Fraud is sometimes defined as the “deception practised in order to induce another to part with property or to surrender some legal right,” Cooley, Torts (2d ed.), 555, and sometimes as the deception which leads “a man into damage by wilfully or recklessly causing him to believe and act on a falsehood.” Pollock, Torts (Webb’s ed.), 348, 349. The second definition seems to be more comprehensive than the first (see for instance Barley v. Walford, 9 Q. B. 197, and Butler v. Watkins, 13 Wall. 456), and while the authorities establishing what is a cause of action for deceit are to a large extent convertible with those which define the right to rescind a contract for fraud or misrepresentation and the two classes of cases are generally cited without any express discrimination, still discrimination is sometimes needful in the comparison of the two classes of cases. Pollock, Torts (Webb’s ed.), 352.
It is true that it must appear that the fraud should have been acted upon. It is a little difficult to see precisely what is meant by the contention that “refraining from action is not acting upon representation.” If by refraining from action it is meant simply that the person defrauded makes no change but goes on as he has been going and would go whether the fraud had been committed or not, then the proposition is doubtless true. Such a person has been in no way influenced, nor has his conduct been in any way changed by the fraud. He has not acted in reliance upon it. If, however, it is meant to include the case where the person defrauded does not do what he had intended and started to do and would have done save for the fraud practised upon him, the proposition cannot be true. So far as respects the owner of property, his change of conduct between keeping the property on the one hand and selling it on the other, is equally great, whether the first intended action be to keep or to sell; and if by reason of fraud practised upon him the plaintiff was induced to recall his order to sell, and, being continuously under the influence of this fraud, kept his stock when, save for such fraud, he would have sold it, then with reference to this property he acted upon the representation within the meaning of the rule as applicable to cases like this. Barley v. Walford, 9 Q. B. 197; Butler v. Watkins, 13 Wall. 456.
The cases of Lamb v. Stone, 11 Pick. 527; Wellington v. Small, 3 Cush. 145; and Bradley v. Fuller, 118 Mass. 239, upon which the defendant relies, are not authorities for the proposition that “refraining from action is not acting upon representation.”
As to whether the loss suffered by the plaintiff is legally attributable to the fraud, much can be said in favor of the defendant, and a verdict in his favor on this as well as on other material points might be the one most reasonably to be expected upon the evidence, especially when it is considered that during the years 1892 and 1893 the plaintiff was a director in the company; but we cannot decide the question as a matter of law. If the fraud operated on the plaintiff’s mind continuously, up to the time of the depreciation of the stock in June, 1893, so that he kept his stock when otherwise he would have sold it, and such was the direct, natural and intended result, then we think the causal relation between the fraud and the loss is sufficiently made out. See Reeve v. Dennett, 145 Mass. 23, 29.
Exceptions sustained.[[357]]
FOTTLER v. MOSELEY
Supreme Judicial Court, Massachusetts, May 19, 1904.
Reported in 185 Massachusetts Reports, 563.
Tort for deceit, alleging, that, relying upon the false and fraudulent representations of the defendant, a broker, that certain sales of the stock of the Franklin Park Land Improvement Company in the Boston Stock Exchange from January 1 to March 27, 1893, were genuine transactions, the plaintiff revoked an order for the sale of certain shares of that stock held for him by the defendant, whereby the plaintiff suffered loss. Writ dated February 17, 1896.
At the first trial of the case in the Superior Court a verdict was ordered for the defendant, and the exceptions of the plaintiff were sustained by this court in a decision reported in 179 Mass. 295. At the new trial in the Superior Court before Sherman, J., it appeared that one Moody Merrill, a director and officer of the Franklin Park Land Improvement Company, absconded late in May or early in June of 1893, and that immediately upon his departure it was discovered that he had embezzled nearly $100,000 of the funds of that company, the result of which was that the market price of the stock immediately fell and the stock could not be sold; that the plaintiff from the time of the discovery of the defendant’s alleged fraud did his best to sell his stock, but was unable to do so at more than $3 a share, at which price he sold it after bringing this action.
The plaintiff among other requests asked the judge to rule, “That it is of no consequence so far as the defendant’s liability is concerned that an outside intervening cause has been the sole or contributing cause of the decline in price to which the plaintiff’s loss is due.”
The judge refused this and other rulings requested by the plaintiff, and instructed the jury, among other things, as follows:—