakes shall be a substantive part of the contract, and though part of the con- (z) Halbot v. Lens, 1901, 1 Ch. 344; 70 L. J. Ch. 125. (a) Salvesen v. Rederi, &c, 1905, A. C. 302, 311; 74 L. J. P. C. 96. (6) Low v. Bouverie, 1891, 3 Ch. p. 102 ; 60 L. J. P. C. 594. ^ (c) Brownlie v. Campbell, 5 App. Ca. p. 952, per Lord Blackburn. (d) Behn v. Burness, 3 B. & S. 753; 32 L. J. Q. B. 204. (e) Coram v. Sweeting, 2 Wms. Saund. 201. See Kain v. Old, 2 B. & C. 634, per Lord Tenterden ; 26 R. R. 497 ; Cornfoot v. Fowke, 6 M. & W. 370, per Lord Cranworth ; 55 R. R. 655. (/) Behn v. Burness, 3 B. & S. 753; 32 L. J. Q. B. 204. (g) Ibid. MISEEPRESENTATIOX. -11 tract, yet collateral to the express object of it (//). For instance, a contract for the sale of a house with windows over- looking land of a third person does not imply any warranty or representation that such windows have a right to access of light over such land (?). So the words " shipped in good order and condition " in a bill of lading do not import a warranty though they amount to a representation (k). A representation of intention does not amount to a warranty (/). If a representation or statement is not of the essence of the contract, there is no warranty (m). The circumstance of a man selling a particular thing by its proper description is not a warranty, but a non-compliance with a contract which he has engaged to fulfil (n). To constitute a warranty, it is not necessary that the word " warrant ' should occur in the bargain (o) ; and, on the other hand, the use of the word "warrant" or "warranty" is not conclusive, the question being what is the true intention of the contract as a whole. A stipulation may be a condition, though called a " warranty " (p). Any affirmance or representation made at the time of sale is a warranty if it appears to have been so intended and understood by the parties (q) ; and in- deter- mining whether it was so intended a decisive test is whether the vendor assumes to assert a fact of which the buyer is ignorant, or merely states an opinion on a matter of which (In Chanter v. Hopkins, 4 M. & W. 404, per Lord Abinger ; 51 R. R. 650; Azemat, v. Casella, L. R. 2 C. P. p. 679; 36 L. J. C. P. 263; De Lassalle v. Cuildford, 1901, 2 K. B. 215; 70 L. J. K. B. 533. (i) Creenhalgh v. Brindley, 1901, 2 Ch. 324; 70 L. J. Ch. 740. (fe) Compania Naviera Vascongada v. Churchill, 1906, 1 K. B. 237; 75 L. J. K. B. 94. (I) Benham v. United Guarantee, <£c, Ass. Co., 7 Exch. 744; 21 I,. .1. Ex. 317. (to) Taylor v. Bullen, 5 Exch. 77'.); 20 L.J. Ex. 21; 82 B. R. 875; Vernede v. Weber, 1 H. & N. 311; 25 L. J. Ex. 326; 108 R. R. 587. (n) Chanter v. Hopkins, 4 M. & W. 404, per Lord Abinger; 51 R, R. 650; Stueley v. Baily, 1 H. & ('. 115, per Martin, B., 31 1,. .1. Ex. 483; L80 R. R. 588. (o) Hopkins v. Tanqueray, 15 C. B. 137, per Jervis, C. J., '-J.'i h. J. C. I'. L62 ; Stueley v. Baily, 1 H. & C. 417 ; 31 L. J. Ex. 483. (p) Barnard v. Faber, L893, 1 Q. B. 3in ; 62 li. J. Q. J'.. L59; Sale of Goods Act, 1893, b. 11. (q) I'asley v. Freeman, 3 T. R. 57. per Buller, J.; I If. R. 684; Stueley v. Bailey, 1 H. & C. 405; 31 L. J. Ex. 488. 42 MISREPRESENTATION. the vendor lias no special knowledge, and on which the buyer may be expected to exercise his own judgment (r). Nor is it necessary that the statement or representation should be simultaneous with the close of the bargain. If it be part of the contract, it matters not at what period of the negotiation it was made (s). If a statement amounts to a warranty, the party making it is bound by his warranty. The fact that he( may have made the statement in honest mistake, or that the statement may be not in a material matter, cannot be taken into consideration (t). The term " warranty ' ' is used in two senses. It is either a condition on the failure or non-performance of which the other party may, if he be so minded, repudiate the contract altogether, and so be released from performing his part of it, or it is an independent agreement, a breach of which will not justify a repudiation of the contract, but will only be a cause of action for compensation in damages. The question whether a statement, though intended to be a substantive part of the contract, is a condition precedent, or an independent agree- ment, is sometimes raised in the construction of charterparties with reference to stipulations that some future thing shall be done or shall happen, and has given rise to very nice distinc- tions. Thus, a statement that a vessel is to sail, or be made ready to receive a cargo, on or before a given day, has been held to be a condition, while a stipulation that she shall sail with all convenient speed, or within a reasonable time, has been held to be only an agreement (u). An affirmation made upon the sale or letting of real property as to the state of the property may amount to a warranty if the like conditions exist as in the case of a warranty on the sale of a chattel. "Where, therefore, the lessor of a house (r) De Lassalle v. Guildford, 1901. 2 K. B. 215; 70 L. J. K. B. 533. (s) Hopkins v. Tanqueray, 15 C. B. 137, per Jervis, C. J., 23 L. J. C. P. 162; 100 B. B. 271. (t) Attwood v. Small, 6 CI. & Fin. 232; 49 B. B. 115 ; Anderson v. Fitzgerald. 4 H. L. C. 504, per Lord Cranworth; 94 B. B. 202; Bannerman v. White, 10 C. B. N. S. 844; 31 L. J. C. P. 28; Behn v Burness, 3 B. & S. 754, 759; 32 L. J. Q. B. 204 ; Head v. Tattersall, L. B. 7 Ex. 11. (u) Behn v. Burness, 3 B. & S. 754; 32 L. J. Q. B. 204. MISREPRESENTATION. 4*J represented that the drains were in good order, the representa- tion was held to be a warranty collateral to the lease, and he tenant could sue for a breach of it (j). Affirmations in policies of insurance are in the nature of warranties. In the case of policies of marine insurance, and policies against fire, a warranty is also a condition. It is an implied condition of the validity of the policy that the party proposing the insurance should make a true and complete representation respecting the property which he seeks to insure. Such policies are therefore vitiated by any material misrepresentations, even though not fraudulently made (y). In the case of life assurances, however, it is not an implied condition of the validity of the policy that the party proposing the insurance should make a true and complete represent ation respecting the life proposed for insurance. If there be no express warranty or condition on the part of the insured, a policy of life assurance is not vitiated by false representations, unless there be fraud (z). If there be a proviso in a policy of assurance, that any untrue statements shall avoid the policy, the policy is vitiated by any statement false in fad, whether material or not (a). The same principle applies to the purchase of Government annuities on lives in which the information required by the A( t forms the basis of the grant of the annuity, and accord- ingly an annuity applied for and granted under a misrepre- sentation, though unintentional, in the information required as to the age of a person was set aside after his death (6). In order that a misrepresentation may support an ad ion, it Misrepresen- . 1 -ill! • i • • • tation must be is essential that it should he material in its nature, that it materia] mid a determining in De Lassalle v. Guildford, 1901, 2 K. B. 215; 70 L. J. K. B. 533; but see K 1 '" 1 "" 1 l,t thc ' transaction. Greswolde Williams v. Bameby, 49 W. R. 203. (y) Bannerman v. White, 10 C. B. N. S. 860; 31 L. J. C. P. 28; 128 K. K. 953; Ionides v. Pacific Ins. Co., L. R. 6 Q. B. 674 ; 7 Q. B. 520; 11 L. J. Q. B. 190; Hivaz v. Gerussi, G Q. B. D. 222; 50 L. J. Q. B. L76; Hambrough v. Mutual, . 4. If/) Vernon v. Keys, 12 Bast, 032; 11 R. R, 499. (In Gordon v. Street, L899, 2 (,>. I'.. 641; 69 I.. J. <.,' B 15; Bee Page v Clark, 31 (i. L. H. 04. 48 MISREPRESENTATION. Eeliance on A misrepresentation to be of any avail whatever must enure tation. t° the date of the transaction in question (i). If a man to whom a representation has been made knows at the time or discovers before entering into a transaction that the repre- sentation is false (k), or resorts to other means of knowledge open to him, and chooses to judge for himself in the matter, he cannot avail himself of the fact that there has been misrepresentation, or say that he has acted on the faith of the representation (I). Where accordingly an iron company had sent some of their directors for the express purpose of verifying the representations of a man respecting his works, who expressed their satisfaction with the proofs produced it was held that the company had, by choosing to judge for themselves in the matter, precluded themselves from being able to say that they had been deceived by the representations of the vendor, and that it was their own fault if they had not availed themselves of all the knowledge or means of knowledge open to them (m). So also where a man had, before purchasing shares in a mine, visited the mine and examined into its condition, it was held that he had not relied on representations made to him by the vendor, and was not entitled to avoid the contract on the ground that they were false, the alleged misstatements being such as he was oonrpetent to detect (n). The allegation of misrepresentation may be effectually met by proof that the party complaining was well aware and cognizant of the real facts of the case (o) ; but the proof of knowledge must be clear and conclusive. Misrepresentation is not to be got rid of by constructive notice (p). A man (i) Irvine v. Kirkpatrick , 7 Bell, Sc. Ap. 186. (k) Ibid.; Vigers v. Pike, 8 CI. & Fin. 650; 54 E. E. 114; Brooke V. Routh- waite, 5 Ha. 298, 306; 15 L. J. Ch. 332; 71 E. E. 115; Nelson v. Stocker, 4 D. & J. 465 ; 28 L. J. Ch. 760 ; 124 E. E. 339. (I) Lysney v. Selby, 2 Lord Eaymond, 1118, 1120; Smith v. Chadwick, 20 C. D. p. 75; 53 L. J. Ch. 873; Arnison v. Smith, 41 C. D. p. 369. See Pearson v. Dublin Corp., 1907, A. C. 351; 77 L. J. P. C. 1. (m) Attwood V. Small, 6 CI. & Fin. 232; 49 E. E. 115. See Redgrave v. Hurd, 20 C. D. 16; 51 L. J. Ch. 113. (n) Jennings v. Broughton, 17 Beav. 234, 5 D. M. & G. 126; 23 L. J. Ch. 999; 104 E. E. 58. (o) See Eaglesfield v. Londonderry, 4 C. D. 709. (p) Jones v. Rimmer, 14 C. D. 590; per Jessel, M. E. ; 49 L. J. Ch. 775. MISREPRESENTATION. 49 who by misrepresentation or concealment lias misled another cannot be heard to say that he might have known the truth by proper inquiry, but must, in order to be able to rely on the defence that he knew the representation to be untrue, be able to establish the fact upon incontestable evidence and beyond the possibility of a doubt. " If a person," said Jessel, M.R., in Redgrave v. Hurd (q), "makes a* material represen- tation to another to induce him to enter into a contract, and the other enters into that contract, it is not sufficient to sav that the party to whom the representation was made does not prove that he entered into the contract relying upon the representation. If it is a material representation' calculated to induce him to enter into the contract, it is an inference of law that he was induced by the representation to enter into it ; and in order to take away his title to be relieved from the contract on the ground that the rejjresentation was untrue, it must be shown either that he had knowledge of the facts contrary to the representation, or that he stated in terms or showed clearly by his conduct that he did not rely on the representation." The inference, however, does not seem to be one of law, but, as Lord Blackburn said in Smith v. CJiadwick (r), " a fair inference of fact." If the subject-matter is not property in this country, where probably independent inquiry would be made ami inspection might take place, but property at such a distance that any person purchasing it is obliged to rely on the statement made with respect to it, the argument is the stronger that reliance has been placed on the representations (s). If a definite or particular statement be made as to the contents of property, and the statement be untrue, it is not enough that the party. to whom the representation was made may have Keen acquainted with the property. A very intimate knowledge of the premises will not necessarily imply knowledge of their exact contents, while the particularity of the statemenl (g) 20 C. D. 21; 51 L. J. Ch. 113. In 9 A pp. (';.. mil; r,:>, I,. J. Ch. 873. (*) Smith's Case, Re Reese River Silver Minn,,, Co., 'J Ch. 63 t ; 86 li. J. Oh. 618. K.F. 4 50 MISREPRESENTATION. will naturally convey the notion of exact admeasurement (t). The fact that he had the means of knowing or of obtaining in- formation of the truth which he did not use is not sufficient (u). It is not indeed enough that he may have been wanting in caution. A man who has made false representations, by which he has induced another to enter into a transaction, cannot turn round on the person whom he has defrauded and say that he ought to have been more prudent and ought not to have concluded the representations to be true in the sense which the language used naturally and fairly imports (x). Nor is it enough that there may be circumstances in the case which, in the absence of the representation, might have been sufficient to put him on inquiry. The doctrine of notice has no appli- cation where a distinct representation has been made (y). Equal means of knowledge is immaterial where there is an express representation, for the plaintiff is thereby put off his guard (z). The party who has made the representation cannot be allowed to say that he told him where further information was to be got, or recommended him to take advice, and even put into his hands the means of discovering the truth. No man can complain that another has relied too implicitly on the truth of what he himself stated (a). If a vendor has stated in his proposals the value of the property, he cannot, except under special circumstances, complain that the pur- chaser has taken the value of the property to be such as he (t) Hill v. Buckley, 17 Ves. 394; 11 E. R. 109. See King v. Wilson, 6 Beav. 124; 60 R. R. 32. (u) Lysney v. Selby, 2 Lord Raym. 1118, 1120; Dobell v. Stevens, 3 B. & C. 623; 3 L. J. K. B. 89; Rawlins v. Wickham, 3 D. & J. 319; 28 L. J. Ch. 188; 121 R. R. 134; Aberaman Iron Works v. Wickens, 4 Ch. 101. (a;) Redgrave v. Hurd, 20 C. D. 1; 51 L. J. Ch. 113. (y) Pope v. Garland, 4 Y. & C. 394; 10 L. J. Ex. 13; 54 R. R. 492 j Wilson v. Short, 6 Ha. 366, 377; 17 L. J. Ch. 289; 77 R. R. 139; Drysdale v. Mace, 2 Sm. & G. 225, 230, 5 D. M. & G. 103; 23 L. J. Ch. 518; 97 R. R. 184; Cox v. Middleton, 2 Drew. 209; 23 L. J. Ch. 618; 100 R. R. 90; Rawlins v. Wickham, 3D. &J. 318; 28 L. J. Ch. 188; Kisch v. Central Venezuela Rly. Co., 3 D. J. & S. 122; 36 L. J. Ch. 849; 142 R. R. 39; Redgrave v. Hurd, 20 C. D. 21 ; 51 L. J. Ch. 113. 0) Dobell v. Stevens, 3 B. & C. 623; 3 L. J. K. B. 89; 27 R. R. 441. (o) Reynell v. Sprye, 1 D. M. & G. 660; 710; 21 L. J. Ch. 633; 91 R. R. 228; Rawlins v. Wickham, supra; Redgrave v. Hurd, supra. See Pearson v. Dublin Corp., 1907, A. C. 351; 77 L. J. P. C. 1. MISREPRESENTATION. 5[ represented it to be (6). The effect of what would be other- wise notice may be destroyed not only by actual misrepre- sentation, but by anything calculated to deceive or even to lull suspicion upon a particular point (c). A vendor of property on lease, for instance, is not justified in parading upon his particulars of sale the existence of covenants beneficial to the estate which he knows or has good reason to believe cannot be enforced (d). A misrepresentation, to be material, should be in respect of Misrepresen- an ascertainable fact, as distinguished from a mere matter be in respect of opinion (e). But a statement of opinion may, like a state- f".^ ^ftfd'n^t ment of intention (/), be a statement of fact, and would merely;! statement of support an action of deceit, if fraudulent and material ; for opinion. instance, a statement that a particular opinion is held when it is not held. The result of the cases seems to be that there is no action of deceit for the statement of an opinion which exists and is honestly entertained, but there is an action if it does not exist and is not honestly entertained ((]). A represen- tation which merely amounts to a statement of opinion, judgment, probability or expectation, or is vague and indefinite in its nature and terms, or is merely a loose, conjectural, or exaggerated statement, goes for nothing, though it may not be true, for a man is not justified in placing reliance on it (// ). Mere exaggeration is a totally different thing from misrepre- sentation of a precise or definite fact (/). Such statements, for instance, as assertions as to the value of property (/>•), or representations by the agent of the vendor of land that the (b) Perfect v. Lane, 3 D. F. & J. 369; 31 L. J. Ch. 489; 130 R. R. 176. (c) Dykes v. Blake, 4 Bing. N. C. 463, 476; 44 R. R. 761. (d) Flint v. Woodin, 9 Ha. 618; 89 R. R. 602. (e) Jennings v. Broughton, 5 D. M. & G. 134; 23 L.'j. Ch. 999; KM R. R. 58; Leyland v. Illing worth , 2 D. I', .v .) . 248; 129 H. K. H8 ; Bellairs v. Tuch 13 Q. B. D. 562; Pritty v. Child, 71 L. J. K. B. 512. if) Edgington v. Fitzmaurice, 29 C. D. 459, 479, 483. (g) Peek v. Berry, 37 C. D. p. 571. l<>r applies (./•)• But notwithstanding the maxim about simplex commendatio, language of general commendation — such as a statement that the person in possession is a most desirable tenant — is deemed to include the assertion that the vendor does not know of any fact inconsistent with it ; and a contract obtained by describing the tenant as " most desirable " when he had only paid his rent under pressure was set aside (y). The difference between a false averment in matter of fact, and a like falsehood in matter of opinion, is well illustrated by familiar cases in the books. If the owner of an estate aihrrn that it will let or sell for a given sum, when, in fact, such sum cannot be obtained, it is a matter of judgment, and so the parties must have considered it (z). But if an owner falsely affirm that an estate is let for a certain sum, when it is, in fact, let for a smaller sum, or that the profits of a busi- ness are more than, in fact, they are, and thereby induces a purchaser to give a higher price for the property, it is fraud, because the matter lies within the private knowledge of the owner (a). If, again, the owner of the land represent that it is well watered, the statement will not, although erroneous or (t) Wall v. Stubbs, 1 Madii. 80; 15 R. K. 210; Ingram v. Thorp, 7 Ha. 71; 82 i;. R. 25. (u) Dimmoch v. Hallett, supra. (u>) Bug, V. ct P. 3; 1 Roll. Al». 101. PI. 16. (x) Young v. McMillan, 40 N. 8. R. 52. (y) Smith v. Land Corporation , 28 C. D. 7. (a) Pasley v. Freeman, :S T. R. 51 ; 1 R. R, 634. (a) Lysney v. Selby, 2 Lord Raym. 1118; Dobell v. Stevens, 8 B. & C. 682; 3 L. J. K. B. 89; 27 R. R. Ill ; Hutchinson v. Motley, 7 Scott, 84] ; 50 It. R. 852; Dimmock v. Ilallett, 2 Cli. 28; 86 I>. J. Ch. 110. 54 MI SREPRE SENTATION . false, amount in law to a misrepresentation, except in extreme cases (&) ; but there is misrepresentation, if the representation be calculated to lead the person to whom it is made to believe that there is a natural supply of water on the property, whereas the fact is that the property, though well supplied with water, derives its supply artificially from the waterworks of a town, and by payment of rates (c). In Vernon v. Keys (d), the true rule was stated to be that the seller was liable to an action of deceit, if he fraudulently misrepresents the quality of the thing sold in some particulars which the buyer has not equal means of knowledge with himself; or if he do so in such a manner as to induce the buyer to forbear making the inquiries which, for his own security and advantage, he would otherwise have made. Exaggera- The rule that exaggeration, as distinguished from misrepre- distinguished sentation, goes for nothing, applies with peculiar force to the rom mis- cage Q £ statement in the prospectuses of companies. The tion - promoters of adventures are so prone to form sanguine expectations as to the prospects of the schemes which they introduce to the public, that some high colouring and some exaggeration in the description of the advantages which are likely to be enjoyed by the subscribers to the undertaking, may generally be expected in such documents. No prudent man can, owing to the well-known prevalence of exaggeration in such documents, accept the prospects which are held out by the originators of every new scheme, without considerable abatement. But though the representations in the prospectus of a company ought not, perhaps, to be tried by as strict a test as is applied in other cases, they are required to be fair, honest, and bond fide. There must be no misstatement of any material facts or circumstances (e). Exaggeration is a totally different thing from misrepresentation of any precise (b) Troiver v. Newcome, 3 Mer. 704; 17 E. R. 171. (c) Leyland v. Illingworth, 2 D. F. & J. 253; 129 R. R. 88. (d) 12 East, 632 ; 11 R. R. 499. (e) Kisch v. Central Rly. Co. of Venezuela, 3 D. J. & S. 122; 36 L. J. Ch. 849; 142 R. R. 39; Denton v. Macneil, 2 Eq. 352 ; Central Rly. Co. of Venezuela v. Kisch, L. R. 2 H. L. 113; 36 L. J. Ch. 849; Hallows v. Fernie, 3 Ch. 467; 36 L. J. Ch. 267; Bellairs v. Tucker, 13 Q. B. D. 573, ante, p. 51. MISREPRESENTATION. 55 or definite facts, as to which there must be uberrima fides on the part of the contractors (/). As, on the one hand, mere assertions of value by the Dispan ment of vendor of property are not fraudulent in law, though erroneous property by a or false; so, on the other hand, a disparagement of property pu by a purchaser is not a fraud (g). Xor is a buyer liable for misrepresenting a seller's chance of sale or probability of his getting a better price. It is a false representation in a matter merely gratis dictum by the bidder, in respect of which he is under no legal duty to the seller for the correctness of his statement, upon which the seller would be incautious to rely (h). So, also, is a representation by a purchaser to a seller, that his partners would not consent to his giving more than a certain sum, though false, merely a gratis dictum (i). But though the value of property is generally a matter of Vendor may ° i i j c j ... put upon pnr- opinion, a vendor ma}' put upon a purchaser the responsibility chaser the „.„.,. ,, ■ , , , responsibility of informing him correctly as to the market value, or any f informing other fact known to him, affecting the value of property, and ^ imasto if the purchaser answers untruly there is a fraud. He is not bound to answer in such cases, but if he does he is bound to speak the truth (k). In a case accordingly, where the seller was ignorant of the value of the property and the purchaser knew that she knew nothing about it, and the seller asked the purchaser the value of the property and relied upon his state- ment, which was greatly below the value, the sale was set aside on the ground that it was not a mere purchaser's assessment, but a deliberate statement made to her by a person having full knowledge, which statement was asked by • her for her guidance and was acted on by her in reliance ou its good faith and accuracy (I). The representations of a vendor of real estate to the vendee Representa lions as to as to the price which he has paid for it are, in respect 01 the price and reliance to be placed on them, to be regarded generally in the [jp^Iand. same light as representations respecting its value, or the offers (/) Boas v. Estates Investment Co., 3 Eq. 122, 186; 87 L. J. Ch. 878. (g) Tate v. Williamson, 2 Ch. 65. i/m Vernon v. Keys, L2 East, 637; 11 R. R. 199. (i) Ibid. (ft) Coaks v. Boswell, 1 1 A.pp. Ca. 285; 56 L. J. Ch. 761. i/i Hayyarth v. Wearing, 12 Eq. 320, 828; 40 U. J. Ch. 677. 56 MISREPRESENTATION. wliicli have been made for it. A purchaser is not justified in placing confidence in them (ra). But a false affirmation by a vendor as to the actual cost of property (n), or as to the amount spent upon it by him in improvements (o), may amount to a fraudulent misrepresentation. A vendor is not bound to disclose to the vendee the true ownership of the property he is engaged in selling, but he is bound to abstain from making any misrepresentations respecting the ownership (/;). False As distinguished from the false representation of a fact, the as to false representation as to a matter of intention, not amounting to a matter of fact, though it may have influenced a transac- tion, is not a fraud at law (q), nor does it afford a ground for relief in equity (/). Where a man, who had given a bond to another, upon which judgment had been entered up, had married upon the declaration of the person who held the bond and warrant of attorney that she had abandoned the claim, and would never trouble him about it, the Court would not restrain her from enforcing at law the judgment on the warrant of attorney (s). But if the representation, though in form a representation as to a matter of intention, amounts in effect to a representation as to a matter of fact, relief may be had in equit}'. Where a man was induced to grant a lease upon a representation by the lessee that he intended to use the premises for a stated purpose, whereas he intended to use, and did use, them for a different and illegal purpose, the (m) 20 Eq. 123. per Bacon, V.-C. Young v. McMillan, 40 N. S. E. 52. in) Kent v. Freehold Land Co. 4 Eq. 599; 37 L. J. Ch. 653; Lindsey Petro- leum Co.. v. Hurd, L. R. 5 P. C. 243. (o) Ross v. Estates Investment Co., 3 Eq. 136, 3 Ch. 682; 37 L. J. Ch. 873. (p) Hill v. Gray, 1 Stark. 434; 18 R. R. 802; but comp. Felloives v. Gwydyr, 1 R. & M. ( 83; 32. R, R. 148. (q) Vernon v. Keys, 12 East, 637; 11 R. R. 499; Hemingway v. Hamilton, 4 M. & W. 122; 51 R. R. 497; Feret v. Hill, 15 C. B. 225; 23 L. J. C. P. 185; 100 R. R. 318. (r) Jorden v. Money. 5 H. L. C. 185; 23 L. J. Ch. 865; 101 R. R. 116; Bold V. Hutchinson, 5 D. M & G. 558; 104 R. R. 196; Chadwick v. Manning, 1896, A. C. 231; 65 L. J. P. C. 42; but see Clydesdale Bank v. Paton, 1896, A. C. p. 394 ; 65 L. J. P. C. 73. (s) Jorden v. Money, 5 H. L. C. 185; 23 L. J. Ch. 865; 101 R. R. 116. See Cross v. Sprigg, 6 Ha. 553 ; 18 L. J. Ch. 204 ; 77 R. R. 236 ; Maunsell v. White, 4 H. L. C. 1039; 94 R. R. 532. MISREPRESENTATION. 57 fraud, though not sufficient to avoid the lease at law. would have been a ground for relief in equity (/). So where an insurance agent represented to the assured that if she con- tinued to pay premiums for four years longer she would got a free policy, that is a representation of fact and not a more promise (u). In Edgington v. Fitzmaurice, the defendants issued a prospectus inviting subscriptions tor debentures, the declared object of the loan being to complete buildings, buy vans and horses, and develop trade, whereas the true objeel was to pay off pressing liabilities. Cotton, L. J., agreed that the statement in the prospectus was "one of intention, but it is nevertheless a statement of f aet : and if it could not be fairly said that the objeets of the issue of the debentures were those which were stated in the prospectus, the defendants were stating a fact which was not true." Bowen, L. J., added: "There must be a misstatement of an existing fact; but the state of a man's mind is as much a fact as the state of his digestion " (r). That which is in form a promise may be in another aspect ;t representation (w). Where a lessor represented to the intended lessee, that he could not obstruct the sea view from the houses to be built by the lessee, because he himself was under covenants which restricted him from so doing, but after the building lease had been taken, and the houses built, the lessor surrendered his lease and took a new lease omitting the restrictive covenants, the Court, considering the representation to have been in effect a representation as to a matter of fact, restrained the lessor by injunction from building so as to obstruct the sea view (./•). It is necessary to distinguish where an alleged ground of Repreaenta- false representation is set up between a representation oi an something bo . ,, . be done in existing fact which is untrue, and a promise to do something fchefuture (t) Feret v. Hill, 15 C. B. 207; 23 L. J. C. P. 185; 100 It. If. 318, which was an action of ejectment; Pollock, Contracts, 389. (u) Kettlewell v. Refuge Assurance Co., 1908, 1 K. B. 515; L909, A ( . 243; 77 L. J. K. B. 421. (v) Edgington v. Fitzmaurice, 29 C. I>. 15'.), 479, 188. (w) Clydesdale Bank v. Poton, L896, A. C. |>. 394; 66 L. .1. I'. C. 7:t. (x) Pi'jijott v. Stratton, John, 359; I \>- F. & .1. 19; 29 I.. J. Ch. l; 135 K. I;. 336. 58 MISREPRESENTATION. in future, and to consider what the bargain is (y). But the existing intention of a party at the time of contracting is a matter of fact, and may be material to the validity of a contract, so that if it be proved that a person has fraudulently misrepresented his intentions in some material point for the purpose of inducing a contract, it may be a sufficient ground for avoiding the contract. Thus a man buying goods must be taken to have made an implied representation that he intended to pay for them, so that if it be clearly made out that at that time he did not intend to pay for them, a case of fraudulent misrepresentation is made out, and the seller may avoid the sale, and recover back the goods from the buyer, or from any person to whom he has transferred them with notice of the sale (z), and although he has notice of an act of bankruptcy by the buyer (a), and even after a receiving order has been made (b). So, also, when a lessee having power to assign only with the consent of his landlord, which the landlord had promised to give upon his finding a respectable tenant, was induced to assign the lease by a false representa- tion of the assignee that a certain intended tenant was a respectable man, it was held that the representation, although only of an intended tenant, involved a sufficiently material fact to avoid the agreement (c). But a misrepresentation by the defendant that premises to be leased to the plaintiff' would be vacant at a certain date was held in a Canadian case not to be sufficient in an action of deceit (d), nor was a repre- sentation that the defendant would grant a right of way (e). There is a clear distinction between .(1) a misrepresentation in point of fact, (2) a representation that something exists at that moment which does not exist, and (3) a representation (y) Ex p. Burrell, 1 C. D. 552; per Hellish, L.J., 45 L. J. B. 68. (z) Load v. Green, 15 M. & W. 216 ; 15 L. J. Ex. 113; 71 R. R. 627 ; White v. Garden, 10 C. B. 919; 20 L. J. C. P. 166; 84 R. R. 846; Ex p. Whittaker, 10 Ch. 449, per Mellish, L.J. ; 44 L. J. B. 91. (a) Re Easigate, 1905, 1 K. B. 465; 74 L. J. K. B. 324. (b) Tilley v. Bowman, 1910, 1 K. B. 745; 79 L. J. K. B. 547. (c) Canham v. Barry, 15 C. B. 597; 24 L. J. C. P. 100. See Feret v. Hill, 15 C. B. 207 ; 23 L. J. C. P. 185; 100 R. R. 318. (d) Smythe v. Mills, 7 W. L. R. 557; 17 Man. L. R. 349. (e) McLernon v. Connor, 9 W. A. L. R. 141. MISREPRESENTATION. 59 that something will be done in the future. Of course a representation that something will be done in the future cannot either be true or false at the moment it is made, and although it may be called a representation, if it is anything, it is a contract or promise (/). But that which is in form a promise may be a representation (g). A representation which amounts to a mere expression of intention must be distinguished from a representation which amounts to a contract (h). If a representation amounts to, or is in the nature of, a guaranty, it must be in writing and signed in compliance with Lord Tenterden's Act (i). Where a man previously to the marriage of his daughter said he intended to leave her 10,000/. which was to be settled in a particular way, and that the person about to marry her was for this reason to settle 5,000/. on her, and the party did make the settlement and married the lady, the engagement was held binding, for the circumstances amounted to a contract (A). If, on the other hand, a man previously to the marriage of a relation tells him that he has made his will and left him his property, and that he is confident he never would alter his will to his disadvantage, or tells him before his marriage to his daughter that he would leave her so much money, this is a mere expression of intention, on which the person to whom it is addressed is not justified in relying (/). So, also, when an unattested paper signed by A., and handed by him to B., stated that as a mark of his esteem and great friendship, he agreed to allow him 500/. a year, and that after (/) 7 Ch. 804, per Hellish, L.J. (g) Clydesdale Bank v. Paton, 189(5. A. C. p. 394; 65 L. J. P. C. 73; Kettle- well v. Refuge Assurance Co., 1908, 1 K. B. 545; 77 L. J. K. B. 421. (h) Hammersley v. De Biel , 12 CI. & Fin. 45: 69 K. R. IS: Maunsell v. White, 4 H. L. C. 1056; 94 R. R. 532; Maddison v. Alderson, 8 App. Ca. p. 173. 52 L. J. K. B. 737. (t) 9 Geo. IV. c. 14, s. 6; Longman v. Balh Kin trie Tramways, L905, 1 Ch. 646; 74 L. J. Ch. 121. post, eh. vii., s. 2. (ft) Hammersley v. De Biel, 12 CI. & Fin. 45; 69 R. R. 1H; Maunsell v. White, 4 H. I,. C. \>. L05] : 94 R. R. 532; Re Holland, L901, 2 Ch. I 15, L902, 2 Ch. 360; 71 L. J. Ch. 518. (/) Bold v. Hutchinson, 5 D. M. & Q. 658; I'M l; l; L96; Maunsell v. White, 4H. L. C. L039; '.*! k. R. 532. 60 MISREPRESENTATION. his death he had in lieu thereof bequeathed him 10,000L, and B. took the paper to a lady who consented to his marriage with her daughter on the faith of the engagement contained in the paper, but no communication took place between the lady and A., and the marriage took place, it was held that there was no such connection between A.'s promise or representation, and the consent given by the lady, as to sustain a claim against A.'s estate (m). A representation which amounts to an engagement is enforced not as being a representation of an intention, but as amounting to a contract (n). There is no middle term, no terthim quid, between a representation so made to be effective for such a purpose and being effective for it and a contract (o). Misrepresen- ^ misrepresentation of a matter of law does not constitute tation as to -i matter of law. a f rail( l ? because the law is presumed to be equally within the knowledge of all the parties. Thus the misrepresentation of the legal effect of a written agreement which a party signs with a full knowledge of its contents is not a sufficient ground for avoiding the agreement (p). So, also, where the directors of a company borrowed money, and issued to the lender a bond in a form that they represented to be valid, but which, according to the general law of such companies, was invalid, it was held that they were not responsible for their repre- sentation, as it was merely a matter of law, and was made to a person who was equally informed of the facts, and to whom they held no fiduciary relation as advisers (q). So, also, when an agent in a recognised position as the director of a company, represents that he has authority by virtue of his office to bind the company, the extent of the authority incident to the office being a matter of general law within the knowledge of the party to whom the representation is made, the latter must trust to such representation of authority at his own risk (r). So a representation by directors that they are authorised to (m) Dashwood v. Jermyn, 12 C. D. 776. (n) Maunsell v. White, 4 H. L C. p. 1056; 94 R. R. 532. (o) 4 H. L. C. p. 1056, per Lord Cranworth. (p) Leicis v. Jones, 4 B. & C. 506; 28 R. R. 360. (q) Rashdali v. Ford, 2 Eq. 750; 35 L. J. Ch. 769. (r) Beattie v. Lord Ebury, 7 Ch. 777, L. R. 7 H. L. 102; 44 L. J. Ch. 20. MI S REPRESENTATION . buv and hold shares in another company is a representation of law, upon which if untrue they cannot be made personally liable (s). But where directors gave debenture stock in payment of work done, and the stock turned out to have been issued in excess of the stock which they had power to issue, it was held that they might be personally sued on their representa- tion that they had power to issue the stock (/). Where an agent represents himself to be an authorized agent under a power of attorney, the extent of his authority depends upon the construction of the power and not upon his assertion respecting it (t). Xor does the principle of relief in equity on the ground of misrepresentation by third persons extend to an innocent statement of the law. If, for example, a person asks another what the law was upon a particular point and acts upon the representation so made, and thereby alters his position to his prejudice, he cannot maintain an action in equity against the latter to make good the representation (//•). So where an insurance agent incorrectly but innocently represented that a policy would be legally valid, it was held that the parties were in pari delicto and the premiums could not be recovered back (#). Still, as Bowen, L.J., said : ' I am not prepared to say, and I doubt whether a man who wilfully misrepresented the law would be allowed in equity to retain any benefit he got by such misrepresentation ' (y). Indeed it has been recently decided that where a person has paid premiums on the statement made fraudulently that a policy would be legally valid, the premiums can be recovered (z). i.v) Mclntyre v. Swyny, 11 N. S. W. R. 436. H) Firbank's Executors v. Humphreys, 18 Q. B. D. 54: 56 1.. .J. Q. B. 57. (u) Ibid., per Mellish, L. J. w) Ibid.; Rashdall v. Ford, 2 Bq. 750; 35 L. J. Oh. 769. Harse v. Pearl Life Ass. Co. 1904, 1 K. B. 558; 73 L. J. K. B. .17:1; bul see Hugties v. Liverpool, \ K. 269; Flight v. lu,rton, ibid. 282. See Puckett and Smith, L902, 2 Ch. 258; 71 L. J. Ch. 666. (1) Cullen v. O'Meara, I. H. 1 ('. H. L38. Bee Molyneuz \. Hatotrey, L908 2 K. B. 487; 72 I;. J. K. I'.. 873. (m) Jones v. Rimmer, 14 C. D. 688; t'.< D. .1. Ch. 775. Torrence v. Bolton, 8 Ch. !!«: 12 L. J. Ch. 177. 64 MISREPRESENTATION. masking a gross defect on the title {<>), there is fraud. So also when a condition of sale induces the purchaser to believe that a recital accurately represents a will, which it does not, it is a fraudulent and misleading condition (/>). A representation though true to the letter may be in sub- stance a misrepresentation (q). There is a misrepresentation if a statement is calculated to mislead or throw the person to whom it is made oft' his guard, though it may be literally true (?-). It is not enough to use words which, read with caution and sifted to the bottom, might have given to the reader a clue to their meaning (s). The test is whether, taking the whole thing together, there is a false representation. If a number of statements give a false impression there is none the less a false representation because it may be difficult to show that any specific statement is untrue (t). Where par- ticulars of sale contain a statement which is literally true but which is capable of another meaning, and such other meaning is more likely to be taken than the true one by a man reading the particulars, the purchaser, if he knows nothing of the real facts and understands the particulars in the one sense, is entitled to say that the vendor has deceived him (u). If a man states a thing partially, he may make a false statement as much as if he had misstated it altogether. Every word he says may be true, but if he leaves out some- thing which qualifies it, he may make a false statement (#). There is misrepresentation if a man represents not the whole of the facts, but only a portion, and omits what he ought to have known was a very material fact. It is an l property to make himself acquainted with all the peculiari- ties and incidents of the property which he is going to sell, and when he describes the property for the information of a purchaser it is his duty to describe everything which it is material for him to know in order to judge of the nature and value of the property. It is not for him just to tell what is not actually untrue, leaving out a great deal that is true, and leaving it to the purchaser to inquire whether there is any error or omission in the description or not (z). It is prima facie the duty of a vendor to disclose all that is necessary to protect himself, and not the duty of the purchaser to demand inspection before entering into a contract (a). He must not, in short, omit what it is essential for the purchaser to know (b). It is not enough for a director who is also a vendor to the company to insert words in the prospectus which, read with caution and sifted to the bottom, might have given to the reader a clue to their meaning (c). In conditions of sale there must not be any representation or condition which can mislead the purchaser as to the facts within the knowledge of the vendor, and the vendor is not at liberty to require the purchaser to assume as the root of his title that which documents in his possession show not to be the fact, even though those documents may show a perfectly good title on another ground. The requirement or insistence in conditions of sale that a certain state of things shall lie (y) Emma Silver Mining Co. v. Grant, 11 C. D. 985. (z) Brandling v. Plummet, -1 Drew. 430; 28 L. .1. Ch. 960. See Broad v. Munton, 12 C. D. 136; 48 L. J. Ch. 837. o) White and Smith, L896, 1 Ch. '•.-•'.7; r,r, L. .7. CI,. 481. (b) Brewer v. Brown, 2K ('. D. 309; 54 L. J. Ch. 605. (c) Gluckstein v. Barnes, L900, A. C. 340; »'. ( .i L. J. Ch. 885. K.F. 5 66 MISREPRESENTATION. assumed, does by implication contain an assertion that no facts are known to the persons who require it, which would make that assumption a wrong one according to the facts. A condition is therefore bad as misleading, if it requires the purchaser to assume what the vendor knows to be false, or if it states that the state of the title is not accurately known when in fact it is known to the vendor (d). But a condition requiring a purchaser to assume certain facts is not misleading if the vendor believes the facts to be true, even though the condition is intended to cover a flaw which goes to the root of the title (e). Though a purchaser will not be bound if a vendor makes an untrue statement in the conditions of sale and then tries to bind a purchaser by a condition, the case is otherwise if the vendor merely does not state everything in the conditions of sale, but invites the purchaser to come and see a certain document for himself, which the conditions of sale tell him is of importance. In such a case the purchaser will be bound by a condition that he shall assume the truth of the document (/). A misrepresentation is usually by words ; but it may be as well by acts or deeds as by words; by artifices to mislead as well as by actual assertions. Even in chaffering about goods there may be such misrepresentations as to avoid a contract. A man who by act or deed falsely and fraudulently impresses the mind of another with a certain belief whereby he is misled to his injury is as much guilty of a misrepre- sentation as if he had deliberately asserted a falsehood (g). So a man who buys goods represents by the act that he intends to pay for them (h). Intent to It is not enough that there has been a misrepresentation, and that the misrepresentation has conduced in some way to the transaction in question. It is necessary that the mis- (d) Broad v. Munton, 12 C. D. 150, per Cotton, L.J. ; 48 L. J. Ch. 837; Scott and Alvarez, 1895, 1 Ch. 596; 64 L. J. Ch. 376. (e) Re Sandbach, 1891, 1 Ch. 99; 60 L. J. Ch. 60; Blaiberg v. Reeves, 1906, 2 Ch. 175; 75 L. J. Ch. 464. (f) Blenkhom v. Penrose, 29 W. K. 238, 43 L. T. 668. ig) Burnes v. Pennell, 2 H. L. C. 497; 81 R. R. 244. ih) Ex p. Whittaker, 10 Ch. 446; 44 L. J. B. 41. mislead or to be acted on. MISREPRESENTATION. 6 i representation should have been made in relation to the transaction in question, and with the direct intent to induce the party to whom it is immediately made, <»r a third party, to act in the way that occasions the injury (/). An innocent misrepresentation which is not intended to be acted upon gives rise to no liability (k). A representation which has been made some time before the date of the transaction in question is not sufficient, unless it can be clearly shown to have been immediately connected with it (/). A representa- tion to be of any avail whatever must, unless under special circumstances, have been made at the time of the treaty (m), and should not have any relation to any collateral matter or other relation or dealing between the parties (n). Misrepresentation, however, goes for nothing either at law Misrepresen- tation must or in equity unless a man has been misled thereby to his be attended prejudice. Fraud without damage is not sufficient to support an action (o). But it is enough if the representation operates to the prejudice of a man to a very small extent. Fraud gives a cause of action if it leads to any sort of damage (p). But in order that a false representation should give a cause of action the damage must be immediate and not the remote effect of the representation (q). Misrepresentation which does no1 itself cause «damage, but is merely incidental to some lawful act which does cause damage, is not actionable. Where, (t) Burnes v. Pennell, 2 H. L. C. 497, 529; 81 R. R. 244; Smith v. Kay. 7 H. L. C. 750, 775; 30 L. J. Ch. 35 ; 115 R. R. 367 ; National Exchange Co. v. Drew, 2 Macq. 120, 387, 440; Denne v. Light, 8 D. M. & G. 774; 26 L. J. Ch. 459; 114 R. R. 328; Barry v. Croskey, 2 J. & H. 1, L. R. 6 H. L. 412; Smith V. Chadwick, 9 App. Ca. 190; 53 L. J. Ch. 873; Arnison v. Smith, 41 C. D. 348. (ft) Collins V. Evans, 5 Q. B. 820; 13 L. J. Q. B. 180; explained 1905, A. C. 400: and see Pearson v. Dublin Corp., 1907, A. C. 351; 77 L. J. P. C. 1. (I) Humes v. Pennell, 2 H. L. C. 497, 530; 81 R. R. 244. See Maunsell V White, 4 H. L. C. 1060, per Lord St. Leonards; 94 R. R. 532; Western Hank of Scotland v. Addie, L. R. 1 H. L. Sc. 155. (m) Harris v. Kemble, 1 Sm. 122; 35 R. R. 83; per Sir J. Leach, M.U. Sei Smith v. Kay, 7 H. L. C. 750, infra. (n) Harris v. Kemble, 1 Sim. 122, 5 Bligh, N. S. 730; 36 R. K. 83; National Exchange Co. v. Drew, 2 Macq., 103. (o) Polhill v. Walter, 3 B. & A<1. Ill; 37 K. It. 344; Edgington v. Fii maurice, 24 C. D. 482; Derry v. Peek, II App. Ca. p. 348; 58 I.. J. Ch. 864 Ajello v. Worsley, 1898, 1 Ch. 274; 67 L. J. Ch. 172. (p)Smith v. Kay, 7 II. I.. C. 750, 77:,; 30 L. J. Ch. 85; 115 It. R. 367. t'71 Barry v. Croskey, 2 J. & H. 1; Ajello v. Worsley, supra. 68 MISREPRESENTATION. therefore, a trader acting bond fide causes injury to the trade of another by advertising or otherwise offering for sale at less than retail price goods of the other's manufacture, not having such goods in stock at the time, but only an expectation of acquiring them, the misrepresentation implied in the adver- tisement is not one to which the damage can be attributed so as to support an action (r). So a representation by a purchaser that he is buying for himself and not for a third party to whom he knew the vendor would not sell, although false, is not material to the contract, and does not result in such immediate damage as would entitle the vendor to rescind (s). Concealment. Misrepresentation may consist as well in the concealment of what is true as in the assertion of what is false (t). If a man conceals a fact that is material to the transaction, knowing that the other party acts on the presumption that no such fact exists, it is as much a fraud as if the existence of such fact were expressly denied or the reverse of it expressly stated (u). Concealment to be of any avail whatever, either at law or in equity, must be dolus dans locum contractu!. There must be the suppression of a fact, the knowledge of which it is reason- able to infer would have made the other party to the transac- tion abstain from it altogether. Concealment of a fact is not material if the statement of that fact would not have induced a man (otherwise desirous of entering into the transaction) to abstain from it (v). A concealment to be material must be the concealment of something that the party concealing was under some legal or equitable obligation to disclose (w), and (r) Ajdlo v. Worsley, 1898, 1 Ch. 274; 67 L. J. Ch. 172. (s) Nicholson V. Peterson, 8 W. L. R. 750; 18 Man. L. R. 106. (t) Central Rly. Co. of Venezuela v. Kisch, L. R. 2 H. L. 114; 36 L. J. Ch. 849; 142 R. R. 39; Oakes v. Turquand, ibid. 326; 36 L. J. Ch. 949. («) Peek v. Gumey, L. R. 6 H. L. 400; 43 L. J. Ch. 19. (v) Pulsford v. Richards, 17 Beav. 98; 22 L. J. Ch. 559; 99 R. R, 48; Peek v. Gurney, supra. See Kisch v. Central Venezuela Rly. Co., 3 D. J. & S. 122; 36 L. J. Ch. 849; 142 R. R. 39. (w) Irvine v. Kirkpatrick, 7 Bell, Sc. Ap. 186 ; Horsfall v. Thomas, 1 H. & C. 100, per Bramwell, B., 31 L. J. Ex. 322; 130 R, R. 394; London Ass. Co. v. Mansel, 11 C. D. 367; 48 L. J. Ch. 331. See Greenfield v. Edwards, 2 D. J. & S. 582, 598; 139 R. R. 244; Central Venezuela Rly. Co. v. Kisch, L. R. 2 H. L. 112 ; 36 L. J. Ch. 849. MISREPRESENTATION. 69 where there has been such concealment honesty of purpose will not avail as a defence to an action for rescission [.>■). Mere non-disclosure apart from circumstances importing a duty of informing the other party, or evidencing a fraudulent intention in not informing him, is not in general a sufficient ground for avoiding a contract (y). The non-disclosure must be such as to make that which is disclosed misleading (z). Where, therefore, plaintiff's solicitor knew the result of pro- ceedings before the chief clerk, and arranged a compromise with defendant, who was ignorant thereof, it was held that there was no obligation on the plaintiff's solicitor to disclose the result of the proceedings, and that plaintiff was entitled to specific performance of the compromise (a). So where a person purchased a house with windows looking over the land of a third person, the non-disclosure of a deed acknowledging that the vendor was not entitled to light was not a ground for refusing specific performance (b). " There is no allegation of fraud," said Lord Blackburn (c), "and short of that the mere concealment of a material fact, except in policies of assurance, does not avoid a contract." There are many things which a man might desire to have communicated to him if they existed at the time of making the contract, as that the plaintiff is in debt, or subject to other liabilities, the dis- covery of which would yet not entitle the defendant to refuse to fulfil his engagement. It might be right to disclose such tilings, and yet it has never been held that the discovery of them justified a party in breaking his contract. Hut a promise to marry a woman is impliedly conditional upon the fact of her being chaste, and consequently the fact <>t unchastity, if not disclosed, would avoid the contract (. -I. Ch. 446, 735; Be Christineville Rubber Estates, 81 \j. J. ch. 63. (a) Turner v. Cireen, 1895, 2 Ch. 205; 64 I.. .1. Ch. 589. (b) fheenhalgh v. Brindlerj, 1901, 2 Ch. 824; 70 I.. J. Ch. 740. (c) Fletcher v. Krell, 42 L. J. g. B. 56. id) Baker v. Cartwright. in ('. I!. N. S. 124, per Cockburn, C. •! . ; 80 K. J. C. P. 64. 70 MISREPRESENTATION. It is also essential that the concealment should be in reference to the particular transaction (e), and should enure to the date of it. If a party to a transaction conceals, however fraudulently, a material fact from another with whom he is treating, but that other, notwithstanding the concealment, gets at the fact concealed before he enters into the transaction, the concealment goes for nothing. It is of no avail if the party has become in any way acquainted with the truth (/). Scientia iitrinque par pares contrahentes facit. The law will not interpose where both parties to the transaction are equally well informed as to the actual condition or value of the subject-matter of the transaction (g). If on the other hand a person has bona fide entered into a transaction and subsequently discovers that he has been defrauded, he is not entitled to conceal the fraud as against an innocent third party for the purpose of making his own title good (h). The law requires men in their dealings with each other to exercise proper vigilance and apply their attention to those particulars which may be supposed to be within the reach of their observation and judgment, and not to close their eyes to the means of information which are accessible to them : vagilantibus non dormientibus, jura subveniunt. If parties are at arms' length, either of them may remain silent and avail himself of his superior knowledge as to facts and circum- stances equally open to the observation of both, or equally within the reach of their ordinary diligence, and is under no obligation to draw the attention of the other to circumstances affecting the value of the property in question, although he may know him to be ignorant of them. If, for example, a man treats for the purchase of an estate knowing that there is a mine under the land, and the other party makes no inquiry, (e) Green v. Gosden, 3 M. & G. 446; 11 L. J. C. P. 4. (/) Irvine v. Kirkpatrick, 7 Bell, Sc. Aj). 186, 237 ; but see Arnison v. Smith, 41 C. D. 348. (g) Sug. V. & P. 1; Knight v. Marjoribanks, 11 Beav. 348, 2 Mac. & G. 10 ; 83 B. E. 166; Re Law, 1905, 1 Ch. 140; 74 L. J. Ch. 169. (h) Marnham v. Weaver, 80 L. T. 412. MISREPRESENTATION'. 71 the former is not bound to inform liim of the fact (/). So also a first mortgagee with power of sale, who has made an advan- tageous contract for the sale of the mortgaged premises, may buy up the interest of a second mortgagee who supposed the property was insufficient to pay off both mortgages, without informing him of the contract (k). A very little, however, is sufficient to affect the application of the principle. If a single word be dropped by a purchaser which tends to mislead the vendor, the principle will not be allowed to operate (Z). " A single word," said Lord Campbell, in Walters v. Morgan (m), " or even a nod, or a wink, or a shake of the head, or a smile from the purchaser, intended to induce the vendor to believe the existence of a non-existing fact which might influence fhe price of the subject to be sold, is a fraud at law. So a fortiori would a contrivance on the part of the purchaser better informed than the vendor of the real value of the subject to be sold, to hurry the vendor into an agreement without giving him the opportunity of being fully informed of its real value, or time to deliberate and take advice respecting the conditions of the bargain." If a purchaser conceal the fact of the death or dangerous illness of a person of which the seller is ignorant, and by which the value of the property is materially increased, there is fraud (n). On a sale under the direction of the Court a person offering to buy is not under any extraordinary duty of disclosure (o). A vendor may not, on the other hand, use any art or practise any artifice to conceal defects, or make any represen- tation for the purpose of throwing the buyer off Ins guard, or use any device to induce the buyer to omit inquiry or (i) Fox v. Macreth, 2 Bro. C. C. 420; 2 R. R. 55 ; Turner v. Harm,, Jac. L69, 178; 23 R. R. 15; Stikeman v. Dawson, 1 De G. & S. 90; 1(5 L. J. Ch. 205; 75 R. R. 47; Wilde v. Gibson, 1 H. L. C. 605; 73 R. R. 191; Walters v. Morgan, 3 D. F. & J. 723 ; 130 R. R. 309. (ft) Dolman v. Nokes, 22 Boav. 402; 111 R. K. 414. (I) Turner v. Harvey, Jac. 169, 178; 23 R. R. 15 ; Dolman \ . Vofc< J, supra. (m) 3 D. F. & J. 724. (n) Turner v. Harvey, supra; Scott v. Coulson, LOOS, 2 Ch. 249; 72 L I Ch 600. See Popham v. Brooke, 5 Russ. 9; 6 \j. J. Ch. 1KI. (o) Coaks v. Boswcll, 11 App. Ca. 232; 55 L. J. Ch, 761. 72 MISREPRESENTATION. examination into the defects of the thing sold. If he says or does anything whatever with an intention to divert the eye or obscure the observation of the buyer even in relation to open defects, or to prevent his use of any present means of observation, there is fraud (p). As,' for example, where a man having a log of mahogany to sell, turned it over so as to conceal a hole in the underneath side (q). So also where a man sold a vessel " with all faults," and before the sale took her from the ways on which she lay and kept her afloat in a dock in order to prevent an examination of her bottom, which he knew to be unsound, the purchaser was held entitled to avoid the sale on account of fraud (r). So also if a vendor were to describe the property as let upon lease under certain specified covenants, beneficial to the reversion, which, however, he knew could not be enforced, this would probably be considered delusive (s). So also if a vendor knowing of an incumbrance on an estate sells without disclosing the fact, and with knowledge that the purchaser is a stranger to it, and under representations inducing him to buy, he acts fraudulently and violates integrity and fair dealing (t). The same rule applies to the case where a party pays money in ignorance of circumstances with which the receiver is acquainted, and does not disclose, and which, if disclosed, would have prevented the payment. In that case the parties do not deal on equal terms, and the money is held to be unfairly obtained and may be recovered back (u). Where M. was fraudulently induced to lend money to AY. on certain fictitious leases, which had been previously mortgaged to ('., avIio was paid off by M., when the latter advanced the money to W., at which date C. had become ip) Hill v. Gray, 1 Stark. 434; 18 B. B. 802; Pillmore v. Hood. 5 Bing. N. C. 97; 50 B. E. 622; Dobell v. Stevens, 3 B. & C. 623; 3 L. J. K. B. 89; 27 E. E. 441 ; Edwards v. Wickicar, 1 Eq. 68 ; 35 L. J. Ch. 309. (q) Udell v. Atherton, 7 H. & N. 172; 30 L. J. Ex. 337: 126 E. E. 383. (t) Baglehole v. Walters, 3 Camp. 154; 13 E. E. 778; Schneider v. Heath, ibid. 506 ; 14 E. E, 825. (s) Flint v. Woodin, 9 Ha. 621; 89 E. E. 602. (t) 1 Ves. 96, per Lord Hardwicke. (u) Martin v. Morgan, 1 Brod. & Bing. 289; 21 E. E. 603. See Heane v. Rogers, 9 B. & C. 577, per Bayley, J. ; 7 L. J. K. B. 285. MISREPRESENTATION. 73 aware that the leases were fictitious, but made no disclosure of the fact to M., and executed a re-assigumeut to him, it was held that C. was liable to M. for the loss and damage sustained by him (.*•')• So also although a veudor is in general under no obligation to disclose the price at which he has himself purchased or contracted to purchase the subject of sale, there may be a fraud upon a purchaser if he misrepresent the price given (»/). So also, and upon the same principle, there is fraud, if a man, wishing to advance an undertaking, in which he was interested, determines to purchase shares in it, and another person also interested in the undertaking takes advantage of the knowledge he possesses of the intention of the former to defeat the particular act, whereby he sought to accomplish his object, and to substitute in the place of it a mode of dis- posing of a portion of his own interest in the undertaking (z). Mere reticence does not amount to a legal fraud, however Silence and it may be viewed by moralists. Either party may be innocently silent as to ground open to both to exercise their judgment upon. If the parties are at arms' length, neither of them is under any obligation to call the attention of the opposite party to facts or circumstances which lie properly within his knowledge, although he may see that they are not actually within his knowledge (a). " It has never, it is believed, been held by our Courts that there is any general obligation to disclosure on the part of a vendor or purchaser of chattels or realty, though the person maintaining silence may know that the other party is acting under an erroneous impression' (6). Mere silence as regards a material fad, which one party is not bound to disclose to the other, is not a ground for rescission or a defence to specific performance (c), lint mere silence in a prospectus as to a material fact, though i./i Marnham v. Weaver, HO L. T. 412. (y) Ante, |». 55. (vi Blake v. Mowatt, 2] Beav. 614; 111 K. R. '220. (a) Archboh! \. L<,nl Hototh, I,, li. If. 2 C. I- 608; See Walters \. l/, rrgan, 3 D. V. & J. 723; L30 I:. I;. 309, (b) Fry on Spec. Perf. 3rd <•. 329. (c) Turner v. (Irecn, 1895, 2 Ch. '205; r,i |,. .1. Ch. 589; Oreenkalgh v. Brindley, 1901,2 Ch. 324; 70 L. J. Ch. 7lo ; 8eddon v. North Eastern Salt Co 1905,1 Ch. 326; 74 L. J. Ch. 199. 74 MISREPRESENTATION. not a ground for an action of deceit, may be a ground for rescission (d), the non-disclosure, however, must be such as to make what is disclosed misleading and fraudulent (e). Mere silence as to iacts capable of influencing a buyer's judgment, but not such as the seller professes or undertakes to communicate, is not of itself any breach of duty (/). " Silence is innocent and safe where there is no duty to speak " (g). If one party asks a question which the other is not bound to answer, and it is not answered, he is not entitled to treat the other's silence as a representation if there is nothing more than silence (h). But a man may by mere silence, without active concealment, produce a false impression on the mind of another, and if he does so there is a fraud. " Where," said Lord Blackburn, in Brownlie v. Campbell .(i), " there is a duty or obligation to speak, and a man in breach of that duty or obligation holds his tongue and does not speak, and does not say the thing he was bound to say, if that be done with the intention of inducing the other party to act upon the belief that the reason why he did not speak was because he had nothing to say, there is fraud." So on a sale of a lease containing unusual and onerous covenants it is the duty of the vendor, before the contract is made, to disclose the existence of the covenants to a purchaser ignorant of them (j). "As a general rule, when there are two contracting parties, each may hold his tongue, but if one says something, it may create an obligation to say something more " (k). In Coaks v. Boswell (I), Lord Selborne said: "Inasmuch as a purchaser, generally speaking, is under no antecedent obligation to com- municate to his vendor facts which may influence his own conduct or judgment when bargaining for his own interest, no . (d) Components Tube Co. v. Naylor, 1900, 2 Ir. E. 1. (e) Re Christineville Rubber Estates, 81 L. J. Ch. 63. (/) Coaks v. Boswell, 11 App. Ca. 232; 55 L. J. Ch. 761. (g) Chadwick.v. Manning, 1896, A. C. p. 238; 65 L. J. P. C. 42. (h) Laidlaw v. Organ, 2 Wheat. 178. (i) 5 App. Ca. 950. (j) Molyneaux v. Hawtrey, 1903, 2 K. B. 487 ; 72 L. J. K. B. 873. (fc) Arkwright v. Newbold, 17 C. D. 310, per Fry, C. J. ; 50 L. J. Ch. 372. (I) 11 App. Ca. 235 ; 55 L. J. Ch. 761. MISREPRESENTATION. 75 deceit can be implied from his mere silence, unless lie under- takes or professes to communicate them. This, however, he may be held to do if he makes some other communication which, without the addition of those tacts, would be necessarily or naturally or probably misleading. If it is a just conclusion that he did this intentionally, and with a view to mislead on any material point, that is fraud ; and it is a sufficient ground for setting aside a contract if the vendor was in fact so misled. A man is presumed to intend the necessary or natural consequences of his own words and acts; and the evidcntia rei would therefore be sufficient with- out other proof of intention." If the seller knows the buyer to be acting under a mistake or in ignorance as to some quality or matter connected with the subject of sale, and not to be acting on his own inspection or judgment, and do not undeceive him, the silence, of the seller as a means of mis- leading him may amount to a fraudulent concealment entitling the buyer to avoid the sale (m). When, for example, a man employed to sell a picture had refused to state the name of the owner, and afterwards becoming aware that the buyer was under a delusion as to the ownership which enhanced the price, did not remove the delusion, but took advantage of it to effect the sale, it was held that the buyer might avoid the sale on the ground of fraud (n). If a man interested is present and hears any false or imperfect representation made, and does not set it right, he is fixed by the representation (o). So if a man knows that a bank is relying on his forged signature to a bill, he must divulge the fact before he sees the position of the bank altered for the worse (/>). When a statement or representation lias been made in the bond fide belief that it is true, and the party who has made (m) Smith v. Hughes, L. R. 6 Q. B. 605, per Cockbum, C. J. ; 40 L. .1. Q. B. 221. (n) Hill v. Gray, 1 Stark. 434; 18 R. R. 802 ; but see Keates v. Lord Cadogan, 10 C. B. 000; 20 L. J. C. P. 76; 84 R. R. 715; Peck v. Gurney, I.. K. 6 B. I.. p. 391 ; 43 L. J. Ch. 19. (o) Davies v. Davies, 6 Jur. N. S. 1322. See Smith \. Bank of Scotland, 1 Dow, 272; 14 R. R. 67. (p) M'Kenzie v. British Linen Co., 6 App. Ca. 82. 76 MISREPRESENTATION. it afterwards comes to find out that it is untrue and discovers what he should have said, he can no longer honestly keep up that silence on the subject after that has come to his know- ledge, thereby allowing the other party to go on upon a statement which was honestly made at the time it was made, but which he has not retracted when he has become aware that it can no longer be honestly persevered in (q). This principle also applies to third persons who, by not making disclosure, assist the person who made the misrepresentation in continuing the deception (/'). When the purchasers of an estate, being the owners of an adjoining colliery, in negotiating the contract had not disclosed the fact that they had already worked a considerable quantity of coal from under the estate through their colliery, it was held that the vendor was entitled to have the contract set aside (s). "If a man," said Lord Hatherley (t), "knows that he has committed a trespass of a very serious character upon his neighbour's property, and finding it convenient to screen himself from the consequences makes a proposal for the purchase of that property, he ought to communicate to the person with whom he is dealing the exact circumstances of the case. . . . The proposal which he makes is not in reality a simple proposal for purchase of the property : it involves a buying up of rights which the owner has acquired against him, and of which the owner is not aware." No duty to A vendor is by the civil law bound to warrant the thing he patent faults. se H s or conveys, albeit there be no express warranty ; but the common law binds him not, unless there be a warranty either in deed or law. Caveat emptor is the ordinary rule of the common law (u), though it is a rule which, as Lord Campbell said, is nearly eaten up with exceptions. If the defects in the subject-matter of sale are patent, or such as might and (q) Brownlie v. Campbell, 5 App. Ca. 950, per Lord Blackburn; Redgrave v. Hurd, 20 C. D. 1 ; 51 L. J. Ch. 113; Scott v. Coulson, 1903, 2 Ch. 249; 72 L. J. Ch. 600. (r) Marnham v. Weaver, 80 L. T. 412; ante, p. 70. (s) Phillips v. Flomfray, 6 Ch. 770; 59 L. J. Ch. 547. (t) Ibid. 779. («) Co. Litt. 102a, Hob. 99. MISREPRESENTATION. 77 should be discovered by the exercise of ordinary vigilance, and the buyer has an opportunity of inspecting 11. the law- does not require the seller to aid and assist the observation oi the purchaser (,*•). It is otherwise, however, if the vendor takes upon himself to inform the purchaser, and the purchaser agrees to trust to him with regard to particulars which he could ascertain himself by inspection (y). Defects, however. which are latent, or circumstances materially affecting the Duty to dis- subjec't-matter of sale of which the purchaser has no mean-, faults, &c. or at least has not equal means, of obtaining knowledge must, if known to the seller, be disclosed, lint mere concealment will not justify an action for damages or rescission unless it is equal to a representation that the fact does not exist. The concealment must be aggressive. It is not enough that the defect is material, that the vendor knows of it. and knows that the buyer is deceived by the concealment (:). Where, for instance, particulars of sale described the subject of sale as a certain interest, if any, the vendor knowing at the time that it was of no value, whereas the purchaser had no means of ascertaining whether it was of any value or not, the transaction was held fraudulent (a). So also on the sale of a ship, which had a rotten keel, and the seller purposely took her off the ways after she had been advertised for sale and floated her in order to conceal the defect, the seller was bound 1o disclose it (b). So where a man sold an estate to another knowing or having reason to know at the time, but concealing the fact that part of the land was- an encroachment upon a common to which he had no title, the sale was set aside as living been effected by fraud (c). So also where a lessor of a I c) Crant v. Munt, Coop. 173; 14 R. R. 231; Horsfall \. Thomas, 1 B. & I Imii: 130 B. R. 394; 31 L. J. Ex. 322; Smith v. Hughes, I.. I; 6 Q. B 597; Mi L.J. Q. B. 221. iy) Lynsey v. Selby. 2 Raym. 1120. 12; Ward v. Hobbs, 1 App. Ca. 13; 48 L. J. C. P. 281; see l>> Lassalle \ Guildford, L901, •_> K. B. 215; 70 I,. J. K. B. 533; Carlish v. Salt, L906, 1 Ch 335; ">■> h. .1. Ch. L75, ■post, p. 117. (a) Smith v. Harrison, 26 L. -J. ch. 412; 112 R. R. 112. (b) Schneider v. He.ath, 3 ('mm, p. 506; 11 R. R. 825; <•!. Baglehole v. Walters, :'• Camp. 154; 13 R. R. 778. (ci Edwards v. M'Cleay, 2 Sw. 287; II R. li. 261, 78 MISREPRESENTATION. mine did not disclose the fact that a material portion of the mine was under land between high and low water mark, to which he had no title, it was held a sufficient ground to set aside the lease at the suit of the lessee, who had no means of knowing the defect (d). So also if one of the parties to a transaction knows that the solicitor of the other party has not disclosed to him some matter of a material nature, the con- cealment may be fraudulent (e). A vendor, however, is not bound to state that the property has been recently valued at a sum greatly less than the intended purchaser's money, or that the tenant has complained of the rent as being excessive (/). On a sale under the direction of the Court a person offering to buy is not under any extraordinary duty of disclosure. It is not the law that because information on some material point is offered or given on request by a purchaser from the Court, it must therefore be given on all others as to which it is neither offered nor requested and concerning which there is no implied representation, positive or negative, direct or indirect, in what is actually stated (g). Chattels sold A vendor may, on the sale of chattels, expressly stipulate faults." that the buyer is to take the chattels "with all faults." In such case it is immaterial how many faults there are within his knowledge ; but he may not use any artifice to disguise them, or to prevent the buyer from discovering them (h). A person knowingly selling a chattel with a material defect without disclosing it to the buyer entitles the buyer to avoid the sale (i). In order to defeat the effect of a sale " with all faults," the representation or fraud must be something as clear in statement in an opposite direction (k), and if the vendor aggressively conceal defects or falsely makes repre- (d) Mostyn v. West Mostyn Coll. Co., 1 C. P. D. 145; 45 L. J. C. P. 401. (e) Solomon v. Honywood, 12 W. R. 572. (/) Abbott v. Sworder, 4 De G. & S. 448, 460; 22 L. J. Ch. 235 ; 87 R. R. 439; cf. Moody v. Cox, 1917, 2 Ch. 71; 86 L. J. Ch. 424. (g) Coaks v. Boswell, 11 App. Ca. 232; 55 L. J. Ch. 761. (h) Schneider v. Heath, 3 Camp. 506, supra. (i) Emmerton v. Matthews, 7 H. & N. 586; 31 L. J. Ex. 139; 126 R. R. 567; Sale of Goods Act, 1893, s. 14. (k) Ward v. Hobbs, 4 App. Ca. 13, per Lord Cairns; 48 L. J. C. P. 281. MIS REPRESENTATION. sentatious with regard to them, he furnishes the buyer with " something as clear in an opposite direction." Where there- fore animals are sold in a market " with all faults," and it is expressly stated that no warranty will be given, there is no representation by the vendor that they are free from disease : but if he goes on expressly to say that, so far as he knows or believes, the animals are free from disease, and it can be proved that to his knowledge the animals were diseased, there is a fraudulent representation (/). But the chattel must answer the description and the circum- stances under which it is sold (m). Thus the sale of a vessel described as "copper fastened " to be taken " with all faults. without allowance for any defect whatsoever," was construed to mean only such defects as were consistent with the descrip- tion, and not to exclude a misdescription in the vessel not being " copper fastened " which was held to be warranted (??). Where, however, a vessel was sold under the description of "teak-built A 1," and to be taken "with all faults, and without any allowance for any defect or error," the additional stipulation against "error" was held to extend to errors of description, and the seller was not responsible for the ship not being as described (o). A purchaser may by express contract to take the property with the risk of error in the particulars of sale debar himself from complaining afterwards of error in the particulars. In a case accordingly where it was expressly stated that the purchaser shall take the property with all risk of error in the particulars, and a representation is made which is true accord- ing to the knowledge and belief of him who makes it, any error is covered by the express contract of the purchaser to take the property with the risk of error in the particulars (p). The maxim caveat emptor is a rule which, as Lord Campbell Gomal said, is almost eaten up with exceptions, and it only applies (I) Ward v. Hobbs, supra, (m) Sale of Goods Art. L893, s. 14. (n) Shepherd v. h'ain, 5 B. & Aid. 240; 24 R. K. 344. (o) Taylor v. Bullen, 5 Ex. 779; 20 L. J. Ex. 21 ; 82 R. R. 875. (p) Brownlie v. Campbell, 5 App. Ca. 931 ; Re Sandbach, L891, I Ch. 99; 60 T, J. Ch. 60; Blaiberg v. Reeves, L906, 2 Ch. L75; 7:, I,. .1 Ch 164 ; ante, p • 80 MISREPRESENTATION. where the parties know or ought to know that they are each judging for himself (q). It applies with certain specific restrictions and qualifications both to the title and quality of the subject-matter of sale. In the case of real estate the vendor must produce to the purchaser all documents of title in his possession or power, and give information of all material facts not apparent thereon (/■). Any charge upon the estate, or right restrictive of the purchaser's absolute enjoyment of it, and the release of which cannot be procured by the vendors, should be stated; or the omission may, in many cases, render the sale voidable by the purchaser (s) ; e.g., a right of sporting over the estate (t), a right of common every third year (u), a right to dig for mines {%), a liability to repair the church chancel (y), onerous covenants in a lease (z), or any other right or liability which cannot fairly admit of compensation (a), or would render the estate different in substance from what the purchaser was justified in believing it to be (b), would, if undisclosed, have that effect (c). Disclosure on A vendor need not, however, direct attention to defects, &c, apparent on the title deeds (d), or to any niattar of which the purchaser has actual or constructive notice (e). But if the seller be informed by the purchaser of his object in buying, and the lease contains covenants which defeat that object, mere silence is fraudulent concealment (/). If there has been (q) Benjamin on Sales, 4th ed. 637. (r) Edwards v. M'Cleay, Coop. 308; 14 R. R. 261: Dart. V. & P. 102. (s) Dart, V. & P. 126. (t) Burnell v. Brown, 1 J. & W. 172; 21 R. R. 136. (u) Gibson v. Spurrier, Pea. Ad. C. 50; 4 R. R. 887. (x) Seaman v. Vawdrey, 16 Ves. 390; 10 R. R. 207. (y) Forteblow v. Shirley, cited 2 Sw. 223. (z) Haedicke and Lipski, 1901, 2 Ch. 666; 70 L. J. Ch. 811; Molyneux v. Hawtrey, 1903, 2 K. B. 487; 72 L. J. K. B. 873. (a) Dart, V. & P. 127. See Leyland and Taylor, 1900, 2 Ch. 625; 69 L. J. Ch. 764. (b) Post, pp. 117. 118 (c) See, further, Dart, V. & P. 128. ((/) Sug. V. & P. 8 (e) Dart, V. & P. 102, 127 ; Leyland and Taylor. 1900, 2 Ch. 625 : 69 L. J. Ch. 764. (/) Flight v. Barton. 3 M. & K. 282; Flight v. Booth, 1 Bing. N. C. 370; 41 R, R. 599 ; Puckett and Smith , 1902, 2 Ch. 258 ; 71 L. J. Ch. 666. sale of real estate. MISREPRESENTATION. 81 no fraudulent concealment on the part of the seller, but the title turns out to be defective, the rule caveat emptor applies, and the purchaser has no remedy, unless he takes a special covenant or warranty (it/). A seller selling in good faith is not responsible for the goodness of the title beyond the extent of his covenants (h). There is no implied warranty on a demise of real or lease- hold property that it is fit for the purposes for which it is taken (/). The purchaser takes the risk of its quality and condition, unless he protects himself by an express agreement on the subject (/i). But where land is sold with a warranty that it answers a certain description, and a conveyance is afterwards executed which contains no covenanl answering to the warranty, an action can be brought on the warranty (I). But in the letting of a furnished house there is an implied condition that it shall be in a good and tenantable condition, and reasonably fit for human occupation from the day on which the tenancy is to begin (m), but there is no implied agreement that it shall continue fit for occupation daring the term (//). There is no implied duty cast on the owner of a house in a ruinous and unsafe condition to inform a proposed tenant that it is unfit for habitation, nor will an action of deceit lie against him for omitting to disclose the fad (<>); but a seller must not, during a treaty for a while intending a sale, endeavour to conceal a defect, or to divert a purchaser's attention from it (p). Where land is sold by auction with a warranty that the sanitary arrangements are in perfect order, and a conveyance (g) Parkinson v. Lee, 2 East, 323, per Lawrence, J.;6R. R. 429; Besley v. /'.. '.) C. D. 103; Clayton v. Leach, 41 C. D. 103. i in See Soper v. Arnold, 14 App. Ca. 433; 59 L. J. Ch. 214. (*) Kent,:. • . . .J. <.,>. B. 37. (o) Keates v. Cadogan, xujira; ami Bee Chester \. Powell, 62 L. T. 7-Jl'. (p) Dart, V. & P. 99. K.I'. G 82 MISREPRESENTATION. is afterwards executed which contains no covenant corre- sponding to the warranty, no action can be brought on the warranty (q). Caveat ^ n ^ n ^ case °^ a sa ^ e °^ g°°ds and chattels, the rule caveat emptor in the e7ri ptor applies to the title, unless the seller knows that he case of a sale L x L of goods. has no title and conceals the fact, or unless the surrounding- circumstances of the case are such that a warranty may be implied (/'). In the ordinary case, for instance, of the sale of goods in a shop, there is a warranty of title, for the seller, by the very act of selling, holds himself out to the buyer that he is the owner of the articles he offers for sale (.s). If, however, the surrounding circumstances are such that the seller must be taken to be merely selling such a title as he has himself in the goods, the maxim applies, and there is no warranty of title (t). When, for example, a pawnbroker sold an article by auction as a forfeited pledge, he was held to affirm only that the article had been pledged to him and was irredeemable, and his warranty was limited to that effect (?/). So also a sale of goods seized under an execution was held to import no warranty of title (%). The question as to the application of the maxim caveat emptor on the sale of goods in respect to the quality of the goods, was very fully considered by the Court of Queen's Bench in Jones v. Just (y). The cases on the subject were distinguished as falling under five different heads : " lstly. Where goods are in esse, and may be inspected by the buyer, and there is no fraud on the part of the seller, the maxim caveat emptor applies, even though the defect is latent, (q) Greswolde-Williams v. Barneby, 49 W. R. 203; but see De Lassalle v. Guildford, 1901, 2 K. B. 215 ; 70 L. J. Ch. 533; where it was otherwise decided in the case of a lease. (r) Morley v. Attenborough, 3 Ex. 500; 18 L. J. Ex. 148; 77 R. R. 709; Hall v. Conder, 2 C. B. N. S. 40; 26 L. J. C. P. 138; 109 R, R. 590; Eichholz v. Bannister, 17 C. B. N. S. 708; 34 L. J. G. P. 105; 142 R. R. 594. (s) Eichholz v. Bannister, supra; Sale of Goods Act, 1893, s. 12. (t) Morley V. Attenborough, supra; Hall v. Conder, supra; Bagueley v. Hawley, L. R. 2 C. P. 629; 36 L. J. C. P. 328. (u) Morley v. Attenborough, supra. (x) Chapman v. Speller, 14 Q. B. 621 ; 19 L. J. Q. B. 239 ; 80 R. R. 342. (y) L. R. 3 Q. B. 197, 202; 37 L. J. Q. B. 89. MISREPRES ENTATION . and not discoverable on examination, at least where the seller is neither the manufacturer nor the grower (:). The buyer, in such case, has the opportunity of exercising his judgment upon the matter; and if the result of the inspection be unsatisfactory, or if he distrusts his own judgment, he may, if he chooses, require a warranty. In such a case it is not an implied term of the contract of sale that the goods are of any particular quality, or are merchantable (a). " 2ndlv. Where there is a sale of a definite existing chattel specially described, the actual condition of which is capable of being ascertained by either party, there is no implied warranty (6). " 3rdlv. Where a known described and defined article is ordered of a manufacturer, although it is stated to be required by the purchaser for a particular purpose, still M the known described and defined thing be actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer (c). " 4thlv. Where a manufacturer or dealer contracts to supply an article which he manufactures or produces, or in which he deals, to be applied to a particular purpose, so that the buyer necessarily trusts to the judgment or skill of the manufacturer or dealer, there is in that case an implied term of warranty that it shall be reasonably fit for the purpose to which it is to be applied (d). In such a case the buyer trusts to the manu- facturer or dealer, and relies upon his judgment and not upon his own. " 5thly. Where a manufacturer undertakes to supply goods manufactured by himself, or in which he deals, but which the vendee has not had the opportunity of inspecting, it is an implied term in the contract that he shall supply a merchant- (z) Parkinson v. Lee, 2 East, 314 ; K. R. 4'29. (a) lUnmcrton v. Matthews, 7 H. & N. f,Hf, ; 33 L. J. Ex. 139; L26 R. R. 567. (b) Bart v. Gibson, 3 M. & W. 390; 49 R. R. 650. (c) Chanter v. Hopkins, i M. & W. 399; 51 R. R. 650; Ollivani v. Bayley, 5 Q. B. 288; L3 h. J. Q. B. 34;' 64 R. R. 501. (d) Jones v. Bright, 5 Bing. 533; 30 R. R. 728; Randall v. Newson,2 Q. B. D. 102; 46 L. J. Q. B. 259; Jones v. Padgett, 24 Q. B. D. 660; 59 I. J Q. B 261. 83 84 MISREPRESENTATION. able article (e). In every contract to supply goods of a specified description which the buyer has no opportunity of inspecting, the goods must not only in fact answer the specific description, but must also be saleable and merchantable under that description " (/). The principles above stated may be resolved into the pro- position that a condition or warranty as to fitness or quality is implied only so far as the buyer does not buy on his own judgment. If the buyer's purpose be communicated to the seller, the seller must supply goods fit for that purpose, and if bought under a commercial description he must supply merchantable goods. Where the goods are bought by sample the buyer must trust to his own judgment as regards the sample, but on the seller's judgment as regards the correspondence of the bulk with the sample (g). The Sale of Goods Act, 1893, ss. 14, 15, adopts the three implied conditions as to fitness, merchantable quality and correspondence with sample. The purpose, however, for which the goods are required need not appear in the contract itself, but niay be proved aliunde (h). Nor is it any longer material that the buyer had an opportunity of inspecting the goods, the question whether he bought on his own judgment being now in every case a question of fact (/). It must also be remembered that by s. 55 the implied conditions may be varied or negatived by express agreement or usage. Caveat emptor does not mean in law or in Latin that the buyer must take chance; it means that he must take care. It applies to the purchaser of specific things as a horse or a picture upon which the buyer can exercise his own judgment; it applies also whenever the buyer voluntarily chooses what he buys, and also where by usage or otherwise it is a term of the contract express or implied that the buyer shall not rely (e) Laing v. Fidgeon, 4 Camp. 169; 16 R. R. 589; Shepherd v. Pybus, 3 M. & G. 868 ; 11 L. J. C. P. 101. (/) Jones v. Just, L. R. 3 Q. B. 197 ; 37 L. J. Q. B. 89. {g) Mody v. Gregson, L. R. 4 Ex. 52; 38 L. J. Ex. 12; Drummond v. Van Ingen, 12 A. C. 284; 56 L. J. Q. B. 563. (h) Jacobs V. Scott, 1899, 2 Fraser, 70. (t) Wallis v. Russell, 1902, 2 Ir. R. at p. 597. MISREPRESENTATION. V~> on the skill or judgment of the seller. But it has no applica- tion Avhere the seller has undertaken and the buyer has left it to the seller to supply goods to be used for a purpose known to both parties at the time of sale. And in any such ease the buyer's opportunity of inspection is immaterial (/•). On the sale of a specific article, unless there be a warranty making it part of the bargain that it possesses some particular quality, the purchaser must take the article he has bought, though it does not possess that quality. Even if the vendor w;is aware that the purchaser thought the article possessed that quality and would not have entered into the contract unless he had so thought, still the purchaser is bound, unless the vendor was guilty of some fraud or deceit upon him, and a mere abstinence from disabusing the purchaser of that impres- sion is not fraud or deceit, for whatever may be the case in a court of morals, there is no legal obligation on the vendor to inform the purchaser that he is under a mistake not induced by the act of the vendor. When a specific lot of goods is sold by sample, which the purchaser inspects instead of the bulk, the law is exactly the same if the sample truly represents the bulk (7). In the sale of goods by sample, the vendor warrants ilie quality of the bulk to be equal to that of the sample (ra), but the sample must be free from any secret defect of manu- facture, not discoverable on inspection and unknown to both parties (n). "When goods are sold by sample, the implied warranty of merchantable quality is excluded only with respect to such matters as could be judged of by the sample (<>). The rule caveat em /it Or lenders it lawful for a man holding Caveat , . , . n j.1 emptor in case shaies in an insolvent company to sell them (o any one of gale of willing to buy them, and in the absence of misrepresentation shares - /. Wallii v. Russell, 1902, 2 Ir. K. 585, 615, per Pitzgibl h. .1.; Priest v. Last, L903, 2 K. B. L48; 72 I.. .1. K. I'-. 657; Frost v. Aylesbury Dairy Co., L905, 1 K. B. 608; 74 L. J. K. I'.. 386. /, Smith v. Hughes, I.. I;. 6 Q. I'.. 607, per Lord Blackburn ; 10 I.. .1. ',> B 221. (m) Parker . . Palmer, 4 B. & AM. :iK7 ; 23 l;. I;. 313; Sale of Goods Act, i 93, b. L5. {n) Heilbuth v. Hickson, L. R. 7 C. I'. 138; II I.. J. 0. P. 228. (o) Modi) v. Gregson, h. R. 1 Ex. 52; 38 L. J. Ex. L2; Drummond v. Van Ingen, 12 A. C. 281; 56 L. J. Q. B. 563. 86 MISREPRESENTATION. Omission of purchaser to disclose insolvency. Misrepresen- tation and concealment by companies. by the seller, the buyer is apparently without any remedy against him (p). The mere omission of a purchaser of property to disclose his insolvency to the vendor is not a fraud for which the sale may be avoided. If no inquiries are made, and the vendee makes no false statements, nor resorts to any artifice or con- trivance for the purpose of misleading the vendor, it is not in general fraudulent in him to remain silent as to his pecuniary condition (q). But a partner purchasing the partnership assets must not conceal what he alone knows about the part- nership accounts or the sale may be set aside (r), so there is fraud if a vendee obtain goods upon credit with a preconceived fraudulent design not to pay for them (s) ; but it is not such a false representation or other fraud as to constitute a misdemeanour under the Debtors Act, 1869 (£). It is not the law that a company cannot in its corporate character be called on to answer an action of deceit (w). The same rules as to false and deceptive statements, which are applicable to contracts between individuals, are also applic- able to contracts between an individual and a company. If a director or promoter knowingly makes a false representation to a person as to a matter of fact in order to induce him to act thereon, and he does act thereon, relying on such repre- sentation, and thereby sustains damage, such damage may be recovered from the director or promoter in an action of deceit. To support such an action, however, it is necessary, as we have already seen, that the statement should be fraudulent. This was decided by the House of Lords in Berry v. Peek (v). reversing the Court of Appeal, where it had been held that (p) See Stray v. Russell, 1 El. & El. 888 ; 29 L. J. Q. B. 115 ; 117 E. E. 506 ; London Founders Ass. v. Clarke, 20 Q. B. D. 576; 57 L. J. Q. B. 291; Seddon v. North Eastern Salt Co., 1905, 1 Cb. 326; 74 L. J. Ch. 199. (q) Ex p. Whittaker, 10 Ch. 449; 44 L. J. B. 91. (r) Re Law, 1905, 1 Ch. 140 ; 74 L. J. Ch. 169. (s) Load v. Green, 15 M. & W. 216; 15 L. J. Ex. 113; 71 E. E. 627; Ex p. Whittaker, supra, per Mellish, L. J. ; Attenborough v. St. Katharine's Docks Co., 3 C. P. D. 450; 47 L. J. C. P. 673; Re Eastgate, 1905, 1 K. B. 465; 74 L. J. K. B. 324. (t) Ex p. Brett, 1 C. D. 151. (u) Moncur v. Ideal Co., 37 O. L. E. 361. (v) 14 App. Ca. 337; 58 L. J. Ch. 864. MISREPRESENTATION. 87 the defendants were liable because the statement complained of was untrue, and was made by them without reasonable ground for their believing it to be true. If directors ac1 within their powers with reasonable care and honesty for the benefit of the company they will not be liable for mistakes or errors of judgment (w) nor even, it seems, for gross negligence, where there is a clause in the articles exempting them from liability (as). Nor will they be liable for non- disclosure of a contract where it is owing to an honest mistake and there is waiver clause (y). The Directors Liability Act, 1890, re-enacted by s. 84 of the Companies Act, 1908, gives legislative sanction to the view of the Court of Appeal in Deny v. Peek as to directors' liability, but not to their view of the law, since an action of deceit can still only be founded on a fraudulent statement. The object of the Act is to impose upon those who issue a prospectus the duty to take reasonable care not to make untrue statements, and in every case where the plaintiff proves that the prospectus contains an untrue statement it throws upon the person liable under the Act the burden .of proving that he believed it was true and had reasonable grounds for such belief (z). The Act creates a now statutory dutv to abstain from untrue statements, and then in effect gives a new action on the case to those persons who have been injured by the neglect of that statutory duly (a). Moreover, a misleading statement in a prospectus is untrue within the meaning of the Act, even though it may be true in the sense in which it is used by those who issue the prospectus (b). Further, the statement must be true when the prospectus was issued, so a siatement that the company have acquired a valuable property is untrue if it is in fact acquired a tew days after tin; prospectus is issued (c). It is not essential that (w) I. n MeConnell v. II right, L903, I Ch. 546; ~<-± I.. -I. ch. :tl7. 88 MISREPRESENTATION. some specific allegation of fact should be false. The true test is whether taking the whole thing together there is a false representation. If a number of statements give a false impression the prospectus is none the less false because it may be difficult to show that any specific statement is untrue (d). It should be noticed that the Act has also made an alteration in the law in this respect, that whereas before the Act a director was not liable for misrepresentations in a prospectus unless he was a party to or ratified its issue, he is now prima facie liable, and cannot escape liability unless he can establish one of the defences under the Act (e). The uncorroborated statements of the vendor and promoter of the company afford by themselves no " reasonable ground ' for believing the statements to be true, and therefore afford no protection to directors under s. 84 (/). It should also be noticed that the Act appears to be wholly cumulative on the existing law, and does not abrogate or affect the old remedy by action of deceit, unless possibly the defendant could in such an action avail himself of some one of the defences in the Act. The Companies Act, 1908, s. 81, re-enacting the Companies Act, 1900, provides that every prospectus, other than a circular inviting subscriptions for further shares or deben- tures, is to contain a statement of certain particulars mentioned in the section; but some of the particulars may be omitted if the prospectus is published more than a year after the company is entitled to commence business (sub- sect. 4), and others may be omitted if the prospectus is pub- lished as a newspaper advertisement (sub-sect. 5). But no person will incur any liability by reason of non-compliance with the section if he proves that, as regards any matter not disclosed, he was not cognizant thereof, or that the non- compliance arose from an honest mistake of fact ; nor will any person incur liability for non-disclosure of a director's interest (d) Aarons Reefs v. Twiss, 1896, A. C. at p. 281; 65 L. J. P. C. 54; cf. Greenwood v. Leather Shod Wheel Co., ]900, 1 Ch. at p. 413; 69 L. J. Ch. 131. (e) See s. 84, and see Slwpheard v. Bray, 1906, 2 Ch. 235; 75 L. J. Ch. 633; as to contribution by co-directors. (/) Adams v. Thrift, 1915, 2 Ch. 21; 84 L. J. Ch. 729. MISREPRESENTATION . in the company or in the property to be acquired unless it be proved against him that he had knowledge of matters not disclosed (sub-sect. G). Nothing in the section is to limit or diminish any liability which any person may incut under the general law or the Act apart from the section: hence a prospectus, though complying with the section, may still bo so framed as to entitle an allottee to rescission of his contract or damages against the directors for deceit or under sect. 84. Where a company is the purchaser of property which belongs absolutely to the vendor the prospectus need not disclose the amount of the purchase-money paid by the vendor upon his acquisition of the property, nor need the prospectus state the amount of any consideration paid or to be paid by any one other than the company. But the whole of the consideration, cash, shares or debentures payable to any one by the company in respect of (lie purchase must be stated (g). An applicant for shares on the faith of a statement filed in lieu of a prospectus under section 82 has the same right of rescission in case of misrepresentation or omission as he would have had if he had relied on a prospectus (//). But the omission to state in a prospectus thai a previous offer of shares had been made as required by section 81 does not entitle the allottee to rescission but only to damages (/). A shareholder suing the company for rescission on the Materiality , £ , . -,, , . , . of false repre ground of misrepresentation must, generally speaking, bring sen tathm in his case under one of the following heads: — (1) Where the P V0S P ectus - misrepresentations are made by the directors or other the general agents of the company entitled to act and act inn on its behalf. (2) Where they are made by a special agent of the company while acting within the scope of his autho- rity, including the ease of a person constituted agent by subsequent adoption of his acts. (3) Where the company can be held affected, before the contract is complete, with the knowledge that it is induced l>\- misrepresentation. (4) Where the contract is made to the knowledge of the i./j Brookes v. Hansen, L906, '2 Ch. L29; 75 I,. J. Ch. 150 tin Re Blair Open Hearth Co., L914, I Ch. 390; 83 I,. .1. ch. 318. in Be 8outh of England Natural Gas Co., L911, I Ch. 57:!: so L,. .1. Ch. 858. 90 MISREPRESENTATION. company or its agents on the basis of certain representa- tions and it turns out that some of them were material and untrue (j). The following are examples of what are material misrepre- sentations in a prospectus : — A statement that more than half the proposed capital had been subscribed for, when in fact ii had been merely agreed to be subscribed by an agent of the company under an arrangement that it should be allotted to future applicants without any liability on his part (k) ; a statement that the object was to construct a railway under a concession granted by a foreign State, without disclosing the fact that the concession was in fact to be purchased from other parties for a large sum in reduction of the stated capital of the company, and a statement, contrary to the fact, that a contract had been made for the required works " at a price considerably within the available capital" (I); a statement that the object of the issue of debentures was to develop the trade of the company, whereas the object was to pay off pressing liabilities (?/i) ; a statement that a tramway company had the right to use steam power, which right was subject to the consent of the Board of Trade, which had not been given (n); a statement that the net profits of a business were over 17 per cent., when they were not more than half that rate (o) ; a statement that full reports on the property had been made for the directors, whereas they had been made for the vendor (p); a statement, contrary to fact, that the directors had taken a large number of shares, or that a certain number of shares or a certain amount had been subscribed for (q) ; (;) Lijnde v. Anglo-Italian Hemp Co., 1896, 1 Ch. 178; 65 L. J. Ch. 96; Buckley, 119; and see Karberg's Case, 1892, 3 Ch. 1 ; 61 L. J. Ch. 741; where the representation was not made by the company. (k) Ross v. Estates Investment Co., 3 Ch. 682; 37 L. J. Ch. 873; Arnison v. Smith, 41 C. D. 348. (I) Central Railway of Venezuela v. Kisch . L. E. 2 H. L. 99; 36 L. J. Ch. 849; 142 E. E. 39. (to) Edgington v. Fitzmaurice, 29 C. D. 459. in) Peek v. Berry, 37 C. D. 541. (o) Glasier v. Rolls, 42 C. D. 436; 58 L. J. Ch. 820. (p) Angus v. Clifford, 1891, 2 Ch. 449; 60 L. J. Ch. 443. (q) Kent v. Freehold Land, &c, Co., 4 Eq. 599; 3 Ch. 493; 37 L. J. Ch. 653; Henderson v. Lacon, 5 Eq. 257*. MISREPRESENTATION. 91 a statement contrary to fact, that certain persons have agreed to become directors (/•); a statement, contrary to fact, that a certain person of great experience would be chairman of the company (s); or a statement, contrary to fact, that certain dividends were guaranteed (t). The Companies Act, 1867, s. 38, enacts that every pro- Companies 1 ' .... Act, 1867, spectus of a company, and every notice inviting persons to s . ss. subscribe for shares in any joint stock company, shall specify the dates and the names of the parties to any contrad entered into by the company, or the promoters, directors or trustees thereof, before the issue of such prospectus or notice, whether subject to adoption by the directors of the company, or otherwise; and that any prospectus or notice not specifying the same shall be deemed fraudulent on the part of the promoters, directors and officers of the company knowingly issuing the same, as regards any persons taking shares in the company on the faith of such prospectus, unless he shall have had notice of such contract (>/). The Companies Act, 1900, repealed sect. 38, and enacted in its place a section which, with additions, now forms sect. 81 of the Act of 1908. But having regard to the Interpretation Act, 1889, it is still necessary to consider the effect of sect. 38 and the construction which has been placed upon it by decided eases. There has been much difference of opinion among tin- judges as to the meaning of the section (■»'). lint it is now clear that the contract to be disclosed must be a material one— that is, material to an intending investor to know (w). Exe- cuted as well as executory contracts must be disclosed (#), and it is no defence that the director honestly believed that the in r.lnke's Case, 34 Bcav. 642; Be Scottish Petroleum Co., 23 C. I). 113: Karberg's Case, 1892, 3 Ch. 1; 61 L. J. Ch. 741. is, Be Kent County Gas 'V, 95 L. T. 756. (t) Knox v. Hayman, 07 L. T. 137. (u) See Arkwright v. Newbold, 17 C. D. 302; 50 L. .1. Ch. 372. (v) Cover's Case, 1 0. D. L82; 45 I.. -I. Ch. 83; Twycross v. Grant, '2 0. I'. I). 409; 40 D. .J. C. 1'. 636; Sullivan v. Mitcalfe, 5 C. I'. l>. 460; 49 L. .1. C. I'. 815. (w) Broome v. Speak, L903, 1 el,. 587, 619, 627; 72 L. J. Ch. 253 ; Shepheard v. Broome, 1901, A. C. 342; 73 D. J. Ch. 608. (x) 1903, 1 Ch. 000. 92 MISREPRESENTATION. < contract was not material (y). But where the non-disclosure is owing to an honest mistake and there is a waiver clause,- the director will not be liable (z). The plaintiff must prove that (1) if he had known of the contract he would not have taken shares, that (2) he has suffered damage from the non-disclosure, and that (3) the defendant knew of the existence of the undisclosed contract (a). But the defendant cannot escape liability by pleading ignorance of the contents of the contract or that he left the matter to his legal advisers (b). A prospectus which merely specifies the dates and names of the parties to contracts in compliance with the section does not give notice of circumstances contained in the contracts which are material to be known and the omission of which causes the prospectus to give a false impression (c). Sect. 38 expressly excludes from relief a person who has notice of the contract before the shares were allotted to him. But notice of such contract means express notice, not construc- tive notice (d), and notice of the contents of the contract (e). It means such notice as brings home to the mind of a careful reader such knowledge as fairly and in a business sense amounts to notice of a contract (/). The omission in the prospectus of a contract which the pro- moter of the company had entered into before he became a promoter is not fraudulent within the meaning of sect. 38 (g). The words "knowingly issuing" in sect. 38 mean inten- tionally issuing a prospectus without inserting the contracts which are required by the section to be specified, although they are omitted under the bond fide belief that it is unneces- sary to specify them (h), or in ignorance arising from wilfully (y) Watts v. Bucknall, 1903, 1 Ch. 766, 773; 72 L. J. Ch. 447; Shepheard v. Broome, supra. (z) Macleay v. Tait, 1906, A. C. 24; 75 L. J. Ch. 90. (a) Ibid. (b) Watts v. Bucknall, supra. (c) Aarons Reefs v. Twiss, 1896, A. C. 273; 65 L. J. P. C. 54. (d) White v. Haymen, 1 C. & E. 101. ^e) Watts v. Bucknall, 1903, 1 Ch. 766; 72 L. J. Ch. 447. (/) Greenicood v. Leather Shod Wheel Co., 1900, 1 Ch. 421; 69 L. J. Ch. 131. (<7) Governs Case, 1 C. D. 182; 45 L. J. Ch. 83. (h) Twycross v. Grant, 2 C. P. D. 469; 46 L. J. C. P. 636; Broome v. Speak, MISREPRESENTATION. 93 abstaining from inquiry (/). Bui a proof copy of a prospectus not authorised for publication is not knowingly issued (/.). \or is a prospectus issued without authority though sub- sequently adopted (/). Sect. 38 is only for the protection of shareholders, and do< not, unlike the Directors Liability Ad. L890, and the Com- panies Act, 1900, give relief to persons who subscribe tor debentures or debenture stock on the faith of the pro- spectus (in). The usual waiver clause in a prospectus or application for shares, to be effective, must show clearly and fairly what is to be waived. The section cannot be evaded by a general waiver clause («). But a waiver clause is now void under sect. 81 (4) of the Companies Act, 1908. Those who, having a duty to perform or undertaking a duty Misrepresen- represent to those who are interested in the performance of it, parties having that it has been performed, make themselves responsible for :l ,UUv t0 1 l perform. all the consequences of the non-performance (o). So the bailee of goods who represents to the owner 1 hat he has insured the goods is liable to make good the loss occasioned by the non-insurance (jp). The false and fraudulent representations of an agent, when Misrepresen- acting within the scope of his authority (q), and in the course agen t binding of business (r), bind the principal, who is liable for the fraud on . . . v n 1 l principal. whether it is committed for the benefit of the principal or for 1903, 1 Ch. 587; 72 L. J. Ch. 251; Shepheard v. Broome, 1904, A. C. 342; 73 L. J. Ch. 608; Macleay v. Tait, 1900, A. C. 24, 31; 75 L. J. Ch. 90. (») Watts v. Bucknall, 1903, 1 Ch. 766; 72 L. J. Ch. 417. (k) Baty v. Keswick, 85 L. T. 18. (I) Hoole v. Speak, 1904, 2 Ch. 732; 73 L. J. Ch. 719. (to) Cornell v. Hay, L. R. 8 C. P. 328 ; 42 L. J. C. P. 136. (n) Greenwood v. Leather Shod Wheel Co., 1900, 1 Ch. 421 ; 69 L. J. Ch. LSI ; Cackett v. Keswick, 1902, 2 Ch. 456; 71 L. J. Ch. 641 ; Watts v. Bucknall, L903, 1 Ch. 766; 72 L. J. Ch. 417 ; Calthorpe v. Trechman, 1906, A. C. 21 ; 75 I.. .1. Ch. 90; but see now Companies Act, 1908, n. 81 (4). (o) Blair v. Bromley, 2 Ph. 360, per Lord Cottenham; 16 I,. .1. Ch. 196. (p) M'Neill v. Millcn, 1907, 2 Ir. K. 328. (q) Blair v. Bromley, supra; Coleman v. Riches, L6 C. B. L04 ; 21 D. •) . C. P. 125; L00 R. U. 035; Wheelton v. Hardisty, h E. >V B. 282, 260; 27 L. J. Q. B 241; 112 K. R. 535; Udell v. Atherton, 7 H. & N. L78; 80 L. J. Ex. 887; 126 R. K. 383. (r) New Brunswick My. Co. v. (ovybcarc, 9 H. L. C. 470; 81 L. J. Ch. 297. 94 MISREPRESENTATION. the benefit of the agent. The only difference between the case where the principal receives the benefit and the case where he does not is that in the latter case he is liable for the wrong done, and in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent (s). A man cannot take any benefit under false and fraudulent representation made by his agent, although he may have been no party to the representations, and may not have distinctly authorised them (t) ; but the principal's liability does not seem to be limited to the benefit so taken (?/). When an act done by an agent is authorised by the terms of his authority, the act is binding on the principal as to all persons dealing in good faith with the agent, though the act Avas done by the agent in abuse of his authority, for his own purposes, and not for the benefit of the principal (#). A principal cannot adopt and take the benefit of a contract entered into by his agent, and repudiate the fraud on which it was built. If the agent at the time of the contract makes any representation or declaration touching the subject-matter, it is the representation and declaration of the principal. The statements of the agent which are involved in the contract, as its foundation or inducement, are in law the statements of the principal. The principal cannot separate the contract itself from that by which it was induced. He must adopt the whole contract, including the statements and representations which induced it, or must repudiate the contract altogether (y). (s) Lloyd v. Grace Smith & Co., 1912, A. C. 716; 81 B. J. K. B. 1140, over- ruling dicta in British Mutual Banking Co. v. Channcood Forest Rly., 18 Q. B. D. 714; 56 L. J. Q. B. 449; and in Ruben v. Great Fingall, 1906, A. C. 465 ; 75 L. J. K. B. 843. (t) NicoVs Case, 3 D. & J. 387, 437; 28 L. J. Ch. 257; 121 B. B. 169; Udell v Atherton, supra, per Pollock, C. B., and Wilde, J. ; Neic Brunswick Rly. Co. v. Conybeare, 9 H. L. C. 714, 726, 739; 31 L. J. Ch. 297; 131 B. B. 415; Mackay x. Commercial Bank of New Brunswick, L. B. 5 P. C. 394, 410; 43 L. J. P. C. 31. (u) Mackay v. Commercial Bank, &c, supra; Houldsicorth V. City of Glas- gow Bank. 5 App. Ca. 317. (x) Hambro v. Buryxard, 1904, 2 K. B. 10; 73 L. J. K. B. 669; cf. Smith v. Prosser, 1907, 2 K. B. 735 ; 77 L. J. K B. 71 ; Cuthbert v. Robarts, 1909, 2 Ch. 226; 78 L. J. Ch. 529. MISREPRESENTATION. 95 It would be inconsistent with natural justice to permit a man to retain properly acquired through the medium of false representations made by his agent, although he was no party to them, or did not authorise them (r). If an agent employs another person to make representations, it is the same as if the representations had been made by him (a). It is now settled that a principal cannot enforce a contract induced by the material misrepresentations of the ageni who negotiates it, whether such misrepresentations are fraudulent or not (&). But whether a principal, in the absence of inten- tional concealment, is liable in an action for damages for a statement known by him to be false, but made without his knowledge or authority by an agent who believes it to be true, is a question which has given rise to much controversy, and can hardly be considered settled. The case of Corn foot v. Fowhe (c), which first gave rise to the question, and decided it in favour of the principal, is said to have turned on a point of pleading (d). The actual point decided was that the jury were misdirected, and apart from the disapproval it has met with, the case can in no way be considered as settling the question ; at any rate it is not law if it is supposed to decide that a principal and agent can be so divided in responsibility that the united principal and agent may commit fraud with impunity (e). It is thought therefore probable that in such a case an action for damages would lie against the principal, either in the form of an action of deceit or as an analogous but special action on the case (/). (y) Udell v. Atherton, supra, per Pollock, C. B., and Wilde, B. ; Barwick v. English Joint Stock Bank, L. K. 2 Ex. 265; 36 L. J. Ex. 147; Weir v. Bell, ■ '■ Ex. D. 244; 47 L. J. Ex. 704; Mullens v. Miller, 22 C. D. 194; 52 L. J. Ch. 380. U) New Brunswick lily. Co. v. Conybeare, 9 H. L. C. 711 ; 31 L. J. Ch. 297 ; l.'il R. R. 415; Western Hank of Scotland v. Addie, I-. K. 1 H. I,. Be. L59; Oakes v. Turquand, L. R. 2 H. L. 325; 36 I,. J. Ch. 949. in) Western Bank of Scotland v. Addie, L. R. 1 H. E. Be. 159. Ibid.; Mullens v. Miller, supra; Bowetead on Agency, 6th ed., 859 o.; and see Polloch on Torts, 298. (c) 6 M. & W. 358; 55 \i. H. 655. . .J. Ex. 147. (e) Pearson v. Dublin Corp., L907, A. ('. 351. per Lord Hal bnrj ; 77 I,. .1 P. C. 1. (/) Pollock on Torts, 299. The effeci of the decision in Derryv. Peek, It App. 96 MISREPRESENTATION. Companies and corpora- tions bound by misrepre- sentation of agents. A company or corporation is as much bound by the false and fraudulent representations of its authorised agents as an individual (). A principal, however, is not bound by the false and fraudu- Principal not lent representations of his agent, unless the agent be acting resents within the scope of his authority (a), or unless the principal tions of , J w ' L L agents, unless accepts and ratifies the fraud (>). A joint stock company, for they be acting , , , „ . within the instance, is not bound by the statements of one of its members, scope of their unless he is also the agent of the company, and unless his authont '- business be to make statements on its behalf (.*). Nor is a company bound by the statements of one of the directors, or of its manager, or secretary, or of a clerk, in the absence of evidence of authority given him to make them (t). The rule that companies are bound by the misrepresentations of the directors applies only to the case of directors acting as a body (u). The fraud of the agent must be committed not only within the scope of his authority, but in the course of his employ- ment. The act complained of may be within the scope of his authority; but the principal is not liable if it is not committed in the course of business (a). It is not, however, necessary (n) Hirst v. West Riding, £c, 1901, 2 K. B. 560; 70 L. J. K. B. 828; post, Ch. vii. , a. 2. (o) Banbury v. Bank of Montreal, 1917, 1 K. B. 409; 86 L. J. K. B. 380. (p) Western Bank of Scotland v. Addie, L. R. 1 H. L. Sc. 163. (q) NicoVs Case, 3 D. & J. 387, 437; 28 L. J. Ch. 257; New Brunswick Illy. Co. v. Conybeare, 9 H. L. C. 711; 31 L. J. Ch. 297; 131 R. R. 415; ante, p. 98. ir) Swift v. Jewsbury, L. R. 9 Q. B. 301, 312; 43 L. J. Q. B. 56; Marsh v. Joseph, 1897, 1 Ch. 213; 66 L. J. Ch. 128, ante, p. 94. is) Burnes v. Pennell, 2 H. L. C. 497; 81 R. U. 244. (t) NicoVs Case, infra; Burnett d Co. v. South London Tramways, L8 Q. B. D. 815; 56 L. J. Q. B. 452. (tt) NicoVs Case, 3 D. & J. 387, 440; 28 L. J. Ch. 257; 121 H. U. 169; bul hcc Mair v. Itio Grande Itubber Estates, infra, p. 99. (x) Swift v. Jewsbury, I,. K. 9 Q. B. 301; 43 L. J. Q. B. 56; /,Y Ih r.ila Co., 22 C. D. 593; 52 L. J. Ch. 434. K.F. 7 98 MISREPRESENTATION. to show that the particular act was authorised if the act was done within the scope of the employment authorised by the principal (y). Holding out. Although a principal is not bound by the statements of an agent when not acting within the scope of his authority, the principal may be liable on the ground of estoppel by " holding out," that is, by apparently authorising the agent to do certain acts (~). Where the owner of property so acts as to mislead another person into the belief that the person dealing with it has authority to do so, the person taking the property will acquire a good title as against the owner («). But 3^011 do not hold out anything by transferring title deeds or shares to your trustee; you do not hold him out as your agent at all (6). Nor can such " holding out " be pushed so far as to bring the forging of a document within the class of acts which the agent is apparently authorised to do (c). Nor can holding out be a ground for an action of deceit unless fraud be proved (d). The holding out must be to the particular individual who says he relied upon it or under such circum- stances of publicity as to justify the inference that he knew of it and acted upon it (- contract, or the person who has been deceived institutes an action against the company to rescind the contract on the ground of fraud, the misrepresentations are imputable to the company, and the purchaser cannot be held to his con- tract, because a company cannot retain any benefit which they have obtained through the fraud of their agents (h). So if directors put forward a prospectus which contains a false report by one of the directors, the company can no more retain money subscribed on the faith of it than it could if the whole board of directors had been guilty (i). But if the person who has been induced to purchase shares by the fraud of the directors, instead of seeking to set aside the contract, prefers to bring an action for damages for the deceit, such an action cannot be maintained against the company if he retains his shares, or if rescission is impossible by reason o£ the winding-up of the company (Jc), but he may sue the directors personally. But a director is not liable for misstatements honestly made which he has taken reasonable care to test. The fact that if he had made inquiries he might have discovered that he was being deceived by his subordinates is not in itself sufficient to show that he did not act with reasonable care (/). As a general rule, one agent is not responsible for the acts Misrepresen- of another agent unless he does something by which he makes B ub°agent himself a principal in the fraud (m). But a sub-agent may stand in a fiduciary position towards the principal and be tij) Fay v. Smillie, post, p. 134. {h) Western Bank of Scotland v. Addie, L. R. 1 H. L. p. 157. (t) Man v. Rio Grande Rubber Estates, 1913, A. C. 858j 83 L. J. P. C. 85. (k) Houldsworth v. City <>j Glasgow Hank, 5 App. Ca. 'U7; and Bee ante, p. 96. (/) Dovey v. Cory, 1901, A. C. 477; 70 L. J. Ch. 7. r .:i. ante, p, 84. (m) Cargill v. Bower, 10 C. D. 502, 514 ; 17 L. .1. Oh. f,49. 100 MISREPRESENTATION. accountable for secret commission which he has received (?i). When an agent employs a sub-agent, and the latter in the course of his employment is guilty of fraud or misrepresenta- tion, and the agent with knowledge of the fraud derives a material benefit from it, the case becomes analogous to that of a principal who profits by the fraud of his agent, the principle being that he who profits by the fraud of one who is acting by his authority, though committed without his authority, adopts the acts of the agent, and becomes respon- sible to the party who has been imposed upon and has sustained damage by reason of it. The doctrine that the principal is in any event liable for his agent's fraud to the extent to which the. principal has profited by the fraud, does not apply to directors employing sub-agents, such as brokers to place debentures, to transact business of the company in the transaction of which the sub-agents are guilty of fraud, for in such a case the company, not the directors, are the principals (o). If the director has really acted as principal, and only colourably as the company's agent, no doubt he might be reudered liable as principal (/?). Agent selling It is not in general fraudulent for an agent to contract as if as if he were m _ • principal. he were principal without disclosing the fact of his being an agent contracting for another (q), but it may be so under the circumstances of the case. Thus, where an apparent vendor of property had represented to the purchaser by means of a fictitious contract made colusively with the real owner that the property had been sold to him at a certain price, when in fact he was acting only as agent under an agreement by which he was to receive a large discount or commission for obtaining a sale at that price, the transaction was held to be fraudulent and the purchaser entitled to rescind the trans- action (/•). On the other hand, for a man to represent that he (n) Powell v. Evan Jones d Co., 1905, 1 K. B. 11; 74 L. J. Iv. B. 115. (o) Weir v. Bell, 3 Ex. D. 238; 47 L. J. Ex. 704; in which case, however, the Court of Appeal were by no means unanimous in their opinions ; Weir v. Barnett, 3 Ex. D. 32. See now Companies Consolidation Act, 1908, s. 84. (p) 3 Ex. D. p. 41. (q) Nelthorpe v. Holgate, 1 Coll. 220; 66 B. B. 46. (r) Lindsey Petroleum Co. v. Hurd, L. B. 5 P. C. 221 ; but see Leask v. Scott, 2 Q. B. D. 376; 46 L. J. Q. B. 576. tions of a partner. MISREPRESENTATION. 101 is acting as agent when in fact lie is acting on his own behalf is of no consequence if the agent had no principal at all and was in fact contracting for himself (a), or if it is immaterial to the purchaser with whom the contract is made (t) ; but if it is material, as where the purchaser has been induced to contract because he has a set-off against the person with whom he intends to contract (u), or where the parties stand in a fiduciary relation to each other (.r), the transaction is fraudulent. A partnership firm is bound by false and fraudulent repre- Partnership sentations made by any of its members whilst acting wjthin rep resenta- the scope and limits of his authority, and having reference to the proper business of the firm (y), but is not bound by statements made by him as to his authority to do that which the nature of the business of the firm does not impliedly warrant (z). If A. has a contract with B. and B. takes C. into partnership, and A. elects to abide by his contract with B., C. is not liable for a fraud by B. against A. in respect of the contract though B. was acting within the scope of the partnership business (a). The principle which treats non-disclosure as equivalent to Duty of dis- . . , , 1 . , elosiuv in the fraud, wnen the circumstances impose a duty that disclosure case f should be made, obtains specially in respect to policies of J^^,!,'' assurance. They arc contracts uberrima fidei; that is to say, the parties are not entitled to contract as if they were at arms' length. They must not keep back, as a vendor may, on the principle of caveat emjrtor, a single material fact unknown to those they deal with. And, inasmuch as the risk which the insurer undertakes can only be learnt from the representations (s) Harper v. Vigers, 1909, 2 K. B. 549; 78 L. J. K. B. 867; Nash V. Dix, 78 L. T. 445. i/) Fellow es v. Lord Gwydyr, 1 R. & M. 83; 32 R. It. 148; but Bee Bickerton v. liurrell, 5 M. & S. 383; Pollock on Cont. 107. (a) Boulton v. Jones, 2 H. & N. 5(54; 27 L. J. Ex. 117; Archer v. Stone, 7s L. T. 34. (x) Kimber v. Barber, 8 Ch. 56. ii/i Partnership Act, 1890, s. 10; Moore v. Knight, L891, I Ch. 547; 60 L. ■). Ch. 271. (z) Partnership Act, 1890, s. 5. (a) British Homes Ass. Corp. v. Vaterson, 1902, 2 Ch. 404 ; 71 L. .1. Ch. 872; see Hnd v. Silberberg, 1906, V. L. R. 126. marine assurance 102 MISREPRESENTATION. of the party proposing- the insurance, courts of justice proceed upon a doctrine strictly analogous to that of the Roman law, and regard non-disclosure as fatal to the validity of the trans- action (b). This rule extends to all contracts of insurance, and is not confined to life, fire, and marine insurance (c). Policies of The rule with respect to the duty of disclosure applies with peculiar force in the case of policies of marine insurance. The validity of a contract of marine insurance being con- ditional upon the completeness, the truth, and the accuracy of the representations of the party proposing the insurance as to the risk, he is bound to make known to the underwriter everything within his knowledge which is of a nature to increase the risk which he is asked to undertake. There are many matters as to which he may be innocently silent. He is not bound to mention facts and circumstances which are within the ordinary professional knowledge of an underwriter : nor is he bound to communicate things which are well known to both parties, or which he is warranted in assuming to be within the knowledge of the party who is asked to undertake the risk; as, for instance, where a fact is one of public notoriety, as of war, or where it is a matter of inference and the materials for forming a judgment are common to both parties. But he is bound to communicate every fact which he is not entitled to assume to be in the knowledge of the underwriter. He may not, however, speculate as to what may or may not be in the mind of the underwriter, or as to what may or may not be brought to his mind by the particulars disclosed to him. It is not enough that the underwriter be furnished with materials from which he may by a course of reasoning and effort of memory see the extent of the risk. The matter must not be left to speculation or peradventure. If the particulars furnished to the underwriter fall short of what the party proposing the insurance is bound to com- municate, the contract is vitiated. It is immaterial whether the omission to communicate a material fact has arisen from (b) Carter v. Boehm, 3 Burr. 1905; Lindenau v. Desborough, 8 B. & C. 586; 7 L. J. K. B. 42. (c) Seaton v. Heath, 1899, 1 Q. B. 782; 68 L. J. Q. B. 63] MISREPRESENTATION, 103 intention, or indifference, or mistake, or from it not being present to the mind of the party proposing the insurance that the fact was one which ought to have been disclosed (//). It lies upon the insurer to prove the misrepresentation (e). Non- disclosure by an agent of the assured, without fraudulent intention, has, however, been held to avoid the policy only to the extent of the loss or risk arising from the particular facts so withheld (/). The party proposing the insurance is bound to communicate not only every material fact of which he had actual knowledge, but every material fact of which he ought in the ordinary course of business to have knowledge, and must take all necessary measures, by the employment of com- petent and honest agents, to obtain through the ordinary channels of intelligence in use in the mercantile world all due information as to the subject-matter of the insurance. If by the fraud or negligence of the agent of the party proposing the insurance the underwriter is kept in ignorance of a fact material to the risk, the contract is vitiated (g). But this only applies to the agent through whom the insurance was actually effected, and not to an agent not directly connected with the transaction in question (h), unless there is a con- tinuous negotiation by more than one agent (/). The conceal- ment by the assured at the time of effecting a policy of assurance of a fact which is material to enable a rational underwriter, governing himself by the principles on which underwriters in practice act, to judge whether he shall accept the risk at all or at what rate, will vitiate the policy, although the fact may not be material with regard to the risk assured (/.-). (d) Carter v. Boehw . 3 Burr. 1005; Bates v. Hewitt, L. R. '2 Q. B. 595, 605, 606, 610; 36 L. J. Q. B. 282; Ionides v. Pender, I,. It. 9 Q. B. 537; 11 L. J. Q. B. 190; Anderson v. Pacific, .t'c, Ins. Co., L. H. 7 C. P. 68; Davies v. London and Provincial Ins. Co., 8 C. D. 474; 47 L. J. Ch. 51] : Mercantile Steamship Co. v. Tyser, 7 Q. B. D. 77. (e) Davis v. National Ins., L891, A. C. 485; 60 h. J. P. C. 7:!. (/) Stribley v. Imperial, Ac, Co., 1 Q. B. D. 507; 45 I.. J. Q. B. 396; but 12 App. Ca. p. 540. (g) Proudfoot v. Montefiore, I,. R. 2 Q. B. 511 ; 36 L.J. Q. B. 225; Biggar v. Rock Life Ass. Co., 1002, 1 K. B. 516; 71 L. J. K. B. 70. (JO Blackburn v. Vigors, 12 App. Ca. 531 ; 55 D. J. Q. B. 847. (t) Blackburn v. Haslam, 2] Q. B. D. Ml; 57 I.. J. Q. B. 170. (A) Rivas v. Gerussi, 6 Q. B. I). 222; r,o \,. .) . Q. B. 176. 104 MISREPRESENTATION. He is bound to communicate all facts which would affect the mind of the underwriter (/). But an underwriter cannot avoid a policy for non-disclosure of matters of which he has notice (//>). And he may in any particular case limit the right of full disclosure which he has by law to that of being informed of what is in the knowledge of the party proposing the insurance, not only as to its existence in point of fact, but also to its materiality (n). After the contract is complete, the party assured need not communicate to the underwriter facts which afterwards come to his knowledge material to the risk assured against (o). Inasmuch, therefore, as according to the practice of insur- ance the slip or memorandum of terms made for the purpose of drawing up the policy is considered as the final acceptance of the risk, any information not obtained until after the slip is initialled is immaterial; and if a policy is executed in accordance with the slip, it cannot be avoided on the ground of concealment of information (/;). Lifeassurance It was formerly considered that policies of assurance on lives, like policies of insurance on ships, were made condition- ally upon the truth or completeness of the representations respecting the risk, and that misrepresentation or concealment of a material fact, although not fraudulent, vitiated the policy (q). But it is now determined that such is not the case. The assured is always bound, not only to make a true answer to the questions put to him, but to disclose spon- taneously any fact exclusively within his knowledge which it is material for the insurer to know. But it is not an implied condition of the validity of the policy that the insured should make a complete and true representation respecting the life (I) Tate v. Hyslop, 15 Q. B. D. p. 379; 54 L. J. Q. B. 592. (m) The " Bedouin" 1894, P. 1 ; 63 L. J. P. 30. (n) Jones v. Provincial Ins. Co., 3 C. B. N. S. 16; 26 L. J. C. P. 272; 111 R. R. 541. (o) Cory v. Patton, L. E. 7 Q. B. 304; 43 L. J. Q. B. 181; Lishman v. Northern Maritime Ass. Co., L. R. 10 C. P. 179; 44 L. J. C. P. 185. (p) Ibid.; Cory v. Patton, L. R. 9 Q. B. 577; Fisher v. Liverpool Marine Ins. Co., ibid. 418; 43 L. J. Q. B. 114. (q) Lindenau v. Desborough, 8 B. & C. 586; 7 L. J. K. B. 42; Jones v. Provincial Ins. Co., 3 C. B. N. S. 86; 26 L. J. C. P. 272; 111 R. R, 541. policies. MISREPRESENTATION. 105 proposed for insurance. Such condition, if intended, must be made a matter for express stipulation. If there be no warranty or condition on the part of the party proposing the insurance, the insurer is subject to all risks, unless he can show a fraudu- lent concealment or misrepresentation, or a non-communication of material facts known to the assured, which it was his duty to communicate (/•), and which formed part of the basis of the contract (s). But knowledge of a material fact if known to the insurance agent, though not communicated, will be im- puted to the principal and will not, therefore, invalidate the policy (f). If, however, the agent is allowed by the proposer to invent answers to questions which form the basis of the contract, he is not the agent of the insurance company, and the latter is not liable on the policy though the proposer did not know that the agent had answered falsely (u). But where the proposal forms were filled in and signed by agents of the company without the authority of the proposers, the company, having received the premiums, was held liable to pay the sums insured (w). It is an implied condition that the person whose life is assured is alive at the time of making the policy, and the policy is void if the assured was dead at the date of the policy, though neither party to the policy was aware of his death (#). If there is a proviso that the policy shall not be disputed on the ground of merely untrue statements, not fraudulently made, a misrepresentation or concealment undesignedly made does not avoid the policy (y). An insurer (r) Wheelton v. Hardisty, 8 E. & B. 232; 27 L. J. Q. B. 241; 112 11. It. 535; London Ass. v. Man.sc/, 11 C. D. 3(57; 48 L. J. Ch. 331 ; Hambrough v. Mutual Ins. Co., 72 L. T. 140; Yorke v. Yorks. Ins. Co., 1918, 1 K. B. 662; 87 L. J. ■R. B. ski. (*) Joel v. Law Union and Crown Ins. Co., 1908, 2 K. B. 863; 77 L. J. K. B. 1 108. i/i Bawden v. London, Edinburgh and Glasgow Ass. Co., 1892, 2 Q. B. 534; 63 L. .J. Q. B. 792; Ayrey v. British Legal, £c, 1918, 1 K. B. 136; 87 L. J. K. B. 513. (u) Biggar v. Rock Life Ass. Co., L902, 1 K. B. 516; 71 L.J. K. B. 79. (to) Pearl Life Ass. Co. v. Johnson, L909, 2 K. B. 288; 78 L. .1. K. B. 777. i.D Pritchard v. Merchant's Life Ass. Society, 3 C. B. N. S. 622; 27 1.. .1. C. P. 169; 111 H. It. 777. (y) Foirkes v. Manchester and London Life Ass. Co., 8 B. & S. 917; 82 L. J. 0. B. 153; 129 Jt R. 607; Hemming s v. Sceptre Life Ass. Co., L905, 1 Ch. 106 MISREPRESENTATION. may limit his rig-lit to that of being informed of what is in the knowledge of the party proposing the insurance, not only as to its existence in point of fact, but also as to its materiality (z). The declaration made as to the basis of the contract is taken as continuing up to the time of executing the policy, so that any intermediate change of circumstances rendering it untrue must be communicated ; as where the declaration stated as required the name of the latest medical attendant of the insured, and before completing the policy he took the advice of another medical attendant who gave important information respecting his state of health, it was held that the declaration had become untrue and avoided the policy (a). The evidence of medical men to show the materiality of facts not disclosed is admissible (6). On the other hand, a policy may be avoided by the false representations of the insurer or his agent and the premiums recovered back by the assured (c). But an innocent mis- representation by an agent that an insurance would be valid in law will not entitle the assured to recover the premiums (d). Secus, if the statement is made fraudulently (e). Premiums on a life policy the payment of which has been obtained by fraud may be recovered back even though the policy is one which is prohibited by statute (/). Accordingly the Assurance Companies Act, 1909, s. 36, does not deprive a person who has effected a policy such as is there described of his right to say that he was induced to enter into the policy by fraud and to claim rescission and repayment of the premiums (g). 365; 74 L. J. Cb. 231. Cf. Macdonald v. Law Union, L. E. 9 Q. B. 328; 43 L. J. Q. B. 131. (z) Jones v. Provincial Ins. Co., 3 C. B. N. S. 86; 26 L. J. C. P. 272; 111 E E. 541. (a) British Equitable Ins. Co. v. Great Western Rly. Co., 38 L. J. Ch. 314. (b) Yorke v. Yorks. Ins. Co., supra. (c) Kettlewell v. Refuge Ass. Co., 1908, 1 K. B. 545; 77 L. J. K. B. 421; Merino v. Mutual Reserve, etc., 21 T. L. E. 165. (d) Harse v. Pearl Life Ass. Co., 1904, 1 K. B. 558; 73 L. J. K. B. 373. (e) British Workman's Ass. Co. v. Cunliffe, 18 T. L. E. 502; Goldstein V. Salvation Army Ass. Soc, 1917, 86 L. J. K. B. 793. (/) Hughes v. Liverpool Friendly Soc, 1916, 2 K. B. 482; 85 L. J. K. B. 1643. (g) Tofts v. Pearl Life Ass. Co., 1915, 1 K. B. 189; 84 L. J. K. B. 286. MISREPRESENTATION. ll»7 Policies of insurance against fire are made upon the implied Fire assur- condition that the description of the property inserted in the policy is true at the time of making the policy (h); and there is an implied condition that the property shall not he altered during the term for which it is insured, so as to increase the risk (i). In effecting an insurance against fire, it is the duty of the party proposing the insurance to communicate to the insurer all material facts within his knowledge touching the property (A'). But the insurer may limit his right to that of being informed of what is in the knowledge of the party proposing the assurance, not only as to its existence in point of fact, but also as to its materiality (/). Where a policy is warranted to be identical in rate, terms and interest with other insurances on the same property, the warranty is a condition precedent of any obligation, and a breach of it avoids the policy (///). The strict rule with respect to non-disclosure, which obtains Duty of dis- ,i p v • r, ■ i ,i closure in the m the case of policies of insurance, does not extend to con- case of con- tracts of suretyship or guarantee. The contract is not one in tracts of * ' ° guarantee or which there is a universal obligation on the part of the suretyship. creditor to make a full disclosure, unless there is a condition that there shall be a full disclosure of all the circum- stances (??). But very little said which ought not and very little not said which ought to have been said will be sufficient to prevent the contract being valid (o). If the creditor be specially communicated with on the subject, he is bound to make a full, fair and honest communication of every circum- stance within his knowledge calculated in any way to influence the discretion of the surety on entering into the required (h) SilTem v. Thornton, 3 E. & B. 868; 23 L. J. Q. B. 362. (0 Ibid. ; Stokes v. Cox, 1 H. & N. 533; 26 L. J. Ex. 113; 108 R. R. 607. (k) Lindenau v. Desborough, 8 B. & C. 592; 7 L. J. K. B. 12; Bufe v. Turner, 6 Taunt. 338; L6 R. R. 626; Condogeanis v. Guardian Ass. Co., L919, Vict. L. It. 1. (I) Jones v. Provincial Ins. Co., 3 C. B. N. S. 86 ; 26 I.. J. C. I'. 272. (m) Barnard v. Faber, L893, 1 Q. 75. 340; 62 L. J. Q. B. L59. (n) Towle v. National Ins., 3 Giffe. 42; 30 L. J. Ch. 900; L38 R. U. 20. (o) North British Ins. Co. v. Lloyd, L0 Ex. 523; 24 L. J. Ex. II; Wytfa v. Labouchere, 3 D. & J. 'ID'.); L2] R. R. 238; Danes v. London and Prov. Ins. Co., 8 C. D. 469; -17 L. J. Ch. 511. As to Lord Tenterden'a Art. Bee post, Ch vii., «. 2. 108 MISREPRESENTATION. obligation (p). But lie is not under any duty to disclose to the intended surety voluntarily, and without being asked to do so, any circumstances unconnected with the particular transaction in which he is about to engage, which will render his position more hazardous, or to inform him of any matter affecting the general credit of the debtor, or to call his attention to the transaction, unless there be something in it which might not naturally be expected to take place between the parties (q). Nor is it necessary in the case of a fidelity guarantee that the non-disclosure should be fraudulent (r). If the intended surety desires to know any particular matter of which the creditor may be informed, he must make it the subject of a distinct inquiry (*). But if there be anything in the transaction that might not naturally be expected to take place between the parties concerned in it, the knowledge of which it is reasonable to infer would have prevented the surety from entering into the transaction, the creditor is under an obligation to make the disclosure (t). If, for instance, there be any private arrangement, or secret under- standing between the creditor and the debtor connected with the particular transaction in which he is about to engage, whereby the risk of the surety is increased (u), or his position is so materially varied that he is not in the position in which he might reasonably have contemplated to be (x) ; or if a party having reason to suspect the fidelity of his clerk requires security in such a way as to hold him out as one whom 1 he considers a trustworthy person (y), or if, when the guarantee (p) Owen v. Homan, 3 Mac. & G. 378 ; 20 L. J. Ch. 314 ; 94 E. E. 516; Blest v. Brown, 4 D. F. & J. 367; Greenfield v. Edwards, 2 D. J. & S. 582, 598; 139 E. E. 244. (q) Hamilton v. Watson, 12 CI. & Fin. 119; 69 E. E. 58; Small v. Currie, 2 Drew. 102; 100 E. E. 51; Wythes v. Labouchere, 3 D. & J. 593, 609; 121 E. E. 238. (r) London General Omnibus Co. v. Holloioay, 1912, 2 K. B. 72; 81 L. J. K. B. 603. (s) Hamilton v. Watson, supra; Wythes v. Labouchere, 3 D. & J. 609. (t) Hamilton v. Watson, 12 CI. & Fin. 109, 119; 69 E. E. 58; Lee v. Jones, 17 C. B. N. S. 503; 34 L. J. C. P. 131; 142 E. E. 467. («) Pidcock v. Bishop, 3 B. & C. 605; 27 E. E. 430. (x) Spaight v. Cowne, 1 H. & M. 359; 136 E. E. 150; Ellesmere Brewery Co. v. Cooper, 1896, 1 Q. B. 75; 65 L. J. Q. B. 173. (y) Smith v. Bank of Scotland, 1 Dow, 272; 14 E. E. 67. MISREPRESENTATION. L09 is a continuing one, an employer chooses to continue a clerk in his employment after discovering that he has been guilty of dishonesty in his service (z), or if the creditor has notice that the circumstances under which the debtor has obtained the concurrence of the surety lead to the suspicion of fraud (a); concealment is fraudulent and will vitiate the transaction. " It must in every case," said Lord Black- burn (b), "depend on the nature of the transaction whether the fact not disclosed is such that it is impliedly represented not to exist, and that fact must be generally a question of fact for the jury." But though the strict rule with respect to non-disclosure which obtains in the case of policies of insurance does not extend to contracts of suretyship, the contract of suretyship is based upon the free and voluntary agency of the individual who enters into it. Anything like pressure used by the intending creditor will have a very serious effect on the validity of the contract, and the case is stronger when pressure is the result of maintaining a false conclusion in the mind of the person pressed (c). In order that a compromise may be supported in equity, it Concealment • iiii jii i m tue case °^ is essential that the parties should have acted with equal compromises. knowledge, or at least equal means of knowledge, in the matter. If one of the parties has knowledge of a material fact, which he withholds from the others, and which they have not reasonable means of knowing, the transaction cannot stand. A compromise cannot be approved of where one party knows only so much of his rights as the opposite party chooses to apprise him of. To constitute a fair coin- promise of a doubtful right, the facts creating the doubt should be equally known by all the parties. There must be a full and fair communication of all material circumstances (z) Philippe v. Foxhall, L. K. 7 Q. B. 679; 41 L. J. Q. B. 293; but see Caxton Union v. Dew, 68 L. J. Q. B. 380. (a) Owen v. Iloman, 4 H. L. C. 997 ; 20 L. J. Ch. 314; 91 R. R. 516; Lee V. Jones, 17 C. B. N. S. 503; 34 L. J. C. P. 131; 142 R. R. 467 ; Rhodes v. Bate, 1 Ch. 252; 35 L. J. Ch. 267; 148 R. It. 255. (6) 17 C. B. N. 9. 506. (c) Davies v. London and Provincial Ins. Co., 8 C. D. 474; 17 I, .1. Ch. 511 110 MISREPRESENTATION. affecting the question which forms the subject-matter of the agreement, which are within the knowledge of the several parties, and which the others have not reasonable means of knowing, whether such information be asked for by them or not. There must not only be good faith and honest intention, but full disclosure, and without full disclosure honest in- tention is not sufficient. A party to a compromise who has knowledge of a fact must not take upon himself to decide that the suppressed fact is immaterial, if it could by any possibility have had any influence on the decision of the other party (d). To make a compromise of any value the parties must be at arms' length, on equal terms, with equal know- ledge, and with sufficient advice and protection (e). Mere silence, however, as regards a material fact which the one party is not bound to disclose to the other, is not a ground of defence to specific performance of a compromise (/). If it is desired to set aside on the ground of fraud a compromise already approved, a new action must be brought (g). If the compromise is a transaction in the nature of a family arrangement, these principles apply with peculiar force (h). The omission to make full communication, even without any wrong motive, is a ground for setting aside the transaction. " Full and complete communication of all material circum- stances' is what the Court must insist on ' (i) ; and without full disclosure honest intention is not sufficient (Jc). The operation of this rule is not affected by the leaning of equity (d) Walker v. Symonds, 3 Sw. 1; 19 E. E. 155; Stewart v. Stewart, 6 CI. & Fin. 911 ; 49 E. E. 267 ; Harvey V. Cooke, 4 Euss. 34 ; 6 L. J. Ch. 84; Pickering v. Pickering, 2 Beav. 56 ; 8 L. J. Ch. 336; Brooke v. Lord Mostyn, ibid. 373; 34 L. J. Ch. 65; De Cordova v. De Cordova, 4 App. Ca. 702; Re Roberts, 1905, 1 Ch. 704; 74 L. J. Ch. 483. (e) Moxon v. Payne, 8 Ch. 881, -per James, L.J., 43 L. J. Ch. 340. (/) Turner v. Green, 1895, 2 Ch. 205; 64 L. J. Ch. 539; Greenhalgh v. Brindley, 1901, 2 Ch. 324; 70 L. J. Ch. 740. (g) Emcris v. Woodward, 43 C. D. 185; 59 L. J. Ch. 230. (h) Gordon v. Gordon, 3 Sw. 400; 19 E. E. 230; Greenwood v. Greenwood, 2 D. J. & S. 28; 139 E. E. 13; Fane v. Fane, 20 Eq. 698; but see Hoblyn v. Hoblyn, 41 C. D. 200; Re Roberts, supra. (i) Gordon v. Gordon, 3 Sw. p. 473; 19 E. E. 230. (70 Ibid., p. 477 ; De Cordova v. De Cordova, 4 App. Ca. 692; Re Roberts, sup. MISREPRESENTATION. Ill towards supporting family arrangements for the sake of peace and quietness in families (/). The rule with respect to compromises which applies between private individuals is not less applicable to compromises by the Court on behalf of infants; but the Court cannot sanction a compromise on behalf of infants against the opinion of their advisers (m). The orders of the Court cannot be set aside on grounds less strong than those which would be required to set aside transactions between competent parties (n). The most comprehensive class of cases in which equitable Concealment 1- £ ' 1 IP 1 • '' V P eI ' sons relief is sought on the ground of concealment is m the case standing in a of transactions between persons standing in a fiduciary fiduciary relation to each other. In all such cases the party who fills rel *tion. the position of active confidence is under an equitable obliga- tion to disclose to the party towards whom he stands in such relation every material fact which he himself knows calculated to influence his conduct on entering into the transaction. The suppression of any material fact renders the transaction impeachable in equity. This subject will come into review in a subsequent chapter, where the peculiar equities between persons standing in these positions will be considered. If a man makes a representation in the honest belief that Miarepreaen- it is true, and there be reasonable ground for such relief, a b y mistake, fraudulent intent will not be imputed to him, although it may turn out to be false (o), unless there be a duty cast on him to know the truth (p). A misrepresentation made through honest mistake is not a ground for rescinding a transaction (q), unless the subject-matter be different in substance from what Hi Fane v. Fane, 20 Eq. 698. (to) Re Birch all, 16 C. D. 41. (n) Brooke v. Lord Mostyn, 2 D. J. & S. 416; 34 L. J. Ch. 65 ; 139 R. K. 134 ; Coaks v. Boswell, 11 App. Ca. 232; 55 L. J. Ch. 761; Turner v. Green, 1895, 2 Ch. 205; 64 L. J. Ch. 539. (o) Haycraft v. Creasy, 2 East, 92; 6 R. R. 380; Collins v. Evans, . r , Q. ]',. 820; 13 L. J. Q. B. 180; 64 R. R. 656; Thorn v. Bigland, 8 Ex. 726; 22 D. J. Ex. 243; 91 R. R. 730. See Bank of England v. Cutler, Bertram, third party, 25 T. L. R. 509. (p) Thorn v. Bigland, supra. (q) Ormrod v. Huth, 14 M. & W. 651; 14 L. .1. Ex. 866; bul Bee Re Club, Bamficld v. Rogers, 1900, 1 Ch. 354 ; 69 L. J. Ch. 278. 112 MISREPRESENTATION. it was represented to be. In cases where a contract is sought to be rescinded on the ground of fraud, it is enough to show a fraudulent representation as to any part of that which induced the party to enter into the contract which he seeks to rescind; but where there has been an innocent misrepresen- tation or misapprehension, it does not authorise a rescission, unless it be such as to show that there is a complete difference between what was represented and what was taken, so as to constitute a failure of consideration. For example, where a horse is bought under a belief that it is sound, if the pur- chaser is induced by a fraudulent representation as to the horse's soundness, the contract may be rescinded. If it was induced by an honest misrepresentation as to its soundness, though it may be clear that both vendor and purchaser thought they were dealing about a sound horse, and were in error, yet the purchaser must pay the whole price, unless there was a warranty; and even if there was a warranty, he cannot return the horse and claim back the whole of the price, unless there was a condition to that effect in the contract. The principle is well illustrated by the civil law as stated in the Digest (/■), to the effect that if there be a misapprehension as to the substance of the thing, there is no contract; but if it be only a difference in some quality or accident, even though a misapprehension may have been the actuating motive to the purchaser, yet the contract remains binding. " Si aes pro auro veneat, non valet, aliter atque si aurum quidem fuerit, detenus autem quam emptor estimaret; tunc eniin emptio valet " (s). The principle of our law is the same as that of the civil law. If the thing sold differs in substance from what the purchaser was led by the vendor to believe he was buying, there is no contract. A man who honestly sold what he thought was a bill without recourse to him, was held never- theless bound to return the price, on its turning out that the supposed bill was void under the stamp laws in the one case, (r) Lib. 18, De contrahendi! emptione, Tit. 1, leg. 9, 10, 11. (s) See Kennedy v. Panama, £c, Co., L. R. 2 Q. B. p. 587 ; 36 L. J. Q. B. 260. MISREPRESENTATION. 113 and was a forgery in the other (t). So also where cotton was sold by sample, and the sample was long stapled cotton, but the cotton delivered was short stapled cotton, the cotton was held to be different in kind from what the purchaser had contracted to buy, and that he was entitled to reject it (u). If, on the other hand, the purchaser receives what answers the description of the article sold, and there is no difference in substance between the article delivered and the article sold, but only a difference in some quality or accident, the contrail remains binding in the absence of a warranty, even though a misapprehension caused by the incorrect representation of the vendor may have been the actuating motive to the pur- chaser (j). In such a case the rule caveat emptor will apply (y). In a case, accordingly, where a steam-packet company issued a prospectus stating in effect that they had entered into a contract with a colonial government for the carrying of mails between certain places, and a man induced by the terms of the prospectus applied for and obtained some of the shares, but the contract, not being binding on the colonial government, was repudiated, it was held that the representation did not affect the substance of the matter, the applicant having actually got shares in the very company for shares in which he had applied, and the shares being a property of considerable value in the market, though perhaps not so valuable as they Mould have been had the statement in the prospectus been strictly accurate (~). The difficulty in every case is to determine whether the mistake or misappre- hension is as to the substance of the whole consideration, going, as it were, to the root of the matter, or only to some point, even though a material point, an error as to which does not affect the substance of the whole consideration. There may be misapprehension as to that which is a material pari (t) Gompertz v. Bartlett, 2 E. & B. 849; 23 L. J. Q. B. 65; 95 K. R. 65] ; Curney v. Womersley. t G. A: B. 133; 24 L. J. Q. B. 16; 99 It. R. 890; i I Hi Glubb, L900, 1 Ch. 354 : 69 I,. .1. Ch. '278. («) Aznnar v. Casella, L. R. •-' C. I'. 677 j 36 L. .1. ('. 1'. 268. (x) Kennedy v. Panama, dtc, Co., L. R. 2 (,>. I'.. i>. 587; 86 I.. .1 . Q. I'.. 260 (y) 2 E. & B. p. 850, /»■/- Lord Campbell. tz) Kennedy v. Panama, le., Co., h. R. 2 Q. B. '>*"; 86 L. J. (,). B. 260 K.F. 114 MISREPRESENTATION. of the motive inducing the transaction, but not so as to prevent the subject-matter of the transaction from being in substance what it was represented to be (a). The same principles apply where a claim is made for the restitution of property acquired through incorrect representa- tions made by honest mistake. In Rawlins v. Wickham (b), Turner, L. J., said that if, upon a treaty for purchase, one of the parties to the contract makes a representation materially affecting the subject-matter of the contract, he cannot be allowed to retain any benefit which he has derived, if the representation proves to be untrue, and that no man can be held to what he has done under circumstances which have been erroneously represented to him by the other party to the transaction, however innocently the representation may have been made ; that a contrary doctrine would strike at the root of fair dealing, and would open a door of escape in all cases of representation as to credit, and indeed in all other cases of false representation (c). The words of Mr. Justice Story (d) are much to the same effect. "Nothing," he said, "is clearer in equity than the doctrine that a bargain founded upon false representations made by the seller, although made by innocent mistake, will be avoided. Mistake as well as fraud in any representation of a fact material to the contract is a sufficient ground to set it aside." In Redgrave v. Httrd (e) Jessel, M. R., said: "As regards rescission of a contract, there was no doubt a difference between the rules of courts of equity and the rules of courts of common law — a difference which of course has now dis- appeared by the operation of the Judicature Act, which makes rules of equity prevail. According to the decisions of courts of equity, it was not necessary in order to set aside a contract obtained by material false representations to prove that the party who obtained it knew at the time when the representa- (a) Ibid., p. 588. (b) 3 D. & J. 317 ; 28 L. J. Ch. 188 ; 121 R. R. 134 ; explained 34 C. D. p. 595. (c) Hart v. Swaine, 7 C. D. 46; 47 L. J. Ch. 5. (d) 1 Story (Amer.), 172. (e)20 C. D. 1; 51 L. J. Ch. 113. MISREPRESENTATION. 115 tion was made that it was false. It was put in two ways, either of which was sufficient. One way of putting the case was : A man is not to be allowed to get a benefit from a statement which he now admits to be false. He is not to be allowed to say for the purpose of civil jurisdiction, that when he made it he did not know it to be false; he ought to have found that out before he made it. The other way of putting it was this : Even assuming that a moral fraud must be shown in order to set aside a contract, you have it where a man having obtained a beneficial contract by a statement which he now knows to be false insists upon keeping that contract. To do so is a moral delinquency ; no man ought to seek to take advantage of his own false statements . . . the doctrine in equity was settled beyond controversy, and it is enough to refer to the judgment of Lord Cairns in Reese River Silver Mining Co. v. Smith (/), in which he lays it down in the way I have stated." Where, therefore, a man subsequently discovers the falsity of an innocent representation it is his duty to disclose it, otherwise he will be liable in an action of deceit for loss subsequently sustained (g). In Adam v. Newbiggin (h), Bowen, L. J., said: "If the mass of authority there is upon the subject were gone through, I think it would be found there is not so much difference as is generally supposed between the view taken al common law and the view taken in equity as to misrepresentation. At common law it has always been considered that misrepre- sentations which strike at the root of the contract are sufficient to avoid the contract on the ground explained in Kennedy v. Panama, 8fc, Co." (i). In Derry v. Peek, Lord Herschell said (k) : " Where rescis- sion is claimed, it is only necessary to prove that there was misrepresentation ; then, however honestly it may have been made, however free from blame the person who made it, the contract having been obtained by misrepresentation cannot (f) L. R. 4 H. L. 64; 39 L. .J. CI.. 849. {g Robertson v. Belson, L905, 1 Vict. L. U. 555. ■in 54 C. I), p. 592; affirmed L3 A.pp. Ca. 308; 57 L. J. Ch. L066. (i) L. II. 2 Q. B. 580; 36 I>. .1. Q. 15. 2G0. (Ic) 14 App. Co. p. 359; 5K I,. .1. Ch. 864. 116 MISREPRESENTATION. stand." So, too, Lord Bramwell said (I): "A material mis- representation, though not fraudulent, may give a right to rescind a contract where capable of such rescission." In Stewart v. Kennedy (ra), the House of Lords held that error in substantialibus is not sufficient to give a person the right to rescind, unless his belief has been produced by the representations, fraudulent or not, of the other party to the contract. Where shares in a company are offered to and taken by the public, and a prospectus is issued by the promoters which misrepresents material facts with regard to a contract for purchase entered into by the company with its promoters, the company in its corporate capacity will be entitled to rescission of the contract, although its directors, who are nominees of the promoters, may have been aware of the real facts of the case, and although fraud is not imputed to them (/».). From all which cases the principle is obviously deducible that a misrepresentation, however honestly made, is a ground for rescission of contract, provided the misrepresentation is material, or, in other words, so different in substance from what it was represented to be as to amount to a failure of consideration or fundamental error (o). Where the mis- description, though not proceeding from fraud, is on a material and substantial point so far affecting the subject- matter of the contract that it may reasonably be supposed that but for such misdescription the purchaser would never have entered into the contract at all, the contract will be rescinded (p). But where the latent defect is not so material as to bring the case within the principle of Flight v. Booth, the purchaser is not entitled to rescission even if the defect is known to and not disclosed by the vendor (q). (I) Ibid., p. 347. (m) 15 App. Ca. 118, 121. (n) Lagunas Nitrate Co. v. Lagunas Nitrate Syndicate, 1899, 2 Ch. 392; 68 L. J. Ch. 699. (o) As to the different kinds of fundamental error, see Pollock on Contract. p. 488. (p) Flight v. Booth, 1 Bing. N. C. 370. (q) Shepherd v. Croft, 1911, 1 Ch. 521; 80 L. J. Ch. 170, distinguishing; Carlish v. Salt, 1906, 1 Ch. 335; 75 L. J. Ch. 175. MISREPRESENTATION. 117 There is a difference in substance amounting to a failure of consideration, if the property is not of the same nature or description as it was represented to be in the particulars of sale, as where leasehold or copyhold property is described as freehold (/•); or where land sold and conveyed as freehold turns out to be copyhold (s) ; or where an under-lease is sold as an original lease (*); or where upon the sale of an estate let at lease on a rack-rent, such rent is described as a ground- rent (v); or where there is a misdescription of the quantity of land in regard to acres being statute acres or customary acres (#)'; or where the acreage of an estate is very much less than it was represented to be (y) ; or where a house com- posed externally partly of brick, and partly of timber, and lath and plaster, is described as a brick-built house (z) ; or where property which was in truth an equity of redemption in a reversionary interest was described as an absolute rever- sion, or as an immediate reversion expectant on the death of a tenant for life (a); or where the rents at which the different parts of a lot of land were underlet were stated, but no mention was made of a ground-rent (6). So, also, there is a difference in substance amounting to a failure of consideration, if there be misrepresentation upon a point material to the due enjoyment of the property: as where a vendor describes land as situated within one mile of a particular town, when it is, in fact, several miles distant therefrom (c); or where, upon the sale of a lease of a house (r) Drewe v. (Jorp, '.) Yes. :_'>('iS; I'ulsford v. Richards, 17 Beav. 96, per Lord Romilly; 22 L. J. Ch. 559; but sec Blaiberg v. Keeves, 1906, 2 Ch. 175; 75 I,. J. Ch. 464. (*) Hart v. Suaine, 7 C. D: 46; 47 L. J. Ch. 5. (t) Madeley v. Booth, 2 De G. k S. 718; 79 H. K. 343; Re Bey f us, 39 C. D. 110. (tt) Stewart v. Alliston, 1 Mer. 26; 15 R, K. 81. i c) Price v. North, 2 Y. & C. 620; 7 L. J. Ex. Eq. 9; 47 R. R. 470; Durham v. Legard, 34 Beav. 612; 34 L. J. Ch. 589; 145 R. R. 698; and see Connor v Potts, 1897, 1 Ir. R. 534; North v. Percival, 1898, 2 Ch. 128; 67 L. J. Ch. 321. (y) Aberaman Iron Works v. Wilkins, 4 Ch. 101. (z) Powell v. Doubble, Bug. V. & P. 29, Dart, V. & P. 151. (a) Torrance v. Bolton, 8 Ch. 124; 42 L. J. Ch. 177. (6) Jones v. Rimmer, 14 C. D. 591; 19 L. J. Ch. 775. ici Duke of Norfolk v. Worthy, 1 Camp. 837; L0 R. R. 749; Pulsford v. Richards, 17 Beav. 96, per Lord Rornilly; 22 L. J. Ch. 569; 99 K. R. 48. 118 MISREPRESENTATION. or shop, the particulars merely stated that the lease con- tained a restriction against certain specified trades being carried on upon the premises, whereas, in fact, several other trades were forbidden (d) ; or where, upon the sale of a piece of land described as " a first-rate building plot of ground," no notice was taken of a right of way passing over it (e), or an underground culvert running through it (/) ; or of an underground watercourse which third parties had liberty to open, cleanse, and repair, making satisfac- tion for damage thereby occasioned (g) ; or where a house described to be situated in a fashionable street, was not actually in that street, but merely communicated with it by a passage (h). So, also, there is a difference in substance amounting to a failure of consideration, where the property, as described, is not identical with that intended to be sold (i) ; or where a material part of the property described 1 has no existence, or cannot be found (k) ; or where no title can be shown to a part of the property which, though small in quantity, is important for the enjoyment of the whole (I); or where the particulars of sale are misleading as to boundaries and frontage (m); or where an annuity was granted to be calculated on a certain footing by the agent of the grantee, and the calculation proved very inaccurate (n); or where a man agreed to purchase a share in a partnership business, on the footing of a balance- sheet prepared by an accountant employed by the vendor, which turned out to be very inaccurate in certain particu- (d) Flight v. Booth, 1 Bing. N. C. 370; 41 E. R. 599. (e) Dykes v. Blake, 4 Bing. N. C. 463; 44 R. R. 761. See Gibson v. D'Este, 2 Y. & C. C. C. 542; 6 R. R. 262. (/) Re Puckett and Smith, 1902, 2 Ch. 258; 71 L. J. Ch. 666; cf. Re Brewer and Hankins, 80 L. T. 127: Shepherd v. Croft, 1911, 1 Ch. 521; 80 L J Ch 170. (g) Shackleton v. Sutcliffe, 1 De G. & S. 609; 75 R. R. 216. (h) Stanton v. Tattersall, 1 Sm. & G. 529: 96 R. R, 471. See Dart, V. & P. 149. (i) Leach v. Mullett, 3 C. & P. 115; 33 R. R. 657. (7c) Robinson v. Musgrove, 2 Moo. & R. 92. (I) Arnold v. Arnold, 14 C. D. 270; cf. Re Jackson and Haden, 1906, 1 Ch. 412; 75 L. J. Ch. 22£. (to) Brewer v. Brown, 28 C. D. 309; 54 L. J. Ch. 605. (n) Carpmael v. Powis, 10 Beav. 44; 16 L. J. Ch. 31. MISREPRESENTATION. 119 lars (o); or where a man was released 1 from an obligation, in which he was bound, on a representation that a certain security deposited with the creditor (which proved to be an imaginary one) was a good security (p). So, also, it may be laid down, as a general rule, that there is a difference in substance amounting to a failure of con- sideration, if the misrepresentation or misdescription is of such a nature that the amount of compensation cannot be estimated (q); as where on the sale of a reversion expectant on the decease of A. in case he should have no children, his age was described as sixty-six, instead of sixty-four (•/•) ; or as where on the sale of a wood, the particulars erroneously stated that the average size of the timber approached fifty feet, the number of trees not being stated (s) ; or as where the particu- lars stated the premises to be! in the joint occupation of A. and B. as lessees, when in fact A. was only assignee of the lease, and B. was a mere joint occupier (f) ; or as where the right to coal under the estate was shown to be in other parties, and no means existed of determining its value (u). The presence of the words " more or less " in a contract for Words "more . 1 „ o or less" after the sale or a deed of conveyance of land after a statement 01 sta tement of the quantity of acres comprised therein does not import a ^^ c ° f special engagement that the purchaser takes the risk of the quantity; and of course a vendor cannot rely on such expres- sions if he fraudulently misstates the quantity (x). The words must be taken merely to cover a reasonable excess or deficiency. If it turned out that the quantity falls con- siderably short of what it was represented to be, the Court will relieve the purchaser from payment for the deficiency; but a slight variation does not afford a ground for relief (y). (o) Charlesworth v. Jennings, 34 Beav. 96. (p) Scholefield v. Templer, 4 D. & J. 434; 124 E. R. 324. (q) See Re Bey f us, 39 C. D. 110. (r) Sherwood v. Robins, Moo. & M. 194. See 8 CI. & F. 792. (*) Brooke v. Rounthwaite, 5 Ha. 298; 15 L. J. Ch. 332; 71 K. R. 115. (t) Ridgway v. Cray, 1 Mac. ,v Gr. Hi'.); 84 K. H. 26. (a) Smithson v. Powell, 20 L. T. 0. S. 105. (.,■) Winch v. Winchester, 1 V. & B. 377; 12 R. K. 288. (y) Portman v. Mill, -2 Rusa. 570; 26 R. R. 175; Su^. Y. A; P. 324; Dart, V. & 1'. 676. 120 MISREPRESENTATION. Equitable application of the doctrine of misrepre- sentation. Estoppel. Nor will the Court interfere, although the deficiency be con- siderable, if the risk as to the quantity constituted one of the elements of the agreement, or if the sale was a thing in gross and not by admeasurement (z) ; or if there was a special stipulation that the quantities shall be taken as stated (a). But if the acreage of an estate is very much less than it was represented to be, a proviso in one of the conditions of sale that the estate as to extent should be taken to be conclusively shown by certain deeds will not estop the purchaser from having the contract rescinded on the ground of the deficiency (b). But on a sale of thirty-six acres, a vendor cannot rescind because it turns out that the property contains forty-two acres (c). A condition of sale providing that if any error in the particulars should be discovered it should not annul the sale nor should compensation be allowed in respect thereof applies only to small errors, and not to a large deficiency (d). Innocent misrepresentations may give rise to liability, or as it is more correct to say, they may give rise to liability without any need for determining whether they are innocent or otherwise. The principle of law that a man who makes a representation to another in such a way or under such circumstances as to induce him to believe that it is meant to be acted on, is liable as for a fraud in the event of the representation proving to be false and damage thereby accru- ing to the party to whom it was made, is the ground on which the doctrine of equitable estoppel rests. " The law is clear," said Lord Denman, in Pichard v. Sear* (e), " that where one by his words or conduct wilfully causes another to believe in a certain state of things, and induces him to act on that belief (z) Anon., 2 Freem. 107; Baxendale v. Seale, 19 Beav. 601: 24 L. J. Ch. 385; 105 E. R. 261; cf. Tancred v. Steel Co., 15 App. Ca, 125. (a) Nicoll v. Chambers, 11 C. B. 996; 21 L. J. C. P. 54; 87 R. R. 846. See Sug. V. & P. 324, 327; Dart, V. & P. 155. (b) Aberaman Iron Works v. Wickens, 4 Ch. 101. (c) North v. Percival, 1898, 2 Ch. 128; 67 L. J. Ch. 321. Id) Terry and White, 32 C. D. 14; 55 L. J. Ch. 345; Fawcett and Holmes, 42 C. D. 156; 58 L. J. Ch. 763; Jacobs v. Revell, 1900, 2 Ch. 858; 69 L. J. Ch. 879; Lee v. Rayson, 1917, 1 Ch. 613; 86 L. J. Ch. 405. (e) 6 A. & E. 476; 45 R. R. 538. MISREPRESENTATION. 121 so as to alter his own previous position, the former is con- cluded from averring- against the latter a different state of thing-s as existed at the same time." In Freeman v. Cooke (/), Lord Wensleydale stated that the rule laid down in Pickard v. Sears "was to be considered as established, but that by the term ' wilfully ' in that rule must be understood, if not that the party represents that to be the truth which he knows to be untrue, at least that he means his representation to be acted upon, and that it is acted upon accordingly; and if, whatever a man's real meaning may be, he so conducts him- self that a reasonable man would take the representation to be true and believed that it was meant that he should act upon it accordingly, and he accordingly does act upon it as true, the party making the representation would be equally precluded from contesting its truth ' (g). This doctrine is not confined to cases where the original representation was fraudulent. The doctrine goes much further. Even when a representation is made in entire good faith, if it be made in order to induce another to act upon it or under circum- stances in which the party may reasonably suppose it will be acted on, then prima facie the party making the representa- tion is bound by it as between himself and those whom he has thus misled (//,). " The doctrine of equitable estoppel by representation," said Lord Selborne (7), ' is this, that if a man dealing witli another for value makes statements to him as to existing facts which being stated would affect the contract, and without reliance upon which or without tin 1 statement of which the party would not enter into the con- tract, and which being otherwise than as they were stated would leave the situation after the contract different from what it would have been if the representations had not been (/) 2 Exch. 654; 18 L. J. Ex. 111. (g) See Swan v. North Australasian Co., 2 H. & C. 182; 31 Ii. .1. Ex. 125; L33 R. R. 639; Carr v. London and North Western Ely. Co., I>. R. 10 ('. I'. 307; 11 h. J. C. P. L09; Hell v. Marsh. L903, I eh. 528; 7-2 l>. .!. Ch. 860; Longman v. Bath Electric Tramways, 1U05, I CI.. 646; 74 L. .1. Ch. 424. (h) West v. Jones, 1 Sim. N. S. '207; 20 L. J. Ch. 882; 89 Ii. R. 67. (*) L. H. 6 H. I,, p. 360. See also Knights v. Whiffen, L. R. 6 Q. B. 864; 40 L. J. Q. B. 51. 122 MISREPRESENTATION. made, then the person making the representation shall, so far as the powers of the Court extend, be treated as if the representations were true, and shall be compelled to make them good." Lord Blackburn, in Burkinshaw v. Nicolls (k), said that " When one says to another : ' I take upon myself to say such and such things do exist, and you may act upon the basis that they do exist,' and the other man does really act upon that basis, it is of the very essence of justice that between those two parties their rights should be regulated, not by the real state of the facts, but by that conventional state of facts which the two parties agree to make the basis of their action, and that is what is meant by estoppel." A man, accordingly, who has by express representation or positive acts induced a reasonable man to believe the existence of a particular fact and to believe that the representation was meant to be acted on, will not be permitted to derogate from interests which have been created or rights which have been acquired on the faith of the existence of such fact, by showing that the fact was not such as he had represented it to be, or by determining the actual state of things which he has so held forth as the consideration for the change of his condition by the other (I). Where, for instance, a man holds himself out as a partner, or allows others to do so, he is rightly held liable as a partner by estoppel, even though creditors knew that he was not in fact a partner (ra). So a receipt in a mortgage or transfer of mortgage may estop the mortgagor or transferor from claiming as against a person dealing in good faith and for value (n). But a fraudulent misstatement in a deed, though it will bind the mortgagor himself, may not estop a party claiming through him who would be aggrieved by the fraud (o). Where, how- ever, a mortgagor makes false representations as to existing (k) 3 App. Ca. p. 1026. (I) Pigott v. Stratum, John. 359 ; 1 D. F. & J. 49 ; 29 L. J. Ch. 1 ; 135 E. R. 336; and see Spicer v. Martin, 14 App. Ca. p. 23; 58 L. J. Ch. 309. (m) Lindley, 224; L. E. 4 P. C. p. 435. (n) King v. Smith, 1900, 2 Ch. 425; 69 L. J. Ch. 598; Rimmer v. Webster, 1902, 2 Ch. 163; 71 L. J. Ch. 561; Powell v. Broicne, 1907, W. N. 228. (o) Doe v. Lloyd, 5 Bing. N. C. 742. MISREPRESENTATION. 1- ". facts relying on which a mortgagee lends him money, those who claim through the mortgagor for value but with notice of the misrepresentations, are estopped from denying the truth of the representations and must if possible make them good 0). So a share certificate will estop the company from denying that shares are fully paid up (q) or that the person named in the certificate is the owner of the shares even though the certificate has been obtained by fraud or under a mistake (/•). But if a transfer of shares is forged the company is not estopped and the purchaser is liable to indemnify the company against liability (s). Nor is the company estopped by a forged certificate (t). But if the certificate is issued under the authority of the directors the company may be estopped though it was obtained by the fraud of the secre- tary (w). The certification of a transfer does not create any estoppel (x). A representation will not operate as an estoppel unless it is precise and unambiguous (y), nor unless it was in the trans- action itself and was the real or proximate cause of the loss (z), nor unless there was neglect of some duty owing to the person acting upon it (a) and the person acted on it to his detriment (6). . An estoppel cannot arise from a representation of intention Gresham Life Ass. v. Crowther, 1912, 2 Ch. 219; 83 L. J. Ch. 867. (g) Bloomenthal v. Ford, 1897, A. C. 156; 66 L. J. Ch. 253; see 1899, 1 Ch. 414. (r) Balkis Consolidated Co. v. Tomkinson, 1893, A. C. 396; 63 L. J. Q. B. 134. (*) Sheffield Corporation v. Barclay, 1905, A. C. 392; 74 L. J. K. B. 717. it) Ruben v. Great Fingall Consolidated. 1906, A. C. 439; 75 L. J. K. B. 843. (u) Dixon v. Kennaway, 1900, 1 Ch. 833; 69 L. J. Ch. 501. (x) Whitechurch v. Cavanagh, 1902, A. C. 117; 71 L. J. K. B. 400. (y) Low v. Bouverie, 1891, 3 Ch. 82; 60 L. J. Ch. 594 ; Onward Building Soc. v. Smiths on, 1893, 1 Ch. 1; 62 L. J. Ch. 138; Re Holland. 1901, 2 Ch. L45; 1902, 1 (h. 360; 71 L. J. Ch. 518. (z) 2 H. & C, at p. 182; Bishop v. Balkis, 25 Q. I'.. I)., al p. 219; Long- man v. Bath, dc, 1905, 1 Ch. 646; 71 I.. .J. Ch. 424. (a) 2 H. & C, at p. 182; 31 I,. J. Ex. 425. (b) Bell v. Marsh. 1903, 1 Ch. 528; 72 I,. .1. Ch. 860 124 MISREPRESENTATION. or promise as to future action, for promises in future, if binding at all, must be binding in contract (c). A person cannot rely by way of estoppel on a statement induced by his own representation or concealment of a material fact the disclosure of which would have been calcu- lated to make his informant hesitate or seek for further information before making the statement, or where the circumstances would have deterred a reasonable man from acting on it (d). Standing by. The principle is not limited to cases where an express and distinct representation by words has been made, but applies equally to cases where a man by his silence causes another to believe in the existence of a certain state of things, or so conducts himself as to induce a reasonable) man to take the representation to be true, and to believe that it was meant that he should act upon it, and he accordingly acts upon it and so alters his previous position. Where there is a duty or obligation to speak, and a man in breach of that duty or obligation holds his tongue, and does not speak and does not say the thing he was bound to say, if that be done with the intention of inducing the other party to act upon the belief that the reason why he did not speak was because he had nothing to say, there is fraud (e). "A party," said Lord Wensleydale in Freeman v. Cooke (/), " who, in neglect of a duty cast upon him to speak, stands by and allows another to contract on the faith and understanding of a fact which he can contradict, cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving' (g). "The doctrine," said Lord Campbell in Cairncross v. Lorimer (h), " is to be found in the laws of all civilised nations that if a man either by words or conduct has intimated that he consents to an act which has been done, or (c) Maddison v. Alderson, 8 App. Ca. p. 473, per Selborne, L.C. ; 52 L. J. Q. B. 737; Whitechurch v. Cavanagh, 1902, A. C. 117; 71 L. J. K. B. 400. (d) Porter v. Moore, 1904, 2 Ch. 367; 73 L. J. Ch. 729. (e) Brownlie v. Campbell, 5 App. Ca. 950, per Lord Blackburn. (/) 2 Exch. 663; 18 L. J. Ex. 14; 76 R. R. 711. (g) See Carr v. London and North Western Rly. Co., L. R. 10 C. P. 307; 44 L. J. C. P. 109. (h) 3 Macq. 829. MISREPRESENTATION. 125 that he will offer no opposition to it, although it could not have been done lawfully without his consent, and he thereby induces others to do that from which they might otherwise have abstained, he cannot question the legality of the act he has so sanctioned to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct. ... If a party has an interest to prevent an act being done, and has full notice of its having been done, and he acquiesces in it so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act to their prejudice than he would have had if it had been done by his previous licence." Nor can parties who stand by without asserting their rights and allow others to incur liabilities which they might not have incurred if those rights had been asserted, set up those rights as against those by whom such liabilities have been incurred (i). A person, for instance, who knows that a bank is relying on his forged signature to a bill, cannot lie by and not divulge the fact until he sees the position of the bank altered for the worse (/.). So, too, where a man builds or lays out monies upon land, supposing it to be his own, and believing that ho has a good title, and the real owner, perceiving his mistake, abstains from setting him right, and leaves him to persevere in his error; or whore a man, under an expectation created or encouraged by the owner of land that he shall have a certain interest, takes possession of such land, with the consent of 1 1n 1 owner, and upon the faith of such promise or expectation, with the knowledge of the former, and without objection by him, lays out monies upon (he land; in such cases a court of equity will not afterwards allow the real owner or the land- lord, as the case may be, to assert his legal right ;i^;iins< the other, without at least making him a proper compensation for (t) Olliver v. King, 8 I). M. & <•■ L18, per Turner, L.J. ; 25 I-. .1. Ch. 427 ; III R. R. 48; Lindsay v. Gibbs, :i I). & J. 697; 28 I.. J. Ch. 692; L23 R. R, ■^.)-,\ London Joint Stock Banl v. Simmons, Ls'.fJ. A. c. 201 ; 63 I.. .1. Ch. 723. i/. i M'Kenzie v. British I. nun Co., 6 App. Ca. 82. 126 MISREPRESENTATION. the expenditure which he has incurred (Z). If the works on which monies have been laid out are of a permanent character, or are works which point to permanence, the Court will not allow them to be interfered with, even upon the payment of a proper compensation. A man who by his conduct has en- couraged another to spend monies on his land, in erecting works of a permanent character, cannot be permitted to put an end to the very thing which he has approved. All that he is entitled to is a proper compensation in respect of the land which has been taken (m). The case in which the principle has been carried to the farthest extent is Clavering v. Thomas (n). It was there held that a man who has stood by and allowed monies to be spent in opening a mine, which he knew could only be worked by a wayleave over his own land, was bound in equity to give the wayleave. Another illustration of the principle that a man who remains silent when there is a duty to speak is bound in equity, is where a man claiming a title in himself to property is privy to the fact of another, with colour of title, or pretend- ing to title, dealing with the property, as being his own, or as being unencumbered, and conceals his claim. A man who claims an interest in property need not voluntarily com- municate the existence of his claim to a person whom he knows to be about purchasing the property (o), but the suppression or concealment of his claim is in equity a fraud ; and if a man is privy to the fact that the apparent owner or party in possession is about to deal with the property as his (1) Shannon v. Bradstreet, 1 Sch. & Lef. 52 ; 9 E. E. 11; Clare Hall v Harding, 6 Ha. 273 ; 17 L. J. Ch. 301 ; 77 E. E. 115 ; Leeds v. Amhurst, 2 Ph 117; 28 E. E. 47; White v. Wakley, 26 Beav. 20; 28 L. J. Ch. 77; 122 E. E 8; Laird v. Birkenhead Rly. Co., John. 514; 29 L. J. Ch. 218; 123 E. E. 206 Archbold v. Scully, 9 H. L. C. 360; 131 E. E. 223; Ramsden v. Dyson, L. E. 1 H L. 129; 149 E. E. 543; Nunn v. Fabian, 1 Ch. 35; 35 L. J. Ch. 140 Plimmer v. Wellington, 9 App. Ca. 699; 53 L. J. P. C. 104. (m) Beaufort v. Patrick, 17 Beav. 60; 22 L. J. Ch. 489; 39 E. E. 34 Somersetshire Canal Co. v. Harcourt, 2 D. & J. 596; 27 L. J. Ch. 625; 119 E. E. 251; Mold v. Wheatcroft, 27 Beav. 516; 29 L. J. Ch. 11; 122 E. E. 511 Davie-s v. Sear, 7 Eq. 433; 38 L. J. Ch. 545. (n) Cit. 5 Yes. 689; 6 Ha. 304. But see Willmott v. Barber, 15 C. D. 104. (o) See Rooper v. Harrison, 2 K. & J. 103; 110 E. E. 112; Mangles v. Dixon, 3 H. L. C. 739; 88 E. E. 296. MISREPRESENTATION . L21 own and as unencumbered, and he does not give the party with whom he is about to deal notice of his right, he will not be permitted by the Court to set up afterwards his own interest against a title created by the other (/;). In a case where a mother heard her son before his marriage declare that a certain term was to come to him at her death, and was witness to a deed, whereby the reversion was settled on the issue of the marriage, she was held compellable in equity to make good the settlement (q). So, also, in a case where a man having a claim upon property, which was the subject of a reference, knew that the arbitration was going on but did not bring forward his claim, he was held bound by the award (r). So, also, where a purchaser agreed with the vendor to buy property, and the vendor's solicitor concealed the fact that he had an encumbrance on the estate, it was held that he must take subject to the interest which he had allowed to be acquired in consequence by the person whom he misled in the transaction (s). So, where a married woman fraudulently concealed a settlement in order to induce a mortgagee to advance his money and the mortgage was completed, but before the deed was acknowledged by the married woman, the mortgagee received notice of the settlement, it was held that her estate was bound and that she could not defeat the mortgage (t). In one case the principle was applied in the case of a first mortgagee, from the mere circumstance of his being a witness to a second mortgage, but the case goes too far. In order to postpone a prior mortgagee, it is necessary to prove against him fraud or actual notice of the subsequent mortgage (u). [p) Teasdale v. Teasdale, Sel. Ca. Ch. 59; Savage v. Poster, 9 Mod. 36; Berrisford v. Milward, 2 Atk. 49; Beckett v. Cordley, 1 Bro. C. C. 357; Govett v. Richmond, 7 Sim. 1; 40 R. R. 56; Nicholson v. Hooper, 4 M. & ('. L79 ; 48 R. R. 59; Mangles v. Dixon, supra; Olliver V. King, 8 I>. M. & G. II"; 25 L. J. Ch. 427; 114 R. R. 48; Davies v. Davies, 6 Jur. N. S. L322 ; Upton v. Vanner, 1 Dr. & Km. 594; 127 R. R. 228; Hooper v. Gumm, 2 Ch. 282; 36 L. J. Ch. 605; Plimmer v. Wellington, 9 App. Ca. 699; 53 L. J. J'. ('. KM. (q) Hunsden v. Cheyney, 2 Vern. 150. >r, Govett v. Richmond, 7 Him. I ; 40 Et. R 66. (.<■•) Sterry v. Combs, 40 L. J. Ch. 595. (t) Sharps v. Foy, 4 Ch. 35. (u) Beckett v. Cordley, 1 Bro. C. C. 853; Stevens v. Mid Hantt Rly, Co., 8 Ch. p. 1069; 42 L. J. Ch. 694. 128 MISREPRESENTATION. The equitable rule that a man claiming an interest in property may not stand by and conceal his claim, when he sees another dealing with the property as his own, or as unencumbered, applies with peculiar force, if the person claiming title has in any way actively encouraged the parties to deal with each other (.*•), or has confirmed the party in the error into which he has fallen, or if he derives any benefit from the delusion so caused (y). In order to justify the application of the principle, it is indispensable that the party standing by should be fully apprised of his rights (z), and should by his conduct en- courage the other party to alter his condition, and that the latter should act on the faith of the encouragement so held out (a). The principle does not apply in favour of a stranger who builds on land, knowing it to be the property of another, nor in favour of a lessee who expends monies with the know- ledge of his landlord on the improvement of the estate. If a> stranger builds on land knowing it to be the property of another, equity will not prevent the real owner from after- wards claiming the land, with the benefit of all the ex- penditure upon it. So, also, if a tenant being in possession of land, and knowing the nature and extent of his interest, lays out money upon it in the hope and expectation of an extended term or an allowance for it, then if such hope or expectation has not been created or encouraged by the land- lord, the tenant has no equity to prevent the landlord from taking possession of the land and buildings when the tenancy is determined (6). Xor does the principle apply in favour of a man who is conscious of a defect in his title, and with such (x) Brown v. Thorpe, 11 L. J. Ch. 73; Davies v. Davies, 6 Jur. N. S. 1322. (y) Nicholson v. Hooper, 4 M. & C. 179; 48 R. R. 59. (*) Per Jessel, M.R., 1 C. D. p. 528. (a) Dann v. Spurrier, '7 Ves. 230; 6 R. R, 119: Barnard v. Wallis, Cr. & Ph. 85; Marker v. Marker, 9 Ha. 16; 20 L. J. Ch. 246; 89 R. R. 305; Rams- den v. Dyson, L. R. 1 H. L. 129; Plimmer v. Wellington, 9 App. Ca. 699; 53 L. J. P. C. 104. (b) Pilling v. Armitage, 12 Ves. 78; 8 R. R. 295; Clare Hall v. Harding, 6 Ha. 273; 17 L. J. Ch. 301; 77 R, R. 115; Duke of Beaufort v. Patrick, 17 Beav. 60; 22 L. J. Ch. 489; 39 R. R. 34: Ramsden v. Dyson, L. R. 1 H. L. p. 129, per Lord Kingsdown. MISREPRESENTATION. 129 conviction in his mind expends money in improvements on the estate (c). A man who, with full knowledge of the real circumstances of the case permits another, under a mistake, to execute a deed, wherebv he incurs a liability, cannot be heard to say that he has contracted liability on the faith of the other being subject to the liability (d). But " acquiescence which will deprive a man of his legal rights must amount to fraud. A man is not to be deprived of his legal rights on the ground of acquiescence unless he has acted in such a way as would make it fraudulent in him to set up those rights' (e). "There are several elements or requisites," said Mr. Justice Fry (/), " necessary to constitute fraud of that description. In the first place the plaintiff," (the party who alleges acquiescence) " must have made a mistake as to his legal rights. Secondly, he must have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right, which is inconsistent with the right claimed by the plaintiff. If he does not know of it, he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your lega] rights. Fourthly, the possessor of the legal right must know of the plaintiff's mistaken belief of his rights.' If he does not, there is nothing which calls on him to assert his own rights. Lastly, the de- fendant, the possessor of the legal right, must have en- couraged the plaintiff in his expenditure of money or in other acts which he has done either directly or by abstaining from .^serting his legal right. When all these elements exist, there is fraud of such a nature as will entitle the Court to restrain the possessor v of the legal right from exorcising it, but nothing short of this will do." (c) Kenney v. Brown, 3 Eidg. 518. {d) Broughton v. Hutt, 8 D. & J. 501; 2h i,. J. eh. 167. (e) Wilhnott v. Barber, 15 C. D. 105; Marriott v. Reid, 82 L. T. 869. (/) Willmott v. Barber, supra; and see Proctor \. Bennis, 86 C. I>. Tin L. .]. Oh. 11. K.F. 9 ance. 130 MISREPRESENTATION. The rule of law as to leave and licence not being counter- mandable cannot, perhaps, as far as it goes, be distinguished from the equitable doctrine of acquiescence (g), but leave and licence executed may be set up at law, as giving a right and title, only in cases where monies have been expended by a man upon his own land (h). No right or title can be acquired to an easement, or other right over the land of another, although the licence may have been executed, and monies may have been expended upon the land of the licensee by his express permission. The licence may be at any time counter- manded at the will of the owner of the soil (i). But in equity the doctrine of acquiescence applies as well where a man has been induced to expend monies on the land of another, as where the expenditure has been on his own land (&). Part perform The equitable doctrine with respect to the part performance of parol agreements is founded on the general doctrine of law as to misrepresentation. It is a fraud in the eye of the Court to set up the absence of an agreement, where possession has been given on the faith of an agreement. If a man has been permitted to take possession on the faith of an agreement, it is against equity that he should be treated as a trespasser and turned out of possession, on the ground that there is no agreement ; and the Court will, as far as possible, ascertain the terms of the agreement, and give effect to it (/). Nothing, however, is part performance that does not put the party into a situation that it is a fraud upon him, if the agreement be not performed (m). The acts must render non-performance a (g) Davies v. Marshall, 10 C. B. N. S. 711, per Willes, J. ; 31 L. J. C. P. 61 ; 128 R. R. 881. (h) Liggins v. Inge, 7 Bing. 682; 33 B. R. 615; Davies V. Marshall, supra; Blood v. Keller, 11 Ir. C. L. 124. (i) Wood v. Leadbitter, 13 M. & W. 838; 14 L. J. Ex. 161; 67 R. R. 831; Davies v. Marshall, supra; but see Blood v. Keller, 11 Ir. C. L. 124. (k) Duke of Beaufort v. Patrick, 17 Beav. 60; 22 L. J. Ch. 489; 39 R. R. 34; White v. Wakley, 26 Beav. 20; 28 L. J. Ch. 77; 122 R. R. 8 ; Laird v. Birkenhead Rly. Co., John. 500; 29 L. J. Ch. 218; 123 R. R. 206; Willmott v. Barber, 15 C. D. 96. (I) Ungley v. Ungley, 5 C. D. p. 890; 46 L. J. Ch. 854; Britain V. Rossiter, 11 Q. B. D. p. 131; 48 L. J. Q. B. 362; Maddison v. Alderson, 8 App. Ca. 467; 52 L. J. Q. B. 737. (m) McManus v. Cooke, 35 C. D. 681, 697 ; 56 L. J. Ch. 662. MISREPRESENTATION. 131 fraud (n). They must be such as to render it a fraud to take advantage of the contract not being in writing (o). In order, tim, that an act of part performance may have any operation whatsoever, it must be shown plainly what the terms of the agreement are, and it must clearly appear that the act of part performance relied on is unequivocally referable to an agreement such as the one alleged and is not referable to another title (/>). It must be such as could be done with no other view than to perform the agreement; there must be some evident i 8 App. Ca. p. 478. in Wills v. Stradlimj, 3 Yes. 378; 4 R. R. 26; Pilling v. Armitage, 12 Ves. 78; 8 B. K. '295; Brennan v. Bolton, 2 Dr. & War. 349. (s) Wills v. Stradlimj, supra; Laird v. Birkenhead lily. Co., John. 530; 29 L. J. Ch. 218; 123 R. R. 206; Nunn v. Fabian, 1 Ch. 35; 35 L. J. Ch. 110; Williams v. Evans, 19 Eq. 547; 44 L. J. Ch. 319. (t) Wills v. 8tradiing, supra; Lincoln v. Wright, 1 I>. & J. 20; 124 R. R. 133. (u) Miller v. Sharp, 1899, 1 Ch. 622; 68 L. J. Ch. 322. (*) Dowell v. Dew, 1 Y. & C. C. C. 345; 12 L. J. Ch. 158; 57 It. R, 868. 132 MISREPRESENTATION. the act of part performance and the interest in the land which is the alleged subject-matter of the agreement. It is not . sufficient that the acts are consistent with the existence of such an agreement or that they suggest or indicate the existence of some agreement, unless such agreement has reference to the subject-matter. Thus payment of part or even of the whole of the purchase-money is not sufficient to exclude the operation of the Statute of Frauds, unless it is shown that the payment was made in respect of the particular land and the particular interest in the land which is the subject of the parol agreement (y). So payment of rent in advance by a person not in possession is not part per- formance (z). On the other hand, the admission into possession of a stranger is, speaking in general terms, a sufficient part performance, for it is not explicable upon any other supposition than that it has resulted from a contract in respect of the land of which possession has been given. Again, the continuance in possession of a tenant is not in itself a sufficient part performance of a parol agreement for the purchase of the land, for it is equally consistent with a right depending on his tenancy (o). Nor is marriage an act of part performance ; but if one of the contracting parties agrees, as the consideration for a marriage, to do something more than marry, as to settle an estate, and in consideration of that promise the other party contracts to make a settle- ment, the settlement made by the one contracting party is a good act of part performance (6). In cases where the aid of the Court is sought on the ground of part performance, the facts must be looked at carefully to see what confirmation there is of the plaintiffs statement, and in looking through the evidence, the Court is particularly (y) Maddison v. Alderson, 8 App. Ca. p. 479; 52 L. J. Q. B. 737. (2) Chaproniere v. Lambert, supra. (a) Alderson v. Maddison, 7 Q. B. D. 178, per Baggallay, L.J. ; Humphreys v. Green, 10 Q. B. D. 154; 52 L. J. Q. B. 140. (b) Hammersley v. De Biel, 12 CI. & Fin. 45; 69 E. B. 18. See Warden v. Jones, 2 D. & J. 76 ; 27 L. J. Ch. 190; 119 B. B. 29; Caton v. Caton, 1 Ch. 137; L. B. 2 H. L. 137; 35 L. J. Ch. 292; Ungley v. U., 5 C. D. 887; 46 L. J. Ch. 854; Re Holland, 1901, 2 Ch. 145; 1902, 2 Ch. 360; 71 L. J. Ch. 518: Kettlewell v. Refuge Co., 1908, 1 K. B. 545; 77 L. J. Ch. 421. MISREPRESENTATION. 133 careful to see if there are any documents which confirm it (c). Where no written documents exist, the proof in support of the claim must be clear beyond all reasonable doubt (d). The general doctrine of law with respect to misrepresenta- Negligence m may be tarna- tion and concealment applies to cases where a man by conduct mount to of culpable negligence misleads another to his prejudice, or senta ^ on " puts it in the power of one man to commit a fraud upon another. But the negligence must be in the transaction itself, and must be the proximate cause of the loss (e). If a man by neglect of some duty that is owing to another, or to the general public, of whom he is one, leads him to believe in the existence of a certain state of facts, and the belief so induced is the proximate cause of leading him to do a certain act, the former shall not afterwards as against the latter be heard to say that that state of facts did not exist, but must abide by the consequences of his own unjustifiable neglect (/). It is immaterial that he may have been acting merely carelessly, and that his conduct may be free from any improper motive. Although a man may be acting in the most entire good faith, if he is guilty of such a degree of neglect as to enable another so to deal with that which is his right as to lead an innocent party to assume that he is dealing with his own, he creates an equity against himself in favour of the innocent party, who has been so misled, and must bear the loss (g). If he puts into the hands of another the means of obtaining money from a third person, he never can be able to get a decree to get rid of that transaction arising out of the securities which he has intrusted to another, and of which he, (c) Nunn v. Fabian, 1 Ch. 35; 35 L. J. Ch. 140; Miller v. Sharp, 1899, 1 Ch. 622; 68 L. J. Ch. 322. (d) Howe v. Hall, Ir. R. 4 Eq. 252. ) CarrarJ v. Lewis, 10 Q. B. D. 33. (c) London ami Smith Western Haul, v. Wentworth, 5 Ex. D. 96; 19 L. J. Ex. 657. Bee Bobarts v. Tucker, 16 (}. is. 580; 20 D, .1. Q. I'.. 270; cf. Baxen dale v. Bennett, :j Q. B. D. 525; 17 \>. .1. Q, B. 624. (d) Halifax Union v. Wheelwright. I;. K. 10 Ex. 191); II I,. .1. Ex. 121 Bee Arnold v. Chequr Bank, I C. P. I>. 587; (5 I.. J. C. P. 562. 138 MISREPRESENTATION. such breach of duty, the loss must fall on the customer, not on the hanker (e). But the acceptor of a bill of exchange is not under a duty to take precautions against fraudulent alteration in the bill after acceptance. Accordingly, where a bill for £500 was presented for acceptance with a stamp of much larger amount than was necessary and with spaces left, and the acceptor wrote his acceptance and handed it to the drawer who fraudu- lently altered it into a bill for £3,500, the acceptor having paid £500 into Court, and being sued by a bond fide holder for value was held not liable (/). And where a person was induced to sign a promissory note by a fraudulent representa- tion that he was witnessing a deed, he was not estopped from relying on the true facts as a defence to an action on the note (g). A cheque signed per pro by a person having authority so to sign cheques for specified purposes is not a forgery within section 24 of the Forgery Act, 1861, by reason of its being drawn for purposes outside and in fraud of the authority (h). The mere fact of a purchaser or mortgagee not being in possession of the title deeds will not, in the absence of other circumstances indicative of fraud, or gross and wilful negli- gence (i), affect his legal title as against subsequent purchasers (e) London Joint Stock Bank v. Macmillan, 1918, A. C. 777; 88 L. J. K. B. 55, approving Young v. Grote, 4 Bing. 253; 29 B. B. 552, and not following Colonial Bank of Australasia v. Marshall, 1906, A. C. 559; 75 L. J. B. C. 76. (/) Scholfield v. Londesborough, 1896, A. C. 514; 65 L. J. Q. B. 593. (g) Lewis v. Clay, 67 L. J. Q. B. 224. (h) M orison v. London County and Westminster Bank, 1914, 3 K. B. 356; 83 L. J. K. B. 1202. (i) The distinction between mere negligence and gross negligence was recog- nised by the Boman lawyers. Culpa levis, in the language of the Boman Law, >s the want of that diligence which is taken by prudent, careful persons; culpa lata is the want of that diligence which might be expected even of a person of less than ordinary prudence. Lindl. on Jur. 131. Culpa lata was considered generally equivalent to dolus. Lata culpa dolo comparatur. Dig. 11, tit. 6, leg. 1, § 1. " Lata culpa est nimia negligentia id est non intelligere quod omnes intelligunt.'* Dig. Lib. 50, tit. 16, leg. 213. " Si quis non ad eum modum quem nominum natura desiderat diligens est, fraude non caret." Dig. Lib. 16, tit. 3, leg. 32. If the fault is one which any man in his senses would have scrupled to commit, there is lata culpa; if the fault consists it) falling short of the highest standard of carefulness, the culpa was levis. Or, again, it might consist in falling short of the care which the person guilty of MISREPRESENTATION. 139 or incumbrancers (k). But if a man on taking the legal estate makes no inquiry for the title deeds which constitute the sole evidence of the title to the property, or allows them to remain in the hands of the vendor or mortgagor, his conduct affords evidence of an amount of negligence and carelessness sufficient to justify the Court in assuming that he had abstained from making inquiry from a suspicion that his title would be affected if it was made, and in imputing to him the knowledge which by the use of ordinary diligence he might have dis- covered. So, also, gross negligence will be imputed to a man who, having lent the title deeds to the vendor or mortgagor, or any other agent for a temporary and reasonable purpose, allows them to remain out of his hands for an unreasonable time, and does not reclaim them with proper diligence. If in either of such cases a fraudulent use is made of the title deeds by the vendor or mortgagor, and a new title is created by means of them in favour of a subsequent purchaser for value without notice, the first purchaser or mortgagee will be post- poned in equity to the subsequent incumbrancer. The cases on the subject were fully considered in Northern Counties Fire Insurance v. Whipp (I), where they were said to fall into two categories: — (1) Where possession of the deeds had not been obtained; (2) where possession had been given up or not retained. These two categories were again divided into the following classes : I. (1) Where the legal mortgagee or purchaser has made no inquiry for the title deeds and has been post- the culpa was accustomed to bestow on his own affairs. Lata culpa was treated very much on the same footing as dolus, as there always seems some- thing wilful in the crassa negligentia which characterised the lata culpa. Bandars, Inst. p. 477. When it is said by the Roman lawyers that negligence, heedlessness, or rashness is equivalent in certain cases to dolus, the meaning is that, judging from the conduct of the party, it is impossible to determine whether he intended or whether he was negligent, heedless, or rash; and that such being the ca«e, it shall be presumed that he intended, and his liability shall be adjudged accordingly, provided that the question arise in a civil action. Austin Lect. on Jur., vol. 2, p. 107. (k) Evans v. Bicknell, 6 Ves. 174, 19 1 ; 5 R. K. 245; Martinez v. Cooper, 2 Rubs. 198; 26 H. R. 49; Colyer v. Finch, 5 H. L. C. 905; 21 \>. .1 . Oh. 65; 101 R. R. 442. (/) 20 C. I>. 482; 53 L. J. Ch. 029. 140 MISREPRESENTATION. poned either to a prior equitable estate (m) or to a subsequent equitable owner who used diligence in inquiring for the deeds (n). (2) Where the legal mortgagee has left the deeds in the hands of the mortgagor or any other agent with authority to raise money on them, and he has exceeded the collateral instructions given to him (o). In which cases the legal owner is postponed. (3) Where the legal mortgagee has made inquiry for the deeds and has received a reasonable excuse for their non-delivery, and has accordingly not lost his priority (p). (4) Where the legal mortgagee has received part of the deeds under a reasonable belief that he was receiving all, and has accordingly not lost his priority (q). II. (1) Where the deeds have been lent by the legal mortgagee to the mortgagor upon a reasonable representation as to the object in borrowing them, and has retained his priority over subsequent equities (r). (2) Where the legal mortgagee has returned the deeds to the mortgagor for the express purpose of raising money, though with the expectation that he would (m) Worthington v. Morgan, 16 Sim. 547; 18 L. J. Ch. 233; 80 E. E. 142; Oliver v. Hinton, 1899, 2 Ch. 264 ; 68 L. J. Ch. 583. (n) Clarke v. Palmer, 21 C. D. 124; 51 L. J. Ch. 634; Lloyd's Banking Co. v. Jones, 29 C. D. 221; 54 L. J. Ch. 931; Berwick d Co. v. Price, 1905, 1 Ch. 632; 74 L. J. Ch. 249; Walker v. Linom, 1907, 2 Ch. 104; 76 L. J. Ch. 500; but see Re Greer, 1907, 1 Ir. E. 57. (o) Perry Herrick v. Attwood, 2 D. & J. 21 ; 27 L. J. Ch. 121 ; 119 E. E. 10; Brocklesby v. Temperance Bldg. Soc., 1895, A. C. 173, 184; 64 L. J. Ch. 433; Lloyd's Bank v. Bullock, 1896, 2 Ch. 192; 65 L. J. Ch. 680; Rimmer v. Web- ster, 1902, 2 Ch. 163; 71 L. J. Ch. 561; Lloyd's Bank v. Cooke, 1907, 1 K. B. 794; 76 L. J. K. B. 666; cf. Cuthbert v. Robarts, 1909, 2 Ch. 226 ; 78 L. J. Ch. 529. (p) Hewitt v. Loosemore, 9 Ha. 449; 21 L. J. Ch. 69; 89 E. E. 526; Agra Bank v. Barry, L. E. 7 H. L. 135; ef. Manners v. Mew, 29 C. D. 725; 54 L. J. Ch. 909. (q) Hunt v. Elmes, 2 D. F. & J. 578; 30 L. J. Ch. 255; 129 E. E. 204; Batcliffe v. Barnard, 6 Ch. 652; 40 L. J. Ch. 777; Colyer v. Finch, 5 H. L. C. 905; 21 L. J. Ch. 65; 101 E. E. 442. (r) Martinez v. Cooper, 2 Euss. 198 ; 26 E. E. 49. MISREPRESENTATION. 141 disclose the prior security to any second mortgagee, in which case the legal estate is postponed (5). The principle of all the above cases, with one exception, seems to be that where one of two innocent persons must suffer by the act of a third person, he who has enabled the third person to occasion the loss must sustain it, provided he has done something which has in fact misled the other (t). The only exception seems to be the case first mentioned, where a legal mortgagee or purchaser makes no inquiry for the deeds; and here the principle does not apply because the question does not arise between two innocent persons, since the purchaser or mortgagee is guilty of gross negligence or wilful ignorance amounting to fraud. But it is not necessary that the person postponed should have been guilty of fraud or of that wilful negligence which leads the Court to conclude that he is an accomplice in the fraud (u). Where the relationship between mortgagor and mortgagee is also of a fiduciary nature, such as solicitor and client, the mortgagee will not lose his priority by leaving the title deeds in the possession of the mortgagor, so long at all events as he has no ground to suppose a want of good faith in the latter (x). The rule that a purchaser or mortgagee who neglects to make proper inquiries for the title deeds, or who allows them to remain in the hands of the vendor or mortgagor, will be postponed to a subsequent incumbrancer without notice, who obtains possession of the deeds, operates not only for the benefit of the incumbrancer who has obtained possession of the deeds, but also for the benefit of a subsequent incum- brancer who has advanced his money innocently in the belie t that there was not any incumbrance prior to thai of the i.vj Briggs v. Jones, LO Eq. 92; cf. Re Ingham, L898, 1 Ch. 352; 62 L. J. Ch. LOO. it) See ante, p. 15. («) Oliver v. Hinton, L899, 2 Ch. 264; 68 L. J. Ch. 588; Walker v. Linom, L907\ -2 Ch. MM; 76 L. J. Ch. 500; ildritt v. Maconehy, L908, I It. R. 888. /) Taylor v. London and County Banking Co . L901, -1 Ch 28] ; To L. J Ch. 477. 142 MISREPRESENTATION. incumbrancer in possession of the deeds and who has made proper inquiries as to the possession of the deeds (y). Where trustees of a marriage settlement are postponed to a subsequent incumbrancer on the ground of their not inquiring for the deeds, the wife and other beneficiaries are in no better position (z). In cases between parties having merely equitable interests, unaccompanied by the legal estate, it seems somewhat doubt- ful whether the same amount of negligence is necessary to displace the equity as to displace the legal estate. The weight of authority, however, seems in favour of the view that there is no distinction between the two, and that the negligence necessary to displace one of two equities is the same as is necessary to displace the legal estate, that is, negligence so gross as to make the prior mortgagee responsible for the fraud committed on the subsequent mortgagee («). This view is supported by Turner, L. J. (6), Lord Cairns (c), Lord Cran- worth (d), and Lord Selborne (c). And Kay, J., said, " nothing short of a decision of the House of Lords can over- rule the law so laid down ' (/). On the other hand, a contrary view seems to have been taken by the Court of Appeal in National Provincial Bank v. Jackson (n). " Persons," said Lord Hatherley, in Shropshire Union, fyc, Canal Co. v. Reg. (n), 'being real owners of equitable interests may so conduct themselves as to hold out to third persons dealing with their trustee that they are not such equitable owners. Either they have parted with their (*') Rice v. Rice, 2 Drew. 95, per Kindersley, V-C. ; 23 L. .1. Ch. 289; ion R. K. 43; Case v. James, 3 D. P. & J. 263; 30 L. J. Ch. 724. (ft) L. R. 7 H. L. 506. Hi Rice v. Rice, supra; cf. Lloyd's Bank v. Bullock, L896, 2 Ch. L92; 65 L. J. Ch. 680; and see Capell v. Winter, 1907, 2 Ch. 8*6; 76 D..J. Ch. 496. (m) Waldron v. Slcper, 1 Drew. 193; 94 R. It. 642. Bee Adaette v. Hives, 33 Beav. 52; 110 R. R. 14; Dowle v. Saunders, 2 H. & M. 251 ; 84 1*. .1. Ch. 87; 144 R. H. L40. (n) L. R. 7 H. L. 512; 45 L. J. Q. B. 31. 144 MISREPRESENTATION. interest, as in Waldron v. Sloper, where deeds had been parted with for four years, deeds that constituted in fact Waldron's only title, or it might be, as in the case of Rice v. Rice, that they may have represented that they had parted with their interest by signing a receipt for the purchase- money when their only interest was a lien on the purchase- money. In one manner or other they may have so represented that they have parted with their equitable rights and interests as to make it impossible for them again to set up that right against a person who has acquired a contradictory right upon the faith of that assertion and that representation." In the case of mere equitable interests priority cannot be obtained through the medium of a breach of trust or duty. Where it is sought to postpone an equitable title created by declaration of trust a strong case must be made out. A trustee cannot without express authority, or at all events without authority to be implied from circumstances furnish- ing the most substantial grounds for the implication, either pledge the deeds of the cestui que trust or affect his estate or interest under them. A cestui que trust will not be postponed on the ground that he did not inquire into the acts or conduct of his trustee (o). Nor will negligence be imputed to a man who has taken a security in the name of another, if he does not watch his trustee. The fact that some of the money may have been advanced by a trustee does not vary the rule (/;>). So a mortgagor is not bound to require production of the title deeds on paying off part of the original mortgage debt (q). Nor will negligence be imputed to a man for leaving his title deeds in the hands of his solicitor (r), or his certificates to) Shropshire Union Canal Co. v. Reg., L. R. 7 H. L. p. 507; 45 L. J. Q. B. 31; Powell v. London and Prov. Bank, 1893, 2 Ch. 555; 62 L. J. Ch. 795; Taylor v. London and County Banking Co., 1901, 2 Ch. 231 ; 70 L. J. Ch. 477 ; but see ante, p. 142. (p) Bradley v. Riches, 9 C. D. 193; 47 L. J. Ch. 811; Carritt v. Real and Personal Advance Co., 42 C. D. 263; 58 L. J. Ch. 688. See Rimmer v. Web- ster, 1902, 2 Ch. 163; 71 L. J. Ch. 561. (q) Berwick v. Price. 1905, 1 Ch. 632; 74 L. J. Ch. 249. . L60; 67 I.. J. Q. B.418. (c) Northern Counties, .rthern Counties v. Whipp, 26 C. D. 482; 53 L. .J. Ch. 629. (1) Ruben v. Great Fiwjall Consolidated, 1906, A. ('. 489; 75 I - .1 K B 843. (m) 2 II. & C. 189, per Cockburn, C.J.; Bee Foster v. Mackinnon, I,. R. 4 C. P. 712; 38 L. J. C. P. 310; and Carlisle Banking Co. \. Bragg L911, 1 K. B 489; 80 L. J. K. B. 472. 148 MISREPRESENTATION. A person "taking a negotiable instrument in good faith and for value obtains a valid title though he takes from one who has none (n). In the case of equitable interests in personal estate, or choses in action, a purchaser or other incumbrancer, who fails to give notice of his interest to the person having legal control of the fund, will be postponed to an incumbrancer, though subsequent in date, who gives notice (o). A rever- sionary interest in the proceeds of real estate held upon trust for sale but not yet sold is a chose in action within the rule (p). But the rule has no application whatever to real estate. As between equitable incumbrancers of real estate, he whose security is prior in date is entitled to priority over a person who takes a subsequent security, notwithstanding that the latter may have been beforehand in giving the party in possession of the estate notice of his security (q). An equitable incumbrancer on real estate is not as against another equitable incumbrancer postponed by any neglect to give notice, except where there is some other controlling equity (r), such as fraud (s). (n) London Joint Stock Bank v. Simmons, 1892, A. C. 201; 61 L. J. Ch. 723; and see Fuller v. Glyn, Mills, Carrie & Co., 1914, 2 K. B. 168; 83 L. J. K. B. 764. (o) Dearie v. Hall, 3 Busa. 1 ; 2 L. J. Ch. 62; 27 B. B. 1; Ward v. Dun- combe, 1893, A. C. 369; 62 L. J. Ch. 881; Lloyd's Bank v. Pearson, 1901, 1 Ch. 865; 70 L. J. Ch. 422; Re Dallas, 1904, 2 Ch. 385; 73 L. J. Ch. 365. (p) Lloyd's Bank v. Pearson, supra. (q) Re Richards, 45 C. D. 589; 59 L. J. Ch. 728. (r) Ward v. Duncombe, 1893, A. C. 369, 390; 62 L. J. Ch. 881. (s) Rooper v. Harrison, 2 K & J. 103; 110 E. B. 112. ( 149 ) CHAPTER III. PRESUMPTIVE OE CONSTRUCTIVE FRAUD. Besides that kind of fraud which consists in misrepresen- tation, express or implied, there is another which will be presumed when parties to a transaction do not stand upon an equal footing- (a). The general theory of law in regard to. acts done and contracts made by parties affecting their rights and interests being- that, in order to bind them there must be a free and full consent, and consent being- an act of reason accompanied with deliberation, transactions, in which one of the parties is not as free and voluntary an agent as the other, or does not apprehend the meaning and effect of what he is doing, want the very qualities which are essential to the validity of all transactions (6). It is upon this principle that when a person, who from his state of mind, age, weakness, or other peculiar circumstances, is incapable of exercising a free discretion, is induced by another to do any act which may tend to the injury of himself or his representatives, that other shall not be allowed to derive any benefit from his improper conduct. The rule is of universal application that where a man is not a free agent, or is not equal to protecting himself, the Court will protect him. The principle is that it is right and expedient, not to save persons from the consequences of their own folly, but to save them from being victimised br- other people (<■). It is upon the general ground that there is a want of Lunacy, iiii-i • • i ■ iiiiotcy, Ac. rational and deliberate consent that the contracts oi Ldiote and persons of unsound mind are generally deemed invalid (a) Edwards v. Meyrick, 2 Ha. 68. (b) Story, Eq. Jur. s. 222. in Allcard v. Skinner, 36 C. D., p. 182; 66 L. J. Ch. L052; post, p. L98. 150 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. Imbecility, mental in- capacity &c. by a Court of equity. The mere fact, however, that a man is in a state of lunacy, or is even in confinement, will not per se induce the Court to interfere, if it is distinctly shown that the transaction was for his own benefit, that no coercion or imposition was used, and that he knew clearly what he was doing (d), and so an executed contract where parties have been dealing- fairly and in ignorance of the lunacy, will not be set aside, if injustice would be done to the other side and the parties cannot be placed in statu quo, or in the position in which they stood before the transaction (e). But this rule is not applicable to the merely voluntary acts of a lunatic, e.g., a voluntary dissentailing deed, which still remain invalid (/). The same rule prevails at law. To prove lunacy is not enough to avoid a contract. A contract entered into bond fide and in the ordinary course of business is not void by reason of one of the parties being of unsound mind (g). To vitiate the contract it must appear that the other party was aware of the fact and took advantage of it (h). A party claiming under a deed is not bound to prove the sanity of the person executing it. The burden of proof lies on the other side (?'). The above principles, however, do not apply to a lunatic so found by inquisition. A lunatic so found cannot, even during a lucid interval, execute a valid deed dealing with or disposing of his property, such a deed being entirely null and void. In this respect there is a difference between the execution of a deed and the execution of a will by a lunatic so found (k). Independently of that degree of imbecility which will render a man legally non compos, a conveyance may be im- (d) Selby v. Jackson, 6 Beav. 192, 204. See Baldwyn v. Smith, 1900, 1 Ch. 588; 69 L. J. Ch. 336. (e) Niell v. Morley, 9 Ves. 478, 482; Jacobs v. Richards, 18 Beav. 300; 23 L. J. Ch. 557; Price v. Berrington, 3 Mac. & G. 486; 87 B. B. 157; Campbell v. Hooper, 3 Sm. & G. 153; 24 L. J. Ch. 644. (/) Elliott v. Ince, 7 D. M. & G. 475; 26 L. J. Ch. 821. (g) Molton v. Camroux, 4 Exch. 17; 18 L. J. Ex. 356; 76 B. B. 669. (h) Beavan v. M'Donnell, 10 Exch. 184; 23 L. J. Ex. 94; 97 B. B. 730; Imperial Loan Co. v. Stone, 1892, 1 Q. B. 599; 61 L. J. Q. B. 449. (i) Jacobs v. Richards, 18 Beav. 305; 23 L. J. Ch. 557. (k) Re Walker (a lunatic), 1905, 1 Ch. 160; 74 L. J. Ch. 86. PRESUMPTIVE OR CONSTRUCTIVE FRAUD. 151 peached for mere weakness of intellect, provided it be coupled with other circumstances to show that the weakness, such as it is, has been taken advantage of by the other party; hut the mere fact that a man is of weak understanding or is in intellectual capacity below the average of mankind, if there be no fraud, or no undue advantage be taken, is not of itself an adequate ground to set aside a transaction (/). The common law has not drawn any discriminating line by which to determine how great must be the imbecility of mind to render a transaction void and how much intellect is necessary to support it (m). The boundaries between actual insanity and great mental weakness are so narrow that the Court must judge in each case upon the facts and circumstances (n). If a man be so drunk as to be incapable of understanding intoxication, the terms of a transaction or of forming a rational judgmenl as to its effect, it is voidable at his option; but this is so only if his state is known to the other party and he has taken advantage of it, and the contract is merely executory and not executed (o). The Court will not specifically enforce a contract against a person who entered into it when intoxicated even in the absence of any unfair advantage (p), and a contract obtained by fraud from an intoxicated person may be set aside (7). The rule is the same both at law and in equity with respect infancy, to the general incapacity of infants to enter into a binding contract (r). A man who enters into a contract during his minority is not bound thereby after his majority on the mere ground that without any false assertion on his part the other (/) Ball v. Mannin, 3 Bligh, N. S. 1, 1 Dow & CI. 381; 32 R. R. 1; Arm- strong v. Armstrong, I. K. 8 Eq. 1 ; Aldritt v. Maconcluj, l'.IOK, ! Ir. It. 333. u/m Manby v. Bewicke, 3 K. & J. 342; 112 R. R. 177. tn) Bennett v. Wade, 9 Mod. 315. Sec Harrod V. Harrod, ! K. & J. 7; 103 l; It. 1 ; Longmate v. Ledger, 2 CiilT. L63; L28 K. K. 72. Sec as to want of assent arising from partial insanity or delusion, Jenkins V. Morris, II C. D. 674. (0) Core v. Gibson, 13 M. A \V. 623, 626; 14 L. .!. Ex. LSI ; 67 R. K. 762; Molton v. Camroux, 4 Exch. 17, L9; 18 L. J. Ex. 356; 76 R. R. 669; Matthews v. Baxter, L. K. 8 Ex. l32; 42 L. .7. Ex. 73. (p) Nagle v. Baylor, 3 Dr. & War. 60. "/1 1 Bligh, 137. (r) Bee Infants' Relief Act, 1874. 152 PRESUMPTIVE OR CONSTRUCTIVE FRAUD. party believed liim to be of age (s). But " infancy never authorises fraud " (t). If an infant, by a false and fraudulent representation that lie is of full age, induces persons to deal with him, he incurs an obligation in equity, which, how- ever, in the case of a contract is not an obligation to perform the contract, and must be carefully distinguished from it. He is not liable for a wrong arising out of contract such as a fraudulent representation at the time of making the contract that he is of full age, but he is bound by payments made and acts done at his request and on the faith of such rejiresenta- tions and is liable to restore any advantage obtained by such representations (u). If he has obtained property other than money by fraud he is bound to restore it, but if he has only purported to bind himself to transfer property or to pay money he cannot be compelled to make good his promise or to make satisfaction for its breach. So if an infant obtain a loan of money from a money-lender by fraudulent mis- representation that he is of full age, he is not liable to refund the money (x). It seems that it is not necessary that he should actively encourage fraud. It is enough if he be privy to it. If an infant knowing his rights stands by and seeing another in treaty for the purchase of his estate gives no notice of his title, he will not be permitted afterwards to avoid the purchase (y). An infant cannot be allowed by a Court of equity to take advantage of his own fraud (z). Nor can he affirm and take the benefit of one part of the trans- action and repudiate the remainder («). Where an infant (s) Stikeman v. Dawson, 1 De G. & Sm. 105; 16 L. J. Ch. 205; 75 E. E. 47; see Freeman v. Bank of Montreal, 26 Ont. L. E. 451. (t) Buckinghamshire v. Drury, 2 Eden, 60, 71. (u) Carry v. Gertcken, 2 Madd. 40; 17 E. E. 180; Wright v. Snowe, 3 De G. & Sm. 321; 79 E. E. 220; Ex p. Unity Bank, 3 D. & J. 63; 27 L. J. B. 33; 121 E. E. 25; Ex p. Taylor, 8 D. M. & G. 254; 25 L. J. B. 25; 114 E. E, 113; Nelson v. Stocker, 4 D. & J. 458; 28 L. J. Ch. 760; Bartlett v. Wells, 1 B. & S. 836; 31 L. J. Q. B. 57; Lempriere v. Lange, 12 C. D. 678; Woolf v. Wool}, 1899, 1 Ch. 343; 68 L. J. Ch. 82. (x) Leslie v. Shiell, 1914, 3 K. B. 607; 83 L. J. K. B. 1145; explaining Stocks v. Wilson, 1913, 2 K. B. 235; 82 L. J. K. B. 598. (y) Savage v. Foster, 9 Mod. 37. * (z) Clarke v. Cobley, 2 Cox, 173; 2 E. E. 25; Woolf v. Woolf, supra. (a) Thurstan v. Nottingham Bldg. Soc, 1902, 1 Ch. 1; 1903, A. C. 6; 72 L. J. Ch. ]34. PEESFMPTIVE OK CONSTRICTIVE FRAUD. L53 had obtained from a creditor of Lis wife two promissory notes, in which she was indebted to him before marriage, on giving his bond to the creditor, he was ordered to give back the notes on his pleading infancy when sued on the bond (o). Where an infant charged his reversionary interest with pay- ment of a sum lent to him upon his promissory units and executed a statutory declaration that he was then of full age, and after attaining full age he mortgaged his interest for an amount exceeding what was ultimately available without disclosing the prior charge, the Court held that the charge given by the infant during his infancy was avoided by the subsequent mortgage executed by him when of full age to a mortgagee without notice (c). But an infant mortgagor cannot repudiate his mortgage without recognising the right of the mortgagee to the repayment of the sums advanced (d). In the absence of proof of the exercise of undue influence or of the existence of the relation of guardian and ward, a gift of her property within a month before her death by an infant aged twenty years, of business habits, firm will, and fully capable of managing her affairs, to a relation with whom she had been residing since her father's death, for a period of five months until her own death, was held not invalid (e). A married woman may now both sue and be sued in tort in Coverture, all respects as if she were a feme sole, and any damages or costs recovered by her in any such action shall be her separate property, and any damages or costs recovered against her shall be payable out of her separate property (/). For torts committed by a woman before her marriage, her husband is now only liable to the extent of the property acquired by him through his wife (//). Hut for the wile's torts coin in it ted during coverture, the husband's Liability continues to bo un- limited as before the Act. He will be exempt from liability (b) Clarke \. Cobley, supra. Sec Jones v. Kearney, I I). & War. L66; 58 R R. 249. (c) Inman v. Inman, 15 Bq. 264. (d) Thurston v. Nottinghani /.'/•). It is an inflexible rule that a trustee will not be allowed to put himself in a position where his interest and duty conflict (/). No trustee who buys up an incumbrance on the estate of which he is trustee can ever as against the trust estate make a profit out of it (m). The restraint on any personal benefit to the trustee is not confined to his dealings with the estate, but extends to remuneration for services and prevents him from receiving anything beyond the payment of his expenses, unless there be an express stipulation to the contrary (»). There may be cases in which the Court will establish an agreement made with a trustee for a certain allowance beyond the term of his trust, but the Court will be extremely cautious and wary in doing so (o). The leading case on the subject is Keech v. Sand for J (p), where it was decided that a trustee or tenant for life of renewable leaseholds who takes a renewal in his own name is a trustee of the renewed lease for the persons interested in the old lease even though the lessor refused to grant a renewal to the beneficiaries. The principle has been extended by Phillips (i) Ex p. Lacey, 6 Ves. 625; G R. R. 9; Ex p. James, 8 Yes. 337, 344; 7 R. R. 56; D'Albiac v. D'Albiac, 16 Ves. 123; Hamilton v. Wright, '.I CI. iV Fin. Ill; 69 R. R. 58; Broughton v. Broughton, 5 D. M. & <".. L64; 25 L. J. Ch. 250; 104 R. R. 71. A lease obtained by a trustee or executor in his own name, even in the absence of fraud, and upon the refusal of the lessor to grant a new lease to the cestui que trust, ehall be held upon trust for the person entitled to the old lease. Keech v. Sandford, Bel. Ca. Ch. 61. i A i Forbes v. Ross, 2 Cox, 116. (I) Bray v. Ford, 1896, A. C. p. 51, per Lord Herschell ; 65 L. .7. Q. B. 218. (to) Ex p. Larking, 4 C. D. 566; 45 L. J. Ch. 235. (n) Robinson v. Pelt, 3 P. Wins. 249; Broughton v. Broughton. supra; Crossbill v. Bower, 32 Beav. 86; 138 R. K. 646; Barrett v. Hartley, 2 Bq 789: Re Bignell, L892, 1 Ch. 59; 61 L. J. Ch. 834; Re White, L898, 1 Ch. 297; 67 L. J. Ch. 139. \yliffe v. Murray, 2 Atk. 59. (p) 2 Wh. & Tu. L. C. (7th ed.), 693. 160 FRAUD BY PARTIES v. Phillips (q) to the case of a trustee or tenant for life purchasing the reversion so that the reversion so purchased is subject to the trust. But the principle only applies in the case of leases renewable by contract, or where there is a reasonable expectation that the lease will be renewed (r). It does not apply to one of the next of kin taking- a new lease in his own right, and in the absence of unfair dealing he is entitled to hold the new lease for his own benefit (5). The principle, however, applies to a tenant for life in possession of mortgaged houses purchasing the property from the mort- gagee, and he holds the property as trustee for the remainder- men (t). In the case of trustees, executors, agents, and perhaps tenants for life, the presumption of personal incapa- city to retain the benefit is one of law and cannot be rebutted; in the case of mortgagees and partners there is a rebuttable presumption of fact; and in the case of co-owners and other persons not in a fiduciary position they will not be deemed trustees unless they have acted fraudulently (u). But there is no rule which incapacitates a trustee from dealing with the cestui que trust in respect of the trust estate. A trustee for sale may purchase the trust estate, if the cestui que trust fully and clearly understands with whom he is dealing and makes no objection to the transaction, and the trustee fairly and honestly discloses all that he knows respecting the property and gives a just and fair price, and does not seek to secure surreptitiously any advantage for himself (#). The onus, however, rests upon the trustee, and he is bound to produce clear affirmative proof that the parties were at arms' length, that the cestui que trust had the fullest (q) 29 C. D. 673; 54 L. J. Ch. 943. (r) Bevan v. Webb, 1905, 1 Ch. 620; 74 L. J. Ch. 300. (s) Re Biss, 1903, 2 Ch. 40; 72 L. J. Ch. 473. (t) Griffith v. Owen, 1907, 1 Ch. 195; 76 L. J. Ch. 92. (u) Re Biss, sup., per Collins, M.E. and Eonier, L.J. (x) Ayliffe v. Murray, 2 Atk. 59; Ex p. Lacey, 6 Ves. 626 ; Q B. B. 9; Ex p. James, 8 Ves. 348; 7 E. E. 56; Coles v. Trecothick, 9 Ves. 246; 7 E. E. 167; Ex p. Bennett, 10 Ves. 381; 8 E. E. 1; Randall v. Errington, ibid. 422; 8 E. E. 18; Morse v. Royal, 12 Ves. 355; 8 E. E. 338; Downes v. Grazebrook, 3 Mer. 208; 17 E. E. 62; Knight v. Marjoribanks, 2 Mac. & G. 10 ; 83 E. E. 136; Thomson v. Eastwood, 2 A. C. 215, 236. IN A FIDUCIARY POSITION. 161 information upon all material facts, and that having this information he agreed to and adopted what was done (y). It is not for the cestui que trust to prove negatively that he had not full information; it is for the trustee to prove affirmatively that the information was given (z). The trans- action becomes impeachable, if there is any secret or under- hand dealing on the part of the trustee. However fair it may be in other respects, the transaction cannot be supported if the cestui que trust does not clearly and distinctly understand that he is dealing with the trustee. A trustee cannot under any circumstances be allowed to deal with himself on behalf of the cestui que trust surreptitiously and without his know- ledge and assent. It is immaterial that he may take no advantage from the bargain. It may be that the terms on which he attempts to deal with the trust estate are as good as could have been obtained from any other quarter. They may even be better, but so inflexible is the rule, that no inquiry can be made as to the fairness or unfairness of the transaction. It is enough that the act has a tendency to interfere with the dut}^ of protecting the trust estate which the trustee has taken upon himself to perform. The policy of the rule is to shut the door against temptation. It makes no matter whether the transaction relates to real estate, or personalty, or mercantile matters, for the disability arises not from the subject-matter, but from the obligation under which a trustee lies to do his utmost for the cestui que trust (a). It makes no difference in the obligation of the principle that the sale was by public auction (6), or that the purchase was (y) Williams v. Scott, 1900, A. C. 499; 69 L. J. P. C. 77. (z) Dougan v. Macpherson, 1902, A. C. 197; 71 L. J. P. C. 62. (a) Fox v. Macreth, 2 Bro. C. C. 400; 2 Cox, 320; 4 Bro. P. C. 258; 2 R. R. 55; Ex p. Lacey, .supra; Ex p. James 8 Ves. 348, supra; Ex p. Bennett, supra; Randall v. Errington, supra; Baker v. Carter, 1 Y. & C. 250; 4 L. J. Ex. Eq. L2, 11 R. R. 267; Lewis v. Hillman, 3 H. L. C. 607; 88 R. R. 233; Knight v. Marjoribanks, 1 Mac. & G. 12; 83 R. R. 136; Hamilton v. Wright, 9 CI. & Pin. Ill: 69 R. R. 58; Aberdeen lily. Co. v. Blaikie, 1 Macq. 461; Parkinson v. Hanbury, 2 D. J. & S. 450; 36 L. J. Ch. 292. (b) Ex p. James, 8 Ves. 348; 7 R. It. 56; Ex p. Bennett, in Ves. 893; 8 R. R. 1; Sanderson v. Walker, L3 V«e. 602; Downes v. Grazebrook, 9 Mei 207; 17 R. R. 62; Grover v. Hug ell, 3 Runs. 428; 27 R. R. L08; Adama v. Sworder, 2 D. J. & S. II : L39 R. H. 23. K.F. I I 162 FRAUD BY PARTIES made through another person (c), as for instance through a purchaser on an understanding that he should resell to the trustee (d), or that the purchase was made from a co- trustee (e), or that the trustee may have purchased as agent for another person (/). The application of the principle is limited to dealings with the trust estate. In all matters unconnected with the subject of the trust the parties are fully competent to deal with each other as strangers (g). Nor will the principle operate after the relation of trustee and cestui que trust is clearly dissolved. Apart from any cir- cumstances of doubt or suspicion there is no rule that a person who has ceased to be a trustee of an instrument containing a trust for sale cannot become a purchaser of the trust pro- perty (h). But a man who has been a trustee cannot, after the termination of the relation, be allowed to avail himself for his own benefit, and to the prejudice of the party for whom he has been trustee, of any information which he may have acquired during the existence of the relation (/). Subject to this limitation a man who has acted in a fiduciary character may, on divesting or discharging himself of the trust, purchase the property in respect of which he has filled a fiduciary position (k). If a man cannot by an act of his own (c) Sanderson v. Walker, 13 Ves. 602; Adams v. Sworder, supra: Bagnal v. Carlton, 6 C. D. 371; 47 L. J. Ch. 30. id) Re Postlethicaite, 37 W. K. 200. (e) Whichcote v. Laurence, 3 Ves. 740. (/) Ex p. Bennett, 10 Ves. 381, 400; 8 R, R. 1; Gregory v. Gregory, Coop. 201; 14 R. R. 244; Ex p. Grylls, 2 Dea. & Ch. 290. (g) Knight v. Marjoribanks, 2 Mac. & G. 12 ; 2 H. & Tw. 308; 83 R. R. 166. (h) Re Boles and British Land Co., 1902, 1 Ch. 244; 71 L. J. Ch. 130. (i) Ex p. Lacey, 6 Ves. 627; 6 R. R. 9; Coles v. Trecothick, 9 Ves. 246; 7 R. R. 167; Ex p. Bennett, 10 Ves. 394; 8 R. R. 1 ; Morse v. Royal, 12 Ves. 373; 8 R. R. 338; Ex p. Larking, 4 C. D. 566; 45 L. J. Ch. 235; Luddy's Trustee v. Peard, 33 C. D. 500; 55 L. J. Ch. 884. (k) Ex p. James, supra; Sanderson v. Walker, 13 Ves. 601; Downes v. Grazebrook, 3 Mer. 200; 17 R. R. 62. The expression "shaking off" the character of trustee, or " dissolving the relation " of trustee, used in some of the cases, does not seem to amount to more than that the transaction takes place with the consent of the parties beneficially interested. Morse v. Royal, supra; Downes v. Grazebrook, supra; Chalmer v. Bradley, 1 J. & W. 68; 20 R. R. 216. In Austin v. Chambers, 6 CI. & Fin. 1; 49 R. R. 1; where it was said that a man might, on shaking off the character of a trustee, purchase the IX A FIDUCIARY POSITION. 163 discharge himself of the trust so as to enable him to purchase, the Court will, under particular circumstances, divest him of the character and enable him to purchase (/). If the trust property is taken entirely out of a man's hands, and all his authority over it put an end to by the interposition and act of law, as in the case of a sale by execution, there is no reason why he should not be able to purchase. The principle upon which a trustee is debarred from purchasing does not apply to such a case (m). The assignee of an insolvent debtor, for instance, may purchase the debtor's estate when sold by the sheriff (n). But on a sale by the Court, the Court will not as a rule give the trustee leave to bid, for that is a question for the cestui.* que trust to decide for themselves (o). But where leave was given to the solicitor of an executor to bid at the sale, it was held that the effect of the leave was to put an end to the fiduciary relation and to place him in the position of a mere stranger (/>). The trustees or governors of a charity cannot grant a Charities. lease to one of themselves (q). But a tenant who has got a lease of charity lands at too low a rent is not to be turned out unless there is collusion, as, for instance, if he is a relative of one of the trustees. In such a case inadequacy of price is less a badge of fraud than in almost any other case (/•). The principle which affects dealings between trustee and Directors of companies. cestui que trust is not confined to the case of trustees properly so called, but extends to other persons invested with a like fiduciary character, such as the directors or promoters of a company (s). trust estate, the solicitor was not employed in the sale by his client, ami wa himself a judgment creditor. A trustee cannot be allowed to purchase the trust estate by his retirement from the trust with that object in view. Spring v. Pride, 4 D. J. & S. 895; cf. Re Boles, 1902, 1 Ch. '241; 71 L. J. Ch. L30. (I) Campbell v. Walker, 5 Ves. 681. See Ex p. Morland, Mont. & M. 76. (m) See Austin v. Chambers, supra; Beaden v. King, 9 Ha. 499; 22 L. J. Ch. 111. (n) Sec Ex p. Morland, Mont. & M. 76. (o) Tennant v. Trenchard, 4 Ch. 545; 38 L. J. Ch. 169. (p) Boswell v. Coaks, 23 C. D. 302; 11 App. Ca. 232; 55 L. J. Ch. 761. (q) Att.-Gen. v. Clarendon, 17 Ves. 500. (r) Ex p. Skinner, He Law ford Charity, 2 MEer. 157. is) Benson v. Heathern, 1 V. & C. C. C. 320; 57 K. R. 85] ; Great Luxcm- 164 FRAUD BY PARTIES The director of a company is in a fiduciary position towards the company of which he is a director. There is, however, an essential difference between a director and a trustee. A trustee is the owner of the property and deals with it as principal, subject only to an equitable obligation to account to his cestui que trust. The office of a director is that of a paid servant of the company. He never enters into a contract for himself, but only for his principal, that is, the company. He cannot sue on such contracts, nor be sued on them, unless he exceeds his authority. That is the broad distinction between trustees and directors (t). A director, however, as we have said, stands in a fiduciary position, and is bound to use his best endeavours for the advantage of the company. He may not place himself in a position in which his interests will come into conflict with that which his duty requires him to do. Any personal benefit which he may gain by availing himself of his fiduciary character must be acquired by a dereliction of duty, and will enure for the benefit of the company (u). If he makes any profit on account of transac- tions of business when he is acting for the company, he must account for it to the company (,r). So, also, if acting for himself, he proposes to the company a contract from the execution of which he will derive a jirofit, that profit belongs t to the company (y). It makes no difference that the profit is one which the company itself could not have obtained. The question is not whether the company could have acquired it, but whether the director acquired it while acting for the company (z). So a company is entitled to money received by a director from a promoter under an agreement to burg Rly. Co. v. Magnaij, 25 Beav. 586; 119 R. R. 555; Aberdeen Rly. Co. v. Blaikie, 1 Macq. 461 ; 149 R. R. 32. (t) Smith v. Anderson, 15 C. D. 247, 275; 50 L. J. Ch. 39. («) Hay's Case, 10 Ch. 600; 44 L. J. Ch. 721; Ex p. Larking, 4 C. D. 568; l.i L. J. Ch. 235. (x) Imperial Mercantile Credit Ass. v. Coleman, L. R. 6 H. L. 189; 40 L. J. Ch. 262; Weston s Case, 10 C. D. 579; 48 L. J. Ch. 425; Eden v. Ridsdale Lamp Co., 23 Q. B. D. 368; 58 L. J. Q. B. 579; Theatre Amusement Co. v. Stone, 50 Can. S. C. R. 32. (y) Imperial Mercantile Credit Ass. v. Coleman, supra. (z) Boston Co. v. Ansell, 39 C. D. 339. IX A FIDUCIARY POSITION. 165 indemnify him against any loss on his qualification shares (a). And if each of several directors has received something with the knowledge and approval of the others, they are all jointly and severally liable for the whole (6). But when a director not purporting to act on behalf of the company buys a property which he sells again at an enhanced price to the company, he is under no obligation to account to the company for the profit so made (c). Where the articles of a joint stock association declared thai if a director had any interest in a contract proposed for acceptance by the association, he should declare his interest, it was held that he must declare the nature of his interest, and that the words were not satisfied by a mere declaration that he had an interest in the matter (d). Directors, who are also vendors to the company, do not discharge their duty of disclosing what profits they have made by inserting words in a prospectus which, read with caution, might give a clue to their meaning. The disclosure must be explicit. Nor can they escape liability by a clause in the articles that they will not be accountable for any profit made (e). A director cannot retain a consideration received by him from the promoters as an inducement to become a director. If the consideration has been a gift of fully paid-up shares, though he is not liable as a contributory, he may be compelled to restore the shares, or to account to the company for the highest value to be attributed to them since they have been in his possession (f), but he ought not to be charged with more than the real value ( the company. The mere suppression of the amount of profit made by him does noi (p) Erlanger v. New Sombrero Co., 3 App. Ca. p. 1268; 48 L. J. Ch. 7.'!. (q) Per Lindley, L. J., 27 W. K. 836. (r) Govers Case, 1 C D. 182; 45 L. J. Ch. 83. (*) 35 C. D. pp. 410, 411; 33 C. D. 85; Ladtj Forrest Gold Mine, L901, 1 Ch. 582; 70 L. J. Ch. 275. (t) Ladywell Co. v. Brookes, 35 C. D. 406; 56 L. J. Ch. 084; Lady Forrest Gold Mine, supra; ami nee post, Ch. vii., s. 1. (tt) Omnium Electric Palaces v. Baines, infra. (x) Lagunas Nitrate Co. v. Lagunas Syn., 1899, 2 Oh. 292; 68 L. .) . Ch. 699 (y) Lindsay Petroleum Co. v. Hunt, \j. B. 5 1'. C. 221- (z) Leeds and Hanley Theatres, L902, 2 Ch. 809; 72 L. .1. Ch. I. (a) Whaley Bridge v. Green, 5 Q. B. I>. OH); 1'.) I,. J. Q. B. 826. 167 168 FRAUD BY PARTIES by itself amount to fraud so as to make him liable to account (&). It is incumbent on promoters to take care that, in forming the company, they provide it with a board of directors who shall both be aware that the property which they are asked to buy is the property of the promoters, and who shall be competent and impartial judges as to whether the purchase ought or ought not to be made. There is no rule that the owner of property may not promote and form a company and then sell his property to it; but, if he does so, he is bound to take care that he sells it to the company through the medium of a board of directors, who can and do exercise an inde- pendent and intelligent judgment on the transaction, and who are* not left under the belief that the property belongs not to the promoters but to some other person (c). There is, however, no duty imposed on promoters of a company to provide it with an independent board of directors, if the real truth is disclosed to those who are induced by the promoters to join the company; and where the promoters are vendors to the company the contract for sale cannot be set aside under such circumstances merely because the board of directors were not independent (J). An assignment of a business to a private company by insolvent traders is not void under 13 Eliz. c. 5, if made for valuable consideration and free from fraud, but if the effect of it is to make the assets unavailable for creditors generally it is an act of bankruptcy (e). Though a one-man company is legal, yet a sale to such a company may turn out to be fraudulent under 13 Eliz. or void as an act of bankruptcy on the part of the vendor (/). (b) Lady Forrest Gold Mine, 1901, 1 Ch. 582, 70 L. J. Ch. 275. (c) Erlanger v. New Sombrero Co., 3 App. Ca. p. 1236; 48 L. J. Ch. 73; Leeds and Hanley Theatres, 1902, 2 Ch. 809; 72 L. J. Ch. 1. See Omnium Electric Palaces v. Baines, 1914, 1 Ch. 332; 83 L. J. Ch. 372. (d) Lagunas Nitrate Co. v. Lagunas Syndicate, 1899, 2 Ch. 392; 68 L. J. Ch. 699. (e) Re David and Adlard, 1914, 2 K. B. 694; 83 L. J. K. B. 1173; post, Ch. iv., s. 1. (/) Re Hirth, 1899, 1 Q. B. 612; 68 L. J. Q. B. 287; Wheatley v. W., 85 L T. 491; Re Slobodinsky, 1903, 2 K. B. 517; 72 L. J. K. B. 883. IX A FIDUCIARY POSITION. 169 It is not fraudulent for a trader to sell his business to a limited company consisting only of himself and six members of his own family, the business being then solvent, and all the terms of sale being known to and approved by the share- holders; and neither the company nor liquidator is in such a case entitled to rescission of the contract of purchase (//). A person not a director may be a promoter of a company which is already incorporated, the capital of which, however, has not been taken up, and which is not yet in a position to perform the obligations imposed on it by its creators (A). The 38th section of the Companies Act, 1867, does contain the word "promoters," but it imposes no fresh duty on them with regard to the company. It imposes a fresh duty towards, and gives a new cause of action to, persons who take shares in the company as individuals; it does not affect the obligation of the promoters towards the corporation. The extent of the fiduciary relation which the promoters bear to the com- pany is a very important consideration in construing the section (t). If the promoters of a company are the owners of the property which they are selling to the company, they are bound, like other persons in a fiduciary position, to state in their prospectus that they are the owners, and to make a full and fair disclosure of their interest and position with respect to that property. It is not necessary in all cases that the price given by them for the property should be stated ; but it is not fair in them to omit to state that they have just pur- chased the property at a very much smaller amount than they propose to sell it for to the company which they are promoting or causing to come into existence (/■). Full disclosure of all material facts by promoters who sell I g) Salomon v. Salomon & Co., 1897, A. C. 22; 65 L. J. Oh. 35. il, , Kmmn Silver Mining Co. v. Lewis, 4 C. P. D. 407; 48 D. J. C. P. 257. (t) Erlanger v. New Sombrero Co., 3 App. Ca. 1269, per Lord Blackburn; 18 L. J. ('Ii. 7:5; and see ante, p. 91. (It) New Sombrero Co. v. Erlanger, 5 C. D. 73; Erlanger v. New Sombrero Co., supra; Bagnal v. Carlton, 6 C. D. 371; 47 L. J. Ch. 80; Lady Forrest Cold Mine, 1901, 1 Ch. 582; 70 L. J. Ch. 275; Leedt and Hani,,, Theatres, 1902, 2 Ch. 809; 72 L. J. Ch. 1. 170 FRAUD BY PARTIES property to and become directors of the company is necessary. Disclosure means disclosure to intended shareholders; and therefore disclosure to directors who are themselves pro- moters or their nominees is not disclosure at all (I). If there has been concealment, honesty of purpose on their part with an intention to act for the benefit of the company will not avail them as a defence to an action for rescission. The mere fact of the disclosure of the fiduciary relation and of the double character in which they have acted will not discharge them from the obligation of making a complete and candid disclosure (m). Further, the disclosure must be explicit; it is not enough to insert in the prospectus words which read with caution and sifted to the bottom might have given to the reader a clue to their meaning (n). Nor can they escape liability by a clause in the articles that they will not be accountable to the company for any profit (o). If a promoter forms a company by fraudulent means and the company is ordered to be wound up, the promoter cannot prove in the winding-up for his services in forming the company or for his services as officer of the company after the company has been registered (p). There is no difference in principle between money taken from the funds of a company by a secret bargain between the vendor and the promoters, and money so taken by secret bargain between the vendor, the promoters, and the contractors (q). Other fidu- The principle which affects dealings between trustee and tions. 16 cestui que trust extends also to other persons invested with a like fiduciary character; such as executors and adminis- (/) Gluckstein v. Barnes, 1900, A. C. 249, 259; 69 L. J. Ch. 385; and see Re Darby, 1911, 1 K. B. 95 ; 80 L. J. K. B. 180. (m) Lagunas Nitrate Co. v. Lagunas Syndicate, 1899, 2 Ch. 392; per Bigby, L. J. ; 68 L. J. Ch. 699. (n) Gluckstein v. Barnes, 1900, A. C. 240; 69 L. J. Ch. 385. (o) Ibid. (p) Re Hereford Waggon Co., 2 C. D. 621, 626; 45 L. J. Ch. 461. (q) Twycross v. Grant, 2 C. P. D. 535, per Cockburn, C. J. ; 46 L. J. C. P. 636. IN A FIDUCIARY POSITION. 171 rrators (/') ; assignees of a bankrupt (s) ; committees of inspection in bankruptcy (t); commissioners of bankrupts and oilier judicial officers (?/); committees of lunatics (#); governors of charities (y) ; receivers (z) ; arbitrators (a) ; auditors (b) ; brokers (c) ; to a member of a corporation taking a lease of the corporate property ( Edwards v. Meyrick, 2 Ha. 60. See Tonkin v. Hughes, 79 L. T. 47 ; 1 T \j. R. 469; Coaks v. Boswell, inf. (/) Bloye's Trust, 1 Mac. & G. 488; 19 L. J. Ch. 89; Lewis v. Hillman, 8 H. L. C. 607; 88 R. R. 233; Tyrrell v. Bank of London, 10 H. L. C. 26, II ; 31 L. J. C. 369; 138 R. R. 14; Adams v. Sworder, 2 I). .1. & S. 44; 139 R R 23. (m) McPherson v. Watt, 3 App. Ca, 256 (tt) Hesse v. Briant, 6 D. M. & (i. 623; 106 R. R. 225; and Bee Farrar v. Farrar*, Lim., 40 C. D. 395; 58 I>. .1. Ch. L85. (o) Cordery, 191. (//) Coaks v. Boswell, 11 App. Ca. 232, 240, 244; 56 I,. .1. Ch. 761. (q) Eyre v. Hughes, 2 C. D. 148; 15 L. .1. ('I,. 895; Watson v. Rodwell, II C. I). L50; 18 I,. J. ch. 209; Cockburn v. Edwards, L8 C. D. 149; 51 I-. .1. Ch, 46. 176 FRAUD BY PARTIES that no undue advantage has been taken, it will be supported, although there may have been some irregularities attending it (r). A solicitor who advances money to or has dealings with a client must be able to prove the advance of the money by some other evidence than the instrument creating the security (s), or the receipt clause (t) ; but a purchaser without notice from the solicitor could rely on the receipt clause (w). A security given by a client to his solicitor for past or future costs or for monies due will be supported if bond fide (x). In dealing with a case where a solicitor has purchased from a client, the circumstances of his employment may be con- sidered and the amount of influence estimated. In a case accordingly where no high degree of confidence existed, and not much influence had been acquired, the Court, being- satisfied that the conduct of the solicitor had been bond fide, and that the bargain was a fair one, the transaction was upheld (y). The statement of an untrue consideration in a deed of purchase of sale between solicitor and client is fatal to the deed. The Court will never support a deed where a solicitor is purchaser and the consideration is unduly stated (z). But a client may be estopped as against a subsequent purchaser from denying the consideration (a). The rule which throws upon a solicitor dealing with his client the burthen of proving the fairness of the transaction is not confined to cases where the solicitor is actually employed at the time, but may extend to cases where a solicitor has in the course of his employment on a previous occasion acquired or had the means of acquiring any peculiar knowledge as to (r) Jones v. Roberts, 9 Beav. 419; Blagrave v. Routh, 8 D. M. & G. 621; 26 L. J. Ch. 86; 110 R. R. 346. (s) Lawless v. Mansfield, 1 Dr. & War. 557, 605. (t) Jones v. Thomas, 3 Y. & C. 498, 522. («) Conv. Act, 1881, s. 55; Lloyd's Bank v. Bullock, 1896, 2 Ch. 192, 197; 65 L. J. Ch. 680; Capell v. Winter, 1907. 2 Ch. 376; 76 L. J. Ch. 496: ante, p. 122. (x) Cheslyn v. Dalby, 2 Y. & C. 170; 47 R. R. 384; Edicards v. Meyrick, 2 Ha. 60; Sol. Rem. Act, 1881. Ord. VII. (y) Pisani v. Att.-Gen. of Gibraltar, L. R. 5 P. C. 536. {z) Uppington v. Bullen, 2 Dr. & War. 184. See Holman v. Loynes, infra. (a) Pawell v. Broicne, 1907, W. N. 228; ante, p. 122. IN A FIDUCIARY POSITION. 177 the property (6). The solicitor of a bankrupt who has acquired information in that character before the bankruptcy, cannot afterwards buy from the trustee without full disclosure, even though the trustee is independently advised (c). As a general rule, however, it no longer applies after there has been an entire cessation of the relation (<•/). The continuance, how- ever, will be presumed in the absence of some positive act or complete case of abandonment (e). Nor will it apply with the same force where the relation though not terminated has been loosened and the influence consequent on the relation which formerly existed between the parties is not subsisting in its full and perfect force (/). The rule which throws upon a solicitor dealing with his client the burthen of proving the fairness of the transaction applies to the case of voluntary agreements, and not to a case where the solicitor is in the hostile attitude of an urgent and pressing creditor (g). Nor does the rule apply, where the transaction is totally disconnected with the relation and con- cerns objects and things not embraced in or affected by or dependent upon that relation (h). But the fact that the relationship exists in matters other than the transaction in question suggests the inference that the influence has not ceased as regards the matter in question (/). The fact that the purchaser may be a solicitor, and that the vendor has no Legal adviser, there having been no previous relation of solicitor and client between them, does not bring the case within the ordinary rule of the Court in such cases (k). (b) Holman v. Loynes, 4 D. M. & G. 270, 281; 23 L. J. Ch. 529; 102 R. R. 127; approved in 3 App. Ca. 271; and 1903, 1 Ch. 27. See. Carter v. Palmer 8 CI. & I'm. 657, 707; 54 R. R. 145. (c) Luddy's Trustee v. Peard, 33 C. D. 500; 55 L. J. Ch. 884. id) Gibson v. Jeye.s, Ves. 277; 5 K. R. 295; Wood v. Dowries, IS \, CA); 11 R. I;. L60; Montesquieu v. Sandys, ibid. 313; 11 R.*B. L97 ; Cane \. Allen, 2 Dow 289. Rhodes v. Bate, 1 Ch. 252, 260; 35 L. J. Ch. 2(17; 118 K. K. 26 (/) Moss v. Bainbrigge, 6 D. M. & /). In case of undue influence, as the account ought never to have been settled at all, it will be reopened generally (.r) ; but mere error, as distinguished from excessive charges, is not a ground for reopening, nor is the omission to inform the client that he has a right to tax the bill (y). The principles which apply in the case of dealings between solicitor and client are also applicable to the case of a counsel employed by a man as his confidential adviser (z) ; to the case of a man who has constituted himself the legal adviser of another (a), or has offered him legal advice in the matter (6); and to the case of the clerk of a solicitor who has acquired the confidence of a client of his master (c). Considerations of a like nature apply to the case of persons Dealings standing in the relation of principal and agent. A person principal and who is an agent for another undertakes a duty in which there B 8 ent ' is a confidence reposed and which he is bound to execute to (s) Segrave v. Kir wan, Beat. 157; Greenfield v. Bates, 5 Ir. Ch. 219; Boyes v. Carritt, 26 C. D. 531 ; 53 L. J. Ch. 654. (t) Watson v. Rodwell, 11 C. D. 150; 48 L. J. Ch. 209. (u) Hiles v. Moore, 17 L.J. Ch. 385. I i ) Coleman v. Mellersh, 2 Mac. & G. 309; 86 R. R. 123; Ward v. N/uir/,. 50 L. T. 557. (y) Re Webb, Lambert v. Still, 1894, 1 Ch. 73; 63 I;. J. Ch. 145. See Cheese v. Keen, 1908, 1 Ch. 245; 77 L. J. Ch. 163. (z) Carter v. Palmer, 8 CI. & Fin. 657, 707; 54 R. R. 145; Broun v. Ktnnedy, 33 Beav. 133; 4 D. J. & S. 217, 33 L. J. Ch. 342 ; 140 R. R. 47 ; CtU-ij V. Staf- ford, 1 D. & J. 238; 26 L. J. Ch. 865. (a) Tate v. Williamson, 1 Eq. 528; 2 Ch. 66. (b) Davis v. Abraham, 5 W. B. 465; Barron v. Willis, L900, 2 Ch. 121 ; 1902, A. 0. 271 ; 71 L. J. Ch. 609. (c) Hobday v. Peters, 28 Beav. 849; 29 L. J. Ch. 780; L26 R. It. L62; Nes bitt v. Berridge, 92 Beav. 284; 188 K. R. 746. 180 FRAUD BY PARTIES the utmost advantage of the person who employs him. The principal is entitled to the full benefit of the best exertions of the agent. An agent cannot be allowed to place himself in a position which under ordinary circumstances might tempt him not to do that which is the best for his principal, or in which his interest and his duty will be in conflict. No agent in the course and execution of his agency can, without the knowledge and consent of his principal, be allowed to make any profit or advantage out of the matter of his agency and the business in which he is employed beyond the proper remuneration to which he is entitled for his services as agent (d). Where a person in the employment of another is bribed with a view to inducing him to act otherwise than faithfully to his employer, the agreement is a corrupt one and unenforceable whatever the effect produced on the mind of the person bribed may be (e). There is no difference in principle between a profit made by an agent after he has become an agent and profit through a bargain made by him at the time when he becomes an agent with a person who is proposing to enter into a contract with his principal (/). An agent cannot bargain for any benefit derived from the subject on which he is employed without disclosing the fact to his principal. Commission received by an agent without the knowledge of his principal is looked on as a bribe. It is a profit which the principal has a right to extract from the agent whenever it comes to his knowledge (g). The rule is the same whether the remuneration received by the agent formed part of the original bargain, or was a present for services rendered (h) ; or whatever the form which the secret profit may take (i). (d) Tyrrell v. Bank of London, 10 H. L. C. 26, 39; 31 L. J. Ch. 369; 138 R. R. 14; Parker v. M'Kenna, 10 Ch. 118; 44 L. J. Ch. 425; Morrison v. Thompson, L. R. 9 Q. B. 480, 485; 43 L. J. Q. B. 215; Stubbs v. Slater, 1910, ICh. 195; 79 L. J. Ch. 420. (e) Stoney Point Go. v. Barry, 36 O. L. R. 522. (/) Hay's Case, 10 Ch. 600; 44 L. J. Ch. 721. (g) Grant v. Gold Exploration, dc, 1900, 1 Q. B. 233; 69 L. J. Ch. 150; Hitchcock v. Sykes, 49 Can. S. C. R. 403; post, p. 184. (h) M'Kay's Case, 2 C. D. 1 ; 45 L. J. Ch. 148. (i) Keogh v. Dalgety, 1917, V. L. R. 11. IX A FIDUCIARY POSITION. 1>1 There is no rule to prevent an agent from dealing with his principal in respect of the matter in which be is employed as agent. But an ageni who seeks to uphold a transaction between himself and his principal must he able to show to the satisfaction of the Court that he gave his principal the same advice in the matter as an independent anil disinterested adviser would have done, and that he made a full disclosure of all he knew respecting the property, and that the principal knew with whom he was dealing and made no objection to the transaction, and finally that the consideration was just and fair (/»•). However fair the transaction may he in other respects, any underhand dealing on the part of the' agent will render it impeachable at the election of the principal. It is immaterial that the agent may have taken no advantage by the bargain. It is sufficient that he has not acted with that good faith which the Court requires, and has placed himself in a situation which might tempt an agent to allow his own interest to come into conflict with that which his duty requires him to do (/). An agent who is employed to sell cannot become the pur- chaser surreptitiously and without the knowledge or assent of his employer (w) ; nor can an agent who is employed to purchase, purchase secretly from himself or from his own trustee (n), or for his own benefit (o). The rule applies whether the agent employed to purchase was actually in the position of a vendor, or intended to place himself in that i/,) Charter v. Trcvelyan, 11 CI. & Fin. 714, 732; 65 H. R. 305; Lewis \. Hillman, 3 H. L. C. 607; 88 R. R. 233; Rhodes v. Bate, 1 Ch. 252; 35 I,. J. Ch. 267; 148 R. R. 255. (I) Gilleti v. J'r ri jercorne, 3 Beav. 78; 52 R. R. 38; Charter \. Trevelyan, supra; Tyrrell v. Bank of London, 10 H. L. C. 26; 31 L. J. Ch. .•«','.); L88 K. R 11; Parker v. M'Kenna, 10 Ch. 118; 44 L. J. Ch. 425; De Bussche \. All. 8 c. D. 316; 17 b. J. Ch. 386; Birt v. Hurt, 22 C. D. 604; 52 b. .1. Ch. 897. (to) Charter v. Trevelyan, supra ; Lewis v. Hilhnan. supra; Parker \. M'Kenna, supra; McPherson v. Watt, 3 App. Ca. 256; Kelly \. Enderton, anti , |. 69. (n) Cillctt v. I'i ppercome, supra; Barker v. Harrison, 2 Cull. 546; Bentley v. Craven, Ik Beav. 75; KM R. K. :)7:( : Tyrrell \. Bank of London, supra; Kimber v. Barber, 8 ch. 57. o) Lees v. Nuttall, 2 M. & K. 819; .'H R. R. 99; Taylor \. Salmon, I M a r l.'il; l.s K. R. 34; cf James v. Smith, L891, 1 Ch. 884 182 FRAUD BY PARTIES position (p). An agent for sale, if he intends to purchase himself, or to take an interest in the purchase, is bound to tell his principal what share in the purchase he intends to take. He is bound to disclose to his principal the exact nature of his interest. It is not enough. for him to say that he has an interest, or to make statements such as would put the principal on inquiry (q). So also an agent who is em- ployed to settle a debt or to make an arrangement cannot purchase the debt or any charge upon the property which is the subject of the arrangement for his own benefit (/'). So also an agent employed to effect an insurance is bound, in the absence of an agreement to the contrary, to account to his principal for any discount which may be allowed by the insurance office on the premiums paid (s). The disability extends to the case of a sub-agent or substitute employed by the agent (t). A sub-agent stands in a fiduciary relation to the principal and is accountable to him (■?/•). The rule applies with peculiar stringency to the directors of companies who are agents for the sales and purchases made by the company (,t'). The rule that an agent dealing with his principal must impart knowledge acquired in his office does not apply where the relation has ceased and there is another agent with equal means of knowledge to guard the interest of the principal in the transaction (y). After the relation of principal and agent has wholly ceased, or the agent has divested himself of thjat character, the parties are restored to their competency to deal with each other (z). But an agent who has in the course of (p) Beck v. Kcmtorowicz, 3 K. & J. 242; 112 R. R. 123. (q) Dunne v. English, 18 Eq. 524; Stubbs v. Slater, 1910. 1 Cb. 195; 79 L. J. Ch. 420. (r) Cane v. Allen, 2 Dow, 294;'Eeed v. Norris, 2 M. & C. 361; 6 L. J. Ch. 197; 45 R. R. 88; Carter v. Palmer, 8 CI. & Fin. 657; 11 Bli. N. S. 397; 54 R. R. 145; Hobday v. Peters, 28 Beav. 349; 29 L. J. Ch. 780; 126 R. R. 162. (s) Queen of Spain v. Parr, 39 L. J. Ch. 73. (t) De Bussche v. Alt, 8 Ch. D. 287 ; 47 L. J. Ch. 386; ante, p. 99. (u) Powell v. Jones, 1905, 1 K.' B. 11 ; 74 L. J. K. B. 115. (*) Hay's Case, 10 Ch. 600; 44 L. J. Ch. 721. (y) Scott v. Dunbar, 1 Moll. 442. (z) Charter v. Trevelyan, 4 L. J. Ch. 209. See Parker v. M'Kenna, 10 Ch. 118; 44 L. J. Ch. 425. IN A FIDUCIARY POSITION. 183 liis employment acquired some peculiar knowledge as to the property cannot after the cessation of the relation use the knowledge so acquired for his own benefit and to the prejudice of his former client (a). Nor can a man who is employed as a confidential agent escape from liability under the pretence that the business has been entrusted to an agent and not to him, unless it can be shown that the agent was intended to act and in fact acted independently of him (/>). So loner as a contract remains executory, and the trustee or agent has power either to enforce it or to rescind or alter it, a trustee or agent cannot repurchase the property from his own purchaser except for the benefit of his principal. There may be cases of agents for sale who when they have once made the contract have concluded their agency, such as the case of an auctioneer, who when he has knocked down the estate and made the written contract may be said to have terminated his agency. But even in that case the Court would look with considerable suspicion on a repurchase by such an agent, because it would always be extremely difficult to find out whether there had not been some previous concert and understanding between them (c). There is no rule preventing the same agent from acting for the opposing parties, but he must be able to satisfy the Court that the parties were substantially at arms' Length in the transaction, and that there had been the utmost fairness throughout (d). Unless he can do this the taking com- missions from both sides is fraudulent. Accordingly a bargain in which the agent of a money-lender receives com- missions from both sides and is a co-adventurer with the money-lender, is fraudulent apart from the Money-lenders Act, 1900 (e). (a) Carter v. Palmer, supra; Holman v. Loynes, I D. M. & <',. 270; 28 L. J. Ch. 529; 102 R. It. 127. (b) Rhodes v. Bate, 1 Ch. 252; 35 L. J. Ch. 26? ; 1 18 It. R. 255. Parker v. M'Kenna, supra; per Mellish, Li.J. j B< Postlethwaite, SO L. T. r,ll; Williams v. Scott, L900, A. C. 499; 69 L. J. P.C. 77. . Hesse v. Brianb, 6 I). M. 4 G. 628; L06 R. R. 225; and see Panax v. Parrars, Urn.., 10 C. D. 395; 58 L. J. Ch. I Samuel v. Newbold, L906, A. C. 46] ; !■> L.3. Ch. 71 184 FRAUD BY PARTIES When a bribe or secret commission is given by a vendor to a purchaser's agent it may be recovered by the purchaser, even though there is a custom, unknown to the purchaser, to give such commission (/). The principle also extends to a sub-agent (g). The Court will not inquire into the motive of the vendor in giving the bribe, and there is an irrebuttable presumption that the agent was influenced by the bribe (h). Any surreptitious dealing between one principal and the agent of the other principal is a fraud. The defrauded prin- cipal is entitled at his option to have the contract rescinded, or if he elects not to rescind, to have such other relief as he is entitled to (i). In the latter case he has two distinct and cumulative remedies — he may recover from the agent the amount of the bribe, and he may also recover from the agent and the briber, jointly and severally, damages for any loss he has sustained by entering into the contract, and it is im- material which of the two he sues first (A*). Further, where an agent to sell property receives a secret profit from the purchaser, he must not only account for that profit to his principal but is not entitled to any commission from his principal (7). A sub-agent is likewise accountable to the principal (ra). But the principal must reprobate the contract as soon as he learns of the payment of the com- mission, otherwise he will still be bound by it (n), and the purchaser though guilty of fraud may claim rescission on the ground of non-disclosure by the vendor (o). A gift to an agent is valid unless some advantage was (/) Bartram d Sons v. Lloyd, 88 L. T. 286. (g) Powell v. Jones, 1905, 1 K. B. 11; 74 L. J. K. B. 115. (//.) Hovenden v. Millhoff, 83 L. T. 41; C. A. (i) Panama, dc, Telegraph Co. v. India Rubber, dc, Telegraph Works Co., 10 Cb. 526; 45 L. J. Ch. 121. (k) Salford v. Lever, 1891, 1 Q. B. 168; 60 L. J. Q. B. 39; Grant v. Gold Exploration, dc., 1900, 1 Q. B. 233; 69 L. J. Q. B. 150. (I) Andrews v. Ramsay, 1903, 2 K. B. 635; 72 L. J. K. B. 865; Stubbs v. Slater, 1910, 1 Ch. 195; 79 L. J. Ch. 420; but see Hippisley v. Knee, 1905, 1 K. B. 1; 74 L. J. K. B. 68; Nitedals, dc. v. Bruster, 1906, 2 Ch. 671; 75 L. J. Ch. 798. (m) Powell v. Evan Jones d Co., 1905, 1 K. B. 11 ; 74 L. J. K. B. 115. (n) Bartram d Sons v. Lloyd, 88 L. T. 286. (o) Moody v. Cox, 1917, 2 Ch. 71; 86 L. J. Ch. 424. IX A FIDUCIARY POSITION. 185 taken by the agent of the relation in which lie stood to the donor. If the conduct of the agent has been fair, honest, and bond fide, it is immaterial that the deed of gilt may have been drawn up by his solicitor without the intervention of a disinterested third party (p). The rule with respect to the capacity of an agent to accept a gift from his principal is not so strict as it is in the case of solicitor and client, trustee and cestui que trust, and guardian and ward. The relation being of a sort less known and definite than in those other cases, the jealousy is diminished (7). The ordinary doctrines of agency are as applicable to corporations as to private persons, whether they arise in questions of contracts or torts and frauds (/•). The principles which govern the case of dealings between Partners, principal and agent apply as between partners. It is the duty of partners towards each other to refrain from all con- cealment in the transaction of the partnership business. If a partner be guilty of any such concealment and derive a benefit therefrom, he will be treated in equity as a trustee for the firm, and compelled to account to his co-partners (.s). This principle extends to p ersons Avho have agreed to become partners, and if one of them in negotiating for the acquisition of property for the intended firm receives a bonus or commission he must account for it (t). If a partner, without the consent of the other partners, carries on any business of the same nature as and competing with that of the firm, he must account lor and pay over to the firm all profits made by him in that business (u). In other words, he is not at liberty to deal on his own private (p) Hunter v. Atkins, 3 M. & K. 113; 41 R. R. 30: Nicol v. Vaughan, 1 CI. A Pin. 495; 35 R. It. CO. «/ 1 Hunter v. Atkins, supra; but sect Hobday v. Peters, 28 Beav. 849; 29 I. .1. Ch. 780; 126 R. K. 162. m Citizens Life Ass. Co. v. lirovn, 1004, A. C. 423; 73 I;. .1. I'. C. L02. (s, Rusell v. iustwick, 1 Sun. 52; 21 H. K. L57; Partnership Art, L890, b. 29; cf. ' v. Stewart, 6 App. Ca. 04. (/) Fawoett v. Whitehouse, 1 R. & M. L32, 148; 8 L. J. Ch. 50; 82 R. R L63; Hichens v. Congreve, 4 Russ. 562; \,. J. ch. 107 ; 82 R. R. 173. (u) Partnership Act, L890, s. 30; Williamson v. Hine, L891, 1 Cb, 890; 60 L. J. Ch. 123; cf. Trimble v. Goldberg, post, p. 186 FRAUD BY PARTIES account in any matter or business which is obviously at variance with his primary duty to the partnership. The object of this prohibitory rule is to withdraw from each part- ner the temptation to bestow more attention and to exercise a sharper sagacity in respect to his own purchases and sales and negotiations than he does in respect to the concerns of the partnership in the same, or in a conflicting line of business (#). So if one partner should purchase articles on his own private account in some special trade in which the partnership was engaged, the purchase being to the injury of the partnership, he would be liable to account for profits (y). But where a partner carries on a business not connected with or competing with that of the firm, his partners have no right to the profits he thereby makes, even though he has agreed not to carry on any separate business (z). A partner must account for any profit derived from the use of the partnership property, name, or business connection (a) ; and if he make use of information obtained in the course of the partnership, or by reason of his connection with the firm for his own exclusive use in any transaction within the scope of the partnership business, he must account for any profit so derived (6) ; but he need not account for any profit derived from the use of such information for purposes which are wholly outside the scope of the partnership business (c). A partner cannot make a secret profit out of dealings with the firm. He cannot, for example, supply the firm with goods which he has himself bought for his own use at a lower price without informing his jjartners of the facts (d). Nor can a partner treat privately and behind the backs of his co- partners for a lease of the premises where the joint trade is (a;) Glassington v. Thwaites, 1 Sim. and St. 124, 133; 1 L. J. Ch. 118; 24 R. R. 153; Burton V. Wookey, 6 Madd. 367; 23 R. R. 349; England v. Curling, 8 Beav. 129 ; 68 R. R. 39. (y) Burton v. Wookey, supra. (z) Aas v. Benham, 1891, 2 Ch. 244. (a) Partnership Act, 1890, s. 29. (b) Dean v. Macdowell, 8 C. D. 345; 47 L. J. Ch. 537; cf. Lamb v. Evans, 1893, 1 Ch. 218; 62 L. J. Ch. 404. (c) Aas v. Benham, 1891, 2 Ch. 244. (d) Bentley v. Craven, 18 Beav. 75; 104 R. R. 373. IX A FIDUCIARY POSITION. 1^~ carried on. A lease obtained in his own name will be held in trust for the partnership (e). One partner may, however, acquire for himself the share of a co-partner without informing the other partners of the purchase (/) ; but he must, if he has had the management of the business or the keeping of the accounts, made a full disclosure of the state of the business, otherwise the purchase will be liable to impeachment by the co-partner (g). There is. however, no rule that the purchasing partner cannot rely on any election or confirmation binding on the selling partner unless and until full disclosure has been made (/i). A firm will be liable for the tortious act of one of the partners if done within the general scope of the authority given to him as a partner to conduct the business of the firm (i). A partner who on his own account buys a property or business which is not within the scope of the partnership and is neither in rivalry nor in any way connected with the partnership, and who acts on information not acquired as a partner, is not liable to account to his co-partners (/r). There is nothing fiduciary between the surviving partner and the dead man's representative, except that they may sue each other in equity. There are certain legal rights and duties which attach to them, but it is a mistake to apply the word "trust " to the legal relation which is thereby created (/). Nevertheless, there is a mutual liability to account for any secret profit so long as the affairs of the partnership have not been completely wound up (m). The rule of equity with respect to dealings between guar- Dealings between guardian and (e) Clegg v. Edmondson, 8 D. M. & G. 787; 114 R. K. 336. Sec Re Btss, 1903, 2 Ch. 40; 72 L. J. Ch. 173. if) Cassels v. Stewart, (5 App. Ca. 64. ((j) Maddeford v. Austwick, 1 Sim. H ( .) ; 27 R. R. 165; Law \. Law, L905, 1 Oh. 140; 74 L. J. Ch. 108. [h) Ibid. (t) Hamlyn v. Houston, L903, I K. I'.. 81 ; 72 I,. .1. K. B. 72. v . J. Ch. 35; No R. K. 367; Rhodes v. Hate, 1 Ch. 252; 35 I.- .1. I h. 267 : l I R. R. 255; Morley v. Loughnan, supra. (1) Fry v. Lane, 40 C. D. 312; per Kay, .1. ; 58 I.. -I. Ch. LIS. (u) 7 H. I,, c. 779; per Lord King down. Bee Harrison \. Guest, 6 l>. M & G. 421: 25 L. .1. ci,. .-, 1 1 ; L06 R. li. L29j Rhodes v. Hair, i Ch. 2/ 35 I,. J. Ch. 267 ; I 18 R. R. 255; Lyon \. Home, 6 Eq. 655; 87 I.. .1. Ch. 674 ; Morley v. Loughnan, 1893, 1 Ch. 736; 62 L. J. Ch. 515. K.F. 13 194 UNDUE INFLUENCE. obviously be to encourage folly, recklessness, extravagance, and vice if persons could get back their property which they foolishly made away with. . . . On the other hand, to protect people from being forced, tricked or misled in any way by others into parting with their property is one of the most legitimate objects of all laws " (x). No general rule can be laid down as to what shall constitute undue influence. As no Court has ever attempted to define fraud, so no Court has ever attempted to define undue influence, which includes one of its many varieties (y). The question is one which must in each case depend on its own particular circumstances. There is no head of equity more difficult of application than the avoidance of a transaction on the ground of advantage taken of distress (z). The case presents no difficulty where direct restraint, duress, or oppression can be shown. The difficulty arises when the Court has to determine whether the advantage taken of distress amounts to oppression (a), or the influence exerted has been so pressing as to be undue within the rule of equity (b). In a case where the holders of forged bills working on the fears of a father for the safety of his son, who had forged them, but without any distinct threat, and without any distinct promise not to prosecute, obtained from him a security for the amount of the bills, the transaction was set aside (t;). But, semble, it does not follow that, where there is (x) Allcard v. Skinner, 36 C. D. 182; per Lindley, L.J. ; 56 L. J. Ch. 1052. (!/) Ibid., at p. 183. (z) Ramsbottom v. Parker, 6 Madcl. 6. (a) Ramsbottom v. Parker, 6 Madd. 6. (b) Middleton v. Sherburne, 4 Y. & C. 389; 54 E. R. 485; Boyse v. Russ- borough, 6 H. L. C. 48 ; 26 L. J. Ch. 256 ; 108 E. R. 1 ; Rhodes v. Bate, supra; Armstrong v. Armstrong, I. R. 8 Eq. 1; cf. Richards v. French, 18 W. R. 636. The civil law always sets aside a contract procured by force, or from want of liberty in the contracting party. It was said in the Pandects that the party must be intimidated by the apprehension of some serious evil of a present oi pressing nature, and such as is capable of making an impression upon a person of courage. Pothier, however, thinks this rule too strict, and that regard should be had to the age, sex, and condition of the party, and that a fear which would not be deemed sufficient to have influence on a man in the prime of life might be sufficient in respect of a woman, or a man in the decline of life. Obi. p. 1, c 1, art. 3, s. 2, p. 25. (c) Williams v. Bayley, L. R. 1 H. L. 200; 35 L. J. Ch. 717. See Davies v. London and Provincial Ins. Co., 8 C. D. 474; 47 L. J. Ch. 511. UNDUE EFFLUENCE. 10f) an agreement not to prosecute, there is a necessary inference of fact that there is siich pressure or undue influence on the party to whom the consideration moves as to entitle him to equitable relief (d). The onus in such a case is on the plaintiff to prove pressure or undue influence (e). Mere inadequacy of consideration or inequality in a bargain Inadequacy is not a ground to set aside a transaction, if the parties were tion"" on equal terms and in a situation to judge for themselves, and performed the act wittingly and willingly (/). Mere inadequacy of consideration is not a ground for refusing specific performance of an unexecuted contract (//), and still less can it be ground for rescinding an executed contract (h). But inadequacy of consideration, if it be of so gross a nature as to amount in itself to evidence of fraud, is a ground for cancelling a transaction. In such cases the relief is granted, not on the ground of the inadequacy of consideration, but on the ground of fraud as evidenced thereby (?'). In determining whether the consideration is or is not adequate, it must always be remembered that there are fancy prices not regulated by instrinsic value (k). The fact that a transaction may have been improvident or precipitate, or may have been entered into without independent professional advice, is as immaterial as mere inadequacy of consideration, if the parties were on equal terms and in a situation to act and judge for themselves, and fully under- stood the nature of the transaction, and no evidence can be (d) Jones v. Merionethshire Bldg. Soc, 1892, 1 Ch. 173; 61 L. J. Cli. 138. (e) McClatchie v. Haslam, 65 L. T. 691. (/) Harrison v. Guest, 6 D. M. & G. 434; 8 H. L. C. 481; 25 L J Ch -Ml 10'} R. R. 129. "n But see Pollock on Contracts, 662. i/i) Coles v. Trecothick, 9 Yes. 246; 7 R. R. L67; Abbott v. Sworder, 4 Do G. .v 8m. 156; 22 L, J. Ch. 235; 87 R. R. 439; Haywood v. Cope, 25 Beav. 140; 27 L. ■). Ch. 168; 119 R. R. 360; comp. Falclce v. Cray, 4 Drew. 651- 29 I; J Ch. 28; L13 R. I;. 193. (n Wood v. Abrey, 3 Madd. 117; im r. r. 264; Cockell \. Taylor, 16 Beav. L03, L15; 21 L. .1. Ch. 545; 92 R. I;. 828; Falcke v. Gray, -1 Drew. 65] ; supra; Sutler v. Miller, L. R. 1 lr. Bq. 210; Prees v. Coke, 6 ch. 648; Hay garth \ .Veanru,. 12 Eq. 326; 40 L. J. Ch. 577; Brenchley v. Higgins, 88 L. T. 751. (/.•) Abbott v. Sworder, supra. 196 UNDUE INFLUENCE. adduced of the exercise of undue influence or oppression (I). But inadequacy of consideration or the absence of independent professional advice becomes a most material circumstance when one of the parties to a transaction is from age, ignor- ance, distress, incapacity, recklessness, weakness of mind, body, or disposition, or from humble position or other circum- stances, unable to protect himself. In all such cases, what- ever be the nature of the transaction, the onus of proof rests on the party who seeks to uphold it to show that the other per- formed the act or entered into the transaction voluntarily, and deliberately, knowing its nature and effect, and that this consent to perform the act or become a party to the transaction was not obtained by reason of any undue advantage taken of his position or of any undue influence exerted over him (m). In Clark v. Malpas (?i), the seller was a man in humble life, imperfectly educated, and unable of himself to judge of the precautions to be taken in selling or of the mode of sale, or of the mode of securing the price which was not at once paid down. He was helpless in the matter, without advice, with- out protection. Only one solicitor was employed, and he was more the solicitor of the purchaser than of the seller. The bargain was not an ordinary one; and not only was there completion at an undervalue, which alone might be nothing, but there was completion under circumstances of gross impru- dence, on terms on which the seller ought not to have been allowed to complete. So also in Baker v. Monk (o), certain real estates had been sold by an elderly, uneducated woman in humble life to a person far above her in station. The agreement was made without the intervention of anyone acting on her behalf, and it appearing that the consideration paid was inadequate, the sale was set aside, though there was no evidence of fraud on (I) Harrison v. Guest, supra; Denton v. Donner, 23 Beav. 291; 113 E. E. 143 ; Toker v. Toker, 3 D. J. & S. 487 ; 32 L. J. Ch. 322 ; 142 E. E. 135 ; Taylor V. Johnstone, 19 C. D. 603; 51 L. J. Ch. 879; Hoblyn v. Hoblyn, 41 C. D. 200. (m) Rhodes v. Bate, 1 Ch. 252; 35 L. J. Ch. 267; 148 E. E. 255; Tate v. Williamson, 2 Ch. 65; Frees v. Coke, 6 Ch. 648; Fry v. Lane, 40 C. D. 312; 58 L. J. Ch. 113; Brenchley v. Higgins, 83 L. T. 751. (n) 4 D. F. & J. 403; 135 E. E. 212; see O'Connor v. Foley, 1905, 1 I. E. 1. (o) 4 D. J. & S. 388; 146 E. E. 361. UNDUE INFLUENCE. 197 the part of the purchaser. " I think," said Turner, L. J., " there was that distinction between the parties which rendered it incumbent on the appellant to throw further protection around this lady before he made the bargain with her." So also in Fry v. Lane (p), the poverty and ignorance of the vendor were held enough to throw the burden of proof on the purchaser. The result, said Kay, J., " is that where a purchase is made from a poor and ignorant man at a consider- able undervalue, the vendor having no independent advice, a Court of equity will set aside the transaction. This will be done even in the case of property in possession, and a fortiori if the interest be reversionary. The circumstances of poverty and ignorance of the vendor and absence of independent advice throw upon the purchaser the onus of proving, in Lord Selborne's words, that the purchase was fair, just, and reasonable." The mere fact, however, that one of the parties may be an illiterate person or a man of advanced age, or may be in bad health, or in distress, or pecuniary embarrassment, will not vitiate a transaction, even although it may have been founded on an inadequate consideration and no independent advice may have been had, if it appear on the face of the evidence that he was fully competent to form an independent judgment in the matter and became a party to the transaction deliber- ately and advisedly, knowing its nature and effect. The onus rests on the party impeaching the transaction to show thai coercion was used or undue influence was exercised (. .1. Ch. 886; 90 I:. B. 362; O'Connor \. Foley 1905, 1 Ir, B. 1 ; sup., pp. L48, L82. (r) luntley v. Mackay, 31 Beav. 143; 135 B. B. 881. Bee Wyoherley v. Wycherley, 2 Eden, 175. (s) Morley v. Loughman, 1893, 1 Ch., p. 757; 62 I>. J. Ch. 615. (t) John v. Dodwell, 1918, A. ('. 668; 87 L. J. P. 0. 92. 204 UNDUE INFLUENCE. scionable bargains, the Sales of Reversions Act, 31 & 32 Vict. c 4, was passed, which enacts that " no purchase made bond fide and without fraud or unfair dealing of any reversionary interest in real or personal estate shall be hereafter opened or set aside merely on the ground of undervalue." The Act is carefully limited to purchases made bond fide and without fraud or unfair dealing, and leaves undervalue still a material element in cases in which it is not the sole equitable ground of relief. In a case accordingly where the party entitled to a reversionary interest was very poor, and there was a false recital in the deed that more money had been advanced than was actually paid, the deed was only allowed to stand for the money actually advanced (u). But the protection which the Court throws round expectant heirs and unwary young men in the hands of unscrupulous persons has not been affected by the repeal of the usury laws or by the change of the law as to the sale of reversionary interests (#). These changes in the law have in no degree altered the onus probandi where the relative position of the parties is such as to raise from the circumstances the presumption of fraud; for fraud in these cases need be nothing more than an uncon- scientious use of the power arising out of the circumstances (y). Mere inadequacy of price will entitle an expectant heir to apply to the Court to set aside on terms the sale of a rever- sionary interest, and the onus of proving the transaction fair and the price sufficient is on the purchaser (z). Where accordingly a money-lender advanced monies to a young man entitled to a large reversionary interest in the event of his surviving his father, taking by way of security his acceptances at three months for the sums advanced with interest and discount together exceeding 60 per cent., and the young man («) Re Slaters Trust, 11 Ch. D. 238; 48 L. J. Ch. 473. (x) Tyler v. Yates, 6 Ch. 665; 40 L. J. Ch. 768; Aylesford v. Morris, 8 Ch. 484; 42 L. J. Ch. 546; Beynon v. Cooke, 10 Ch. 389. (y) Chesterfield v. Janssen, 2 Ves. 124; Aylesford v. Morris, 8 Ch. 490; 42 L. J. Ch. 546. (z) Aylesford v. Morris, supra; O'Rorke v. Bolingbroke, 2 App. Ca. 814; Brenchley v. Higgins, inf. FRAUD ON EXPECTANT HEIRS. 205 had no professional assistance, and no application was made to his father or to the solicitor of his father, an order was made for the delivery up of the bills on payment of the sums actually advanced and interest at five per cent. (a). Where the plaintiff sold a share in the reversionary interest to which he was entitled for such a sum that the interest on the expectation was about 10 per cent., although the plaintiff was of full age and full intelligence and had written a letter prior to the sale showing that he understood the exact nature of the bargain, it was held that the o?ius was on the defendant to show that there had been no unconscionable bargain, and the transaction was set aside (6). "The result of the decisions," said Kay, J., in Fry v. Lane (c), " is that where a purchase is made from a poor and ignorant man at a considerable undervalue, the vendor having no independent advice, a Court of equity will set aside the transaction. This will be done even in the case of property in possession and a fortiori if the interest be reversionary." In each case it must depend on the circumstances whether the presumption of fraud is raised; but if raised the pre- sumption may be repelled by proving that the transaction was in point of fact fair, just, and reasonable. In a case where a man purchased the reversionary interest from a lad only a few days above twenty-one years, in furtherance of an arrangement made whilst he was an infant, the transaction was held good, as upon the evidence it appeared to be not only bond fide and without fraud or unfair dealing, but a fair one and to be for the advantage of the lad, and was sanctioned by his father, who was his natural guardian. The fact that the price given for the reversion was inadequate, as the facts turned out in the end, was considered immaterial, there being evidence to show that the purchaser was not aware thai the life of the father was not a good one, and thai hie was not iuuorant of the fact because he liad neglected to make proper (a) Aylesford v. Morris, 8 eh. 484; 42 L. J. Ch. 546. (6) Brenchley v. Higgins, 83 L. T. 751. , , in C. D 312; 58 D. J. Oh. L18; cf. Rees v. De Bernardy, L896, 2 Ch! 137; 65 L. J. Ch. 656; and Bee James v. Kerr, 40 C, D 149; .Oh L. .). Ch. 3 206 UNCONSCIONABLE BARGAINS. inquiries or to take steps which he ought to have taken. Nor was the fact that the lad had no professional adviser con- sidered under the circumstances material, as it appeared that he had no friend whom he could consult but his father, and that neither he nor his father had the means of paying a professional adviser. The Court was, however, of opinion that had the matter been practicable, and the lad not been penniless, the purchaser should have required him to have had an independent adviser (d). A sale of a reversionary interest by a young man of full age for a substantial purpose stands on the same footing as other contracts (e). Unconscion- The principle on which a Court of equity relieves from an e argains. unconsc i onaD i e bargain entered into with an exjjectant heir or reversioner for the loan of money applies also to the case of money being lent on unconscionable terms (not fully under- stood by the borrower and known not to be fully understood by the lender) to a young man, being a minor at the time of the 1 first transaction, the son of a father possessing large property, who has no property of his own and no expectation of any, except such general expectations as are founded on his father's position in life, the money being lent without any thought of repayment by the borrower but on the credit of such general expectations, and in the hope of extorting pay- ment from the father to avoid the exposure attendant on his son being made a bankrupt (/). The obolition of the usury laws does not affect' the power of the Court to set aside usurious transactions when they are founded on fraud. Accordingly a series of deeds charging sums advanced by a money-lender with exorbitant interest on the borrower's estates, which were ample security, were set aside save to the extent of securing the actual advances with moderate interest, the deeds containing unprecedented clauses, introduced by the money-lender without the knowledge of the borrower, who was unprotected by proper professional (d) O'Rorke v. Bolingbroke, 2 App. Ca. 814. (e) Judd v. Green, 45 L. J. Ch. 108; but see Brenchley v. Higgins, supra. (/) Nevill v. Snelling, 15 C. D. 679; 47 L. J. Ch. 777. FRAUD BY MONEY-LENDERS. 207 advice (g). And in another case a similar transaction was Bel aside although the plaintiff fully understood the exad nature of the bargain into which he was about to enter (A). Although the circumstances may not entitle a party to relief on the ground of a catching bargain with an expectani heir, the transaction may be opened up under the Money-lenders Act (i). Under the Money-lenders Act, 1900, a transaction can be Money- reopened if the Court is satisfied that the transaction is harsh SoO* ^ and unconscionable even though it is not such as a Court of equity would have given relief against before the Act (/.■). The policy of the Act is to enable the Court to prevent oppression, leaving it in the discretion of the Court to weigh each case upon its own merits and to look behind a class of contracts which peculiarly lend themselves to abuse of power (I). Ex- cessive interest may of itself show that a transaction is harsh and unconscionable within the meaning of the Act (to). But where that is not so it must be shown that the interest is ex- cessive and the transaction harsh and unconscionable under the circumstances (n), and in arriving at that conclusion it seems that the Court will take into consideration the following matters: (1) what risk the lender ran, or in other words, whether the loan was secured or not; (2) whether the borrower was an intelligent man on equal terms with the lender and understood the bargain; and (3) whether the lender was guilty of fraud, misrepresentation, or duress (o). An agreement with respect to a loan by an unregistered money-lender is illegal and void, and the borrower may recover back any securities given to the money-lender though (g) Howley v. Cook, Ir. R. 8 Eq. 571; and see Rae v. Joyce, 1892, 29 1>. K. Ir. 500, where the cases are reviewed. (h) Brenchley v. Higgins, 83 L. T. 751. (i) Wolfe v. Loiother, 31 T. L. R. 354. 'In Re a Debtor, 1903, 1 K. B. 705; 72 L. J. K. B. 382. As to what ie a money-lender, see Litchfield v. Dmjfus, 1906, 1 K. B. 584. tl) Samuel v. Newbold, 1900, A. ('. 461; 75 I,. .). (h. 705. («t) Ibid. (») Midland Discount Co. v. Macdonald, L909, S. C. 177. (o) Ibid. Part v. Bond, 93 L. T. 49; Poncione v. Higgins, 2] T. I. I; L2; Carringtons v. Smith, 1906, 1 K. B. 79; Bonnard v. Dott, L906, I Ch. 740; Levine v. Creenwood, 20 T. L. R. 889; Wells v. Joyce, L905, 2 Ir I; L84. 208 FRAUD IN DEEDS OF GIFT. the latter cannot counterclaim for the money advanced (p). But in an equitable action by a borrower to recover securities the money-lender will not be ordered to give up the securities except upon the terms that the borrower repay the money advanced (q). Secus, where the action is for a mere declara- tion that the transaction is void (r). A money-lender can only carry on business at his registered address; a transaction carried out elsewhere is void (s), even though the transaction is an isolated one (t). Where the money-lender proceeds under Order XIV. and the borrower sets up a defence under the Act but admits that the money advanced is due, the proper order is to order summary judgment for the amount admitted to be due and to give leave to defend for the rest of the claim (u). The question whether a transaction is unconscionable is for the judge and not for the jury (x). Voluntary Considerations of a similar character apply to the case of and^ed^of d ^^ s of g ift and voluntary settlements. A man may make a S ift - voluntary settlement if he pleases, either by way of gift or in the shape of a trust to be executed by persons to whom he conveys property. Whether it be a gift or a conveyance upon trust, it must satisfactorily appear that he understood and approved of the contents of the deed, and knew what he was doing, or at all events was protected by independent advice, and that no undue influence was exercised over him by the person in whose favour he made the instrument (y). No eeneral rule can be laid down as to the proper and usual provisions in such a settlement, but a power of revocation is (p) Bonnard v. Dott, 1906, 1 Ch. 740. (q) Lodge v. National Union Investment Co., 1907, 1 Ch. 300. (r) Chapman v. Mtchaelson, 1909, 1 Ch. 238. (s) Gadd v. Provincial Union Bank, 1909, 2 K. B. 353; Jackson v. Price, 1910, 1 K. B. 143. (t) Cornelius v. Phillips, 1918, A. C. 199; 87 L. J. K. B. 246. (u) Lazarus v. Smith, 1908, 2 K. B. 266, explaining Wells v. Allott, 1904, 2 K B. 842. (x) Abrahams v. Dimmock, 1915, 1 K. B. 662; 84 L. J. K. B. 802. (y) Lister v. Hodgson, 4 Eq. 32; Phillips v. Mullings, 7 Ch. 246; 41 L. J. Ch. 211 ; Turner v. Collins, ibid. 329; 41 L. J. Ch. 558. FRAUD IX DEEDS OF GIFT. 209 not essential. Whether there should be such a power or uot must depend on the circumstances of the ease (z). The absence of a power of revocation in a voluntary settle- ment, and the fact that the intention of the settlor was nol called to that absence, do not make a voluntary settlement invalid. They are merely circumstances to be considered in deciding on the validity of the settlement. The true rule is that the absence of a power of revocation is a circumstance to be taken into account, and is of more or less weight according to the other circumstances of each case (a). The absence of a power of revocation in a voluntary deed not impeached on the ground of undue influence is material when it appears that the settlor did not intend to make an irrevocable settle- ment, or when the settlement is of such a nature or was made under such circumstances as to be unreasonable and impro- vident, unless guarded by a power of revocation (6). If there are substantial questions of incapacity and undue influence bond fide raised, and the Judge is unable to arrive at a favour- able conclusion upon them, he cannot thereupon proceed to treat the absence of a power of revocation upon its own merits, as if those other questions had not been raised at all. With- out it the grounds of special impeachment might be insuffi- cient. Without these it might itself be insufficient. Yet the two in combination might be fatal to the deed (c). In Phil lips v. Mullings (d), where it was the object of the settlor to preserve his property from being wasted by himsel I , and in Proctor v. Gregg (e), where it was the object of the settlor to protect himself against the importunity of his relations, it was held that the absence of a power of revoca- tion was sufficiently accounted for and the deed was upheld (/). So where the object of a post-nuptial settlemenl was to (z) Phillips v. Mailings, supra; James v. Couchman, 2. .1. Ch. 838. (a) Hall v. Hall, 8 ch. 430; 42 L. J. Ch. Ill: Henry \. Armstrong, 18 c. p. 668. (5) Hall v. llalL 8 ch. 440, per Lord Selborne. <, Armstrong v. Armstrong, [r. R. 8 Eq. 45. (d) 7 Ch. 244; 41 I.. .J. Ch. '211. (e) 21 W. ll. 210 a. (f) Long v. Donegan, 21 W. K. 830. K.F. 14 210 FRAUD IN DEEDS OF GIFT. provide for the plaintiff's wife and children in ease of bank- ruptcy, and a life interest to the plaintiff was intentionally omitted, the Court refused to interfere (g). In Henshall v. Fereday (h), however, where a lady on the suffffestion of her brother executed a deed which had been oo prepared by a solicitor on his instructions, and the solicitor never saw the settlor or performed any duty at all towards her, the deed was set aside on the ground that it contained no power of revocation. But where a lady understood what she was doing, and that it was an irrevocable settlement, and the settlement was reasonable and just, it was upheld, though the deed did not exactly correspond with the instructions, but was read over to and executed by her. The fact that she afterwards burned the deed is of no weight. This fact may prove change of mind but does not prove that at the time of the execution of the deed her mind was other than therein expressed (i). " The law is that anybody of full age and sound mind who has executed a voluntary deed by which he has denuded himself of his own property is bound by his own act, and if he himself comes to have the deed set aside, especially if he comes a long time afterwards, he must prove some substantial reason why the deed should be set aside ' (A-). Voluntary limitations in a settlement come under the general rule as to undue influence in obtaining the gift (I). But if there is no ground for impeaching the settlement, either on the ground of undue influence or on the ground of the absence of a power of revocation, the provisions of a marriage settlement in favour of volunteers cannot be revoked (m). Voluntary gifts and subscriptions to charities fall within (g) Rake v. Hooper, 83 L. T. 669. (h) 21 W. R. 570. (i) Hall v. Hall, 8 Ch. 437; 42 L. J. Ch. 444. (k) Henry v. Armstrong, 18 C. D. 668; and see James v. Gouchman, 29 C. D. 212; 54 L. J. Ch. 838; Bonhote v. Henderson, 1895, 2 Ch. 202. (I) Wollaston v. Tribe, 9 Eq. 44; but see Tucker v. Bennett, 38 C. D. 1; 57 L. J. Ch. 507. (to) Paul v. Paul, 20 C, D. 742; 51 L. J. Ch. 839. FRAVD EN DEEDS OF GIFT. 211 the same principle, and cannot be set aside or recovered except on the ground of fraud or mistake induced by the donee (n). an Ogilvie v. LiWebny, 1897, \V. N. 53; Re Glubb, 1900, 1 Ch. 354; 69 L. J. Ch. 278. ( 212 ) CHAPTER IV. FRAUDS UPON THIRD PARTIES. Another class of frauds is where a contract or other act is substantially a fraud upon the rights, interests, or intentions of third parties. The general rule is that particular persons in contracts and other acts shall not only transact bond fide between themselves, but shall not transact mala fide in respect to other persons who stand in such a relation to either as to be affected by the contract or the consequences of it (a). Collusion between two persons to the prejudice or loss of a third is in the eye of the Court the same as a fraud (6). SECTION I. FRAUD UPON CREDITORS. A class of frauds coming under the head of fraud upon third parties embraces all those agreements or other acts of parties which tend to delay, deceive, or defraud creditors. Transactions in fraud of creditors are voidable at common law (c), but the Legislature, with the view of affirming the rule and carrying the principles of the common law more fully into effect, declared by statutes 50 Edw. III. c. 6, and 3 Hen. VII. c. 4, all fraudulent gifts of goods and chattels in trust for the donor and to defraud creditors to be void. The statute 13 Eliz. c. 5, perpetuated by 29 Eliz. c. 5, after reciting that feoffments, gifts, grants, alienations, con- veyances, bonds, suits, judgments, and executions, have been contrived of malice, fraud, covin, collusion, &c, to delay, hinder or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, &c, proceeds to (a) 2 Vas. 156, 157, per Lord Hardwicke ; 3 Ves. 502. (b) Garth v. Cotton, 1 Dick. 217. (c) Cadogan v. Kennett, Cowp. 432; Copis v. Middleton, 2 Madd. 428; 17 R. R. 226; Richards v. Att.-Gen., 12 CI. & Fin. 44; Barton v. Vanheythuysen, 11 Ha. 132. FRAUD UPON CREDITORS. 213 declare and enact that every feoffment, &c, of lands, tenements, hereditaments, goods, and chattels, or any of them, by writing or otherwise, and all and every bond, suit, judgment, and execution made for any intent and purpose, before declared and expressed, shall be, as against that person or persons, his or their heirs, successors, executors, &c, whose actions, suits, &c, are or might be in any wise disturbed, hindered, delayed, or defrauded, utterly void (d). Estates, however, or interests in lands or chattels, &c, conveyed or assured bond fide and on good consideration without notice to the person who is dealing with the person who afterwards becomes insolvent of any fraud or collusion, are excepted from the operation of the statute (e). The scheme of the statute is this: By it all conveyances and assignments made with intent to hinder and delay creditors are rendered void against all creditors hindered or delayed by their operation. There is, however, a proviso for the protection of a purchaser for good consideration without notice of the illegal intention. In the authorities which deal m with the statute it is not always clear whether the judges are dealing with the operative part of the Act or with the proviso. The illegal intent under the operative part is a question of fact. The want of consideration is a material fact in con- sidering whether there was any illegal intent, but it is not conclusive that there existed any such intent. In the same way consideration is by no means conclusive that there was no illegal intent. When, however, one comes to deal with the proviso it is quite clear that any person relying on the proviso must prove both good consideration and thai lie had no notice of the illegal inlent (/). As between the parties themselves and all persons claiming under them in privity of estate, voluntary conveyances are binding (g); but in so far as they have the el'l'eet of delaying, (,h Tarleton v. lAddell, 17 Q. B. 39] ; 20 L. .1. Q. IV 501 (e) 13 Bliz. <-. .",. a. 6; Halifax Banking Co. v. Gledhill, L891, I < h. 81 ; 60 I,. .1. Ch. L81. (/) Glegg v. Bromley, L912, 3 K. I'.. 474; 8] L. J. K. B. L081, pai Parker, .I (g) Petre v. Espinasse, -2 M. & K. 196; 89 B. B. 254 ; Robinson \ WDonnell, 2 B. ,v AM. [34 ; I'm,,!, v. French, 6 D. M . & G-. 95; 28 I-. .I. Oh. 612; Ollivei 214 FRAUD UPON CREDITORS. defrauding, or deceiving creditors, voluntary conveyances are not bond fide, and are void as against creditors to the extent to which it may be necessary to deal with the property to their satisfaction. To this extent, and to this extent only, they will be treated as if they had not been made. Eor every other purpose they are good (/*.), unless the transaction is so tainted with fraud as to necessitate its avoidance in toto so as to work justice between the parties {%). The mere fact of a deed being voluntary is not enough to render it void as against subsequent creditors (j). But if at the time a man executes a voluntary settlement he is actually in- solvent, the settlement is void as against creditors (fr). It is not, however, necessary, in order to invalidate a voluntary settlement, that the settlor should be in a state of in- solvency (I). The language of the Act being that any con- veyance of property is void against creditors, if it is made to hinder, delay or defeat creditors, the Court has to decide in each particular case whether, under all the circumstances, the object of the settlor was to hinder, delay, or defeat creditors (m), and if that is so, a valuable consideration will not necessarily make it valid (n). The main question is the bond fides, and that is only to be settled by reference to the facts of each case. " I abstain," said Lord Campbell (o), ' from saying what are the particular proofs that are v. King, 8 D. M. & G. 110; 25 L. J. Ch. 427; 111 E. R. 48. A sham transfer for the purpose of defrauding creditors will not pass the property in goods even as between the debtor and his confederate. Bowes v. Foster, 2 H. & N. 779 ; 27 L. J. Ex. 262. (/() Groker v. Martin, 1 Bligh, N. S. 573; 30 R, R. 93; French v. French, supra; Neale v. Day, 28 L. J. Ch. 45; see Re Sims, 3 Manson, 340; Re Carter and Kendcrdine, 1897, 1 Ch. 776; 66 L. J. Ch. 408. (i) Tarleton v. Liddell, 17 Q. B. 418, 419; 20 L. J. Q. B. 507. (/) Holmes v. Penney, 3 K & J. 99; 26 L. J. Ch. 179; 112 R. R. 49; Re Lane-Fox, 1900, 2 Q. B. 508; 69 L. J. Q. B. 722. See post, p. 218. (k) French V. French, supra; Freeman v. Pope, 5 Ch. 544; 39 L. J. Ch. 689 ; Taylor v. Coenen, 1 C. D. 640. (I) Townsend v. Westacott, 2 Beav. 344; 9 L. J. Ch. 241; 50 R. R. 193; Thompson v. Webster, 4 Drew. 632 ; 4 L. T. 750, in Dom. Proc. ; 28 L. J. Ch ' 703 ; 113 R. R. 488. (m) Godfrey v. Poole, 13 App. Ca., at p. 503; 57 L. J. C. P. 78. (n) Bott v. Smith, 21 Beav. 511; 111 R. R. 187. (o) Thompson v. Webster, 4 L. T. 750. FRAUD UPON CREDITORS. 215 necessary, or from laying down any particular rule as to what amount of evidence, or what proof of consideration or want of consideration, or what evidence of notice or want of notice may be necessary. Those are facts to be inquired into in each particular case." If there is no evidence to show that the settlor, when he executed the instrument, had any intention to defraud, it is immaterial that he may have been em- barrassed at the time, and wanted money to meet claims upon him, if there is no reason for saying thai he had the slightest notion of doing more than borrowing money to tide over (he difficulty. Though there may be circumstances in the case which might lead to the presumption that the sett lenient was made to defeat creditors, yet when the circumstances come to be explained and established, it may be clear that no such intent existed in the minds of either of the parties to the transaction (/;). The Court must look at the whole of the circumstances and see whether the deed was in lad executed with the intent to defeat and delay creditors (q). Although there be no intention to defraud, the question then is whether there is any evidence to show that the settlor knew at the time when the settlement was executed that ii was a necessary consequence of the settlement that his creditors would be defrauded (/•), for in order to defeat a voluntary settlement it is not necessary that there should be proof of an actual and express intent to defeat creditors. It is enough if the facts are such as to show that the sett lenient would necessarily have that effect. If at the date of the cttlernent the person making the settlement was nut in a position actually to pay creditors, the law will infer that In' intended by making the voluntary sett lenient to defeat and delay them. Again, the same inference will he made by the law, if after deducting the property which is the subject ol the settlement, sufficient assets an- not left lor the payment (p) Thompson \. Webster, I !-. 'I', 750, per Lord Cbelm ford; B( Lane Fox, I '.ion, -a Q. B. 508; 69 I,. •). Q. B. 722. Oyj Be Holland, L902, 2 Ch. 360; 71 L. .1. Ch. 518. (r) Ibid. 216 FRAUD UPON CREDITORS. of the settlor's debts (s). But a bond fide settlement by a person having ample means outside the settlement to pay present debts is not void because afterwards the effect proves to be to defeat future creditors (£). And the mere fact that a debt exists which existed at the date of the settlement, will not make a deed fraudulent (u). But where the intention to defraud is manifest, and no other purpose appears, this is sufficient to bring the case within the statute and to override all circumstances whatever (#). A man may by executing a settlement defeat, defraud, or delay his creditors, although at the time he makes the settle- ment, he may have more property than would be sufficient to satisfy his creditors, after the settlement had been made, because the property may be so inaccessible as to make it almost impossible for the creditors to get possession of it — it may be at the antipodes — it may be an accumulation of bad debts very difficult to get. There might be fifty reasons to bring it within the scope of the statute, so that a solvent man in making a settlement may nevertheless be liable to have that settlement avoided, although not only he was not in- solvent but might have had more than enough property left in some form or other to satisfy his creditors (y). But a voluntary settlement made bond fide by a person having ample means outside the settlement for payment of present debts is not void because some years afterwards the effect proves to be to defeat or delay future creditors, and such a settlement cannot be set aside by the settlor's trustee in bankruptcy (z). The existence of debts at the time of the execution of the deed is not sufficient to debar a man from (s) Freeman v. Pope, 5 Ch. 538; 39 L. J. Ch. 689; Taylor v. Coenen, 1 .CD. 641; Ridler v. Ridler, 22 C. D. 74; 52 L. J. Ch. 343; Ex parte Chaplin, 26 C. D., p. 335; 53 L. J. Ch. 732; Edmunds v. Edmunds, 1904, P. 362; 73 L. J. P. 97; but see dictum of Esher, M.K., in Ex parte Mercer, 17 Q. B. D., p. 298; 55 L. J. Q. B. 558. (t) Re Lane-Fox, infra. (u) Skarf v. Soulby, 1 Mac. & G. 364; 19 L. J. Ch. 30; 84 B. B, 103. See post, p. 219. (x) Acraman v. Corbett, 1 J. & H. 423; 30 L. J. Ch. 642; 128 B. B. 449. (y) Thompson v. Webster, 7 Jur. N. S. 532, per Lord, Cranworth. (z) Re Lane-Fox, 1900, 2 Q. B. 508; 69 L. J. Q. B. 722. FHAUD UPON CREDITORS. 217 executing a voluntary deed. A man may intend to pay every debt as soon as it is contracted, and constantly use bis best endeavours and have ample means to do so, and yet be fre- quently, if not always, indebted in small sums (a). In the absence of an intent to delay, defraud or defeat creditors a voluntary settlement made by a settlor in embarrassed circum- stances but having property not included in the settlement, ample for payment of debts, due by him at the time of making it, may be supported against creditors, although debts due at the date of the settlement may to a considerable amount remain unpaid (6). It makes no difference whether the voluntary conveyance is to trustees or directly to volunteers: if the conveyance is made to trustees and all the cestuis que trust are volunteers, the conveyance to the trustees is void under the statute no less than the interests of the cestuis que trust (c). A surety is no more justified in placing his property out of the reach of liability for the debt than if he were the principal debtor (d). Nor is a man who has entered into a guarantee for the liability of another justified in making a voluntary settle- ment, if under the peculiar circumstances of the case the possible liability under the guarantee is likely at im distant date to become an actual debt. There may be a state of things in which the liability of a guarantor might be so remote thai it need not be regarded, but if he conveys away all his property by a voluntary settlement, it is doubtful whether the settlement can in any ease be supported in the event of his ultimately being called on under his guarantee (e). In a case, accordingly, where in 1872 a father gave a bank a guarantee to secure the balance due from his son on his hanking account to the extent of £1,000; and in May, 1S77, the son's account was overdrawn by £1,500, and the lather in May, 1*77, made a voluntary settlement of a leasehold property worth L"JH<) a year, his only other property being furniture worth less than (a) Townsend v. Westacott, 2 Beav. 344; fl L. J. Ch. 241 ; 50 B R L98. (b) Kent. v. Riley, I I Eq. L90; II L. J. Ch. 569. (o Townend v. Taker, 1 Ch. 458; 35 I-. -I. Ch. 608. .,/, Goodricke v. Taylor, ■> II. * M. 380; 2 I'. -I. & B. L85; L89 It. R. 66 Ridler \. Ridler, 22 C. I). 74; 52 I-. .1. Ch. 848. 218 FRAUD UPON CREDITORS. £200 and a debt of £1,500 due to him from his son, and in 1880 the son went into liquidation ; it was held that the settle- ment was void as against creditors, for that under the circum- stances the liability under the guarantee ought to have been regarded as a substantial one; that the father had no right to treat the sum of £1,500 due to him from the son as a good debt, and that after the settlement the father had nothing left to meet his liability under the guarantee (/). It has been said that to bring a transaction within the pro- visions of the statute 13 Eliz. c. 5, it should include the whole or substantially the whole of the debtor's property (g) ; but this statement of the law is directly opposed to that laid down in an earlier case (h). If the effect, not necessarily the object of the deed, is to defeat, hinder, or delay one particular creditor only, the deed will be void under the statute (i). But a deed of assignment made for good consideration by a debtor in favour of a creditor is not rendered invalid by reason of its being made with the intention of defeating some other particular creditor or creditors (j). Subsequent The provisions of the statute 13 Eliz. c. 5, are not confined creditors. . . to existing creditors, but extend to subsequent creditors whose debts had not been contracted at the date of the settlement (k), but the principle will not operate in favour of subsequent creditors, unless it can be shown either that the settlor made the settlement with the express intent to " delay, hinder, or defraud " persons who might become creditors (/), or that after the settlement the settlor had not sufficient means or reason- able expectation of being' able to pay his then existing (/) Ibid. (g) Re Hirth, 1899, 1 Q. B., at p. 620; 68 L. J. Q. B. 287. (/i) Alton v. Harrison, 4 Ch., at p. 626; 38 L. J. Ch. 669. (j) Edmunds v. Edmunds, 1904, P. 362; 73 L. J. P. 97; but see Golden v. Gilham, 20 C. D. 396; 51 L. J. Ch. 503; ante, p. 215. (j) Glegg v. Bromley, ante, p. 213. (k) Tarback v. Marbury, 2 Vera. 509. (/) Stileman v. Ashdown, 2 Atk. 481; Stephens v. Olive, 2 Bro. C. C. 91; Holloway v. Millard, 1 Madd. 414; Holmes v. Penney, 3 K. & J. 99 ; 26 L. J. Ch. 179; 112 K. E. 49; Murphy v. Abraham, 15 Ir. Ch. 371. FRAUD 0P0N CREDITORS. I'll I debts (m), or at least that there are debts unsatisfied which were due at the date of the settlement (n). If at the time of bringing the action no debt due at the execution of the settle- ment remains unpaid, and there is no evidence to show that the settlement had for its object the delaying, hindering, or defrauding of subsequent creditors, the settlement prevails against them (o), but if any debt due at the date of the settle- ment remains unsatisfied at the time of bringing the action i, or if there be evidence to show that the settlement was made in contemplation of future debts or in furtherance of a meditated design of future fraud, although the settlor may not have been indebted at the time (q), or if it be a necessary inference to be drawn from the facts and dates thai the deed was executed with a view to defeat persons who might become creditors, the deed will be set aside (/•). If a settlement is set aside as fraudulent against creditors whose debts accrued before its execution, subsequent creditors are entitled to participate (s) : but if antecedent creditors cannot make out a case for setting it aside, subsequent creditors cannot impeach the settlement as fraudulent by reason of the prior indebt- ment (£). The true test, to be derived from the above cited cases, appears to be, not whether there is any debt in existence which was due prior to the settlement and which in the result has remained unpaid, though the settlor continued solvent after making the settlement, but whether from all the circum- (m) Spirett v. Willows, 3 I). J. & S. 302; 34 L. J. Ch. 365; 142 R. R. 65; Freeman v. Pope, infra; Re Lane-Fox, 1900, 2 Q. B. 508; 69 L. J. Q. B. 722. (n) Jenkyn v. Vaughan, 3 Drew. 419; 25 L. J. Ch. 338; L06 R. K. 385; r.'irton v. Vanheythuysen, 11 Ha. L32; 90 R. R. 607; Freeman v. l'opc infra, (o) Jenkyn v. Vaughan, supra; Thompson v. Webster, 7 Jur. N. S. ">:'tni 13 Eliz. c. 5, even in equity, as any other creditor (n). ^H,; 1 """ Estates or interests in lands or chattels, &c, conveyed or ih KHz. <■. •">. assured bond fide and for good consideration without notice to tiotV v. l , the party who is dealing with the person who afterwards deed xb for 1 J ° * valuable con- i afcion and (g) Ibid; Norcutt v. Dodd, Cr. & Ph. 100; 54 K. K. 224. bond fide, (h) Norcutt v. Dodd, ibid.; Barrack v. M'Culloch, 3 K. & .1. L10; 26 L. J. Ch. 105; 112 R. R. 60; French v. French, 6 D. M. & G. 95; 28 L. J. Ch. 612; L06 R. R. 46; Warden v. Jones, 2 D. & J. 76; 27 L. J. Ch. L90; L19 R. R. 29; Stokoe v. Cowan, 29 Beav. 637; 131 R. R. 742. i) Edmunds v. Edmunds, 1904, P. 362; 73 L. J. P. 97. /.-, Ideal Bedding Co. v. Holland, L907, 2 Ch. 157; 76 L. J. Ch. ill (I) Way's Trust, 2 D. J. >v S. 365; 31 D. J. Ch. 19; 139 R. R. ISO (m) Exton v. Scott, 6 Sim. 31 ; 38 R. R. 72; of. Lloyd v. Attwood, 8 D. & .1. 655; 29 L. J. Ch, 97; 121 K. R. 252; Cracknall v. Janson, M C. D. 22; I,. .1. Ch. 16: (n) idames v. Hallett, 6 Bq. 168; and see Re Whittaker, L901, I Oh. 9; 70 L. J. Ch. 6. 222 FRAUD UPON CREDITORS. becomes unable to pay bis debts of any fraud or collusion, are by the 5th section (o) excepted from the operation of the statute 13 Eliz. c. 5 (p). The section includes the purchaser of any interest under the deed impeached, whether legal or equit- able, and prevents the deed being impeached against him (q). In order to come within the exception, and escape from the operation of the statute, it is not sufficient that a conveyance be upon good consideration or bond fide. It must be both for good consideration and bond fide. Although a deed be made upon good consideration within the meaning of the statute, it is void against creditors, unless it be bond fide (r). But it is not a ground for invalidating a bond fide sale that it was made with intent to defeat creditors, if the purchaser is free from fraud (s) ; and fraud will not be imputed to a purchaser merely because his solicitor was privy to it (t). The expression "good consideration" in the statute means valuable con- sideration. Meritorious consideration, such as love, affection, &c, though good as between the parties themselves, is not in the eye of the law bond fide, if it is inconsistent with that good faith which is due to creditors (u). Marriage°a Marriage is in itself a sufficient consideration for an ante- sufficient . , , . ,, . -. . consideration, nuptial settlement upon the husband, wife, or issue; and m the absence of fraud the settlement made by one of the con- tracting parties is not invalidated by reason of the settlement made by the other proving ineffective, as by reason of his or her infancy, nor does any case of election arise as against the (o) Commonly printed as sect. 6. (p) Supra, p. 213. (q) Halifax Banking Co. v. Gledhill, 1891, 1 Ch. 31; 60 L. J. Ch. 181. (r) Tivijne's Case, 3 Eep. 81; Worsley v. De Mattos, 1 Burr. 474, 475; Cadogan v. Kennett, Cowp. 434; Bott v. Smith, 21 Beav. 516; 111 E. B. 187; Harman v. Richards, 10 Ha, 81; 22 L. J. Ch. 1066; 90 B. B. 297; Thompson v. Webster, 4 Drew. 628; 28 L. J. Ch. 703; 113 B. B. 488; Lloyd v. Attwood, supra; Fraser v. Thompson, 4 D. & J. 600; 124 B. B. 443; Corlett v. Radcliffe, 14 Moo. P. C. 121, 135; 134 B. B. 13; Middleton v. Pollock, 2 C. D. 108; 45 L. J. Ch. 293; Ex parte Ellis, 2 C. D. 797; 45 L. J. B. 159; Ex parte Chaplin, 26 C. D. 319; 53 L. J. Ch. 732. (s) Glegg v. Bromley, ante, 213. (t) Re Tetley, 3 Manson, 321; 66 L. J. Q. B. 111. (u) Copis v. Middleton, 2 Madd. 430; 17 B, B. 226; Taylor v. Jones, 2 Atk. 600; Strong v. Strong, 18 Beav. 408; 104 B. B. 490; Thompson v. Webster, 7 Jur. N. S. 531; Golden v. Gillam, 20 C. D. 392; affirmed 51 L. J. Ch. 503. FRAUD I TON CREDITORS. 223 other party or Lis or her representatives (w). Nor will the fraudulent intent of the husband invalidate the settlemenl as against the wife if she is free from fraud ( a . But a settlement made in pursuance of an agreemeni When the , . . , . . . marriage is entered into m contemplation ot a marriage not recognised ;is not a valid valid by the laws of this country, as formerly between a man and his deceased wife's sister, cannot (at any rale as far as it is executory) (y) be supported (~), even as respects a provision made thereby for children of a former legal mar- riage (a); and the same rule, it is conceived, will equally apply where the marriage, though a bona fide one, is invalid by reason of one of the parties having contracted a previous marriage which, although not known to be so, is still sub- sisting. In the case of a settlement executed as part of the arrangements of a marriage within the prohibited degrees, there is not merely the absence of a good consideration, but the presence of that which the Courts necessarily treat as an immoral consideration, namely, an agreement for concubinage instead of coverture (b). But a voluntary settlement upon the woman herself, if not founded upon an agreement for, although it in fact precedes, a concubinage of this descrip- tion, and which purports on the face of it to be voluntary, cannot be set aside by the settlor or his representatives, it it has been perfected by an actual transfer of the property to the trustees (c). A question is frequently raised as to how far the considera- How Car the ,. £ . -. . , -. , . consideration tion ot marriage extends. As against the settlor and his f marri heirs, limitations in favour of collaterals contained in an ,x, "" ls - ante-nuptial settlement are binding (//), hut whether they (w) Campbell v. Ingilby, 21 Beav. 507; 1 D. & J. 393; L18 K. R. I IV See, however, Codrington v. Lindsay, 8 Ch. 593; 45 L. J. ('}i. 526. (x) Parnell v. Stedman, Cab. & El. 153. {y) Ayerst v. Jenkins, L6 Bq. 275; 42 L. J. Ch. 690. See L8 <'. !>.. p. 206, and Phillips v. Probyn, infra. (z) Coulson v. Allison, 'J D. I'. & .1. 521 ; I--".) I; l; L76. (a) Chapman v. Bradley, 33 Beav. 61 : :s:i I,. .1. Ch. L39. (b) Phillips v. Probyn, L899, 1 Ch, Bll ; oh l. ,i. Ch. 401. (c) Dart, V. & P. 920. ''/) Davenport v. Bishop, 1 Ph. fi'.JH ; t\r> K. U. 2«3 ; Iral - II ollaston \ Trib 9 Eq. 44. 224 FRAUD UPON CREDITORS. Post-nuptial settlements when valid against creditors. will be supported as against creditors or subsequent bond fide purchasers for value has been the subject of frequent dis- cussion (e). Limitations in favour of collaterals in a marriage settlement are as a general rule voluntary (/), but they will be upheld if there be any party to the settlement who pur- chases on their behalf (g). There are two exceptions to the rule that the valuable consideration of marriage extends only to the husband, wife, and issue of the marriage, and not to collaterals. The first is in favour of a settlement made by a widow before a second marriage on the children of a former marriage (h), but this does not extend to a like settlement made by a widower (?'). The second is in favour of a settle- ment made on the children of either of the marrying parties by a future marriage (/). Iu ClarJte v. Wright (A), Lord Blackburn was of opinion that if the limitations in an ante-nuptial settlement in favour of collaterals so far interfere with those which would naturally be made in favour of the husband, wife, and issue, that they must be presumed to have been agreed upon by all parties as part of the marriage contract, they are not voluntary, and will be upheld. And recent decisions have laid down the principle that where such limitations are supported, it is not upon the ground of consideration, but because they could not be defeated without defeating the interests of persons who are within the marriage consideration (/). A post-nuptial settlement made in pursuance of articles or of a binding written agreement drawn up before marriage is valid against creditors, and a parol ante-nuptial agreement (e) Dart. V. & P. 922 ; May on Fraud. Conv. 264-286. (/) Johnson v. Legard, T. & E. 295; 18 K. R. 301; Wollaston v. Tribe, 9 Eq. 44. (g) Heap v. Tonge, 9 Ha. 104; 20 L. J. Ch. 661; 89 R. R. 339; Mullins v. Guiljoyle, 2 L. R. Ir. 109. (/i) Clarke v. Wright, 6 H. & N. 849; 30 L. J. Ex. 113; Gale v. Gale, 6 C. D. 144; 46 L. J. Ch. 809. (t) Re Cameron and Wells, 37 C. D. 32; 57 L. J. Ch. 69. (j) Clayton v. Winton, 3 Madd. 302, n. ; 18 R. R. 234; but see Wollaston v. Tribe, 9 Eq. 44; De Mestre v. West, infra. (k) 6 H. & N. 869. (I) Mackie v. Herbertson, 9 App. Ca. 303; De Mestre v. West, 1891, A. C. 264; 60 L. J. P. C. 66. FRAUD UPON CREDITORS. 225 may prevent a post-nuptial settlement from being voluntary, if recited in the settlement, or there is a note or memo- randum of it in writing (to), but though such a recital is a memorandum in writing sufficient to satisfy the Statute of Frauds, it does not dispense with the necessity of proving that the ante-nuptial agreement was actually made (n), and a written recognition after marriage of a verbal promise made upon marriage will not support a post-nuptial settlement against creditors (o). Nor can a post-nuptial settlement be supported against creditors if made in pursuance of ait ides entered into during infancy, and not ratified or referred to in the settlement (p). Post-nuptial settlements arc as a general rule voluntary deeds, and therefore void as against creditors; the fact that a post-nuptial settlement may be founded on a moral duty will not deprive it of its voluntary character (q). But a post-nuptial settlement becomes a settle- ment for valuable consideration if made in consideration of the receipt of a further portion (?), or of an agreement to pay a further portion which is afterwards paid (s), or (on a settlement of the husband's estate) of the wife relinquishing her interest under an existing settlement (t); or her join- ture (u), or dower (if married before the laic Act came into operation) (#); or mortgaging her separate estate (//), or property over which she had a power of appointment (:), to pay his debts. So if the settlor's father brings property into settlement, the settlement, though post-nuptial, is for value (a). (to) Re Holland, 1902, 2 Ch. WO; 71 L. J. Ch. 518. (n) Re Gillespie, 20 Mans. 31 1. (o) Warden v. Jones, 2 D. & J. 70; 27 L. J. Ch. 190: LIS R, I; 29 (p) Trowell v. Shenton, 8 C. I). -U8 ; 47 L. J. Ch. 738. {q) Jefferys v. Jefferys, Cr. .v Hi. 138, 141; 54 R. J;. 249. (r) Stileman \. I //-/"» n . -i Atk. 479; Ramsden \. Hi/lion, 2 Vi (s) Brown v. Jones, I Atk. L90. (t) Harman v. Richards, 10 Ha. hi ; -22 I,. .1. Oh. L066; 90 R. R. 297. u) Cottle v. Fripp, 2 Vera. 220. (a | Bug. 718. (y) Carter v. ///„./, 22 I.. T. 10), coram Lord Hatherle) (2) Bee Whitbread v. Smith, 3 l>. M. & C. 740; 98 B B 286. (a) //<;„«■ v. Harding, 20 Q. B. I). 782; 57 L. .(. Q, B 108. Bee Re Parry, L904, 1 K. I'.. L29; 78 b. .1 K. I'-. 88. K.F. 1"' 226 FRAUD UPON CREDITORS. So, also, when in a post-nuptial settlement there is a bargain between husband and wife, altering their relative positions as to the estate, and their relative rights and interests in the estate, there is a valuable consideration for the settlement (b). Where, accordingly, by a post-nuptial settlement, certain freeholds belonging to the wife were settled by the husband and wife to the use of the wife for life, and after her decease to such uses as she should by will appoint, and in default of appointment, to the use of children, with a power during her life for the wife to lease at rack-rent, and with a power of sale and exchange in the trustees with her consent, it was held that, inasmuch as the husband by the settlement lost his estate by the curtesy and also his power of preventing the wife from alienating the estate during his life, while on the other hand the wife was reduced by the same instrument from being an owner in fee to a life estate with a testamentary power of appointment, the estate going in default to her children, both of them had given value, and that the settle- ment therefore was one for valuable consideration (c). So, also, where the wife was entitled in reversion to a moiety in freehold estates, and by a post-nuptial settlement husband and wife by a deed duly acknowledged conveyed their moiety of the estate, subject to the prior life estate, to trustees and their heirs upon trust to pay the rents to the wife for life for her separate use, and without power of anticipation, with remainder to the husband for life, and after the decease of husband and wife to such persons as the wife should by will appoint, and in default of appointment to the use of her children as tenants in common in fee, with cross remainders between them, with an ultimate limitation to the wife or heirs, it was held that, inasmuch as the husband had given up his chance of an estate during the coverture and of an estate by the curtesy, and had also given his wife the first interest in the estate, and the wife on the other hand had given up her fee simple, there was a bargain for value between them, and that the settlement was therefore one for valuable (b) Re Foster and Lister, 6 C. D. 87; 46 L. J. Ch. 480. (c) Ibid. FRAUD UPOX CREDITORS. 227 consideration, and ought to be sustained against a subsequent purchaser for value ( 108; 22 I. J. Ch. 270; 92 R I; 184; Acraman v. Corbett, l J. A II. 122; 80 I.. J. Oh. 642; L28 R R 149 Middleton, 2 K. & J. 208 : 25 L. J Ch 518; 114 B R 228 FRAUD UPON CREDITORS. husband for life, with remainder to their children as they should appoint, and she conveyed her life estate to trustees for the benefit of her children, and the husband covenanted to assign his life interest, if he should survive his wife, it was held that the settlement was for valuable consideration (k). In certain cases a settlement made upon a wife after marriage is not to be treated as wholly voluntary, where it is done in performance of a duty which a Court of equity would enforce. Thus, if a man should contract a marriage by stealth with a woman having a considerable fortune in the hands of trustees, and he should afterwards make a suitable provision on her in respect of her fortune, the settlement would not be set aside in favour of the creditors of the husband, since a Court of equity would not suffer him to take possession of her fortune without making a suitable settle- ment on her (/). Settlement of In Price v. Jenkins (m), it was held bv the Court of Appeal leaseholds. that a settlement of leasehold property is not a voluntary conveyance under 27 Eliz. c. 4, on the ground that the assignment of leasehold property is of itself a conveyance for valuable consideration on account of the implied obligation to perform the covenants in the lease. But in Lee v. Matthews (n), the Court of Appeal in Ireland dissented from the judgment in that case, and declined to follow it. " The question," said Chief Justice May, " in each case is, was the dealing a bargain or a gift? The existence of onerous liabilities, from which the covenantee covenants to indemnify the assignor, may give the transaction the character of a bargain for good and valuable consideration, while, on the other hand, the gift of a valuable interest in lands is not less a gift because the property so given carries with it certain obligations. The gift is thereby diminished, but it does not necessarily lose its essential character of gift because it must (k) Joyce v. Hutton, 12 Ir. Ch. 77. (I) Moore v. Rycault, Prec. Ch. 22; Ward v. Shallet, 2 Ves. 16; Ramsden v. Hylion, ibid., 304; Arundell v. Phipps, 10 Ves. 139. (m) 5 C. D. 621; 46 L. J. Ch. 805; followed in Harris v. Tubb, 42 C. D. 79; 53 L. J. Ch. 434. («) 6 L. R. I. 530. FRAUD UPON CREDITORS. 229 be taken cinn onere." "Where, however, leaseholds are settled by way of sub-demise, the doctrine of Price v. Jenkins has no application (o) ; and the doctrine has no application as against creditors to cases coming under 13 Kliz. c. 5, and therefore a settlement of leaseholds, though carrying liabilities and covenants, is void under that statute as being calculated to defeat and delay creditors (//). Nor does the doctrine apply to cases coming within s. 47 of the Bankruptcy Act, 1883 (q). In Harris v. Tubb (/'), Kekewich, J., treated the principle as laid down in Price v. Jenkins as the rule, and the principles laid down in Ridler v. Ridler and Ex p. Hillman as exceptions to the rule. If a person whose concurrence the parties think essential Concurrence joins in a settlement, his concurrence will be deemed a ; n settlement valuable consideration, even although he did not substan- '" av '! 1:lke lt ° for value. tially part with anything (s). The concurrence in such cases depends not so much on whether the concurrence passed any interest as on whether it enabled a settlement to be made which could not otherwise have been effected (£). The joinder of a necessary party is not, however, always a sufficient consideration. It has been held not to be so where a limitation was made not for his benefit, or at his desire, or in pursuance of any contract of his (//). In separation deeds the covenant usually entered into by the trustees to indemnify the husband against the wife's debts will, as againsl creditors and also, it is conceived, as againsl subsequent purchasers, support any further settlement he may mak< her (>). A deed which appeals on its face to be voluntary, may be Consideral shown by any evidence (consistent with its terms) to have m " iN < ^ ( '."' been made for valuable consideration, but the evidence must P roved be clear, and it must be proved beyond the shadow of a doubl (o) Shurmur v. Sedgwick, 24 C. D 597; 53 U J. Ch, 87. (p) Ridler v. Ridler, 22 C. D. 74; 52 L. J. Ch. 848; see Re Marsh and Lord Granville, -l\ C. D. 11, per Bowen, L.J. ; 53 I.. J. Ch. 640. (g) EX part,: Hillman, L0 C. D. 622; 18 l>. J. B. 77. 12 C. D. 79; 58 L. J. Ch. 184. («) Bug. 71!); Dart, 918. (t) Harman v. Richards, L0 Ha. 87; 22 L. J. Ch. L066; 90 R. If. 291 (a) Doe v. Rolft . A. & E. 650; 16 R, R. 687. ix) Dart, V. & P. 916; May on Fraud. Conv. 241, 242. 230 FRAUD UPON CREDITORS. Voluntary deed may become for value by consideration given since its execution. Purchase of a settlement for third parties is within sect. 6. that there was that additional consideration which the parties did not choose to put on the face of the instrument (y). If the execution of a voluntary deed be not communicated to the party benefited, there cannot be a question of con- sideration. There can be no consideration without either contract in the first instance, or such notice on the part of the party benefited by the voluntary instrument, as after knowledge of it changes his position. If, after the voluntary settlement has been executed, its contents are communicated to the person taking the benefit of it, and, acting on the faith of it, he does substantially alter his position — that is, com- municates to the donor his acceptance of the further security — then, by so doing, he gives value to the donor being the value which the donor expected him to give. He has, in fact, accepted the voluntary instrument as a consideration for the action he takes on the faith of it. In that way it comes back again really to contract, and upon that ground it is that the Courts have refused to disturb voluntary deeds where con- sideration has been given to them, so to say, ex post facto. But where he has no knowledge, it is impossible that he can give consideration in that way (z). A deed, though voluntary at the time of its execution, may afterwards become valuable by a consideration given since its execution (a), or by subsequent acts. If an assignment or appointment has been made to a volunteer, the subject of which is afterwards assigned for value by the assignee or appointee, the purchaser from him has a better equity than the creditors (6). A man who has made a voluntary grant is not entitled to have it set aside except on jaaying all that the transferee has paid for it (c). The benefit of 13 Eliz. c. 5, s. 6, has been extended to cases (y) Kelson v. Kelson, 10 Ha. 385 ; 22 L. J. Ch. 745 ; Townend v. Toker, 1 Ch. 446; 35 L. J. Ch. 608; Levy v. Creighton, 22 W. K. 605. U) Jones v. Bygott, 44 L. J. Ch. 487, per Jessel, M.E. ; see Gracknall v. Janson, 11 C. D. 1; 48 L. J. Ch. 168. (a) Parr v. Eliason, 1 East, 95. (b) Morewood v. South Yorkshire, Sc, Rly. Co., 3 H. & N. 798; 28 L. J. Ex. 114; 117 E. E. 981. (c) Aldbrough v. Trye, 7 CI. & Fin. 463; 51 E. E. 32; see Judd v. Green, 45 L. J. Ch. 111. FRAUD UPON CREDITORS. 231 in which the purchaser, innocent of any fraud on the part of the owner of the property, has, by making a loan or payment, become a purchaser, not for his own benefit, but for the purpose of inducing the settlor to settle the property mi his family (d). In Bayspoole v. Collins (i ), where the owner of an equity of redemption settled it upon his wife and children at the request of a near relative, and, in consequence of a small advance by way of loan upon the security of his promissory note, the settlement was upheld as being for valuable consideration. So where the consideration for the settlement was covenants by the mother and brother of the settlor to pay him annuities of £50 and £25 (/). So, also, where a man being in embarrassed circumstances, his mother agreed to advance the money necessary to relieve him from his embarrassment, on condition of his settling his estate on his family, the transaction was upheld as being one for valuable consideration (g). So, also, where a man entitled to a life interest in the dividends of Consols, being largely indebted, his brother agreed to pay all debts, not charged on his life interest in the Consols, upon condition that such life interest should be settled so as to be applicable for the main- tenance of the man, his wife and children, or any of them, at the absolute discretion of the trustees, the settlement was held valid as one made for valuable consideration (//). So, also, where A. and 13. were indebted and, being under threat of eviction, executed a deed, afterwards registered as a bill of sale, whereby, in consideration of the payment of the debl by the father-in-law of one of them, they conveyed to him the farm and all its chattels, the deed was held to be for valuable consideration (/). In considering whether or not a deed is voluntary, tin' Rule t"i i-i .-, i determining Court will take into consideration all the circumstances under whether a deed is voluntary, (d) Thompson v. Webster, 4 D. & -!. 605; 7 Jur. N. S. 581. (« - 6 Ch. 228; 40 L. J. Ch. 289. {f) He Tethij. Ex parti J< ffn y, 66 L. -I. Q. 15. Ill; affirmed 8 Man on, 821. (g) Thompson v. Webster, 7 Jur. N. B. 531; L24 R. R. 109. • h, Holnn v. Penney, 3 K. & J. 98; 26 I.. J. Oh, L79; L12 R. R, 19 Ex parte Eyre, 44 L. T. 922. (t) Smith v. Tatton, 6 L. R. I. 41. 232 FRAUD UPON CREDITORS. which it was executed, and the relative positions of the parties, and will look at other deeds executed at the same time, if they appear to be part of the same transaction, although not mentioned in the impeached deed, and will take into consideration any evidence which tends to throw light on the reasons and considerations for the settlement, and, though there is no proof either by intrinsic evidence or by anything appearing on the face of the deeds of any stipulation or aerreement which there was sufficient consideration to support, yet several transactions may be viewed together, and the parties to them must be considered to have stipulated according to the rights which they had, and any consideration which is found to exist will either support the whole trans- action or none at all (h). Deed must be It is not enough, in order to support a settlement against creditors, that it be made for valuable consideration. It must also be bond fide. If it be made with intent to delay, hinder, or defraud creditors, it is void against them, although there may be, in the strictest sense of the term, a valuable or even an adequate consideration (I). Cases have frequently occurred in which persons have given a full and fair price for goods, and where the possession has been actually changed, yet being done for the purpose of delaying or defeating creditors, the transaction has been held fraudulent, and has therefore been set aside as against them (m). " The fact that there is a valuable consideration," said Mr. Justice Fry, in Golden v. Gillam (n), " shows at once that there may be a purpose in the transaction other than the delaying or defeating of creditors, and renders the case of those who contest the deed more difficult." Where the instrument sought to be set aside as fraudulent against creditors is founded on a valuable consideration, (k) Harman v. Richards, 10 Ha. 88; 22 L. J. Ch. 1066; 90 B. B. 297; see Re Reis, 1904, 2 K. B. 769; 73 L. J. K. B. 929. (I) Tivyne's Case, 3 Bep. 81 ; Holmes v. Penney, supra. (m) Ibid., Worsley v. De Mattos, 1 Burr. 474, 475; Cadogan v. Kennett, Cowp. 434; Bott v. Smith, 21 Beav. 511; 111 B. B. 187; Harman v. Richards, supra. (n) 20 C. D. 396; 51 L. J. Ch. 503. FRAUD UPON CREDITORS. 233 an actual and express intent to defeat creditors must be proved (o). The mere fact of a bond fide creditor being defeated is not enough of itself to set aside a deed founded on valuable con- sideration (p). In Holmes v. Penney (g), the creditor was excluded from all remedy in respect of his debtj and the existence of the debt must have been present to the mind of the settlor at the time of the settlement, but Lord Hatherley, then a Vice-Chancellor, being- of opinion thai the person who advanced the money as the consideration of the settlement, had no knowledge at the time of the settlement that there were any unpaid debts of the settlor in existence, and that his only object was to make an honest family arrangement, upheld the deed (V). So, also, in Golden v. Gillam (s), where it appeared to be the object of a mother and daughter to make an honest family settlement, under which the mother conveyed a farm to the daughter, and the daughter, in con- sideration of the conveyance, undertook to maintain the mother and to pay creditors whose debts had been contracted in connection with the carrying on of the farm, the settle- ment was upheld, though there was outstanding a debt of another description to which the covenant did not apply, the Court being of opinion thai the settlement was a bond ful> one, and that the debt in question was not present to the mind of the settlor or her daughter at the time of the settlement. The inquiry in every case is whether the A^vil was executed with the intent to defeat or delay creditors. The mere fact that, as a collateral result, il mav have that effect will not make the deed void within the statute, if it was otherwise made for good consideration and bond fide (I). But since a person must he taken to intend the consequence io, Freeman v. Pope, 5 Ch. 538, per Giffard, I, .J.; 39 L. J. Ch. 689. (p) Smith v. Tatton, 6 I.. I;. I. II ; cf. Edmunds v. Edmunds, L904, I'. 862; 73 l>. -I. P. '.iT : ante, \>. 21K. (g) 3 K. & J. 98; 26 I,. J. Ch. IT 1 .); L12 R. H. 19. m Bee Ex parte Eyre, ill.. T. 922. I 20 C. I). 396; affirmed 51 I,. J. Ch. 503. '/ 1 Ibid., tee %v i„. n ' 'A *\t as against creditors (i), but the inadequacy must not be so great as to induce the belief that the transaction was a mere fraudulent contrivance between the parties to defraud creditors (A'), so that when a man in a hopeless condition assigned to his mother policies of assurance on his life amounting to £800 in consideration of a debt of £180 owing to her, it was set aside as a fraud against creditors (/). Where it appeared that the consideration stated to have been paid was not really bond fide paid, or was afterwards returned, the sale was not allowed to override a prior conveyance, although voluntary (m); and when the estate is conveyed as security for money to be thereafter advanced, it must be proved that (e) Colombine v. Penhall, 1 Bm. & G. 228; 96 R. R. 391; Fraser v. Thomp- son, 4 D. & J. 660; 124 R. R. 443; Bulmer v. Hunter, 8 Eq. 49; 38 L. J. Ch. 534; Re Pennington, 5 Morrell, 268. if, Kevan v. Crawford, 6 C. D. 30; 45 L. J. Ch. 658; Parnell v. Stedman, I ab. & El. L53. See Bankruptcj Act, 1914, s. 27. (g) Be Rets, Ex p. Clough, L904, 2K B. 769; 1905, A. C. 442; 7-1 L.J. K. B 918. See post, p. 240. (fe) 17 Bq. 120; 43 L. J. B. L6. (i) Copis v. Middleton, 2 Marfd. 423; 17 R. R. 226. ik) Twyne'8 Case, 3 Rep. 88 b; Doe v. James, L6 Ba b, 218; Strong v. Strong, 18 Beav. W8j L04 R. R. 490; Hale \. Allnutt, L8 C. B. 527; L07 R. R. 390. (Z) Stokoe v. Cowan, 29 Beav. 687; i:il R. R, 742. Roberts v. Williams, I Ea. L80; II L. J. Ch. 65; ''.7 R. R, 25; Mulliru \. Guilfoyle, 2 b. H. I. L18. 236 FRAUD UPON CREDITORS. money has actually been advanced on the mortgage (n). But a vendor's giving back part of the purchase-money to the purchaser's family does not invalidate the sale (o). A con- veyance, though made for valuable consideration, may under certain circumstances be fraudulent against subsequent purchasers (p). When the transaction is on the whole fair and honourable and not induced by the fraudulent intention of defeating creditors or purchasers, the Court is not very particular as to the amount of the consideration (q). It is enough if it is valuable and not so entirely inadequate as from its insufficiency to induce the presumption of fraud. The smallness of the consideration is not a matter the Court will go into, except so far as it is evidence that the transaction was a sham (r). The case is all the stronger when the instrument is between relatives. In such cases, less than in others, will the Court weigh in very nice scales the amount of the consideration (5), or hold that the difference between the real value of the estate and the consideration given is a badge of fraud, or evidence of an intention to defraud creditors (t). In a case accordingly where husband and wife jointly seised in fee mortgaged the estate limiting the equity of redemption to such uses as they or the survivor should appoint, and the property was recon- veyed by their appointment to the use of the wife for life, with remainder to the use of the husband for life, with remainder to uses in favour of their issue, it was held that her con- currence in the settlement made by the reconveyance was a sufficient consideration to support it against a subsequent pur- 1 n I Doe v. Webber, 1 A. & E. 740; 3 L. J. K. B. 208; 40 B. E. 268. (0) Doe v. James. 16 East, 214 ; per Lord Ellenborough. (p) Perry-Herrick v. Atwood, 2 D. & J. 21; 27 L. J. Ch. 121; 119 E. E, 10. See Rimmer v. Webster, 1902, 2 Ch. 163; 71 L. J. Ch. 561. (q) Holmes v. Penney, 3 K. & J. 90; 26 L. J. Ch. 179; 112 E. E, 49; Atkin- son v. Smith, 3 D. & J. 186; 28 L. J. Ch. 2; 121 E. E. 65 ; Thompson v. Web- ster, 4 D. & J. 605; 28 L. J. Ch. 703; 124 E. E. 409; Townend v. Toker, 1 Ch. 446; 35 L. J. Ch. 608; Price v. Jenkins, 5 C. D. 621; 46 L. J. Ch. 805; Rosher V Williams, 20 Eq. 217; 44 L. J. Ch. 419. (r) Bayspoole v. Collins, 6 Ch. 228; 40 L. J. Ch. 289. (s) Thompson v. Webster, 7 Jur. N. S. 532; 124 E. E. 409. (t) Toicnend v. Toker, supra; Bayspoole v. Collins, supra; Golden v. Gillam, 20 C. D. 396 ; aff. 51 L. J. Ch. 503. FRAUD UPON CREDITORS. 237 chaser from the husband (u). So if a post-nuptial settlement be made with the aid of another person whose concurrence is essential to its full validity, as is the case of a settlement by tenant for life and tenant in tail in remainder, this may take from the instrument its voluntary character (.r). So a family compromise founded on doubtful intestacy is valid (//). But oi course the fact of the grantees having- had estates in the property which, as in the case of estates in remainder on an estate tail, have been destroyed by the settlor will not support the settlement (z). A nominal consideration is insufficient to support a deed. Nominal When accordingly a deed conveying the whole real estate of insufficient. the grantor and otherwise voluntary contained a covenant by the grantor that under certain specified circumstances and within a limited period he would build a house on pari of the estate conveyed, but there was no shifting clause or proviso for defeasance in case of non-performance of the covenant, it was held that the covenant raised no consideration affecting the voluntary nature of the contract (a). When there has been a sale for value, not only must fraud Purchase] . . n . . must hav< be shown, but, in order to avoid the transaction as against a notice of purchaser, it must be shown that he was privy to the fraud haut - against creditors. A conveyance cannot be invalidated where there is a bond fide purchaser (6). The fraudulent intent oi the vendor or settlor will not invalidate the deed if the pur- chaser was free from fraud (c). Even though there may be some suspicion in the circumstances of the case, the purchase will be held good unless it is shown that it was a contrivance to defeat creditors and that the purchaser was privy to ii <,/). (u) Atkinson v. Smith, supra. 8 A. & E. at p. 659. Dart, V. & P. 918. Heap v. Tonge, 9 Ha. 90; 20 I,. J. Oh. 663 ; 89 R. R, 339 (z) Cormick v. Trapaud, 6 Dow, 60. (a> kosher v. Williams, 20 Eq. 210; 44 L. J. Ch. 419. (b) Co V xs v. Middleton, 2 Madd. 426; 17 R. R. 226. French v. French, 6 D. M. & C. 101; 28 D. .1. Ch. 612; L06 R. R. 16; Golden v. Gillam, 20 C. D. 394; aff. ~>\ \,. .1. eh. 508; Parnell v. Stedrrn Cab. & El. 153. (d) Hale v. 8aloon Omnibus ( - I Dr< w. 496; 28 L. J. Ch. 777; LIS R R. 430. 238 FRAUD UPON CREDITORS. And fraud will not be imputed to a purchaser merely because his solicitor was privy to it (e). When a recovery was suffered by A., tenant for life, and B. his son, tenant in tail in remainder, and by the deed leading the uses of the recovery, A.'s life estate was limited to B. in order to defraud A.'s creditors, and subject thereto the pro- perty was settled on B. for life, with remainder to his first and other sons in tail, but B. was not privy to the fraud, it was held that the recovery was good, and that the deed leading to uses was bad, so that A.'s life estate passed to his assignees in a subsequent bankruptcy, and subject thereto B. became entitled in fee simple (/). A conveyance pending an action or judgment is not necessarily void if supported by a valuable consideration (g). Purchase- The benefit of the section which excepts from the operation money may A tit not be taken of the statute conveyances made bona fide and tor valuable creditors consideration is strictly confined to the purchaser and the interest created in his favour, so that even when there is a bond fide purchaser, the consideration received for property sold by a debtor is liable to the same rules as the property would have been if unsold (h). Mala fides ^ fraudulent intention to which the purchaser is a party supersedes consideration, will override all inquiry into the consideration (i). ' If," said Lord Mansfield in Cadogan v. Kennett (j), " the transac- tion be not bond fide, the circumstances of its being done for a valuable consideration will not alone take it out of the statute." If moreover the purchaser must have been aware that the debtor was in a state of insolvency, or that the effect of the deed will be to leave the debtor without the means of (e) Re Tetley, 3 Manson, 321. (/) Tarleton v. Liddell, 17 Q. B. 390; 4 De G. & Sm. 538; 20 L. J. Q. B. 507; 85 K. R. 505; Wakefield v. Gibbon, 1 Giff. 401; 26 L. J. Ch. 505; 114 R. R. 486. (g) See Marlow v. Orgill, 8 Jur. N. S. 789, 829; Darvill v. Terry, 6 H. & N. 807; 30 L. J. Ex. 355; 123 R. R. 845. (h) French v. French, supra; Neale v. Day, 28 L. J. Ch. 45. (i) Acraman v. Corbett, 1J. & H. 423; 30 L. J. Ch. 642; 128 R. R. 449. (;) Cowp. 434. FRAUD UP0X CREDITORS. 239 paving his debts, the transaction, though for value, cannot be upheld (k). Though there be a judgment against the vendor, and the purchaser has notice of it, that fad will not of itself affect the validity of the sale of personal property. But if the pur- chaser, knowing of the judgment, purchases with the view and purpose to defeat the creditor's execution, it is iniquitous and fraudulent, notwithstanding he may have given a full price, for it is assisting the debtor to injure the creditor. The question of fraud depends on the motive (J). So where a debtor transfers his business to a company with the object of defeating his creditors and the company takes with notice, the transaction will be set aside as fraudulent under the statute of 13 Eliz. (m). In Barling v. Bishoyp (n) a voluntary conveyance with the intention of depriving the plaintiff in an action of the fruits of his verdict was held bad. So, also, when the object of the deed was to defeat proceedings under a winding up, it was held bad (o). But where the liability of a solvent settlor in respect of a pending action is highly speculative, the settle- ment will not be bad (/;). The absence of any fraudulent intention on the part of the debtor is not sufficient to uphold the settlement, if the settle- ment has been procured by the fraud of the donees. The distribution accordingly by a debtor, when in a weak state of mind and body, of the whole of his property among his children, partly in consideration of annuities for his life, partly by voluntary settlement, and partly by pecuniary gifts, was held void under 13 Eliz. c. 5, the Court being satisfied that the children were aware at the time that the creditor's i/.i Corlett v. Radcliffe, II Moo. P. C. 135; 134 R. K. L3; French v. French, supra, L03; Be Slobodinsky, L903, 2 K. B. 517; 72 L. J. K. B. 883. 'h 1 Burr. 171. Coup. 434, per Lord Mansfield; 8 Taunt. 678, per l> l -I nville v. Patent Caramel Co., L912, I K. B 599; 8] I. J. K B. 291; ante, p. L68. (n) 29 Beav. 117; L3] I:. I;. 648. R< - e River, £c, Co. v. Attwell, 7 Eq. 347. (p) Exp. Mercer, 17',). r, D. 290; 55 I. J. Q B 55 d Reg v. Hopkins, L896, 1 Q. B 652 65 L J. Iff. C. L25. 240 FRAUD UPON CREDITORS. Bankruptcy Act, 1914, s. 42. Voluntary settlements. claim would be defeated, though it did not appear that the debtor had any such intention (q). Under the Bankruptcy Act, 1914, s. 42 replacing s. 47 of the Act of 1883, any settlement of property (not being a settlement made before and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after his marriage in right of his wife) shall, if the settlor becomes bankrupt within two years after the date of such settlement, be void as against the trustee in bankruptcy, and shall, if the settlor becomes bankrupt at any subsequent time within ten years after the date of such settlement, be void against the trustee in bankruptcy, unless the parties claiming under such settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in such settlement, and that the interest of the settlor in such property passed to the trustee of such settlement on the execution thereof. The section also provides that any covenant or con- tract made in consideration of marriage for the future settle- ment on or for the settlor's wife or husband or children of any property wherein the settlor had not at' the date of the marriage any interest, and not being property in right of the settlor's wife or husband shall, if the settlor is adjudged bankrupt and the covenant or contract has not been executed, be void against the trustee in bankruptcy (r). " Settlement " for the purposes of the section does not include a gift of money to a son in order to start him in business (s), but it has been held to include gifts of jewellery and other chattels made within two years of the bankruptcy (t). (g) Cornish v. Clark, 14 Eq. 184; 42 L. J. Ch. 11; cf. Golden v. Gillam, 20 C. D. 389. (r) Re Reis, 1904, 2 K. B. 769; 74 L. J. K. B. 918. (s) Re Player, 15 Q. B. D. 682; 54 L. J. Q. B. 554; Re Plummet, 1900, 2 Q. B. 790; 69 L. J. Q. B. 936. (t) Re Tankard, 1899, 2 Q. B. 57 ; 68 L. J. Q. B. 670. FHAl'D UPON CREDITORS. 241 On the other hand a slight consideration will suffice to prevent the settlement being voluntary within the section (u). In order to constitute a " purchaser in good faith " within the section it is sufficient if there be good faith on the part of the purchaser; it is not necessary that both parties to the transaction should act in good faith (#). It seems that a voluntary settlement avoided under the section is not avoided absolutely, but only so far as may be necessary to satisfy the debts of the bankrupt and the costs of the bankruptcy (y). Xor does the settlement become void ab initio, but only as from the date of the act of bankruptcy (z). The rule that a trustee in bankruptcy stands in the bank- rupt's shoes does not apply to cases under settlements which come within sect. 47 of the Bankruptcy Act, 1SS-'!, or the statute 13 Eliz. c. 5, or to cases of fraud (a). The law relating to the prevention of frauds upon creditors Billsofsale. by secret bills of sale is to be found in the Hills of Sale Acts, 1878 and 1882, with minor amending Acts of 1890 and 1891, but the subject is too special to be dealt with ;it length in the present treatise. Transactions which have for their objed the defeating or Assignment defrauding of creditors must lie carefully distinguished from enceto cases where a sale or assignment or other conveyance merely '' l,(ll,,lls - amounts to giving a preference to one creditor or to one set of creditors over another. The law tolerates assignments giving one creditor a preference over another. The tad thai a man may have assigned the whole or the bulk of his pro- perty to a creditor or set of creditors and that the assignment may have been expressly made with the intent to benefil some creditors (6), or to defeat the claim of a particular creditor, is of no consequence under the common law or under (it) lie Tetley, 3 Manson, 321i 66 L. J. Q. B. Ill; but see B< Parry, L904, 1 K. B. 129; 73 L. J. K. B. 83. (x) Mackintosh v. Pogose, L895, 1 Ch. 505; 64 b. J. Ch. 274. (y t Re Sims, 3 Manson, 340; Bee Ideal Bedding Co. v. Holland, L907, 2 Ch. 157; 76 L. •(. Ch. ill : Re Parry, L904, I K. B. L29; 7.'! I.. .1 K B 88. (z) Carter and Kenderdine's Contract, L897, 1 Ch. 776; 66 b. J. Ch. K)8. (a) Re Holland, L902, 2 Ch. 860; 71 l, .1 Ch. 518. [b) Alton v. Harrison, l Ch. 625; 88 I,. •) . Ch. 669. k.f. 16 242 FRAUD UPON CREDITORS. the statute of Elizabeth, if the consideration be adequate (c), and the bill of sale or assignment be not a contrivance resorted to by the debtor as a mere cloak for retaining a personal benefit in his own favour (d). A transfer of property is not made with intent to defeat or delay creditors because its effect or object is to prefer one creditor to another. What the Act invalidates is a transfer which removes the whole or part of the debtor's property from the creditors as a body for the benefit of the debtor (e). The test is, was the deed bond fide, or was it a mere cloak for retaining a benefit to the grantor? (/) A payment is bond fide within the meaning of the statute of Elizabeth if it is intended to be a payment, and a security is bond fide if it was intended to be a security, even though the debtor knew he was insolvent, and even although the creditor who accepted the money knew it. The statute has no regard whatever to the question of preference or priority among the creditors of the debtor. The creditor of an insolvent debtor who dies without having been ad- judicated a bankrupt is entitled to the benefit of any payment or security made or given by the debtor (g). A deed of arrangement is not necessarily void under 13 Eliz. c. 5, because it contains jirovisions in favour of the debtor or reserves certain benefits to him, or because a particular creditor is intentionally excluded from its operation (h). Assignments, conveyances, or gifts, though not fraudulent within the statute 13 Eliz. c. 5, may be fraudulent as against bankrupt law. cre dit rs within the provisions of the bankrupt laws. Any transfer which is fraudulent within the meaning of the statute of Elizabeth is also fraudulent and an act of bank- ruptcy under the bankrupt law, and void as against the (c) Middleton v. Pollock, 2 C. D. 106; 45 L. J. Ch. 293; Ex p. Games, 12 C. D. 321; Maskelyne v. Smith, 1902, 2 K. B. 158; 71 L. J. K. B. 476. (d) Alton v. Harrison, supra. (e) Musahar Sahu v. Hakim Lai, L. R. 43, Ind. App. 104. (/) Ex p. Games, supra, (g) Middleton v. Pollock, supra. (h) Maskelyne v. Smith, supra. Benefit reserved to debtor. Fraud upon creditors under tbe FRAUD UrON CREDITORS. 243 trustee in bankruptcy (/). Hut a conveyance to a creditor of his whole property, or of the whole of his property with an exception merely nominal, in consideration of a past or pre-existing debt, though not fraudulent within the statute of Elizabeth (/), is fraudulent under the Bankruptcy Act, and an act of bankruptcy ('/•). So the assignment of a business to a private company, though not fraudulent within the statute of Elizabeth, may be an act of bankruptcy (/). The principle of the bankrupt laws being the equal distribution of the pro- perty and effects of a bankrupt among his creditors, acts which are done with the object of preventing an equal dis- tribution of the property and effects of a bankrupt among his creditors are fraudulent within the meaning of those laws (m). The assignment accordingly by a man of the whole of his estate and effects, or of the whole with a colourable exception of part only under such circumstances as necessarily to defeat and delay his creditors, is a fraud within the meaning of those laws, although there be no actual moral fraud (n). Where therefore the debtor's property consisted chiefly in the imple- ments of his trade, the assignment of these, which con- sequently rendered him incapable of carrying on his trade, was in substance an assignment of all his property, and void against his trustee in bankruptcy (o). So a creditor who takes a transfer of substantially the whole of the debtor's property in payment of a past debt with notice that there ate other creditors is not acting with good faith, and such a transac- tion is an act of bankruptcy and prima facie a fraudulent preference (p). Hut where there is a substantial exception out of the debtor's property, such an exception as might (*) Doe v. Ball, 11 M. & W. 531; K.r p. Games, L2 ('. D. 321; Be Ilirti,, 1699, 1 Q. B. 612, 620; 68 L. J. Q. B. 287. (;') See ante, p. 222. (k) Allen v. Bonncti . 5 I a. 580; Re It ood, 7 Ch. 302; Ex /<. Games, supra; Re -lukes, 1902, 2 K. B. 58; 71 I,. J. K. B. 710. (I) Re David and hilar, I. L914, 2 K B. 694 : 83 L.J. K. B. 117:5. (m) Young v. Waud, 8 Exch. 234; 22 L. J. Ex. 27. (n) Allen v. Bonnett, 5 Ch. 577; Be Wood, 7 Ch. 305; Ex p. King, 2 C. D. 263; 45 L. J. B. LOO; Ex p. Payne, 11 C, D. 539. (o) Be Rayment, ho |,. t. hot. (p) Be Jukes, supra; distinguishing Shears v. Goddard, 1 •"- , . •< '. . 1 (.,>. 1!. 406; 65 L. .]. Q. B. 344. 244 FRAUD UPON CREDITORS. possibly enable liini to cany on bis trade witb advantage, an assignment of tbe wbole of tbe rest of bis property cannot be necessarily and by force of law, witbout reference to extrinsic circumstances showing fraud, an act of bank- ruptcy (q). In such a case it would be necessary to prove some other circumstances besides the mere execution of the deed to satisfy the Court that it was intended to be a fraud upon creditors (/•). Whether an exception is substantial enough depends on the circumstances of the case (s). If the property excepted out of the assignment is property which cannot be taken in execution by a creditor, it does not con- stitute a substantial exception (t). Nor is there a substantial exception when a trader assigns everything except his house- hold furniture and book debts of small value (u). So also a deed is invalid although a substantial part of the property be not comprised in it, if the necessary consequence of it be to cause insolvency or to defeat and delay creditors (w). The rule applies with peculiar force, if the fact of his embarrassed circumstances be known or must be necessarily taken to be known to the assignee (a-). In determining whether a bill of sale comprises the whole of the debtor's property, the' value of his book debts is to be taken into consideration (y). Assignment The assignment by a trader of his property and effects f °, ran t for a present advance of money is not necessarily a fraud advance of 1 J ^ money is not U p u the bankrupt laws, though the whole of his stock, fraudulent. x . . . . , present and future, is included in the conveyance. A present substantial advance puts the transaction upon the same footing as an assignment with a substantial exception of part of the property. The advance may be the means of enabling him (q) Lomax v. Burton, L. E. 6, C. P. 112, per Willes, J. ; 40 L. J. C. P. 150. (r) Ibid. (s) Ex p. King, supra, per Mellish, L.J. ; Ex p. Hughes, 1893, 1 Q. B. 595; 62 L. J. Q. B. 358. (t) Ex p. Hawker, 7 Ch. 214; 41 L. J. B. 34. («) Ex p. Bland, 6 D. M. & G. 761 ; 106 B. E. 257. (w) Young v. Waud, 8 Exch. 221; 22 L. J. Ex. 27; Ex p. Wensley, 1 D. J. & S. 281; 32 L. J. B. 23; 137 E. E. 219; Re Wood, 7 Ch. 305. (x) Young v. Fletcher, 3 H. & C. 732; 34 L. J. Ex. 154; 140 E, E. 705; Re Slobodinsky, 1903, 2 K. B. 517; 72 L. J. K. B. 883. (y) Ex p. Burton, 13 C. D. 102. FRAUD UPON CREDITORS. 245 to go on with his trade, and so the transaction may be beneficial to creditors. If the conveyance be made bond fidt for the purpose of enabling him to carry on his business, it cannot be called a fraudulent act as lending to defeat or delay creditors, although the property or effects have been sold or pledged for a sum less than their value. A bond fide sale of goods in a season of pressure by a trader for whatever ready money can be obtained is valid, though the price be small. The proportion which the sum raised bears to the value of the property sold or pledged is a circumstance to be considered in determining whether the transaction is bond fide or not, but it is not conclusive that it is fraudulent (z). It is for the Court to say whether, under all the circumstances of the case, the effect of the assignment is to defeat or delay creditors (a). If, however, there was in the minds of the parties the sinister object of defeating or delaying creditors, the advance of even a substantial part of the value of the property at the time of the assignment will not make the transaction valid. But the Court will not hold a deed conveying property in con- sideration of a present advance which bears a substantia] proportion to the value of the property to be invalid unless it is satisfied that there exists an intention to defeat and dela\ and consequently to defraud creditors; and that object must be the object not only of the bankrupt but also of the party who is dealing with him. A person dealing bond fide with the bankrupt would be sate I'nless he knows, or from the very nature of the transaction must be taken necessarily to have known, thai the object was to defeat or delay creditors. the deed cannot b^ impeached (6). A conveyance by a trader of all his property was held fraudulent upon creditors within the meaning of the bankrupt laws, even though made in consideration of marriage, it being shown that the wife (x) Bittlestone v. Cooke, 6 E. & B. 307; Bell v. Simpson, -l II. .\ N. 410; 26 L. J. Ex. 363; LIS R. R. 618; Pennell v. Reynolds, 11 c IV N. 8. 709; L82 R. R. 725; see Ex p. Wensley, supra. nn Pennell v. Reynolds, supra; Ex p. Cohen, 7 Ch. 22; Id L. •) . 15. L6 J I ,,. Cooper, Id C. D. 325; 48 L. -J. B. 54. tin i-rasrr v. Levy, 6 II. & N. L6; L28 R. R. 862; Re Slobodinsky, L908, 2 K. B. 517; 72 I>. .1. K. B. hk:{ ; see R< Colemere, I Ch. L28; 86 L J B. 8 246 FRAUD UPON CREDITORS. was cognizant of the embarrassed state of the husband's affairs (c). An assignment of all a trader's effects to secure a present advance or present and future advances bond fide agreed to be made for the purpose of enabling him to carry on his business, is not an act of bankruptcy (d). So, also, an assign- ment by a trader of all his effects to secure an advance to enable him to satisfy a pressing demand and thus to continue his business, is not of itself an act of bankruptcy (e) ; and, if the advance be to pay off a subsisting charge on the property, the transaction will be protected, although the security is not transferred, but a new mortgage is executed, even although the person advancing the mone}' had notice of an act of bankruptcy committed by the debtor (/). A security comprising all the debtor's property for an existing debt arising from a loan previously made will not be an act of bankruptcy if it is made in performance of an agree- ment, whether written or parol (g), bond fide entered into at the time of the loan (h). But an agreement of this sort will not protect the transaction, if it is not absolute but conditional to give a security on the request of the creditor, and such request is purposely postponed until the debtor is in a state of insolvency in order to prevent the destruction of his credit which would result from registering the deed (i). Such a transaction will be regarded as evidence of a design to commit a fraud on the general creditors (A); and the onus is on the creditor to prove that he did not postpone taking the security in order to enable the debtor to obtain credit from other (c) Colombine v. Penhall, 1 Sin. & G. 228; 96 E. E. 391; Buhner v. Hunter, 8 Eq. 49; 38 L. J. Ch. 534: Re Pennington, 5 Morrell, 268. (d) Htitton v. Cruttwell, 1 E. & B. 15 ; 22 L. J. Q. B. 78 ; 93 E. E. 4 : Harris v. Rickett, 4 H. & N. 1; 28 L. J. Ex. 197; 118 E. E. 294; Ex p. Dann, 17 C. D. 26; 51 L. J. Ch. 290. (e) Hutton v. Cruttwell, supra; Harris v. Rickett, supra; Re Colemere, supra; Lomax v. Buxton, L. E. 6 C. P. 112; 40 L. J. C. P. 150. (/) Ex p. Harris, 19 Eq. 253; 44 L. J. B. 31. (g) Harris v. Rickett, supra; Ex p. Foxley, 3 Ch. 515. (h) Jones v. Harber, L. E. 6 Q. B. 77 ; 40 L. J. Q. B. 59 ; Ex p. Izard, 9 Ch. 271 ; 43 L. J. B. 31. (t) Ex p. Fisher, 7 Ch. 636; 41 L. J. B. 62; Ex p. Burton, 13 C. D. 102. (k) Ex p. Fisher, supra. FRAUD TPON CREDITORS. 247 people (/). Nor ran a man under a secret unregistered agree- ment borrow money with which to carry on business, enjoy credit, contract debts, and acquire property subjeci to an undertaking: that at any moment he may be called on to pay the money or else to give up not merely the property he had at the time of the bill of sale, but all the property he might have acquired (m). An assignment by a debtor of all his property and effects Assignment • iiii' . " v debtor partly as a security for a past debt and partly as a security partly in con- p ■, , • i x . , i ,, ., , p sideration of it ior a substantial fresh advance, is not necessarily an act of past debt and bankruptcy. If the assignment is made not merely for an :l fresh 1 ■ advance of antecedent debt but also for a present further advance, of money, which the debtor really has the advantage and which he can apply to the purchase of stock* or otherwise for his use, the transaction is considered on the same footing as if there was a substantial exception out of the debtor's property, and is therefore not necessarily per se an act of bankruptcy (n). It is not necessary to the validity of the transaction that a security should be given at the time of the advance. The rule applies where a sum of money is advanced upon the faith of a contract that a bill of sale shall be given. If a bill of sale is subsequently given in performance of an agreement entered into at the time of the further advance, it stands upon the same footing, and will have the same elt'ect with respect to creditors as if it had been given at the time of the further advance (o). lint if the giving of the bill of sale is purposely postponed till the circumstances of the debtor become hopeless and he is on the verge of bankruptcy, the antecedent agreement will not support it (/>). Nor will the agreement to give a bill of sale be upheld, if it appear to have been concocted between (/) Re Jackson and Ba ford, L906, 2 ( b. 467; 7:. I.. .1. Ch. 697. Ex p. Hauxwell, 23 C. D. 626; 52 L. J. Ch. 737. (n) Lomax v. Buxton, I.. I;. 6 C. I'. 112; 40 I.. .) . C. I'- L50; LHen \. Bon- nett, 5Ch. 577; Ex p. Fisher, 7 Ch. 642; II I,. .1. I'. 62; Ea p. Games, L2 ('. D. 321. (o) Hutton v. Cruttwell, supra; Ex i>. King, 2 C. I». 268; r> I., J B L09; Ea i>. Fisher, tupra. p) Ea p. Fisher, ibid.; /■.> /<. Burton, L3 C. D. L02; /■:< /-. Kilner, ibid. 249; Re Joel wn and l-> ford L906, 2 Ch. 167; 7:. I,. .1 Ch. 697. 248 FRAUD UPON CREDITORS. the creditor and the debtor for the purpose of evading the remedy which the Act as to bills of sale intended to provide for the benefit of creditors (q). In order that the execution of a bill of sale of substantially the whole of a debtor's property and effects as a security for a jjre-existing debt, and further advances may not be an act of bankruptcy, it is necessary that there should be an agreement binding the grantee to make further advances. It is not sufficient that further advances should have been in con- templation of the parties, the deed being so stamped as to cover them and further advances having been actually made after the execution of the deed (r). But it is enough if there is a contemporaneous parol agreement on the part of the creditor to make further advances to a sufficient amount, and such advances are afterwards in fact made, even though the deed contains no covenant or obligation on the part of the creditor to make further advances (s). Where there was a parol agreement on the part of the creditor to make fresh advances, but no covenant or written agreement binding him to do so, the transaction was upheld (t). Where a bill of sale comprising the whole of the grantor's property is given on the eve of bankruptcy to secure a pre- existing debt, and it is attempted to support it by an agree- ment alleged to have been made at the time the money was advanced, it is for the Court to judge from all the surrounding circumstances whether the agreement was a bond fide one, or whether the bill of sale was purposely postponed in order to protect the grantor's credit. The onus probandi is upon the person who sets up the prior agreement to prove not only that the agreement did exist, but that it was in all respects a bond fide agreement (u). (q) Ex p. Cohen, 7 Ch. 20; 40 L. J. B. 16; Ex p. Hauxwell, 23 C. D. 626; 52 L. J. Ch. 737. (r) Ex p. Dann, 17 C. D. 26; 51 L. J. Ch. 290. (s) Re Winstanley, 1 C. D. 290, 560; 45 L. J. B. 89. it) Ex p. Wilkinson, 22 C. D. 788; 52 L. J. Ch. 657; Jamaica v. Lascelles, 1894. A. C. 135 ; 63 L. J. P. C. 70. (u) Ex p. Kilner, 13 C. D. 246; Ex p. Hauxwell, supra •■ ; Re Jackson and Bass- ford, supra. FRAUD UPON CREDITORS. 249 It is not essential for the validity of transactions of this sort by way of security that the advance should he of equal value with the existing deht or the property charged, it it be bond fide to enable the debtor to carry on his business Neither is it essential that the equivalent should he a sum of money paid down. If the debtor has something done for him that will enable him to carry on his business, that will be a sufficient equivalent, as where the drawer of bills of ex- change took them up at maturity at the request of the acceptor (y). So, also, where the agreement was to supply goods on credit and they were supplied (z). To constitute a substantial advance, it is not necessary that there should be money actually paid down. It is enough if a trader carrying on his business has something done for him which will enable him to continue carrying it on (a). The payment accordingly of bills by the drawee at the request of the acceptor is a substantial advance, and prevents the assignment by a man of all his j)roperty and effects from being an act of bankruptcy (o). An honest giving of time to a trader may be as fair and valuable an equivalent as an advancement of money (c). But the forbearance of tin- grantee of a bill of sale to enforce a judgment is not a sufficient consideration for an assignment of the whole of the debtor's property to secure a past debt {e determined on the circumstances of each particular case (>). li is not a question whether the further advance is great or small, lint whether there was a Ixnu) fi //. Griffith, 23 C. I>. 69; 52 I.. .1. 717. (h) Ex ,,. Reader, 20 Bq. 765; II I.. •). B, L39. Bee /■■'< /<. Kevan, '■> Ch. 758. (»') Gaslight Improvement Co. \. Terrell, K' Eq L68; 39 I.. .1. Ch. 726. Bui II ilmot v. London Co., :'•! C. D. L49. (ft) /■;./■ //. Holland, 8 C. I). 280; B< Jackson and Bassford, L906, 2 Ch. 167; 7", l.. J. ri,. 697. the fraud of the debtor, and being a party to the fraud, he cannot be in any better position than the debtor who perpetrated it (g). An assignment by a trader of all his effects to a trustee for the general benefit of all his creditors is valid, though it con- tains a clause empowering the trustee to employ the grantor or any other person or persons in winding up the affairs of the grantor, and in collecting and getting in his estate and effects thereby assigned, and in carrying on his trade, if thought expedient by him, if it appear from the whole scope of the deed that the carrying on the trade was merely subsidiary to the general purpose of sale and distribution (//). Where a debtor in insolvent circumstances executed a deed by which he conveyed all his estate to trustees in trust to sell in such a manner as they might think proper, and to divide the residue of the proceeds, after paying expenses rateably, among the creditors, parties to the deed, and if the trustees thought tit, creditors who refused or neglected to execute, and if the trustees thought proper but not otherwise, to pay the dividends or debts due to non-assenting creditors to the debtor; and the deed also provided for the payment of main- tenance to the debtor, if the trustees thought fit, and the executing creditors respectively indemnified the debtor and the trustees in respect of the bills of exchange and promissory notes made or indorsed to them respectively by the debtor, in respect of the scheduled debts, the deed was held good under the statute (i). (g) Smith \. Hurst, supra. {h) Jams v. Whitbread, 11 C. B. 406; 20 L. J. C. P. 217. (t) Boldero v. London & Westminster Discount Co., 5 Ex. D. 50; Maskelyne v Smith, 1U02, 2 K. B. 158; 71 L. J. K. B. 476 FRAUD UPON CREDITORS. 261 The distinction between deeds vesting property in trustees upon trust for the benefit of particular persons, which deeds cannot lie revoked, altered, or modified by the party who has created the trust, and deeds purporting to be executed for the benefit of creditors, when the question whether the trusts can be revoked, altered, or modified, depends on the circumstances of each particular case, has been laid down as follows, viz. : In cases of deeds vesting property in trustees upon trust for the benefit of particular persons, the deed cannot be revoked, altered, or modified by the party who has created the trust; but in cases of deeds purporting to be executed for the benefit of creditors, the question whether the trusts can be revoked, altered, or modified depends on the circumstances of each particular case. It is difficult at first sight to see the distinc- tion between the two classes of cases, for in each of the classes a trust is created, and the property is vested in the trustees. The distinction lies in this : In cases of trust for the benefit of particular persons, the party making- the trust can have no other object than to benefit the persons in whose favour the trust is created, and the trust being well created, the property belongs in equity to the cestui que trust as much as it would belong to them at law, if the legal interest had been trans- ferred to them; but in cases of deeds purporting to be executed for the benefit of creditors, and to which no creditor is a party, the motive of the party executing the dvod may have been either to benefit liis creditors or to promote his own con- venience, and the Court has to examine the circumstances for the purpose of ascertaining what was the true purpose of the deed, and this examination does not stop with the deed, but must be carried on to what lias subsequently occurred, because the party who has created t he trust may, by liis own conduct or by the obligations which he lias permitted his trustees to contract, have created an equity against himself. Kadi case of the latter description is governed by its own circum- stances (/.•). ./,, Smith v. Hurst, supra; Julius v. James, 8 ( . I>. Til: 17 !,. .1. Ch. 858; Smith \. Cooke, L891, A. c. -j'JT ; 60 L. .1. ch. 607; New's Trustet v. Hunting, L897, 2 Q. B. L9; 66 I,. •). Q. B. 554. 262 FRAUD UPOJS T CREDITORS. Fraud in drawing mid accepting bills in con- templation of bankruptcy. Fraudulent composition deeds. Another case of fraud upon creditors is where at the time bills of exchange were drawn and accepted, the drawer and acceptor were both intending to become bankrupts, and the drawer sold the bills at a great undervalue to a third party. The Court being satisfied that the holder of the bills knew that the bills were issued in contemplation of bankruptcy, and that there was something wrong about the bills, held that he could not prove in the bankruptcy for more than he had paid for the bills (/). Another case of fraud upon creditors is where upon a com- position by a debtor with his creditors, particular creditors, by means of secret bargains, secure to themselves undue advantages over the rest of the creditors. The principle of all composition deeds being that the debtor shall make a true representation of his assets, and that the creditors shall stand upon an equal footing, any secret arrangement between the debtor and a particular creditor whereby he is placed in a more favoured position than the rest of the creditors, is a fraud upon the others, which will entitle them to set aside the composition and resort to their original debts (in), and the debtor may recover back any sum so paid (n). The principle applies though the bargain was made after the creditor had executed the deed, and though the additional payment was made at the expense of a third person, if with the debtor's knowledge. It also applies to composition arrangements made under the provisions of any statute (o). The validity of the composition, however, will not be affected by a compulsory payment to a creditor under legal proceedings known to be pending at the time of the arrangement for composition (p). A creditor who has bargained for a secret advantage of this sort will be bound by a release contained in the deed, although it be void as against the other creditors (q). Indeed, it would (I) Jones V. Gordon, 2 App. Ca. 632 ; 47 L. J. B. 1 : Re Aylmer, 70 L. T. 244. (m) Dauglish v. Tennant, L. E. 2 Q. B. 49; 36 L. J. Q. B. 10; Ex p. Milner, infra. ; McDermott v. Boyd, 1894, 3 Ch. 365 : 64 L. J. Ch. 13. (n) Re Lenzberg's Policy, 7 C. D. 650; 47 L. J. Ch. 178. (o) Ex p. Milner, 15 Q. B. D. 605; 54 L. J. Q. B. 425. (p) Carey v. Barrett, 4 C. P. D. 379. (q) Ex p. Oliver, 4 De G. & Sm. 354; Ex p. Phillips, 36 W. R. 567. FRAUD UPON CREDITORS. 263 seem that a creditor who has practised a fraud of this sort on the other creditors will not, if the composition is not paid and the debtor becomes bankrupt, be allowed to prove under the bankruptcy for either his original debt or the composition (r). The Bankruptcy Act, 1914, s. 35, preserves to a landlord. Bankruptcy in the event of the tenant's bankruptcy, the right of distress s. 35. for six months' rent of the demised premises (s). The clause applies to attornment clauses in a mortgage deed when there is nothing unreasonable in the deed itself, or in the rent reserved (t). But if from the terms of the particular deed, or from the amount of the rent fixed by the attornment clause, it can be concluded by the Court that the rent is not a real rent, but a mere sham, that the tenancy is not a real tenancy, but a mere sham, and that the attornment clause is a mere device to give the mortgagee a hold in the event of bankruptcy over the goods and chattels of the mortgagor, which would otherwise have been distributed among his general creditors, the attornment clause is invalid (u). An order of discharge will not release a bankrupt from any Debt incurred debt or liability incurred by means of fraud or fraudulent breach of trust to which he was a party, nor from any debt or liability whereof he obtained forbearance by any fraud of which he was a party (#). If property be granted to a man defeasible on his bank- Grant , , defeasible on ruptcy the grant is good, it made by a person other than the bankruptcy. bankrupt, and if the condition is express (y). But the law is clearly settled that no man possessed of property can reserve that property to himself, until he shall become bankrupt, and then provide that in the event of bankruptcy it shall pass to (r) Re Cross, 4 De G. & Sm. 364. (s) Bankruptcy Act, 1914, s. 35. it) lie Stockton Iron Furnace Co., 10 C. D. 335; 48 L. J. Ch. 417: Ex />. Voisey, 21 C. D. 452; 52 L. J. Ch. 121. See Ex p. Isherwood, 22 C. D. 885 ; 52 L. J. Ch. 370. (u) Ex p. .Jackson, 11 ('. I). 745. Bankruptcy Art,. l'.H4, s. 28. {y) Seymour v. Lucas. 29 L. •) . Ch. 841; 127 R. R. 66; Ex p. Eyre, II I. T. 922. 264 FRAUD UPON CREDITORS. another, and not to his creditors (~). A covenant or bond by a man to pay monies upon the contingency of his bankruptcy, even though given in consideration of marriage, is a fraud upon the bankrupt laws and cannot be upheld (a), except as tar as the value of the wife's fortune may extend (b). If the (din I can find a definite sum which can be appropriated as i lie wife's property, the covenant will to that extent be supported (c). The fortune of a wife may be settled on her husband till he shall become bankrupt or make a composition wit 1 ) his creditors, and then to her separate use (d), and a post-nuptial settlement by a husband of property coming to him in right of his wife, even though reversionary, is not made fraudulent by a clause making his life interest deter- minable on bankruptcy (c). Fraudulent The same policy of affording protection to the rights of creditors pervades the provisions of the statute 11 Geo. IV. and 1 Will. IV. c. 47, respecting fraudulent devises in fraud of creditors, which, in effect, enacted that an heir or devisee alienating the lands made the testator's debts his own debts to the extent of the value of the land so alienated. The creditors may by taking proceedings obtain payment out of the descended or devised real estates in the hands of the heir or devisee; but if such proceedings are not taken, the heir or devisee may alienate, and in the hands of the alienee, whether upon a common purchase or on a settlement, even with notice that there are debts unpaid, the land is not liable although the heir remains personally liable to the extent of the value of the land alienated (/). An equitable (z) Ex p. .lay, 14 C. D. 19; Mackintosh v. Pogose, 1895, 1 Ch. 505; 64 L. J. Ch. 274; Merry v. Pownall, 1898, 1 Ch. 306; 67 L. J. Ch. 162. (a) Higinbotham v. Holme, 19 Ves. 88; 12 R. R. 16; Higginson v. Kelly, 1 Ba. & Be. 255 ; 12 R. R. 28. (b) Higginson v. Kelly, supra; Lester v. Garland, 5 Sim. 205; 1 L. J. Ch. 185: 35 R. R. 146; Whitmore v. Mason, 2 J. & H. 204 ; 31 L. J. Ch. 433; 134 R. R. 190. (c) Ibid. dh Lester v. Garland, supra : Sharp v. Gosserat, 20 Beav. 470; 109 R. R. 502. (e) Re Holland, 1902, 2 Ch. 360; 71 L. J. Ch. 518; overruling Re Pearson, 3 C. D. 808. (/) Small v. Hedgely, 34 C. D. 379; 56 L. J. Ch. 360; Worthinqfon v. Abbott, 101 L. T. 895. ( (t.\ STB D( I' 1 V 1 . NOTICE. 265 tenant for life is a " devisee " within the meaning of the Act, and therefore a bond fii/r alienation by him before action brought will be protected (;/). It may be well to mention here another class of frauds on '-" K,iz - c - *• third parties which were formerly of some importance, though they are no longer so. Under the 27 Eliz. c 4, a mere volun- tary settlement or conveyance was deemed to be fraudulent against subsequent purchasers. This statute lias now been displaced by the Voluntary Conveyances Act, 1893 (56 & 57 Vict. c. 21), which enacts that no voluntary conveyance of land if made bond fide and without any fraudulent intent shall be deemed fraudulent within 27 Eliz. c. 4 by reason of any subsequent purchase for value or be defeated under that Act by a conveyance made upon any such purchase. There is therefore no longer any presumption of fraud in such cases and the onus is now on the person alleging fraud to prove it (h). SECTION II. CONSTRUCTIVE NOTICE. Another class of frauds upon third parties consists of cases where a man takes or purchases property with notice of the legal or equitable title of other persons to the same property, and seeks to defeat their just rights by appropriating the property to his own use. In equity notice affects the con- science. A man who takes or purchases property cannot protect himself against claims of which he has notice, to the same property. If a man acquiring property has at the time of the acquisition notice of an equity binding the person from whom he takes, in respect of the property, he is bound to the same extent and in the same manner by the same equity («'). in accordance with this principle t lie purchaser of property from a trustee, with notice of the trust, is himself a trustee for the same property (/.); the purchaser of property (gf) He Atkinson. L908, 2 Ch. 307; 77 L. J. Ch. 766. (In Moore v. Kelly, L918, I Ix. li. L69. (i) Taylor v. Stibbert, 2 Vee. Jr. 137; 2 R. R. 278. do Saunders v. Dehew, -i Wbvn. 271; Allen v. Knight, ~> Ba. 272; II Jur. 527; If, I,. J. Ch. 370; 71 R. R. LOO; Cory v. Eyre, I D. J. >v S. I I'.i ; L37 R. B 184; Mumford v. Stohwasser, Ik Eq. 556; 13 li. J. Ch, 694; Taylor v. London and County Bank, L901, 2 Ch. 231 : 70 b. J. Ch. 177. 266 CONSTRUCTIVE NOTICE. which the vendor has contracted to sell is, if he has notice of the contract, bound by the same equity by which the vendor whom he represents was bound (I) ; the purchaser of property with notice of an equitable lien for unpaid purchase- money (///), or of an equitable mortgage by deposit of deeds (n), is bound by the equity to which his vendor was liable; and the purchaser of land which the vendor has cove- nanted to use in a specified manner is, if he has notice of the covenant, bound by its terms (o) ; but of course the covenant must be binding in order to affect him, and he has the benefit of whatever would prevent the person entitled to the benefit of the covenant from insisting on it, e.g., material alterations in the property or acquiescence in breaches of the covenant (p). Actual notice. Notice is either actual or constructive; but there is no difference between them in its consequences (q). Actual notice consists in express information of a fact, and brings home knowledge directly to a party (r). Actual notice must, in order to be binding, at least when it depends on oral com- munication only, proceed from someone interested in the property (s), and should be in the same transaction. Actual notice embraces all degrees and grades of evidence, from the most direct and positive proof to the slightest evidence from which a jury would be warranted in inferring notice. It is a mere question of fact, and is open to every species of legiti- mate evidence which may tend to strengthen or impair the conclusion (t). If there be knowledge the case of constructive (I) Taylor v. Stibbert, supra; Scott v. Dunbar, 1 Moll. 442; Manchester Ship ' eneral Steam Navigation Co. v. Bolt, 6 C. B. N. S. 550; 120 R. R. 264. (g) Davis v. Hutchings, 1907, 1 Ch. 356; 76 L. J. Ch. 272. (h) Knight v. Bowyer, 2 D. & J. 450; 27 L. J. Ch. 521. CONSTRUCTIVE NOTICE. 269 have exactly the same knowledge, and will be liable to the same extent, as if he had employed a solicitor (/). If mere want of caution, as distinguished from gross and culpable negligence, is all that can be imputed to a man, the doctrine of constructive notice will not apply (k). The doctrine does not go to the extent of fixing a man with such knowledge as he might by the exercise of extreme and extra- ordinary caution have obtained. A man is in no case bound to use every exertion to obtain information. The want, indeed, of that caution which a wary and prudent man might, and probably would have adopted, is not such negligence as will affix a party with notice of what he might have ascer- tained (/). A purchaser is not bound to be suspicious (///). The means of knowledge by which a man will be affected with notice must be means of knowledge which are practically within reach, and of which a reasonable man or a man of ordinary prudence might have been expected to avail him- self ()>). In the words of the Conveyancing Act, 1882, he will not be prejudicially affected by notice of any instrument, fact, or thing unless it would have come to his knowledge, if such inquiries and inspections had been made as ought reasonably to have been made by him (/>). Mere suspicion, or vague and indeterminate rumour is not sufficient to put a man upon inquiry (p). There must be a reasonable certainty as to time, (t) Kennedy v. Green, 3 M. & K. 699; 41 R. R. 176; Harrison v. Curst, 6 I). M. & G. 428; 8 H. L. C. 481; 25 L. J. Cli. 544; 106 R. R, 129. (/«) Jones v. Smith, supra; West v. Reid, 2 Ha. 249, 259: supra; Ware v. Egmont, 4 D. M. & G. 460; 24 L. J. Ch. 361 ; 102 R. R. 215 ; Wilson v. Hart, 2H. & M. 551; 144 R. R. 265 (I) Jones v. Smith, supra; West v. Reid, supra: Ware v. Egmont, supra : Hunter v. Walters, 7 Ch. 84; 41 L. J. Ch. 175; Redgrave v. Hard, 20 C. D. I : 51 I.. J. Ch. 113. m) Huilei) v. Barnes, L894, 1 Ch. 25, 36; 63 L. .1. Ch. 73. (n) Broadbent v. Barlow, 3 I). V. A J. 570; 30 L. J. Ch. 569; 130 R. R. 256; Itt.-Gen. v. Biphosphated Guano Co., ll C. IX 337; 49 I.. J. Ch. 68; Jones v. Rimmer, 11 ('. I). 589; 19 L. .). Ch. 775; Henderson v. Comptoir d'Escompte de Paris. L. R. 5 P. ('. 262; 42 L. J. P. C. 60. It is the duty of a purchaser l j marriage to make inquiries just as much as it is tin- dutj < Jones v. Williams, 24 Beav. 47; 116 R. R. 25. (*) Williams v. W., 17 C. D. 443; English J Scottish, dc, Co. v. Brunton, L892, 2 Q. B. 709; 62 L. J. Ch. 136. (h 14 C. D. 588, 590; 49 L. J. Ch. 775. («) Parker v. White, 1 H. & M. 167 ; 32 L. J. Ch. 520; 136 R. R. 73; Clements v. Welles, 1 Eq. 200; 35 L. J. Ch. 265; Fielden v. Slater, 7 Eq. 523; 38 L. J. Ch. 379; Patman v. Harland, 17 C. D. 353; 50 L. J. Ch. 642. (x) Ibid. ; Imray v. Oakshette, 1897, 2 Q. B. 218; 66 r,. J. Q. B. 511. (>)) Infra, a. ((j). K.F. 18 271 CONSTRUCTIVE NOTICE. docs not affect the title (z), nor is it a misrepresentation, although the value of the premises mav he lessened by such covenants (a). In a case where the conditions of sale were silent as to the nature of the covenants, and required that the purchaser should covenant witli the vendor for the. per- formance of the covenants and conditions in the lease, a covenant in the lease against carrying on certain specified trades, " or any other noisome or offensive trade," was held to he no objection to the title (6). A man who wishes to protect himself against unusual or particular covenants should before purchasing inquire into the covenants and stipulations of the original lease, so as to know precisely the terms on which the property is held (c). If there be no misrepresentation by the vendor, the purchaser is bound by the contents of the lease (d), but if there be mis- representation so that the acuteness and industry of the pur- chaser are set to sleep, and he is induced to believe the contrary of what is the real state of the case, the vendor is in such case bound by the misrepresentation (e). If, for instance, the terms of a particular covenant turn out to be of a much more stringent description than they were represented to be, there is fraud (/). Though notice of a lease is notice of its contents, a pur- chaser is not so affected with notice of onerous covenants as to be bound to complete unless he has had an opportunity of ascertaining the terms of such covenants; and the Court may decline to grant specific performance of a lease containing covenants of an unusual nature, if the person against whom the relief is sought had no reasonable means of inspecting tin (2) Pope v. Garland, 4 Y. & C. 394; 10 L. J. Ex. Eq. 13: 54 E. R. 492: but Re White and Smith, infra. (a) Spunner v. Walsh, 10 Ir. Eq. 386; 11 Ir. Eq. 508. (b) Grosvenor v. Green, '28 L. J. Ch. 173; Thorneicell v. Johnson, 50 L. J. Ch. 661; Patman v. Harland, supra. (c) Pope v. Garland, supra; Martin v. Cotter, 3 J. & L. 506; 72 B, E, 100; II ilson v. Hart, 1 Ch. 463. (d) Pope v. Garland, supra: Wilson v. Hart, 1 Ch. 463; 144 R. E, 265. (e) Pope v. Garland, supra. (f) Flight v. Booth, I Bing. N. C. 377: 41 E. E. 599; Van v. Corpe, 3 M. & K. 269; supra, p. 63. CONSTRUCTIVE NOTICE. 275 original lease, or knowing its contents (g). If the vendor does not give the purchaser express notice of the covenants, he must, in order to affect him with notice, show that he gave him an opportunity of acquainting himself with the terms of the lease (h). Where, therefore, on a sale of leaseholds by auction the particulars of sale omitted to state onerous cove- nants and gave no notice that the lease might be inspected, the purchaser was not affected with constructive notice and was not bound to complete (i) and was entitled to a return of his deposit (k). If, however, he has had reasonable means of inspecting the lease, specific performance will be decreed (/), although he may have intended to apply the property to a purpose which, as it turned out, was prohibited (ra). It is immaterial in such case whether or not the vendor knew of the purchaser's intention (n). So, also, and upon the same principle, where a man is of Notice that a right in possession of corporeal hereditaments, he is entitled Session of to impute knowledge of that possession to all who deal for auv lll " d is no . tice . •'of his equities interest in the property, and persons so dealing cannot be therein and heard to deny notice of the title under which the possession is held (o). The rule may be stated thus: (1) a tenant's occupation is notice of all that tenant's rights, but not of his lessor's title or rights; and (2) actual knowledge that the rents are paid by the tenants to some person whose receipt is inconsistent with the title of the vendor is notice of such person's rights. But the payment in the latter case must be actually inconsistent; and payment therefore to a house agent puts the purchaser to no inquiry and fixes him with no (gf) Hyde V. Warden, 3 Ex. D. p. 80; 47 L. J. Ex. 121; Reeve v. Berridye, 20 C^. B. D. 523; 57 L. J. Q. B. 265; He Davis and Cavey, 40 C. D. 601; 58 L J. Ch. 153; Re Haedicke and Lipski, 1903, 2 Ch. 666; 70 L. J. Ch. 811. (h) Molyneux v. Hawtrey, 1903, 2 K. B. 487; 72 L. J. K. B. 873. (i) Be White and Smith, 1896, 1 Ch. 637; 65 L. J. Ch. 481. (ft) Hone v. Gakstatter, 53 Sol. Jo. 286. U, Smith v. Capron, 7 Ha. 191; 82 R. R. 60; Flood v Pritchard, 40 L. T 873. (m) Morley v. Clavering, 29 Beav. 84; L31 R. R. 468. Ibid.; Fry, Spec. Perf. L99. (o) Jones v. Smith, 1 Ha. 60; 12 L. J. Ch. 881; 58 R. R. 22; Holmes v. Pou < II, 8 D. M. & G. 580 ; 114 R. R. 255 276 CONSTRUCTIVE NOTICE. notice (/;). Xotice, accordingly, that the rents are received by A. is notice of A.'s title and of the instrument under which he claims ( (x) Cavander v. Bulteel, supra. (y) Ibid. iz) 2 Ves. Jr. 437. (a) Daniels v. Davison, 10 Ves. 249; 17 Ves. 133; in R. R. 171; [lien v. Inthony, 1 Mer. 282; 15 R. 11. 113. (b) Barnhart v. Greenshields , 9 Moo. P. C. 32; 105 R. H. 1: Knighi v. Bowyer, 2 D. k J. 150; 27 L. J. Ch. 521 ; Hunt v. Luck, L901, 1 Ch. 15; L902, 1 Ch. 128; 71 L. J. Ch. 239. (c) Daniels v. Davison, supra; Crofton v. Ormsby, 2 Sch. & Lei. 683; U R. R. !07; Wilbraham v. btvesey, L8 Beav. 206; 104 R. R, 434. (d) Hervey v. 8mith, 1 K. k J. 389; 22 Beav. 299; 103 R. R. 141; but see Bug. V. & P. 765; Allen v. Beckham, post, p. 286. 278 CONSTRUCTIVE NOTICE. which it was devoted, lie was held hound by the right of burial, temporary or in perpetuity, granted by his mortgagor when left in possession (e). Notice, however, of a past tenancy is not notice of the tenant's equitable interests (/), nor when the vendor is himself the tenant, and has acknowledged payment of the purchase- money both in the body of the conveyance and by the usual endorsed receipt, is the tenancy notice of his lien for any part thereof which may in fact remain unpaid (g). Nor is notice of a tenancy necessarily notice of the tenant's equities as between vendor and purchaser (h). The doctrine laid down in Daniels v. Davison does not apply while the matter rests in contract (i). A man who has notice of the occupation of a tenant is not bound to go to the tenant and inquire what is the nature of his tenancy (k). There are some dicta in James v. Litchfield (/) which go nearly to that extent, and which support the notion that the doctrine of Daniels v. Davison applies as between vendor and purchaser, and whilst the matter still rests in contract. The doctrine in question refers to equities between the purchaser and the tenant when the legal estate has passed and has nothing to do with the rights and liabilities of vendors and purchasers between themselves. If there is anything in the nature of the tenancies which affects the property sold, the vendor is bound to tell the purchaser and let him know what it is which is being sold (in). Nor is notice of a tenancy constructive notice of the lessor's title (n). Nor will a bond fide purchaser, otherwise without notice, be affected by the mere circumstance of the vendor having been out of possession for many years. (e) Moreland v. Richardson, 22 Beav. 596; 25 L. J. Ch. 883; 111 E. E. 501. (/) Miles v. Langley, 1 E. & M. 39 ; 2 E, & M. 626 ; 32 E. E. 131. (g) White v. Wakefield, 7 Sim. 401; 4 L. J. Ch. 195; 40 E. E. 163; Hunt v. Luck, 1901, 1 Ch. 45; 1902, 1 Ch. 428; 71 L. J. Ch. 239. (h) Nelthorpe v. Holgate, 1 Coll. 203; 66 E, E. 46. (*") Caballero v. Henty, 9 Ch. 447 ; 42 L. J. Ch. 635. (k) Ibid. (I) 9 Eq. 54. (m) Caballero v. Henty, supra. (n) Bamhart v. Greenshields , 9 Moo. P. C. 34; 105 E. E. 1; Hunt v. Luck, ^itpra. CONSTRUCTIVE NOTICE. I?79 A purchaser neglecting; to inquire into the title of the occupier is not affected by any other equities than those which such occupier may insist on. If a person equitably entitled to an r-i ate lets it to a tenant who takes possession, and then the person having the legal estate sells to a person who purchases bond fide and without notice of the equitable claim, the pur- chaser will hold against the equitable owner, although he had notice of the tenant being in possession (o). In all cases the possession relied on has been the actual occupation of the land, and the equity sought to be enforced has been on behalf of the party so in possession (p). But it must be remembered that by the party in occupation is meant, not merely the person who by himself and his labourers tills the ground, but the person who is known to receive the rents from the person in occupation (q). So also notice of the legal estate being out- standing is notice of the trusts on which it is held (/■); and notice that the title deeds are in the possession of a third ] tarty other than a solicitor is notice of any charge he has upon the property (s), but is not notice of a fraud committed by him (t). So, also, and upon the same principle, a person has been Person held held to be affected with notice of a fraud affecting a deed, and of facts which which the unusual manner in which it was executed ought to haveki have suggested to his solicitor (u). So also a lessee, or a sub- lessee, has notice of the title of his lessor, and the mere fact that he is precluded by the terms of the contract or by the Vendor and Purchaser Act, 1874, s. 2, from calling for the lessor's title will not exempt him from the consequences of notice (./•'). So a purchaser taking less than a forty years' title (o) Oxwith v. Plummer, 2 Vera. 636; Barnhari v. Greenshields , supra. \j!j Barnhari x. Greenshields, ibid. (q) Knight v. Bowyer, 23 Beav. 609, 640, 641 ; 2 I). & .). 421; '27 I,. J. Ch. 521; L19 It. R. L84. U) Awm.. 2 Freem. 137. («) Maxfield v. Burton, 17 Eq. I*: 18 I.. .1. Ch. 46; Lloyd's />'. p. 13; 51 L. .1. Ch. 113. (e) Wason v. Wareing, l". Beav. LSI ; 92 H. H. 357. (/) Iiainbrigge v. Moss, 3 Jur. N. B. 58. 284 (OXSTIU'CTTVE NOTICE. ]f a man has notice thai property is affected, he is fixed with notice as to the nature of the charge, and canno! rely on tin rmation given to him o its nature. Doctrine of notice does not extend to instruments or circum- stances which may only by possibility affect pro- perty. A man who in dealing for property is told of anything as affecting the property, though incorrectly, cannot rely on what is told him, but is hound to make further inquiry and to ascer- tain the exact truth (g). If he knows that another has or claims an interest in the property, he, in dealing for that property, is bound to inquire what that interest is, although it may be inaccurately described (h). If he is told or has notice that a certain instrument affects the property in question in some particular respect, he will be fixed with notice of its provisions if it should turn out to affect the property in other respects also (i). But if a man has notice that there is a deed or document and at the same time has notice that it does not affect the property, he is put so completely off his guard that the Court will not treat him as fixed with knowledge of the document or the effect of it (/»•). This rule, however, only applies where a person might get a complete chain of title without any notice of the document. A purchaser or lessee who has notice of a deed forming part of the chain of title of his vendor or lessor is not protected from the consequences of not looking at the deed even by the most express representa- t ions of the vendor or lessor that it contains no restrictive covenants nor anything affecting the title (/), and notwith- standing that he is precluded by his contract from making inquiry (m). Though a man, who has actual notice that the property in respect of which he is dealing is in fact affected by a particular instrument, is bound to examine that instrument, he is not bound to examine instruments which are not directly or pre- sumptively connected with the title to the property in (g) Wilson v. Hart, 1 Ch. 463; 144 E. E. 265; Jones v. Smith, supra. Comp. Re Bright's Trust, 21 Beav. 430; 25 L. J. Ch. 449; 111 E. B, 152. (h) Gibson v. Ingo, 6 Ha. 112, 124; 77 E. E. 44. (i) Taylor v. Baker, 5 Pri. 306; 19 E. E. 625; Jackson v. Rome, 2 Sim. & St. 175 ; 4 L. J. Ch. 119; 25 E. E. 250; Farrow v. Rees, 4 Beav. 18; 55 E. E, 1; Mitchell v. Steward, 35 L. J. Ch. 393. See Jones v. Smith, supra; Davis v. Hutchings, 1907, 1 Ch. 356; 76 L. J. Ch. 272; 84 E. E. 30; and see Penny v. Watts, 1 Mac. & G. 150; which, however, is considered to carry the principle too far; Sug. V. & P. 766. (A:) Williams v. Williams, 17 C. D. 443. (1) Pat wan v. Harland, 17 C. D. 353; 50 L. J. Ch. 642. Cm) Ibid. : Re Morgan. Pillgrem v. P., 18 C. D. 93; 50 L. J. Ch. 834. CONSTRUCTIVE NOTICE. 285 question, merely because he knows that they exist and may by possibility affect it. If an instrument does not necessarily affect the title, but only may or may not do so according to circumstances, the omission to examine it will not fix a party with gross negligence, if there is no reason to suppose that he may have acted otherwise than fairly in the transaction (//). Xor is notice that certain circumstances exist which may by possibility affect the property in dispute sufficient to put a man upon inquiry, if he appear to have acted fairly in the transac- tion (o). A purchaser, for instance, will not be affected by an ambiguous recital (p), nor by the absence of an indorsed receipt (q), nor by circumstances inducing merely a suspicion of fraud (r) ; so notice of there being a change of solicitors who are professionally to represent a particular interest is not, in itself, notice of a change in the ownership of such interest (s) ; nor is the mere fact of a daughter, soon after coming of age, giving securities to a creditor of her father in payment of his debt of itself a ground for imputing to the creditor knowledge of undue influence having been exerted over her by her father (t). To affect the creditor with notice of undue influence it is not enough to show that he was aware of the reluctance of the daughter to concur in the security (u). A purchaser of lands with notice that the title deeds have been deposited with a bank as security for the general balance on the vendor's present and future accounts is not bound to inquire whether the bank has after notice of the purchase made fresh advances. The burden lies on the bank advancing (n) Jones v. Smith, supra; Ware v. Egmont, 4 D. M. & G. 460; 24 L. J. Ch. 361; 102 R. R. 215; Re Bright' s Trust, supra; Cox v. Coventon, 31 Beav. 37S; 135 R. R. 474; Perry v. Ho!!, 2 D. F. & J. 38; 129 R. R. 9; Patmau v. Harlan, I, .supra; English d Scottish, dc, Co. v. Brunton, 1892, 2 Q. B. 709. (o) Ibid. M'Queen v. Farquhar, 11 Ves. 482; 8 R. R. 212. Sec Dodds v. Hills, 2 H. &M. 426; 144 R. K. 210. (*; West v. Reid, 2 Ha. 249; 12 L. J. Ch. 215 ; 62 B. R. 98. it) Thornber v. Sheard, 12 Beav. 589; 85 R. R. L69. See Cobbett v. Brock . 20 Beav. 524; 109 K. R. 523; ante, p. 191 (u) Rhodes v. Cook, 4 L. J. Ch. 149 ; 2 Sim. & St. 488. 286 CONSTRUCTIVE NOTICE. on the security of the unpaid vendor's lien to give the pur- chaser notice that it has so done or intends so to do (#). The purchaser of property cannot be held to have con- structive notice of every agreement relating to any structure which he sees on the adjoining ground (y). Where, accord- ingly, disputes having arisen between the plaintiff and the owner of an adjoining tenement as to whether a! window in the plaintiff's house, overlooking the adjoining tenement, was an ancient window, an agreement, not under seal, was signed by which the owner of the adjoining tenement agreed that the plaintiff should have access of light to the window and the plaintiff agreed to keep the window opaque and make it open only in such a way that no person could look out of it, and the owner of the adjoining tenement afterwards sold the tenement to the defendant, who had no notice of the agree- ment, but knew of the existence of the window, it was held that the mere fact of there being windows in an adjoining house which overlooked a purchased property is not con- structive notice of any agreement giving a right to the access of light to them (z). But if a structure upon land is of such a nature that every reasonable man must know that it affects the property, a purchaser is put upon inquiry as to it and has constructive notice. In Norland v. Cook (a) the purchaser saw the property protected by a sea wall, and the Court con- sidered that every reasonable man under the circumstances must be taken to have known that the wall existed for the protection of the lands below the level of the sea, and that there must be some provision made for its maintenance and repair, and that therefore he was put upon inquiry. So if the condition of the property at the date of the contract is such as to suggest inquiry, the purchaser may be fixed with constructive notice of rights of way or other (x) London & County Banking Co. v. Ratcliffe, 6 App. Ca. 739, per Lord Blackburn; 51 L. J. Ch. 28. (y) Allen v. Seckham, 11 C. D. 790; 48 L. J. Ch. 611; cf. Att.-Gen. v. Biphosphated Co., 11 C. D. 327; 49 L. J. Ch. 68; Greenhalgh v. Brindley, 1901, 2 Ch. 324 ; 70 L. J. Ch. 740. (z) Allen v. Seckham, supra. (a) 6 Eq. 252; 37 L. J. Ch. 825. CONSTRUCTIVE NOTICE. 287 easements affecting it. Thus, where A. purchased from B. a house, part of an estate agreed to be let to B. on a building agreement, and the house was built partly over an archway leading to mews in the rear, but not then forming the only means of access thereto, it was held that A. had con- structive notice that when the building scheme was completed the road under the archway would be the only approach to the mews, and that a right of way, though not expressly reserved in the assignment to A., was reserved by implication (b). Nor is a man bound to examine a deed or document which Notice does not form part of the chain of title or does not necessarily distinct repre- from its very nature affect the property in question, if he is sen,a1 " told that it does not affect it, and he acts fairly in the trans- action, and believes the representation to be true (c). If a man has notice that there is a deed or document, and at the same time has notice that it is entirely worthless or does not affect the property, he is put so completely off his guard that the Court does not treat him as fixed with knowledge of the document or the effect of it (d). The effect, indeed, of what would otherwise be notice may be destroyed by misrepresenta- tion. A man to whom a particular and distinct representa- tion is made is entitled to rely on the representation, and need not make any further inquiry, although there are circum- stances in the case from which an inference inconsistent with the representation might be drawn, ami which independently of the representation would have been sufficient to put him upon inquiry (V), or although he is told (hat further informa- tion may be had on the matter by making inquiries from a particular person, or at a particular place (/). A man is entitled to rely on the representations of the vendor as to the contents of a i\vod, and is not bound 1o examine the deed (b) Davies v. Sear, 7 Eq. 427; 3H I,. .). Ch. 545. (c) English A Scottish., &c, Co. v. Brunton, L892, 2 Q. B. 709. (d) Williams v. W., 17 C. D. 443. id) Williams v. IV., 17 U. V. 4 1.. (e) Wilson v. Short, fi Ha. 366, 367 ; Cox v. Middleton, 2 Drew. 209; 38 L. J. Ch. 618; LOO R. R. 90; Potman v. Harland, 17 C. D. 353; 50 D. J. Ch. 642; ante, pp. 50, 284. (/) Redgrave v. Hurd, 20 C. D. p. L8; 51 l...l.. L13. Bee 1907, A. C. 851 A _j? < < 288 CONSTRUCTIVE NOTICE. itself (g). Misrepresentation is not got rid of by constructive notice (h). So, also, a man who purchases shares in a company on the faith of a prospectus may rely on the statements made therein, and is not bound to ascertain whether they are true (»). The mere fact that he may have attended a meeting of the company is not a sufficient ground for fixing him with notice of the falsity of the representations in the prospectus (ft). A similar rule has also been applied where a share certificate contains- a representation that it is fully paid up; the purchaser in that case need not inquire whether it has been fully paid up, and the onus lies on the company to prove (I). If a bond fide inquiry be made in the proper quarter and a reasonable answer be given, a man may rest satisfied with the information, and need not make any further inquiry (m). A man, for instance, who on the purchase of property bond fide inquires for the title deeds is not bound to make further inquiry, if a reasonable excuse is made for their not forth- coming (n). The omission of the solicitor of a legal mortgagee to require production of deeds when a reasonable excuse is given for their non-production is not of itself a sufficient ground to postpone the legal mortgagee to a prior equitable incumbrance (o), but it is not a reasonable excuse that the deeds relate to other property (p). So, also, if deeds are (g) M'Culloch v. Gregory, 1K4J. 286; 24 L. J. Ch. 246; 103 E. E. 86; Re Bright' s Trust, 21 Beav. 430; 25 L. J. Ch. 449; Cox v. Coventon, 31 Beav. 378; Ex parte Briggs, 1 Eq. 483; 35 L. J. Ch. 320 Williams v. W., 17 C. D. 443. (h) Jones v. Rimmer, 14 C. D. 588, 590; 49 L. J. Ch. 775. (t) Redgrave v. Kurd, 20 C. D., p. 13; 51 L. J. Ch. 113; cf. Peel's Case, 2 Ch. 674, 684 ; 36 L. J. Ch. 757 ; and see post, p. 300. (k) Stewart's Case, 1 Ch. 574; 35 L. J. Ch. 738. (I) Re Hall & Co., 37 C. D. 712 ; 57 L. J. Ch. 288. (m) Jones v. Smith, 1 Ha. 43; 12 L. J. Ch. 381; 58 E. E. 22; Bird v. Fox, 11 Ha. 47; Jones v. Williams, 24 Beav. 47; 116 E. E. 25; Dawson v. Prince, 2D. & J. 44; 27 L. J. Ch. 169; 119 E. B. 21; Espin V. Pemberton, 3 D. & J. 547 ; 28 L. J. Ch. 311 ; 121 E. E, 224. (n) Hewitt v. Loosemore, 9 Ha. 449 ; 21 L. J. Ch. 69; 89 E. E, 526; Espin v. Pemberton, supra; Agra Bank v. Barry, 7 E. & I. App. Ca. 149; cf. Manners v. Mew, 29 C. D. 725; 54 L. J. Ch. 909; ante, p. 140. (o) Ratcliff v. Barnard, 6 Ch. 654; 40 L. J. Ch. 777. (p) Oliver v. Hinton, 1899, 2 Ch. 264 ; 68 L. J. Ch. 583. CONSTRUCTIVE -NOTICE. 289 deposited with a man by the other party to the transaction, which purport or are represented to be all the material deeds relating to the estate, and he honestly believes the represen- tation to be true, he is not guilty of gross 1 negligence if he abstains from further inquiry on the subject (q). A mort- gagee cannot be said to have constructive notice of equities because non-essential requisitions are not pressed home (/•). In a case where an equitable mortgagee, with whom some of the title deeds of the mortgaged property, including the con- veyance to the mortgagor, were deposited, brought an action to establish his priority over a subsequent legal mortgagee whose solicitor had omitted to examine a parcel which was given to him previously to the execution of the mortgage deed and purported to contain all the title deeds but contained only the earlier deeds, it was held that there was not such wilful negligence on the part of the solicitor as to fix the legal mortgagee with constructive notice of the prior charge so as to entitle the equitable mortgagee to enforce in equity his priority over the legal mortgagee (.v). " A series of authorities,'' said Lord Selborne, in Dixon v. Muckleston (t), " have decided that when the Court is satisfied of the good faith of the person who has got a prior equitable charge, and is satisfied that there has been a positive state- ment, honestly believed, that he has got the necessary deeds, he is not bound to examine the deeds and is not bound by con- structive notice of their actual contents or of any deficiencies which by examination he might have discovered in them. This I take to be the law, even in cases where the depositor of the deeds is himself acting in the double character of borrower of the depositee's money and of solicitor for the depositee. In the cases of Hunt v. Elmes and Hewitt v. Loosemon the facts were of that character. In Hunt v. Elmes and Colyer v. Finch the deeds had never been looked at, but credit had (q) Roberta v. Croft, 2 D. liorell v. Dann, 2 Ha. 440. (e) Maxfield v. Burton, 17 Eq. 18; i:t I;. .). ch. 46; Rolland v. Hart, C, Ch. 680; h'rttlewell v. Watson, 21 C. D. 685; 26 C. D. 501; 53 h. J. Oh. 717. -mftieient. 2 ( J2 CONSTRUCTIVE NOTICE. agent (/). Notice to the agent is notice to the principal; for upon general principles of public policy it must be taken for granted that the principal has notice of whatever is communi- cated to his agent whilst acting as such in the transaction to which the communication relates, and is fixed with the knowledge of every fact material to the transaction which his agent or solicitor either knows or has imparted to him in the course of his employment, and which it was his duty to communicate, whether it be communicated or not (g). But the knowledge of an agent not acquired in the course of his employment cannot be imputed to the principal. Thus the maker of a false representation cannot protect himself by proving that the agent of the other knew of the untruth (/?). The presumption that a solicitor has communicated to his client facts which he ought to have made known to him cannot be rebutted by proof that it was the interest of the solicitor to keep back the facts (i). The rule that notice to an agent is notice to the principal applies to cases where the principal is an infant (/'). The notice which affects a jnincipal or client through his agent or solicitor is generally treated as constructive notice (Jc) ; but inasmuch as the principal or client is bound by the notice, whether it be communicated to him or not, and is not presumed to have the knowledge, merely because the circumstances of the case put him on inquiry, such notice may more properly be treated as actual notice, or if it is necessary to make a distinction between the knowledge which a man possesses himself and that which is known to (/) Toulmin v. Steere, 3 Mer. 224; 17 E. E. 67; Vane v. Vane, 8 Ch. 399; 42 L. J. Ch. 299. (g) Roddy v. Williams, 3 J. & L. 16; 72 E. E. 1 ; Espin v. Pemberton, 3 D. & J. 554; 28 L. J. Ch. 311; 121 E. E. 224; Wyllie v. Pollen, 3 D. J. & S. 601 ; 32 L. J. Ch. 782; 142 E. E. 180; Boursot v. Savage, 2 Eq. 134; 35 L. J. Ch. 627; Vane v. Vane, supra; Dixon v. Winch, 1900, 1 Ch. 736; 69 L. J. Ch. 465; Berwick v. Price, 1905, 1 Ch. 632; 74 L. J. Ch. 249. (h) Wells v. Smith, 1914, 3 K. B. 722; 83 L. J. K. B. 1614. (i) Bradley v. Rwhes, 9 C. D. 193. (?) Toulmin v. Steere, 3 Mer. 222 ; 17 E. E. 67. (fe) See Toulmin v. Steere, supra. CONSTRUCTIVE NOTICE. 293 his agent or solicitor, the latter may be called imputed knowledge (/). Notice to an agent, solicitor, or counsel should, in order to bind a principal or client, be notice in the same transaction. He is not bound unless, in the words of the Conveyancing Act, 1882, s. 3, " In the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, agent, or solicitor, as such, or would have come to the knowledge of his solicitor, or other agent, as such, if such inqiiiries and inspections had been made as ought reasonably to have been made by such solicitor or other agent " (m). In order that the knowledge of the solicitor may be imputed to the client it must be (1) in the same transaction, (2) the matter must come to his knowledge, and (3) must come to his knowledge as such (n). But it is declared by sub-sect. 2 of the same clause that the section shall not exempt a purchaser from any liability under, or any obliga- tion to perform or observe, any covenant, condition, provision, or restriction contained in any instrument under which his title is derived, either mediately or immediately; and such liability may be enforced in the same manner and to the same extent as if this section had not been enacted (o). The rule that notice to an agent or solicitor is notice to a principal or a client applies where the same solicitor or agent is employed by both parties to the transaction {/>), or is himself the vendor (q). But the effect of the Conveyancing Act, 1882, seems to be that the solicitor in such a case is to be treated as two persons, and the purchaser only to be affected [I) 3 D. & J. 554, per Lord Chelmsford. See Cave v. Cave, 15 C. D. 643 19 L.J. Ch. 505. (m) 45 & 46 Vict. c. 39, s. 3 (2). (n) Re Cousins, 31 C. D. 671 ; 55 L. J. Ch. 662. (o) Alms Com Charity, 1901, 2 Ch. 750; 71 L. J. Ch. 76. (//) he Neve v. he Neve, 3 Atk. 646; 2 Wh. & Tu. 32; Atlrrl>urii v. Wallis, H I). M. & G. 454; 25 L. J. Ch. 792; 114 R. R. 194; Spaight \. Cowne, I H. & M. 359; L36 R. K. L50; liour.^.t v. Savage, supra; Bradley v. Riches, '■> C. I' 193. ( M. & C. 670; 45 K. R. Hit; Robinson \. Briggs, 1 Bm. A- (\. L88; 96 R. R. 372. 294 CONSTRUCTIVE NOTICE. with notice of such facts as would or ought to have come to the knowledge of an independent solicitor (?•). But a solicitor who acts for both vendor and purchaser and fails to disclose material facts to the purchaser is not excused by reason of his being under a conflicting duty to the vendor (5). The mere circumstance, however, of there being only one solicitor in the business does not necessarily constitute him the solicitor of both parties so as to aifect both with notice. It does not follow that, if there be not a solicitor employed on both sides, the solicitor who does act is the solicitor of both parties. To have this effect there must be a consent to accept him as such, or something equivalent thereto (£). The mortgagee or purchaser may not desire to employ a solicitor, but if he knowingly constitute the relation of solicitor and client between himself and his vendor or between himself and the solicitor of the party with whom he is dealing, he will of course be affected with notice of any prior incumbrance of which the solicitor is cognizant (u), and although a purchaser is not necessarily to be held to have employed his vendor's solicitor because he employed no other, yet if he employs no solicitor he must be held to have exactly the same knowledge as if he had employed one (#). The rule that notice to a solicitor is notice to the client applies only as between parties dealing hostilely with each other (y). It is not every description of knowledge possessed by a solicitor employed in any particular transaction that can be treated as the actual knowledge of the client. All matters affecting the title to property, or the interests of other persons in connexion with it, all circumstances which would entitle (r) Re Cousins, 31 C. D. 671, 677 ; 55 L. J. Ch. 662. (s) Moody v. Cox, 1917, 2 Ch. 71; 86 L. J. Ch. 424. (t) Espin v. Pemberton, 4 Drew. 333; 3 D. & J. 547; 28 L. J. Ch. 311; 121 R. R. 224; Wythes v. Labouchere. 3 D. & J. 594; 121 R. R, 238; Lloyd v. Att- wood, ibid. 614; 29 L. J. Ch. 97; 121 R. R. 252; Perry v. Holl, 2 D. F. & J. 38; 129 R. R. 9. (u) Espin v. Pemberton, supra; Kettlewell v. Watson. 21 C. D. 685; 26 C. D. 501; 53 L. J. Ch. 717. (x) Atterbury v. Wallis, infra, per Lord Romilly. (y) Austin v. Tawney, 2 Ch. 143; 36 L. J. Ch. 339. TJOHN R. GREEN ?Uirrt8trr 398-208 BELMONT 3UILD ,,M G VICTORIA, 1 CONSTRUCTIVE NOTICE. 295 parties to equitable priorities, or change the character of rights, which depend upon want of notice, known to the solicitor, have the same effect as if actually known to the client. But this imputed knowledge will not extend to matters which have no reference to rights created or affected by the transaction, but which merely relate to the motives and objects of the parties, or to the consideration upon which the matter is founded (z). Nor does the employment of a solicitor to do a mere ministerial act, such as the procuring the execution of a deed or preparing a conveyance, so con- stitute him an agent as to affect his employer with notice of matters within his knowledge («). The rule that notice to a solicitor is notice to the client does not apply to a case where trustees and executors are in possession of a fund, and notice of a mortgage or charge on the fund is given to the solicitor employed by them in the matter. Such notice is not sufficient to create a privity and to make the trustees or executors liable to the same consequences as if notice had been given to them personally (6). The rule that notice to a solicitor is notice to the client has been held to apply notwithstanding that the solicitor may be perpetrating a fraud upon the client (c). But in Kennedy v. Green (d) Lord Brougham held that a client is not to be affected with notice of a prior fraud committed by the solicitor, which the latter would of course conceal. A dis- tinction was, however, subsequently made between cases where there was fraud independently of the question whether the act which had been done was made known or not, and cases where the question of fraud depended wholly upon whether the act had been made known or not (e) ; and in the latter class of cases it was considered that the client had (z) Per Lord Chelmsford, 10 H. L. C. 114. (o) Wyllie v. Pollen, :< I). J. & S. 601; 32 L. J. Ch. 782; 142 R. R. 180; Krttlewell v. Watson, 21 C. D. 085; 26 C. D. 501; 58 L. J. Ch. 717 (b) Saffron W aid en. dc., Society v. liayner, 14 C. D. 406; 49 L. J. Ch. 4(55. (c) Dixon v. Winch, 1900, 1 Ch. 736; 69 L. .1. Ch. 465. (dj 3 \1. & K. 699; 41 K. R. 176. Bee Green v. Fletcher. 8 N. S. W. It. Eq. 58. (e) Hewitt v. Loosemore, ( .) Ba. 149; '-'1 L. J. Ch. 69; 89 R. R. 626; Attrr- bury v. Wallis, infra. 296 CONSTRUCTIVE NOTICE. constructive notice. In Atterbury v. Wallis (/), for instance, where a solicitor took a mortgage of an equity of redemption which he sub-mortgaged, and afterwards joined with the first mortgagee and the mortgagor in a new mortgage of the property, acting as the solicitor of all parties to the transac- tion, but not disclosing the existence of the sub-mortgage, it was held that the new mortgagee was affected with the solicitor's knowledge, and his security was to that extent displaced. So also in Rolland v. Hart (g), where a solicitor on behalf of A., one of his clients, procured from B., another client, an advance on a mortgage of land in Middlesex, and then, concealing the incumbrance, induced C, also a client, to lend money on mortgage of the same estate, and C.'s security was the first registered, it was held that the case did not fall within the principle of Kennedy v. Green, and that C, having notice through the solicitor of B.'s mort- gage, could not gain priority over it by registration. So also in Boursot v. Savage (h), where a purchaser employed one of three fiduciary vendors as his solicitor in the transaction, he was fixed with constructive notice of the trust. 'The fact," said Kindersley, V.-C, " that the solicitor may be committing a fraud in relation to a transaction in which he is employed, cannot afford any reason why the client should not be affected with constructive knowledge of the facts. The constructive knowledge of all the facts must be imputed to him whether there is fraud relating to the transaction or not. It is the existence of the trust, and not of the fraud, of which he is held to have constructive notice. The constructive notice of the trust must be imputed to him whether there is fraud relating to it or not." So also in a case where the plaintiff jointly with his solicitor contributed money on loan on a deposit of deeds, and the solicitor subsequently took a mort- gage to himself and deposited the deeds with a bank as security for moneys advanced to him, it was held that notice of the plaintiff's advance must be imputed to the bank (i). (/) 8 D. M. & G. 466 ; 25 L. J. Ch. 792 ; 114 R. R. 194. (g) 6 Ch. 678. (h) 2 Eq. 134; 35 L. J. Ch. 627. (i) Bradley v. Riches, 9 C. D. 193. CONSTRUCTIVE NOTICE. " Where," said Mr. Justice Fry (/. I, " iliere is an interest and a duty, the Court will not presume that the solicitor will follow his interest and not his duty. If, moreover, the circumstances of the case are looked to, the suggestion that the transaction would have failed if the solicitor had made known to the bank the advance of the plaintiff does not arise. The mortgage was taken by the bank as the best thing it could get." The tendency of later decisions and of the Conveyancing Act, however, has been in favour of the doctrine that when a man employs a solicitor, whose whole purpose and meaning in the transaction is to cheat and defraud his client, and who in furtherance of this intention keeps back purposely from his knowledge the true state of the case, the presumption is con- clusively repelled that the client has imputed or constructive notice through the solicitor of the fact which has been con- cealed from him (I). " This exception," said Mr. Justice Fry, in Cave v. Cave (/»), "has been put in two ways. In the one view notice is not imputed, because the circumstances are such as not raise the conclusion of law which does ordinarily arise from the mere existence of notice to the agent; in the other view, the act done by him in his character of agent is such as cannot be said to be done by him in his character of agent, but is done by him in the character of a party to an independent fraud on his principal, and thai is not to be imputed to the principal as an act done by his agent." " The presumption from duty,'* said further Mr. Justice Fry, in Kettlewell v. Watson (n), " in the agents may be repelled by showing that whilst he was acting as agent, he was also acting in another character, namely, as a party to a scheme or design OJ trail. I, and thai the knowledge he attained was attained l.\ (ft) [bid. (I) Espin v. Pemberton, :* D. a J. 547; 28 l>. J. Ch. 311: Thompson v. Cartwright, 33 Beav. is."-: 2 I). -I. & S. 1": 33 \>. J. Ch. 324; Hopgood v. Ernest, 3 I). J. & S. 116; 142 R. I;. 36; Waldy \. ('■ray. 20 Eq. 251 ; 44 1,. .1. Ch. 394; Jones v. Bygott, It L. J. Ch. 487; Banfather's Claim, 16 C D. 178; :„> h. .1. Ch. 218; Kettlewell \. Watson '21 ('. D. 685; 26 C. D. 501; 53 1-. .1. i|i. 717; hut wee Dixon v. Winch, infra. (m) 15 C. 1). ''.It : t'.i I.. -I Ch. 505. in) 21 C. D. 707; 20 ('. D. 501. 29. 298 CONSTRUCTIVE NOTICE. him in the latter character, and therefore there would be no ground to assume that the duty of the agent was performed by a person who filled that double character." Where, however, a client mortgaged land to his solicitor, who shortly afterwards transferred the mortgage to a trans- feree who gave no notice of the transfer to the mortgagor, and afterwards the solicitor and mortgagor, who put himself entirely in the hands of the solicitor, conveyed the land to the plaintiff by a deed containing a recital that it was free from incumbrances, and the proceeds of sale were received by the solicitor, who retained the mortgage debt out of them, it was held that the mortgagor, having placed himself entirely in the hands of his solicitor, must have imputed to him the know- ledge which the solicitor actually had (o). Where a mortgagee who was also solicitor deposited the deeds with his bankers as security and the bankers gave no notice to the mortgagor, and subsequently the mortgagor and mortgagee joined in a further mortgage to S. and the mortgagee acted throughout as solicitor for all parties ' without disclosing the existence of the mortgage to the bank, it was held that S. was affected with constructive notice of the bank's mortgage, and therefore the bank had priority over S., but that the mortgagor, not having placed himself entirely in the hands of the solicitor, had no such notice (p). It would seem that the test whether the imputation be excluded by the fraud of the solicitor is whether the fraud is such as to exclude the doctrine of agency. The same considerations apply where one solicitor is employed by both parties to a transaction, and the evidence establishes the fact that the solicitor has entered into a conspiracy with one client to defraud the other (q). Nor is notice to a solicitor notice to a client where the person giving the information knows or has good reason to believe that it will not be communicated to the client (r). (o) Dixon v. Winch, 1900, 1 Ch. 736; 69 L. J. Ch. 465; cf. Turner v. Smith, 1901, 1 Ch. 213; 70 L. J. Ch. 144. (p) Berwick d Co. v. Price, 1905, 1 Ch. 632; 74 L. J. Ch. 249. (q) Sharpe v. Foy, 4 Ch. 35. (r) Ibid. CONSTRUCTIVE NOTICE. 299 Though a client by reason of the fraud of a solicitor be not affected with notice through the fraud of the solicitor, he may be affected by his negligence (5). In determining the equities between parties who have been defrauded by a common solicitor, the Court looks to see whether there has been anything in the transaction calculated to put either of the parties upon inquiry. If there be any- thing in the case calculated to excite suspicion or to put either of the parties upon inquiry, and he abstains from inquiry, the same knowledge will be imputed to him as he would have been affected with, had he employed an independent solicitor (t). Notice to one partner in a partnership matter during the Notice to , partner. continuance of the partnership is notice to the other partners (u). A partner, however, is not necessarily fixed with notice of the contents of his own books (w). Nor is the knowledge of a fraud by one partner necessarily the know- ledge of the firm (#). A partner is entitled to rely on the good faith of his co-partners (y). The rule that notice to one partner is notice to the other Notice to directors or partners does not apply to the case of corporations or shareholders companies. Notice to a director does not necessarily affect the company (z) ; and knowledge by directors of fraud does not amount to notice to the company (a) ; but notice to one of the persons legally intrusted with the proper business to which the notice relates, or who has authority to act for the corpora- tion in the particular matter in regard to which the notice is (*) Hopgood v. Ernest, 3 D. J. & 8. 116; 142 R. R, 36; Kettlewell v. Wat- son, 21 C. D. 685, 708; 53 h- J. Ch. 717. (t) Kennedy v. Green, 3 M. & K. 699; 41 L. J. Ch. 176; Frail v. BIIw, 16 Beav. 357; 22 L. J. Ch. 467; 96 R. R. 168; Atterbury v. Wallis, 25 L. J. Ch. 794; 114 R. R. 194; Perry v. Holl, 2 D. F. & J. 38; 129 H. R. 9; Taylor \. London and County Bank, 1901, 2 Ch. 231; 70 L. J. Cb. 477; Davis v. Hatch- ings, 1907, 1 Ch. 356; 76 L. J. Ch. 272. tu) Atkinson v. Mackreth, 2 Eq. 570; 35 L. J. Ch. 624. See Williamson v. Barbour, 9 C. D. 535; 50 L. J. Ch. 147. 1 See Stewart's Case, 1 Ch. 574; 35 L. J. Ch. 738. (a:) Williamson v. Barbour, supra, per JcshcI, M.H. (y) Betjemann v. B., 1895, 2 Ch. 474; 64 L. J. Ch. 641. (z) Re Carew's Estate, 31 Beav. 45. (a) MonUjomerie Co. v. Blyth, -21 V. L. K L75. of a company. 300 CONSTRICTIVE NOTICE. given, will bind the corporation (6). Where one person is a director or officer of two companies his personal knowledge is not the knowledge of both the companies, unless he is under some duty to communicate it, and if he has been guilty of fraud the Court will not infer that he has fulfilled that duty (c). So notice to a company through a sole director will not be imputed if it necessarily involved disclosure by the director of his own fraud (d). Casual notice brought home to the secretary, not as secretary but as an individual, is not notice to the company (e). There is no presumption of law that a director has notice of everything that may be discovered from entries in the books of the company (/). A shareholder is not necessarily fixed with a knowledge of the contents of the memorandum or articles of association of the company (g). But he must, within a reasonable time after the registration of the memorandum and articles of association, be presumed to acquaint himself with their contents. After the lapse of a reasonable time he cannot be heard to say that he had no knowledge of their contents (h). But now under the Companies Act, 1900, s. 10, re-enacted by the Companies Act, 1908, s. 81, the memorandum must appear in the prospectus. The shareholders in a company are not bound to look into the management, and will not be held bound to have notice of everything which has been done by the directors, who may be assumed by the shareholders to have done their duty (i). (b) Worcester Corn Exchange Co., 3 D. M. & G. 183; 22 L. J. Ch. 593; 98 R. R. 98; Re Carew's Estate, 31 Beav. 45. (c) Hampshire Land Co., 1896, 2 Ch. 743; Re Fenwick, Stobart & Co., 190-2, 1 Ch. 507 ; 71 L. J. Ch. 321. (d) Re European Bank, 5 Ch. 358; 39 L. J. Ch. 588. •(e) Societe Generale v. Tramicays Union., 14 Q. B. D. 424. 438; 54 L. J. Q. B. 177. (/) Hallmark's Case, 9 C. D. 329; 47 L. J. Ch. 868; Denham & Co., 25 C. D. 752; 53 L. J. Ch. 1113. See 1894, 1 Ch., at p. 534. (g) Stewart's Case, 1 Ch. 574; 35 L. J. Ch. 738. (h) Wilkinson's Case, Re Madrid Bank, 2 Ch. 536, 540; 36 L. J. Ch. 489; Buckley, 96. (t) L. R. 3 H. L., at p. 276; Stanhope's Case, 1 Ch. 161, 170: 35 L. J. Ch. 296. CONSTRUCTIVE NOTICE. 301 assurance. Notice to one of several trustees is, as a general rule, notice Notice to . . trustees. to all (k), but not where the trustee to whom alone notice is u-iven has an interest adverse to that of his co-trustee, as, e.g., where he has a beneficial interest which he has secretly incumbered (I). Where one only of several trustees has notice and dies, a subsequent assignee who gives notice to the then existing trustees is entitled to priority (in). But a trustee will not be affected with notice of a prior charge which the other trustee has fraudulently concealed if such interest would not have been disclosed to an independent solicitor making proper inquiries (n). The res-istration of an assurance is not of itself notice. A Registration ° .of an assur- prior equitable incumbrance will not, although registered, a nce is not affect a subsequent purchaser without notice who has obtained the legal estate (o). Registration is no protection against an unregistered Registration •"> r ° . with notice of assurance of which the party claiming under the registered unregistered instrument had notice prior to the completion of his purchase or security (/>). The object of the Registration Acts being to give notice, the evils against which those statutes intended to guard do not exist where a man has notice independently of the reffistrv. If, therefore, a man has notice of an earlier deed, which though executed is not registered, the registration which he actually effects will not give him priority over the earlier deed (q). The notice must, however, amount to actual (fe) Low v. Bouverie, 1891, 3 C'li. 82; 60 L. 3. Ch. 594; Ward v. Duncombe, L893, A. C. 369; 62 L. J. Ch. 881; Re Wasdale, 1899, 1 Ch. 163; 68 L, J. Ch. 117. (/) Brown v. Savage, 4 Drew. 635; Lloyd's Bank v. Pearson, 1901, 1 Ch. 65; 70 J,. J. Ch. 422; Re Dalian, 1904, 2 Ch. 385; 73 L. J. Ch. 365. (ni) Be Phillips' Trusts, 1903, 1 Ch. 183; 72 L. J. Ch. 94. hi) Taylor v. London and County Banking Co., 1901, 2 Ch. 231; 70 I;. J. ( h. 477. (o) Bushel v. Bushel, 1 Sch. & Lief. 98; 9 R. R. 21; Robinson v. Trevor, L2 Q. B. D. 434; 53 L. I. Q. B. 85; «*ee Be Greer, infra: Gresham Life Ass. v. Crowther, L912, 2 Ch. 219; 83 L. J. Ch. 867. (p) Le Neve v. Le Neve, 3 A.tk. 646; 2 Wh. & Tu. 43. (q) Eyre v. M'Dowell, 9 H. L. C. 619, 646; LSI R. R. 378; Chadwick v. Turner, 1 Ch. 310; 35 L. J. Ch. 349; Agra Bank v. Barry, \j. K. 7 H. L. I in; Kettlewell v. Watson, 21 C. D. 685; 58 L. J. Ch. 717: Bradley v. Btcfces, 9 C. D. 193. 302 CONSTRUCTIVE NOTICE. notice (r). Constructive notice is not sufficient (s). But the actual knowledge of a solicitor will be imputed to a client (t). A purchaser is not relieved from inquiring for and examining deeds, memorials of which are registered, the object of the Middlesex Act being to let him know what he is to inquire for rather than to dispense with inquiry (u). But, on the other hand, if he searches the registry, he will not be affected by constructive notice of prior unregistered charges because he neglects to make inquiries which might be necessary where no registry exists 0). But if he or his agent actually knows of the existence of such unregistered instru- ments when he takes his own deed, and has abstained from inquiry with a view to avoid notice, the Court may postpone him; but the case must be one in which the Court is able to come to a clear decision as to the fact of fraud (y). The non-production in a register county of deeds to the solicitor instructed to prepare a mortgage upon an estate there will not of itself be deemed a proof that the solicitor has acted fraudulently or even negligently so as to affect the interests of his client. The construction to be put upon his conduct does not depend on an inflexible rule of law, but upon the circum- stances of the case (z). Quaere whether the registration of a mortgage will negative the existence of fraud and negligence on the part of the mortgagee in not obtaining possession of the title deeds (a). By the Yorkshire Registry Act, 1884, s. 14, assurances of freehold lands in that county rank according to their date of registration, and all priorities given by the Act are to have full effect, except in cases of actual fraud. A solicitor regis- tering a mortgage to himself so as to gain priority over an (r) Chadwick v. Turner, supra. (s) Agra Bank v. Barry, L. E. 7 H. L. 148; Lee v. Clutton, 46 L. J. Ch. 48. (t) Bradley v. Riches, 9 C. D. 193. («) Kettlewell v. Watson, 26 C. D. 501, 508; 53 L. J. Ch. 717. (x) Chadwick v. Turner, 1 Ch. 310, 319; 35 L. J. Ch. 349. (y) Lee v. Clutton, 46 L. J. Ch. 48. (z) Agra Bank v. Barry, L. R. 7 H. L. 149. (a) Re Greer, 1907, 1 Ir. R. 57. \ FRAUDS RELATING TO MARRIAGE. 303 unregistered mortgage to his client is within the exception to sect. 14 (6). The Land Transfer Acts, 1875 and 1897, contain no express provision as to the effect of actual notice of unregistered or unprotected claims; but it is suggested that such notice will not affect the estate of the registered transferee for value unless the case amounts to a connivance with fraud (c). The priority of charges created by the registered proprietor is decided by priority of registration (d); but unregistered dispositions may be created and their priorities preserved by entering notices, cautions, or inhibitions on the register (e). As the register is the title itself, semble a person is fixed with notice of all he might have discovered by searching it, and no protection is given by any legal estate (/). Registered dispositions which would be fraudulent and void if unregistered remain so under the Act of 1875, s. 98, and therefore the register can, under the Act of 1875, s. 95, and the Act of 1897, s. 7 (2), be rectified as against transferees for value (g) ; but if a disposition be voidable only, as distin- guished from void, the register cannot, it is conceived, be rectified as against transferees for value. In Australia and New Zealand the fraud which must be proved to invalidate the title of a registered purchaser for value is actual, not constructive, fraud brought home to the person whose registered title is impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents (h). SECTION III.- — FRAUDS RELATING TO MARRIAGE. Another class of frauds upon third parties, which will be Marriage relieved against, is where persons, after doing nets required (b) Battison v. Hob.wn, 1896, 2 Ch. 403; 65 L. J. Ch. 695. (c) Brickdale (ed. 2), 14. (d) S. 28. (e) S. 49. (/) Brickdale (ed. 2), 169. (g) Att.-Gen. v. Odell, 1906, 2 Ch. 47; 75 L. J. Ch. 425. (/;) Assets Co. v. Mere Roihi, 1905, A. C. L76; 74 I). .1. P. C. 49; Butler v. FaiTclough, 1917, V. L. R. 175. 304 FRAUDS RELATING TO MARRIAGE. to be done on a treaty of marriage, render those acts unavail- ing by entering into other secret agreements, or derogate from those acts, or otherwise commit a fraud upon the relatives or friends of one of the contracting parties (/); as where a parent declines to consent to a marriage on account of the intended husband being in debt, and the brother of the latter gives a bond for the debt to procure such consent, and the intended husband then gives a counter-bond to his brother to indemnify him against the first bond (/,). So, also, where a creditor of the intended husband concealed his own debt and misrepresented to the lady's father 'the amount of the debts of the intended husband, the transaction was treated as a fraud upon the marriage, and the creditor was restrained from enforcing his debt at law against the husband after the marriage (/). So, also, where a brother on the marriage of his sister let her have a sum of money privately that her fortune might appear to be as much as was insisted on by the other side, and the sister gave a bond to the brother to repay it, the bond was set aside (m). So, also, where the money due by an intended husband upon a mortgage was represented by the mortgagee to the relations of the wife to be much less than was really due, he was not allowed to recover more than he had represented the debt to amount to (//). Another case of fraud upon marriage articles is where a father, who had on .the marriage of his daughter covenanted that he would upon his death leave her certain tenements, and would also by his will give and leave her a full and equal share with her brothers and sisters of all his personal estates, transfers afterwards during his life a very large portion of his personal property to his son, retaining the dividends for his own life (o). Covenants of this sort do not prohibit a (*) Peyton v. Bladwell, 1 Vern. 240. (7c) Turton v. Benson, 1 P. Wins. 496; Scott v. Scott, 1 Cox, 366; Palmer v. Neave, 11 Ves. 166. (1) Neville v. Wilkinson , 1 Bro. C. C. 543. See D'Albiac v. D'Albiac, 16 Yes. 124; Morris v. Clarkson, 1 J. & W. 107; 19 R, K. 277. (m) Gale v. Lindo, 1 Vein. 175: Lamlee v. Hanman, 2 Vern. 499. (n) Barrett v. Wells, Pree. Ch. 181. (o) Jones v. Martin, 3 Anst. 882; 5 Ves. 265 n. ; 8 Bro. P. C. 242; 5 R. K. 32. See M'Neill v. Cahill, 2 Blight, 228. Cf. Stocken v. Stocken, 4 M. & C. 95, 48 R. R. 16; Bell v. Clarke, 25 Beav. 436; 27 L. J. Ch. 674. FRAUDS RELATING TO MARRIAGE. 305 parent from making any disposition of his property during his lifetime among his children more favourable to one than another. But they do prohibit a man from doing any acts which are designed to defeat or defraud the covenant. A parent may, if he pleases, notwithstanding the covenant, make an absolute gift to a child; but the gift must be an absolute and unqualified one, and must not be a mere reversionary gift, which saves the income to the parent during his own life (p). Another class of transactions which will be relieved against Fraud on ,..„-,„, . marital as being in fraud of the marriage contract are conveyances rights. made by an unmarried woman of her property, during the treaty of marriage, without the knowledge of her intended husband, in contravention of his marital rights, or in dis- appointment of his just expectations (q). The doctrine of fraud on marital rights has, however, since the Married Women's Property Act, lost much of its import- ance. In the old sense of the husband being deprived of something to which as a husband he would have a right if the wife had not before marriage executed a conveyance, fraud on marital rights does not appear to be any longer possible. It must, however, be remembered that the change is effected not by abrogation of the doctrine, but by withdrawal of the subject-matter to which it is capable of application. The necessity of the most abundant good faith in such a contract as that of a settlement made on marriage is so obvious and cogent that it would be rash to conclude that even so widely sweeping a change as that made by the Married Women's Property Act has wholly deprived of effect such a doctrine as that under consideration (/•). Other eminent authorities have treated the doctrine as rendered altogether obsolete by the Act (s). But though there may be some doubt on the point, • ■specially when it is remembered that the husband's estate by the curtesy still exists, there can be no doubt whatever that (p) Jones v. Martin, 3 Anst. 882; 5 Vea. 265 n. (g) Strathmore v. Bowes, 2 Bro. C. C. 345; 2 Cox, 33; 1 Ves. Jr. 22; I Wh. & Tu. r,13; 1 R. R. 7(5. (r) Vaizey on Settlements, p. 1586. i.s) WblBtenholme, 8th <•. 21 ; Ford v. Stier, L896, I'. I ; 65 I.. .1. I'. L3. U) Swift v. Kelly, 3 Knapp, 293; Scott v. Scott, 2d Y. I.. U. 588. (m) Story, Eq. Jar. 293. (n) Colin,, v. Emu88, 1 c,,ll. 242; L3 I.. .1. Ch. 388; Re Carew's Estate, 26 Beav. 187; 122 K. K. 70; Heffer v. Martyn, 36 I,. .). ch. 372. (o) Parfiti v. Jepson, 46 L. J. C. P. 529. 310 FRAUD UPON THIRD PARTIES. be necessary for the protection of the property, and the em- ployment of more could only be for the purpose of increasing the price (p). The extraordinary result followed that in this particular instance a contract might be valid in eqnity though voidable at law on the ground of fraud. In order to remove any conflict between the rule at law and in equity upon the subject in the case of sales by auction of land, the Sale of Land by Auction Act (30 & 31 Vict, c. 48) was passed, enacting by sect, 4 that where a sale by auction of land would be invalid at law by reason of the employment of a puffer, the same shall be deemed invalid in equity as well as at law (q). The announcement that property is to be sold by auction '• without reserve ' imports that there shall be no bidding directly or indirectly on the part of the vendor, and the employment of any bidder at a sale under such conditions is fraudulent (/•). In a case where a sale was stated to be " without reserve but with liberty to the parties interested to bid," it was held that the purchaser could not avoid his contract upon the ground that the vendor had increased the price hy bidding against him (s), nor on the ground that, unknown to the vendors, a fictitious bidding was made by a stranger, and the purchaser was thereby induced to give more than he had previously bid, which was more than the reserved price (t). With respect to sales " without reserve,"' the above statute has enacted by sect. 5 that the particulars or conditions of sale by auction of land shall state whether such land will be sold without reserve or subject to a reserve price, or whether a right to bid is reserved, and that if it is stated that such land shall be sold without reserve it shall not be lawful for the seller to employ any person to bid at such sale or for the auctioneer to take knowingly any bidding from any such person. And a similar provision as to goods is contained in the Sale of Goods Act, 1893, s. 58. (p) Flint v. Woodin, 9 Ha. 618; 89 R. R. 60-2. (q) See Heatleij v. Newton, 19 Ch. D. 326; 51 L. J. Ch. 225. (r) Robinson v. Wall, 2 Ph. 372. 375; 16 L. J. Ch. 401: 78 R. R. 119. (s) Dimmock v. Hallett, 2 Ch. 26; 36 L. J. Ch. 146. (t) Union Bank v. Minister, 37 C. D. 51; 57 L. J. Ch. 124. FRAUD UPON THIRD PARTIES. 311 The section makes a distinction between a reserved price and a reserved right to bid, anil under conditions stating the former only it is not competent for the vendor to employ a person to bid up to the price stated to be reserved, and a sale effected by means of such bidding was set aside (u). By sect. 6 it is enacted that where any sale by auction of land is declared either in the particulars or conditions of such sale to be subject to a right for the seller to bid, it shall be lawful for the seller or any one person on his behalf to bid: but in a case where the seller reserved a right to bid once, and the auctioneer, with his sanction, bid thrice, the sale was held voidable at the option of the purchaser (x). It seems that a seller's right to bid once would be exercised by the auctioneer starting the property at a price, or by the seller or auctioneer naming a reserve* (y). Sect. 7 takes away the power of the Court to open biddings after sales by auction of land under its authority unless on the ground of fraud or improper conduct in the management of the sale (z). On the other hand, if a purchaser procure a sale to himself by fraudulently or wrongfully preventing other persons from bidding, the vendor may avoid the sale (a). So, also, where the purchaser employed the vendor's agent to bid for him, which deterred other persons from bidding who supposed him to be bidding for the vendor, it was held sufficient ground for refusing specific performance (6). i/n Gilliati v. Gilliatt, '.) Eq. 60; :)<•> D. J. Ch. 142. \x) Parfitt \. Jepson, t6 1;. J. C. P. 520. (y) Ibid. 531 . per Grove. .1. (z) See Delves v. Delves, 20 Eq. 77. (a) Fuller v. Abrahams, 3 B. ,v B. 116; 23 R. H. 626. b) Twining v. Morrice, -1 Bro. <'. C. 32G. ( 312 ) CHAPTEE V. MISCELLANEOUS FRAUDS . SECTION I. FRAUD IN WILLS. Frauds upon testators in the making of wills are a class of frauds against which the Court will relieve. The execution of a will with due solemnities by a person of competent understanding and apparently a free agent being duly proved, the presumption is that the testator was cognizant of its contents, and that the instrument expresses his will (a), unless there be other circumstances to lead to a different conclusion, in which case the burden of proof lies upon the party propounding the will, and the Court will not pronounce in its favour unless it is judicially satisfied that the instrument propounded is the last will of a free and capable testator (o). So where a will is prepared and executed under suspicious circumstances it is for the party propounding ii to adduce evidence to remove such suspicion and to satisfy the Court that the testator knew and approved of the contents of the will (c). The burden of proving capacity to make a will rests upon those who propounded the will, and a fortiori when it appears that the testator was subject to delusions (d). If a person benefited by a will has himself prepared it, or procured it to be prepared, the law looks on the case with suspicion, and the Court requires clear and satisfactory proof that the testator knew and approved the contents of the instrument, and that it expressed his real intentions (e). If (a) Boyse v. Russborough, 6 H. L. C. 49; 26 L. J. Ch. -256: 108 R. R. 1. (b) Brotoning v. Budd, 6 Moo. P. C. 435. (c) Tyrrell v. Painton (No. 1), 1894. P. 151. (d) Smee v. Smee, 5 P. D. 84; 49 L. J. P. 8. (e) Baker v. Batt. 2 Moo. P. C. 321: 46 P. R. 52; Grenlle v. Tyler, 7 Moo. P. C. 320; 83 R. R. 57. FRAUD IN WILLS. 313 there be no evidence of instructions previously given, or knowledge of its contents, the party propounding it must prove by evidence of some description or other thai the testator knew and approved of the instrument (/). The onus of proof may be increased by circumstances, such as un- bounded confidence in the drawer of the will, extreme debility in the testator, clandestine and other circumstances, which may increase the presumption even so much as to be conclusive against the instrument (g). Proof of knowledge of the contents of a will may be given in any form. The degree of proof depends on the circum- stances of each case. Although in perfect capacity, knowledge of the contents will be inferred; yet where capacity is im- paired, and the benefit of the drawer of the will large, the suspicion is strong, and the proof must be most stringent. Where the drawer of an instrument gives himself a benefit under the instrument, it is a case for suspicion, depending more or less upon the circumstances of each individual case, and the proof must be in proportion to the degree of suspicion, which of course will vary. The greater the benefit and the less the capacity, the more stringent is the requirement of proof of knowledge of the contents (h). If a testator being of sound mind and capacity has read the will, there is, as a general rule, sufficient evidence to show that he knew and approved of its contents (/). So, also, if a will has been read over to a capable testator on the occasion of its execution, or there is evidence to show that its contents have been brought to his notice in any other way, this fact when coupled with his execution thereof will, as a general rule, be sufficient to show that he approved as well as knew the contents thereof (k). But circumstances may exist which may require that something further shall be done in the (f) Harry v. Butlin, 2 Moo. P. C. t'.U ; 16 R. K. L23; Mitchell v. Thomas, 6 Moo. P. C. L37. (g) Paske v. Ollatt, 2 Phillim. 324; Jones v. Goodrich, 5 Moo. P. C. 16; Greville v. Tylee, supra; Ashwell v. Lomi, 2 P. & D, 177. Ill) Durnell v. Corfield, 1 Roberts, 63, (t) Alter v. Atkinson, 1 P. & D. r>nr,. ./, i Guardhouse v. Blackburn, 1 P. & D. 116; 35 L. J. P. L16. 314 MISCELLANEOUS FRAUDS. matter than the mere establishment of the fact of the testator having been a person of sound mind and capacity, and also of his having had read over to him .that which had been prepared for him, and which he executed as his will. There is no unyielding rule of law (especially when the ingredient of fraud enters into the case) that when it has been proved that a testator, competent in mind, has had a will read over to him, and has thereupon executed it, all further inquiry is shut out (/). The exercise of undue influence may be a ground for the interposition of the Court to set aside a will. Though a man may have a mind of sufficient soundness and discretion to manage his own affairs in general, still, if such a dominion or influence be obtained over him as to prevent his exercising that discretion in the making a will, he cannot be considered ;is having such a disposing mind as will give it effect (7/1). In cases of weakness of mind, arising from the near approach of death or otherwise, strong evidence may be required that the contents of the will were known to and approved by the testator executing the will at such time (n), and that the execution was his spontaneous act (o). When it has been proved that a will has been executed with due solemnities by a person of competent understanding, and apparently a free agent, the burden of proving that it was executed under undue influence rests on the party who alleges 1; (/;), or at least he must show facts from which the Court would be justified in treating the circumstances attending the bounty as suspicious. Further, in order to set aside the will of a person of sound mind, it is not sufficient to show that the circumstances attending its execution are consistent with the hypothesis that it was obtained by undue influence; it must be shown that they are inconsistent with a contrary hypothesis (q). (I) Fulto,, v. Andrew, L. R. 7 H. L. 469: 44 L. J. P. 17. (m) Mountain v. Bennett, 1 Cox, 355. (n) Mitchell v. Thomas, 6 Moo. P. C. 137; Duruell v. Corfield, 1 Roberts, 63. (0) Tribe v. Tribe, 13 Jur. 793. (p) Boyse v. Russborough, 6 H. L. C. 2. 49; 26 L. J. Ch. 256; 108 R. R. 1. (q) Ibid., 51. FRAUD IN WILLS. A distinction exists between the influence which is held to be undue in the case of transactions inter vivos and that which is called undue in relation to a will. In the Hist place, in tin- case of gifts or contracts inter civos, there is a transaction in which the person benefited at least takes part, whether he unduly urges his influence or not, and in calling on him to explain the part he took, and the circumstances that brought about the gift or obligation, the Court is plainly requiring ol him an explanation within his knowledge. But in the case of a legacy under a will, the legatee may have and in general has no part or even knowledge of the act; and to cast on him, on the bare proof of the legacy and his relation to the testator, the burden of showing how the thing came about, and under what influence or with what motives the legacy was made, or what advice the testator had, professional or otherwise, would be to cast a duty on him which in many, if not in most, Cases he could not possibly discharge. Another distinction is this : In the case of gifts or transactions inter vivos, it is considered that the natural influence which such relation as those in question involve, exerted by those who possess it to obtain a benefit for themselves, is an undue influence. Gifts or con- tracts brought about by it are therefore set aside, unless the party benefited can show affirmatively that the other party to the transaction was placed in such a position as would enable him to form an absolutely free and unfettered judgment. The law regarding wills is very different. The natural influence of the parent or guardian over the child, or the husband over the wife, or the attorney over the client, may lawfully be exerted to obtain a will or legacy so long as the testator thorough I \ understood what he was doing and was a free agent. There is nothing illegal in the parent or husband pressing his claims on ;i child or wife, and obtaining a recognition of these claims in a legacy, providing that persuasion stops short of coercion, and that the volition of the testator, though l»i;isscd ami impressed by the relation in which he shiiuls to the legatee, is not overborne ami subjected to the domination of another (/). in Parfiit v. Lawless, 2 V. x D. 489; l! I.. J. I'. 88. 315 31(5 MISCELLANEOUS FRAUDS. The influence which will set aside a will must amount to force and coercion destroying free agency; it must not be the influence of affection or attachment; it must not be the mere desire of gratifying the wishes of another, for that would be a strong ground in support of a testamentary act; further, ihere must be proof that the act was obtained by this coercion, by importunity which could not be resisted — that it was done merely for the sake of peace, so that the motive was tanta- mount to force and fear. " To make a good will a man must be a free agent, but all influences are not unlawful. Per- suasion appeals to the affections or ties of kindred, to a sentiment of gratitude for past services, or pity for future destitution, or the like — these are all legitimate, and may be fairly pressed on a testator. On the other hand, pressure of whatever character, whether acting on the fears or the hopes if so exerted as to overpower the volition without convincing the judgment, is a species of restraint under which no valid will can be made. Importunity or threats such as the testator has not the courage to resist: moral command asserted and yielded to for the sake of peace and quiet or of escaping from distress of mind or social discomfort — these, if carried to a degree in which the free play of the testator's judgment, discretion, or wishes is overborne, will constitute undue influence, though no force is either used or threatened. In a word, a testator may be led, not driven, and his will must be the offspring of his own volition and not that of another ' (s). To establish undue influence sufficient to invalidate a will it must be shown that the will of the testator was coerced into doing that which he did not desire to do, and the mere fact that in making his will he was influenced by immoral considerations does not amount to such undue influence so long as the dispositions of the will express the wishes of the testator. A very little pressure may be sufficient, and the mere talking to him and pressing something upon him ma}' so fatigue the brain that the sick person may lie induced for quietness' sake to do anything. This would f.s) Hall v. Hall, 1 P. & D. 482, per Lord Penzance; 37 L. J. P. 40. FRAUD IN WILLS. 317 equally be coercion though not actual violence (£). There must be " coercion " and not merely persuasion or induce- ment, however improper that may be (//). In a case. accordingly, where the plaintiff, a Roman Catholic priest, had resided with the testatrix and her husband many years as chaplain, and for a part of the time as confessor, and was confessor at the time the will in dispute was made, but there was no evidence that the plaintiff had interfered in the making of the will, or that he had procured the gift of the residue to himself, or that he had brought such gift about by coercion or dominion exercised over the testatrix against her will or by importunity not to be resisted, it was held thai there was no evidence to go to the jury on the issue of undue influence (.r). So, also, a solicitor may take a benefit under the will of a client, although he may himself have prepared it. if no undue influence has been exerted by him over the testator (;, thai the execution of the impeached instrument was procured by the exercise of such influence as the causa causans of the act itself (n). It lies on the person who brings the charge to prove it by direct or circumstantial evidence. Circumstantial evidence is enough; for a jury is at liberty to infer undue influence, noi (t) Re Stead, 1900. 1 Ch. 237 : 69 I,. J. Ch. 19. (fc) Jones v. Goodrich, 5 Moo. P. ('. 40. (I) Boyse v. Russborough, 6 E. L. C 5] ; 26 L. J. Ch. 256; L08 R. R. 1. See Parfiti v. Lawless, 2 P. & D. 472; 11 L. J. P. 68. (mi Longford v. Purdon, 1 Fj. R. I. 75. (n) Ibid. 320 MISCELLANEOUS FRAUDS. as a matter of surmise, but if the evidence leaves no other- rational hypothesis on which the conduct of the testator can be accounted for (o). If part of a will has been obtained by fraud, probate will be refused of that part and granted as to the rest (p). So words and clauses introduced into a will by fraud or mistake will be struck out of the probate (q). SECTION II. FRAUD UPON POWERS. A class of fraud against which the Court will relieve are frauds upon powers. The term "fraud" is here used in a technical sense (r). It does not necessarily denote conduct which could be termed dishonest or immoral, it merely means that the power has been exercised for a purpose or with an intention beyond the scope of the instrument creating the power (5), and it often happens that the persons implicated in what is called a fraud upon a power were actuated by honest and unselfish motives (t). There is a fraud upon a power if a man, having a power of appointment, corruptly exercises the power with a view to his own personal benefit and advantage. An appointment under a power, accordingly, will be set aside in equity, if it appear- that the person in whose favour the power has been exercised has agreed or stipulated to give the donee of the power some benefit or advantage in the event of the power being exercised in his favour (u), or if the circumstances of the case attending (0) Barry v. Butlin, 2 Moo. P. C. 491; 46 E. B, 123; Longford v. Pardon, 1 L. E, I. 80. (p) Allen v. Macpherson, 1 H. L. C. 207, 208; 73 E. E. 30; Farrelhj v. Corrigan, 1899, A. C. 563; 68 L. J. P. C. 133. (q) Briscoe v. Baillie Hamilton, 1902, P. 234; 71 L. J. P. 121; Karunaratne v. Ferdinandus, 1902, A. C. 405; 71 L. J. P. C. 76. (r) Norton v. Ashburton, ante, p. 5. (s) Vatcher v. Paull, 1915, A. C. 372; 84 L. J. P. G. 89. per Lord Parker. (t) Aleyn v. Belcher, 2 Wh. & Tu. 314; Crawshay v. Crawshay, 43 C. D. 615 ; 59 L. J. Ch. 395. (u) Lane v. Page, Ambl. 233; Farmer v. Martin, 2 Sim. 511; 29 E, E, 151: Arnold v. Hardwick, 7 Sim. 343; 4 L. J. Ch. 152; 40 E. E. 159; Jackson v. Jackson, 7 CI. & Fin. 977 ; 51 E. E. 190; Rowley v. Rowley, Kay, 242; 23 L. J. Ch. 275; 101 E. E. 574; Reid v. Reid, 25 Beav. 478; 119 E. E. 491. See Ask- ham v. Barber, 17 Beav. 44; 22 L. J. Ch. 769; 99 E. E. 18. FRAUD UPON FOWERS. 321 the execution of the power are such as to show conclusively that the appointment was made with a view to some profit ultimately accruing to the donee of the power (#); as, for instance, where a parent, having a power of appointment among children, exercises it in favour of a son, a lunatic, in very bad health and likely to die, in which event the parent would of course become entitled to the fund, as the personal representative of the son (y). So, also, and for the same reason, where a parent having power to raise portions for children appointed a portion to a child in a delicate state of health long before it was required, and the child died shortly afterwards, the appointment was held invalid (z). So, also, an appointment by a parent in favour of a daughter, with a view to obtaining the benefit of the fund so appointed, through the exercise of undue parental influence over her, would be held invalid (a). An appointment by will to an object of the power, un- objectionable when it was executed, may be rendered invalid as a fraud on the power by the appointee entering into an arrangement with the appointor under which a person not an object of the power was to take an interest in the sum appointed (/;). Under a power to appoint to children a fund actually set apart or provided, shares may be appointed to a child so as to vest long before they are required. A bond fide appointment to a child of very tender age, and in good health, of an estate or fund which has been previously set apart or provided for the benefit of children is in itself no sign of fraud. It is of no consequence that the child may die shortly afterwards, if it was in good health at the time the power was exercised. If the power be in other respects well executed, it is immaterial that it may have in fact been exercised with the object of (x) Humphrey v. Olver, 28 L. J. Ch. 406. See Cooper v. Cooper, 8 Eq. 312: 5 Ch. 203 ; 39 L. J. Ch. 240; Duggan v. Duggan, 7 L. R. I. 155. (y) Wellesley v. Mornington, 2 K. & J. 143; 110 R. R. 143. (■/.) Hinchinbrooke v Seymour, 1 Bro. C. C. 395. Sec Ilenty v. Wrey, 21 C. D. 332; 53 L. J. Ch. 674. (a) Re Marsden's Trusts, 4 Drew. 601; 28 L. J. Ch. 906; 113 R. It. 474. (b) Re Kiraan's Trusts, 25 C. D. 373; 52 L. J. Ch. 952; Knowles v. Morgan. 54 S. J. 117. K.F. 21 322 MISCELLANEOUS FRAUDS. providing that in any event the persons entitled in remainder on failure of children shall not take the estate or fund (c). Where the donee of a power of raising portions for the benefit of children has under the terms of the power clear authority to fix the times at which portions shall vest, and appoints a portion to vest immediately, the Court will not hold the appointment invalid as a fraud upon the power because in the events which have happened the donee of the power has obtained a benefit from its exercise. In a case, accordingly, where a parent having" such a power exercised it in favour of three daughters of tender age, it was held that the mere fact that the portions were appointed so that upon the death of the children the father took the benefit of their shares as next of kin was not of itself sufficient to induce the Court to set aside the appointment as a fraud on the power (<1). It would be otherwise, however, if there were evidence to show that the early death of any of the children might have been reasonably expected (c). 'The results," said Lord Justice Lindley, in Henty v. II rey (/), " at which I have arrived from a careful examina- tion of all the authorities are as follows: — First, that powers to appoint portions charged on land ought, if their language is doubtful, to be construed so as not to authorise appointments vesting those portions in the appointees before they want them, that is, before they attain twenty-one, or, if daughters, many; secondly, that when, on the true construction of the power and the appointment, the portion has not vested in the lifetime of the appointee, the portion is not raisable, but sinks into the inheritance; thirdly, that when the language is clear and unambiguous, effect must be given to it; fourthly, that when, upon the true construction of both instruments, the portion has vested in the appointee, the portion is raisable, even although the appointee dies under twenty-one, or, if a daughter, unmarried; fifthly, that appointments (c) Butcher v. Jackson. 14 Sim. 444; 65 R. E. 625; Fearon \. Desbrisay, 14 Beav. 635; 21 L. J. Ch. 505; 92 R. R. 269. (d) Henty v. Wrey, 21 C D. 332; 53 L. J. Ch. 674. (e) Ibid. in 21 C. D. 359. FRAUD UPON POWERS. .1)23 vesting portions charged on laud in children of tender years who die soon afterwards are looked at with suspicion, and very little additional evidence of improper motive or object will induce the Court to set aside the appointment or treat it as invalid, but that, without some additional evidence, the Court cannot do so." An appointment of interest on children's portions will be supported where it is within the terms of the power and for the benefit of the children, although it is made by a revocable deed, and the interest will be payable 1 to the donee of the power as guardian (//). The fact that the donee of the power may derive a benefit under the appointment does not necessarily render the appointment invalid (h). It is not every possible benefit to the donee of a power from the exercise of it which will make the execution of the power bad (i). It is no objection to an appointment of a jointure that the husband receives a consideration for exercising the power (I ). If the object of the appointment be to secure a benefit for all the objects of the power, the appointment is good, though the appointor may to some extent participate in such benefit (/). Thus, in a case where it was urged that certain appointments (made by a tenant tor life acting under a power given by a marriage settlement), the object of which was to affeel building leases, were for the benefit of the appointor, and therefore, not being authorised by the settlement, were invalid, the Court considered that this principle should give way when the benefit of the appointment extended to parties in interest. The building leases had indeed benefited the tenant for life, but they had also benefited the other interested parties in the improved value of the property, which they would lose if the appointment were declared void. To hold otherwise would be to strain a rule intended to benefit the (g) De Hoghton v. De Hoghton, L896, 2 Ch. 385; 65 L. J. Ch. 667. (h) Bcere v. Hoffmeister, 23 Beav. 101; 2(5 L, J. Ch. 177. (») Palmer v. Locke, 15 C. D. p. 303; 50 L. J. Ch. 118. (k) Post, p. 326. (I) Re finish's charily. Hi Eq. - r , ; 89 [,. .j. Ch. 499; Palmer v. Locke) supra. 321 MISCELLANEOUS FRAUDS. objects of the power to a rigid exactness which would inflict manifest injury on them (m). So, also, where a father, having a power of appointment over a fund in favour of children, on the marriage of a daughter appointed a share to her to be held upon the trusts declared by her marriage settlement, and by the settlement the fund so appointed was limited for the benefit of the husband and wife during their respective lives and then for the benefit of children, with an ultimate trust in default of children for the father, his executors, administrators, and assigns, it was held that the appointment was not in fraud of the power (n), " The transaction," said Lord Hatherley (o), " is a virtuous and proper transaction, in which the father takes care that the interests of the children shall be protected, and simply protects the property against the marital right, which would otherwise transfer it altogether from the source from which it came, and he puts it back into the channel in which it was at the time of the marriage." If a person be the only child who has been kind to a parent in distress, there is no fraud if the parent exercises a power of appointment in his favour (p). Nor is there fraud if a parent exercises a power of appointment in favour of two of his sons to enable them to embark in business, and then, at their request, becomes a partner with them in the business, there being no evidence to prove any bargain between them in the event of his exercising the power in a particular way (q). An appointment, however, to one of several objects of a power in payment of a debt due to him from the appointor is bad (r). Although an appointment by a parent in favour of a child, over whom he exercises undue influence, cannot be sup- (m) Ibid. (n) Cooper v. Cooper, 5 Ch. 212; 39 L. J. Ch. 240. (o) Ibid. (p) Palmer v. Wheeler, 2 Ba. & Be. 31 ; 12 R. R. 60. (q) Cockroft v. Sutcliffe, 2 Jur. N. S. 323. (r) Reid v. Reid, 25 Beav. 478- 119 R. R. 491. See Beddoes v. Pugh, 2G Beav. 411. FRAUD UPON POWERS. '>'25 ported (s), it is otherwise if the exercise of undue influence be disproved (*). A child to whom property has been appointed by a parent may, in such a case, give the parent a benefit or advantage in the property so appointed (it). In an arrangement settling the interests of all the branches of a family, children may contract with each other to give to a parent, who had power to distribute property among them, some advantage which the parent, without their contract with each other, could not have (#). In order, however, to constitute a fraud upon a power, it is not necessary that the object of the exercise of the power should be the personal benefit or advantage of the donee of the power. If the design of the donee in exercising the power is to confer a benefit, not upon himself actually, but upon some other person not being an object of the power, that motive just as much interferes with and defeats the purpose for which the power was created as if it had been for the personal benefit of the donee himself. If the donee of a power of appointment exercises the power in favour of one of several objects of the power, with a view to the benefit of a stranger, the appointment is fraudulent and void, even although the motive of the donee is not morally wrong (y). The mere conferring of a benefit upon a person not an object of the power will not avoid the exercise of the power it made with the approbation of the real objects of the power (:). A man who takes property absolutely under an appointment may do with the property so appointed as he pleases, and may settle it on persons who are not objects of the power {<<). The mere existence of an antecedent contract between the donee of the lie Marsdens Trusts, 4 Drew. HOI; 28 L. J. Ch. 906; L13 R. II. 174. See Topham v. Duke of Portland, 1 D. J. A S. 517: 32 I.. •! . Ch. 606; L37 R. R. 313. (t) See ante, p. 189. («) Davis v. Uphill, 1 Bw. 136; Warde v. Dickson, 5 Jur. N. S. 699. Davis v. Uphill, 1 Sw. L36. (y) He Marsden's Trusts. 1 Drew. 601; 28 L. J. Ch. 906; L13 R. R. 174; Knowles v. Morgan, 54 B. J. 117. (z) Re Turner's 6'. ft.. 28 ('. D. p. 216; 51 I,. .1. Ch. 690. (a) lioutledye v. Dorrill, 2 VeB. Jr. 357; 2 R. R. 250. Bee Bvrley v. Birley , 25 Beav 299; 27 L. J. Ch. 569; Re Turner's S. /•-'.. supra. :]2Q MISCELLANEOUS FRAUDS. [tower and the appointee for a resettlement conferring benefits on a stranger is nol enough to invalidate the appointment (6). The exercise of a power of jointuring can he the subject of a bargain between husband and wife, and so long as no. part of the jointure itself is to be received by any person other than the wife, the husband can exercise the power in con- sideration of receiving some benefit out of her property, and the fact that the consideration given by her is the full actuarial value of the jointure is immaterial (c). Sec us, if the bargain deals with the actual jointure and the wife only receives part of the sum secured by the jointure (d). But in the case of appointments to children the appoint- ment will be bad if made upon a bargain for the benefit of persons who are not objects of the power (e). The appoint- ment, accordingly, of a portion of a fund to a daughter, for the purpose of paying her husband's debts, was held void (/). So, also, where a married woman, having a power to appoint a fund of which she received the income for her life, appointed the whole fund at her death absolutely in favour of her daughter, in order that thereout the daughter should benefit the father, the appointment was held invalid (g). The prin- ciple has been held even to apply to a case where an arrange- ment was entered into between the original donor and creator of the power and any of the objects of the power, to benefit persons other than those within the power (h). The principle that the donee of a power may not appoint to a person who is not an object of the power applies even although the appointee is not privy to the intentions of the donee of the power. The design to defeat the purpose for Which the power was created will stand just the same whether the appointee was aware of (b) Re Turner's S. E.. supra. (c) Saunders v. Shafto, 1905. 1 Ch. 126; 74 L. T. Ch. 110; overruling Whelan v. Palmer. 39 C. D. 648; 57 L. J. Ch. 784. (d) Ibid. (e) Birley v. Birley, supra: Pryor v. Pryor. 2 D. .7. & S. 205; 33 L. J. Ch. (41; 139 R. R. 90. (/) Ranking v. Barnes. 12 W. R. 568. (g) Re Marsden's Trusts. 4 Drew. 601 ;28 L. J. Ch. 906: 113 R. R. 474. {h) Lee v. Fernie, 1 Beav. 483; 49 R. R. 412. supra. FRAUD UPON POWERS. it or not in. Where, accordingly, a married woman, having a power to appoint a fund of which .she received the income for her life among her children, appointed the whole fund at her death in favour of her daughter in order thai thereout the daughter should benefit her father, relying on the influence which the lather would have over her to carry out the secret arrangement, the appointment was held invalid, although the daughter was not informed of the mother's intention until after lier mother's death (I'). The fact, however, that under the provisions of an appoint- ment whether such provisions appear on the face of the instrument itself or are to be gathered from intrinsic evidence, some persons who are not objects of the power may take interests in the appointed fund, either in conjunction with or in succession to persons who are objects of the power, is not of itself sufficient to invalidate the appointment (/). If there is nothing on the face of the transaction or in the evidence to indicate thai the appointment was made with the intention of benefiting the donee of the power, or that it was other than part of a fair and reasonable division of the pro- perty of a father among- his children, the appointment is not invalid, though the effect may be to confer a benefit, not only upon the donee, but also 11)1011 others who were not objects of the power (m). Although children may contract with each other to give to a parent, who has power to distribute property among them, some advantage which the parent, without their contract with each other, would not have (/>), a transaction of the sort cannot be upheld if, taken as a whole, it appears not to be a bond full family arrangement, but to have been entered into in fraud of the power, for the purpose of giving a benefit to a person who was by the donor excluded from being an (t) Re Marsden's Trusts, supra; Topham v. Duke oj Portland, 5 Ch. 61; 32 L. J. Ch. 606; L37 R. R. 313. ). The donee of the power shall, at the time of the exercise of the power, and for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view to the real purpose and object of the power, and not for the purpose of accomplishing or carrying into effect any object which is beyond the purpose and intent of the power (q). It is, accordingly, a fraud upon a power if a man having a power to appoint among two sisters appoints the whole to one of them, it being understood that she was only to receive one moiety of the fund to her own use, and was to allow the other to accumulate, subject to some future arrangement (r). In determining whether there is a fraud upon a power, the Court looks to the purpose with which the power was exercised (5). In Scroggs v. Scruggs (t) the consent of a trustee was neces- sary to the exercise of a power, and the donee of the power procured the trustee's consent by a false representation, to which the appointee does not appear to have been in any way a party; yet the Court set aside the appointment (w). Any attempt to exceed the limitations of a power is equally invalid, whether the purpose of the donee be selfish or, as he supposes, a more beneficial mode of effecting that which he takes the donor of the power to have desired. The Court will not allow him to interpret the donor's intention in any other sense than the Court itself holds to be the true construction (0) Agassiz v. Squire, 18 Beav. 431 ; '23 L. J. Ch. 985 ; 104 B. B. 499. (p) Topham v. Duke of Portland, 1 D. J. & S. 570; 32 L. J. Ch. 606; 147 B B. 313. (q) Duke of Portland v. Topham, 11 H. L. C. 54. per Lord Westbury ; Duggan v. Duggan, 7 L. B. I. 155; Molyneux V. Fletcher, 1898. 1 Q. B. 648; 67 L. J. Q. B. 392. (r) 11 H. L. C. 32. (*) Topham v. Duke of Portland; 1 D. J. & S. 570 ; 5 Ch. 60 ; 32 L. J. Ch. 606. (t) Ambl. 272. (w) Per Turner, L.J., 1 D. J. & S. 570. FRAUD UPON POWERS. 29 of the instrument creating the power, and a literal execution of the power with a purpose which it does not sanction is regarded as a fraud on the power (as). Where a mother having a power of appointment among her children appointed one-third to one daughter for life, or until she should become a Roman Catholic, and subject as afore- said to the other two daughters, it was held that the gift ovei was not void as being a fraud upon the power (y). If there be a fraudulent arrangement between the donee of a power and the appointee, the bad purpose will, in general, vitiate the appointment in toto, and not merely the part to which the fraud extends (z). Appointments to children, accordingly, in part fraudulent, have almost always been avoided altogether (a). In cases, however, where the evidence enables the Court to distinguish what is attributable to an authorised from what is attributable to an unauthorised purpose, the bad purpose will not affect the whole appoint- ment (b). Where there is no bargain and no suspicion oi improper motive, but the appointor has annexed a condition to the appointment which would, if observed, be a fraud upon the power although in itself bond fide and honest, the question arises whether there is a complete execution of the power with something ex abundanti added, in which case the excess will be void and the execution good, or is the execution and excess not severable, in which case the execution will be bad (c). So, where a man appointed to his wife on condition that she paid his debts, it was held that the appointment could not be severed from the condition, and that the appoint- U) Topham v. Duke of Portland, 5 Ch. 59; 32 L. J. Ch. 606; 147 R. R. 313 Wainwright v. Miller, 1897, 2 Ch. 255; 66 L. J. Ch. 616; R< Gage, 1898, 1 Ch. 498; 67 I,. J. Ch. 200. (z) Daubeny v. Cockburn, 1 Mer. 626; 15 R. R. 171; Be Perkins, 1893, 1 ( h. 283; 62 L. J. Ch. 531. (a> Ibid.; Farmery. Martin, 2 Sim. 511; 29 R. R. 151; Arnold v. Hardwich 7 Sim. 343; 1 L. J. Ch. 152; 40 R. R. 159. See Rowley v. Rowley, Kay, 259 23 L. J. Ch. 275; mi R. H. 574. (b) Topham v. Duke of Portland, 1 D. J. & S. 572. per Tinner. I,. .J. Bei Carver v. Richards, 27 Beav. 488; Ranking v. Barnes, 12 \V. li. 565; /.'< Oliphant, 86 L. J. Ch. 452. (c) Grawshay v. Crawshay, 43 C. D. 615; 59 L. J. I h. 395; Viani \. Cooper, 1<) L. T. 768; Re Perkins, L893, 1 Ch. 283; 62 I.. J. Ch. 531. :\:){) MISCELLANEOUS FRAUDS. ment was fraudulent and void (d). But where a wife appointed 1 ; ante, p. L72. m) Warner v. Jacoh. 20 C. D. 220: 51 L. J. Ch. 642. n) 1 Will. IV. c. 40; Re Capon's Trust, in ('. D. 484 : -I* l>. •! . Ch. 355. (o) 37 & 38 Vict. c. 37. Middleton v. Middleton, L J. & W. 96; 20 R. R. 238. {q Luttrell v. Olmius, cit. 11 W-. 638; II Ves. 290; I J. & W. 96. 332 MISCELLANEOUS FRAUDS. Hon of a power has the deed creating the power in his custody, and the donee of the power, wishing to execute it, sends for the deed, which the party refuses to deliver, and thereupon the donee does an act with an intend to execute the power, equity will uphold the execution, although defective by reason of the fraud in the person who was to have the benefit of the original settlement (r). But the mere refusal or neglect of an attorney with whom a deed containing a power has been deposited to deliver it up to the donee of the power, in the absence of fraud, is no ground for relief against informality (.<). Equity would extend the relief to a case where a wife, having a power of revocation over an estate vested in her husband, is desirous to exercise it, but the husband hinders anybody from coming to her, or prevents the execution or obstructs the engrossing of the deed of revoca- tion (t). The principle applies to cases where a man has been induced by false promises to abstain from doing an act for the benefit of third parties. If, for example, a testator be induced to omit the insertion in his will of a formal provision for any intended object of his bounty upon the faith of assur- ances given by his heir or other person, who would take his property in the event of his omitting to insert the particular- bequest in his will, that his, the testator's, wishes shall be executed as punctually and fully as if the bequest were formally made, this promise and undertaking will raise a trust, which, though not available at law, would be enforced in equity on the ground of fraud (u). So, also, if a father devises an estate to one son who engages if the estate is devised to him to give a certain amount of money to another (t) See 3 Ch. Ca. 69, 83, 84. 89, 93, 108, 122. See West v. Ray, Kay, 385; 23 L. J. Ch. 147; 101 R. R. 66. (s) Buckell v. Blcnkliorn. 5 Ha. 131. (t) Seagrave v. Kirwan, Beatt. 157; Bulkley v. Wilford, 2 CI. & Fin. 102; 37 R. R. 39; Nanney v. Williams, 22 Beav. 452; 111 R. R. 435. (m) Chamberlaine v. Chamberlaine, 2 Freem. Ch. 34; Reech v. Kennigate . Amb. 67; Barrow v. Greenough, 3 Ves. 153; Chamberlaine v. Agar, 2 V. & B. 262; Podmore v. Gunning, 7 Sim. 660; 40 R. R. 203; Russell v. Jackson, 10 Ha. 213; 90 R. R. 336; Tharp v. Tharp, 1916, 2 Ch. 205. FRAUDS RELATING TO DEEDS, ETC. 333 sou, the promise will be enforced in equity (.<•). An engage- ment to the same effect may be entered into not only by words, but by silent assent, or may be inferred from conduct so as equally to raise a trust (y). If an heir should suppress deeds, wills, &c, in order to Suppression 1 x or destruction prevent another party, as grantee or devisee, from obtaining of deeds, &c. the estate vested in him thereby, Courts of Equity, upon due proof by other evidence, would grant relief and perpetuate the possession and enjoyment of the estate in such grantee or devisee (z). If the contents of a suppressed or destroyed instrument are proved, the party will receive the same benefit as if the instrument were produced (a). Xo valid instrument which effectually conveys property can lose its effect merely by reason of its fraudulent cancellation • or destruction (6). Where there has been a spoliation or suppression of instru- ments, which might have thrown light upon a suit, everything will be presumed against the party by whose agent sudi spoliation and suppression have been practised, and every presumption will be made in favour of the prima facie rights of the other party (c). Prima facie the cancellation of a deed is evidence of its discharge, but in a Court of Equity it is open to the party claimingr under the deed to show that it was cancelled by fraud, mistake, or accident. Where the deed has always been in the hands of the party beneficially interested under it, should it appear to have been cancelled, the proof that this was done by fraud would rest with that party; but where the deed has constantly remained in the power of the maker thereof, or has been deposited by him with a person of his own selection, circumstances may throw upon the maker of (x) M'Cormick v. Grognn, L. II. 4 H. L. 88. tip Byrne v. Godfrey, 4 Ves. 10; 4 R. R. 155; Paine v. Hall, L8 Veu. 475; M'Cormick v. Grog an, Ij. R. 4 H. L. 88. (z) Hunt v. Matthews, 1 Vera. 408; Barnesley v. Powell, 1 Vea. 289; Tuckei v. Phipps, 3 Atk. 360, in) Saltern v. Melhuish, Ami). 247; Cowper v, Cowper, 2 P. Wins, 719, (b) Donaldson v. Gillott, L. R. 8 Bq. '277: Ronnie v. Ogg, L8 R. ( .»03. (c) Bowles v. Stuart, 1 Sen. & Lef. 222; Hampden v. Hampden, 1 Bro. P. C. 252. 334 MISCELLANEOUS FRAUDS. Fraud in procuring the execution of a deed. Execution in false name. Setting up a deed obtained for one purpose for another purpose. the deed the onus of showing not only that such deed is cancelled, but that the obligation it imposed has been duly discharged and satisfied (d). No man will be permitted to take advantage of a deed which he has fraudulently induced another to execute that the former may commit an offence against morality, to the injury or loss of the party by whom the deed is executed. Thus, where a married woman obtains a separation deed from her husband, with pecuniary allowance, for the purpose of enabling her the more effectually to carry on an adulterous intercourse with another, the Court will, on the petition of the husband, order that the deed be delivered up to be cancelled, and proof of subsequent adultery with a person with whom the wife had sexual intercourse before rnarriagr, and had continued on terms of improper intimacy afterwards, seems to be sufficient evidence that such a deed was obtained for the fraudulent purpose of promoting the adultery {<■). But such a deed will not be set aside for adultery previously committed; nor will a marriage settlement be annulled on the ground that the wife has concealed from her husband the fact of previous incontinence, though he alleges that he would not have married her had he known it (/). And where a husband sought to set aside his marriage settlement on the ground that his wife had concealed the fact that she had been divorced for her adultery, the statement of claim was struck out as showing no cause of action (g). A person who executes a deed cannot avoid liability under it by signing a name which is not in fact his own, nor can he impose liability on the person whose name he uses (/i). Where a man obtains an instrument or conveyance from another in order to answer one particular purpose, but after- wards makes use of it for another, a Court of Equity will relieve under the head of fraud. It is immaterial that the (d) Sluysken v. Hunter, 1 Mer. 45. (e) Evans v. Carrington, 2 D. F. & J. 481; 30 L. J. Ch. 364; 129 E. E. 158; Fearon v. Aylesford, 14 Q. B. D. 792; 54 L. J. Q. B. 33. (/) Ibid. (g) Johnston v. J., 52 L. T. 76. (/;) Fung Ping Shan v. long Shun, 1918, A. C. 403. FEATJD BY AND IPOX COMPANIES. 335 conveyance may be perfected by act of record (i). Where, accordingly, a father, who was tenant for life of real estate, fearing- that the husband of his daughter, who was tenant in tail of the property, would waste the property, induced him and the daughter to join in a recovery with a view to pro- tecting the property from his creditors, and the property was conveyed to the father for a mere nominal sum, the recovery was set aside at the suit of the assignees in insolvency of hi^ son-in-law (k). SECTION IV. -FRAUD BY AND UPON COMPANIES. Fraud which consists in misrepresentation or concealment on the part of directors or promoters of companies has been already considered (/) ; but there are other acts on the part of companies which are fraudulent in the contemplation of th< Court. On the question of shareholders 5 right to transfer their Transfer of shares the following broad rules have been laid down (m) : A shareholder may, although the company is in difficulty or even in eatremis, effect a valid transfer of his shares, though made avowedly to escape liability, though made to a man of straw, and though made without consideration or even with a consideration paid l<> the transferee, provided the trans- action be bond fide an absolute out and out disposal of the property without any trust or reservation tor the benefit of the transferor (n). And a director, in the absence of an equity against him, has the same light of transfer (o). But if the transaction be colourable and fictitious and the transfer be merelv nominal, and there be any trust <>i reserva- (t) Young v. Peachey, intra: Nixon v. Fetzer, 30 N. '/,. I-. R. 229. (A;) Young v. Peacliey, 2 Atk. 256. See Evans \. Bicknell, >'> Ves. L91; : "> l:. R. 245; Pickett v. Loggon, 11 Ves. -2:11. • (/) Ante, pp. 86, 163, 166. (m) Buckley, 9th ed., 36. 01) Sinter's Case, 35 Beav. 391; 35 l>. -I. Ch. 304; 117 !(.' R. 230 ; Haiti, Case, 39 I.. J. Ch. :«tl : Bishop's ( ase, 7 ch. 296, n. ; lAndlar's Case, 54 6. I 287. (o) Cawley & Co., 12 ('. I>. 209 ; 58 L. J. Ch. 683; cf. South London Fish market ^'o., infra. 336 MISCELLANEOUS FRAUDS. tion of benefit in favour of the transferor, the transaction is invalid, and the transferor remains liable (p). Or if the transfer be not open and bond fide, but be made with colour indicating an attempt to escape liability in a manner tainted with fraud, or be made upon an opportunity fraudulently obtained, it cannot be supported (q), unless the transfer has been recognised by the company (r). Further, in cases where directors have by the articles a discretion as to accepting transferees, and the facts have been wilfully misstated to the directors, and were such that, if the directors had known them, they ought to have refused to register the transfer, then the transfer will be set aside and the transferor rendered liable (s). The mere fact that a person in a humble station of life has been described by the vague title of gentleman does not necessarily constitute such a fraudulent misrepresentation as will avoid the transaction (t). The principle on which such transactions are set aside is that a person cannot profit by his own fraud — that having been guilty of misrepresentation he cannot complain that his representation was believed, and insist that it was the duty of the company to make inquiry. The whole point is that the representation was intended to mislead, but if there is no such intention, and the transferee is honestly described, the mere fact of there having been some misdescription is unimportant (w). The power of directors to refuse a transfer is a fiduciary power to be exercised for the benefit of the company (#), and must be exercised reasonably (y). (p) Budd's Case, 3 D. F. & J. 297; 31 L. J. Ch. 4; 130 R. R. 138; Lund's Case, 27 Beav. 465; 28 L. J. Ch. 628; 122 R. R. 491. (q) Costello's Case, 2 D. F. & J. 302 ; 30 L. J. Cb. 113; 129 R. R. 101 ; South London Fishmarket Co., 39 C. D. 324; Lankester's Case, 6 Ch. 905 » n. ; Dis- coverers Finance Corporation, 1908, 1 Ch. 141; 77 L. J. Ch. 288; Lindlar's Case, supra. (r) Chynoweth's Case, 15 C. D. 13. (s) Payne's Case, 9 Eq. 223; Ex p. Kintrea, 5 Ch. 95; 39 L. J. Ch. 193. For cases under the European Arbitration, see Buckley, 8th ed. 39. (t) Williams' Case, 1 C. D. 576; 45 L. J. Ch. 48. («) Ibid. ; Master's Case, 7 Ch. 292; 41 L. J. Ch. 501. (x) Coalport China Co., 1895, 2 Ch. 404, 410; 64 L. J. Ch. 710. (y) Nations Case, 3 Eq. 77, 2 Ch. 16; 36 L. J. Ch. 112. FRAUD BY AND UPON COMPANIES. 337 The trustee of shares, and not the cestui que trust, is liable Fraudulent piii- i trusts of as contributory in respect o± them, but this must be under- shares, stood only of a bond fide trusteeship, for if the trusteeship be only colourable or fraudulent the real owner will be liable (z). So, too, if a person takes shares in the name of a fictitious person (a) or applies for shares under an alias he is liable as a shareholder (6). But if a person without any intention to take shares falsely applies for shares in the name of another, he may be liable for fraud, but is not liable as a contri- butory (c). The mere fact of there having been fraud in the promo- Winding-up tion of the company or fraudulent misrepresentation in the prospectus will not of itself be sufficient to found a winding-up order, for the majority of the shareholders may waive the fraud and confirm the transaction (d). And a fortiori charges of fraud not connected with the formation or promotion of the company do not form a ground for a compulsory order by reason of the fact that investigation under such an order would be desirable (e). * Where a winding-up petition contains an allegation of fraud against an officer of the company, the statutory affidavit is not sufficient; the facts of the alleged fraud must be stated on affidavit (/). Where a company is formed for a fraudulent purpose the signatories to the memorandum are guilty of a fraudulent conspiracy, and will be restrained from effecting thai purpose [g). (z) Cox's Case, 4 D. J. & S. 53; 33 L. J. Ch. 115 ; 146 It. R. '219. (a) London, Bombay, £c, Bank, 18 C. D. 581; 50 L. J. Ch. 557. (b) Savujny's Case, 5 Man.son, 336, distinguishing Coventry's Case, infra. (c) Coventry's Case, 1891, 1 Ch. 202; 60 L. .1. Ch. 186. (d) Haven Gold Mining Co., 20 C. D. 151; 51 L. J. Ch. 212; but see Brim mead and Sons, L897, 1 Ch. 45, 406; 66 I-. .1. Ch. 290. Medical Battery Co., L894, 1 Ch. 444; 63 L. J. ch. L89. London and Hull Soap Works, 1907, \V. N. 254. [g) La HociiU Anonyme, dc. V. Panhanl, 1901, 2 Ch. 618; 70 L. .1. Ch. 786 K.F. 22 • 338 MISCELLANEOUS FRAUDS. SECTION V. — FRAUD ON THE STOCK EXCHANGE. A stockbroker is in a fiduciary position, and like any other agent he must account for secret profits (//.). If he takes to himself the bargain which his principal has instructed him to make, the principal can either adopt the transaction and claim any profit which the broker has made out of it, or he may repudiate the transaction and claim the return of his money (i). If a broker sells securities to close a principal's account and repurchases them at a lower price than he could have purchased in the market in the ordinary way, he must account to the principal for the profit thus obtained (/■). Another case of fraud is where parties conspire tog-ether in procuring a settling day and a quotation on the Stock Exchange for the purpose of inducing those who deal on the Stock Exchange and see the quotation to belieA'e that the rules of the Stock Exchange have been complied with, so thai iu consequence of that belief they should think the company was a better company than it really was. In Bedford v. Bagshaw (I) the director of a company, in order to obtain a quotation on the Stock Exchange, gave to the Committee false information as to the number of shares allotted and paid for. In consequence the Committee granted a special settling day and allowed a quotation in the Official List. The plaintiff, knowing of the Stock Exchange rules regarding special settlements, took shares in the belief that the necessary amount had been subscribed. The shares proved to be valueless, and the Court of Exchequer held that an action could be maintained against the defendant for false and fraudulent representations made by him. " All persons," said Pollock, C.B., " buying shares upon the Stock Exchange must be considered as persons to whom it was contemplated the representations would be made. I am not prepared to lay down as a general rule, that if a person makes a false (h) Nicholson v. Mansfield, 17 T. L. R. 259; Stubbs v. Slater, 1910, 1 Ch. L95; 79 L. J. Ch. 420. i/i Rothschild v. Brookman, 5 Bli. N. S. 165; 30 R. R. 147. (k) Erskine v. Sachs, 1901, 2 K. B. 504; 70 L. J. K. B. 978. II) IE & N. 538; 29 L. J. Ex, 59. FRAUD ON THE STOCK EXCHANGE. 339 representation, everyone to whom it is repeated and who acts' upon it may sue him. But it is a different thing where a director of a company procures an artificial and false value to be given to shares which he professes to offer to the public. . . . There must always be this evidence against the party to be charged, viz. : that the plaintiff was one of the persons to whom he contemplated that the representation could be made or a person whom the defendant ought to have been aware he was injuring or might injure." In Barry v. Croskey (?«), V.-C. Page Wood said he assented to every word of the Chief Baron's judgment in that case; but he also made this significant statement : " Your argument would show that every person who, in consequence of B.'s frauds on the Stock Exchange, was induced to purchase stock at an advanced price in reliance on the false rumour he had circulated, was entitled to maintain an action against B. Would not such consequences be too remote to form ground for an action ? "' In Peek v. Gurney (n), Lord Chelmsford, referring to Bedford v. Bagshaw, said: "The actions were brought upon the allegation of a false representation made to the plaintiff. But no representation was made which reached either his eyes or his ears. From his knowing the rules of the Stock Exchange he assumed that a certain representation had been made, and acted upon it. According to the judgment it was his knowledge of the rules which led him to appropriate the representation to himself, and therefore it could not be taken to be made to any one who was ignorant of these rules. The decisions and the grounds on which they proceeded appear to me to be extraordinary, and T cannot bring my mind to agree to t Im-iii." In Salaman \. Warner (o), the plaintiff, who was a jobber on the Stock Exchange, on the strenglh of a prospectus issued by the defendants, sold shares before allotment for the special settling day to brokers who had been instructed by the iw) 2 J. 4 E p. 22. I,. R. 6 E. I.. |>. 397; 48 I.. -I. ''I,. I'.i {o) 65 I,. 'I' L32; Vickery v. Taylor, II V B. W. St. R, L19. 340 MISCELLANEOUS FRAUDS. • defendants to contract on the Stock Exchange for the purchase of the shares. The defendants then procured allotment of a large majority of the shares to their own nominees, and subsequently induced the Committee of the Stock Exchange to grant a special settling day. In consequence of the control of the shares thus obtained by the defendants, the plaintiff when called upon to deliver was only able to do so at a price dictated by the defendants, and incurred heavy loss. The Court of Appeal held that the plaintiff could not recover damages on the ground of fraud, because his contract was made on his own judgment, and that although there was a conspiracy to obtain a special settlement by means of a misleading statement, such conspiracy did not give rise to civil liability unless the plaintiff's rights were thereby infringed. The case of Salaman v. Warner affords an instance of a method of dealing known as "cornering the market." The process consists in getting into the hands of the person creating the corner, or his nominees, so large a number of shares in a particular undertaking as will practically give him complete control over all transactions connected with the undertaking. There is not, of course, anything necessarily illegal in such a process, but it may become illegal if used for the purpose of perpetrating a fraud. "Rigging the market" is a somewhat different method of dealing, and is employed to induce the public to purchase shares of a new company by creating an artificial price in the market by means of transactions which, if not actually fictitious, are not bond fide. When two or more persons combine with the intention of obtaining purchasers by such means, or of making purchasers pay more for the shares than they would otherwise have done, they are guilty of a con- spiracy to defraud (p). The remedy for this fraud consists primarily in criminal proceedings for conspiracy. But whether there is a sufficiently direct communication between the conspirators and party defrauded to enable the latter to sue for damages seems doubtful. The case is not quite the (p) Reg. v. Aspinall, 2 Q. B. D. 48; 46 L. J. M. C. 145. FRAUD IX ARBITRATIONS. 341 same as where fraud is perpetrated to obtain a special settle- ment, since the representation is made not to the Committee, but only to the public, though it is made through the same source, namely, the Official List. But there is no doubt that as between the conspirators themselves the transaction is illegal and cannot give rise to any rights enforceable in a Court of law (q). SECTION VI.— FRAUD IN ARBITRATIONS. Courts of Equity have from a very early period had juris- diction to set aside awards on the ground of fraud, except where it is excluded by statute (r). By the Arbitration Act, 1889, s. 11, it is provided that where an arbitrator or umpire has misconducted himself, or an arbitration or award has been improperly procured, the Court may set the award aside. The application to set aside an award is by notice of motion in the Chancer}- Division to the judge in Court and in the King's Bench Division to a Divisional Court. There is fraud in an award if it be obtained through corruption or partiality on the part of the arbitrator (s). But the fraud must of course be strictly proved; and evidence of an admission out of Court by an arbitrator that he had received a bribe is not admissible to set aside the award (£). And in the absence of fraud on the part of the parties it is competent for them to agree not to raise any question of fraud in the arbitrator (u). In a case where arbitrators had, either by force or fraud, excluded a co-arbitrator, or either of the parties, from their meetings, it was held to furnish such a presumption of corruption as to be a sufficient ground for setting aside the award (w). So, also, it is against good faith for a person appointed arbitrator to consider himself as agent (q) Scott v. Brown, L892, 2 Q. B. 724; 61 I.. ■). Q. B. 738. t» Smith v. Whitmore, 1 H. & M. 576; 2 D. .J. * 8. -I'll; 136 R. R. 249. i.vi Moseley v. Simpson, L6 Bq. 226; 12 I.. .1. Ch. 739. (t) Be Whiteley, L891, I Ch. 558; 60 L. J. Ch. L49. iu) Tullis v. Jacson, 1892, 3 Ch. 411 ; 6] I.. J. Ch. 655; Pearson v. Dublin Corporation, L907, A. C. 351, jur Lord Atkinson. 77 I,. .1. P. C. 1. (u | Burton v. Knight, 2 Win. 514 See Gregson \. Armstrong, 70 1-. T. lo»i. 342 MISCELLANEOUS FRAUDS. of the person appointing him (.r), or to buy up the unsustained claims of any of the parties to the reference (y). So, also, there is fraud if the award has been obtained by fraud or concealment of material circumstances on the part of one of the parties so as to mislead the arbitrator. If either party be guilty of fraudulent concealment of matters which he ought to have declared, or if he wilfully mislead or deceive the arbi- trator, the award may be set aside (z). An award will not, however, be set aside on the ground that the arbitrator has been misled by the evidence of a witness who might have been cross-examined (a). There is also fraud to set aside an award if the award be obtained by undue means, as, for instance, if the witnesses have been examined in the absence of the parties (b); or if the award has been made clandestinely without hearing each party (c) ; or if the award has been made by one arbitrator apart from the others (d); or if the inter- views have taken place between the arbitrator and one party in the absence of the others (c). So, also, the existence of any ground calculated to bias the mind of the arbitrator, unknown to either of the parties, is sufficient for the inter- ference of the Court (/) ; or if one of the parties has not been allowed a proper opportunity of discussing his case (g). If interviews have taken place between the arbitrator and one of the parties in the absence of the other, similar misconduct on the part of the person applying will not prevent the Court from setting aside the award, for the matter concerns the due administration of justice (h). (x) Caicraft v. Roebuck, 1 Ves. Jr. -226: 1 R. R. 126. (y) Blennerhasset v. Day, 2 Ha. & Be. 116; 53 K. R. 79. (z) South Sea Co. v. Bumpstead, Viu. Ab. Arbitr. (1 a.) 39, 2 Eq. Ca. Ab. 80; Ives v. Medcalfe, 1 Atk. 64; Gartside v. Gartside, 3 Anst. 735. (a) Pilmore v. Hood, 8 Scott, 180; 50 R. R. 622. (b) Re Plews and Middleton, 6 Q. B. 845: 14 L. J. Q. B. 149. See Haigh v. Haigh, 3 D. F. & J. 159. (c) Harding v. Wickham, 2 J. & H. 676; 134 R. R. 387. See Smith v. Whit- more, 1 H. & M. 576; 136 R. R, 249. (d) Re Pleios and Middleton, supra. (e) Harvey v. Shelton, 7 Beav. 455; 13 L. J. Ch. 466; 64 R, R. 116; Gregson v. Armstrong, 70 L. T. 106. (/) Kemp v. Rose, 1 Giff. 258; 114 R. R. 429. (g) Spettigue v. Carpenter, 3 P. Wms. 361. (h) Harvey v. Shelton, supra. FKAID IX ARBITRATIONS. 343 The Court will not give relief against an award if the conduct of the party making the application has been such as to destroy his right to resort to the ('curt for relief (/). An agreement for reference, accordingly, cannot be set aside as obtained by undue pressure if the party objecting has attended the reference and taken the chance of an award in his favour (T). Nor can relief he had against an award when there has been any laches on the part of the person making the application (I). Similar misconduct, however, to that com- plained of on the part of the person making the application will not prevent the Court from setting aside an award, if the award has been obtained by undue means (m). In cases where fraud is charged, the Court will in general refuse to send the dispute to arbitration, if the party charged with fraud desires a public inquiry. But where the objection to arbitration is by the party charging the fraud, the Court will not necessarily accede to it, and will never do so, unless a prima facie case of fraud is proved («). So disputes between partners where a prima facte case of fraud is set up should not as a rule be referred to arbitration (o). So an allegation by a contractor that he was induced to enter into the contract by fraudulent misrepresentation is not a dispute within a clause referring to arbitration disputes arising in relation to or in connection with the contract (//). But a condition in a policy requiring the liability of the insurance company, and not merely the amount of such liability, to be referred to arbitration is binding even though a charge ot fraud be made against the insured ((/). Where there is a question of account which can be referred compiilsoiilv under sect. 14 of tin- Arbitration Act, 1889, the io Smith v. Whitmore, 1 E. & M. 576; 2 D. J. & S. 297. (k) Ormes v. Beadel, -1 Giff. 166; 2 D. I'. & J. 333; 30 L. J. Ch. 1; 128 R. R. 77: Ex p. Wyld, -1 I). I'. & J. 642; 30 L. J. B. L0; L29 R. R. 225. (I) Jones v. Bennett, I Bro. 1'. C. 528. See Nickels \. Hancock, 7 D. M S G. 300; L09 R. R. L30. (to) Harvey \ . Shelton . supra. (n) Russell v. Russell, It C. D. 471; 49 L. J. Ch. 268. (o) Barnes v. Youngs, 67 I.. J. Ch. 263. (p) Monro v. Bognor I). C, L915, 3 K. 15. 167; 84 b. J. K. B. L091. {q) Trainor v. Phoenix Fire Ass. Co., 65 L. T. 825; Gaw v. British Law Fire Ins. Co., L908, 1 [r. R. 245. :)[\ MISCELLANEOUS FRAUDS. Court has power to refer the whole action even though the issues involve questions of fraud (r). But such issues ought not to be referred unless so mixed up with matters of account us to be incapable of being tried separately (s). SECTION VII. FRAUD IN JUDGMENTS. A judgment or decree obtained by fraud upon a Court binds not such Court or any other, and its nullity upon this ground, though it has not been set aside or reversed, may be alleged in a collateral proceeding (£). "Fraud," said De Grey, C. J., "is an extrinsic, collateral act, which vitiates the most solemn proceedings of courts of justice. Lord Coke says it avoids all judicial acts ecclesiastical and temporal " (u). In applying this rule, it matters not whether the judgment impugned has been pronounced by an inferior or by the highest court of judicature in the realm, but in all cases alike it is competent for every Court, whether superior or inferior, to treat as a nullity any judgment which can be clearly shown to have been obtained by manifest fraud (#). Whether an innocent party would be allowed to prove in one Court that a judgment against him in another Court was obtained by fraud is a. question not equally clear, as it would be in his power to apply directly to the Court which pronounced it to vacate it. But however this may be, it is evident that a guilty party would not be permitted to defeat a judgment by showing that in obtaining it he had practised an imposition on the Court (y). In order to sustain an action to impeach a judgment actual fraud must be shown; mere constructive fraiid is not, at all events after long delay, sufficient (z). The Court has jurisdic- (r) Sacker v. Rajozine, 44 L. T. 308; Hack v. Boor, 43 L. T. 425. is) Leigh v. Brooks, 5 C. D. 592; 46 L. J. Ch. 344; Russell v. Harris, 65 L. T. 752. (t) Shedden v. Patrick, 1 Macq. 535; 149 K. R. 55; Reg. v. Saddlers' Co., 10 H. L. C. 431, per Willes, J., 32 L. J. Q. B. 337 ; 138 R. R. 217. (u) Rex v. Duchess of Kingston. 20 How. St. Tr. 544; 2 Smith L. C. 687. (x) Shedden v. Patrick, 1 Macq. 535. Post, Chap. VII., s. 1. (y) 20 How. St. Tr. 479; Doe v. Roberts, 2 B. & Aid. 367; 20 R. R. 477; Bessey v. Windham, 6 Q. B. 166; 14 L. J. Q. B. 7. (z) Patch v. Ward, 3 Ch. 203. FRAUD IX JUDGMENTS. tion to set aside a judgment obtained by fraud in a subsequent action brought for that purpose, the proper remedy being an original action and not a rehearing (a), but such a judgment will not be set aside upon mere proof that the judgment was obtained by perjury (6). An action to set aside a judgment in a probate action on the ground of fraud ought not to be allowed to proceed unless the plaintiff can produce evidence showing a reasonable probability of the alleged fraud being established ; but such evidence need not necessarily be of such a character thai it would be evidence in the action itself (c). Though in most cases a judgment obtained by fraud can be set aside only as against the person guilty of the fraud, this limitation does not apply to an action to set aside a judgment granting probate of a will, inasmuch as a will must be good or bad against all the world (d). The Divorce Court has no jurisdiction on motion by a co-respondent to rescind a decree absolute on the ground of fraud, where the co-respondent has failed to appeal from the decree nisi (e). An action will lie to set aside a judgment on the ground of fraud although such judgment was obtained by default; but, inasmuch as a shorter method of doing it in chambers in such a case has been provided by Order XXVII., r. 15, it may be a question whether a plaintiff who adopts the more dilatory method will not be put upon terms (/). Where the order as drawn up correctly represents the decision of the Court, but that decision is based upon a mis- representation not caused by an accidental slip, it cannot be corrected under Order XXVIII., r. 11 (g). (a) Cole v. Langford, 1898, 2 Q. B. 36; (57 L. J. Q. B. 698; but see Nixon \ Lounde.s, 1909, 2 Ir. R. 1. (6) Baker v. Wadsworth, (Yl L. J. Q. B. 301; Flower v. Lloyd, a ('. D. 297; 46 L. J. Ch. 838. (c) Birch v. Birch, 1902, P. 130; 71 L. J. P. 58. (d) Ibid. (e) Kemp Welch v. Kemp Welch, 1912, P. 82; 81 I,. .1. I'. 25. (/) Wyatt v. Palmer, 1899, 2 Q. B. 106, 110; 68 L. J. Q. B. 709. Pre ton Banking Co. v. Allsup, L895, I Ch. L41; ''.1 L. .) . ch. 196; cf, ' h ::u»i v. Cordon, 1901. ] C,). I',. 694; 70 L. J. g. B. 394. 346 MISCELLANEOUS FRAUDS. A foreign judgment can be impeached, if it be made to appear that it was fraudulently obtained. When a question between the parties has been decided by a foreign Court, with jurisdiction, that decision is, as a general rule, conclusive, and cannot be opened on the merits; but if the foreign judgment was obtained by fraud, that would be an answer to any proceeding founded on the judgment (h). But an English Court will not refuse to enforce a foreign judgment as being contrary to natural justice merely because the foreign Court has excluded evidence tendered to show that the contract was induced by fraud (i). A judgment by consent is binding, but if it appear that the consent was obtained by fraud, the Court will treat the consent as a nullity (A). So, also, if it be made to appear that a judge's order has been obtained by fraud or by the suppression of information which it was essential the Court should know, the order will be set aside (I). The Court of Chancery would give assistance to enforce the judgments of other Courts of competent jurisdiction, when the execution of such judgments was defeated or obstructed by fraudulent contrivances (m). A voluntary settlement, accordingly, of real and personal estate, made by a man who was defendant in a suit in the Ecclesiastical Court, with the intent of withdrawing his property from the process of that Court, was set aside. Although the deed might have been executed before any right was declared, or any order for payment of money was made, yet if it appeared that the deed was executed for the purpose of defeating the right which the* defendant knew the plaintiff was entitled to establish, it was considered i/i) Bank of Australasia v. Nias, 16 Q. B. 717 ; 20 L. J. Q. B. 284 ; Ochsenbein v. Papelier, 8 Ch. 700; 42 L. J. Ch. 861; Messina v. Petroccochino , L. E. 4 P. C. 144; 41 L. J. C. P. 27; Abouloff v. Oppenheimer , 10 Q. B. D. 295; 52 L. J. Q. B. 309; Vadala v. Lawes, 25 Q. B. D. 310, 316. (*) Robinson v. Fenner, 1913, 3 K. B. 835; 83 L. J. K. B. 81. (fc) Stannard v. Harrison, 19 W . R. 812. (I) Ex p. Cockerell, 4 C. P. D. 39, per Lord Coleridge. (m) Blenkinsopp v. Blenkinsopp, 12 Beav. 586, 1 D. M. & G. 500; 21 L. J. Ch. 401. hiq r^ FRAUDS UPON THE LEGISLATURE. .".-17 to have been executed with the view and intention of defrauding him (»). A faculty granted by the Ordinary after citation and FaeuH unappealed against cannot in the absence of the consent of all the parties interested be revoked for any cause other than fraud (o). An agreement intended as a contrivance to evade the scope Fraud on . ... statute. and policy of an Act of Parliament is void (/;). In Vauxhall Bridge Co. v. Earl Spencer (a) it was held that Fliiud u P° n Legislature. an agreement between a landowner and a company, that, in the event of his not opposing an application to Parliament, the landowner should receive a sum of money, is a fraud upon the Legislature if concealed from Parliament, and is therefore void upon grounds of public policy. But the principle upon which that case was founded is open to much question. The better opinion would seem to be that there is no fraud upon the Legislature unless the agreement is one which the parties are bound to communicate. There may be cases in which an agreement of the sort should be communicated to the Legisla- ture, but there can be no doubt that in ordinary cases it is open to parties to enter into such an agreement, and that there is no obligation incumbent on them to communicate it to the Legislature (r). The question whether such an agree- ment is binding on the company after incorporation is a very different one. It is a fraud upon the Legislature for a company to obtain an Act authorising land to be taken apparently for the purposes of the company, but really with a view to selling it again t<> other parties in order to make a profit. It is a fraud upon the Act by which the powers were conferred (*). (n) Ibid.; cf. Reg. v. Hopkins, 1896, 1 Q. B. 652; 65 I-. J. M. C. L25. (o) London County Council v. Dundas, 1904, P. 1. (p) Nash v. Neazor, 1W8, 2 Ir. R. 46. (g) 2 Madd. 366; S. C. Jac. 04. ir) Simpson v. Lord Howden, 10 A. & E. 793, 9 CI. & Fin. 6] : 50 K. R. 555; Taylor v. Chichester, to fraud in obtaining a local Act of Parliament, Mangles v. Grand Dock Colliery Co., 10 Him. 519; M K. R. 880. (s) Carington v. Wycombe lily. Co., 'A Cli. 377; and Bee II C. D. p. 484. ( 348 ) CHAPTER VI. HOW THE RIGHT TO IMPEACH A TRANSACTION ON THE GROUND OF FRAUD MAY BE LOST. Transactions, although impeachable in equity at the time of inception, and for some time afterwards, on the ground of fraud, may become unimpeachable by a subsequent confirma- tion by acquiescence, or by the mere lapse of time. But though a voidable transaction may be confirmed, there can be no ratification of one which is void ab initio or illegal (a). By voidable is meant not that it is void until ratified, but that it is valid until rescinded (6). SECTION I. — CONFIRMATION. No confirmation, release, acquiescence, or laches will bar (he right to relief unless the party was sui juris, a free agent, and had full knowledge of the facts, and to some extent the law also; for example, he must know that the transaction is one which might not improbably be set aside (c). In order that an act may have any effect or validity as a confirmation, it must clearly appear that the party confirming was fully apprised of his right to impeach the transaction, and acted freely, deliberately, and advisedly, with the inten- tion of confirming a transaction which he knew, or might or ought with reasonable or proper diligence to have known, to be impeachable. If his right to impeach the transaction be concealed from him, or a free disclosure be not made to him of every circumstance which it is material for him to know, (a) Brook V. Hook, L. R. 6 Ex. 89; 40 L. J. Ex. 50. (b) L. R. 2 H. L. at p. 375; L. R. 4 H. L., at p. 73. (c) Allcard v. Skinner, 36 C. D. pp. 188, 192; 56 L. J. Ch. 1052. CONFIRMATION. 349 or if the act takes place under pressure or constraint, or by the exercise of undue influence, or under the delusive opinion that the original transaction is binding on him, or if it be merely a continuation of the original transaction, the confirma- tion operates as nothing (d). To make a confirmation of any value, the parties must be at arms' length, on equal terms, with equal knowledge, and with sufficient advice for protection. There must be full knowledge of all the facts, full knowledg* of the equitable rights arising out of these facts, and an absolute release from the undue influence by which the fraud was practised (e). It will not be valid if done in distress and difficulties, under the force, pressure, and influence of the former transaction (/) ; and it must be an act separate and distinct from the impeachable transaction (. 829. [y) Gandy v. Macaulay, 31 C. D. 1. (z) Thomson \. Eastwood, 2 App. Ca. 234, 247. (a) Wright v. Vanderplank, 8 I). M. A <",. L33; 25 I-. J. ch. 753; in R. R. 60; J/irrait v. Aldam, supra; Turner v. Collins, 7 Ch. 329; II I,. J. Ch, 558; Mitchell \. Homfray, 8 Q. B. D. 587; 50 I.. .1. Q. I'. 160 (b) De Bussche v. Alt, 8 C. D. p. 31 I ; 17 I,. .1. Ch. 386. (c) L. It. :i IT. I;, p. 265. Peek v. Derry, :i7 C. I>. 576; 58 I.. -I. Ch. 864, Lmi n v. Smith, 11 C. I'. 374. 352 ACQUIESCENCE. Acquiescence or delay for a length of time after a man is in a situation to enforce a right, and with a full knowledge of facts, is, in equity, cogent evidence of a waiver and abandon- ment of the right (/) ; but it is not the time, but the acquiescence, which changes what would otherwise be a void act into a valid one (g). If a voidable contract, or other trans- action, is voluntarily acted on, with a knowledge of all the facts, in a hope that it may turn out to the advantage of a party who might have avoided it, he may not void it when, after abiding that event, it has turned out to his dis- advantage (h). To fix acquiescence upon a party it must unequivocally appear that he knew or had notice of the fact upon which the alleged acquiescence is founded and to which it refers (/'). Acquiescence imports and is founded on knowledge. A recog- nition resulting from ignorance of a material fact goes for nothing. The question as to acquiescence cannot arise unless the party against whom it is set up was aware of his rights. A man cannot be said to acquiesce in what he does not know, nor can he be bound by acquiescence unless he is fully apprised as to his rights and all the material facts and circumstances of the case (k). Acquiescence in what has been done will not be a bar to relief when the party alleged to have acquiesced has acted or abstained from acting through being ignorant that he possessed rights which would be available against that which he permitted to be enjoyed (7). A man cannot permit (/) Duke of Leeds v. Lord Amherst, 2 Ph. 117, 123; 78 E, E. 47; Life Association of Scotland v. Siddall, 3 D. F. & J. 73; 130 E. E. 28; Skottowe v. Williams, ibid. 535; 130 E. E. 243. ! (g) L. E. 3 H. L. 233, 260. (h) Ormes v. Beadel, 2 D. F. & J. 336, per Lord Campbell; 30 L. J. Ch. 1. (i) Randall v. Errington, 10 Ves. 428; 8 E. E. 18; Spackman's Case, 34 L. J. Ch. 321, 326; Stanhope's Case, 1 Ch. 161; 35 L. J. Ch. 296; Stewart's Case, ibid. 514 ; 35 L. J. Ch. 738. (A-) Lloyd v. Attwood, 3 D. & J. 624; 29 L. J. Ch. 97 ; 121 E. E. 252; Savery v. King, 5 H. L. C. 627; 25 L. J. Ch. 482; 101 E. E. 299; Bright v. Legerton, ■2 D. F. & J. 617; 30 L. J. Ch. 338; Life Association of Scotland v. Siddall, 3 D. F. & J. 74 ; 130 E. E. 28 ; Bullock v. Downes, 9 H. L. C. 1 ; 131 E. E. 1 ; Wall v. Cockerell, 10 H. L. C. 229; 32 L. J. Ch. 276; 138 E. E. 124; Bagnall v. Carlton, 6 C. D. 371; 47 L. J. Ch. 30; Be Bussche v. Alt, 8 C. D. 287; 47 L. J. Ch. 386; ante, pp. 128, 129. (I) Earl Beauchamp v. Winn, L. E. 6 H. L. 223. ACQUIESCENCE. 353 who does not know that he has a right to refuse (/»).. You cannot consent to a thing unless you have knowledge of it (n). In the absence of full information mere lapse of time cannol grow into acquiescence (o). Nor, indeed, is a recognition of avail which assumes the validity of a transaction, if the question as to its validity does not appear to have come before the parties (p). In order that acquiescence may be a bar to relief the party must be aware not only of the facts on which his claim is based, but of his legal rights to redress in respect of them (q). The mere fact that a man may have heard unfavourable rumours, and conceived suspicions, is not enough to fix him with acquiescence (/•). The proof of knowledge lies on the party who alleges acquiescence, and sets it up as a defence (s). If the transaction has taken place under pressure, or the exercise of undue influence, it must clearly and unequivocally appear that the party against whom acquiescence is alleged was sui juris, and was released from the influence or the pressure under which he stood at the time of the transaction, and acted freely and advisedly in abstaining from impeaching it. Acquiescence goes for nothing so long as a man continues in the same situation in which he was at the date of the transaction (t). But as soon as a man with full knowledge, (to) Per Alderson, B., 15 M. & W. p. 217. (n) Per Jessel, M. R., 1 C. D. p. 528. (o) L. R. 3 H. L. 233, 260. ) Honner v. Morton, 3 Russ. 65; 27 R. R. 15; Wright v. Vander plank, 8 D. M. & G. 133; 25 L. J. Ch. 753; 114 R. R. 60. See Baker v. Bradley. 7 D. M. & G. 597; 25 L. J. Ch. 7; 109 R. R, 245. (q) Robinson v. Abbott, 20 V. L. R. 346. ir) Central Ely. Co. of Venezuela v. Kisch, L. R. 2 H. L. 112; 36 L. J. Ch. 849; 142 R. R. 39. (s) Bennett v. Colley, 2 M. & K. 225; Burrows v. Walls, 5 D. M. & G. 233; 104 R. II. 95; Life Association of Scotland v. Siddall, 3 D. F. & J. 58; L30 R. R 28; Wall v. Cocker ell, supra; Spackman's ('use, 34 Xj. J. Ch. 329. (t) Gregory v. Gregory, Coop. 201 ; 14 R. R. 244 : Roche v. O'Brit n,l B. 4 B. 338; Aylward v. Kearney, 2 B. & B. 463; Honner v. Morton, supra; Duk( of Leeds v. Lord Amherst, 2 Ph. 117; 7s R. R. 47; Addis v. Campbell, I Beav. mi ; id L. -I Ch. 284; 55 R. R. 122; Roberts v. Tunstall, 7 Ba. •-'■ r .7 : 11 L. J. Ch. 184; 67 R. R. 54; Salmon v. Cutts, \ J).- G. & Bm. L82; 21 L. J. Ch. 750; -7 R. k. 320; Wright v. Vanderplank, supra; Berdoe v, Dawson, 34 Bea^ 603; 145 R. R. 693. K.F. 23 354 ACQUIESCENCE. or at least with sufficient notice or means of knowledge, of his rights, and of all the material circumstances of the case, freely and advisedly dot's anything 1 which amounts to the recognition of a transaction, or acts in a manner inconsistent with its repudiation, or lies by for a considerable time, and knowingly and deliberately permits another to deal with the property, or incur expense, under the belief that the transaction has been recognised, or freely and advisedly abstains for a considerable lapse of time from impeaching it, there is acquiescence, and the transaction, although originally impeachable, becomes unimpeachable in equity (u). 80 a shareholder who is registered to his knowledge as the holder of shares for which he has been induced to subscribe by misrepresentation will lose his right to rescission (1) by doing something after notice of the misrepresentation which is inconsistent 1 with repudiation (w); or (2) by the commence- ment of the winding up of the company {%) ; or (3) by the company becoming insolvent and stopping payment (y), unless in cases (2) and (3) he has previously repudiated the shares, and proceedings for rectification have been commenced by him or by some other person, and he has, in the latter case, agreed with the company to be bound by such proceedings (z), or he has previously repudiated the shares and filed an affidavit setting up the misrepresentation in an action for calls (a), or (4) by not repudiating his shares within a reason- (u) Selsey v. Rhodes, 1 Bligh, N. S. 1; 30 E. E. 1; Vigers v. Pike, 8 CI. & Fin. 652; 54 K. E. 114: Charter v. Trevelyan, 11 CI. & Fin. 714; 65 R. R. 305; Stone v. Godfrey, 5 D. M. & G. 76; 23 L. J. Ch. 769; 104 R. R. 32; Farrant v. Blanchford, 1 D. J. & S. 107; 32 L. J. Ch. 327; 137 R, R. 164; Cairncross v. Lorimer, 3 Macq. 830; Archbold v. Scully, 9 H. L. 360; 131 R. R. 223; Turner v. Collins, 7 Ch. 329; 41 L. J. Ch. 558; Smethurst V. Hastings, 30 C. D. p. 497; 55 L. J. Ch. 173. {w) Ex p. Briggs, 1 Eq. 483; 35 L. J. Ch. 320; Aarons Reefs v. Ttoiss, 1896, A. C. 273; 65 L. J. P. C. 54; Ex p. Shearman, 66 L. J. Ch. 25; cf. Tomlins Case, 1898, 1 Ch. 104; 67 L. J. Ch. 11. (x) Burgess's Case, 15 C. D. 507; Scottish Petroleum Co., 23 C. D. 436. (y) Tennent v. Glasgow Bank, 4 App. Ca. 615. (z) Paivle's Case, 4 Ch. 497; 38 L. J. Ch. 412; Scottish Petroleum Co., 23 C. D. 414. (a) Whiteley's Case, 1900, 1 Ch. 365; 69 L. J. Ch. 250. ACQUIESCENCE. ;."«."» able time (b). The shareholder is also debarred in cases (2) and (3) from obtaining damages (c). The equitable rule as to acquiescence applies with peculiar force to the case of property which is of a speculative character, in is subject to contingencies, and can only be rendered pro- ductive by a large and uncertain outlay (d). A distinction must be taken between cases where the ;i< -quiescence alleged takes place while the act is in progress and cases where it does not take place until after the act has been completed. " The term ' acquiescence,' ' said Thesiger, L.J., in De Bussch& v. Alt (e), "is one which was said by Lord Tottenham, in Duke of Leeds v. Amherst, ought not to be used ; in other words, it does not accurately express any known legal defence, but if used at all, it must have attached , to it a very different signification, according to whether the acquiescence alleged occurs while the act is in progress, or only after it has been completed. If a person having a right, and seeing another person about to commit, or in the course of committing, an act infringing on that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act. This, as Lord Cottenham said, is the proper sense of the word ' acquiescence,' and in that sense may be defined as quiescence under such circumstances, as that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct. But when once the act is completed without any knowledge or assent upon the part of the person whose right is infringed, the matter is to (6) As to what is reasonable time, see Buckley, 96. (c) Houldvworth v. City of Clasgow Bank, 5 App. Ca. 317. Norway v. Rowe, 19 Ves. 144; 12 R. K. 157; Small v. Attwood, 6 CI. & Fin. 232, 359; Prendergasi v. Turton, 1 Y. & C. C. C. 98; 13 hi J. Ch. 268 57 It. R. 255; Lovell v. Hicks, 2 Y. & C. 46; 6 L. J. Ex. Eq. 85; Jennings v Broughton, 5 D. M. & G. L40; ■!■'• b. .1. Ch. 999; 104 R. R. 58; Clegg \ Edmondson,8 D. M. & > D. P. it J. 58. 7:; : L30 R. R. 28 (p) Ibid. fr/i charter v. Trevelyan, 11 CI. & I'm. 711, 7lii; 65 R. R. 805; Gandy v. Macaulay, 31 C. D. 1. (r) 3 ]>. I'. & J. p. 77. '. 200. it) Vatcher v. Paull, L915, A. C. 872; 84 1.. I i' C. 86. 358 DELAY with reasonable diligence (?/). It is a rule of equity not to encourage stale demands, or give relief to parties who sleep on their rights. The rule is founded on the difficulty of procuring full evidence of the character and particulars of remote transactions, and is independent of the Statutes of Limitations (w). In the case of legal titles and legal demands, Courts of Equity act in obedience to the Statutes of Limitations (x); a legal right cannot be lost by mere delay, unless the delay is such as to cause a statutory bar. The rule of equity as to laches does not therefore apply to cases falling within 13 Eliz. c. 5 (y). But if the demand is not of a legal nature, or is strictly equitable, the Statutes of Limita- tions are not a bar in equity. Courts of Equity, however, look to them as guides (z), and assimilate their rules, as far as the transactions will admit, to the law (a) ; and though they are not within the words of the statute, they are within its spirit and meaning, and have uniformly adopted its rules (b). Where a bar exists by statute, equity will, in analogous cases, consider the equitable rights as bound by the same limita- tions (c); but in cases where the analogies of law do not apply, a Court of Equity is governed by its own inherent doctrine not to encourage stale demands. Parties who would have had the clearest title to relief, had they come in reason- («) Hicks v. Cooke, 4 Dow. 16 ; 16 R. R. 1 ; Chalmer v. Bradley, 1 J. & W. 59 ; 20 R. R. 216; Walford v. Adie, 5 Ha. 112. (to) Hovenden v. Lord Annesley, 2 Sch. & Lef. 630; 9 R. R. 119; Beckford v. Wade, 17 Ves. 87; 11 R. R. 20; Rancliffe V. Parkins, 6 Dow, 149, 232; 19 R. R. 36; Cholmondeley v. Clinton, 4 Bligh, 119; Bright v. Legerton, 2 D. F. & J. 606, 617; 129 R. R, 216; Knight v. Boicycr, 2 D. & J. 421, 443; 27 L. J. Ch. 521; 119 R. R. 184; Gresley v. Mousley, 4 D. & J. 78; 28 L. J. Ch. 620; 124 R. R. 164; Skottowe v. Williams, 3 D. F. & J. 535; 130 R. R. 243. (x) Hovenden v. Lord Annesley, supra; Fulwood V. Fulwood, 9 C. D. 178; 47 L. J. Ch. 459; Gibbs v. Guild, 9 Q. B. D. 59; 51 L. J. Q. B. 313. . {y) Re Maddever, 27 C. D. 523; 53 L. J. Ch. 998. (z) Whalley v. Whalley, 3 Bligh, 17: Knox v. Gye, L. R. 5 H. L. 656; 42 L. J. Ch. 234. (a) Cholmondeley v. Clinton, 4 Bligh, 1, 95; Brooksbank v. Smith, 2 Y. & C. 60; 6 L. J. Ex. Eq. 34; Knox v. Gye, supra; Gibbs v. Guild, supra. (b) Bulli Coal Mining Co. v. Osborne, 1899, A. C. 351; 68 L. J. P. C. 49. (c) Hovenden v. Lord Annesley, 2 Sch. & Lef. 607, 632; Whalley v. Whalley, 3 Bligh, 17; Cholmondeley v. Clinton, 4 Bligh. 1, 119; Sibbering v. Balcarres, 3 De G. & S. 735 ; 19 L. J. Ch. 252 ; 84 R. R. 418 ; Leeds v. Amherst. 2 Ph. 117 ; 78 R. R. 47 ; Fulwood v. Fulwood, supra. AND LAPSE OF TIME. 359 able time, may deprive themselves of their equity by a delay which falls short of the period fixed by the statutes (i Scotland v. Si). In an action of deceit against directors in respect of shares taken under a false prospectus, the House of Lords has laid down that equity will follow by analogy the rule of law, and that the only amount of delay which could be a bar to relief is that fixed by the Statute of Limitations (c). But if share- holders come to the Court to be released from their shares on the ground of fraud, they must come with diligence and promptitude (d). A man indeed who, after being fully aware of the false representation in the prospectus of a company, by which he has been induced to take shares, delays for an un- reasonable time in taking proceedings to have his name removed from the list of shareholders, cannot claim to be Or) Attwood v. Small, (i CI. & Fin. 232. 357; 49 R. R, 115; Clegg v. Edmond- son, 8 D. M. & G. 787; 114 R. R. 336; Clements v. Hall. 2 D. & J. 173; 27 L. J. Ch. 349; 119 R. R, 74: Mills v. Haywood, 6 Ch. p. 202; Rule v. Jewell, 18 C. D. 660; Tadcaster Brewery v. Wilson, 1897, 1 Ch! p. 711 ; 66 L. J. Ch. 402. (y) Ridgway v. Newstead, supra: Levy v. Stogd&n, 1899, 1 Ch. 5 ; 68 L. J. Ch. 19. Where the lapse of time has not altered the position of the parties interested, it is of little or no importance. Wollaston v. Tribe, 9 Eq. 50; Beauchamp v. Winn. L. R. 6 H. L. 232. (z) Chnigh v. London and North Western Rly. Co., L. R. 7 Ex. 34; 41 L. J. Ex. 17; Smethurst v. Hastings, 30 C. D. p. 497; 55 L. J. Ch. 173; ante, p. 11. (a) Jennings v. Broughton, 5 D. M. & G. 126 ; 23 L. J. Ch. 999 ; 104 R. R. 58 ; Ernest v. Vivian, supra: Levy v. Stogden, supra; Seddon v. North Eastern Salt Co., 1905, 1 Ch. 326 ; 74 L. J. Ch. 199. (b) Walford v. Adie. 5 Ha. 112; Lawrence's Case, 2 Ch. 425; 36 L. J. Ch. 490; Rule v. Jewell, 18 C. D. 660; Levy v. Stogden, supra. ■ (c) Peek v. Gurney, L. R. 6 H. L. 377, 384, 402; 43 L. J. Ch. 19. (d) Kent v. Freehold Land, Ac., Co., 3 Ch. 493; 37 L. J. Ch. 653; Scottish Petroleum Co., 23 C. D. 413; Aarons Reefs v. Twiss, 1896. A. C. 273, 294; 65 L. J. P. C. 54. AND LAPSE OF TIME. 363 entitled, even after the creditors are paid, to be treated as between himself and the company as if he were not a share- holder, and to have repayment upon that footing (e). So, also, persons who apply for shares on the faith of a prospectus are bound to ascertain at the earliest possible moment whether the memorandum and articles of association are in accordance with the prospectus. If they fail to do so, and the objects of the company are extended beyond those described in the prospectus, the persons who have so taken shares on the faith of the prospectus will be held bound by acquiescence (/). It is difficult to lay down any general rule as to the time within which an objection on the ground of misrepresentation in the prospectus of a company should be made the ground of repudiation of shares after it has been discovered. In even case attention must be paid to the circumstances (g). A delay pending the hearing and decision of the case of another share- holder in the same position, agreed to be taken as a representa- tive case, was held not to prejudice the party, notwithstanding that a winding-up order intervened (h). lint a shareholder who did not repudiate, but remained silent, and attended meetings, and took no steps in the matter until after the winding-up order and after the result of the trial, was held debarred by his delay from taking proceedings to have his name removed from the list of shareholders (•/). Where an allottee of shares did not move to have his name removed from the register until five months after he became fully aware of the misrepresentation, the unexplained delay Was held to preclude him from relief (_/'). The rule is that the repudiating shareholder must not only repudiate, but also get his name removed or commence pro- (e) Oyilvie v. Currie, 37 L. .1. Ch. All. (/) Oalws v. Turquand, L. R. 2 H. L. p. 352, per Lord Chelmsford; 36 L. J. Ch. 949. By the Companies Act. 1908, every prospectus must now state ill'- contents of tin- memorandum. (r/i Ogilvie v. Currie, :'>7 I,. .). ch. 544, per Lord Cairns. Sec L896 A. C. al p. 294. (h) Pawle Case, I Ch. 497; 38 L. .1. Ch. 112: Karberg's Cose, L892, :i Ch. 1 ; 'H I,. .). ch. 711 ; cf. M'NeilVs Case, 10 Eq. 507; 39 D. J. Ch. 822. («) Ashley's Case, 9 Bq. 263; 39 L. J. Ch. 354. (j) Re Christineville Rubber Estates, 81 L. J. Ch. 68. 364 DELAY ceedings to have it removed, subject, however, to this, that if one repudiating shareholder takes proceedings, the others will have the benefit of them, if there is an agreement with the company that they shall stand or fall by the result (k). The question as to delay may be also materially affected by reference to the relation which subsists between the parties. A delay which might be available by way of defence to persons not under any fiduciary relation or obligation may not be available to those who are affected by a fiduciary relation or obligation (Z). If, for instance, the transaction be between solicitor and client, a delay (which would be fatal in other cases) may be permitted, for the solicitor must know that the onus of supporting the transaction will rest on him, and that if he desire it to be upheld he must preserve the evidence which will be required to uphold it (m). The time within which a client must assert his right as against his solicitor to obtain or in case of error to open an account is not limited to six years or to any other definite period (n). The rules of the Court as to lapse of time being a bar in equity apply to cases of constructive trust (o), and even to transactions between trustee and cestui que trust in respect of the trust estate (p), as well as to ordinary' transactions. Length of time can, however, have no effect between trustee and cestui que trust, except the trusts are properly executed (g). There is a wide distinction between trusts which are actual and express and constructive trusts. A trust by which a man (k) Scottish Petroleum Co., 23 C. D. 413, 436; ante, p. 354. (I) Lindsey Petroleum Co. v. Hurd, L. R. 5 P. C. 242; Erlanger v. New Sombrero Co., 3 App. Ca. 1248; 48 L. J. Ch. 73. (to) Gresley v. Mousley, 4 D. & J. 78, 99; 28 L. J. Ch. 620; 124 R. R. 164; Boswell v. Coaks, 27 C. D. 456; 55 L. J. Ch. 761. (n) Cheese v. Keen, 1908, 1 Ch. 245 ; 77 L. J. Ch. 163. (o) Hovenden v. Lord Annesley, 2 Sch. & Let'. 633; 9 R. R. 119; Beckford v. Wade, 17 Ves. 97; 11 R. R, 20; Clegg v. Edmondson, 8 D. M. & G. 787; 114 R. R. 336; Clanricarde v. Henning, 30 Beav. 180; 30 L. J. Ch. 865; 132 R. R. 227; Soar v. Ashwell, 1893, 2 Q. B. 390. (p) Gregory v. Gregory, Coop. 201; 14 R. R. 244; Roberts v. Tunstall, 4 Ha. 257; 14 L. J. Ch. 184; 67 R. R. 54; Baker v. Read, 18 Beav. 398; 104 R. R. 484; Banoell v. Barwell, 34 Beav. 371; Rochefoucauld v. Boustead, 1897, 1 Ch. 196; 66 L. J. Ch. 74. (q) Franks v. Bollans, 37 L. J. Ch. 155. AND LAPSE OF TIME. .SO") undertakes to hold and apply property for the benefit of another is widely different from the ease of ownership, subject to the claims of another, if he thinks proper to enforce it (r). In the case of a bribe received or profit made by a person in a fiduciary position, the cestui que trust who is wronged is not barred by any length of time, so long as that wrong is con- cealed from him by the wrongdoer; but a Court of Equity will, whether by analogy or in obedience to the Statute of Limitations, hold the claim barred, if the cestui que trust stands by and takes no proceedings for six years from the time when he became aware of it. The money sought to be recovered in such a case is in no sense the money of the cestui qui trust, unless it is made so by a judgment founded on the act by which the trustee got the money into his hands. The case is different from that of a cestui que trust seeking to recover money which was his own before an act wrongful lv done by the trustee (5). In the case of continuing express trusts, created by act of parties, no time is a bar, for from the privity existing between the parties the possession of the one is the possession of the other, and there is no adverse title (/). Nor is length of time a bar where a debt has accrued in consequence of a violation of confidence bestowed in a fiduciary character (u). But if the trust, though express. be not continuous, and the case be one of gross laches, the general rule of equity, that encouragement is not to be given to stale demands, is equally applicable (ir). If there be laches on both sides, the ordinary rules as to delay and acquiescence may not apply (at). (r) Toft v. Stephenson, 7 Ha. 15; 21 L. J. Ch. 129; 91 R. R. 11. («) Metropolitan Bank v. Heiron, 5 Ex. D. 323. (t) Cholmondeley v. Clinton, I Bligh, J ; Wedderburn v. Wedderbum. J Keen 749; 4 M. & C. 41; 8 L. J. Ch. 177; 44 11. R. 331: Knight v. lawyer, 2 D. & J. 121, 443; 27 L. J. Ch. 521; 11'.) Et. R. 184; Clanricarde v. Henning, 30 Bea^ 175. supra; Rochefoucauld v. Boustead, 1897, 1 Ch. 196; 66 L. J. Ch. 71 Teed v. Beere, 5 Jar. X. S. 381; Burdick \. Garrick, •"> Ch. 233; 39 L. J. Ch. 661. I Bright v. Legerton, 1 D. V. & .1. 606; 30 L. J. Ch. 338; Harston v. Tenison, 20 C. J). 120; 51 L. J. Ch. 645; Re Postlethwaite, 60 L. T. Rochefoucauld v. Boustead, ropra. > i) llirj.r. v. Uorant, 2 Do* S 01. Ill 366 DELAY Time, however, does not begin to run against a man in cases of fraud until he has knowledge of the fraud. Time begins to run only from the discovery (y). But the discovery of a concealed fraud only gives a new cause of action where the fraud is the fraud of the defendant himself or of some one for whom he is directly responsible (z). The Statute of Limitations is no bar in equity in cases of fraud (a) ; and the Trustee Act, 1888, s. 8, does not apply to cases of fraud or fraudulent breaches of trust; but if fraud is relied on, it must be fraud imputable to the person who invokes the aid of the statute (b). The right of the party defrauded is not affected by lapse of time, or, generally speaking, by anything done or omitted to be done, so long as he remains, without any fault of his own, in ignorance of the fraud that has been committed (c). Lapse of time imputed as laches may be excused by the obscurity of the transaction, whereby a man is disabled from obtaining full information of his rights (d). Time does not begin to run against a man, so as to bar the remedy, until he has full information of his rights and injuries (e), or has in his possession full means of know- ledge (/), or might by the exercise of reasonable diligence have obtained evidence of the fraud (g). But if he delays his claim to rescission until after the lapse of six years from his discovery of the fraud, the Court will act by analogy to (y) Ante, p. 16. (z) John v. Dodwell, 1918, A. C. 563; 87 L. J. P. C. 92. (a) Sturgis v. Morse, 24 Beav. 5-11; 29 L. J. Ch. 766; 116 B. E. 219 (b) Thome v. Heard, 1895, A. C. 495; 64 L. J. Ch. 652. - (c) Rolje v. Gregory, 4 D. J. & S. 579; 34 L. J. Ch. 274; 146 B, E. 463. See Allfrey v. AUJrey, 1 Mac. & G. 99; 84 E. E. 15. (d) Murray v. Palmer, 2 Sch. & Lef. 486; Erlanger v. New Sombrero Co., 3 App. Ca. 1231; 48 L. J. Ch. 73. (e) Blennerhassett v. Day, 2 Ba. & Be. 104, 119; 53 E. E, 79; Whalley V. Whalley, 3 Bligh, 1; Charter v. Trevelyan, 11 CI. & Fin. 714; 65 E. E. 305; Browne v. Cross, 14 Beav. 106 ; Parker v. Bloxam, 20 Beav. 295 ; 109 E, E. 423 ; Savery v. King, 5 H. L. C. 627 ; 25 L. J. Ch. 482; 101 E. E. 299. (/) Browne v. M'Cliniock, L. E. 6 H. L. 456; Redgrave v. Hard, 20 C. D. 13; 51 L. J. Ch. 113. The fact, however, that a man has the means of knowledge is not the same thing as knowledge, if no culpable negligence can be imputed to him. Earl Beauchamp v. Winn, L. E. 6 H. L. 233. (g) Chetham v. Hoare, 9 Eq. 571 ; 39 L. J. Ch. 376 ; Vane v. Vane, 8 Ch. 383 ; 42 L. J. Ch. 299 ; Willis v. Lord Howe, 50 L. J. Ch. 4. AND LAPSE OF TIME. 367 the Statute of Limitations and refuse to grant relief (A). As between partners concealed fraud prevents the operation of the statute, although such fraud might have been discovered at t lie time by the use of due caution: a partner being entitled in rely on the good faith of his co-partners (i). In an action for negligence concealment of the negligence until six years before action is no answer to the defence of the statute if the defendant has not been guilty of fraud (J). In cases of pressure or undue influence time does not begin to run until the person is emancipated from the dominion under which he stood at the date of the transaction (/,). The objection of time is removed so long as a man remains, without any fault of his own, in ignorance of his rights and injuries (/), or is under a legal disability (m), or so long as the dominion or undue influence which vitiated the transaction is in full force (n). The mere fact, however, of the poverty or pecuniary embarrassment of the injured or defrauded party is not a sufficient excuse for delay (0) ; nor will the mere notice or assertion of a claim, unaccompanied by any act to (7i) Oelkers v. Ellis, 1914, 2 K. B. 151; 83 L. J. Ch. 658; Armstrong v. Jackson, 1917, 2 K. I'.. 822; 86 L. J. K. B. 1375. (i) Betjemann v. /J.. 1895, 2 Ch. 474; G4 L. J. Ch. 641. (/') Armstrong v. Milburn, 54 L. T. 723; hut see Osgood v. Sunderland, 111 L. T. 529. (fe) Gregory v. Gregory, Coop. 201; It It. R. 241; Addis v. Campbell, 1 Beav. 401; 10 L.J. Ch. 284; 55 K. R. 122; Bellamy v. Sabine, 2 Ph. 425; 17 I,. J. Ch. 105; 78 R. R. 132; Grosvenor v. Sherratt, 28 Beav. 659; 124 R. R. 284; Sharp V. Leach, 31 Beav. I'll ; 135 R. R. 526; Kemps,,,, v. Ashbee, 10 Ch. 15; 44 L. J. Ch. 195; Allcard v. Skinner, 36 C. D. 145, 187; 56 L. J. Ch. 1052. (/) Charter v. Trevelyan, 11 CI. & Km. 714; 65 R. R. 305; Allfrey v. Allfrey, 1 Ma.-. ,v; (1. 87; 84 R. R. L5; Rolfe v. Gregory, 4 D. J. & S. 579; 34 L. J. Ch. 274; 140 R. R. 463; Spademan's Case, 34 I,. J. Ch. 32'.); Stanhope's Case, 1 Ch. L61; 35 L. -J. ch. 296; hut see Re McCallum, 1901, 1 Ch. 1 43; 70 L. J. Ch. 206. (to) Duke of Leeds v. Lord Amherst, 2 Ph. 117; 7s R. R. 17; Neesom \. Clarkson, 2 Ha. 163; 12 L. .1. Ch. 99; 02 R. R. 51 ; Wright v. Vanderplank, 8 1). M. & c. L33; 25 L. .1. Ch. 73: 111 R. R. CO; Greeley v. Mousley, 1 l>. & .1. 78; 28 L. .1. (h. 620; 124 R. R. L64. (n) Wright v. Vanderplank, supra; Gresley v. Mousley, supra; Sharp \. Leach, supra: Kempson \. Ashbee, supra : Allcard v. Skinner, supra. (0) Roberts v. Tunstall, 1 Ha. 257; 11 L. .1. Ch. L84; 67 R. R. 54 ; Champion v. Rtflfbtf, Taml. 421 ; '.i L. J. Ch. 211 ; 31 |{. R. i<>7. Bee Beningfield v. Boaster, 12 App. Ca. L67; 56 L. J. P. C. L3. 368 DELAY give it effect, keep alive a right which would be otherwise barred (/>). In eve^ case of concealed fraud the right of any person to bring a suit in equity for the recovery of any land or rent of which he or any person through whom he claims may have been deprived by such fraud shall be deemed to have first accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered (q). In order to enable a plaintiff to take advan- tage of the section he must show that he or some one through whom he claims was deprived of the land by the fraud (r), and that the fraud was the fraud of the person setting up the statute or of some one through whom he claims (a). Laches may be set up against a company as well as against an individual. In considering the question of laches Avhen set up against a company the Court cannot divest itself of the knowledge that a corporation is an aggregate of individuals. The knowledge of one shareholder is not the knowledge of the others, but great injustice might sometimes be done, if it were held that when it is shown that all the shareholders who paid reasonable attention to the affairs of the company had notice sufficient to make it laches in them not to act ' promptly, there could be no laches in the company, unless the notice was brought home to the company in its corporate capacity. At the same time it should be recollected that shareholders who seek to set aside a contract made by the governing body have practically first to change that governing body, and must have time to do so (t). Those, on the other hand, who deal inequitably with a com- pany know that it must be necessarily slow in its proceedings, and are not entitled to complain that time elapses, and that it is not desirable to lay down such a rule as would practically (p) Clegg v. Edmondsan, 8 D. M. & G. 787; 114 E. E. 336; Ernest v. Vivian. 33 L. J. Ch. 513; 143 E. E. 395. (q) 3& 4 Will. IV. c. 27, s. 26. (r) Laicrence v. Norreys, 15 App. (a. 210; 59 L. J. Ch. 681: Willis v. Horce, 1893, 2 Ch. 545; 62 L. J. Ch. 690. (s) Re McCallmn, 1901, 1 Ch. 143; 70 L. J. Ch. 206. (t) Erlanger v. New Sombrero Co., 3 App. Ca. 1280. per Lord Blackburn; 48 L. J. Ch. 73. AND LAPSE OF TIME. 369 deprive a company when defrauded of relief; and this is a reason against considering a company as precluded from that relief to which it would be otherwise entitled on account of delay unless the delay is excessive (w). " I can find no case," said Lord Blackburn (u), " in which even a private individual has been precluded by mere delay, except where the delay has been much greater than in this case. In Prendergast v. Turton (w) nine years elapsed, in Clegg v. Edmondson (x) nearly as long; and in both cases the plaintiff had lain by whilst the defendants were investing money in the mine, until that investment proved remunera- tive. It was clearly not equitable to leave the defendants to all the risk of loss and claim to themselves a profit, and this seems to be w r hat Lord Eldon principally relied on in Norway v. Row (y). In the present case there is no ground for imputing to the plaintiff what Lord Lyndhurst in Prendergast v. Turton calls a conditional acquiescence. As it is pointed out in Clarke v. Hart (z), there was in Prendergast v. Turton very nearly if not quite a legal defence. Here, taking the time at which the active shareholders were put upon exerting diligence to be February, there was not quite nine months before the filing of the bill. That is not very long for getting the majority of shareholders to make an inquiry, turn out the board, and get proper advice before instituting a suit; and having come to the conclusion that the company once had the right to this relief, I think the burden is on the defendant to show that the company have precluded themselves from the relief to which they had a right." When time has once begun to run against a man, all persons who derive their right through him will be affected with the disabilities which affect him (a). Nor can the representatives («) App. Ca. 1282; ante, p. 360. (w) 1 Y. & C. C. C. 98; 13 L. J. Ch. 208; 57 R. li. 255. (x) 8 D. M. & G. 789; 114 K. H. 836. (y) 19 Ves. 144; 12 K. K. 157. (z) 6 H. L. C. 058; 108 K. K. 231. (a) Clanricarde v. Henning, 80 Beav. 175; 80 L. J. Ch. 865; L82 K. li. 'J'JT ; Rrnc.it v. Vivian, 33 L. -J. Ch. 513; 143 R. K. 395. K.F. 24 370 PURCHASE FOR VALUE of a man be in a better position than the man himself (b). A remainderman may during the, life of the tenant for life bring an action to impeach a sale under a judgment, but he is not barred by laches, if he waits until the death of the tenant for life (c). Where equities are equal, legal estate prevails. SECTION V.— PURCHASE FOR VALUE WITHOUT NOTICE. The right to impeach a transaction on the ground of fraud has no place as against third parties, who have paid money and acquired a legal right to property, without notice of the fraud. As against a purchaser for valuable consideration without notice, having the legal title, no relief can be had in equity. If a man has paid his money in ignorance of the fact that another party has an equitable claim to the property, the Courts will not deprive him of the benefit of his legal title, even although his equitable claim be of later date than that of the other party (d). A purchaser for valuable consideration without notice of any defect in his title, or of the existence of any prior equit- able incumbrance at the time when he advanced his money, may buy in or obtain any outstanding legal estate, not held upon express trust for an adverse claimant, or a judgment, or any other legal advantage, the possession of which may be a protection to himself or an embarrassment to other claimants (e). A man who has bona fide paid money without notice of any other title, though at the time of payment he as purchaser gets nothing but an equitable title, may afterwards get in a legal title and hold it, though during the interval he may have had notice of some prior dealing inconsistent with his own title (/), unless the circumstances are such as (b) Skottowe v. Williams, 3 D. 1'. & J. .535: 130 B. E. 243. (c) Boiven v. Evans, 1 J. k L. 265; 81 E. B. 136. (d) Pilcher v. Rawlins, 7 Ch. 271; 41 L. J. Ch. 485; Taylor v. London and County Banking Co., 1901, 2 Ch. 231; 70 L. J. Ch. 477. (e) Saunders v. Dehew, 2 Vern. 471; Willoughby v. Willoughby, 1 T. E. 763; 1 E. E. 397; Maundrell v. Maundrell, 10 Ves. 246; 7 E. E. 383: Hughes v. Garner, 2 Y. & C. 328; Bates v. Johnson, John. 304; 28 L. J. Ch. 509: 123 E. E. 131; Bailey v. Barnes, 1894, 1 Ch. 25. 37; 63 L. J. Ch. 73. 'J'i Per Lord Selborne, L. E. 5 P. C, p. 111. WITHOUT NOTICE. 37 1 to make it inequitable for him to do so, as, for instance, if the legal estate were held upon express trusts or vested in a satisfied mortgagee. The fact that he has notice when he gets in the legal estate counts for nothing (g), and it is even immaterial that it is got in pendente lite (h). But if a purchaser, however honest, on the completion of his purchase acquires a defective title, the Court will not allow this defective title to be strengthened either by his own fraud or by assisting in the fraud or by the known fraud of any other person (i), or through further acts on the part of the person from whom he derives title, which would be a continuation of the fraud (A-). The possession of a legal estate obtained through the medium of a breach of trust on the part of a mortgagor docs not give priority over a prior equitable mortgagee (/). Whatever may be the accident by which a purchaser has obtained a good legal title, and in respect of which he has paid his money, and is in possession of the property, he is entitled to the benefit of it (m) ; and even the execution of the conveyance having been procured by the fraud of a third party has not been allowed in equity to prejudice an innocent purchaser without notice, the deed remaining unimpeached at law (n). This, however, is not so where the purchaser has not got the legal estate, though even then the vendor may be estopped from denying the conveyance: and (inure whether the vendor, where so estopped, can plead the fraud of the third party (o). When a trustee of two different settlements misapplied the Wberethe i ^ fraud i* by :i trust funds under one, and transferred the trust tunas of person in a the other to make good the misappropriation, it was held that '.'i'', 1 ,' ''',',', the transfer was in effect an alienation for value wit Ik. in (g) Taylor v. Russell, L892, A. I . 244, per Lord Macnaghten ; 60 b. J. Ch. L. (// 1 Bailey v. Barnes, supra. (t) Heath v. Crealock, 1" ' h. 33; li I.. J. Ch. L57; Marnham v. Weaver, 80 L. T. 112. (k) Ortigosa v. Brown, IT I. .1 . Ch. 108. I Perham v. Kempster, L907, 1 Ch. 373; 76 L. J. Ch. 228 (m) Pilcher v. Rawlins, 7 Ch. 270. per James, L. J.; ll L. J. Ch. I Hiorns v. Holtom, L6 Beav. 259; 96 R R L23. (o) Onward Bldg. Soc. v. Smithson, L893, 1 Ch. I ; 62 I.. J. Cb I 372 PURCHASE FOR VALUE Where the holder of a legal estate is an express trustee. notice, and that the cestuis que trustent under the latter settle- ment could not follow the trust funds into the hands of the transferee (/;). And in a similar case the Court of Appeal held that an innocent trustee receiving stock belonging to another trust from his co-trustee without notice of the breach of trust was entitled to be treated as a purchaser for value without notice (q). So a person who on being appointed a trustee requires and obtains a transfer of the legal estate from his co-trustee to himself and the co-trustee jointly becomes a purchaser for value inasmuch as he gives up a right of action against the co-trustee (r). So, also, where A., solicitor of B., a mortgagee, put up the mortgaged estate for sale without his client's authority, and bought it himself, and then procured B., who had been informed of the sale, to execute a convey- ance and sign the endorsed receipt for the purchase-money, on the faith of representations which, however, were not considered to be such as affected the validity of the deed at law, and A. afterwards deposited the title deeds with C, as security for an advance, it was held that C. had priority over B. (s). But if the trustee has executed a declaration in favour of the incumbrancer, or if his trust involves the discharge of active duties, he can only transfer the property subject to the trusts on which he holds it, even though he conveys the legal estate to a purchaser for value, if the purchaser has notice that he is getting the legal estate from a trustee (t). Thus, when the person having the legal estate holds it in the character of trustee for several incumbrancers, he cannoi make a priority by transferring it to any of them (u), and whenever the purchaser has notice of the existence of such a (p) Thorndike v. Hunt, 3 D. & J. 563; 28 L. J. Ch. 417; 131 R. R. 232: Taylor v. London and County Banking Co., 1901, 2 Ch. 231; 70 L. J. Ch. 477. (q) Taylor v. Blakelock, 32 C. D. 560; 56 L. J. Ch. 390. (r) Taylor v. London and County Banking Co., supra. (s) Hunter v. Walters, 7 Ch. 75 ; 41 L. J. Ch. 175. See King v. Smith, 1900. 2Ch. 425; 69 L. J. Ch. 598. (t) Perham v. Kempster, 1907, 1 Ch. 373; 76 L. J. Ch. 223; cf. Walker v. Linom, 1907, 2 Ch.*104; 76 L. J. Ch. 500.. («) Sharpies v. Adams, 32 Beav. 213; 138 R. R, 705; Harpham v. Shacklock, 19 C. D. 207 WITHOUT NOTICE. 373 trust at the time of getting in the legal estate, he will take it subject to the claim of the cestuis que trustent (x), and perhaps even if he does not know of it (y). A trustee who has the legal estate and takes a charge from his cestui que trust can avail himself of the protection of the legal estate as against a prior incumbrance of which he had no notice (z). If the legal estate has been acquired by the purchaser 'or mortgagee he may defend his estate by relying on an instrument which discloses the trust even if he had no notice of it when he purchased. Where a trustee had lent trust money on mortgage (the mortgage deed mentioning that it was trust money), and, acting in concert with the mortgagor, procured the advance of money for which the second mortgage was granted by suppressing the existence of the first mortgage; in that state of things, the first mortgagee having both priority of time and the legal estate, his priority seemed incontestable; but a curious thing transpired, and not until after the institution of the suit. It appeared that on the day of the date of the second mortgage, but before the execution of it, the first mortgagee had executed a deed by which, in consideration of a part payment by the mortgagor on foot oi the first mortgage, he, the first mortgagee, reconvened a part of the mortgaged premises, by which means, at the time of the execution of the second mortgage, the mortgagor had got back in law again his legal estate in that part, which accordingly passed to the second mortgagee. The existence of this deed, as well as of the first mortgage, was wholly unknown to him. "When it was discovered, he claimed the benefit oi the legal estate which accident had thus thrown upon him; and it was held he was entitled to rely on the windfall which wholly without his knowledge had fallen t«. him in the shape of this accidental legal estate, and that the notice which did 'm Saunders v. Deliew, 2 Vern. 271; Allen v. Knight, 5 Ha 272, affd. ; LG [.. J. Ch. 370; Taylor v. London and County Bank, 1901, --i Ch. 281; 70 [.. .1. Ch. 177. (y) Bailey v. Barnes, 1694, 1 Ch. 25, 87; 63 I.. -I. Ch. 78. («) Newman v. N., 28 C. D. 674; 54 L. J. Ch. 598. :S74 PURCHASE FOR VALUE Protection of legal estate extends to eases where vendor bad no title in equity. Notice of another having better right to call for legal '■state is notice of all equities. not come to Lira until after his purchase had been completed was immaterial (a). The protection from getting in the legal estate extends even to cases where the apparent or asserted equitable title is deduced through a forged instrument, provided the asserted or apparent title of the party from whom it was derived was clothed with possession (b). If the asserted or apparent title is deduced through a forged instrument, or through an instru- ment which has been obtained by a trick or a cheat, the doctrine of purchase for value without notice cannot apply, unless the party from whom the title is deduced had taken possession, and being in possession, as apparent owner, had sold and conveyed for value (c). To raise the equity of purchase for value without notice it is not necessary to prove possession. It is enough that the purchase be from an apparent owner who was actually in possession (d). If, however, an instrument which purports to convey a legal estate or interest be a forged instrument no title can be acquired under it. A man who takes under such an instrument has no title at all, and cannot claim as a purchaser without notice (e). The legal estate will not protect a purchaser against the claims of persons whose prior right to its protection was known to him before completion of the purchase, even although the extent of such claims was unknown : for instance, when A., knowing that B. had a charge on the property, accepted a mortgage on the estate, relying on the mortgagee's covenant, and then got in an old outstanding term of years, it was held that B., having in respect of A.'s notice of the first incumbrance a preferable right to acquire (a) Pilcher v. Rawlins, 7 Ch. 269; 41 L. J. Ch. 485; disapproving Carter v. Carter, 3 K. & J. 617 ; 27 L. J. Ch. 74. (b) Jones v. Powlcs, 3 M. & K. 596; 3 L. J. Ch. 210; 41 B, E. 137; Ogihie V. Jeaffreson, 2 Giff. 380; 128 E, E. 148. See Carlisle Bank v. Thompson, 28 C D. 398. (c) Ogilvie v. Jeaffreson, 2 Giff. 380; 128 E. E. 148. (d) Wallwynn V. Lee, 9 Ves. 24; 7 E. E. 142; Ogilvie v. Jeaffreson, supra. (e) Esdaile v. La Nauze, 1 Y. & C. 399; 4 L. J. Ex. Eq. 46; 41 E. E. 299; Johnston v. Renton, 9 Eq. 181; 39 L. J. Ch. 390; Cooper v. Vesey, 20 C. D. 629; 51 L. J. Ch. 862; and see Fawkes v. Alt. -Gen., 6 Ont. L. E. 490. WITHOUT NOTICE. 375 ;iii assignment of the term, was entitled to priority not only in respect of such first incumbrance, but also in respect of a subsequent charge of which A. had no notice at the date of his advance (/). So where a man bought a freehold messuage which was subject to three mortgages, two only of which were disclosed to him, and took an assignment and paid the pnrehase-money by cheque, but shortly afterwards having some misgiving stopped the cheque and then for the first time had actual notice of the third incumbrance, but eventually under threats of legal proceedings allowed the cheque to be paid to the vendor, it was held that he was not a purchaser without notice and that he was bound to redeem the third mortgage ( Sm. ,v <:. 543; L07 R. R. 154. (h) Dodds v. Hills, -1 II. .v M. 424; lit R. R. 210; cf. Powell v. London and Prov. Bank. 1893, 2 Ch. 555; 02 L. J. Ch. 795. i) Bates v. Johnson, John. 315; 25 L,. J. Ch. 509; L23 R. R. LSI ; Bailey v. Barnes, L894, 1 Ch. ■!'>, :)7 ; 63 I-. .1. Ch. 73. ik) Harpham v. Shacklock, L9 C. D. -2D7. •h Urandhjn v. Old, 1 A 1 1< . 571; Andrew v. Wrigley, 1 Bro. C. C. 125; Barrou Case, Hi D. 132, 145; 49 L. J. Ch. 498. PURCHASE FOR VALUE Purchaser with notice of facts which ought to have put him on inquiry can- not claim as purchaser without notice. he has acquired, and a person acquiring such legal or equit- able interest under such purchaser has a valid title to it (m). So, also, if a person who has notice sells to another who has no notice, and is also, a bond fide purchaser for valuable con- sideration, the latter may protect his title, although it was a ti ected with the equity arising from notice in the hands of the person from whom he received it (n). A person affected by notice has the benefit of want of notice by intermediate purchasers (o). The bond fide purchase of an estate for valu- able consideration purges away the equity from the estate in the hands of all persons who may derive title under it, with the exception of the original party, whose conscience stands bound by the meditated fraud. If the estate becomes revested in him, the original equity will attach to it in his hands ([)). A purchaser, however, having notice, cannot insist on holding the legal estate as against those parties with notice of whose right that estate was taken (q). A man who has notice of a fact which ought to have put him on inquiry, and which he might have discovered by using due diligence, cannot claim as a purchaser without notice (r). If a purchaser chooses to rest satisfied without the knowledge which he has a right to require, he cannot claim as a purchaser without notice (s). Gross negligence may preclude him from taking up the position of a bond fide purchaser for value (t). Nor can a man who has by his own act precluded himself from the means of knowledge or from information set up, as against persons as innocent as himself, the want of information which (m) Kettlewell v. Watson, 21 C. D. 707; 26 C. D. 501; 53 L. J. Ch. 717. (n) Ferrars v. Cherry, 2 Vera. 384; Mertins v. Joliffe, Arab. 313; Lotvther v. Carlton, Barnard. Ch. 358; For. 187; 2 Atk. 242. (o) McQueen v. Farquhar, 11 Yes. 467; 8 R. R. 212. (p) Kennedy v. Daly, 1 Sch. & Lef. 379; cf. Bates v. Johnson, supra. (q) Allen v. Knight, 5 Ha. 278; 16 L. J. Ch. 370; 71 R. R. 100; Taylor v. London and County Banking Co., 1901, 2 Ch. 231 ; 70 L. J. Ch. 477. (r) Jackson v. Rowe, 2 Sim. & St. 475; 4 L. J. Ch. 119; Jones v. Powles, 3 M. & K. 596; 3 L. J. Ch. 210; Robinson v. Briggs, 1 Sm. & G. 188; 96 R. R. 372; Davies v. Thomas, 2 Y. & C. 234; 47 R. R. 399: Jenkins v. Jones, 2 Gift. 99; 29 L. J. Ch. 493; Ogilvie v. Jeafjreson, ibid. 378; Maxfield v. Burton, 17 Eq. 18; 43 L. J. Ch. 46; Sehcyn v. Garjit, 38 C. D. 273; 57 L. J. Ch. 609; Aldritt v. Maconchy, 1908, 1 Ir. R. 333. (s) Parker v. Whyte, 1 H. & M. 167; 32 L. J. Ch. 520: 136 R, R. 73. (t) Oliver v. Hinton, 1899, 2 Ch. 264; 68 L. J. Ch. 583. WITHOUT NOTICE. 377 he lias precluded himself from obtaining (u). A purchaser, for example, who buys with notice of circumstances sufficient to invalidate the sale is not protected by a proviso that the purchaser need not inquire (as). So the doctrine ). So if a vendor executes a conveyance containing a receipt for the purchase-money and hands such conveyance to the purchaser, who subsequently deposits it with an equitable mortgagee without notice of the vendor's lien, the equity of the mortgagee may be superior to the vendor's lien by reason of his possession of the conveyance. This is the effect, having regard to the Conveyancing Act, 1881, ss. 54 and 55, of the case of Rice v. Rice (<■); and the case of Lloyd's Hank v. Bullock (d) decides that where a vendor is a trustee having :> power of sale his cestuis que t nisi are with regard to enforcing (z) Allen v. Knight, 5 Ha. 272; affd., 16 I.. .1. Ch. :t70 ; 71 H. K. 100. (a) Rice v. Rice, supra. (l>) Rice v. Rice, supra; Walker v. [Anom, supra; ante, p. L39, (c) 2 Drew. 82. (d) 1800, 2 Ch. 102; f,5 I.. .1. Ch. G80. 382 PURCHASE FOR VALUE the vendor's lien in no better position than the trustee himself (e). The right of the cestui que trust to follow into land trust monies which have been misappropriated by the trustee, being an equitable lien of the same quality as an equitable mort- gage by deposit of deeds, the claim of the cestui que trust, when prior in point of date, has priority over the claim of the equitable mortgagee, though a purchaser for value without notice (/). So when bankers took an equitable mortgage by deposit of title deeds of an estate which was subject to a trust of which they had no notice, it was held that such trust must prevail against their security (g). In a case, however, accom- panied by circumstances of a very complicated nature, it was held that the rule, Qui prior est tempore potior est jure, could not be applied, and that a purchaser for value without notice, by deposit of title deeds, though subsequent in date, was entitled to priority (h). Assignee The assignee of a chose in action cannot set up the defence of purchase for value without notice as against equities which attached to the security in the hands of the assignor (?'). There may be such dealings between the assignee and the party liable originally as to preclude him from insisting as against the assignee upon rights which he might have claimed as against the assignor; but, as a general rule, a person who buys a chose in action takes subject to the equities which affect the assignor, even although he be a bona fide purchaser without notice (.;). The assignee of a debt also takes it subject to any right of the debtor to set it aside on the ground of fraud, but if the debtor does not claim rescission he cannot set off damages for the fraud against the claim of the assignee (e) Capell v. Winter, 1907. 2 Cli. 376; 76 L. J. Ch. 496. (/) Cave v. Cave, 15 C. D. 643: 49 L. J. Ch. 50-5. See Bradley v. Riches, 9 C. D. 193. (g) Manningford v. Toleman, 1 Coll. 670; 14 L. J. Ch. 160; 66 B. B. 239; Taylor v. London and County Bank. 1901. 2 Ch. 231; 70 L. J. Ch. 477. (h) Keate v. Philipps, 18 C. D. 570; 50 L. J. Ch. 664. (i) Turton v. Benson. 1 P. Wins. 496: Mangles v. Dixon, 3 H. L. C. 702, 731 ; 88 E. E. 296 : Phipps v. Lovegrove, 16 Eq. 80, 88 ; 42 L. J. Ch. 892. 0') Athenceum Life Ass. Society v. Pooley. 3 D. & J. 294; 121 E. E. 128: Exp. Asiatic Banking Co.. 2 Ch. 391; 36 L. J. Ch. 222. of chose in action WITHOUT NOTICE. 383 to the debt (k). So the debentures of a company are prima facie, and in the absence of special conditions, subject in the hands of the assignee to all the equities to which they were liable in the hands of the assignor. But it is otherwise if the company with a view to induce people to become assignees represent that there are no equities or that they will not take advantage of them (/). But such conditions only protect a registered transferee and do not preclude the company from setting up equities against an unregistered transferee {in). As respects equitable interests in land, the priority of a Notice of purchaser or incumbrancer is not affected by his giving or interests in neglecting to give notice of his purchase or security to the land " trustees, mortgagees, or other persons in whom the legal estate may happen to be vested. The ordinary rub' as to notice of assignments of choses in action does not apply in such cases (n). Under the former procedure the Court of Chancery would Delivery up not as against a purchaser for value without notice give any assistance to the legal title or deprive him of anything which he had honestly acquired (o). If he had got possession of title deeds honestly, the Court of Chancery would not interfere with him or deprive him of the possession (/>). But now thai the Court can administer both legal and equitable remedies in every case this rule has lost its practical importance, and the Chancery Division lias jurisdiction on the application of the owner of the legal estate to order title deeds to be delivered up by a purchaser for value without notice ( tion without notice of any available act of bankruptcy (y); and semble that protection may extend to persons not taking immediately from the debtor (z). Lastly, the Statute of Limitations (a), enacting that in case of concealed fraud time runs from the date when the fraud is discovered, provides that no conveyance shall be set aside on the ground of fraud against a bona fide purchaser for valuable consideration who has not aided in the commission of such fraud, and who at the time he made his purchase did not know and had no reason to believe that any such fraud had been committed (6). On the other hand, by the Yorkshire Registry Act, 1884 (c), registration confers priority even against a purchaser for valuable consideration without notice; and the priorities given by the Act are not to be altered except in the case of actual fraud (d), by which is meant fraud in the ordinary meaning of the term, and not legal or constructive fraud. //) Re Carter and Kenderdine, 1897, 1 Ch. 776; 66 L. J. Ch. 408; Re Jukes, 1902, 2 K. B. 58; 71 L. J. K. B. 710; Re Dunkley, 1905, 2 K. B. 683; 74 L. J. K. B. 963. (z) Re Slobodinsky, 1903, 2 K. B. 517; 72 L. J. K. B. 883. (a) 3 & 4 Will. IV. c. 27, s. 25. (.6) See as to this section, Re McCallum, 1901, 1 Ch. 143; 70 L. J. Ch. 206. (c) 47 & fs Vict. c. 54, s. 116. (d) Battison v. Hobson, 1896, 2 Ch. 403; 65 L. J. Ch. 695. K K. 25 ( 386 ) CHAPTER VII. REMEDIES. SECTION I. RESCISSION, AND OTHER REMEDIES OF A LIKE CHARACTER . If a contract for sale or purchase of goods, chattels, or real estate be induced by false and fraudulent representations, or a transaction be in any way tainted by fraud, and the defrauding party is party to the contract or transaction, the party defrauded has a right at his election, after knowledge of the fraud, to rescind and avoid the contract or other trans- action, and to recover back what he has paid, or sold or conveyed, provided always the parties can be restored to the position in which they stood before or at the time of the contract or transaction (a), for it would be unjust that a person who has been in possession of property under the con- tract or transaction which he seeks to repudiate should be allowed to throw that back on the other party's hands without accounting for any benefit he may have derived from the use of the property, or if the property, though not destroyed, has been in the interval deteriorated, without making compen- sation for that deterioration (b). The effect of the avoidance of an agreement on the ground of fraud is to place the parties in the same position as if it had never been made, and all rights which are transferred or created by the agreement are revested or discharged by the (a) Load v. Green, 15 M. & W. 220; 15 L. J. Ex. 113; 71 R. R. 627; Rawlins v. Wickham, 3 D. & J. 322; 28 L. J. Ch. 188; 121 R. R. 134; Clough v. London and North Western Rly. Co., L. R. 7 Ex. 26; 41 L. J. Ex. 17; Lagunas Co. x. Lagunas Syndicate, 1899, 2 Ch. 392; 68 L. J. Ch. 699; Be Eastgate, 1905, 1 K. B. 465; 74 L. J. K. B. 324. As to the difference between repudiation and rescission, see Halkett v. Dudley, 1907, 1 Ch. 590; 76 L. J. Ch. 330. (b) 3 App. Ca. 1278, per Lord Blackburn; Lagunas Co. v. Lagunas Syndicate, supra. RESCISSION. 387 avoidance. If, when it is avoided, nothing has occurred to alter the position of affairs, the rights and remedies of the parties are the same as if it had been void from the begin- ning; but if any alteration lias taken place, their rights and remedies are subject to the effect of that alteration (<•). There can be no avoidance of an agreement unless the parties can be restored to their original condition. As a condition to rescission, there must be a restitutio in integrum. Though the party defrauded may rescind the transaction and demand restitution, he can only do so on the terms that he himself makes restitution. If, either from his own act, or from misfortune, it is impossible to make such restitution, it is too late to rescind (d). A party to a contract who alleges fraud cannot avoid one Rescission part of the contract and affirm another unless the parts are n pa ' so severable as to form independent contracts (e). A contract cannot be rescinded in part and stand good for the residue. A man cannot treat the agreement as avoided by him, so as to resume the property which he parted with under it, and at the same time keep the money or other advantages which he has obtained under it. There cannot be rescission if the circumstances have in the meantime so far changed that the parties cannot be restored to the position in which they stood before or at the time of the contract. There cannot, indeed, be rescission if the position of the wrong-doer is so affected that he cannot be placed in statu (/). But the rule has no application where the subject-matter has been reduced by the wrong-doer himself, and where compensation can be made for any deterioration (g). (c) Queen v. Sadler's Co., 10 H. L. C. 420, per Lord Blackburn; 32 I-. .1. Q. B. 337: 138 R. R. 217. (d\ 5 App. Ca. 338, per Lord Blackburn; Lagunas Co. v. Lagunas Syndicate, supra. (e) United Shoe Manufacturing Co. v. Hrunet, 1909, A. C. 330; 78 b. J. P. I 101 ; see Howatson v. Webb, 1908, 1 Oh 1 ; 77 L. .1. Ch. 32 ; and h,-,- post, p. 890. (f) Clarke v. Dickson, El. Bl. A El. 148; 27 L. .1. Q. I:. 223; LIS R. U Clough v. London and North Western lily. Co.. supra; Erlanger \. Neu Sombrero Co., :', App. ('a. L268; 48 I>. .1. ch. 73; Houldsworth v. City of Glas gow Bank, 5 App. Ca. 338, per Lord Blackburn. up Lagunas Co. v. Lagunas Syndicate, L899, 2 Ch. 392, per Rigby, 1.. J.; 68 L. J. ch. 699; cf. Re Gallard, 1k'.)7, 2 Q. B. 8; 66 I.. .1. <,>. B I I ;}g8 RESCISSION. Restitutio in As a general rule a Court of Equity will not decree integrum. rescission of a contract except on condition of there being restitutio in integrum. The phrase is somewhat vague and must be applied with care. It must be considered with regard to the facts of each case. Deterioration of the subject- matter does not destroy the right to rescind nor prevent restitutio in integrum. Indeed, it is only in cases where the plaintiff hits sustained loss by deterioration of the subject- matter that he will desire to exert his power of rescission (h). The Court has full power to make all just allowances, and in practice it always grants such relief when it can do what is practically just, although it may not be able to restore the parties precisely to the state in which they were before they entered into the contract (i). The extent to which the requirements of restitutio in integrum may be limited is strikingly illustrated in Adam v. Newbiggin (j). A party exercising his option to rescind is entitled to be restored as far as possible to his former position. This includes a right to be indemnified against obligations incurred under the contract. The nature and extent of this right to indemnity in the case of innocent misrepresentation is very fully considered in Newbiggin v. Adam (k). It seems that the right to indemnity does not extend to liabilities which are natural consequences of the contract but are not created by the contract itself, for otherwise the indemnity would not be distinguishable from the damages recoverable in an action of deceit, and a person misled by an innocent misrepresentation is not entitled to damages (I). Nor can there be rescission of a contract if third parties, without notice of the fraud, have in the meantime acquired rights under it for value (m). Thus, where a man has bought goods by means of a fraud upon the seller, and, whilst the contract of sale is still subsisting, sells them to a third party, Oi) Armstrong V. Jackson, 1917. 2 K. B. 822; 86 L. J. K. B. 1375. ii) Hulton v. Hulton, 1917, 1 K. B. 813; 86 L. J. K. B. 633. (j) 13 A. C. 308; 57 L. J. Ch. 1066. (k) 34 C. D. 582 ; 56 L. J. Ch. 275. (I) Ibid.; post. p. 413. (in) Clough v. L. . Tfifl . 50'. 1 : 19 I,. J. Ch. 541. 390 RESCISSION. the fraud, and before any proceedings for winding up the company have been taken, he is entitled to be relieved from his shares on the ground of the fraud (u), and where in an action for calls a shareholder filed an affidavit that he intended to counter-claim for rescission and obtained leave to defend on that footing, that was held equivalent to taking proceedings (w). Whether up to the time of the commencement of the winding up a contract to take shares can be rescinded on the ground of fraud depends on the particular circumstances of the case. If the company has become insolvent and has stopped payment, a rescission of the contract to take shares cannot be permitted (#). Though as a general rule there cannot be a rescission of a contract unless the circumstances of the case are such that the contract can be rescinded in toto, and that there can be a restitutio in integrum, there is an exception to the rule when the subject of the sale is practically worthless, as, for example, a concession from a foreign government that had become forfeited before sale, there being nothing in such a case to return (y). So, also, is there an exception to the rule where the contract or transaction is severable, or is of such a nature that it can be partially rescinded. If the contract or transaction is severable, inability to rescind it as to part is not fatal to the right to rescind it as to another part (z). A deed may be void as against a person exercising undue influence, but good as regards benefits conferred on other persons not induced by the undue influence (a). Nor is the inability of a man to rescind a transaction as a whole fatal to his right of rescission, if his inability to do so is attributable to the party against whom he seeks relief. If the latter has entangled (u) Ross v. Estates Investment Co., 3 Ch. 682 ; 37 L. J. Ch. 873; Reese River Silver Mining Co. v. Smith, L. K. 4 H. L. 64; 39 L. J. Ch. 849. (w) Whiteley's Case, 1900, 1 Ch. 365; 69 L. J. Ch. 250. (x) Tennent v. Glasgow Bank, 4 App. Ca. 615; ante. p. 354. (y) Phosphate Sewage Co. v. Hartmont, 5 C. D. 394 ; 46 L. J. Ch. 661. (z) Maturin v. Tredennick, 12 W. R. 740; 140 R. R. 867. (a) Wright v. Carter, 1903, 1 Ch. 27 ; 72 L. J. Ch. 138. RESCISSION. 391 and complicated the subject of the transaction in such a manner as to render it impossible that he should be restored, the party defrauded may, on doing whatever it is in his power to do, have the transaction rescinded (6). So, also, it is no objection to the rescission of a transaction for the purchase of shares obtained by fraud that the shares have fallen in value since the date of the transaction (c). Nor is a man, if the property is of a perishable nature, bound to keep it in a state of preservation until commencing proceedings. His only duty is to do nothing with the property after action brought ; and in cases where damage is likely to occur, and might be prevented, he ought, perhaps, to give intimation to the defendant, leaA'ing him to do what he pleased (d). A party seeking to set aside a sale of shares is not bound to pay calls on them to prevent forfeiture after action brought. It is not fatal to his right of recission that some of the shares may have been forfeited for non-payment of calls since action brought (e). So the purchaser of a horse who had been defrauded in the transaction had a right to rescind without restitution, where the horse had died without any neglect on his part (/). A sale, however, of several kinds of shares in one transaction cannot be set aside for misrepresentation, if the person seeking relief is unable to restore all the shares he has taken (g). So, also, there may be rescission when the situation of the parties has been in no substantial way altered, and the Court is satisfied that by the exercise of its equitable powers to impose terms upon the parties, as a condition of rescission, it can do what is practically just, and can restore the party against whom relief is sought to that which shall be a just situation with reference to the rights which he held ante- cedently to the transaction, though it may not be able to (b) Liujuna.; Co. v. Lagunas Syndicate, L899, 2 Ch. 392; 68 I-. ■! . Ch. 699. (c) Blake v. Mowatt, -Jl Beav. 613; ill R. R. 220. (d) Maturin v. Tredennick, 2 V l;. 514; 1 N. R. L5, tupra. Ibid. (f) Moore v. Scott, ~> W. L. R. 8, 383 ; L6 Ma... L, R. 192 (c imposed (q). If the property is personal, a decree for the repayment of monies, or the delivery up and cancellation of the instrument, will be complete relief, although the legal interest should have been conveyed (r). But if the subject-matter of the transaction Reconvi be real estate, it is usual to direct a reconveyance, because. w ] 1( , n su bjecl if this is not done, a question may arise as to what has "' ilt '| '" become of the real estate (s). If, however, the deed is not merely voidable, but wholly void, no reconveyance is necessary (t). The terms on which a reconveyance will be ordered are the Terms of . . reconvej repayment of the purchase-monies and all sums laid out in a nce. improvements and repairs of a permanent and substantial nature, by which the present value is improved, with interest thereon from the times when they were actually disbursed. On the other hand, charges for the deterioration of the property must be set off against the allowances for permanent improvements. The party in possession must also account for all rents received by him and for all profits, such as monies arising from the sale of timber, or from working mines, with interest thereon, from the times of the receipts thereof. He must ;ilsuf Bee Hoghton v. Hoghton, L5 Beav. 278; 21 L. J. Ch. 482; Att.-Gen. v. Magdalen College, L8 Beav. 255; 23 L. J. Ch 844. (t) Ogilvie v. Jeafjreson, 2 Giff. 383 ; L28 R. R. L48. (it) Trevelyan v. Charter, t L. J. Ch. 214; Mulhallen \. Marum, 8 l>r. & War. 337; Gibson v. D'Este, 2 V. & C. . r ,si ; 60 R. R, 262; Davey \. Durrant, lD.lt J. 554; 26 L. J. Ch. 880; L18 R. R. 218; Tyrrell v. Bank of London, 10 H. L. C. 26; 31 L. J. Ch. 369; L38 R. R. it: Dally v. Wonham, 83 Beav. 162, 32 L. J. Ch. 790; L40 R. R. 64. 394 RESCISSION. Allowance for lasting improvements can only be for such as were made during the period of accounting for the rents (w). The account of rents and profits on the one side, and of lasting improvements on the other, must be carried back to the same time (.?). The party in possession would also, it is conceived, be required to reinstate premises which he had materially altered; e.g., a private residence into a shop (y). The value of permanent and substantial improvements of all kinds, by which the present value of the property is improved, such as for the erection of a mansion house, will be allowed (z). But no allowance will be made for monies expended by the party in possession, as a matter of taste or personal enjoyment (a). Nor will allowance be made for monies which have been expended upon the property with the view of rendering it impossible for the real owner to recover his estate, and so improving him out of it, as it may be called (b). A purchaser who seeks to set aside a transaction on the ground of fraud should specially pray in his statement of claim for the repayment of repairs and improvements. He will be credited with the amount of lasting repairs and improvements, executed before the discovery of the defect in title, if their repayment is specially prayed (c) ; and probably, if necessary, repairs executed during or pending litigation, if specially prayed ; but the relief will not go beyond what is specially prayed (d). A purchaser who has a contract for the sale of land set aside on the ground of fraud is entitled to a lien on the land or to recover the purchase-money which he has paid (e). In a case where a purchase was set aside for fraud, and the (w) Att.-Gen. v. Earl of Craven, 21 Beav. 411; 111 R. R. 133. (x) Neesom v. Clarkson, 4 Ha. 103; 12 L. J. Ch. 99; 62 R. R. 51. p (y) Donovan v. Fricker, Jac. 165. (z) Stepney v. Biddulph, 13 W. R. 576, 5 N. R. 506. (a) Mill v. Hill, 3 H. L. C. 828; 88 R. R. 356. (b) Stepney v. Biddulph, 13 W. R. 576; Sug. V. & P. 287. (c) See Edwards v. M'Cleay, 2 Sw. 289; 14 R. R. 261. (d) Sug. V. & P. 254; Dart, V. & P. 811. (e) Aberaman Iron Works Co. v. Wickens, 4 Ch. 101; Fleming v. hoe, 1901. •2 Ch. 594; reversed on facts, 1902, 2 Ch. 359; 70 L. J. Ch. 805. RESCISSION. 395 purchaser was decreed to pay an occupation rent, receiving back his purchase-monies with interest, there being a con- siderable excess of the rent over the interest, annual rests were directed, until the principal should be liquidated (/); but a special case must be shown to warrant such a direction (g). It is not the course of the Court to direct an account of wilful neglect and default, in cases where the possession is not primarily referable to the character of mortgagee (h). When persons, though in fact mortgagees, enter into posses- sion of rents and profits in another character, they cannot be subjected to that special liability (i). The rule may be different if a special case of fraud be made out (k). If the transaction complained of is one in which a trustee Terms of rescission or agent, employed to purchase, has sold property of his own where trustee, surreptitiously, to his cestui que trust or principal, the right ^"oYd ' ' of the latter is not merely to rescind the contract in toto, or property o J his own Bur- to abide by it in its integrity, but to hold the property, and to reptitiously . ., , , to cestui que pay no more for it than the trustee or agent himself had trust, pre- paid (I). If the agent sells to his principal property of his cipa own for which he has paid nothing, the principal can only retain the property upon the terms of paying its proper value (m). Where a promoter or other person standing in a fiduciary position towards the company has sold to the company his own property without disclosing his interest, the company is entitled to rescind, and for this purpose it is immaterial whether at the time when he acquired the property he stood in a fiduciary relation or not. If he did so stand when he bought, the company can either rescind or retain the property, (/) Donovan v. Fricker, Jac. 165. tip Sec Neesom v. Clarkson, supra. (h) Knisington v. isomeric, 7 D. M. & (i. 134, L56, L57; -2\) L. J. CI'. 537; L09 I: R. 050; Barber v. Wackrell, 12 C. D. 534. in Parkinson v. Hanbury, 1.. R. 2 H. L. 1 ; 36 I-. .1. el,. 292. It) idams v. Swordcr, 2 D. •). & B. 11: Parkinson v. Hanbury, I-. R. 2 H. L. p. L5. (/) Bank of Londcm v. Tyrrell, Hi H. U. C. 26; :u L, .1. Ch. 869; L88 li. R. 14; Kimber v. Barber, h Ch. 57. im) Great Luxemburg lily. Co. v. Magnay, 26 Beav. '>'■>;•: L19 R. R. 5 396 RESCISSION. paying for it no more than he gave (n). If he did not so stand, then if the company does not elect to rescind, or rescission has become impossible, the company may be with- out remedy (o), but quaere whether this applies where there is not only concealment but misrepresentation (p). But although a company may not be able to rescind, yet it may have a cause of action in respect of the fraud of the vendor (q), and the difference between the fair value and the price given by the company is recoverable as secret profit (r). The price at which the promoter bought the property is not the measure of its value at the time of the sale to the company (s). The measure of damages is the profit which the promoter obtained on the purchase and resale of the property (t). If a company make out a case for recission of a contract on the ground of fraudulent representation and concealment by the promoters or directors, the terms of rescission are that the promoters or directors repay the whole of the purchase- monies with interest at 4 per cent., and all monies in the nature of a bribe which they have received for neglecting their duty, and all profits which they have unduly made, the company on the other hand to account for any profit they may have made (u). If a company which has been brought into existence by promoters do not seek to rescind the contract under which the company has been formed, but elect to recover from the promoters a sum of money as due to them for profits unfairly made, the promoters will be allowed all expenses properly (n) 10 H. L. 0., p. 47 ; Ambrose Lake Co., 14 C. D. 390, 398 ; 49 L. J. Ch. 457 ; Bentinck v. Fenn, 12 A. C. 652, 658. (o) Bentinck v. Fenn, supra, at p. 659; Ladywell Co. v. Brookes, 35 C. D. 400; 56 L. J. Ch. 684; Lady Forest Gold Mine, 1901, 1 Ch. 582; 70 L. J. Ch. 275; Burland v. Earle, 1902, A. C. 83; 71 L. J. P. C. 1. (p) 1898, 2 Ch. at p. 179; 1901, 1 Ch. at p. 589. (q) 12 App. Ca. p. 664, per Lord Herschell. (r) Crluckstein v. Barnes, 1900, A. C. 240; 69 L. J. Ch. 385. (s) Ladyivell Co. v. Brooks, supra; Lagunas Co. v. Lagunas Syndicate, 1899, 2 Ch. 411; 68 L. J. Ch. 699. (t) Leeds and Hanley Theatres, 1902, 2 Ch. 809; 72 L. J. Ch. 1. (u) New Sombrero Co. v. Erlanger, 5 C. D. 125; 3 A. C. 1218; 48 L. J. Ch. 73; Phosphate Sewage Co. v. Hartmont, 5 C. D. 394, 456; 46 L. J. Ch. 661; cf. Silkstone Coal Co. v. Edey, 1900, 1 Ch. 167; 69 L. J. Ch. 73. RESCISSION. 397 incurred in bringing out the company, but they are not entitled to a commission (./•): and in estimating the amount <>i protits which a promoter is liable to refund, he will be allowed all sums bona fide expended in securing the services of directors, and providing their qualifications, ami in payments to the brokers and officers of the company, and to the public Press in relation to the company | y). If the trustee, or other person, tilling a fiduciary character, or has has purchased surreptitiously from the person towards whom property sur- he stands in such relation, and the latter does not wish for a '''r tltu ' n -- % from mm. reconveyance of the property, the former will be held strictly to his bargain, if it be beneficial to the estate. If it be not beneficial to the estate, the property will be ordered to be resold and reconveved to another purchaser, if a better can be found, otherwise he will be held to his purchase; if a better purchaser be found, he will be regarded as a trustee for the profit on the resale (z). In a case where an estate sold under a decree of the Court was purchased by a solicitor in the cause without leave of the Court, Hie Court, after the purchase had been confirmed, ordered the ('state to be again offered for sale at the price at which he had purchased it; and, if there should be no higher price, that he should be held to his purchase (a). The usual course is to order that the expense of repairs and improvements, not only substantial and lasting, but such as have a tendency to bring the estate to a better sale, after making an allowance for acts that deteriorate the value of the estate, shall be added to the purchase-monies, and that the estate shall be put up at the accumulated sum (b). In estimating lasting improvements, old buildings which had been pulled down after the purchase c) Bagnall v. Carlton, 6 C. D. 371, 389; 17 L, .). Ch. 30; Emma Silvei Mining Co. v. Lewis, 4 C. P. D, 407; 48 L. •) . C. P. 257. (y) Emma Silver Mining Co. v. Grant, 11 I . I>. 922, 938; Lydney <>>. v. Bird, 33 <\ I). 85. (z> Randall v. Errington, in W-. 128; 8 R. R. L8; Ex /-. Morgan, 12 Ves. »', : 8 R. R. 276; Lewin, 570; ante, p. L58. {a) Sid, ui v. Ranger, Vl Sim. 11h : 56 l:. I;. 29; cf. Re Gallard, L897, -1 <.,» B 8; 66 I,. -J. Q. B. 484. (b) A'.' /'. Lacey, 6 Ves. 625; i'dU: 6 R. K. *.»; /•> /<. Bennett, LO Vee. :(M : 8 R. R. 1 : Lewin, "j7u : ante, \>. L58. 398 RESCISSION. Interest allowed and debited on monies. No reconvey- ance until account be taken. shall, if incapable of repair, be valued as old materials; but otherwise, as buildings standing (c). If the trustee, or other person filling a fiduciary character, who has purchased property surreptitiously from the person towards whom he stands in such relation, has resold the property at a profit, he must account for such profit with interest (d). In a case where a servant took an agreement for a lease of premises in his own name, but really as the agent of his master, and having afterwards denied the agency, claimed to hold the premises for his own benefit, he was decreed by the Court to be a trustee for his master (e). In taking the accounts between the parties, interest will be allowed on all monies expended in lasting and substantial improvements by the party in possession. Interest will also, as a general rule, be debited to him in respect of monies, &c, received by him, and of costs, charges, and expenses properly incurred by the complaining party (/). If there has been negligence on the part of the complaining party, interest will not be allowed (g). In ordinary cases, when the Court sets aside a transaction, the defendant has a right to insist upon an account before he is called upon to reconvey (h) ; but a defendant who is in possession under a pretended purchase cannot, if the Court shall be of opinion that there has been in fact no purchase, insist upon an account of monies paid by, or owing to him, which he alleged, but failed to prove, was the consideration agreed upon for such purchase (i). If a reconveyance is ordered, and an account of rents and payment of the balance is ordered, but no lien for such balance is given on the estate, (c) Robinson v. Ridley, 6 Madd. 2. (d) Ante, p. 161. (e) Stamford v. Dawson, 15 W. R. 896; cf. James v. Smith, 1891, 1 Ch. 384. (/) Gibson v. D'Este, 2 Y. & C. C. C. 581; 6 R. R. 262; Sharp v. Leach, 31 Beav. 503. As to rate of interest, see Re Barclaij, 1899, 1 Ch. 674 ; 68 L. J. Ch. 383. (gr) M'Culloch v. Gregory, 1 K. k J. 286; 24 L. J. Ch. 246; 103 R. R. 86. (h) Gibson v. D'Este, supra; Wilkinson v. Foiokes, 9 Ha. 594. (*) Wilkinson v. Fowkes, ibid. RESCISSION. 399 the conveyance must be made at once, without waiting for the result of the accounts (k). In one case the purchaser, obtaining a decree for rescinding Following a contract, on the ground of fraud was allowed to follow the [^ e yor stock in which part of the purchase-money had been invested (/). br,be - But where an agent corruptjly receives commission, the principal cannot, until he has obtained judgment against the agent, follow the money into investments made by the agent and obtain an injunction against his dealing therewith (m). The principal as regards unpaid commission is only entitled to a declaration that the agent, will become indebted to the principal for such commission as and when he shall receive the same («). But in an action to set aside an assignment of a policy under 13 Eliz. c. 5, where the policy moneys had been received by the assignee and could be traced, the Court granted an injunction restraining the assignee from dealing with the moneys (o). If the transaction into which a man has been induced by Terms of fraud or misrepresentation to enter is a partnership, the terms partnership of rescission will be that his partner or co-partners repay him whatever he may have paid, with interest thereon, and in- demnify him against all claims and demands which he may have become subject to by reason of his having entered into the partnership; he, on the other hand, accounting £or what he may have received since his entry into the concern (//). He is also entitled, in respect of the purchase-money which he has brought into the partnership, to a lien on the surplus of the partnership assets, after satisfying the partnership debts and liabilities, and in respect of any sums which he has paid or might pay in satisfaction of partnership debts, he is entitled to stand in the place of the partnership creditors to whom he made the payment, and also to be indemnified by the person (k) Trevelyan v. Charter, 9 Beav. 140; fi I,. .1. C),. -274. (1) Small v. Attwood, Yourige, 507. (m) I Aster . 525; Partnership A . t . L890, h transactions. 400 RESCISSION. Terms of rescission where a man has been induced by fraud to take shares in a company. Removal of name of transferee when there is fraud in the company guilty of the fraud or making the representation against all the debts and liabilities of the firm (q). If a man has been induced by false representations in the prospectus of a company to take shares from the company, he is entitled to recover his money, and to have his name removed from the register (r). He is entitled to have the money paid by him on calls repaid with interest at 4 per cent, (s). If he has received dividends before discovering the fraud, the terms of rescission are that his name shall be removed from the register, and that an account shall be taken of what sums have been paid to him by the company, and of what sums he has received with interest at a reasonable rate, and that the balance shall be paid to him with all costs (t). If the company admit misrepresentation and apply ex parte to rectify the register by removing the name after repayment to the shareholder of the balance due to him, an ex parte order may be made (u). When the directors of a company have registered a transfer of shares which they had reason to believe was a bond fide instrument, the Court will, after a winding-up order has been made, expunge from the list of shareholders the name of the transferee and substitute in his place the name of the share- holder, if it be shown that the deed of transfer has been executed in collusion between him and the shareholder, so as to enable the latter to escape from his liability to the creditors of the company (x). So, also, when there is a transfer of shares, the name of the transferee will be struck out from the register, and that of the transferor substituted in his stead, if it appear, not only that the transfer was made to get rid of liability, but that it was a sham and not a real transaction, and was not intended to divest the interest of the transferor and to render the transferee the real owner of the shares, (q) Mycock v. Beatson, 13 C. D. 384; 49 L. J. Ch. 127; Neicbiggin v. Adam, 34 C. D. 582; 56 L. J. Ch. 275. (r) Ross v. Estates Investment Co., 3 Eq. 122; 37 L. .1. Ch. 873. (s) Karberg's Case, 1892, 3 Ch. 1 ; 61 L. J. Ch. 741. (t) Kent v. Freehold Land and Brickmaking Co., 4 Eq. 598 ; 37 L. J. Ch. 653. («) Re London Electrobus Co., 1906, W. N. 147. (x) Kintrea's Case, 5 Ch. 95; 39 L. J. Ch. 193; ante, p. 335. RESCISSION. 401 but the transferee held them subject to the order of the transferor (y). The contract must be repudiated or rescinded within ;i Reasonable reasonable time, that is, before the lapse of a time, after the true state of things is known, so long that under the circum- stances the other party may fairly infer that the right oi rescission is waived (z). It is a condition precedent which must be fulfilled before a person can escape from a contract however fraudulent it may be (a). This is especially so in the case of shareholders; if a man claims to rescind his contract to take shares in a company on the ground of misrepresenta- tion he must rescind as soon as he learns the facts or else lie forfeits all claim to relief (6). So a principal must reprobate a contract as soon as he learns of the fraud of his agent, otherwise he will be bound by it (c). There can be no rescission of a contract or other transact ion Waiver of if it appear that the defrauded party has at any time after r egcj n( j knowledge of the fraud, either by express words or unequivocal acts, elected to affirm the contract. If after discovering the fraud he has in any manner elected to affirm the contract, his right to rescind is waived. He cannot revoke his election, and avail himself of the fraud in avoidance of the contract, accord- ing to the general maxim as to election quod semel placuii in election i bus amplius displicere non potest (d). Thus, where a man after knowledge of the fraud continues to deal with the property as his own, he thereby affirms the contract (e). So, also, the taking steps to enforce a contract is a conclusive election not to rescind on account of anything known at the (y) King's Case, 6 Ch. 196; 40 L. J. Ch. 361; Massey's Case, 1907, 1 Ch. 582; 76 L. J. Ch. 290; ante, p. 335. (z) Pollock, Contracts, 590; Isaacs v. Towell, 1898, 2 Ch. 285; 67 L. J. Ch. 508; Re Eastgate, 1905, 1 K. B. 465; 74 L. J. K. B. 324; Seddon v. North Eastern Salt Co., 1905, 1 Ch. 326; 74 L. J. Ch. L99. (./) United Shoe Co. v. Brunet, 1909, A. C. 330; Tk L. .1. 1> ('. KH. (6) Aarons Reefs v. Ttoiss, 1896, A. C. 273, 294; 65 L. J. P. C. 54; Com ponents Tube Co. v. Naylor, 1900, 2 Ir. R. 1 ; Bucklej . 96. (c) Bartram \ the result of those proceedings (/). When the original contract was made with an agent Eoi (b) Mersey Steel Co. v. Naylor, 9 Q. B. D. 'Us. 666; ',| I,. .1. y. !'.. 576; Carnque v. Catts, 32 Ont. L. R. 548. (c) Clarke v. Dickvon, supra. <7 contract by the seller was an answer to li is claim, and even after he had commenced an action against the carrier (/). There may be rescission, if the fraud inducing the contracl Rescission , pi- • • i when contract was that of an agent acting in the business oi his principal is induced by and within the scope of his authority, though the principal ^ t " was ignorant of the fraud and free from all moral guilt, or even, being a corporation, was necessarily incapable of know- ing anything except by its agents, and therefore, free from all moral guilt, if such a phrase can be properly applied to a corporation (m). But in order to have a right to rescind it must be shown that the agent had an interest conflicting with his duty (n). Where a vendor has procured the salt' of his property h\ misrepresentation, the purchaser can set aside the contracl prior to completion even though the misrepresentation be innocent (o). But after a conveyance has been executed, tin Rescission 11 £ after Court will set aside a transaction only on the ground of actual conveyance fraud. Mere constructive notice is not sufficient (p). ' When the conveyance takes place, it is not, as far as 1 know, the principle of equity that relief should afterwards be given against the conveyance (q), unless there be fraud, but where there has been fraud the conveyance may be set aside unless something has occurred to prevent it " (r). Rescission after conveyance of land can only be obtained on the ground of unfair dealing (s), and a lease when executed cannot be rescinded merely on the ground of innocent misrepresenta- tion (t). But rescission on the ground of mutual mistake {I) dough v. London £ North Western Rly. <'<>.. I.. R„. 7 Ex. 26; II L. J. Ex. 17; and see Danby v. Coutts, 29 C. D. 500; 54 I.. •! . eh. 577; Re Gallard, L897, 2 Q. B. 8; 66 L. J. ,Q. B. 484. (//o Houldsworth v. City of Glasgow Bank, ■> App. ('a. 338, per Lord Black- burn; Hambro v. Burnand, L904, 2 K. I'.. 10; 7:i I,. .!. K. B. 669; Kettlewell \. Refuge .1 . Co., L909, A. C. 243; 77 I,. .1. K. B. 121. (n) Rowland v. Chapman, 17 T. I-. R. 670 Redgravi v. Kurd, 20 ('. D. 1. 12; 51 I- -l. eh. 117. (p) Wilde v. Gibson, I H. I,. C. 624; 7:i l; R. L91; Rutherford \. Acton Adam*. L915, A. C. 866; 84 1.. .1. 1'. C. 238. (q) Brownlie v. Campbell, - r , App. Ca. pp. 937, 949. < >*1 s agamsl the of bankrupts trustee in bankruptcy, because the trustee takes only the righl j',' inivk-r. and interest of the bankrupt; nor can the trustee claim to retain the goods as having been in the possession of the bankrupt with the consent of the true owner, for the seller never consented to any other possession in the bankrupt than in the right of buyer, and the seller does not resume the position of real owner until disaffirmance of the sale (/). It has been said that any surreptitious dealing between one Rescis principal to a contract and the agent of the other principal is surreptitious a fraud in equity, and entitles the last-named principal to ' 1 •> r j between one have the contract rescinded and to refuse altogether to proceed principal and with it (g). But Lord Justice Mellish was not willing to go the other so far. The consequence of fraud in his opinion was that J.''/"/,', 1 ,.) the Court would see that the defrauded party obtained full redress for the fraud, as far as that could be given. If it could be obtained with the contract it should be so given; if not, it must be given without the contract, and rescission must be allowed. It was his opinion that the situation of the contract in question was one of the latter kind. The only way in which the injured party could be suitably relieved was by rescission. The case was this: — A telegraph works company had agreed with a telegraph cable company to lay a cable, the same to be paid for by a sum payable when tin- cable was begun, and by twelve instalments payable on certificates by the cable company's engineer, named in the contract. Shortly afterwards the engineer, who was engaged to lay other cables for the works company, agreed with them (e) Gething v. Keighley, 9 C. D. 550; 48 L. J. Ch. 45. Sec Watson v. Rod well, 11 G. D. 150; 48 L. J. Oh. 209; Holgatev. Shutt, 28 C. D. Ill : 54 L. J. Ch. 436; Cheese v. Keen, L908, 1 Ch. 245; 77 L. J. Ch. L63. (/) Load v. Green, 15 M. & \V. 216; L5 b. J. Ex. LIS; 71 R. R. 627; Ri Eastgate, Ex p. Want, 1005. i K. I'.. 465; 74 L. J. K. B. 824, ante, p. 889. See Re Reed, 3 C. D. L23; 45 L. J. B. 120. (g) Panama Telegraph Co. v. India Rubber Co., L0 Ch, 515; 15 L. J. Ch. LSI, per James, L. J. Bee Rowland v. Chapman, 17 T. I,. R. 670, 410 RESCISSION. llt'scission though a profit may accrue to a party to the fraud. Rescission of chattels sold under a warranty. to lay this cable also for a sum of money to be paid to hirn by instalments payable by the works company when they received the instalments from the cable company. It was held that, under the circumstances, the agreement between the engineer and the works company was a fraud, entitling the cable company to have their contract rescinded, with a return of the money which they had paid under it (h). It is no argument against setting aside a contract that has been obtained by fraud that a profit may be given to a share- holder who is a party to the fraud, a profit because he will take it in respect of his shares, and that, since as between co-conspirators there is no contribution, his brother con- spirators who are made liable for the fraud cannot make him repay his contributions (i). The Court will not hold its hands and avoid doing justice in favour of the innocent because it cannot apportion the punishment fully amongst the guilty. A dozen parties to a fraud may be defendants and one judg- ment go against all, and if it is a fraud of such a character that none of them can bring an action for contribution, the plaintiff may, at his will and pleasure, enforce that judgment against any one of them and perhaps pass over the most guilty of them, still there is no remedy as between those who commit the fraud. It is one of the punishments of fraud that there is no such remedy, and that a guilty party, though not the most guilty, may suffer the greatest amount of punishment. ft is one of the deterrents to prevent men from committing fraud (A-). If a specific chattel be sold under a warranty, and the property has passed to the purchaser, he cannot return the chattel and claim back what he has paid, or resist an action for the price, on the ground of breach of warranty, unless there was a condition to that effect in the contract; but must have recourse to an action for damages in respect of the breach of warranty (/). The case, however, is different if (h) Panama Telegraph Co. v. India Rubber Co., supra. (i) New Sombrero Phosphate Co. v. Erlanger, 5 C. D. 114: 4(5 L. J. Ch. 425. {k) Ibid., per Jessel, M. R. (I) Street v. Blay. 2 B. & Ad. 462; 36 R. R. 626; Dawson v. Collis, 10 C. B. 523; 20 L. J. C. P. 116; Behn v. Burness, 3 B. & S. 755; 32 L. J. Q. B. 204. RESCISSION". 411 fraud can be shown. If a representation be made fraudulently for the purpose of inducing a party to enter into a contract, the party defrauded is entitled to avoid the contract on the ground of fraud, and may recover back the price, notwith- standing the warranty of the same matter (m). In the case of money paid as the consideration of a contract, Actions to F6C0V6I the party defrauded may on avoidance of the contract recover mon ey the amount as a debt (n). When a defendant has fraudulently procured the plaintiff to sell goods to a person who cannot pay for them, and the defendant gets the goods into his possession, he cannot set up the sale to him because his own fraud had procured it, and the mere possession unaccounted for raises an assumpsit to pay (o). So, also, if under similar circumstances there has been a resale of the goods, and the defendant obtains posses- sion of the monies on such resale, the plaintiff may in an action for money had and received recover from the defendant the value of the goods unpaid for by the purchaser (p). Although it may no longer be open to the party defrauded. Though -. . rescission from the change of circumstances which has taken place in r .,imot be the meantime, to avoid the contract or transaction upon .^j"^. 1 £, discovery of the fraud, he has a remedy by action of deceit maintained. for damages against the person by whose misrepresentation ;ie has been misled to his injury ( App. Ca 888, pi i Lord Blacl burn, ante, p. 381. (r) Lachlan v. Reynolds, Kay, 56; L01 !(. H 528; Cooks v. Bosurell, 11 App Ca. 232; 55 L. J. Ch. 761. Hi- rescission. Bights of parties on rescission. Indemnity. sent at ion or undue concealment in the conditions or particulars. or a good title cannot be shown, the sale will be set aside if application be made before conveyance executed (s). If the convej^ance be executed, the purchaser must take the conse- quences, and can only rely on the covenants (£), or a collateral warranty (u), unless it seems he can prove fraud or mutual mistake amounting to a total failure of consideration (x). In cases where the right of rescission is available and has been exercised, the contract is as if void ab initio, and the rights of the parties must be determined as if a contract had never existed. The defrauded party is therefore entitled to recover back as upon a total failure of consideration all sums paid by him under the contract, and has a valid defence against an action for recovery of sums which would otherwise be due under the contract. Anything which in law constitutes a consideration moving to the innocent party, and which actually passes from the contracting party, is a benefit within the rule that benefits received by a person seeking to avoid a fraudulent contract must be restored before avoidance (y). When a contract to take shares is rescinded, the shareholder is entitled to a return of the amount paid for his shares with interest at 4 per cent, (z), or if rescission is granted after the beginning of the winding-up, he is entitled to prove for the amount paid on the shares and the costs of the application (a). The nature and extent of the right to indemnity on rescission of contract, on the ground of simple misrepresentation not fraudulent, was very fully considered in the case of New- (s) Ibid.: M'Culloch v. Gregory, 1 K. & J. 286; 24 L. J. Ch. 246; 103 E. R. SO; Else v. Else. 13 Eq. 196: 41 L. J. Ch. 213; Broad v. Munton. 12 C. D. 131 ; 48 L. J. Ch. 837 ; 2 R. R. 86. (t) Thomas v. Powell. 2 Cox. 394; but see Hart V Swaine, 7 C. D. 42; 47 L. J. Ch. 5. tu) De Lassalle v. Guildford, 1901, 2 K. B. 215; 70 L. J. K. B. 533; but see Greswolde- Williams v. Barneby. 49 W. R. 203. (,r) Debenham v. Sawbridge. 1901, 2 Ch. 98; 70 L. J. Ch. 525; ante, p. 408. (y) Hogan v. Healey, I. R, 11 C. L. 122; Fleming v. Loe, 1901, 2 Ch. 594; 70 L. J. Ch. 805. (z) Karberg's Case, 1892, 3 Ch. 1 ; 61 L. J. Ch. 741. (a) British Gold Fields, ,fc, 1899, 2 Ch. 7; 68 L. J. Ch. 412. RESCISSION . ii: biggin v. Adam (b). The general rule is that the party who misleads is to put back the party misled into the position in which he was before the contract, and that the right carries with it the right to be indemnified from the consequent and obligations which are the result of the contract Bet aside (c). Bowen, L.J., said (d) : " It seems to me that when you are dealing with innocent misrepresentation, you musi understand the proposition that he is to be replaced in statu quo with this limitation — that he is not to be replaced in exactly the same position in all respects, otherwise he would be entitled to recover damages, but is to be replaced in his position so far as regards the rights and obligations which have been created by the contract." There is nothing in the case of Rawlins v. Wickham which carries the doctrine beyond that (e). This was followed by Farwell, J., in a recent case (/), where it was held that on rescission of a lease on the ground of misrepresentation as to the sanitary condition of the premises, the plaintiff could not claim to be indemnified by way of compensation for injuries sustained by the insanitary state of the premises. Where a company is requested to register a transfer of stock which is apparently valid but in reality forged, there is an implied contract to indemnify the company (>' L. J. Ch. 275. (c) Ibid., p. 589, per Cotton, I. ..I. Bee Partnership Act, L890, s. 41. id) 34 C. D. p. 592. (e) 34 C. D. [.. 595, per Bowen, I ..J. if) Whittington v. Scale Ilayne, 82 L. T. 49. (g) Sheffield Corporation v. I'.arclay, 1905, A. C. :t'.»2 ; 71 L. .1. K. B. 717. 414 RESCISSION. No rescission if defrauding party is not a party to the transaction. as to admit of compensation by a pecuniary equivalent (h). If, however, the misdescription of the property is such that it cannot be estimated by a pecuniary equivalent, there is no case for compensation, and the transaction will be set aside (i). If the person by whose fraudulent misrepresentation a trans- action has been induced, is not himself a party to the trans- action, the transaction stands good and cannot be repudiated, if the other party to the transaction has not been party or privy to the fraud (k). If, for instance, a man has been induced by the false representations of a third party to deal with another, he cannot have the transaction rescinded, if the other party to the transaction has not been party or privy to the false representation (1). So, also, if a man has been induced to take shares from a company by fraudulent misrepresenta- tions made by some person, not by an agent of the company, authorised to make any representations or authorised to deal on behalf of the company, he is bound by his contract with the company, and cannot have it rescinded (m). But a misrepre- sentation in a prospectus issued by jjromoters before the incor- poration of the company may be a ground for rescission of a contract to take shares (n) ; though this does not apply to a subscriber of a memorandum of association (o). Cases in which a man has been induced by false representa- tions to purchase shares directly from a company must be distinguished from cases in which the transaction is between two individuals, meeting in the market and dealing for their private interests, like the seller and purchaser of transferable shares. If a man be induced by false representations on the part of the directors of a company to purchase shares from (h) Post, p. 443. (i) Post, p. 444. (k) Worth's Case, 4 Drew. 529; 28 L. J. Ch. 589; 113 R. R. 451 ; Re Felgate's Case, 2 D. J. & S. 456 ; 139 R. R. 182. (I) Pulsford v. Richards, 17 Beav. 95; 22 L. J. Ch. 559; 99 R. R. 48; Duranty's Case, 26 Beav. 271; 28 L. J. Ch. 37; 122 R. R. 104. (m) Brockwells Case, 4 Drew. 205; 26 L. J. Ch. 855; 113 R. R. 344; Nicol's Case, 3 D. & J. 427 ; 28 L. J. Ch. 257 ; 121 R. R. 169 : cf. Andrews v. Mockford , infra. (n) Karberg's Case, 1892, 3 Ch. 1 ; 61 L. J. Ch. 741. (o) Re Metal Constituents, Ltd., 1902, 1 Ch. 707; 71 L. J. Ch. 323; Buff Pressed Brick Co. v. Ford, 33 Ont. L. R. 264. RESCISSION. 11") an actual shareholder who lias not been himself a party to the false representations, the shares cannot be forced hack on the vendor, nor can the transaction be set aside as between the purchaser of the shares and the company. The purchaser of the shares must seek his remedy in an action against the parties by whose false representations he has been misled (//). But if the prospectus was in fact intended not merely to induce applicants for shares but to induce buyers, then a buyer may sue on the prospectus (gr). If A. induce B. by misrepresentation to buy. and B. sell Sub-sale after .,-, . . ., . ' .. . misrepresen- without misrepresentation to ( ., an action will not lie by tation! B. and ('. against A. to rescind (r). Where a person who has purchased through misrepresenta- tion resells the property and repeats the misrepresentation to the sub-purchaser, quoere whether the Latter can set aside the original sale without impeaching the sub-sale (s). Where a person who has been induced by misrepresentation Makinggood i -,i •, i t -ii • a representa- to buy property parts with it and then gets it back again so tion I as to be in a position to restore it, it does not follow that he ^the 1 * can impeach the sale (t). transaction. On the other hand, where a vendor induces a sale by mis- representation and assigns the benefit of the contract, the purchaser can recover any payments made by him under the contract as on a total failure of consideration (w). Where a man has been induced to enter into a transaction by the false and fraudulent representations of a person who is not a party to the transaction, it was at one time thought that the Court would, when it could do so, make him make good his assertion as far as possible (a). But the doctrine oi making representations good is said to be now exploded. At (]i) Duranty's Case, supra, at p. 274. See L6 Eq. p. 131 : Buckley, L10 (q) Andrews v. Mock ford, 1896, 1 Q. B. 372, 383; 65 L. J. Q. B. (r) Edinboro' Breweries v. Mollison, L894, V C. 96, LOO, L12; Buckley, 627. (*) Ibid., p. 109. (t) Ibid., p 112. (u) Fleming v. hoe, L901, 2 Ch. 594; 70 \,. J. Cb. 805. (./■, Pulsford v. Richards, 17 Beav. 87, 95; 22 L. J. Cb. 559; 99 R. R. 18; ville vr. Wilkinson, I Bro. C. C. 543; Gale v. Lindo, I Vern. 17.".; Ingram v. Thorpe, 7 Ha. 67 ; 82 K. R. 35; Hobbs v. Vorton, I Vern. 185; Peeh v. Gurney, L. R. 6 E. L, p. 393; 13 L.J. Ch. L9. 416 REMEDIES. one time it seems to have been thought by some judges of the Court of Chancery that under certain conditions a repre- sentation which did not support an action of deceit, which did not amount to contract, and which did not operate by way of estoppel, might yet be binding on the person making it. But when these three effects are duly considered it appears that there is no other way in which it can be binding (y), unless under the circumstances there is a legal duty to be careful (z). The cases referred to as supporting the supposed doctrine will be found in the second edition of the present work (a). Rectification Though, as a general rule, there can be no rectification settlement on when an instrument is founded on fraud (b), or where the fraud or° mistake is of one party only (c), there may be rectification unilateral where one party acts as another's agent in preparing an instrument which concerns them both, and that other relies on the good faith and competence of the acting party to carry out the true intention. Thus there may be rectification of a marriage settlement when the Court is satisfied that the settle- ment has been drawn up and prepared in violation of the agreement and understanding which was come to between the husband and wife before the marriage. When a party acting in the transaction and claiming a benefit under it is proved to have occupied a confidential relation to a lady whom he afterwards marries, and has undertaken to have a proper settlement prepared for her, has an improper settlement made in his own favour, the Court makes the settlement as it ought to have been made, on the principle that the husband under- took to the wife as agent to see that a right settlement was made, and that he is bound by such undertaking (d). In Clark v. Girdwood (e), where the intended husband had undertaken as agent of the intended wife to have a settlement prepared, and marriage articles were drawn up by a solicitor (y) Pollock on Contracts, 8th ed. 558; but see ante, p. 8. (z) Nocton v. Ashburton, 1914, A. C. at p. 951 ; 83 L. J. Ch. at p. 792. (a) Kerr on Fraud, 2nd ed., p. 395. (b) Watt v. Grove, 2 Sch. & Lef. 502. (c) 31 Beav. p. 151. (d) Corley v. Stafford, 1 D. & J. 239; 26 L. J. Ch. 865. (e) 7 Ch. D. 18. RECTIFICATION. 117 upon instructions given by the intended husband the night before the marriage, by which the wife's property was limited in the first instance to him for life, the Court held, in an action by the wife, that he was bound under the circumstances to have such a settlement prepared as the Court would sanction, that such settlement would give the Avife the first life interest in her own property, and that therefore the limitations were contrary to the intentions of the plaintiff, and it was ordered that the settlement should be rectified (/). The order was made on the uncorroborated testimony of the wife (g). So, also, in Smith v. Uiffe (h), a lady, a ward of Court, had married during her minority, and the Court had approved of the settlement. Her personalty was by the instrument limited on the death of her husband and in default of children (both which events had happened) to the wife as she should by will appoint, and in default to her next of kin. She complained that the Court had not provided for her interests as they ought to have been provided for, she being an infant ; and the Court held that it was the right of the lady after the death of the husband to have the settlement reformed and put in such a shape as the Court would have approved of if the thing were new and nothing had been done, and rectified the settlement by limiting the property in the events which had happened to herself, her executors, and administrators absolutely (i). Another class of cases in which the Court will rectify a settlement is when an action is brought by the grantor to set aside a voluntary deed in so far as it conferred a benefit on collateral volunteers on the ground that the grantor did not know the precise effect of the deed or the consequences of its execution. In a case, accordingly, where the Court was satisfied that a lady did not understand < he true I'Wvci of the limitation to collaterals in a voluntary t\vvd executed by her, if, See Lovesy v. Smith, L5 C. D. 655; 4 Tuekei \ Bennett, 38 ('. D. I ; 57 I,. .!. Ch. 507. tip 1 1, til. i/ ( j -2.U Eq. 666; ll I,. •!. Ch. 755; but Bee Tucket \. Bennett, supra, (i) Bee Cogan v. Duffield, 20 Bq. 789; 15 I-. ■>. Ch. :«)7. k.f. 21 418 REMEDIES. that it was not properly explained to her, and that the instructions she had given for the preparation of the settle- ment were materially departed from, the limitation in question to collaterals was cancelled, and a clause introduced so as to bring the settlement into accordance with the instructions she had given (k). But the Court will not set aside or rectify a voluntary settlement unless a substantial reason for so doing is shown (/). Relief by The Court may in the exercise of its equitable powers relieve party^mstee ag-aiiist fraud by converting the person guilty of the fraud into a trustee for the person defrauded. The Court will never allow a man to take advantage of his own wrong, and there- fore if an heir or devisee, or legatee or next of kin contrive to secure to himself the succession of the property through fraud, the Court affects the conscience of the legal holder and converts him into a trustee, and compels him to execute the disappointed intention (m). So, also, in cases where a man has fraudulently appropriated to his own use monies belong- ing to another, the Court will declare him a trustee of such monies, and order him to make them good (n). Relief against The Court has jurisdiction to set aside a judgment obtained judgments, . probates, &c. by fraud m a subsequent action brought for that purpose (o). If a party has been induced by fraud to consent to a judgment, or if fraud in obtaining a judgment has been practised on the Court, the Court will grant relief on being satisfied that the conduct of the party himself has not deprived him of his title to relief, and that the relief can be given with due regard to the just interests of others (p). Where any fraud or collusion has been practised, a sale and conveyance cannot be held valid, although they have the colourable protection of a judgment of the Court (q). The (fc) Maunsell v. Maunsell, 1 L. R. I. 547. (I) Ante, p. 210. (m) M'Cormick v. Grogan, L. R. 4 H. L. 82; Lewin, 62. (n) Rolfe V. Gregory, 4 D. J. & S. 576; 34 L. J. Ch. 274; 146 R. R. 463; Spencer v. Clarke, 9 Ch. D. 137; 47 L. J. Ch. 692; cf. Powell v. Jones, ante, p 399. (o) Cole v. Langford, 1898, 2 Q. B. 36; 67 L. J. Q. B. 698. (p) Ante, p. 344. (q) Colclough v. Bolger, 4 Dow, 64; 16 R. R. 24. REMEDIES. 419 orders of the Court cannot, however, be set aside on grounds less strong than those which would be required to se1 aside transactions between competent parties (r). To set aside a judgment on the ground of fraud, actual positive fraud must be shown. There must be on the part of the person charge- able with it the mains animus, the mala /n Smith v. Chadwick, '.) App. Ca. p, 203; 58 I.. -I. Ch. 873. 422 REMEDIES. fact that lie did believe it to be true, lie is not liable (o). The test is whether the statement was made without positive belief in its truth, not necessarily with positive belief in its falsehood (p). A statement made without reasonable grounds for believing it, is not necessarily fraudulent. The absence of such grounds is evidence but not proof of a want of belief. It may be most material as evidence upon the question whether the belief was really entertained ; but if it be found as a fact that the belief was really entertained the absence of reasonable grounds will not constitute a fraud (q). Whether there were reasonable grounds for the statement, and what were the means of know- ledge of the person making it, are most weighty matters for consideration. The ground upon which an alleged belief was founded is a most important test of its reality. ' If I thought that a person making a false statement had shut his eyes to the facts, or purposely abstained from inquiring into them, I should hold that honest belief was absent, and that he was just as fraudulent as if he had knowingly stated that which was false " (r). A distinction must be drawn between an action of deceit and an action to set aside a! contract. Mere concealment is not sufficient to give a right of action to a man who if the real facts had been known would not have entered into the contract. Mere non-disclosure of material facts, however morally censurable, however sufficient it may be as a ground for setting aside a contract, will not form a ground for an action of deceit. There must be some active misstatement of fact, or at all events such a partial and fragmentary state- ment of fact as that the withholding of that which is not stated makes that which is stated absolutely false (s). Mere silence will not ground an action of deceit, but silence as to a (o) Derry v. Peek, supra; Angus v. Clifford, supra, (p) See Pollock, Contracts, 537. (q) 14 App. Ca. 344, 350, 352, 358, 360, 363, 369. (r) 14 App. Ca. 375, 376, per Lord Herschell. (s) Peek v. Gurney, L. E. 6 H. L. 377, 403; 43 L. J. Ch. 19; Derry v. Peek, 14 App. Ca. 337 ; 58 L. J. Ch. 864. ACTION OF DECEIT. 123 material fact in a prospectus may be a ground for rescission (t). In an action, moreover, for setting aside a contract, the plain- tiff may succeed, although the misrepresentation was innocent; but in an action of deceit the representation must be fraudu- lent. The coming into existence of a fact which would have made a statement untrue if it had existed at the time of issuing the prospectus will not in an action for deceit entitle the plaintiff to relief: nor are persons issuing a prospectus liable to an action for deceit because they do not mention a fact coming to their knowledge before allotment which falsifies the prospectus. Moreover, in an action of deceit the plaintiff cannot establish title to relief simply by showing that the defendants have made a fraudulent statement; he must also show that he was deceived by the statement and acted on it to his prejudice (u). To be a ground for an action of deceit the false statement Materiality, must be material. With respect to the materiality of the statement, the untrue statement may be of such a character as to be clearly material and such as to induce the contract ; in such case no evidence of its materiality, or of its having in fact been an inducement, is wanted. It is an inference of fact, not of law, that the representation was the inducement (./■). The defence, if any, in such case must be either (1) that the applicant knew the true facts; or (2) that he avowedly did not rely upon the facts stated; or (3) that he contracted to take the matter at his own risk (y). It is not sufficient to prove that the person deceived made some investigation into the facts, or that he had the means of discovering the truth and did not sufficiently avail him- self of them. In the case of false representation negligence (t) Components Tube Co. v. Naylor, 1900, 2 I. R. 1. («) Arkwrighi v. Newbold, 17 C. D. 320; 50 L. J. Ch. 872; Smith v. Chad- wick, 20 C. D. -H: 53 I.. .1. Ch. H7:!; Angus v. Clifford, L891, 2 Ch. 149; 60 I. .J. Ch. 443. ' Irnison v. Smith, ll C. D. 348, 369; Aaron's Reeft \. Twiss, L896, A ' •27.'5, 280; 65 L. .J. P. C. 54. (y) Brownlie v. Campbell, 5 A.pp. Ca. 925; Smith v. Chadwich 20 C. D, 11. 45; 58 L. J. Ch. 873; Redgrave v. Hurd, 20 C. B. 1, 21 ; 51 L. J. Ch. 118. 424 REMEDIES. or laches affords no answer unless there is such delay as to bring in the Statute of Limitations (z). But if the statement be not obviously material, or if it be ambiguous, the applicant must in the former case prove it to be material, and in the latter prove the sense in which he understood it, and must in either case prove that he was induced by it (a). The defendants cannot be heard to say that they did not know the popular meaning of the words they used (b). If a man uses language which taken in its natural sense conveys a wrong impression, he cannot be heard to say that he did not intend to deceive (c). It is not necessary to prove that the representation was the sole inducement. The question is whether the plaintiff acted on the misrepresentation, not whether he acted on the mis- representation alone. He may therefore recover although he was induced also by other things, as for instance his own mistake (d). It is not, however, every misstatement, although untrue, and untrue to the defendant's knowledge, that will do. It may be that the misstatement is trivial — so trivial that the Court will be of opinion that it could not have affected" the plaintiff's mind at all, or induced him to enter into the con- tract; or it may be that although the means of knowledge were in the hands of the defendant, yet the matter was minute and required a careful examination, and there may have been reasonable grounds for the defendant to believe that this statement was true, although he had those means of know- ledge in his possession. In that way also he would be entitled to succeed (e). In a case where there was a misstatement of the valuation of a property in the prospectus of a company to the amount (z) Redgrave v. Hurd, 20 C. D. 13, 22, 24; Oelkers v. Ellis, 1914. 2 K. B. 139; 83 L. J. K. B. 658. (a) Smith v. Chadwick, 20 C. D. 45, 64; 9 App. Ca. 187. (b) Arnison v. Smith, 41 C. D. 348, 368, 373. (c) Ibid. ; but cf. Derry v. Peek, supra; and see Glasier v. Rolls, 42 C. D. 436; 58 L. J. Ch. 820. (d) Edgington v. Fitzmaurice, 29 C. D. 459; Arnison v. Smith, 41 C. D. 359, 369. (e) Smith v. Chadwick, 20 C. D. 27, 44; 53 L. J. Ch. 873. ACTION OF DECEIT. 425 of 3,000/. out of 300,0007. the misstatement was hold not material (/). So, also, when money was to be paid by instal- ments, the omission to mention that interest was also payable was held not material (g). If the name of a person is improperly placed on the list of directors of a company, it must depend on the circumstances of the case whether it is a material misstatement. There mav be cases in which the name of a man is so well known and notorious in connection with the business and subject- matter of a company that the occurrence of his name on the list of directors would be a clear and undoubted inducement to persons to embark in the concern (h). But in the absence of some special reason, the mere fact that one name out of several happens to be wrongly inserted in the list of directors is not sufficient to support an action of deceit (i). Where a transaction has been induced by fraud, but rescission is not competent to the party defrauded, either because the parties cannot be restored to their original con- dition (k), or because the person by whoso fraud the transaction has been induced is not a party to the trans- action (I), the party defrauded may bring an action of deceit against the party by whose fraud he has been misled to his injury (ra). So, also, the party defrauded may if he pleases stand to the contract after discovery of the fraud, and recover damages in an action of deceit for the fraud (n). So, also, where a man enters into a contract for the sale of real estate, knowing that he has no title to it nor any means of acquiring it, the purchaser may recover damages in an action of deceit (o). if) Ibid. {g) Ibid. (h) Karberg's Case, 1892, 3 Ch. 1 ; 61 L. J. Ch. 741. (i) Smith v. Chadwick, 20 C. D. 44 ; 9 App. Ca. 187, supra. (k) Ante,p 388. (I) Ante, p. 414. (ro) Pasley v. Freeman, 3 T. R. Lloyd v. Grace Smith ,f Co., 1912. A. C. 716; 83 L. J. K. B. 1140, ante, p. 94. 428 REMEDIES. have actually derived benefit (d). The principal cannot escape liability upon the ground that the agent acted for his own purposes and not in the interest of the principal (e), nor on the ground that he, the principal, has incurred other liability (/). The principle of the law of agency applies equally to all such cases. It may be that the master has not authorised the particular act, but he has put the agent in his place to do that class of acts, and he is answerable for the manner in which that agent has conducted himself in doing the business which it was the act of the master to place him in (g). It is of course assumed in all such cases that the third party who may seek for redress has been dealing in good faith with the agent in reliance upon the credentials with which he has been entrusted by the principal, and had no notice, either of any limitation material to the question of the agent's authority, or of any fraud or other wrong-doing on the agent's part at the time when the cause of the action arose (h). A company, whether incorporated or not, is like any other principal liable to an action of deceit for the misrepresentation of its directors, or other agents, if the statement relates to a matter as to which they are agents, and if it be made in the course and as part of the business which they are appointed by the company to transact (i). Although the particular act which gives the cause of .action may not be authorised, still if the act is done in the course of employment, then the prin- cipal is liable; and the rule is as applicable to companies as to individuals (/;). This doctrine was approved of in Swire v. Francis (7) and Mackay v. Commercial Bank of New Bruns- wick (m). In the latter case the officer of a banking (d) Swire v. Francis, 3 App. Ca. 113; 47 L. J. P. C. 18; Hambro v. Burnand, 1904, 2 K. B. 10; 73 L. J. K. B. 669. (e) Hambro v. Burnand, supra. (/) Kettlewell v. Refuge Ass. Co., 1908, 1 K. B. 545 ; 77 L. J. K. B. 421. (g) See note (b), p. 427. (h) Houldsicorth v. City of Glasgoic Bank, 5 App. Ca. 326, per Lord Sel- borne ; Rimmer v. Webster, 1902. 2 Ch. 163 ; 71 L. J. Ch. 561. See 1910, A. C. 174. (i) Berwick v. English Joint Stock Bank, L. E. 2 Ex. 265; 36 L. J. Ex. 147. (k) Citizens' Life Ass. Co. v. Brown, 1904, A. C. 423; 73 L. J. P. C. 102. (/) 3 App. Ca. 106 ; 47 L. J. P. C. 18 ; and see 5 App. Ca. 317, 326. (to) L. B, 5 P. C: 394; 43 L. J. P. C. 31. ACTION OF DECEIT. t-*> corporation, whose duty it was to obtain the acceptance of bills of exchange in which the bank was interested, fraudu- lently and without the knowledge of the president and directors of the bank, made a representation to a man, which bv omitting a material fact misled him and induced him to accept a bill in which the bank was interested, and he was compelled to pay the bill. It was held he could recover from the bank the amount so paid. The principle on which Barwick v. English Joint Stock Bank proceeded was followed in Swire v. Francis (n), and Weir v. Bell (o). But in the latter case Lord Bramwell said he did not consider the reasoning- on which Barwickv. English Joint Stock Bank was founded was satisfactory, but, never- theless, he thought it might be supported on the ground that " every person who authorises another to act for him in the making of any contract undertakes for the absence of fraud in that person in the execution of the authority given as much as he undertakes for its absence in himself when he makee the contract." This statement was approved by Lord Macnaughten in Lloyd v. Grace Smith ty Co. (p) and Lord Haldane in Mail v. Rio Grande Rubber Estates [q). The authority of Burn- id- v. English Joint Stork Hank, is, however, conclusive. But a company is not liable for a fraudulent representation as to the credit of another person made by its agent, though made in the interest of the company (')■ When the prospectus of a company omits to specify con- Action of deceit under tracts entered into by the promoters or directors before the Companies issue of such prospectus, as required by section ^8 of the Com- g c 3 ' 8 J,^ m< panies Act, 1867, a man who has been induced by the direetorsof 1 * companies. concealment to take shares in the company has his remedy against the promoters or directors personally (s), but he is (it) Supra. (o) :J Ex. I). 244; 47 L. .1. Ex. Tut. (p) 1912, A. C. 716 j M I-. J. K. B. II to. (q) L913, A C. 853; 83 L. •). P. C. 35. (t) Hirst v. Wi < Riding, ic, Bank, L901, 2 K. B 560; 70 L. J. K. B. 828, ante, p. '.)2. («) Ante, p. 91. 430 REMEDIES. One agent not liable for fraud of other agent. Laches. Measure of damages. not entitled to relief by removal of his name from the list of shareholders (t). The difference in the wording of section 38 and section 81 of the Companies (Consolidation) Act, 1908, has not altered the law in this respect («). As a general rule one agent is not responsible for the acts of another agent unless he does something by which he makes himself a principal in the fraud («). The director of a company, for instance, before the Directors Liability Act, 1890, was not liable for a fraud, such as the issue of a fraudulent prospectus, committed by his co-directors or any other agent of the company, unless he either expressly authorised or tacitly permitted its commission (y). A man who has by his laches or delay barred his right to repudiate a contract to take shares in a company on the ground of fraudulent representation may nevertheless main- tain an action of deceit against the directors for damages founded on the same misrepresentation (z). A man may affirm a contract, and yet sue the person who by fraud induced him to enter into it (a) ; but if he affirms the contract he cannot defend an action for calls on the ground of fraud (6). In actions of deceit the measure of damages is not the full consideration which has passed from the defrauded party. Any benefits received by him under the contract must be taken into consideration, and the damages recoverable will be the excess only of the value of the one over the other (c) : The measure of damages is the difference between the actual value of the property and its value if the property had been what it was represented to be. When a man has been induced by false representations in a prospectus to take shares in the company, the proper mode of measuring the damages is to (t) Cover's Case, 1 C. D. 182; 45 L. J. Ch. 83. (u) Re South of England Natural Gas Co., 1911, 1 Ch. 573; 80 L. J. Ch. 358. (x) Cargill v. Bower, 10 C. D. 514; 47 L. J. Ch. 649. (y) Ibid. ; Peek v. Gurney, L. E. 6 H. L. 378 ; 43 L. J. Ch. 19 ; cf. Dovey v. Cory, 1901, A. C. 477; 70 L. J. Ch. 753. (z) Eaglesfield v. Londonderry , 4 C. D. p. 715. (a) Amison v. Smith, 41 C. D. p. 371, per Cotton, L. J. (b) Aarons Reefs v. Twiss, 1896, A. C. 273, 294 ; 65 L. J. P. C. 54. (c) Hog an v. Healey, I. R. 11 C. L. 122. DAMAGES. 431 ascertain the difference between the price paid for the shares and the actual value at the time of allotment, such value to be ascertained, not by the market value at the time, but by the light of subsequent events, including, if the company be in liquidation, the result of the winding up (), and he is entitled to an inquiry as to the difference between the price paid by him for the shares and their real value on the day after allotment (/). But the real value of the shares at the date of allotment is not the market value, which may be inflated by the very misrepresentation of which the plaintiff complains, but the value of the assets which is behind them (g). The party defrauded can only recover damages to the extent of the loss he has actually sustained. He cannot recover the entire price he paid unless the thing prove wholly worthless. If the article which he has been induced to buy is of any value, that value in assessing the damages must be deducted from the price. If the article had any value and he has by his own act diminished or destroyed that value, he cannot throw the loss so occasioned on the defendant. But if the article was worthless from the beginning and only derived its apparent value from the representation which has proved false, the measure of damages is the price which the plaintiff was induced to give for it by the fraud on which the action is founded. If the article was a share in a company it may be that it may have had some fictitious value in the share market at the time of the purchase, but the plaintiff having invested was not bound to sell it immediately. He was fully entitled to wait until the company was in operation (h). When the purchaser has sold the property at a profit he can recover no (d) Arkwright v. Newbold, 17 C. D. 302; 50 L. J. Ch. 372; Arnison v. Smith, 41 C. D. p. 363; Shaw v. Holland, 1900, 2 Ch. 305; 69 L. J. Ch. 621 ; Cackett v. Keswick, 1902, 2 Ch. 456; 71 L. J. Ch. 641. MeConnel v. Wright, 1903, 1 Ch. 546, per Collins, M. It. ; 72 L. J. Ch. 847. if) Cackett v. Keswick, supra. (jjf) FaiOCeti V. Johnson, 15 S. R. 61. [h) TwycrosB v. Grant, 2 C. P. D. 469; 46 L. .1. (' P. 686. Bee Jury v. Stoker, 9 L. R. I. 397; Lamb v. Johnson, 15 N. S. W. St. R. 65. 4-32 DAMAGES. damages, although he has failed to realise the profit he could reasonably have expected if the representations had been true (i). It is a general rule that persons in a fiduciary position should be charged with the highest value of property which they have wrongfully taken while it was in their hands. But where allotments of shares were made ultra vires to directors, it was held that the measure of damage was the value when they were allotted to the directors (&). Where there is a fraudulent misrepresentation of the character or condition of goods, the vendor is responsible for all injury which is the direct and natural result of the purchaser acting on the faith of the representation. Where, therefore, a cattle dealer fraudulently represented a cow to be free from infectious disease when he knew it was not so, and the purchaser placed it with five others which caught the disease and died, the latter was held entitled to recover as damages in an action for fraudulent misrepresentation the value of all the cows (/). In an action for false representation the plaintiff cannot recover damages if they are too remote and not the immediate consequence of the defendant's act (m). Costs incurred, upon the discovery of the falsehood of a representation, in order to reverse the consequences of the representation are too remote an injury to be included in a verdict upon an action of deceit (n). In a case where a man had purchased shares under a forged transfer, and the name of the real owner was afterwards substituted, it was held that the purchaser was entitled to recover from the company for their negligence in registering the forged transfer, as damages for the loss of the shares, the value of the shares at the time the company first refused to recognise him as a shareholder, with interest at four per (i) Rosen v. Lindsay, 7 W. L. R. 115; 17 Man. L. R. 251. (ft) Shaw v. Holland, 1900, 2 Ch. 305; 69 L. J. Ch. 621. (/) Mullett v. Mason, L. R. 1 C. P. 559; 35 L. J. C. P. 209. (m) Collins V. Cave, 4 H. & N. 225; 118 R. R. 403; Barry v. Crosskey, 2 J. & H. 1; Peek v. Gurney, L. R. 6 H. L. 412; 43 L. J. Ch. 19; Angus v. Clifford, 1891. 2 Ch. p. 481; 60 L. J. Ch. 443. (») Hyde v. Buhner, 18 L. T. 293. DAMAGES. cent. (o). So where a company is estopped from denying that the person named in a share certificate is the owner of the shares, and the company cannot give the shares, the measure of damages is the value of the shares at the time of the refusal (p). The measure of damages in an action for fraudulent mis- representation on a sale is the difference between the price paid and the fair value at the time of the purchase, and therefore it is not sufficient for the plaintiff to show that the property was not worth as much as it would have been if the repre- sentation had been true (q). If a mine owner fraudulently works into the mines of his neighbour and abstracts his minerals, he will be charged the full value of the minerals when gotten, without being allowed the expenses of getting and severing them. The expenses, however, of raising the minerals to the pit's mouth will be allowed him (r). He will also have to pay compensation for the use of a way-leave under the land. If he dies, his executor will not after his death be liable in damages for what damage the owner of the mine may have sustained by the abstraction of coal from under his land. The estate, of the wrong-doer is only liable for such profit as it may have derived from the fraud (s). The measure of damages for which an agent is responsible in consequence of his misrepresentations is the actual loss which the principal thereby sustains, and does not include the anticipated profit which the principal might have made if the representation had been true (t). When a person employed to purchase purchases secretly from himself but the fraud complained of does not touch the value of the article sold, but consisted only of the fraudulent io) Re Bahia and San Francisco Railway, L. K. 3 Q. B. 594; 37 L. J. Q. B. 176; Karberg's Case, 1892, 3 Ch. p. 17; 61 L. J. Ch. 741. (,n Re Olios Kopje Diamond Mines. 1893, 1 Ch. 618; 62 L. J. Ch. L66 (q) Holmes v. Jones, 4 C. L. R. L692; 7 S. R. 82] (r) Phillips v. Homfray, 6 Ch. 770; 59 L. J. Ch. 517; Bulli Mining Co. v. Osborne, L899, A. C. 351 ; 68 L. J. P. C. 19; cf. Jegon v. Vivian, 6 Ch. 742; 40 l, .1. Ch. 389 («) Phillips v. Homfray, '21 C. D. 154; supra. (t) Salve en v. Rederi AkUebolaget, <£c, 1905, A. C. 302; 74 h. J. P. C. 96 K.F. 28 433 434 INJUNCTION. concealment by the agent that he was selling to his principal, the proper measure of damages is the difference which the agent paid and the price at which the principal might have resold it upon the same day upon which he bought it from the agent. What occurs afterwards cannot be taken into account (u). Although it is a general principle that directors or other persons in a fiduciary position should be charged with the highest value of the property wrongfully taken by them, they ought not to be charged with more than the real value, which is not necessarily the market value (#). SECTION III. INJUNCTION RECEIVER SUMMONS . The appropriate remedy of the Court may under the peculiar circumstances of the case be by way of injunction. In restraining by injunction acts which are fraudulent the Court exercises a most extensive jurisdiction. Injunctions may be had upon a proper case being made out to restrain a man from parting with or transferring property, or paying or recovering monies (y), from negotiating securities (z), from selling pro- perty, &c. (a). So, also, if a man has by his conduct encouraged another to expend monies on property, or deal in a matter of interest, the Court will restrain him from derog-atinsr from the interest in which that other has been induced to deal, or from enforcing his legal right against him, unless the latter has received the benefit which he contem- plated at the time he was induced to alter his condition (6). Where, accordingly, a lessor, pending an agreement for a building lease, represented to the intended lessee that he could not obstruct the sea view from the houses to be built by the lessee, pursuant to the proposed lease, because he himself was a lessee under a lease for 999 years, containing covenants which restricted him from so doing; but after the (u) Waddell v. Blockey, 4 Q. B. D. 680; 48 L. J. Q. B. 517. (x) Shaw v. Holland, 1900, 2 Ch. 305; 69 LL. J. Ch. 621; ante, 432. (y) Kerr on Inj. (4th ed.), 537. (z) Ibid. 536. (a) Ibid. 533. (b) Ante, p. 124. INJUNCTION. 435 building lease had been taken, and the houses built upon the faith of the representation, the lessor surrendered his 999 years' lease, and took a new lease omitting; the restrictive covenants, the Court restrained him by injunction from building so as to obstruct the sea view (c). So, also, the Court will interfere by injunction to restrain any unfair competition in trade. The protection of trade marks and trade names was originally undertaken by the Courts on the ground of preventing fraud (d), but in cases within the Patents, Designs, and Trade Marks Acts, 1883 and 1888, the wrong to be redressed is now thought to be no longer a species of fraud, but a wrong in the nature of a trespass upon a proprietary right, (dd). In cases of trade names and the like outside the statute the principle is that no one may canvass for custom by falsely holding out his goods or business, whether by misleading description or by colourable imitation, as being the goods or business of another. Its application is not excluded by showing that the style or words appropriated by the defendant are in themselves not false as he uses them, or that the plaintiff if he succeeds will have a virtual monopoly in an exclusive designation which is not capable of registration as a trade mark. Thus the assumption of a surname by a man, or even the use of his own name, for the purpose of fraudulent competition, is a fraud which the Court will restrain (e). So where a plaint ill establishes that the defendant has represented him as his principal or partner, or been responsibly connected with him in a venture and there is a tangible probability of injury to the plaintiff, he is entitled to an injunction (/). The question in all these cases is whether the defendant's action is calculated to deceive (g). Underselling, even at a manifest loss, is not in itself unfair competition (h). (c) Piggotl v. Stratton, John. 359: 1 D. F. & J. 33; 29 U. .1. Gh. 1 ; 135 R. B 336. (d) Sec per Lord Blackburn, 8 App. Ca p. 29. (dd) Post, p. 150. (e) Cash v. Cash, 82 L. T. 655. (/) Walter v. Ashton, 1902, 2 Ch. 282; 71 L. J. Ch. 839. (g) Reddaway v. Ha,,h,im, 1896, A. C. L99; 65 I.. J. Q. B. 381; Bourne s Sunn £ Edgar, L903, 1 Ch. 'ill ; 72 b. J. Ch. L68. (h) Ajello v. Worsley, L898, 1 Ch. 274; 67 L. J. Ch. 172. 436 DEFENCE TO SPECIFIC PERFORMANCE. Summons. Where by contract between the plaintiffs and certain factors the latter were contractually bound not to sell to the defen- dants any of the plaintiffs' goods, and the defendants by deceit induced the factors to sell to them the plaintiffs ' goods, whereby damage resulted to the plaintiffs, it was held that the defendants had committed an actionable wrong and that the plaintiffs were entitled to an injunction and an inquiry as to damages (i). If a fair 'prima facie case of fraud be made out, the Court may appoint a receiver before the hearing, even against a party having the legal title (k). Questions of fraud cannot be raised or decided on an originating summons (I), nor can accounts on the footing of wilful default be directed (m). A question as to the validity of a contract in its inception cannot be decided on a summons under the Vendor and Purchaser Act (n), but the validity of a notice to rescind may be decided (o). And on a vendor's application for a declaration that a good title had been shown, an order was made in the purchaser's favour rescinding the contract (p). Fraud a bar to specific performance. SECTION IV. DEFENCE TO SPECIFIC PERFORMANCE. Where a party comes to the Court for specific performance of a contract, he must as to every part of the transaction be free from any imputation of fraud or deceit. An agreement affected by misrepresentation or tainted by deceit is incapable of being made the subject of the interference of the Court in order to compel its specific performance (q). A contract will (t) National Phonograph Co. v. Edison-Bell Co., 1908, 1 Ch. 335; 77 L. J. Ch. 218. (fc) Kerr on Receivers, 26, 73. 105. See Re Mouatt, 1899, 1 Ch. 831; 68 L. J. Ch. 390. (I) Sandbach and Edmondson. 1891. 1 Ch. 99; 60 L. J. Ch. 60; Re Johnson, 2 Tas. L. E. 92. (m) Re Hengler, 1893, W. N. 37. (n) Sandbach and Edmondson, supra; Wallis and Barnard, 1899, 2 Ch. 515; 63 L. J. Ch. 753. (o) Jackson and Woodburn, 37 C. D. 14; 57 L. J. Ch. 243. (p) Higgins and Perceval, 1888, W. N. 172 ; Wulker and Oakshott, 1901, 2 Ch. 383; 70 L. J. Ch. 666. (q) Harris v. Kernble, 5 Bligh, 730; 35 R. R. 83; but see Greenhalgh v. Biindley, 1901, 2 Ch. 324; 70 L. J. Ch. 740. DEFENCE TO SPECIFIC PERFORMANCE. \ 37 not be specifically enforced against a defendant who estab- lishes that his entering into it was procured or occasioned by some fraud on the part of the plaintiff or his agent : bin whether the fraudulent act of a stranger can ever operate to deprive the innocent vendor of his right to enforce a contract seems doubtful (/•). When the aid of the Court is sought by way of specific performance of a contract, the principles of ciliics have a more extensive sway than when a contract is sought to be rescinded. The Court is not bound to decree specific performance in every case where it will not set aside a contract, or to set aside everv contract that it will not specifically perform (s). Specific performance rests with the discretion of the Court upon a view of all the circumstances, and with an eye to the substantial justice of the case (<). There can be no specific performance if a material and important fact be untruly stated («), or if there be a mis- description of the property to a material extent in the con- ditions of the sale (V). It is no answer, in a suit for specific performance, to the fact of the plaintiff having made a false representation, to say that the defendant was imprudent. A man who calls for specific performance must be able to show that his conduct has been clear, honourable, and fair (y). The Court must see its way very clearly before it will decree specific performance, and must be satisfied as to the integrity and good faith of the party seeking its interference (z). Mis- representation as to a small portion only of the property, the subject of the contract, will, if the misrepresentation is inten- tional, prevent a man from coming to the Court to have the (r) Union Bank v. Munster, 37 C. D. pp. 53—55; 57 L. J. Ch. 124. («) Wilde v. Gibson. 1 H. L. C. 607; 73 R. R. 191; Rawlins v. Wickham. 3 D. & J. 322; 28 L. J. Ch. 188; 121 R. R. 134 ; Broad v. Munton, 12 C. D. 131 : 48 L.J. Ch. 837. tt) Watson v. Marston, 4 D. M. k G. 230; 102 H. R. 100; Re Hare and O'More, 1001, 1 Ch. 93; 70 L. J. Ch. 45. (u) Price v. Macaulay, -2. D. M. k G. 339; 95 R. R. 129. f-i Caballero v. Henty, Ch 147; 42 L. J. Ch. (135; Goddard v. Jeffreys, 51 D. J. Ch. 57. (y) Cox\. Middleton, 2 Drew. 220; 23 L. -I. Ch. 618; LOO I;. R. Oil; Walters v. Morgan, ■■> I). I 1 '. & •) . 718; L30 l;. R. 3(H). See Phillip* v. Homfray, 6 ch. 770; 59 L. J. Ch. 517. (z) Walters v. Morgan, •". D. I 1 '. k J. 718. 438 DEFENCE TO SPECIFIC PERFORMANCE. contract enforced. It is not sufficient that the vendor offer to waive the portion affected by the representation (a). The effect of a partial misrepresentation is not to alter or modify the agreement, pro tanto, but to destroy it entirely, and to operate as a personal bar to the party making the applica- tion (b). Misrepresentation of a material fact, by a party or his agent, although innocently made, will be a bar to the application (c). If a prospectus be issued containing material representations, and a person accepts shares on the faith of the representations, the party who made the representations cannot, if they prove to be untrue, compel the other party to accept the shares, although he believed what he stated to be true (d). It is a defence to an action for specific performance that the plaintiff has made inaccurate representations with respect to the property, the subject of the contract, although , these representations proceeded upon and had reference to sources of information which were equally open to all parties, and might have enabled the defendant to detect the alleged inaccuracies^ if the evidence shows that they could not have been easily detected (e). There may, however, be specific performance although the description of the property, the subject of the contract, be incorrect, if it appear that the purchaser knew at the time of the purchase that the representation was untrue, or inspected the property before making the purchase, and so acted upon his own judgment in the matter (/); or if there were circum- stances in the case which demanded further investigation, for which the vendor afforded every facility (g), or if the repre- (a) Clermont v. Tasburgh, 1 J. & W. 119, 120: 20 E. E. 243. (b) Ibid.; Stewart v. Alliston, 1 Mer. 26; 15 E. E. 81. See Rawlins v. Wickham, 3 D. & J. 321; supra. (c) Mullens v. Miller, 22 C. D. p. 199; 52 L. J. Ch. 380; Wauton v. Coppard, 1899, 1 Ch. p. 97 ; 68 L. J. Ch. 8. (d) New Brunswick, &c, Railway Co. v. Muggeridge, 1 Dr. & Sm. 363, 382; 30 L. J. Ch. 242 ; 127 E. E. 142. (e) Harris v. Kernble, 5 Bligh, 730; 35 E. E. 83; Denny v. Hancock, 6 Ch. 1 ; 40 L. J. Ch. 193. (/) Dyer v. Hargrave, 10 Yes. 505; 8 E. E. 36; Brooke v. Rounthwaite, 5 Ha. 306; 15 L. J. Ch. 332; 71 E. E. 115; Clarke v. Mackintosh, 4 Giff. 134; Nene Valley v. Dunkley, 4 C. D. p. 4 (g) Clarke v. Mackintosh, 4 Giff. 134. DEFENCE TO SPECIFIC PERFORMANCE. 439 eentations which have been made are vague in their term-, and merely amount to a statement of value or opinion (//). And specific performance will not be refused merely because the vendor has done something, unknown to the purchaser, which renders his position different from the normal position of a vendor (/). It seems that where it is in the vendor's power to make good the description of the property, but not by way of money compensation, he can enforce the contract on condition of doing so (ft), and that there may be specific performance of a contract if the representation at the time of completion be accurate, although at the time of sale the representation was not correct. When, accordingly, several cottages let to weekly tenants were put up for sale and described as " producing i'T-'l a year," which was not correct at the time the particulars of sale were issued, but before the day fixed for completion the repairs were done and the rents were raised, so that on the day of completion the particulars were quite accurate, it was held there was not such a misrepresentation as to entitle the purchaser to resist specific performance (I). Indeed in an action for specific performance a vendor is not confined to showing such title as he had at the date of the decree, much less to such title as he had at the date of the contract, but may perfect his title at any time before certificate (?/<). A representation of intention as to future acts upon faith in which the contract is made may be a ground for refusing specific performance ; as where a vendor announced at the sale his intention of making improvements in the neighbour- hood and approaches which would materially enhance the value of the property sold, the Court refused to give specific performance, unless he fulfilled the expectation held out to the purchaser (■/»). So, also, specific performance of an agree- (h) Scott v. Hanson, 1 R. & M. 128; 27 K. K. 141; Johnson \. Smart, 2 Giff. 151 ; L28 R. R. 68; ante, pp. 51, 52. (»') Greenhalgh v. Brindley, 1901, 2 Ch. 324; 70 L. J. Ch. 740. (ft) Bascomb v. Beckwith, 8 Eq. 1Q0 ; 38 L. J. Ch. 536 ; Pollock (6th ed.), 623. tl, Goddard \. Jeffryes,'51 I-. J. Ch. 67. (mi Halketi \. Dudley, L907, 1 Ch. 590; 76 I.. .J. Ch. 330. Beaumont v. Dukes, -lie. 422; 23 R. R. 11<>; Myers v. Watson, 1 Sun N. S. 523; 89 K. K. 17:!. 440 DEFENCE TO SPECIFIC PERFORMANCE. merit to take a lease was refused, although the lessee had taken possession and occupied for two years, on the ground that the lessor had not fulfilled promises made to improve the premises ( materially different from that for which he contracted (n), or to take property which defeats his object in buying if the vendor knew of that object (a). There can be no specific per- formance if the description be inaccurate, and the Court feels that it cannot measure the difference between that which was promised and the actual tact, so as to found a proper basis for compensation (/;). If, for example, a man has contracted for the purchase of a freehold, he will not be compelled to take a leasehold (though held for a very long term) (q) unless held for a long term without payment of rent (r), or a copy- hold (5); nor can a man who has contracted for a copyhold be compelled to take a freehold (t); nor will a man be com- pelled to take property held in a different manner from that which is expressed or implied in the contract, as in the assignment of an underlease instead of an original lease (V), or of a redeemable instead of an absolute interest (#), or of an improved instead of a ground rent (y). Nor can a. man who has contracted for an estate in possession be compelled to take a reversion expectant on a life estate (z). Nor where the vendor has contracted to show a marketable title, will the purchaser be forced to complete, if the lease is subject to restrictive covenants (a). Nor will the Court, even at the instance of the purchaser under an open contract, decree specific performance with compensation for restrictive cove- nants (6). Nor will a man, who has been led by the repre- (n) Drewc v. Corp, 9 Ves. 368; Flight v. Booth, 1 Bing. N. C. 377; 41 K. R. 599; Arnold v. Arnold, 14 C. D. 279; Puckett and Smith, 1902, 2 Ch. 258; 71 L. J. Ch. 666. 10) Puckett v. Smith, supra, ante, p. so. ip) Brooke v. Rounthwaite, 5 Ha. 298; 15 I. J. Ch. 332; 71 R. R. 115; Cot v Coventon, 31 Beav. 388; 135 R. R. 474. (q) Drewe v. Corp, 9 Ves. 368. (r) Blaiberg v. Keeves, 1906, 2 Ch. 175; 75 L. J. Ch. 464. (s) Bellamy v. Debenham, 1891, 1 Ch. 41; 60 L. J. Ch. 166. (t) Ayles v. Cox, 16 Beav. 23; 96 R. R. 13. («) Re Bey f us and Masters, 39 C. D. 110; ante, p. 441. (x) Sug. V. & P. 299; Dart, V. «: P. 131. \y) Stewart v. Alliston, 1 Mer. 26; l r > R. R. 81. (7.) Collier v. Jenkins, You. 298; 34 K. R. 268. (a) Cato v. Thompson, 9 Q. B. D. 618; Haedicke ami Lipski, 1901, 2 Ch. 666; 70 L. J. Ch. 811. (b) Rudd v. Lascelles, 1900, 1 Ch. 815; 69 L. J. Ch. 396. 144 DEFENCE TO SPECIFIC PERFORMANCE. sentations of the vendor to believe that the property, the subject of the sale, was in the possession of a tenant of the vendor, be compelled to take a mere right of entry (c). Nor can a man be compelled to take an estate where liabilities exist which would materially affect its enjoyment (d), or where a part of the property to which a title cannot be made, though small in quantity, is important for the enjoyment of the whole (e). The Court will not compel a man to take compensation for that which can hardly be estimated by pecuniary value (/). And where there is extreme difficulty in assessing the compensation, that will influence the Court in refusing such relief (g). When upon the sale of land, represented to consist of a certain specified number of acres, there proves to be a deficiency in quantity, such deficiency is properly the subject for compensation if the deficiency be not too great. If the / difference be great, there is no case for compensation. The party prejudiced by the error may, if he pleases, avoid the contract; but he cannot have specific performance unless he is willing to perform the contract without compensation (h). But his case must be treated as an exception to the general rule (i). Conditions of sale providing for compensation in cases of error or mistake apply only to innocent errors or accidental slips, and not to cases where the subject-matter of the contract is materially different in substance from what it was repre- sented to be (k), nor to cases where the error amounts to a misrepresentation in law. The function of such conditions is (c) Lachlan v. Reynolds, Kay, 54; 101 B. E. 523. (d) Hope v. Walter, 1900, 1 Ch. 257; 69 L. J. Ch. 166. (e) Arnold v. Arnold, 14 C. D. 279; cf. Jackson and Haden, 1906, 1 Ch. 412; 75 L. J. Ch. 226. (/) Dyer v. Hargrave, 10 Ves. 507; 8 E, E. 36; Cato v. Thompson, 9 Q. B. D. 618 ; Brewer v. Brown, 28 C. D. 309 ; 54 L. J. Ch. 605. (g) Rudd v. Lascelles, 1900, 1 Ch. 815; 69 L. J. Ch. 396. (h) Durham v. Legard, 34 Beav. 612; 34 L. J. Ch. 589; 145 E. E. 698; ante, p. 117. (i) Connor v. Potts, 1897, 1 Ir. E. 534. (k) Madeley v. Booth, 2 De G. & S. 722; 79 E. E. 343; Ayles v. Cox, 16 Beav. 23; 96 E. E. 13; Dimmock v. Hallett, 2 Ch. 29; 36 L. J. Ch. 146; Brewer v. Brown, supra; Lee v. Rayson, ante, p. 120. DEFENCE TO SPECIFIC PERFORMANCE, 145 to prevent such errors from either vitiating the contract altogether, or causing loss to the purchaser by holding him bound by a contract which through accident or inaccuracy it is not possible for the vendor literally to perform (/). A con- dition providing that an error in the description of the property shall not annul the sale applies only to an error in the description of the physical property, and not to a mistake in the description of the title (m). Such a condition does not apply to a defect in title (n). A condition giving a vendor the right to rescind if unwilling Condition . ... giving vendor to comply with an objection to the title does not give him an right to arbitrary power to annul the contract ; some reasonable srround must be shown. He must satisfv the Court that he entered into the contract in ignorance of some material fact or document or under some mistaken notion that he could make a title : there must be no failure of duty and he must have omitted nothing which a prudent man is bound to do. In every case where a vendor has been allowed to avail himself of the stipulation there was always absent that element of shortcoming on his part which, though falling short of fraud or dishonesty, might be described as reckless- ness (a). And where a vendor is entitled to rescind he may rescind after action brought by the purchaser, although the condition does not contain the words " notwithstanding any intermediate litigation ' (/;). A false representation as to the value of property may be Specific i -i i , , • , i i i i • /• _e / \ performance enough to induce the Court to withhold specific performance (7 ). not or dered If a vendor affirm that the estate was valued by persons of S2s??raw-° f competent judgment at a greater price than it was worth, and sentations as the purchaser acts on that representation (/•), or if he falsely affirms that the estate had not been already in the market at a much lower price, and the purchaser acts on the repiesenta- (I, I'hdps v. White, 7 I.. R. I. L60. (,„, He Beyfus and Masters. 39 C. I), tin: cf. Re Hare and O'More, 70 I.. .1. Ch. 45. (n) Debenham v. Sawbridge, L901, 1 Ch. 98; 70 L. .1. Ch. :i-J.">. (0) Jackson and Haden, L906, I ch. 412, 422; 75 L. .1. Ch. 226. (p) Isaacs v. Towell, L898, '2 el,. 285; 67 I.. .1. Ch. 508, ( Q. B. D. 619; May v. Plait, 1900, 1 Ch. 616; 69 L. J. Ch. 357. {f) Leslie v. Thumps,;,, 9 Ea. 268; 2() L. -I. Ch. 561 ; 89 K. K. 489; Pointer v. Mewby, 11 Ha. 30; 22 I,. .1. Ch. 871 : 00 U. K. 552. ( fl ) Hare and O'More, L901, 1 Ch. 93; 70 I.. .1. Ch. 15, (h) Post v. Marsh, L6 C. D, 395; 50 I>. J. Ch. 287. ( 448 ) CHAPTER VIII. PLEADING. In actions brought for the purpose of impeaching trans- actions on the ground of fraud, it is essential that the nature of the case should be distinctly and accurately stated. The facts must be so stated as to show distinctly that fraud is charged (a). Any charge of fraud or misrepresentation must be pleaded with the utmost particularity (6) ; it will not be inferred from the circumstances pleaded, at all events if those circumstances be consistent with innocence (c). A general charge of fraud, however strong, without alleging specific facts, is not sufficient to sustain the action. It must be shown in what the fraud consists, and how it has been effected. The fraud alleged must be set forth specifically in particular and in detail, so that the person against whom it is charged may have the opportunity of knowing what he has to meet, and of shaping his defence accordingly (d). A charge of fraud must be proved as laid, and where one kind of fraud has been charged another kind of fraud cannot be substituted for it (e). Where, accordingly, on appeal, charges of fraud failed, the appellant was not allowed to contend, for the first time, that the pleading and evidence disclosed a case of negligence (/). (a) Davy v. Garrett. 7 C. D. 489, per Thesiger, L. J. ; 47 L. J. Ch. 218. (b) Redgrave v. Hurd, 20 C. D. p. 6 ; 51 L. J. Ch. 113; and see Clydesdale Bank v. Paton, 1896, A. C. 381; 65 L. J. P. C. 73. (c) Ibid.; Bullivant v. Att.-Gen. for Victoria, 1901, A. C. 196; 70 L. J. P. C. 645. (d) Wallingford v. Mutual Society, 5 App. Ca. pp. 697, 701. 709; 50 L. J. Q. B. 49; Lawrence v. Norreys, 15 App. Ca. p. 221 ; 59 L. J. Ch. 681 ; Willis v. Lord Howe, 1893, 2 Ch. 545 ; 62 L. J. Ch. 690. (e) Abdool Hooseni Abadin v. Turner, 14 Ind. App. 111. (/) Connecticut Ins. Co. v. Kacanagh, 1892, A. C. 473; 61 L. J. P. C. 50; but see post, 457. PLEADING. 449 Fraud is a conclusion of law; and it is wholly immaterial and insufficient to allege that an instrument has been obtained by fraud, unless the things done constituting the fraud are stated on the face of the statement of claim (g). But although particulars of fraud must be specially pleaded, otherwise evidence in proof of them will not be admissible (h), yet where the party is unable to plead except in general terms, he may be entitled to discovery before giving particulars so as to enable him to plead in detail (/), and in such a case the defendant's application for particulars may be ordered to stand over until the defence has been put in (j). In civil proceedings it is in general sufficient to allege the misrepresentation relied on, and the facts and circumstances that render it fraudulent, without specifically alleging a fraudulent intent, which is a legal inference from the facts. If the facts create a fraud it is not necessary to allege the fraudulent intention, nor will the word " fraud ' create a fraud if the facts themselves do not establish it (7c). The statement of claim should state whether the alleged repre- sentations were oral or in writing, and when and where each of .them was made (?) ; but the motive in making them is immaterial and need not be stated (m). The acts alleged to be fraudulent must be set out, and then it should be stated that these acts were done fraudulently; but from these acts fraudulent intent may be inferred (?*). Where a plaintiff alleged that certain entries in certain books were false, he was ordered to give particulars of such entries; and after having given them, he was ordered, on an application for further particulars, to state in a general way (g) Gilbert v. Lewis, 1 D. J. & S. 38, 49, per Lord Westbury; 32 L. J. Cb. 347; 1:57 U. R. 138. (h) Symonds v. City Bank, 34 W. H. 364; Re Rica Cold Washing, Co., II C. D. 3(5. n, Leitch v. Ahlmt.t, 31 C. J). :?74 ; 66 L. J. Ch. 460. (;) Sachs v. Spielman, 37 C, 1). 295 ; 57 L. J. Ch. B68. (k) Thorn v. Bigland, 8 Bxch. 725, per Lord Wensleydale ; 22 L. J. Ex. 243; 9J Et. K. 780; Davy v. Garrett, 7 C. D. 489; Johnson v. Barnes, L888, W . N. 82. (1) Seligmann v. Young, 1884, W. N. 93. (m) Herring v. Bischoffsheim, 1876, W. N. 77. (n) Ibid. ; Johnson v. Barnes, 1883, W. N. 32. K.F. 29 450 PLEADING. the nature of the falsehood or fraud alleged against each item (o). If the facts alleged do not necessarily amount to a fraud, but only may amount to fraud, there should be an averment of fraud (//). If the acts are innocent in themselves it is not to be presumed that they were done with a fraudulent inten- tion. So an allegation of an intent to evade a statute is not ;i specific allegation of fraud (q). It is not necessary to aver and prove fraud in order to obtain protection for a trade mark [/■). Nor is it necessary to aver and prove fraud in a passing off case or that any person has been deceived (s). If the transaction sought to be impeached be between solicitor and client or principal and agent, the statement of claim should allege that the defendant was the solicitor or agent at the time of the transaction, if such be the ground on which relief is sought. If the case is not so stated in the pleadings, evidence to prove it cannot be admitted (t). If a party seeks rescission of a contract, it is not necessary that there should be a declaration of his intention to rescind before plea (u), nor need he aver that he can restore the property, this being presumed as a usual if not a necessary consequence when he applies to have the contract rescinded and everything placed in statu quo. If a statement of claim charges notice, it is sufficient to allege such notice as a fact, without averring facts as evidence of the charge (x). It is not, however, necessary to charge notice in a statement of claim to which a plea for valuable (o) Newport, ,fc, Co. v. Paynter, 34 C. D. 38; 56 L. J. Ch. 1021; Harbord v. Monk, 38 L. T. 411. (p) Davy v. Garrett. 7 C. D. p. 489, per Thesiger, L. J.; 47 L. J. Ch. 218; Salomon v. S., 1897, A C. p. 35; 65 L. J. Ch. 35; Betjemann v. B., 1895-, 2 Ch. 474; 64 L. J. Ch. 641. (q) Bullivant v. Att.-Gen. for Victoria. 1901, A. C. 196; 70 L. J. P. C. 645. (r) Singer Machine Manufacturing t'o. v. Wilson, 3 App. Ca. 391, 396; 47 L. J. Ch. 481; ante, p 435. (s) Bourne v. Swan ?). (g) Gedge v. Roijal Exchange Ass. 1900, 2 Q. B. 214; 69 L. J. Q. B. 506. (h) Holderness v. Rankin, 2 D. F. & J. 258 ; 29 L. J. Ch. 753 ; 129 B. B. 94. (i) Walsham v. Stainton, 1 D. J. & S. 678; 137 B. B. 342. (k) Aarom Reefs v. Twiss, 1896, A. ,C. 273, 280; 65 L. J. P. C. 54. (I) Carling v. London and Leeds Bank, 56 L. J. Ch. 321 ; Smith v. Chadwick\ 20 C. D. p. 44; Arnison v. Smith, 41 C. D. p. 369. (m) Macleay v. Tait, 1906, A. C. 24; 75 L. J. Ch. 90. (n) Re Christineville Rubber Estates, 81 L. J. Ch. 63. PLEADING. 153 If a case of fraud is alleged in respect of the formation of a company, it must be set up by an action, and not by proceed- ings under the winding-up order (o). To support an action of deceit there must be the assertion of that which the party making it knew to be false. The scienter must be either expressly alleged, or there must be an allegation that is tantamount to the scienter of the fraudulent representation (p). In actions of deceit the plaintiff should aver that the representation of the defendant was false to hi • knowledge, that it was made under circumstances on which the plaintiff might reasonably rely, that the plaintiff acted in consequence of the defendant's false representation, and has suffered actual -loss thereby (q). In actions of deceit, whether against a person or a company, the fraud of the agent may be treated, for the purpose of pleading, as thai of the principal who is sought to be made answerable in the action (r). Where the consideration has been obtained by means of a contract, although induced by fraud, the plaintiff cannol assert any other contract than that in fact made. If he treats the transaction as a contract, he must take the contract altogether and be bound by the specified terms. He cannol avail himself of defendant's fraud so as to rescind the contract and substitute a new contract on different terms. But he may, if he disaffirm the contract, recover his property, or damages for the fraud as a substantive wrong (s). When, for example, a man has sold goods on credit, although he has been defrauded into selling them, he cannot by reason of the fraud sue for the price before the credit has expired, but he may treat the sale as a nullity and claim a return of the goods. By suing for the price he affirms the contract. If he (o) Leif child's Case, 1 Eq: 231, ante, p. 337. (p) Wilde v. Gibson, 1 H. L. C. p. 633 : 73 R. R. L91; ingus v. Clifford, L891.2 Ch. 449; 60 r>. J. Ch. 443. (q) Hyde v. Bulmer, 18 L. T. 29.'5. (r) Harwich v. English Joint Stock Hank-, L. R. 2 Ex. 265; 36 L. J. Ex. 117 ; Mackay v. Commercial Bank of New Brunswick, L. R. 5 P. C. 394; 18 I;. J. P. C. 31. (s) Ferguson v. Carrington, 9 B. & C. 59; 7 I,. .1. K. B. L89; Strutt v. Smith, 1 Cr. M. Sc H. 812; 3 L. J. Kx. 857. 454 PLEADING. treats the contract as a fraud lie should claim a return of the goods (t). If a contract is altogether rescinded there is no sale. The defrauding party is not a purchaser, but a person who has tortiously got possession of goods (u). A plaintiff who conies to the Court with the contract as an existing contract cannot have the relief to which he would be entitled if the contract had been rescinded. He cannot recover the money, which, if the contract stands, is not repayable (x). Defence. The defence of fraud must be specially pleaded (y), and where the party pleading relies upon any misrepresentation, fraud or undue influence, particulars must be stated in the pleading (z). A plea to an action on a contract by a defen- dant that he had been induced to enter into the contract by the fraudulent representations of the plaintiff should aver that he had repudiated the contract by giving up the benefit under it (a). Under the rules of pleading, the plea of fraud imports an allegation that the defendant on discovering the fraud disaffirms the contract. But if the evidence shows or the jury find that the defendant has not disaffirmed the contract, the plea is bad, for only part of it is proved (b). In an action 1o enforce a contract in which the defendant sets up a plea that he was induced by fraud to enter into the contract, it is not necessary for the defendant expressly to repudiate the contract. In order to rebut the plea, it is for the plaintiff to show that the defendant adhered to the contract notwith- standing the discovery of the fraud (c). "Where a plaintiff who was assignee of the unpaid balance of the purchase money of a newspaper sold to the defendants the sale of which had been induced by the fraud of the vendor (t) Ibid. (a) Selway v. Fogg, 5 M. & W. 86; 8 L. J. Ex. 199; 52 R. R. 650. (x) Cargill v. Bower, 10 C. D. 517 : 47 L. J. C'h. 649 ; Goldrei <& Co. v. Sinclair, 1918, 1 K. B. 180; 87 L. J. K. B. 261. (y) Ord. XIX. r. 15. (z) Ord. XIX. r. 6. (a) Bwlch-y-Plwm Lead Mining Co. v. Bayries, L. R. 2 Ex. 324; 36 L. J. Ex 183. (b) Dawes v. Harness, L. R. 10 C. P. 166; 44 L. J. C. P. 194. (c) Aarons Reefs v. Twiss, 1896, A. C. 273; 65 L. J. P. C. 54. PLEADING. 155 m\ which the defendants had sustained damage equal to the sum sued for, it was held that the defendants could not set up a claim for damages for the fraud of the vendor by way of defence against the plaintiff's claim ( Q. I'.. I). 59; 51 I,. .1. Q. 1'.. 813; bul Bee v or against the heir or devisees of the parties, so it may lie avoided by or against them where grounds of avoidance exist (6). So, also, may a remainderman, under a settlement, bring an action to set aside a transaction, into which his predecessor in title, under the settlement, has been induced by fraud to enter (c). If fraud has been practised on a tenant in tail, and has been carried into effect by barring the entail, and he dies without issue, and without confirming the transaction, ilic next remainderman may bring an action to set it aside; but not, if there were an independent intention to bar the entail, and the fraud applies only to some part of the transaction, distinct from that object (d). The right of action to recover the value of shares on the ground of misrepresentation in a prosjjectus is not capable of transmission on the plaintiff's death to his representatives (e). And if a party entitled to avoid a transaction has precluded himself by his own acts or acquiescence from disputing it in ia) Including trustees in bankruptcy. I b) Bellamy v. Sabine, 2 Ph. 425; 17 L. J. Ch. 105: 78 R. R. 132; Charter v. Trevelyan, 11 CI. & Fin. 714; 65 R. R. 305; Gresley v. Mousley, 4 D. & J. 78; 28 L. J. Ch. 620; Clark v. Malpas. 31 Beav. 88; 4 D. F. & J. 401; 135 R. R. 212; Longmate v. Ledger, 2 Giff. 157; 128 R. R. 72. (c) Brydges v. Brarifill, 12 Sim. 369; 11 L. J. Ch. 12; 56 R. R. 71. (d) Bellamy v. Sabine, supra. (e) Peek v. Gurney, post, 468. PARTIES. 159 his lifetime, his representatives cannot tome forward to dispute it. afterwards (/). In an action for misrepresentation and therefore in an action under s. 84 of the Companies Act, 1908, a person ought not to sue on behalf of himself and the other members of the class to which he belongs, as his claim is purely personal (//). But a number of persons may join as plaintiffs in actions for misrepresentation although their claims are separate (//). Thus where several persons separately apply for debentures on the faith of a prospectus containing misrepresentations they may jointly sue the directors, as they have a claim for relief arising out of the same transaction (/). And there is no objection under the new practice to joining a claim against the company for rescission, and a claim against the directors for deceit or compensation under s. 84 (k). The general rule is that the company itself should be plaintiff in an action against the promoters and directors of the company to set aside a contract of sale or purchase upon the ground that it was obtained by means of fraudulent representations in the prospectus and for the recovery and repayment of the purchase money (/), but where the acts complained of are acts which a majority of the shareholders cannot sanction so as to bind the minority, and it is impossible through the improper conduct of the directors to get the com- pany to impeach these acts, a shareholder may bring an action on behalf of himself and all the other shareholders (///). If the directors of a company have misrepresented the state of the company, the whole body of the shareholders cannot maintain an action to recover the money which they have lost (/; Skottowe v. Williams, 3 D. F. & J. 535, 541; 130 Et. K. 243. <(j) II allows v. Fernie, 3 Ch. 471 ; 36 L. J. Ch. 267. (h) R. S. C. urd. XVI. r. 1; Arnison v. Smith, 41 C. D. 348. (:') Drincqbier v. Wood, 1899. 1 Ch. 393; 68 L. J. CI). 181. i/.i Frankenberg v. Great Horseless Carriage Co., L900, I Q. 1'-. 504, 68 L. J. Q. B. 147. (/) Foss v. Harbottle, 2 Ha. 461; 62 R. K. 185; MacDougall \. Gardiner, 1 C. D. 13; 45 L. J. Ch. 27; Dtickett v. Gover, 6 C. I'. 83; 16 I.. .1. Oh. 107. (to) Mason v. Hams, it C. D. 108; 48 I;. .1. Ch. 589; Spokes v. Qrosvenm lintel Co., 1897, 2 Q. B. 12-1 ; 66 L. .1. g. B. 572; Alexander \. Automata Telephone Co., 1900, 2 Ch. 56; 69 J.. .1. Ch. 428. ICO PARTIES. from the directors; nor can the shareholders as a body, though the directors by misrepresenting the state of the company have caused larger dividends to be paid than ought to have been paid, make the directors liable to repay the dividends (?i); but the company can sue them for a breach of trust as in a winding-up (o). The right to bring an action of deceit, or to have relief, on the ground of misrepresentation, is not confined to the person to whom the false representation has been made, but extends to third persons, provided it appear that the representation was made with the intent that it should be acted on by such third persons, or by the class of persons to whom they may be supposed to belong, in the manner that occasions the loss or injury (/?). It is sufficient if the representation be made to a third person to be communicated to the plaintiff, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made by advertisement to the public generally with a view to its being acted on, and the plaintiff as one of the public acts on it and suffers damage thereby (q). But if the misrepresentation does not itself cause damage to the third party but is merely incidental to some lawful act which does cause damage it is not actionable (■/•). Where, accordingly, a representation was made to the plaintiff's father with a view to being acted on by the plaintiff, it was held that by acting on it the plaintiff had a right of redress (.«). So, also, a party may make inquiry where such is the custom through his bankers (instead of personally) concerning the standing of a third person, and it is no objection to a claim for redress for a fraudulent answer given to the plaintiff's banker that the representation was not made (n) Turquand v. Marshall, 4 Ch. 376; 38 L. J. Ch. 639. (o) Oxford Building Society, 35 C. D. 502 ; 56 L. J. Ch. 98. (p) Barry v. Crosskey, 2 J. & H. 1 ; Peek v. Gurney, L. R. 6 H. L. 412; 43 L. J. Ch. 19; and see ante, pp. 338, 339. (q) Swift v. Wintcrbotham, L. R. 8 Q. B. 253; 43 L. J. Q. B. 56; Richardson v. Sylvester, L. R. 9 Q. B. 34; 43 L. J. Q. B. 1 ; Hosegood v. Bull, 36 L. T. 618; CarUU v. Carbolic Smoke Ball Co., 1893, 1 Q. B. 256; 62 L. J. Q. B. 257; and see ante, p. 338. (r) Ajello v. Worsley, 1898, 1 Ch. 274; 67 L. J. Ch. 172. (s) Langridge v. Levy, 4 M. & W. 337. PARTIES. It*)! to the plaintiff (t). So, also, where directors of a company put forth a prospectus containing false representations Eoi the purpose of selling shares of the company, the false repre- sentations are deemed to have been made to all who read the prospectus and become purchasers of shares from the company in reliance upon the statements there made (u). The right of an allottee of shares in a company, who has been induced to apply for them on the faith of fraudulent statements in the prospectus, to bring an action of deceit against the directors does not extend to a purchaser of shares in the market, thoiigh he may have purchased the shares upon the faith of statements contained in the prospectus. The prospectus is not addressed to purchasers; it is exhausted when the shares have been allotted. The responsibility of directors who issue a prospectus misrepresenting actual or material facts or concealing facts material to be known does not, as of course, follow the shares on their transfer from an allottee to a purchaser from him. In order that the purchaser should be enabled to maintain an action of deceit against the directors in respect of losses occasioned by his belief in the prospectus and his consequent purchase of shares, he must show some direct connection between them and himself in flic communication of the prospectus and its influence upon his conduct in becoming a purchaser (V). There must be some- thing to connect the directors making the representation with the purchaser as in Scott v. Dixon (./•), by issuing and selling a report containing the misrepresentation complained of to a person who afterwards purchases shares upon the faith of it. Where, therefore, the object with which the prospectus is issued is not merely to induce applications for allotment but also to induce persons to whom it is sent to purchase shares in the market, its function is not exhausted on allotment, and the person issuing the prospectus is responsible to any person to whom the prospectus has been sent who is induced by the it) Swift v. Winterbotham, supra. (u) Barry v. Groxskey, 2 J. & H. 21; Peck v. Gurney, Ii. R. 6 11. L. 378; 43 L. J. Ch. 19. (;/■) I'rck v. Gurney, supra. i.r, 29 L. J. Ex. 62 n; 121 Ii. R. 873; app. L. B. (3 H. L., ut p. 897. 462 PAETIES. Plaintiff particeps criminis. false representation to purchase shares and thereby sustains loss (y). A party partially interested in an estate may maintain an action to set aside a conveyance of such interest fraudulently obtained from him, without making the other persons interested in the estate parties (z). But one joint contractor cannot set aside the contract on the ground of fraud unless all the other joint contractors are also seeking rescission (a). Applications under the Companies Act, 1908, s. 32, to have a name removed from the list of shareholders must be made by the person aggrieved or any member of the company or the company itself. When a winding-up order has been made, the application must be made in the name of the compar- and not of the liquidator (6). It is a general rule that a Court of Justice will not interpose actively in favour of a man who is particeps criminis in an illegal or fraudulent transaction (c). The Court will take the objection as to the illegality of the transaction, even although the defendant himself does not (d). Where both parties are equally offenders against the law, the maxim potior est conditio possidentis prevails, not because the defendant is more favoured, where both are equally criminal, but because on the principle of public policy the Court will not assist a plaintiff, who has paid over money or handed over property in pursuance of an allegal or immoral contract, to recover it back (e). If, accordingly, a deed has been executed, or a conveyance made, to enable a party to contravene the provisions of an Act of Parliament, no suit in equity will lie to set aside the deed or recover the estate. The party execut- (y) Andrews v. Mockford, 1896, 1 Q. B. 372 ; 65 L. J. Q. B. 302. (z) Henley v. Stone, 3 Beav. 355 ; 52 R. R. 153. (a) McLaren v. McMillan, 5 W. L. R. 336; 16 Man. L. R. 604. (b) Kintrea's Case. 5 Ch. 95; 39 L. J. Ch. 193. (c) Cecil v. Butcher, 2 J. & W. 572; 22 L. J. Ch. 213; Doe v. Roberts, 2 B. & Aid. 369; 20 R. R. 477; Williams v. Williams, 20 C. D. 659. (d) Hamilton v. Ball, 2 Ir. Eq. 191, 194; Gedge v. Royal Exchange Ass. Corp., 1900, 2 Q. B. 214; 69 L. J. Q. B. 506. (e) Taylor v. Chester, L. R. 4 Q. B. 312; 38 L. J. Q. B. 225; Scheuermau v. S., 52 Can. S. C. R. 625; post, pp. 464, 465. PARTIES. ing it cannot be heard to allege his own fraudulent purpose. He is estopped from confining the operation of his deed within the limits of his intended fraud (/). In a case where a husband took a lease in his wife's name and with her connivance in order to protect the property from his creditors. it was held that he could not set up his own fraudulent design to rebut the presumption that it was a gift, and that the wife was entitled to retain the property notwithstanding tlial she was a party to the fraud (//). So where a man, in order to give his brother a colourable qualification to kill game, conveyed some land to him, it was held that his widow could not avoid the conveyance in an action of ejectment against her by the brother (h). So, also, money paid in furtherance of a fraud or other unlawful purpose cannot be recovered back (/'), except in the case of marriage brokage contracts (/). A distinction has been taken between cases where a deed executed, or a conveyance made, for an illegal purpose, has performed its office, and been accompanied by the completion ot the purpose, and cases where the deed or conveyance has not been used for the purpose for which it was executed (/ . But the distinction does not seem sound. If a grantor, so far as he can, completes the transaction for an illegal purpose, and leaves it in the power of the grantee to make at his pleasure the illegal use of the instrument originally intended, he merits the consequences attached to the illegality of his act (I). It is difficult to see upon what principle it can be contended that a man. who intends to commit a fraud, shall not have relief if he succeed in his attempt, but shall be if, Brackenbury v. Brackenbury , 2 .1. & W. 391; 22 R. R. 180; Cecil v. Butcher, supra: Groves v. Groves, 3 Y. & J. 163; 32 R. R. 782; cf. Childers v. Childers, 1 D. & .1. 482. (gf) Gascoigne v. Gascoigne, 1918, 1 K. B. 223. tin Doe \ . Roberts, 2 B. & Aid. 369; 20 R. R. 177 ; Bowes v. Foster, 2 H. A N. : 27 I.. •) Ex. 262. (0 Begbie v. Phosphate Sewage <'<>.. I>. K., 10 Q. B. 199; Harse \. Pearl Life Is*. ( -.. L904, 1 K. B. 558; 73 L. •! . K. B. 373; post, pp. 165, 166. (;) Hermann v. Charlesworth, L905, 2 K. I'.. L23; 71 L. J. K. B. ''.20. (/.) Platamone v. Staple, Coop. 251. (I) Cecil \ . Butcher, 2 J. & W. 578; 22 L. J. Ch, 213; Doe v . Roberts, supra : Roberts v. Roberts Dan. 113; is R. R. 7:::): Groves v, Groves, 3 Y. \ .1. L63; 32 R. I: 782 163 464 PAETIES. relieved if lie fails or hesitates to proceed, because he fears a failure. His intention is as fraudulent in the one case as in the other (m). A distinction has also been taken between cases where the conveyance has been made with the privity of, or the deed has been delivered to, the grantee, and cases where the con- veyance has not been communicated to the grantee, nor the deed parted with by the grantor (n). But there is a pre- ponderance of authority in support of the proposition that, although a voluntary deed is made without the knowledge of the grantee, and has been kept in the hands of the grantor, a Court of equity will not relieve against it (o). Inasmuch as it is well-established law that a man who executes a volun- tary settlement passes the estate out of himself, though he retains the deed in his own possession (p), it is impossible to contend that the distinction attempted to be made is a sound one. The rule that the Court will not actively interpose in favour of a man who is particeps criminis in a fraudulent transaction, like most other general rules, admits of exceptions. An exception to the rule takes place where the party seeking relief, although particeps criminis, is not in pari delicto with his associate. There may be, and often arej very different degrees of guilt of parties who concur in an illegal act. One party may act under circumstances of oppression, imposition, undue influence, of great inequality of age or condition, so that his guilt may be far less in degree than that of the other party (q). Accordingly an innocent person who has by fraudulent misrepresentations been induced to take part in the commis- sion of a criminal offence can maintain an action against (m) Bateman v. Ramsay, Sau. & Sc. 478. (n) Birch v. Blagrave, Amb. 264; Groves v. Groves, supra; cf. Pattle v. Hornibrook, 1897, 1 Ch. 25; 66 L. J. Ch. 144. (o) Cecil v. Butcher, supra ; Brackenbury v. B., 2 J. & W. 391 ; 22 R. R. 180. (p) Roberts v. Williams, 3 Ha. 130; 11 L. J. Ch. 65 ; 67 R. R, 25. (q) Osborne v. Williams, 18 Ves. 379 ; 11 R. R. 218 ; Reynell v. Sprye, 1 D. M. & G. 678, 679 ; 21 L. J. Ch. 633 ; 91 R, R. 228 ; Bowes v. Foster, 2 H. & N. 785 ; 27 L. J. Ex. 262. PARTIES. 465 those by whose false statements lie was led to commit it, ;iiid recover damages from them for losses he has sustained (r). Illegalities resulting from a fraudulent misrepresentation, or from pressure or from an attempt to stifle a prosecution, do not fall within that class of illegalities in which the Court stays its hand, but are of a class in which the Court will actively give its assistance in favour of the oppressed party, by directing monies to be repaid (s). Other cases which form an exception to the general rule are cases where the act or deed in which the parties concur is against the principles of morality or public policy. In such cases there may be on the part of the Court itself a necessity of supporting the public interest or policy, however reprehensible the conduct of the parties themselves may be (t). So, the purchase of a bankrupt's estate secretly, by a person for the benefit of the solicitor to the assignees, was set aside at the suit of the bankrupt, after his bankruptcy had been annulled, though there was evidence to show that the bankrupt had been privy to the transaction (?/). If money is paid or goods delivered for an illegal purpose, the person who has so paid the money or delivered the goods may recover them back before any illegal purpose is carried out ; but if he wait till the illegal purpose is carried out, or if he seeks to enforce the illegal transaction, in neither case can he maintain an action. The law will not allow that to be done. In permitting a man to recover before the illegal purpose is carried out, the law does not carry out the illegal transaction. The effect is to put the parties in the same situation as they were in before the illegal transaction was determined upon and before the parties took any steps to (r) Burrows v. HI, odes, 1899, 1 Q. B. 816 ; 68 L. J. Q. B. 545. (s) Duties v. London and Provincial Ins. Co., 8 C. D. 477 ; 47 L. J. Cli. ">1 1 Burrows v. Rhodes, supra. (t) Laic v. Law, Ca. t. Tail,. 140; St. John v. St. John. I! Vi-s. 535. (u) Adams v. Sworder, 2 D. J. & S. 41 ; L89 R. H. 23. K.F. 30 466 PARTIES. carry it out (x). But this does not apply to marriage brokage contracts (y). There is great difficulty in applying the maxim potior est conditio possidentis to a case where money has been placed in medio, and where the Court must do something with it or leave it to be locked up for ever (z). When a party to an illegal or immoral contract comes himself to be relieved from that contract, or its obligations, he must distinctly and conclusively state such grounds of relief as the Court can legally attend to. He should not accompany his claims to relief, which may be legitimate, with claims and complaints, which are contaminated with the original immoral purpose (a). A distinction will be taken between cases where a party has actually accomplished the bad purpose to which a deed was auxiliary, and cases in which he had not participated in the bad purpose which it was the very object of the deed to procure (o). A distinction is taken in equity between enforcing illegal contracts, and asserting title to monies arising from an illegal contract. If the transaction alleged to be illegal is completed and closed, so that it will not be in any manner affected by what the Court is asked to do, the party to the transaction, who has possessed himself of the monies arising out of the transaction, cannot be permitted to set up the illegality of the transaction against the otherwise clear title of the other. One of two partners, or joint adventurers, therefore, who has possessed himself of the property, common to both, cannot be permitted to retain it, by merely showing that in realising it (x) Taylor v. Boicers, 1 Q. B. D. 300; 46 L. J. Q. B. 39; Re Great Berlin Steamboat Co., 26 C. D 616 ; 54 L. J. Ch. 68 ; but see Herman>i v. Charlestcortli . 1905, 2 K. B. 123; 74 L. J. K. B. 620, where Taylor v. Bowers was questioned, ante, p. 462. (y) Hermann v. Charlesworth, supra. (z) Davies v. London and Provincial Ins. Co., 8 C. D. 477; 47 L. J. Ch. 511. (a) Batty v. Chester, 5 Beav. 103. (b) Benyon v. Nettlefold, 17 Sim. 56 ; Sismey v. Eley, 17 Sim. 1 ; 18 L. J. Ch. 350; 83 R. R. 276. See 16 Eq. 282 and Phillips v. Probyn, 1899, 1 Ch. 812; 68 L. J. Ch. 401. PARTIES. - 167 some provisions in an Act of Parliament, or in the fiscal hn\ of a foreign state, may have been violated (c). So, also, and upon a similar principle, notwithstanding the Contribution, rule that as between tort-feasors there is no equity, if two trustees are equally guilty of a breach of trust, but one has received the monies, the other may maintain an action against him to recover the trust property (d). So, also, a director who has incurred liability by reason of untrue statements in a prospectus may have a right to contribution against his co-directors (e). In Sykes v. Beadon (/), Jessel, M.R., said the notion that because an illegal transaction was closed a Court of Equity would interfere in dividing the proceeds of the illegal transaction was opposed to principle and authority. He was of opinion that no Court would lend its assistance in any way towards carrying out an illegal contract; that such a contract cannot be enforced by one party to it against the other, either directly by asking the Court to carry it into effect or indirectly by claiming damages or compensation for breach of it ; though there might be cases in which a party to such a contract might recover from a third person money paid over to that person in pursuance of the.contract, and other cases in which a person might recover from the parties to such a contract monies obtained by them from him on the representation that the contract was legal. In all cases of fraud the hand of the Court is not arrested Parties by the death of the wrong-doer. An action survives against his executor when the wrong complained of has benefited the estate of the deceased (g). But if no benefit accrued to the (c) Sharp v. Taylor, 2 Ph. 801; 78 R. R. 298; Sheppard v. Oxenford, 1 K. & .1 496; L03 K. R. 203. See 11 C. D. 194. (d) Baynard v. Woolley, 20 Beav. 583; 109 ft. R. 548. (e) Gersotl v. Simps,,,,, L903, >J K. B. 197; 72 L. J. K. B. G03 ; Shepheard v. Bray, L906, 2 Ch. 235: 75 L. J. Ch. 633. if) 11 C. D. 170; 48 I,. •!. Ch. 522; and see Great Berlin Steamboat Co., 26 c It. 616; 54 I.. .1. CI,. 68; Burrows v. Rhodes, 1899, 1 Q. B. 816; 68 L. J. Ch. 5 15 : ante, p. 438. (g) Haulms v. Wickham, 3 I). & J. 304; 28 L. J. Ch. 188; Gresley v. Mousley,i I). & J. 78; 28 I.. .1. Ch. <',•_'(»; 124 K. Et. L64; Walsham v. Stainton, 1 D. J. A S. 690; 137 k. K. 342; New Sombrero Phosphate Co. v. Erlanger, 5 ('. I). 71; 16 I.. -I. ('I,. 125. 468 PARTIES. estate of the deceased from the wrong complained of, an action will not survive against his executor (h), unless in cases where the executor can be said to have taken the estate with the liability to make good his testator's representations out of it (t). As a rule an action of deceit falls within the maxim actio personalis moritur cum persona, and is not maintainable (k). But such an action may be maintained against the personal representative of the wrong-doer if it can be shown that pro- perty belonging to the plaintiff has been appropriated by the deceased and added to his estate (/). The fact that the deceased in his lifetime profited by his wrong is not enough to make his personal representative liable to be sued after his death. The benefit must consist in the acquisition of property or its proceeds or value. If the damages are unliquidated and uncertain the executors of a wrong-doer cannot be sued, though he may have reaped an indirect benefit from the act com- plained of (m). But the estate of a deceased director may be rendered liable in respect of any claim in the nature of a breach of trust (n). It seems clear that apart from the estate having benefited by the deceased's conduct an action against a director under section 84 of the Companies (Consolidation) Act, 1908, does not survive against the director's executors (o). But a right of action under section 38 of the Companies Act, 1867, survived on the plaintiff's death, and might be prosecuted by his legal personal representatives (p). All persons who lend themselves to a fraud and receive money from the defrauded party may be made parties to an action to set aside the transaction, and to recover the monies which they have received. If trustees lend themselves to a fraud, by their cestui que trust, the liability is a joint and 00 Peek v. Gurney, L. R. 6 H. L. 392; 43 L. J. Ch. 19. (i) Ingram v. Thorpe, 7 Ha. 67 ; 82 R. R. 25. (k) Peek v. Gurney, supra; Davoren v. Wootton, 1900, 1 I. R. 273. (I) Phillips v. Homfray, 24 C. D. at p. 454; Geipel v. Peach, infra. (to) Ibid. ; Re Duncan, Terry v. Sweeting, 1899, 1 Ch. 387 ; 68 L. J. Ch. 253 (n) Masonic Co. v. Sharpe, 1892, 1 Ch. 154; 61 L. J. Ch. 193. (o) Geipel v. Peach, 1917, 2 Ch. 108; 86 L. J. Ch. 745. (p) Twycross v. Grant, 4 C. P. D. 40; 46 L. J. C. P. 636. PARTIES. 169 several one of all the accomplices (q). So, also, a man who has been s-uiltv of a fraud, in concert with one of several trustees, may be joined in an action against the trustees generally (r). All persons concerned in the commission of a fraud are to be treated as principals : no person can be permitted to excuse himself as the agent or servant of another (s). If an agent in the course of his employment commits a fraud upon another party, whereby damage ensues to the party injured, he will be liable to the party injured, though his principal would be so likewise (t). The right of action is given to the party injured by the fraud against all persons who have joined in committing it, although the concurrence of some of these persons might be unknown to the party injured at the time of the injury (u). If a man has abetted a fraud, the absence of a personal benefit resulting from it is no excuse; he may be justly made responsible for its results, and even if no other relief can be had against him, he may be compelled to pay the costs of the action (.r). Solicitors who have abetted their clients in a fraud, or have prepared deeds to carry it out, may be made parties to an action to set aside the fraudulent transaction, and are liable to pay the costs, even though they may have derived no personal benefit therefrom (y). If solicitors deliberately deal with trust property so as to make themselves trustees de son tort, or assist with knowledge in a fraudulent design, they may be made liable as (q) Phosphate Sewage Co. v. Hartmont, 5 C. D. 456; 46 L. J. Ch. GG1 ; am! see Danby v. Coutts, 29 C. D. 500; 54 L. J. Ch. 577, us to complicity. (r) Att.-Gen. v. Cradock, 3 M. & C. 85. (*) Cullen v. Thompson's Trustees, 4 Macq. 424, per Lord WVstlmi v. (0 Weir v. Bell, 3 Ex. D. 248; 47 L.J. Ex. 704, per Cockburn, C.J. ; Sibley v. Grosvenor, 1910, V. L. K. 307; Goldrei v. Sinclair, 1918, 1 K. I'.. L80; 87 L. -T. K. B. 201. (u) Cullen v. Thompson's Trustees, 4 Macq. 432. (,, Seddon v. Connell, 10 Sim. 85; 9 I>. .7. CI.. 311 ; 51 H. K. 209; Clark v. GtrdtOOod, 7 C. D. 18. See Mnrnham v. Weaver, 80 I;. 'I'. 112. (y) lUnrlcs v. Stewart, 1 Sch. & Lef. 227; Beadles v. Burch, in Sim. 882; lUrry v. Armitstead , 2 Ken, 2'J.l ; 5 L. J. Ch. 370: Pr08phate Sewage Co. V. Hartmont, 5 C. D. 444 ; 46 L. J. Ch. 661. 470 PARTIES. principals (z); but they must he shown to have actual notice of the fraud or trust, and will not be liable on the mere ground of constructive notice (a). In an action, however, founded on alleged misrepresenta- tion, it is improper to make as party to the action an attorney, agent, or arbitrator who has taken no active part in making the statement out of which the action arises, and who has been connected with it in such a way as to have made no profit out of it, merely with a view to making him liable for costs in case the principal defendant should fail (b). A solicitor, like any other agent, may be liable for the costs of an action where he is properly chargeable with any of the relief sought against the principal. But it is wrong to make a solicitor a party to an action without seeking any relief against him, except payment of costs or discovery (c). The liability of a principal may be incurred by the solicitor of a company towards the shareholders (d). But where the object of the action is not to set aside the transaction but to recover profits unfairly made by persons in a fiduciary character, a solicitor qua solicitor who has not shared in the profits is not a proper party (e). Nor is a solicitor who has drawn up an instrument which is set aside or rectified on the ground of fraud, a proper party to the action, if he has only committed a blunder in the matter and not abetted the fraud (/). Where one by power of attorney appoints another to be his agent to deal with property, and that agent is guilty of fraud in dealing with third parties in respect of such property, the principal cannot render such third parties liable where they have had no complicity in the fraud nor were able to gather from the power of attorney that the agent was going beyond his powers (g). (z) Cordery, 147. (a) Williams v. W., 17 C. D. 437. (b) Mathias v. Yetts. 46 L. T. 497; cf. Heathy v. Neicton, 19 C. D. 326; 51 Ij. J. Ch. 225, where an auctioneer was held to be rightly made a party. (c) Burstall v. Beyfus, 26 C. D. 35; 53 L. J. Ch. 565; post, p. 492. (d) Phosphate Sewage Co. v. Hartmont, 5 C. D. 394, 443; 46 L. J. Ch. 661. (e) Bagnal v. Carlton, 6 C. D. 372; 47 L. J. Ch. 30. (/) Clark v. Girdwood, 7 C. D. 18; 47 L. J. Ch. 116. (g) Danby v. Coutts, 29 C. D. 500; 54 L. J. Ch. 577. PARTIES. 471 A person tilling a position of a fiduciary character, as an agent, is liable for a breach of duty, though he may have derived no benefit from it. Where two agents concur in a fraud, and one of them only derives benefit from the fraud, the other is also liable in equity for the benefit so derived (/<). Those who, having a duly to perforin, represent to others, who are interested in the performance of it, that it has been per- formed, make themselves responsible'for all the consequences of the non-performance (/). If a man has been induced by the false representations, or fraud, of a particular shareholder in a company to purchase shares, the only necessary party to an action for the return of the purchase-money, and for an indemnity, is the person who sold the shares (k). If A. induce B. by misrepresentation to buy, and B. sell without misrepresentation to C, an action will not lie by B. and C. against A. to rescind (/). It is not necessary that all the parties charged with fraud should be made parties. Where there are several partners, some of whom have committed fraud, any of the persons jointly and severally liable may be sued without making the others parties (m). A man who has released the principal actor in a fraud, cannot go on against the other parties who would have been liable only in a secondary degree (n). A partner being liable for the fraud of his. co-partner, when acting wit bin the proper scope of the partnership business, a firm of bankers or solicitors is liable for fraud practised upon a client by a member of the firm (o). The client, or principal. is entitled to relief against the other partners, not only if the (l n WaUham v. Stainton, 1 D. J. & S. 678; L37 K. R. 342. See Peek v. Gurne;,, L. R. 6 H. I,. 393; 43 I,. .1. Ch. 19. (t) Blair v. Bromley, -1 Ph. 360; 16 L. J. Ch. 495. (k) Turner v. //«//, 11 Sim. 1,16. (/) Edinburgh Breweries \. Molleson, L894, A. C. 96; . 415. (m) Plumer v. Gregory, In Eq. 627; 43 1^. .1. Ch. 616. (n) Thompson v. Harrison, '2 Bro. ('. ('. H'>t; l Cox, 346. (o) Brydges v. Branfill, 12 Sim. 369; 11 I.. -I. Ch. 12; ^ R. R. Tl ; Blair \ Bromley, ~> Ba. ~>V1: 2 Ph 354 ; L6 I.. .1. Ch. 495; St. !"'"/»/ v. Smart, ■•> Ch. r,ir, ; ante, p. 101. 472 PARTIES. case is one in which he might have recovered against such other partners, but also if the remedy at law against the other partners is barred by lapse of time (/;). The original liability of one partner for the fraud of a co-partner is continued as well after as before the dissolution of the partnership (q). A fraud, however, committed by a partner whilst acting on his own separate account, is not imputable to the firm, although, had he not been connected with it, he might not have been in a position to commit the fraud (r). But if the firm has derived benefit from the fraudulent transaction, the other partners are jointly and severally liable with the partner who has committed the fraud to make good the money which has been fraudulently received by the firm, though the other partners have not committed any violation of duty (s). Inasmuch as one partner has no authority to bind the other partners by borrowing money, unless it is borrowed in the usual course of business and for business purposes, if a client advances money to one of a firm of solicitors on the represen- tation that it was to be lent to a client, and the solicitor fraudulently appropriates the' money, his partner, if he had no knowledge of the fraud, is not liable to make it good, for it is not the business of a solicitor to act as a scrivener (t). Where a syndicate has been formed for promoting a com- pany and fraud has been practised in the matter, the members of the syndicate are jointly and severally liable (?/). The (p) Blair v. Bromley, supra; Moore v. Knight, 1891, 1 Ch. 547; 60 L. J. Ch. 271. (q) Ibid. (r) Ex p. Eyre, 1 Ph. 227 ; Coomer v. Bromley, 5 De G. & Sm. 532 ; 90 E. R. 131; Bishop v. Countess of Jersey, 2 Drew, 143; 23 L. J. Ch. 483. See British Homes Ass. Corp. v. Paterson, 1902, 2 Ch. 404; 71 L. J. Ch. 872. (s) Imperial Mercantile Credit Association v. Coleman, L. E. 6 H. L. 189; 40 L. J. Ch. 262; Moore v. Knight, 1891, 1 Ch. 547; 60 L. J. Ch. 271. (t) Plumer v. Gregory, 18 Eq. 621; 43 L. J. Ch. 616; Cleather v. Twisden, 28 C. D. 340; 54 L. J. Ch. 408; cf. Rhodes v. Moules, 1895, 1 Ch. 236; 64 L. J. Ch. 122. («) New Sombrero Co. v. Erlanger, 5 C. D. 74; 46 L. J. Ch. 425; Phosphate Sewage Co. v. Hartmont, 5 C. D. 394; 46 L. J. Ch. 661; Lagunas Co. v. Lagunas Syn., 1899, 2 Ch. 420, 441 ; 68 L. J. Ch. 699. PARTIES. 173 estate of a deceased member of the syndicate is liable to the extent that it may have been benefited by the fraud (x). The infancy of the defrauding party will not exempt him, for though the law protects him from binding himself by contract, it gives him no authority to cheat others (//). A bankrupt is not a proper parly to an action brought by the trustee under his bankruptcy to set aside a conveyance executed by the bankrupt with intent to delay or defeat his creditors (z). (x) New Sombrero Co. v. Erlunger, supra; Peek v. Gurnet), L. R. 6 H. L. :)77 ; 43 L. J. Ch. 19. (y) Ante. p. 152. (z) Weise v. Weirdie, 19 Eq. 171. ( 474 ) CHAPTEK X. PROOF. A man who alleges fraud must clearly and distinctly prove the fraud he alleges. The onus probandi is upon him to prove his case as it is alleged in the statement of claim (a), or in his particulars (b). Every material step in the evidence which makes out a case of fraud must be proved by sufficient evidence (c). If, he complains of fraud in the prospectus of a company, it is for him to prove that it was false, and false to the knowledge of the defendant, or at all events that he did not believe it, and that he was misled by it to his prejudice (d). If the fraud is not strictly and clearly proved, as it is alleged, relief cannot be had, although the party against whom relief is sought may not have been perfectly clear in his dealings (e). Fraud will not be carried by way of relief one tittle beyond the manner in which it is proved to the satisfaction of the Court (/). But proof of a substantial part of a misrepresentation is sufficient (y). Money obtained or retained by fraud can be recovered with interest, but the fraud must be proved in the proceedings by which the money is recovered, otherwise no interest will be (a) Bellamy v. Sabine, 2 Ph. 425, 448; 17 L. J. Ch. 105; 78 B. B. 132; Blair v. Bromley, 5 Ha. 559; 16 L. J. Ch. 495; Jennings v. Broughton, 17 Beav. 239; 23 L. J. Ch. 999; 104 E, E. 58; Smith v. Kay, 7 H. L. C. 750; 30 L. J. Ch. 35; 115 E. E. 367; Moxon v. Payne, 8 Ch. 881: 43 L. J. Ch. 240; Craig v. Phillips, 3 C. D. 733; 46 L. J. Ch. 49. (b) Sachs v. Spielman, 37 C. D. 295; 57 L. J. Ch. 658. (c) Angus V. Clifford, 1891, 2 Ch. at p. 479; 60 L. J. Ch. 443. (d) Smith v. Chadwick, 9 App. Ca. 187; 53 L. J. Ch. 873; Glasier v. Rolls, 42 C. D. 436; 58 L. J. Ch. 820. (e) Moicatt v. Blake, 31 L. T. 387. (/) 11 Jur. N. S. p. 52, per Lord Westbury, (ff) Lamb v. Johnson, 15 N. S. W. St. E. 65. PROOF. ITT) allowed, and it is not enough that the fraud has been proved in other proceedings in a criminal court (h). If a case of actual fraud is alleged, relict cannot be had by proving only a case of constructive fraud (/). But where material allegations of fraud arc proved, the plaintiff will obtain relief, though other allegations are not proved (j). When a statement in a prospectus is clearly capable of two meanings, the plaintiff must swear that he understood it in the false sense, and was deceived (A). If he is uncertain, he must make inquiries or consult the memorandum and articles, for if he does not do so he cannot fairly say that he has been deceived (/). But except in the contract to take shares, he is not, even when invited to do so, called upon to prosecute inquiries (/«). It is not sufficient that the party deceived made some investigation into the facts, or that he had the means of discovering the truth. In the case of false representation negligence or laches affords no answer unless there is such delay as to bring in the Statute of Limitations (n). If the statement of claim alleges a case of fraud, and the title to relief rests upon that fraud only, the action will be dismissed, if the fraud as alleged is not proved. It cannot be allowed to be used for any secondary purpose. But if the case does not entirely rest upon the proof of fraud, but rests also upon other matters, which are sufficient to give the Court jurisdiction, and are separable from the case of fraud, and the case of fraud is not proved, but the other matters arc proved, relief will be given in respect of so much of the statement of claim as is proved (o). (h) Johnson v. Rex, 1904, A. C. 817 ; 73 L. J. P. C. 113. (t) Wilde v. Gibson, 1 H. L. C. 605; 73 R. It. 191. (,) Moxon v. Payne, 8 Ch. 881 ; 43 L. J. Ch. '240. (ft) Arkivright v. Newbold, 17 C. D. p. 324 ; 50 L. J. Ch. 372 : Smith \ I 'had wick, supra. (I) Hallows v. Fernie, 3 Ch. 475; 36 L. J. Ch. 267 ; and Bee ante, p. 452. (m) Caballero v. Henty, 9 Ch. 447; 42 L. J. Ch. 635; Redgrave v. Hurd, 20 C. D. at p. 13; 51 L. J.. Ch. 113. (n) Redgrave v. Hurd, 20 C. D. 1, 13, 22, 21 ; 5] I,. .1. ch. 113: Oelkers v. Ellis, L914, 2 K. I',. L39; 83 I.. .1. K. B, *) Australia v. !,<■„, priere, L. B. 4 C. I'. p. 597; 42 L. .1. C. I'. 49; Thompson v. Eastwood, 2 App. (':,. p. 243; and see ante, pp. 448, 451. 176 PROOF. If a party alleges that a contract was obtained from liini by fraud, the burden of proving the fraud lies on him (p). Thus to make out a ease of promotion money it is not enough to show that all the consideration did not reach the vendor's pocket, but you must show that the price was swollen fraudu- lently for the purpose of making the company pay promotion money in addition to what was understood to be the real purchase-money (q). So, also, if fraud is established against a party, it is for him, if he alleges acquiescence in the other party, to show when the latter acquired a knowledge of the truth and prove that he knowingly forebore to assert his rights (/). So in an action to enforce a contract in which the defendant sets up the plea that he was induced by fraud to enter into it, it is not for the defendant to repudiate the con- tract, but for the plaintiff to show that the defendant adhered to the contract notwithstanding the discovery of the fraud (s). So, also, where a man makes a false representation to another, the onus probandi is on him to show that the other party waived it and relied on his own knowledge (t). It is not enough to show that the plaintiff had the means of knowledge and might have found out the truth (u). Mere means of knowledge is not the same thing as knowledge (#) ; it is only evidence of a want of bond fide belief. Where knowledge is relied upon as a defence, the truth must be brought clearly home to the deceived (y). Evidence. The rules of evidence are the same in equity as at law (z). Whether certain facts, as proved, amount to a fraud, is a question for the Court as well at law as in equity. The facts to constitute a fraud must be found at law by the jury (a). (p) Glasier v. Rolls, 42 C. D. 436; 58 L. J. Ch. 820. See ante, p. 452, as to proof of fraud in a prospectus. (q) Arkwright v. Newbold, 17 C. D. 301, 319; 50 L. J. Ch. 372. (r) Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 221. («) Aarons Reefs v. Twiss, 1896. A. C. 273; 65 L. J. P. C. 54. it) Redgrave V. Hurd, 20 C. D. p. 13; 51 L. J. Ch. 113. (tt) Redgrave V. Hurd, 20 C. D. p. 21; 51 L. J. Ch. 113. (x) Brownlie v. Campbell , 5 App. Ca. 925, 952. (i/) Amison v. Smith, 41 C. D. 369, 371. (z) Glyn v. Bank of England, 2 Yes. 41. (a) Murray v. Mann, 2 Exch. 539; 17 L. J. Ch. 256; 76 R. R. 686. PROOF. t l ' tv Iu equity they are found by the Court; but a Court of Equit; is not justified in finding such facts upon any less or different kind of proof than would be required to satisfy a jury. The law in no case presumes fraud. The presumption is always in favour of innocence, and not of guilt. In no doubtful matter does the Court lean to the conclusion of fraud. Fraud is not to be assumed on doubtful evidence. The facts constituting fraud must be clearly and conclusively established (b). Cir- cumstances of mere suspicion will not warrant the conclusion of fraud (c). The proof must be such as to create belief, and not merely suspicion. If the case made out is consistent with fair dealing and honesty, a charge of fraud fails (d). But it suspicion is aroused and no inquiries are made for fear of learning the truth fraud may be presumed (e). In an action of deceit brought on the ground that a par- ticular article used by the defendant is a colourable imitation of the plaintiff's, the conclusion of a judge on a view by him of the two articles that the defendant's article is calculated to deceive is not sufficient; the judge must be satisfied by independent evidence that there is at least a reasonable probability of deception (/). But in a passing-off case the plaintiff need not prove fraud on the part of the defendant, or give evidence that any single person has been deceived ( neither sufficient nor relevant to prove that A. has committed <,,) Aarons Reefs v. Twiss, L896, A. ('. 273, 280; 65 L. J. V. C. "•! {q) Redgrave \. ffttrd, 20 C. D. 13,22,24; 5] I.. -I Ch. L13. (r) Smith v. Chadwiek, 20 C. D. 15, (it ; 9 A. c. L87 ; 53 L. J. Ch 873. (8) Walters v. Morgan, 3 l>. F. & .1. 718; 130 R. R. 309. /, 2 Comm. p. 184. (a) 8ee Owen v. Homan, I B. L. C. L038 ; 20 L. J, Ob. 81 1 ; 94 R. R, 516. 480 PROOF. fraud on C, D., and E. But the case is different if it can be shown that the fraud on B. is one of a class of other trans- actions, having common features, the features being the false pretence and the knowledge of that false pretence on the part of the defendant («). So evidence of similar frauds was admitted where the statement of claim alleged that the fraud was part of a system (y). So where fraudulent preference is alleged other acts of preference in favour of other creditors committed shortly before or after the transaction impugned is admissible to show the debtor's intent (z). In an action against a vendor for misrepresentation in the sale of goods, if it is shown that a material representation has been made by the vendor to induce the purchaser to buy, and that such representation is not true in fact, and it is proved that it was not true to the vendor's knowledge, the question cannot be asked him as to whether he did or did not entertain some other belief as to its truth, as the Court cannot enter into any question as to the state of a man's mind when the representation was made (a). Where the fraud on a vendor is effected by means of assur- ances given by a third person of the buyer's solvency and ability to pay, the proof that such assurances were made must be in writing signed by the party to be charged therewith as required by s. 6 of Lord Tenterden's Act (b). The application of s. 6 is confined to fraudulent representations or representa- tions such as would support an action of deceit (c). Burden of Though the proof of fraud rests on the party who alleges it, 8hif°te™ ay ^ anc * in tne absence of any special relation from which influence is presumed the burden of proof is on the person impeaching the transaction (d), yet circumstances may exist to shift the burden of proof from the party impeaching a transaction on (a;) Blake v. Albion Life Ass. Soc., 4 C. P. D. 101, 106; 48 L. J. C. P. 169. See Staffordshire Financial Co. v. Hill, 53 Sol. J. 446; Parker v. Wachner, 1917, N. Z. L. K. 440. (y) Edinburgh Life Ass. v. Y., 1911, 1 Ir. R. 308. (z) Re Ramsay, 1913, 2 K. B. 80; 82 L. J. K. B. 526. (a) Hine v. Champion, 7 C. D. 334, per Jessel, M. R. (b) Haslock v. Ferguson, 7 A. & E. 86 ; 6 L. J. Q. B. 247 ; ante, p. 426. (c) Banbury v. Bank of Montreal, 1918, A. C. 626; 87 L. J. K B. 1158. (d) Toker v. Toker, 3 D. J. & S. 487 ; 32 L. J. Ch. 322; 142 R. R. 135. PKOOF. 1S1 the party upholding it. If the evidence establishes a prima facie case of fraud, or shows that an instrument is false in any material part, the burden of showing that the transaction was fair lies upon the party who seeks to uphold it (e). If, for example, it appear that the donee of a power of appointment had at any time before the exercise of the power, the intention to derive a personal benefit from its exercise, or to make an appointment in fraud of the power, the burden rests on those who support the appointment to show that the intention had been abandoned at the time of the execution of the appoint- ment (/). So, also, where conditions of sale are misleading, the onus is on the vendor to show not only that the purchaser had the means of information, but that he relied on his own information or judgment and was not in fact misled by the misrepresentation (g). So, also, where within a few months after making a voluntary settlement the settlor calls a meeting of his creditors and lays before them a statement showing himself to be insolvent, the burden is on him to show solvency at the date of the settlement {It). So, also, if a man fraudu- lently mingles monies belonging to another with monies of his own, it lies on him to sever the portion which is affected by the fraud from that which is not affected by the fraud (/). Where the contract for sale of a chattel is voidable by the seller on account of fraud and before any election to avoid the sale by the seller, the buyer pledges the chattel to secure an advance, the onus lies on the seller of proving that the pledgee took with notice of the fraud or otherwise than in good faith (/,-). (e) Wait \. Crove, 2 Sch. & Lef. 502; Russell v. Jackson, 10 Ha. 213; 90 R. R. 330; Cottam v. Eastern Counties Ry. Co., 1 J. & H. 243; 30 L. J. Ch. 217; 128 H. B. 346; Dowle v. Saunders, 2 H. & M. 250; 34 L. J. Ch. 87; 144 B. R. 140; Prees v. Coke, 6 Ch. 648. (/) Humphrey v. Olver, 28 L. J. Ch. 406; Topham v. Duke of Portland, 5 Ch. 6] : 32 L. J. Ch. 606; Bainbrigge v. Browne, 18 C. D. 188; 50 L. J. Ch. 522. (g) Torrance v. Bolton, 8 Ch. 118; 42 L. J. Ch. 177; See Blaiberg v. Keeves, L906, -1 Ch. 17:,: 75 |,. .J. Ch. 464. , Crossley v. Elworthy, 12 Eq. L68; 40 L. J. Ch. 480: Mackay v. Douglas, il Eq. L06; II I. . J. Ch. 539. m Russell \. Jackson, 10 Ha. 213; 90 H. H. 386. (k) Whitehorn \. Davison, L911, l K. B. 163; ho L. .1. K. 1?. 126. K.F. 3] 482 proof. The Bills of Exchange Act, 1882, s. 30 (2), shifts the onus and throws on the holder of a bill affected with fraud the onus of proving that h# took it in good faith and for value. But this does not apply where the holder seeking to enforce the bill is the person to whom it was originally delivered and in whose hands it remains (?). Notwithstanding the maxim omnia presumuntur rite esse acta, whenever any person by donation derives a benefit under a deed to the prejudice of another person — and more especially if any confidential relation exists between them — the Courts so far presume against the validity of the instrument as to require some proof (varying in amount according to circum- stances) of the absence of anything approaching imposition, overreaching, undue influence, or unconscionable advantage. If, therefore, it appear that a fiduciary, or confidential relation exist between the parties to a transaction (m), or if it be established by evidence that one of the parties possessed a power of influence over the other (n), or was in a position to exercise dominion over the other (o), the burden of proof lies upon the party filling the position of active confidence, or possessing the power of influence, or dominion, as the case may be, to establish, beyond all reasonable doubt, the perfect fairness and honesty of the transaction, and he is bound to preserve evidence to show that all was rightly done (p). So the poverty and ignorance of a vendor throw upon the pur- chaser the onus of proving that the transaction was fair, just, and reasonable (g). Parol evidence is admissible in such cases to prove the (0 Talbot v. Von Boris, 1911, 1 K. B. 854; 80 L. J. K. B. 661. (m) Benson v. Heathorn, 1 Y. & C. C. C. 340; 57 R. R. 351; Allfrey v. All- frey, 1 Mac. & G. 99 ; 84 R. R. 15; Billage v. Southee, 9 Ha. 540; 21 L..J. Ch. 472; Moore v. Prance, 9 Ha. 303; 20 L. J. Ch. 468; ante, p. 155. (n) Cooke v. Lamotte, 15 Beav. 240; 21 L. J. Ch. 371; 92 R. R. 397; Smith v. Kay, 7 H. L. C. 750; 30 L. J. Ch. 35; 115 R. R. 367; Topham v. Duke of Portland, supra; Bainbrigge v. Browne, 18 C. D. 188; 50 L. J. Ch. 522; ante, pp. 193, 196. (o) Lord Aylesford v. Morris, 8 Ch. 498; 42 L. J. Ch. 546; O'Rorke v. Boling- broke, 2 App. Ca. 834. (p) King v. Ay\de>rson, I. R. 8 Eq. 637. (g) Fry v. Lane, 40 C. D. 312; 58 L. J. Ch. 113. proof. 483 fairness of the transaction, hut it is to be received and weighed with the most scrupulous accuracy, and to be dealt with as having its weight affected by the circumstances under which the parties stood (/•). If an agent for sale purchases the estate, or an interest in the estate, which he is employed to sell, the burden of proving that a full disclosure was made to his principal of the exact nature of his interest lies on him, and is not discharged merely by swearing that he did so if his evidence is contradicted by the principal, and is not corrobo- rated (s). So, also, and upon the same principle, those who take a benefit under a will, and have been instrumental in preparing and obtaining it, have thrown upon them the burden of showing the righteousness of the transaction (t). So, also, a man who takes advantage of a deed of gift or voluntary settlement, and sets it up against the donor or author of the settlement must, as a general rule, be able to show that the donor or author thoroughly understood the contents of the deed, knew what he was doing, or at all events was protected by independent advice, and was not acting under the pressure of undue influence. If there are any unusual provisions in the deed, he must be able to show that they were brought to the notice of and were understood and approved of by the donor or author of the settlement (u). If, for example, the gift be not subject to a power of revocation, the party taking the benefit may have thrown upon him the burden of proving that the donor meant the gift to be irrevocable (w). But where a voluntary deed is impeached, the onus of supporting it does not necessarily rest upon those who set it up. A man of full age and sound mind, who has executed a voluntary deed by which he has denuded himself of his property is bound by his own act, and if he comes to have the deed set aside, he (r) He Holmes's Estate, 3 Giff. 347; 133 R. R. L19; Walker v. Smith, 29 Beav. 394 : L31 R. R. '137. (*) Dunne v. English, 18 Eq. 524. See SUibbs v. Slater, 1910, 1 C'li. 195; 79 L. J. Ch. 420. (t) Fulton v. Andrew, L. R. 7 H. L. 449; It I,. .1. I'. 17; ante, pp. 312, 311. As to " n; lii> .11 ii< 8 " Ba (lurk V. Loft us, '2<'> Out. Ij. U. '204. (u) Philippe v. Mulling*, 7 Ch. 246; II I;. .1. ch. 211; Turner v. Collins, 7 Ch 329; 11 L. .1. Ch. 558. (w) Wollaston v. Tribe, 9 Eq. 44. 484 proof. must prove some substantial reason why it should be set aside (#). There is no general presumption against the validity of gifts as such (y), and in the absence of any special relation from which influence is presumed the burden of proof is on the person impeaching the transaction, and he must show affirmatively that pressure or undue influence was employed (z). When a party is under the obligation of showing that an unprofessional person understood the contents of a deed or instrument which he executed, the mere proof of its having been read over to him unaccompanied with proper explana- tions is not sufficient (a). It must be proved that the nature, effect, and contents of the deed were explained to and perfectly understood by him (b). It is not sufficient for a solicitor, employed to prepare a marriage settlement for a lady, to say in general terms that he explained it to her. He ought to say what was the explanation he gave, and what was the meaning and effect of the limitations as stated by him to her (c), and further, he should satisfy himself that the transaction is one which it is right and proper under the circumstances to carry out (d). The intervention of an independent third party, or adviser, is an important ingredient in showing the fairness of a trans- action (e). If a solicitor be employed, there is always strong prima facie evidence that the party for whom he was acting (x) Henry v. Armstrong, 18 C. D. 668; Ogilvie v. Littleboy, 1897, W. N. 53; Rake v. Hooper, 83 L. T. 669. (y) See Allcard v. Skinner, 36 C. D. 145 ; 56 L. J. Ch. 1052. (z) Toker v. Toker, 3 D. J. & S. 487 ; 32 L. J. Ch. 322; 142 E. B. 135 ; Pol- lock on Contracts, 604. (a) Hoghton v. Hoghton, 15 Beav. 311; 21 L. J. Ch. 482; 92 E. E. 421. See Sharp v. Leach, 31 Beav. 503; Fulton v. Andrew, L. E. 7 H. L. 449; 44 L. J. P. 17. (b) Moore v. Prance. 9 Ha. 304; 20 L. J. Ch. 468; Anderson v. Ellsworth, 3 Giff. 154; 30 L. J. Ch. 922; 133 E. E. 60; Dames v. Davies, 4 Giff. 417; Toker v. Toker, supra; Hall v. Ho/1, 8 Ch. 430; 42 L. J. Ch. 444. (c) Maunsell v. Maunscll, 1 L. E. I. 549. (d) Powell v. Powell, 1900, 1 Ch. 243; 69 L. J. Ch. 164; Wright v. Carter. 1903, 1 Ch. 27; 72 L. J. Ch. 138. (e) Cooke v. Lamotte, 15 Beav. 240; 21 L. J. Ch. 371; 92 E. E, 397; Bain- brigge v. Browne, 18 C. D. 188; 50 L. J. Ch. 522; ante, p. 174. VICTORIA, B.~ proof. 485 knew the nature of the transaction (/) : in all cases, indeed, where an independent legal adviser or solicitor is employed, the evidence that everything which was necessary to be known had been brought to the knowledge of his employer, would be conclusive (g). The intervention, however, of another solicitor goes for nothing unless it be shown that he had sufficient information and took sufficient pains to make his intervention of value (h). Xor is the intervention of a solicitor sufficient to support a transaction, if that one of the parties for whom the solicitor is acting is under the influence of the other party (i), or the solicitor is acting in the interests of the other party (k). A party is not estopped from avoiding his deed by proving Admission of that it was executed for a fraudulent, illegal, or immoral evidence to purpose (/). Notwithstanding the solemnity and force which av ° l atee ' the law ascribes to deeds, and all the strictness with which it in general prohibits the introduction of extrinsic evidence, to prove that an instrument goes bej^ond, or does not fully contain, or incorrectly exhibits, the terms of the contract which it was written and signed for the purpose of expressing and recording, the rule is settled that a deed — on its face just and righteous — may be vitiated and avoided, by alleging and adducing extrinsic evidence to prove that it was founded on a consideration, or had a view or purpose contrary to law or public policy (in). Although a party may thus, in certain cases, be enabled to take advantage of his own wrong, this evil is of a trifling nature in comparison with the flagrant evasions that would, in many eases, result from the adoption of a different rule (n). (/) Denton v. Donner, 23 Beav. 291; 113 R. R. 143; Miller v. Cook, 10 Eij. 641; 40 L. J. Cli. 11. (g) De Montmorency v. Devereux, 7 CI. & Fin. 188. (h) Luddy'a Trustee v. Peard, 33 C. D. 500; 55 L. J. Ch. 884; Powell v. Powell, supra; Cordery, 187. (*) Moxon v. Payne, 8 Ch. 881; 43 L. J. Ch. 240. (ft) Shitor v. Nolan, I. R. 11 Eq. 407. (I) Collins v. Blantern, 2 Wils. 341, 1 Smith, L. C. 355. (m) Reynell V. Sprye, 1 I). M. & (i. 072, per Knight Bruce, I,. .1.; 21 L. J. Qh. 633; 91 If. B. 228. (n) Benyon v. Nettlefold, 3 Mar. * C. 102; 20 L. .1. Ch. L86; h7 li. B 25; Bee Mallalieu v. Hodgson, 10 Q. I',. 689; 20 L. J. Q. B. 889; 88 K. K. 679; Bowes v. Foster, 2 H. k N. 779; 27 L. J. Ex. 202. 486 PROOF. Testimony of single witness. If a person be induced by fraudulent statements to enter into a written contract, it is competent for him to prove fraud by evidence aliunde, although the written contract, or the deed of conveyance, is silent on the subject to which the fraudulent representation refers (o). So, also, fraud, whether in a record, or deed, or writing under seal, may be proved by parol evidence (p). So, also, if it appear from the written evidence, that the agreement really made between the parties is not stated by the deed, parol evidence is admissible to explain it (q). So, also, where an alleged contract in writing is sued on, the defendant may show by parol evidence that, notwithstanding the writing, there was no contract (r). The testimony of a single witness, though uncorroborated, may be sufficient for the Court to conclude that there has been fraud (s). There is no rule that the Court must neces- sarily reject a claim against a deceased person's estate merely because it is supported only by the uncorroborated evidence of the claimant (t). The Court, however, will hesitate to rectify a settlement on the unsupported evidence of the settlor as to his intention (u). Nor can the testimony of one single witness, unless supported by corroborating circumstances, be allowed to prevail against a positive denial by the answer. If a defendant positively denies the assertion, and one witness only proves it as positively, and there is no corroborating circumstance attaching to the assertion, the Court will not act upon the testimony of that witness, without some circumstance attaching a superior degree of credit to the latter (#). (o) Dobell v. Stevens, 3 B. & C. 623; 3 L. J. K. B. 89; 27 E. R. 441; Hotson v. Browne, 9 C. B. (N. S.) 442 ; 30 L. J. C. P. 106 ; 127 R. R. 713. (p) Filmer v. Gott, 4 Bro. P. C. 230; Robinson v. Lord Vernon, 7 C. B. (N. S.) 231; 29 L. J. C. P. 135; 121 R. R. 472; Rogers v. Hadley, 2 H. & C. 227; 32 L. J. Ex. 211 ; 133 R, R. 652. (q) Cripps v. Jee, 4 Bro. C. C. 472. in Rattle v. Hornibrook, 1897, 1 Ch. 25; 66 L. J. Ch. 144. (5) Smith v. Iliffe, 20 Eq. 666 ; 44 L. J. Ch. 755 ; Clark v. Girdwood, 7 C. D. 18. (t) Rawlinson v. Scholes, 79 L. T. 350; Re Griffin, 1899, 1 Ch. at p. 43; 68 L J. Ch. 220. (u) Bonhote v. Henderson, 1895, 2 Ch. 202; Rake v. Hooper, 83 L. T. 669. (x) Evans v. Bicknell, 6 Ves. 183, per Lord Eldon, 5 R. R. 245; East India Co. v. Donald, 9 Yes. 275; Pilling v. Armitage, 12 Ves. 80; 8 R. R. 295. PROOF. i s 7 "Where the Court has to depend solely ou the evidence of the party himself to prove that there was false representation made to him as to the contents of a deed at the time he executed it, the evidence must be looked at with very con- siderable care before it will act upon it, so as to set aside a deed as against the person, who bond fide acted on the faith of the deed being genuine (y). "Where fraud is alleged against a defendant, communications Privilege, between himself and his solicitor as to the subject-matter of the alleged fraud are not privileged from production, and it is immaterial for this purpose whether the solicitor is or is not a party to the alleged fraud (z). But in order to displace the privilege there must be a specific allegation of fraud (a). A mere suggestion or suspicion is not sufficient (6). (y) 7 Ch. 88, per Mellish, L.J. (z) Williams v. Quebrada Co., 1895, 2 Ch. 751; 65 L. J. Ch. 68. (a) Bullivant v. Att.-Gen. for Victoria, 1901, A. C. 196; 70 L. J. K. B. 645. (b) Re Whitworth, 1919, 1 Ch. 320. ( 488 ) CHAPTER XI. COSTS. Costs being in the discretion of the Court, it would be of little practical use to attempt a classification of the very numerous decisions on the subject. A few, however, of the more important and more recent cases may be usefully referred to. The Courts are anxious to discover and discourage fraud in every shape, and' therefore there is no rule more general with respect to costs than that where relief is claimed on the ground of fraud, the relief, if granted, will be- granted with costs, even against an infant (a). But the Courts are no less anxious to discourage loose and unfounded charges of fraud, and therefore a party introducing them will be made to pay the costs occasioned thereby, though he may be successful in the action (6). Though the general rule is that, 'prima facie, he who succeeds ought to have the costs, costs do not always follow the event. Where an unconscionable bargain is set aside the usual course is not to give the plaintiff his costs, on the principle that he ought to pay for the relief which is granted to him against the consequences of his own folly. If, however, the defendant has refused reasonable terms before action, or has been guilty of fraud or misconduct, the plaintiff may be allowed costs (c). In Fry v. Lane (d), Kay, J., said, " Xo absolute rule has been laid down by the Court in these cases. Some- times where the only ground was undervalue the plaintiff has (a) Woolf v. JVoolf, 1899, 1 Ch. 343; 68 L. J. Ch. 82. (b) See post, p. 491, n. (r). (c) Beynon v. Cook, 10 Ch. 391, n. ; Nevill v. SneWng, 15 C. D. 679; 47 L. J. Ch. 777; Chapman v. Michaelson, 1909, 1 Ch. 238; 78 L. J. Ch. 272. (d) 40 C. D. 322 ; 58 L. J. Ch. 113. ( dsts. 189 been relieved on payment of costs, as in Twistleton v. Griffith. In some cases no costs are given, as in Bromley v. Smith] sometimes the costs are thrown upon the defendant, as in iVeviU v. Snelling." There may be other circumstances of an equitable nature to exempt the unsuccessful party from the payment of costs. When, for instance, an action for rescission of a trans- action on the ground of misrepresentation was dismissed, the dismissal was without costs, the Court being satisfied, although the charges as to misrepresentation had failed, that the pro- perty had not been correctly described (e). So, also, where an action for the rescission of a transaction, on the ground of undue influence, or of advantage taken of a fiduciary position, was dismissed on the ground of acquiescence, or delay in instituting the suit, or even on the merits, the dismissal was without costs, the Court being satisfied that the plaintiff had a reasonable cause of suit, or that the conduct of the defen- dant had rendered an investigation not unreasonable (/). So where a settlement is made under circumstances which make it right for the trustee in bankruptcy to investigate the transaction, the costs of an unsuccessful attempt to upset it ought not to be given against the trustee (//), unless his applicatiou is wrong in form and unsupported by evidence (h). So, also, if there has been negligence or misplaced confidence on the part of the plaintiff, he will not have his costs, although he succeed in the suit (i). So, also, although a transaction is set aside, the rescission may be without costs, if the defendant is free from moral blame (/) ; or if the plaintiff is not free from (e) Bartlett v. Salmon, 6 D. M. & G. |n : Hallows v. Fernie, 3 Eq. 520 ( 36 L J. CI,. 267. (/) Clegy v. Edmondson, 8 D. M. 4 G. 806; 111 R. It. 336; Clanricarde v. Henning, 30 Beav. 175; 30 L. J. Ch. 865; 132 R. R. 227; Toker v. Toker, 3 D. J. & S. tn7; 32 L. J. Ch. 322; 142 R, R. L35. (g) He Tetley, 3 Maneon, 226, 321; 66 L. J. Q. B. 111. (In Re Lane-Fox, 1900, 2 Q. B. 508; 69 L. .1. Q. B. 722. (*) Allen v. Knight, 5 Ha. 280; L6 I.. J. Ch. 370; 71 R. K. Km; Johnston v. lient<,n,:\ Eq. 1*1 : 39 I.. -J. Ch. 390. (/) Stanton v. Tattersall, 1 Bm. a ('•. 536; '•)<; R. R. 171 ; Phosphate 8ewage Co. v. Hartmont, 5 C. D. 394; 46 L. J. Ch. 661. In particular cases the plain- tiff may have to pay tin- costs, although the transaction is el aside, if tin' <■ free from moral blame. Davies v. Otty, 36 Beav. 208. 490 costs. moral blame (Z*). So, also, costs were allowed to the trustees of a voluntary settlement, though it was set aside, as they seemed to have acted bond fide, and really with the desire to benefit the plaintiff (I) ; and they were entitled to retain their costs as between solicitor and client out of the monies in their hands before paying over the balance, but beneficiaries will not receive their costs (m). So, also, where a settlement is set aside as against creditors under 13 Eliz. c. 5, the trus- tees may have their costs of defending the action out of the trust funds (n). So, also, where the plaintiff is particeps criminis, and seeks to set aside a security on the ground of public policy, judgment will be without costs (o). So, also, although specific performance be decreed, the decree will be without costs, if the party resisting performance had a fair and reasonable ground for doing so (p). The Court always exercises its discretion in dismissing an action for specific performance, with costs, on the ground of circumstances which would not be sufficient to cancel the agreement on the ground of fraud. If, on the other hand, the defendant has been to blame in the matter, or has bv conduct contributed to the litigation, the dismissal will be without costs (q). As a general rule, where costs have been occasioned by the conduct of either party, the part}- who occasioned the costs must bear them ; and where by the misconduct of both parties, neither has his costs; and where a suit has been rendered necessary by the misconduct of either party, still a part of the costs may have been rendered necessary by the other party. If, accordingly, a man succeeds in obtaining the relief prayed for, and has the costs of the suit generally, but fails to establish allegations of fraud, he must pay the (k) Aylesford v. Morris, 8 Ch. 498; 42 L. J. Ch. 546; Lyon v. Home,' 6 Eq. 655; 37 L. J. Ch. 674. (I) Everitt v. Everitt, 10 Eq. 410; 39 L. J. Ch. 777. (m) Merry v. Pownall, 1898, 1 Ch. 306; 67 L. J. Ch. 162. («) Ideal Bedding Co. V. Holland, 1907, 2 Ch. 157; 76 L. J. Ch. 441; dis- tinguishing Elsey v. Cox, 26 Beav. 95; 122 R. E. 41. (o) Debenham V. Or. 1 Yes. 276; but see Jack man v. Mitchell. 13 Ves. 581; 9 E. R. 229; Dan. Ch. Pr. 1038. (p) Fenton v. Broivne, 14 Ves. 150; 9 R. R. 255. (g) Walters v. Morgan. 3 D. F. & J. 718; 130 R, R. 309. costs. 491 costs occasioned by such allegations being introduced (/), or, for the sake of simplicity, no costs will be given to either side when, but for the allegations of fraud, the plaintiff would have been entitled to the costs (s). In Parker v. M'Kerma (/), where the plaintiff made elaborate charges of fraud which proved to be unfounded, the Court not only made him pay the costs of that part of the case, but refused to allow him the costs even of tne part on which he succeeded. It was held that he had so mixed up unfounded and reckless aspersions upon character with the rest of the suit as to forfeit his title to the costs which he otherwise would have been entitled to receive (>). In Rhodes v. Bate (#), the defendant was nut ordered to pay costs, though the transaction was set aside, inasmuch as the case of the plaintiff failed to a considerable extent, and inasmuch as in so far as it succeeded, it was by force of the law of the Court, and not by any merits of his own, the evidence adduced by him being also irrelevant and overcharged. An action containing unproven charges of fraud was dismissed without costs, because the defendants, by mixing up their personal interests in the transactions in question, had rendered an investigation not unreasonable (y). In like manner, charges of fraud made by defendants will, if unsub- stantiated, be visited with costs, even though the defendant gets the costs of the suit generally (:). So, also, the intro- duction of charges of fraud wdiich are irrelevant and cannot be tried is improper. The plaintiff must in such a case pay all defendant's costs incurred by reason of such charges as between solicitor and client (a). A plaintiff who fails to substantiate charges of undue (r) Milliard v. Eiffe. I,. R. 7 H. L. 39, 51: Clinch v. Financial Corporation, 5 Eq. 450, 483; 37 L. .J. Ch. 281; Thomson v. Eastwood, 2 App. ('a. 236, '243. (s) Rawlins v. Wickham, 1 Cliff. 355; 28 L. J. Ch. 188; 121 R. R, 134; Tyler v. Yates, 6 Ch. 665; 40 I.. J. Ch. 70s. (t) 10 Ch. 96, L23, 125; 111.. J. Ch. 425. (u) 10 Ch. 125. f rights under a deed oof arising From the misconstruction of the deed, is. it has been said, a mistake in fact, and is consequently relievable in equity. Deny s v. Shuckburgh, 4 Y. A C. 42; 54 R. R. 146. H, Midland Ry. . J. P. C. 50. m) Ii'iii. (n) Preston v. Luck, 27 C. D. 497. 496 MISTAKE OF LAW. been drawn between mistakes of fact and mistakes of law (o). Indeed it has been said that recent decisions have lessened, if not destroyed, the importance of the distinction between the two (/>). The following propositions may, however, perhaps be laid down : — (1) A mistake as to a general rule of law is not a ground for relief, though even here it is conceivable that a common mistake of law might so go to the root of the matter as to prevent any real agreement from being formed. (2) A mistake in the construction of an instrument, 'or at least of a contract, is a mistake of law, so far as the question of relief is concerned. (3) A mistake as to private rights, such as rights of ownership, is generally a mistake of fact and law, and is apparently assumed to be the former until the latter is proved (q) ; and a mistake of fact which involves a mistake of law is still a mistake of fact (?•). Mistake in law, to be a ground for relief in equity, must be of a material nature, and a determining ground of the transaction (s). If a man has been made aware of the question of law on which his title depends, and deliberately determines to give up the matter, he cannot afterwards have relief on the ground of a mistake in matter of law (t). Mistake of law may be a misapprehension of the law, or of their private rights to property by both parties to a trans- action, both of them making substantially the same mistake ; or it may be a misapprehension of the law or of his private right by one of the parties alone. Mutual mis- If an agreement be entered into between two parties in as to°their '^ mu ^ lia l mistake as to their relative and respective rights, rights. either of them is entitled to have it set aside (?/). Where, for instance, a party entered into an agreement with another to take a lease of what in fact was his own property, both parties being under a common mistake as to their respective (o) 6 App. Ca, at p. 190. (p) Fry on Spec. Perf. p. 347. (q) 3 My. & K. at p. 99. (r) 4 C. D. at p. 702. (s) Stone v. Godfrey, 5 D. M. & G. 76, supra. (t) Ibid.; Rogers v. Ingram, 3 C. D. 351: 46 L. J. Ch. 322. <;/) Cooper v. Phibbs, L. E. 2 H. L. 149: Beauchamp v. Winn, 6 ibid. 233: Butler v. Fairclough, 1917, V. L. E. 175. alone. MISTAKE OF LAW. 197 rights, the transaction was set aside (.v). So, also, where a man had sold another an estate which in truth belonged to him, and the conveyance was completed, the Court rescinded the transaction, and ordered the purchase-monies to be refunded (y). So also where the second of three brothers having died, the eldest, who had entered upon his deceased brother's share, agreed to divide it with his youngest brother upon the representation of a third party whom the two brothers had consulted, that, as land could not ascend, the youngest brother was heir to the second, and executed a conveyance accordingly, the Court relieved the eldest brother against the instrument (z). If the mistake as to his private right be that of one party Mistake as to . « his right by only to a transaction, and the other party was not aware of one party the mistake, the Court may, under the peculiar circumstances, grant relief. But if it appear that the mistake was induced or encouraged by the misrepresentation of the other party to the transaction (a), or was perceived by him ami taken advantage of, the Court will be more disposed to grant relief than in cases where it does not appear that he was aware of the mistake (6). In Broughton v. Huff (c), where the heir-at- law of a shareholder in a company, the shares in which were personal estate, supposing himself, through ignorance of law, to be liable in respect of the shares, had executed a deed taking the liability on himself, it was held that he was entitled to have the deed cancelled. So also where a creditor of a company having a legal security gave it up in exchange for another security, upon the faith that the right which he gave up would be secured to him by the substituted security, Cooper v. Phibbs, supra; Jones v. Clifford, :i C. D. 77'.); 45 I.. •! . Ch. 809. {y) Bingham v. Bingham, 1 Ves. l'2fi; Jones v. Clifford. 3 ('. D. 79'J ; 6 L. J. Ch. 809. See Debenham v. Sawbridge, L901, 2 Ch. al p. L09; post, p. 556. {■/.) Lansdowne v. Lansdowne, Mose. 364, cit. 2 J. & \Y. 205. (a) Scholfield v. Templer, John. 166; 124 Et. H. •'(21: l ooper \. Phibbs, \.. R. 2 H. T;. 149, ante, p. 02. (b) Cocking \. Pratt, 1 Ves. 400; Sturge v. Sturge, 12 Beav. 229; L9 1.. -J . I h. 17; Broughton v. Hull, 3 D. & J. 501 : 28 L. A. Ch. 107: Powell \. Smith, 14 Eq. 90; 41 I.. J. Ch. 734; Beauchamp v. Winn, L. H. 6 11. L, 283; Red grave \ . Hurd, post , p. 519. (c) r .\ D. k I. 501 ; 28 L. J. Ch. 1G7. K.F. 32 498 MISTAKE OF LAW. but the substituted security proved to be a mere nullity in law, relief was given (d). So also where a woman renewed a note, believing that she was liable on the original note, relief was given ( Payment of at law, that money paid under a mistake of law, with full mfetake of knowledge of the facts, is not recoverable, and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party (>n). So where an increased rent was not recoverable by the landlord, but the tenant paid it under a mistake of law, he was not entitled to recover ii from the landlord in any shape or form (n). So where the plaintiff had paid taxes by mistake upon the assumption thai he was liable, both parties being ignorant of a change in the law, it was held that he could not recover (o). But the rule is liable to a qualification, if the person seeking to recover did not make the payment and was not bound by the person making it (/;), or if the man to whom money has been paid has been accessory to the error of the other party, or has got some one to misinform him of the law (q). "If," said James, L.J., in Rogers v. Ingram (/■;, 'the proposition were true that in every case where money has been paid under a mistake as to legal rights, it could be recovered back, it would open a fearful amount of litigation and evil in cases of distribution of estates, and it would be difficult to say what limit could be placed to this kind ot claim, if it could be made after a trustee has distributed the whole estate among the persons supposed to be entitled, evei \ one of them having knowledge of all the facts and having (to) Bilbie v. Lumtey, 2 East, 469; 6 R. R. 479; Brisbane v. Dacres, 5 Taunt. 143; 11 R. R. 718; Drewry v. Barnes^ 3 Russ. 94; Bate v. Hooper, 5 D. M. & G. 338; Stafford v. Stafford, 1 D. & J. 197 ; L18 R. R. 86; Salt marsh v. Barrett, 31 L. J. Ch. 783; Rogers v. Ingram, 3 C. D. 351 ; 46 L. J. Ch. 322 : He Hulkes, 33 C. D. 552; 55 L. J. Ch. 846. Where money had been paid many years without deducting the land-tax. do deduction was afterwards allowed out of the subsequent payments. Nicholls v. Leeson, :t Atk. 573. S<>. also. where an executor had paid interest for seventeen years without deducting the property-tax, it was held he could imt afterwards deduct out of the future in tere-t due the amount ot property-tax on such precedent payments, ('urn, \ Goold, 2 Maild. L63; 53 R. R. 33. tin Sharp liros. v. Chant, 1917, 1 K. B. 771 ; B6 I-. .1. K. B. ''.08. (o) O'Grady v. Toronto City, 'M Ont. I-. R. L39 ; cf. Meadows \. Grand Junction Waterworks, 3 L. (!. R. 910. (p) Blackburn Soc. v. Brooks, 29 C. D. at p. 910; 54 L. J. Ch, LOW Bee Re West, L909, •-! ch. 180; 78 I.. .1. ch. 559. (q) Dixons v. Monkland Canal, ■> Wills. *v Bh. Be. Ap. 145. (r) 3 C. I). 856; V, I.. .1. ch. 322. 500 MISTAKE OF LAW. given a release. The thing has never been done, and it is not a thing which, in my opinion, should be encouraged. When people have knowledge of all the facts and take advice, and whether they get proper advice or not, and the business is settled, it is not for the good of mankind that the matter should be reopened ' (s). Where accordingly an executor under the advice of counsel on the construction of a will, proposed to divide in certain proportions a fund between two legatees, but one of the legatees being dissatisfied took the opinion of counsel, which agreed with the former opinion, and two years afterwards the dissatisfied legatee filed a bill against the executor and the other legatee, alleging that the will had been wrongly construed and claiming repayment from the other legatee, it was held that the suit could not be maintained (t). So also where there had been a payment and acceptance of money between two parties under a mutual mistake of law, and it appeared under the circumstances of the case that the party who received the money received it as a composition in lieu of a larger sum, it was held that he could not afterwards sue for the balance (u). Where tolls were paid by mistake, it was held that they could not be recovered unless the mistake went not merely to the liability but to the fact on which the liability de- pended (tc), but on appeal the Court without deciding whether the mistake was one of law or of fact, held that the money could be recovered (x). Where a landlord by mistake paid inhabited house duty which the tenant was bound to pay, he was entitled to recover as upon an implied promise to refund the amount (y). Where since 1838 a rent-charge had been paid without making the statutory deduction for poor rate, it was held that the mistake was a reasonable explanation and that the deduction could be made (~). (s) See Hilliard v. Fulford, 4 C. D. 390; 46 L. J. Ch. 43. (t) Rogers v. Ingram, 3 C. D. 351; 46 L. J. Ch. 322 («) Kitchin v. Hawkins. L. R. 2 C. P. 28. (id) Maskell v. Horner, 78 J. P. 167. (x) Ibid., 1915, 3 K. B. 106; 84 L. J. K. B. 1752. (y) Eastwood v. McNab. 1914, 2 K. B. 361; 83 L. J. K. B. 941. (c. v. General Finance Aqency, 1905, A. C. 373; 74 L. J. P. C. 73. (d) Henderson v. Folkestone Waterworks, 1 T. L. H. 329; but Bee Be Birk- beck Bid g. Soc, infra. (e) Bayley-Worthington and Cohen, VMM, I Ch. 648; 7h L. J. Ch. 351 : Hunt v. Hunt, 54 \j. J. Ch. 289. (/i Rogers v. Ingram, 3 C. D. 357. per Mellish, L.J. (g) Ex p. James, 9 Ch. 614 ; Dixon v. Broun, 32 C. D. 597 ; 56 L. J. < lh. 566 ; Be Rhoades, L899, 2 Q. B. 347; w L. J. Q. B. 804; Be Tyler, L907, l K. B. 865; 70 L. J. K. B. 541; cf. Be Hall, ibid., 875; Tapster \ Ward, L0] I. 1 25; Be Thellusson, L919, W. N. 235. (In Ex p. Simmonds, 16 Q. B. D. 308; 55 L. .1. Q. B. 74; Be Opera, Ltd., 1891, 2 Ch. L54; 60 L. J. Ch. 839. (i) Re Birkbech Bldg. 8ocs, L915, l Ch. 91; 84 L. J. Ch. 189. 502 MISTAKE OF LAW. overpaid an annuitant, was permitted to deduct the amount overpaid from subsequent payments (k). So, also, where accounts were drawn up and assented to under a common mistake of law as to their respective rights and interests by the parties, certain sums having been wrongly credited, the accounts, though settled, were reopened (I). A voluntary payment made under a supposed legal obliga- tion creates in law no obligation at all, and therefore a voluntary payment for many years under a supposed legal obligation to pay rent does not estop the person making such payment from setting up his true title (/»■). Money not claimed by reason of a mistake of law is not the same as money paid, and may be recovered (n). But money allowed in account under a mistake of law cannot be recovered back (o). Payment out. Where money is paid out of Court to the wrong person, then except perhaps where the order was obtained by fraud, the person really entitled though not before the Court has no claim on the Consolidated Fund (p). Mistake in law is not a ground for setting aside a com- promise, if the parties to the transaction were in difficulty setting aside a anc j doubt, and wished to put an end to disputes, and to compromise. L terminate or avoid litigation. If one or more parties, having, or supposing they have, claims upon a given subject-matter, or claims against each other, agree to compromise these claims, and the knowledge, or means of knowledge, of each of them with respect to the mode in which, and the circum- stances under which, his claim arises, stand upon an equal Mistake of law not a ground for (k) Liveseij v. Livesey, 3 Euss. 287; 6 L. J. Ch. 13; Dibbs v. Green, 11 Beav. 483. See Re Home, 1905, 1 Ch. 76; 74 L. J. Ch. 25; Re Allsop, 1914, ICh. 1;83L. J. Ch. 42. (I) Daniel v. Sinclair, 6 App. Ca. 181; 50 L. J. P. C. 50. (to) Batten-Poole v. Kennedy, 1907, 1 Ch. 256; 76 L. J. Ch. 162; 0' Grady v. City of Toronto, 37 O. L. E. 139. (n) R. v. Blenkinsop, 1892, 1 Q. B. 43; 61 L. J. M. C. 45; Davis v. Morier, 2 Coll. 303 ; 70 B. B. 234. (o) Skyring v. Greenwood, 4 B. & C. 281; 28 B. B, 264. See 1892, 1 Q. B. at p. 46. (p) Re Williams' Settled Estates, 1910, 2 Ch. 481; 80 L. J. Ch. 8. As to mistake in payment in, see G. W. Ry. v. Cripps, 5 Ha. 91; Re Stamford, 53 L. T. 511. MISTAKE OF LAW. ; i{ ,;; footing, and there is an absence of fraud or misrepresentation, the transaction is binding, although the conclusion at which the parties may have arrived is not that which a Court oJ Justice would have arrived at had its decision been sought The real consideration which each party receives under a compromise being, not the sacrifice of the right, but the settlement of the dispute, and the abandonment of the claim, it is no objection to the validity of the transaction that the right was really in one of the parties only, and the others had no right whatever. If, for instance, two parties claim adversely to each other the inheritance of a deceased person, and, in order to avoid litigation, agree to divide the in- heritance, it is no ground for setting aside the agreement that only one was heir, and that the other gave up the right which he really possessed. The fact that the one may have had no claim is immaterial, if he was honestly mistaken as to his claim. It is enough if at the time of the compromise he may have believed he had a claim, and that the parties have, by the transaction, avoided the necessity of going to law (q). To render valid the compromise of a litigation, it is not even necessary that the question in dispute should really be doubt- ful, if the parties bond fide consider it to be so. It is enough to render a compromise valid, that there is a question to be decided between them (r). A compromise of doubtful rights will not be set aside except on the ground of fraud (Y) or mis- representation as to rights (t). In dealing with a compromise all that a Court of Justice has to do is to ascertain that the (g) Stapilton v. Stapilton, 1 Atk. 10; Gordon v. Gordon. 3 Sw. 463; 19 R. R. 230; Naylor v. Winch, 1 Sim. & St. 555; 24 R. R. 227; Harvey \. Cooke, ! Buss. 31 : r, L. J. Ch. 84; Aftwood v. - -, 5 Russ. 149; 29 R, R, 15; Stewart v. Stewart, 6 CI. & I'm. 969 ; 49 R. R. 267; Pickering v. Pickering, 2 Beav. 56; 8 L. J. Ch. 336; Reynell v. Sprye, 8 Ha. 222, 254; 21 L. •) . Ch. 633; Lawton v. Campion, L8 Beav. 87; 23 L. J. Ch. 505; Trigge v. LavalUe, L5 Moo. I'. C. 270; Bullock v. Doiones, 9 H. L. 1; 131 R. R. 1 ; Belhaven's Case, :i D. .1. ,\ S. 41; 34 L. J. Ch. 503; Callisher v. Bischofjshtim . !,. R. 5 Q. I; 150; 39 I,. .1. Q. B. 181 : Re Roberts, 1905, 1 Ch. 704; 74 l>. ,1. Ch. 183. (r) Ex p. Lucy, 4 D. M. & G. 356; 22 l>. .1. Ch. 732; L02 R. I; L68; Miles v. New Zealand Co., 32 C. D. 266; 54 I,. .1. ch. L035. (*) Brooke v. Mostyn, 2 I). .1. & S. 378; 34 I.. .1. Ch. 65; 139 l;. R. L34; ante, pp. 110, 111. . J. Ch. 300; cf. Barrow \ Isaacs, 1891, 1 Q. I'.. 117 ; 60 L. J. Q. B. 179. in Sec (olyer v. Clay, 7 Beav. L88; 'VI R. R. 58; Strickland \. Turner t 7 Exch. 208; 22 1,. .1. Ex. 115; Cochrane v. Willis, I Ch. 58; 35 1.. J. Oh. M. (i omnea in oivitate Bciant quod ille solus ignorat. Dig. Lib. 22. lit. 6, 1. 9. 506 MISTAKE OF FACT. attributable only to that want of due diligence which may be fairly expected from a reasonable person (e). Parties, for instance, who, having a good defence, or plain and complete remedy at law, neglected to avail themselves of it there, could not come to equity for relief (/). Nor has a purchaser who is evicted by reason of a defect in title, which his legal adviser has overlooked, an equity to recover his purchase-money (g). Nor can relief be had against a forfeiture, where a man who is charged with a legal obligation forgets to perform it (h). Mistake A mistake amounting to a breach of contract will not as a negHgence of general rule be a cause of action for a stranger. Thus where third parties. ft messa g e [ s incorrectly transmitted by a telegraph company and the person to whom it is delivered sustains damage, that person has no remedy against the company. For the duty to deliver the message arises out of a contract with the sender and not with the receiver. Wilful alteration might be a ground for an action of deceit, but a mere mistake cannot be so treated (i). Mistake as Mistake, to be a ground for relief, must be of a material relief must be nature, and must be the determining ground of the trans- matenal, &c. ac ^ on Mistake in matters which are only incidental to and are not of the essence of a transaction, and in the absence of which it is reasonable to infer that the transaction would nevertheless have taken place, goes for nothing (/•). Nor does the circumstance that the mistake may be in a material matter and induced the contract entitle a man to rescind, unless the error goes to the root of the matter (I). In the (e) Duke of Beaufort v. Neeld, 12 CI. & Fin. 248, 286; Campbell v. Ingilby, I D. & J. 403 ; 118 B, E. 145 ; Leuty v. Hillas, 2 D. & J. 110 ; 27 L. J. Cb. 534 ; 119 B, E. 46 ; Rogers v Ingham, 3 C. D. 351 ; 46 L. J. Ch. 322 ; Re Hulkes, 33 C. D. 552, 561 ; 55 L. J. Ch. 846. (/) Dretcry v. Barnes, 3 Euss. 94; 5 L. J. Ch. 47 ; 27 B. E. 20. (g) Urmston v. Pate, 3 Ves. 235, n. See Thomas v. Powell, 2 Cox, 394; 2 E. E. 86. (/i) Gregory v. Wilson, 9 Ha. 683, 689; 89 E. E. 625; Barrow v. Isaacs, 1891, 1 Q. B. 417 ; 60 L. J. Q. B. 179; and see post, p. 554. (*) Dickson v. Reuter's Telegraph Co., 3 C. P. D. 1 ; 47 L. J. C. P. 1. (k) Stone v. Godfrey, 5 D. M. & G. 76; 23 L. J. Ch. 769; 104 E. E. 32; Carpmael v. Powis, 10 Beav. 39; 16 L. J. Ch. 31 ; Trigge v. LavalUe, 15 Moo. P. C. 276; 137 E. E. 61; but see post, p. 519. {I) Stewart v. Kennedy, 15 A. C. 118. MISTAKE OF FACT. 507 case of fraud a misrepresentation of any material tact giv< 3 a right to rescission, but mistake to be a ground for such relief must be a fundamental error, an error which affects the substance of the whole consideration (m). Mistake of fact is not the less a ground for relief because the person who made the mistake had the means of know- ledge (n), and still less where there is misrepresentation (0). Mistake of fact may be the mistake of one party only to a Mistai contract, or there may be a mistake of both parties respecting Q ie lwlt ,,, the same matter; and thus there arise two different conditions 2* e £* r( ' the trim-- of the question, which are governed by considerations of a action, or n ' h J mutual to different character. both. The mistake of one party only is attended by different Mistakeol consequences, accordingly as the other party is or is not only> not cognizant of the mistake. tta^otUr. The law judges of an agreement between two persons exclusively from the mutual communications which take place between them. If the terms of the proposal of the one are unambiguous and unmistakeable, and the answer of the other is an unequivocal and unconditional acceptance, the latter is bound, in the absence of fraud or warranty, however clearly he may afterwards make it appear that he was labouring under a mistake in his acceptance of the proposal. He cannot be allowed to escape from the effect of his agreement by merely showing that he understood the terms in a different sense from that which they bear in their legal effect. If a man will not take reasonable care to ascertain what he is doing, he must bear the consequences (p). Nor indeed is it sufficient to resist specific performance lm the purchaser to say that he has made a mistake, if the terms of the contract are noi ambiguous, and the property has been described in a manner which could not mislead anybody who (m) Kennedy v. Panama Co., L. K. 2 Q. B. 580; 36 U J. Q. B. 260; but post, p. 519. (n) Willmoti v. Harber, 15 C. D. ( .»7 : It L. J. Ch. 792; buj -•■ 9 H. U, C al p. 742, Redgrave v. Hurd, 20 C. D. 1; 51 L. J. Ch, L18. (p) Ante, p. 498; Stewart v. Kennedy. 16 App. Ca. p. LSI. 508 MISTAKE OF FACT. took reasonable care (q). In a case before Lord Homilly, where the defendant alleged that he had misunderstood the particulars of sale, he said that " If there appears on the particulars no ground for the mistake, if no man with his senses about him could have misapprehended the character of the parcels, then I do not think it is sufficient for the pur- chaser to swear that he did make a mistake, or that he did not understand what he was about ' (r). Where, accordingly, an inn together with a saddler's shop were put up for sale, and at the back of the inn and saddler's shop were two pieces of garden ground not belonging to the vendor, one of which had been for many years occupied with the inn, and the other with the saddler's shop, and which were hardly at all fenced from the premises with which they were occupied, and the purchaser, who was acquainted with the property and knew the gardens to be occupied along with the inn and saddler's shop, did not look at the plan, but bought in the belief that he was buying the whole of the property in the occupation of the tenants, it was held that he could not resist specific performance, as the description of the property was accurate and free from ambiguity (Y). So, also, on the other hand, where a purchaser believed he was buying and intended to buy the whole of the premises comprised m the particulars of sale, and there was no ambiguity in the particulars of the property sold, it is not competent to the vendor to say merely that he has made a mistake, and did not intend to sell a portion of the property (t). So where a purchaser by mistake bids for a different lot from that which he meant to buy, he will not be relieved from the contract (?/). The Court may, however, refuse to enforce specific per- formance of a contract on the ground of mistake, even in cases (q) Tamplin v. James, 15 C. D. 217 ; May v. Piatt, 1900, 1 Ch. 616 ; 69 L. J. Ch. 357. (r) Swaisland v. Dearsley, 29 Beav. 430; 30 L. J. Ch. 652; 131 R. R. 656; approved by Baggallay, L.J., 15 C. D. 218. (s) Tamplin v. James, 15 C. D. 217; cf. Brewer v. Brown, 28 C. D. 309; 54 L J. Ch. 605. (t) Dyas v. Stafford, 7 L. R. I. 606. (u) Van Praagh v. Everidge, 1902, 2 Ch. 266; 72 L. J. Ch. 260; reversed on another point, 1903. 1 Ch. 434; post, p. 518. MISTAKE OF FACT. 7)09 where the mistake is purely the mistake of the poison against whom relief is sought, and has not been contributed to in any May by the other party to the contract, if in the opinion of the Court a hardship amounting to injustice would be inflicted on the party against whom relief is sought by holding him to his bargain (.c). Thus specific performance was refused against a vendor who had contracted to sell an estate under the mistake that he was entitled to the purchase-money absolutely, whereas, in fact, he was bound to reinvest it in the purchase of other land (y). So, also, where a vendor had offered property for sale by a letter, in which the juice was stated to be 1,250/., instead of 2,250/., and the pun baser accepted the offer by letter, the Court refused to enforce the contract at the price mentioned in the letter, the vendor having given notice of the mistake immediately on discovering it (z). So, also, where a man entered into a contract for the purchase of land under the belief that he would be able to build over the whole site, but he subsequently discovered that he would not be able to do so by reason of certain provisions in an Act of Parliament, the Court would not enforce specific performance against him (a). So, also, where a man who was employed to bid for one or two distinct estates kept bidding in a hasty and inconsiderate manner, and ultimately purchased the lot, which, by his own gross mistake, he thought to be the lot for which he was to bid, the Court refused specifically to carry out the sale (b). So, also, where a vendor had revoked the authority of the auctioneer as to part of the pro- perty, the auctioneer inadvertently sold the whole, the Court refused specific performance, although the purchase]' was (x) Tamplin v. James, 15 C. D. 220; Burrow v. Scammell, 19 C. D. L82; 5] I, J. Ch. 296; Goddard v. Jeffryes, 51 L. J. Ch. 67 ; Re Hare and O'More, 1001, 1 Ch. 93; 70 L. J. Ch. 45. (y) Howell v. George, 1 Madd. 1; 15 |{. R. 203; Hood \. Oglander, 34 I'.. ,\ 513; 34 L. J. Ch. 538; 145 R. R. 639. (z) Webster v. Cecil, 30 Beav. 62; 132 R. K. L85. Such a mistake will not be ground for open biddings, which can imw onlj be opened Foi Fraud : Griffiths . lones, 15 Eq. 279; 42 L. J. Ch. 468. (a) Bray v. Briggs, 20 W. R. 962. (b> Malins v. Freeman, 2 Keen. 25; 6 I,. .1. (h. l.",:t; ll R. R. 17.^; but > Van Praayh v. Ki-eriihir. sufira. 510 MISTAKE OF FACT. justified in believing that lie purchased all he claimed in his action (c). So if a mistake in the particulars is corrected by the auctioneer at the sale, the purchaser is not entitled to specific performance with compensation, even though he did not hear the auctioneer's statement, and the vendor is entitled to rescind (d). Where the subject of sale was the reversionary estate in land under a lease, and the price was fixed in the contract without any mention of the rent payable under the lease, and the vendor proved his understanding of the contract to have been that the rent was to be paid to him during the term, besides the contract price, it was held that the purchaser could not have specific performance upon any other construction of the contract, and his action was dismissed, but without pre- judice to his legal rights (e). So, also, where a mortgagee, having obtained a foreclosure, contracted to sell, subject to a clause in the contract stating the vendor to be a mortgagee with power of sale, and that the covenants would be restricted accordingly, and the purchaser insisted upon a conveyance under the power of sale in the mortgage, which might have the effect of opening the foreclosure, it was held that the vendor might resist a specific performance in the form claimed, upon the ground that the clause referring to the power of sale was inserted by mistake (/). So, also, a defendant charged with the performance of an agreement to give a lease may show that the stipulation for the tenant to pay the rent, " free from taxes," was omitted from the agreement by mistake (g). So where the subject of the lease was a malt-house, and by mistake the condition was omitted that the lessees should covenant as to the quantity of malt to be made (h), and where in offering an agreement (c) Manser v. Back, 6 Ha. 443; 77 E. R. 187. (d) Re Hare and O'More, 1901, 1 Ch. 93; 70 L. J. Ch. 45. (e) Wijcombe Ry. Co. v. Donnington Hospital, 1 Ch. 268; cf. Powell v. Smith, ante, p. 498. (/) Watson v. Marston, 4 D. M. & G. 230; 102 R. R. 100. See 1903, 1 Ch; 862. (g) Joynes v. Statham, 3 Atk. 388. (70 Garrard v. Grinling, 2 Sw. 244. MISTAKE OF FACT. 511 for a lease on certain terms, which were accepted, the lessor had omitted by mistake to insert the term that lie required a certain sum for a premium (/). So, also, where a description of parcels was prepared by the vendor's solicitor from a previous description, and the description turned out to be erroneous as to quantity, and materially in excess of the contract, the Court would not enforce the sale on the vendor unless the case were one for compensation, and the purchaser would submit to it (7r). So, also, where a contract for sale includes, by mistake in drawing up the particulars of sale, property not intended to be sold, the Court will refuse to enforce the contract, unless the purchaser consent to take only the property intended to be sold (I). So, also, the Court would not enforce specific perfomianee against a vendor who had contracted to sell at an inadequate price, in ignorance of the report of his agent upon the value, which the agent had neglected to present (ra); nor against a vendor who had reserved a bidding for the protection of the sale, but his agent had by mistake omitted to bid (»). So it seems that specific performance might be successfully resisted by a purchaser who supposed a certain property to be included in his purchase that formed a material inducement for him to make the contract, and which proves, in fact, not to be included (o). Xor will the Court compel a man specific- ally to perform an agreement where the result would be to compel him to commit a breach of a prior agreement with another person (//). When, on the other hand, an estate was put up to auction and bought upon the terms of the purchaser taking the timbei (») Wood v. Scarth, 2 K. A .J. 33; 110 R. H. 88. (fc) Leslie v. Thompson, 9 Ha. 2(58; 20 I.. .1. Ch. 56] ; 89 R. R. 439. See 54 L. J. Ch. 590. 'I, Alvanley v. Kinnaird, 2 Mac. & (!. I ; 13 L. .1. Ch. 65; 86 R. R. i ; bui see ante, p. 508, n. . B. 758; and • - post, p. 549. (z) Sutton v. Temple, L2 M. & \\ . 64, per Lord Wenaleydale; L8 L. .1. Ex. 17; 67 R. R. 255. See 1905, 2 Jr. R. 168 K.F. 33 514 MISTAKE OF FACT. Mistake as to person with whom the contract is made. buyer (a). So, also, on the other hand, where a sale was made of 100 chests of tea out of a specific cargo warranted to be equal to a sample shown at the time of sale, which the seller then believed to be, but which was not, in fact, a sample of the cargo; it was held that he had no right to avoid the contract by giving notice to the buyer of the mistake respecting the sample (6). A mistake as to the person with whom the contract is made may or may not avoid the contract, according to the circum- stances of the case. Where the consideration of the person with whom a man thinks he is contracting does not at all enter into the contract, and he would have been equally willing to make the contract with any person whatever as with him with whom he thought he was dealing, a mistake of identity will not prevent the formation of the contract. But when the consideration of the person with whom a man is willing to contract enters as an important element in the contract, as if it be a sale on credit where the solvency of the buyer is the chief motive which influences the assent of the vendor, or where a purchaser buys from one whom he supposes to be his debtor and against whom he would have the right of set off, a mistake as to the person dealt with prevents the contract from coming into existence for want of assent (c). Where a person passes himself off as another (d), or falsely represents himself as agent for another for whom he professes to buy, and thus obtains the vendor's assent to a sale and even a delivery of goods, the whole contract is void; it has never come into existence, for the vendor never assented to sell to the person thus deceiving him (e). (a) Smith v. Hughes, L. R. 6 Q. B. 597 ; 40 L. J. Q. B. 221. (b) Scott v. Littledale, 8 E. & B. 815; 27 L. J. Q. B. 201; 112 R. B. 791. (c) Boulton v. Jones, 2 H. & N. 564; 27 L. J. Ex. 117 ; Smith v. Wheatcroft, 9 C. D. 230; 47 L. J. Ch. 745; Archer v. Stone, 78 L. T. 34; Nash v. Dix, 78 L. T. p. 448. (d) Hardman v. Booth, 1 H. & C. 803; 32 L. J. Ex. 105; 130 R. R. 784; Cundy v. Lindsay, 3 App. Ca. 468; 47 L. J. Q. B. 481; Gordon v. Street, 1899, 2 Q. B. 641; 69 L. J. Q. B. 45; Baillie's Case, 1898, 1 Ch. 110; 67 Ii. J. Ch. 81. (e) Ante, pp. 10, 11. MISTAKE OF FACT. .1 1.1 A clause in a contract by which an employer disclaims Disclaiming responsibility for the statements therein made and as to which f or mistakes, the contractor is to satisfy himself, will protect the employer against mistakes but not against statements fraudulently or recklessly made (/). When the mistake is that of one party alone, it must be Party may so borne in mind that the general rule of law is that whatever a se if as t0 man's real intention may be, if he so conducts himself that a PP ea r to accede to the a reasonable man would believe that he was assenting to the terms of the other party, terms proposed by the other party, and that other party, in that belief, enters into a contract with him, the party thus conducting himself would be equally bound as if he had intended to agree to the other party's terms (g). When the mistake of one party to a contract is known to Mistake of iiii-i i- ill- one p ar 'y the other, though it has not been in any way caused by him, known to the there may be cases in which a contract between them founded ° ier ' on the mistake would be void. If, for example, the one party is ignorant of a fact materially affecting the transaction, and the other party is aware of his ignorance, and knew of his intention to contract only with reference to a supposed different state of facts, he is precluded from denying that he understood the contract in the same sense as the other, namely. as conditional on the existence of the supposed state of tacts. So, also, if a contract be entered into between two parties for the sale of a ship, and the vendor knew that the purchaser had a different ship in his mind from that intended by the vendor, there would he no contract, for by the rule of law established in Freeman v. Cooke (h), the vendor would not be in a position to show that he had been induced to act by a manifestation of the buyer's intention different from his real intention. But as a general rule in sales the vendor and purchaser deal at arms' length, each reiving on his own skill and knowledge, and each at liberty to impose conditions or exact warranties before giving assent, and each taking upon if, Pearson v. Dublin Corporation, L907, A. C. 351; 77 L. J. P. C I (g) Freeman v. Cooke, -A Exch. 663; L8 L. .1 . Ex. Ill; 76 K. It. 711 ; Smith v. Hughes, I.. K. 6 Q. B, 607, per Lord Blackburn; 10 L J. y. B. 22] ; ante, p. 120. (h) 2 Exch. 654, supra; ante, p. 121. 516 MISTAKE OF FACT. himself all risks other than those arising from fraud or from the causes against which he has fortified himself by exacting conditions or warranties. So that even if the vendor should know that the buyer was purchasing, for instance, cotton goods submitted to his inspection in the mistaken belief that they were made of linen, or if the purchaser should know that the vendor was selling a valuable estate under the mis- taken belief that a search for mines under it had proved unsuccessful, neither party could avoid the contract under the supposed error or mistake. The exception to this rule exists only in cases where from the relation between the parties some special duty is incum- bent on the one to make full and candid disclosure of all he knows on the subject to the other (i). Thus, when a man sold oats by sample without any other representation as to their quality, and the buyer in reliance on his own judgment bought them for old oats, which quality only would serve his purpose, and which in fact the seller knew them not to be, it was held that the more passive acquiescence of the seller in the self-deception of the buyer did not entitle the latter to avoid the contract, and that there was no legal obligation on the seller to inform the buyer that he was under a mistake not induced by the act of the seller, and that there was no common understanding that the sale was for old oats (k). But it was said (I) by Chief Justice Cockburn " that if the buyer had said anything which showed that he was not acting on his own inspection and judgment, but assumed as the foundation of the contract that the oats were old, the silence of the seller as a means of misleading him might have amounted to a fraudulent concealment, such as would have entitled the buyer to avoid the contract." Where, however, on a sale of goods by sample, the pur- chaser is aware that the vendor is under a mistake as to the sample he was offering, the vendor would be entitled to say (t) Benjamin on Sale, 4th ed., 392; Q. B. 597; supra. (k) Smith v. Hughes, L. R. 6. (I) Ibid. MISTAKE OF FACT. 5 1 7 that he had not intended to enter into the contracl by which the purchaser sought to bind him (in). When one of the parties to a transaction is aware of a mistake of the other in a matter materially inducing it, relief may be had in eqnity even though no fiduciary relation appear to subsist between the parties, where under the special circum- stances of the case, it appears inequitable that the one party should hold the other to the engagement (//). Relief accord- ingly was given where an instrument had been delivered up under the ignorance of one party and with the knowledge ot the other as to a fact upon which the rights attached (o). Where by mistake a contract in writing fails to express the real meaning of the parties, the party interested in having the real agreement adhered to will have a good defence to specific performance if he can show that the written contract does m>i represent the real agreement even though the contract is of a kind required by law to be in writing (//). On the other hand. a party cannot, where the contract is required by law to be in writing, come forward as plaintiff to claim performance of the real agreement which is not completely expressed by the written contract (q). Where the printed particulars, conditions and annexed form Mistake in of contract were prepared for a sale on October 17 which was agreement. postponed to November 18, but by inadvertence the original date though altered in the particulars remained in the con- ditions and form of contract; it was held that there was do contract within the Statute of Frauds, nor, sc ruble, any consensus ad idem to suppori an action by the vendor foi specific performance (■/■). If the mistake is in the expression of the agreement, one of Mistake in .... the expn the parties cannot in equity hold the other bound to an expres- f the agree ment. (m) Ibid., per Hannen, J. (n) East India Co. v. Donald, 9 Ves. -275. See Ward v. Wallis, L900, I Q. B 075; 69 D. J. Q. B. 423. (o) Ibid. (p) Watson v. Marston, 1 D. M. & G. 230, 240; L02 B. R. LOO. (q) Post, p. 626. r) Van Praagh v. Everidge, L908, I Ch. 184; 72 L. J. Ch. 260. 518 MISTAKE OF FACT. Mistake caused by misrepresen- tation. sion of intention which he knew to be not in accordance with his real intention (s). If the mistake of the one party in expressing the agreement be known to the other party at the time, it may be available even at common law in avoidance of the apparent contract, so long as the evidence remains open and is not excluded by a written contract, for, as a general rule, a party cannot hold the other to an expression of terms which he knows at the time are agreed to under a mistake and not in accordance with the real intention. The doctrine has been stated as follows in Smith v. Hughes (t) : " The promisor is not bound to fulfil a promise in a sense in which the promisee knew at the time the promisor did not intend it ; and in considering the question in what sense a promisee is entitled to enforce the promise, it matters not in what way the knowledge of the meaning in which the promisor made it is brought to the mind of the promisee, whether by express words, or by conduct, or by previous dealings, or by other circumstances. If by any means he knows that there was no real agreement between him and the promisor, he is not entitled to insist that the promise shall be fulfilled in a sense to which the mind of the promisor did not assent." If the other party to the contract has caused the mistake, different considerations arise according to the circumstances of the case. If he has caused the mistake by misrepresentation intentionally and for the purpose of inducing the contract, it is a fraud, and the contract may be avoided on that ground (u). In Torrance v. Bolton (x), it was held that where a bidder at an auction was misled by the particulars advertised, and being deaf did not hear the conditions read out at the sale in which the property was stated to be subject to mortgages, he was not bound by the contract made by mistake under such misleading particulars, which had induced him to belieA^e he is) Garrard v. Frankel, 30 Beav. 445; 31 L. J. Ch. 604; 132 R. R. 352; Harris v. Pepperell, 5 Eq. 1. These cases, however, can only be supported on the ground of fraud; May v. Piatt, 1900, 1 Ch. 616; 69 L. J. Ch. 357. (t) L. R. 6 Q. B. p. 610; 40 L. J. Q. B. 221. (u) Ante, pp. 18, 27. (a:) L. R. 8 Ch. 118; 42 L. J. Ch. 177. MISTAKE OF FACT. 519 was buying the absolute reversion of the freehold and not an equity of redemption. No fraud was shown, but the Court said that the description was "improper." and thai a pur- chaser is not bound to look at the conditions to correcl a statement in the particulars (y). So, also, in Andrt w v. Aitken (z), when a vendor by his assent to the assumption of the purchaser that the property, the subject of the contract, was not subject to any restrictive agreement, whereas in fad it was so subject, the transaction was set aside on the ground of mistake induced by the vendor. Where owing to a mistake induced by a mortgagor the deeds as framed did not express the true bargain between the parties, which was that the mortgagee should have a first mortgage, it was held that the deeds could be rectified (a). If he has caused the mistake unintentionally, and with an Mistake honest belief in the truth of his representation, the contract tentionally. is in general absolute, and independent of any mistake or erroneous supposition respecting the qualities and accidents of the article, if the specific article be accurately identified in substance, and be not so different in substance from what it was represented to be as to constitute a failure of consideration (b). For example, where new shares were offered by a company and accepted, under the supposition that the company had obtained a contract that required an extension of their busi- ness, and in fact the supposed contract proved to be invalid, it was held that the contract to take the shares was absolute and not conditional upon the validity of the supposed contract, for that the mistake did not affect the substance or validity of the shares actually contracted for and accepted, nor did it constitute a failure of consideration (c). But where a person obtains a contract or other advantage (ij) Sec Blaiberg v. Keeves, 1906, 2 Ch. 175; 75 L. J. Ch. 164. tz) 22 C. 1). 218; 51 L. J. Ch. 784; Re White and Smith, L896, 1 Oh. 687; 65 L. •). Ch. 481; ante, p. 274. (a) Whiteley v. Delaney, L914, A. C. L82; 88 L. J. Ch. 849. (b) Ante, pp. II I I L8. (c) Kennedy v. Panama, dtc, Co., L. R. 2 Q. B. 587; 86 b. J. Q. B. 260; mile, p. 1 13. 520 MISTAKE OF FACT. No specific performance at suit of party who has caused the mistake. by mistake or misstatements innocently made, lie cannot retain the advantages he has gained when he discovers his mistake. If he does so his innocent misstatement becomes from that moment a deliberate misrepresentation, or in other words fraud (d). If a party to the contract has caused the mistake of the other party to the contract by negligence of himself or his agent, or in any manner for which he may be responsible, although unintentionally and without any fraudulent intention, he cannot have specific performance (e). Where, for example, on a sale by auction the plan annexed to the particulars of the property showed a shrubbery on the western boundary, and the defendant, going to inspect the property before the sale with the plan in his hand, found on the western side a belt of shrubs with an iron fence outside enclosing three ornamental trees, and he then bought the property, believing that the fence was the boundary, but the real boundary was a line of shrubs within the shrubbery and did not enclose the trees, the Court held the mistake was increased at least by crassa negligentia on the part of the vendor, and dismissed the bill for specific performance (/). So, also, where land was put up for sale according to a plan annexed to the particulars of sale and subject to a condition that no public house should be built upon the estate; and a purchaser bought, supposing the plan to represent the whole estate, but it omitted to point out a plot reserved by the vendor for the building of a public house ; it was held that as the plan contributed to the mistake of the purchaser, the vendor must either admit the restrictive condition to extend to the plot reserved, or must have his action for specific performance dismissed, and in either case must pay the costs of the purchaser (g). Nor will specific performance be enforced against a purchaser where the con- Id) Redgrave v. Hurd, 20 C. D. 1, 12; 51 L. J. Ch. 113; Scott v. Coulson, 1903, 2 Ch. 249; 72 L. J. Ch. 600; and see Re Glubb, 1900, 1 Ch. 354; 69 L. J. Ch. 278. (e) Stewart v. Kennedy, 15 App. Ca. p. 105. (/) Denny v. Hancock, 6 Ch. 1; 40 L. J. Ch. 193. (g) Bascomb v. Beckwith, 8 Eq. 100; 38 L. J. Ch. 536. See Andrew v. Aitken, supra. MISTAKE OF FACT. 521 ditions of sale are misleading and erroneous (/<), even though it be the result of a perfectly innocent oversight on the pari of the vendor or his solicitors (/). A special condition limiting the time for which title is to be shown must be perfectly fair and explicit (k). Payment of interest by a vendor or purchase] often depends Mistake -, -lfinxi 11 coming upon whether the party is in default or wilful default, and the Nv iif u l question arises whether there can be default or wilful default where there is an honest mistake. It seems to be now settled that there is " default " whenever there is a breach of duly towards the other party, however honestly and reasonably lie may have acted; but it is not "wilful default" until a mistake honestly and reasonably made is persisted in after attention has been called to it. The rule is the same whether the mistake relates to title or evidence of title or conveyance. A purchaser who refuses to complete on the ground that the title is bad when it is perfectly good is guilty of " default," though he may have a judgment of the Court of first instance in his favour (/). By the general rule of the common law, if there be a con- Parol evi- 1/0 ... ... dence adiiii*- tract which has been reduced into writing, verbal evidence is sible in equity not allowed to be given of what passed between the parties, m j 8ta k e . either before the written instrument was made, or during the time it was in a state of preparation, so as to add or subtract from, or in any manner to vary or qualify the written emit ract. A Court of equity, however, admits such evidence when the purpose of the action is to rectify or rescind an agreement (///), or to show that a document purporting to be a contract is in fact no contract at all (n), or that the contract has been (It) Jones v. Rimmer, 11 C. D. 592, per Jesse], M.K. ; 49 L. J. Ch. 775; Hey wood v. Mallalieu, 25 ('. D. 357; 53 J,. J. Ch. 392. (i) Broad v. Munton, 12 C. D. p. 119; is L. .1. Ch. 837; qu. whether tins would In' :\ ground for rescission, ibid. p. 142; Nottingham' Brick Co, v. Butler, 10 Q. B. D. 77h: r>r> I,. .J. Q. B. 280. (ft) 24 C. D. p. 22. (I) London Corporation ami Tubbs, 1894, 2 Ch. 521: V.<. .! . Ch. 240; Bayley-Worthington «n Taunt. 707; 15 R. R. 624 (o) WaulevereT v. Hawxby, 2 Will. Sannd. 78; Hi'' word mighl !"■ rejected urplu age ; ibid. /,, ll // on v. Wilson, 5 H. I.. C. 67, per Lord Si. Leonards; •-'•'! I.. •' . Ch 697; 101 R. K. 25. (c) Fitch v. Jones, r, E. & B. 23K : >\ I.. .1. Q. I'.. 298; L08 R. R 165; l.«>nh \. I'.ruce, 45 L.J. Q. I'.. 538. (d) Scholefield v. Lockwood, 32 Beav. 136; L88 K. R. 805. 523 524 MISTAKE OF FACT. word " male ' as a misdescription and construed the settle- ment on that footing without rectification (e). So, also, where in a submission to arbitration the words " shall appoint ' were obviously omitted in giving time to enlarge the time for the award, these words were read as supplied (/) ; and in a marriage settlement of real estate, in which the word " heirs ' had been obviously omitted throughout, the deed was rectified by supplying that word wherever it was necessary for the limitation of the intended estates (g). So, also, an omitted life estate (h), and a clause giving to children of one daughter an interest similar to that given to children of other daughters (?•), has been supplied by reference to the context. Where it is manifest upon the face of an instrument that one name has been written in mistake for another, the Court will read the instrument with the mistake corrected Ck). So, where the name of the grantor was omitted in the operative part of a deed, or where the name of the obligee was omitted in a bond, it was supplied from the other parts of the instrument (I). So the Court may presume from the mere inspection of a settlement that words which, though they make sense, give a result which is unreasonable and repugnant to the general intention and to the usual frame of such instruments, were inserted by mistake (ra). However general the words of a covenant may be, if stand- ing alone, yet if, from other covenants in the same deed, it is plainly and irresistibly to be inferred that the party could not have intended to use the words in the general sense which (e) Re Alexander's Settlement, 1910, 2 Ch. 225; 79 L. J. Ch. 656. (/) Kirk v. Unwin, 20 L. J. Ex. 345. (g) Bird's Trust, 3 C. D. 214. (h) Greenwood v. Greenwood, 5 C. D. 955; 47 L. J. Ch. 298; cf. Rake v. Hooper, 83 L. T. 669. (i) Redfern v. Bryning, 6 C. D. 133; 47 L. J. Ch. 17. See Hood v. Mac- kinnon, 1909, 1 Ch. 476; 78 L. J. Ch. 300. (k) Wilson v. Wilson, 5 H. L. C. 66, per Lord St. Leonards, supra. (I) Lord Say and Seles Case, 10 Mod. 46; Dent v. Clayton, 33 L. J. Ch. 503. (m) De la Touche's Settlement, 10 Eq. 603; 40 L. J. Ch. 85; Re Alexander's Settlement, supra. MISTAKE OF FACT. 525 thev import, the Court will limit the operation of the general words (n). Similarly the effect of general words of conveyance is con- fined to property of the same kind with that which ha- been specifically described and conveyed [<>). Where there is a specific description of a particular kind of property followed bv words which prima facie would be sufficient to include other property of the same kind, it has been held that those words do not include the property not specifically described on the principle expressio unius est exclusio alterius {/>). A lease after covenants of the lessee to pay rent, and not to assign without licence, provided for a right of re-entry by the lessor, if any of the covenants "hereinafter contained " on the part of the lessee should be broken. There were no covenants thereinafter contained on the part of the lessee: the Court in construing the lease refused to reject the words " hereinafter contained ' (q). Upon this principle, where an obvious mistake appears in applying the contract to the facts, the instrument will be con- strued and applied according to the manifest intention of the parties; as where an agreement dated October 24, referred to a bill of exchange "payable at three months from this date," and it appeared that the only bill applicable was dated October 25, it was held thai the bill was sufficiently identified and referred to (/•). So where a lease was executed for a term stated in the habendum to be for ninety-four years, and the reddendum stated the rent to be payable " during the said term of ninety- one years hereby demised,'' and the counterpart of the lease stated the term in the habendum to be ninety-one years: the (n) Hesse v. Stevenson, 3 B. & P. 574; it K. R. 880. (o) Rooke v. Kensington, 2 K. & J. 771; 25 L. J. Ch. 795; LlO B B 156; Jennet v. Jenner, L. K. 1 Eq. 361 ; 30 L. J. ( h. 201 ; 129 R. R. 110. p) Denn v. WUford, 8 Dow. & Ry. 549; I L. •>. K. B. 295. (q) Doe v. Godwin, I M. >v S. 265; L6 B R. 163. Though it was plain there was a mistake Borne where, it was aol certain whether it was in the in tion of these words, or in th t the ub equenl covenants. Ibid., oei Bay ley, J. (r) Way v. Hearn, 13 C. B. (N.S.i 292; 32 I. J. C. P. 84; L84 R. R 588. 526 MISTAKE OF FACT. No specific performance of an agreement incorrectly drawn up except on terms. Court construed the documents together as intending a lease for ninety-one years only, so as to entitle the lessor to recover possession against an assignee of the lessee, who claimed to hold under the lease for a term of ninety-four years (s). So, also, in construing an Act of Parliament, a word that makes a passage unintelligible may be altogether struck out (f). The defence that the contract sought to be enforced is not in conformity with the real agreement between the parties, but has been drawn up incorrectly by mistake, may be set up by parol evidence in answer to an action for specific perform- ance. If the defendant can show that the instrument does not represent the real agreement between the parties, the plaintiff cannot have specific performance, unless he consent to the variation as set up by the defendant. If the plaintiff will not accept specific performance with the variation as set up and proved by the defendant, his action will be dis- missed (u) ; and specific performance of the agreement, with the variation proved, may be decreed at the instance of the defendant without a cross action (w). Although a defendant may show by parol that the written instrument does not represent the contract between the parties, a plaintiff cannot have a decree for specific performance of a written contract with a variation upon parol evidence, for the Statute of Frauds is a bar to the relief (#). Parol evidence is admissible on the part of the party resisting specific performance, not to vary the terms of the agreement, but to show that it is unconscientious in the plaintiff to seek specific performance, (s) Burchell v. Clarke, 2 C. P. D. 88; 46 L. J. C. P. 115. (t) Stone v. Yeovil, 1 C. P. D. 691; 46 L. J. C. P. 137. (u) Joynes v. Statham, 3 Atk. 388; Clarke v. Grant, 14 Ves. 519; 9 K. R. 336; Ramsbottom v. Gosden, 1 V. & B. 165 ; 12 R. R. 207 ; Martin v. Pycroft, 2 D. M. & G. 785 ; 22 L. J. Ch. 94 ; Smith v. Wheatcroft , 9 C. D. 223 ; 47 L. J. Ch. 745 ; but see post, p. 530. (w) Fife v. Clayton, 13 Ves. 546; 9 R. R. 220. I/) Woollam v. Hearn, 7 Ves. 211; 6 R, R. 113; Clinan v. Cooke, 1 Sch. & Lef . 22, 39 ; 9 R. R. 3 : Davies v. Fitton, 2 D. & W. 225 ; 90 R. R. 885 ; Manser v. Back, 6 Ha. 443, 447; 77 R. R. 187; May v. Piatt, 1900, 1 Ch. 616; 69 L. J. Ch. 357; Thompson v. Hickman, 1907, 1 Ch. 550: 76 L. J. Ch. 254; but see Olley v. Fisher, infra. MISTAKE OF FACT. Ol'T without submitting to the variation set up and proved by the other (y). But since the passing of the Judicature Act, 1873, the Court has, at the suit of a plaintiff, rectified an agreement in pan performed to which the statute was not and could not be pleaded, and decreed specific performance thereof as recti- fied (z). Hence the decision in Woollam v. Hearn would no longer be followed, at least in cases in which the Statute of Frauds does not create a bar (a). A Court of Equity will not enforce in favour of a volunteer a title based upon deeds framed under a common mistake (6). If parties enter into an agreement, but there is an error in Rectification the reduction of the agreement into writing, so that the written ' " lsll """' ,1 t & ' on tlic ground instrument fails through some mistake of the draftsman, of mistake. either in matter of law (c) or of fact, to represent the real agreement of the parties, or omits or contains terms or stipula- tions contrary to the common intention of the parties, a Court of Equity will correct and reform the instrument, so as to make it conformable to the real intent of the parties (<7). So, also, if a conveyance, executed for the purpose of giving effect to and executing an agreement, should by mistake give the pur- chaser less than the agreement entitled him to, he may call on the Court to rectify the defective conveyance, and give him all that the agreement comprehended (e). So where a con- veyance is not in accord with the written contract it may be rectified on the ground of common mistake (/). But where a deed is in conformity with the written contract, the Court will (y) Clowes v. Higginson, 1 V. k W. 524; L2 R. R. 284. I Olley'v. Fisher, 34 C. D. 367; 56 I,. .1. Ch. 208; Shrewsbury v. Shaw, 89 L. T. Jo. 274 ; but see 1900, 1 Ch. at p. 022. (a) Fry, :i5:i. (b) Whiteley v. Delaneij, L914, A. < . L32; 83 I.. .1. Ch. 349. (c) Wake v. Harm,,, 1 H. & C. 202; :si D. .1. Ex. 15] ; L30 l;. R. 161. (d) Ishhurst v. Mill, 7 Ha. 502; 82 l;. II. 214; Murray v. Parker, L9 Bea\ 308; L05 I;. R. L53; Druiff v. Parker, 5 Eq. L37; :t7 I.. .1. ch. 241; /'<■ / I.. -I. Ch. 307; Re Bird's Trust. .", <\ I>. 214; Welntan \. II .. L6 C. I' 570; \'.i I-. .). Ch. 736. (e) \Lonro \. Taylor, 3 Mac. & c. 718; 2\ I.. .1. Ch. 525; B5 R l;. I'M. Leuhj v. Hillas, 2 It. >^ .1. L20; 27 I.- -I. Ch. 584; L19 R. I; 16; II ln'r \. White, L5 Eq. 249; \2 I.. .1. Ch. 288. See Ellis v. Hills, ''.7 I,. T. 287. {f) Beale v. Kyte, L907, l Ch, 564; 76 I-. •! . Ch. 294. 528 MISTAKE OF FACT. not rectify the deed on the ground that due effect has not been given to the intention of the parties (g). Where a deed showed on the face of it the intention of the parties, the Court rectified the mistake by introducing technical words of limitation so as to confer an estate tail (h). The principle upon which the Court acts in correcting instruments, is, that the parties are to be placed in the same situation as they would have stood in, if the error to be corrected had not been committed. When a deed as drawn up goes beyond the instructions and intention of the parties, it will be rectified (I). The fact that a provision inserted in a settlement (e.g., a restraint on inticipation of the income of the wife's property) is in itself usual, and is generally considered proper, is not a ground for the Court to refuse to strike it out where its insertion is shown to have been contrary to the desire of the parties and the instructions given by them (A). Relief upon a defective instrument is the more readily afforded, when the party to be charged thereon is himself the person who prepared or perfected it (/). The fact, however, that the defective instrument may have been drawn up by the party seeking relief is immaterial, if a proper case be made out (>n). It is, moreover, immaterial to the exercise of the jurisdiction that the instrument sought to be rectified was made under an order of the Court (n). But an agree- ment cannot be rectified after it has been adjudicated upon by a competent Court and performed under the direction of that Court (o). The Fines and Recoveries Act, 1833, s. 47, does not preclude the Court from exercising its jurisdiction to rectify an error in a disentailing deed which prevents the deed from being the (g) Thompson v. Hickman, 1907, 1 Ch. 550; 76 L. J. Ch. 254; Matear v. Lyne, 1918, Vict. L. E. 629. See Ellis v. Hills, 67 L. T. 287. (h) Fitzgerald v. F., 1902, 1 Ir. R. 477; Re Alexander's Settlements, ante, p. 524. (i) Walker v. Armstrong, 8 D. M. & G. 544 ; 25 L. J. Ch. 738 ; 114 R. R. 234; Tucker v. Bennett, 38 C. D. 1, 14; 57 L. J. Ch. 507. (k) Torre v. Torre. 1 Sm. & G. 518 ; 96 R. R. 464. (1) Ex p. Wright, 19 Yes. 257; Collett v. Morrison, 9 Ha. 176; 21 L. J. Ch. 878; 89 R. R. 374. (m) Ball v. Stone, 1 Sim. & St. 218; 1 L. J. Ch. 214; 24 R, R. 170. (n) Smith v. Iliffe, 20 Eq. 666 ; 44 L. J. Ch. 755. (o) Caird v. Moss, 33 C. D. 22; 55 L. J. Ch. 854. MUTUAL MISTAKE. 529 deed of the parties, even though all the parties are dead (p); and the jurisdiction to rectify a resettlement is noi excluded by reason of its being enrolled under the Act (g |, A person, however, who seeks to rectify an instrument, on the ground of mistake, must be able to prove noi only thai there has been a mistake, but must be able to show exactly and precisely the form to which the deed ought to be brought, in order that it may be set right, according to what was really intended, and must be able to establish in the clearesl and most satisfactory manner, that the alleged intention of the parties to which he desires to make it conformable, continued concurrently in the minds of all parties down to the time of its execution. The evidence must be such as to leave no fair and reasonable doubt upon the mind that the devd does nol embody the final intention of the parties (r). If, upon a personal agreement for a life assurance, a policy be drawn tip by the insurance office in a form which differs from the terms of the agreement, and varies the rights of the parties assured, equity will interfere and deal with the case on the footing oi the agreement, and not on that of the policy (*). If it appear that there was a change of intention, by which the circum- stance that the instrument does not follow the terms of the original contract might be explained, there can be no rectifi- cation (t) ; so, also, if it appear that the parties took different views of what was intended, there would be no contract between them which could be carried into effect by rectifying the instrument (it). There can be no rectification if the mistake be not mutual or common to all parties to the instrument (/>■). (p) Meeking v. Meeking, 1917, I Ch. 77: 86 L. J. Ch. 97. (q) Hall Dare v. Hall Dare. 31 C. D. 251 ; 56 L. J. Ch. 154 (r) Beaumont v. Bramley, T. dt H. 41, 50; Rooke v. Kensington, 2 K. & -I . 764; 25 L. J. Ch. 795; L10 R. R. 456; Fowler v. Fowler, 4 l>. & .1. 265; Selh v. Sells, 1 Dr. & 8m. 42; 29 D. J. Ch. 500; L27 R. R. 20; M'Kenzie v. Coulson, 8Eq. 375; Falck v. Williams, 1900, A. C. 176; 29 l>. J. P. C. 17: Re Hare and O'More, 1901, 1 Ch. 93; 70 I,. .1. Ch. 15; Rake v. Hooper, 83 L. T. 6l (*) Collett v. Morrison, 9 II... 162; 2\ h. .1. Ch. 778; 89 I; R. 874. (t) Breadalbane v. ( hando, . 2 M . & C. 740; 46 R. It. L72. (a) Bentley v. Mackay, I D. P. & J. 279; L85 R. R. L46 (u-) Rooke v. Kensington, supra; Fowler v. Fowler, l l» >v J. 265; Selh v. 8ells, ] Dr. & Sin. 42; 29 L. J. Ch. 500; L27 R. R. 20; Re Walsh, L6 \Y. I; 1117: Bradford v. Romney, 30 Beav. 481. K.F. -H 530 MUTUAL MISTAKE. or if one of the parties knew of the mistake at the time he executed the deed. Where one party only has been under a mistake, while the other, without fraud, knew what the character of the deed was, and intended that it should be, the Court cannot interfere, for otherwise it would be forcing on the latter a contract he never entered into, or depriving him of a benefit he had bond fide acquired by an executed deed. Rectification can only be had where both parties have executed an instrument under a common mistake, and have done what neither of them intended (#). A mistake on one side may be a ground for rescinding, but not for correcting or rectifying an instrument (y). There can be no rectification where there is not a prior actual contract by which to rectify the written instrument. So a policy cannot be rectified by the slip because the slip does not constitute a contract, and there is no contract till the policy is signed and the premium paid (z). Nor can there be rectification if one of the contracting parties had never heard of that which is said to be the real agreement. So the Court refused to rectify a policy according to the intention of the insured as there was no mistake on the part of the company in granting it (a). The mistake of one party to a contract can never be a ground for compulsory rectification so as to impose on the second party the erroneous conception of the first (6). The mistake of the plaintiff alone may, however, where there is fraud, be a ground for putting the defendant to elect between having the transaction annulled altogether or submitting to the rectifica- (x) Eaton v. Bennett, 34 Beav. 196; 145 R. R. 476; Paget v. Marshall, 28 C. D. 261; 54 L. J. Ch. 575. (y) Mortimer v. Shortall. 2 Dr. & War. 372; 59 R. R. 730; Fotoler v. Fowler, 4 D. & J. 265; 124 R. R. 234; Re Walsh, 15 W. R. 1117; Paget v. Marshall, supra; Ellis v. Hills, 67 L. T. 287; May v. Piatt, 1900. 1 Ch. 616; 69 L. J. Ch. 357. (z) M'Kenzie v. Coulson, 8 Eq. 368. (a) Fowler v. Scottish Equitable Ins. Co., 28 L. J. Ch. 225. The Court, however, set aside the policy, and ordered a return of the premiums as having been paid by mistake. (b) Rooke v. Kensington, supra; Thompson v. Whitmore, 1 J. & H. 268; 128 R, R. 353; Bradford v. Rornney, 30 Beav. 431. MUTUAL MISTAKE. 531 tiou of the deed in accordance with the plaintiff's intention (< but this can only be done where there is fraud or conducl equivalent to fraud (d). In Harris v. Pepperell (e), Lord Romilly, M.1C. said thai the rule that the Court will not rectify an instrument on the ground of mistake, except the mistake be mutual, is liable to an exception in a case between vendor and purchaser. Hut the distinction is not supported by the authorities, and does not seem sound. Garrard v. Frankel (/), and Harris v. Pepperell (g), if correctly determined, might possibly be sup- ported on the principle that the Court in these cases mere I \ abstained from setting the agreement aside on the consent of the defendant to submit to the variation alleged by the plain- tiff (/*). But it seems that Harris v. Pepperell, Garrard v. Frankel, and Paget v. Marshall (/), can only be supported on the ground of fraud; and in the absence of fraud vendors or purchasers of land cannot be put to their election to rescind or accept rectification on the ground of unilateral mistake (/. I. Although, however, the Court will not rectify a transaction between two or more parties, unless on the ground of mutual mistake, a deed poll by way of appointment may be rectified on the ground of mistake, if the mistake is clearly proved on the part of the person making it (/). Parol evidence is admissible on the application to rectify an instrument to show what the intention of the parties really was {m), even although the contract be one required by the (c) Garrard v. Frankel, infra; Harris v. Pepperell, infra; Bloomer v. Spilth , infra ; Paget v. Marshall, infra. (d) May v. Piatt, 1900, 1 Ch. 616; 69 L. J. Cli. 357. (e) 5 Eq. 1 (/) 30 Bear. 451; 31 L. J. Ch. 601; 132 R. R. 352. (g) 5 Eq. 1. (h) See Bloomer v. Spittle, 13 Eq. 429; 11 I.. .). Ch. 369. (i) 28 C. D 261 : 51 1;. J. Ch. 575. !/.•) May v. Piatt, L900, 1 Ch. 616; 69 L. J. Ch. 357. (I) Wright v. Goff, 22 Beav. 214; 25 L. J. Ch. 808; ill R. R. 380; Killick v, Cray. 46 L. T. 583; Bonhote v. Henderson, L895, 2 Ch. 202; II I «f Avaloi (Lady) v. Mackinnon, L909, 1 Ch. 176; 78 D. J. Ch. 800. (m) Alexander v. Crosbie, 1.1 & Gh temp. Bag L45 ; 16 R. R L88; Vortimei v. Shortall, '2 Dr. a- War. 363; 59 R. R. 780; Barrou \. Barrow, Ifi I ■■ J82; 104 R. R. 514. 532 MUTUAL MISTAKE. Statute of Frauds to be proved by writing (n), and can be admitted to prove rescission of such a contract (o). Mistake like fraud must be deemed an exception to the statute (p). In most, if not in all, the cases in which the Court has reformed an instrument, there has been something beyond the parol evidence, such, for instance, as a rough draft of the agree- ment, written instructions for preparing it or the like; but the Court will act where the mistake is clearly established by parol evidence, even though there is nothing in writing to which the parol evidence may attach (q). If, however, there is not anything in writing beyond the ]>arol evidence to go by, and the defendant by his answer denies the case set up by the plaintiff, the plaintiff will often be without a remedy, though even in such cases the parol evidence may be so conclusive as to justify the Court in granting the relief prayed (/•). The Court may, though it will hesitate to do so, rectify a settlement on the ground of mistake upon the evidence of the plaintiff alone if no other evidence can be obtained (s). But the evidence must be clear and distinct that there was some different intention at the time the deed was executed (t). If the original agreement is of doubtful construction, and the conveyance is definite and unequivocal, it is not easy to avoid the conclusion that the latter may be the best evidence of the terms of the actual agreement (u), but if ambiguous, parol evidence may be used to express it (a;). (n) Re Boulter, 4 C. D. 241; 46 L. J. B. 11; Johnson v. Bragge, 1901, 1 Ch. 28; 70 L. J. Ch. 41. (o) Vezey v. Rashleigh, 1904, 1 Ch. 634; 73 L. J. Ch. 422. (p) Fry Spec. Perf. p. 351; Johnson v. Bragge, supra. (q) Alexander v. Crosbie, supra; Mortimer v. Shortall, supra; Welman v. Welman, 15 C. D. 570; 49 L. J. Ch. 736; Cook v. Fearn, 48 L. J. Ch. 63; Johnson v. Bragge, supra. (r) Ibid.; Beaumont v. Bramley, T. & E. 52; Fowler v. Fowler, 4 D. & J. 273; 124 E. E. 234; Bentley v. Mackay, 4 D. F. & J. 279; 135 E. E. 145; De la Touches Settlement, 10 Eq. 600; 40 L. J. Ch. 85; Bloomer v. Spittle, 13 Eq. 430;41L. J. Ch. 369. (s) Hartley v. Pearson, 13 C. D. 545 ; Bonhote v. Henderson, 1895, 2 Ch. 202; Hood of Avalon (Lady) v. Mackinuon, 1909, 1 Ch. 476; 78 L. J. Ch. 300. (t) Tucker v. Bennett, 38 C. D. 1, 15; 57 L. J. Ch. 507; and see fie Daniels Settlement, 1 C. D. 375; where a provision was omitted by the engrossing clerk. («) Humphries v. Home, 3 Ha, 277 ; 64 E, E. 293. (x) Murray v. Parker, 19 Beav. 305, 308; 105 E. E. 153. MT/TUAL MISTAKE. 533 Where a document has been signed as an agreement undei a common mistake as to it- contents, and it appears that no real agreement was come to between the parties according t<> which it might be rectified, the Court will sei it aside (y), oi will at least refuse specific performance Courts of equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pur- suance of the terms of contracts. Bui it is always necessary for a plaintiff to show that there was an actual concluded contract antecedent to the instrument which is sought to be rectified, and that such contract is inaccurately represented in the instrument. It is impossible for the Court to rescind or alter a contract with reference to the terms of the negotia- tion which preceded it (a). There can be no rectification, it one of the contracting parties never heard of that which is said to be the real agreement (l>). Where the instrument sought to be rectified on the ground of mistake was a marriage settlement the doctrine in the older cases was that where the articles and settlement were both before marriage, the Court would not interfere unl< the settlement was expressed to be made in pursuance of the articles, for, without such a recital, the Court supposed that the parties had altered their intentions as regarded the terms of the contract (c). But a post-nuptial settlement would always be reformed in accordance with ante-nuptial articles {<■). The later authorities have modified this as follows, so fat as regards ante-nuptial settlements: (I) When the settlement purports to be in pursuance of articles and there is a variance, the variance will he presumed to have arisen from mistake. (2) When the settlement does not refer to articles it will not be presumed, but it may he proved thai the settlement was meant to be in conformity with the articles, and that any variance arose from mistake. In the first case ( V ) Calverley v. Williams, I Ves. Jr. 210; 1 R. R. lis; Prict \. Ley, 1 Gifl 235, aff. 11 W. R. 175; HI R. It. L86. (■/.) Douglas v. Baynes, L908, A. C. 477 ; 7h l,. .1. P. C. L8, (a) 8 Eq. :i7" ; . per Jameu, V.-C. \b) Fowler v. Scottish Equitable Life. Ass. 8oc, 28 L. J. Ch. 2 (c) Hold v. Hutchinson, infra. 534 MUTUAL MISTAKE. the Court will act on the presumption ; in the second on clear and satisfactory evidence of the mistake (d)._ A settlement may be rectified even against previous articles on clear and distinct evidence, evidence of departure from the real intention (e), but not on mere parol evidence uncon- tradicted because there was no one to contradict it (/). The intent rather than the literal words of the articles will be followed. Accordingly, where the limitations in a post- nuptial settlement purporting to be made in pursuance of articles may agree with the words of the articles, if it does not carry out their intent, the Court will reform it, and will, so far as is consistent with the articles, construe them so as to make such a settlement as is generally approved by the Court, and will supplement the articles accordingly (g). Where shares intended to be issued as fully paid up have been issued without registration of a contract, and the mistake was common to the directors and the allottee, the Court would rectify the register (h). So, also, where a transfer of certain shares was executed in which the shares were wrongly numbered by mistake, it was held that the transfer was substantially valid so as to render the transferee a shareholder, and that the numbers might afterwards be rectified (i). So, also, where a man purchased land of a building society under an arrangement that he should mortgage it to the society to secure the purchase-money, but the deeds were drawn and executed in mistake as representing an advance of money to a member with covenants to make all payments in respect of his shares, it was held on the liquidation of the society that he could not be charged as a member (d) Bold v. Hutchinson. 5 D. M. & G. 566, 568; 25 L. J. Ch. 598; King v. King-Harman, I. R. 7 Eq. 447 ; Johnson v. Bragge, 1901, 1 Ch. 28; 70 L. J. Ch. 41; Viditz v. O'Hagan, 1899, 2 Ch. 569; 68 L. J. Ch. 553. (e) Smith v. Ilifie, 20 Eq. 666 ; 44 L. J. Ch. 755 ; Hanley v. Pearson, 13 C. D. 545. (/) Tucker v. Bennett, 38 C. D. at p. 15; 57 L. J. Ch. 507. (g) Gogan v. Duffield, 2 C. D. 49; 45 L. J. Ch 307. See 1905, 1 Ir. R. at p. 471. (h) Buckley, 200; but see now Companies Act, 1908, s. 88. (*) Ind's Case, 7 Ch. 485; 41 L. J. Ch. 564; post, p. 543. MrTlAI. MISTAKE. under the deeds, but must be charged according to the real transaction (Jc). So, where a bill of exchange drawn in renewal id a forme] hill between an indorser, drawer, and indorsee had by mistake the name of the indorsee inserted in the place of the drawer, in which form the bill was accepted and indorsed to him, and in an action by the intended indorsee against the drawer, the latter relied in defence upon the apparent form of the bill, the Court entertained a bill for rectifying the instrument (/). So, also, where an agreement was made for the insurance of a ship beginning the risk ). Upon the same ground the Court will not reform a joint bond (k) Empson'a Case, '■> Bq. 597. (/) Druiff v. Parker, 5 Bq. Kit : :i" I,. .1 . < n, 243 (m) Motteux v. London iss. Co., 1 Ath 545. (n) Stephens v. lustralasian Ins. Co., L. R. 8 C. l'. L8; 12 I/. J. C. P. L2 (o) Bee Thorpe \ , Jackson, 2 Y. & I 558 (p) Sumner v. Powell, 2 Mer. 86; 16 R. R. L86; Kendall \ Hamilton, i A I 504; 48 L. J. C. P. 705. 536 MUTUAL MISTAKE. Cases in which there can be no rectification of an instru- ment. against a surety so as to make it several on the presumption of a mistake from the nature of the transaction (q), nor will it treat joint covenants in a lease to joint lessees as several (r). But there may be equitable grounds for treating the liability as several, as where through fraud or mistake the bond is made joint only (s). The equity for rectification on presumptive evidence is applied also to a mortgage by husband and wife of the wife's estate, which has limited the equity of redemption to the husband. If the instrument does not recite an intention to do more than make a mortgage, the presumption is that nothing more was intended; and the instrument will be reformed by restoring the equity of redemption to the wife (t). And, in like manner, it is held that if a lease be made by a tenant for life under a power created by a settle- ment, and a rent reserved to the lessor and his heirs, these words shall be interpreted by the prior title, and applied to the remainderman under the settlement, and not the heir of the lessor (it). The principle upon which the Court reforms and corrects an instrument on the ground of mistake will not apply in a case in which a matter has been completely overlooked on both sides; and the agreement is a substantial agreement which speaks in sufficiently clear terms for itself, and contains no reference to any other instrument or to any pre-existing relation (./), or in a case where the instrument is in accord- ance with the expressed intention of the parties, and has been prepared with full knowledge of their rights, but has failed only because the parties have been ill-advised as to the way of giving effect to their intention (y). Nor will the Court make a settlement conformable with what it is alleged it would (q) Other v. Iveson, 3 Drew. 177; 24 L. J. Ch. 654; 106 E. E. 307. (r) Clarke v. Bickers, 14 Sim. 639; 65 E. E. 657. (s) Simpson v. Vaughan, 2 Atk. 31, 33. See Rawstone v. Parr, 3 Euss. 539. (t) Jackson v. Innes, 1 Bligh, 104, 114; 20 E. E, 45; Clark v. Burgh, 2 Coll. 221; 14 L. J. Ch. 298; 70 E. E. 181; Davis v. Whitehead, 1894, 2 Ch. 133; 63 L. J. Ch. 471. (u) 1 Bligh, at p. 115. (x) Parker v. Taswell, 2 D. & J. 559; 27 L. J. Ch. 812 ; 119 E. E. 230 (y) Farr v. Sheriffe, 4 Ha. 513; 15 L. J. Ch. 89. MUTUAL MISTAKE. have been if all the material points had been present to the minds of the parties at the time they executed it No] will the Court, under the name of rectification, add to the agreement a term which had not been determined upon, <>i was not discussed between them. There can be no rectifica- tion of an agreement which is executed in accordance with the proposals (a), nor of a deed which is executed in pursuance of and in conformity with a previous agreement in writing (o). Nor can there be rectification, if it was by the intention oi the parties that the written instrument did not comprise all the terms of the actual agreement (r). An agreement will net be specifically performed with a parol variation, and on the other hand the Court will not decree specific performance without such variation if it is relied on as a defence (l I See Hilh v. Rowland, 4 D. M. & <;. 130; L02 R. R. L95. (a) Elwes v. Elwes, 3 D. P. >v J. 667;'130 R. R. 2 (h) Thompson v. Hickman, L907, I Ch. 550; 76 L. .1- Ch 254 (O Townshend v. Stangroom, 6 Ves. 332; 5 R. R. 312; Harbidge v. Wogan, 5 Ha. 258; L5 L. J. Ch. 283 : 71 R. R. 90; ante, p. 527. (d) Wo,,,! v. Searfh, '2 K. & J. at p. 12; L10 R. R. 88. (e) Wakev. Harrop, IE &C 202; 31 L.J. Ex. 451; 130 B R 161 (/) Sutherland v. Heathcote, L892, l Ch 175; 61 L.. J. Ch. 248; Worth Eastern Rhj. v. Hastings, L900, A. ('. 260; 69 L. J. Ch. 516. 538 MUTUAL MISTAKE. which they would have intended had they been better informed (g). So, also, where a party making- a voluntary deed supposes that he will have a power of subsequent revoca- tion, though no such power is reserved, the deed cannot afterwards be rectified by inserting the power, the evidence merely showing that the power had been omitted under the erroneous belief that it was not necessary to insert it, not that the power was intended to be inserted, but was left out by mistake (h). So, too, where a voluntary settlement was made to provide for the plaintiffs wife and children in case of bankruptcy, and a life interest in favour of the plaintiff was intentionally omitted, the Court refused to rectify it (/). Nor can there be rectification, although both parties may have been under a mistake, if the mistake be in respect of a matter materially inducing the agreement (&). Rectification It is not necessary that a person claiming to have a settle- deed! l nient rectified should be or should represent a party to the original contract, or should be within the consideration of it (/). But the Court will not rectify a voluntary deed unless all the parties assent. If any object, the deed must take its chance as it stands (m), the reason being that an agree- ment for the execution of a voluntary deed cannot be enforced (?i). A voluntary deed cannot be reformed, except with the con- sent of the settlor, if it fails to carry out the intention of the parties. If the case be that he has made a mistake, no amount of evidence, however conclusive, proving that he made a mis- take, will justify the Court in compelling him to introduce a clause into the deed, which he does not choose to introduce (g) Irnham v. Child, 1 Bro. C. C. 92 ; Townsliend v. Stangroom, 6 Ves. 328; 5 R. R. 312. (h) Worrall v. Jacob, 3 Mer. 270. (i) Rake v. Hooper, 83 L. T. 669. (k) Carpmael v. Powis, 10 Beav. 36: 16 L. J. Ch. 31; post, p. 542. (I) Thompson v. Whitmore, 1 J. & H. 273; 128 R, R. 353; Weir v. Van Trornp, 16 T. L. R. 531. (m) Broun v. Kennedy, 33 Beav. 133, 147; 33 L. J. Ch. 342; 140 R. R. 47. But the Court has power to set aside a voluntary deed in part only at the suit of the grantor, if he is content that the rest should stand; Turner v. Collins, 7 Ch. 342 ; 41 L. J. Ch. 558. (n) Lister v. Hodgson, 4 Eq. at p. 34. MUTUAL MISTAKE. -^39 although at the time of execution lie might have wished to have done so (o). On the other hand, the Court will exercise caution in rectifying a voluntary settlement upon the evidence of the settlor alone (p). But if a man executes a voluntary deed declaring certain trusts and happens to die, and it is proved from the instructions or otherwise that the deed was not prepared in the exact manner which he intended, the deed may be reformed and those particular provisions necessary to carry his intention into effect may be introduced (q). So ;il so a voluntary deed may be set aside after the death of both donor and donee, if there is evidence to show that the donor complained of the deed and took steps to annul it (/•). So also a voluntary deed may be set aside if it fail in substance to carry out the intention of the settlor (s). But mistakes which may be a ground for rectification may not be important and serious enough to enable a donor to set aside the whole deed as failing in substance to carry out his intention (t). The Court refused to rectify a post-nuptial settlement on the settlor's wife and children where the object of the settlement was to provide for the plaintiff's wife and children in case of bankruptcy, and where the life interest in favour of the plaintiff was intentionally omitted (u). Lapse of time may be a bar to the rectification of an instru- Lapse of time r J a bar to recti- ment (a). The time runs not from the date of the conveyance rication. but from the date when the party seeking relief first became aware of the mistake (y). But in particular cases, if the mistake is clearly made out to the satisfaction of the Court, the lapse of a long period will not be a bar. In Wolterbeck v. (o) Ibid. (p) Bonhote v. Henderson, 1895, 2 Ch. 742;, 1895, 2 Ch. 202, ante, p. 532. (q) Lister v. Hodgson, 4 Eq. 34; but see Henry v. Armstrong, 18 C. D. (508; Tucker \. Bennett, 38 C. D. 1; 57 L. J. Ch. 507; ante, pp. 210, 418. lr) Philippson v. Kerry. 32 Beav. 028; 138 R. R. 889. (*) Hughes v. Seanor, 1* \V. R. 1122; Everitt v. E., 10 H<). 409; 39 I.. J. Ch. 777: and .see He Glubb, L900, J Ch, 351. (t) Ogilviev. Littleboy, L897, W. N. 53. («) Rake v. Hooper, H3 L. 'J'. W.K (x) Bloomer v. Spittle, L3 Eq. 429; 11 I- J. ch. 369. (i/) Beale v. Kyte, 1907, 1 Ch. 564 ; 70 L. J. Ch. 294. 540 MUTUAL MISTAKE. Mode of application for rectifica- tion. Order of Court to rectify suffi- cient without deed. Mutual mistake in material matters inducing an agreement. Barrow (2) a marriage settlement dated 1823 was reformed in 1857, after the death of the husband, upon proof that it was not in accordance with the written instructions. So also in McCormack v. McCormach (a), a marriage settlement drawn up in 1841 was rectified in 1874. So also a release to a trustee was set aside after the lapse of more than 20 years on the ground that it was executed in error (6). The Court will not rectify a deed or instrument upon petition except perhaps in cases under the Trustee Act (c), nor upon motion, but only in an action instituted for the purpose; and until a deed is reformed, the Court is bound to act upon it as it exists (d). Actions for the rectification of instruments are assigned to the Chancery Division, but where a statement of defence to an action brought in another division is accompanied by a counter claim for rectification, this is not a sufficient reason for transferring the action (e). Where a conveyance is rectified, the order of the Court is sufficient without a new deed. A copy of the order is indorsed on the deed which is to be rectified (/). Thus, where a deed was executed purporting by mistake to convey a moiety only of real estate instead of the whole, as the parties intended, the Court held that an order for rectifying the deed indorsed upon it was effectual to pass the legal estate in the whole without a conveyance of the other moiety (g). So, where in a memo- randum of mortgage, the property, although specifically identified, was misdescribed, the Court held that the document must be treated as rectified and the security operate as intended (h). If parties enter into an agreement with reference to a sup- posed state of things, and it turn out that, by the mutual (z) 23 Beav. 430 ; 113 E. R. 209. (a) 1 L. R. I. 119. (6) Gandy v. Macaulay, 31 C. D. 1. (c) Bird's Trust, 3 C. D. 214; Re Hoffe, 48 W. R. 507. (d) Re Malet, 30 Beav. 407 ; 31 L. J. Ch. 455 ; 132 R. R. 332. (e) Storey v. Waddle, 4 Q. B. D. 289. (/) Hood (Lady) v. Machinnon, 1909, 1 Ch. 476; 78 L. J. Ch. 300. (g) White v. White, 15 Eq. 247; 42 L. J. Ch. 288. (h) Re Boulter, 4 C. D. 241; 46 L. J. B. 11. . MUTUAL MISTAKE. mistake of the parties, the supposed actual state of things does not in fact subsist, the consideration for the agreement fails, and the agreement is consequently void (i). A contract, for instance, ior the sale of a cargo, supposed by both parties to be on board a particular ship, is at an end if the cargo had at the time ceased to exist (k). So a contract for the sale of a life interest after it has in fact, though without the knowledge of the parties, expired, is void, and the purchaser is entitled to recover back his money (I). So a contract for the sale of a freehold interest which is afterwards discovered to be in the purchaser (m). So also a grant of an annuity made upon the statement of the grantor as to the age of the nominee which is erroneous, although unintentionally so, is void, and the payments can be recovered back (n). So also where a policy of insurance was renewed, both parties being ignorant that the life insured had previously died, it was held that, the renewal being conditional upon the insured being then alive, it was void (o). So also where an agreement was made for the sale of a remainder in fee expectant on an estate tail, and a bond was given to secure the purchase-monies; but it appeared that at the time of the sale the tenant in tail had suffered a recovery and destroyed the remainder, of which both parties were ignorant, the agreement was held void (//). So also where rent was paid and received for the occupation of laud after the expiration of a lease for lives under which it was supposed to be payable in ignorance of the death of the persons upon whose lives the lease depended, it was held that no implication of the creation of a new tenancy could arise from mi See Stapylton v. Scott. 13 Ves. 417; Robinson v. Dickenson, 3 Huss. 413; 7 I,. J. Ch. 70; Cooper v. Phibbs, L. R. 2 H. L. 149; ante, p. 496. (k) Couturier v. Hastie, 9 Exch. 102; 5 H. L. C. 673; 25 L. J. Ex. 253; 101 R. H. 329. (/) Strickland v. Turner, 7 Exch. 208; 22 I.. -I. Ex. 115: 86 R. R. 619; Cochrane v. Willis, 1 Ch. oh ■ 85 L. J. Ch. 36. (m) l«nes v. Clifford, 3 C. D. 779; 45 L. J. Ch. 809. (n) Att.-Gen. v. Ray, '.) Ch. :t'.i7 ; 43 I,. J. Ch. 478. (o) Pritchard v. Merchants- Life Ins. Society, 8 C. B. (N.S.) 622; 27 L. .1 . C. P. L69; 111 R. R. 777. See Scoti v. Coulson, 1903, 2 Ch. 249; 72 L. •). Ch. 600. Hitchcock v. Giddings, 4 Pri. 135; IK R. R. 725; cf. ('hire v. Lamb L. R. 1 C. P. 340; 44 L. J. C. P. 177; post, p. 557. 541 542 MUTUAL MISTAKE. such receipt of rent (q). So also where the plaintiff bought a bar of silver and by agreement it was sent to an expert to be assayed, and on his report of the quantity of silver contained in the bar, the plaintiff paid for it; but it was afterwards discovered that there was a mistake in the assay, and that the quantity of silver was much less than was stated in the report ; it was held to be a common mistake, and that the plaintiff was entitled to recover what he had paid (r). So also where a fund was sold as a reversionary interest, but it turned out that at the time of the sale the interest, which was supposed to be a .reversionary one, had become an interest in possession, and the fact was unknown to both parties, it was held that the sale could not stand (s). So also where a party had, upon a compromise, executed a general release in respect of partner- ship matters, it was held that he was entitled to relief, on the ground of a large item in which he was interested having been omitted by mistake in the account (t). So also if the vendor, in fixing the price, has altogether relied on information furnished to him by the purchaser and such information turn out to have been (even unintentionally) incorrect, this may entitle the vendor, even after conveyance, to relief in equity (u). But a contract may be unconditional, although the parties are under a mistake respecting some matter which induces the contract. Thus, if the contract be absolute, and not with reference to collateral circumstances, as, for instance, if a ship on a voyage be sold, and the ship, at the time of the contract, be seriously damaged, to the ignorance of both parties, still the contract is valid (x). So, also, although there be a mutual mistake respecting the subject-matter of the agreement, yet if both parties are aware (q) Doe v. Crago, 6 C. B. 90; 17 L. J. C. P. 263; 77 R. R. 283. (r) Cox v. Prentice, 3 M. & S. 344; 16 R. R. 288. (s) Cohjer v. Clay, 7 Beav. 188) 64 R. R. 58. (t) Pritt v. Clay, 6 Beav. 503; 63 R. R. 160. («) Carpmael v. Poiois, 10 Beav. 36; 16 L. J. Ch. 31; Haygarth v. Wearing, 12 Eq. 320; 40 L. J. Oh. 577. (x) Ban v. Gibson, 3 M. & W. 390; 49 R. R. 650: Barker v. Janson, L. R. 3 C. P. 303; 37 L. J. C. P. 105. MUTUAL MISTAKE. 543 that the subject-matter is, from its nature, doubtful or uncer- tain, or is of a speculative or contingent character, the mistake goes for nothing. If a bargain depends on a contingent event, or the subject-matter of a contract be an uncertain thing, and the contingency or chance be known to both parties, neither of them can resist specific performance because the reality has turned out to be different from what he anticipated (y). There is mutual mistake which will vitiate a contract, or which at least will render it incapable of being specifically enforced in equity, if the one party does not think he is selling what the other thinks he is buying (z). If, for instance, a transfer is filled up with shares which the transferor did not agree to transfer, or with shares which the transferee did not agree to accept, the transfer is a nullity; but an error in the distinguishing numbers of the shares is immaterial (a). Care must, however, be taken in distinguishing cases, where the parties are under a mutual mistake as to the subject- matter of a contract, from cases where there is no doubt as to the subject-matter; but the one has, in fact, sold more than he thought he was selling, and the other has got more than he expected. In such cases relief cannot be had in equity, if there has been no unfairness on either side (b). Where, for instance, that which the vendor in- tended to sell, and the purchaser to buy, was a leasehold interest, erroneously supposed to have a shorter time lo run than it in fact had to run, it was held that the vendor had. after conveyance, no equity for relief (c). So also where a man entitled to an interest in a residuary estate, assigns all his interest to a creditor, he is not entitled to relief if it after- wards appear that the residuary estate consisted partly of a fund, the existence of which was not known to either of the (y) Mortimer v. Capper, 1 Bio. C. C. L56; Ridgway v. Sneyd, Kay, 627; LO] K. R. 776; Baxendale v. Seale, 1 ( .) Beav. 601; 24 L. J. Ch. 385; 105 K. I; 261. (z) Hitchcock v. Gidding8, 4 Pri. 135; Cochrane v. Willis, 1 Oh. 58; 35 I j. -I. Ch. •'!<; ; Haxendale v. Seale, supra. (a) Buckley (9th ed.), 581. (b) Okill \. Whittaker, I De (i. A B. 88; 2 Pli. 338; 78 H. K. 104. (c) Ibid. 544 MUTUAL MISTAKE. Mistake of fact in com- promises. parties at the time of the execution of the deed (d). So also where a lessor agreed to grant an underlease for the residue of his term, except the last ten days, and the lessor's solicitor drew up a lease for twenty-three years less ten days, and the lease was executed by the lessee, who did not inspect the original lease, and it was afterwards discovered that the original lease had only sixteen years to run, it was held on a claim by the underlessee for compensation that the rule caveat emptor applied, and that he had no claim to com- pensation (e). Apart from condition, compensation cannot be recovered after conveyance in respect of a defect of title (/). Nor where several persons have joined in conveying an estate to a purchaser for a full consideration, can one of them be afterwards heard to say that he was under a misappre- hension as to the extent of his interest in the property (g). The same considerations which apply to the case of agree- ments entered into under a mutual mistake of the parties as to fact, apply to the case of compromises. A compromise which is founded on a mutual mistake of fact cannot be supported (Ji). If, for instance, a compromise is founded on the genuineness of an instrument which turns out to be forged, or if a suit which it is the object of a compromise to determine turns out to have been already decided in favour of one of the parties, or if a compromise be founded on a will, which turns out to have been revoked by another will of which the parties are ignorant, the transaction cannot be supported (/). But the case is different if the fact in respect of which there is a mistake be included in the compromise and be not the very (d) Howkins v. Jackson, 2 Mac. & G. 372; 19 L. J. Ch. 451; 86 E. E. 136; cf. Turner v. Turner, 14 C. D. 829. (e) Besley v. Besley, 9 C. D. 103; Clayton v. Leach, 41 C. D. 103. (/) Debenham v. Sawbridge, 1901. 2 Ch. 98; 70 L. J. Ch. 525. (g) Maiden v. Menill, 2 Atk. 8. See Soper v. Arnold, 14 App. Ca. 429, 433; 59 L. J. Ch. 214. (/<) Hickman v. Berem, 1895, 2 Ch. 638; 64 L. J. Ch. 785; Huddersfield Banking Co. v. Lister & Son, 1895, 2 Ch. 273; 64 I,. J. Ch. 523. (t) Toull. Cod. Civ. Liv. 3, tit. 3, c. 2. See Ashurst v. Mill, 7 Ha. 502; 82 E. E, 214; Lawton v. Campion, 18 Beav. 87; 23 L. J. Ch. 505; 104 E. E. 378; Trigge v. LavalUe, 15 Moo. P. C. 276. HUTU A L MI S TAKE . ."> 1 .") foundation on which the compromise rests (k), as where a person compromises an action forgetting some matter already in evidence (/). If one or more parties having, or supposing they have, claims upon a given subject-matter, or claims upon each other, agree to compromise those claims, and to come to a general settlement of the matters in dispute between them without resorting to litigation, and they act with good faith, and stand on an equal footing, and have equal means of know- ledge as to the facts, the compromise is binding in equity (to). It is not enough to invalidate the transaction that one of the parties may have been in error as to a fact included in it (/?). The principles which apply to the case of ordinary compro- mises between strangers do not equally apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced, if honestly made, although the} r have not been meant as a compromise, but have pro- ceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend (o). Generally the Court will support a compromise entered into after the parties have jointly consulted the family solicitor, even though the agreement may not be quite in accordance with their rights, the very object of the compromise being to avoid the necessity of having the exact relative rights deter- mined by litigation. But the family solicitor is not entitled to keep his clients in the dark as to their rights, because he thinks it is to the advantage of all parties to the compromise, (k) See Triage v. Lavalee, 15 Moo. P. C. 276; 137 R. R. 61. (I) West Devon Consols, 38 C. D. 51; 57 L. J. Cb. 850. (to) Atttoood v. -, 1 Buss. 353: 5 Russ. 149; 29 R. R. 15; Naylor V. Winch, I Sun. & St. 555; 24 R. R. 227; Pickering v. Pickering, 2 Beav. 31, 56; fiL. J. Ch. 336; Pritt v. (lay. 6 Beav. 503; 63 R. R. L60; Stewart v. Stewart, 6 CI. & Fin. 911; 49 R. R. 207; Trigge v. Lavalie, L5 Moo. P. C. 270; Stainton v. Carton Co., 30 L. .J. Ch. 713; Miles v. New Zealand Co., 32 ('. D. 266; 54 I,. .7. Ch. 1035; ante, pp. 109, 502. (n) Scoti v Scott, 11 Tr. Bq. 75: West Devon Consols, supra. (o) Gordon v. Gordon, 3 Sw. KM); L9 R. R. 2:i(); Westby \. Westby, 2 Dr. .v War. 502; 59 R. R. 795; Stewart v. Stewart, 6 CI. & I'm. '.Ml ; 19 R. R. 267; Vrrssc v. /Vi-.s-.v*. 7 ('!. a- Pin. 270: 51 R. R. 'j'2 ; Williams v. Williams, 2 Dr. k 8m. 378; L43 R. R. L70; Hoblyn v. //.. II C. D. 200. K.F. 35 546 MUTUAL MISTAKE. Ambiguous terras of contract. and that if they knew their exact rights there would be no compromise (p). But a family settlement will not be supported, if founded on a mistake of fact of either party to which the other party is accessory, although such mistake may have been innocently brought about by the other party (q). Where accordingly a resettlement of family estates was made hj the father, tenant for life, and son, tenant in tail in remainder, upon the supposition that a charge for portions was within the power of the father to appoint or release, and not, as was the fact, a subsisting charge, it was set aside as being founded on a mistake (r). The instrument of contract may be correctly expressed according to the intention of each party, and yet there may be no real agreement by reason of a mistake between them as to the application of the expression to the facts. This may arise from the generality or ambiguity of the expression, admitting of two different constructions or meanings as applied to the facts or from a certain expression applying equally to two different things. In such a case the Court will not enforce the agreement on the ground that " it is against conscience for a man to take advantage of the plain mistake of another or at least that a Court of equity will not assist him in doing so " (s). The expression of the contract may be sufficiently general or ambiguous to admit of different applications, and may be accepted by each party with a different application unknown to the other. In this case the written contract must be con- strued and applied, if possible, according to its terms, but it is open to either party to show his application of the contract so far as is consistent with the terms used, and if no reasonably certain construction can be adopted in the application to the facts, the contract would be void in law by reason of the uncertainty and impossibility of executing it. Thus, where the particulars of a' sale by auction were ambiguous as to (p) Re Roberts, R. v R., 1905, 1 Ch. 704: 74 L. J. Ch. 483. (q) Fane v. Fane, 20 Eq. 706. (r) Ibid. (s) Manser v. Back, 6 Ha. 443, 448; 77 R. R. 187; approved, Douglas v. Baynes, 1908, A. C. 477, 485; 78 L. J. P. C. 13. MUTUAL MISTAKE. .~il7 including or excluding timber, and the vendor and purchaser accepted them with a different meaning, it was held that specific performance could not be decreed upon either con- struction (t). So where upon the sale of a reversion of an undivided moiety of an estate, the rent was stated upon the particulars of sale to be at a certain sum, leaving it ambiguous whether the half or the whole of the stated rent was the subject of sale, a bill for specific performance, charging the contract as for a purchase of half the rent mentioned, was dismissed upon the ground that the purchaser was induced by the particulars to believe that he purchased the whole rent («). So, also, where the terms of a contract were ambiguous and something different from what was claimed by the purchaser was intended to be sold by the vendor, the Court would not, nt the suit of the purchaser, compel the vendor specifically to convey property not intended or believed by him to be included in the contract, though the vendor was the author of the ambiguity (x). So, too, where the price to be paid for land is uncertain, the Court will not enforce the agreement for sale. though the vendor may himself be responsible for the ambiguity (y). If, in the application of the contract to the tacts and Falsa demon- circumstances, it appears that a thing or matter referred to is sufficiently identified, but with some inaccurate description or addition, the latter may be rejected or corrected in the application as expressed in the maxim falsa demonstratio non /inert cum de cor pore constat, the last words being of import- ance {z). Thus, where a tenant contracted to transfer his tenancy in certain premises, describing them as the premises he then occupied, and known by a certain name, and it appeared that he occupied a part only of the premises known it) Higginson v. Clowes, \-> Ves. 516; Clowes v. Higginson, 1 Y. A B. 524; 12 R. R. 284. In) Swaisland v. Dearsley, 2'.) Beav. 430; 30 I.. .1. eh. 652; I'U R. I;. 6 (x) Manser v. Back, 6 If;*. 143; 77 I;. R. L87 ; Baxendale v. Seale, L9 Beav. 60] ; 24 h. .1. Ch. 385; Re Hare and O'More, L901, I Ch 93; 70 h. J, Ch. 16. (y) Douglas v. Baynes, 1901 . A. C. 177; 78 L. J. P. C. 13. (z) Re Brocket, L908, I Ch. L85, per Joyce, J.; 77 I,. .) . Ch. 245. 548 MUTUAL MISTAKE. by that name; it was held upon a construction of the contract as applied to the facts that the premises occupied were the essential description, and were alone included in the con- tract (a). So, also, where an insurance is effected upon a ship, or upon goods on board a ship, if the subject of insur- ance be sufficiently identified, a mere misnomer of the ship would be immaterial (b). In the application of the doctrine falsa demonstratio non nocet it is immaterial in which part of the description the falsa demonstratio appears. It is not necessary that it should follow the true part and qualify what has gone before (c). Qucere, whether the doctrine applies in a case where the Court can see what the document in question was really intended to mean (d). Latent A mistake in the application of the instrument of contract igui y. may arise from some expression therein sufficiently certain in itself, applying equally to two different things, one of which was intended by one party and the other by the other. This is called a latent ambiguity, and extrinsic evidence is ad- missible to prove the intention of the parties (e), and if it appear that each party mistook the meaning of the other, and that they intended different things by the same expression, the contract is void on account of the absence of a consensus ad idem, for each party was assenting to a different contract, notwithstanding the apparent mutual consent (/). In Thornton v. Kempster (g), the sale was of ten tons of sound merchantable hemp, but it was intended by the vendor to sell Petersburg hemp, and by the buyer to purchase Riga hemp. The broker had made a mistake in describing the hemp to the buyer, and the Court held that there had been no (a) Magee V. Lavell, L. R. 9 C. P. 107 ; 43 L. J. C. P. 131. (b) Ionides v. Pacific Ins. Co., L. R. 7 Q. B. 517; 41 L. J. Q. B. 190. (c) Cowen V. Truefitt, 1899. 2 Ch. 309; 68 L. J. Ch. 563. (d) Ibid. (e) Smith v. Jeffryes, 15 M. & W. 56-2. per Alderson, B. ; 15 L. J. Ex. 325; 71 R. R. 761. (/) Smith v. Hughes. L. R. 6 Q. B. 597: 40 L. J. Q. B. 221; Hodges v. Horsfall, 1 R. & M. 116; 32 R, R, 157; Marshall v. Berridge, 19 C. D. 233; 51 L. J. Ch. 329. (g) 5 Taunt. 786; 15 R. R, 658. MUTUAL MISTAKE. 549 contract whatever, the assent of the parties not having really existed as to the same subject-matter of sale. So, also, in Raffles v. Wichelhaus (A), where A. and B. contracted for the sale of the cargo to arrive " per ship Peerless from Bombay," and it appeared that there were two ships of that name then arriving from Bombay, and that A. meant one ship and B. the other, it was held that there was no contract. So when the master of a ship having chartered it to a broker, who again chartered it in his own name, the latter placed a cargo on board for which the master signed bills of lading for delivery, " paying freight for the said goods, as per charter party," and the cargo was delivered and the shipper paid his charterer before either party had any notice or knowledge of the other charter; it was held that the master could not recover freight upon the bill of lading, because that document being equally applicable to either charter-party, there was in fact no agree- ment or contract between them, and it was further held that there could be no implied contract with the master to pay a reasonable freight for the carriage of the cargo because it was shipped in fulfilment of a contract expressly exclusive of such intention (i). But one of the parties to an apparent contract may by his own fault be precluded from setting up that he entered into it in a different sense to that in which it was understood by the other. Thus, in the case of a sale by sample where the vendor exhibited by mistake a wrong sample, it was held that the contract was not avoided by this error of the vendor (/,). Bui if the purchaser be aware that the vendor was under a mistake as to the sample he was offering, the vendor would be entitled to show that he had not intended to enter into the contract by which the purchaser sought to bind him (/). Care must be taken not to confound a common mistake as Mistake a i • l i-i collateral fart to the subject-matter of sale or the price or the terms which 0l . motlv , prevent the sale Erom ever coining into existence by reason of (h) 2 H. & C. 906; 33 I.. J. Ex. L60; L33 R. R. 853. in Smidi \ Tiden, !i. R. '•> Q. I'.. 446; 13 L. .1. Q. B. L99. (In Scott v Littledale, m E. A B. 815; 27 L. J. Q. B. 201 ; L12 R. R. 791. (I) Smith v. Hughes, L. R. 6 Q. B. 607 ; )'» L, J. Q. B. 221. 550 MUTUAL MISTAKE. the absence of a consensus ad idem, with a mistake made by one of the parties as to a collateral fact or what may be termed a mistake in motive. If the buyer purchases the very article at the very price and on the very terms intended by him and by the vendor, the sale is complete by mutual assent, even though the buyer or the seller may be totally mistaken in the motive which induced the assent (m). If, for example, a man buy a horse without a warranty, believing him to be sound, and the horse turns out unsound, it is not open to him to say that, as he had intended to buy a sound horse and the seller to sell an unsound one, the contract is void because the seller must have known from the price the buyer was willing to give, or, from his general habits as a buyer of horses, that he thought the horse was sound in). So, also, if a trainer of horses agree to buy a particular parcel of oats, believing them to be old oats, and therefore suitable for his purpose, new oats being unsuitable, but omits to make their age a condition of the contract, the sale is good although the oats are new and unsuitable for the purpose of the buyer (o). ' All that can be said," said Chief Justice Cockburn (p), " is that the two minds were not ad idem as to the age of the oats. They certainly were «// idem as to the sale and purchase of them." On a similar principle where a vendor of houses overlooking a recreation ground had, unknown to the purchaser, covenanted to pay a shilling yearly as an acknowledgment that no easement of light over the recreation ground attached to the houses, it was held that the vendor was entitled to specific performance without compensation (q). But where the vendor is informed by the purchaser of his object in buying and the vendor knows of some thing which will defeat that object, mere silence is a fraudulent ron- cealment (r). (m) Benjamin on Sale, 105; ante, p. 513. in) Ante, p. 513. (o) Smith v. Hughes, L. K. 6 Q. B. 597; 40 L. J. Q. B. 221. (p) Ibid. 606. (q) Greenhalgh v. Brindley, 1901, 2 Ch. 324; 70 L. J. Ch. 740. (r) Puckett and Smith, 1902, 2 Ch. 258; ante, p. 80. MUTUAL MISTAKE. 553 Where oue of the parties to a contract having- partial Specific per- • i i. • formance interests, but believing himself to be entitled to the entirety, withcompen- enters into a contract with a purchaser to sell the estate in its J^JJJ^ 86 entirety, it is not competent to him afterwards to say that because the purchaser cannot have the estate in its entirety he is not entitled to such an interest as the vendor can give. The vendor is bound by the assertion in his contract, and if the purchaser chooses to take as much as the vendor can give a title to, he is entitled to have specific performance of as much as the vendor can give a title to, with an abatement or compensation for the deficiency (s). But a mistake in the description of property may be fatal if il is a mistake or misrepresentation as to title. The usual condition that an error in description shall not annul the sale but be a ground for compensation only applies to an error as to the physical state of the property and not to a mistake in the description of the title (*). Further the vendor may be entitled to rescind even where the mistake is made by himself (u). Mistake is not an answer to an action for specific perform- ance when the mistake is not as to the essential terms of a contract, but is a mistake as to the quantity of acres of land comprised in the contract. In such a case the mistake is a proper subject for compensation (a?). Where accordingly the plaintiff offered to take a lease of a farm at a rent of 500/. per annum, specifying the closes which he wished to take with their acreage, amounting in the whole to 249 acres, and defendant's agent, who had in fact let one of the closes to another person and desired-only to let 214 acres with the farm, accepted plaintiff's offer; it was held that the defendant must grant the plaintiff a lease of 214 acres at a rent reduced in proportion (y). And where the plaintiff purchased " ; '>. 110. (u) Re Hare and O'More, L901, 1 Ch. 93; 70 L. J. Ch. 15. | M'Kenzie v. Hesketh, 7 C. I). 680; 17 I. .1 . Ch. 281. (y) Ibid. 552 MISTAKE OF FACT. of land " at £100 per acre and the vendor afterwards dis- covered that the property contained 42 acres, it was held that there was no such mistake as entitled the vendor to rescission and that the purchaser was entitled to specific performance of the contract for sale of 36 acres only (z). Money paid Money paid voluntarily under mistake of fact is recover- Hk^ofTact. able both at law and in equity where it is against justice and conscience that the receiver should retain it (a), and where the mistake has not induced the receiver to alter his position (b). Giving a negotiable instrument is for this purpose equivalent to the payment of money (c). The mistake must be a mistake as to a fact which if true would make the person paying liable to pay the money, not where if true it would merely make it desirable that he should pay the money (d). But money paid under compulsion of legal process cannot be recovered back, even though the process never terminated in a final order or judgment, and even though it may have been withdrawn before action brought for the recovery back (e), and this is so, although no payment has been made but credit has by mistake been given for a payment on account which has not in fact been made (/). But the rule does not apply where there has been an absence of bond fides on the part of the defendant ( M. & W. 68, supra; Freeman v. Jeffries, \,. R. 4 Ex. 198; 38 L. J. Ex. 118. (6) Baker v. Courage. 1910, 1 K. B. 56; 7'.) L. J. K. B. 313. i.i piipe v. Wray, 1 M. A W. -15M. per Lord Wensleydale. (d) Wason v. Wareing, L5 Beav. 151 ; 92 R. R. 357. (e> Williamson v. Barbour, '.< ('. D. 529; 50 L. .J. Ch. 117. (/) Gandy v. Maeaulay, 31 C. I). 1. l(D Coleman v. Meller.sh. -i Mac. & G. 309; 86 R. R. L23 ; Pritt v. Clay, r, Beav. 503; 63 1:. I:. L60; and ee hnuirll v. Sim lair. 6 A.pp. Ca, IM ; 60 I.. •) 1'. C. 50. I/O Allfrey v. Allfrey, 1 Mac. & <'< -1 ■. 84 R. R. L5; Gething \. Keighley, u C. I). 550; 18 I.. •). ch. 45. 556 MISTAKE. Errors dis- covered after execution of conveyance. How far the Court will open settled accounts upon proof of error appearing in some but not in all must depend upon the circumstances of each case. Where, however, the character of the errors lead to the inference that the errors proved in some cases are likely to appear in all, the Court will give relief in respect of all (i). Rescission on the ground of mutual mistake may undoubtedly be granted in a proper case, that is, where there is a total failure of consideration, even after conveyance, although there has been nothing in the nature of fraud (k). But as a general rule a purchaser, after the conveyance is executed by all necessary parties, has no remedy in respect of any defects either in the title to or quantity or quality of the estate which are not covered by the vendor's covenants (/), or by a collateral warranty that the property sold answers a certain descrip- tion (m). An executed lease therefore cannot be rescinded on the ground of innocent misrepresentation (n). I 11 the case of Legge v. Croker (o) it was held that no compensation could be granted in a case where a lease had been deliberately executed making no mention of a right of way over the premises, though there was such a right of way and though the lessor had more than once represented to the lessee that there was no such right of way, and though the heads of the intended agreement between the parties, including the state- ment that there was no such right of way, had been reduced to writing, but not signed by the parties before the lease was prepared. So also in Brett v. Clowser (p) the Court held that a purchaser was not entitled to compensation after the com- pletion of the purchase for the absence of a right of way which the auctioneer at the sale honestly, but under a mistake, (i) G7iee.se v. Keen, 1908, 1 Ch. 245 ; 77 L. J. Ch. 163. (k) Debenham v. Sawbridge, 1901, 2 Ch. 98; 70 L. J. Ch. 525; Scott v. Coulson, 1903, 2 Ch. 249 ; 72 L. J. Ch. 600 ; ante, p. 384. (1) Ibid.; Clare v. Lamb, L. R. 10 C. P. 335; 44 L. J. C. P. 147: Allen v. Richardson, 13 C. D. 524; 49 L. J. Ch. 137; Brownlie v. Campbell. 5 App. Ca. pp. 937, 949; Re Tyrell, 82 L. T. 675. (to) De Lassalle v. Guildford, 1901, 2 K. B. 215 ; 70 L. J. K. B. 533. (n) Angel v. Jay, 1911, 1 K. B. 666; 80 L. J. K. B. 458. (o) 1 Ba. & Be. 506 ; 12 R. R. 49. (p) 5 C. P. D. 388; cf. Re Hare and O'More, 1901, 1 Ch. 93. MISTAKE. ."),") 7 represented to belong to the premises. So too a lessee cannot claim compensation in respect of a defect of title which he might have discovered before he took his lease (q). It is not, however, the law that a man can misrepresent and mislead, no matter how innocent of fraud, and profit thereby at the expense of another who has had no fair opportunity to test the truth of the misrepresentation (/■). 13ut where in an agreement for the sale of land the con- ditions provide that if any error or misstatement should be found in the particulars of sale it should not annul the sale, but that compensation should be made in respect thereof, an error, although not discovered until after the completion of the conveyance, is a proper subject of compensation within the meaning of the condition. If no distinction is made in the conditions of sale between an error or mistake discovered before and one discovered after the execution of the con- veyance, it will not be imported into the contract (>). Unless it is the clear intention that the condition should be merged in the deed, it is operative even after conveyance (t). But such a condition does not apply to a defect of title (u). In a case where leasehold premises were sold by the executors of a deceased husband under a mistake thai the property belonged to him, whereas it belonged to the wife, and the conveyance was completed, the property being afterwards recovered by the widow, it was held that the purchaser could not recover the purchase-monies as upon a failure of consideration (x). A mistake in the name of the purchaser will not render a conveyance inoperative nor prevent the legal estate passing if it can be ascertained- who is meant by the description (_«/). (q) Clayton v. Lencli. 11 C. D. 103. (r) Hansen v. Franz. 57 Can. S. C. R. 57. (*) Bos v. Helsham, b. R. 2 Ex. 76; 36 L. J. Ex. 20; Be Turner and Skelton, 13 C. D. 130; 19 L. -J. Ch. 114: Palmer v. Johnson, 13 Q. B. D. 351; 53 L. J. Q. B. 348. (1) Ibid. («) Debenham v. Sawbridge, L901, 2 Ch. 98; 70 L. J. Ch. 525. i,) Clare v. Lamb, L. R. 10 C. P. 840; 44 L. J. C. P. 147; but see Dart, V. & P. 816. (, n Wray v. Wray, 1905, 2 Ch. 349; 74 L. J. Ch. 687. 558 MISTAKE. Statutes of Where money has been paid under a mistake of fact, the Statute of Limitations begins to run from the time of pay- ment and not from the date of the discovery of the mistake, except in cases where prior to the Judicature Act, 1873, equitable relief only could be obtained (~). An action in the Chancery Division by one cestui que trust against another to recover money wrongly paid by the trustee to the latter under a common mistake of fact, is in the nature of a common law action for money had and received, and will be barred after the lapse of six years. Secus if the claim is made in an action in which the Court is administering the trust estate (a). Where trustees acting on the mistaken view of their solicitor as to the construction of the will, paid income to the wrong person, it was held in an action against the trustees that the case fell within section 8 of the Trustee Act, 1888, but that time did not begin to run until the beneficiary's interest fell into possession. It was also held that the trustees were entitled to relief under the Judicial Trustees Act, 1896, s. 3 (b). Acquiescence. The application for relief on the ground of mistake must be made with due diligence (<■) ; and in some eases of mistake, time runs from the discovery (d). Acquiescence will operate as an equitable estoppel (e). Where executors paid away funds, the income of which they ought to have paid to H., but paid H. a part of these funds and rendered him accounts and sent him a cop}' of the will, and all these pay- ments were due to a mistake in construing the will, it was held that H. had made himself a party to this mistake, and could not therefore claim arrears of income after lying by for (z) Baker v. Courage, 1910, 1 K. B. 56 ; 79 L. J. K. B. 313. (a) Re Robinson, 1911, 1 Ch. 502; 80 L. J. Ch. 381. (b) Re AUsop, 1914, 1 Ch. 1 ; 83 L. J. Ch. 42. (c) Stone v. Godfrey, 5 D. M. & G. 76; 23 L. J. Ch. 769; 104 R. R. 32; Bentley v. Mackay, 31 Beav. 143; 4 P. P. & J. 279; 135 R. R, 145; ante, pp. 351 el seq. id) Denys v. Shuckburgh, 4 Y. & C. 42. 53; 54 R. R. 446; Durrani v. Eccl. Commissioners, 6 Q. B. D. 234; 50 L. J. Q. B. 30; but see Cholmondeley v. Clinton, 2 J. & W. pp. 168—172; Baker v. Courage, supra. (e) Rogers v. Ingham, 3 C. D. 351 ; 46 L. J. Ch. 322. MISTAKE. 559 two years (/). Bui where the parties to an agreement mis- construed it for more than forty veins, the plaintiff was nevertheless held entitled to relief on the true construction (g). Where there has been some common mistake as to some Principles on which Court essential fact, forming an inducement to the contract, whether interposes on . P t ,1 the ground of it be a mistake as to the subject-matter ot the contract, or the mistake. price, or the terms, that is, where the circumstances justify the inference that no contract would have been made if the whole truth had been known to the parties, the contract is voidable at the election of either of the parties. If either party has performed his part of the contract during the con- tinuance of the mistake, he may set aside the contract on discovering the truth, unless he has done something to render it impossible for him to restore the other party to the condition in which he was before the contract was made (It). Transactions, although impeachable on the ground of mistake, are nevertheless subject to all real and just equities between the parties. The Court will not set aside a transaction without restoring the party against whom it interferes, as far as possible, to that which shall be a just situation with reference to the rights which he had antecedently to the transaction (i). If the Court sees that it can restore the parties to their former condition, or place them in the same si; nation in which they would have stood but for the mistake, without interfering with any new right acquired by others on the faith of* the altered condition of the legal rights, the jurisdiction will be exercised. The Court will not, however, relieve against a mistake, unless it is fully satisfied that it can make ample compensa- tion (k). If the Court sees that the parties cannot be restored to that which shall be a jusl situation with reference to the Re Hulkes, Powell v. Hulkes, 33 C. D. 552; 55 I.. .J. Ch. 846. Worth Eastern Ely. v. Hastings, 1900, A. C. 2(i0; 69 L. J. Ch. 516. Cox v. Prentice, 3 M. & S. 311; L6 R. R. 288 ; Blackburn \. Smith, 2 Exch. 783; Strickland v. Turner, 7 Exch. 208; 22 I.. J. Ex. 11".; Clarke v. Dickson, B. B. & E. Its; 27 I,. .1. Q. B. '223: 113 R. R. 583; Freeman v. Jeffrie, . L. R. I Ex. L95; 38 L. •). Ex. L16. Inte, p. 388. i/. i Dacre v. Georges, 2 Sun. A St. 154 \ 25 R. R. 246; ante pp. 891, 392. 560 MISTAKE. rights which they had antecedently to the transaction, or that the mistake cannot be corrected without breaking in upon or affecting the rights of innocent parties, who were not aware of the existence of the mistake when their rights accrued, relief cannot be given (I). But if a good case be made out, the Court will not hold its hand merely because, on account of circumstances which have intervened, it may be difficult to restore the parties exactly to their original condition (m). It is enough if the Court sees that it would not be difficult to adjust matters so as to place the parties in a position in which they would receive little or no prejudice from what has been done (n). As against bond fide purchasers for value without notice, no relief can be had in equity (o). On setting aside a transaction on the ground of mistake, the Court may, with a view of putting the parties in the position in which they have an equity to stand, annex conditions to the judgment (p). Acquiescence in what has been done will not be a bar to relief where the party alleged to have acquiesced has acted or abstained from acting through being ignorant that he possessed rights which would be available against that which he permitted to be enjoyed (q). Measure of Upon a contract for the sale and purchase of real estate, if the vendor is incapable of making a good title, the pro- posing purchaser is not entitled to recover damages for the loss of his bargain. He can only recover the expenses he has incurred (?•). The rule is based on the uncertainty of making a good title and does not depend upon the absence of (?) Maiden v. Menill, 2 Atk. 8; Clifton v. Cockburn, 3 M. & K. 76; 41 R. R. 21; Blackie v. Clarke, 15 Beav. 595 ; Re Saxon Life Ins. Co., 2 J. & H. 408; 32 L. J. Ch. 206; 134 R. R. 271; Bateman v. Boynton, 1 Ch. 359; 35 L. J. Ch. 568; ante, pp. 355 et seq. (m) Earl Beauchamp v. Winn, L. R. 6 H. L. 232. (n) Ibid. (o) Ante, pp. 370 et seq. (p) Garrard v. Frankel, 30 Beav. 445; 31 L. J. Ch. 601: 132 R. R. 352: but see May v. Piatt, 1900, 1 Ch. 616; 69 L. J. Ch. 357 ; ante, p. 531. (q) Earl Beauchamp v. Winn, L. R. 6 H. L. 223; supra, pp. 351—354. (r) Bain v. Fothergill, L. B. 7 H. L. 158; 43 L. J. Ex. 243; see H oil 'ho ell v. Seacombe, 1906, 1 Ch. 426 ; 75 L. J. Ch. 289; Morqan v. Russell, 53 Soi. J. 136. MISTAKE. 561 fraud. It applies to eases where a vendor is unable to make a good title and not to cases where he will not, or will not do what he can and ought to do in order to obtain one (s). To entitle a plaintiff, in an action for specific performance, to recover damages other than his expenses in respect of a breach of contract by defendant, misrepresentation must be pleaded and established (£). In an action for taking coal from plaintiffs land, in the absence of any wilful wrong, or other circumstances war- rant ing punitive damages, the true rule of damages is the value of the coal at the pit's mouth, less the cost of labour in severing it from the freehold and raising it to the pit's mouth («). Where an action is brought for specific performance, and specific performance is refused on the ground of mistake, the Court ought to give the same damages as would, under the old practice, have been given in an action at law (#). Courts of equity have jurisdiction on the ground of mistake Defective to relieve against the defective execution of a power. If the powers> formalities required by a power are not strictly complied with, an appointment under the power is invalid at law, and the property which is the subject of the power will go as in default of appointment. In equity, however, if an intention to execute the power be sufficiently declared, but, by reason of some informality, the act declaring the intention is not an execution of the power, the Court will, in favour of certain parties, aid the defective execution, by compelling the person seised of the legal estate to do that which was intended to be done (y). The supplying the surrender of a copyhold and the supplying the execution of a power which is defective in form go hand in hand. Wherever there is a decision that the Court i.s) Day v. Singleton, L899, 2 Ch. 320 ; OH L. J. Ch. 593. i/) Roch Portland Cement Co. v. Wilson, 33 W. R. I'.'.'i; Royal Bristol, ttc. < Bomash, 35 C. I'. 390; 56 I.. .1. eh. 840. dn Jegon v. Vivian, 6 Ch. 7-12; lu I,. .1. ch. 389; app. ■> A. C. 25. (x) Tamplin \. .hum::, [5 C. I>. 220. (y) Shannon v. Bradstreet, 1 Scb. >v Let. ''>■'(; '.» R. R. 11: Sayer \. Sunn. 7 Ea. •".77: 87 K. R. 2)7; Johnson v. Braggt . L901, 1 Ch. 28; 7n I,. .1. Ch. 11. k.f. :iG 562 DEFECTIVE EXECUTION Persons in whose favour the defective execution of a power will be aided. will supply a surrender, it follows that the Court will also supply the defective execution of a power (z). The equity, however, is confined to cases of execution formally defective, or of contract amounting to such defective execution (a). If there be no such execution or contract, the Court cannot interpose; for unless where the power is in the nature of a trust, the donee has his choice whether to execute it or not ; and if he does not execute or attempt to execute, there is no equity to execute it for him or to do that for him which he did not think fit to do himself (6). Nor can an execution be aided in equity, if the defect be not formal, but in the substance of the power, for such aid would defeat the intention of the donor. Where, for example, a tenant for life had power to lease with the consent of trustees or others, an agreement by the tenant for life alone to lease would not be aided (c). The only persons in whose favour equity will interpose to supply the defect in the execution of a power are, a bond fide purchaser for valuable consideration (d), a creditor (e), a charity (/), a wife or a legitimate child (g). To no other persons, except a wife and legitimate child, will the aid of the Court be granted upon the ground of a meritorious considera- tion (h). The equity does not extend to the case of a defective execution by a wife in favour of her husband (i) ; nor to a defective execution in favour of a natural child, a father, mother, brother, sister, nephew, or cousin : a fortiori it does (z) Sayer v. Sayer, supra, per Wigram, V.-C. ; Chapman v. Gibson, 3 Bro. C C. 229. (a) Johnson v. Bragge, supra; Farwell, 330. (b) Toilet v. Toilet, 2 P. Wms. 489; 2 Wh. & Tu. 289; Re Weekes' Settle- ment, 1897, 1 "Ch. 289; 66 L. J. Ch. 179. (c) Laivrenson v. Butler, 1 Sch. & Lef. 13. (d) Affleck v. Affleck, 3 Sm. & G. 394; 26 L. J. Ch. 358; Chetwynd v. Morgan, 31 C. D. 596. See 1906, 2 Ch. at p. 527. (e) Chartered Bank of Australia v. Lempriere, L. E. 4 P. C. 597; 42 L. J. P. C. 49. (/) Innes v. Sayer, 7 Ha. 377 ; 21 L. J. Ch. 190; 87 R. R. 217. (g) Hervey v. Hervey, 1 Atk. 567; Farwell, 342. (h) Moodie v. Reid, 1 Madd. 516; 16 R. R. 257. (*) Ibid. OF POWERS. 563 not extend to a volunteer (k), even though he be the creator of the power himself (I). The character of purchaser, creditor, wife, or child, must be borne by the party claiming relief in relation to the donee of the power and not to the person creating the power (m). In Wilkinson v. Nelson (n), a deed of appointment in favour of some of the objects of a power was rectified by the insertion of a hotchpot clause, the Court being satisfied that the inten- tion of the donee of the power was to produce equality, and that the clause had been omitted by mistake (o). It is not sufficient in order to constitute a case entitling a Intention to party to relief in equity on the ground of the defective execu- po wer must tion of a power that there should be a mere intention on the a PP ear - part of the donee to execute the power, without some steps taken to give it a legal effect (p). A mere parol promise or agreement to execute the power is not sufficient (q). Nor is the mere expression of a wish contained in a memorandum sufficient (r). But if an intention to execute the power appear clearly by some paper or instrument in writing, equity will aid a defect which arises from the instrument itself being informal or inappropriate (s): as, for instance, where the donee of a power covenants (/), or merely enters into an agreement, not under seal, to execute the power (w), or when by his will he desires the remainderman to create the estate authorised by the power <■/■), or if he promises by letter to grant an estate which he could only do by the exercise of his power (y), or (k) Sug. Pow. 535; Parwell, 342. (I) Chetwynd v. Morgan, 31 C. D. ry.iii. (m) Bug. Pow. 537; Farwell, 335. (n) 9 W. B. 393. (o) See Killick v. Cray, 46 L. T. 583. (p) Garth v. Townsend, 7 Eq. 223; Bruce v. Bruce. 11 Eq. 372; 40 L. J. Ch. 141. {q) Carter v. Carter, Mose. 370; Shannon v. Bradstreet, 1 Sch. & Lef, 72; y I;. K. 11. (r) Garth v. Townsend, 7 Eq. 220. {s) Saijrr v. Bayer, 7 Ea. .".77: m7 U. K. 217. it, Sug. Bow. 550. (in Shannon v. Bradstreet, 1 Sen. & Pel'. 52; 9 H. R. 11; Dowell v. Dtu- , 1 Y. & C. C. C. 345; 12 P. J. Ch. L58; Sug. Pow. 550. (x) Vernon v. Vernon, Ami.. 3; S 1 1 ^r . I'nw. 550; Karwi-ll, :i.'!7. (y) Campbell v. Leach, Amb. 740; Sug. Pow. 550; Parwell, 837. 5G4 DEFECTIVE EXECUTION if, having a power to appoint by an instrument sealed and delivered, he wrote and signed an unattested paper expressing his intention that a particular child shall have the property which is the subject of the power (z), or where a woman having a power to appoint a fund by deed or will gives a letter charging the fund in favour of a purchaser for value (a). In all these and the like cases equity will supply the defect. So also a recital by the donee of a power, in the marriage settle- ment of one of his daughters, who was one of the objects of the power, that she was entitled to a share of a sum to which she could only be entitled by his appointment, has been held sufficient evidence of his intention to execute the power, so as to be aided in equity (b), and even an answer to a bill in Chancery stating that the party did appoint and intended by writing in due form to appoint was held to be an execution of the power for this purpose (c) ; and a statement in a lease that certain persons were " the present trustees " of a will was held to operate as an appointment of new trustees (d). So, also, if the power ought to be executed by deed, but it is executed by will, the defective execution will be supplied (e), if there is nothing in the instrument creating the power to mark the intention of the creator of the power beyond the fact that he has pointed to a deed as the mode of executing the power. But it is competent to a settlor to make the nature and character of the instrument by which the power he creates shall be executed of the essence of the power, without observing which no execution of his power shall be valid. Equity in such a case will not uphold an act which will defeat what (he person creating the power has declared by expression or necessary implication to be a material part of his inteition (/). (z) Kennard v. Kennard, 8 Ch. 228; 42 L. J. Ch. 280. See 25 Ch. D. 373. (a) CJtartered Bank of Australia v. Lempriere, L. K. 4 P. C. 597; 42 L. J. P. C. 49. (fc>) Wilson v. Piqgot, 2 Yes. Jr. 351; 2 R. E. 246. See Poulson v. Welling, ■1 P. Wins. 533. (c) Carter v. Carter, Mose. 365. (d) Re Famell, 33 C. D. p. 599. (e) Toilet v. Toilet, 2 P. Wins. 489; Smith v. Adkins, 14 Eq. 405; 41 ^ i . J. Ch. 628. if) Cooper v. Martin, 3 (Jh. 57. OF POWERS. 565 The Court will supply the defect whore there has been a defective execution of a power by a formal or appropriate instrument: as, for instance, if a deed be required by the power to be executed in the presence of a certain number of witnesses, and it be executed in the presence of a smaller number of witnesses: or if it is required to be signed and sealed, and sealing is omitted (g). The validity of an appoint- ment by will, so far as regards execution and attestation, now wholly depends on the Statute Law (//): and a document, if testamentary, cannot be aided if it does not comply with the Wills Act (i), unless the testator is domiciled abroad and special formalities are prescribed (A*). The Court will also, in order to give effect to the inten- tion of the donee of the power for that purpose, aid the execution of a power not especially referred to, though such power was not present to the mind of the donee at the time of execution (/). But of course there can be no intention to execute a power No relief . , where no unless there is a knowledge of its existence (//>), and where it intention. was quite ambiguous which of two powers it was intended to exercise it was held that there had been no exercise of either (n). Equity will in no case aid a defective execution of a power, No relief so 1 . l i i :ls lu defeat if the intention of the person creating the power won Id he intention thereby defeated. Although a power will be aided, if it has ™^™ oi been executed by a will, when it ought strictly to have been executed by deed (o), the case is otherwise, if a power, re- (g) Kennard v. Kennard, 8 Ch. 228; 42 L. J. Ch. 280. An appointment bj deed is now rendered valid in many cases, although nol executed or attested with all the solemnities required by the instrument creating the power : 22 & 23 Vict. c. 35, s. 12. (In Bug. Pow. j>. S.v.i. in Be Kirwan, 25 C. D. 373, 381; 52 L. J. Ch. 952; Be Barnett, L908, 1 Ch. 102; 77 L. J. Ch. 2(57. See Re Simpson, 1916, 1 Ch. 602. (A) Re Walker, 1908. 1 Ch. 560; 77 L. J. Ch. 370. (I) Bruce v. Bruce, 11 Eq. 377 •. 40 I-. .1. Ch. I 11. (w) Griffith-Boscawen v. Scott, 20 ('. D. 358, 362: 53 I.. J. Ch. 571 : cf. Be Sharland, L899, 2 Ch. 536; 68 I- J. Ch. 717; Turnbull v. Hayes, 1901, 2 ch. .W.I: 70 I,. .1. Cb. 770. oo Be Herdman, :'.l L. K. lr. 87; cf. Be Sharland, supra. (o) Supra, p. 504. of 566 DEFECTIVE EXECUTION quired to be exercised by will, has been executed by deed (p). The intention of a power to appoint by will being to reserve to the donee of the power a certain control over the estate, until the moment of the death of the donee, if the donee of such a power should execute an appointment or a conveyance of the estate by an absolute deed, it will be invalid, because such an appointment or conveyance, if it avail to any purpose, must avail to the destruction of the power, since it would be no lonsrer revocable, as a will would be. The distinction between this case and the case of a power executed by will, though required to be executed by deed, is marked and obvious. An act done not strictly according to the terms of the power, but consistent with its intent, may be upheld in equity. But an act which defeats the intention of the person creating the power, and determines the control over the pro- perty, which was meant to rest in the donee, is repugnant to it, and cannot be deemed in any just sense to be an execution of it (q). As against In a11 cases > however, where the aid of the Court is sought whom equity f or ^e purpose of aiding the defective execution of a power, will aid a r i o , the party seeking relief must stand upon some equity superior to that of the party against whom he seeks it (r). There can be no relief, if the aid of the defective execution would be inequitable to other parties, or if it is repelled by some counter- equity (5). As against a purchaser for valuable consideration without notice, equity will in no case aid the defective execution of a power. But as against a remainderman, who takes, although by purchase, subject to the power (*), and also in general as against an heir-at-law or customary heir (a), relief may be had against the defective execution of a power. Whether, however, equity will afford its aid as against defective execution (p) Reid v. Shergold, 10 Yes. 378, 380; Re Walsh, 1 L. R. Ir. 373. (q) Ibid.; Sug. Pow. 560, 561; Farwell, 332. (r) Sug. Pow. 541. (s) Ante, pp. 559, 560. (t) Toilet v. Toilet, 2 P. Wms. 489; Shannon V. Bradstreet. 1 Scb. & Lef. 52; 9 R. R. 11. (u) Smith v. Ashton, 1 Ch. Ca. 263, 264. OF POWERS. 567 an heir totally unprovided for seems doubtful upon the authorities (#). In cases of defective execution of powers a distinction exists No reliei against def< c between powers which are created by private persons and those live execution which are specially created by, or come within, a statute. powers . The latter are construed with more strictness, and whatever formalities are required by the statute must be strictly complied with. In the case of powers which are in their own nature statutable, equity must follow the law, be the consideration ever so meritorious. Thus the power of a tenant in tail to make leases under a statute, if not executed in the requisite form prescribed by the statute, will not be made available in equity, however meritorious the consideration may be (y). Although the Court will not in general aid the defective Defective ° ° execution execution of a power in favour of a volunteer, except in aided on / p -n i ground of particular cases (z), the defective execution ol a power will be f mill i, ^c. aided in favour of a volunteer, when a strict compliance with the power has been impossible, from circumstances beyond the control of the party, as when the prescribed witnesses could not be found; or where an interested party having possession of the deed creating the power has kept it from the sight of the party executing the power, so that he could not ascertain the formalities required (a). So, also, although the Court will in no ease aid the non- execution of a power, as distinguished from its defective execution (6), the case is otherwise, if the execution of a power has been prevented by fraud (c), as where the deed creating the power has been fraudulently retained by the person interested in its non-execution (d). V (x) Braddick v. Mattock, 6 Madd. 363; Sun. p ow . 545; Farwell, 348. (y) Darlington v. Pulteney, Cowp. 267; Sug. Pow. 209; Farwell, 343. (z) Ante, p 562. (a) Farwell, 384; 2 Wh. & Tu. 807. (b) Toilet v. Toilet, 2 P. Wms. 489; and see Be Weeks' Settlement, L897, 1 (!li. 289; 66 L. J. Ch. 179. (c) Middleton v. M., 1 J. & W. 96; 20 R. K. 233. \d) Ante, p. 331. 568 MISTAKE IN JUDGMENTS. Mistake in judgments and judicial proceedings. The Court will also interfere in cases of mistake in judg- ments. But where an order has been perfected and expresses the real decision of the Court, the Court has no jurisdiction to alter it (e). A judgment by consent is binding, and after it has been passed and entered, it cannot be varied or set aside except upon some ground sufficient to set aside an agreement (/). Mistake as to the meaning of the words used, whether common to both parties or one party only but induced by the conduct of the other, is such a ground. So also is the fact that the parties were not ad idem as to the subject. The fact that the party complaining has, before he found out his mistake, sought to enforce the order, in the sense in which he under- stood it, does not prevent him from taking steps to have it set aside (g). After a judgment has been passed and entered, even where it has been taken by consent and under a mistake, the Court cannot set it aside otherwise than in a fresh action brought for the purpose, unless (1) there has been a clerical mistake or an error arising from an accidental slip or omission within the meaning of Order XXVIII. r. 11, or (2) the judgment as drawn up does not correctly state what the Court actually decided and intended to decide — in either of which cases the application may be made by motion in the action (//)• It seems that different considerations apply to interlocutory orders, but that even if a judgment has not been passed and entered the Court will not always interfere on motion; for example, where from the nature of the ground relied on con- flicting evidence is essential (i). Where an interlocutory injunction has been wrongly granted through the Judge's mistake in law, the plaintiff can be compelled to pay damages under the undertaking as to (e) Preston Banking Co. v. Allsup, 1895, 1 Ch. 141; 64 L. J. Ch. 196. (/) Att.-Gen. v. Tomline, 7 C. D. 388; 47 L. J. Ch. 473; Huddersfield Bank- ing Co. v. Lister & Son, 1895, 2 Ch. 273; 64 L. J. Ch. 523. (g) Wilding v. Sanderson, 1897, 2 Ch. 534; 66 L. J. Ch. 684; Hickman v. Berens, 1895, 2 Ch. 638; 64 L. J. Ch. 785. (h) Ainsworth v. Wilding, 1896. 1 Ch. 673; 65 L. J. Ch. 432. (i) Ibid. MISTAKE IX JUDGMENTS. 569 damages, though he has not been guilty of any misrepresenta- tion or other default in obtaining the injunction (/,•). Where a special case is stated in an action and a decision given upon it under a mistake of fact, the Court is not bound by that decision unless it has been adopted 1>\ subsequent orders, but may disregard it, direct the action to go on to trial, and direct inquiries to ascertain the real facts (/). A foreign judgment of a Court of competent jurisdiction is conclusive and not open to examination by another Courl unless the judgment impeached carries on the face of it manifest error, or it can be shown to have been obtained by fraud, or to be wanting in the conditions of natural just ice (in). It cannot be impeached on its merits, nor can a man set up as a defence to an action on it thai the tribunal mistook either the facts or the law. It makes no difference that the judgment proceeded on a mistake as to English law, and that the mistake appears on the face of the proceedings (n). In a redemption action an order was made giving the Mistake in plaintiff leave to lodge the mortgage money in Court and thai Sgwith^ in default of such lodgment within two months the action be ord ' dismissed. Under a bond fide mistake the plaintiff tailed to lodge the money until after the time fixed: Held that the Court had jurisdiction to extend the time so as to include the actual date of lodgment (o). A garnishee order absolute may he set aside on prooi of a mistake under which the order was obtained (//). So where owing to a mistake no cause was shown against a conditional order, the order absolute was set aside (q). (k) Hunt v. //.. r,\ L. J. (')i. 289; Griffith v. Blake, 27 C. D. 171. 177: 58 L. J. Ch. 965. (I) Tomline v. Underhay, 22 C. D. 496. (to) Messina v. Petrocchino, I>. R. 4 P. C. 144 ; II l>. .1. 1'. C. '27 ; Abouloff v. Oppenheimer, LO Q. B. D. 302; 52 L. J. Q. B. 809; Robinson v. Fenner, ante, p. 346. (n) Godard v. Gray, I,. B. 6 Q. B. L47 ; W L. J. Q. B. 62. (o) Collinson v. Jeffrey, L896, 1 Ch. 644; 65 L. J. Ch. 376. (p) Marshall v. James, L905, I Ch. 482; 71 D. J. Ch. 279. (q) O'Brien v. Killeen, 1914, 2 lr I; 68. awards. 570 MISTAKE IN AWARDS. Supply of Iii like manner, as equity will give relief against mistakes written in- in written instruments, will it give effect to the real intention strdments,&c. of t k e p ar ties, as gathered from the objects of the instrument and the circumstances of the case, although the instrument may be drawn up in a very inartificial and untechnical manner. For, however just the general rule may be, quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba fienda est (/•), yet that rule shall not prevail to defeat the manifest intent and object of the parties where it is clearly discernible on the face of the instrument, and the ignorance or blunder or mistake of the parties has prevented them from expressing it in the appropriate language (s). Mistake in i n re gard to mistake in awards, where there is a com- pulsory reference any party may appeal from the award on a question of law, and the Court may set the award aside on any ground on which it might set aside a verdict of a jury {t). Where the reference is by consent out of Court, the Court will not relieve against an award on the ground of mistake either in matter of law or fact, if the award is within the sub- mission, and contains the honest decision of the arbitrators after a full and fair hearing of the parties, and the mistake does not appear on the face of the award, or is not disclosed by some contemporaneous writing («). Where an award is o-ood on the face of it and the mistake is as to matter within the arbitrator's authority it cannot be remedied (.r). In the absence of proof of the arbitrator's misconduct or excess of jurisdiction or disregard of some fundamental rule of adminis- tration of justice, or admitted mistake, the Court will not set aside an award which is good on the face of it. An award may be impeached on proof of actual excess of jurisdiction; but the fact that the arbitrator took evidence on matters out- side his jurisdiction is not enough to vitiate the award (y). A (r) Co. Litt. 147 a. (s) Story, Eq. Jur. 168. (£) Ord. LIX. r. 3; but see now Arbitration Act, 1889, s. 14. (u) Dinn v. Blake, L. R. 10 C. P. 388; 44 L. J. C. P. 276. (x) Adams v. Great Northern, £c, Co., 1891, A. C. 31, 39. (y) Falkingham v. Victorian Rly. Gommrs., 1900, A. C. 452; 69 L. J. P. C. 89.' MISTAKE IN WILLS. 571 party in whose favour a mistake had been made cannot avail himself of it to set aside the award (z). The Court may, however, give leave to revoke the submission where the arbitrator is going wrong in point of law even in a matter within his jurisdiction (a). An arbitrator having signed his award is functus officio, and if his award does not embrace the matters in issue he cannot of his own motion treat it as no award and make another; but where the mistake is due to a misapprehension of the terms of the submission the Court has power to remit the matter to the arbitrator (b). The decisions on the power of the Court to set aside awards for mistake are now of less importance than formerly, since the Court has now power in all cases to remit the award (c), and arbitrators have now power to correct clerical mistakes arising from any accidental slip or omission (d). But the Court will not remit the award ori the sole ground that the arbitrator has made a mistake in law (e). With regard to mistakes in wills, if words have been Mistakes introduced into the will by mistake, the Court of Probate directs them to be omitted from the probate (/). The right words, however, cannot be substituted ( Br Nunn'8 Trust. 10 Eq. 333; II I.. J. ch. 265; Charter \. Charter, upra. (b) Holmes v. Custance, 12 Yes. 279. (c) Chambers v. Minchin, 4 Ves. 676. 574 MISTAKE IN WILLS. the case if there had been no mistake (d). But if the omission of some word or phrase is so palpable on the face of the will that no difficulty occurs in pronouncing the testator to have used an expression which does not accurately convey his mean- ing', and it is not only apparent that he has used the wrong word or phrase, but it is also apparent what is the right one, the Court will substitute the right one (e). Although the particulars which the testator has included in his description of the property the subject of the gift should be inaccurate, the gift will be upheld if there be enough of correspondence to afford the means of identification (/). If the property the subject of the gift be capable of being accurately identified, certain errors in the description will not vitiate the gift ( ascertain the subject of devise (z). The same considerations apply when the description or terms employed by the testator are insufficient to determine the person intended by the testator. It the object of the testator's bounty, or the person meant by him, is described in terms which are applicable indifferently to more than one person, parol evidence is admissible to prove which of the persons so described was intended by the testator (a). So. also, if it appear that the name inserted in the will is not the correct name of any one in existence, the Court may look at the circumstances surrounding the testator to ascertain who was meant by him (6). If the words of a will, aided by evidence of the material facts of the case, are insufficient to determine the meaning of the testator, evidence to prove the sense in which he intended to use them is, as a general proposition, inadmissible. Thus, evidence is inadmissible for the purpose of filling up a total blank in a will (c), or inserting a devise inadvertently omitted by the mistake of the person drawing, making, or copying the will ( 255; 56 L. J. Ch. 171: hut see Donaldson v. Bomber, 1897. I Ch. 75; 66 r<. J. Oh. 9:i. (b) lie Murphy, 7 D. H. I. 562. See Charter v. Charter. I,. K. 7 11. h. 882, per Lord Cairns; 43 L. J. P. 73. (c) Hunt v. Ilort. 3 15m. C. C. 311: Taylor v. Richardson, 2 Drew. Mi; -J;; I,. .1. Ch. 9; Re Harrison. 30 C. D. 3911; 55 I-. .1. Ch. 799. (d) Newbunjh v. Newburgh, 5 Madd\ 364; 21 \i. R. 810; Jarm. on Wills. I, ,,. 486. li would, however, seem that it ;* clause be inadvertentlj intro ,i u,-irc I, there may be an issue: to trj whether it is pari of the teetator'i will Ibid. (e) Goblett \ . Beechey, 3 Sim. 24. K.F. M 578 MISTAKE IN WILLS. from that described in the will was intended (/) ; or of chang- ing the person described (g) ; or of reconciling conflicting clauses in the will (h). Bevocation of Where a testator by a codicil revokes a devise or bequest mistake ^ ^ n n * s w ^ or * n a P rev i° us codicil, expressly grounding such revocation on the assumption of a fact which turns out to be false, the revocation does not take effect, being, it is considered, conditional, and dependent on a contingency which fails (i). So also if a will is cancelled by mistake, or on the presumption that a later will is good, which proves void, the heir is not let in, but the mistake may be relieved against (&). In such case equity does not alter the will ; it merely relieves the party from the effect of the mistake, thus placing him in the same condition as if the mistake had not happened (I). Document Where a document has been signed by a man and has been .signed as will j u i y attested in mistake for his will, it was held not admissible by mistake. J to probate (m). The doctrine of election is not merely applicable to a wilful Election . under mis- but also to a mistaken disposal 01 the property of another (n). An election made by a party under a mistake of facts or a misconception as to his rights is not binding in equity (o). He must not only know the facts, but he must be acquainted with the rule of equity which obliges him to elect (p). In order to presume an election from the acts of any person, that person must be shown to have had a full knowledge of all the requisite circumstances, as to the amount of the different properties, his own rights in respect of them, &c. (q). (/) Selwood v. Mildmay, 3 Ves. 306; 4 E. E. 1. (g) Del Mare V. Robello, 1 Ves. Jr. 412; Jarm. on "Wills, vol. 1, p. 527. (h) Ulrich v. Litchfield, 2 Atk. 372, per Lord Hardwicke. (i) Campbell v. French, 3 Ves. 321; 4E.E.5; Jarm. on Wills, vol. l,p. 288. (k) Onions v. Tyrer, 1 P. Wms. 345. (I) Ibid. (m) Re Hunt, 3 P. & D. 250; 44 L. J. P. 43. In the Estate of Meyer, 1908, P. 353. (n) Serrell, 15. (o) Wintour V. Clifton, 21 Beav. 468; 111 B. B. 159. (p) Spread v. Morgan. 11 H. L. C. at p. 611; 145 B. B. 315. (q) Wake v. Wake, 1 Ves. Jr. 335; and the other cases mentioned, 1 Sw. 381 n. MISTAKE. 579 A person who has elected under a misconception is entitled to make a fresh election (■/•). mr r\ • ... Condition The Court will not inquire into the fact of whether a imposed testator was mistaken or not with reference to his daughter's take. health and capacity assigned by his will as a condition for imposing a condition in restraint of marriaere (5). ° 6 v ' Cancellation by mistake. In the case of bills and notes a cancellation by mistake does not affect the liability of the parties whose signatures are cancelled (t), nor does a cancellation by an agent with- out authority (u). It appears that a mistake annuls the cancellation of a deed (#). (r) Kidney v. Coussmaker, 12 Yes. 136; 2 E. R. 118; Jarman on Wills, vol. 1, p. 555. (s) Morley v. Rennoldson, 2 Ha. 584; 12 L. J. Ch. 372. (t) Bills of Ex. Act, 1882, s. 63 (3). (w) Bank of Scotland v. Dominion Bank, 1891, A. C. 592. (x) Perrott v. P., 14 East, 423; 12 R. R. 566. See 67 L. J. P. 36. INDEX. ABATEMENT, of price for misdescription, 119, 413, 551 purchaser compelled to aocept with, 442 — 445 ABETTING FRAUD, no relief given to person, 462 person abetting may be made liable as principal, 189, 469 ACCOUNT, on setting aside a sale as fraudulent against vendor, 393—395 what interest allowed on taking, 398 on setting aside a sale of shares as fraudulent against purchaser, 400 no re-conveyance until, be taken, 398 of wilful default, in what cases ordered. 395, 408, 555 ACCOUNTS, opened on ground of fraud, if there be a single fraudulent entry, 408, 555 mistake, when, 555 between solicitor and client, 179 opened after a long lapse of time, 179. 364 between guardian and ward, 188 between partners. 185 when opened on account of errors, 555 ACQUIESCENCE, principle of, 124. L29, 351, ct seq. founded on fraud, 129 what is necessary to constitute, 129, 351 — 353 extent of the principle, 351 rt seq. casrs in which the principle does not apply, 129, 352 cases in which the principle applies with peculiar force, 355 distinction between cases where the alleged, takes place while the act in in progress and where it does not fake place until after the act is completed, 355 in expenditure on his land binds landowner, 125 applies as between trustee and cestui que trust , 357 representatives of man bound by his, 806 remainderman may be hound by, 856 company hound by, 356 standing by, 124 shareholder bj . 354 mistake, in eases of, 558, 560 582 INDEX. ACT OF PARLIAMENT, may not be used to perpetrate a fraud, 532 mistake in, 526 fraud on, 347 ACTIO PERSONALIS MORITUB, CUM PERSONA, 468 ACTION OF DECEIT. See Damages. when maintainable, 19 et seq., 420 et seq. can be maintained by whom, 420, 458 distinction between action for rescission and, 422 in what cases not maintainable, 421, 459 by shareholder of a company, 404, 414, 420, 424, 459, 461 maintainable, though rescission cannot be had, 411, 425 though contract be affirmed, 425, 430 against third party, 17, 18, 426 by shareholder of company, 420 et seq., 458 et seq. by shareholder of company against directors, for omission to specify contracts, 91, 429 against principal for fraud of agent, 427 maintainable by one who has by laches lost right to rescission, 430 after execution of conveyance, 426 not maintainable against one agent for fraud of another, 430 , except in particular cases, 430 pleading in, 448, 452 materiality of false statement, 423 ACTION TO RECOVER MONEY, on avoidance of contract, party defrauded may bring, 384, 411 ACTS, representation implied from, 66 ADMINISTRATION, LETTERS OF, obtained by fraud, 419 ADVERTISEMENTS, fraud through medium of, 460 misrepresentation by, 68 ADVICE, independent, absence of, effect of, 156, 190 what is independent, 156 AGENT. See Principal and Agent. principal bound by misrepresentation of, 93. 96, 427 unless he be acting ultra vires, 93, 96 action of deceit against principal for fraud of, 427 selling as if he were principal, 100 in what cases bound by fraud of sub-agent, 99, 430 of one principal dealing surreptitiously with other principal, 183 for sale or management cannot purchase, 181 INDEX. 583 AGENT— continued. misrepresentation of authority by, 39 bribe or secret commission to, 184 gift to, 184 may deal with his principal, when, 181 for purchaser may not purchase from himself, 181 may not make profit out of his business, 180 notice to, notice to principal, 291 — 299 abetting fraud on principal may be made party to action, 469 sub-agent, misrepresentation by. V)9 AGREEMENT. See Contract. misrepresentation a bar to specific performance of, 436 although made innocently, 438 unless compensation can be made, 442 mistake a bar to specific performance of. when. 508 et seq. unless with a variation, 526 mistake in written, when rectified, 526 et seq. when not rectified, 528, 529, 536 when relieved against, 426 in fraud of third party, 17 not to prosecute, when it amounts to undue influence, 195 parol evidence admissible to explain errors in, 521, 526, 53] not to bid at auction valid, 309 fraudulent respecting marriage, 305 — 309 to secure influence over other persons, 397 among heirs to share equally, 397 addition by parol to written, not admissible at law, 521 or on behalf of plaintiff in equity, 526 when admissible as a defence in equity, 446, 521, 522, 531 ALLOWANCE. See Account. ALTERATION, in position of parties, effect of, on right to rescind, 387 in property, effect of, on right to rescind, 387 AMBIGUITY. of agreement, 522, 546 patent, 522, 546 latent, 548. in what cases evidence admissible to explain. 548 a ground of defence in equity, 440, 546 in ri'pn rntat ion, 63 latenf ambiguity, 548 in wills, 571 et seq. parol evidence when admissible to explain, 572, 575 AMBIGUOUS RECITAL, ii', t qoI ice, 285 AMENDMENT OF PLEADINGS, not allowed to add a plea of fraud, 457 584 INDEX. APPOINTMENT. See Power. fraud upon power of, when relieved against, 320—331 when vitiated in toto by fraud, and when in part, 329 defective execution of power of, when relieved against, 561 et seq. relief in case of illusory, 331 release or revocation of, 330 ARBITRATIONS, fraud in, 341 mistake in, 570 ARBITRATOR. See Award. may not purchase claims of parties for reference, 171, 342 corruption or partiality of, 341 ARRANGEMENT. See Family Arrangement. ARTICLES OF ASSOCIATION, duty of shareholder to examine, within reasonable time, 300, 363 ASSIGNEE OF BANKRUPT may not purchase bankrupt's estate, 171 ASSIGNMENT, of equitable interest in personal estate, notice of, to trustee neces- sary to complete title, 148 of business to private company by insolvent traders, 168 by debtor for advance of money, 244, 247 by debtors giving preference to creditors, when valid or not, 241, 251, 258 for benefit of creditors, when valid or not, 258 ATTESTING WITNESS, whether affected with notice of contents of deed, 283 ATTORNEY. See Solicitor and Client. AUCTION, engagement by parties not to bid against each other at an, valid, 309 employment of puffers or underbidders at, 309 purchase at, by fiduciary vendor, voidable, 161 fraud by purchaser at, 311 opening biddings on ground of fraud, 311 sale " without reserve," 310 sale not avoided by fictitious bidding of stranger, 310 purchase of wrong lot at, 509 AUCTIONEER, mistake by, 509 mistake in particulars corrected by, 510 INDEX. 586 AUDITORS are in fiduciary position, 171 AUTHORITY, misrepresentation of, 39 warranty of, by agent, 40 AVOIDANCE, of contract. See Rescission. of policy, 101 AWARD. See Arbitrator. jurisdiction over, 341 fraud in, 341 mistake in, when relievable, 570 circumstances excluding relief against, 343 BANKRUPT, estate of, may not be bought bj assignee, 171 nor by commissioner, 171 not a party to action to set aside conveyance, 473 BANKRUPT LAWS, fraud under the. 242, 262 assignment by a man of the whole of his estate and effects is a, 243 assignment by a man of the whole of his estate and effects with a substantial exception, 243 or for a present advance of money, J 11 or for a present advance and future advances agreed to be made, 246 or for a past debt and a fresh advance, 247 or for a past debt and a fresh advance agreed to he made, 248 is not a fraud on the. if the transaction be bond fide, 249 and has not for its object fraud upon creditors, 246 drawing and accepting bills when a, 262 effect of lapse of time in validating what would otherwise be a, 250, 258 preference of a particular creditor a, 251 unless in particular cases, 252 or there be good faith, 253 composition deeds when a, 262 giving one creditor preference over anothei is, settlements void under, 240 covenant or bond by a man to pay monies in contingent bankruptcy is, in general, a, 264 fraud on, settlement by a man on himself until bankruptcy is, 263 settlement by a third parts on a man until bankruptcy, is not a, 263 assignment of property lor benefil of creditors, when a, 261 what lapse of time will pnvenf a deed, 4c., from being mv.li dated as a, 250, 258 586 INDEX. BELIEF, reasonable ground for, 32 BIDDER, employment of, at auction, when allowable, 311 employment of, at auction, a fraud at law, 309 BILL OF EXCHANGE, fraud in drawing and accepting, 138, 262, 482 mistake in, 535 cancellation by mistake, 579 proof of good faith, 482 BILL OF SALE. See Fraudulent Conveyance. BONA FIDE PURCHASER. See Purchaser for Value without Notice. protected in equity, 370 BOND, marriage and place brokage, 306 to marry given secretly, 306 for giving consent to marriage, fraudulent, 304 fraudulent upon an intended marriage, 304, 305 obtained by solicitors from their clients, 175 reform of mistake in, 535 joint, when deemed joint and several, 535 BRIBE, agent accepting, liable to principal, 184 cannot be followed before judgment, 399 BROKAGE BONDS, marriage and place, 306 BURTHEN OF PROOF, in cases of constructive fraud, 156, 160, 175, 190, 480 BUSINESS, sale to company, 168, 169, 239 CANCELLATION, of deeds by fraud or accident, 333 by mistake, 333, 379 order for, 392 " CATCHING BARGAINS," relief against, when given, 206, 207 CAUTION, mere want of, as distinguished from gross negligence, 269 purchaser not bound to use excessive, 269 INDEX. 587 CAVEAT EMPTOR, the rule of the common law, 76, 79, 84 in case of purchase of real estate, 80 in case of purchase of goods, 82, 84 does not apply where there is misrepresentation. 77, 85 on a sale of shares, 85 CERTIFICATE OF SHARES, representation by means of, 123 measure of damages where company cannot give shares, 488 CERTIFICATION. does not create estoppel, 123 CESTUI QUE TRUST, right of, to impeach purchase by trustee, 159. 397 may be lost by acquiescence, 357 or lapse of time, 364 right of, to impeach purchase from trustee, 162, 395 CESTUI QUE VIE, death of, before date of contract, 541 CHANGE, of solicitors not notice of change of interest, 285 CHARITY, Governor of, lease to, of the lands, invalid, 163 lands, tenant of, also a trustee, 163 inadequacy of rent of charity estates as a badge of fraud, 163 CHARTER, obtained by fraud, 420 CHASTITY. misrepresentation as to, 69, 334 CHATTELS, defrauded vendee may keep and sue for damages, 404 fraud on sale of,- 11, 78 measure of damage, 431 rescission of sale of, 386 where purchaser is insolvent, 411 where sold under a warranty, 410 revesting, on conviction, 11 ' UK AT, goods, obtained by, as distinguished from goods obtained by fraud 11 < EEQUE, fraud in adding figures to, 137 588 INDEX. CHILD, and parent, contracts, gifts, &c, between, when valid, 189 defective execution of power supplied in favour of, 562 CHOSE S IN ACTION, assignee of. cannot set up defence of purchase for value without notice, 382 rule as to notice of assignment of, does not apply to real estate ;>r to equitable interests in land, 148 CLAIM, concealment of, may amount to fraud, 128 CLERICAL ERROR, corrected by courts of law, 523 — 525 in judgment, 568 CLERK, may be fiduciary position, 179 CLIENT AND ATTORNEY. See Solicitor and Client. COERCION, undue influence on testator, 316. 317. And see Undue Influence. COLLATERAL FRAUDULENT AGREEMENT, effect of, on the principal agreement, 350 COLLATERAL MATTERS, misrepresentation as to, 67 mistake as to, 549 COLLUSION, 212. See Complicity in Fraud. COMMENDATION, of property by vendor, allowable, 51, 52 COMMISSION. See Bribe. double, 183 custom to give, 184 COMMISSIONERS, of bankrupts may not buy bankrupt's estate, 171 COMMITTEE, of lunatic may not purchase or rent the lunatic's estate, 171 COMMUNICATION OF REPRESENTATION, to whom made, 339, 460, 461 INDEX. 589 COMPANIES ACT, 1867, e. 38, what is fraud within meaning of, 91 omission to specify contracts required by, not a ground for rescis- sion, 429 a ground for action of damages, 429 COMPANIES ACT, 1900, particulars required to be stated in prospectus by, 88, 300 waiver clause, effect of, in prospectus, 402 COMPANIES ACT, 1908, contents of prospectus required by, 88 liability for statements in prospectus, 87 memorandum must appear in prospectus, 300 waiver clause in prospectus is now void. 93 COMPANY, misrepresentation and concealment in prospectus of a, 86- 93 party induced by, to take shares relieved from bis shares, 87, .^00, 459, 461 when not relieved from his shares, 363, 402. 414 must act with diligence, 363 vague representations in prospectus of a, 54 may bring action in its own name to set aside contracts, 459 must, however, act with diligence, 363 bound by representation of agents when acting within the scopi their authority, 97 purchaser of shares in a, when entitled to bring act inn of deceit against directors, 461 fraud in formation of, 337, 453 fraud as a ground for winding-up, 337 fraud upon a. by shareholder, 335, 400 directors, 163 promoters, 166 notice to proper officers of, is notice to, 300 notice to directors of, not notice to, 299 notice to shareholder of, not notice to, 299, 368 mistakes by, 87 formed for a fraudulent purpose, 337 one man company, not fraudulent, 168 promoters, action against, by company, 167, 459 winding-up on ground of fraud, 337 COMPENSATION, defects, &c, not admitting of, avoid contract, it nndisclosed, 80 119, 443 conditions respecting, 444, 551 what matters do QOl admit of, L19, 443 purchaser compelled to take defective estate with, 448 551 vendor's or purchaser's right to, for difference in quuntity, L19, 148, 55] for improvements on an estate on setting aside a transaction, allowed in respect of false representation through mistake, 118 590 INDEX. COMPLICITY IN FEAUD, effect of, 406, 462, 468 et seq. COMPOSITION DEEDS, secret arrangements by creditors, a fraud upon, 262 under statute, 262 COMPROMISES, vitiated by concealment, 109 of doubtful rights, not vitiated by mistake, 502 may be vitiated by mistake of fact, 544 consideration for, 502 CONCEALED FRAUD, time runs from discovery of, 16, 366 CONCEALMENT. See Misrepresentation. artifices to conceal, 71 by agent, 179 directors, 86—93, 163 guardian, 187 incumbrancer, 127 mortgagee, 71, 171 parent, 189 partner, 101, 185 persons in fiduciary relation. Ill, 154 principal, 33 promoters, 167 purchaser by, of advantages, 55, 75, 76, 86 of insolvency, 88 on sale by the Court, 78 solicitor, 173 trustee, 158 vendor, 52, 71, 75 contract obtained by, cannot be enforced, 10, 43 immaterial if fact be known, 70 if parties are at arm's length, 70 in compromises, 109 fraud of marriage, 303 guarantees, 107 policies of assurance, 101 prospectus, 86 — 93 suretyship, contracts of, 107 must be a duty to disclose, 68 be material, 68 refer to transaction, 68 of claim of incumbrancer, 127 latent faults, 77 patent faults, 76 title, 126 truth after discovery of misrepresentation, 30. 75. 76 reticence, 73 silence, mere, 73, 441 INDEX. 591 CONDITION, imposed under mistake, 579 CONDITIONS OF SALE, must not be misleading. 65 more especially if sale is by the Court, 441 effect of certain requirements in, 65 giving vendor right to rescind, 445 inviting attention to documents. 66 stipulating that buyer is to take a chattel " with all faults," 78 by which purchaser is debarred from complaining of error in parti- culars, 79 providing that errors shall not annul the contract. 120. 557 do not cover a fraudulent misrepresentation, 444 only apply to innocent errors, 444 apply to errors not discovered until after conveyance, 557 CONFESSOR AND PENITENT, undue influence between, 199 CONFIDENTIAL RELATION. See Fiduciary Relation. what constitutes a, 154 CONFIRMATION, of impeachable transaction, when binding in equity, 348 concealment will vitiate, 348 marriage brokage bonds incapable of, 307 CONSENT, necessary in contracts, 149 what i6 necessary to constitute, 149 to marriage, fraud in withholding, 308 CONSIDERATION. See Inadequacy of Consideration. may In- cither good or valuable, 222 what will constitute a valuable, 222 el seq. marriage a valuable, 222 unless there be fraud, 234 inadequacy of, not per se a ground for relief, 195, 446 or for refusing specific performance, 195 when a ground for relief, 174, 195 false statement of, 197 may vitiate a deed, 198 not expressed, may he proved, 229 in what cases question of, cannot ;irisc. 230 uncertain, 440 untrue statement of, 17'',. 197 CONSTRUCTIVE FRAUD, the meaning of the expression, 5 592 INDEX. CONSTRUCTIVE NOTICE. See Notice. what is, 267 et seq. as distinguished from actual notice, 267 limits of doctrine of, 268 et seq. notice of deed is notice of its contents, 272 notice of possession is notice of equities, 275 notice to agent or solicitor, 291 to partner, directors or shareholders, 299 to trustees, 301 possession of deeds, 281 party not fixed with, of instruments or facts which may only by possibility affect property, 284 may be excluded by positive representation, &c, 51, 287 only operates in matters affecting title, 291 registration is not notice, 301 CONTRACT. See Agreement. vitiated by absence of consent, 10 induced by fraud voidable, uot void, 10 of lunatic, idiot. &c, 149 of person in a state of mental imbecility, 150 of person in a state of intoxication, 151 of infant, 151 of married woman, 153 by a party under duress or threat of. imprisonment, 194 in a state of embarrassment, 197 vitiated on the ground of undue influence, 193 with persons in a fiduciary relation, 154 marriage brokage, not capable of confirmation, 306 rescission in part, 387 CONTRACTING OUT OF FRAUD, is illegal, 17 CONTRIBUTION, between wrongdoers, 467 CONVEYANCE. See Fraudulent Conveyance. reformed in equity, 527, 540 errors discovered after execution of, 408, 556 rescission after execution, 407, 556 CONVEYANCING ACT, 1882, provisions of, with regard to notice, 267 CONVICTION, revesting of property on, 11 COPYHOLD, surrender of, supplied in equity, 561 purchaser need not take, instead of freehold, 117, 443 nor need he take freehold instead of, 117, 443 index. 593 CORPORATION. lease to member of. of corporate property set aside, 171 bound by representations of its agents, 96 CORRECTION, of misrepresentation. 31 COSTS, action collusively brought, 492 against infant, 488 solicitor may take' security for past or future, 176 general rule as to, 488 charges of fraud, if unsubstantiated, visited with, 490, 491 unsuccessful litigant as a general rule has to pay, 488 do not always follow the event, 488 unsuccessful litigant exempted from payment of, 489 receiver charged with fraud, of, 492 solicitor made party to a suit for the purpose of having costs paid by him, 470, 49-2 party abetting a fraud made party, and ordered to pay, 468 469 COUNSEL, «rule in equity as to dealings between client and, 179 notice to, is notice to client, 291, 293 COURT, sale by the, set aside on ground of fraud, 411 sale by, disclosure by purchaser on, 78 settlement under order of the, set aside as obtained by fraud, 417 order of, sufficient to rectify, without deed, 540 COURTS OF COMPETENT JURISDICTION, assistance of Courts of equity to prevent fraud upon, 346 COVENANTS, notice of lease is notice of, 273 in lease, deceptive statements respecting, 63, 72 duty to disclose onerous and unusual, 74, 80, 273, 274 COVERTURE, rights of married women in respect of property notwithstanding, 153 husband's liability for wife's torts, 153 separation deed induced by fraud, 154 CREDIT, representations as to, 96, 426 CREDITORS. See Fratoulbni Conveyance. I ' and upon, 2\2 el sf'tf. assignment for benefit of, when valid or Dot, 250, 2 I raudulent devises in fraud of, 264 favoured in equitj in cases of defective execution of powers, 5i preference of particular, 241, 251 k.i'. 38 594 INDEX. CKED1T0RS— continued. assignment by debtor, when a fraud on the bankrupt laws, 250 trust deeds for, when fraudulent, 259 statute of 13 Eliz. c. 5. ..212 subsequent creditors, 218 CUSTOM, to give commission, 184 DAMAGE must be proved in action for deceit, 3, 67, 430 DAMAGES. See Action of Deceit. against agent, 433 party defrauded may recover, 425, 430 measure of, in actions of deceit, 430 measure of, in case of mistake, 560 not recoverable, if remote, 67, 432 for communication of disease by animals sold through fraud, 432 measure of, where coal has been taken from a mine, 433, 561 where specific performance is refused on ground of mistake, 561 not recoverable for loss of bargain, in absence of fraud, 560 recoverable in actions of specific performance when there has been misrepresentation, 561 shareholder cannot recover, against company, 404 against promoters, 396 DEATH, affecting rights and liabilities, 433, 458, 467, 468 must be disclosed when, 71 DEBENTURES, subscribers for, entitled to relief for misrepresentation in prospectus, 93 assignment subject to equities, 383 DEBT INCURRED BY FRAUD, bankrupt not discharged from, 263 DECEIT. See Action of Deceit. DECEPTIVE STATEMENT, is a fraud, 62—66, 71 DECREE. See Judgments. fraud in, remediable in equity, 344, 418 purchases under, take with notice of fraud apparent on face of, 378 mistakes in, 568 DEED POLL, rectification of, 531 INDEX. 595 DEEDS, fraudulent suppression and destruction of, 323 execution in false name, 334 given in extreme intoxication, 151 vendor need not state defects apparent on face of, 76, 80 cancellation of, 323, 392 fraud in the procurement of the execution of, 334 omission to ask for, or to retain, its effects as regards priority, 139 140, 282 retention of, by settlor does not prevent its operation, 221 may be rectified though enrolled, 529 notice of, as affecting property, is notice of entire contents, 272 notice that party holds, is notice of his incumbrance, 272, 273 attesting witness not affected with notice of contents of, 283 fraud in, provable by parol evidence, 485 possession of, by solicitor not notice, 281 DEFECTS, patent and latent, what are, 76, 77 disclosure or concealment of, by vendor, 76 in execution of power, when supplied in equity, 561 in instruments, when supplied in equity, 570 in estate, abatement of purchase monies in respect of, 443 — 445 DEFICIENCY, in quantity of estate, compensation for, 119, 443 DELAY. See Time. in instituting a suit to impeach a transaction a bar to relief, 357 et seq. especially in certain cases, 359 et seq. even as between trustee and cestui que trust, 364 in cases where a fiduciary relation exists, 364 in the case of shareholders in companies, 362, 363 may be set up against a company, 368 acquiescence, as distinguished from, 359 representatives of a man bound by his, 369 in case of false representation, not material, 424, 430 on both sides, 365 by shareholder, 363 in case of undue influence, 367 DEPRECIATORY, remarks, &c, by purchaser, their effect, 55 DESTRUCTION, of deeds, fraudulent, 323 DEVISE, in fraud of creditors. 264 596 INDEX. DIEECTOES, misrepresentation by, 86, 99 binds tbe company, 96, 99 false reports by, 96 stand in a fiduciary relation to tbe companies, 164 may not make profit out of the business of the companies, 164 mistakes of, 87 bound to account for all profits made by them, 164 fraud by, 86, 99, 428, 429 DIEECTOES' LIABILITY ACT, 1890, provisions of and liability under, 87, 430, 459 DISCLOSUEE. See Concealment. of facts, defects, &c, by vendor, 71 et seq. of advantages, &c, by purchaser, 71 by purchaser as to value of property, 55, 86 on sale by the Court, 78 on sale of a lease, 74 on sale of real estate, 80 DISCOVEEY, in cases of fraud, 449 DISPAEAGEMENT OF PEOPEETY, by purchaser, not a fraud, 55 DISTEESS, rule of equity as to transactions entered into by a person in, 194 DOLUS, according to the civilians, 138, n. DBUNKABDS, acts and contracts of, relievable, where there is fraud, 151 specific performance against, 151 where relief refused to, 151 DUEESS, relief in cases of, 194, 316, 331 ELECTION, what is necessary to constitute a valid, 578 relief against, made under mistake, 578 to affirm is a waiver of right to rescind, 401, 403 what constitutes, 401 delay may preclude, 403 by party defrauded, and to recover damages, 403 to rescind a contract, 10, 402 mode of exercise of, 404 may be exercised by plea, 405 ixdex. 597 ELECTION, DOCTRINE OF, relief against, made under mistake. 578 ENCOURAGEMENT. of party in error may amount to fraud. 74. 124, 128, 497 EQUITABLE ESTATE. See Equitable Interest. in land, purchaser of, acquires no priority, by notice to owner of legal estate, except in cases of fraud, 1 In EQUITABLE ESTOPPEL, doctrine of, founded on fraud, 120 may arise from passive conduct or concealment, 124 what necessary to constitute, 123 standing by, 124 by negligence, 145 EQUITABLE INTEREST, in personal estate, purchaser of, acquires priority by giving notice to person in possession of fund, 148 as between parties claiming a mere, he who is prior in time has i better equity, 379 defence of purchase for value without notice has no place. 380 the negligence of one may give the other a better equity, 141, 381 the possession of the deeds may give a better equity. 139, 380 EQUITABLE TITLE, of purchaser without notice protected by the legal estate. 370 mere, postponed to prior equities, 379 with possession of deeds and the ownership of the legal estate, priorities between, 140, 378 EQUITIES, as between innocent parties defrauded, 14, 133 as between mere, purchase for value without notice has no place, 379, 380 priorities as between, 379 EQUIVOCAL, terms of agreement. See Ambiguity. ERROR. See Mistake. clerical, in agreement, corrected by Court, 523— 52*> not discovered until alter execution of conveyance, 108, 556 compensation for, when it may be bad, -V.7 in account, 555 in award, 570 in judgment, 56 ESTATE TAIL, barred by fraud, remedy of remainderman, 158 misdescription of, in settlement, 528 598 INDEX. ESTOPPEL, 120. See Equitable Estoppel. EVIDENCE. See Proof. allegation of fraud in winding-up petition, 337 rules of, same in equity as at law, 474, 476 to prove fraud, 474 parol, where admissible to prove consideration in a deed, 198 of variation in or addition to agreement admissible in defence to a suit for specific performance, 446, 526 admissible on application to rectify or rescind an instrument on the ground of mistake, 521, 531 when admissible to explain ambiguity in an agreement, 548 when admissible to explain a will, 575 of one witness cannot prevail against a denial by the defendant, 486 of other frauds when admissible, 479, 480 EXAGGERATION, distinguished from misrepresentation, 54 EXECUTION OF DEED, procured by fraud, 334 in false name, 334 EXECUTION OF POWER, defective, when relieved against in equity, 561 intention to execute the power, must appear, 563 persons in whose favour execution will be aided, 562 no relief so as to defeat intention, 565 as against whom execution will be aided, 566 when aided in favour of a volunteer, 567 non-execution, when aided, 567 no relief where no intention, 565 no relief in case of statutory powers, 567 EXECUTOR. See Fiduciary Relation. rule in equity as to, dealing in respect of the testator's estate, 170 may bring an action to have a transaction, fraudulent as against his testator, set aside, 458 action of deceit against, 467, 468 mistake by, 472 EXPECTANCY, fraud in respect of sale of, 203 EXPECTANT HEIRS, fraud upon, relieved against, 203 EXPENDITURE, in improvements, allowed to a purchaser in account, on rescinding a transaction, 384 purchaser when protected against person encouraging, 126, 128 when a part-performance in equity, 131 INDEX. 599 FACULTY, revoked on ground of fraud, 347 FALSA DEMONSTRATIO, inaccurate description, when immaterial, 547 FALSE REPRESENTATION. See Misrepresentation. FALSE STATEMENT, of consideration, 197 FAMILY ARRANGEMENT, rule as to validity of, 191, 327, 545 valid, notwithstanding mistake of parties, 545 FAMILY SETTLEMENT, upheld though consideration be small, 191 FATHER, and 6on, rule in equity as to dealings between, 192 FAULTS, sale with all, 78 FEEBLE-MINDED PERSONS, transactions with, set aside, 150 FELONY, goods obtained by, as distinguished from goods obtained by fraud, 11 FEME COVERT, may be sued in tort and liable for damages, 153 bound by fraudulent representations, 153 defective execution of power aided in favour of, 562 liability of husband for torts of, 153 FICTITIOUS name, transfer of shares into, 335 bidding at auction, by stranger, 310 FIDUCIARY RELATION, rule of equity as to dealings between parties standing in a position to each other of, 154 et seq. proof of fairness of transaction rests on party filling the position of, 156 independent advice, where necessary, 156, 157, 174, 190 limitation of general rule as to dealings between parties in a, 155 after termination of, parties may deal with each other, L68, 162 rule of equity as to dealings between parties in a, may continue after cessation of, 158, 190 applies to third persons who make themselves parties to such > dealings between, L88. 189 HEIR, of party defrauded may sue. for relief, \->* agreement between expectant heirs to bare equally is valid 807 ■ le;iiiiij_ misrepresentation, 274 misdescription, respecting, when fatal, 117, II purchaser of, has what notice of lessee's title, 281 nol bound to take underlease, ill except in certain ca es, ill 608 INDEX. LEASE — continued. warranty on, when implied. 81 rectification of, 536 LEASEHOLD, described as freehold, variance is material, 117, 443 settlement of, whether voluntary, 228 LEAVE AND LICENCE, rule at law as to, 130 as distinguished from equitable doctrine of acquiescence, 130 LEGACIES, fraud in the prevention of, 318 revocation of, under mistake, 578 false reason given for, when avoiding, 575 obtained under a false character, 418, 575 LEGAL ESTATE, how far a protection to purchaser, 370, 378 not a protection where a purchaser has omitted to inquire for the title deeds, 139, 282 being outstanding, notice of, is notice of the trusts on which it is held, 279 when a protection against incumbrances, 370, 378 LEGISLATURE, fraud upon the, 347 LESSEE, has constructive notice of lessor's title, 279 LESSOR, notice of tenancy, not notice of title of, 278 lessee or purchaser from lessee has notice of title of, 279 LICENCE, to exercise a right over the land of another may be countermanded at law by the owner of the soil, 130 not so in equity, if there has been acquiescence or encouragement to spend monies, 125 LIEN, notice of possession of deeds is notice of, 291 vendor's tenancy, when not notice, 278 LIFE INSURANCE, what must be disclosed on, 104 LIMITATIONS, STATUTE OF, equity acts upon analogy of, and follows as to legal demands, 358 no delay short of period fixed by, is a bar to relief in cases of false- representation, 360 INDEX. 609 LIMITATIONS, STAT1 TE OF— continued. effect of, upon equitable demands and in cases oi equ I ibl titles effect of, on right to rescind contract . 3G0, 366 effect of, on right to sue for breach of trust, 366 deceit, 360 recovery of laud. 368 delay for less than time allowed by, may bar righi to relied in equity, 359 not a bar in cases of fraud, 360. 366 LUNATIC. how far incompetent to contract. 149 committee of, may not purchase lunatic's estate. 171 MAKING REPRESENTATIONS GOOD, doctrine of. now thought to be exploded. 8, 415 MARITAL RIGHTS, of husband, fraud upon the, 305 settlement or conveyance of property during treaty of marriage without notice to the intended husband. 305 of wife, in what case fraud upon, 306 MARKET OVERT, goods purchased in. not reclaimable though obtained by larceny, II unless on conviction of thief, 11 MARRIAGE. See Settlement. a sufficient consideration for a settlement. 222 except in particular cases. 223 annulled by fraud. 309 settlement before, may be fraudulent and void. 234. 245 whether valid in favour of collaterals. 223, 224 on faith of false representation as to pecuniary standing, 304 is not a part performance of parol agreement. 132 fraud in withholding consent to, 308 mistake in settlement on, 528, 533 rectification of settlement, 528, 533 MARRIAGE ACT, fraud on the, 308 MARRIAGE ARTICLES, fraud upon, 304 ettlement rectified m accordance with, 533 MARRIAGE BROKAGE BONDS, incapable of confirmation, 307 relieved against . 306 MARRIED WOMAN. how far husband liable for tori i of, 168 acting fraudulently is liable for damages, when, L68 K.K. 39 610 INDEX. MARRIED WOMAN— continued. separation deed to enable a, to carry on adulterous intercourse, 334 separation deed induced by fraud, 154 ante-nuptial settlement by, in fraud of husband's marital rights, 305 participation of, in fraud with husband, 234, 245 undue influence by, 201 MARRY, bond to, when a fraud, 308 MATERIALITY, of representation generally, 43, 423 of representation in prospectus, 90, 424 in contract of insurance, 101 — 107 proof of, 423, 478 MEANS OF KNOWLEDGE, not the same thing as knowledge, 49, 50, 267, 476 does not preclude recovery of money paid by mistake. 552 MEDICAL MAN, as to purchases by, and gifts to, from patient. 199 MISAPPREHENSION, agreement entered into under, when not enforced, 508, 509 MISDESCRIPTION. See Misrepresentation. condition respecting, 444 destroys effect of what would otherwise be notice. 51, 287 what so material as to avoid a contract, 117 specific performance decreed notwithstanding, where compensation can be made, 441 MISREPRESENTATION, action of deceit for, 19, 420 advertisement, by, 68 agents, by, 93, 97, 179, 426 allegations of, must be met by proof of knowledge, 48. 476 artifices to mislead, 66, 71 authority, of, 39 becoming true, 31 caveat emptor does not apply where there is, 52, 53, 81 companies, by 86 compromise, in, 109 concealment may be, 68 cost of property, as to, 55 damage, must be attended with, 67 deceit, when fraudulent, 19 difference in substance amounting to failure of consideration, 117 disparagement distinguished from, 55 duty to know the truth, by person upon whom a, 34 to perform, by those having a, 93 estoppel, 120 exaggeration distinguished from, 54 INDEX. ,; 1 1 MISREPRESENTATION— continued. express terms, need not be in, 62 fact, must be in respect of a, 51 failure of consideration, 117 fraudulent, when, 19 future, something to be done in the, as to, 57 indemnity for, 412 infant, by, 151 innocent, 19, 111 insurance, in policies of, 101 intent to deceive, necessary, 66 intention, as to, 56, 445 latent defects, 77 law, as to matter of, 60 materiality of, 43, 46, 90 merely incidental, 67 mistake, by, 18, 111 " more or less," 119 motive is immaterial, 29 need not be in express terms, 62 negligence may be tantamount to, 133 notice, destroyed by, 48 — 51 omission of purchaser to disclose insolvency, 86 opinion, a mere matter of, is not, 51 part performance founded on, 130 partner, by, 101 patent defects, 76 persons having a duty to perform, 93 price, as to, 55 prospectus, in, 86 proximate cause of transaction, must be, 45, 67 purchaser, by, 55, 76, 86 reliance on, 48 reports of others, by adopting, 33 rescission on ground of, 386 6anitary condition of premises, as to, 413 silence not generally a, 73 specific performance, a defence to, 436, 441 standing by, 124 sub-sale, on, 415 suretyship, in contracts of, 107 value, as to, 51 — 54, 445 warranty distinguished from, 40 what constitutes, 19 " with all faults," 78 MISTAKE, accounts opened on ground of, 555 acquiescence in, 558, 560 agrcerni lit , in application of, 546 in date <>f, 517 in expression of, 517, 523 in matters inducing, 540 612 INDEX. MISTAKE— continued. auction, in bidding at, oil award, in, 570 bill of exchange, in, 535 cancellation by, 333, 579 caused by misrepresentation, 518 collateral fact or motive, as to, 549 common to both parties, 522 et seq. in expression of agreement, 517, 522 correction of, as a matter of construction. 523 rectification of, 527 specific performance of, 526 in matters inducing agreement, 540 to which agreement is to be applied. 546 compromise, in, 502, 544 condition imposed by will under, 579 conveyance, discovered after execution of, 556 court, of, 501 damages in case of, 560 date of agreement, in, 517 deed poll, in. 531 definition of, 493, 505 directors, of, 87 disclaiming responsibility for, 515 discovery of, effect of, 520 distinguished from fraud, 505 election under, 578 evidence admissible to prove, 512, 521, 526, 531, 575 execution of powers, defective, 561 executor, by, 501 fact. of. 504 et seq. falsa demonstratio , 547 forgetf ulness, 505 fraud distinguished from, 505 fundamental error, 116 instruments drawn untechnically. 570 rectified on ground of. 527 judgments, in, 568 judicial proceedings, in, 568 lapse of time a bar to rectification, 539 latent ambiguity, 548 law, of, 493 legacies, false reason given for, 575 Limitations, Statute of, 558 marriage settlement, in, 528. 533 material, must be, 506 misrepresentation, made through, 111, 518 money paid under, of fact, 552 of law, 499 ■spent on another's estate by, 125 motive, in, 513, 549 mutual, 496, 540 negligence distinguished from, 505 INDEX. 613 MISTAKE -continued. igence of third parties causing, one part} only, of, Wi . 507, 513, 515 order, m not complying with, io rectify sufficient without deed, 540 parol evidence admissible to prove. 512, 526, 531, 575 payment of money under, of fact, 552 [aw, 199 payment out of Court . 502 person with whom contract made, as to, Mi policy, in effecting, 103. 530, 535 powers, defective execution of, 561 principles i o which relief granted, 559 private rights, as to. 496 procedure, in, 568 prospectus, in. 87 purchaser, in name of, 557 recovery of money paid, allowed, or not claimed under, 499. 502 rectification on rlie ground of, •">-". 535 relief, principles on which granted, 559 rescission, 5<»7. 55'.). 560 revocation of Legacies under, 578 ul will under. 578 right- oi p mi ies, as to, 196, 497 shares, in issue or numhers of, 534 in transfer of, 543 specific performance m cases of. 512, 520. 526, 551 statute, in, 526 subscriptions given under. 210 substance, in, 116 telegram, in. 506 terms imposed on setting aside transaction. 531. 560 third parties . c bused by, 506 trustee, bj . 501 unilateral, 116, 507, 513, 530 unintentional. 519 voluntary died in. 538 warrantj made by mistake, 12 wilful default caused by, 521. wills, in. 571 MONEY-LENDERS ACT, 1900, ground for re-opening transaction under, 207 agent of, receiving commission from both Bides, L88 MONIES, paid under mistake of fact , when recovi rabli . of law . u Inther recovei able, 199, 501 from illegal contract ertion <■! title to, 165, 166 allowed in account undei a mi 503 not cla imed bj i ea ion of a mistaki undei ! obligation, 502 p .1 nndi i compul lion of li tl proa cannot bi recoven d pa id in furtherance of a fraud . 168 614 INDEX. " MORE OR LESS," quantity of land stated to be, 119 MORTGAGE, rectification of, 536 MORTGAGEE, puisne, may buy the mortgaged property from a prior, under his power of sale, 171 may buy from mortgagor, 171, 202 exercising power of sale cannot purchase on his own account, 172 legal, not inquiring for or giving up the title-deeds, how affected in equity, 139, 141 equitable, not inquiring for or giving up the title-deeds, how affected in equity, 142 of leasehold, obtaining renewal, 171, 202 whether in a fiduciary relation, 141, 171, 202 misrepresentation by mortgagor to, 123 MOTIVE of representation, not material, 29 mistake as to. 513, 549 NEGLIGENCE, distinguished from fraud, 6, 133 from mistake, 505 may be tantamount to misrepresentation, 133 principle of law as to, 133 application of, as between two innocent parties who have been defrauded by a third, 14, 134 application of, as between owner of legal estate and a party ■having an equitable claim, 134 application of, as between parties having mere equitable interest in real estate, 142, 144 in what cases does not apply, 144 distinction between gross and mere, 138 as understood in the Roman law, 138, n. as distinguished from mere want of caution. 269 gross, treated as notice, 268, 269 in signing without reading an instrument, 11 — 14, 484 omission by incumbrancer to give notice of claim is. in case of per- sonal estate, 148 secus in cases of equitable interests in real estate. 148 omission to inquire for title-deeds is gross, 141, 282 not getting or giving up title-deeds, when gross, 139, 140 mistake caused by negligence of third parties, 506 by trustees, 142 NEGOTIABLE INSTRUMENT, exception from the general law as to fraud, 147 cancellation of, by mistake, 579 NON EST FACTUM, 11—14 INDEX. G15 N< >TICE. See Constructive Notice. doctrine of, 265 founded on fraud, 265 actual, 266 constructive. 267 gross negligence may be treated as, 268, 269 mere want of caution not tantamount to, 269 that property is incumbered, &c, is notice of incumbrances, fee., 272 of deed is notice of contents, 272 of lease is notice of covenants, 273 that a man is in possession of land i6 notice of all equities therein, 275 of mortgage to solicitor not notice of state of account. 282 of tenancy is notice of equities of tenant. 275, 277 of past tenancy not notice of equities of tenant, 278 of tenancy not notice of lessor"s title, 278 person held to have, of facts which he ought to have known, 279 that title-deeds are in possession of another is 'notice of bis claim, 282, 291 possession of deeds by solicitor of vendor is not, of interest of solicitor therein, 281 witness to deed not bound by, of contents of deed, 283 party specially referred to another for information fixed with, 283 mere statement that information may be had at a particular place not, 283 that property is charged is notice a« to the nature of the charge, 284 doctrine as to, does not extend to instruments or circumstances which may only by possibility affect property. 284 may be excluded by positive representation. 51, 287 misrepresentation may avoid effect of what would be, 51, 287. 291 misrepresentation not got rid of by constructive, 48 registration of assurance is not, 301 registration with, of unregistered assurance, 301 to solicitor or agent is notice to client or principal, 291 notwithstanding that solicitor be committing a fraud upon client, 295 unless presumption of constructive notice is repelled. 297 to partner is notice to other partners, 299 to one of several trustees is notice to all, 301 to director of company not notice to company, 299 to shareholder of company not notice to company, '.-". ,, .' to proper onV< i ol companj notice to company, 299 shareholder uol necessarily fixed with, of contenl I kndum or article-, of association of company, ■"> l|l » doctrine of, applies, although no solicitor be employed, 268 gives priority as between equitable incumbrancers in personal estate, 148 doeanoi giv< prioritj ae between equitabli intereei in land, L48, 383 purchaser for value without, having legal estate, protected in equity, 370 ei teq purchaser for value with, from purcba ei with | tected, 8"i purchaser having, cannol defeal it bj getting in the legal i I 616 INDEX. NOTICE— continued. of another having better right to call for legal estate is notice of all equities, 374 purchaser with notice of facts which ought to have put him on inquiry cannot claim as a purchaser without, 376 before payment of purchase-money, though it be secured, and con- veyance executed, is sufficient, 378 before conveyance, and payment of purchase-monies, 378 purchasers under a decree affected with, 378 purchase for value without, no defence as between persons claiming mere equities, 379 defence of purchase for value without, cannot be admitted, unless it is pleaded, 456 purchase for value with, formerly not bound by a voluntary settle- ment, 265 matters of which purchaser has, vendor need not state, 77 statutes giving protection to purchasers without, 384 tacking, 384 OCCUPATION. notice, of, notice of equities of occupier, 277 aliter as respects a past occupation, 278 rent debited in account to a purchaser on rescinding purchase of real estate, 393, 395 OFFER for purchase by third person, false assertion of, by vendor, 53, 55 OFFICE BROKAGE BONDS void on ground of public policy, 306 OMISSION of terms of agreement, when rectified, 527 " ONE MAN COMPANY " not fraudulent if business is solvent, 168 OPINION. puffing statements amounting to mere expression of, allowable, 51—54 PARENT AND CHILD, rule of equity as to dealings between, 189 bounty by child to parent, how regarded, 189, 190 family arrangements, 191 PAROL EVIDENCE. See Evidence. admissible to prove fraud in a deed, 585 admissible to prove mistake, 512, 521, 526, 531, 575 not in general admissible to vary a written agreement, 521. 531 admissible to explain will, when, 575 PART, unspecified, of estate, notice of charge as affecting, 272 INDEX. ''IT PARTICEPS CRIMINIS, cannot in general have relit t . 162 may in particular cases hav< 164 PARTICULARS OF FRAUD, must be specifically pleaded. 148 discovery before giving. 149 PARTIES. who may sue for relief on the ground of fraud, 158 defendants to a suit for relief on the ground of fraud, 467 contribution, 467 third parties, who haw- abetted a fraud, may be made, 469 members of syndicate, 472 particeps criminis, 462 PARTNERS, stand to each other, in respect of dealings between them, in a fidu- ciary relation, 185 one of two, how far liable for fraud of other. 171 PARTNERSHIP, firm, how far bound by fraud or misrepresentation of a partner. 101, 471 terms of rescission of. for fraud. 399 PART-PERFORM A N C E , doctrine of, founded on fraud, 130 what acts of, are or are not sufficient in equity, LSO — 133 PASSING-OFF, goods or business of another, when restrained, 135 evidence in, 477 PATENT, defects, vendor need not point out, 76 ambiguity, evidence not admissible to explain. 522 PAYMENT, of monies, under mistake of fact, relievable, 552 ol law, whethei or qoI relievable, 199 tnjuncl ion to restrain tin . 134 PERSONAL REPRESENTATH may bring action for fraud upon the deceased, made parties i" actione for fraud of the deceased, 167, 168 l'in ST< IAN AND PATIENT, -ilt i by p. it leni to physician, L9fl P] Al I. BROKAGE BONDS, fraudulent and roid on ground ol public policy, : h>*'. 618 INDEX. PLEA of fraud avoids a contract, 406, 455 to action against shareholder for shares, 405. 452 must be specially pleaded, 454 imports a repudiation of the contract, 454 by defendant to action. 454 # PLEADING, amendment of. not allowed to raise a case of fraud. 457 fraud, mode of, 448 by shareholder of company, 452 evidence not admissible to prove fraud, unless fraud be alleged in the, 448, 449 in action of deceit, 453 illegality, 451 purchase for value without notice. 456 acquiescence. 455 notice, 450 Statute of Frauds, 456 statute of 13 Eliz. c. 5. ..457 wilful default, 457 estoppel, 457 particulars of fraud, 448, 454 fraud of third party, 456 misrepresentation in prospectus, 452 in trade mark cases, 450 Statute of Limitations, 451, 455 fraudulent preference. 452 in passing-off cases, 450 POLICIES OF ASSURANCE, affirmation in, when warranties, 43 concealment in, 101 mistake in effecting, 104 premiums obtained by fraud. 106 POST-NUPTIAL SETTLEMENT, when valid or not, as against creditors, 224, 240 POVERTY, of vendor, when a ground for setting aside a contract, 196, 197 onus on purchaser, 482 not an excuse for laches. 367 POWER, fraud upon a, relieved against, 320 where appointment is made for benefit of appointor, 320 — 325 or for benefit of party, not an object of the power, 325 or for a purpose foreign to the purpose of the power, 328 where necessary consent to it has been obtained by misrepre- sentation, 328 when vitiating an appointment in toto. and when in part only, 329 INDEX. 619 POWER— continued. fraud upon — continued. appointment, whereby donee of power may be benefited, not necessarily a, 323 in the exercise of power of jointuring, 326, 330 in the exercise of power of sale, 330 defective execution of a, when aided, 561 in favour of whom, 562 as against whom. 566 as against whom, not aided, 566 only in cases when an intention to execute clearly appears, 563 Dot aided, if executed by deed, instead of by will, 566 or if intention of author of power would be defeated, 565 of statutory powers not aided, 567 aided in favour of a volunteer, if there be fraud, 567 by will, when aided, 565 not aided, if the defect be in the substance of the power, 562 non-execution of, as distinguished from defective execution of, not aided, unless there be fraud, 562, 567 fraud in preventing the execution of, relieved against, 331, 567 PREFERENCE to creditors, assignments giving, valid at law, 241 secret, when void in eases of assignment, 257 fraudulent, under the Bankrupt Laws, 251. See Fraudulent Pre- ference. PREVENTION OF ACTS for benefit of third parties, fraud in, relieved against, 331 PRICE, representations as to, by vendor, 55 mistake as to, 509 — 511 uncertain, no specific performance if, 440 PRINCIPAL AND AGENT. See Agent. agent stands in a fiduciary relation to principal, 179 may not derive secret profits, 180, 184 rule of equity as to dealings between, 179 — 185 rule of equity as to dealinge between, is not limited to cases where the relation actually exists at the time, 180 after termination of relation of, parties may deal, 182 gifts between, 184 agent receiving commission from both sides, 183 principal putting forth representations made to him by his agent as his own, bound, 33 action of deceit against principal for fraud of agent, 426 form of order, when agent has secretlj bought from or sold to prin- cipal, 395, 397 secret commission, 180, L84 PRIORITIES, as between innocent parties, defrauded by a third, 14, 184, Ml as between equitable incumbrancers of personal estate, l is 620 INDEX. PBIOEITIES— continued. as between equitable incumbrancers of real estate, 148, 379, 383 as between parties having mere equities, 142, 144, 379 as between voluntary grantees, 208 PRIVILEGE, allegation of fraud displaces, 187 PROBATE, obtained by fraud, relief against, 345, 419 PROFIT, trustee, agent, &c, purchasing and making, must account, 155, 159, 167, 180 PROMISE, distinguished from representation, 57 — 60 PROMISSORY NOTE, fraud in filling up, 137 PROMOTER OF A COMPANY, stands in a fiduciary relation to the company, 166 may not make profit out. of the company, 167, 169 full disclosure must be made by, 169 terms of rescission against, 395 remedies of company against, 395, 396 what must be proved against, 476 PROOF. See Evidence. of fraud, must be clear and conclusive, 474 what is sufficient, 477, 478 rests in general on party alleging fraud, 474 burthen of, that transaction is free from fraud, rests on defendant in what cases, 156, 174. 177, 181, 205 in what cases burthen of, is shifted, 480 burthen of, where deeds have been cancelled, 333 what is, of fairness of transaction, 482 — 484 extrinsic evidence to avoid a deed, 485 PROSECUTION. agreement to stifle, 195 PROSPECTUS, misrepresentation and concealment in, 65, 87 mistakes in, 87 non-disclosure of contracts in, 91 untrue statements in, 87 contents of (Companies Act, 1908), 88 materiality of statements in, 89 ambiguity in, 63, 65, 475 exaggeration in, 54 variation from memorandum and articles, 363 pleading and proof of fraud in, 45, 452, 474 INDEX. 621 PUBLIC. fraud 011 the, agreement in, 117 representations made to the, 339, 460 PUBLIC AUTHORITIES PROTECTION ACT, 1893, does not apply in cases of fraud, 16 PUBLIC POLICY, transactions set aside on ground of, 465 PUFFING, statements by vendor, their effect, 55, 56 on sales by auction. 309 PURCHASE-MONIES, notice of adverse right before payment of, sufficient, 378 payment of, not part performance, 132 procured by fraud, relieved against. 411 purchaser allowed to follow, 399 PURCHASER, assurance of solvency by third pereon. 480 not bound to be suspicious, 267 fraud by, 55, 74, 75, 76, 86 mistake in name of, 557 buying in false name, 68 disparagement of property by, 55 no rescission against, 560 non-disclosure by, 55, 74, 75, 76, 86 insolvency of, 86, 480 induced to contract by fraud, 100 PURCHASER FOR VALUE WITHOUT NOTICE. See Notice having legal estate, protected in equity, 370 et seq. may get in outstanding legal estate, 370 even when his equitable title depends on a forged instrument, 374 unless from a trustee, 371, 372 protected where he has the best right to call for the legal estate, 374, 378 of a mere equity, not entitled to priority, 379 may be ordered to deliver up title deeds, 383 :i man whose agent has notice is not a, 377 may defend himself by plea, 456 negligence by, effect of, 282 QUALIFYING I'.XI'KKSSIONS in statement of quantity, 119 QUANTITY, deficiency in, compensated, 119, 442 misdescription in. not capable of compensation, 120, 444 when not :> ground for rescission. 551 622 INDEX. BACK RENT, misdescribed as ground rent, 117 RATIFICATION, none of void or illegal transaction, 348 REASONABLE ground for believing a representation, 32 under Companies Act, 1908... 87 time for repudiating contract, 401 RECEIVER, costs of defending action charging fraud, 492 may not purchase for his own benefit, 171 when appointed in cases of fraud, 436 RECITAL, of instrument amounts to notice, 273 ambiguous, not notice, 285 RECKLESS STATEMENTS, when fraudulent, 19, 23, 28, 35 RECONVEYANCE, of real estate, decreed in case of fraud and mistake, 393, 556 not decreed, if transaction is not voidable but void, 393 on what terms decreed, 393 against trustee, agent, &c, who has purchased or sold impro- perly, 397 no, in general, until account be taken, 398 costs of, &c, allowed to plaintiff, 398 RECORD, fraud in, provable by parol evidence, 486 RECTIFICATION, of mistake in written instruments, 527 et seq. cases in which there cannot be, 530, 536 none where instrument has been adjudicated upon by a Court, 528 not given, unless mistake be clearly proved, 529 parol evidence of mistake admissible on application for, 521 in particular cases decreed, though mistake is only implied, 535 of voluntary deed, in what cases ordered, 538 of deed poll, 531 of conveyance, 527, 540 mode of application for, 540 lapse of time may be a bar to, 539 order of Court sufficient for, without deed, 540 ordered only upon action, not upon motion or petition, 540 if there be fraud, there can be no, 416 except in particular cases, 416 none where mistake of one party only, 416 INDEX. 623 REGISTER. 13 notice only if searched. 302 removal of name of party induced to take shares in a company by fraud from the. 400 removal of name inserted by fraud on, of a company. 400 REGISTRATION. with notice of unregistered assurance, 301 not notice unless search be made. 302 of mortgage negatives negligence, 302 in county register. 302 without notice of unregistered instruments gives priority, 301 REGISTRY (YORKSHIRE) ACT, 1884, registration under, gives priority except in case of fraud, 302, 385 RELEASE, when binding in equity, 350 REMEDIES FOR FRAUD, by rescission, 386 by ordering a party who ha-s made a misrepresentation to make good his representation, 415 by declaring the defrauding party a trustee, 418 by rectification, 416, 527 by action of deceit, 420 by injunction. 434 as a defence to specific performance, 436 by appointment of receiver, 436 by summons, 436 REMEDIES FOR MISTAKE, by rescission, 530, 559 by rectification, 527 by action, 540 by motion or petition, 540 RENEWAL of lease by trustee enures for benefit of cestui que trust, 159, n. RENTS AND PROFITS, party in possession must account for. on a purchase being set aside, 393 trustee, &c, purchasing must account for, 398 REPAIRS. See Improvements. REPORT of directors, company bound by, 83, 99 putting forward as true, of others, 33 624 INDEX. KUPRESENTATION. See Misrepresentation. made recklessly, is fraud at law, if it be untrue, 18, 23, 28, 35 honestly believed to be true, is not a fraud, although it be untrur, 19, 28. 421 unless there be a duty to know the truth, 34 what are reasonable grounds for believing in the truth of a, 32 duty of party who lias innocently made a false, to disclose the truth. on discovering the falsehood, 30 though false when made, may be true when it is acted on 31 though true when made, becomes false, 31, 76 as distinguished from a warranty, 40 doctrine of notice does not apply, if there be a distinct, 48, 51, 287 party entitled to rely on a distinct. 51. 287 as to matter of opinion, 51 as to value, not to be relied on, 55 except in particular cases, 56 disparagement of property by purchaser, 55 by vendor as to price paid by him, &c, not to be relied on, 55 vague, goes for nothing, 51 amounting to contract, 59 as to intention, 56, 59, 445 as distinguished from representation amounting to contract, 59 by parties having a duty to perform, 93 person making a false, if not a party to the transaction, as far as possible compelled to make it good, 8, 415 making good, 8, 415 E EPEESENTATIVES of party defrauded may bring an action. 458 relief may be had against, of defrauding party, after his death, 467, 468 nine continues to run against, 369 REPUDIATION, difference between, and rescission. 386, n. of shares, 405 RESALE of property purchased by trustee, &c, 397 ordered on what terms, 397 RESCISSION of deeds, instruments, &c, on ground of fraud, 386 principle on which, is had, 386 et seq. of sale of goods and chattels, 386, 410 cannot be had if there has been acquiescence, 11. 403 or waiver of right to rescind, 401 what constitutes waiver. 401 delay evidence of, 402, 403 or if rights of others have intervened, 11, 387, 560 or if the parties cannot be restored to their original condition. 387, 388, 560 IXDEX. 62:"> RESCISSION— continued. cannot in general be had, unless the transaction can be rescinded in Into. 387, 390 unless the contract, ic, is severable, 387, 390 or the contract is worthless, 390 or full justice can be done, 392 cannot be had, if the defrauding party is not a party to the trans- action, 414 what constitutes election to rescind, 404 rights of parties on, 379, 412 of contract induced by fraud of agent, 407 parties to fraud, how affected by, 406 after conveyance executed, 407, 556 by seller in case of bankruptcy of fraudulent buyer, 409 of sale of chattels sold under a warranty, 410 in case of surreptitious dealings between one principal and the agent of the other principal, 409 though profit accrues to a party to the fraud, 410 where vendee of goods is insolvent, 409, 411 right of defrauded party on, to recover all monies paid by him, 411 omission to specify contracts required by Companies Act, 1867, not a ground for, 429 on what terms decreed, 393 et seq. where trustee, kc, hag bought or sold secretly, 395, 397 where a man has been induced by fraud to take shares in a company, 400, 401 where a man has been induced to enter into a partnership, 399 where no equitable relief is claimed, 393 within reasonable time, 401 of transaction on the ground of mistake, 507, 559 principle on which, is had, 559 terms on which granted, 559, 560 RESERVED BIDDING, 310 RESTITUTION a condition of rescission, 387, 388 RESTORATION, by purchaser of altered premises, on rescission, 393, 394 RESTRAINING fraud by injunction, 434 RESTS directed in case of fraud, 395 RETENTION of deeds by vendor, its effect, 139, 141, 282 of contract with claim for damages, 403 RKTICENCE. See Silkncb. K.F. 1(1 626 INDEX. REVERSION, purchaser contracting for, must inform vendor of death of tenant for life, 71, 541 misstatement on sale of, when not matter for compensation, 119 inadequacy of consideration in sale of, not a ground for setting aside sale, 204 except in the case of an expectant heir, 204 purchaser need not take, instead of estate in possession, 443 REVESTING of goods on conviction, 11 REVOCATION of will under mistake, 578 of legacy by mistake, 578 SALE by Court, set aside for fraud, 411, 418 of goods and chattels rescinded at law for fraud, 386, 410 by auction, fraud in respect of, 309 of chattels sold under a warranty, rescission of, 410 SALE OF GOODS ACT, 1893, reserved right to bid at auctions, 310 revesting of goods on conviction, 11 warranty on sale of goods in shop, 82 SALE OF REVERSIONS ACT, transactions not set aside for under-value, 204 SEPARATION DEED, to enable a married woman to carry on adultery. 334 induced by fraud, rescission of, 154 SETTLEMENT, notice of, is notice of articles, 272 voluntary, was formerly fraudulent as against purchasers, 265 on marriage may yet be fraudulent, 234, 235 to defraud creditors, 212 et seq. revocable, is fraudulent, when, 220, 259 post-nuptial, when valid or not, 224 et seq. ante-nuptial, voluntary as to collaterals, 210, 223 unless in special cases, 224 of leaseholds, when a conveyance for value, 228 though apparently voluntary, may be shown to be for value, 229 though voluntary may become for value, 230 may by concurrence of a third party be one for value, 229 underhand agreement to defeat, avoided in equity, 304 rectified in accordance with articles, 533 secret, of wife in fraud of marital rights, 305 mistake in, when remedied, 416, 533, 538 fraud in. when remedied, 416 INDEX. (j'JT SHAREHOLDER. See Shares. may bring action to be relieved from .-hares. 458—462 may bring action against directors tor damages, 129, 459, 461 when he may sue promoters, 159 seeking to be relieved from share- musl aet with diligence, 354, 3(33, 388 blank transfer by. 134, 270 induced l>y fraud to take shares, upon what terms relieved, 100 removal of name of, induced by fraud to take shares, 388, 400, 414, 462 removal of name of transferee from register, 336, I* 111 plea of fraud by. 152, 153 cannot have his name removed from register, if rights of creditors intervene, 389 assignment by, of shares to a pauper, whether fraudulent or not, 335, 400 cannot bring action of damages against company. 404 in what cases may sue on behalf of himself and other shareholders, 459 purchasing shares in the market, cannot bring an action of deceit against directors of company, 401 except in particular cases, 461 SHARES, purchaser of, in a company, upon misrepresentation by the com- pany, relieved from the, 400, 414, 461 not relieved from the, if he was induced to take them by the fraud of a third party, 414, 461 or of a shareholder, 414 nor relieved from the, if he was induced to fake them from a shareholder upon misrepresentations by the company, 414, 461 what constitutes a repudiation of contract to take. 405 fraudulent trusts of, 337 forged transfer of, 136 SILENCE. See Concealment. mere, not a fraud, 73, 441 a fraud, if there be a duty to speak, 6'.), 74, 124, 126 a fraud, if there be artifices to mislead, 71, 124 S( iMCITOR AND CLIENT. See Costs. rule of equity as to dealings between, 173 et seq. statement of untrue consideration in a deed between, fatal. L76 rule of equity as to dealings between, is not limited to cases where solicitor is actually employed at tin' ti , I"''' liter terminal loii of relation of. partie maj deal with each other, 177 iii which the rule of eipnt\ ;i- to dealings between, dm';; Hot apply, 177, L78 gifts from client to solicitor invalid, 1 7* legacy \'\ elient iii favour of solicitor, 178, 817 accounts between, may !><• opened, 179 628 INDEX. SOLICITOR AND CLIENT— continued. effect of Court giving solicitor leave to purchase property of client, 78, 163, 175 privilege between, is displaced by fraud, 487 what parties come, within the rule as to dealings between, 179 notice to solicitor, notice to client, 291 et seq. notwithstanding solicitor may be committing a fraud, 295 form of order when solicitor has secretly bought or sold from or to client, 395, 397 solicitor when a party to action against client, 469, 492 . not liable for costs if he has not participated in fraud, 492 SOLICITORS ACT, 1860, avoids conveyance which defeats charging order, 384 unless made to a bond fide purchaser without notice, 384 SOLVENCY, misrepresentation as to, 306, 480 representation as to, should in general be in writing, 96, 426, 480 SPECIFIC PERFORMANCE, principle of the Court in respect of, 436 misrepresentation a bar to, 436 conduct of parties seeking, must be fair and clear, 437 misdescription a bar to, 437 — 442 unless compensation can be made, 442 false representation as to value, a ground for refusing, 445 false representation as to intention may be a bar to, 439 mere misstatement when not a bar to, 439 misstatement by agent of vendor a bar to, 440 principal selling as agent, may have, 446 no, when agreement is in fraud of the public, 447 mistake of defendant a bar to, 508 — 512, 547 with compensation in cases of mistake, 551 inadequacy of consideration not a ground for refusing, 446 of lease not enforced, containing unusual covenants, which defen- dant had no reasonable grounds of knowing, 274, 441 parol evidence of misrepresentation or mistake admissible as an answer to action for, 446, 512, 521, 526 with parol variation introduced by the defendant. 446, 526 none where price is uncertain, 440 parol variation on part of plaintiff, formerly not admissible in suit for, 526 condition giving vendor right to rescind, 445 by purchaser against vendor, who has innocently made a mistake in description, not enforced except on terms, 512, 526, 547 costs in suits for, 490, 492 SPIRITUAL INFLUENCE, undue exercise of, 199 SPOLIATION OF DEEDS, fraud by, 333 INDEX. 629 STANDING BY, doctrine of, 124 infant, 152 STATUTE, FKAUD ON. 347 STATUTORY FRAUD, waiver of, 403 STATUTORY POWERS, no relief against defective execution of, 567 STOCK EXCHANGE, fraud on the, 338 "rigging the market," 340 STRANGER, agreement brought about by, with a fraudulent object, yet valid between parties, 18, 414 liable for misrepresentation, 18 SUB-AGENT, misrepresentation by, 99 SUB-LESSEE, has notice of title, of immediate and original lessor, 279 cannot rely on misrepresentations of his lessor, also a sub-lessee, is to covenants in lease, 290 SUB-SALE, misrepresentation on, 415 SUBSCRIPTIONS OR GIFTS TO CHARITIES, made under mistake, 210 SUMMONS, jurisdiction on, in the case of fraud and mistake. 13(3 SUPPRESSION OF DEEDS, fraud by, 333 SURETY, voluntary settlement by, in what case fraudulent, 217 disclosure to, what is necessary, 107 SURETYSHIP, what concealmenl vitiates contract of, 107 contract of, vitiated by pressure, 109 SUBPBISE, not a separate ground for relief, 5 630 INDEX. SUEEENDEB of copyhold supplied in equity, 561 SUSPICION, mere, of fraud, is not notice, 269, 285 circumstances of, do not warrant conclusion of fraud, 477 TACKING, 384 TELEGEAM, mistake in, company not liable to receiver, 506 TENANCY, notice of, is notice of tenant's interests, 275 but not of lessor's title, 278 past, notice of, not notice of tenant's interests, 278 of vendor, notice of, is no notice of lien, when, 278 TENANT, what acts by, are part performance, 131 TENANT FOE LIFE may purchase from trustees of settlement, 172 with power to sell or lease, may sell or lease to himself, 172 under Settled Land Act, 1882, cannot purchase from himself except by leave of Court, 172, n. concealment of death or dangerous illness of, by purchaser of rever- sion, 71, 541 death of, unknown to both parties at time of contract, contract vitiated by, 541 TENANT IN TAIL induced by fraud to bar the entail, remedy of remainderman, 458 TENTEEDEN'S (LOED) ACT, representations as to credit must be m writing, 96, 426, 480 TEEM OF YEAES, instead of fee, purchaser need not accept, 117, 443 TEEMS on which a transaction is rescinded for fraud, 393 et seq. of rescission of partnership transactions for fraud, 399 of rescission of contract for purchase of shares, 400, 401 on setting aside a transaction for mistake, 559, 560 of reconveyance, 393 THIED PAETY, fraud of, 18, 202, 371 undue influence by, 202 mistake caused by, 506 cannot retain benefit derived from fraud of others, 203 possession of deeds by, when notice, 279 INDEX. 631 THIRD PAETY— continued. misrepresentation through. 460 fictitious bidding by, 310 concealment of fraud as against, 70 disclosure by, 76 TIME. See Delay. lapse of, a bar to relief, in equity, 357 et seq. not a bar of legal rights, if short of the period fixed by the Statute of Limitations, 358 begins, in cases of fraud and mistake, to run from the discovery. 366, 558 does not run while there is undue influence, 367 lapse of, as affecting remainderman, 370 lapse of. effect of, as between trustee and cestui que trust. 364 what, lapse of, sufficient to bar relief in equity, 361, 369 reasonable time for repudiating contract. 401 TITLE, possession of deeds, 139 — 142 mistake as to, payment of interest, 520 TRADE MARK, protection of. without proof of fraud, 450 ground upon which Court gives protection. 435 TRADE NAME, passing off goods or business of another, when restrained, 435. 450 TRICK. See Cheat. TRUSTEE and cestui que trust, rule of equity as to dealings between 158—163 concealment in dealings between, 161 what parties within the rule. 163, 170 what parties not within the rule, 155, 162, 171 dealings between, after termination of rela- tion, 162 may not derive, any profit in the execution of his trust, 159, 395, 397 selling property of his own secretly to the cestui que trust, 395 buying property secretly from cestui que trust, 397 acquiescence by cestui que trust in dealings with, when binding, mistake by, 501, 558 legal estate got in from, when available, 371 jurisdiction of the Court to declare a person who has acquired an estate by fraud to be a, 418 UNCONSCIONABLE BARGAINS relieved against, 206 UNDER-LEASE. See Sub-Lbbsh . instead of lease, purchaser need nut accept, 443 632 INDEX. UNDEE- SELLING in trade is not unfair competition, 435 UNDUE INFLUENCE, what is, 193, 194 rule of equity as to, 193 the principle explained, 201 in what cases has been relieved against, 199 et seq. in what cases relief is not given, 201, 202 relief barred by laches and acquiescence, 202 in obtaining a will, 314 in the case of transactions inter vivos, and in obtaining a will, dis- tinction between, 315 must be practised in relation to the will itself, 319 onus probandi, 195, 204, 482, 483 in the case of wills, burden of proof rests on party alleging, 314, 319 bond given as a reward for, to be exercised over testator, 307 in the promotion of marriage, bonds given for, 306 in preventing an act for the benefit of third parties being done, 331 by third persons, 202 by wife, 201 UNFAIE COMPETITION in trade, when restrained, 435 under-selling is not, 435 USURY LAWS, repeal of, has not altered doctrine of catching bargains, 206 VALUE, representation as to, not to be relied on, 51 — 54 false representations as to, may, however, amount to a fraud, 52 — 54 vendor may put upon purchaser the responsibility of telling him the, 55 VOID OR VOIDABLE, contract induced by fraud whether, 10, 348 meaning of " voidable," 348 VOLUNTARY CONVEYANCE. See Fraudulent Conveyance. good as between the parties, 213 void as against creditors, 212 et seq. valid, unless the effect be necessarily to delay creditors, 215, 218 existence of debt does not prevent a man from making a, 216 in what cases void as against subsequent creditors, 218 retention of, by settlor, 221 may become for value by consideration given since its execution , 230 as distinguished from settlement for value, 221 et seq. rules for determining whether a deed is a, 231 to trustees, 217 of real estate, defeated by subsequent sale for value, 265 not so now unless made with fraudulent intent, 265 settlement of equitable reversionary personalty, 221 INDEX. 633 VOLUNTARY CONVEYANCES ACT, 1893, displaces 27 Eliz. c. 4. ..265 VOLUNTARY SETTLEMENTS AND DEEDS OF GIFT, in what cases valid, 208 when relieved against, 208 absence of power of revocation in, when evidence of fraud, 200 when properly accounted for, 209 rectified on ground of fraud, 417 when rectified on ground of mistake, 538 WAIVER CLAUSE IN PROSPECTUS, formerly binding on shareholders, 93 now void under Companies Act, 1908.. .93, 402 WAIVER OF RIGHT TO RESCIND, what constitutes, 401 delay evidence of, 403 WAIVER OF STATUTORY FRAUD, 403 WARD. See Guardian and Ward. WARRANTY, what is a, 7, 40 as distinguished from representation, 7, 40 does not cover patent defects, 76 of title on sale of goods, 82 of authority by agent, 39 * in policies of insurance, 43 representation when a, 40 on sale or letting of land, 42, 81, 408 as to sanitary arrangements, 81 rescission of sale of chattels sold under a, 410 implied, 40, 81 WEAK-MINDED PERSONS, transactions with, 150 WILFUL DEFAULT, accounts on footing of, when ordered, 395, 408 mistake becoming, 521 must be pleaded, 457 vendor or purchaser, by, 521 w t r,L conferring benefit on party drawing it, 312, 313 burden of proof in such a case, 312, 81 I what is undue influence in obtaining a, 814, 816 burden of proof on party alleging it, .'111, 819 distinction between undue influence in the ease of deeds and [n pro curing a, 315 fraud in procuring a, 816, 819 634 INDEX. WILL — continued. burden of proof on party alleging it, 314 difficulty of determining influence in cases between husband and wife, 317 and in other cases, 316 influence must have been practised in reference to the will itself, 319 form of issues in determining the validity of a, 319 coercion necessary to invalidate a, 316, 317 revocation of, procured by fraud, 318 by mistake, 578 mistake in, when corrected, 571 parol evidence admissible to explain, 575 execution of power by, instead of by deed, 566 by deed instead of by, 566 WINDING-UP, fraud not a ground for, 337 proof of fraud in petition for, 337 shares cannot be repudiated after, 354 WINK, may be a fraud, 71 WITNESS. See Attesting Witness. testimony of one, when sufficient, 486 YORKSHIRE REGISTRY ACT, 1884, registration under, gives priority except in cases of fraud, 302, 385 The Eastern Press, Ltd., London and Reading. » * n. [~l «rr aaa.209 belmo« t ami*, V| CTOR?A, 8. a UC SOUTHERN REGIONAL LIBRARY FACILITY llllllllllll llll Hill Hill Hill lllll III I II nil II [ I HUM Mil llll Mil HUH AA 000 745 449 9 VICTORIA, B.C.