Sec 283

A contract induced by fraud is voidable, not void, it being within the option of the party defrauded to confirm or repudiate. By the Roman law, as we have seen, a party defrauded in a contract has the option of holding on to the contract, with special compensation for its defective consummation caused by the fraud of the other side, or of rescinding the contract, and recovering damages for his entire loss in the whole transtion,1 though it is otherwise, so it is declared, when the fraud does not consist in a false pretence as to an individual, but in what is called constructive fraud, as where a trustee buys the cestui que trust's property, while in cases of constructive fraud the transaction, being merely voidable, may be confirmed.2 But this exception no longer is maintained in Pennsylvania,3 and cannot on principle be supported. If adopted it would paralyze business. Few statements made during negotiations are absolutely exact; there are few negotiations in which each party does not seek to make a good bargain, and does not use language in which a severe critic might not discover at least omissions of facts the statement of which might have caused hesitancy on the other side. If all sales in which false pretences of any kind have been used are so void as to be incapable of subsequent confirmation, it is hard to see what titles would be secure. Fraud is easily charged, and depends, as a matter of fact, upon the opinion of a jury based upon the case that may happen to be presented at trial. To say that all sales in which fraud enters are void would expose the title, not only of the fraudulent vendee, but of persons bona fide purchasing from him, to destruction upon contingencies which no prudence could forecast or ward against.4 At the same time it must be remembered that the distinction above noticed holds so far good that, in cases of false personation, no title passes, and, therefore, the transaction is inoperative as to third parties,5 while in cases of Contract induced by fraud is voidable.

1 Load v. Green, 15 M. & W. 216; Donaldson v. Farwell, 93 U. S. 601.

2 Supra, sec 232a; Hill v. Buckley, 17 Ves. 394; Kelly v. Pember, 35 Vt. 183; Lord v. Brookfield, 8 Vroom, 552; Brewster v. Brewster, 9 Vroom, 119; Cravens v. Kiser, 4 lnd. 512; Cox v. Reynolds, 7 lnd. 257; Earl v. Bryan, Phill. Eq. (N. C.) 278; Cullum v. Bank, 4 Ala. 21. The remedies given by equity, under form of decrees for rescission and decrees of specific performance, are substantially the same as those given in the Roman law by the restitutio in integrum; 1 Spence, Eq. 622; Bispham Eq. sec 198. That on rescission, the consideration paid may be recovered back, see infra, sec 520, 742.

3 Edmunds' Appeal, 59 Penn. St. 220; Stewart's Appeal, 78 Penn. St. 88; Cummins v. Hurlbutt, 92 Penn. St. 165; Lynch's App., 97 Penn. St. 349; Scott v. Webster, 50 Wis. 53; Lavassar v. Washburne, 50 Wis. 200; Fitz v. Bynum, 55 Cal. 459; see Smith v. Richards, 13 Pet. 26, where it was held immaterial whether the misrepresentation proceeded from mistake or fraud; supra, sec 214. That preponderance of proof is sufficient, see supra, sec 239.

4 Supra, sec 214, 241. 419 action.1 And such is the rule in our own law.2 It was at one time argued in Pennsylvania that a contract induced by fraud is absolutely void, and hence not susceptible of confirma-.

1 L. 62, sec 1, D. de contrah. emt. xviii., 1 - Voet, Com. L. iv. T. 3, sec 7.

Savigny's views in cases where a bargain has been made under influence of error have been already stated. Supra, sec 177. The alternatives, so far as concerns the question now immediately before us, he states as follows: The transaction might be regarded as prima facie valid, the party in error to be entitled to impeach it by legal process; or the transaction, on account of want of consent, is a nullity. By the Roman law this is the case when fraud precludes assent. Numerous rulings are cited to this effect, among which may be noticed L. 9, sec 2, de contr. emt. (18, 1): . . . "in ceteris autem nullam esse venditionem puto, quotiens in materia erratur." In L. 11, pr. eod., the existence of a consensus in such cases is negatived. It is the error as to the nature of the thing that requires us to conclude that the will requisite to a contract was wanting. This, however, may be complicated by the introduction of other conditions. There may, for instance, so Savigny goes on to say, be an express warranty of some subordinate quality, so that the party giving the warranty may be sued either on the promise or for fraud.

The only cases, so Savigny holds, in which errors of this class are held so essential as to avoid all contracts based on them, are cases in which a purchaser is in error as to the genus (Gat-tung) of purchased goods, as where he buys a vessel of brass or lead for a vessel of gold or silver, or where he buys vinegar for wine. The result in such cases is the same whether the vendor was or was not participant in the purchaser's error. The main effect of this principle is to protect the purchaser from paying a preposterously high price for an inferior article. There are, however, other consequences. If the bargain should be for a golden vessel, and the price be suitable for such a vessel, then the purchaser might wish to treat the contract as binding, and to claim the difference of price ex contractu; but this he cannot do, since there was no contract, even in cases where the vendor was in dolo. But fraud in such cases has independent consequences. The vendor would be liable in an action of deceit, and would be required to pay damages to indemnify the purchaser for his loss, even though the contract itself was a nullity. The vendor is obliged to put the purchaser in the position he would have been in had there been no such transaction.

The nullity of sales of this class was not recognized in the earlier stages of Roman jurisprudence; it is one of the conclusions, according to Savigny, of that jurisprudence in its more perfect development. By Ulpian and Paulus the doctrine, after much wavering by older jurists, was firmly asserted. L. 9, 11, 14, de contr. emt. (18, 1). See discussion, supra, sec 177.

2 Oakes v. Turquant, L. R. 2 H. L. 346; Clough v. R. R., L. R. 7 Ex. 26; Foreman v. Bigelow, 4 Cliff. C. C. 508; Cooper v. Newman, 45 N. H. 339; Lindsley v. Ferguson, 49 N. Y. 625; and cases cited in the following sections. That a party misled by honest misrepresentations may rescind, see supra, sec 214. As to the distinction between voidable and void contracts, see supra, sec 28.

1 Chess v. Chess, 1 Pen. & Watts, 32; Jackson v. Summerville, 13 Penn. St. 359; McCaskey v. Graff, 23 Penn. St. 321; McHugh v. Schuylkill Co., 67 Penn. St. 391; Seylor v. Carson, 69 Penn. St. 81; see infra, sec 288.

2 Pearsoll v. Chapin, 44 Penn. St. 9; Negley v. Lindsay, 67 Penn. St. 217. See as tending to same effect, Foster v. Mackinnon, L. R. 4 C. P. 704; Hunter v. Walters, L. R. 7 Ch. Ap. 75; Stacy v. Ross, 27 Tex. 3.

3 Shisler v. Vandike, 92 Penn. St. 447, cited infra, sec 288.

4 See Bigelow on Fraud, 421; Myton v. Thurlow, 23 Kan. 30. In Moor-house v. Woolfe, 46 L. T. N. S. 374, it was held that where a party acting as money-lender offers by public advertisement to lend on easy terms, and then exacts from a borrower peculiarly hard terms, the burden will be on the lender to prove that the terms of the loan were made fully known to the borrower.

5 Supra, sec 183; infra; $ 291; Cundy v. Lindsay, L. R. 3 Ap. Ca. 465; Hard-man v. Booth, 1 H. & C. 803; Hollins v. Fowler, L. R. 7 H. L. 757; Moody v. Blake, 117 Mass. 23; Barker v. Dinsfraud by false pretences a title to the goods obtained passes, though the party obtaining the goods is exposed to a prosecution for false pretences, and to an action of deceit, as well as to a rescission of the contract.1 This distinction, however, only applies to title. So far as involves the relations of the parties concerned in the bargain, the mere fact that the contract may be subsequently rescinded does not prevent its intermediate efficiency.2.