Claim by

2. The defendant further denies that the said E. S. supplied executrices and fitted to the defendant a gold plate, as alleged in the said 3rd paragraph.

of surgeon

dentist for professional

services.

Payment

into Court.

3. The defendant says that in or about the month of 187, it was agreed by and between the said E. S. and the defendant that the said E. S., in consideration that the defendant would employ him as his dentist, should supply the defendant with a set of teeth and plate, and charge the defendant for the materials only; and the defendant employed the said E. S. to fit him with a set of teeth on these terms, and not otherwise.

4. The defendant further says that the said E. S. supplied a certain set of teeth which were not properly fitted and were useless to the defendant, and that he was put to expense in employing another dentist to fit him with other teeth in conse quence thereof.

5. The defendant further says that he is and always was ready to pay for the materials used by the said E. S. as aforesaid; and the defendant has paid into Court the sum of £3, and says that the said sum is sufficient to satisfy the plaintiff's claim.

Claim by physician for balance

of purchasemoney on sale of

practice.

Action by Medical Man for Balance of Purchase-money of a
Practice.

1. The plaintiff is a medical man, who, until the sale of his practice hereafter mentioned, exercised his profession at S., in the county of

2. The defendant is also a medical man.

3. By an agreement dated the day of 1877, the plaintiff agreed to sell to the defendant, and the defendant agreed to buy of the plaintiff, the practice aforesaid, on the terms (among others) that the defendant should pay to the plaintiff the sum of £150 as purchase-money, such sum to be paid when the defendant should have been elected as medical officer to the W. Union, that appointment at the date of the agreement being held by the plaintiff.

4. The defendant paid to the plaintiff £50 as a deposit and in part payment of the aforesaid sum of £150.

5. The defendant took possession of the said practice on the
day of
1877, and was duly elected as medical officer

of the W. Union, whereupon the balance of the purchase-money Claim by became payable to the plaintiff.

6. The defendant refused to pay the said balance, and the

same still remains unpaid.

The plaintiff' claims £100.

physician for balance

of

purchasemoney on sale of practice.

Misrepresentation (@).

And see Fraud.

Action for Misrepresenting the Value of a Business on its Sale.

1. In or about

March, 1875, the defendant caused to be

value of

business

on sale thereof.

(a) The most common form of action under this head is that for misrepresentation of the value of property sold to the plaintiff. It is essential to maintain the action that

Essential elements in action

1. The defendant has made a statement with reference to the subject- for misrematter of the sale which is false in fact.

2. That he knew it to be false.

3. That he made it intending to influence the decision of the plaintiff. 4. That the plaintiff believed it, and acted on it, or in other words, that he was thereby induced to purchase, &c.

5. That the plaintiff was thereby damnified.

presenta

tion.

In Cornfoot v. Fowke (6 M. & W. 358), it was held, that where the owner Misrepreof a house authorised an agent to let it without telling him of a nuisance sentation which lowered the value of the premises, and the agent, in answer to the by agent. plaintiff, said there were no objections to it, it was held that there was no fraud either by the agent or his principal. Where an agent knowing that timber was unsound represented it as sound, but his principal did not know of the defect, the Court was divided as to the responsibility of the latter in an action against him. (Udel v. Atherton, 30 L. J. Ex. 337. And see Archibald v. Howth, 1 Ir. R. 1 C. L. 608, C. P.) In Wright v. Leonard, 30 L. J. C. P. 365, the Court was divided as to whether defendant was liable for a false representation by his wife.

A person is responsible for the consequences of a false representation made by him to another on which a third person acts, if made with the intention that such third person should act on it, and the injury complained of be the immediate consequence of such representation. (Peek v. Gurney, L. R. 6 H. L. 377, 412, per Lord Cairns.) Where, however, the act of the plaintiff which caused him the injury is not directly induced by the representation of the defendant, though made with the intention that it should be so acted on, no action will lie. (lb.) Thus, though the statements in a prospectus were knowingly false, and caused the shares to be all applied for and allotted, and the plaintiff purchased some of them in the market, acting on the statements in the prospectus; held he could not recover from the defendants, on the ground that he did not receive the prospectus from them, and could not therefore treat the misrepresentations as made personally to him. (1b.) It is not very easy to reconcile this decision with that in Scott v. Dixon, 29 L. J. Ex. 62 n., where

When

misrepresentation

made to

third

person.

Misrepre

sentations

made in

prospectus.

Claim for

ment, in which he offered for sale the lease, fixtures, fittings, misrepre- goodwill, and stock-in-trade of a baker's shop and business, and

sentation

of the

value of a business.

Misrepresentations

in fraudu

lent prospectus.

Incorporated

company

liable for misrepresentations

of agent.

Misrepresentations

as to the

of third

persons.

Must be in

the directors of a bank who knowingly issued a false report, in form addressed to the shareholders, but intended for the information of persons wishing to purchase shares, and the plaintiff, through a broker, obtained a copy of the report, were held liable for a loss sustained by the plaintiff in consequence of his having been induced by the false statements contained in the report to purchase shares. The only ground of distinction seems to be that the information in this case was more or less directly communicated to the plaintiffs. See a distinction between the cases, in Peek v. Gurney, supra.

A class of actions for misrepresentation which have come very much under discussion recently have been those founded on fraudulent prospectuses by the promoters or directors of companies. Some cases of this kind have just been referred to. A leading case on this subject is that of Gerhard v. Bates, 22 L. J. Q. B. 364, in which it was laid down that false statements in prospectuses, &c., made with the intention that they should be read and acted on, will, if so read and acted on, entitle a person acting on them to sue the authors of such statements for loss occasioned thereby. (See on this subject Richardson v. Sylvester, L. R. 9 Q. B. 34; Cullen v. Thomson's Trustees, 4 Macq. 424; Clarke v. Dickson, 28 L. J. C. P. 225.)

An incorporated company is liable for a misrepresentation of an agent acting in the course of the business entrusted to him. (Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259, Ex. Ch.) It was said (not decided) in Addie v. Western Bank of Scotland, L. R. 1 H. L. 145, 158, 167, that in such cases only the agent or directors who made the false statements could be made liable, and not the company. This was dissented from in Swift v. Jewsbury, L. R. 9 Q. B. 301, 312, Ex. Ch., per Coleridge, C. J. And see Mackay v. Commercial Bank of New Brunswick, L. R. 5 P. C. 394; M'Gowan v. Dyer, L. R. 8 Q. B. 141.)

The more common forms of this action are, those for misrepresentation of the value, takings, and profits of a business on the sale thereof by the vendor. This is virtually the same kind of action as those for misrepresentations, relating to the position of companies in which shares are purchased.

Another form of the action is that for misrepresentations as to the solvency and pecuniary position of a person to whom the plaintiff, acting on such misrepresentations, has given credit and so suffered a loss. This credit, &c., action differs from other actions for misrepresentation in this, that by the 9 Geo. 4, c. 14, s. 6, no person is liable to be sued for any representations as to another's solvency, &c., unless such representation is in writing and signed by the person sought to be made liable. A representation respecting the credit of a firm of which the defendant is partner is within this provision. (Deraux v. Steinkeller, 6 N. C. 84.) The signature of an agent will not satisfy this section. (Swift v. Jewsbury, L. R. 9 Q. B. 244.) And one partner signing in the name and by the express authority of the firm, will only make himself liable. (Mason v. Williams, 28 L. T. N. S. 232.) The manager of a banking co-partnership will not bind the co-partnership by his signature. (Swift v. Jewsbury, supra.)

writing and signed. Signature of agents

and part

ners.

How far plaintiff must be

The misrepresentations must in every form of action founded thereon be shown to have materially influenced the plaintiff. (Moore v. Burke. 4 F. & F. 258, cor. Cockburn, C. J.) But the fact that there were other influenced. inducements will not protect a defendant. (Clarke v. Dixon, 28 L. J. C. P. 225.) So in actions for misrepresenting the position of a person to whom credit was given, where there was a written and signed representation partly on which and partly on a verbal statement the plaintiff acted, the

described the same as an increasing business, and doing twelve Claim for sacks a week. The advertisement directed application for par- misrepreticulars to be made to X. Y.

sentation

of the

business.

2. The plaintiff having seen the advertisement applied to value of a X. Y., who placed him in communication with the defendant, and negotiations ensued between the plaintiff and the defendant for the sale to the plaintiff of the defendant's bakery at with the lease, fixtures, fittings, stock-in-trade, and goodwill.

3. In the course of these negotiations the defendant repeatedly stated to the plaintiff that the business was a steadily increasing business, and that it was a business doing twelve sacks a week.

4. On the 5th April, 1875, the plaintiff, believing the said statements of the defendant to be true, agreed to purchase the said premises from the defendant for £500, and paid to him at deposit of £200 in respect of the purchase.

5. On the 15th April the purchase was completed, an assignment of the lease executed, and the balance of the purchasemoney paid. On the same day the plaintiff entered into possession.

6. The plaintiff soon afterwards discovered that at the time of the negotiations for the said purchase by him and of the said agreement, and of the completion thereof, the said business was and had long been a declining business; and at each of those times, and for a long time before, it had never been a business of more than eight sacks a week. And the said premises were not of the value of £500, or of any saleable value whatever.

7. The defendant made the false representations hereinbefore

action was held maintainable. (Tatton v. Wade, 25 L. J. C. P. 240, Ex. Cb.) In actions for misrepresentation, on the sale of a business, it is a very common line of defence that the plaintiff acted, not on any verbal representation made to him, but on an examination of the books relating to it, and on his own observation and examination.

Measure of damages.]— The plaintiff is entitled to recover damages for any injury which is the direct and natural consequence of his acting on the representations; as where a vendor of cattle represents them to be free from disease, and the vendee's other cattle catch the disease from them, the latter can in this action recover in respect of the loss of his cattle so caused. (Mullett v. Mason, L. R. 1 C. P. 559.)

Costs incurred upon discovery of the falsehood of the representation in order to reverse the consequences thereof, are too remote to be recovered in this action. (Hyde v. Bulmer, 18 L. T. N. S. 293.)

Defence that plaintiff relied

on his own

observa

tion.

Measure of

damages.

Claim for
misrepre-
senting
the value of

a business.

Statement

of defence.

That plaintiff relied on his own investigations.

Claim for fraudu

lently

inducing plaintiff

mentioned well knowing them to be false, and fraudulently, with the intention of inducing the plaintiff to make the said purchase on the faith of them.

1. The defendant says that at the time when he made the representations mentioned in the 3rd paragraph of the statement of claim, and throughout the whole of the transactions between the plaintiff and defendant, and down to the completion of the purchase and the relinquishment by the defendant of the said shop and business to the plaintiff, the said business was an increasing business, and was a business doing twelve sacks a week.

2. The defendant denies the allegations of the 6th paragraph of the statement of claim.

3. The defendant repeatedly during the negotiations told the plaintiff that he must not act upon any statement or representation of his, but must ascertain for himself the extent and value of the said business. And the defendant handed to the plaintiff for this purpose all his books, showing fully and truthfully the details of the said business, and from which the nature, extent, and value thereof could be fully seen.

4. The said books were examined for that purpose by the plaintiff, and by an accountant on his behalf. And the plaintiff made the purchase in reliance upon his own judgment, and the result of his own inquiries and investigations, and not upon any statement or representation of the defendant.

Action for fraudulently inducing the Plaintiff to take worthless
Shares, claiming a return of the Money paid.

at

1. The plaintiff is a gentleman of private fortune, residing in the county of

2. The defendant is a mining engineer, carrying on business at 1, Buildings, in the city of London. The defendant. worthless also acts as a stock and share broker, but is not a member of shares.

to take

the Stock Exchange.

3. Previous to the transaction herein mentioned, the plaintiff