Where an action was brought against a person for making false
representations of the pecuniary condition of a certain party,
whereby the plaintiff had been induced to sell goods upon credit,
and had incurred loss, evidence conducing to show that the
statements of the defendant were false, ought to have been allowed
to go to the jury.
The defendant having written to his own agent, and headed the
letter confidential, it was for the jury to say whether or not it
was intended for the exclusive perusal of the agent.
It was also for the jury to say, on a thorough examination of
the letters and the facts and circumstances connected with them,
whether they were calculated to inspire, and did inspire, a false
confidence in the pecuniary responsibility of the party, to which
the writer knew he was not entitled.
The entire history of the case is given in the opinion of the
Court.
Page 58 U. S. 189
MR. JUSTICE McLEAN delivered the opinion of the Court.
This case is brought before us by a writ of error to the Circuit
Court of the United States for the District of Massachusetts.
The plaintiffs are merchants in Boston, and deal largely in
wool, and, prior to the 4th of April, 1851, sold, occasionally,
to
Page 58 U. S. 190
two corporations in the State of Connecticut, called the
Thompsonville Company and the Tariffville Company, and received
therefor their notes, endorsed by Orrin Thompson. And, with the
view of making further sales to them, having become doubtful of
their pecuniary means and ability to make payment in future, the
plaintiffs applied to Thomas B. Curtis of Boston, the agent of
defendant, to ascertain his opinion as to any possibility of loss,
by selling largely on credit to said corporations or to Thompson;
the plaintiffs knowing that the defendant was friendly to the
companies, and intimately acquainted with their pecuniary
condition.
A letter was written to defendant, by his agent, Curtis, and an
answer was received, as alleged in the declaration of the
plaintiffs, which induced them to give large credits to the two
companies and Orrin Thompson, when, at the time, they were
insolvent, which fact was known to the defendant.
The points in the case are stated in the bill of exceptions, and
arise on the construction of the above letter and one of a
subsequent date, and on facts proved and offered to be proved,
which conduced to show, as plaintiffs insist, the fraudulent intent
with which the letters were written.
The first letter, from Curtis to Brown, bears date the 5th of
April, 1851, and reads as follows:
"Dear Sir:"
"I have your note of yesterday, but have scarcely had a moment
to peruse it this morning. My object, at the moment, is to ask your
opinion as to any possibility of loss, by selling largely to the
Thompsonville Company or Orrin Thompson. Whatever that opinion may
be, it will be discreetly used by myself."
The reply to this letter is marked "confidential," and dated
"New York, 7th April, 1851."
"T. B. Curtis Esquire."
"Dear Sir: With respect to Thompson & Co. and Orrin
Thompson, I have to say that our house done business with them for
some twenty years or more; they have always met their engagements
promptly, and we feel are men of strict integrity. They have
unquestionably laid out too much money in the Tariffville
Manufacturing Company and the Thompsonville Carpet Manufacturing
Company, and my house has been for years in the habit of loaning
them either paper or money to a considerable extent on security. On
the failure of Austen & Spicer, they were unfortunately on
their paper received for sales of carpets for $183,000; this threw
suddenly so heavy a burden on Thompson & Co., that Messrs.
Hicks & Co. and ourselves looked into their affairs, and
feeling that they had an abundance to pay everyone and have a
handsome sum left, if they continued their business, we jointly
advanced the money to pay their endorsements as they came round,
for which advances we have
Page 58 U. S. 191
security. In order, however, to relieve them from the necessity
of borrowing, and needing more cash capital to carry on the
business comfortably, both the companies alluded to owing Messrs.
Thompson & Co. each about $375,000, making, together, $750,000,
executed a mortgage to John H. Hicks, W. S. Wetmore, and James
Brown, for $750,000, to secure the payment of those bonds, which
are payable in six, eight, and ten years. A gentleman goes out to
Europe this month to negotiate these bonds, which he feels
confident of doing on favorable terms. The negotiation of these
bonds, and the securities held, would pay off all the advances made
by ourselves, Messrs. Hicks & Co., and of W. S. Wetmore, who
also made them some advances. From Thompson's statement of the
business of the factory, they are doing a good, nay, a very
profitable business, and I feel that in making sales to them now,
no more than the ordinary business risk would be run."
"If the bonds are negotiated, which is confidently expected,
they would be enabled to conduct their business with more facility
and comfort than they have ever yet done, and as I will recommend
brother William to take from sixty to one hundred thousand dollars
for himself and for me, whatever they are negotiated at, the
confidence shown will probably help the negotiation. Messrs. Hicks
will also take some of them. Since the failure, Thompson & Co.
have laid their hands on Austen & Spicer's property, to the
extent of fifty thousand dollars, reducing the risk to one hundred
and twenty-three thousand; and out of this they will get a
dividend. As Mr. Orrin Thompson considers himself fully worth four
hundred thousand dollars, any loss that can now occur by Austen
& Spicer does not hurt him much. All they want is the
negotiation of the bonds, to make them move on with perfect
comfort."
"[Signed] JAMES BROWN"
The next letter from Curtis to Brown is dated "Boston, 26th
June, 1851."
"A friend of ours desires me to inform him how far it would be
satisfactory to me you to have him sell to the Thompsonville
Company. I replied that I believed you thought favorably of the
concern. Now I wish to know what your present feelings are in
respect to that concern, there being several among my friends here
who have heretofore sold them wool, and wish to continue to do
so."
The answer to this letter was:
"Dear Sir:"
"We are in receipt of yours 26th instant; contents noted. We
continue to have a favorable opinion of the concern you allude
to."
"[Signed] BROWN, BROTHERS, & CO."
Mr. Curtis, being called as a witness, said he was agent for
Brown, Brothers & Co., who carried on, in the City of New
Page 58 U. S. 192
York, an extensive banking business. He wrote his first letter
at the request of Iasigi, and never showed the reply except to him
and his friend, Mr. Skinner, until after the failure of the
Thompsons. When he wrote to Brown, he did not let him know that the
information requested was for any other person than himself. On the
day his first letter was written, Iasigi said to him that he held a
large amount of notes of certain factories in Connecticut, endorsed
by Orrin Thompson, of New York; that by the recent failure of
Austen & Spicer they had lost money, and he was solicitous
about the paper he held. Witness supposed it amounted to about the
sum of $40,000. He said Brown was the friend of Thompson, and
witness was requested to ascertain his standing by writing to
Brown.
As the answer was marked confidential, the witness, when Iasigi
first read the letter, declined handing it to him to show to his
partner, but on his calling, it was shown to him also. Witness
expressed a favorable opinion as to Iasigi's getting his money. Mr.
Brown never authorized the witness to show his letter to anyone.
After the failure of Thompson, Iasigi stated he had collected his
debt, but that he again trusted them. The witness remarked, that on
that letter you should not have trusted them. He asked to see the
letter, and on reading it he said, if you had not stated this to be
the same letter, I should not have believed it.
The witness stated, some of our clients prior to this had been
in the habit of selling wool to Thompson & Co. There were five
or six firms, importers of wool, who had credits with me. It was
highly important to me and my principals that I should know the
standing of this great concern, because large amounts of credits
were being invested in wool, by houses which might or might not be
jeoparded by selling to that concern; I mean invested by
correspondents of Brown, Brothers & Co., who had credits for
them.
Mr. Grant, a witness, stated that he, Iasigi, and several others
who had sold wool to the two companies and Thompson, had an
interview with the defendant at his office in the City of New York,
where a conversation respecting the letters was had, principally
between Iasigi and Brown, who replied that the letter of the 7th of
April was a guarded one, and as to the second letter, it was only a
statement that "we continue to have a favorable opinion of the
concern." He proceeded to say that the connection of Brown,
Brothers & Co. with Mr. Thompson had been of long date; that
they had a great number of transactions together, and that at the
time the April letter was written, they intended to carry Mr.
Thompson through; but that Thompson had deceived them. He repeated
several times that
Page 58 U. S. 193
this was a guarded letter, and as it was written in entire good
faith, and as they had lost much more than we had subsequently to
the writing of the letter, they did not see how there could be any
responsibility resting on them.
As the company was about separating, Mr. Stewart Brown
observed:
"If you had called on us, gentlemen, and conversed with us,
instead of writing, you would not have sold this wool. That the
letter was a guarded one, was several times repeated. That they had
great confidence in Thompson; that at the time the letter was
written, they had lost their confidence, but still meant to carry
him through in good faith; but being unable to do so, and having
lost their confidence, the letter was guarded."
On being asked by witness, if, at the time the first letter was
written, he had all the property of Orrin Thompson conveyed to him,
he replied: "No, sir, not all his property, but his real estate."
There was no objection at this time by anyone, that the letter was
confidential. The Browns refused to acknowledge any
responsibility.
After this evidence had been given, the plaintiffs offered
evidence, not objected to or excluded, except as hereinafter
stated, tending to prove that certain statements in the letter of
April 7, 1851, material to show the property and credit of the two
companies, and of Orrin Thompson, and the safety and expediency of
selling them goods on credit, and material to influence and
determine the judgment of one who should read the letter, in regard
to the safety and expediency of so selling goods on credit, were
false at the time the letter was written, and were then known to
the defendant to be false. And that the defendant, prior to the 7th
of April, alone and jointly with one Hicks, had taken conveyances,
in mortgage or absolutely, of all Orrin Thompson's property, real
and personal, with some small exceptions, to the amount of one
hundred and eighty-eight thousand dollars, as security for the debt
and liabilities of the house of Thompson & Co. to defendant's
house and said Hicks, amounting to over five hundred and nine
thousand dollars. And also offered evidence to prove that defendant
had an interest of a pecuniary kind to sustain the credit of said
Thompsonville Company, said Tariffville Manufacturing Company, and
Orrin Thompson, and to induce extensive sales of goods on credit to
them.
And other evidence was offered conducing to show that the letter
was written with a fraudulent intent, and that it was intended for
other persons than Curtis. And the plaintiffs proved that they made
the sales stated in the declaration, relying on and trusting to the
statements in said letter.
But the evidence, as above offered, was rejected as immaterial
and as insufficient, when taken in connection with the other
Page 58 U. S. 194
evidence above set forth, to authorize the jury to find a
verdict for the plaintiffs.
And the court thereupon ruled and held that the plaintiffs had
not maintained their action, and directed a verdict for the
defendant. And a verdict was accordingly so rendered. To which
rulings and direction the counsel for the plaintiffs excepted.
The 3d section of the act of Massachusetts to prevent frauds and
perjuries in contracts and actions founded thereon, published in
the Revised statutes of 1836, provides that
"No action shall be brought to charge any person, upon or by
reason of any representation or assurance, made concerning the
character, conduct, credit, trade, or dealings of any other person,
unless such representation or assurance be made in writing, and
signed by the party to be charged thereby, or by some person
thereunto by him lawfully authorized."
As the letter was written in New York, a doubt has been
suggested whether this statute can apply to the case. The letter
was intended to operate in Massachusetts, and consequently the law
of that state applies to it. But it is not perceived that the
statute can have any other effect than to require the
representation, on which the defendant is charged, to be in
writing.
No one controverts the power and duty of the court to construe
all written agreements or papers which are given in evidence. This
is not the question involved in this case. No individual can be
held responsible for a statement of facts, however injurious they
may be to an individual or company. But when there is a
misstatement of facts in regard to the pecuniary ability of an
individual or company, and, especially, if this be done through
interested motives or a fraudulent intent, by reason of which a
credit is given and the debt is lost, the facts which conduce to
establish the liability must, as in this case, be outside of the
writing. And if these facts may not be established by parol
evidence, there can be no remedy in such cases, however gross the
fraud or ruinous the consequences may be.
It is contended that the letter of the 7th of April, being
marked confidential, could have been intended only for Curtis the
agent, and that he was not authorized to show it to the plaintiffs.
In his testimony Mr. Curtis says, Brown never authorized him to
show the letter. There may have been no express authority to show
the letter, but the intention of the writer, in this respect, can
be best ascertained by reference to the facts and circumstances
under which it was written.
In his letter of April the 5th, Mr. Curtis requested to know
"the opinion of the defendant as to any possibility of loss by
selling largely to the Thompsonville Company or Orrin Thompson,
Page 58 U. S. 195
and he remarks, whatever that opinion may be, it will be
discreetly used by myself."
Mr. Curtis states when under examination as a witness that he
was then, and had been for several years, acting as the agent of
the Browns, and that was his principal business. He said that he
was not at any time a seller of wool to the factories of Orrin
Thompson. This employment of the agent must have been known to his
principal, and it appears in the proof that when the plaintiffs and
others had an interview with the defendant in New York, he spoke of
the letter's being guarded, but made no objection that it had been
written to his agent in confidence, and ought not to have been
shown to the plaintiffs.
In view of these and other facts, it might have been submitted
to the jury whether the defendant, in marking his letter
"confidential," intended it for the eye of his agent only. The
terms of the letter, independently of the above facts, would
scarcely authorize such an inference. The "opinion will be
discreetly used by myself." This was notice to Brown that the
opinion was to be used, and how could it be used by the agent, who
made no sales of wool to Thompson on his own account, without
imparting the opinion to others; but "the opinion will be
discreetly used by myself." It shall not be made known by any other
person than myself, and you may rely on my discretion. In view of
the facts, the jury should consider whether the word "confidential"
might be construed to mean, in confidence that you will use my
opinion discreetly by yourself, as you propose, or whether it
restricted the letter to the agent only.
This seems to have been the construction given to the letter by
the agent. He suffered Iasigi to read it, but refused to give it
into his hands to show to Skinner. Had the writer intended that no
one should read the letter but Curtis he would probably have said
so. Such a restriction was not necessarily imposed by the terms of
the letter, in view of the facts proved. Its detailed statement of
facts in regard to the embarrassments of the two concerns and of
Orrin Thompson, and how they had been relieved by himself and
others, and enabled to do a good, nay "a profitable business,"
&c., would be a matter, in connection with other facts, for the
jury to consider, and to determine whether the letter could have
been written for the eye of the agent only, who at no time sold
wool to Orrin Thompson.
In another letter written to the defendant by Curtis, he
says:
"A friend of ours desires me to inform him how far it would be
satisfactory to me, you, to have him sell to the Thompsonville
Company. I replied that I believed you thought favorably of the
concern. Now I wish to know what your present feelings are in
respect to that concern, there being several among
Page 58 U. S. 196
my friends who have heretofore sold them wool, and wish to
continue to do so."
To this, Brown, Brothers & Co. reply: "We continue to have a
favorable opinion of the concern you allude to."
This letter sheds some light on the first letter of Brown. It
was on the same subject, and was a reiteration of what had been
stated more particularly and at large in the first letter. In fact,
the words "we continue to have a favorable opinion of the concern
you allude to," refers to an opinion before expressed.
As the court instructed the jury to find for the defendant on
the ground that the plaintiffs had not sustained their action, if
the plaintiffs gave, or offered to give, any evidence which was fit
to be considered by the jury, the judgment must be reversed. Any
evidence conducing to prove that the statements of the defendant,
in the letter of the 7th April, in regard to the condition of the
Thompsonville Company and Orrin Thompson, and their ability to meet
their engagements, and in regard to the value of Thompson's
property, were false, was competent evidence as tending to prove
the facts. And especially was the testimony of Grant admissible,
who heard the defendant say, if the plaintiffs had called on them
personally, they would not have sold their wool to the company;
also the statement that before the letter was written, Brown
admitted that he had lost confidence in Thompson, and therefore the
letter of the 7th of April was guarded. These, and all other facts
which conduce to show that the defendant acted in bad faith in
writing that letter, are proper to be considered by the jury.
By whatever motives the defendant may have been actuated, he is
not to be held responsible, unless his letters did mislead, and
were intended to mislead the plaintiffs. And it will be for the
jury to say, on a thorough examination of the letters, and the
facts and circumstances connected with them, whether they were
calculated to inspire, and did inspire, a false confidence in the
pecuniary responsibility of the Thompsonville Company and Orrin
Thompson. If an impression, not only of their solvency but of their
success in business, so that by selling largely to them no more
than the ordinary risks of business were incurred, was made and
authorized, by the letters, while, at the same time, their true
condition was known to the defendant, which did not authorize such
a representation, and which was intended to deceive and mislead the
plaintiffs, the defendant may be justly held responsible. But of
this the jury are to judge, they being the triers of the facts
outside of the letters, and which should be submitted to them for
their consideration and decision.
We have necessarily referred to the leading facts stated in the
bill of exceptions, in order to show that the circuit court erred
in
Page 58 U. S. 197
withdrawing them from the jury; but we express no opinion on the
merits of the case.
The judgment of the circuit court is reversed, and the cause
is remanded for a venire de novo.
MR. JUSTICE NELSON, MR. JUSTICE CURTIS, and MR. JUSTICE CAMPBELL
dissented.
MR. JUSTICE CURTIS.
I do not agree with the majority of my brethren in this case.
But, as I may be required to preside at the trial which has now
been ordered, I am not willing to enter into a discussion of the
evidence heretofore given, and which will doubtless be repeated on
another trial. Without doing so, it is not practicable to exhibit
the legal principles which, in my opinion, should govern this case.
I therefore merely say I do not concur in the judgment.
MR. JUSTICE CAMPBELL, dissenting.
The importance of this cause renders it proper that the reasons
for a dissent from the judgment should be placed on the record. The
charge of the plaintiffs is that in anticipation of large sales of
merchandise to two manufacturing corporations of Connecticut, on a
credit, and distrustful of their condition to govern and direct
their conduct, they sought of the defendant, through his agent, an
opinion and information of them and their endorser, Orrin Thompson,
as to the risk they would encounter. That the defendant was
intimate with their affairs and knew they were untrustworthy, but
well knowing the motives of the plaintiffs inquiry, they wrote to
their agent a letter, for exhibition, containing false and
fraudulent statements and representations, calculated and designed
to increase the credit of the corporations and Thompson, and to
induce the plaintiffs and others, who, like them, should see the
letter, to sell their property to them. These averments, describing
the circumstances under which the information was obtained, and the
knowledge of the defendant of the aims of the plaintiffs, are, in
my opinion, material, and should be substantially proved.
In
Pasley v. Freeman, 3 T.R. 51, Justice Ashurst,
replying to the argument that, should the principle of that suit be
supported, actions might be brought against anyone for telling a
lie by the crediting of which another sustains damage, said
"No; for, in order to make it actionable, it must be accompanied
with the circumstances averred in the count, namely that the
defendant, intending to deceive and defraud
Page 58 U. S. 198
the plaintiff, did deceitfully encourage and persuade them to do
the act and for the purpose made the false affirmation, in
consequence of which they did the act."
And Lord Kenyon said two grounds of the action concur:
"The plaintiffs applied to the defendant, telling him that they
were going to deal with Falch, and desiring to be informed of his
credit, when the defendant fraudulently, and knowing it to be
otherwise, and with a design to deceive the plaintiffs, made the
false affirmation which is stated on the record, by which they
sustained a considerable damage."
The case of
Pilmore v. Hood, 5 Bing.N.C. 97, was that
of a defendant about to sell a public house to one who had agreed
to purchase. He fraudulently misrepresented to him its receipts.
The bargain having failed, the sale was made to another, who had
heard these representations and acted upon them with the knowledge
of the defendant. Lord Chief Justice Tyndal said that notice to the
defendant was "an important ingredient in the case," and adapting
the terms of
Langridge v. Levy, 2 M. & W. 532, he
says:
"We do not decide whether the action would have been
maintainable if the plaintiff had not known of and acted upon the
false representation. Nor whether the defendant would have been
responsible to a person not within the defendants' contemplation at
the time of the sale, to whom the gun might have been sold or
handed over. We decide that he is responsible in this case for the
consequences of his fraud, whilst the instrument was in the
possession of a person to whom his representation was either
directly or indirectly communicated, and for whose use he knew it
was purchased."
In
Gerhard v. Bates, 2 Ell. & Black. 476, the
misrepresentation was contained in the prospectus of a bubble
company, of which the defendant was a director. Lord Campbell
said,
"that had the plaintiff only averred that afterwards, having
seen the prospectus, the plaintiff was induced to purchase the
shares, objection might have been made that a connection did not
sufficiently appear between the act of the defendant, and the act
of the plaintiff, from which the loss arose; but the second count
goes on expressly to charge the defendant, that by means of the
said false, fraudulent, and deceitful pretenses and
representations, he wrongfully and fraudulently induced the
plaintiff to become the purchaser and bearer, and plaintiff did
then and by reason thereof actually become the purchaser and holder
of the shares, and alleges the loss sustained to have been the
direct consequence of the defendant's act. Thus the wrong and the
loss are clearly concatenated as cause and effect."
The allegations, therefore, being essential to the action,
the
Page 58 U. S. 199
question is, was there any evidence to go to the jury for their
support?
I leave out of consideration for the present the statute law of
Massachusetts. The charge of the declaration is that the letter was
written for exhibition to the plaintiffs and among dealers like the
plaintiffs, and to deceive those who should see it. The proof of
the plaintiffs is that until after the failure of the corporations,
only two persons were permitted to see it, or heard of its contents
from Mr. Curtis. One of these was Skinner. The proof in regard to
the exhibition to him is:
"Iasigi asked me Curtis to let him take the letter to his friend
Skinner, with whom he always advised. I Curtis again said the
letter was confidential, and that I could not suffer it to go from
my office. He then said, will you let Skinner see it here,
repeating that he always advised with Skinner on matters of
importance, and that he wanted him to see it. Upon this
solicitation I consented, and Skinner came with Iasigi, and read
the letter."
There is no evidence that Skinner ever had a transaction with
the corporations of Connecticut, or conducted a business which
could bring them into any contact or connection. And surely this
evidence can afford no support to the averment of a purpose to
defraud or injure him or others through him.
The charge in the declaration, by this evidence, loses its
generality, and is reduced to the imputation of a mischievous and
fraudulent design upon the plaintiffs alone. The only use, "the
discreet use," of the opinion contained in the defendant's letter,
consisted in communicating its contents to Iasigi himself, and to
his confidential friend, at his solicitation, and that he might
advise intelligently with him. It then becomes necessary to inquire
of the circumstances under which that communication was made to
him. It was not told to the defendant that the plaintiffs had asked
for information of Mr. Curtis nor that his letter was written at
his request, nor was he advised until several months afterwards
that any use had been made of the letter. I do not think it
necessary to consider how much the power of the agent was limited
by the mark "confidential," on the face of the letter, but I will
suppose that it was nothing more than a repetition of the caution
that it should be "discreetly used" by Mr. Curtis and that the
defendant is liable for the use he made.
The evidence on the record comes from the plaintiffs, and in
reference to the circumstances of the exhibition, from a single
witness. The agent of the defendant was the near neighbor and
friend of the plaintiffs, but had never had any intercourse of
business with them, either for himself or for his principal.
Such being their relations, Iasigi, on the 5th April, came
to
Page 58 U. S. 200
him as a friend and neighbor, and stated, that
"he had a large amount of notes of certain factories in
Connecticut, endorsed by Orrin Thompson; that there had been a
failure recently, in New York, Austen & Spicer, by which he
thought the factories, or Orrin Thompson, or all of them, would
lose money; and that he felt anxious as to the fate of the paper he
held. He did not state the amount he held exactly, but Curtis was
led to believe it was about $40,000. He proceeded to say that Mr.
James Brown was a friend of Orrin Thompson, and that he, Iasigi,
had himself heavy dealings with him, and that he wished him
(Curtis) to write to Mr. James Brown, and ask him about the
standing of Thompson and his property. Curtis accordingly wrote,
but did not state that he wrote at Iasigi's request."
Upon this statement, the particular form of the inquiry is open
to, and will be the subject of remark hereafter. The question to
Mr. Brown is:
"What is your opinion as to any possibility of loss to the
Thompsonville Company or Orrin Thompson?"
The witness proceeds:
"I was led to ask the information and to communicate the result
to him in consequence of the friendly relations that had long
existed between us, and further, because I thought it would tend to
relieve Mr. Iasigi's mind, and not with a view to future
sales."
He says further:
"At these interviews about my letter, and Brown's reply, there
was nothing said about any anticipated or prospective operations by
Iasigi. Mr. Iasigi said the credits were due to him."
The witness "never knew that he had sold his notes," but was
asked if he would guarantee them.
This statement of the circumstances of the exhibition of the
letter to Iasigi contains the whole case. No other letter of the
defendant was seen by him, no other communication was made to him,
nor was this letter after this produced to any other person before
the failure of the corporations. Now the proof of the plaintiffs is
that they held but a single note, of less than $800, running on
time, at this date; the others had been sold in the winter
previously, in the New York market, without endorsement or
guarantee. They had a book debt then due, upon which a large
payment was made within ten days after, all of which has been
collected, and about which no solicitude was expressed. It likewise
appears that Iasigi did contemplate further operations, for in
January Thompson had taken samples of wool to arrive, and which did
arrive, and was sold about six weeks from this interview.
Before closing this statement of the evidence, it is proper to
note the impression that the defendant's letter made upon those who
read it, as an accrediting document.
Curtis reading it with the object of deciding whether the
Page 58 U. S. 201
corporations and Thompson would meet their negotiable notes for
two or three months, was willing to guarantee the debt for the
usual commission; but when told that credits on sales were given
afterwards, he "expressed his surprise that Iasigi should have sold
after reading that letter." Skinner, who probably knew the secret
purpose of Iasigi, and interpreted the letter accordingly, was not
"favorably impressed." Iasigi, in reply to the expression of
surprise by Curtis quoted above, asked to see the letter again, and
after reading it said: "If you did not say that this was the same
letter I read in your office, I should say that I had never seen
this letter before," and the Browns, when interrogated upon it
after the failure of these parties, said, that the letter was a
guarded one and did not warrant credits on sales to them. Having
collected the facts important to the issue, the question arises, do
they constitute a case to go to the jury upon this declaration? The
evidence is that the plaintiffs anticipating consignments of wool,
and sales to these Connecticut corporations, and desiring the
defendant's information and opinion of them, through Iasigi,
approached his neighbor and friend, Mr. Curtis the confidential
agent of the defendant, to engage him to procure this opinion and
information from his principal in New York. He approaches Curtis
with a statement of anxieties for debts, existing in the form of
negotiable notes running on time.
These statements were certainly not accurate, and are apparently
insincere, and it will be noticed that the motive alleged in the
declaration, as prompting the plaintiffs, was not revealed, and if
it existed, was disguised under the apprehensions that were then
expressed. The evidence shows the plaintiffs did not have notes of
the amount spoken of, and that the book debt was then due. There is
a discordance between this evidence and the inquiry proposed in the
letter of Curtis. That inquiry discloses no apprehensions of loss
upon existing debts, but refers to perils to arise on future
transactions. If Iasigi suggested the form of the inquiry with a
view to obtain information to guide his conduct, as the declaration
avers, and concealed his aim, and by affecting an alarm he did not
feel, covered that aim from Curtis it has the appearance of
circumvention. Curtis says he wrote his letter in consequence of
his friendship for the plaintiffs, to calm their fears, and without
an intimation of prospective operations. Curtis gave a pledge that
he would use the letter of the defendant discreetly. Before the
letter was placed in the hands of the plaintiffs, they were
informed it was "confidential," and Iasigi read that upon the
letter itself. Iasigi again confirms the impression of Curtis that
apprehensions of loss upon his notes were still moving him, by
addressing queries as to the
Page 58 U. S. 202
probabilities of his getting his money, and importunes Curtis to
exhibit the letter to his friend, that he might profit from his
counsel. The declaration avers that this letter, exhibited under
such circumstances, was written for exhibition to inquiring
dealers, to encourage and persuade them to give credit to these
corporations, and was shown to the plaintiffs with that design.
That when it was written and exhibited, the anticipated
transactions from which loss has followed, were known to the
defendant, and the object of the exhibition was to induce the
plaintiffs to make them.
I find no support for these averments, but a direct and palpable
contradiction of them. This conclusion upon the evidence renders a
discussion of the statute of Massachusetts, Rev.Stat. ch. 74, ยง 3,
requiring that representations of the character, ability, and
conduct of another person should be in writing to support an
action, unnecessary. But the discussions upon a similar statute
fortify the conclusions contained in this opinion. "The true
construction of the statute," says Lord Abinger,
"is that the representation or assurance should concern or
relate to the ability of the other person effectually to perform
and satisfy the engagement, of a pecuniary nature, into which he
has proposed to enter, and upon the faith of which he is to obtain
money, credit, or goods."
1 M. & W. 101, 123. "He who has money to lend or goods to
sell on credit, and doubts the ability of the borrower, or buyer,"
says Baron Gurney,
"may exact his own terms; he may insist on having a
representation or assurance in writing, of the ability, from a
third person; and if that be refused, he may keep his money and
goods. If he thinks fit to trust without that, he has no right to
resort to the responsibility of the person of whom he
inquires."
S.C. 107. Baron Alderson says:
"If we refer to the cases which had occurred before the
legislative provision, I think it will be found that the decision
in the class of cases commencing with
Pasley v. Freeman,
had raised a well founded complaint in the profession of having
virtually repealed the statute of frauds, by which a guarantee was
required to be in writing, and that the object Lord Tenterden had
in view, was to place both on the same footing, and to provide that
a written document should be equaly required in both. The two cases
are, I think, identical in principle."
He adds, "that fraud, in substance, amounts to an implied
guarantee of the plaintiff's solvency."
Had Curtis given a guarantee to the plaintiffs of their debt,
either for or without a commission, and accompanied the act with
statements of the pecuniary condition of the debtors, and
expressions of confidence in his solvency wholly unwarranted, it is
clear that it would have imposed no responsibility for sales
Page 58 U. S. 203
not then spoken of or alluded to, which were not made for
several weeks afterwards, which were not contemplated by one of the
parties, and if by the other, were concealed in all the intercourse
that then took place. The statute was designed to reduce the
liabilities, for the representations it describes, to some definite
and appreciable limit; that the representations should be evinced
in a written document, and that those who were to derive a benefit
from it, as a security, should be ascertained from its contents,
and that the liability on the document should not be extended
beyond the engagements to which it had reference.
The questions embraced in this case, are exhibited in a short
conversation detailed in the evidence of the plaintiffs. Curtis
says:
"After the failure of the corporations, in September, I had an
interview with Mr. Iasigi. I met him in the street; he accosted me
in a state of excitement; he said: 'Mr. Curtis Thompson has failed,
and the Thompsonville Company has failed.' I said: 'I am sorry, but
you have got your money.' He said: 'Yes, I have got the money that
was owing to me, but I have trusted them again.' I expressed
surprise that he should have trusted them again."
It was not with a declared purpose of trusting them again that
Iasigi sought information of Curtis, nor was the confidential
letter of Mr. Brown to his agent read, with the avowal that future
operations were to be affected by the impression it made; nor was
the questionable act of its exhibition superinduced by any
suggestions of the existence of pending negotiations.
The objects disclosed by Iasigi were wholly incompatible with,
and exclusive of, the notion of any legal responsibility for the
accuracy or sufficiency of the letter or even for a willful
misrepresentation.
He did not ask for information, proposing action, even in regard
to the notes of which he spoke, nor did any alteration of his debt
take place in consequence. He simply inquired of Curtis that
anxieties might be relieved and his apprehensions quieted.
The liabilities incurred in cases like that described in the
declaration, are for a fraud productive of damage, of damage
directly consequential and in the contemplation of the parties, as
a result of the act done, and not for consequences remote,
contingent, and arising from acts unconnected with the objects
disclosed or comprehended by them.
Order
This cause came on to be heard on the transcript of the record
from the circuit Court of the United States for the District of
Page 58 U. S. 204
Massachusetts, and was argued by counsel. On consideration
whereof it is now here ordered and adjudged by this Court, that the
judgment of the said circuit court in this cause be and the same is
hereby reversed with costs, and that this cause be and the same is
hereby remanded to the said circuit court, with directions to award
a venire facias
de novo.
MR. JUSTICE CAMPBELL, MR. JUSTICE NELSON, and MR. JUSTICE CURTIS
dissented.
|58 U.S. 183|
* MR. JUSTICE CATRON did not sit in this cause.