Lord v. Goddard - 54 U.S. 198 (1851)
U.S. Supreme Court
Lord v. Goddard, 54 U.S. 13 How. 198 198 (1851)
Lord v. Goddard
54 U.S. (13 How.) 198
Where an action was brought against certain persons for giving a commercial letter of recommendation with intention to defraud and deceive whereby the party to whom the letter was addressed gave credit and sustained a loss, the question for the jury ought to have been whether or not there was fraud and an intention to deceive in giving the letter.
If there was no such intention, if the parties honestly stated their own opinion, believing at the time that they stated the truth, they are not liable in this form of action, although the representation turned out to be entirely untrue.
Goddard was the plaintiff below, and Lord and Jenness the defendants.
The declaration in two counts alleged that the plaintiffs in error, October 28, 1847, intending to deceive and defraud the
defendant in error, wrongfully and deceitfully made and signed a letter of recommendation in favor of E. K. West and A. W. Daby, addressed to the defendant in error, in which they represented they had full confidence in West & Daby, dealers in coal, lumber &c., that they were men well worthy of credit, and good for what they wished to purchase, and that West was visiting Bangor for the purpose of purchasing lumber for the New York market, and did thereby falsely, fraudulently, and deceitfully cause and procure the defendant in error to sell, and that he, confiding in the statements, on 9 November, 1847, did sell to West & Daby certain timber on credit &c., whereas, in fact, West & Daby were not worthy of credit, and that the plaintiffs in error well knew the same, and that West & Daby have not paid &c.
The plaintiffs in error pleaded severally not guilty, on which issue was joined.
The defendant in error offered, in support of his declaration, the letter addressed to him, as follows, viz.:
"To John Goddard, Esq., Bangor, Me."
"Sir -- We the undersigned have full confidence in Messrs. E. K. West and A. W. Daby, dealers in coal, lumber, lime &c. They are men well worthy of credit and good for what they wish to purchase. The bearer of this, Mr. E. K. West, is visiting your city for the express purpose of purchasing lumber for the New York market."
"S. B. LORD"
"GEORGE W. JENNESS"
"Portsmouth, N.H. October, 28, 1847"
In July, 1850, the cause came on for trial, when the jury, under the instructions of the court, found a verdict for the plaintiff for $2,300.
The bill of exceptions was very comprehensive. It began with reciting the writ, the declaration, and other pleadings, then recapitulated the evidence of two persons with all the interrogatories and cross-interrogatories, and also the evidence of seven persons taken upon the stand. It is not necessary to recite any of this, as the point stated in the instructions of the court was the only matter brought into discussion.
The evidence being closed, the counsel for the defendants then prayed the Honorable Court to instruct the jury that in order to maintain the plaintiff's declaration, it must be proved that the representations made were false and that the defendants made them knowing they were false and intending to defraud the plaintiff, and that if the defendants made the representations on such information as they believed to be true,
whether that information was true or false, this action cannot be maintained. The defendants further requested the Honorable Court to charge the jury that if the plaintiff had not proved to the satisfaction of the jury either that the defendants gave the recommendation in this case knowing that it was false and intending to defraud the plaintiff or that they gave it without any information of the credit or means of West & Daby, or if the jury believe that the defendants gave such information respecting said West & Daby as said defendants believed to be true and sufficient, whether that information was true or false and whether it was sufficient or not, the defendants were entitled to a verdict.
But the Honorable Court declined to do this, and did not charge the jury in the terms and manner and to the extent prayed, but the Honorable Court did instruct the jury upon the subject matter so prayed for as follows:
"That as a general rule, one ground upon which to maintain the plaintiff's declaration is it must be proved that the representations made were false and that the defendants made them knowing they were false and intending to defraud the plaintiff, and that if the defendants made the representations on such information as they believed to be true, whether that information was true or false, the action cannot be maintained; but a party, if stating positively that a person is entitled to credit, should do it from his own knowledge or from full and proper inquiries, and then he is not liable if the debtor is insolvent unless the jury see circumstances in the case of real fraud. But if a party state this positively as to the credit of an individual, and does it ignorantly, not knowing the credit of the person recommended and without making full and proper inquiries, and the statements turn out to be false, the jury may infer that those so recommending did wrong and deceived, because they must know that third persons are likely to rely on their stating what they personally know, or had duly inquired about, or what they had good reason to suppose their information as to it was sufficient and true. If the defendants in this case did not make the recommendation upon such authority or information as you may think, under the instructions, they ought to have acted upon, you will charge them."
Whereupon the counsel for the defendants did then and there except to the aforesaid refusal, and the instructions and charge of the Honorable Court.
Upon this exception the case came up to this Court.