ed, with the knowledge of the other directors, in placing treasury stock, he is to be regarded as authorized to represent the corporation in such matters, and any fraudulent representations which he makes while trying to sell the stock are within the scope of his employment and will bind the corporation.346 So, a married woman who through her husband sells a lot is bound by his action in inducing the vendee to accept a deed conveying only a part of the lot, by his fraudulent representation that it conveyed the whole.347 So, the two owners of a vessel are jointly liable in an action of deceit for fraudulent representations made by one of them, acting for both, in a sale of the vessel.348 And generally, where one of the joint owners of property makes false representations in effecting the sale of it, and the other joint owners, knowing of such false representations, do not contradict them, but allow the sale to be completed and accept their share of the proceeds, the purchaser can maintain an action for deceit against them all jointly.349 For similar reasons, both members of a firm are liable for false representations in a matter relating to the firm's business, though. they were made by one partner only, without the knowledge of the other.850

§ 94. Repeating Information Received from Third Persons. If one of the parties to a negotiation, in order to influence the other and induce him to act, repeats to him information which he has received from a third person, with respect to any matter material to the subject of the contract, it is his duty to report correctly what he has heard, without any misstatement, exaggeration, or concealment, to repeat only what he believes to be correct and trustworthy, and not to assert the matter as being within his own knowledge. If he does this, he will not be liable as for the making

346 Weissinger Tobacco Co. v. Van Buren, 135 Ky. 759, 123 S. W. 289, 135 Am. St. Rep. 502.

347 Bell v. McJones, 151 N. C. 85, 65 S. E. 646.

348 Cook v. Castner, 9 Cush. (Mass.) 266; White v. Sawyer, 16 Gray (Mass.) 586.

349 O'Leary v. Tillinghast, 22 R. I. 161, 46 Atl. 754.

350 Boston Foundry Co. v. Whiteman, 31 R. I. 88, 76 Atl. 757, Ann. Cas. 1912A, 1334.

BLACK RESC.-16

of false representations, although the information so received and repeated proves to have been entirely incorrect.351 Thus, in one of the cases, it appeared that the plaintiff traded his farm for a tract of land owned by defendant in another state. Neither of the parties had any personal knowledge of the character or quality of the land in such tract, but defendant knew that plaintiff meant to occupy the land and devote it to agricultural purposes. Defendant exhibited to plaintiff a letter, which had been written by a stranger to a former owner of the land, and which described the property as favorably situated and of good quality and well timbered. It was on the strength of this letter that defendant himself had purchased the land, but at the time he showed it to the plaintiff he made no false statement or suppression of the truth in regard to it. On the contrary, he told the plaintiff that he would not be responsible for the description contained in the letter, as it might not be true, and that if plaintiff traded with him it must be at his own risk. He advised the plaintiff to visit the land and inspect it for himself, or to see the writer of the letter, of whose place of residence he informed him. But the plaintiff declined to take this trouble, agreed to make the proposed exchange at his own risk, and told several witnesses that he had traded "unsight unseen." Mutual conveyances were drawn up and executed, and possession of plaintiff's property given to defendant. The lands in question proved to be swamp lands, to a great extent overflowed with water, poorly timbered, wholly unfit for cultivation, and of very little value. But it was held that the plaintiff could have no relief in equity, since his own carelessness was responsible for his predicament, and defendant had made no false representations.352 In another case, concerning the sale of oil lands, it appeared that the vendor had no personal knowledge of

851 Davidson v. Jordan, 47 Cal. 351; Connell v. El Paso Gold Min. & Mill. Co., 33 Colo. 30, 78 Pac. 677; Hanson v. Kline, 136 Iowa, 101, 113 N. W. 504; Krause v. Cook, 144 Mich. 365, 108 N. W. 81; Peters v. Lohman, 171 Mo. App. 465, 156 S. W. 783; Duryea v. Zimmerman, 121 App. Div. 560, 106 N. Y. Supp. 237; Boles v. Aldridge (Tex. Civ. App.) 153 S. W. 373; Lams v. Fish, 86 N. J. Law, 321, 90 Atl. 1105.

852 Crist v. Dice, 18 Ohio St. 536.

the lands except what he derived from letters written by his brother, and that he made no representations of any kind to the purchaser except as to the contents of these letters and as to the reliable and trustworthy character of their writer. The court said: "If he intentionally misstated their contents, that would amount to a misrepresentation of a material fact, and would come within the established definition of deceit. If he knew that the information contained in the letters was false, and that the writer was not trustworthy and reliable, it would of course be fraudulent if by words or acts he induced the defendant to act and rely upon them and to incur damage and loss by such reliance. But if he himself believed the information contained in the letters to be true, and the writer to be entitled to confidence, and if he truly and honestly stated the contents of the letters, and explained to the defendant that he had no other personal knowledge on the subject-matter, such representations would not be fraudulent."853

But one cannot escape liability for fraud, on the plea that he merely repeated what he had heard from others, if he knows the information so repeated to be false, or if he has reason to believe that it is incorrect on account of the unreliable source from which it comes, or if he misstates the information in his possession, either by perverting it, exaggerating so much of it as is in his favor, or suppressing that which tells against him.354 And if one asserts as a fact within his personal knowledge that which he has merely accepted on the word of another, he assumes responsibility for its correctness.355 So again, although one states only what he has heard from others, he may put it in such a way as to guaranty its correctness or make himself responsible for its falsity.356 Thus, where the seller of bank stock rep

853 Cooper v. Lovering, 106 Mass. 77.

354 Davidson v. Jordan, 47 Cal. 351; Johnson v. Withers, 9 Cal. App. 52, 98 Pac. 42; Hanson v. Kline, 136 Iowa, 101, 113 N. W. 504; Peters v. Lohman, 171 Mo. App. 465, 156 S. W. 783; Boles v. Aldridge (Tex. Civ. App.) 153 S. W. 373.

355 Fisher v. Mellen, 103 Mass. 503; Chatham Furnace Co. v. Moffatt, 147 Mass. 403, 18 N. E. 168, 9 Am. St. Rep. 727.

856 Johnson v. Withers, 9 Cal. App. 52, 98 Pac. 42; Stoll v. Wellborn (N. J. Ch.) 56 Atl. 894. But see Kimber v. Young, 137 Fed. 744, 70 C. C. A. 178.

resented to the buyer that the books of the bank were correctly kept, showed its true condition, and indicated what it had on deposit with other banks, and the representations were false, and the buyer relied on them, it was held that the seller was liable as for deceit, although he did not intend to misrepresent the facts and relied on information furnished by a defaulting officer of the bank.357 So where one states that he "understands" that the owner of certain bonds had obtained a loan of a certain amount on them from a bank, this is to be regarded as a representation of a fact, and he cannot escape responsibility on the theory that it was merely the repetition of something which he had heard and which he intended to state simply as hearsay.358 So, one falsely representing that land is in a certain situation and of a certain quality, and that the description is based on accurate and reliable information, is liable as for a fraud.359 And where the sellers of timber assured the buyer that they had had the timber carefully estimated, and that the estimate showed certain quantities, it was held that such representations were not mere matters of opinion, but involved liability for fraud, if false. 360

§ 95. Representations to Third Parties Communicated to Plaintiff.-To sustain a rescission of a contract or the cancellation of an obligation on the ground of fraud, it is not necessary that the false representations should have been made directly to the person defrauded, but the responsibility of the person setting them on foot is the same if they were made to a third person with the expectation and intention that they should be communicated to the injured party, and with the purpose of persuading or misleading him, and if they were so communicated and produced the intended result.361 Thus, if measures resorted to in order

357 Barclay v. Deyerle, 53 Tex. Civ. App. 236, 116 S. W. 123. 358 Adams v. Collins, 196 Mass. 422, 82 N. E. 498.

359 Hanson v. Kline, 136 Iowa, 101, 113 N. W. 504.

360 May v. Loomis, 140 N. C. 350, 52 S. E. 728.

361 Langridge v. Levy, 2 Mees. & W. 530; National Bank of Savannah v. Kershaw Oil Mill, 202 Fed. 90, 120 C. C. A. 362; Henry v. Dennis, 95 Me. 24, 49 Atl. 58, 85 Am. St. Rep. 365; Wells v. Western Union Tel. Co., 144 Iowa, 605, 123 N. W. 371, 24 L. R. A. (N. S.) 1045, 138 Am. St. Rep. 317; Hadcock v. Osmer, 153 N. Y. 604, 47

to obtain a deed of land were adopted with the intent of practising a deception on a particular person, and were all adapted to achieve that result, and if they did accomplish the unlawful purpose sought to be attained, then the fact that the words used in furtherance of such unlawful object were not directly addressed to the person designed to be defrauded, or in whose presence they were thus spoken, will not relieve the parties from responsibility for fraud.362 So where a party, pursuant to a scheme to defraud, conveys worthless real estate for a fictitious consideration, part of which is recited to be for cash, and a trust deed is executed purporting to secure notes for the balance, and the notes contain a memorandum that they are secured by the trust deed, and a certificate by the trustee recites that such notes are part of a series secured by the trust deed, such statements being representations calculated to deceive, it is immaterial, in an action by a purchaser thereof for damages for deceit, that the defendant made no direct representations to him.363 Again, where defendant and a third person were engaged in the common enterprise of organizing a corporation to take over an established business, and defendant made a statement to the third person as to the profits of the business, and meant that it should be used by the latter to induce persons to subscribe for stock in the proposed corporation, the defendant was held liable for fraud in an action by one who was thus induced to purchase the stock, the statement being false.364 On the same principle, one is equally responsible for fraudulent representations whether they were made by himself or by a third person to whom he referred the other party for information with the expectation that he would be deceived. Hence,

N. E. 923; Light v. Jacobs, 183 Mass. 206, 66 N. E. 799; Simonds v. Cash, 136 Mich. 558, 99 N. W. 754; Barnhart v. Anderson, 22 S. D. 395, 118 N. W. 31; Minneapolis Brewing Co. v. Grathen, 111 Minn. 265, 126 N. W. 827; Sigafus v. Porter, 84 Fed. 430, 28 C. C. A. 443. The case last cited was reversed on appeal (179 U. S. 116, 21 Sup. Ct. 34, 45 L. Ed. 113), but only on a question as to the measure of damages. See, also, De Grasse v. Verona Min. Co. (Mich.) 152 N. W. 242; Lowance v. Johnson (W. Va.) 84 S. E. 937. 362 Brown v. Brown, 62 Kan. 666, 64 Pac. 599. 363 Leonard v. Springer, 197 Ill. 532, 64 N. E. 299. 364 Diel v. Kellogg, 163 Mich. 162, 128 N. W. 420.